Mar 31, 2023
*The Company has long-term investments in subsidiaries, associates and joint ventures which are measured at cost less accumulated impairment. During the year ended March 31, 2023, the Company considered indicators of impairment such as operational losses in previous years, changes in outlook of future profitability for its investment in Daawat Kameda India Private Limited.
The management assesses the performance of these entities including the future projections and relevant economic and market conditions in which they operate to identify if there is any indicator of impairment in the carrying value of the investments. In case indicators of impairment exist, the impairment loss is measured by estimating the recoverable amounts based on the higher of (i) ''fair value less cost of disposal'' determined using market price information, where available, and (ii) ''value-in-use'' estimates determined using discounted cash flow projections, where available. The fair value less costs of disposal is determined using the market approach. The future cash flow projections are specific to the entity based on its business plan and may not be the same as those of market participants. The future cash flows consider key assumptions such as volume projections, margins, terminal growth rates, etc. with due consideration for the potential risks given the current economic environment
in which the entity operates. The discount rates used are pre-tax rates based on weighted average cost of capital and reflects market''s assessment of the risks specific to the asset as well as time value of money. The recoverable amount estimates are based on judgments, estimates, assumptions and market data as on reporting date and ignore subsequent changes in the economic and market conditions. During the year ended March 31, 2023, the performance of joint venture along with the relevant economic and market indicators and uncertainties arising from continued impact of Covid-19, supply chain challenges and unprecedented rise in commodity prices resulted in indicators of impairment.
The estimated value in use is based on the future cash flows using annual growth rate for future period of 8 years, weighted average cost of capital is 20.30% (March 31, 2022: 17%) and the terminal growth rate of 5% (March 31, 2022: 5%).
Accordingly, the Company determined the recoverable amount of its investment in joint venture and other exposures related to this entity and recorded a provision of '' 719.85 lakhs (March 31,2022: Rs. 319.01) for the year ended March 31,2023.
If the weighted average cost of capital applied to the cash flow projections of this investment had been 1 % higher than management''s estimates with all other variables held constant, the Company would have had to recognise an additional impairment loss of '' 174.98 (March 31,2022: '' 246.19).
If the terminal growth rate applied to the cash flow projections of this investment had been 1% lower than management''s estimates with all other variables held constant, the Company would have had to recognise an additional impairment loss of ''84.10 (March 31,2022: '' 136.95).
Notes to the standalone financial statements
for the period ended March 31,2023
(All amounts are in ? lakhs unless otherwise stated)
Particulars |
As at April 01, 2021 |
Recognised in other comprehensive income |
Recognised in statement of profit and loss |
As at March 31, 2022 |
Deferred tax liabilities arising on account of: Property, plant and equipment and intangible assets |
(369.04) |
70.29 |
(298.75) |
|
Key man insurance policy |
(77.94) |
- |
(13.63) |
(91.57) |
Unrealised foreign exchange (gain)/loss on forward contracts |
(82.40) |
37.45 |
(44.95) |
|
(529.38) |
37.45 |
56.66 |
(435.27) |
|
Deferred tax assets arising on account of: Provision for employee benefits |
79.00 |
23.21 |
10.64 |
112.85 |
Impairment of trade receivables |
23.86 |
32.49 |
56.35 |
|
Impairment in value of investment |
- |
- |
74.32 |
74.32 |
Lease liabilities |
34.25 |
- |
62.14 |
96.39 |
Others |
53.28 |
- |
(9.04) |
44.24 |
190.39 |
23.21 |
170.55 |
384.15 |
|
Net Deferred tax (liabilities)/assets |
(338.99) |
60.66 |
227.21 |
(51.12) |
As at |
As at |
|
March 31,2023 |
March 31,2022 |
|
Prepaid expenses |
14.51 |
22.19 |
Capital advances (considered good -Unsecured) |
217.47 |
456.27 |
231.98 |
478.46 |
As at March 31,2023 |
As at March 31,2022 |
|
Income tax assets (Net of provision) |
3,107.63 |
3,097.16 |
3,107.63 |
3,097.16 |
I 274 |
LT FOODS LIMITED
The Company has only one class of equity shares having the par value of f 1 per share (March 31, 2022: ?1 per share). Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31,2023 the amount of per share dividend recognised as distributions to equity shareholders was f 0.50 per share (March 31,2022: ?1 per share).
In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.
Footnote:
The Shareholders at its meeting (Extra Ordinary General Meeting) held on December 07, 2022, approved the proposal to issue, offer and allot on preferential and private placement basis, for cash, to SALIC International Investment Company ("Salic") a limited liability company duly incorporated under the laws of the Kingdom of Saudi Arabia with registration number 1010769582, of 27,408,164 (Twenty Seven Million Four Hundred Eight Thousand One Hundred and Sixty Four) ("Equity Shares") at face Value of 1/- per Equity Share and Securities Premium of 141.23/- (Rupees One Hundred and Forty One and Twenty Three Paise) per Equity Share aggregating 142.23/- (Rupees One Hundred and Forty Two and Twenty Three Paise) per Equity Share amounting to 7.89% (Seven point Eight Nine Percent) of the share capital of the Company on a fully diluted basis for an aggregate subscription amount of 3,898,263,165.72/- (Rupees Three Billion Eight Hundred and Ninety Eight Million Two Hundred and Sixty Three Thousand One Hundred Sixty Five and Seven Two Paise). The Board of Directors, thereafter, in its meeting held on February 28, 2023, allotted aforementioned equity shares to Salic on Preferential basis. Post allotment of 27,408,164 equity shares the paid -up share capital of the Company has been increased to 34,72,52,944/- of face value of 1/- each. The preferential issue of equity shares was completed with due approval of statutory authorities concerned and the amount raised has been utilised for the purpose for which the funds were raised.
Nature and purpose of other reserves General reserve:
The Company had transferred a portion of the net profit before declaring dividend to general reserve pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
Securities premium reserve:
Securities premium reserve represents premium received on issue of shares. The reserve is to be utilized in accordance with the provisions of the Companies Act.
Cash flow hedging reserve:
The cash flow hedging reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges.
* Total costs related to the issuance of shares amounting to '' 747.34 have been recognised against equity.
i. The interest on above vehicle loans from banks are fixed in nature. As at March 31,2023 the interest rates ranges from 7.35% to 8.35% per annum (March 31,2022: 7.35% to 8.88% per annum).
i. Vehicle loans from all banks are secured against hypothecation of respective motor vehicle financed. Refer note 45 for assets pledged as security
The Company has lease for laboratory equipments and building. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Company classifies its right-of-use assets in a consistent manner to its property, plant and equipment. The Company has considered automatic extension option available for laboratory equipment in lease period assessment since the Company can enforce its right to extend the lease beyond the initial lease period.
a. The Company has pending appeals at Income Tax Appellate Tribunal (ITAT) for the AY 2008-09 to AY 2010-11 and AY 2012-13 to AY 2014-15 and for AY 2016-17 on the matters over which no relief was provided by CIT (Appeals) amounting to ? 1,208.31 (March 31,2022: ? 1,208.31).
The Company''s appeals at Income Tax Appellate Tribunal (ITAT) for the AY 2003-04 and AY 2007-08 have been concluded for amounting to f 62.38 (March 31, 2022: f 62.38). However, appeal effect of the same is yet to be processed by the Ld. Assessing Officer.
The Company''s appeal for AY 1999-00 and AY 2010-11 against the demand under section 271(1)(c) amounting to f 36.27 and f 177.43 respectively (March 31, 2022: f 36.27 and f 177.43) are pending at Income Tax Appellate Tribunal (ITAT) and CIT (Appeals) repectively.
The Company has received demands during the FY 2019-20, under section 147 for the Assessment Year 2015-16 for f 466.81 (March 31, 2022: f 466.81). The Company has already filed an appeal before the CIT (Appeals). The matter is still pending with CIT (Appeals).
The Company has received demands during the FY 2021 -22, under section 143(3) for the Assessment Year 201718 for f 599.12 (March 31,2022: f 599.12). The Company has already filed an appeal before the CIT (Appeals). The matter is still pending with CIT (Appeals).
The Company has received demand during the FY 2023-24 vide order dated 18.04.2023, under section 143(3) for the Assessment Year 2018-19 for f 375.57 (March 31,2022: f Nil). The Company has already filed an appeal before the CIT (Appeals). The matter is still pending with CIT (Appeals).
The Company has received demands during the FY 2023-24 vide orders dated 17.05.2023, under section 147 for the Assessment Years 2014-15 and 2015-16 ), which is subject to rectification u/s 154 of the IT Act. The company is expecting the demands shall be reduced to f 43.97 & f 290.46 after rectification, against which the company is in process of filing appeals before the CIT (Appeals).
The Company has paid f 1,651.26 (March 31,2022: f 1,651.26) as per the directions of the Income Tax Department against the outstanding demands of various assessment years and the same will be adjusted/ refunded, once the appeals are final. The amount paid includes f 631.95 lakhs deposited against cases in respect of which favourable order has been received.
The management is confident that its position is likely to be upheld in the appeals pending before various appellate authorities and no liability could arise on the Company on account of these proceedings.
Capital commitments remaining to be executed and not provided for, net of capital advances f 788.18 (March 31, 2022: ? 490.46).
In terms of Paragraph 4 of Ind AS 108 ''Operating Segments'', entity wide disclosures have been presented in the consolidated financial statements.
As per the international transfer pricing norms introduced in India with effect from April 01, 2001, the Company is required to use certain specified methods in computing arm''s length price of international transactions between the Company and its associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/ class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial year. However, in the opinion of the Management the same would not have a material impact on these standalone financial statements. Accordingly, these financial standalone statements do not include any adjustments for the transfer pricing implications, if any.
The Company provides gratuity for employees in India as per the Payment of Gratuity Act, 1972. The planned assets are managed by Life Insurance Corporation of India. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. For the funded plan the Company makes contributions to recognized funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied which was applied while calculating the defined benefit obligation liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.
The earned leave liability arises on retirement, withdrawal, resignation and death-in-service of an employee. The actuary has used projected unit cost (PUC) actuarial method to assess the plan''s liabilities of employees.
1 The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.
2 The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors on long term basis.
Contribution made towards provident fund by the Company during the year is f 236.11 (March 31,2022: f 216.92) Contribution made towards ESI fund by the Company during the year is ? 21.00 (March 31,2022: ? 20.99)
Investment in equity instruments and preference shares of subsidiaries, joint venture and associates has been accounted at cost in accordance with Ind AS 27. Therefore not within the scope of Ind AS 109, hence not included here.
Financial assets and financial liabilities measured at fair value in the balance sheet are categorised into three levels of fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
(i) The fair value of investments in government securities and quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.
(ii) In order to arrive at the fair value of unquoted investments, the Company obtains independent valuations. The techniques used by the valuer are as follows:
a) Asset approach - Net assets value method
b) Income approach - Discounted cash flows ("DCF") method
c) Market approach - Enterprise value/Sales multiple method
(iii) Key man insurance policy fair value is based on surrender value stated by Life Insurance Corporation of India, Max New York Life Insurance Company Limited, SBI Life Insurance Company Limited, Star Union Dai-Ichi Life Insurance and Canara HSBC OBC Life Insurance which represents surrender value for the investors.
The Company enters into derivative financial instruments with various counterparties and financial institutions with investment grade credit ratings. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates etc.
The management assessed that security deposits, loan to related parties, loan to employees, other financial assets, borrowings and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities are estimated at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) Long-term fixed-rate and variable-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) All the borrowing facilities (other than vehicles loans) availed by the Company are variable rate facilities which are subject to changes in underlying Interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Company''s creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.
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 investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure.
- cash and cash equivalents,
- trade receivables,
- loans and receivables carried at amortised cost, and
- deposits with banks
The Company assesses and manages credit risk based on internal credit rating system, continuously monitoring defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks.
The Company closely monitors the creditworthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become past due one year.
Other financial assets measured at amortised cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.
The Company provides for expected credit losses on financial assets other than trade receivables by assessing individual financial instruments for expectation of any credit losses. Since, the Company deals with only highrated banks and financial institutions, credit risk in respect of cash and cash equivalents, other bank balances and bank deposits is evaluated as very low. In respect of other financial assets, credit risk is evaluated based on Company''s knowledge of the credit worthiness of those parties and loss allowance is measured as lifetime expected credit losses. The Company does not have any expected loss based impairment recognised on such assets considering their low credit risk nature, though incurred loss provisions are disclosed under each subcategory of such financial assets.
Expected credit loss for trade receivables under simplified approach
The Company uses expected credit loss model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available internal credit risk factors such as the Company''s historical experience for customers. The Company believes that amount receivable from related parties is collectible in full, based on historical payment behaviour and hence no loss allowance has been recognized on the same. The Company based upon past trends determines an impairment allowance for loss on receivables from others.
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the company operates.
The tables below analyse the Company''s financial liabilities into relevant maturity of the Company based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - 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 optimizing the return.
"The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, GBP, Euro and CHF. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.
The Company''s policy is to hedge all material foreign exchange risk associated with highly probable forecast sales transactions denominated in foreign currencies. The Company''s policy is to hedge the risk of changes in foreign currency. The Company uses combination of pre-shipment credit in foreign currency (PCFC) and forward contracts (derivative instruments) to hedge its exposure in foreign currency risk. The Company designate both change in spot and forward element of forward contracts and change in spot of PCFCs to hedge exposure in foreign currency risk on highly probable forecast sales.
A reasonably possible strengthening (weakening) of the Euro, US dollar, GBP and CHF against all other currencies at March 31, 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. Further, the sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts and pre-shipment credit in foreign currency (PCFC) designated as cash flow hedges. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
2) Interest rate risk i) Liabilities
The Company''s policy is to minimise interest rate cash flow risk exposures on long-term financing. As at March 31, 2023, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company''s investments in fixed deposits all pay fixed interest rates.
The Company''s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
The Company does not have any significant investments in equity instruments which create an exposure to price risk.
The Company''s capital management objectives are:
- to ensure the Company''s ability to continue as a going concern
- to provide an adequate return to shareholders
The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.
Management assesses the Company''s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company''s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Indian Accounting Standard 115, ''Revenue from Contracts with Customers'' ("Ind AS 115"), establishes a framework for determining whether, how much and when revenue is recognised and requires disclosures about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts. Under Ind AS 115, revenue is recognised through a 5-step approach:
(i) Identify the contract(s) with customer;
(ii) Identify separate performance obligations in the contract;
(iii) Determine the transaction price;
(iv) Allocate the transaction price to the performance obligations; and
(v) Recognise revenue when a performance obligation is satisfied.
There has been no significant changes in the nature of contract assets/contract liabilities during the year. Revenue recognised in relation to contract liabilities
The current ratio is favourable in current year on account of repayment of borrowings.
The debt equity ratio is favourable in current year on account of repayment of borrowings and preferential issue of share capital.
The debt service coverage ratio is favourable in current year due to increased operating income.
The inventory turnover ratio has increased due to increased sales in current year.
The return on investment has increased due to increased profitability in current year.
55 The Supreme court of India in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act,1952. There are numerous interpretation issues relating to the judgement passed by Supreme Court dated February 28, 2019 in the matter of Surya Roshni Ltd and others v/s State of M.P. on Provident fund. The order does not specifically mention the date of applicability of this judgement, whether it will be retrospectively or prospectively. Pending issuance of guidelines by the regulatory authorities on the application of this ruling, the impact on the Company for the previous periods, if any, can be ascertained. However, the Company has adopted the above changes prospectively.
56 The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment received Indian Parliament approval and Presidential assent in September 2020. The Code has been published in the Gazette of India and subsequently on November 13, 2020 draft rules were published and invited for stakeholders'' suggestions. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
The Ministry of Corporate Affairs had vide notification dated March 23, 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective April 01,2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods
The Ministry of Corporate Affairs has vide notification dated March 31,2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the ''Rules'') which amends certain accounting standards, and are effective April 01,2023.
