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Accounting Policies of Tata Global Beverages Ltd. Company

Mar 31, 2017

1. General Information

Tata Global Beverages Limited ("the Holding Company") and its subsidiaries (together referred to as ''the group'') and the group''s associates and joint ventures are engaged in the trading, production and distribution of Tea, Coffee and Water. The group has branded beverage business operations mainly in India, Europe, US, Canada and Australia, plantation business in India/Sri Lanka and extraction business mainly in India and US.

The Holding Company is a public limited company incorporated and domiciled in India and has its registered office at Kolkata, West Bengal, India. The Holding Company has its primary listings on the Bombay Stock Exchange and National Stock Exchange in India.

The financial statements for the year ended March 31, 2017 were approved for issue by Company''s board of directors on May 30, 2017.

2. Significant Accounting Policies:

The principal accounting policies applied in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation and presentation of financial statements

(i) Accounting convention

The financial statements are prepared in accordance with and in compliance, in all material aspect with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read along with Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Amendment Rules, 2016 and other relevant provision of the Act.

For all periods upto and including the year ended March 31, 2016, the company prepared its financial statements in accordance with the Accounting Standards earlier notified under Section 133 of the Companies Act, 2013, read together with Companies (Accounts) Rules, 2014 (Indian GAAP).

These are the Company''s first annual financial statements prepared in accordance with Ind AS. The Company has adopted all applicable standards and adoptions were carried out in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. An explanation of how the transition to Ind AS has affected the reported financial position, financial performance and cash flows of the Company is provided in note 45 of these financials.

(ii) Basis of measurement

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, unless otherwise stated. All assets and liabilities are classified into current and non-current generally based on the criteria of realization/settlement within a twelve month period from the balance sheet date.

(b) Foreign currency and translations

i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates ("functional currency"). The financial statements are presented in Indian Rupees (Rs.), which is the functional currency of the Company.

ii) Foreign currency transactions and balances

Transactions in foreign currencies are recorded at the exchange rate at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the year-end rate. Any resultant exchange differences are taken to the statement of profit and loss, except when deferred in other comprehensive income as qualifying cash flow hedges. Nonmonetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.

(c) Property, Plant and Equipment

i) Recognition and measurement: Property, plant and equipment including bearer assets are carried at historical cost of acquisition less accumulated depreciation and accumulated impairment loss, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent expenditure related to an item of fixed asset are added to its book value only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced asset is derecognized. All repairs and maintenance are charged to the statement of profit and loss during the financial year in which they are incurred.

ii) Depreciation: Depreciation is provided on assets to get the initial cost down to the residual value, including on assets created on lands under lease. Land is not depreciated. Depreciation is provided on a straight line basis over the estimated useful life of the asset as prescribed in Schedule II to the Companies Act, 2013 or based on technical evaluation of the asset. Cost incurred on assets under development are disclosed under capital work-in-progress and not depreciated till the asset is ready to use.

The residual values and useful lives of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount. Recoverable amount is the higher of the value in use or exchange.

Gains and losses on disposals are determined by comparing the sale proceeds with the carrying amount and are recognized in the statement of profit and loss.

(d) Biological Assets

Biological assets are classified as bearer biological assets and consumable biological assets. Consumable biological assets are those that are to be harvested as agricultural produce. Bearer biological assets which are held to bear agricultural produce are classified as bearer plants.

The Company recognizes Tea bushes and shade trees as bearer plant, bearer plants with further classification as mature bearer plants and immature bearer plants. Mature bearer plants are those that have attained harvestable stage.

Bearer assets are carried at historical cost of acquisition less accumulated depreciation and impairment loss, if any. Subsequent expenditure on bearer assets are added to its book value only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Cost incurred for new plantations and immature areas are capitalized. The cost of immature areas coming into bearing is transferred to mature plantations and depreciated over their estimated useful life which has been ascribed to be in the range of 50 years.

Tea is designated as agricultural produce at the point of harvest and is measured at their fair value less cost to sell as at each reporting date. Any changes in fair value are recognized in the statement of profit and loss in the year in which they arise.

(e) Investment Property

Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the company, are classified as Investment Property. These are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. Subsequent expenditure related to investment properties are added to its book value only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Investment properties are depreciated using the straight line method over the useful lives. Depreciable investment properties have been ascribed a useful life in the range of 60 years.

(f) Intangible Assets

(i) Patent / knowhow

Product development cost incurred on new products having enduring benefits is recognized as Intangible Assets and are amortized over a period of 10 years.

(ii) Non-compete fees

Non-compete fees paid on acquisition of business is being amortized over a period of 10 years.

(iii) Computer software

Software development costs are expensed unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the company has an intention and ability to develop and sell or use the software and the costs can be measured reliably. Directly attributable costs that are capitalized as part of the software product include software product development costs, related employee costs and an appropriate portion of relevant overheads. Other expenditures that do not meet these criteria are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Computer software development costs recognized as assets are amortized over their estimated useful lives, which range between 3 to 5 years.

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives of 3 to 5 years.

(iv) Research and Development

Research expenditure is recognized in the statement of profit and loss as incurred. Development expenditure is capitalized only if the costs can be reliably measured, future economic benefits are probable, the product is technically feasible and the Company has the intent and the resources to complete the project. Development assets are amortized based on the estimated useful life, as appropriate.

