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Notes to Accounts of Nitta Gelatin India Ltd.

Mar 31, 2018

1. GENERAL INFORMATION:

Nitta Gelatin India Limited (‘the Company''/‘NGIL''), a public limited company, operates in the business of manufacture and sale of ossein, gelatin, collagen peptide. The Company''s shares are listed for trading on BSE Limited in India.

a. Deemed carrying cost

For property, plant and equipment existing as on the date of transition to Ind AS, i.e., 1 April 2016, the Company has used previous GAAP carrying value as deemed costs.

b. Contractual obligations Refer Note 3.32

c. Capitalised borrowing cost

There is no borrowing costs capitalised during the year ended 31 March 2018 (31 March 2017: Nil).

d. Property, plant and equipment pledged as security Refer note 3.28

Note: a. Deemed carrying cost

For intangible assets existing as on the date of transition to Ind AS, i.e., 1 April 2016, the Company has used previous GAAP carrying value as deemed costs.

b. Contractual obligations

There are no contractual commitments for the acquisition of intangible assets

(a) 6 % Optionally Convertible Non-Cumulative Preference Shares (OCPS) of Rs. 10 each, fully paid up of Reva Proteins Limited, the option for conversion into equity shares is to be exercised within six years from the date of allotment (23 March 2016). The outstanding OCPS which are not converted will get redeemed in two equal tranches at the end of the 7th and 8th year commencing from such date of allotment of OCPS.

(a) The Board of Directors have appproved a scheme of merger of its subsidiary company - Reva Proteins Limited with the Company, in their meeting held on 3rd February 2018 in view of the operational synergies emerging out of the said restructuring. The scheme provides for inssuance of 4,444,444 numbers of Redeemable Preference shares of Rs.10/- each to Nitta Gelatin Inc., as consideration for their equity holding of 4,800,000 shares in Reva Proteins Limited. The merger is proposed to be undertaken through a Scheme of amalgamation under Section 230-232 of the Companies Act, 2013 to be filed with the National Company Law Tribunal with the appointed date 1st April 2017 or as may be directed by the National Company Law Tribunal and is subject to approval by the shareholders, lenders, creditors and other regulatory approvals in this regard. The Company has filed an application before the Bombay Stock Exchange and is awaiting approval from them for the said merger.

Further, the operations of the subsidiary have been consistent with the projections of the management and in view of the above and the cash flows that will be generated in the near future, no provision has been considered necessary for the remaining value of non-current equity investments amounting to '' 131,845,715 and advance amounting to Rs.78,917,577 due from the said subidiary.

- Balance with banks in Deposit accounts include deposits held as security against Letter of Credits/ Guarantee.

-- Not due for deposit in the investor education and protection fund

Export incentives receivable includes:

(a) Claims amounting to Rs.20,818,015 (31 March 2017: Rs.20,818,015) under Duty Entitlement Pass Book (DEPB) Scheme recognised as income in earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods amounting to Rs.4,151,031 (31 March 2017: Rs.4,151,031) The Dy. Director General of Foreign Trade vide letter dt 03 October 2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The Company has been legally advised that it is entitled to both benefits as per the relevant regulations, based on which representations have been filed before higher authorities. During the year, the Grievance Committee of the Directorate General of Foreign Trade have heard the Company''s grievance application and remanded the matter back to the original adjudicating authorities for re-examining and for issuing necessary clarification based on the provisions of Foreign Trade Policy. Though the management is of the opinion that these claims are fully recoverable, provision has been created in the accounts towards Duty Drawback claim for the relevant period as a matter of abundant caution.

(b) Claim for duty drawback on furnace oil consumed relating to earlier years amounting to Rs.6,461,789 (31 March 2017: Rs.6,461,789) which has been decided against the company by the division bench of the Hon''ble High Court of Kerala. The Company has sought further appeal before Hon''ble Supreme Court and although the Company is hopeful of favourable order, provision has been created in respect of such disputed claims in the books of account as a matter of abundant caution.

Balance with banks in Deposit accounts include Rs.10,377,873 (31 March 2017: Rs.9,186,963) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee and Buyers Credit and Rs.Nil (31 March 2017: Rs.58,298,318) being other short term deposits with a maturity period of less than 12 month.

Assets held for sale represents cost of plant and machinery proposed to be sold by the Company for which provisions have been made in the current year due to loss in value based on technical evaluation and non completion of disposal action as planned.

(b) Terms/ Rights attached to equity share:

The Company has only one class of shares referred to as equity shares with a face value of '' 10 each. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularisation of the shareholders'' in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

The company has issued 929,412 Nos of Optionally Convertible Non-Cumulative Preference Shares (OCPS) with a face value of Rs. 170/- each for cash at par on a preferential basis to M/s. Nitta Gelatin Inc., Japan, a significant share holder. Each holder of Preference shares is entitled to a preferential right for fixed dividend of 5.4029% (5 % 6 months USD Libor as on record date ie, 17.04.2015) per annum on the face value of the OCPS, on a non-cumulative basis payable on prorata basis from date of allotment, if declared. The OCPS is convertible into an equal number of equity shares of face value of Rs 10/- each within 18 months from the date of allotment (i.e 28.04.2015), in one or more financial years, at a price of Rs 170/- each (inclusive of a premium of Rs. 160/- per share). All outstanding Optionally Convertible Non- Cumulative Preference Shares, which are not converted into equity shares at the end of the 18 months from the date of allotment are redeemable at par at the expiry of seven years from date of allotment or except as is otherwise repayable on the exercise of a put and call option at the expiry of five years from date of allotment subject to such approvals as may be required. No OCPS was converted into equity shares till the completion of the period of 18 months from the date of allotment.

- Does not include gratuity and compensated absences as these are provided in the books on the basis of actuarial valuation for the Company as a whole and hence individual figures cannot be determined.

-- Represents guarantees given in respect of loans taken by Reva Proteins Limited from banks/ financial institutions. During the year, the Company has given guarantee for loan taken by Reva Proteins Limited amounting to Rs.Nil (31 March 2017: Rs.30,000,000 ) in compliance with Section 186 of the Companies Act, 2013.

# Net of Provision for impairment of investments Rs.170,403,998 (previous year Rs.170,403,998).

2. Segment Information

The Company is engaged in the manufacture and sale of products which form part of one product group which represents one operating segment, as the Chief Operating Decision Maker (CODM), reviews business performance at an overall company level. Entity-wide disclosure as required by Ind AS 108 "Operating Segment” are as follows:

3. (i) Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs.35,074,543 (31 March 2017 Rs.35,074,543) which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs.13,229,289 (31 March 2017 Rs.13,229,289) as a matter of abundant caution and the balance amount of Rs. 21,845,254 (31 March 2017 Rs.21,845,254) has been disclosed as a contingent liability.

4. (ii) The Central Sales Tax authorities had raised demand on assessment for an earlier year amounting to Rs.2,874,385 (31 March 2017 Rs.2,874,385) which has been disputed in appeal. Though the management is of the opinion that these demands are not fully sustainable, provision has been created in the accounts for the aforesaid amount as a matter of abundant caution.

5. (iii) The Sales Tax authorities had raised demand for entry tax on furnace oil for an amount of Rs.2,200,998 in an earlier year and was under appeal. Against the demand an amount of Rs.1,100,494 was deposited under protest and later a provision of equivalent amount was created for the doubtful deposit. The Supreme Court has held that levy of entry tax on furnace oil is valid constitutionally and the company has made additional provision of Rs.1,100,494, being the balance as per the demand as a matter of abundant caution.

6.(i) The Income Tax authorities has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

The Company has received tax orders from the Income Tax authorities reducing brought forward losses (including unabsorbed depreciation) amounting to Rs.8,235,581 (31 March 2017 Rs.8,235,581), primarily on denial of certain expenditure upon completion of tax assessmet for the assement years 2006-07, 2007-08 and 2008-09. There is no tax demand on account of the above. The Company''s appeal against the said demads are pending before appellate authorities in various stages of litegation.

Further, the Company has received the tax orders from the transfer pricing authorities redusing brought forward losses (including unabsorbed depreciation) amount to Rs.51,206,777 (31 March 2017 Rs.51,206,777), primarily on tranfer pricing adjustment upon completion of tax assessment for assessment years 2006-07, 2007-08 and 2008-09. There is no tax demand on account of the above. The Company''s appeal against the said demads are pending before appellate authorities in various stages of litegation.

The Company is contesting these litigations and the management believes that its position will be likely to be upheld in the appellate process and therefore will not impact these financial statements. Consiquently no provision has been created in the financial statements for the above.

7.(ii) The sales tax authorities had raised demands on assessment for some earlier years amounting to Rs.5,218,932 (31 March 2017 Rs.34,888,363) (net of bank guarantees), excluding interest on demand not quantified by the management, which had been disputed by the Company on appeal. Based on legal advice, no provision is considered necessary towards the said demands and the amount involved is disclosed as contingent liability.

8.(iii) Includes demands raised by the Central Excise Authorities (including penalty thereon but excluding interest) for higher excise duties on a product of the Company and towards cenvat credits availed aggregating to Rs.1,293,274 (31 March 2017 Rs.1,293,274) which have been disputed by the company before the appellate authorities; and show cause notices received from such authorities for service tax on certain deemed services and ineligible cenvat credit availed aggregating to Rs.6,469,623 (31 March 2017 Rs.6,131,372), which have been represented before adjudicating authorities. In the opinion of the management these demands/ show cause notices issued are not sustainable, so no provision is considered at this stage.

9.(iv) During an earlier year, an amount of Rs.71,484,400 was demanded as water cess for extraction of river water for industrial use during the period from 01 April 1979 to 31 December 2010, in accordance with a Government Order issued on 25 July 2009. The Company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon''ble High Court of Kerala against the proceedings, which is pending.

