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Notes to Accounts of Britannia Industries Ltd.

Mar 31, 2017

1 Reporting entity

Britannia Industries Limited (the ‘Company’) is a Company domiciled in India, with its registered office situated at 5/1A, Hungerford Street, Kolkata, West Bengal - 700017. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The Company is primarily involved in manufacturing and sale of various food products.

2 Basis of preparation

A. Statement of compliance

The financial statements of the Company 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 financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (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 standalone 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 is provided in Note 55.

The standalone financial statements were authorised for issue by the Company’s Board of Directors on 25 May 2017.

Details of the Company’s accounting policies are included in Note 3.

B. Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (''), which is also the Company’s functional currency. All amounts have been rounded-off to two decimal places to the nearest crores, unless otherwise indicated.

C. Basis of measurement

The standalone financial statements have been prepared on the historical cost basis except for the following items:

D. use of estimates and judgements

In preparing these standalone 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 recognised prospectively.

Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:

- Note 36 - leases: whether an arrangement contains a lease and ;

- Note 36 - lease classification.

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 March 2017 is included in the following notes:

- Note 34 - recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;

- Note 45 - measurement of defined benefit obligations: key actuarial assumptions;

- Note 40 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Note 4 - useful life of property, plant and equipment

- Note 5 - useful life of investment property.

- Note 6 - useful life of intangible assets.

- Notes 7 to 10 and Notes 12, 13, 15 and16 - impairment of financial assets.

E. Measurement of fair values

Certain accounting policies and disclosures of the Company 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 the measurement of fair values.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

Fair values are categorised into different levels in a fair value hierarchy based on the 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 a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into a different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Further information about the assumptions made in the measuring fair values is included in the following notes:

- Note 5 - investment property

- Note 18 (d) - share-based payments

- Note 54 - financial instruments.

Note 3 Contingent liabilities and commitments: (to the extent not provided for) :

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs.60.08 (31 March 2016: Rs.146.82, 1 April 2015: Rs.44.49)

(b) Bank guarantees and letters of credit for Rs.43.75 (31 March 2016: Rs.25.12, 1 April 2015: Rs.22.46)

(c) Discounted cheques Rs.Nil (31 March 2016: Rs.Nil, 1 April 2015: Rs.0.30) notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 40,41 and 49].

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.167.44 (31 March 2016: Rs.131.78, 1 April 2015: Rs.106.82).

(b) The Company has furnished the following corporate guarantees:

Note 4 (a) Operating leases

(i) The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs.8.89 (31 March 2016: Rs.6.76) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

(ii) The Company has certain cancellable arrangements with contract packers (which conveys a right to use an asset in return for a payment or a series of payment) identified to be in the nature of lease and have been classified as operating lease arrangements. Rental expenses of Rs.47.48 (31 March 2016: Rs.43.95) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

(b) Finance leases

The Company has taken motor vehicles on finance lease. The total minimum lease payments and present value of minimum lease payments are as follows:

The difference between minimum lease payments and the present value of minimum lease payments of Rs.0.08 (31 March 2016: Rs.0.12, 1 April 2015: Rs.0.25) represents interest not due. The lease liability is secured by the relevant vehicles acquired under lease.

* The movement in corporate guarantee is on account of change in exchange rates.

Purpose: The loan availed by Britannia and Associates (Mauritius) Private Limited from Mizuho Bank -USD 1.3 was repaid on 13 October 2016 and fresh loan was availed from The Bank of Tokyo - Mitsubishi UFJ, Ltd. outstanding USD 1.3 for which Britannia Industries Limited has given Corporate Guarantee of USD 1.3. This loan is towards working capital facilities for Al Sallan Food Industries Co. SAOC/ Strategic Food International Co. LLC, Dubai.

Note 5 In accordance with Ind AS 37 - “Provisions, Contingent Liabilities and Contingent Assets", notified under Section 133 of the Act, certain classes of liabilities have been identified as provisions which have been disclosed as under:

Note 6 With respect to the matter related to the refund of excess contribution by the Britannia Industries Covenanted Staff Pension Fund (“CSPF”) to the Company, the Honourable Supreme Court at its hearing on 12 May 2008 set aside the order of the Division Bench of the Honourable High Court, Kolkata and remanded the writ pending for disposal. Based on the directions of the courts, the Company was required to deposit Rs.12.12 with a Nationalised Bank, which the Company has done under protest.

In the suit filed by the Britannia Industries Limited Pensioners Welfare Association (PWA), the Company received a judgement on 21 September 2015 from Honourable City Civil Court, Bangalore, in the matter of pension payable to its eligible beneficiaries. The Board of Directors of the Company reviewed the judgement and after obtaining legal opinion from eminent lawyers resolved to file an appeal in the higher court against the said judgement. Accordingly, the Company as well as CSPF appealed against the Honourable City Civil Court’s judgement in the Honourable High Court of Karnataka. In response to the appeals filed, the Honourable High Court of Karnataka, in its order dated 18 December 2015, referred the matter to Bangalore Mediation Centre for exploring the possibilities of a settlement. The PWA through their legal counsel had submitted that they will not precipitate execution before the trial court during mediation.

As a result of the mediation process, a Memorandum of Settlement (‘MoS’) dated 29 August 2016 was entered into between the PWA, the Company and Trust funds. As per the terms of the MoS and the Decree passed by the Honourable High Court of Karnataka dated 18 October 2016, the Company, inter alia, filed an application with the Honourable High Court at Calcutta for obtaining approval to use the fixed deposit held in the name of the Trust and interest thereon. In response to the petition filed by the CSPF, the Honourable High Court of Calcutta passed an order wherein it directed the CIT, calcutta to consider the representations made by the PWA and the Company. On 9 January 2017, the CIT passed an order wherein, in continuation to the show cause notice dated 11 April 2007, the approval accorded to the CSPF was withdrawn w.e.f. AY 2003-04 in view of Rule 91(2) of the Income Tax Rules, 1962. The CSPF filed a Writ petition with the Honourable High Court at Calcutta against the said order of CIT, Kolkata. On 3rd February 2017, while admitting the writ, the Honourable High Court of Calcutta did not pass any interim order or grant stay against the order of the CIT. Aggrieved by the same, the CSPF filed an appeal in the Division Bench of Calcutta High Court which was heard on 10 March 2017 and the Calcutta High Court granted the stay. However it restrained the Company from encashing the fixed deposit of Rs.12.12 It also directed the single bench of the Calcutta High Court to dispose of the writ petition as expeditiously as possible. The matter before the single bench is yet to be listed for hearing.

In the meanwhile, the Company continues to pay pension as per the interim order passed by the Bangalore City Civil Court on 1 January 2009 (i.e. on Defined Contribution basis).

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have any material adverse effect on the financial statements of the Company. Accordingly, no adjustment in this respect has been made in the financial results of the Company.

Note 7 Segmental information

The Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, segment information has been presented for industry classes.

The operating segment of the Company is identified to be “Foods” as the CODM reviews business performance at an overall Company level as one segment.