The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.
These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Company''s accounting policy already complies with the now mandatory treatment.
The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
60 The Company has a working capital limit of '' 71,500 (March 31,2022: '' 74,256). For said facility, the management files returns/ statements, including information about inventory, debtors (with their ageing) and creditors, with such banks on monthly basis. The management also files revised returns/ statements, including similar information as at quarter-end and for the quarter then ended, with such banks on quarterly basis after reconciling the data with quarter-end accounts. The revised returns/ statements filed with such banks, except for few immaterial differences, are in agreement with the unaudited books of accounts of the Company on aggregate basis.
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or, b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or , b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(v) The Company has no such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(vi) The Company has not been declared as wilful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(vii) The Company does not have any transactions with company struck-off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
(viii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
Previous year''s figures have been regrouped/ reclassified wherever necessary, to confirm to current year''s
classification.
Mar 31, 2018
1. i) Corporate information
LT Foods Limited (the âCompanyâ) is a public company should be in running with registered office Unit No. 134, 1st floor, Rectangle-1, Saket District Center, New Delhi-110017 domiciled in India and incorporated under the provisions of the erstwhile Companies Act, 1956. LT Foods Limited is primarily in the business of milling, processing and marketing of branded and non-branded basmati rice and manufacturing of rice food products in the domestic and overseas market. LT Foods Limited operations include procurement, storage, processing, packaging and distribution. LT Foods Limited is also engaged in research and development to add value to rice and rice food products. The Companyâs rice product portfolio comprises brown rice, white rice, steamed rice, parboiled rice, organic rice, quick cooking rice, value added rice and flavored rice in the ready to cook segment.
ii) Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
These financial statements are separate financial statements of the Company prepared in accordance with Ind AS 27. The Company has also prepared consolidated financial statements for the year ended March 31, 2018 in accordance with Ind AS 110 and the same were also approved for issue by the Board of Directors on May 24, 2018.
For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) (hereinafter referred to as âPrevious GAAPâ) used for its statutory reporting requirement in India immediately before adopting Ind AS.
The Company had prepared the Opening Ind AS balance sheet as at April 01, 2016 using the exemption and exceptions provided under Indian Accounting Standards, Ind AS 101, First time adoption of Indian Accounting Standards. The exemptions availed by the Company are presented with the respective accounting policies. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Companyâs Balance Sheet, Statement of Profit and Loss are provided in note 53.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
- Certain financial assets and liabilities which have been measured at fair value (refer accounting policy regarding financial instruments);
iii) Use of estimates
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates.
* Represents deemed cost on the date of transition to Ind AS. Gross carrying value and accumulated depreciation of previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.
** Represents adjustment in the value of gross carrying amount and accumulated depreciation of tangible assets as per fixed asset register and books of accounts of the Company.
i. Contractual obligations
Refer note 41 for disclosure of contractual commitments for the acquisition of property, plant and equipment.
ii. Property plant and equipment pledged as security
Refer note 45 for information on property, plant and equipment pledged as security by the Company.
iii. Capitalised borrowings cost
The Company has capitalised borrowing costs during the year ended March 31, 2018: Rs. 88.51 lakhs (March 31, 2017: Nil) with respect to addition to property, plant and equipment.
* Represents deemed cost on the date of transition to Ind AS. Gross carrying value and amortisation of previous GAAP have been disclosed for the purpose of better understanding of the original cost of assets.
** Represents adjustment in the value of gross carrying amount and amortisation of intangible assets as per fixed asset register and books of accounts of the Company.
(a) No loans are due from director or other officers of the Company either severally or jointly with any other persons. Further, no loans are due from firms or private companies respectively in which any director is partner, director or a member.
(a) The deposits are restricted as they are held as margin money deposits against guarantees given by the Company.
(i) No trade receivables are due from director or other officers of the Company either severally or jointly with any other persons. *Includes receivables from related parties
During the year, Company had issued and allotted 112,910 (March 31, 2017: Nil, April 01, 2016: 209,605 of Rs. 10 each) equity shares of Rs. 1 each to eligible employees of the Company and its subsidiaries under Employees stock option scheme. The company had issued and allotted 53,100,000 (March 31, 2017: Nil, April 01, 2016: Nil) equity shares of Rs. 1 each to qualified institutional buyers on December 26, 2017 at an issue price of Rs. 75.20 per equity share (including a premium of Rs. 74.20 per equity share), aggregating to Rs. 39,931.20 lakhs. The amount so raised has been utilized for repayment of borrowings (both long term and short term), trade payables and for general corporate purposes.
(b) Terms/ rights attached to equity shares
The Company has only one class of equity shares having the par value of Rs. 1 per share (March 31, 2017: â1 per share, April 01, 2016: Rs. 10 per share). Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees.
During the year ended March 31, 2018 the amount of per share dividend recognised as distributions to equity shareholders was Rs. 0.15 per share (March 31, 2017: Rs. 0.15 per share, April 01, 2016: Rs. 1.50 per share).
In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.
(d) Shares reserved for issue under options and contracts / commitments for the sale of shares / disinvestments
The Company on April 01, 2011 granted 648,329 of Rs. 10 each options to employees specified in the Employee Stock Option Scheme of 2010. According to Ind AS 102 Share based payments, the Company has recorded an expense basis fair valuation of the underlying options. The Remuneration Committee on February 07, 2013 has approved additional grant of 201,209 of Rs. 10 each options to the eligible employees of the Company. Further under the above Scheme, the Committee in the previous meetings had allotted 556,064 of Rs. 10 each to the employees who have exercised their options. However, 293,474 of Rs. 10 each options granted to the employees specified have lapsed upto March 31, 2018. The aforementioned shares are before share split (refer note e below).
(e) Sub-division of equity shares
(i) During the year 2016-17 the equity shares of the Company having the face value of Rs. 10 (Rupees ten only) each were subdivided into 10 (ten) equity shares having face value of Rs. 1 (Rupee one only) each. Accordingly 26,663,187 equity shares of face value of Rs. 10 each were sub divided into 266,631,870 equity shares of face value of Rs. 1 each.
(f) The Company has not issued any equity shares pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issues and brought back during the last five years.
Dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 400.12 lakhs as at March 31, 2017 (April 01, 2016 - Rs. 401.87 lakhs) included under provisions has been reversed with corresponding adjustment to retained earnings.
Nature and purpose of other reserves General reserve:
The Company has transferred a portion of the net profit before declaring dividend to general reserve pursuant to the earlier provision of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013
Securities premium reserve:
Securities premium reserve represents premium received on issue of shares. Further the securities premium reserve has been netted off with the share issue expenses incurred on issue of shares under qualified institutional placement amounting to Rs. 1,815.42 lakhs.
Share options outstanding amount:
The account is used to recognise the grant date value of options issued to employees under Employee stock option plan.
A. Details of interest rate for each type of borrowings
i. The interest on above rupee term loans from banks are linked to the respective banks base rates / MCLR which are floating in nature. As of March 31, 2018 the interest rates ranges from 10.00% to 12.00% per annum (March 31, 2017: 10.70% to 13.15% per annum; April 01, 2016: 10.70% to 13.50% per annum).
ii. The interest on above foreign currency term loan from bank is linked to the respective banks base rate / MCLR which is floating in nature. As of March 31, 2018 the interest rate is Nil (March 31, 2017: Nil; April 01, 2016: LIBOR 2%).
iii. The interest on above vehicle loans from banks are linked to the respective banks base rates which are fixed in nature. As of March 31, 2018 the interest rates ranges from 8.35% to 10.55% per annum (March 31, 2017: 8.50% to 12.00% per annum; April 01, 2016: 8.50% to 12.00% per annum).
C. Details of security for each type of borrowing :
i) Rupee term loans from all banks are secured against first pari passu charge on the existing project assets, excluding assets charged specifically to the term lenders, and second pasri passu charge on current assets of the Company.
ii) Rupee term loans from Yes Bank availed during the year are secured with the personal guarantee of directors in addition to the security mentioned in (i) above.
iii) Foreign currency term loan from Oriental Bank of Commerce is secured against first pari passu charge on the existing project assets, excluding assets charged specifically to the term lenders and Second Pari Passu on current assets of the Company.
iv) Vehicle loans from all banks are secured against hypothecation of respective motor vehicle financed.
D. Reconciliation of liabilities arising from financing activities:
The changes in the Companyâs liabilities arising from financing activities can be classified as follows:
(The working capital loans are secured against hypothecation of inventories and trade receivables of the Company. The interest on above loans from banks are linked to the respective bankâs base rates which are floating in nature. The interest rate ranges from 8.55 % to 12.00 % p.a. (March 31, 2017: 8.55 % to 12.50 % p.a. ; April 01, 2016: 9.55% to 12.00% p.a.) on rupee working capital loan and 4.00% to 6.00% p.a. (March 31, 2017: 2.00% to 5.50% p.a. ; April 01, 2016: 2.75% to 6.00% p.a.) on foreign currency working capital loans)
(i) Information about individual provisions and significant estimates
Refer note 46 on Employee benefit obligations
A. The Company has entered into rent agreements as a lessor for Silos, which are in the nature of operating lease. Rental income for operating lease for the years ended March 31, 2018 and March 31, 2017 was Rs. 102.74 and Rs. 102.74 respectively. The Company has not executed any non-cancellable operating leases.
A. The Company has entered into rent agreements as a lessee for warehouses and office premises, which are in the nature of operating lease. Rental expense for operating lease for the years ended March 31, 2018 and 2017 was Rs. 866.97 lakhs and Rs. 730.46 lakhs respectively. The Company has not executed any non-cancellable operating leases.
2 SHARE-BASED PAYMENT
The Company maintains an equity settled share-based payment scheme LT Foods Employee Stock Option Plan 2010, (hereinafter referred to as the âPlanâ) adopted and approved by shareholders on September 30, 2010.
Under the Plan the Board of Directors of the Company have the powers to determine, from time to time, the persons eligible for grant of share options; when and how each option shall be granted; what type or combination of types of option shall be granted; the provisions of each option granted, including the time or times when a person shall be permitted to receive shares pursuant to an option grant. The Company has no legal or constructive obligation to repurchase or settle the options. In accordance with the Plan, upon vesting, the stock options will be settled by issuance of new shares on payment of exercise price. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. The total expense recognised in the income statement for the year ended March 31, 2018 is Nil (March 31, 2017 is Nil, April 01, 2016 is Rs. 0.36).
The fair values of options granted were determined using Black Scholes option pricing model that takes into account factors specific to the share incentive plans along with other external inputs.
The following principal assumptions were used in the valuation: Expected volatility was determined by assuming that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. The expected option life, average expected period to exercise, is assumed to be equal to the contractual maturity of the option. The risk-free rate is the rate associated with a risk-free security with the same maturity as the option. At each balance sheet date, the Company reviews its estimates of the number of options that are expected to vest. The Company recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to âretained earningsâ in equity.
The inputs to the Black Scholes model for options that have been granted are summarized as follows:
The total outstanding and exercisable share options and weighted average exercise prices for the various categories of option holders during the reporting periods are as follows:
ESOP-2010 (Grant I)
Share options granted to employees and others providing similar services
a. The Company has filed appeals in previous years against the order of the Assessing Officer before Commissioner of Income Tax (âCITâ) Appeals for the AY 2003-04 to AY 2007-08. The CIT (Appeals) vide its order dated March 25, 2013, March 28, 2013 and October 10, 2013 has allowed substantial relief to the Company and after allowing appeal effect of the order of CIT (Appeals) by the AO, the demand has reduced to Rs. 89.84 lakhs (previous year Rs. 89.84 lakhs). The Company in previous years has filed appeals against the order of CIT (Appeals) for the above said assessment years before the Income Tax Appellate Tribunal (âITATâ), on issues for which relief has not been given by CIT (Appeals).
The Companyâs appeal for the AY 2008-09 and AY 2009-10 are still pending before ITAT and demand of â563.57 lakhs (net of relief from CIT (Appeals)) is outstanding against the company (previous year Rs. 563.57 lakhs).
The Companyâs appeal for AY 2010-11 has been partially allowed by the CIT (Appeals) vide its order dated September 09, 2016. After allowing the appeal effect of the order of CIT (Appeals) the demand reduced to Rs. 346.01 lakhs (previous year Rs. 346.01 lakhs). The Company has filed appeals against the order of CIT (Appeals) for the above said assessment years before the ITAT, on issues for which relief has not been given by CIT (Appeals).
The Companyâs appeal for AY 2011-12 to AY 2014-15 for Rs. 2,476.14 lakhs (previous year Rs. 985.32 lakhs) is pending before CIT (Appeals).
Also the Company had received demand under section 271(1)(c) for AY 1999-00 and AY 2010-11 for Rs. 213.69 lakhs (previous year Nil) which is pending before CIT (Appeals).
The Company has paid Rs. 1,538.08 lakhs (previous year Rs. 1,193.65 lakhs) as per the directions of Income Tax Department against the outstanding demands of various assessment years and the same will be adjusted/ refunded, once the appeals are final.
The management is confident that its position is likely to be upheld in the appeals pending before ITAT and no liability could arise on the Company on account of these proceedings.
b. The guarantees given by LT Foods Limited on behalf of subsidiary companies against the loan availed by subsidiaries is for their business purposes.
*The difference is on account of the foreign exchange fluctuation.
(B) Capital commitments
Capital commitments remaining to be executed and not provided for, net of capital advances Rs. 349.74 lakhs (March 31, 2017: Rs. 30.76 lakhs; April 01, 2016: Rs. 22.50 lakhs).
3 Segment information
In accordance with Ind AS 108, the Board of directors being the Chief operating decision maker of the Company has determined its only one business segment of manufacture and storage of rice. Further, in terms of Paragraph 4 and 31 of Ind AS 108 âOperating Segmentsâ, entity wide disclosures have been presented in the consolidated financial statements.
4 Transfer pricing
As per the international transfer pricing norms introduced in India with effect from April 01, 2001 and the domestic transfer pricing norms introduced with effect from April 01, 2012, the Company is required to use certain specified methods in computing armâs length price of international and national transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/ class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial year. However, in the opinion of the Management the same would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.
A Gratuity
The Company provides gratuity for employees with the Life Insurance Corporation of India (LIC) in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination/other decrements (if any) on account any accident or disease is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. For the funded plan the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.
The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied which was applied while calculating the defined benefit obligation liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to prior period.
B Compensated absence
The earned leave liability arises on retirement, withdrawal, resignation and death-in-service of an employee. The actuary has used projected unit cost (PUC) actuarial method to assess the planâs liabilities of employees.
Notes:
1 The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.
2 The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors on long term basis.
C Provident fund & ESI fund
Contribution made towards provident fund by the Company during the year is Rs. 159.26 lakhs (March 31, 2017: Rs. 142.67 lakhs) Contribution made towards ESI fund by the Company during the year is Rs. 33.06 lakhs (March 31, 2017: Rs. 18.94 lakhs)
Investment in equity instruments of subsidiaries, joint ventures and associates has been accounted at cost in accordance with Ind AS 27. Therefore not within the scope of Ind AS 109, hence not included here.
ii) Fair values hierarchy
Financial assets and financial liabilities measured at fair value in the balance sheet are categorized into three levels of fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data rely as little as possible on entity specific estimates.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Valuation process and technique used to determine fair value
(i) The fair value of investments in government securities and quoted equity shares is based on the current bid price of respective investment as at the balance sheet date.
(ii) The fair value of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in the published statements as at the Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.
(iii) In order to arrive at the fair value of unquoted investments, the company obtains independent valuations. The techniques used by the valuer are as follows:
a) Asset approach - Net assets value method
b) Income approach - Discounted cash flows (âDCFâ) method
c) Market approach - Enterprise value/Sales multiple method
(iv) Key man insurance policy fair value is based on surrender value stated by Life Insurance Corporation of India which represents surrender value for the investors.
