Itc Subsidiaries 2011 Complete
Itc Subsidiaries 2011 Complete
Itc Subsidiaries 2011 Complete
Russell Credit Limited Greenacre Holdings Limited Wimco Limited Prag Agro Farm Limited Pavan Poplar Limited Technico Pty Limited Technico Technologies Inc. Technico Agri Sciences Limited Technico Asia Holdings Pty Limited Technico Horticultural (Kunming) Company Limited Srinivasa Resorts Limited Fortune Park Hotels Limited Bay Islands Hotels Limited ITC Infotech India Limited ITC Infotech Limited ITC Infotech (USA), Inc. Pyxis Solutions, LLC. USA Wills Corporation Limited Gold Flake Corporation Limited Landbase India Limited BFIL Finance Limited MRR Trading & Investment Company Limited Surya Nepal Private Limited King Maker Marketing, Inc. 3 16 23 40 47 54 65 69 81 86 94 102 112 118 129 136 142 146 154 162 172 180 184 196
2.
3,99,42,819
8,38,54,836
f.
3.
DIRECTORS Mr. K. Vaidyanath, consequent to his retirement from the services of ITC Limited, the Holding Company, stepped down as the Chairman and Director of your Company with effect from close of work on 2nd January, 2011. Your Directors would like to place on record their sincere appreciation for the contribution made by Mr. Vaidyanath during his tenure with the Company. Mr. R. Tandon was appointed as the Chairman of the Board of Directors of your Company with effect from 3rd January, 2011. In accordance with the provisions of Article 143 of the Articles of Association of the Company, Mr. P. Banerjea will retire by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers himself for re-election. Your Board of Directors has recommended his re-election.
4.
RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THE COMPANIES ACT, 1956 The Board of Directors of your Company re-appointed Mr. Sharad Jain as Manager of the Company for a period of two years with effect from 1st July, 2011, in terms of the provisions of Section 269 of the Companies Act, 1956, read with Schedule XIII thereto, subject to the approval of the Members of the Company at the next General Meeting. Appropriate resolution seeking your approval for re-appointment of Mr. Jain as Manager is appearing in the Notice convening the ensuing Annual General Meeting of the Company.
5.
DIRECTORS RESPONSIBILITY STATEMENT As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm having : i) followed in the preparation of the Annual Accounts, the applicable Accounting Standards with proper explanations relating to material departures, if any; selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
ii)
iii) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv) prepared the Annual Accounts on a going concern basis.
5th May, 2011 Registered Office: Virginia House 37, J. L. Nehru Road Kolkata 700 071
R. Tandon S. Dutta
Director Director
Name
Gross Remuneration
Experience (Years)
(`) 5 38,97,050 6 B.Com (Hons.), ACA and ACS 7 29 8 01.09.2007 9 COO, Technico Pty Ltd. Australia
2 52
4 83,49,620
Remuneration includes salary, performance bonus, allowances & other benefits and taxable value of perquisites except contribution to the approved Group Pension under the Defined Contribution Scheme and Gratuity Funds and provisions for leave encashment which are actuarially determined on an overall Company basis. The term remuneration has the meaning assigned to it in Section 198 of the Companies Act, 1956. Net remuneration comprises cash income less : a) income tax, surcharge & education cess deducted at source. b) employees own contribution to Provident Fund.
The aforesaid appointment is contractual in accordance with terms and conditions as per Company rules. The aforesaid employee is not a relative of any Director of the Company.
5th May, 2011 Registered Office: Virginia House 37, J. L. Nehru Road Kolkata 700 071
R. Tandon S. Dutta
Director Director
AUDITORS REPORT TO THE MEMBERS OF RUSSELL CREDIT LIMITED 1. We have audited the attached Balance Sheet of RUSSELL CREDIT LIMITED (the Company) as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows : (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; Kolkata 5th May, 2011 For A. F. Ferguson & Co. Chartered Accountants (Registration No. 112066W) R. A. Banga Partner (Membership No. 037915) (d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;
2.
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
3.
4.
(c) Details of dues which have not been deposited on 31st March, 2011 on account of dispute are given below:
Name of the statute Nature of Forum where Period to which the dues pending the amount relates Sales Tax Appellate Assistant Commissioner Commercial Tax Officer 2003-04 Amount (`) 3,96,900*
Sales Tax
2004-05
19,24,395*
Sales Tax
2005-06
24,24,648*
2005-06
10,53,273
*Of the above, ` 47,45,943 has been stayed for recovery by the relevant authorities. (v) Based on our examination of the records and evaluation of the related internal controls, the company has maintained proper records of transactions and contracts in respect of its dealing in shares and other investments and timely entries have been made therein. The aforesaid securities have been held by the company in its own name, except to the extent of the exemption granted under Section 49 of the Companies Act, 1956. (vi) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long-term investment. (vii) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year. For A. F. Ferguson & Co Chartered Accountants (Registration No. 112066W) R. A. Banga Partner (Membership No. 037915)
4 12,08,96,456 4,08,05,006 5 6 7 8 9 10 257,05,24,808 2,89,29,010 32,37,843 4,23,461 29,40,46,649 289,71,61,771 1,62,85,996 2,04,88,305 3,67,74,301 286,03,87,470 785,96,93,483 8,00,91,450 491,92,14,563 372,30,07,211 1,52,20,516 3,08,98,557 2,56,93,674 20,82,94,622 400,31,14,580 45,23,102 1,77,29,144 2,22,52,246 398,08,62,334 766,13,43,914 12,63,59,638 3,09,94,461 9,53,65,177 358,51,16,403
4.
11 12
13 14 15 16 17 4
II. EXPENDITURE Employee Cost Financial Charges Establishment and Other Expenses Provision for Standard Assets Depreciation III. PROFIT Profit before Taxation Provision for Taxation Profit after Taxation Profit brought forward Available for appropriations IV. APPROPRIATIONS Special Reserve u/s 45-IC of the RBI Act, 1934 (Refer to Note 9 of Schedule 19) Profit carried forward
18
Earnings Per Share (Face Value ` 10/- each) 19(8) (Basic & Diluted) Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our report of even date For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011
Authorised 70,00,00,000 Equity Shares of ` 10/- each (2010 - 70,00,00,000 Equity Shares of ` 10/- each) Issued, Subscribed and Paid up 59,74,54,177 (2010 - 59,74,54,177) Equity Shares of ` 10/- each, fully paid up (Of the above 59,74,04,170 Equity Shares allotted for consideration other than cash pursuant to a Scheme of Amalgamation) 7,54,22,400 (2010 - 7,54,22,400) Equity Shares of ` 10/- each, ` 6.50 per share paid up (Equity Shares allotted for consideration other than cash pursuant to a Scheme of Amalgamation) (All the above shares are held by the Holding Company, ITC Limited) 2. RESERVES AND SURPLUS (`) Special Reserve u/s 45-IC of the RBI Act, 1934 At the commencement of the year Add: Transferred from Profit and Loss Account Capital Reserve General Reserve Profit and Loss Account 58,81,92,201 3,99,42,819
700,00,00,000 700,00,00,000
700,00,00,000 700,00,00,000
Deferred Tax Liabilities On fiscal allowances on fixed assets Deferred Tax Assets On employees' seperation and retirement etc. Other timing differences On Provision on Standard Assets
4.
FIXED ASSETS As at commencement of the year (`) 12,63,59,638 12,63,59,638 14,17,35,259 As at the end of the year (`) 12,08,96,456 12,08,96,456 12,63,59,638 Upto 31st March, 2010 (`) 3,09,94,461 3,09,94,461 2,30,39,158
Particulars
*Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms. The Gross Value of such assets is ` 12,07,10,155/- ( 2010 - ` 12,61,99,637/-) and Accumulated Depreciation is ` 4,07,81,380/- ( 2010 - ` 3,09,74,204/-). Depreciation for the period charged to Profit and Loss Account is ` 1,20,80,356/- (2010 - ` 1,26,19,287/-). The aggregate lease rental of ` 2,09,09,256/- (2010 - ` 2,16,89,256/-) is included in Lease and Other Rentals in the Profit and Loss Account. 5. INVESTMENTS LONG TERM A. UNQUOTED SUBSIDIARY COMPANIES Equity Shares of ` 10/- each, of Greenacre Holdings Limited, fully paid Equity Shares of ` 1/- each, of Wimco Limited, fully paid Ordinary Shares of Technico Pty Limited no par value 5% Redeemable Cumulative Preference Shares of ` 100/each, of Wimco Limited, fully paid Zero Coupon Redeemable Preference Shares of ` 100/each, of Wimco Limited, fully paid TRADE INVESTMENTS Equity Shares of ` 100/- each, of Maharaja Heritage Resorts Limited, fully paid Equity Shares of ` 10/- each, of Russell Investments Limited, fully paid Equity Shares of ` 10/- each, of Classic Infrastructure & Development Limited, fully paid Equity Shares of ` 10/- each, of Divya Management Limited, fully paid Equity Shares of ` 10/- each, of Antrang Finance Limited, fully paid OTHER INVESTMENTS Class G Shares of ` 48,000/- each, of Lotus Court Limited, fully paid Equity Shares of ` 100/- each, of Adyar Property Holding Company Private Limited, ` 65/- per share paid B. QUOTED TRADE INVESTMENTS Equity Shares of ` 10/- each, of International Travel House Limited, fully paid Equity Shares of ` 10/- each, of VST Industries Limited, fully paid OTHER INVESTMENTS Equity Shares of ` 2/- each, of Hotel Leelaventure Limited, fully paid 2 2,34,00,000 2 2,34,00,000 As at 31st March, 2011 Number Value (`) As at 31st March, 2010 Number Value (`)
311
43,86,50,000 377,32,98,746
311
43,86,50,000 327,32,98,746
36,26,633 6,00,000
21,21,58,031 9,96,59,626
36,26,633 6,00,000
21,21,58,031 9,96,59,626
1,79,29,513
31,18,17,657 358,51,16,403
9.
* Includes due to Holding Company ` 9,000/- (2010 - ` NIL) ** Includes deposits from Holding Company ` 12,00,000/- (2010 - ` 12,00,000/-) 12. PROVISIONS As at 31st March, 2011 (`) Provision for Long Term Employee Benefits 10,63,503 Current Taxation (net of advance tax) 1,85,70,648 Contingent Provision against Standard Assets 8,54,154 2,04,88,305 As at 31st March, 2010 (`) 7,83,750 1,69,45,394 1,77,29,144
1,50,000 1,00,000 2,00,000 30,499 26,177 69,589 40,41,236 1,50,00,000 8,77,167 2,23,09,291
* Paid to the erstwhile auditors, a firm in which some of the partners of the statutory auditors firm are partners. 18. PROVISION FOR TAXATION For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Income Tax for the year Current Tax Deferred Tax (A) Less: Adjustments related for previous years Current Tax MAT Credit Entitlement Fringe Benefit Tax (B) 3,00,00,000 (13,64,526) 2,86,35,474 7,20,00,000 11,18,524 7,31,18,524
13. PROFIT/ (LOSS) ON SALE OF STOCK-IN-TRADE (NET) As at As at 31st March, 2011 31st March, 2010 (`) (`) Sales 5859,05,47,086 1944,55,29,392 Less: Purchases 5743,30,93,434 2294,20,03,166 115,74,53,652 (349,64,73,774) Add/Less: Increase/ (Decrease) in Closing Stock-in-Trade (115,24,82,403) 3 59,91,71,908 Profit/(Loss) on Sale of Stock-in-Trade 49,71,249 10,26,98,134 14. OTHER INCOME For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Foreign Exchange Gain 24,70,485 30,57,120 Profit on Sale of Fixed Assets 93,693 14,73,491 Interest on Income Taxes 1,17,819 Interest on Fringe Benefit Tax 693 Liabilities no longer required written back 13,11,033 Miscellaneous Income 37,17,317 17,52,012 62,82,188 77,11,475 15. EMPLOYEE COST For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 1,04,10,902 94,10,924 48,42,648 3,53,655 1,56,07,205 11,84,431 5,90,843 1,11,86,198
(A)-(B) 2,62,66,898
Salaries / Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses
16. FINANCIAL CHARGES For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Bank, Custodial and Depository Charges 3,61,036 3,61,036 39,037 39,037
19. NOTES TO THE ACCOUNTS 1. Uncalled liability on partly paid up shares : ` 10,885/- (2010 ` 10,885/-). 2. Dividend Income includes ` 3,15,17,837/- (2010 ` 15,82,97,176/-) from Long Term Investments. Of these ` 2,97,86,557 /- (2010 ` 8,10,38,209/-) are from Trade Investments and ` 17,31,280/- (2010 ` 7,72,58,967/-) are from Other than Trade Investments. Dividend from Stock In Trade is ` 13,59,21,414/- (2010 - ` 2,78,03,224/-) 3. Interest on Loans and Deposits is stated Gross, the amount of Income Tax deducted is ` 5,60,848/- (2010 ` 44,246/-) 4. Claims against the Company not acknowledged as debts : In respect of sales tax : ` 56,20,611/- (2010 ` 54,71,774/-). 5. Guarantees and Counter Guarantees outstanding ` 1,78,605 /- (2010 ` 3,27,442/-). 6. Loans and Advances include : Interest free loans to whollyowned subsidiaries, balances as at the year end are as follows : Technico Pty Limited, Australia ` 2,30,53,750/- (2010 ` 2,05,81,250/-). Technico Agri Sciences Limited ` 12,00,00,000/- (2010 ` 12,00,00,000/-). Loan to a subsidiary, balance as at the year end is as follows : Wimco Limited ` 10,00,00,000/- (2010 Nil) The maximum indebtedness during the year : Technico Pty Limited, Australia ` 2,30,53,750/- (2010 ` 2,05,81,250/-). Technico Agri Sciences Limited ` 12,00,00,000/- (2010 ` 12,00,00,000/-). Wimco Limited ` 30,00,00,000/- (2010 Nil)
10
Nil Nil
Nil
436.92*2
748.97
*1 Investments classified as Stock in Trade as per Schedule 6 *2 Investments classified as Long Term as per Schedule 4 16. Related Party Disclosures : (a) Relationships Holding Company Subsidiary Companies Particulars For the year ended 31st March, 2011 (`) Nil 2,76,240 4,95,246 2,13,935 For the year ended 31st March, 2010 (`) 4,40,229 2,76,240 5,41,648 Nil
ITC Limited Greenacre Holdings Limited Wimco Limited and its subsidiaries Pavan Poplar Limited Prag Agro Farm Limited Technico Pty Limited, Australia and its subsidiaries Technico Agri Sciences Limited Technico Technologies Inc., Canada Technico ISC Pty Limited, Australia (Deregistered on 3rd November, 2010) Technico Asia Holdings Pty Limited, Australia and its subsidiaries Technico Horticultural (Kunming) Co. Limited, China Key Management Personnel Mr. K. Vaidyanath Non - Executive Chairman (upto 2nd January, 2011) Mr. R. Tandon Non - Executive Chairman (w.e.f. 3rd January, 2011) Non - Executive Director (upto 2nd January, 2011) Mr. B. B. Chatterjee Non - Executive Director Mr. P. Banerjea Non - Executive Director Mr. S. Dutta Non - Executive Director Other Related Parties with whom the Company had transactions during the year: Associate Companies International Travel House Limited Divya Management Limited (b) Disclosure of transactions between the Company and Related Parties and the status of outstanding balances: Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Holding Company Sale of Investments * Nil 387,31,40,993 Intercorporate Loan Taken Nil 661,20,00,000 Intercorporate Loan Repaid Nil 665,30,00,000 Lease Rentals Received 84,00,000 51,60,000
Miscellaneous Income Rent, Repairs and Maintenance Miscellaneous Expenses Reimbursement of Expenses
*Investments have been sold to the Holding Company at cost, the market value of such shares on the date of sale was ` Nil (2010 ` 1030.06 crores).