Note 8 Related parties Relationships

1. Ultimate holding Company The Bombay Burmah Trading Corporation Limited Holding Company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary companies Al Sallan Food Industries Co. SAOC

Boribunder Finance and Investments Private Limited Britannia and Associates (Dubai) Private Company Limited, Dubai Britannia and Associates (Mauritius) Private Limited, Mauritius Britannia Dairy Holdings Private Limited, Mauritius Britannia Dairy Private Limited Britchip Foods Limited

Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai Strategic Food International Co. LLC, Dubai Sunrise Biscuit Company Private Limited

3. Fellow subsidiary companies Bannatyne Enterprises Pte Limited, Singapore

Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited

Nalanda Biscuits Company Limited Sunandaram Foods Private Limited*

5. Other related party Bombay Dyeing & Manufacturing Co. Ltd. (w.e.f 20 March 2017)

6. Post employment-benefit plan entities Britannia Industries Limited Management Staff Provident Fund

Britannia Industries Limited Covenated Staff Gratuity Fund Britannia Industries Limited Non Covenated Staff Gratuity Fund Britannia Industries Limited Covenated Staff Pension Fund Britannia Industries Limited Officers Pension Fund

Note 9 employee benefits

(a) Post retirement benefit - Defined contribution plans

The Company has recognised an amount of Rs.7.43 (31 March 2016: Rs.6.54) as expenses under the defined contribution plans in the statement of profit and loss for the year:

(b) Post retirement benefit - Defined benefit plans

The Company has two funds: Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at balance sheet date.

Notes:

(i) The discount rate is based on the prevailing market yield on Government Securities as at the balance sheet date for the estimated term of obligations.

(ii) The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the Company’s policy for plan asset management.

(iii) The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(iv) The disclosure above includes amounts for both Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund.

Note 10 disclosure as per Regulation 34 (3) and 53 (f) read with Part A of Schedule v of the SEBI (Listing Obligations and disclosure Requirements) Regulations, 2015 in respect of loans and advances, the amount in the nature of loans outstanding at year end:

Note 11 Government grant

During the year ended 31 March 2013, an amount of Rs.5 was received towards capital subsidy for the Hajipur Factory, Bihar in accordance with the State Industrial Policy of Bihar. Out of this, an amount of Rs.0.71 (31 March 2016: Rs.0.71) has been credited to the statement of profit and loss (by reducing the depreciation charge for the year) and the outstanding amount of Rs.2.15 (31 March 2016: Rs.2.86, 1 April 2015: Rs.3.57) has been classified as government grant in the balance sheet [Refer note 3 (k)].

Note 12 Corporate Social Responsibility

During the year, the amount required to be spent on corporate social responsibility activities amounted to Rs.15.80 (31 March 2016: Rs.10.46) in accordance with Section 135 of the Companies Act, 2013.The following amounts were spent during the current & previous years:

Note 13 During the previous year ended 31 March 2016, based on queries received from Securities Exchange Board of India (‘SEBI’), the Company conducted a preliminary internal investigation and discovered certain irregularities by M/s Sharepro Services (India) Private Limited (‘Sharepro’), the Company’s erstwhile Registrar and Share Transfer Agent. Subsequently, the Company filed a criminal complaint against Sharepro and its employees. Pursuant to the directions issued by SEBI in its interim order dated 22 March 2016, the Company appointed an independent external agency to conduct an audit of the records and systems of Sharepro with respect to past transactions.The report of the external agency was submitted with SEBI by the Comapny vide its letter dated 12 July 2016. The Company will evaluate additional steps, if any, based on the directions of SEBI or any other regulatory authorities.

Based on consultations with its legal counsel, the Company has been advised that the liability will not devolve on the Company and thus no provision is considered necessary. Further, the Company has a right to claim losses, if any, from Sharepro and accordingly the Company does not plan to make good the losses on its own account.

Note 14 During the year ended 31 March 2016, the Board of Directors in its meeting dated 9 February 2016 had approved the scheme of arrangement between the Company and a wholly owned subsidiary of the Company i.e. Daily Bread Gourmet Foods (India) Private Limited (“Daily Bread"), its shareholders, creditors and other stakeholders of both the Companies under section 391 to 394 of the Companies Act, 1956 by way of merger of the manufacturing and Retail sales businesses consisting of the manufacturing facility, retail outlets/ stores and the brand/ trademark of Daily Bread into the Company as a going concern with appointed date as 1 April 2015. The relevant petition has been filed before the respective jurisdictional High courts has been sanctioned on dated 7 October 2016. Upon necessary filings with the respective Registrars of Companies, the scheme has become effective from 1 April 2015 (Appointed date") and effect thereof have been given in these financial statements. Consequently, all assets and liabilities of manufacturing and Retail sales businesses consisting of the manufacturing facility, retail outlets/ stores and the brand/ trademark of Daily Bread, as a going concern transferred to and vested in the Company in accordance with the provisions of the scheme with effect from the appointed date.

The Company has given effect to the Scheme in the accounts with effect from 1 April 2015, being the appointed date. As stipulated in the Scheme:

- Assets and liabilities comprised in the manufacturing and Retail sales businesses consisting of the manufacturing facility, retail outlets/ stores and the brand/ trademark of Daily Bread has been recorded at the same value as appearing in the books of the Daily Bread at the close of the business of day immediately preceding the appointed date.

- Difference between the value of net assets of Daily Bread transferred to the Company after reduction in value of investment held by the Company in Daily Bread has been debited to accumulated balance of Profit and loss in the balance sheet of the Company.

The aforementioned has resulted in decrease in other equity by Rs.1.25 as at 1 April 2015, and decrease in net profit for the year ended 31 March 2016 by Rs.1.67.

Note 15 Disclosure on Specified bank notes (SBNs)

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated 31 March, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from 8 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification is given below:

Note 16 Capital management

The Company’s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investors, creditors and market confidence and to sustain future development and growth of its business. In order to maintain the capital structure the Company monitors the return on capital, as well as the level of dividends to equity shareholders.The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to all its shareholders. For the purpose of the Company’s capital management, capital includes issued capital and all other equity reserves and debt includes maturities of finance lease obligations.

Note 17 Financial instruments - fair values and risk management Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2017, including their levels in the fair value hierarchy.

The fair value of cash and cash equivalents, bank balances, trade receivables, loans, investments in tax-free bonds, investments in debentures/ bonds, borrowings, trade payables and other financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company’s loans have been contracted at market rates of interest. Accordingly, the carrying value of such loans approximate fair value.

Investments in liquid and short- term mutual funds, which are classified as FVTPL are measured using net assets value at the reporting date multiplied by the quantity held.

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s management risk policy is set by the Managing Board. The Company’s activities expose it to a variety of financial risks: credit risk, liquidity and risk market risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. A summary of the risks have been given below.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and loans given. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivables. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The Company limits its exposure to credit risk from trade receivables by establishing a maximum payment period of three months for customer respectively. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are wholesale, retail or institutional customers, their geographic location, industry, trading history with the Company and existence of previous financial difficulties. The default in collection as a percentage to total receivable is low.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, that it will always have sufficient liquidity to meet its liabilities when due. The Company’s corporate treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by the senior management.

The Company aims to maintain the level of its cash and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outflows on financial liabilities (other than trade payables) over the next six months. The Company also monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables and other financial liabilities. At 31 March 2017, the expected cash flows from trade receivables is Rs.126.41 (31 March 2016: Rs.106.88 , 1 April 2015: Rs.71.14). This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

In addition, the Company maintains the following lines of credit, Rs.227 (31 March 2016: 252, 1 April 2015: 307) overdraft facility with various banks that is unsecured. Interest would be payable basis prevailing MCLR (31 March 2016: prevailing base rate , 1 April 2015: prevailing base rate)

The table below provides details regarding the contractual maturities of significant financial liabilities as at 31 March, 2017, 31 March, 2016 and 1 April, 2015:

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.

Currency risk

The Company is exposed to currency risk to the extent that there is mismatch between the currencies in which sales, purchase are denominated and the respective functional currencies of Company. The Company has export sales (2% of total sales) primarily denominated in US dollars and Euro. At any point in time, the Company hedges 95% to 100% of its estimated foreign currency exposure in respect of sales and purchases over the following 12 months. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

Exposure to currency risk

The summary quantitative data about the Company’s exposure to currency risk as reported to the management is as follows:

Sensitivity analysis

The impact of strengthening/weakening of currency on the Company is not material as Company hedges 95% to 100% of the foreign currency exposure.