(g) Impairment of tangible and intangible assets

Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest possible levels for which there are independent cash inflows (cash-generating units). Prior impairment of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortization and are tested annually for impairment.

(h) Assets held for sale and disposal groups

Non-current assets held for sale and disposal groups are presented separately in the balance sheet when the following criteria are met:

- the company is committed to selling the asset or disposal group;

- the assets are available for sale immediately;

- an active plan of sale has commenced; and

- sale is expected to be completed within 12 months.

Assets held for sale and disposal groups are measured at the lower of their carrying amount and fair value less cost to sell. Assets held for sale are no longer amortized or depreciated.

(i) Financial Instruments Financial assets

The Company classifies its financial assets in the following categories:

i) Financial assets at amortized cost- Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost.

These are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently, if maturing after 12 months period, using the effective interest method, less any impairment loss.

Debt instruments which do not meet the criteria of amortized cost are measured at fair value and classified as fair value through profit and loss or through other comprehensive income, as applicable.

Financial assets at amortized cost are represented by trade receivables, security deposits, cash and cash equivalents, employee and other advances.

ii) Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)

- All equity investments are measured at fair values. Investments which are not held for trading purposes and where the Company has exercised the option to classify the investment as Fair Value through other comprehensive income (''FVTOCI''), all fair value changes on the investment are recognized in OCI. The accumulated gains or losses recognized in OCI are reclassified to retained earnings on sale of such investments.

iii) Financial assets at Fair Value through Profit and Loss (FVTPL) - Financial assets which are not classified in any of the categories above are fair valued through profit or loss (FVTPL).

iv) Impairment of financial assets - The

Company assesses expected credit losses associated with its assets carried at amortized cost and fair value through other comprehensive income based on Company''s past history of recovery, credit-worthiness of the counter party and existing market conditions. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Company applies the simplified approach for recognition of impairment allowance as provided in Ind AS 109, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognized initially at fair value and in case of loans and borrowings net of directly attributable costs.

Financial liabilities are subsequently measured at amortized cost using effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying value approximates fair value due to short maturity of these instruments.

Investment in Subsidiaries, Associates and Joint Ventures

Investment in subsidiaries, associates and joint ventures are accounted at cost in the separate financial statements.

Derivative financial instruments and hedging activities

A derivative is a financial instrument which changes value in response to changes in an underlying asset and is settled at a future date. Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The company designates certain derivatives as either:

(a) hedges of the fair value of recognized assets or liabilities (fair value hedge); or

(b) hedges of a particular risk associated with a firm commitment or a highly probable forecast transaction (cash flow hedge).

The company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The company also documents its assessment, both at hedge inception and on an on-going basis, of whether the derivatives that are used in hedging transactions are effective in offsetting changes in cash flows of hedged items.

Movements in the hedging reserve are accounted in other comprehensive income and are shown within the statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is for more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is for less than 12 months. Trading derivatives are classified as a current asset or liability.

(a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of profit and loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The company only applies fair value hedge accounting for hedging foreign exchange risk on recognized assets and liabilities.

(b) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The ineffective portion of changes in the fair value of the derivative is recognized in the statement of profit and loss.

Gains or losses accumulated in equity are reclassified to the statement of profit and loss in the periods when the hedged item affects the statement of profit and loss.

When a hedging instrument expires, swapped or unwound, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted hedged transaction is ultimately recognized in the statement of profit and loss.

When a forecasted transaction is no longer expected to occur, the cumulative gains/losses that were reported in equity are immediately transferred to the statement of profit and loss.

Fair value measurement

The Company classifies the fair value of its financial instruments in the following hierarchy, based on the inputs used in their valuation:

i) Level 1 - The fair value of financial instruments quoted in active markets is based on their quoted closing price at the balance sheet date.

ii) Level 2 - The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques using observable market data. Such valuation techniques include discounted cash flows, standard valuation models based on market parameters for interest rates, yield curves or foreign exchange rates, dealer quotes for similar instruments and use of comparable arm''s length transactions.

iii) Level 3 - The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs).

(j) Inventories

Raw materials, traded and finished goods are stated at the lower of cost and net realizable value. Stores and spares are carried at cost. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

Cost is determined on weighted average method for all categories of inventories other than for auction/privately bought teas in which case, cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition, where applicable, include appropriate overheads based on normal level of activity. Agricultural produce included within inventory largely comprises stock of tea and in accordance with Ind AS 41, on initial recognition, agricultural produce is required to be measured at fair value less estimated point of sale costs.

Provision is made for obsolescence and other anticipated losses wherever considered necessary.

(k) Employee Benefits

The Company operates various post-employment schemes, including both defined benefit and defined contribution plans and post-employment medical plans. Short-term employee benefits are recognized on an undiscounted basis whereas long-term employee benefits are recognized on a discounted basis.

i) Post retirement employee benefits:

Contribution to post retirement defined benefit and contribution schemes like Provident Fund (PF), Superannuation Schemes and other such schemes are accounted for on accrual basis by the Company. With regard to Provident Fund contribution made by the Company to a Self-Administered Trust, the Company is generally liable for annual contributions and any shortfall in the fund assets, based on the government specified minimum rates of return, such contribution and shortfall, if any, is recognized as an expense in the year incurred.