31st March, 2011 (`) 12,00,000 9,000 For the year ended 31st March, 2011 (`)
31st March, 2010 (`) 12,00,000 Nil For the year ended 31st March, 2010 (`)
Subsidiary Companies Greenacre Holdings Limited Subscription to Share Capital Nil Wimco Limited Subscription to Preference Share Capital 50,00,00,000 Intercorporate Loan given 40,00,00,000 Intercorporate Loan repaid 30,00,00,000 Interest on Loan 55,49,918 Sale of Plant & Machinery Nil Balances as at Subsidiary Companies Loans Outstanding Technico Pty Limited, Australia Technico Agri Sciences Limited Wimco Limited 31st March, 2011 (`)
9,00,00,000 Nil Nil Nil Nil 1,24,18,500 31st March, 2010 (`)
11
Associates Dividend Income International Travel House Limited Travelling Expenses International Travel House Limited Reimbursement of Expense Divya Management Limited In addition, remuneration of managers on deputation, absorbed 1,17,86,557 8,706 4,18,331 1,12,05,286 1,08,79,899 1,231 3,87,334 94,27,460
Leave Leave IV. Change in Defined Benefit Obligations (DBO) Pension Gratuity Encashment Pension Gratuity Encashment N.A. 1. Present Value of DBO at Beginning of Period 2. Current Service Cost 3. Interest Cost 4. Curtailment Cost/(Credit) 5. Settlement Cost/(Credit) 6. Plan Amendments 7. Acquisitions 8. Actuarial (Gains)/Losses 9. Benefits Paid 10. Present Value of DBO at the End of the Period V. Change in Fair Value of Assets 1. 2. 3. 4. 5. 6. 7. Plan Assets at Beginning of Period Acquisition Adjustment Expected Return on Plan Assets Actuarial Gains/(Losses) Actual Company Contributions Benefits Paid Plan Assets at the End of Period N.A. N.A. N.A. N.A. N.A. N.A. N.A. 14,92,000 Nil 1,39,680 (98,587) 4,66,907 Nil 20,00,000 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 8,15,033 Nil 77,053 1,39,083 4,60,831 Nil 14,92,000 N.A. N.A. N.A. N.A. N.A. N.A. N.A. Funded Unfunded N.A. Funded Unfunded N.A. 5,17,123 7,83,750 N.A. 11,51,189 4,98,931 N.A. 3,00,629 1,41,669 N.A. 41,370 62,700 N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. 10,49,616 75,384 N.A. Nil Nil N.A. 19,08,738 10,63,503 N.A. 37,295 1,24,740 N.A. 73,197 34,925 N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. (7,44,558) 1,53,021 N.A. Nil (27,867) N.A. 5,17,123 7,83,750
17. Employee Benefits : Contribution to Defined Contribution Schemes ` 34,92,126 /- (2010 ` 7,23,600/-) Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes : For the year ended 31st March, 2011 (`) For the year ended 31st March, 2010 (`)
Leave Leave Pension Gratuity Encashment Pension Gratuity Encashment N.A. I. Components of Employer Expenses 1. 2. 3. 4. 5. 6. 7. 8. Current Service Cost Interest Cost Expected Return on Plan Assets Curtailment Cost/(Credit) Settlement Cost/(Credit) Past Service Cost Actuarial Losses/(Gains) Total expense recognised in the Statement of Profit & Loss Account N.A. 3,00,629 1,41,669 N.A. 37,295 1,24,740 N.A. 41,370 62,700 N.A. 73,197 34,925 N.A. (1,39,680) N.A. N.A. (77,053) N.A. N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. 11,48,203 75,384 N.A. (8,83,645) 1,53,021 N.A. 13,50,522 2,79,753 N.A. (8,50,206) 3,12,686 Funded Unfunded N.A. Funded Unfunded
VI. Actuarial Assumptions 1. Discount Rate (%) 2. Expected Return on Plan Assets (%) N.A. N.A. 8.00 8.00 8.00 N.A. N.A. N.A. 7.00 7.00 7.00 N.A.
II. Actual Returns III. Net Asset / (Liability) recognised in Balance Sheet 1. Present Value of Defined Benefit Obligation 2. Fair Value of Plan Assets 3. Status [Surplus/(Deficit)] 4. Unrecognised Past Service Cost 5. Net Asset/(Liability) recognised in Balance Sheet
N.A.
8%
8% N.A.
7%
7%
N.A. 19,08,738 10,63,503 N.A. 5,17,123 7,83,750 N.A. 20,00,000 N.A. N.A. 14,92,000 N.A. N.A. 91,262 (10,63,503) N.A. 9,74,877 (7,83,750) N.A. Nil Nil N.A. Nil Nil N.A. 91,262 (10,63,503) N.A. 9,74,877 (7,83,750)
The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. As at As at 31st March, 2011 31st March, 2010 VII. Major Category of Plan Assets as a % of the Total Plan Assets 1. Government Securities/Special Deposit with RBI 45.50% 45.30% 2. High Quality Corporate Bonds 40.00% 38.90% 3. Insurance Companies 7.00% 8.10% 4. Mutual Funds 3.30% 3.20% 5. Cash and Cash Equivalents 3.40% 3.30% 6. Equity 0.80% 1.20% 7. Term Deposit 0.00% 0.00% VIII. Basis used to determine the Expected Rate of Return on Plan Assets The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified. For the year ended 31st March, 2009 (`) Pension N.A. N. A . N. A . N. A . N. A . N. A . Gratuity Funded Leave Encashment Unfunded For the year ended 31st March, 2008 (`) Pension N.A. Gratuity Funded Leave Encashment Unfunded
For the year ended 31st March, 2011 (`) Pension IX. Net Asset / (Liability) recognised in Balance Sheet (including experience adjustment impact) 1. Present Value of Defined Benefit Obligation 2. Fair Value on Plan Assets 3. Status [Surplus / (Deficit)] 4. Experience Adjustment of Plan Assets [Gain / (Loss)] 5. Experience Adjustment of Obligation [(Gain) / Loss] N.A. N. A . N. A . N. A . N. A . N. A . Gratuity Funded Leave Encashment Unfunded
For the year ended 31st March, 2010 (`) Pension N.A. N. A . N. A . N. A . N. A . N. A . Gratuity Funded Leave Encashment Unfunded
19,08,738 10,63,503 20,00,000 N.A. 91,262 (10,63,503) (81,127) 11,66,407 Nil 1,58,640
5,17,123 7,83,750 14,92,000 N.A. 9,74,877 (7,83,750) 2,44,436 (6,39,036) N.A. 1,25,154
11,51,189 4,98,931 8,15,033 N.A. (3,36,156) (4,98,931) Nil Nil N.A. Nil
N. A . 13,22,680 5,31,699 N. A . Nil N.A. N. A . (13,22,680) (5,31,699) N. A . N. A . Nil Nil N.A. Nil
18.
Amounts recognised as expense is included in Schedule 15 as below : Leave Encashment of ` 2,79,753/- [2010 ` 3,12,686/-] in Salaries Wages and Bonus and Gratuity of ` 13,50,522/- (2010 ` 4,60,831/-) in Contribution to Provident and Other Funds. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also as at 31st March, 2011. This information as required to be disclosed
19. 20.
under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified based on information available with the Company. During the year a donation of ` 1,50,00,000/- (2010 ` Nil) was made to All India Congress Committee of the Indian National Congress. Figures for the previous year have been regrouped / re-arranged wherever necessary.
12
such restatement are recognised over the period of such contracts. Borrowing Costs Borrowing Costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such assets. All other borrowing costs are charged to revenue. Taxes on Income Current tax is accounted as the amount of tax payable in respect of taxable income for the period, measured using the applicable tax rates and tax laws. Deferred tax is accounted for on timing differences between taxable income and accounting income subject to consideration of prudence, measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognised unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Employee Benefits Regular monthly contributions are made to various Provident Funds / Superannuation Funds which are in the nature of defined contribution scheme and such paid / payable amounts are charged against revenue. Liability for Gratuity and Leave Encashment schemes in the nature of defined benefit schemes are based on independent actuarial valuation as per the requirements of Accounting Standard 15 (revised 2005) on Employee Benefits. Actuarial gains and losses are recognised immediately in the Profit and Loss Account as income or expense. Lease Rentals Lease Rentals are accounted for on an accrual basis except in case of lessees in default where accrual is guided by Prudential Norms prescribed by the Reserve Bank of India for Non-Banking Financial Companies. On behalf of the Board Kolkata 5th May, 2011 R Tandon S. Dutta S. Jain Director Director Secretary
1.
India
4,20,60,166 Equity Shares of ` 10/- each 2,26,06,065 Ordinary Shares without par value 3,79,62,800 Equity Shares of ` 10/- each
36,84,522 Ordinary Shares without par value
100%
84,31,989
7,33,52,199
Nil
Nil
2.
Australia
100%
43,73,623
2,51,29,109
Nil
Nil
3.
India
100%
7,02,04,947
22,32,75,598
Nil
Nil
4.
Australia
100%
1,96,66,010
Nil
Nil
5.
Technico Horticultural (Kunming) Co. Limited* (a 100% Subsidiary of Technico Asia Holdings) Technico Technologies Inc. (a 100% Subsidiary of Technico Pty Limited) Wimco Limited
China
Registered Capital paid US $ 2.3m 10,87,999 Common Shares without par value 9,12,38,170 Equity Shares of ` 1/- each 53,35,061 Equity Shares of ` 10/- each 36,79,369 Equity Shares of ` 10/- each
100%
31,50,034
11,60,934
Nil
Nil
6.
Canada
100%
3,19,246
91,50,145
Nil
Nil
7.
India
96.825%
(57,75,64,807)
(9,19,44,026)
Nil
Nil
8.
Pavan Poplar Limited (a 100% Subsidiary of Wimco Limited) Prag Agro Farm Limited (a 100% Subsidiary of Wimco Limited)
India
96.825%
4,29,105
(11,34,015)
Nil
Nil
9.
India
96.825%
5,19,552
(4,76,432)
Nil
Nil
* The financial year of Technico Horticultural (Kunming) Co. Limited ends on 31st December, 2010.
13
3.
SCHEDULE TO THE BALANCE SHEET AS AT 31ST MARCH, 2011 [as required in terms of Paragraph 13 of Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007]
Particulars Liabilities Side: (1) Loans and advances availed by the NBFCs inclusive of interest accrued thereon but not paid a) Debentures Secured Unsecured (other than falling within the meaning of public deposits) b) Deferred Credits c) Term Loans d) Inter-Corporate loans and borrowings e) Commercial Paper f) Other Loans Break-up of outstanding public deposits inclusive of interest accrued thereon but not paid. Assets Side: (2) Break-up of Loans and Advances including bills receivables [other than those included in (4) below] (a) Secured (b) Unsecured (3) Break-up of Leased Assets and stock on hire and hypothecation loans counting towards EL/HP activities (i) Lease assets including lease rentals under sundry debtors (a) Financial lease (b) Operating lease (ii) Stock on hire including hire charges under sundry debtors (a) Assets on hire (b) Repossessed Assets (iii) Other loans counting towards AFC Activities (a) Loans where assets have been repossessed (b) Loans other than (a) above (4) Break-up of Investments: Current Investments 1. Quoted: (i) Shares:(a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual Funds (iv) Government Securities (v) Others (please specify) 2. Unquoted: (i) Shares:(a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual Funds (iv) Government Securities (v) Others (please specify) Amount Outstanding (` in Lakhs) Amount Overdue Assets Side: Long Term Investments 1. Quoted: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual Funds (iv) Government Securities (v) Others (please specify) 2. Unquoted: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual Funds (iv) Government Securities (v) Others (please specify) (5) Borrower group-wise classification of assets financed as in (2) and (3) above 157.07 2,430.54 Secured Category 1. Related Parties (a) Subsidiaries (b) Companies in the same group (c) Other related parties 2. Other than related parties Total (6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted): Market Value/ Break-up or fair value or NAV Category 1. Related Parties (a) Subsidiaries (b) Companies in the same group (c) Other related parties 2. Other than related parties Total (7) Other Information Particulars (i) Gross Non-Performing Assets (a) Related Parties (b) Other than related parties (ii) Net Non-Performing Assets (a) Related Parties (b) Other than related parties (iii) Assets acquired in satisfaction of debt Book Value (Net of Provisions) Amount Net of Provisions Unsecured Total (` in Lakhs) Amount Outstanding 11,459.16 11,459.16 37,732.99 27,232.99 10,500.00
Amount Outstanding
1,236.82 1,236.82
157.07 157.07
25,705.25 25,705.25
* Subsidiaries having further step down subsidiaries have been considered on a consolidated basis. Amount (`)
14
Investments
4 9 1 9 2 1 5
2 0 1 1
Date II.
Month
Year
Misc. Expenditure
N I L
Accumulated Losses
N I L L
Rights Issue
N I
Bonus Issue
N I L
Private Placement
N I L
IV.
III.
Total Assets
7 8 5 5 8 6 1
+
+
(Please tick appropriate box + for profit, for loss) Reserves & Surplus
1 3 9 1 0 7 4
Dividend Rate %
N I L
# Includes 59,74,04,170 Equity Shares of ` 10/- each, fully paid up, and 7,54,22,400 Equity Shares of ` 10/- each, partly paid up, issued on Amalgamation. Secured Loans
N I L
V.
Generic Names of Three Principal Services of Company Item Code No. (ITC Code) Service Description Not Applicable Investments Lending Asset Financing
Unsecured Loans
N I L
Audit Committee : Mr. R. Tandon, Chairman, M/s. B. B. Chatterjee and S. Dutta, Members
15
Your Board of Directors is looking at various options to increase the Companys future revenues including by enhancement of maintenance charges. 3. DIRECTORS Mr. K. Vaidyanath, consequent to his retirement from the services of ITC Limited, the Ultimate Holding Company, stepped down as the Chairman and Director of your Company with effect from close of work on 2nd January, 2011. Your Directors would like to place on record their sincere appreciation for the contribution made by Mr. Vaidyanath during his tenure with the Company. Mr. R. Tandon was appointed as the Chairman of the Board of Directors of your Company with effect from 3rd January, 2011. In accordance with the provisions of Article 143 of the Articles of Association of the Company, Mr. A. Nayak will retire by rotation at the ensuing Annual General Meeting of the Company, and being eligible, offers himself for re-election. Your Board of Directors has recommended his re-election. 4. RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THE COMPANIES ACT, 1956 The Board of Directors of your Company re-appointed Ms. Anjali Prasad as Manager of the Company for a period of three years with effect from 1st October, 2010, in terms of the provisions of Section 269 of the Companies Act, 1956, read with Schedule XIII thereto, subject to
6.
7.
8.
5th May, 2011 Registered Office : ITC Centre 37, J. L. Nehru Road Kolkata - 700 071
AUDITORS REPORT TO THE MEMBERS OF GREENACRE HOLDINGS LIMITED 1. We have audited the attached Balance Sheet of GREENACRE HOLDINGS LIMITED (the Company) as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows : (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; 5. (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India : (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; (ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. On the basis of the written representations received from the Directors as on 31st March, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956. For A. F. Ferguson & Co. Chartered Accountants (Registration No.112066W) Kolkata 5th May, 2011 R. A. Banga Partner (Membership No. 037915)
2.
3.
4.