Note 18 Explanation of transition to Ind AS

As stated in Note 2A, the Company has prepared its first financial statements in accordance with Ind AS. For the year ended 31 March 2016, 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.

The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended 31 March 2017 including the comparative information for the year ended 31 March 2016 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2015.

In preparing its Ind AS balance sheet as at 1 April 2015 and in presenting the comparative information for the year ended 31 March 2016, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cashflows.

There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.

Optional exemptions availed and mandatory exceptions

In preparing the 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 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 revaluation, provided the revaluation was, at the date of revaluation, broadly comparable to:

- fair value

- or cost or depreciated cost under Ind AS adjusted to reflect.

The elections under (i) and (ii) above are also available for intangible assets that meets the 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 and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency 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. The same election has been made in respect of intangible assets also.

2 determining whether an arrangement contains a lease

Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether an arrangement exisiting at the date of transition contains a lease by considering the facts and circumstances exisiting at the date of transition (rather than at the inception of the arrangement).

The Company has elected to avail of the above exemption.

3 Investment in subsidiaries, joint venture and associates

As permitted by Ind AS 101, the Company has elected to carry all investments in subsidiaries and associates at cost as determined in accordance with Ind AS 27.

4 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated. The Company has applied same exemption for investment in subsidiaries and associates.

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 transitition (for preparing 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/ FVOCI.

- Impairment of financial assets based on the expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

- Discounted value of liability for decommissioning cost.

2 Classification and measurement of financial assets

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 restrospective 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 except where the same is impracticable.

Notes to the reconciliation

a. Investments:

Under the previous GAAP, investments in mutual funds were classified as non-current investments or current investments based on the intended holding period and realisability. Non-current 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 Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition 1 April 2015 and subsequently in the profit or loss for the year ended 31 March 2016.

b. Loans

Under the previous GAAP, interest free security deposits 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 deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.

c. deferred tax assets (net)

The (decreased) / increased in the deferred tax assets are on account of adjustments made on transition to Ind AS.

d. Reconciliation of total equity as at 31 March 2016 and 1 April 2015

e. Reconciliation of total comprehensive income for the year ended 31 March 2016

f. Proposed dividend

Under the previous GAAP, dividends proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

g. Sale of goods

Under the previous GAAP scheme based discounts were grouped under other expenses, however, under Ind AS, these expenses are netted off against sale of goods.

h. deferred revenue- Customer loyalty program

The Company grants credit points to the customers as part of a sales transactions which allows customers to accumulate the credit points and these points can be redeemed by the customers. Under the previous GAAP, the Company had created a provision towards its liability under the programme. Under Ind AS, sales consideration received has been allocated between the goods sold and the credit points granted. The consideration allocated to the customer credit points has been deferred and will be recognised as revenue when the reward points are redeemed or lapsed. Accordingly, the Company has recognised deferred revenue with corresponding adjustment to retained earnings.

i. excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses.This change has resulted in an increase in the revenue from operation and expenses for the year ended 31 March 2016. There is no impact on the total equity and profit.

j. Share based payment

Under the previous GAAP, the cost of equity-settled employee share-based plan were recognised using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date. There is no impact on total equity.

k. Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

l Lease arrangement

Under the previous GAAP, arrangements that did not take the legal form of lease were accounted for based on the legal form of such arrangements. Under Ind AS, any arrangement (even if not legally structured as lease) which conveys a right to use an asset in return for a payment or series of payments are identified as leases provided certain conditions are met. In case such arrangements are determined to be in the nature of leases, such arrangements are required to be classified into finance or operating leases as per the requirements of Ind AS 17, Lease.

The Company has certain arrangements with contract packers which have been identified to be in the nature of lease and have been classified as operating lease arrangements.

Note 19 The financial statements are presented in Rs. crores (rounded off to two decimal places). Those items which are required to be disclosed and which were not presented in the financial statements due to rounding off to the nearest Rs. crore are given below:

Note 20 During the year ended 31 March 2017 no material foreseeable loss (31 March 2016: Nil) was incurred for any long-term contract including derivative contracts.


Mar 31, 2015

1. During the financial year 2008-09, the Company introduced Britannia Industries Limited Employee Stock Option Scheme ('the Scheme'). As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Executive Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, the Company granted 15,000 options on 29 October 2008 at an exercise price of Rs. 1,125.30/-; 15,000 options on 27 May 2009 at an exercise price of Rs. 1,698.15/-; 20,000 options on 27 May 2010 at an exercise price of Rs. 1,668.55/-; 125,000 options on 27 May 2011 at an exercise price of Rs. 391.75/- and 100,000 options on 28 May 2012 at an exercise price of Rs. 528.75/- to the Managing Director of the Company. Each option represents one equity share of Rs. 10/- each (for options granted between the years 2008 to 2010) and one equity share of Rs.2/- each (for options granted after the year 2010). The said price was determined in accordance with the pricing formula approved by the shareholders i.e. the latest available closing price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having higher trading volume.

Exercise prices as stated above are adjusted downwards by Rs. 170/- per share for options granted on 29 October 2008 and 27 May 2009, being the face value of bonus debentures issued pursuant to the Scheme of Arrangement approved by the Honourable Calcutta High Court on 11 February 2010.

The number of options have been appropriately adjusted, consequent upon the sub-division of the equity shares [Refer note (e) below].

The Company had not granted options during the year 2013-14. The Company has further granted 50,000 options on 26 May 2014 at an exercise price of Rs. 870.35/- to the Managing Director of the Company.

2. Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 44.49 (previous year: Rs. 37.87).

(b) Bank guarantee and letter of credit for Rs. 22.46 (previous year: Rs. 7.15).

(c) Discounted cheques Rs. 0.30 (previous year: Rs. 0.88).

Notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 32 and 33].

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.106.82 (previous year: Rs. 9.51).

(b) The Company has furnished the following corporate guarantees:

Banking facilities Name of the 31 March 31 March given to bank 2015 2014

(i) Britannia and Bank of 103.12 149.70 Associates (Mauritius) America

Private Limited, Mauritius *

* The following are the loan balances outstanding against the corporate guarantees mentioned above: Bank of America: Rs. 96.87 crores (USD 15.5 Million).

Regarding items (i) and (ii) (b) above, it is not practicable to disclose information in respect of the estimate of the financial effect, an indication of the uncertainties relating to outflow and the possibility of any reimbursement as it is determinable only on occurrence of uncertain future events / receipt of judgments pending at various forums.

(c) The Company has furnished the following letters of comfort / letters of awareness:

Banking facilities Name of the bank 31 March 31 March given to 2015 2014

(i) Britannia Dairy HSBC Bank 4.50 4.50 Private Limited

(ii) Strategic Food Royal Bank of 30.62 29.34 International Co. Scotland LLC, Dubai

(iii) Al Sallan Food Royal Bank of 11.91 11.41 Industries Co. SAOC Scotland

These letters are not to be construed as a guarantee issued by the Company.

3. (a) Operating leases

The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 6.56 (previous year: Rs. 5.09) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

4. With respect to the matter related to the refund of excess contribution by Company's Covenanted Staff Pension Fund ("Fund") to the Company, the Honourable Supreme Court at its hearing on 12 May 2008 set aside the order of the Division Bench of the Honourable High Court, Kolkata and remanded the writ pending for disposal. Based on the directions of the courts, the Company was required to deposit Rs. 12.12 with a Nationalised Bank, which the Company has done under protest.

In other Writ Petitions filed by some of the pensioners in the Honourable Madras High Court, challenging the Deeds of Variation submitted in May 2005, the Honourable High Court has passed an interim order restraining the CIT, Kolkata from approving the Deeds of Variation pending disposal of the Writ Petitions.