Post retirement defined benefits including gratuity, pension and medical benefits for qualifying executives/whole time directors as provided by the Company are determined through independent actuarial valuation at year end and charge recognized in the statement of profit and loss. Interest costs on defined benefit plans have been classified within finance cost. For schemes, where funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in other comprehensive income. Such accumulated re-measurement balances are never reclassified into the statement of profit and loss subsequently.

The Company recognizes in the statement of profit and loss, gains or losses on curtailment or settlement of a defined benefit plan as and when the curtailment or settlement occurs.

ii) Other employee benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognized in the statement of profit and loss.

iii) Employee termination benefits:

Payments to employees on termination along with additional liabilities towards retirement benefits arising pursuant to the termination are charged to the statement of profit and loss in the year in which it is incurred.

(l) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

If the effect of the time value of money is material, provisions are discounted. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.

(m) Income Tax i) Current Income Tax:

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

ii) Deferred Tax:

Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The tax rates and tax laws used to compute the tax are those that are enacted or substantively enacted at the reporting date. Current income tax/deferred tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

iii) Minimum Alternate Tax:

According to section 115JAA of the Income Tax Act, 1961, Minimum Alternative Tax (''MAT'') paid over and above the normal income tax in a subject year is eligible for carry forward for fifteen succeeding assessment years for set-off against normal income tax liability. The MAT credit asset is assessed against the Company''s normal income tax during the specified period.

(n) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts inclusive of excise duty receivable for goods supplied, stated net of discounts, returns and value added taxes. The Company recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Company''s activities, as described below. The Company bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

i) Sale of goods and services

Sales are recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of contract, which generally coincides with the delivery of the product. Income and fees from services are accounted as per terms of relevant contractual agreements /arrangements. The products are often sold with sales related discounts such as volume discounts, customer rebates, trade support and listing costs and consumer promotional activities as billed by customers. Sales are recorded based on the price specified in the sales contracts, net of the estimated discounts/rebates and returns at the time of sale. Accumulated experience is used to estimate and provide for the discounts and returns.

ii) Interest income and Dividend Income

Interest income is recognized using the effective interest method. When a loan and receivable is impaired, the company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognized using the original effective interest rate.

Dividend income is recognized when the right to receive payment is established. Income from investments are accounted on an accrual basis.

o) Government Grant

Government grants including any non-monetary grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Government grants are recognized in the statement of profit and loss on a systematic basis over the periods in which the related costs, for which the grants are intended to compensate, are recognized as expenses. Government grants related to property, plant and equipment are presented at fair value and are recognized as deferred income.

(p) Leases

As a lessee

Lease of assets, where the Company, as a lessee, has substantially assumed all the risks and rewards of ownership are classified as finance leases. Assets acquired on finance lease are capitalized and depreciated as per Company''s policy on Property, Plant and Equipment. Finance lease are measured at the lease''s inception at the lower of fair value of the leased property and the present value of the minimum lease payments. The corresponding lease rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each year.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the less or) are charged to statement of profit and loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the less or’s expected inflationary cost increases.

As a less or

Lease income from operating leases where the company is a less or is recognized as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases.

(q) Borrowing Costs

Borrowing costs consist of interest, ancillary and other costs that the Company incurs in connection with the borrowing of funds and interest relating to other financial liabilities. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.

(r) Exceptional Items

Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the company. These are material items of income or expense that have to be shown separately due to their nature or incidence.

(s) Earnings per share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

(t) Segment Reporting

Segments are identified based on the manner in which the Company''s Chief Operating Decision Maker (''CODM'') decides about resource allocation and reviews performance.

Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible assets other than goodwill.

(u) Contingent Liabilities

Contingent liabilities exist when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required or the amount cannot be reliably estimated. Contingent liabilities are appropriately disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

(v) Cash and cash equivalents

Cash and cash equivalents for the purpose of presentation in the statement of cash flow, comprises of cash at bank, in hand, bank overdrafts and short-term highly liquid investments/bank deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(w) Offsetting instruments

Assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amount and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counter-party.

(x) Events after the reporting period

Adjusting events are events that provide further evidence of conditions that existed at the end of the reporting period. The financial statements are adjusted for such events before authorization for issue.

Non-adjusting events are events that are indicative of conditions that arose after the end of the reporting period. Non-adjusting events after the reporting date are not accounted, but disclosed.

(y) Key accounting judgment, estimates and assumptions

The preparation of the financial statements requires management to exercise judgment and to make estimates and assumptions. These estimates and associated assumptions are based on historical experiences and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision affect only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas involving critical estimates or judgments are:

1. Depreciation and amortization

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

2. Employee Benefits

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

3. Fair Value of derivatives and other financial instruments

All financial instruments are required to be fair valued as at the balance sheet date, as provided in Ind AS 109 and 113. Being a critical estimate, judgment is exercised to determine the carrying values. The fair value of financial instruments that are unlisted and not traded in an active market is determined at fair values assessed based on recent transactions entered into with third parties, based on valuation done by external appraisers etc., as applicable.

(z) Recent accounting pronouncements

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards)

(Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of Cash Flows'' and Ind AS 102, ''Share-based payment.'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of Cash Flows'' and IFRS 2, ''Share-based payment'', respectively. The amendments are applicable from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. The Company will analyze the impact on Statement of Cash Flow and the notes to the financial statements.

Amendment to Ind AS 102:

The Ind AS 102, ''Share-based payment'' is not applicable to the Company.