Derivative financial assets:
The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates etc.
(iii) Fair value of instruments measured at amortised cost
Fair value of instruments measured at amortised cost for which fair value is disclosed is as follows:
The management assessed that security deposits, loan to related parties, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
(i) Long-term fixed-rate and variable-rate receivables are evaluated by the Company based on parameters such as interest rates, individual creditworthiness of the customer and other market risk factors. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) All the other long term borrowing facilities availed by the Company are variable rate facilities which are subject to changes in underlying Interest rate indices. Further, the credit spread on these facilities are subject to change with changes in Companyâs creditworthiness. The management believes that the current rate of interest on these loans are in close approximation from market rates applicable to the Company. Therefore, the management estimates that the fair value of these borrowings are approximate to their respective carrying values.
5 Financial risk management
(i) Risk management framework
The Companyâs activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the Company is exposed to and how the Company manages the risk and the related impact in the financial statements.
The Companyâs risk management is carried out by a central treasury department (of the Company) under policies approved by the board of directors. The board of directors provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.
A) 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 Companyâs receivables from customers and investments in debt securities. The carrying amount of financial assets represents the maximum credit exposure.
- cash and cash equivalents,
- trade receivables,
- loans & receivables carried at amortised cost, and
- deposits with banks
a) Credit risk management
The Company assesses and manages credit risk based on internal credit rating system, continuously monitoring defaults of customers and other counterparties, identified either individually or by the company, and incorporates this information into its credit risk controls. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
A: Low
B: Medium
C: High
Assets under credit risk -
Cash and cash equivalents and other bank balances
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks.
Trade receivables
The Company closely monitors the credit-worthiness of the debtors through internal systems that are configured to define credit limits of customers, thereby, limiting the credit risk to pre-calculated amounts. The Company assesses increase in credit risk on an ongoing basis for amounts receivable that become past due and default is considered to have occurred when amounts receivable become past due one year. However, there are no amounts outstanding for more than a year so no credit risk associated with this.
Other financial assets measured at amortised cost
Other financial assets measured at amortised cost includes loans and advances to employees, security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities. Management monitors rolling forecasts of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the company operates.
Maturities of financial liabilities
The tables below analyze the Companyâs financial liabilities into relevant maturity of the Company based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
C) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Companyâs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
a) Foreign currency risk
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar, GBP and Euro. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the functional currency of the Company.
(i) Exposure to currency risk:
The Companyâs exposure to foreign currency risk at the end of the reporting period expressed in INR are as follows
Apart from above, the Company has a foreign currency liability (advances from customers) of Rs. 20.59 lakhs (USD 0.32 lakhs) (March 31, 2017: Rs. 19.99 lakhs (USD 0.35 lakhs), Rs. 40.18 lakhs (EURO: 0.56 lakhs); April 01, 2016: Rs. 21.13 lakhs (USD 0.73 lakhs))
Sensitivity
A reasonably possible strengthening (weakening) of the Euro, US dollar, GBP against all other currencies at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
b) Interest rate risk
i) Liabilities
The Companyâs policy is to minimise interest rate cash flow risk exposures on long-term financing. As at March 31, 2018, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Companyâs investments in fixed deposits all pay fixed interest rates.
Interest rate risk exposure
Below is the overall exposure of the Company to interest rate risk:
Sensitivity
Profit or loss is sensitive to higher / lower interest expense from borrowings as a result of changes in interest rates. In case of fixed rate borrowings a change in interest rates at the reporting date would not affect profit or loss.
*Holding all other variable constant
ii) Assets
The Companyâs fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.
c) Price risk Exposure
The Companyâs exposure price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.
The Company does not have any significant investments in equity instruments which create an exposure to price risk.
6 Capital management
The Companyâs capital management objectives are:
- to ensure the Companyâs ability to continue as a going concern
- to provide an adequate return to shareholders
The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.
Management assesses the Companyâs capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Companyâs various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
7 Related party disclosures
The Companyâs related party transactions and outstanding balances are with its subsidiaries, associates and joint venture, key management and others as described below.
A. Relationships
a) Subsidiaries
Daawat Foods Limited SDC Foods India Limited Nature Bio Foods Limited LT International Limited LT Overseas North America, Inc.
Sona Global Limited
Raghuvesh Foods & Infrastructure Limited
LT Foods International Limited (from September 06, 2016)
Deva Singh Sham Singh Exports Private Limited Raghunath Agro Industries Private Limited
b) Step down subsidiaries
LT Foods America Inc. (formerly known as Kusha, Inc.)
LT Foods USA LLC LT Foods Middle East DMCC Raghuvesh Power Projects Limited Universal Traders Inc.
Ecolife LLC
Fresco Fruit N Nuts Private Limited
Nature Bio Foods B.V. (from February 07, 2018)
Expo Services Private Limited
LT Agri Services Private Limited
LT Foods Europe B.V. (from September 06, 2016)
c) Joint Venture
Genoa Rice Mills Private Limited (from January 25, 2017) Daawat Kameda India private Limited (from March 14, 2017)
d) Associate enterprises
Raghuvesh Agri Foods Private Limited Raghuvesh Warehousing Private Limited Raghuvesh Infrastructure Private Limited
e) Key management personnel and Directors
- Key Management Personnel
Entities in which Key Management Personnel and their relatives have significant influence and transactions
V.K Foods
SK Engineering Company Super Texfab Private Limited
Deva Singh Sham Singh Exports Private Limited (from August 08, 2016)
8 Explanation of transition to Ind AS
These are the Companyâs first financial statements prepared in accordance with Ind AS.
The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS Statement of Financial Position at April 01, 2016 (the Companyâs date of transition). In preparing its opening Ind AS Statement of Financial Position, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.
A. Ind AS optional exemptions
1 Deemed cost for property, plant and equipment, investment property and intangible assets
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their Previous GAAP carrying value
2 Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at Fair value through Statement of Profit & Loss on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to apply this exemption for its investment in equity investments.
3 Share based payments
Ind AS 102 Share based payments requires an entity to recognise the equity settled share based payment plans based on fair value of the stock options granted to employees instead of intrinsic value. Ind AS 101 permits a first time adopter to ignore such requirement for the options already vested as on transition date that is April 01, 2016. The Company has elected to apply this exemptions for such vested options.
4 Deemed cost for investments in subsidiaries, associates and joint ventures
The Company has elected to continue with the carrying value of all of its investments in subsidiaries, joint ventures and associates recognised as of April 01, 2016 (transition date) measured as per the Previous GAAP as its deemed cost as at the date of transition
B. Ind AS mandatory exceptions
1 Estimates
An entityâs estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 01, 2016 are consistent with the estimates as at the same date made in conformity with Previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under Previous GAAP:
a) Investment in equity instruments carried at Fair value through Statement of Profit and Loss
b) Impairment of financial assets based on expected credit loss modelâ
2 Classification and measurement of financial assets and liabilities
The classification and measurement of financial assets will be made considering whether the conditions as per Ind AS 109 are met based on facts and circumstances existing at the date of transition. Financial assets can be measured using effective interest method by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing at the date of transition and if it is impracticable to assess the use of effective interest method, fair value of financial asset at the date of transition shall be the new carrying amount of that asset. The measurement exemption applies for financial liabilities as well.
3 Impairment of financial assets
At the date of transition to Ind AS, determine whether there has been a significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised.
C. Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
Note 1:
Government grant and fair valuation as deemed cost for certain items Under Ind AS, the transfer of resources from the government in the form of a waiver of duty needs to be accounted for as government grant. Accordingly, the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and SEZ scheme on purchase of plant and equipments has been recognised as government grant by an increase in the carrying value of plant and equipment with a corresponding credit to the deferred government grant. The increase in the value of plant and equipment is depreciated over the balance useful life of the asset. The deferred grant revenue is released to the profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset. Under Previous GAAP such benefits were being netted off with the cost of the respective item of plant and equipment.
Note 2:
Measurement of investments at fair value through profit or loss (FVTPL)
Under previous GAAP, investments in long-term equity instrument were carried at cost and tested for other than temporary diminution. Under Ind AS, such investments are carried at fair value through profit or loss (FVTPL) (except for investment in subsidiaries and joint venture).
Note 3:
Derivative recognised at fair value
The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US$, EUR and GBP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency (INR) of the relevant Company entity. The risk is measured through a forecast of highly probable foreign currency cash flows.
The intrinsic value of foreign exchange option contracts is determined with reference to the relevant spot market exchange rate. The differential between the contracted strike rate and the spot market exchange rate is defined as the intrinsic value. Time value of the option is the difference between fair value of the option and the intrinsic value.
Note : 4
Adjustment in proposed dividend (included in other adjustments)
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, dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for equity dividend of Rs. 401.87 lakhs and corporate dividend tax Rs. 81.42 lakhs as at March 31, 2016 included under the provisions has been reversed with corresponding adjustment to retained earnings. Further dividend declared for the financial year 2015-16 on dated September 21, 2016 amounting to Rs. 401.87 lakhs and corporate dividend tax Rs. 81.42 lakhs recognised as liability during the year 2016-17. Dividend declared for the financial year 2016-17 on dated September 19, 2017 amounting to Rs. 400.12 lakhs and corporate dividend tax Rs. 81.45 lakhs recognised as liability during the current year.
Note 5:
Deferred tax on above adjustments
Under Previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under Ind AS, deferred tax is recognised following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments has also led to recognition of deferred taxes on new temporary differences.
Note 6:
Remeasurements of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year.
Also as the company never recognised provision in respect of employee benefits under the previous GAAP, the company accordingly has recognised the amount of provisions in respect of gratuity and leave encashment.
9 Previous year figures
Previous yearâs figures have been regrouped/ reclassified wherever necessary, to confirm to current yearâs classification.
Mar 31, 2017
1. Capital commitments
Capital commitments remaining to be executed and not provided for, net of capital advances - Rs, 30.76 lakhs (previous year: Rs, 22.50 lakhs).
2. Related party disclosures
In accordance with the requirements of Accounting Standard (AS)-18 on "Related Party Disclosures", the names of related parties where control exist and/or with whom transactions have taken place during the year and description of relationships, as identified and certified by the management, are:
(i) Names of related parties and description of relationship - Subsidiaries
Daawat Foods Limited SDC Foods India Limited Nature Bio Foods Limited LT International Limited LT Overseas North America, Inc.
Sona Global Limited
Raghuvesh Foods & Infrastructure Limited
LT Foods International Limited (from September 6, 2016)
- Step subsidiaries
LT Foods America Inc. (formerly known as Kusha, Inc.)
LT Foods USA LLC LT Foods Middle East DMCC Raghuvesh Power Projects Limited Universal Traders Inc.
Royal Curry Delights LLC Fresco Fruit N Nuts Private Limited Expo Services Private Limited LT Agri Services Private Limited
Raghunath Agro Industries Private Limited (from October 1, 2015)
LT Foods Europe B.V. (from September 6, 2016)
- Joint Venture
Genoa Rice Mills Private Limited (from January 25, 2017)
- Partnership firm
Raghunath Agro Industries (till September 30, 2015)
- Associate enterprises
Raghuvesh Agri Foods Private Limited Raghuvesh Warehousing Private Limited Raghuvesh Infrastructure Private Limited LT Infotech Private Limited (till June 30, 2015)
- Entities in which KMP and their relatives have significant influence and transactions
V.K Foods
SK Engineering Company Super Texfab Private Limited
Deva Singh Sham Singh Exports Private Limited (from August 8, 2016)
- Key Management Personnel
Name Designation
Vijay Kumar Arora Managing Director
Surinder Kumar Arora Joint Managing Director
Ashwani Kumar Arora Managing Director and Chief Financial Officer
Ashok Kumar Arora President-Punjab Operations
- Relatives of Key Management Personnel
Name Relationship
Aditya Arora Son of
Mr. Ashok Kumar Arora
Aditi Arora Daughter of
Mr. Vijay Kumar Arora
Isha Arora Daughter of
Mr. Surinder Kumar Arora
Purva Arora Daughter of
Mr. Surinder Kumar Arora
Ritesh Arora Son of Mr. Ashwani Kumar Arora
Sanjana Arora Daughter of
Mr. Ashwani Kumar Arora
Parvesh Rani Mother of Key management personnel''s
Abhinav Arora Son of Mr. Vijay Kumar Arora
Ranju Arora Wife of Mr. Vijay Kumar Arora
Sakshi Arora Wife of Mr. Surinder Kumar Arora
Anita Arora Wife of Mr. Ashok Kumar Arora
Vandana Arora Wife of Mr. Ashwani Kumar Arora
Gursajan Arora Son of Mr. Ashok Kumar Arora
3. The Company has entered into rent agreements as a lessee for warehouses and office premises, which are in the nature of operating lease. Rental expense for operating lease for the years ended March 31, 2017 and 2016 was Rs, 730.46 and Rs, 550.58 respectively. The Company has not executed any non-cancelable operating leases.
''Apart from above, the Company has a foreign currency liability (advances from customers) of Rs, 19.99 (USD 0.35) (previous year Rs, 21.13 (USD 0.73) and Rs, 40.18 (EURO 0.56) (previous year nil).''
4. Transfer pricing
As per the international transfer pricing norms introduced in India with effect from April 1, 2001 and the domestic transfer pricing norms introduced with effect from April 1, 2012, the Company is required to use certain specified methods in computing arm''s length price of international and national transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/ class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial period. However, in the opinion of the Management the same would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.
5. The Company uses derivative contracts to hedge its risks associated with fluctuations with foreign currencies relating to foreign currencies receivables. The following are outstanding derivative contracts as on March 31, 2017.
6. In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated financial statements of LT Foods Limited, and therefore, no separate disclosure on segment information is given in these financial statements.
7. Corporate social responsibility expenses
(a) Gross amount required to be spent by the Company during the year in compliance with section 135 of the Companies Act, 2013 is Rs, 95.49
(b) Amount spent during the year -
8. Pursuant to scheme for development/ strengthening of agricultural marketing infrastructure, grading and standardization, the Company is eligible for capital grant amounting to Rs, 50, on successful capitalization of machinery pertaining to sortex unit. During the financial year 2010-11, the Company had successfully capitalized the machinery. The Company has received a capital subsidy amounting to Rs, 50 during the current year from National Bank for Agriculture and Rural development.
9. The Company takes forward cover contracts on the basis of sales orders to hedge the foreign currency risks on receivables in foreign currency. Based on accounting practices prevailed, mark to market (MTM) losses on such Derivative transactions had been charged to Statement of Profit and Loss and any gains on transactions were ignored till the year ended March 31, 2016. As per guidance note on "Accounting for Derivative Accounts" (the ''Guidance Note1) applicable w.e.f April 1, 2016, MTM gains on Derivative transactions are also to be recorded in Statement of Profit and Loss. Consequent to the aforementioned, the Company has recognized an unrealized gain of Rs, 1,097.58 in the Statement of Profit and Loss.
Further based on the transitional provisions provided in the Guidance Note, MTM Gain on outstanding forward contracts as on March 31, 2016 amounted Rs, 548.71 out of which an amount of Rs,362.18 (net of tax - Rs, 186.53) has been adjusted with the opening reserves as at April 1, 2016.
The Company does not maintain independent records of denomination of currency in its books of accounts.
10. Previous year figures
Previous year''s figures have been regrouped/reclassified wherever necessary, to confirm to current year''s classification.
Mar 31, 2016
a) During the year, the Company had issued and allotted 209,605 (previous year 147,973) equity shares to eligible employees of the Company and its subsidiaries under Employees stock option scheme.
b) Terms/rights attached to equity shares
The Company has only one class of equity shares having the par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees.