There have been no significant development in the year under review.

In the suit filed by the Britannia Industries Limited Pensioners Welfare Association ('the Association') in the Honourable City Civil Court, Bangalore, the proceedings are currently in the stage of final arguments. However, in the meanwhile the Association further filed an application stating certain members have joined the Association post retirement from the Company and are eligible for Pension and hence the Court should direct the Company and the Fund to pay pension to these employees. the Company and the Fund filed their objections to this Application on 31 August 2013. Based on the interim order of the Honourable City Civil Court, Bangalore and the direction of the Honourable Supreme Court the, Company presently continues to pay pension as per the interim order passed by the Bangalore City Civil Court on1 January 2009 (i.e. on Defined Contribution basis) till disposal of the suit by the Trial Court.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

5. Based on guiding principles in the Accounting Standard 17 - "Segment Reporting", the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

6. Related party disclosures under Accounting Standard 18

Relationships

1. Ultimate The Bombay Burmah Trading Corporation Limited holding company Holding company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary Al Sallan Food Industries Co. SAOC companies Boribunder Finance and Investments Private Limited

Britannia and Associates (Dubai) Private Company Limited, Dubai

Britannia and Associates (Mauritius) Private Limited, Mauritius

Britannia Dairy Holdings Private Limited, Mauritius

Britannia Dairy Private Limited

Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai Strategic Food International Co. LLC, Dubai Sunrise Biscuit Company Private Limited

3. Fellow Bannatyne Enterprises Pte Limited, Singapore subsidiary companies Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore

Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited Nalanda Biscuits Company Limited

5. Key Management Personnel (KMP) *

Managing Director Mr.Varun Berry

Erstwhile Managing Director Ms. Vinita Bali

* Mr. Varun Berry was appointed as Executive Director (w.e.f. 11 November 2013). Further, effective from 1 April 2014, Mr. Varun Berry has been appointed as Managing Director of the Company Ms. Vinita Bali has ceased to be Managing Director of the Company w.e.f. the close of business on 31 March 2014.

6. Post retirement benefit - Defined benefit plans

The Company has two funds: Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

7. Notes:

(i) The discount rate is based on the prevailing market yield on Government Securities as at the balance sheet date for the estimated term of obligations.

(ii) The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the Company's policy for plan asset management.

(iii) The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(iv) The disclosure above includes amounts for both Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund.

8. Derivative contracts

Foreign currency forward contracts

The Company has designated certain foreign exchange forward contracts (relating to foreign currency receivables and payables) outstanding as on 31 March 2015 as hedge of committed transaction. On that date, the Company had forward contracts amounting to USD 2,908,783 and EUR 2,060,830 (previous year: USD 2,686,908 and EUR 58,287). As at the year end the unrealized exchange loss of Rs. 0.49 has been accounted for (previous year: unrealized exchange gain of Rs. 0.55 has not been accounted) (arrived on a mark to market basis) in line with the ICAI notification issued in March 2008.

9. Capital subsidy

During the year ended 31 March 2013, an amount of Rs. 5 was received towards capital subsidy for the Hajipur Factory, Bihar in accordance with the State Industrial Policy of Bihar. Out of this, an amount of Rs. 0.71 (previous year: Rs. 0.54) has been credited to the statement of profit and loss (by reducing the depreciation charge for the year) and the outstanding amount of Rs. 3.57 (previous year: Rs. 4.28) has been classified as capital subsidy in the balance sheet [Refer note 1 (t)].

10. Corporate Social Responsibility

During the year, the amount required to be spent on corporate social responsibility activities amounted to Rs. 7.35 in accordance with Section 135 of the Companies Act, 2013.The following amounts were spent during the year:

11. Figures in rupees have been rounded off to two decimal places to the nearest crore, unless otherwise stated.

12. During the year ended 31 March 2015 no material foreseeable loss was incurred for any long-term contract including derivative contracts.


Mar 31, 2014

Note 1. Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 37.87 (previous year: Rs. 43.37).

(b) Bank guarantee and letter of credit for Rs. 7.15 (previous year: Rs. 9.60).

(c) Discounted cheques Rs. 0.88 (previous year: Rs. 0.42).

The Honourable Supreme Court against the Order of the Division Bench. The Honourable Supreme Court at its hearing on 12 May 2008 set aside the Order of the Division Bench of the Honourable Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of the Honourable Calcutta High Court.

Pursuant to the directions of the Honourable Madras High Court, the CIT, Kolkata passed Orders rejecting the Deeds of Variation submitted in May 2005 by the Company''s Pension Funds on technical grounds. The Company preferred Appeals before the Central Board of Direct Taxes (''CBDT''), New Delhi challenging the Orders of the CIT. CBDT passed Orders in the said Appeals in March 2011 directing the Company inter alia to submit Deeds of Variation incorporating the modifications in line with the directions made in the Orders effective 1 November 2004. The modified Deeds of Variation in line with the directions contained in the CBDT Orders have already been filed with the CIT, Kolkata, for its approval. In Writ Petitions filed by some of the Pensioners in the Honourable Madras High Court and by the Pensioners Welfare Association in the Honourable Calcutta High Court, the Honourable High Courts have passed interim orders restraining the CIT, Kolkata, from approving the Deeds of Variation pending disposal of the Writ Petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association (''the Association'') in the Honourable City Civil Court, Bangalore, where the Honourable Court passed interim orders on 1 January 2009 and 10 February 2009 directing the Funds to pay pension to the Members in accordance with the computation made and submitted by the Pension Funds to the Court. This computation was on a defined contribution basis, and is consistent with the pension offered by the Pension Funds to eligible employees at the time of their retirement / exit. Since then, the Funds have been complying with the said Order. In April 2010, the Honourable City Civil Court passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months'' time for complying with the Order. This was challenged by Britannia Industries Limited ("BIL" / "Company") in an Appeal before the Honourable Karnataka High Court, the Honourable Karnataka High Court in April 2010 modified the Trial Court''s Order so as to extend the time limit from two months to three months and in July 2010, further modified the Trial Court''s Order directing inter alia that the Pension shall be paid as per Rule 11(a) from the date of filing of the Suit by the Association in the Honourable City Civil Court, Bangalore, i.e. with effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs) in the Honourable Supreme Court against the above Order of the Honourable Karnataka High Court, Bangalore. The Honourable Supreme Court passed an Order in January 2011 disposing of the SLPs, and directing that the Pension Fund should continue to pay pension as per the interim order passed by the Bangalore City Civil Court on 1 January 2009 (i.e. on Defined Contribution basis) till disposal of the suit by the Trial Court. The proceedings in the main suit are currently in progress in the Honourable Bangalore City Civil Court and Sessions Judge. However, in the meanwhile the Association further filed an application stating certain members have joined the Association post retirement from BIL and are eligible for pension and hence the Court should direct BIL and the Fund to pay pension to these employees, BIL and the Fund filed their objections to this Application on 31 August 2013.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.


Mar 31, 2013

Note 1 Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 43.37 (previous year: Rs. 28.95).

(b) Bank guarantee and letter of credit for Rs. 9.60 (previous year: Rs. 5.13).

(c) Discounted cheques: Rs. 0.42 (previous year: Rs. 0.32).

Notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 29].

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 30.32 (previous year: Rs. 42.44).

Note 2 (a) Operating leases

The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 6.30 (previous year: Rs. 4.66) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

(b) Finance leases

The Company has taken motor vehicles on finance lease. The total minimum lease payments and present value of minimum lease payments are as follows:

Note 3 In accordance with Accounting Standard 29 - "Provisions, Contingent Liabilities and Contingent Assets", prescribed by the Companies (Accounting Standard), Rules 2006, certain classes of liabilities have been identified as provisions which have been disclosed as under:

(a) and (b) represents estimates made for probable cash outflow arising out of pending disputes / litigations with various regulatory authorities.