(aa) Transition to Ind AS

For the purpose of reporting as set out in Note 2(a), Basis of preparation and presentation of financial statements, we have transitioned our basis of accounting from Indian Generally Accepted Accounting Principles ("IGAAP") to Indian Accounting Standards (Ind AS). The significant accounting policies as disclosed in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March

31, 2016 and opening statement of financial position as at April 1, 2015 (the "transition date").

In preparing the opening Ind AS statement of financial position, the Company has made adjustments to amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in Note 45. On transition, the Company did not revise estimates previously made under IGAAP except where required by Ind AS.

1) On transition to Ind AS as at April 1, 2015, the Company has elected to measure all its property, plant and equipment at the previous GAAP''s carrying value.

2) Certain Plantation land meant for usage as tea plantations and for ancillary activities has been leased by the Company to its associate company Kanan Devan Hills Plantation Company Private Limited for a period of 30 years as part of restructure of its South India Plantation Operation in 2005.

3) Cost of Buildings include Rs. 5.90 Crores (31 March 2016 - Rs. 5.90 Crores, 1 April 2015 - Rs. 5.90 Crores) represented by shares in Co-operative Housing Societies / a Company.

4) (@) Includes amount of Rs. 1.26 Crores (31 March 2016 - Rs. 1.26 Crores, 1 April 2015 - Rs.1.26 Crores ), Rs.0.62 Crores (31 March 2016 - Rs. 0.62 Crores, 1 April 2015 - Rs. 0.62 Crores ), Rs. 0.08 Crores (31 March 2016 - Rs. 0.08 Crores, 1 April 2015 -Rs. 0.08 Crores), respectively, jointly owned / held with a subsidiary company.

5) Land includes leasehold land amounting to Rs. 0.17 Crores (31 March 2016: Rs. 0.17 Crores, 1 April 2015: Rs. 0.17 Crores).

& During the financial year 2016-17, the Company has invested an amount of Rs. 74.41 Crores towards equity capital of Zhejiang Tata Tea Extractions Company Limited (ZTTECL).The revised shareholding post this infusion in ZTTECL stands at 89.75%. This investment is held for sale as at March 31 2017.

A Sale of these investments requires first offer of sale to the venture partners.

* During the financial year 2016-17, the Company has invested an amount of Rs. 16 Crores towards issue of equity shares by NourishCo Beverages Limited and Rs. 12 Crores towards issue of equity shares by Tata Starbucks Private Limited. Both these Companies are 50:50 Joint Ventures.

Investment in subsidiaries, joint ventures and associates are carried at cost (Refer Note 45).

Investment in preference shares of Amalgamated Plantation Pvt. Ltd, are redeemable with a special redemption premium, on fulfillment of certain conditions, within 10-12 years from the date of the issue and are designated as fair value through profit and loss. Preference shares of TRIL Construction Ltd are non-cumulative and mandatorily fully convertible within six years from the issue date, the same is carried at cost.

c) Issue of Shares

Consequent to and as part of the amalgamation of the erstwhile Mount Everest Mineral Water Limited with the Company, the Authorized Share Capital of the Company stand increased to Rs. 110 Crores made up of 110,00,00,000 Equity Shares of Re. 1/each with effect from May 18, 2015 (effective date of amalgamation). Pursuant to the amalgamation, the Company had issued 12731159 equity shares in 2015-16 which was earlier accounted under Share Suspense Account.

d) Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of Re. 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The Board of Directors in its meeting held on May 30, 2017 has recommended a final dividend payment of Rs. 2.35 per Share for the financial year ended March 31, 2017. The Board has also approved transfer of 10 % of the year''s profit to the General Reserve.

f) Nature and Purpose of Reserve

i. Capital Reserve

Capital Reserve had been created consequent to acquisition of certain plantation business.

ii. Securities Premium Account

Securities Premium Account had been created consequent to issue of shares at premium. These reserves can be utilised in accordance with Section 52 of Companies Act, 2013.

iii. Debenture Redemption Reserve

Debenture Redemption Reserve had been created in accordance with Section 71(4) of Companies Act, 2013.

iv. Contingency Reserve

Contingency Reserve are in the nature of free reserves.

v. Revaluation Reserve

Revaluation Reserve was created on acquisition of shares in Tata Coffee Limited (Refer Note 6).

(b) Labour disputes under adjudication relating to some staff - amount not ascertainable.

(c) Guarantees given to the lenders of subsidiary Rs. 19.80 Crores (31 March 2016 - Rs. 75.94 Crores, 1 April 2015 - Rs. 72.53 Crores). These corporate guarantees were issued against loans drawn by a subsidiary company from banks as working capital loans and term debts.


Mar 31, 2014

1. General Information:

Tata Global Beverages Limited ("the holding company”) and its subsidiaries, joint ventures and associates (together, "the Group”) is a global beverages company engaged in the trading, production and distribution of Tea, Coffee and Water. The group has branded beverage business operations mainly in India, Europe, US, Canada and Australia, plantation business in India/Sri Lanka and extraction business mainly in India, US and China.

2. Significant Accounting Policies:

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared in accordance with the historical cost convention.

The presentation of the accounts is based on the revised Schedule VI of the Companies Act 1956. All assets and liabilities are classified into current and non-current generally based on criteria of realisation/settlement within a twelve month period from the balance sheet date.