During the year ended March 31, 2016 the amount of per share dividend recognized as distributions to equity shareholders was Rs. 1.50 per share (previous year Rs. 2.00 per share).
In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after payment of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.
d) Shares reserved for issue under options and contracts / commitments for the sale of shares / disinvestments
The Company had reserved issuance of 849,538 (previous year 849,538) Equity shares of Rs. 10 each for offering to eligible employees of the Company and its subsidiaries under Employees Stock Option Plan (ESOP). During the year, the Company had issued and allotted 209,605 (previous year 147,973) equity shares to eligible employees of the Company and its subsidiaries under ESOP. The option would vest over a maximum period of 4 years or such other period as may be decided by the Employees Stock Compensation Committee from the date of grant based on specific criteria.
e) Details of security for each type of borrowings :
(i) Rupee term loan from all banks, other than those mentioned in (ii) & (iii) below are secured against first pari passu charge on the existing project assets, excluding assets charged specifically to the term lenders and Second Pari Passu on current assets of the Company.
(ii) Rupee term loan from Allahabad Bank amounting to Rs. 1,305.99 Lakhs (previous year Rs. 1,684.15 Lakhs ) is secured against first exclusive charge over the entire fixed assets of the Silos project located at Amritsar.
(iii) Rupee term loan from Allahabad Bank amounting to Nil (previous year- Rs.729.97 Lakhs) is secured against first exclusive charge over the entire fixed assets created under the Varpal, Amritsar project. second charge on current assets on reciprocal basis with ceding of second charge on the fixed assets in favour of working capital loan bankers.
(iv) Foreign currency term loan from Oriental Bank of Commerce are secured against first pari passu charge on the existing project assets, excluding assets charged specifically to the term lenders and Second Pari Passu on current assets of the Company.
(v) Vehicle loans from all banks are secured against hypothecation of respective motor vehicle financed.
b) Employee benefits
The Company has taken a group gratuity for its employees with the Life Insurance Corporation of India (LIC). Under this policy the eligible employees are entitled to receive gratuity payments upon their resignation or death in lump sum after deduction of necessary taxes up to a maximum limit of Rs. 1,000,000.
The following table set out the status of the gratuity plan as required under Accounting Standard (AS) - 15 - Employee benefits and the reconciliation of opening and closing balances of the present value of the defined benefit obligation.
* The Company earned income of Rs. 0.51 Lakhs (previous year Rs. 1.87 Lakhs) as share in profit from partnership firm and Rs. 2.43 Lakhs (previous year ?4.48 Lakhs) as interest on capital in partnership firm till September 30, 2015. Effective October 1, 2015, Raghunath Agro Industries (RAI), the partnership firm was acquired by Raghunath Agro Industries Private Limited and correspondingly, the Company was allotted equity shares in RAIPL in proportion to its share of partnership in the RAI.
Share of Investments in partnership firm :-The Company has 4% interest in partnership firm M/s Raghunath Agro Industries, which is engaged in the business of milling and export of rice. The financial results of the partnership firm for the year ended September 30, 2015 (previous year ended March 31, 2015) are as under:
a) Provident fund
Contribution made by the Company during the year is Rs. 127.76 Lakhs (previous year Rs. 101.85 Lakhs).
b) Share-based payment
The Company maintains an equity settled share-based payment scheme LT Foods Employee Stock Option Plan-2010, hereinafter referred to as (''the Plan'') adopted and approved by share-holders on September 30, 2010.
Under the Plan the Board of Directors of the Company has the powers to determine, from time to time, the persons eligible for grant of share options; when and how each option shall be granted; what type or combination of types of option shall be granted; the provisions of each option granted, including the time or times when a person shall be permitted to receive shares pursuant to an option grant. The Group has no legal or constructive obligation to repurchase or settle the options. In accordance with the Plan, upon vesting, the stock options will be settled by issuance of new shares on payment of exercise price.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted. The total expense recognized in the income statement for the year ended March 31, 2016 is Rs. 0.36 Lakhs (March 31, 2015 Rs. 29.00 Lakhs).
The fair values of options granted were determined using Black Scholes option pricing model that takes into account factors specific to the share incentive plans along with other external inputs.
The following principal assumptions were used in the valuation: Expected volatility was determined by assuming that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. The expected option life, average expected period to exercise, is assumed to be equal to the contractual maturity of the option. Dividend yield is taken as nil as the Group has not paid any dividend. The risk-free rate is the rate associated with a risk-free security with the same maturity as the option. At each balance sheet date, the Company reviews its estimates of the number of options that are expected to vest. The Company recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to ''retained earnings'' in equity.
1. Transfer Pricing
As per the international transfer pricing norms introduced in India with effect from April 1, 2001 and the domestic transfer pricing norms introduced with effect from April 1, 2012, the Company is required to use certain specified methods in computing arm''s length price of international and national transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/ class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Company is in the process of conducting a transfer pricing study for the current financial period. However, in the opinion of the Management the same would not have a material impact on these financial statements. Accordingly, these financial statements do not include any adjustments for the transfer pricing implications, if any.
2. In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated financial statements of LT Foods Limited, and therefore, no separate disclosure on segment information is given in these financial statements.
3. Previous year figures
Previous year''s figures have been regrouped/reclassified wherever necessary, to confirm to current year''s classification.
Mar 31, 2015
1. Corporate information
LT Foods Limited (the Company) is a public Company domiciled in India
and incorporated under the provisions of the Companies Act, 1956. LT
Foods Limited is primarily in the business of milling, processing and
marketing of branded and non-branded basmati rice and manufacturing of
rice food products in the domestic and overseas market. LT Foods
Limited operations include contract farming, procurement, storage,
processing, packaging and distribution. LT Foods Limited is also
engaged in research and development to add value to rice and rice food
products. LT Foods Limited rice product portfolio comprises brown rice,
white rice, steamed rice, parboiled rice, organic rice, quick cooking
rice, value added rice and flavoured rice in the ready to cook segment.
a. Terms /rights attached to equity shares
The Company has only one class of equity shares having the par value of
Rs. 10 per share. Each holder of equity share is entitled to one vote
per share. The Company declares and pays dividend in Indian Rupees.
During the year ended March 31, 2015 the amount of per share dividend
recognised as distributions to equity shareholders was Rs. 2.00 per
share (previous year Rs. 2.25 per share).
In the event of liquidation of the Company, the holder of equity shares
will be entitled to receive remaining assets of the Company, after
payment of all liabilities. The distribution will be in proportion to
the number of equity shares held by the shareholders.
b. Shares reserved for issue under options and contracts / commitments
for the sale of shares / disinvestments
The Company had reserved issuance of 8,49,538 (previous year 849,538)
Equity shares of Rs. 10 each for offering to eligible employees of the
Company and its subsidiaries under Employees Stock Option Plan (ESOP).
During the year, the Company had issued and allotted 147,973 (previous
year 137,214) equity shares to eligible employees of the Company and
its subsidiaries under ESOP. The option would vest over a maximum
period of 4 years or such other period as may be decided by the
Employees Stock Compensation Committee from the date of grant based on
specific criteria.
c) Details of security for each type of borrowings:
(i) Rupee term loan from all banks are secured against first pari passu
charge on the existing project assets, excluding assets charged
specifically to the term lenders and Second Pari Passu on current
assets of the Company.
(ii) Rupee term loan from Allahabad Bank amounting to Rs. 729.97 lacs
is secured against first exclusive charge over the entire fixed assets
created under the varpal, Amritsar project. second charge on current
assets on reciprocal basis with ceding of second charge on the fixed
assets in favour of working capital loan bankers.
(iii) Rupee term loan from Allahabad Bank amounting to Rs. 1,643.52
lacs is secured against first exclusive charge over the entire fixed
assets of the Silos project located at Amritsar. second pari -passu
charge over fixed assets of Bahalgarh unit along with equitable
mortgage over land and building on pari passu basis to secure entire
credit facilities sanctioned by consortium.
(iv) vehicle loans from all banks are secured against hypothecation of
respective motor vehicle financed.
d) Employee benefits
The Company has taken a group gratuity for its employees with the Life
Insurance Corporation of India (LIC). Under this policy the eligible
employees are entitled to receive gratuity payments upon their
resignation or death in lumpsum after deduction of necessary taxes upto
a maximum limit of Rs. 1,000,000.
The following table set out the status of the gratuity plan as required
under Accounting Standard (AS) - 15 - Employee benefits and the
reconciliation of opening and closing balances of the present value of
the defined benefit obligation.
2. Employee benefits
a) Provident fund
Contribution made by the Company during the year is Rs. 101.85 lacs
(previous year Rs. 59.25 lacs).
b) Share-based payment
The Company maintains an equity settled share-based payment scheme LT
Foods Employee Stock Option Plan-2010, hereinafter referred to as ''the
Plan'') adopted and approved by share-holders on September 30, 2010.
Under the Plan the Board of Directors of the Company has the powers to
determine, from time to time, the persons eligible for grant of share
options; when and how each option shall be granted; what type or
combination of types of option shall be granted; the provisions of each
option granted, including the time or times when a person shall be
permitted to receive shares pursuant to an option grant. The Group has
no legal or constructive obligation to repurchase or settle the
options. In accordance with the Plan, upon vesting, the stock options
will be settled by issuance of new shares on payment of exercise price.
The total amount to be expensed over the vesting period is determined
by reference to the fair value of the options granted. The total
expense recognized in the income statement for the year ended March 31,
2015 is Rs. 29.00 lacs (March 31, 2014 Rs. 40.74 lacs).
The fair values of options granted were determined using Black Scholes
option pricing model that takes into account factors specific to the
share incentive plans along with other external inputs.
The following principal assumptions were used in the valuation:
Expected volatility was determined by assuming that the historical
volatility over a period similar to the life of the options is
indicative of future trends, which may also not necessarily be the
actual outcome. The expected option life, average expected period to
exercise, is assumed to be equal to the contractual maturity of the
option. Dividend yield is taken as nil as the Group has not paid any
dividend. The risk-free rate is the rate associated with a risk-free
security with the same maturity as the option. At each balance sheet
date, the Company reviews its estimates of the number of options that
are expected to vest. The Company recognizes the impact of the revision
to original estimates, if any, in the income statement, with a
corresponding adjustment to ''retained earnings'' in equity.
3. Contingent liabilities
(Rs. in lacs)
Nature of contingency March 31,2015 March 31,2014
* Income-tax demands * 2,345.19 834.37
* Haryana rural development fund
demand of market committee, Sonepat - 30.78
* Food Corporation India demand for
differential price /freight /taxes 339.00 339.00
* Saracen Advertising JLT demand for
breach of contract 133.07 -
* Duty saved under EPCG licenses (export
obligation outstanding Rs.2,728.53 lacs
(previous year Rs. 3,702.13 lacs)) 451.40 609.05
* Bank Guarantees 710.72 1,524.59
* Guarantee given by Company to bank on
behalf of subsidiary/firm in which the
Company is a partner ** 62,844.00 54,284.43
* Guarantee given by Company on the behalf
of subsidiary for export obligation
under EPCG scheme ** 14.68 14.68
Total 66,838.06 57,636.89
* The company has filed appeals in previous years against the order of
the AO before CIT(Appeals) for the AY 2003-04 to AY 2007-08. The
CIT(Appeals) vide its order dated March 25, 2013, March 28, 2013 and
October 10, 2013 has allowed substantial relief to the Company and
after allowing appeal effect of the order of CIT(Appeals) by the AO,
the demand has reduced to Rs. 89.84 lacs (previous year Rs. 89.84
lacs). The Company in previous years has filed appeals against the
order of CIT(Appeals) for the above said assessment years before the
Income Tax Appellate Tribunal, on issues for which relief has not been
given by CIT(Appeals).
The Company''s appeal for the AY 2008-09 and AY 2009-10 are still
pending before Income Tax Appellate Tribunal and demand of Rs. 563.57
lacs (net of relief from CIT(Appeals)) are outstanding against the
company (previous year Rs. 563.57 lacs). Further, the company appeal
for the AY 2000-01 has been decided in the favor of company by ITAT and
after allowing appeal effect of the order of ITAT, the liability is
reduced to Rs. 1.47 lacs (previous year Rs. 180.96 lacs)which has been
provided by the Company in the books in the current year.
During the current year, the Company has received demands under section
143(3) for AY 2010-11 and AY 2011-12 for Rs. 1,691.78 lacs. For AY
2010-11 the Company has already filed an appeal before the CIT
(Appeals) and for AY 2011-12 the company is in the process of filing an
appeal before the CIT (Appeals). Pending the orders from CIT (A) and
filing of orders respectively, no adjustment has been made in the
financial statements for the additional tax so demanded and the same
has been disclosed as a contingent liability.
The company has paid Rs. 1,028.15 lacs (previous year Rs. 1,028.15
lacs) are per the directions of Income Tax Department against the
outstanding demands and the same will be adjusted / refunded, once the
appeals are final. The management is confident that it''s position is
likely to be upheld in the appeals pending before Income Tax Appellate
Tribunal and no liability on the Company on account of these
proceedings.
** The guarantees given by LT Foods Limited on behalf of subsidiary
companies against the loan availed by subsidiaries is for their
business purposes.
4. Capital commitments
Capital commitments remaining to be executed and not provided for, net
of capital advances - Rs. 40.42 lacs (previous year: Rs. 1,304.67
lacs).
5. Related party disclosures
In accordance with the requirements of Accounting Standard (AS)-18 on
"Related Party Disclosures", the names of related parties where control
exist and/or with whom transactions have taken place during the year
and description of relationships, as identified and certified by the
management, are:
(i) Names of related parties and description of relationship
* Subsidiary companies LT Agri Services Private Limited
Daawat Foods Limited Kusha, Inc.
SDC Foods India Limited Nice International FZE ( liquidated on
22 March 2015)
Expo Services Private Limited LT Foods USA LLC
Nature Bio Foods Limited LT Foods Middle East DMCC
LT International Limited Raghuvesh Power Projects Limited
LT Overseas North America, Inc. Universal Traders Inc.
Sona Global Limited Royal Curry Delights LLC
Raghuvesh Foods & Infrastructure Fresco Fruit N Nuts Private Limited
Limited
* Partnership firm
Raghunath Agro Industries
* Associate enterprises
LT Infotech Private Limited
Raghuvesh Agri Foods Private Limited
Raghuvesh Warehousing Private Limited
Key Management Personnel and their relatives
Name Designation
Vijay Kumar Arora Managing Director
Surinder Kumar Arora Joint Managing Director
Ashwani Kumar Arora Joint Managing Director
Ashok Kumar Arora President-Punjab
Operations
* Entities of KMP and their relatives
V.K Foods
SK Engineering Company
Super Texfab Private Limited
* Relatives of Key Management Personnel
Abinav Arora Aditya Arora
Aditi Arora Anita Arora
Gurucharan Dass Arora Gursajjan Arora
Isha Arora vandana Arora
Parvesh Rani Arora Purva Arora
Ranju Arora Ritesh Arora
Sakshi Arora Sanjana Arora
6. The Company has entered into rent agreements as a lessee for
warehouses and office premises, which are in the nature of operating
lease. Rental expense for operating lease for the years ended March 31,
2015 and 2014 was Rs. 372.27 lacs and Rs. 513.73 lacs respectively. The
Company has not executed any non-cancelable operating leases.
7. Transfer Pricing
As per the international transfer pricing norms introduced in India
with effect from April 1, 2001 and the domestic transfer pricing norms
introduced with effect from April 1, 2012, the Company is required to
use certain specified methods in computing arm''s length price of
international and national transactions between the associated
enterprises and maintain prescribed information and documents relating
to such transactions. The appropriate method to be adopted will depend
on the nature of transactions/ class of transactions, class of
associated persons, functions performed and other factors, which have
been prescribed. The Company is in the process of conducting a transfer
pricing study for the current financial period. However, in the opinion
of the Management the same would not have a material impact on these
financial statements. Accordingly, these financial statements do not
include any adjustments for the transfer pricing
implications, if any.