(c) represents provisions made for probable liabilities / claims arising out of commercial transactions with vendors / others. Further disclosures as required in Accounting Standard 29 are not made since it can be prejudicial to the interests of the Company.

* Included under various heads in the statement of profit and loss.

Note 4 In April 2007, the Commissioner of Income Tax (''CIT''), Kolkata issued a notice to the Company''s Covenanted Staff Pension Fund (''BILCSPF'') asking it to show cause why recognition granted to the Fund should not be withdrawn for refunding in the year 2004, the excess contribution of Rs. 12.12 (previous year: Rs. 12.12) received by it in earlier years. The Single Judge of the Hon''ble Calcutta High Court, on a Writ Petition, granted a stay restraining the CIT from proceeding with the show cause notice but with a direction to the Company to deposit Rs. 12.12 (previous year: Rs. 12.12) with a nationalised bank in the name of the Fund. On appeal, the Division Bench of the Hon''ble Calcutta High Court disposed off the Writ Petition pending before the Single Judge. The Fund filed a Special Leave Petition (''SLP'') before the Hon''ble Supreme Court against the Order of the Division Bench. The Hon''ble Supreme Court at its hearing on 12 May 2008 has set aside the Order of the Division Bench of the Hon''ble Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of the Hon''ble Calcutta High Court.

Pursuant to the directions of the Hon''ble Madras High Court, the CIT, Kolkata passed Orders rejecting the Deeds of Variation submitted in May 2005 by the Company''s Pension Funds on technical grounds. The Company preferred Appeals before the Central Board of Direct Taxes (''CBDT''), New Delhi challenging the Orders of the CIT. CBDT passed Orders in the said Appeals in March 2011 directing the Company inter alia to submit Deeds of Variation incorporating the modifications in line with the directions made in the Orders effective 1 November 2004. The modified Deeds of Variation in line with the directions contained in the CBDT Orders have already been filed with the CIT, Kolkata, for its approval. In Writ Petitions filed by some of the Pensioners in the Hon''ble Madras High Court and by the Pensioners Welfare Association in the Hon''ble Calcutta High Court, the Hon''ble High Courts have passed interim orders restraining the CIT, Kolkata, from approving the Deeds of Variation pending disposal of the Writ Petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association (''the Association'') in the Hon''ble City Civil Court and Sessions Judge, Bangalore, where the Hon''ble Court passed interim orders on 1 January 2009 and 10 February 2009 directing the Funds to pay pension to the Members in accordance with the computation made and submitted by the Pension Funds to the Court. This computation was on a defined contribution basis, and is consistent with the pension offered by the Pension Funds to eligible employees at the time of their retirement / exit. The Funds have been complying with the said Order. In April 2010, the Hon''ble Judge passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months'' time for complying with the Order. In an Appeal filed against this Order in the Hon''ble Karnataka High Court, the Hon''ble Karnataka High Court in April 2010 modified the Trial Court''s Order so as to extend the time limit from two months to three months and in July 2010, further modified the Trial Court''s Order directing inter alia that the Pension shall be paid as per Rule 11(a) from the date of filing of the suit by the Association in the Hon''ble Bangalore City Civil Court and Sessions Judge, i.e. with effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs) in the Hon''ble Supreme Court against the above Order of the Hon''ble Karnataka High Court. The Hon''ble Supreme Court passed an Order in January 2011 disposing of the SLPs and directing inter alia that the interim order passed by it in September 2010 directing that the Pension Funds should continue to pay pension as per the interim order passed by the Hon''ble Bangalore City Civil Court and Sessions Judge on 1 January 2009 would continue till disposal of the suit by the Trial Court. The proceedings in the main suit are currently in progress in the Hon''ble Bangalore City Civil Court and Sessions Judge.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

Note 5 Based on guiding principles in the Accounting Standard 17 - "Segment Reporting", the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

Note 6 Related party disclosures under Accounting Standard 18 Relationships

1. Ultimate holding company The Bombay Burmah Trading Corporation Limited Holding company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary companies Al Sallan Food Industries Co. SAOC

Boribunder Finance and Investments Private Limited Britannia and Associates (Dubai) Private Company Limited, Dubai Britannia and Associates (Mauritius) Private Limited, Mauritius Britannia Dairy Holdings Private Limited, Mauritius Britannia Dairy Private Limited

Britannia Lanka Private Limited, Sri Lanka [Refer note (iv) below] Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai

Strategic Food International Co. LLC, Dubai

Sunrise Biscuit Company Private Limited

3. Fellow subsidiary companies Bannatyne Enterprises Pte Limited, Singapore

Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited

Nalanda Biscuits Company Limited

5. Others Britannia Sports (partnership firm) [Refer note (iv) below]

6. Key management personnel (KMP)

Managing Director Ms. Vinita Bali

Note 7 Employee benefits

(a) Post retirement benefit - Defined contribution plans

The Company has recognised an amount of Rs. 5.70 (previous year: Rs. 5.03) as expenses under the defined contribution plans in the statement of profit and loss for the year.

(b) Post retirement benefit - Defined benefit plans

The Company makes annual contributions to the Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at balance sheet date.

Note 8 Derivative contracts

Foreign currency forward contracts

The Company has entered into foreign exchange forward contracts for hedging the foreign exchange fluctuation risks on foreign currency payables / loans, which has been accounted for in line with Accounting Standard 11 - "The Effects of Changes in Foreign Exchange Rates". Accordingly, the amount receivable of Rs. 25.71 (previous year: Rs. 27.57) and loan payable of Rs. 20.08 (previous year: Rs. 20.08), relating to foreign exchange forward contracts for hedging have been netted off and disclosed under ''Short-term loans and advances (previous year: Long-term loans and advances)'' [Refer note 19 (previous year: note 14)].

The Company has designated certain foreign exchange forward contracts (relating to foreign currency receivabes and payables) outstanding as on 31 March 2013 as hedge of committed transaction. On that date, the Company had forward contracts amounting to USD 1,741,026 and EUR 39,150 (previous year: USD 2,158,505 and EUR 66,000). As at the year end the unrealised exchange gain of Rs. 0.05 has not been accounted for (previous year: unrealised exchange loss of Rs. 0.19 was accounted for) (arrived on a mark to market basis) in line with the ICAI notification issued in March 2008.

The foreign currency exposures not hedged towards payables / receivables as at the year end amount to USD 185,294 / Rs. 1.01 (previous year: USD 148,891 / Rs. 0.76).

Note 9 Capital subsidy

During the year ended 31 March 2013, an amount of Rs. 5 has been received towards capital subsidy for the Hajipur Factory, Bihar in accordance with the State Industrial Policy of Bihar. Out of this, an amount of Rs. 0.18 has been credited to the statement of profit and loss (by reducing the depreciation charge for the year) and the outstanding amount of Rs. 4.82 has been classified as capital subsidy in the balance sheet [Refer note 1 (t)].

Note 10 Figures in Rs. have been rounded off to two decimal places to the nearest crore, unless otherwise stated.

Note 11 Previous year''s figures have been regrouped / reclassified as per the current year''s presentation for the purpose of comparability.


Mar 31, 2012

(a) During the financial year 2008-09, the Company introduced Britannia Industries Limited Employee Stock Option Scheme ('the Scheme'). As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Executive Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, the Company granted 15,000 options on 29 October 2008 at an exercise price of Rs. 1,125.30/-; 15,000 options on 27 May 2009 at an exercise price of Rs. 1,698.15/- and 20,000 options on 27 May 2010 at an exercise price of Rs. 1,668.55/- to the Managing Director of the Company. Each option represents one equity share of Rs. 10/- each. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. the latest available closing price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having higher trading volume.