(b) Fixed Assets and Depreciation

i) Tangible:

Tangible Assets are carried at cost of acquisition less accumulated depreciation and accumulated impairment loss, if any. Subsequent expenditure related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

Depreciation is provided on tangible assets including asset created on lands under lease on a monthly straight-line basis over the estimated useful life of the asset or at the rate prescribed in Schedule XIV to the Companies Act, 1956.

Renewal of land leases is assumed, consistent with past practice.

Estimated useful lives of Assets are as follows:

Desktop and Computers 4 years

Printers 4 years

Servers 4 years

Leashold improvements Over the life of lease

ii) Intangible:

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any.

Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a monthly basis over a period of five years.

Non-compete fees paid on acquisition of business is being amortised on monthly basis over a period of 10 years.

Product development Cost incurred on new products having enduring benefits is recognised as Intangible Assets and are amortised on a monthly basis over a period of 10 years.

(c) Impairment

At each balance sheet date, the management assess whether there is any indication that the assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset''s net selling price and its value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Cash flows used to determine value in use are derived from the annual budgets and strategic plans of the cash generating units. For certain cash generating units, variable growth has been considered even beyond five years, given the maturity of the business and scope for geographical expansion.

Reversal of impairment loss is recognised as income in the statement of Profit and loss.

(d) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially assumed all risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease period at lower of fair value or present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease rental under operating leases are recognised in the statement of Profit and loss on a straight- line basis over the period of lease.

(e) Borrowing Costs

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange difference arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the statement of Profit and loss. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(f) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost or fair value.

(g) Inventories

Inventories are stated at lower of cost or net realisable value. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolescence and other anticipated losses wherever considered necessary.

(h) Foreign Currency Transactions

Transactions in foreign currencies are recorded at average fortnightly spot rates. The exchange difference resulting from settled transactions is recognised in the statement of Profit and loss. Year end balances of monetary items are restated at the yearend exchange rates and the resultant net gain or loss is recognised in the statement of Profit and loss.

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange difference between the spot rate at the date of the contract and the spot rate on the balance sheet date is recognised as gain/loss in the statement of Profit and loss.

(i) Revenue Recognition

(i) Sales are recognised when the significant risks and rewards of ownership in the goods are transferred to the buyer as per terms of contract.

(ii) Income and fees from services are accounted as per terms of relevant contractual agreements/ arrangements.

(iii) Export incentives are accounted on accrual basis.

(j) Other Income

Interest income and income from investments are accounted on accrual basis.

Dividend income is recognised when the right to receive dividend is established.

(k) Replanting/Rejuvenation

Cost of replanting/ rejuvenating tea bushes/ fuel trees is charged to revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(l) Compensation of Land

Compensation, if any, in respect of land surrendered/ vested in Governments under various State Land Legislations is accounted for as and when received.

(m) Employee Benefits

i) Post retirement employee benefits:

Post retirement benefits like Provident Fund which are in the nature of defined benefit plans and also Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company and for certain categories contributions are made to State Plans. In respect of PF contribution made to a Self Administered Trust, the Company is liable for annual contributions and any shortfall in the fund assets based on the Government specified minimum rates of return, such contribution and shortfall, if any is recognised as an expense in the year incurred.

Post retirement defined benefits including gratuity, superannuation and medical benefits for qualifying executives/Whole time directors as provided by the Company are determined through independent actuarial valuation at year end and charge recognised in the statement of Profit and loss. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the statement of Profit and loss.

The Company recognizes in the statement of Profit and loss, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the statement of Profit and loss. Short-term Employee Benefits are recognised on an undiscounted basis whereas Long-term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits:

Payments to employees on termination along with additional liabilities towards retirement benefits arising pursuant to the termination are charged to the statement of Profit and loss in the year in which it is incurred.

(n) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets.

(o) Taxes on Income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets.

Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(p) Financial Instruments

The Company uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account.

On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the statement of Profit and loss. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the statement of Profit and loss. Fair value hedges are marked to market on balance sheet date and gain or loss recognised in the statement of Profit and loss.

(q) Cash and Cash Equivalents

Cash and Cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short term investments/bank deposits with an original maturity of three months or less.

(r) Provisions

Provisions are recognised when there is a present obligation as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the obligation at the reporting date and are not discounted to its present value. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

(s) Contingent Liabilities

Contingent liabilities exist when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group, or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required or the amount cannot be reliably estimated. Contingent liabilities are appropriately disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.


Mar 31, 2013

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared in accordance with the historical cost convention.

The presentation of the accounts is based on the revised Schedule VI of the Companies Act, 1956. All assets and liabilities are classified into current and non-current generally based on criteria of realisation/settlement within twelve months period from the balance sheet date.

(b) Fixed Assets and Depreciation

i) Tangible:

Tangible Assets are carried at cost of acquisition less accumulated depreciation, Impairment loss, if any, ascertained as per the Accounting Standard 28 (Impairment of Assets).The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost.

Depreciation on tangible assets including assets created on lands under lease is provided on monthly basis in accordance with Schedule XIV to the Companies Act, 1956 (except as below). Renewal of land leases is assumed, consistent with past practice.

Management estimates the useful lives for other Ta ngible Assets as follows:

Desktop and Computers 4 years

Printers 4 years

Servers 4 years

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

ii) Intangible:

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any.

Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a monthly basis over a period of five years.

Non-compete fees paid on acquisition of business is being amortised on monthly basis over a period of 10 years.