16
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule (`) I. SOURCES OF FUNDS 1. Shareholders Funds a) Capital b) Reserves and Surplus Total II. APPLICATION OF FUNDS 1. Fixed Assets a) c) 2. 3. 4. Gross Block Net Block 4 5 6 7 8 9 10 1,23,71,911 4,18,200 10,05,915 2,63,867 58,93,350 1,99,53,243 Less : 5. Current Liabilities and Provisions a) Liabilities 11 12 4,06,72,777 23,11,516 4,29,84,293 Net Current Liabilities Total Notes to the Accounts Significant Accounting Policies 18 19 (2,30,31,050) 52,81,51,684 3,98,15,142 17,17,567 4,15,32,709 (1,96,10,695) 51,97,19,695 b) Provisions b) Less: Depreciation Investments Deferred Tax Assets Current Assets, Loans and Advances a) c) e) Inventories Cash and Bank Balances Loans and Advances 1,23,71,911 15,000 34,36,415 1,55,000 59,43,688 2,19,22,014 b) Sundry Debtors d) Other Current Assets 3 43,35,86,629 26,05,297 43,09,81,332 11,94,35,572 7,65,830 42,34,68,927 24,23,553 42,10,45,374 11,77,69,308 5,15,708 1 2 42,06,01,660 10,75,50,024 52,81,51,684 42,06,01,660 9,91,18,035 51,97,19,695 31st March, 2011 (`) (`) 31st March, 2010 (`)
The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date. For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011 On behalf of the Board R. Tandon S. Dutta A. Prasad Director Director Secretary
17
13
II. EXPENDITURE Employee Cost Project Expenses Management and Other Expenses Maintenance and Service Expenses Depreciation
14 15 16 3
III. PROFIT Profit before Taxation Provision for Taxation 17 Profit after Taxation Profit brought forward Profit carried to Balance Sheet Earnings Per Share (Face Value ` 10/- each) 18(2) (Basic & Diluted) Notes to the Accounts 18 Significant Accounting Policies 19 The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our Report of even date. For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Liabilities no longer required written back Dividend from Current Investments Interest on Income Tax Loss on Sale of Current Investments Excess of Cost over Fair Value of Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Paid NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Current Investments Sale of Current Investments Dividend from Current Investments Purchase of Land NET CASH USED IN INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS Notes : 1. The above Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 Cash Flow Statements. 2. CASH AND CASH EQUIVALENTS : Balance with Scheduled Banks - On Current Account Cash on Hand Cheques on Hand Cash and Bank Balances (Schedule 8) In terms of our report of even date For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011 1,09,68,030 1,81,744 (6,35,326) (26,17,910) 102 1,02,400 79,99,040 (1,10,647) 9,69,208 88,57,601 (31,37,349) 57,20,252 (71,40,72,784) 71,37,99,111 11,22,921 (90,00,000) (81,50,752) (24,30,500) 34,36,415 10,05,915 For the year ended 31st March, 2010 (`) 1,03,04,705 1,81,742 (28,18,643) 7,11,929 27,695 84,07,428 6,31,160 (4,58,644) 85,79,944 (27,26,123) 58,53,821 (140,48,94,452) 143,94,81,968 28,18,643 (13,02,28,547) (9,28,22,388) 9,00,00,000 9,00,00,000 30,31,433 4,04,982 34,36,415
25,34,415 20,000 8,82,000 34,36,415 On behalf of the Board R. Tandon S. Dutta A. Prasad Director Director Secretary
18
42,06,01,660
42,06,01,660
42,06,01,660
GROSS BLOCK (AT COST ) Particulars As at commencement of the year (`) 41,24,07,025 1,10,04,119 57,783 42,34,68,927 29,32,40,380 Additions during the year (`) 1,01,17,702 1,01,17,702 13,02,28,547 As at the end of the year (`) 42,25,24,727 1,10,04,119 57,783 43,35,86,629 42,34,68,927 Upto 31st March, 2010 (`) 23,91,064 32,489 24,23,553 22,41,811
DEPRECIATION For the year (`) 1,79,367 2,377 1,81,744 1,81,742 Upto 31st March 2011 (`) 25,70,431 34,866 26,05,297 24,23,553
NET BOOK VALUE As at 31st March, 2011 (`) 42,25,24,727 84,33,688 22,917 43,09,81,332 42,10,45,374
* Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms. The Gross Value of such assets is ` 1,10,04,119/- ( 2010 - ` 1,10,04,119/-) and Accumulated Depreciation ` 25,70,431/- ( 2010 - ` 23,91,064/-) Depreciation for the year charged to Profit and Loss Account is ` 1,79,637/- ( 2010 - ` 1,79,637/-). The aggregate lease rental received is included in Other Income (Schedule 13) 4. INVESTMENTS As at 31st March, 2011 (`) A. UNQUOTED Long Term TRADE INVESTMENTS Classic Infrastructure & Development Limited 16,50,000 (2010 16,50,000) Equity Shares of ` 10/- each, fully paid As at 31st March, 2010 (`) As at 31st March, 2011 (`) 5. DEFERRED TAX - NET Deferred Tax Assets On fiscal allowances on fixed assets On employees' seperation and retirement etc. 6,63,26,700 6,63,26,700 B. Current OTHER INVESTMENTS AIG Short Term Fund - Institutional Weekly Dividend Nil (2010 40,667) Units of ` 1,000/ each DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend 23,102 (2010 - Nil) Units of ` 1,000/- each Kotak Quarterly Interval Plan Series 2 - Dividend 29,99,641(2010 - Nil) Units of ` 10/- each LIC MF Liquid Plan - Dividend Nil (2010 9,76,707 ) Units of ` 10/- each Total (A + B) 4,07,18,261 7. 6,63,26,700 6,63,26,700 6. INVENTORIES Work-in-Progress (at lower of cost and net realisable value) 1,23,71,911 1,23,71,911 SUNDRY DEBTORS Good and Unsecured Other Debts [includes ` 4,00,000/- (2010 - Nil) due from Ultimate Holding Company ITC Limited] 4,18,200 15,000 1,23,71,911 1,23,71,911 15,859 7,49,971 7,65,830 18,368 4,97,340 5,15,708 As at 31st March, 2010 (`)
2,31,08,872
8. CASH AND BANK BALANCES With Scheduled Banks On Current Accounts Cheques on Hand Cash on Hand
4,18,200
15,000
3,00,00,000
1,07,24,347
9.
OTHER CURRENT ASSETS Good and Unsecured Deposits Interest Receivable 1,55,000 1,08,867 2,63,867 1,55,000 1,55,000
5,31,08,872 11,94,35,572
5,14,42,608 11,77,69,308
19
1,00,00,000 1,00,00,000 2,80,90,000 2,80,90,000 17,71,041 3,07,492 4,06,72,777 3,98,15,142 *Includes Deposits from Ultimate Holding Company, ITC Limited ` 2,20,00,000/(2010 - ` 2,20,00,000/-) 12. PROVISIONS Provision for Retirement Benefits 23,11,516 17,17,567 23,11,516 17,17,567 For the year ended 31st March, 2011 (`) 13. OTHER INCOME Lease Rentals Income from Current Investments-others Interest on Income Tax Liability no longer required written back 14. EMPLOYEE COST Salaries/Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses 15. PROJECT EXPENSES Opening Work-in-progress Add : Expenditure incurred on Projects during the year Less : Closing Work-in-progress Project Expenses 16. MANAGEMENT AND OTHER EXPENSES Rates and Taxes Insurance Travelling Legal and Consultancy Charges Auditors' Remuneration (excluding Service Tax ) - Audit Fees - Tax Audit Fees * Interest - Others Loss on Sale of Current Investments Excess of carrying cost over Fair Value of Investments Miscellaneous Expenses For the year ended 31st March, 2010 (`)
(xviii) 30,00,000 Units of Kotak FMP Series 31 - Dividend at cost of ` 3,00,00,000/(xix) (xx) (xxi) (xxii) 9,92,894 Units of Kotak Floater Long Term - Daily Dividend at cost of ` 1,00,08,173/8,17,854 Units of Kotak Liquid (Institutional) - Daily Dividend at cost of ` 1,00,00,798/6,12,325 Units of LIC Nomura MF Income Plus Fund - Daily Dividend Plan at cost of ` 61,23,252/10,57,727 Units of LIC Nomura MF Liquid Fund - Dividend Plan at cost of ` 1,16,14,791/-
(xxiii) 13,35,655 Units of Principal Cash Management Fund - Liquid Option - Instl. Plan - Dividend Reinvestment - Daily at cost of ` 1,33,59,490/(xxiv) 21,36,855 Units of Reliance Liquid Fund - Cash Plan - Daily Dividend Option at cost of ` 2,38,07,770/(xxv) 22,300 Units of Religare Liquid Fund - Institutional Daily Dividend at cost of ` 2,23,05,169/-
(xxvi) 61,93,687 Units of Sundaram Money Fund Inst. - Daily Div Rein at cost of ` 6,25,27,130/(xxvii) 5,952 Units of Templeton India Treasury Management Account Regular Plan - Daily Dividend Reinvestment at cost of ` 90,01,172/(xxviii) 58,968 Units of Templeton India Treasury Management Account Institutional Plan - Daily Dividend Reinvestment at cost of ` 5,90,07,390/(xxix) 59,00,593 Units of Templeton India Ultra Short Bond Fund Institutional Plan - Daily Dividend Reinvestment at cost of ` 5,90,71,426/(xxx) 9,01,852 Units of Templeton India Ultra Short Bond Fund Retail Plan - Daily Dividend Reinvestment at cost of ` 90,28,085/(xxxi) 18,346 Units of UTI Liquid Cash Plan Institutional - Daily Income Option - Reinvestment at cost of ` 1,87,02,686/(xxxii) 18,734 Units of UTI Treasury Advantage Fund- Institutional Plan (Daily Dividend Option) - Reinvestment at cost of ` 1,87,37,944/-
27,695 57,541 52,807 5,00,759 21,60,173 * Paid to the erstwhile auditors, a firm in which some of the partners of the statutory auditors firm are partners. 17. PROVISION FOR TAXATION Income Tax for the year - Current Tax 32,00,000 26,00,000 - Deferred Tax (2,50,122) (55,959) 29,49,878 25,44,041 Less: Adjustments related to previous years-Net - Current Tax 4,17,167 - Fringe Benefit Tax (3,330) 25,36,041 25,44,041
20
3.
4. 5.
(b) Disclosure of transactions between the Company and Related Parties and the status of outstanding balances: Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Holding Company Russell Credit Limited Issue of Equity Shares Nil 9,00,00,000/Ultimate Holding Company : ITC Ltd Lease Rental Income 18,20,000/17,20,000/Maintenance Income 2,19,19,629/2,21,01,849/Other Reimbursements received 2,61,830/1,91,280/Other Reimbursements made 26,332/7,292/Balances as at Ultimate Holding Company : ITC Ltd Security Deposit Received Other Receivables Particulars Fellow Subsidiary Company Landbase India Ltd Reimbursement of Expenses Balances as at 31st March, 2011 (`) 2,20,00,000/4,00,000/31st March, 2010 (`) 2,20,00,000 /Nil
For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 21,79,702/31st March, 2011 (`) 95,87,277/31st March, 2010 (`)
Employee Benefits: Contribution to Defined Contribution Schemes ` 8,25,782/- (2010 ` 5,57,243/-) Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes: For the year ended For the year ended 31st March, 2011 (`) 31st March, 2010 (`) Leave Leave Pension Gratuity Encashment Pension Gratuity Encashment N.A. Funded Unfunded N.A. Funded Unfunded I. Components of Employer Expenses 1. Current Service Cost N.A. 2,11,698 1,28,601 N.A. 1,79,096 1,02,564 2. Interest Cost N.A. 1,50,696 1,25,405 N.A. 1,33,418 1,06,858 3. Expected Return on Plan Assets N.A. (1,88,083) Nil N.A. (1,60,114) Nil 4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 6. Past Service Cost N.A. 2,17,055 Nil N.A. Nil Nil 7. Actuarial Losses/(Gains) N.A. 4,77,594 2,70,421 N.A. (1,38,234) (344) 8. Total expense recognised in the N.A. 8,68,960 5,24,427 N.A. 14,166 2,09,078 Statement of Profit & Loss Account II. Actual Returns N.A. 2,09,189 N.A. N.A. 1,93,153 N.A. III. Net Asset / (Liability) recognised in Balance Sheet 1. Present Value of Defined Benefit Obligation N.A. 27,27,984 19,41,994 N.A. 20,89,233 17,17,567 2. Fair Value of Plan Assets N.A. 23,58,462 N.A. N.A. 23,43,602 N.A. 3. Status [Surplus/(Deficit)] N.A. (3,69,522) (19,41,994) N.A. 2,54,369 (17,17,567) 4. Unrecognised Past Service Cost N.A. Nil Nil N.A. Nil Nil 5. Net Asset/(Liability) recognised in N.A. (3,69,522) (19,41,994) N.A. 2,54,369 (17,17,567) Balance Sheet IV. Change in Defined Benefit Obligations (DBO) 1. Present Value of DBO at the N.A. 20,89,233 17,17,567 N.A. 19,76,274 15,44,591 Beginning of Period 2. Current Service Cost N.A. 2,11,698 1,28,601 N.A. 1,79,096 1,02,564 3. Interest Cost N.A. 1,50,696 1,25,405 N.A. 1,33,418 1,06,858 4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 6. Plan Amendments N.A. Nil Nil N.A. Nil Nil 7. Past Service Cost N.A. 2,17,055 Nil N.A. Nil Nil 8. Actuarial (Gains)/Losses N.A. 4,70,360 2,70,421 N.A. (58,958) (344) 9. Benefits Paid N.A. (4,11,058) (3,00,000) N.A. (1,40,597) (36,102) 10. Present Value of DBO at the End N.A. 27,27,984 19,41,994 N.A. 20,89,233 17,17,567 of the Period V. Change in Fair Value of Assets 1. Plan Assets at Beginning of Period N.A. 23,43,602 N.A. N.A. 22,31,093 N.A. 2. Acquisition Adjustment N.A. Nil N.A. N.A. Nil N.A. 3. Expected Return on Plan Assets N.A. 1,88,083 N.A. N.A. 1,60,114 N.A. 4. Actuarial Gains/(Losses) N.A. (7,234) N.A. N.A. 79,276 N.A. 5. Actual Company Contributions N.A. 2,45,069 N.A. N.A. 13,716 N.A. N.A. N.A. (1,40,597) N.A. 6. Benefits Paid N.A. (4,11,058) 7. Plan Assets at the End of Period N.A. 23,58,462 N.A. N.A. 23,43,602 N.A. VI. Actuarial Assumptions 1. Discount Rate (%) N.A. 8.00 8.00 N.A. 7.00 7.00 2. Expected Return on Plan Assets (%) N.A. 8.00 N.A. N.A. 7.00 N.A. VII. Major Category of Plan Assets as a % of the Total Plan Assets As at 31st March, 2011 1. Government Securities/Special Deposit with RBI 2. High Quality Corporate Bonds 3. Insurance Companies 4. Mutual Funds 5. Cash and Cash Equivalents For the year ended 31st March, 2009 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded N.A. N.A. 100% N.A. N.A. As at 31st March, 2010 N.A. N.A. 100% N.A. N.A.
6.
Fellow Subsidiary Company Landbase India Ltd Other Payables 11,17,702/Nil Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Contribution to Greenacre Holdings Limited Provident Fund 3,35,206/3,00,942/Contribution to Greenacre Holdings Limited Gratuity Fund 2,35,195/2,764/For the year ended 31st March, 2011 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded VIII. Net Asset / (Liability) recognized in Balance Sheet (including experience adjustment impact) 1. Present Value of Defined Benefit Obligation 2. Fair Value on Plan Assets 3. Status [Surplus / (Deficit)] 4. Experience Adjustment of Plan Assets [Gain / (Loss)] 5. Experience Adjustment of Obligation [(Gain) / Loss]
For the year ended 31st March, 2010 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded
For the year ended 31st March, 2008 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded
N. A . 27,27,984 19,41,994 N. A . 23,58,462 N.A. N. A . (3,69,522) (19,41,994) N. A . N. A . (61,732) 6,41,666 N.A. 4,49,894
N. A . N. A . N. A . N. A . N. A .
20,89,233 17,17,567 23,43,602 N.A. 2,54,369 (17,17,567) 79,276 (58,958) N.A. (344)