Exercise prices as stated above are adjusted downwards by Rs. 170/- per share for options granted on 29 October 2008 and 27 May 2009, being the face value of bonus debentures issued pursuant to the Scheme of Arrangement approved by the Honourable Calcutta High Court on 11 February 2010.

The number of options have been appropriately adjusted, consequent upon the sub-division of the equity shares [Refer note (e) below].

The Company has further granted 125,000 options on 27 May 2011 at an exercise price of Rs. 391.75/- to the Managing Director of the Company after the aforesaid adjustments.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to employees and Executive Directors of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price (without considering the impact of Rs. 170/- on account of issue of bonus debentures) of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

(e) In the Annual General Meeting held on 9 August 2010, the shareholders of the Company approved the sub- division of equity shares, where in each equity share with a face value of Rs. 10/- has been subdivided into 5 equity shares with a face value of Rs. 2/- each. The effective date for the sub-division was 10 September 2010.

(a) 23,890,163 - 8.25% Redeemable non-convertible bonus debentures of face value of Rs. 170/- each, fully paid up.

Secured by way of first mortgage created on identified immovable property and first charge on Company's movable assets restricted to inventories and plant and machinery. The book value (net) of plant and equipment and inventories as on 31 March 2012 amounts to Rs. 256.19 (previous year: Rs. 223.89) and Rs. 382.28 (previous year: Rs. 311.20) respectively.

Redeemable in full at the end of 36 months from 22 March 2010 being the date of allotment.

The Committee of the Board of Directors ('the Board'), at its meeting held on 22 March 2010, pursuant to the Scheme of Arrangement ('the Scheme') sanctioned by the Honourable Calcutta High Court on 11 February 2010 under Section 391(2) of the Companies Act, 1956 ('the Act'), allotted 8.25% secured fully paid-up Redeemable non-convertible bonus debentures ('the bonus debentures') from the general reserve, in the ratio of one debenture of the face value of Rs. 170/- for every equity share held by the shareholders of the Company as on 9 March 2010. The date of allotment of bonus debentures is 22 March 2010. The Scheme was earlier approved by the Board at its meeting held on 27 May 2009 and by the shareholders at the general meeting held on 31 August 2009. The bonus debentures have been listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and the Calcutta Stock Exchange Limited. The Scheme involves issuance of bonus debentures out of General Reserve and does not entail any real borrowing, accordingly, the requirement of creating a Debenture Redemption Reserve pursuant to Section 117C of the Act or Clause 10.3 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued under the Securities and Exchange Board of India Act, 1992 is not applicable. This has also been noted in the Scheme of Arrangement sanctioned by the Honourable Calcutta High Court.

Note 1 Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 28.95 (previous year: Rs. 57.88).

(b) Bank guarantee and letter of credit for Rs. 5.13 (previous year: Rs. 6.50).

(c) Discounted cheques Rs. 0.32 (previous year: Rs. 45.70).

Notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 28].

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 42.44 (previous year: Rs. 34.67).

Regarding items (i) and (ii) (b) above, it is not practicable to disclose information in respect of the estimate of the financial effect, an indication of the uncertainties relating to outflow and the possibility of any reimbursement as it is determinable only on occurrence of uncertain future events / receipt of judgements pending at various forums.

Note 2 (a) Operating leases

The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 4.66 (previous year: Rs. 3.77) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

Note 3 In April 2007, the Commissioner of the Income Tax ('CIT'), Kolkata issued a notice to the Company's Covenanted Staff Pension Fund ('BILCSPF') asking it to show cause why recognition granted to the Fund should not be withdrawn for refunding in the year 2004, the excess contribution of Rs. 12.12 (previous year: Rs. 12.12) received by it in earlier years. The Single Judge of the Honourable Calcutta High Court, on a writ petition, granted a stay restraining the CIT from proceeding with the show cause notice but with a direction to the Company to deposit Rs. 12.12 (previous year: Rs. 12.12) with a nationalised bank in the name of the Fund. On appeal, the Division Bench of the Honourable Calcutta High Court disposed off the writ petition pending before the Single Judge. The Fund filed a Special Leave Petition ('SLP') before the Honourable Supreme Court against the order of the Division Bench. The Honourable Supreme Court at its hearing on 12 May 2008 has set aside the order of the Division Bench of the Honourable Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of the Honourable Calcutta High Court.

Pursuant to the directions of the Honourable Madras High Court, the CIT, Kolkata passed orders rejecting the deeds of variation submitted in May 2005 by the Company's Pension Funds on technical grounds. The Company preferred appeals before the Central Board of Direct Taxes ('CBDT'), New Delhi challenging the orders of the CIT. CBDT passed Orders in the said appeals in March 2011 directing the Company inter alia to submit deeds of variation incorporating the modifications in line with the directions made in the Orders effective 1 November 2004. The modified deeds of variation in line with the directions contained in the CBDT Orders have already been filed with the CIT, Kolkata, for its approval. In writ petitions filed by some of the pensioners in the Honourable Madras High Court and by the Pensioners Welfare Association in the Honourable Calcutta High Court, the Honourable High Courts have passed interim orders restraining the CIT, Kolkata, from approving the deeds of variation pending disposal of the writ petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association ('the Association') in the Honourable City Civil Court and Sessions Judge, Bangalore, where the Honourable Court passed interim orders on 1 January 2009 and 10 February 2009 directing the Funds to pay pension to the Members in accordance with the computation made and submitted by the Pension Funds to the Court. This computation was on a defined contribution basis, and is consistent with the pension offered by the Pension Funds to eligible employees at the time of their retirement / exit. The Funds have been complying with the said order. In April 2010, the Honourable Judge passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months' time for complying with the order. In an appeal filed against this Order in the Honourable Karnataka High Court, the Honourable Karnataka High Court in April 2010 modified the Trial Court's order so as to extend the time limit from two months to three months and in July 2010, further modified the Trial Court's order directing inter alia that the pension shall be paid as per Rule 11(a) from the date of filing of the suit by the Association in the Honourable Bangalore City Civil Court, i.e. with effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs) in the Honourable Supreme Court against the above order of the Honourable Karnataka High Court. The Honourable Supreme Court passed an order in January 2011 disposing of the SLPs and directing inter alia that the interim order passed by it in September 2010 directing that the Pension Funds should continue to pay pension as per the interim order passed by the Honourable Bangalore City Civil Court on 1 January 2009 would continue till disposal of the suit by the Trial Court. The proceedings in the main suit are currently in progress in the Honourable Bangalore City Civil Court.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

Note 4 Based on guiding principles in the Accounting Standard 17 - "Segment Reporting", the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

Note 5 Related party disclosures under Accounting Standard 18 Relationships

1. Ultimate holding company The Bombay Burmah Trading Corporation Limited

Holding company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary companies Al Sallan Food Industries Co. SAOC

Boribunder Finance and Investments Private Limited

Britannia and Associates (Dubai) Private Company Limited, Dubai

Britannia and Associates (Mauritius) Private Limited, Mauritius

Britannia Dairy Holdings Private Limited, Mauritius

Britannia Dairy Private Limited

Britannia Lanka Private Limited, Sri Lanka

Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai

Strategic Food International Co. LLC, Dubai

Sunrise Biscuit Company Private Limited

3. Fellow subsidiary companies Bannatyne Enterprises Pte Limited, Singapore

Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited

Nalanda Biscuits Company Limited

Note 6 Employee benefits

(b) Post retirement benefit - Defined benefit plans

The Company makes annual contributions to the Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the maximum amount payable as per the Payment of Gratuity Act, 1972.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at balance sheet date.