Product development cost incurred on new products having enduring benefits is recognised as Intangible Assets and are amortised on a monthly basis over a period of 10 years.

(c) Impairment

At each balance sheet date, the management reviews the carrying amounts of each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset''s net selling price and value in use.

In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Cash flows used to determine value in use are derived from the annual budgets and strategic plans of the cash generating units. For certain cash generating units, variable growth has been considered even beyond five years, given the maturity of the business and scope for geographical expansion.

Reversal of impairment loss is recognised as income in the statement of profit and loss.

(d) Borrowing Costs

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange difference arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the statement of profit and loss. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(e) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

(f) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

(g) Foreign Currency Transactions

Transactions in foreign currencies are recorded at average fortnightly spot rates. The exchange difference resulting from settled transactions is recognised in the statement of profit and loss. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognised in the statement of profit and loss.

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange difference between the spot rate at the date of the contract and spot rate on the balance sheet date is recognised as gain/loss in the statement of profit and loss.

(h) Revenue Recognition

(i) Sales are recognised on when the substantial risks and rewards of ownership in the goods are transferred to the buyer i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

(ii) Fees and income from services are accounted as per terms of relevant contractual agreements/arrangements.

(iii) Export incentives are accounted on accrual basis.

(i) Other Income

Interest income and income from investments are accounted on accrual basis.

Dividend income is recognised when the right to receive dividend is established.

(j) Replanting/Rejuvenation

Cost of replanting/rejuvenating tea bushes/fuel trees is charged to revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(k) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in Governments under various State Land Legislations is accounted for as and when received.

(l) Employee Benefits

i) Post retirement employee benefits:

Post retirement benefits like Provident Fund which are in the nature of defined benefit plans and also Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company and for certain categories contributions are made to State Plans. In respect of PF contribution made to a Self Administered Trust, the Company is liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contribution and shortfall, if any, as an expense in the year incurred.

Post retirement defined benefits including gratuity, superannuation and medical benefits for qualifying executives/wholetime directors as provided by the Company are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the statement of profit and loss.

The Company recognizes in the statement of profit and loss, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the statement of profit and loss. Short-term Employee Benefits are recognised on an undiscounted basis whereas Long-term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits:

Payments to employees who have opted for the Employee Separation Scheme (ESS) along with additional liabilities towards retirement benefits arising pursuant to the ESS are charged to statement of profit and loss in the year in which it is incurred.

(m) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets. (n) Taxes on Income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets.

Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(o) Financial Instruments

The Company uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the statement of profit and loss. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the statement of profit and loss. Fair value hedges are marked-to-market on balance sheet date and gain or loss recognised in the statement of profit and loss.

(p) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially assumed all risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease period at lower of fair value or present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straightline basis.

(q) Cash and Cash Equivalent

Cash and Cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short-term investments/ bank deposits with an original maturity of three months or less.

(r) Provisions

A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

(s) Contingent Liabilities

Contingent liabilities exist and are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of company, unless the possibility of an outflow is remote. A present obligation that arises from past events where it is either not probable that an outflow of resources will be required or a reliable estimate of the amount cannot be made is termed as contingent liability.


Mar 31, 2012

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared in accordance with the historical cost convention.

The presentation of the accounts is based on the revised Schedule VI of the Companies Act, 1956, applicable from the current financial year. Accordingly previous year figures are realigned to make it comparable with current year.

All assets and liabilities are classified into current and non-current generally based on criteria of realisation/settlement within twelve months period from the Balance Sheet date.

(b) Fixed Assets and Depreciation i) Tangible

Tangible Assets are carried at cost of acquisition less accumulated depreciation. Impairment loss, if any, ascertained as per the

Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised. The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost.

Depreciation on tangible assets including assets created on lands under lease is provided on straight-line method in accordance with Schedule XIV to the Companies Act, 1956 based on useful life as estimated by the management. Renewal of land leases is assumed, consistent with past practice.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

ii) Intangible

Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any. Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a straight-line basis over a period of five years.

Non-compete fees paid on acquisition of business is being amortised on straight-line basis over a period of ten years. Product development cost incurred on new products is recognised as Intangible Assets and are amortised over a period of ten years.

(c) Impairment

At each Balance Sheet date, the management reviews the carrying amounts of each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.

Reversal of impairment loss is recognised as income in the statement of profit and loss.

(d) Borrowing Costs

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange difference arising from foreign currency borrowings to the extent they are regarded as adjustment to the interest cost.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the statement of profit and loss. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(e) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

(f) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

(g) Foreign Currency Transactions

Transactions in foreign currencies are recorded at average fortnightly spot rates. The exchange difference resulting from settled transactions is recognised in the statement of profit and loss. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognised in the statement of profit and loss.

Premium or discount on forward contracts where there are underlying assets /liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the Balance Sheet date and the exchange difference between the spot rate at the date of the contract and spot rate on the Balance Sheet date is recognised as gain/loss in the statement of profit and loss.

(h) Revenue Recognition

(i) Sales are recognised on when the substantial risks and rewards of ownership in the goods are transferred to the buyer i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

(ii) Fees and income from services are accounted as per terms of relevant contractual agreements/arrangements.

(iii) Export incentives are accounted on accrual basis.

(i) Other income

Interest income and income from investments are accounted on accrual basis.