The Company had also made a representation to the Secretary (Water resources), Government of Kerala which is pending consideration of the Government. Pursuant to discussions with Government authorities, the Company had entered into an agreement for payment of such charges for the periods subsequent to 01 January 2011. Further, a provision of Rs.6,183,200 towards disputed charges for the period from 25 July 2009 to 31 December 2010, being periods subsequent to issue of the Government order, was made in the accounts in an earlier year as a matter of abundant caution.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01 April 1979 to 24 July 2009 amounting to Rs.65,301,200, being periods prior to the issue of the Government order which has been disclosed as contingent liability.

10. The customs authorities have issued show cause notice-cum-demand proposing classify/ reassess import of a certain item of raw materials, which has been objected by the Company. During the year, the Commissioner of Customs had issued an order confirming demand of Rs.87,714,969, penalty of Rs.109,120,912. The Company has filed appeal before the appellate authorities which is pending for disposal at this stage. As per the independent legal advice, the proposal of the department is legally incorrect and the matter has not reached finality as the appellate proceedings are pending for adjudication and hence no provision is considered necessary at this stage

11. Estimated amount of contracts remaining to be executed on capital account - Rs.9,780,290 (31 March 2017 Rs.26,007,513)

12. a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs.1,700,000 (31 March 2017 Rs.1,690,000) which is required to be fulfilled at different dates until 2020. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorisation Scheme, the Company has an export obligation of approximately Rs.6,27,70,000 (31 March 2017: Rs.624,80,000 ) which is required to be fulfilled at different dates until 2016. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable. The DGFT is not considering the companies application for the extension of time for the fulfilment of export obligation, due to dispute on classification of the imported raw material as per note 3.31.3 above. Since the company''s dispute on classification / reassessment of the raw material is pending for adjudication before the appellate tribunal and the company is hopeful of a favourable decision based on legal opinion received, no provision is considered necessary at this stage.

13. In the opinion of the management, Current financial assets and Other current assets, have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

14. Disclosure with respect to operating leases

The lease expenses for cancellable operating leases during the year ended 31 March 2018 is Rs.5,340,632 (31 March 2017: Rs.3,637,702)

The Company''s significant leasing arrangements in respect of operating leases for office premises, which includes both cancellable leases generally range between 4 months to 11 months and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent under note 3.26 to the financial statements.

15. Capital management

For the purpose of the Company''s capital management, capital includes issued capital, additional paid up capital and all other equity reserves attributable to the equity holders of the company. The primary objective of the Company''s capital management is to maximise the share holder value.

In order to achieve this overall objective, The Company''s capital management, amongst other things, aims to ensure that it meets financial convenants attached to the interest bearing loans and borrowings that define capital structure requirements. Breeches in meeting the financial coventants would permit the bank to immediately call loans and borrowings. There have been no breeches in the financial covenants of any interest bearing loan and borrowing in the current period.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure the Company may adjust the divident payment to shareholders, return capital to shareholders or issue new shares. The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade payables less cash.

16. A. Defined benefit plan

The Company has gratuity fund for its employees. The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity at the rate of 15 days basic salary for each year of service until the retirement age. As at 31 March 2018 and 31 March 2017 the plan assets were invested in insurer managed funds.

16 B. Defined contribution plan

The Company provides benefits in the nature of defined contribution plans viz, provident fund, employee state insurance scheme and superannuation fund for qualifying employees. Under these Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.25,466,227 (31 March 2017: Rs.28,917,668) towards contribution for mentioned funds in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.

C. Sensitivity analysis

Description of Risk Exposures

Valuations are performed on certain basic set of pre-determined assumptions which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit which are as follows:

Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of liability (as shown in financial statements).

Liquidity Risk: This is the risk that the Company is not able to meet the short term benefit payouts. This may arise due to non availability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Salary Escalation Risk: The present value of the above benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory Risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (for example, increase in the maximum liability on gratuity of 2,000,000).

Asset Liability Mismatching or Market Risk: The duration of the liability is longer compared to duration of assets exposing the company to market risks for volatilities/fall in interest rate.

Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. There are no changes from the previous period in the methods and assumptions used in preparing the sensitivity analysis.

There is no change in the method of valuation for the prior period.

16. D. Long Term Employee Benefits

Compensated absences (Vesting and Non Vesting): Unfunded Obligation

The management assessed that the fair value of cash and cash equivalents, trade receivables, loans, other financial assets, trade payables, working capital loans and other financial liabilities approximate the carrying amount largely due to short-term maturity of this 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.

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

The management assessed that for amortised cost instruments, fair value approximate largely to the carrying amount.

(iii) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a 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 maximise 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.

Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The valuation techniques uses the exchange rates provided by banks for revaluation of balance in forward contracts as on the reporting dates.

(iv) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the fair value of quoted investments is determined using the market value for the investment. The fair value estimates are included in level 1.

- the fair value of foreign exchange forward contracts is determined using market observable inputs, including prevalent forward rates for the maturities of the respective contracts and interest rate curves as indicated by banks and third parties.

- the fair value of other equity instruments have been computed based on income approach using a discounted cash flow model, which discounts the estimated cash flows using the appropriate discount rates.

17. Financial risk management

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on it''s financial performance. The primary market risk to the Company is foreign exchange exposure risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer.

The Company''s risk management activity focuses on actively securing the Company''s short to medium-term cash flows by minimising the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns.

The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below.

(A) Credit risk analysis

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company, resulting in a financial loss. The Company is exposed to this risk for various financial instruments. The Company''s maximum exposure to credit risk is limited to the carrying amount of financial assets, as summarised below:

A1 Trade and other receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India, USA, Japan and Europe. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company is exposed to a concentration of customer risk with respect to its trade receivable balances. At the reporting date, trade receivable balance from three customer represented 73% (2017 - 73%) of the total trade receivable balances, respectively. On account of adoption of Ind AS 109, Financial Instruments, the Company uses expected credit loss model to assess the impairment loss or gain. The provision for expected credit loss takes into account available external and internal credit risk factors and Company''s historical experience for customers.

A2 Cash and cash equivalents

The credit risk for cash and cash equivalents, and derivative financial instruments is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Financial assets that are neither past due nor impaired

Cash and cash equivalents, advances recoverable, loans and advances to employees, security deposit and other financial assets are neither past due nor impaired.

Financial assets that are past due but not impaired

There is no other class of financial assets that is past due but not impaired.

(B) Liquidity risk

Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, usually on a month on month basis. Long-term liquidity needs for a 360-day lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.

The Company''s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.

The Company''s non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:

(C) Market risk

The Company is exposed to market risk through its use of financial instruments and specifically to currency risk and interest rate risk, which result from both its operating and investing activities.

(C1) Foreign currency sensitivity

The Company operates internationally and a significant portion of the business is transacted in USD, JPY and EURO currencies and consequently the Company is exposed to foreign exchange risk through its sales and purchases from overseas suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company''s operations are adversely affected as the rupee appreciates/ depreciates against these currencies.

Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. These include outstanding derivatives contracts entered into by the Company and unhedged foreign currency exposures.

Sensitivity

The following table details the Company''s sensitivity to a 1% increase and decrease in the '' against the relevant foreign currencies. 1% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 1% change in foreign currency rates, with all other variables held constant. A positive number below indicates an increase in profit or equity where '' strengthens 1% against the relevant currency. For a 1% weakening of '' against the relevant currency, there would be a comparable impact on profit or equity, and the balances below would be negative.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

(C2) Interest rate risk

(i) Liabilities

The Company''s policy is to minimise interest rate cash flow risk exposures on long-term financing. At 31 March 2018, 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.

Interest rate risk exposure

Below is the overall exposure of the Company to interest rate risk:

(ii) Assets

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.

18. First time adoption of Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (‘previous GAAP'').

Accordingly, the Company has prepared the standalone financial statements for the comparitive period as at and for the year ended 31 March 2017 that comply with the applicable Ind AS, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 April 2016, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its previous GAAP financial statements, including the balance sheet as at 1 April 2016 and the comparitive financial statements as at and for the year ended 31 March 2017.

A Ind AS optional exemptions

A1. Deemed cost for property, plant and equipment, and intangible assets

Ind AS 101 First-time Adoption of Indian Accounting Standards, permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

A2. Deemed cost for investments in subsidiaries

Ind AS 101 First-time Adoption of Indian Accounting Standards, permits a first-time adopter to elect to continue with the carrying value for investments in subsidiaries 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. Accordingly, the Company has elected to measure its investments in subsidiaries in the standalone financial statements at their previous GAAP carrying value.

A3. Lease

Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, Leases, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101, First-time Adoption of Indian Accounting Standards, provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The Company has elected to apply this exemption for such contracts/ arrangements.

B. Ind AS mandatory exemptions

B1. Estimates

In accordance with Ind AS, as at the date of transition to Ind AS an entity''s estimates shall be consistent with the 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 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP except impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition this was not required under the previous GAAP

B2. 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 Financial Instruments 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 elements of modified time value of money i.e. 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.

Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so. It is impracticable to apply the changes retrospectively if:

a) The effects of the retrospective application or retrospective restatement are not determinable; or

b) The retrospective application or restatement requires assumptions about what management''s intent would have been in that period; or

c) The retrospective application or retrospective restatement requires significant estimates of amounts and it is impossible to distinguish objectively information about those estimates that existed at that time.

B3. De-recognition of financial assets and liabilities

Ind AS 101 First-time Adoption of Indian Accounting Standards, requires a first-time adopter to apply the de-recognition provisions of Ind AS 109, Financial Instruments, prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 First-time Adoption of Indian Accounting Standards, allows a first-time adopter to apply the de-recognition requirements in Ind AS 109, Financial Instruments, retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109, Financial Instruments, to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition provisions of Ind AS 109, Financial Instruments, prospectively from the date of transition to Ind AS.