Note 7 Derivative contracts

Foreign currency forward contracts

The Company has entered into foreign exchange forward contracts for hedging the foreign exchange fluctuation risks on foreign currency payables / loans, which has been accounted for in line with Accounting Standard 11- " The Effects of Changes in Foreign Exchange Rates". Accordingly, the amount receivable of Rs. 27.57 (previous year: Rs. 23.68) and loan payable of Rs. 20.08 (previous year: Rs. 20.08), relating to foreign exchange forward contracts for hedging have been netted off and disclosed under 'Long-term loans and advances' [Refer note 13].

The Company has designated certain foreign exchange forward contracts (relating to foreign currency

receivabes and payables) outstanding as on 31 March 2012 as hedge of committed transaction. On that date, the Company had forward contracts amounting to USD 2,158,505 and EUR 66,000 (previous year: USD 1,448,372). As at the year end the unrealized exchange loss of Rs. 0.19 (previous year: Rs. Nil) (arrived on a mark to market basis) has been accounted for in line with the ICAI notification issued in March 2008.

Note 8 Figures in rupees have been rounded off to two decimal places to the nearest crore, unless otherwise stated.

Note 9 The financial statements for the year ended 31 March 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2010

1 Capital commitments and contingent liabilities:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 118,159 (Previous year: Rs. 69,509).

(b) Contingent Liabilities for:

(1) Bank guarantee and letter of credit for Rs. 1,046,138 (Previous year: Rs.43,799).

(2) Discounted cheques Rs. 582,506 (Previous year: Rs. 737,696).

(3) Claims/demand against the Company not acknowledged as debts including Excise, Income tax, Sales tax and Trade and other demands Rs. 1,058,882 (Previous year: Rs. 822,401).

Notes:

(i) Contingent liabilities disclosed above represents possible obligations where possibility of cash outflow to settle the obligation is not remote.

(ii) The above does not include non quantifiable industrial disputes and other legal disputes pending before various judicial authorities. [Also refer note 28]

Regarding items (b) and (c) above, it is not practicable to disclose information in respect of the estimate of the financial effect, an indication of the uncertainties relating to outflow and the possibility of any reimbursement as it is determinable only on occurrence of uncertain future events/receipt of judgements pending at various forums.

2 (a) Operating leases

The Company has certain operating leases for vehicles, office facilities and residential premises (cancellable as well as non-cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 130,230 (Previous year: Rs. 13,019) in respect of obligation under operating leases [including minimum lease payments of Rs.906 (Previous year: Rs. 1,343)] have been recognised in the Profit and Loss Account.

Assets on operating lease which represents motor vehicles (acquired prior to 1 April 2001) aggregate to Rs. Nil (Previous year: Rs. 4,064). The charge on account of lease rental to Profit and Loss Account for the year is Rs. 1,019 (Previous year: Rs. 1,511).

"Accounting for taxes on income" disclosure as per AS 22: Major components of deferred tax assets and liabilities on account of timing differences are as follows:

Depreciation

Voluntary retirement scheme, terminal compensation benefits

Statutory payments

Provisions allowed on payments, write off

Deferred tax asset/(liability), net

The Company has an investment of Rs. 49 (Previous year: Rs. 49) in a partnership firm "Britannia Sports" having a capital of Rs. 100 (Previous year: Rs. 100) in which it holds 49% share of the profit or loss and the balance share is held by two associate companies, Flora Investments Company Private Limited and Gilt Edge Finance and Investments Private Limited who hold 26% and 25% respectively. The Company has booked its proportionate share of partnership losses which is disclosed in the Profit and Loss Account.

4 Pursuant to Labour Commissioners Order under section 25 O (1) of the Industrial Disputes Act, 1947, production at the Company owned facility was closed effective 24 March 2004. As per the Order of the Bombay High Court, the Company as on the date of the Balance Sheet has paid an amount of Rs. 58,317 (Previous year: Rs. 58,317) equivalent to eligible compensation under section 25 O (1) of the Industrial Disputes Act, 1947. Further, based on the appeal filed by the worker union, the Industrial Tribunal has reversed the Order of the Labour Commissioner. The Company has preferred an appeal against the Order of the Industrial Tribunal. As per interim direction of the Bombay High Court, the Company has paid Rs. 14,703 (Previous year: Rs. 12,799) as compensation equivalent to 70% of the last drawn amount for the year (Previous year: 50% of the last drawn amount for the period from 1 April 2008 to 19 November 2008 and 70% of the last drawn amount for the period 20 November 2008 to 31 March 2009). The Company has made the above payments as compensation under the Industrial Disputes Act, 1947. The case is currently pending in the High Court.

5 Voluntary Retirement Scheme (VRS) expenditure includes payment made towards VRS expenditure of Manna Foods Private Limited, Subsidiary of Britannia Industries Limited, amouting to Rs. 49,381 as per arbitration award dated 25 January 2010.

6 Provisions for deferred tax for the current year is after provision in respect of earlier years of Rs. Nil (Previous year: Rs. 11,246).

7 Salaries, wages and bonus and contribution to provident and other funds are net of recoveries of Rs. 41,671 and Rs. 3,622 respectively for seconded staff costs (Previous year: Rs. 27,953 and Rs. 2,789 respectively).

8 (i) In accordance with AS 13 - "Accounting for Investments", notified u/s 211(3C) of the Companies Act, 1956, the Company has, based on an approved business plan, retained provision of Rs. 325,000 (Previous year: Rs. 325,000) for diminution, other than temporary, on long term investment made in equity shares of Britannia Dairy Private Limited.

(ii) During current year, an amount of Rs. 390,000 has been reversed from Provision for doubtful advances as a result of conversion of loan given to Daily Bread Gourmet Foods (India) Private Limited into equivalent investment in equity shares. Further, an amount of Rs. 390,000 has been provided for diminution in value of investments in relation to these equity shares.

(iii) The Company has decided to discontinue the business operations of Britannia Lanka Private Limited, Sri Lanka (Subsidiary of the Company). Pursuant to this, an amount of Rs. 46,475 and Rs. 11,243 has been provided for diminution in value of investments and for doubtful advances respectively. Further, an amount of Rs. 142,282 has been provided in relation to Corporate guarantee and other claims.

9 Directors remuneration of Rs. 58,130 (Previous year: Rs. 60,145 ) includes:

- Fees and estimated cost of benefits Rs. 32,369 (Previous year: Rs. 29,869)

- Contribution to Provident Fund, Pension Fund Rs. 2,700 (Previous year: Rs. 2,700)

- Perquisites or benefits in cash or in kind Rs. 62 (Previous year: Rs. 76)

- Commission to Non-wholetime Directors Rs. 13,000 (Previous year: Rs. 17,500), net of reversal of last years liability of Rs. Nil (Previous year: Rs. Nil)

10 Based on guiding principles in the AS 17 - "Segment Reporting," the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

11 Related party disclosures under Accounting Standard 18: Relationships

1. Ultimate Holding Company

The Bombay Burmah Trading Corporation Limited

Holding Company

ABI Holdings Limited (ABIH), UK (till 14 April 2009). Associated Biscuits International Limited (ABIL), UK

2. Subsidiary Companies

Strategic Food International Co. LLC, Dubai

Boribunder Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Sunrise Biscuit Company Private Limited

Manna Foods Private Limited

Ganges Vally Foods Private Limited

Al Sallan Food Industries Company SAOC, Oman

Flora Investments Company Private Limited

Gilt Edge Finance and Investments Private Limited

Britannia and Associates (Mauritius) Private Limited, Mauritius

Britannia and Associates (Dubai) Private Company Limited, Dubai

Strategic Brands Holding Company Limited, Dubai

Britannia Lanka Private Limited, Sri Lanka

Daily Bread Gourmet Foods (India) Private Limited

Britannia Dairy Private Limited #

Britannia New Zealand Holdings Private Limited, Mauritius #

3. Fellow Subsidiary Companies

Valletort Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Dowbiggin Enterprises Pte Limited, Singapore Bannatyne Enterprises Pte Limited, Singapore

4 . Associates

Britannia Sports (partnership firm) Klassik Foods Private Limited Nalanda Biscuits Company Limited

5. Key Management Personnel (KMP) Managing Director

Ms. Vinita Bali

6. Relatives of Key Management Personnel None

# Britannia Dairy Private Limited (Formerly known as Britannia New Zealand Foods Private Limited) and Britannia New Zealand Holdings Private Limited have been considered as subsidiaries pursuant to a change in control during the year.