8. a) The Company uses derivative contracts to hedge its risks
associated with fluctuations with foreign currencies relating to foreign
currencies receivables. The following are outstanding derivative
contracts as on March 31, 2015.
(Rs. in lacs)
Particulars Purpose
Forward contract to sell (USD) Hedge of highly probable foreign
currency sales
USD 354.68 (previous year: USD 325.67)
Rs. 23,043.42 (previous year: Rs. 20,437.04)
b) The Company has taken put option of USD 40 lacs from Bank of Baroda
to hedge its foreign currency receivable exposure having an exercising
period between April 2015 to November 2015 for USD 5 lacs per month.
c) The Company has taken put option of USD 24 lacs from ICICI to hedge
its foreign currency receivable exposure having an exercising period
for April 2015 and November 2015 for USD 3 lacs per month.
d) The Company has taken put option of USD 39 lacs from ICICI Bank to
hedge its foreign currency receivable exposure having an exercising
period for September 2015 and February 2016 for USD 6.5 lacs per month.
9. In accordance with AS-17 "Segment Reporting", segment information
has been given in the consolidated financial statements of LT Foods
Limited, and therefore, no separate disclosure on segment information
is given in these financial statements.
10. Corporate social responsibility expenses
(a) Gross amount required to be spent by the parent company during the
year in compliance with section 135 of the Act is Rs. 69 lacs
(b) Amount spent during the year on-
In Cash Yet to be paid in Cash Total
Contribution Made 13 lacs - 13 lacs
11. Previous year figures
Previous year''s figures have been regrouped/reclassified wherever
necessary, to confirm to current year''s classification.
Mar 31, 2014
1. (a) Corporate information
LT Foods Limited (the Company) is a public Company domiciled in India
and incorporated under the provisions of the Companies Act, 1956. LT
Foods Limited is primarily in the business of milling, processing and
marketing of branded and non-branded basmati rice and manufacturing of
rice food products in the domestic and overseas market. LT Foods
Limited operations include contract farming, procurement, storage,
processing, packaging and distribution. LT Foods Limited is also
engaged in research and development to add value to rice and rice food
products. LT Foods Limited rice product portfolio comprises brown rice,
white rice, steamed rice, parboiled rice, organic rice, quick cooking
rice, value added rice and flavored rice in the ready to cook segment.
2. Contingent liabilities
(Rs. in lacs)
Nature of contingency March 31, 2014 March 31, 2013
- Income-tax demands * 825.11 1,066.79
- Haryana rural development
fund demand of market committee,
Sonepat 30.78 30.78
- Food Corporation India demand for
differential price / freight /taxes 339.00 339.00
- Duty saved under EPCG licenses
(export obligation outstanding
Rs.3,702.13 lacs (previous year 609.05 565.53
Rs.3,464.05 lacs))
- Bank Guarantees 1,524.59 1,266.00
- Guarantee given by Company to bank
on behalf of subsidiary/firm in
which the Company is a 54,284.43 56,334.93
partner
- Guarantee given by Company on the
behalf of subsidiary for export
obligation under EPCG 14.68 14.68
scheme
- Guarantee given by Company to others
on behalf of subsidiary - 543.89
Total 57,627.64 60,161.60
* The Company has filed appeals against the order of the AO before
CIT(Appeals) for the AY 2003-04 to AY 2007-08. The CIT(Appeals) vide
its order dated 25/3/2013, 28/3/2013 and 10/10/2013 has allowed
substantial relief to the Company and after allowing appeal effect of
the order of CIT(Appeals) by the AO, the demand has reduced to Rs. 80.59
lacs (Previous year Rs. 205.82 lacs). The Company has filed appeals
against the order of CIT(Appeals) for the above said assessment years
before the Income Tax Appellate Tribunal, on issues for which relief
has not been given by CIT(Appeals).
The Company appeal for the AY 2008-09, AY 2009-10 and AY 2000-01 are
still pending before Income Tax Appellate Tribunal and demand of Rs.
744.53 lacs is outstanding against the Company (Previous year Rs. 744.53
lacs).
The Company appeal before CIT(Appeals) for the AY 2010-11 against order
of the AO for penalty u/s 272B of the Act has been allowed in favour of
the Company vide order of the CIT(A) dated 25/9/2013 and the
outstanding demand in the case has reduced to Nil (Previous year Rs.
116.80 lacs).
The Company has paid Rs. 1028.15 lacs are per the directions of Income
Tax Department against the outstanding demands and the same will be
adjusted / refunded, once the appeals are final. The management is
confident that it''s position is likely to be upheld in the appeals
pending before Income Tax Appellate Tribunal and no liability on the
Company on account of these proceedings.
3. Capital commitments
Capital commitments remaining to be executed and not provided for, net
of capital advances - Rs.1,304.67 lacs (previous year: Rs. 92.30 lacs).
4. Related party disclosures
In accordance with the requirements of Accounting Standard (AS)-18 on
"Related Party Disclosures", the names of related parties where control
exist and/or with whom transactions have taken place during the year
and description of relationships, as identified and certified by the
management, are:
(i) Names of related parties and description of relationship
- Subsidiary companies Daawat Foods Limited SDC Foods India Limited
Expo Services Private Limited Nature Bio Foods Limited LT International
Limited LT Overseas North America, Inc. Sona Global Limited Raghuvesh
Foods & Infrastructure Limited LT Agri Services Private Limited
- Fellow subsidiaries Kusha, Inc.
Nice International FZE LT Foods USA LLC LT Foods Middle East DMCC
Raghuvesh Power Projects Limited Universal Traders Inc. Royal Curry
Delights LLC
- Partnership firm Raghunath Agro Industries
- Associate enterprises LT Infotech Private Limited
Key Management Personnel
Name Designation
Vijay Kumar Arora Managing Director
Surinder Kumar Arora Joint Managing Director
AshwaniKumar Arora Joint Managing Director
Ashok Kumar Arora President-Punjab Operations
Relatives of Key Management Personnel
Abinav Arora
Aditya Arora
Aditi Arora
Anita Arora
GurucharanDass Arora
Gursajjan Arora
Isha Arora
Munish Arora
Parvesh Rani Arora
Ranju Arora
Ritesh Arora
Sakshi Arora
Vandana Arora
Vaneet Arora
5. The Company has entered into rent agreements as a lessee for
warehouses and office premises, which are in the nature of operating
lease. Rental expense for operating lease for the years ended March 31,
2014 and 2013 was Rs. 513.73lacs and Rs. 582.25lacs respectively. The
Company has not executed any non-cancelable operating leases.
6. Transfer Pricing
As per the international transfer pricing norms introduced in India
with effect from April 1, 2001 and the domestic transfer pricing norms
introduced with effect from April 1, 2012, the Company is required to
use certain specified methods in computing arm''s length price of
international and national transactions between the associated
enterprises and maintain prescribed information and documents relating
to such transactions. The appropriate method to be adopted will depend
on the nature of transactions / class of transactions, class of
associated persons, functions performed and other factors, which have
been prescribed. The Company is in the process of conducting a transfer
pricing study for the current financial period. However, in the opinion
of the Management the same would not have a material impact on these
financial statements. Accordingly, these financial statements do not
include any adjustments for the transfer pricing implications, if any.
7. a) The Company uses derivative contracts to hedge its risks
associated with fluctuations with foreign currencies relating to
foreign currencies receivables. The following are outstanding
derivative contracts as on March 31, 2014.
b) The Company has taken put option of USD 90 lacs from Bank of Baroda
to hedge its foreign currency receivable exposure having an exercising
period between April 2014 to December 2014 for USD 10 lacs per month.
c) The Company has taken put option of USD 20 lacs from Bank of Baroda
to hedge its foreign currency receivable exposure having an exercising
period for August 2014 andSeptember 2014 for USD 10lacs per month.
8. In accordance with AS-17 "Segment Reporting", segment information
has been given in the consolidated financial statements of LT Foods
Limited, and therefore, no separate disclosure on segment information
is given in these financial statements.
9. Previous year figures
Previous year''s figures have been regrouped/reclassified wherever
necessary, to confirm to current year''s classification.
Mar 31, 2013
1. Corporate information
LT Foods Limited (the Company) is a public Company domiciled in India
and incorporated under the provisions of the Companies Act, 1956,
primarily in the business of milling, processing, storage and
transportation of food grains and trading in other agri products. The
company is marketing branded and non-branded basmati rice and
manufacturing rice food products in the domestic and overseas market.
Its rice product portfolio comprises brown rice, white rice, steamed
rice, parboiled rice, organic rice, quick cooking rice, value added
rice and flavored rice in the ready to cook segment. The company''s
operations include contract farming, procurement, storage, processing,
packaging and distribution. The company is also engaged in
international trade of non-basmati rice and other grains, warehousing
facility, research and development to add value to rice and rice food
products.
2. Contingent liabilities
(Rs. in lacs)
Nature of contingency March 31, 2013 March 31, 2012
- Income-tax demands * 1,066.79 3,161.59
- Haryana rural development fund
demand of market committee, Sonepat 30.78 30.78
- Food Corporation India demand for
differential price /freight /taxes 339.00 339.00
- Duty saved under EPCG licenses
(export obligation outstanding Rs.
3,464.05 lacs 535.52 591.69
(previous year Rs. 3,815.92 lacs))
- Guarantees given by Company 58,159.50 58,891.87
Total 60,131.59 63,014.93
*The management has filed appeals against the order of Assessing
Officer before CIT (A) for the Assessment Year 2003-04 to Assessment
Year 2007-08. The CIT (A) vide its order dated March 28, 2013for the
Assessment Year 2004-05 to Assessment Year 2007-08 has allowed
substantial relief to the Company. However, the appeal effect of order
of CIT (A) is yet to be given by the Income Tax Department. Also, the
Company is in the process of filing appeal before ITAT for the
Assessment Year 2004-05 to Assessment Year 2007-08 on issues for which
relief has not been given by CIT (A). The Company appeal for the
Assessment Year 2008-09 and Assessment Year 2009-10 and Assessment Year
2000-01 are still pending before ITAT. The Company has paid Rs. 775.00
Lacs fixed instalment as per the directions of Income Tax Department
and the same amount will be adjusted, once the appeal is final. The
management is confident that it''s position is likely to be upheld in
the appeals pending before CIT(A) and ITAT and no liability will
devolve on the Company on account of these proceeding.
3. Capital commitments
Capital commitments remaining to be executed and not provided for, net
of capital advances - Rs. 92.30 lacs (previous year: Rs. 1.96 lacs).
4. Related party disclosures
In accordance with the requirements of Accounting Standard (AS)-18 on
"Related Party Disclosures", the names of related parties where control
exist and/or with whom transactions have taken place during the year
and description of relationships, as identified and certified by the
management, are:
(i) Names of related parties and description of relationship
- Subsidiary companies
Daawat Foods Limited
SDC Foods India Limited
Expo Services Private Limited
Nature Bio Foods Limited
LT International Limited
LT Overseas North America, Inc.
Kusha, Inc.
Sona Global Limited
Nice International FZE
Raghuvesh Foods & Infrastructure Limited
LT Foods USA LLC
Raghuvesh Power Projects Limited Universal Traders Inc. LT Agri
Services Private Limited Royal Curry Delights LLC
- Partnership firm
Raghunath Agro Industries
- Associate enterprises
LT Infotech Private Limited
Cordia LT Communications Private limited (till October 03, 2012)
- Relatives of Key Management Personnel
Abhinav Arora Aditya Arora Anita Arora Gursajjan Arora Parvesh Rani
Ranju Arora Sakshi Arora Vandana Arora
5. The Company has entered into rent agreements as a lessee for
warehouses and office premises, which are in the nature of operating
lease. Rental expense for operating lease for the years ended March 31,
2013 and 2012 was Rs. 582.25 lacs and Rs. 453.01 lacs respectively. The
Company has not executed any non-cancelable operating leases.
6. Transfer Pricing
As per the international transfer pricing norms introduced in India
with effect from April 1, 2001 and the domestic transfer pricing norms
introduced with effect from April 1, 2012, the Company is required to
use certain specified methods in computing arm''s length price of
international transactions between the associated enterprises and
maintain prescribed information and documents relating to such
transactions. The appropriate method to be adopted will depend on the
nature of transactions/ class of transactions, class of associated
persons, functions performed and other factors, which have been
prescribed. The Company is in the process of conducting a transfer
pricing study for the current financial period. However, in the opinion
of the Management the same would not have a material impact on these
financial statements. Accordingly, these financial statements do not
include any adjustments for the transfer pricing implications, if any.
7. The remuneration paid to Mr. Vijay Kumar Arora (Chairman and
Managing Director), Mr. Ashwani Kumar Arora (Joint Managing Director)
and Mr. Surinder Kumar Arora (Joint Managing Director) was approved by
the shareholders of the Company. However, owing to the insufficient
profits during the previous year, not determinable on the date of such
approval, the remuneration paid during the year ended March 31, 2012 is
in excess of the limits specified under the provisions of the Companies
Act, 1956 by Rs. 119.25 lacs. The Company is taking necessary steps to
seek approval from the shareholders and Central Government for excess
remuneration paid.
8. In accordance with AS-17 "Segment Reporting", segment information
has been given in the consolidated financial statements of LT Foods
Limited, and therefore, no separate disclosure on segment information
is given in these financial statements.
9. Previous year figures
Previous year''s figures have been regrouped/reclassified wherever
necessary, to confirm to current year''s classification.
Mar 31, 2012
1. Corporate information
LT Foods Limited (the Company) is a public Company domiciled in India
and incorporated under the provisions of the Companies Act, 1956.LT
Foods Limited is primarily in the business of milling, processing and
marketing of branded & non-branded basmati rice and manufacturing of
rice food products in the domestic and overseas market. LT Foods
Limited operations include contract farming, procurement, storage,
processing, packaging and distribution. LT Foods Limited is also
engaged in research and development to add value to rice and rice food
products. LT Foods Limited rice product portfolio comprises brown rice,
white rice, steamed rice, parboiled rice, organic rice, quick cooking
rice, value added rice and flavored rice in the ready to cook segment.
a) There is no movement in the equity share capital during the current
and previous year.
b) Terms/rights attached to equity shares
The Company has only one class of equity shares having the par value of
Rs 10 per share. Each holder of equity share is entitled to one vote
per share. The Company declares and pays dividend in Indian Rupees.
During the year ended March 31, 2012 the amount of per share dividend
recognised as distributions to equity shareholders was nil (previous
year Rs 1 per share).
In the event of liquidation of the Company, the holder of equity shares
will be entitled to receive remaining assets of the Company, after
payment of all liabilities. The distribution will be in proportion to
the number of equity shares held by the shareholders.
c) Shares reserved for issue under options and contracts / commitments
for the sale of shares / disinvestments
The Company had reserved issuance of 6,48,329 ( Previous year Nil)
Equity shares of Rs 10 each for offering to eligible employees of the
Company and its subsidiaries under Employees Stock Option Plan (ESOP).
During the year, the Company had issued and allotted Nil (Previous year
Nil) equity shares to eligible employees of the Company and its
subsidiaries under ESOP. The option would vest over a maximum period of
4 years or such other period as may be decided by the Employees Stock
Compensation Committee from the date of grant based on specific
criteria.
d) Details of security for each type of borrowings:-
(I) Rupee term loan from all banks amounting to Rs 6,398.31 lacs are
secured against first pari passu charge on the existing project assets,
excluding assets charged specifically to the term lenders and Second
Pari Passu on current assets of the Company.
(II) Rupee term loan from Allahabad Bank amounting to Rs 2,722 lacs is
secured against first exclusive charge over the entire fixed assets
created under the Varpal, Amritsar project. Second charge on current
assets on reciprocal basis with ceding of second charge on the fixed
assets in favour of working capital loan bankers.