C. Reconciliations between previous GAAP and Ind AS

Ind AS 101 First-time Adoption of Indian Accounting Standards, 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 as at the periods specified below.

C1. Reconciliation of other equity

The Company has also prepared a reconciliation of equity as at 31 March 2017 and 1 April 2016 under the previous GAAP with the equity as reported in these financial statements under Ind AS, that reflect the impact of Ind AS on the components of statement of Balance sheet which is presented below:

C5. Reconcilation of Cash flow statement for the year ended 31 March 2017

The transition from previous GAAP to Ind AS has not made a meterial impact on the statement of cash flows.

C6 Notes 1 Issue of preference shares

The Company has issued optionally convertible redeemable preference shares to its significant shareholder Nitta Gelatin Inc. However the option of conversion had expired on the date of transition. The preference shares carry fixed cumulative dividend which is non-discretionary. Hence, the instrument has been considered as a pure liability instrument. Under the Previous GAAP, the preference shares were classified as equity and dividend payable thereon was treated as distribution of profit. Under Ind AS 32, Financial Instruments: Presentation, such instruments are separated into liability and equity components based on the terms of the contract. The difference between carrying value of financial liability and fair value on initial recognition has been considered as equity contribution by the holding company and shown as part of ‘Other equity''. Interest expense on financial liability is charged to the Statement of Profit and Loss using the effective interest method.

2 Borrowings from related parties

Under the Previous GAAP, all financial liabilities were carried at cost. Under Ind AS 109, Financial Instruments, borrowings from Nitta Gelatin Inc have been measured at amortised cost. The difference between carrying value of borrowings and fair value on initial recognition has been considered as equity contribution by the company and shown as part of ‘Other equity''. Interest expense on amortised cost is charged to the Statement of Profit and Loss using the effective interest method.

3 Fair valuation of investments

Investments in preference shares have been measured at fair value through profit or loss (FVTPL) as against cost less diminution of other than temporary nature, if any, under the Previous GAAP. The difference between the fair value and previous GAAP carrying value on transition date has been recognized as an adjustment to opening retained earnings. Subsequent fair value changes have been recorded in the Statement of Profit and Loss.

4 Measurement of investments at fair value through OCI

Under the Previous GAAP, the Company accounted for long term investments in quoted and unquoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVOCI investments. Ind AS requires FVOCI investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognised as a separate component of equity, in the FVOCI reserve, net of related deferred taxes.

5 Expected credit loss assessment for trade receivables

Under the Previous GAAP, the Company has created a provision for impairment of receivables only with respect to specific amount for losses incurred . Under Ind AS 109, Financial Instruments, impairment allowance has been determined based on Expected Loss model (ECL). On application of the ECL model, the Company impaired part of its trade receivable on 1 April 2016 which has been adjusted with retained earnings. The impact for year ended on 31 March 2017 has been recognised in the Statement of Profit and Loss.

6 Financial guarantee

Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified subsidiary fails to make a payment when due in accordance with the terms of a debt instrument. Under the Previous GAAP, there was no requirement to account for financial guarantees given by the Company. Under Ind AS, financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109, ‘Financial Instruments'' and the amount recognized less cumulative amortization.

7 Adjustment for proposed dividend

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

8 Leasehold land

Under the Previous GAAP, the leasehold land had been capitalized under property, plant and equipment and depreciation on the same had been claimed. Under Ind AS 17 Leases, all leases have to be assessed as per the criteria of finance and operating lease. Accordingly, the Company has classifed the arrangement for leasehold land as an operating lease. The net block appearing under PPE has been reclassfied to Prepaid lease rentals and the aforementioned depreciation has been reclassified as rent expense.

9 Excise duty

Under the Previous GAAP, revenue from sale of goods was presented net of excise duty whereas under Ind AS the revenue from sale of goods is presented inclusive of excise duty. Accordingly, the excise duty has been included in revenue and other expenses respectively.

10 Foreign exchange forward contracts

Under the Previous GAAP, the company had adopted the principles of hedge accounting as per Accounting standard 30, Financial Instruments: Recognition and Measurement, and accordingly designated the foreign exchange forward contracts in a cash flow hedge relationship. However, for certain hedge relationships all the conditions for hedge accounting were not met. Consequent to above, the unrealised gain/(loss) on such hedges have been reclassified to opening retained earnings on the transition date and to the Statement of profit and loss for the year ended 31 March 2017, respectively. In addition to above, the Company had not recorded the consequent deferred tax impact on the aforesaid adjustments which have now been given effect in these financial statement.

11 Foreign exchange gain/ (loss) on PCFC loans

Under the Previous GAAP the Company had recorded the gain/ loss on PCFC loans in the hedging reserve which has been adjusted in the opening retained earnings and statement of profit and loss for the year ended 31 March 2017 respectively. In addition to above, the Company had not recorded the consequent deferred tax impact on the aforesaid adjustments which have now been given effect in these financial statement.

12 Impairment of investments

Under the Previous GAAP, the Company had not recorded impairment on its investments in one of the subsidiary. Accordingly, the same has been recorded as an adjustment in the opening retained earnings.

13 Defined benefit obligation

Both under the Previous GAAP and Ind AS, the Company recognized costs related to its postemployment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is reduced by such amount with a corresponding adjustment on defined benefit plans has been recognized in the OCI net of tax.

14 Deferred tax

Under the 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 12, Income Tax, deferred taxes are recognized following the balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base.

15 Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the Statement of Profit and Loss as ‘other comprehensive income'' includes re-measurements of defined benefit plans, effective portion of gains and losses on cash flow hedging instruments and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under Previous GAAP.

16 Other equity

Adjustments to retained earnings as at 1 April 2016 and 31 March 2017 has been adjusted consequent to the above Ind AS transition adjustments.


Mar 31, 2017

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2017 (CONTD.)

Terms/ Rights attached to Equity Shares

The company has only one class of shares referred to as equity shares with a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularization of the shareholders'' in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

1 Terms/ Rights attached to Preference Shares

The company has issued 929,412 Nos of Optionally Convertible Non-Cumulative Preference Shares (OCPS) with a face value of Rs. 170/- each for cash at par on a preferential basis to M/s. Nitta Gelatin Inc., Japan, one of the promoters. Each holder of Preference shares is entitled to a preferential right for fixed dividend of 5.4029% (5 % 6 months USD Libor as on record date ie, 17.04.2015) per annum on the face value of the OCPS, on a non-cumulative basis payable on prorate basis from date of allotment, if declared. The OCPS is convertible into an equal number of equity shares of face value of Rs 10/- each within 18 months from the date of allotment (i.e 28.04.2015), in one or more financial years, at a price of Rs 170/- each (inclusive of a premium of Rs. 160/- per share). All outstanding Optionally Convertible Non-Cumulative Preference Shares, which are not converted into equity shares at the end of the 18 months from the date of allotment are redeemable at par at the expiry of seven years from date of allotment or except as is otherwise repayable on the exercise of a put and call option at the expiry of five years from date of allotment subject to such approvals as may be required. No OCPS was converted into equity shares till the completion of the period of 18 months from the date of allotment.

Aggregate number of Equity shares allotted as fully paid up by way of Bonus shares during the period of 5 years immediately preceding the reporting date.

The Nominee Directors representing KSIDC are in the capacity of equity investor

2. The number of Directorships shown includes Directorships in Private companies also. As such it is within the limit prescribed under Section 165 of the Companies Act, 2013.

3 The number of Board committees in which the director is a member or chairperson includes only Audit Committee and Stakeholders Relationship Committee.

4 The Directors have no inter-se relationship, whatsoever.

5 The Board of Directors has an optimum combination of executive and non-executive directors with more than 50% of the Directors being non-executive Directors and two women Directors in conformity with Regulation 17(1)(a) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

None of the Directors are disqualified under Section 164 of the Companies Act, 2013. Necessary declarations have been made by the Directors under Regulation 26(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, stating that they do not hold any membership in more than 10 committees or chairperson of more than 5 committees across all listed entities in which he/she is a Director.

6 As per proviso to Regulation 17(1) (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, since the company has a regular Non-Executive Chairman who is a nominee of a promoter, at least one half of the Board of

7 Preference Dividend of Rs 9.18 ( Rs.8.48 ) per share has been proposed @ 5.4029% ( 5.4029%) on the face value of Optionally Convertible Non cumulative Preference Shares by the Board which is subject to approval by the shareholders in the ensuing Annual General Meeting.

8 The Board of Directors has proposed an Equity dividend @ Rs.2.50 (Rs 2.50) per share for the financial year ending 31.03.2017 at their meeting held on 9th May 2017, which is subject to approval by the shareholders in the ensuing Annual General Meeting.

9 In accordance with the revised Accounting Standard - 4 ‘Contingencies and Events occurring after the Balance Sheet Date'' (effective from 01.04.2016) proposed dividend for the year and Corporate Dividend Tax thereon has not been recognized as a distribution of profit in the current year''s accounts.

10. Secured by way of exclusive charge over the fixed assets created with the term loan assistance and collateral security by way of equitable mortgage of land owned by the Company on pari passu basis with other lenders and first charge over the other fixed assets of Company on pari passu basis.The interest rate is LIBOR 3.75 %.

11. Secured by exclusive charge over the fixed assets created with the term loan assistance. The principal amount is to be paid in 20 quarterly installments of Rs 2,250,000 starting from December 2014 as per the original terms. During the year 2015-16, the term loans had been converted into foreign currency, based on the same the quarterly installments had been reset to an amount in foreign currency of $ 33,122 (Rs. 2,162,890) The interest rate is LIBOR 5.00 %.

12. The external commercial borrowings (ECB) is not Secured by any charge over the assets of the company. The principal amount is to be paid in lump sum after the end of 7 years from the date of credit of the ECB funds into the account of the company, ie 24.03.2016 and the interest rate is payable @ 6 months USD LIBOR Rate 5.00 % at half yearly rests.