N. A . N. A . N. A . N. A . N. A .
19,76,274 15,44,591 22,31,093 N.A. 2,54,819 (15,44,591) Nil Nil N.A. Nil
N. A . N. A . N. A . N. A . N. A .
16,38,837 12,91,053 19,19,289 N.A. 2,80,452 (12,91,053) Nil Nil N.A. Nil
21
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Application of Funds
0 4 9 4 6 7 0 3 Month 2 0 1 1 Year
State Code
2 1
Investments
3 0 2 2
9 8 2 6
1 5
1 9
4 3 N I
6 L
Net Current Assets * *Includes Deferred Tax Asset Accumulated Losses Rights Issue
Misc. Expenditure
II. Capital raised during the year (Amount in ` Thousands) Public Issue
L
Total Expenditure
N
Bonus Issue
N I
Private Placement
L L
N I
N I
2 7 +
1 6
1 6
2 0
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities Total Assets
5
Sources of Funds
2 8
1 5
2 8
1 5
Profit/Loss after Tax + 1 0 9 6 8 8 4 3 (Please tick appropriate box + for Profit, for Loss) Dividend Rate %
0
Reserves & Surplus
Paid up Capital
2 0
6 0
N I
2
L
0 7
5 5
I
0
L
V. Generic Names of Three Principal Services of Company Item Code No. Service Description Not Applicable Project Management Property Maintenance Property Development
Secured Loans
Unsecured Loans N
Audit Committee : Mr. R. Tandon, Chairman, M/s. A. Nayak and S. Dutta, Members
22
WIMCO LIMITED
DIRECTORS REPORT TO THE MEMBERS OF WIMCO LIMITED Your Directors present their report for the financial year ended 31st March 2011. Company Performance Your Companys turnover, which stood at ` 192.19 crores has seen a decline by 10% as compared to last year primarily on account of lower volumes in the Matches business. During the year under review, the Company incurred a net loss of ` 59.65 crores after taking into account a one-time cost of ` 37.46 crores, inter alia, for restructuring of the Companys operations at Chennai and Ambarnath. The income from Matches business for the year has decreased by 10% to ` 184.78 crores from ` 205.85 crores earned in the previous year. Your Company is facing challenge in its main business of Matches due to steep rise in input costs on one hand and growing competition from small scale and cottage sector on the other hand. Your Company, with a view to making its Matches business viable, restructured its operations in the Matches Factories at Chennai and Ambarnath. Alternative arrangements have been put in place to ensure continued supplies of Companys products in the market. The income from the engineering business during the year was ` 14.04 crores as compared to ` 14.36 crores in the previous year. Your Company is working towards increasing its value capture through continuous product development in packaging machinery. This business is poised for growth through new customer acquisitions, both in the domestic and overseas market. The income from the seedling business during the year was ` 9.76 crores as against ` 9.33 crores in the previous year. The Agro Forestry business of your Company is supplying high quality poplar ETPs (Entire Transplants) to farmers in Northern India. Apart from creating a long-term sustainable supply of a critical raw material, your Companys strategy of creating sustainable and meaningful linkages across the farmer community is helping us to contribute towards improving the green environment in the region. The initiatives taken by your Company during the year to restructure its operations, coupled with the possibility of alternative usage of land now rendered surplus, are expected to yield positive results in the years to come. In furtherance of the objective of restructuring, the Company is also exploring the possibility of raising further funds. Dividend In view of the losses incurred during the year, your Directors are unable to recommend any dividend. Further, the 5% Dividend on the outstanding 55,00,000 Redeemable Cumulative Preference Shares of the Company has been kept in abeyance. Directors Mr. Rajeev Gopal ceased to be the Managing Director of your Company with effect from 30th December, 2010 consequent to withdrawal of nomination by the Holding Company i.e. Russell Credit Limited (RCL). Pursuant to nomination by RCL, the Board of Directors (the Board) of your Company appointed Mr. V. M. Rajasekharan as Additional Director and Managing Director of the Company with effect from 7th January, 2011. By virtue of the provisions of Section 260 of the Companies Act, 1956, Mr. Rajasekharan will vacate his office at the ensuing Annual General Meeting of the Company. Your Board has recommended for the approval of the Members the appointment of Mr. Rajasekharan as Managing Director of your Company for a period of three years with effect from the date of the ensuing Annual General Meeting of the Company. Appropriate resolution seeking the approval of the Members to such appointment is appearing in the Notice convening the ensuing Annual General Meeting of the Company. In accordance with the provisions of Article 131, 132 and 133 of the Articles of Association of the Company, Mr. R. L. Auddy and Mr. Dipak Dutta will retire by rotation at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re-election. The Board has recommended their re-election. Redemption and Issue of Preference Shares Pursuant to the approval of the members at the last Annual General Meeting, 50,00,000 Zero Dividend Redeemable Cumulative Preference Shares of ` 100 each, aggregating ` 50 crores, were issued for cash at par to RCL. AUDITORS REPORT TO THE MEMBERS OF WIMCO LIMITED We have audited the attached balance sheet of Wimco Limited (the Company) as at 31 March 2011 and the related profit and loss account and cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditors Report) Order, 2003 (the Order), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, (the Act) we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further, the redemption date of 30,00,000 5% Redeemable Cumulative Preference Shares of ` 100 each, aggregating ` 30 crores, held by RCL in the Company was extended from 15th March, 2011 to 15th March, 2012, after receiving consent from RCL. Directors Responsibility Statement As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that (i) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no significant departures have been made from the same; (ii) appropriate accounting policies have been selected and applied consistently and judgments and estimates that have been made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the loss of the Company for that period; (iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the Annual Accounts have been prepared on a going concern basis. Auditors The Companys Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting, and, being eligible, offer themselves for re-appointment. The Board has recommended their re-appointment. Subsidiaries Particulars as required under Section 212 of the Companies Act, 1956 in respect of the subsidiaries of the Company viz. Pavan Poplar Limited and Prag Agro Farm Limited, have been attached to the Accounts of the Company. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo A) Conservation of Energy The particulars in Form A regarding conservation of energy are not provided as the activity of the Company does not fall under the list of industries specified in the Schedule annexed to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. B) Technology Absorption Investment made in upgraded match manufacturing machinery have benefited the Company in waste reduction and enhancement of process efficiency and product consistency. During the year, the Companys expenditure on Research and Development was ` 21.35 lacs. C) Foreign Exchange Earnings and Outgo During the year, the Company earned foreign exchange of ` 277.50 lacs. The total outflow on account of foreign exchange was ` 820.96 lacs. Employees The relations between the Company and its employees have generally been cordial and harmonious during the year under review. The operations at the Companys Kolkata Factory has been suspended due to industrial unrest with effect from 29th April, 2011. None of the employees of the Company is covered under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. Acknowledgement The Board acknowledges the understanding and support of the government, investors, banks, distributors, customers, suppliers and business associates and the dedication and hard work of its employees. Kolkata 3rd May 2011 For and on behalf of the Board K.N. Grant Chairman
23
WIMCO LIMITED
2. a) Further to our comments in the Annexure referred to above, we report that: We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) ii) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2011; in the case of the profit and loss account, of the loss of the Company for the year ended on that date; and
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211of the Act; e) On the basis of written representations received from directors of the Company as at 31 March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and
iii) in the case of the cash flow statement, of the cash flows of the Company for the year ended on that date. For BSR & Co. Chartered Accountants Firms Registration No. : 101248W Kolkata 3rd May 2011 Bhavesh Dhupelia Partner Membership No. : 042070
ANNEXURE TO THE AUDITORS REPORT - 31 MARCH 2011 (Referred to in our report of even date) (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, certain fixed assets were physically verified during the year and no material discrepancies were noted on such verification. (c) Fixed assets disposed off during the year were not substantial and, therefore, do not affect the going concem assumption. (ii) (a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at year-end, written confirmations have been obtained. (b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. (iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under Section 301 of the Act. Accordingly, paragraph 4(iii) of the Order is not applicable. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit. (v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register maintained under Section 301of the Act. amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund. There were no dues on account of cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other material statutory dues were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues of Wealth-tax, Service tax, Customs Duty and Cess which have not been deposited with the appropriate authorities on account of any disputes. According to the information and explanations given to us, the following statutory dues have not been deposited by the Company on account of disputes: Name of the Statute Nature of the Dues Amount (` in Lakhs) 48.51 Period to which the amount relates 2006-2008 Forum where dispute is pending Additional Commissioner Excise, Kolkata III Member, Tribunal Trade Tax, Bareilly High Court, Allahabad
The Central Excise Act, 1944 Uttar Pradesh Sales Tax Act, 1948 Uttar Pradesh Sales Tax Act, 1948 Central Sales Tax Act, 1956 Income-Tax Act, 1961
Excise Duty
Sales tax
1.32 0.14
Sales tax
0.75
Sales tax
272.68
2005-2006
(vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an intemal audit system commensurate with the size and nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Govemment for maintenance of cost records under Section 209(1)(d) of the Act in respect of generation of electricity from wind power and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records. (ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company,
Appellate Authority, Kolkata Commissioner of Income Tax (Appeal), Mumbai Commissioner of Income Tax (Appeal), Mumbai Commissioner of Income Tax (Appeal), Mumbai
Income-tax
(x)
The accumulated losses of the Company at the end of the financial year are less than fifty percent of its net wroth. However, it has incurred cash losses in the financial year as well as in the immediately preceding financial year.
24
WIMCO LIMITED
(xi) (xii) (xiii) The Company did not have any outstanding dues to any banker, financial institution or debentureholders during the year. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. The Company did not have any term loans outstanding during the year. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment. (xviii) As stated in paragraph (iii) above, there are no companies / firms / parties covered in the register required to be maintained under Section 301 of the Act. (xix) The Company did not have any outstanding debentures during the year. (xx) The Company has not raised any money by public issues during the year. (xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.
(xiv)
(xv)
(xvi) (xvii)
For BSR & Co. Chartered Accountants Firms Registration No. : 101248W Kolkata 3rd May 2011 Bhavesh Dhupelia Partner Membership No. : 042070
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule SOURCES OF FUNDS : Shareholders Funds : Share Capital Reserves & Surplus Loan Funds : Unsecured Loans 31st March, 2011 (` in Lacs) 11,442.30 5,132.03 16,574.33 3 1,303.29 1,303.29 TOTAL APPLICATION OF FUNDS : Fixed Assets : Gross Block Less : Accumulated Depreciation Provision for Impairment Net Block Capital Work-In-Progress Investments Deferred Tax Asset (Net) Current Assets, Loans & Advances : Plantation Work-In-Progress Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions : Current Liabilities Provisions Net Current Assets Profit and Loss Account Less : Adjusted against General Reserve (As per contra in Schedule 2) TOTAL Notes to the Accounts Segment Information Related Party Disclosure Significant Accounting Policies 18 19 20 21 17,877.62 4 27,316.38 11,190.57 414.35 15,711.46 104.99 5 6 204.77 2,931.65 329.84 60.71 2,836.28 6,363.25 5,390.30 342.98 5,733.28 629.97 7,367.07 6,534.97 832.10 17,877.62 1,402.03 1,402.03 15,816.45 599.10 210.55 3,290.89 207.83 51.60 2,561.88 6,322.75 5,882.82 216.00 6,098.82 223.93 12,435.67 22,496.54 10,680.26 414.35 11,401.93 210.71 11,612.64 599.10 315.27 315.27 12,435.67 6,442.30 5,678.10 12,120.40 31st March, 2010 (` in Lacs)
1 2
7 8 9 10 11
The Schedules referred to above and the annexed notes form an integral part of the Accounts. This is the Balance Sheet referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani
For and on behalf of the Board Chairman Managing Director Head - Finance & Company Secretary Kolkata, 3rd May 2011
25
WIMCO LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule For the year ended 31st March, 2011 (` in Lacs) 20,857.78 1,638.60 22,954.32 1,642.12 For the year ended 31st March, 2010 (` in Lacs)
INCOME Sales and Services Less : Excise Duty Other Income EXPENDITURE Cost of Trading Products Sold Cost of Seeds Raw Materials Consumed Decrease in Stocks Employee Costs Other Costs Interest Depreciation 1,888.20 7.34 11,476.53 69.33 3,244.42 4,436.24 55.28 514.00 21,691.34 (2,218.58) 3,746.46 (5,965.04) (5,965.04) (1,402.03) (7,367.07) (6.67) 1.00 1,080.86 5.45 13,187.00 1,132.54 3,489.83 4,883.87 (15.18) 495.21 24,259.58 (1,623.95) (1,623.95) (1,623.95) 221.92 (1,402.03) (2.06) 1.00 12 13 19,219.18 253.58 19,472.76 21,312.20 1,323.43 22,635.63
14 15 16 17 4
(LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION Exceptional Item ( See Note 4 of Schedule 18) : (LOSS) BEFORE TAXATION Income Tax Expenses (LOSS) AFTER TAXATION (Loss)/Profit Brought Forward Balance Carried to Balance Sheet Earnings per share (`) - Basic and Diluted (See Note 13 of Schedule 18) Face Value (`) Notes to the Accounts 18 Segment Information 19 Related Party Disclosure 20 Significant Accounting Policies 21 The Schedules referred to above and the annexed notes form an integral part of the Accounts. This is the Profit and Loss Account referred to in our report of even date.
For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani
For and on behalf of the Board Chairman Managing Director Head - Finance & Company Secretary Kolkata, 3rd May 2011
26
WIMCO LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (` in Lacs) A. CASH FLOW FROM OPERATING ACTIVITIES : (LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION Adjustments for : Depreciation Interest Expense Interest Income Provisions Written Back Profit/Loss on sale of fixed assets (net) Fixed assets/Inventory written off Provision/Write off of Doubtful/Bad Debts, Advances & Deposits (Net) Operating Loss Before Working Capital Changes Adjustments for : Inventories Sundry Debtors Loans and Advances Current Liabilities and Provisions Income Tax Paid 200.75 (122.01) 90.22 (305.04) (136.08) (365.15) (2,045.56) Exceptional Item NET CASH FLOW/(USED IN) FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets Proceeds from sale of/advance against sale of Fixed Assets Interest Received NET CASH FLOW FROM/(USED IN) INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Borrowings : Issue of Zero Coupon Preference Shares Cash Credit / Working Capital Demand Loan Loan from Subsidiary / Holding Company Interest Paid (Net) NET CASH FLOW (USED IN)/FROM FINANCING ACTIVITIES D. NET DECREASE IN CASH AND CASH EQUIVALENTS : (A+B+C) E. RECONCILIATION : CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR (Refer Schedule 9) CASH AND CASH EQUIVALENTS - AT THE END OF THE YEAR (Refer Schedule 9)* *Includes ` 0.25 lacs in restricted bank account. Notes : 1. The Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard -3 on Cash Flow Statement. 2. The following have been considered under financing activities : Cash credit/working capital demand loan and other borrowings being source of finance. 3. Proceeds from borrowings are shown net of repayments. 4. Purchase of fixed assets are shown inclusive of movements in capital work-in-progress. 5. Cash and cash equivalents represent cash and bank balances only. 6. Previous years figures have been regrouped wherever necessary. This is the Cash Flow Statement referred to in our report of even date. (132.68) 1.20 3.09 (128.39) (3,746.46) (5,792.02) (362.93) 405.05 17.14 59.26 183.06 1,599.20 (12.83) 328.88 29.84 1,945.09 (198.53) (2,218.58) 514.00 57.84 (2.56) (60.10) 0.81 164.27 674.26 (1,544.32) 495.21 3.04 (18.22) (28.31) (917.50) 506.38 19.85 60.45 (1,563.50) For the year ended 31st March, 2010 (` in Lacs) (1,623.95)
For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani
For and on behalf of the Board Chairman Managing Director Head - Finance & Company Secretary Kolkata, 3rd May 2011
27
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS SCHEDULE 1 SHARE CAPITAL As at 31st March, 2011 (` in Lacs) As at 31st March 2010 (` in Lacs)
Authorised : 35,00,00,000 (2009-10 : 55,00,00,000) Equity Shares of ` 1 (2009-10: ` 1) each (See Note (a) and (e) below) 113,00,000 (2009-10 : 93,00,000) Redeemable Preference Shares of ` 100 each (See Note (e) below)
Issued, Subscribed and Paid Up : 9,42,30,000 (2009-10 : 9,42,30,000) Equity Shares of ` 1 each fully paid up (See Notes (a), (b) and (c) below) 50,00,000 (2009-10: NIL ) Zero Coupon Preference Shares of ` 100 each fully paid ( See note (f) below ) 55,00,000 (2009-10 : 55,00,000) 5% Redeemable Cumulative Preference Shares of ` 100 each fully paid up
Notes : Of the above : (a) Pursuant to the provisions of Section 100 of the Companies Act, 1956, Article 8 of the Articles of Association of the Company and High Court order dated February 11, 2005, the Issued, Subscribed and Paid Up Capital of the Company was reduced from ` 10,400 lacs to ` 5,720 lacs by reducing the paid up value of Equity Shares by ` 9 per Equity Share and the amount so cancelled was utilised for reducing the accumulated losses as at March 31, 2004 to the extent of ` 4,680 lacs.To give effect to the above, the composition of the Authorised Capital was modified from 5,50,00,000 Equity Shares of ` 10 each to 55,00,00,000 Equity Shares of ` 1 each. (b) 4,39,08,340 equity shares have been allotted as fully paid up pursuant to contracts for consideration other than cash. Of the equity shares :(i) 12,50,000 equity shares have been allotted pursuant to the scheme of amalgamation of the Assam Match Company Limited with the Company. (ii) 4,22,30,000 equity shares have been allotted pursuant to the scheme of amalgamation of Wimco Boards Limited with the Company. (iii) 1,20,000 and 80,000 equity shares have been allotted pursuant to the agreement with ICICI Bank Limited and trustee of debentureholders respectively. (c) 42,50,000 equity shares have been allotted as fully paid by way of bonus shares by capitalisation of reserves. (d) 9,12,38,170 (2009-10 : 9,12,38,170 ) equity shares of ` 1 each and 55,00,000 (2009-10: 55,00,000), 5% Redeemable Cumulative Preference shares of ` 100 each are held by Russel Credit Limited, the holding company. Out of these, 30,00,000 preference shares were due for redemption on March 15, 2011 but the same was extended upto March 15, 2012 with the consent of Russel Credit Limited. Further 25,00,000 preference shares are due for redemption on March 15, 2012. (e) Pursuant to the provision of Section 94 of the Companies Act, 1956, Article 3 of the Articles of Association of the Company, the Authorised Share Capital of ` 148,00,00,000 comprising 55,00,00,000 Equity Shares of ` 1 each and 93,00,000 Redeemable Preference Shares of ` 100 each, is re-classified into 35,00,00,000 (Thirty Five Crores) Equity shares of ` 1 (Rupee One) each and 1,13,00,000 (One Crore Thirteen Lakhs ) Redeemable Preference shares of ` 100 (Rupees One Hundred) each. (f) 50,00,000, Zero coupon Preference Shares of ` 100 each, redeemable at 6% premium per annum were issued during the year to Russel Credit Limited. These shares shall be redeemable on or before 15th September, 2015. SCHEDULE 2 RESERVES AND SURPLUS As at 31st March, 2011 (` in Lacs) 29.96 14.93 0.27 0.27 500.00 6,534.97 6,534.97 0.27 500.00 6,534.97 1,402.03 0.27 As at 31st March, 2010 (` in Lacs) 29.96 14.93
Capital Reserve Capital Subsidy Securities Premium Account Less : Adjusted towards premium on Redeemable Preference Shares ( See note 1(d) of Schedule 18 ) Capital Redemption Reserve Balance at the beginning of the year Add : Transfer from General Reserve General Reserve as per last Balance Sheet Less : Profit and Loss Account (As Per contra) Revaluation Reserve Balance at the beginning of the year Add : Revaluation Reserve ( See note in Schedule 4 )
500.00
500.00
5,132.94
4,587.14
4,587.14 5,132.03
5,678.10
SCHEDULE 3 LOAN FUNDS Unsecured Loans Pavan Poplar Limited (See Note below) ( Subsidiary Company) Note: The said loan is interest free, with no stipulation as to repayment terms. Russell Credit Limited ( Holding Company ) 303.29 1,000.00 1,303.29 315.27 315.27
28
WIMCO LIMITED
SCHEDULE 4 FIXED ASSETS
GROSS BLOCK Cost/Valuation Additions as at April 1, during the 2010 year Revaluation Deduction/ Cost/Valuation during the Adjustments as at March 31, year during the year 2011 As at April 1, 2010 Depreciation Intangible Assets Leasehold Land Computer Software Tangible Assets Freehold Land Buildings Plant Machinery Factory Equipment Furniture and Fittings/ Computers/Office Equipment Motor Cars, Lorries, Tractors and Launches 2010-11 2009-10 247.28 288.54 7,600.31 6,274.71 1,117.47 5,287.32 408.82 1,117.83 154.26 22,496.54 22,825.97 1.30 14.16 0.96 171.64 27.79 22.55 238.40 996.08 4,587.14 4,587.14 5.70 5.70 1,325.51 247.28 289.84 12,187.45 6,288.87 1,118.43 5,458.96 436.61 1,140.38 148.56 27,316.38 22,496.54 0.66 158.04 5,696.65 455.06 3,252.11 264.06 733.68 120.00 10,680.26 10,516.63 Impairment 246.62 167.73 414.35 414.35 ACCUMULATED DEPRECIATION / IMPAIRMENT Charge on account of Deductions/ As at March 31,2011 Depreciation Impairment Held for Sale Adjustments during the for the year Depreciation impairment year 50.85 41.45 76.52 263.76 12.61 62.60 6.21 514.00 495.21 3.69 0.66 208.89 5,738.10 531.58 3,515.87 276.67 796.28 122.52 246.62 (` in Lacs) NET BLOCK As at As at March 31, March 31, 2011 2010
DESCRIPTION
80.95
130.50 7,432.58 578.06 662.41 2,035.21 144.76 384.15 34.26 11,401.93 210.71 11,612.64
Capital Work in Progress [including capital advances ` Nil (2009-10: ` 6.06 Lacs)] Notes: Based on the valuation report submitted by the approved valuers the Company has revalued the land at Chennai by ` 4587.14 Lacs and the same has been transferred to revaluation reserved account.