Dividend income is recognised when the right to receive dividend is established.

(j) Replanting/Rejuvenation

Cost of replanting/rejuvenating tea bushes/fuel trees is charged to revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(k) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in Governments under various State Land Legislations is accounted for as and when received.

(l) Employee Benefits

i) Post retirement employee benefits:

Post retirement benefits like Provident Fund and Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company and for certain categories contributions are made to State Plans. In respect of PF contribution made to a Self Administered Trust, the Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contribution and shortfall, if any, as an expense in the year incurred.

Defined Benefit plans like Gratuity and Superannuation schemes are also maintained by the Company. Post retirement medical benefits are provided by the Company for certain categories of employees. Liabilities under the defined benefit schemes are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the statement of profit and loss.

The Company recognises in the statement of profit and loss, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits:

Other employee benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the statement of profit and loss. Short term Employee Benefits are recognised on an undiscounted basis whereas Long Term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits:

Payments to employees who have opted for the Employee Separation Scheme (ESS) along with additional liabilities towards retirement benefits arising pursuant to the ESS are charged to Statement of profit and loss in the year in which it is incurred.

(m) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets.

(n) Taxes on income

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with Income Tax Act, 1961.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets.

Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(o) Financial instruments

The Company uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the statement of profit and loss. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the statement of profit and loss. Fair value hedges are marked to market on Balance Sheet date and gain or loss recognised in the statement of profit and loss.

(p) Leases

Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially assumed all risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease period at lower of fair value or present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straight-line basis.

(q) Cash and Cash Equivalent

Cash and Cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short term investments/ bank deposits with an original maturity of three months or less.

(r) Provisions

A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.


Mar 31, 2011

A) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notifed u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared in accordance with the historical cost convention.

b) Fixed Assets and Depreciation

Fixed Assets are carried at cost of acquisition less depreciation. Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised. The cost of extension planting of cultivable land, including cost of development, is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost. Depreciation on fixed assets, including assets created on lands under lease is provided on, straight-line method in accordance with Schedule XIV to the Companies Act, 1956 or on estimated useful life. Renewal of land leases is assumed, consistent with past practice. Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic Benefits and are amortised on a straight-line basis over a period of fve years.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

Non-compete fees paid on acquisition of business is being amortised on straight-line basis over a period of 10 years.

c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised. The other costs are charged to the profit and Loss Account. Discount on Commercial Paper is amortised on straight-line basis over its tenure.

d) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

e) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction-bought teas, in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and deffective stocks, where necessary.

f) Foreign Currency Transactions

Transactions in foreign currencies relating to exports are recorded at average fortnightly spot rates. Other transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. The exchange diference resulting from settled transactions is recognised in the profit and Loss Account. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognised in the profit and Loss Account.

g) Sales and Services

i) Sales are recognised on passing of property in goods, i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

ii) Fees and income from services are accounted as per terms of relevant arrangements.

h) Other Income

Export incentives, interest income and income from investments are accounted on accrual basis.

i) Replanting/Rejuvenation

Cost of replanting/rejuvenating tea bushes/fuel trees is charged to Revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

j) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in governments under various State Land Legislations is accounted for as and when received.

k) Employee Benefits

i) Post-retirement employee Benefits: Post-retirement Benefits like Provident Fund and Defined Contribution Superannuation schemes, in the nature of Defined contribution plans, are maintained by the Company and, for certain categories, contributions are made to State Plans. Contributions required are recognised in the profit and Loss Account on an accrual basis and funded with recognised funds set up for the purpose. For certain Provident Fund Schemes, the interest rates are assured and the defcit is borne by the Company.

Defined benefit plans like Gratuity and Superannuation schemes are also maintained by the Company. Post-retirement medical Benefits are provided by the Company for certain categories of employees. Liabilities under the Defined benefit schemes are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the profit and Loss Account.

The Company recognises in the profit and Loss Account, gains or losses on settlement of a Defined benefit plan as and when the settlement occurs.

ii) Other Employee Benefits: Other employee Benefits are accounted for on accrual basis. Liabilities for compensated absences are determined based on independent actuarial valuation at year end and charge is recognised in the profit and Loss Account. Short Term Employee Benefits are recognised on an undiscounted basis whereas Long-Term Employee Benefits are recognised on a discounted basis.

iii) Other Employee Termination Benefits: Payments to employees who have opted for the Employee Separation Scheme (ESS) along with additional liabilities towards retirement Benefits arising pursuant to the ESS are charged to profit and Loss Account in the year in which it is incurred.

l) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is included under fixed assets.

m) Deferred Taxation

Deferred tax is recognised using the liability method, on all timing diferences to the extent that it is probable that a liability or asset will crystallise. As at the balance sheet date, unless there is evidence to the contrary, deferred tax assets pertaining to business loss are only recognised to the extent that there are deferred tax liabilities offsetting them.

n) Financial Instruments

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange diference between the spot rate at the date of the contract and spot rate on the balance sheet date is recognised as gain/loss in the profit and Loss Account.

The Company also uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fuctuations relating to certain frm commitments and highly probable transactions. The Company designates these hedging instruments as cash fow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash fow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the profit and Loss Account. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash fow hedge is recognised in the profit and Loss Account. Fair value hedges are marked to market on the balance sheet date and gain or loss recognised in the profit and Loss Account.

o) Leases

Rental in respect of operating leases are charged of to profit and Loss Account.