(b) Post Retirement Benefit- Denned Benefit Plans

The Company makes annual contributions to the Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the maximum amount payable as per the Payment of Gratuity Act, 1972.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at Balance Sheet date.

The Payment of Gratuity Act (Amendment) Bill, 2010 has proposed to increase the ceiling limit from Rs. 3.5 Lakhs to Rs. 10 Lakhs. This Bill has been passed by both the houses of parliament in May 2010. The effect of this change has been considered in the actuarial valuation carried out at Balance Sheet date as this event is an adjusting event in accordance with AS 4 - "Contingenices and Events Occurring After the Balance Sheet Date".

12 In April 2007, the Commissioner of Income Tax (CIT), Kolkata issued a notice to the Companys Covenanted Staff Pension Fund (BILCSPF) asking it to show cause why recognition granted to the Fund should not be withdrawn for refunding in the year 2004, the excess contribution of Rs. 121,199 (Previous year: Rs. 121,199) received by it in earlier years. The Single Judge of the Calcutta High Court, on a writ petition, granted a stay restraining the CIT from proceeding with the show cause notice but with a direction to the Company to deposit Rs. 121,199 (Previous year: Rs. 121,199) (included in Deposits under Schedule I) with a nationalised bank in the name of the Fund. On appeal, the Division Bench of the Calcutta High Court disposed off the writ petition pending before the Single Judge. The Fund filed a Special Leave Petition before the Supreme Court against the order of the Division Bench. The Supreme Court at its hearing on 12 May 2008 has set aside the order of the Division Bench of the Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of Honble Calcutta High Court.

Pursuant to the directions of the Madras High Court, the CIT, Kolkata passed orders rejecting the deeds of variation submitted in May 2005 by the Pension Fund on technical grounds. The Company has preferred appeals before the Central Board of Direct Taxes (CBDT), New Delhi challenging the orders. The appeals came up for hearing in August 2009 and the matter is in progress. A suit has been filed in the City Civil Court, Bangalore, where the Honble Judge has passed interim orders on 1 January 2009 and 10 February 2009 directing the Fund to pay pension to the members in accordance with the Funds calculations. The Fund has since complied with the said order. On 8 April 2010, the Honble Judge passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months time for complying with the order. An appeal was filed against this order in the Karnataka High Court, which was heard on 22 April 2010. The Honble Court has modified the Trial Courts order so as to extend the time limit for compliance from two months to three months and has fixed 15 June 2010 for further hearing.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

13 There are no material dues owed by the Company to Micro, Small and Medium Enterprises, which are outstanding for more than 45 days as at 31 March 2010. This information as required under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and hasbeen relied upon by the auditors.

14 Derivative contracts

(i) Foreign currency forward contracts

The Company has entered into foreign exchange forward contracts for hedging the foreign exchange fluctuation risks on foreign currency payables/loans, which has been accounted for in line with AS 11 - "The effects of changes in foreign exchange rates". Accordingly, the amount receivable of Rs. 215,149 (Previous year: Rs. 229,651) and loan payable of Rs. 200,772 (Previous year: 200,772), relating to foreign exchange forward contracts for hedging have been netted off and disclosed under Loans and advances (Refer Schedule J).

The Company has designated certain foreign exchange forward contracts (relating to foreign currency receivabes) outstanding as on 31 March 2010 as Hedge of highly probable forecasted transaction. On that date, the Company had forward contracts to sell USD 974 (in thousands), (Previous year: USD 2,092 (in thousands)). As at the year end the unrealised exchange loss of Rs. Nil (Previous year: 1,102) arrived on a mark to market basis has been accounted for.

(ii) Other derivative contracts .

For all other derivative contracts, a mark to market valuation has been obtained and any loss thereon has been accounted for in line with the ICAI notification issued in March 2008 in relation to such transactions. Any gain on such valuation is not accounted for based on the principle of prudence.

As at the year end, the unrealised loss of Rs. 1,655 (Previous year: Rs. Nil) arrived on a mark to market basis for such contracts has been duly accounted for.

15 The Committee of the Board of Directors (the Board), at its meeting held on 22 March 2010, pursuant to the scheme of arrangement (the Scheme) sanctioned by the Honourable High Court of Calcutta on 11 February 2010 under Section 391(2) of the Companies Act, 1956 (the Act), allotted 8.25% secured fully paid-up redeemable non-convertible bonus debentures (the bonus debentures) from the general reserve, in the ratio of one debenture of the face value of Rs. 170 for every equity share held by the shareholders of the Company as on 9 March 2010. The date of allotment of bonus debentures is 22 March 2010. The Scheme was earlier approved by the Board at its meeting held on 27 May 2009 and by the shareholders at the general meetings held on 31 August 2009. The bonus debentures have been listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and the Calcutta Stock Exchange Limited. The Issue of bonus debentures has been treated as deemed dividend under the provisions of the Income Tax Act, 1961. Accordingly the Company has remitted Rs. 690,222 (in thousands) as dividend distribution tax and has utilised general reserve for the payment of the same, pursuant to the Scheme. The scheme involves issuance of bonus debentures out of General Reserve and does not entail any real borrowing, accordingly the requirement of creating a Debenture Redemption Reserve pursuant to Section 117C of the Act or Clause 10.3 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued under the Securities and Exchange Board of India Act, 1992 is not applicable. This has also been noted in the scheme of arrangement sanctioned by the Honourable Calcutta High Court.

16 The Company had offered a VRS scheme to workers at its manufacturing unit at M.T.H. Road, Padi, Chennai during the month of April 2008. The same was accepted by all workers. Consequently, manufacturing operations have been suspended effective 7 April 2008.

17 During the financial year 2008-09, the Company introduced Britannia Industries Limited Employee Stock Option Scheme (Scheme). As per the Scheme, the Remuneration/Compensation Committee grants options to the employees and Executive Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, the Company granted 15,000 options on 29 October 2008 at an exercise prices of Rs. 1,125.30 and 15,000 options on 27 May 2009 at an exercise of Rs. 1,698.15 to the Managing Director of the Company. Each Option represents one equity share of Rs. 10 each. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. the latest available closing price, prior to the date of the meeting of the Board of Directors or Remuneration/Compensation Committee in which options were granted, on the stock exchange having higher trading volume.

Exercise prices as stated above are adjusted downwards by Rs. 170 per share, being the face value of bonus debentures issued pursuant to the Scheme of Arrangement approved by the Honourable High Court of Calcutta on 11 February 2010.

Method used for accounting for share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to employees and Executive Directors of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price (without considering the impact of Rs. 170 on account of issue of bonus debentures) of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Nil. Consequently the accounting value of the option (compensation cost) is also Nil.

18 During the year, there were no significant purchase of machinery spares that are of irregular usage.

19 Figures in rupees have been rounded off to the nearest thousand, unless otherwise stated.

20 Previous years figures have been regrouped/rearranged, wherever necessary.

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