SCHEDULE 5 INVESTMENTS LONG TERM INVESTMENTS (UNQUOTED) (i) Government Securities (trade) National Savings Certificates (pledged with various Mandi Samitis) (ii) Investments in wholly owned subsidiary companies Pavan Poplar Limited 55,10,004 (2009-10: 55,10,004) Equity Shares of ` 10 each, fully paid (including 6 Equity Shares held by nominees) Prag Agro Farm Limited 38,00,020 (2009-10: 38,00,020) Equity Shares of ` 10 each, fully paid (including 6 Equity Shares held by nominees) Less : Provision for Diminution (iii) Other Investments (Non-trade) Woodlands Hospital & Medical Research Centre Ltd. (Formerly known as The East India Clinic Limited) 22, (2009-10: 22) 1/2% Debentures of ` 100 each fully paid Mirage Advertising and Marketing Limited 12,488 (2009-10: 12,488) Equity Shares of ` 10 each fully paid Bilaspur Cane Development Corporation Limited 100 (2009-10: 100) Equity Shares of ` 10 each Less : Provision for Diminution
599.06
599.06
Aggregate of Unquoted Investments - At Book Value SCHEDULE 6 DEFERRED TAX ASSETS (NET) Deferred Tax Liability - Difference between book depreciation and depreciation under the Income Tax Act, 1961. Less : Deferred Tax Assets - On Unabsorbed depreciation as per Income Tax Act, 1961* - On disallowance u/s 43B of the Income Tax Act, 1961* - On VRS Cost u/s 35 DDA of the Income Tax Act 1961* - On Provision for Doubtful Debts - On Long Term Capital Loss as per Income Tax Act.1961* - On Business Loss as per Income Tax Act, 1961* 577.45 216.35 764.44 156.59 261.63 1,874.18 3,850.64
599.10
442.52
442.52
*Deferred tax asset which is on account of unabsorbed depreciation/carry forward losses/disallowances has been recognised only to the extent of the deferred tax liabilities as this amount is considered to be virtually certain of realisation. SCHEDULE 7 INVENTORIES (See Note 3 of Schedule 18) Stores and Spares Raw Materials * [including in transit ` 58.30 Lacs (2009 - 10 ` NIL)] Semi-finished goods * Finished Goods * Trading goods * Net of obsolescence 729.58 969.58 236.85 986.08 9.56 2,931.65 811.76 1,183.09 500.75 785.32 9.97 3290.89
29
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (` in Lacs) SCHEDULE 8 SUNDRY DEBTORS (Unsecured and considered good) Considered Good (including debtors over six months old ` 52.71 lacs (2009-10: ` 47.72 lacs)) Considered Doubtful (over six months old) Less : Provision For Doubtful Debts SCHEDULE 9 CASH AND BANK BALANCES Cash in Hand [ including cheques : ` NIL ( 31.03.2010 : ` NIL ) ] Balances with Scheduled Banks in: Current Accounts * (includes ` 0.25 lacs (2009-10: ` 0.25 lacs) lying in 'Restricted' Bank Account) Deposit Accounts Cash Credit (including working capital demand loan) with Banks is secured by hypothecation of all stock in trade present and future of the Company including raw materials, finished goods, trading products and stock-in-process and present and future book debts, outstanding receivables,claims and bills. 60.71 SCHEDULE 10 LOANS AND ADVANCES (Unsecured, considered good - Unless otherwise stated) Loans to Subsidiary Companies (See Note 5 of Schedule 18) Sundry Advances and Claims Receivables Considered Good Considered Doubtful Less: Provision for Doubtful Advances 328.94 26.83 355.77 26.83 328.94 Prepaid Expenses Balance with Customs, Port Trust, Excise Authorities, etc Deposits - Considered Good - Considered Doubtful Less : Provision for Doubtful Deposits Advance Tax and Tax Deducted at Source (Net of Provision for Taxation ` 446.77 lacs (2009-10: ` 429.56 lacs)) Fringe Benefits Tax [(Net of Provision ` 49.80 lacs (2009-10: ` 49.80 lacs)] 254.94 11.10 266.04 11.10 254.94 1,088.49 10.85 2,836.28 96.72 293.88 256.54 11.10 267.63 11.10 256.54 740.56 10.85 2,561.88 431.12 26.83 457.95 26.83 431.12 33.71 353.15 762.46 735.95 51.60 471.43 471.43 329.84 329.84 10.47 49.46 0.78 50.24 44.40 0.78 45.18 471.43 471.43 207.83 207.83 6.42 As at 31st March 2010 (` in Lacs)
SCHEDULE 11 CURRENT LIABILITIES AND PROVISIONS Current Liabilities Advances Received from Customers Sundry Creditors (See Note 7 of Schedule 18) [Due to ultimate holding company ` 2606.97 lacs, (2009-10 : ` 3,016.56 lacs)] Dealers' Deposits Due to Subsidiaries Interest Accrued but not Due Provisions : Leave Encashment Diminution in value of machinery Gratuity 131.94 5,107.22 64.37 5,660.20
SCHEDULE 12 SALES & SERVICES Sales (Net of Sales Tax) [tax deducted at source ` 365.11 lacs (2009-10: ` 215.28 lacs)] Technical Fees, Service Charges etc. [tax deducted at source ` 0.74 lacs (2009-10: ` 0.07 lacs)]
30
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS For the year ended 31st March, 2011 (` in Lacs) SCHEDULE 13 OTHER INCOME Provisions/Liabilities Written Back As No Longer Required (Net) Insurance Claims Exchange Loss (Net) Income from Sale of Energy Profit on sale of fixed assets (net) Other Receipts [includes sale of scrap and materials ` 95.15 lacs (2009-10 : ` 107.79 lacs)] and Lease/Rental Income ` NIL (2009-10 : ` 12.50 lacs) [tax deducted at source ` 5.15 lacs (2009-10 : ` 11.67 lacs)] SCHEDULE 14 (INCREASE)/DECREASE IN STOCK Plantation work in progress: Opening Stock Closing Stock Semi-finished Goods: Opening Stock Closing Stock 210.55 204.77 5.78 500.75 236.85 263.90 Finished and Trading Goods/Agriculture Produce: Opening Stock Closing Stock 795.29 995.64 (200.35) 69.33 SCHEDULE 15 EMPLOYEE COSTS Salaries, Wages and Bonus Contribution to Provident and Other Funds Staff and Workers Welfare Expenses SCHEDULE 16 OTHER COSTS Stores and Spares Consumed ( Including provision made for obsolete spares ) Power and Fuel Rent (See Note 14 of Schedule 18) Rates and Taxes Repairs and Maintenance: Machinery Buildings Others Insurance Directors Sitting Fees Freight and Transport CFAs/Stockists Costs Fixed assets/Inventory written off Provision/Write off of Doubtful/Bad Debts, Advances and Deposits (Net) Travelling and Conveyance Export Commission Advertisement Sales Promotion Loss on sale of fixed assets (net) Exchange Loss (Net) Plantation, Cultivation and Harvesting Charges Measurement and Extraction charges Commission to brokers Other Expenses 2,462.97 505.42 276.03 3,244.42 671.24 765.27 254.77 112.95 124.41 37.44 147.02 72.23 0.50 661.64 28.55 129.36 201.32 15.00 7.38 16.16 0.81 151.75 22.49 0.12 1,015.83 4,436.24 SCHEDULE 17 INTEREST Cash Credit (including Working Capital Demand Loan) Others Less : Interest Income On Income Tax Refund Others 57.84 57.84 2.56 12.80 5.42 1.87 1.17 3.04 2,741.15 455.37 293.31 3,489.83 763.86 833.47 247.04 44.06 147.70 58.88 168.48 45.78 0.60 601.24 65.28 506.38 19.85 210.78 22.99 14.16 2.66 134.00 16.04 8.32 972.30 4,883.87 1,905.54 795.29 1,110.25 1,132.54 500.15 500.75 (0.60) 233.44 210.55 22.89 60.10 11.28 3.51 17.88 160.81 28.31 26.38 26.07 917.50 325.17 For the year ended 31st March, 2010 (` in Lacs)
253.58
1,323.43
2.56 55.28
18.22 (15.18)
31
WIMCO LIMITED
SCHEDULE 18 - NOTES TO THE ACCOUNTS 1. (a) (b) (c) (d) 2. (a) Commitments:
Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is ` Nil (2009-10: ` Nil). The Company has issued letter of financial support to one of its subsidiary companies, viz., Prag Agro Farm Limited. Arrears of dividend on redeemable cumulative preference shares aggregate ` 570.34 lacs (2009-10: ` 295.34 lacs) excluding dividend tax. Premium on Redeemable preference shares remaining to be adjusted against profit of the Company ` 141.42 lacs. Contingencies: Claims against the Company not acknowledged as debts ` 2,218.57 lacs (2009-10: ` 1,501.05 lacs). These comprise: G Excise Duty, Sales Tax and Indirect Taxes claims disputed by the Company relating to issues of applicability and classification, etc. aggregating ` 360.85 lacs (2009-10: ` 329.43 lacs) G Local authority taxes / Cess / Royalty on property, utilities, etc claims disputed by the Company relating to issues of applicability and determination aggregating ` 342.09 lacs (2009-10: ` 341.08 lacs) G Third party claims arising from disputes relating to contracts aggregating to ` 400.51 lacs (2009-10: ` 382.01 lacs) G Other matters ` 1,115.12 lacs (2009-10: ` 448.52 lacs) [(includes Income Tax ` 1,048.72 lacs (2009-10: ` 370.13 lacs) excluding interest)] (b) Test bonds / special valuation bonds aggregating ` 241 lacs (2009-10: ` 241 lacs) equivalent to CIF value of imports of certain raw materials in respect of which additional liability of customs duty is not likely to exceed the above amount. (c) Claims have been filed by farmers in respect of disputes under the WIMCO NABARD Poplar Scheme amounting to ` 19.65 lacs (2009-10: ` 23.60 lacs). (d) The Company had issued Legal Agreement - Undertaking in favour of the President of India acting through the Director General of Foreign Trade, Ministry of Commerce, aggregating ` 1,362.62 lacs (2009-10: ` 1,362.62 lacs) and given declarations under the amended procedures of the Export Import Policy 1992-1997 and issued bonds to the President of India acting through the Assistant Commissioner of Customs, Mumbai, aggregating ` 235.35 lacs (2009-10: ` 235.35 lacs), where necessary formalities and entries have not been completed. 3. The Company suspended operations in its unit at Dhubri, Assam in an earlier year. Based on internal assessment as supported by a technical evaluation carried out in the previous year, fixed assets (excluding land) aggregating ` 43.67 lacs (2009-10: ` 43.67 lacs) and inventories of stores and spares aggregating ` 34.91 lacs (2009-10: ` 34.91 lacs) at Dhubri, were considered to be in good condition and usable. During the year, the Company has provided accelerated depreciation on these assets and made a provision for the stores & spares. 4. During the year, the Company has completed a voluntary separation scheme that has been accepted by all its workmen at its Chennai and Ambernath factories. Consequently, the Safety Matches operations at these units stand suspended and related assets being released for alternate use. The Company is evaluating various options for the utilization of its plant & machinery and inventory lying at these factories as also the alternate use for its land and building at these locations in order to optimise value. The value of land and buildings at Chennai and Ambernath locations, amounting to ` 9,859.22 lacs are now included under Unallocated Assets, while the restructuring costs incurred to get these assets released for alternate use have been included under Unallocated Expenditure in Schedule No.19 - Segment Information. 5. In respect of Loans and Advances from Subsidiary Company (Prag Agro Farm Limited), maximum amount due at any time during the year ` 762.46 lacs (2009-10: ` 735.95 lacs). Interest free loans where no repayment schedule has been specified represents amounts advanced from time to time in previous years and current year to provide financial support to the subsidiary company. 6. The order passed by the District Magistrate authorising the State authorities to take possession of the land leased to Pavan Poplar Limited and Prag Agro Farm Limited, subsidiaries of the Company, has been stayed by the order of the High Court. In the circumstances, no provision has been made for advances to subsidiaries. 7. Micro and Medium scale business entities: There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and as at 31st March 2011 and 31st March 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company. Remuneration to Auditors 2010-11 (` in lacs) Audit Fees Out-of -Pocket expenses 9. (a) Annual Licensed Capacity Matches Unit Million boxes 2010-11 5,000 2009-10 5,000 15.50 0.75 2009-10 (` in lacs) 15.50 0.71
8.