Mar 31, 2010

(a) Accounting Convention

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards, notified u/s 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956. The financial statements have been prepared in accordance with the historical cost convention.

(b) Fixed Assets and Depreciation

Fixed Assets are carried at cost of acquisition less depreciation. Impairment loss, if any, ascertained as per the Accounting Standard of the Companies (Accounting Standards) Rules, 2006 is recognised. The cost of extension planting of cultivable land including cost of development is capitalised.

Assets acquired on hire purchase, for which ownership will vest at a future date, are capitalised at cash cost. Depreciation on fixed assets including assets created on lands under lease is provided on straight-line method in accordance with Schedule XIV to the Companies Act, 1956. Renewal of land leases is assumed, consistent with past practice. Expenditure on software and related implementation costs are capitalized where it is expected to provide enduring economic benefits and are amortised on a straight-line basis over a period of five years.

Subsidies receivable from government in respect of fixed assets are deducted from the cost of respective assets as and when they accrue.

Non-compete fees paid on acquisition of business is being amortised on straight-line basis over a period of 10 years.

(c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised.The other costs are charged to the profit and loss account. Discount on Commercial Paper is amortised on straight line basis over its tenure.

(d) Investments

Investments of a long-term nature are stated at cost, less adjustment for any diminution, other than temporary, in the value thereof. Current investments are stated at lower of cost and market value.

(e) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined on weighted average method for all categories of inventories other than for auction bought teas in which case cost is considered as actual cost for each lot. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes, where applicable, appropriate overheads based on normal level of activity. Provision is made for obsolete, slow-moving and defective stocks, where necessary.

(f) Foreign Currency Transactions

Transactions in foreign currencies relating to exports are recorded at average fortnightly spot rates. Other transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. The exchange difference resulting from settled transactions is adjusted in the profit and loss account. Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is adjusted in the profit and loss account.

(g) Sales and Services

(i) Sales are recognised on passing of property in goods i.e. delivery as per terms of sale or on completion of auction in case of auction sale.

(ii) Fees and income from services are accounted as per terms of relevant arrangements.

(h) Other Income

Export incentives, interest income and income from investments are accounted on accrual basis.

(i) Replanting/Rejuvenation

Cost of replanting/ rejuvenating tea bushes/fuel trees is charged to Revenue. Related Tea Board subsidies are accrued as Other Income on obtaining approval from Tea Board.

(j) Compensation of Land

Compensation, if any, in respect of land surrendered/vested in Governments under various State Land Legislations is accounted for as and when received.

Schedule 22 (Continued) (k) Employee Benefits

(i) Post retirement employee benefits:

Post retirement benefits like Provident Fund and Defined Contribution Superannuation schemes, in the nature of defined contribution plans, are maintained by the Company. Contributions required are recognised in the profit and loss account on an accrual basis and funded with recognised funds set up for the purpose. For certain Provident Fund Schemes, the interest rates are assured and the deficit is borne by the Company.

Defined Benefit plans like Gratuity and Superannuation schemes are also maintained by the Company. Post retirement medical benefits are provided by the Company for certain categories of employees. Liabilities under the defined benefit schemes are determined through independent actuarial valuation at year end and charge recognised in the books. For schemes, where recognised funds have been set up, annual contributions determined as payable in the actuarial valuation report are contributed. Actuarial gains and losses are recognised in the profit and loss account.

The Company recognizes in the profit and loss account, gains or losses on settlement of a defined benefit plan as and when the settlement occurs.

(ii) Other Employee Benefits:

Other employee benefits are accounted for on accrua basis. Liabilities for Compensated absences are determined based on independent actuarial valuation at year end and charge recognised in the profit and loss account. Short-term Employee Benefits are recognised on an undiscounted basis whereas Long Term Employee Benefits are recognised on a discounted basis.

(I) Miscellaneous Expenditure to the extent not written off or adjusted

Payments to employees who have opted for the Employee Separation Schemes (ESS) of the Company along with additional liabilities towards retirement benefits arising pursuant to the ESS are being amortised over a period of sixty months but not later than 1 st April 2010.

(m) Research and Development

Research and Development expenditure of revenue nature is charged to revenue and capital expenditure is treated as fixed assets.

(n) Deferred Taxation

Deferred tax is recognised using the liability method, on all timing differences to the extent that it is probable that a liability or asset will crystallise. As at the balance sheet date, unless there is evidence to the contrary, deferred tax assets pertaining to business loss are only recognised to the extent that there are deferred tax liabilities offsetting them.

(o) Financial Instruments

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the balance sheet date and the exchange difference between the spot rate at the date of the contract and spot rate on the balance sheet date is recognised as gain/loss in the profit and loss account.

The Company also uses foreign currency forward contracts and options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable transactions. The Company designates these hedging instruments as cash flow hedges.

Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Gain or loss on account of change in the fair value of hedging instruments in respect of effective portion of cash flow hedges are recognised in the hedging reserve account. On occurrence of the underlying transactions the accumulated balance is transferred from hedging reserve and recognised in the profit and loss account. The portion of the gain or loss on the hedging instruments if determined to be an ineffective cash flow hedge is recognised in the profit and loss account. Fair value hedges are marked to market on balance sheet date and gain or loss recognised in the profit and loss account.

(p) Leases

Rental in respect of operating leases are charged off to profit and loss account.

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