13. Secured by the hypothecation of entire current assets of the Company namely inventories, debtors, cash & bank balances, other current assets and loans & advances, present & future and by way of pari passu charge on the fixed assets of the Company. The loans are repayable on demand except in the case of Buyers Credit amounting to Rs NIL (Rs 14,333,382) which is repayable within a period of 70 days to 90 days from the date of a ailment as per terms.

14. The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at the year end, based on which, principal amount unpaid to such suppliers as at the yearend aggregating to Rs. 473,250 (Rs. 189,750) has been included under Trade Payables. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

15. Additions to Plant and Equipment include Reserves and Development assets of Rs. 1,608,211 (Rs. 1,677,585) purchased during the year and transfer from Capital Work-in- Progress of Rs. Nil (Rs. 33,091,003).

16. During the current year, the company has written off the book value of investments in the associate company M/s K. K. Organics Private Limited by adjusting the value of investment in full against the provision made in an earlier year towards permanent diminution in the value of investments made in the said company.

17. In view of the business plans of the subsidiary company, Reva Proteins Limited, which is expected to bring in positive cash flows in the near future, the management is of the opinion that no diminution in value of investments in the subsidiary company is anticipated at this stage and hence no provision is made.

18. In respect of the 6 % Optionally Convertible Non- Cumulative Preference Shares (OCPS) of Rs 10 each, fully paid up of Reva Proteins Ltd,the option for conversion into equity shares is to be exercised within six years from the date of allotment (23.03.2016). The outstanding OCPS which are not converted will get redeemed in two equal tranches at the end of the 7th and 8th year commencing from such date of allotment of OCPS.

19. Method of Valuation of Inventories - Refer 1(h) of Significant Accounting Policies.

20. Balance with banks in Current Accounts include earmarked balances for unpaid dividend of Rs. 1,613,259 (Rs. 1,581,266) and debit balances in overdraft account amounting to Rs.183,922 (Rs. 972,987).

21. Balance with banks in Deposit Accounts include Rs.9,186,963 (Rs. 5,239,761) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee and Buyers Credit and Rs. 58,298,318 ( Rs 1,82,349,512 ) being other short term deposits with a maturity period of less than 12 months.

22. Balance with banks in Deposit Accounts include Rs. 1,211,432 (Rs. 557,137 ) with a maturity period beyond 12 months, which are held as security against Letter of Credits/ Guarantee.

23. Specified Bank Notes (SBN) transacted during the period 08th November 2016 to 30th December 2016.

Note: The above disclosures do not include direct remittances made by customers into the Bank Account of the Company Rs. 194,556 (SBN - Rs. 59,000 and other denomination notes Rs. 135, 556).

24. Advance to Subsidiary company Reva Proteins Limited represents trade advance for purchase of materials made in the ordinary course of business.

25. Assets held for disposal represents cost of plant and machinery proposed to be sold by the company. Steps are being taken to dispose the said assets at the earliest and hence continued to be classified as current assets.

26. Export incentives receivable includes:

a) Claim for duty drawback on furnace oil consumed relating to earlier years amounting to Rs 6,461,789 (Rs 6,461,789) has been decided against the company by the division bench of the Hon High Court of Kerala during an earlier year. The company has sought further appeal before Hon Supreme Court and although the company is hopeful of favorable order, provision has been created in respect of such disputed claims in the books of account as a matter of abundant caution.

b) Claims amounting to Rs 20,818,015 (Rs 20,818,015) under Duty Entitlement Pass Book (DEPB) Scheme recognized as income in earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods amounting to Rs 4,151,031 (Rs 4,151,031) The Dy. Director General of Foreign Trade vide letter dt 03.10.2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The company has been legally advised that it is entitled to both benefits as per the relevant regulations, based on which representations have been filed before higher authorities. Though the management is of the opinion that these claims are fully recoverable, provision has been created in the accounts towards Duty Drawback claim for the relevant period as a matter of abundant caution.

27. Disclosure of transactions with Related Parties as required by Accounting Standard - 18 on Related Party Disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

28 Represents guarantees given in respect of loans taken by Reva Proteins Limited from banks/ financial institutions. During the year the company has given guarantee for loan taken by Reva Proteins Limited amounting to Rs 30.000,000 ( Rs 12,500,000 ) in compliance with Sec 186 of the Companies Act, 2013.

29 Segment Information

The company is engaged in the business of manufacture and sale of Gelatin, Ossein, DCP and Collagen Peptide, which form broadly part of one product group and hence constitute a single business segment. However, based on geographical factors, reportable geographic segments have been identified as export sales and domestic sales. The segment wise information pertaining to the reportable geographical segments as above is as follows:

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

30.The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006 )

31. Provisions

32.(i) Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs. 35,074,543 (Rs. 35,074,543) which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs.13,229,289 (Rs 11,050,417) as a matter of abundant caution and the balance amount of Rs. 21,845,254 ( Rs 24,024,126) has been disclosed as a contingent liability.

33.(ii) The Central Sales Tax authorities had raised demand on assessment for an earlier year amounting to Rs 2,874,385 (Rs 2,874,385) which has been disputed in appeal. Though the management is of the opinion that these demands are not fully sustainable, provision has been created in the accounts for the aforesaid amount as a matter of abundant caution.

34.(iii) The Sales Tax authorities had raised demand for entry tax on furnace oil for an amount of Rs.2,200,998 in an earlier year and was under appeal. Against the demand an amount of Rs 1,100,494 was deposited under protest and later a provision of equivalent amount was created for the doubtful deposit. During the year, the Supreme Court Tax has held that levy of furnace oil is valid constitutionally and the company has made additional provision of Rs.1,100,494, being the balance as per the demand as a matter of abundant caution.

35.(i) The Income Tax department has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

36.(ii) The Value Added tax/CST authorities had raised demands on assessment for some earlier years amounting to Rs.34,888,363 (Rs.43,745,239) (net of bank guarantees amounting to Rs. 4,879,070(Nil) included in 2.28.2 (4) above), which had been disputed by the Company on appeal. Based on legal advice, no provision is considered necessary towards the said demands and the amount involved is disclosed as contingent liability.

37.(iii) Includes demands raised by the Central Excise Authorities (including penalty thereon but excluding interest) for higher excise duties on a product of the company and towards cenvat credits availed aggregating to Rs.6,729,274 (Rs 3,480,352) which have been disputed by the company before the appellate authorities; and show cause notices received from such authorities for service tax on certain deemed services and ineligible cenvat credit availed aggregating to Rs.695,372 (Rs 1,734,103), which have been represented before adjudicating authorities. In the opinion of the management these demands/ show cause notices issued are not sustainable, so no provision is considered at this stage.

38.(iv) During an earlier year, an amount of Rs 71,484,000 was demanded as water cess for extraction of river water for industrial use during the period from 01.04.1979 to 31.12.2010, in accordance with a Government Order issued on 25.07.2009. The company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon'' High Court of Kerala against the proceedings, which is pending.

The company had also made a representation to the Secretary (Water Resources), Government of Kerala which is pending consideration of the Government. Pursuant to discussions with Government authorities, the company had entered into an agreement for payment of such charges for the periods subsequent to 01.01.2011. Further, a provision of Rs 6,183,200 towards disputed charges for the period from 25.07.2009 to 31.12.2010, being periods subsequent to issue of the Government Order, was made in the accounts in an earlier year as a matter of abundant caution.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01.04.1979 to 24.07.2009 amounting to Rs 65,301,200, being periods prior to the issue of the G.O. which has been disclosed as contingent liability.

39.The customs authorities have issued show cause notice-cum-demand proposing classify/ reassess import of a certain item of raw materials, which has been objected by the company. As per legal advice, the proposal of the department is legally incorrect and the matter has not reached finality as the notice is pending adjudication, in view of which there is no contingent liability.

40.Estimated amount of contracts remaining to be executed on capital account - Rs. 26,007,513 (Rs.49,233,558).

41. a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs. 1,690,000 (Rs. 1,730,000) which is required to be fulfilled at different dates until 2021. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorization Scheme, the Company has an export obligation of approximately Rs. 190,500,000 (Rs.251,710,000) which is required to be fulfilled at different dates until 2016. The Company has applied to the Directorate General of Foreign Trade for extent on of export obligation period as per provisions, which is however pending at this stage. In the event of non fulfillment of the export obligation/non extension of period, the Company may be liable for the Customs duties and penalties as applicable.

42. In the opinion of the Directors, Short Term Loans and Advances and Other Current Assets, have the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

43. The financial risks arising to the company include foreign exchange risk. As a part of company''s risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts, foreign currency packing credit and buyers credit designated as cash flow hedges. The fair value of derivative contract is determined based on mark to market price, ie, the price that would be paid / received to transfer a liability / asset as at the reporting date.

44. The following are the hedging instruments designated as cash follow hedges entered by the company and outstanding as at Balance Sheet date, determined to be effective hedges:

45. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year''s layout.


Mar 31, 2016

Terms/ Rights attached to Equity Shares

The company has only one class of shares referred to as equity shares with a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularization of the shareholders'' in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

1. Terms/ Rights attached to Preference Shares

The company has issued 929,412 Nos of Optionally Convertible Non-Cumulative Preference Shares (OCPS) with a face value of Rs. 170/- each for cash at par on a preferential basis to M/s. Nitta Gelatin Inc., Japan, one of the promoters. Each holder of Preference shares is entitled to a preferential right for fixed dividend of 5.4029% (5 % 6 months USD Libor as on record date ie, 17.04.2015 ) per annum on the face value of the OCPS, on a non-cumulative basis payable on prorata basis from date of allotment, if declared. The OCPS is convertible into an equal number of equity shares of face value of Rs 10/- each within 18 months from the date of allotment (i.e 28.04.2015), in one or more financial years, at a price of Rs 170/- each (inclusive of a premium of Rs. 160/- per share). All outstanding Optionally Convertible Non-Cumulative Preference Shares, which are not converted into equity shares at the end of the 18 months from the date of allotment are redeemable at par at the expiry of seven years from date of allotment or except as is otherwise repayable on the exercise of a put and call option at the expiry of five years from date of allotment subject to such approvals as may be required. No OCPS have been converted into equity shares till date.