(b) Annual Installed Capacity (As certified by the Management) Unit Matches (on 3 shift basis, 300 working days) (c) OPENING STOCK * Unit Own Production Matches Machines Foresty Wood (From own trees)# Trading Matches Total Plantation work in progress Agricultural Produce/ plants # Poplar ETPs # Poplar and Kadam trees Total 31.03.2011 Quantity Amount (` in lacs) 135 7 744.32 35.71 5.29 Million boxes 2 9.97 795.29 7.75 98.15 104.65 210.55 8 31.03.2010 Quantity Amount (` in lacs) 324 6 1,805.66 51.46 48.42 1,905.54 9.38 96.60 127.46 233.44 Million boxes 2010-11 5,000 2009-10 5,000
Numbers
83,087
98,185
32
WIMCO LIMITED
(d) ACTUAL PRODUCTION Matches Machines (e) Unit Million Boxes Numbers 2010-11 2,675 54 2009-10 3,344 51
COST OF TRADING PRODUCTS PURCHASED Unit Matches Machines Total Million boxes Numbers 2010 - 2011 Quantity Amount (` in lacs) 352 1,888.20 1,888.20 2009 - 2010 Quantity Amount (` in lacs) 195 2 1,010.98 10.13 1021.11
(f)
(g)
DETAILS OF SALES Unit Own Production Manufacturing Matches Machines Forestry Agricultural produce /plants # $ Poplar and Kadam wood (from own trees) # $ Poplar ETPs Trading Matches Machines
2010 - 2011 Quantity Amount (` in lacs) 2,634 57 16,357.36 1,344.65 51.43 103.47
2009 - 2010 Quantity Amount (` in lacs) 3,533 50 19,421.83 1,396.86 36.37 60.94 4.11 201 2 835.87 1,163.18 17.29 22,932.34
3.85 352
(h)
Closing Stock* Unit Own Production Matches Machines Forestry Wood (from own trees) # Trading Matches Total Plantation work in progress Agricultural Produce/plants # Poplar ETPs # Poplar and Kadam trees Total Million boxes Numbers
31.03.2010 Quantity Amount (` in lacs) 135 7 744.32 35.71 5.29 2 9.97 795.29 7.75 98.15 104.65 210.55
Million boxes
Numbers
63,115
83,087
* Includes adjustments for shortage/excess and the effects of reduction of stock items to realisable value. # Due to the typical nature of the product, it is not possible to state quantities. $ Includes free issues and damages and is net of sales returns. 10. DETAILS OF RAW MATERIALS AND COMPONENTS CONSUMED* Unit Wood Splints and Veneers Cardboard and Paper Chemicals Others CMHub Million Tonnes Tonnes 2010 - 2011 Quantity Amount (` in lacs) 21,670 1,03,159 9,867 5,254 2,408.81 2,411.02 3,552.15 2,494.81 609.74 11,476.53 1,077.82 10,398.71 11,476.53 2009 - 2010 Quantity Amount (` in lacs) 26,570 1,53,573 12,574 6,807 2,539.20 2,716.84 3,276.97 2,927.05 1,726.94 13,187.00 617.31 12,569.69 13,187.00
Imported Indigenous * includes shortages/excesses/damages due to flood 11. (a) Value of Imports calculated on C.I.F. basis Raw Material Spares (b) Expenditure in Foreign currency Travelling (c) Earnings in Foreign Exchange Exports of Goods calculated on FOB basis
% 9 91
% 5 95
33
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS 12. UNHEDGED FOREIGN CURRENCY EXPOSURES NOT COVERED BY FORWARD CONTRACTS : 31.03.2011 Amount (in lacs) Sundry Debtors Sundry Creditors 13. EARNINGS PER SHARE (Loss) after taxation (` in lacs) Arrears of preference dividend and including Preference dividend tax (` in lacs) (Loss) attributable to equity shareholders (` in lacs) Weighted Average Number of equity shares Earnings per share (`) - Basic and Diluted Nominal value of an equity share (`) 14. LEASES: WHERE THE COMPANY IS A LESSEE/LICENSEE The Company has taken various office and godown premises under operating lease on leave and license agreements. These are not non-cancellable and range between 11 months and 3 years under leave and license or longer for other leases. 15. Research and development expenses incurred during the year as ascertained by the management, amounting to ` 21.35 lacs (2009-10: ` 17.53 Lacs) have been charged to appropriate heads of expenses. 16. EMPLOYEE DEFINED BENEFITS In accordance with Accounting Standard 15, the undiscounted amount of short-term compensated absences in the nature of unavailed leave expected to be paid in exchange for services rendered amounting to ` 27.58 lacs (2009-10; ` 27.50 lacs) has been recognised to the profit and loss account for the year. ` in lacs Defined Benefit Plans Gratuity (Funded) 2010-11 Change in obligation during the year ended March 31, 2011 1. 2. 3. 4. 5. 6. Obligation at the beginning of the year Service Cost Interest Cost Actuarial (Gains)/Losses Benefits payments Obligations at the end of the year 1,066.52 41.93 85.49 143.14 (573.86) 763.22 951.89 57.51 71.39 99.87 (114.14) 1,066.53 110.90 32.09 8.99 37.68 (103.83) 85.83 94.21 30.20 7.07 5.35 (25.92) 110.90 2009-10 Leave Encashment (Unfunded) 2010-11 2009-10 ` 0.98 Amount (in lacs) ` 42.92 Amount (in lacs) USD 0.03 2010-11 (5,965.04) 320.67 (6,285.61) 9,42,30,000 (6.67) 1.00 31.03.2010 Amount (in lacs) ` 1.25 2009-10 (1,623.95) 320.67 (1,944.62) 9,42,30,000 (2.06) 1.00
Change in Plan Assets 1. 2. 3. 4. 5. 6. Plan assets at the beginning of the year Expected return on plan assets Contribution by employers Actual benefits paid Actuarial Gains/(Losses) Plan assets at the end of the year 969.37 88.58 32.00 (573.86) (2.09) 514.01 956.07 86.05 39.54 (114.14) 1.85 969.37
Reconciliation of present value of the obligation and the fair value of the plan assets 1. 2. 3. Fair value of plan asset at the end of the year Present value of the defined benefit obligations at the end of the period Asset/(Liability) recognised in the balance sheet 514.01 763.22 (249.21) 969.37 1,066.53 (97.16) 85.83 (85.83) 110.90 (110.90)
Cost for the period 1. 2. 3. 4. 5. Service Cost Interest Cost Return on Plan Assets Actuarial (Gains)/Losses Past Service Cost 41.93 85.49 (88.58) 143.14 181.98 57.51 71.39 (86.05) 99.87 142.72 32.09 8.99 37.68 78.76 30.20 7.07 5.35 42.62
Net Cost Investment details of plan assets The Gratuity Scheme is invested in a Group-cum-Life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India. Actual return on plan assets Acturial Assumptions: 1. 2 3 Discount Rate Salary escalation Expected return on plan assets
8.00% 4.00%
7.00% 3.50%
34
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS Net Asset/(Liability) recognized in Balance Sheet (including experience adjustment impact) 1 Present Value of Defined Benefit Obligation For the year ended 31st March, 2011 (` in Lacs) Gratuity 763.22 514.01 (249.21) Leave Encashment 85.83 (85.83) For the year ended 31st March, 2010 (` in Lacs) Gratuity 1,066.53 969.37 (97.16) Leave Encashment 110.90 (110.90) For the year ended 31st March, 2009 (` in Lacs) Gratuity 951.89 956.07 4.18 Leave Encashment 94.21 (94.21) For the year ended 31st March, 2008 (` in Lacs) Gratuity 899.42 836.38 (63.04) Leave Encashment 103.10 (103.10)
There are no experience adjustments of Plan Assets / Obligations as at 31 March 2011. A. Amounts recognised as an expense and included in Schedule 17 - "Salaries, Wages and Bonus" ` 78.76 lacs (2009-10: ` 42.62 lacs) for leave encashment and in "Contribution to Provident and Other Funds" ` 181.98 lacs (2009-10: ` 142.72 lacs) for gratuity. B. Basis used to determine expected rate of return on assets: The Gratuity Scheme is invested in a Group-cum-Life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India. The invested return earned on the policy comprises bonuses declared by LIC having regard to LIC's investment earnings. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. We understand that LIC's overall portfolio of assets is well diversified and as such, the long-term return on the policy is expected to be higher than the rate of return on Central Government bonds. C. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. 17. PROVIDENT FUND LIABILITY In terms of the Guidance on implementing the revised AS 15, the provident fund set up by the Company is treated as a defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the year-end no shortfall remains unprovided for. As advised by an independent actuary, it is not practicable/feasible to actuarially value the provident fund liability. 18. PRIOR PERIOD COMPARATIVES The previous years figures have been re-grouped or re-arranged as necessary to conform to the present years presentation. SCHEDULE 19 NOTES TO SEGMENT INFORMATION: (i) The business segment has been considered as the primary segment. The Company is organised into three main business segments: Match, Engineering and Forestry. The segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organisation structure and the internal financial reporting systems. (ii) Segment revenue in each of the above business segments primarily includes sales and services in the respective segments. (iii) The Segment revenues in the geographical segments considered for disclosure are as follows: (a) Revenue within India includes sales to customers located within India and earnings in India. (b) Revenue outside India includes sales to customers located outside India and earnings outside India. The Company has disclosed Geographical Segment as the secondary segment. Fixed assets used in the Company's business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments for some units. The Company therefore believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities (including capital expenditure incurred during the period) other than debtors, since a meaningful segregation of the available data is onerous. (iv) Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the above segments and amounts allocated on a reasonable basis. Segment information for the year ended March 31, 2011 (I) Information about Primay Business Segments: Match 2010-11 Revenue External Inter-Segment Total Revenue Less: Eliminations on account of Inter Segment Revenue Total Revenue Result Segment Result Unallocated expenditure net of unallocated income Operating Profit/(Loss) before exceptional items Exceptional item (See Note 4 of Schedule 18) Operating Profit/(Loss) after exceptional items Interest Expenses Interest Income Net Profit/(Loss) Other Information Segment assets Segment liabilities Capital Expenditure Depreciation 18,478.00 18,478.00 18,478.00 (2,201.19) (2,201.19) (2,201.19) (2,201.19) 8,944.15 2,102.31 109.77 406.07 2009-10 20,585.02 20,585.02 20,585.02 (2,246.44 ) (2,246.44 ) (2,246.44 ) (2,246.44 ) 14,872.71 2,625.96 356.82 375.16 Engineering 2010-11 2009-10 1,404.25 1,404.25 1,404.25 173.84 173.84 173.84 173.84 681.16 304.93 5.73 8.65 1,436.14 1,436.14 1,436.14 230.58 230.58 230.58 230.58 717.47 319.86 2.26 9.16 Forestry 2010-11 2009-10 975.53 329.32 1,304.85 (329.32) 975.53 736.45 736.45 736.45 736.45 1,935.02 472.21 1.79 3.33 933.17 245.06 1,178.23 (245.06 ) 933.17 683.74 683.74 683.74 683.74 2,133.60 465.03 0.08 3.70 Unallocated 2010-11 2009-10 ` in lacs Total 2010-11 2009-10 20,857.78 329.32 21,187.10 (329.32) 20,857.78 (1,290.90) (872.39) (2,163.30) (3,746.46) (5,909.76) (57.84) 2.56 (5,965.04) 22,778.81 7,036.57 132.68 514.00 22,954.33 245.06 23,199.39 (245.06) 22,954.33 (1,332.12) (307.00) (1,639.12) (1,639.12) (3.05) 18.22 (1,623.95) 18,534.48 6,414.09 362.94 495.21
(872.39) (872.39) (3,746.46) (4,618.86) (57.84) 2.56 (4,674.14) 11,218.48 4,157.12 15.40 95.95
(307.00 ) (307.00 ) (307.00 ) (3.05 ) 18.22 (291.83 ) 810.70 3,003.24 3.78 107.19
35
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS
Revenue by Geographical Segments: Sales 20,573.15 22,913.44 284.63 40.88 20,857.78 Carrying Amount of Segment Assets 22,778.81 18,533.23 1.25 22,778.81 Capital Expenditure 132.68 362.94 132.68 Unallocated income and expenditure relate mainly to the Corporate Office as also the Unallocated assets and Liabilities which include investments made centrally at the Corporate Office. SCHEDULE 20 - RELATED PARTY DISCLOSURES : 1. Parties exercising control over the Company : Related Party ITC Limited Russell Credit Limited 2. Relationship Ultimate holding company Holds 96.82% of the equity share capital 4. 3.
Other related Parties with whom the Company had transactions Fellow subsidiaries ITC Infotech India Limited Directors of the Company : Managing Director Rajeev Gopal (upto 29th December,2010) VM Rajasekharan (w.e.f. 7th January, 2011)
Parties over whom Company exercises control : Subsidiary Companies (Wholly owned) Pavan Poplar Limited (PPL) Prag Agro Farm Limited (PAFL)
No remuneration is paid by the Company to the Managing director in accordance with the terms of his appointment.
5.
Transaction with related parties ULTIMATE HOLDING COMPANY ITC Ltd. 2010-11 2009-10 21,044.91 1,400.00 2,381.31 0.48 435.12 63.98 400.00 1,400.00 259.82 505.79 2,770.59 HOLDING COMPANY RUSSELL CREDIT Ltd. 2010-11 55.50 4,000.00 3,000.00 1,000.00 5,000.00 2009-10 124.19 2010-11 5.35 3.96 0.85 1.33 13.30 303.30 82.87 SUBSIDIARY COMPANIES PPL 2009-10 5.12 4.01 1.74 15.50 12.00 315.27 82.87 2010-11 4.88 306.78 15.31 33.72 55.02 28.51 762.46 PAFL 2009-10 14.80 307.79 46.59 19.68 118.30 53.05 735.95 Fellow Subsidiaries ITC Infotech India Ltd. 2010-11 98.22 2009-10 84.09 2010-11 18,546.66 1,553.81 99.62 678.00 34.71 51.48 55.02 28.51 762.46 4,128.43 3,343.91 1,303.30 87.06 209.82 2,567.08 5,000.00
` in Lacs Total 2009-10 21,064.83 1,400.00 2,689.10 84.57 124.19 485.72 21.42 63.98 118.30 53.05 735.95 415.50 1,412.00 315.27 259.82 588.66 2,770.59
Sale of goods & services Sale of Fixed Asset Purchase of raw materials and components Purchase of Services Purchase of Fixed Assets Expenses Reimbursed Expenses Recovered Rent Received Loans & Advances given during the year Receipt towards Repayment of Loans and advances given Outstanding Loans and Advances (Dr) Loans & Advances taken during the year Repayment of loans & Advances by the Company Unsecured Loans (Cr) Outstanding Receivables Outstanding Payables Advance Payable Issue of Preference Shares
18,536.43 1,247.04 1.40 603.23 0.14 51.48 127.10 330.61 87.06 126.95 2,567.08
SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Preparation of Financial Statements The financial statements have been prepared and presented under the historical cost convention (except for fixed assets revalued in earlier years), on the accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 and the accounting principles generally accepted in India and comply with the accounting standards (AS) prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable. 2. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
3.
Fixed Assets/Depreciation/Impairment (i) Fixed assets are stated at cost of acquisition less accumulated depreciation and impairment loss except in case of certain Freehold Land which is shown at revalued amount and certain Buildings, which are shown at revalued amounts less accumulated depreciation. Depreciation is computed on a straight-line basis at the following annual rates: Nature of Assets Building Plant, machinery and factory equipment Furniture and fittings/office equipment Computers Motor cars, lorries, tractors and launches Rates % 1.63 to 3.34 4.75 to 10.34 6.33 31.67 7.07 to 11.31
Assets individually costing ` 5,000.00 or less are fully depreciated in the year of purchase.