(III) Rupee term loan from Allahabad Bank amounting to Rs 2,526 lacs is
secured against first exclusive charge over the entire fixed assets of
the Silos project located at Amritsar. Second pari -passu charge over
fixed assets of Bahalgarh unit along with equitable mortgage over land
and building on pari passu basis to secure entire credit facilities
sanctioned by consortium.
(IV) Vehicle loans from all banks are secured against hypothecation of
respective motor vehicle financed.
e) Employee benefits
"The Company has taken a group gratuity for its employees with the Life
Insurance Corporation of India (LIC). Under this policy the eligible
employees are entitled to receive gratuity payments upon their
resignation or death in lumpsum after deduction of necessary taxes upto
a maximum limit of Rs 1,000,000.
The following table set out the status of the gratuity plan as required
under Accounting Standard (AS) - 15 - Employee benefits and the
reconciliation of opening and closing balances of the present value of
the defined benefit obligation."
Notes
(i) The gratuity expenses have been recognized under note 25
(ii) Provident fund contribution made by the company during the year is
Rs 40.82 lacs (Previous year Rs 33.28 lacs).
Cash credits/ working capital demand loans are secured by hypothecation
of stocks and book debts of the Company.
The cash credits/working capital demand loans is repayable on demand
and the interest on above term loans from banks are linked to the
respective banks base rates which are floating in nature. The interest
rate ranges from 11.50 % to 15.50 % on rupee working capital loan and
3.00% to 6.50% on foreign currency working capital loans.
The management has identified enterprises which have provided goods and
services to the Company and which qualify under the definition of micro
and small enterprises, as defined under Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006. Accordingly, the disclosure
in respect of the amounts payable to such enterprises as at March 31,
2012 has been made in the financial statements based on information
received and available with the Company. Further in the view of the
management, the impact of interest, if any, that may be payable in
accordance with the provisions of the MSMED Act, 2006 is not expected
to be material.
a) Provident fund
Contribution made by the Company during the year is Rs 40.82 lacs
(previous year Rs 33.28 lacs).
b) Share-based payment
The Company maintains an equity settled share-based payment scheme LT
foods employee stock option plan-2010, hereinafter referred to as ''the
Plan1) adopted and approved by share-holders on September 30, 2010.
Under the Plan the Board of Directors of the Company has the powers to
determine, from time to time, the persons eligible for grant of share
options; when and how each option shall be granted; what type or
combination of types of option shall be granted; the provisions of each
option granted, including the time or times when a person shall be
permitted to receive shares pursuant to an option grant. The Group has
no legal or constructive obligation to repurchase or settle the
options. In accordance with the Plan, upon vesting, the stock options
will be settled by issuance of new shares on payment of exercise price.
The total amount to be expensed over the vesting period is determined
by reference to the fair value of the options granted. The total
expense recognized in the income statement for the year ended March 31,
2012 is Rs 71.08 lacs (March 31, 2011: Nil).
The fair values of options granted were determined using Black Scholes
option pricing model that takes into account factors specific to the
share incentive plans along with other external inputs.
The following principal assumptions were used in the valuation:
Expected volatility was determined by assuming that the historical
volatility over a period similar to the life of the options is
indicative of future trends, which may also not necessarily be the
actual outcome. The expected option life, average expected period to
exercise, is assumed to be equal to the contractual maturity of the
option. Dividend yield is taken as nil as the Group has not paid any
dividend. The risk- free rate is the rate associated with a risk-free
security with the same maturity as the option. At each balance sheet
date, the Company reviews its estimates of the number of options that
are expected to vest. The Company recognizes the impact of the revision
to original estimates, if any, in the income statement, with a
corresponding adjustment to ''retained earnings'' in equity.
The inputs to the Black Scholes model for options that have been
granted during the reporting periods are summarised as follows:
2. Contingent liabilities
(Rs In lacs)
Nature of contingency March 31, March 31,
2012 2012
- Income-tax demands * 3,161.59 256.33
- Haryana rural development fund demand of
market committee, Sonepat 30.78 102.03
- Food Corporation India demand for
differential price /freight /taxes 339.00 339.00
- Liability against duty saved under EPCG
licenses Issued 3,815.92 1,092.29
- Guarantee given by Company to bank on
behalf of subsidiary/firm in which the 57,797.82 40,607.50
Company is a partner
- Guarantee given by Company on the behalf
of subsidiary for export obligation under 14.68 14.68
EPCG scheme
- Guarantee given by Company to other
company on behalf of subsidiary 511.57 446.50
- Guarantee given by Company for loan taken
by others from banks - 3,000.00
Total 65,671.36 45,858.33
*The demand of Rs 135.96 lacs are disputed and the matter is subjudice
with Commissioner of Income tax Appeals.
These are departmental appeals with Income tax appellate tribunal,
which has redirected the assessing officer to re-compute the deduction
under section 80IA and 80HHC in the case for AY 2002- 2003 and order of
the Income tax appellate tribunal is awaited in the case for AY
2006-2007.
LT Foods Limited on August 19, 2011 received a tax demand of Rs
2,863.83 lacs pursuant to the proceedings initiated by the income tax
department post the search and seizure procedures on February 10, 2009.
The Company has filed appeals against the above mentioned orders and no
further provisions have been made pending conclusion of the appeals.
The management believes that its position is likely to be upheld and no
financial liability will devolve on the Company on account of these
proceeding.
3. Capital commitments
Capital commitments remaining to be executed and not provided for, net
of capital advances - Rs 1.96 lacs (previous year: Rs 20.91 lacs).
4. Related party disclosures
In accordance with the requirements of Accounting Standard (AS)-18 on
"Related Party Disclosures", the names of related parties where control
exist and/or with whom transactions have taken place during the year
and description of relationships, as identified and certified by the
management, are:
(i) Names of related parties and description of relationship
- Subsidiary companies
Daawat Foods Limited
SDC Foods India Limited
Expo Services Private Limited
Nature Bio Foods Limited
LT International Limited
LT Overseas North America, Inc.
Kusha, Inc.
Sona Global Limited
Nice International FZE
Raghuvesh Foods & Infrastructure Limited
LT Foods USA LLC.
Raghuvesh Power Projects Limited
- Partnership firm
Raghunath Agro Industries
- Associate enterprises
LT Infotech Private Limited
Cordia LT Communications Private Limited (Subsidiary of LT Infotech
Private Limited)
5. In the opinion of the board of directors, the current assets, loans
and advances have a value on realization in the ordinary course of
business at least equal to the amounts at which they are stated and
provision for all known liabilities have been made in the Financial
Statements.
6. The Company is a lessee under an operating lease. Rental expense
for operating lease for the years ended March 31, 2012 and 2011 was Rs
453.01 lacs and Rs 376.46 lacs respectively. The Company has not
executed any non-cancelable operating leases.
7. The year end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise is as follows:
8. Transfer Pricing
As per the transfer pricing norms introduced in India with effect from
April 1, 2001, the Company is required to use certain specified methods
in computing arm''s length price of international transactions between
the associated enterprises and maintain prescribed information and
documents relating to such transactions. The appropriate method to be
adopted will depend on the nature of transactions/ class of
transactions, class of associated persons, functions performed and
other factors, which have been prescribed. The Company is in the
process of conducting a transfer pricing study for the current
financial period. However, in the opinion of the Management the same
would not have a material impact on these financial statements.
Accordingly, these financial statements do not include any adjustments
for the transfer pricing implications, if any.
9. The remuneration paid to Mr. Vijay Kumar Arora (Managing Director),
Mr. Ashwani Kumar Arora (Joint Managing Director) and Mr. Surinder
Kumar Arora (Joint Managing Director) was approved by the shareholders
of the Company. However, owing to the insufficient profits during the
year, not determinable on the date of such approval, the remuneration
paid during the year ended March 31, 2012 is in excess of the limits
specified under the provisions of the Companies Act, 1956 by Rs
119.25lacs. The Company is taking necessary steps to seek approval from
the shareholders and Central Government for excess remuneration paid.
10. In accordance with AS-17 "Segment Reporting", segment information
has been given in the consolidated financial statements of LT Foods
Limited, and therefore, no separate disclosure on segment information
is given in these financial statements.
11. Previous year figures
Till the year ended March 31, 2011 the Company was using pre-revised
schedule VI to the Companies Act 1956, for preparation and presentation
of its financial statements. During the year ended March 31, 2012 the
revised schedule VI notified under the Companies Act 1956, has become
applicable to the Company. The Company has reclassified previous year
figures to confirm to this year''s classification. The adoption of
revised schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
its significantly impacts presentation and disclosure made in the
financial statements, particularly presentation of balance sheet.
Mar 31, 2011
1. Contingent liabilities
(Rs. in Lacs)
Nature of contingency March 31,2011 March 31,2010
- Income-tax demands
Assessment Year 1999-2000** - 5.51
Assessment Year 2000- 2001 * 135.18 135.18
Assessment Year 2000 -2001 (Penalty) 81.10 81.10
Assessment Year 2002 -2003** 33.66 33.66
Assessment Year 2003 -2004 - 44.55
Assessment Year 2006 -2007 6.39 11.70
Assessment Year 2006 - 2007 (Penalty) - 0.95
- Sales tax demand-Ghaziabad - 41.91
- Haryana rural development fund demand
of market committee, Sonepat 71.25 91.75
- Food Corporation India demand for
differential price /freight /taxes 339.00 339.00
- Liability against duty saved under
EPCG licenses Issued 1,092.29 1,027.33
- Guarantee given by Company to bank
on behalf of subsidiary/firm
in which the Company isa partner 40,607.50 34,009.56
- Guarantee given by Company on the
behalf of subsidiary for export
obligation under EPCG scheme 14.68 14.68
- Guarantee given by Company to
other company on behalf of subsidiary 446.50 451.40
- Guarantee given by Company for loan
taken by others from banks 3,000.00 3,000.00
Total 47,149.08 40,423.53
* The demand is disputed and the matter is sub judice with Commissioner
of Income tax who has directed the Assessing officer to provide remand
report. The Company has deposited Rs.45.00 lacs against this disputed
demand.
** These are departmental appeals with Income tax appellate tribunal,
which has redirected the assessing officer to recompute the deduction
under section 80IA and 80HHC in the case for AY 2002-2003 and order of
the Income tax appellate tribunal is awaited in the case for AY
2006-2007.
2. Capital contracts
Capital commitments remaining to be executed and not provided for, net
of capital advances - Rs.20.91 lacs (previous year: Rs.1,321.93 lacs).
3. Employee benefits
The Company is providing the following benefits to their employees:
a) Contribution to gratuity fund
b) Leave encashment
c) Provident fund
The Company makes contribution to LT Overseas Limited gratuity fund
which is administered by its trustees. The trust further makes
contributions to Life Insurance Corporation of India which administers
its funds. Information regarding planned assets, has been obtained by
the Company from Life Insurance Corpo ration of India.
Leave encashment
During the year the Company changed its policy of accounting for leave
encashment liability from full cost basis to where the liability in
respect of compensated absences becoming due and expected to be availed
more than one year after the balance sheet date is estimated on the
basis of an actuarial valuation performed by an independent actuary
using the projected unit credit method as on March 31,2011. Had the
Company followed the erstwhile policy, personnel cost during the year
would have been Rs.1,456.27 lacs as against the reported figure of
Rs.1,444.16 lacs and the profit before tax for the year would have been
Rs.2,386.38 lacs as against the reported figure of Rs.2,3 98.49 lacs.
Gratuity
The Company changed the independent actuary in the Current year
accordingly the disclosure tables provided by the previous actuary are
not comparable and therefore not disclosed below. Owing to the change
in actuary, present value of obligation as at April 1, 2010 has changed
in from Rs.93.48 lacs to Rs.71.01 lacs, primarily for different
estimate and the difference has been included in actuarial gain losses.
4. Related party disclosures
In accordance with the requirements of Accounting Standard (AS)-18 on
"Related Party Disclosures", the names of related parties where control
exist and/or with whom transactions have taken place during the year
and description of relationships, as identified and certified by the
management, are:
(i) Names of related parties and description of relationship
Subsidiary companies
Daawat Foods Limited
SDC Foods India Limited (formally known as Staple Distribution Company
Limited)
Expo Services Private Limited
Vedic Spices Private Limited
Nature Bio Foods Limited
LT International Limited
LT Overseas North America, Inc.
Kusha,lnc.
SonaGlobal Limited
Nice International FZE
Raghuvesh Foods& Infrastructure Limited
LT Foods USA LLC. Partnership firm
Raghunath Agro Industries Associate enterprises
LTInfotech Private Limited
Cordia LT Communications Private Limited (Subsidiary of LTInfotech
Private Limited)
Enterprise owned or significantly influenced by group of individuals or
their relatives having control or significant influence over the
Company
Swami Freight Brokers
RS Rice &General Mills
Key Management Personnel
Name Designation
Vijay Kumar Arora Chairman and Managing Director
Surinder Kumar Arora Joint Managing Director
Ashwani Kumar Arora Joint Managing Director
Ashok Arora President-Punjab Operations
5. In the opinion of the board of directors, the current assets,
loans and advances have a value on realization in the ordinary course
of business at least equal to the amounts at which they are stated and
provision for all known liabilities have been made in the Financial
Statements.
6. The Company is a lessee under an operating lease. Rental expense
for operating lease for the years ended March 31,2011 and 2010 was
Rs.339.51 lacs and Rs. 282.10 lacs respectively. The Company has not
executed any non-cancelable operating leases.
7. With respect to the search proceedings under Section 132 of the
Income-tax Act, 1961 on the Company in connection with the search
proceedings conducted by the Income Tax Department (the ''Department'')
on the Company and its group companies/associates, no demand has been
raised by the Department yet. The Company continues to cooperate with
the Department and management is confident that no financial liability
will devolve on the Company on account of these proceedings. An audit
under Section 142(2A) of the Income-tax act, 1961 is being conducted on
the accounts of the Company, the audit is still in progressand no
report has been received for such audit.
8. In accordance with AS-17"Segment Reporting", segment information
has been given in the consolidated financial statements of LT Foods
Limited, and therefore, no separate disclosure on segment information
is given in these financial statements.
9. Previous year''s figures have been regrouped/reclassified wherever
necessary, to confirm to current year''s classification.
Mar 31, 2010
1. CONTINGENT LIABILITIES : (Rs. in Lacs)
2009-10 2008-09
(a) Claims against the Company not
acknowledged as debts which in the
opinion of the Management are not
tenable/under appeal at various
stages: (Figures as per demand notice
received by the Company exclusive
of interest thereafter)#
(i) Income-Tax Demands
Assessment Year 1999 - 00** 5.51 5.51
Assessment Year 2000 - 01 * 135.18 135.18
Assessment Year 2000 - 01 (Penalty) 81.10 81.10
Assessment Year 2002 - 03 ** 33.66 33.66
Assessment Year 2002 - 03 (Penalty) NIL 4.39
Assessment Year 2003 - 04 44.55 44.55
Assessment Year 2003 - 04 (Penalty) NIL 4.05
Assessment Year 2004 - 05 (Penalty) NIL 5.27
Assessment Year 2005 - 06 (Penalty) NIL 8.17
Assessment Year 2006 - 07 11.70 11.70
Assessment Year 2006 - 07 (Penalty) 0.95 NIL
(ii) Sales Tax Demand - Ghaziabad 41.91 41.91
(iii) HRDF Demand of Market Committee,
Sonepat 91.75 166.75
(iv) FCI Demand for Differential Price /
Freight / Taxes 339.00 339.00
(v) Labour Related Claims 9.62 9.62
(vi) Trademark Related Claims NIL 20.00
(b) Guarantees given by Banks on behalf of
the Company 123.92 93.26
(c) Letter of credits opened with bankers
and remaining outstanding
1011.33 108.53
(d) Liability against Duty Saved under
EPCG Licenses Issued 1027.33 1008.42
(e) Guarantee given by Company to Bank on
behalf of Subsidiary/ Firm in
which the Company is a Partner 34009.56 23025.50
(f) Guarantee given by Company to
subsidiary for export obligation under
EPCG scheme 14.68 14.67
(g) Guarantee given by Company to other
Company on behalf of Subsidiary 451.40 509.50
Notes:
- The demand is disputed and the matter is subjudice with CIT who has
directed the AO to provide Remand Report. The Company has deposited Rs.