2. Preference Dividend of Rs 8.48 ( Nil ) per share has been proposed @ 5.4029% ( Nil ) on the face value of Optionally Convertible Non cumulative Preference Shares by the Board which is subject to approval by the shareholders in the ensuing Annual General Meeting.

3. The Board of Directors has proposed an Equity dividend @ Rs.2.50 ( Rs 1.00 ) per share for the financial year ending 31.03.2016 at their meeting held on 06th May 2016, which is subject to approval by the shareholders in the ensuing Annual General Meeting.

4. Secured by way of exclusive charge over the fixed assets created with the term loan assistance and collateral security by way of equitable mortgage of land owned by the Company on pari passu basis with other lenders and first charge over the other fixed assets of the Company on pari passu basis. The interest rate is LIBOR 3.75 %. During the year, the term loans have been converted into foreign currency The principal amount of the loan is to be repaid on monthly installments in the following manner:

5. Secured by exclusive charge over the fixed assets created with the term loan assistance. The principal amount is to be paid in 20 quarterly installments of Rs 2,250,000 starting from December 2014 as per the original terms. During the year, the term loans have been converted into foreign currency, based on the same the quarterly installments have been reset to an amount in foreign currency of $ 33,122 (Rs 2,211,580) The interest rate is LIBOR 5.00 %.

6. The external commercial borrowings (ECB) is not Secured by any charge over the assets of the company. The principal amount is to be paid in lumpsum after the end of 7 years from the date of credit of the ECB funds into the account of the company, ie 24.03.2016 and the interest rate is payable @ 6 months USD LIBOR Rate 5.00 % at half yearly rests.

7. Current Maturities of Long - term borrowing ( disclosed under other current liabilities in Note No.2.08)

8. Disclosures required under Accounting Standard 15 - “Employee Benefits”

a. Defined Contribution Plans

During the year the following amounts have been recognized in the Statement of Profit and Loss on account of defined contribution plans:

9. Secured by the hypothecation of entire current assets of the Company namely inventories, debtors, cash & bank balances, other current assets and loans & advances, present & future and by way of pari passu charge on the fixed assets of the Company. The loans are repayable on demand except in the case of Buyers Credit amounting to Rs 14,333,382 (Rs 16,022,915) which is repayable within a period of 70 days to 90 days from the date of availment as per terms..

10. The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at the year end, based on which, principal amount unpaid to such suppliers as at the year end aggregating to Rs. 189,750 (Rs. 193,800) has been included under Trade Payables. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

11. In respect of land admeasuring 126.88 cents (Gross value and Net value: Rs. 469,964) and buildings thereon (Gross value: Rs. 14,425,871 and Net value: Rs. 9,499,000) the Revenue Department, Government of Kerala has ordered the issue of title deeds infavour of the company, though formal issue of the same by the authorities is pending.

12. Net Block of Tangible Assets include Assets held for disposal as below :

a) Land Rs. 25,232,939

b) Building Rs. 15,831,593

c) Plant & Equipment Rs 5,243,087

d) Office Equipment Rs. 12,136

e) Furniture Rs. 37,688

13. Additions to Plant & Equipment include Research & Development assets of Rs 16,77,585 purchased during the year and transfer from Capital Work in progress of Rs 33,091,003. The amount transferred from capital work in progress includes capital expenditure incurred during the year (net of recoveries) amounting to Rs 2,967,742.

14. In view of the business plans of the subsidiary company, Reva Proteins Limited, which is expected to bring in positive cash flows in the near future, the management is of the opinion that no diminution in value of investments in the subsidiary company is anticipated at this stage and hence no provision is made.

15. In respect of the 6 % Optionally Convertible Non- Cumulative Preference Shares (OCPS) of Rs 10 each, fully paid up of Reva Proteins Ltd., the option for conversion into equity shares is to be exercised within six years from the date of allotment (23.03.2016). The outstanding OCPS which are not converted will get redeemed in two equal tranches at the end of the 7th and 8th year commencing from such date of allotment of OCPS.

16. Method of Valuation of Inventories - Refer 1(g) of Significant Accounting Policies.

17. Balance with banks in Current Accounts include earmarked balances for unpaid dividend Rs. 1,581,266 (Rs. 1,637,705) and debit balances in overdraft account amounting to Rs.9,72,987 (Rs. Nil)

18. Balance with banks in Deposit Accounts include Rs. 5,239,761 (Rs. 4,946,293) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee and Buyers Credit and Rs. 182,349,512 ( Rs Nil ) being other short term deposits with a maturity period of less than 12 months

19. Balance with banks in Deposit Accounts include Rs. 557,137 (Rs.520,851 ) with a maturity period beyond 12 months, which are held as security against Letter of Credits/ Guarantee

20. Export incentive receivable includes Duty Drawback claims amounting to Rs. 17,776,195 (Rs. 9,090,768) taken credit for in prior years not admitted by the Department. In respect of such claims amounting to Rs.6,461,789 (Rs. 6,461,789) during an earlier year, a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the Department before the division bench of the Hon High Court. In respect of such claims amounting to Rs. 11,314,406 (Rs. 2,628,979), the amounts have been withheld by the Central Excise / Customs officials, against which representations have been made before higher authorities. Though the company is hopeful of favourable decisions, provision has been created in the accounts as a matter of abundant caution.

21. Export incentive receivable includes claims under Duty Entitlement Pass Book (DEPB) Scheme accounted as income for earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods of Rs 4,151,031 ( Rs 4,151,031 ) The Dy. Director General of Foreign Trade vide letter dt 03.10.2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The company has been legally advised that it is entitled to both benefits as per the relevant regulations, based on which representations have been filed before higher authorities. Though the management is of the opinion that these claims are fully recoverable, provision has been created in the accounts towards Duty Drawback of Rs.4,151,031 (Nil) as a matter of abundant caution and is included in the total amount provided as stated in Note 2.17.1 above .

22. Details of expenses on Corporate Social Responsibility activities

a. Gross amount required to be spent by the company during the year Rs.1,923,004 (Rs.1,690,295).

b. Amount spent during the year on:

i. Construction/acquisition of any asset Rs. Nil (Nil)

ii. On purposes other than (i) above Rs.1,947,550 (Rs 1,786,059)

23. Represents guarantees given in respect of loans taken by Reva Proteins Limited from banks/financial institutions. During the year the company has given guarantee for loan taken by Reva Proteins Limited from HDFC Bank Limited amounting to Rs 1,25,00,000 ( Nil ) in compliance with Sec 186 of the Companies Act, 2013

24. Segment Information

The company is engaged in the business of manufacture and sale of Gelatin, Ossein, DCP and Collagen Peptide, which form broadly part of one product group and hence constitute a single business segment. However, based on geographical factors, reportable geographic segments have been identified as export sales and domestic sales. The segment wise information pertaining to the reportable geographical segments as above is as follows:

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

25. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006 )

26. Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs. 35,074,543 (Rs. 33,409,583 ), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 11,050,417 (Rs 10,393,020) as a matter of abundant caution and the balance amount of Rs. 24,024,126 (Rs 23,016,563) has been disclosed as a contingent liability.

27. The Central Sales Tax authorities had raised demand on assessment for an earlier year amounting to Rs 2,874,385 (Nil) which has been disputed in appeal. Though the management is of the opinion that these demands are not fully sustainable, provision has been created in the accounts for the aforesaid amount as a matter of abundant caution..

28. The Income Tax department has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the first appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

29. The Value Added tax / CST authorities had raised demands on assessment for some earlier years amounting to Rs 43,745,239 (Rs 36,775,140) which had been disputed by the Company on appeal. Based on legal advice, no provision is considered is necessary towards the said claims and the amount involved is disclosed as contingent liability.

30. Includes demands raised by the Central Excise Authorities (including penalty and interest thereon) for higher excise duties on a product of the company and towards cenvat credites availed aggregating to Rs. 1,661,332 (Rs. 1,139,524) which have been disputed by the company before the appllate authorities, and show cause notices received from such authorities for service tax on certain deemed services and ineligible cenvat credit availed aggregating to Rs. 1,734,103 (Nil) which have been represented before adjudicating authorities.

In the opinion of the management, these demands/show cause notices issued are not sustainable and no provision is considered necessary for the same at this stage.

31.During an earlier year, an amount of Rs 71,484,000 was demanded as water cess for extraction of river water for industrial use during the period from 01.04.1979 to 31.12.2010, in accordance with a Government Order issued on 25.07.2009. The company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon'' High Court of Kerala against the proceedings, which is pending.

The company had also made a representation to the Secretary (Water Resources), Government of Kerala which is pending consideration of the Government. Pursuant to discussions with Government authorities, the company had entered into an agreement for payment of such charges for the periods subsequent to 01.01.2011. Further, a provision of Rs 6,183,200 towards disputed charges for the period from 25.07.2009 to 31.12.2010, being periods subsequent to issue of the Government Order, was made in the accounts in an earlier year as a matter of abundant caution.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01.04.1979 to 24.07.2009 amounting to Rs 65,301,200, being periods prior to the issue of the G.O. which has been disclosed as contingent liability.