36
WIMCO LIMITED
II. Leasehold Land is carried at cost less accumulated amortisation and impairment loss, if any. Accordingly, expenditure incurred on leasehold land is amortised on a straight-line basis over the remaining period of the lease. 7. year are recognized in the profit and loss account of the year. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognised in the profit and loss account. Revenue Recognition Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. Sales are accounted for inclusive of excise duty but net of sales tax and discounts. Service Income is accrued as services are rendered, based on respective contractual terms. Consultancy income is recognized on rendering service in accordance with related contracts with the customers. Revenue from interest is accrued taking into account the amount outstanding, period and the rate applicable. Lease / Rental Income is recognised on a straight-line basis over the period of the related agreement. 8. Taxes on Income Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law), fringe benefits tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized. 9. Employee Benefits: Short-term employee benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period. Post-employment benefits In respect of the employees of the erstwhile WIMCO Seedlings Limited, the contribution towards provident fund is deposited in a government administered fund which is a defined contribution scheme. The contribution paid/payable under the scheme is recognised as expense in the profit and loss account during the period in which the employee renders the related service. In respect of other employees, the contributions made to Company managed provident fund are charged to profit and loss account as incurred. The interest rate payable by the trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The Companys approved Superannuation Pension Scheme applicable to certain employees is a defined contribution plan funded with the Life Insurance Corporation of India (LIC). The annual contributions made under the policy are recognised as an expense in the profit and loss account during the period in which the employee renders the related service. The Companys gratuity benefit scheme is a defined benefit plan funded through a policy taken with the LIC. The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value
III. Assets identified as held for disposal are stated at lower of their book value and estimated net realisable value. IV. Application software, which is not an integral part of the related hardware, is shown as intangible asset and amortised on a straight line basis over its useful life, not exceeding 5 years, as determined by the management. V. In accordance with AS 28, where there is an indication of impairment of the Companys assets, the carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets (or where applicable, that of the cash generating unit to which the asset belongs) is estimated at the higher of its net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. An impairment loss is recognised whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. Impairment loss is recognised in the Profit and Loss Account.
4.
Valuation of Investments Long-term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments. Current investments are carried at lower of cost and market value. Valuation of Inventories and Plantation Work in Progress Inventories are valued at the lower of cost and net realisable value. Inventories of Raw Materials, Stores and Spares are valued on a weighted average cost basis. Finished and semi finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Semi finished goods are valued based on stage of completion as certified by management. Entire Transplants included in semi-finished goods are valued at cost. Cost represents direct expenses including cost of Entire Transplants purchased specifically for multiplication and other direct costs.
5.
Plantation Work in Progress: (i) In valuing poplar trees included under semi finished products, no adjustment is made to the total cost of trees on account of undeveloped / diseased trees being normal loss during the period of maturity of plantation (based on a technical estimate) except that realization/ insurance claim for such trees is reduced from the total cost. Every year, plantation cost already incurred is compared with net realizable value which is determined on the basis of estimated selling price less estimated cost likely to be incurred in future for bringing the plantation to maturity and the cost necessarily to be incurred in order to make sale. Net Realisable Value is arrived at based on standard average yield of matchwood per tree and the prevailing market price for matchwood of similar quality/contracted price. The yield is computed based on an evaluation carried out by the Companys technical expert. Cost includes all direct and indirect expenses in respect of the poplar plantation. Further, 75% of net realizable value of intercropping, waste, etc is reduced from the above cost because entire farm cost is first added to cost of plantation. Agricultural produce / standing crops and plants are valued at 75% of their net realizable value. Fuel wood arising from poplar trees and lying in stock is valued at 75% of their net realizable value. Livestock is valued at 75 % of their net realizable value. The Company has considered an average yield of 0.22 cmh per tree based on the evaluation carried out by the Companys technical expert and further certified by an external technical expert. Foreign Currency Transaction Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of the transactions. Exchange differences arising on foreign exchange transactions settled during the
6.
37
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. The obligation is compared with the fund balance with LIC and where the calculation results in a benefit to the Company, the recognized asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the fund or reductions in future contributions to the fund. Actuarial gains and losses are recognized immediately in the profit and loss account. Other Long-term employment benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date. 10. Borrowing Costs Borrowing costs specifically relatable to the acquisition of qualifying fixed assets are capitalised as part of the cost of fixed assets. Other borrowing costs are charged to revenue. 11. Provisions and Contingencies A provision is created where there is a present obligation as a result of a past event that probably an outflow of resources and a reliable estimate can be made of the amount of the obligation. A contingent liability is disclosed when there is a possible or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure is made. For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani 12. Leases The Company has various operating leases, principally for properties and office space, with various renewal options. Rental expense in agreements with scheduled rent increases is recorded on a straightline basis. 13. Earnings per share (EPS) Basic earnings per share is computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. Diluted EPS is computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number of equity and equivalent dilutive equity shares outstanding during the year, except where the results would be anti-dilutive. 14. Research and development costs Revenue expenditure incurred on different projects is charged to appropriate expense heads in the period incurred and amounts recovered from the customer form part of the consultancy income. Signatures to the Schedules forming part of the Balance Sheet and Profit and Loss Account and to the above notes.
For and on behalf of the Board Chairman Managing Director Head - Finance & Company Secretary Kolkata, 3rd May 2011
ANNEXURE BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (Additional Information pursuant to Part IV of Schedule VI of The Act) I. Registration Details Registration No.
1 0 8 2
State Code
1 1
Investments
5 9 9 1 0
Balance Sheet Date 3 1 0 3 2 0 1 1 Date Month Year II. Capital raised during the year (Amount in ` Thousands) Public Issue
N I L
Deferred Tax
N I L
Miscellaneous Expenditure
N I L
Accumulated Losses
8 3 2 1 0
Rights Issue
N I L
IV.
Bonus Issue
N I L
Private Placement
5 0 0 0 0 0
III.
(Please tick appropriate box + for profit, for loss) Earnings per Share in ` - Basic and Diluted +
6 . 6 7
Total Assets
2 3 6 1 0 9 0
(Please tick appropriate box + for earnings, for loss) V. Generic Names of Three Principals Products / Services of the Company (as per monetary terms) Item Code No. (ITC Code)
3 6 0 5 0 0 0 1 1 0
Product Description
M A T C H E S M A C H I N E R Y E N T I R E T R A N S P L A N T S
Secured Loans
N I L
Unsecured Loans
1 3 0 3 2 9 8 4 2 2 3 0 0 0 0 6 0 2 9 0 . 0 9
38
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
1. Name of the Subsidiary Company PAVAN POPLAR LIMITED PRAG AGRO FARM LIMITED
2. 3.
Financial Year of the Subsidiary Company ended Number of Shares held in Subsidiary
March 31, 2011 55,10,004 Equity Shares of ` 10 each. (Including 6 Equity Shares held by nominees of Wimco Limited) Equity Shares - 55,10,004 Shares of ` 10 each. Equity Shares - 100%
March 31, 2011 38,00,020 Equity Shares of ` 10 each (Including 6 Equity Shares held by nominees of Wimco Limited) Equity Shares - 38,00,020 Shares of ` 10 each. Equity Shares - 100%
4. 5.
Total issued Share Capital of the Subsidiary Company Percentage of Shares held in the subscribed capital of the Subsidiary (including shares held by nominees) The net aggregate amount so far as it concerns members of the Company and is not dealt with in the Companys accounts of Subsidiary (i) Profit / (Loss) for the financial year ended (` in lacs) (ii) Profits / (Losses) for the previous financial years of the Subsidiary since it became the Companys Subsidiary (` in lacs)
6.
` 135.17
` (754.29)
7.
The net aggregate amount so far as it concerns members of the Company and is dealt with in the Companys account of Subsidiary (i) Profit for the financial year ended (` in lacs) (ii) Profits for the previous financial years of the Subsidiary since it became the Companys Subsidiary (` in lacs) March 31, 2011 Nil March 31, 2011 Nil
Nil
K. N. Grant Chairman V. M. Rajasekharan Managing Director S. K. Sipani Head - Finance & Company Secretary
39
Auditors The Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. Your Board has recommended their re-appointment. Auditors Report The Auditors Report given by the Auditors is self-explanatory. Secretarial Compliance Certificate The certificate from a Secretary in Whole-time Practice as required under proviso to Section 383(1) of the Companies Act, 1956 is attached with this Report. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo A) Conservation of Energy The particulars in Form A regarding consumption of energy are not provided as the activity of the Company does not fall under the list of industries specified in the Schedule annexed to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. B) Technology Absorption During the year, there is no technology absorption and the Company has not incurred any expenses on research and development. C) Foreign Exchange Earnings and Outgo There is no foreign exchange earning and outgo during the year. Employees None of the employees of the Company is covered under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. Acknowledgement The Board acknowledges the understanding and support of the government, investors, banks, distributors, customers, suppliers and business associates and the dedication and hard work of its employees. For and on behalf of the Board Kolkata, 3rd May 2011 S. Limaye Chairman
18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.
dividend during the financial year under review. (iii) The Company was not required to post warrants to any member of the company as no dividend was declared during the financial year. (iv) The Company has not transferred the amounts in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to Investor Education and Protection Fund as there were no such amounts outstanding during the financial year under review. (v) The Company has complied with the requirements of section 217 of the Act. The Board of Directors of the Company is duly constituted and the appointment of additional director and additional director as director has been duly made. The Company has not appointed any Managing Director/ Whole time Director/Manager during the financial year under review. The Company has not appointed any sole selling agents during the financial year under review. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and/or such other authorities prescribed under the various provisions of the Act during the financial year. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. The Company has issued Nil Equity Shares during the financial year under review. The Company has not bought back any shares during the financial year under review. The Company has not issued any preference shares/ debentures; therefore the comment is not required. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, right shares and bonus shares pending registration of transfer of shares. As per explanation provided, the Company has not invited/ accepted any deposits including any unsecured loans falling within the purview of section 58A during the financial year under review. The Company has not made any borrowings during the financial year under review. The Company has not made any loans or advances or given guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose. The Company has not altered the provisions of the Memorandum with respect to situation of the companys registered office from one State to another during the financial year under review. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the financial year under review. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the financial year under review. The Company has not altered the provisions of the Memorandum with
40
Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ending 31st March, 2011. 1. Form 23AC/ Form 23ACA alongwith Balance Sheet and other required documents u/s 220 of the Companies Act, 1956 for the year 2010 filed on 30.09.2010 with normal filing fees. 2. Form 20B alongwith Schedule V u/s 159 of the Companies Act, 1956 for the year 2010 filed on 03.11.2010 with normal filing fees. 3. Form 66 alongwith Compliance Certificate u/s 383A of the Companies Act, 1956 for the year 2010 filed on 29.09.2010 with normal filing fees. 4. Form 32 u/s 303(2) of the Companies Act, 1956 for Resignation of Director filed on 03.06.2010 with additional filing fees. 5. Form 32 u/s 303(2) and 264(2) of the Companies Act, 1956 for Appointment of Additional Director and Resignation of Director filed on 23.07.2010 with normal filing fees. 6. Form 32 u/s 303(2) of the Companies Act, 1956 for Appointment of Additional Director as Director filed on 24.09.2010 with normal filing fees. Chennai, 3rd May 2011 Name of CP Holder: Anchal R. Jain CP Number: 5168
AUDITORS REPORT TO THE MEMBERS OF PRAG AGRO FARM LIMITED We have audited the attached balance sheet of Prag Agro Farm Limited (the Company) as at 31 March, 2011 and the related profit and loss account and the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, (the Act), we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: (a) we have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; ANNEXURE TO THE AUDITORS REPORT 31 MARCH 2011 (Referred to in our report of even date) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified annually. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No discrepancies were noticed upon such verification. (c) The Company has not disposed off any fixed assets during the year. (ii) (a) The inventory has been physically verified by the management during the year. ln the opinion, the inventory of such verification is reasonable. (b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. (iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act,
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; (e) on the basis of written representations received from the directors of the Company as of 31 March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and (f) in our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March, 2011; (ii) in the case of the profit and loss account, of the profit of the Company for the year ended on that date; and (iii) in the case of the cash flow statement, of the cash flows of the Company for the year ended on that date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070
(iv)
(v)
1956 (the Act). Accordingly, the provisions of paragraph 4 (iii) of the Order are not applicable to the Company. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases, of inventory and fixed assets and with regard to the sale of goods. The activities of the Company do not involve sale of services. We have not observed any major weakness in the internal control system during the course of audit. ln our opinion, and according to the information and explanations given to us, there are no contracts and arrangements, the particulars of which need to be entered into the register maintained under Section 301 of the Act. The Company has not accepted any deposits from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Act for any of the products manufactured/services rendered by the Company. (a) According to the information and explanations given to us and
41
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule As at 31st March, 2011 (`) SOURCES OF FUNDS Shareholders Funds Share Capital Loan Funds Unsecured Loans Total Application of Funds Fixed Assets Gross Block Less : Accumulated Depreciation Provision for Impairment Net Block Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Net Current Assets Profit and Loss Account Total Notes to the Accounts Related Party Disclosure Significant Accounting Policies 12 13 14 4 5 6 7 8 9 2,69,754 2,69,754 1,57,46,251 7,48,92,319 11,42,46,257 6,87,351 6,87,351 1,14,09,325 7,54,28,908 11,15,95,220 As at 31st March, 2010 (` )
1 2
3 10,19,53,195 2,73,75,561 5,10,01,947 2,35,75,687 32,000 99,06,202 7,10,108 18,499 53,81,196 1,60,16,005 10,19,53,195 2,62,21,261 5,10,01,947 2,47,29,987 27,000 93,51,100 73,900 5,937 26,65,739 1,20,96,676
The Schedules referred to above and the annexed notes form an integral part of this Balance Sheet. This is the Balance Sheet referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
42
11 3
Earnings per share - Basic and Diluted (Refer Note 4 of Schedule 12) 0.14 Face Value (`) 10 Notes to the Accounts 12 Related Party Disclosure 13 Significant accounting policies 14 The Schedules referred to above and the annexed notes form an integral part of this Profit and Loss Account. This is the Profit and Loss Account referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 ( `) ( `) A. CASH FLOW FROM OPERATING ACTIVITIES : Profit before Taxation Adjustments for : Interest Income Profit on sale of fixed assets Depreciation Operating Profit Before Working Capital Changes Adjustments for : Loans and Advances Debtors Inventories Current Liabilities Direct Taxes Paid NET CASH FLOW USED IN OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Investment NET CASH FLOW USED IN INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES Loans (repaid to)/taken from Holding Company NET CASH FLOW FROM FINANCING ACTIVITIES D. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS : (A+B+C) E. RECONCILIATION CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS- AT THE END OF THE YEAR (5,000) 6,59,847 (2,435) 11,54,300 18,11,712 (21,21,896) (6,36,208) (5,55,102) (4,17,597) (37,30,803) (7,14,384) (26,33,476)
For the year ended 31st March, 2010 ( `) 7,33,495 (1,879) (16,040) 11,54,300 18,69,876 (14,64,874) (73,900) (41,16,186) (11,74,728) (68,29,688) (3,90,652) (53,50,464) (5,000) (5,000)
(5,000)
26,51,037
Notes : 1. The Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 on Cash Flow Statement. 2. Cash and cash equivalents represent cash and bank balances only. 3. Previous years figures have been regrouped wherever necessary. This is the Cash Flow Statement referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
For and on behalf of the Board S K Sipani Director S Limaye Director Kolkata, 3rd May 2011
43
7,62,46,057 7,62,46,057
7,35,95,020 7,35,95,020
Intangible Asset Leasehold Land 10,16,90,195 Tangible Asset Building 1,79,500 Plant and Machinery 45,500 Furniture and Fixture 1,500 Vehicle 36,500 Total 10,19,53,195 2009-10 10,19,68,195
SCHEDULE 4 - INVESTMENTS National Saving Certificates Kissan Vikas Patra (lodged with the local authorities) SCHEDULE 5 - INVENTORIES Semi Finished Produce Finished Goods/Produce SCHEDULE 6 - SUNDRY DEBTORS Unsecured - Considered Good Over six months Debts outstanding for less than six months SCHEDULE 7 - CASH AND BANK BALANCES Cash in Hand Balance with a Scheduled Bank in Current Account SCHEDULE 8 - LOANS AND ADVANCES Advances recoverable in Cash or in Kind or for value to be received Advance tax [net of provision for tax ` 347,602 (2009-10 : ` 224,344)] Advance Fringe Benefit Tax [net of provision for tax ` 63,497 (2009-10 : ` 63,497)] Prepaid Expenses Interest accrued on investment Advance to suppliers
SCHEDULE 9 - CURRENT LIABILITIES AND PROVISIONS Current Liabilities Sundry Creditors Advance received from customers Other Liabilities
As at 31st March, 2011 ( `) 31,000 1,000 32,000 99,06,202 99,06,202 7,10,108 7,10,108 12,091 6,408 18,499 42,48,146 9,45,094
2,496 8,525 5,439 1,71,496 53,81,196 2,01,888 50,000 17,866 2,69,754
As at 31st March, 2010 ( `) 26,000 1,000 27,000 79,41,276 14,09,824 93,51,100 73,900 73,900 2,947 2,990 5,937 17,80,152 3,53,968
2,496 8,040 3,004 5,18,079 26,65,739 6,16,755 50,000 20,596 6,87,351 SCHEDULE 10 - OTHER INCOME Sale of scrap Insurance claim Interest Income SCHEDULE 11 - OTHER COSTS Plantation and Cultivation Deputation Charges Travelling and Conveyance Power and Fuel Rent Rates and Taxes Freight outward Legal and Professional fees (includes prior year expenses : ` 2,03,276) Insurance Auditors Remuneration Audit Fees Out of pocket expenses Repairs and Maintenance Building Plant and Machinery Others Communication Printing and Stationery Bank Charges Tools Consumed Other Expenses
44
79,41,276 48,330 13,61,494 2,82,48,793 6,86,107 4,88,359 41,11,307 1,89,493 17,36,943 3,00,76,071 15,86,873
51,68,334 66,580 3,07,15,712 4,72,644 14,79,588 34,39,189 18,40,747 27,61,776 3,01,75,476 10,10,458
CMH
99,06,202
172.3167
*Due to typical nature of the product, it is not possible to state quantities. 7. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and as at March 31, 2011 and March 31, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. 8. Information with regard to other matters specified in paragraphs 4-A, 4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 is either nil or not applicable to the Company for the current as well as previous financial year. 9. Previous year's figures have been re-grouped / re-arranged wherever necessary to conform to current years presentation.