45.00 Lacs against this disputed demand.
- These are departmental appeals with ITAT and ITAT has redirected the
AO to recomputed the deduction under section 80IA and 8OHHC.
- Future cash outflows in respect of (a) above can be determined only
on receipt of Judgment/ Decisions pending with various Forums/
Authorities.
2. Some of the receivables, loans & advances and payables are subject
to confirmation from the parties.
3. Travelling Expenses include foreign travelling expenses of
Rs.104.14 Lacs (Previous Year - Rs. 106.46 Lacs).
4. As required by Accounting Standard 28 ÂImpairment of Assets issued
by the Institute of Chartered Accountants of India, the company has
carried out the assessment of impairment of assets. There has been no
impairment loss during the year.
5. List of Small Scale Industrial Undertakings to whom payment is
outstanding for more than 30 days as on 31st March, 2010 to the extent
available to the Company is as under:
Adishri Marketing & Packaging Co, Ashmit Packaging Co, Avon Containners
Pvt Limited, Bag Poly International Pvt. Ltd., Bharat Hosiery Factory,
Box & Carton India Pvt. Ltd, Daawat Foods Pvt. Ltd., Bhopal, G.R.M.
Plastic, Golden Rolls Pvt.Ltd, Indo Pack Industries, Jhaveri Flexo
India Ltd., JBL Saks Pvt. Ltd., Jets Inks Private Limited, Kris
Flexipacks Pvt. Ltd., Leotronic Scales Pvt. Ltd, Montage Enterprises
Pvt. Ltd., Mheshwari Printpack, Nanak Chand Bhagwan Dass Jain, New
Sales Corporation, Neel Kanth Packaging Industries, Nichrome India
Limited, Nirmal Packaging Systems, Orient Press Limited, Packaging
India Pvt. Ltd, Pearl Polymers Limited, Rajesh Die Cutting Works,
Rajeev Enterprises, Reed Midway Packaging Company of, Sanmati Printo
Graphics, Shri Radhey Enterprises, Shree Ram Corg Pack, S R S Engg.
Co., S.R Agro Engineering, The Paper Products Ltd., Unique Corrugated
Containers, Visitech Engineers Pvt. Ltd.
6. Related Party Disclosure
A. Related Parties and their Relationship
I. Subsidiary Companies
Sona Global Ltd., Dubai,UAE
L T Overseas North America Inc., California,USA
Daawat Foods Ltd.
L T International Ltd.
Nature Bio Foods Ltd.
Staple Distribution Company Ltd.
II. Fellow Subsidiaries
Nice International FZE, Dubai, UAE
Kusha Corporation, California, USA
III. Enterprises controlled by Company
Raghunath Agro Industries, Bhikiwind, Amritsar (PUNJAB)
IV. Associate Enterprises
LT Infotech (Pvt.) Ltd.
Cordia LT Communications Pvt. Ltd.
V. Key Management Personnel
Mr. Vijay Kumar Arora (Chairman & Managing Director)
Mr. Surinder Arora (Joint Managing Director)
Mr. Ashwani Arora (Joint Managing Director)
Mr. Ashok Arora (President - Punjab Operations)
7. Information pursuant to provisions of paragraph 3 &4 of part II of
Schedule VI of the Complantes Act, 1956.
I CAPACITY-PADDYMILLING (INSTALLED)
OWNED 33.0 MTPERHOUR
(33.0 MTPERHOUR)
5.00 MTPERHOUR
(4.5 MTPERHOUR)
The installed capacity given above is based on the information provided
by the management. This being the relied upon.
8. Derivative Financial Instruments
The Company, in accordance with its risk / interest management policies
and procedures, enters into foreign currency forward contracts and
currency option contracts to manage its exposure in foreign exchange
rates and interest costs. The counter party is generally a bank. These
contracts are generally for a period between one day and eight years.
The Company has following outstanding derivative instruments as on
March 31, 2010.
9. As per the exit rights agreement between company, Daawat Foods
Limited, India Agri- business Fund Limited and Real Trust (the last two
parties termed as investors in the agreement), contingent upon trigger
events, investors shall have the right but not the obligation to
require the company to acquire all( but not less than all) of the
subscription shares held by investors at the put option price on spot
delivery basis. For the purpose of the agreement put option price shall
mean an amount which gives investors an IRR of fifteen percent per
annum on the investment or the fairmarket value whicheveris higher.
Investors are holding 56,55,341 equity share of rupees ten each, fully
paid up of Daawat foods Limited at an investment price of rupees
23,30,00,050/-. Company proposes to account for this liability on
occurrence of triggering events.
10. Previous year figures have been regrouped, recast and rearranged
wherever necessary.
20. Figures are rounded off nearest to the Rupees in lacs.
Mar 31, 2009
1. CONTINGENT LIABILITIES:
(Amount in Lacs)
(a) Claims against the Company not
acknowledged as debts which
in the opinion of the Management
are not tenable/under appeal at
various stages: (Figures as per
demand notice or other relevant
document received by the Company
exclusive of interest thereafter)#
(i) Income-Tax Demands*** 2008-09 2007-08
Assessment Year 1999-00** 5.51 NIL
Assessment Year 2000 - 01 * 135.18 135.18
Assessment Year 2000 - 01 {Penalty} 81.10 NIL
Assessment Year 2002 - 03 33.66 33.66
Assessment Year 2002-03 (Penalty) 4.39 25.00
Assessment Year 2003 - 04 44.55 44.55
Assessment Year 2003 - 04 (Penalty) 4.05 4.05
Assessment Year 2004 - 05 (Penalty) 5.27 5.27
Assessment Year 2005 - 06 (Penalty) 8.17 NIL
Assessment Year 2006 - 07 11.70 NIL
(ii) Sales Tax Demand - Ghaziabad 41.91 32.39
(iii) Sales Tax Demand -
Sunrise Traders, Bilaspur NIL 72.07
(iv) HRDF Demand of Market Committee, Sonepat 166.75 166.75
(v) Recovery Proceedings by
Standard Chartered Bank NIL 99.32
(vi) DGFT Demand against EPCG License Commitment NIL 11.50
(vii)FCI Demand for Differential
Price / Freight / Taxes 339.00 339.00
(viii) Labour Related Claims 9.62 8.59
(ix) Consumer Related Claims NIL 2.00
(x) Trademark Related Claims 20.00 20.00
(b) Guarantees given by Banks on behalf
of the company 93.26 122.48
(c Letter of credits opened with bankers
and remaining outstanding 108.53 2400.83
(d) Liability against Duty Saved under
EPCG Licenses Issued 1008.42 712.75
(e) Guarantee given by Company to
Bank on behalf of
Subsidiary/Enterprises
controlled by the Company 23025.50 12841.00
(f) Guarantee given by Company to
subsidiary for export obligation 14.67 NIL
under EPCG scheme
(g) Guarantee given by Company to
other company on behalf of 509.50 NIL
Subsidiary
Notes:
* The demand is disputed and the matter is subjudice with ITAT. The
company has deposited Rs. 45.00 Lacs against this disputed demand.
** These are departmental appeals with ITAT and original demands stand
vacated.
*** search/survey proceedings under section 132/133A of the Income tax
Act were conducted on the group on 11.2.2009 and the proceedings of the
same are still in progress. In pursuance of these, the income for the
six assessment years preceding the previous year of search shall be
assessed and re-assessed. Further, following the search, assessment or
reassessment proceedings relating to these six assessment years pending
on the date of search shall abate. # Future cash outflows in respect
of (a) above can be determined only on receipt of Judgment/Decisions
pending with various Forums/ Authorities.
2. The Company has been advised that the computation of net profit for
the Directors remuneration under section 349 of the Companies Act,
1956 need not be set out since no commission has been paid to the
Directors. Fixed monthly remuneration has been paid to the Managing
Director and to the Directors as per terms of their appointment.
3. Some of the receivables, loans and advances and payables are
subject to confirmation.
4. A sum of NIL (Previous Year:-Rupees 7.92 Lacs) has been shown as
due from Project Equipment Corporation of India Ltd. under the head
"Loans and Advances". The company had filed a case against the PEC Ltd,
for the recovery of the same, before the Monopolistic & Restrictive
Trade Practice Commission (MRPTC). The MRPTC has passed an order on
13.05.2003 and directed to PEC Ltd. to repay the said money to the
company. PEC Ltd. has filed an appeal against the said order before
Honorable Supreme Court. As the probability of recovery seems to be
remote, the company has written off the amount recoverable from Project
Equipment Corporation of India Ltd.
5. A sum of Rupees. 241.58 Lacs (Previous Year - Rupees 241.58 Lacs)
is recoverable from Food Corporation of India, Punjab for guarantees
invoked by it. The company has represented the matter with Government
and Food Corporation of India and pending that a provision for damages
to the extent of fifty percent of the amount has been provided for in
the profit and loss account. Accordingly an amount of Rs. 120.79 Lacs
has been shown as recoverable under the head "Loans and Advances".
6. Travelling Expenses include foreign travelling expenses of Rs.
106.46 Lacs (Previous Year - Rs. 136.99 Lacs).
7. As required by Accounting Standard 28 "Impairment of Assets" issued
by the Institute of Chartered Accountants of India, the company has
carried out the assessment of impairment of assets. There has been no
impairment loss during the year.
8. List of Small Scale Industrial Undertakings to whom payment is
outstanding for more than 30 days as on 31st March, 2009 to the extent
available to the Company, is as under:
Aggarwal Trading Company Delhi, Adishri Marketing & Packaging Co,
Aditya Packers, Avon Containners Pvt Limited, Bag Poly International
Pvt .Ltd., Bharat Hosiery Factory, Bishan Saroop Ramkishan Agro P Ltd
Delhi, Box & Carton India Pvt.Ltd, Classic Jute Company, D & A
Packaging, Deepak Packaging Industries, Golden Rolls Pvt.Ltd, Govind
Packes (P) Ltd, Hassia Packaging Pvt Ltd, HBD Packaging Pvt Ltd,
Industrial Sale Promoters, JBS Saks Pvt Ltd, Jhaveri Flexo India Ltd.
Krishna Packaging, Leotronic Scales Pvt. Ltd, Luxmi Rice Mills,
Maheshwari Printpack, Millenium Packaging Solutions, Multi Flex Lami
Print Ltd, Neel Kanth Packaging Industries, Nichrome India Limited,
Nirmal Packaging Systems, Packaging India Pvt.Ltd, Rajeev Enterprises,
Rajeev Sales Corp, Reed Medway Packaging Company of India, Rexor India
Ltd. RKG Polymers Pvt. Ltd, Sharp Industries Ltd, Shri Radhey
Enterprises, SSA International Limited, Surya Packaging Industry,
Ultimate Flexipack Limited, Unique Packaging, United Traders and Zenith
Containers.
Daawat Foods Ltd.
LT International Ltd.
Nature Bio Foods Ltd.
Staple Distribution Company Ltd.
II. Fellow Subsidiaries
Nice International FZE, Dubai, UAE Kusha Corporation, California, USA
III. Associate Enterprises
LTInfotech(Pvt.) Ltd.
Cordia LT Communications Pvt. Ltd.
IV. Enterprises controlled by Company
Raghunath Agro Industries, Bhikiwind, Amritsar (PUNJAB)
V. Key Management Personnel
Mr. Vijay Kumar Arora (Chairman & Managing Director) Mr. Surinder Arora
(Joint Managing Director) Mr. Ashwani Arora (Joint Managing Director)
Mr. Ashok Arora (President - Punjab Operations)
*The Assets used for earning revenue from geographical locations above
are not maintained separately as the same is impractical and not
feasible.
9. Derivative Financial Instruments
The company, in accordance with its risk / interest management policies
and procedures, enters into foreign currency forward contracts and
currency option contracts to manage its exposure in foreign exchange
rates and interest costs. The counter party is generally a bank. These
contracts are generally for a period between one day and eight years.
The Company has following outstanding derivative instruments as on
March 31, 2009.
10. Previous year figures have been regrouped, recast and rearranged
wherever necessary.
11. Figures are rounded off nearest to the Rupee except as stated
otherwise.
Mar 31, 2008
1. Contingent Liabilities: (Amount in Lacs)
2007-08 2006-07
(a) Claims against the Company not
acknowledged as debts which in
the opinion of the Management are
not tenable/under appeal at vari-
ous stages: (Figures as per demand
notice received by the Company
exclusive of interest thereafter)
(i) Income-Tax Demands
Assessment Year 1998 - 99 NIL 68.76
Assessment Year 2000 - 01 135.18 91.30
Assessment Year 2001 - 02 (Penalty) NIL 46.57
Assessment Year 2002 - 03 33.66 NIL
Assessment Year 2002 - 03 (Penalty) 25.00 NIL
Assessment Year 2003 - 04 44.55 41.64
Assessment Year 2003 - 04 (Penalty) 4.05 NIL
Assessment Year 2004 - 05 NIL 24.55
Assessment Year 2004 - 05 (Penalty) 5.27 NIL
(ii) Sales Tax Demand - Gaziabad 32.39 32.39
(iii)Sales Tax Demand - Sunrise
Traders, Bilaspur 72.07 NIL
(iv)HRDF Demand of Market Committee,
Sonepat 166.75 166.75
(v)Recovery Proceedings by Standard
Chartered Bank 99.32 99.32
(vi)DGFT Demand against EPCG
License Commitment 11.50 11.50
(vii)FCI Demand for Differential Price /
Freight / Taxes 339.00 339.00
(viii)Labour Related Claims 8.59 8.59
(ix) Consumer Related Claims 2.00 NIL
(x) Trademark Related Claims 20.00 NIL
(b) Guarantees given by Banks on
behalf of the company 122.48 53.82
(c) Letter of credits opened with
bankers and remaining outstanding 2400.83 NIL
(d) Liability against Duty Saved
under EPCG Licenses Issued 712.75 712.75
(e) Guarantee given by Company to
Bank on behalf of Subsidiary 12841.00 NIL
Notes:
The demand is disputed and the matter is subjudice with ITAT. The
company has deposited Rs. 45.00 Lacs against this disputed demand.
Departmental Appeals have been dismissed by the ITAT
These are departmental appeals with ITAT and original demands stand
vacated
Future cash outflows in respect of (a) above can be determined only on
receipt of Judgment/ Decisions pending with various Forums /
Authorities.
2. Some of the Sundry debtors and creditors are subject to
confirmation from the parties.
3. A sum of Rs. 792,000 (Previous year: Rs. 792,000) has been shown as
due from Project Equipment Corporation of India Ltd. under the head
"Loans and Advances". The company had filed a case against the PEC Ltd,
for the recovery of the same, before the Monopolistic & Restrictive
Trade Practice Commission (MRPTC). The MRPTC has passed an order on
13.05.2003 and directed to PEC Ltd. to repay the said money to the
company. PEC Ltd. has filed an appeal against the said order before
HonÂble Supreme Court.
4. A Sum of Rs. 24,157,500 (Previous year: Rs. 24,157,500) have been
shown as recoverable from Food Corporation of India, Punjab under the
head "Loans and Advances" for Guarantees invoked by it. The company is
representing the matter with Government and Food Corporation of India
and pending that a provision for damages to the extent of fifty percent
of the amount has been provided for as liability.
5. Traveling Expenses include foreign traveling expenses of Rs.
13,699,308 (Previous year : Rs. 4,740,647).