32. Estimated amount of contracts remaining to be executed on capital account - Rs. 49,233,558 (Rs.30,470,888)

33. a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs.1,730,000 (Rs.3,520,000) which is required to be fulfilled at different dates until 2021. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorization Scheme, the Company has an export obligation of approximately Rs. 251,710,000 (Rs.336,030,000 ) which is required to be fulfilled at different dates until 2016. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

34. In the opinion of the Directors, Short Term Loans and Advances and Other Current Assets, have the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

35. As a part of company''s risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts, foreign currency packing credit and buyers credit designated as cash flow hedges.

36. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year''s layout.


Mar 31, 2015

1. In order to comply with the Minimum Public Shareholding (MPS) to 25% as required under Securities Contracts Regulations (Rules) 1957, during the preceding year, pursuant to a resolution passed at the Extra Ordinary General Meeting (EGM) of the company held on 29th May 2013, the company had allotted 100,000 equity shares at Rs. 50/- per equity share of face value of Rs. 10/- each to the employees under an Employee Stock Puchase Scheme (ESPS) and bonus shares in the ratio of 1:3 (579,160 equity shares) only to the public shareholders excluding the promoters.

On 17th June 2013, one of the promoter shareholders, M/s Kerala State Industrial Development Corporation Limited (KSIDC) informed the company their inability to forego its right to bonus shares and consequently the other promoter shareholder, M/s Nitta Gelatin Inc, Japan also declined to forgo their right to the bonus shares. In view of the said request the company informed BSE of its intention to partially modify the earlier EGM resolution dated 29th May, 2013, to allot bonus shares to the two Promoters as above also, subject to applicable approvals. Subsequently, the Board in their meeting dated 5th July 2013 recommended to the shareholders to issue bonus shares in the ratio of 1:3 to both the Promoter shareholders, in partial modification of EGM resolution dated 29th May 2013 and subject to necessary approvals, and also to allot further shares under the ESPS Scheme to its employees to ensure compliance of MPS even after the issue of bonus shares as above. This recommendation of the Board was approved in the adjourned EGM held on 24th August 2013 adopting a special resolution in partial modification of the resolution in EGM dated 29th May 2013, to allot 2,254,173 Bonus shares to Promoter shareholders and 696,667 shares to employees under ESPS scheme at Rs. 25/- per equity share of face value of Rs.10/- each, subject to the approval of SEBI and other applicable authorities.

On 19th August 2013 the company sought an in-principle approval for listing equity shares to be issued to the promoter shareholders and to employees under ESPS as per resolution proposed at the EGM on 24th August 2013. The BSE advised the company by email dated 27th August to seek condonation of delay from SEBI under Regulation 95(2) regarding Bonus issue, under SEBI (ICDR) Regulations, 2009 and this application was made to SEBI on 31st August 2013 seeking condonation of the delay in allotment of Bonus shares to the promoters and for retaining 20th June 2013 as the record date for the Bonus issue. SEBI in their letter dated 14th February 2014 declined to accede to the request of the company to allot Bonus shares to the promoter shareholders also on the ground that the interest of investors including those who traded in shares of the company based on the resolution passed at the EGM held on 29th May 2013, would be adversely affected.

Under the circumstances the company was unable to act on the resolution passed at the EGM held on 24th August 2013 and to allot 2,254,173 Bonus shares to Promoter shareholders (in the ratio 1:3) and 696,667 shares to employees under ESPS scheme as per resolutions adopted therein and hence no adjustment in this regard was made in the accounts for the preceding year ended 31st March 2014. Based on legal opinion received, the company had filed an appeal against the order of SEBI as above before Securities Appellate Tribunal (SAT).

During the year, the Securities Appellate Tribunal has dismissed the company's appeal on the above matter and based on the leagal openion that any appeal before the Supreme Court against the SAT order is not warranted, the Board of directors has decided not to pursue the matter further.

Terms/ Rights attached to Equity Shares

The company has only one class of shares referred to as equity shares with a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularisation of the shareholders' in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

2. Final dividend of Re. 1 ( Nil ) per share proposed by the Board of Directors is subject to approval of share holders in the ensuing Annual General Meeting.

3. Secured by way of exclusive charge over the fixed assets created with the term loan assistance and collateral security by way of equitable mortgage of land owned by the Company on pari passu basis with other lenders and first charge over the other fixed assets of Company on pari passu basis. The interest rate is Base Rate 2.40 %.

4. Secured by exclusive charge over the fixed assets created with the term loan assistance. The principal amount is to be paid in 20 quarterly instalments of Rs 2,250,000 starting from December 2014. The interest rate is Base Rate 3.00 %.

5. Secured by the hypothecation of entire current assets of the Company namely inventories, debtors, cash & bank balances, other current assets and loans & advances, present & future and by way of pari passu charge on the fixed assets of the Company. The loans are repayable on demand except in the case of Buyers Credit amounting to Rs. 16,022,915 (Nil) which is repayable within a period of 70 days to 90 days from the date of availment as per terms.

6. Secured by exclusive charge over the fixed assets to be created out of the term loan. The loan is repaid during the current year in quarterly installments of Rs 25,00,000 each commencing from the first quarter of the year. The interest rate is Base Rate 3.00 %.

7. The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at 31.03.2015, based on which, principal amount unpaid to such suppliers as at the year end aggregating to Rs. 193,800 (Rs. 69,021) has been included under Trade Payables. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

8. In view of business plans of the subsidiary company, Reva Proteins Limited, which is expected to bring in positive cash flows in the near future the management is of the opinion that no dimunition in value of investments in the subsidiary company is anticipated at this stage and hence no provision is made.

9. Method of Valuation of Inventories - Refer 1(g) of Significant Accounting Policies.

10. Balance with banks in Current Accounts include earmarked balances for unpaid dividend Rs. 16,37,705 (Rs. 17,93,682)

11. Balance with banks in Deposit Accounts include Rs. 4,946,293 (Rs.2,491,776) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee and Buyers Credit.

12. Balance with banks in Deposit Accounts include Rs. 520,851 (Rs.Nil ) with a maturity period beyond 12 months, which are held as security against Letter of Credits/ Guarantee

13. Export incentive receivable includes Duty Drawback claims amounting to Rs. 9,090,768 (Rs. 6,858,636) taken credit for in prior years not admitted by the Department. In respect of such claims amounting to Rs. 6,461,789 (Rs. 6,461,789) during an earlier year, a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the Department before the division bench of the Hon. High Court. In respect of such claims amounting to Rs.2,628,979 (Rs. 396,487), the amounts have been withheld by the Central Excise / Customs officials, against which representations have been made before higher authorities. Though the company is hopeful of favourable decisions, provision has been created in the accounts as a matter of abundant caution.

14. Export incentive receivable includes claims under Duty Entitlement Pass Book (DEPB) Scheme accounted as income for earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods of Rs 4,151,031 ( Rs 4,151,031 ) The Dy. Director General of Foreign Trade vide letter dt 03.10.2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The company has been legally advised that it is entitled to both benefits as per the relevant regulations, based on which representations have been filed before higher authorities. The management is of the opinion that these claims are fully recoverable, and no provision is considered necessary at this stage.

15. Miscllaneous expenses include Rs. 1,786,059/- incurred as expenditure towards Corporate Social Responsibility activities. The expenditure includes contributions made to trust controlled by the company as shown in Note 2.26.

16. Disclosure of transactions with Related Parties as required by Accounting Standard - 18 on Related Party Disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

A. Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company

ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc

iii. Nitta Gelatin Canada Inc. - Subsidiary of Nitta Gelatin Inc

iv. Bamni Proteins Limited - Subsidiary Company

v. Reva Proteins Limited - Subsidiary Company

vi. K K Organics Private Limited - Associate Company

vii. K. T. Chandy Seiichi Nitta - Trust controlled by the Foundation Company

viii. Key Managerial Personnel

Mr Sajiv K. Menon - Managing Director ( w.e.f. 01.04.2014 )

Mr Takeo Yamaki - Whole Time Director ( w.e.f. 11.07.2014 )

A) In view of the inadequacy of profits , the remuneration paid / payable to the Whole Time Director during the year - Rs. 1,861,479/- (Nil) is subject to necessary approvals prescribed under the Companies Act, 2013 which is being sought by the Company in the General Meeting.

B) Remuneration to Managing Director for the year includes gratuity and leave encashment paid out of liability funded /recognised in earlier years - Nil (Rs 8,177,167)

C) Amounts payable to Bamni Proteins Limited is net of amounts receivable from them for claims of Nitta Gelatin Inc., Japan - Rs 17,345,863 ( Nil )

17. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006 )

A) (i). Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs. 33,409,583 (Rs 31,065,141), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 10,393,020 (Rs. 9,598,921) as a matter of abundant caution and the balance amount of Rs. 23,016,563 ( Rs 21,466,220) has been disclosed as a contingent liability. Further the Central Excise authorities have issued show cause notices relating to CENVAT Credit for Rs 623,430 ( Rs 115,720 ). In the opinion of the management, no provision is considered necessary for the same and has accordingly been disclosed as contingent liability.

B) Contingent Liabilities not provided for:

As at As at 31.03.2015 31.03.2014 Particulars Rupees Rupees

1. Claims against the Company not acknowledged as debts:

a. Income Tax [See Note 2.28.2(i)] 67,049,358 67,049,358

b. Value Added Tax/ CST [See Note 2.28.2(ii)] 36,775,140 1,237,334

c. Excise Duty [See Note 2.28.1(i)] 23,639,993 21,581,940

d. Water Cess [See Note 2.28.2(iii)] 65,301,200 65,301,200

2. Foreign Bills Discounted 231,983,217 239,148,923

3. Domestic Bills Discounted 7,994,250 1,632,000

4. Counter Guarantee issued in favour of bankers 9,048,426 6,352,152

5. Corporate guarantee issued in favour of Subsidiary Company Reva Proteins Limited. - Amount outstanding 131,245,832 156,250,000 [ Amount of Guarantee - Rs 200,000,000 ( Rs 200,000,000) ]

Total 573,037,416 558,552,907

C) (i) The Income Tax department has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the first appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

D) (ii) The Value Added Tax / CST authorities had raised demands on assessment for an earlier year amounting to Rs 36,775,140 ( Rs 1,237,334 ) which had been disputed by the Company on appeal. Based on legal advice, no provision is considered necessary towards the said claims and the amount involved is disclosed as contingent liability.