6. As required by Accounting Standard 28 "Impairment of Assets" issued
by the Institute of Chartered Accountants of India, the company has
carried out the assessment of impairment of assets. There has been no
impairment loss during the year.
7. List of Small Scale Industrial Undertakings to whom payment is
outstanding for more than 30 days as on 31st March, 2008 to the extent
available to the Company, is as under:
Adishri Marketting & Packaging Co., Image India (P) Ltd., Box & Carton
(India) P. Ltd., Jhaveri Flexo India Ltd., Golden Rolls (P) Ltd.,
Leotronic Scales (P) Ltd., Motors Industries Co. Ltd., Techno Weigh
Systems (P) Ltd., SRV Pring Pack Pvt. Ltd., Bharat Hoisery Factory,
Brown Multi Wall Paper Bags Ltd., Brajesh Packaging Pvt. Ltd., Jet Tech
Pvt. Ltd., Millenium Packaging Solutions, Neel Kanth Packaging
Industries, Nirmal Packaging Systems, Packaging India Pvt. Ltd., Rexor
India Ltd., Shri Radhey Enterprises, Nichrome India Ltd., Reed Medway
Packaging Co., Sarvpriya Indus- tries Ltd., Visitech Engg. Pvt. Ltd.,
Warner Industries, Deepak Packaging Industries, Concept International,
Govind Packages Pvt. Ltd., HBD Packaging Pvt. Ltd., Jai Jawala
Processors, Satyam Enterprises, Multiflex Lami Print Limited, Pearl
Polymers Ltd., Rajeev Enterprises, Rajeev Sales Corporation, AND Vim
Pack Industries
8. Related Party Disclosure
A. Related Parties and their Relationship
I. Subsidiary Companies
Sona Global Ltd., Dubai
LTO North America Inc., California
Daawat Foods Pvt. Ltd.
L T International Ltd.
Nature Bio Foods Ltd.
L T Infotech Pvt. Ltd.
Staple Distribution Company Ltd.
II. Fellow Subsidiaries
Nice International FZE, Dubai
Kusha Corporation, California
III. Enterprises controlled by Company
Raghunath Agro Industries
IV. Joint Ventures
Cordia L T Communications Pvt. Ltd.
V. Key Management Personnel
Mr. Vijay Kumar Arora (Chairman & Managing Director)
Mr. Surinder Arora (Joint Managing Director)
Mr. Ashwani Arora (Joint Managing Director)
Mr. Ashok Arora (President  Punjab Operations)
Mr. Abhinav Arora (Sr. Manager  Value Added Products)
9. Previous year figures have been regrouped, recast and rearranged
wherever necessary.
10. Figures are rounded off nearest to the Rupee.
Mar 31, 2007
1. Contingent Liabilities:
(a) Claims against the Company not acknowledged as debts which in the
opinion of the Management are not tenable/under appeal at various
stages: (Figures as per demand notice received by the Company )#
(i) Income-tax claims
Assessment Year 1998 - 99
Assessment Year 2000 - 01*
Assessment Year 2001 - 02
Assessment Year 2003 - 04*
Assessment Year 2004 - 05
(ii) HRDF demand of Market Committee, Sonepat
(iii) Sales Tax
(iv) Recovery proceeding by Standard Chartered Bank
(v) DGFT demand against EPCG License commitment
(vi) Suit filed by a firm for Damages for breach of contract and
interest for supply of Goods
(vii) Labour Related claims
(b) Letter of Credits opened with bankers and remaining outstanding **
(c) Guarantees given by Banks on behalf of the company**
(d) Liability against Duty Saved under EPCG Licences Issued
(Amount in Lacs)
2006-07 2005-06
6876 NIL
91.30 135.19
46.57 46.57
41.64 131.93
24.55 NIL
166 75 166.75
32.39 32.39
99.32 99.32
11.50 11.50
NIL 38.98
8.59 NIL
NIL NIL
53.82 262.87
712.75 659.40
Notes: * These are departmental appeals and original demands stands
vacated.
** Previous year figures have been recasted in view of Guidance Note 2
issued by Institute of Chartered Accountants of India.
# Future cash outflows in respect of (a) above are determinable only on
receipt of Judgment/ Decisions pending with various forums/
authorities.
2. The Company has been advised that the computation of net profit for
the Directors remuneration under section 349 of the Companies Act,
1956 need not be set out since no commission has been paid to the
Directors. Fixed monthly remuneration has been paid to the Managing
Director and to the Directors as per term of their appointment.
3. The Company started a gold life program, in earlier years, to give
incentives to retailers based on targets achieved to promote its brands
and resultant sales thereof. The Company has accounted for expenditure
incurred on the scheme as and when the claims lodged by the retailers
have been lodged and accepted.
4. Some of the Sundry debtors and creditors are subject to
confirmation from the parties.
5. The company was running a foreign branch under the name and style
of Sona Trading Limited in New Jersey (USA) the operation of which has
been discontinued. The figures pertaining to Foreign Branch Office,
which have been clubbed with the figures of Indian operation.
6. Sum of Rs. 792,000 (Previous year: Rs. 792,000) have been shown as
due from Project Equipment Corporation of India Ltd. under the head
"Loans and Advances". The company had filled a ease against the PEC
Ltd, for the recovery of the same, before the Monopolistic &
Restrictive Trade Practice Commission (MRPTC). The MRPTC has passed an
order on 13.05.2003 and directed to PEC Ltd. to repay the said money to
the company PEC Ltd. has filed an appeal against the said order before
Honble Supreme Court.
7. A Sum of Rs. 24,157,500 (Previous year: Rs. Nil) have been shown as
recoverable from Food Corporation of India, Punjab under the head
"Loans and Advances" for Guarantees invoked by it. The company is
representing the matter with Government and Food Corporation of India
and pending that a provision for damages to the extent of fifty percent
of the amount has been provided for as liability.
8. The company during the year effective 1st July 2006 has effected a
change in the method of accounting of expenditure incurred on brand
promotion, advertisement etc. The expenditures incurred during the
period after that have been expensed in the profit and loss account, as
against previous method of deferring these and amortizing in the next
five years. The expenditure deferred till 30th June 2006 has been and
shall be amortized as per the earlier method. The change in method has
resulted into understatement of profit of the year by a sum of Rs.
45,134,701 and corresponding amount of overstatement of surplus in the
reserve and surplus and understatement of miscellaneous expenditure.
During the year, Rs. 6,263,127 (Previous year: Rs. 22,241,827) incurred
towards the brand promotion, advertisement and market development has
been shown as Deferred Revenue Expenses under the head Miscellaneous
Expenditure as benefit are expected of the same are likely to extend
beyond that period and shall be amortized equally in next five years
and the head-wise details of which are as under:-
2006-07 2005-06
a. Legal & Professional Expenses 754,313 330,660
b. Advertisement / Market Development 2,809,760 21,911,167
c. Sales Promotion Expenses 461,900 NIL
d. Tour & Travelling 2,237,154 NIL
9. Travelling Expenses include foreign travelling expenses of Rs.
4,740,647 (Previous year: Rs. 4,915,887).
10. The Other Current Assets include Input Tax Receivable amounting to
Rs. 23,416,116 (Previous Year: Rs. 20,327,972.00) under the State VAT
Acts, which is subject to the final assessment by the Departments.
11. The company paid an advance of Rs. 50,000,020 to Bennett and
Coleman & co. limited, under an agreement dated 5th July 2006 , towards
advance for spending on buying media space in three years ending July
2008, failing which the advance shall lapse. The company has spent a
sum of Rs.7,432,599.till the year ending March 2007 and balance amount
of Rs 42,567,401 is shown in loans and advances.
12. As required by Accounting Standard 28 "Impairment of Assets" issued
by the Institute of Chartered Accountants of India (ICAI), the company
has carried out the assessment of impairment of assets. There has been
no impairment loss during the year.
13. List of small Scale Industrial Undertakings to whom payment is
outstanding for more than 30 days as on 31st March, 2007 to the extent
available to the Company, is as under:
Pepsi Foods (P) Ltd., Bharat Hari Printers, Adishri Marketting &
Packaging Co., Image India (P) Ltd., Vardhman Precision Profiles, Box &
Carton (India) P. Ltd., Jhaveri Flexo India Ltd., Golden Rolls (P)
Ltd., Leotronic Scales (P) Ltd., Motors Industries Co. Ltd., Milltec
Machinery (P) Ltd., Techno Weigh Systems (P) Ltd., SRV Pring Pack Pvt.
Ltd., Bharat Hoisery Factory, Bally Jute Company Ltd., Brown Multi Wall
Paper Bags Ltd., Brajesh Packaging Pvt. Ltd., ag Poly International
Pvt. Ltd., Century Packagings, JPM Polypack, JPS Plastics Pvt. Ltd.,
Jet Tech Pvt. Ltd., Montage Enterprises Pvt. Ltd., Millenium Packaging
Solutions, Neel Kanth Packaging Industries, Nirmal Packaging Systems,
Packaging India Pvt. Ltd., The Paper Products Ltd., Rexor India Ltd.,
Rollatainers Limited, Rijul Plasto craft, Sunrise Industries, Samarth
Packaging Industries, Shaktiman Packaging Pvt. Ltd., Shri Radhey
Enterprises, Unitized Packaging, Anama Energies Pvt. Ltd., Aroma Paints
Ltd., DKS Dessiccants Pvt. Ltd., Eurocoustic Products Ltd., Everest
Transmission, FEC Engg. Projects Pvt. Ltd., Fric India Ltd., Guru Nanak
Engg. Works, Hitachi Home & Life Solutions, ISS Controls, International
Combustion India Ltd., ION Exchange Services Ltd., Ions Hydro Pvt.
Ltd., IPS Automation Products Pvt. Ltd., Kilburn Engg. Ltd., Kelson
Steel Products (P) Ltd., Nichrome India Ltd., Packmech engineers,
Process Engg. Co., Reed Medway Packaging Co., RAI Prexim India Pvt.
Ltd., RT Packaging Limited, Sarvpriya Industries Ltd., S R Engg. Co.,
Visitech Engg. Pvt. Ltd., Warner Industries, Deepak Packaging
Industries
14. Deferred Tax Liability :-
The company has provided the Deferred tax liability as perAS-22 issued
by ICAI, the details of which are as under: -
Accumulated Deferred Tax Liability on account of Timing Difference :
Rs. 31,952,593
- Current Deferred Tax Liability on account of Timing Difference : Rs.
4,168,780
Total : Rs. 36,121,373
Mar 31, 2006
1) The Authorised Share Capital was increased from 15,000,000 to
25,000,000 equity shares of Rs. 107- each pursuant to a shareholders'
resolution passed at the Extra Ordinary General Meeting on 10th Feb.,
2006.
2) During the year, the Company issued 340,000 Equity Shares of Rs.10/-
each fully paid-up at a premium of Rs. 10/- per share under ESOP
Scheme.
3) A sum of Rs. 3,766,009 (Pr. Year 2,409,951/-) is secured by
Hypothecation of Vehicles.
4) A Sum of Rs. 14,037,660 (Pr. Year Nil) is secured by Properties
under Development for office Block.
5) The Balance of Rs. 225,278,974 (Pr. Year 120,024,799) is secured by
Equitable Mortgage/Hypothecation charges on fixed assets of the
Company.
6) Secured by Hypothecation of stock of Raw Material, Stock-in-Process,
Finished goods, stock & spares and Receivables.
7) Secured by mortgage & Hypothecation of fixed assets of the company
8) Secured Working Capital Loans & Term Loans other than Vehicles Loans
are also personally guaranteed by Directors
9) REPAYMENTS
The term loans repayable within one year Rs. 557.63 lacs (previous year
Rs.364.17 lacs).
10. FOB value of exports made during the period is Rs. 1,70,75,98,855
(Previous year Rs. 2,115,043,763)
11. Some of the Sundry debtors and creditors are subject to
confirmation from the parties.
12. The company was running a foreign branch under the name and style
of Sona Trading Limited in New Jersey (USA) the operation of which has
been discontinued. The figures pertaining to Foreign Branch Office,
which have been clubbed with the figures of Indian operation. The
operating results of the Foreign Branch Office.
13. Sum of Rs. 7,92,000.00 (Previous year Rs. 7,92,000.00) have been
shown as due from Project Equipment Corporation of India Ltd. under the
head "Loan and Advances". The company had filled a case against the PEC
Ltd, for the recovery of the same, before the Monopolistic &
Restrictive Trade Practice Commission (MRPTC). The MRPTC has passed an
order on 13.05.2003 and directed to PEC Ltd. to repay the said money to
the company and further PEC Ltd. has filed an appeal against the said
order before Hon'ble Supreme Court.
14. During the year, a sum of Rs. 2,22,41,827/- (previous year
1,9,923,542/-) incurred towards the brand promotion, advertisement and
market development has been capitalized as Deferred Revenue Expenses
under the head Miscellaneous expenditure as benefit are expected of the
same are likely to extend beyond that period and shall be amortized
equally in next five years and the head-wise.
15. Provision of Bonus has been made as per the decision of the
Management and the computation of liability as per the Payment of Bonus
Act, 1965 is not ascertained.
16. Traveling Expenses include foreign traveling expenses of
Rs.49,15,887/-(Pr.year Rs. 6,517,360).
17. The provision for Income-tax for the current period
Rs.1,00,000,00/- (previous year Rs. 12,500,000) has been made on
estimated basis. The provision for Fringe Benefit Tax for the current
period Rs.20,000,00/- has also been made on estimated basis.
18. The other current assets include Input Tax Receivable amounting to
Rs. 20327972/- (Pr. Year Rs. 21,165,215) under the State VAT Acts,
which is subject to the final assessment by the Deptt.
19. There has been change in section 80HHC &28 (IV D) of the Income Tax
Act with retrospective effect from Ass. Year 1998. Based on this,
assessment of the company for the year 2000-2001, 2003-04 have been
made raising a demand of Rs. 135.19 Lacs and Rs. 131.93 Lacs
respectively. Though these assessments are under appeal, the
possibility of such assessments being framed for other years is not
ruled out. However the same have not been quantified & disclosed in
the absence of any assessment proceedings as on date.
20. The company has been taken as partner in Raghunath Agro Industries
acquiring share of outgoing partners namely Meena Rani & Dilbag Rai.
The Sum of Rs. 145.00 Lacs has been paid to outgoing partners as
goodwill. The partnership firm is profit-making concern established
since year 1993 and the amount of goodwill is as mutually agreed among
the partners. The goodwill shall be amortized as per accounting policy.
21. The company has allotted 72,34,450 equity shares of Rs. 10/- each
fully paid-up at par in proportion of 1:1 to its existing shareholders
by way of Bonus Share out of its reserves & surplus after the balance
sheet date i.e. on 01.04.2006.
22. As required by Accounting Standard (AS 28) "Impairment of Assets"
issued by the Institute of Chartered Accountants of India, the company
has carried out the assessment of impairment of assets. There has been
no impairment loss during the year.
23. During the current period, the company has sold out one of its
milling unit situated at Kakroi Road, Sonepat, Haryana, for a total
sale consideration of Rs. 39,700,000/-, which has resulted the decrease
of installed capacity of the company by 6 M.T. per hour. The loss of
Rs.69,72,022 arising on sale of unit has been charged to profit and
loss account.
24. List of small Scale Industrial Undertakings to whom payment is
outstanding for more than 30 days as on 31st march 2006, to the extent
available to the Company, is as under:
Pepsi Foods (P) Ltd., Bharat Hari Printers, Boxman, Saaj Overseas (P)
Ltd., Samarth Packaging Industries, Adishri Marketting & Packaging Co.,
Image India (P) Ltd., Navin Engineering Company, Reed Medway Packaging
Company, S.K. Systems (P) Ltd., Vardhman Precision Profiles.