E) (iii) During an earlier year, an amount of Rs 71,484,000 was demanded as water cess for extraction of river water for industrial use during the period from 01.04.1979 to 31.12.2010, in accordance with a Government Order issued on 25.07.2009. The company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon' High Court of Kerala against the proceedings, which is pending.

The company had also made a representation to the Secretary (Water Resources), Government of Kerala which is pending consideration of the Government. Pursuant to discussions with Government authorities, the company had entered into an agreement for payment of such charges for the periods subsequent to 01.01.2011. Further, a provision of Rs 61,83,200 towards disputed charges for the period from 25.07.2009 to 31.12.2010, being periods subsequent to issue of the Government Order, was made in the accounts in the previous year as a matter of abundant caution.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01.04.1979 to 24.07.2009 amounting to Rs 65,301,200, being periods prior to the issue of the G.O. which has been disclosed as contingent liability.

18. Estimated amount of contracts remaining to be executed on capital account - Rs. 30,470,888 (Rs.32,010,596)

19. a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs. 3,520,000 (Rs. 12,560,000) which is required to be fulfilled at different dates until 2020. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorisation Scheme, the Company has an export obligation of approximately Rs. 336,030,000 (Rs. 162,549,000) which is required to be fulfiled at different dates until 2016. In the event of non fulfilment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

20. In the opinion of the Directors, Short Term Loans and Advances and Other Current Assets, have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

21. As a part of company's risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts, designated as cash flow hedges.

22. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year's layout.


Mar 31, 2013

Terms/ Rights attached to Equity Shares

The company has only one class of shares referred to as equity shares with a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed/ declared by the Board of Directors is subject to approval/regularisation of the shareholders'' in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

1.1.1 With effect from 1st April 2012, the company has changed the policy for accounting forward contracts intended to hedge the foreign currency risk of future transactions in respect of which firm commitments are made or which are highly probable forecast transactions, in accordance with the principles enunciated in the accounting treatment contained in AS 30 (Financial Instruments: Recognition and Measurement) issued by the Institute of Chartered Accountants of India by recognizing the losses/gains from marking to market such contracts determined to be "effective hedges" in the Hedging Reserve Account (under ''Reserves & Surplus'') in the Balance Sheet, as against the earlier policy of charging losses from such contracts to the Statement of Profit and Loss and not recognizing gain therefrom. Accordingly Marked to Market gain of Rs 4,785,189 as on 31.03.2013 is recognized in Hedging Reserve Account. This has no impact on the profit for the year.

1.1.2 The Board of directors has declared interim dividend of Rs 4 (Nil) per share for the financial year ending 31.03.2013 at their meeting held on 3rd May 2013 , which is subject to regularisation of the shareholders in the ensuing Annual General Meeting.

1.2.1 Secured by the hypothecation of entire current assets of the Company namely inventories, debtors, cash & bank balances, other current assets and loans & advances, present & future and by way of pari passu charge on the fixed assets of the Company.

1.2.2 The above loans are repayable on demand.

1.3.1 The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at 31.03.2013, based on which, principal amount unpaid to such suppliers as at the year end aggregating to Rs. 673,186 (Rs. 640,634) has been included under Trade Payables. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

1.4.1 Balance with banks in Current Accounts include earmarked balances for unpaid dividend Rs. 1,441,417 (Rs. 1,166,557)

1.4.2 Balance with banks in Deposit Accounts include Rs. 2,183,674 (Rs.2,183,674) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee.

1.5.1 Duty Drawback includes Rs. 6,461,789 (Rs. 6,461,789) being claims taken credit for in prior years not admitted by the Department. During the previous year a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the Department before the division bench of the Hon High Court. Though the company is hopeful of a favourable decision, provision created in the accounts in the preceding years has been retained as a matter of abundant caution.

1.5.2 Represents claims accounted as income for earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods amounting to Rs. 4,151,031 (Rs. 5,424,105). The Dy. Director General of Foreign Trade vide letter dt 03.10.2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The company has been legally advised that it is entitled to both benefits as per the relevant regulations and the management is of the opinion that claims are fully recoverable, and no provision is considered necessary at this stage.

1.6 Disclosure of transactions with Related Parties as required by Accounting Standard - 18 on Related Party Disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

A. Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company

ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc

iii. Nitta Gelatin Canada Inc. - Subsidiary of Nitta Gelatin Inc

iv. Bamni Proteins Limited - Subsidiary Company

v. Reva Proteins Limited - Subsidiary Company

vi. K K Organics Private Limited - Associate Company

vii. Key Managerial Personnel

i. Mr G. Suseelan - Managing Director

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

1.7 The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006)

1.7.1(i). Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs. 28,903,586 (Rs 26,265,559), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 8,799,108 (Rs.7,868,898) as a matter of abundant caution and the balance amount of Rs. 20,104,478 (Rs 18,396,661) has been disclosed as a contingent liability.

1.7.2(i) The Income Tax department has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the first appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

1.7.2(ii) The Value Added Tax/ CST authorities had raised demands on assessment for an earlier year amounting to Rs. 20,642,815 (Rs. 20,642,815), which had been disputed by the Company on appeal. The appellate authority has remanded the matter back to the assessing officer for fresh consideration. Based on legal advice, no provision is considered necessary towards the said claims and the amount involved is disclosed as contingent liability.

1.7.2(iii) During the preceding year, an amount of Rs 71,484,400 was demanded as water cess for extraction of river water for industrial use during the period from 01.04.1979 to 31.12.2010, in accordance with a Government Order issued on 25.07.2009. The company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon'' High Court of Kerala against the proceedings, which is pending.

The company had also made a representation to the Secretary (Water Resources), Government of Kerala which is pending consideration of the government. During the year, pursuant to discussions with government authorities, the company has entered into an agreement for payment of such charges for the periods subsequent to 01.01.2011. Further, an amount of Rs 6,183,200 (Rs. NIL) has been provided towards disputed charges for the period from 25.07.2009 to 31.12.2010, being periods subsequent to issue of the Government Order and is disclosed under the head ''Other Current Liabilities''.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01.04.1979 to 24.07.2009 amounting to Rs 65,301,200, being periods prior to the issue of the G.O. which has been disclosed as contingent liability.

1.8 Estimated amount of contracts remaining to be executed on capital account - Rs. 99,171,177 (Rs. 15,943,539)

1.9 a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs. 72,150,000 (Rs. 33,680,000) which is required to be fulfilled at different dates until 2020. In the event of non fulfilment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorisation Scheme, the Company has an export obligation of approximately Rs. 19,250,000 (Rs. NIL) which is required to be fulfilled at different dates until 2015. In the event of non fulfilment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

1.10 In the income tax assessment of the company, the income tax authorities have made certain disallowances which has resulted in additional demands on assessments completed for certain prior years, which are disputed by the company before appellate authorities. Though the company is hopeful of favourable decisions on such appeals on these matters, as a matter of prudence, a provision of Rs 11,532,974 has been additionally made during the year, towards incremental tax liability of prior years, with necessary adjustments in deferred tax. In the opinion of the management no provision is considered necessary in respect of the balance demands raised by the tax authorities aggregating to Rs 22,415,688, which have been disclosed as contingent liability in the accounts as shown in Note 2.27.2(i) .

1.11 In the opinion of the Directors, Short Term Loans and Advances and Other Current Assets, have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

1.12 As a part of company''s risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts, designated as cash flow hedges.

1.13 Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year''s layout.


Mar 31, 2011

1. Amounts due to Micro and Small Enterprises

The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at 31.03.2011, based on which principal amount unpaid to such suppliers as at the year end aggregating to Rs. 1.92 Lakhs (Nil) has been disclosed under Current Liabilities in Schedule - 11. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

2. Managerial Remuneration under Section 198 of the Companies Act 1956:

Enhancement in remuneration to Managing Director for the period 01.04.2010 to 31.03.2011 is as approved by the Remuneration Committee / Board of Directors. Necessary approval of shareholders in accordance with the requirements of Schedule XIII of the Companies Act, 1956, is being sought at the ensuing Annual General Meeting.

3. In the opinion of the Directors, the Current Assets, Loans and Advances have the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

4. Other current assets in the Balance Sheet include Rs. 64.62 lakhs (Rs. 64.62 lakhs) being Duty Drawback claims taken credit for in prior years not admitted by the Department. During the previous year a single bench of the Honourable

High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the department before the division bench of the Honourable High Court. Though the company is hopeful of a favourable decision, provision created in the accounts in the preceding years has been retained as a matter of abundant caution.

5. During the year, the companys appeals against disallowance of certain duty drawback claims have been allowed by the appellate authority. Though the department has filed a further revision application against this order, the company has been legally adviced that there is no significant uncertainty in realisability of these claims. Accordingly, the provision of Rs 43.21 lakhs created in prior years as a matter of abundant caution, is no longer considered necessary and has been written back to the Profit & Loss Account.

6. Disclosure of transactions with related parties as required by Accounting Standard - 18 on related party disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

(A) Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company

ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc

iii. Bamni Proteins Limited - Subsidiary Company

iv. Reva Proteins Limited - Subsidiary Company

v. K K Organics Private Limited - Associate Company vi.

vi. Key Management Personnel:

i) Mr. G. Suseelan - Managing Director



7. As a part of companys risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts.

d) The outstanding forward contracts as at Balance Sheet date have been marked to market as at 31st March, 2011 and the Exchange Gain arising on the same amounting to Rs.36.84 lakhs (Rs.49.80 Lakhs) has not been recognized in the accounts.

8. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006.

Note:

i) Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs 219.86 lakhs. (Rs 189.54 lakhs), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 67.92 lakhs (Rs. 51.92 lakhs) as a matter of abundant caution and the balance amount of Rs. 151.94 lakhs ( Rs 137.62 lakhs) has been disclosed as a contingent liability.

ii) The company has made representations before the Government of Kerala for waiver of water cess payable to the Government and has also obtained a stay from the Honble High Court of Kerala in respect of demands raised from 20.11.1998 towards the same. Pending final decision in the matter, provision of Rs 77.35 Lakhs (Rs.70.78 Lakhs) has been made in the accounts, as estimated by the management, as a matter of prudence.

b) Contingent Liabilities not provided for: (Rs. In lakhs)

Particulars For the Year For the Year Ended Ended 31.03.2011 31.03.2010

1. Claims against the Company not acknowledged as debts:

a) Income Tax 112.03 Nil (See Note (i) below)

b) Sales Tax 135.81 Nil (See Note (ii) below)

c) Excise duty 151.94 295.75 (See Note 13 (a)(i) above)

2. Foreign Bills Discounted 1,513.09 1,931.15

3. Counter Guarantee issued in favour 43.52 13.56 of bankers

4. Letter of Credit 10.93 Nil

5. Corporate guarantee issued 2,000.00 Nil in favour of Subsidiary company, M/s Reva Proteins Limited

TOTAL 3,967.32 2,240.46

Note:

i) The Hon. High Court of Kerala has during the year, passed an order which has the effect of enhancing the income tax liability of the company relating to certain prior years; but the revised assessment order/demands are yet to be received from tax authorities. The company has filed an appeal against the said order before the Honble Supreme Court of India which is pending and according to the expert legal opinion received by the company, there is no likelihood of any additional liability and hence no provision is made for the same, estimated at Rs 112.03 lakhs.

ii) During the year, Sales Tax authorities have issued show cause notices proposing to withdraw sales tax exemption allowed to the company in earlier years amounting to Rs 135.81 lakhs, which has been disputed by the company. Based on legal advice received, no provision is considered necessary towards the said claims and the amounts involved are disclosed as contingent liability.

9. Estimated amount of contracts remaining to be executed on capital account - Company - Rs.303.79 lakhs (Rs. 57.92 lakhs).

10. Loans and advances include interest free loan to subsidiary company Reva Proteins Limited, Rs 1,009.58 lakhs (Rs.389.77 lakhs) in respect of which no fixed repayment schedule has been prescribed at this stage.

11. (a) During the year, the Company has acquired certain assets including investments held by a company in its industrial unit, for setting up an industrial undertaking of the company, for an aggregate consideration of Rs. 777.31 lakhs. This includes "Patta land" admeasuring 126.88 cents acquired for a value of Rs 4.70 lakhs, which is included under Land & Development under Fixed Assets, in respect of which the assignment order by Government of Kerala is pending to be received.

The cost of buildings Rs. 237.36 lakhs and Plant, Machinery and Equipments costing Rs 207.62 lakhs acquired as part of the above, which are required for the companys use as per technical assessment have been included under Capital Work in Progress, to be capitalized on commissioning the unit, after completion of necessary modifications.

Certain items of machinery acquired as part of the above for an estimated cost of Rs 50 lakhs and identified on the basis of technical assessment as not usable for the business of the company, are shown under Other Current Assets.

An amount of Rs 30 lakhs being cost of investments in equity shares of another company, acquired as part of the above, has been included under "Loans and Advances", pending transfer of shares of the relative shares in the name of the company.

(b) The company has contracted to purchase land admeasuring 73.775 cents adjacent to the above industrial unit, for a total consideration of Rs 225 lakhs, against which an advance of Rs 60 lakhs was paid during the year and included under Capital Advances.

12. Advertisement and Publicity under Schedule 16 - Other Manufacturing, Selling and administrative expenses include expenditure incurred during the year towards sales promotion and brand building on new consumer products Rs 393.11 lakhs (Rs 33.86 lakhs).

13. (a) Licensed and Installed Capacities, Production, Turnover and Opening and Closing stock.

NOTE:

1. Licensed Capacity - Not applicable

2. Installed Capacity is as technically reassessed by the management

3. Production includes quantity manufactured outside on jobwork basis, as under: Ossein - 2406.850 MT (2,365.800 MT)

DCP - 5295.000 MT (5284.10 MT)

4. Turnover - Others - Rs 41,48,398 ( Rs 2,63,950 )

14. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current years layout.


Mar 31, 2010

1. Amounts due to Micro and Small Enterprises

The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Based on available information, there are no balances outstanding as payable to such suppliers at the year end. In the opinion of the management there are no amounts paid / payable towards interest under the said statute.

2 In the opinion of the Directors, the Current Assets, Loans and Advances have the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

3 On the basis of an independent professional valuation carried out in an earlier year and taking into consideration the improved performance of the subsidiary company, Bamni Proteins Limited, no loss in respect of the investments in and advances to the said company, aggregating to Rs 455.62 Lakhs (Rs. 455.65 Lakhs) is anticipated at this stage.

4. Deferred Tax Asset/ (Liability) consists of:

(Amount in Rs.) As at As at Particulars 31.03.2010 31.03.2009 Deferred Tax Liability: On excess of net book value over income tax written down value of fixed assets 77,140,000 74,135,366 Deferred Tax Asset: On Unabsorbed Depreciation Loss - 4,090,280 On Provisions 9,512,000 3,588,384 On other disallowances 3,995,000 806,702 Net Deferred Tax Asset/ (Liability) (63,633,000) (65,650,000)

5. Other current assets in the Balance Sheet include Rs. 64.62 lakhs (Rs. 64.62 lakhs) being Duty Drawback claims taken credit for in prior years not admitted by the Department. During the year a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the department before the division bench of the Honourable High Court of Kerala. Though the company is hopeful of a favourable decision, provision created in the accounts in the preceding year has been retained as a matter of abundant caution.

6. Disclosure of transactions with related parties as required by Accounting Standard - 18 on related party disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

(A) Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc iii. Bamni Proteins Limited - Subsidiary Company iv. Reva Proteins Limited - Subsidiary Company v. K K Organics Private Limited - Associate Company vi. Key Management Personnel: i) Mr. G. Suseelan - Managing Director

7. Segment Information

The company is engaged in the business of manufacture and sale of Gelatin, Ossein, DCP and Bovine Collagen Peptide, which form broadly part of one product group and hence constitute a single business segment. However, based on geographical factors, reportable geographic segments have been identified as export sales and domestic sales. The segment wise information pertaining to the reportable geographical segments as above, is as follows:

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

8. Employee benefits

Disclosures required under Accounting Standard 15 - "Employee Benefits" (Revised 2005)

a) Defined Contribution Plans

During the year the following amounts have been recognised in the Profit and Loss Account on account of defined contribution plans:

9. As a part of companys risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts.

a) The outstanding forward contracts as at Balance Sheet date have been marked to market as at 31st March, 2010 and the Exchange Gain arising on the same amounting to Rs.49.80 lakhs (Rs.1.85 Lakhs) has not been recognized in the accounts.

10. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006.)

* The company has made representations before the Government of Kerala for waiver of water cess payable to the Government and has also obtained a stay from the Hon High Court of Kerala in respect of demands raised from 20.11.1998 towards the same. Pending final decision in the matter, provision of Rs 70.78 lakhs (Nil) has been made in the accounts, as estimated by the management, as a matter of prudence.

b) Contingent Liabilities not provided for: (Rs. In lakhs)

For the Year Ended For the Year Ended 31.03.2010 31.03.2009 Claims against the Company not acknowledged as debts:

Disputed sales tax demands Nil 138.23

Disputed excise duty demands (See Note 12 (c) and (d) below) 294.07 135.94

Foreign Bills Discounted 1931.15 2001.96

Counter Guarantee issued in favour 13.56 21.11 of bankers

Letter of Credit Nil 48.77

TOTAL 2238.78 2346.01

c) During the preceding year Central Excise authorities had issued a show cause notice proposing to withdraw CENVAT credit availed by the company in prior years on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs 176.89 lakhs. (Rs 176.89 lakhs). The company has disputed the matter. Though no demand has been raised by the department, based on legal advice received, the company had created a provision of Rs 40.95 lakhs as a matter of abundant caution and the balance amount of Rs. 135.94 lakhs has been disclosed as a contingent liability.

d) Central excise authorities had issued a show cause notice in an earlier year demanding excise duty of Rs 158.13 Lakhs (Rs 158.13 Lakhs) along with interest and penalty for manufacture and clearance of Di-Calcium Phosphate (DCP) during the period from 1.03.2005 to 30.11.2005. Based on representation by the company that manufacture of DCP attracts Nil Rate of Duty and hence falls under an exempt tariff classification, the above show cause notice had been dropped by the Commissioner. During the year the company has received an intimation regarding department appeal before CESTAT against the action of the Commissioner in dropping the show cause notice as above, in view of which the demand of Rs 158.13 lakhs (Rs 158.13 lakhs) has now been disclosed as a contingent liability.

e) Estimated amount of contracts remaining to be executed on capital account - Rs. 57.92 Lakhs (Rs. 234.16 lakhs).

11. Loans and advances include interest free loan to subsidiary company Reva Proteins Limited, Rs 389.77 lakhs (Nil) [Maximum amount outstanding during the year Rs 389.77 lakhs] in respect of which no fixed repayment schedule has been prescribed at this stage.

NOTE : 1. Licensed capacity - Not applicable

2. Installed Capacity is as technically reassessed by the management

3. Production includes quantity manufactured outside on job work basis as under: Ossein - 2365.800 MT (2415.250 MT)

DCP - 5284.100 MT (5533.350 MT)

12. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current years layout.

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