# No transaction during the years 2010 -11 and 2009-10. 2. Other related parties with whom the Company had transactions Pavan Poplar Limited (PPL) - Fellow subsidiary
3. Transaction between related parties HOLDING COMPANY PARTICULARS Wimco Limited 2010-11 Purchases Sales Expenses Reimbursed Expenses Recovered Loans taken Loan repayment Loans given Receipts towards loan repayments Outstanding unsecured loans 4,88,359 3,06,77,595 38,60,101 15,31,412 55,01,714 28,50,677 7,62,46,057 2009-10 14,79,588 3,07,78,982 19,68,371 46,59,459 1,18,29,924 53,04,704 7,35,95,020 2010-11 4,01,403 82,250 26,78,922 20,266 FELLOW SUBSIDIARY COMPANY PPL 2009-10 1,33,300 16,450 30,19,498 4,277 2010-11 8,89,762 3,07,59,845 60,50,664 15,51,678 55,01,714 28,50,677 7,62,46,057 2009-10 16,12,888 3,07,95,432 49,87,869 46,63,736 1,18,29,924 53,04,704 7,35,95,020 TOTAL Amounts in (`)
SCHEDULE 14 - SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Accounting The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with provisions of the Companies Act, 1956, and the accounting principles generally accepted in India and comply with accounting standards (AS) prescribed in the Companies (Accounting Standards) Rules, 2006, issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable. The accumulated losses of the Company as at March 31, 2011 have resulted in erosion of Companys net worth. At the year-end, the Companys current assets exceeded its current liabilities by ` 1,57,46,251 (2009-10: ` 1,14,09,325) and its total liabilities exceeded its current assets by ` 6,04,99,806 (2009-10: ` 6,21,85,695). These accounts have been prepared on a going concern basis as the Company has received a letter of financial support from WIMCO Limited (Holding Company). 2. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. 3. Fixed Assets/Amortisation/Impairment /Depreciation Fixed Assets are stated at cost of acquisition less accumulated depreciation and impairment loss. Cost includes all expenses attributable to the acquisition and development of the assets.
45
For and on behalf of the Board S. K. Sipani Director S. Limaye Director Kolkata, 3rd May 2011
ANNEXURE BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (Additional Information pursuant to Part IV of Schedule VI to The Act) I. Registration Details: Registration No. Balance Sheet Date 3 1 Date 1 2 8 0 8 4 1 8 State Code 1 1 Application of Funds Net Fixed Assets 2 3 5 7 Net Current Assets 1 5 7 4 Investments 6 6 3 Misc. Expenditure N I L Accumulated Losses 7 4 9 3 6 IV. Performance of the Company: (Amount in ` Thousands) Turnover (including other income) 3 + 7 8 4 9 Total Expenditure 3 7 1 8 9 2
0 3 2 Month
1 Year
II. Capital raised during the year: (Amount in ` Thousands) Public Issue N I L N Rights Issue I L
Bonus Issue N I L
Private Placement N I L
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 Sources of Funds Paid up Capital 3 8 0 0 0 Reserves and Surplus N I L 1 4 5 1 6 1 Total Assets 1 4 5 1 6
Profit / Loss Before Tax Profit / Loss After Tax + 6 6 0 5 3 7 (Please tick appropriate box + for profit, for loss) Dividend Rate % Earnings per Share in ` 0 . 1 4 N I L (Please tick appropriate box + for Earnings, for loss)
Secured Loans N I L
Unsecured Loans 7 6 2 4 6
V. Generic Names of Three Principal Products/Services of the Company: (As per monetary terms) N O T Item Code No. (ITC Code) A P P L I C A B L E Product Description N O T A P P L I C A B L E
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Audit Committee The Audit Committee comprises of M/s. S. Sipani, S. Limaye and D. Chakraborti. Auditors The Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. Your Board has recommended their re-appointment. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo A) Conservation of Energy The particulars in Form A regarding consumption of energy are not provided as the activity of the Company does not fall under the list of industries specified in the Schedule annexed to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. B) Technology Absorption There is no technology absorption during the year and the Company has not incurred any expenses on research and development. C) Foreign Exchange Earnings and Outgo There is no foreign exchange earning and outgo during the year. Employees None of the employees of the Company is covered under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. Acknowledgement The Board acknowledges the understanding and support of the government, investors, banks, distributors, customers, suppliers and business associates and the dedication and hard work of its employees. For and on behalf of the Board S. Limaye Chairman
(iii)
(iv)
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (the Act). Accordingly, the provisions of paragraph 4(iii) of the Order are not applicable to the Company. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods. The activities of the Company do not involve sale of services. We have not observed any major weakness in the internal control system during the course of audit.
47
(vi)
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Act for any of the products manufactured/services rendered by the Company. (ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund, Income tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Wealth tax, Sales tax, Excise duty, Cess, Employees State Insurance and Investor Education and Protection Fund. There are no dues on account of Cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax, Provident fund and other material statutory dues were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues of Income tax which have not been deposited with the appropriate authorities on account of any dispute. (x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year. The Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.
For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070
(xi)
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule SOURCES OF FUNDS Shareholders Funds Share Capital Reserves & Surplus APPLICATION OF FUNDS Fixed Assets Gross Block Less : Accumulated Depreciation / Amortisation : Provision for Impairment Net Block Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities & Provisions Current Liabilities Provisions Net Current Assets As at 31st March, 2011 (` ) 5,51,00,040 1,44,59,813 6,95,59,853 As at 31st March, 2010 (` ) 5,51,00,040 1,40,16,637 6,91,16,677
1 2
3 4,49,33,855 1,80,68,422 32,59,487 2,36,05,946 4 5 6 7 1,02,20,619 83,60,629 2,53,279 3,04,09,313 4,92,43,840 25,80,868 7,09,065 32,89,933 4,59,53,907 6,95,59,853 4,49,33,855 1,69,16,913 32,59,487 2,47,57,455 72,64,981 83,02,080 94,901 3,15,49,273 4,72,11,235 23,29,510 5,22,503 28,52,013 4,43,59,222 6,91,16,677
8 9
Notes to the Accounts 13 Related Party Disclosure 14 Significant Accounting Policies 15 The Schedules referred to above and the annexed notes form an integral part of this Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070 Kolkata, 3rd May 2011
For and on behalf of the Board S. K. Sipani Director S. Limaye Director Dr. R. C. Dhiman Manager Kolkata, 3rd May 2011
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INCOME Sales Other Income EXPENDITURE (Increase)/Decrease in Stock Purchases Employee Costs Other Costs Depreciation/Amortisation
10
11 12 3
Profit /(Loss) before Taxation Less: Provision for taxation Current Tax Profit /(Loss) after Taxation Balance in profit and loss account brought forward Profit and loss account balance carried forward Earnings per share (in ` ) - Basic and Diluted (Refer Note 7 of Shedule 13) Notes to the Accounts Related Party disclosure Significant Accounting Policies
The Schedules referred to above and the annexed notes form an integral part of this Profit and Loss Account. This is Profit and Loss Account referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070 Kolkata, 3rd May 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES : (Loss)/Profit before Taxation Adjustments for : Interest Income Amortisation Operating Profit Before Working Capital Changes Adjustments for : Debtors Inventory Loans and Advances Current Liabilities and Provisions Direct Taxes Paid NET CASH FLOW FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES : Interest Received Loan to Holding Company NET CASH FLOW USE IN INVESTING ACTIVITIES C. NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS : (A+B+C) D. RECONCILIATION CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR Cash and Bank Balances CASH AND CASH EQUIVALENTS - AT THE END OF THE YEAR Cash and Bank Balances Notes : 1. The Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 on Cash Flow Statement. 2. Cash and cash equivalents represent cash and bank balances only. 3. Previous years figures have been regrouped wherever necessary. This is the Cash Flow Statement referred to in our Report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070 Kolkata, 3rd May 2011 (58,549) (29,55,638) (60,511) 4,37,920 (`) 4,49,100 (12,356) 11,51,509 15,88,253 (4) (24,01,231) (2,685) 1,37,132) For the year ended 31st March, 2010 (`) (`) (1,80,860) 11,51,509 9,70,649
For and on behalf of the Board S. K. Sipani Director S. Limaye Director Dr. R. C. Dhiman Manager Kolkata, 3rd May 2011
For and on behalf of the Board S. K. Sipani Director S. Limaye Director Dr. R. C. Dhiman Manager Kolkata, 3rd May 2011
49
Of the above, 38,00,000 (2009 -10: 38,00,000) equity shares of ` 10 each were issued for consideration other than cash. 55,10,004 (2009-10: 55,10,004) equity shares are held by Wimco Limited, the holding company and its nominees. SCHEDULE 2 - RESERVES AND SURPLUS General Reserve Profit & Loss Account SCHEDULE 3 - FIXED ASSETS
GROSS BLOCK ACCUMULATED DEPRECIATION/AMORTISATION/IMPAIRMENT Accumulated as at April, 2010 Description Intangible Asset Leasehold Land Total 2009-10 4,49,33,855 4,49,33,855 4,49,33,855 4,49,33,855 4,49,33,855 4,49,33,855 1,69,16,913 1,69,16,913 1,57,65,404 32,59,487 32,59,487 32,59,487 11,51,509 11,51,509 11,51,509 1,80,68,422 1,80,68,422 1,69,16,913 32,59,487 32,59,487 32,59,487 2,36,05,946 2,36,05,946 2,47,57,455 As at 31st March, 2010 (`) 80,073 4,42,430 5,22,503 2,47,57,455 2,47,57,455 As at 1st April, 2010 Additions during the year As at 31st March, 2011 Depreciation Impairment Charge for the period Accumulated as at 31st March, 2011 Depreciation Impairment As at 31st March, 2011 As at 31st March, 2010 NET BLOCK
SCHEDULE 4 - INVENTORIES
Semi Finished Produce Finished Goods/Produce 1,02,03,470 17,149 1,02,20,619 71,85,406 79,575 72,64,981
SCHEDULE 9 - PROVISIONS
Leave encashment Gratuity 97,706 6,11,359 7,09,065
(Debtors include ` 82,87,088 (2009-10: ` 82,87,088) due from Wimco Limited, the holding company)
14,283 8,425
50
2.
3.
4.
5.
6.
(8,526) (43,040)
6,11,359 4,42,430
Schedules to the financial statements as at and for the year ended March 31, 2011 Net Asset/(Liability) recognized in Balance Sheet (including experience adjustment impact) 1 Present Value of Defined Benefit Obligation 2. Fair Value on Plan Assets 3. Status [Surplus /(Deficit)] 4. Experience Adjustment of Plan Assets [Gain/(Loss)] 5. Experience Adjustment of Obligation [(Gain)/(Loss)] For the year ended 31st March, 2011(`) Gratuity 6,11,359 (6,11,359) Leave Encashment 97,706 (97,706) For the year ended 31st March, 2010(`) Gratuity 4,42,430 (4,42,430) Leave Encashment 80,073 (80,073) For the year ended 31st March, 2009(`) Gratuity 4,17,806 (4,17,806) Leave Encashment 99,795 (99,795) For the year ended 31st March, 2008(`) Gratuity 3,95,023 (3,95,023) Leave Encashment 66,823 (66,823)
A. Amounts recognised as an expense and included in Schedule 11 - Salaries, Wages and Bonus ` 23,273 [2009-10: ` (14,228)] for leave encashment and in Contribution to Provident and Other Funds ` 1,91,747 (2009-10: ` 78,336) for gratuity. B. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. 7. Earnings per share : 2010-11 Profit /(Loss) for the year after taxation (`) (A) 4,43,176 Weighted Average number of Equity Shares (B) 55,10,004 outstanding during the year Earnings per Share - Basic and Diluted (`) (A/B) 0.08 10 Nominal Value of an Equity Share (`) 2009-10 (1,80,860) 55,10,004 (0.03) 10 8. Segment information The Companys activities involve predominantly business of growing and selling agricultural produce in India, which is considered to be a single business segment since these are subject to similar risks and returns. Further, the business is carried out in India and product sold primarily in India and hence there are no reportable geographical segments. Hence, the financial statements are reflective of the information required by Accounting Standard 17 on Segment Reporting. 9. No remuneration is payable to the Manager during the year (2009-10 : ` Nil).
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71,85,406 79,575 5,34,934 3,73,338 9,08,272 Qtls Qtls Qtls 8,570 214 5,679 18,23,726 2,08,440 52,57,004 9,29,603 23,272
11. Information with regard to other matters specified in paragraphs 4-A, 4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 are either nil or not applicable to the Company for the current as well as previous financial year. 12. The Company has not appointed a whole-time Company Secretary as required by Section 383 A of The Companies Act, 1956 and accordingly, the accounts have not been authenticated by a whole-time Company Secretary. 13. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and as at 31st March 2011 and 31st March 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. 14. Prior year's figures have been regrouped/rearranged wherever necessary to conform to current years presentation. SCHEDULE 14 RELATED PARTY DISCLOSURES a) Parties exercising control over the Company: ITC Limited # - Ultimate holding Company of WIMCO Limited Russell Credit Limited # - Holding Company of WIMCO Limited WIMCO Limited - Holding Company # No transaction during the financial years 2010-11 and 2009-10 b) Other related parties with whom the Company had transactions Prag Agro Farm Limited (PAFL) - Fellow Subsidiary Company
(`)
1,02,03,470 17,149
71,85,406 79,575
Certain assets of holding company are being used free of cost for administrative convenience. SCHEDULE 15 - SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Preparation The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 and the accounting principles generally accepted in India and comply with the accounting standards (AS) prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Fixed Assets/Amortisation/Impairment/Depreciation Fixed Assets are stated at cost of acquisition less accumulated depreciation and impairment loss. Cost includes all expenses attributable to the acquisition and development of the assets. Leasehold Land is carried at cost less accumulated amortisation and impairment loss, if any. The lease agreement is effective up to 2031. Accordingly, expenditure incurred on leasehold land is amortised on a straight-line basis over the remaining period of the lease. In accordance with AS-28 Impairment of Assets, where there is an indication of impairment of the Companys assets, the carrying amounts
2.
3.
of the Companys assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the asset (or where applicable, that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. Impairment loss is recognized in the profit and loss account or against revaluation surplus, where applicable. 4. Inventories G In valuing poplar trees included under semi finished products, no adjustment is made to the total cost of the trees on account of undeveloped / diseased trees, being normal loss during the period of maturity of plantation (based on a technical estimate) except that realization/insurance claim for such trees is reduced from the total cost. Every year, plantation cost already incurred is compared with the net realizable value which is determined on the basis of estimated selling price less estimated cost likely to be incurred in future for bringing the plantation to maturity and the cost necessarily to be incurred in order to make the sale. G Cost includes all direct and indirect expenses in respect of the poplar plantation. G Further, 75% of net standard realizable value of intercropping, waste, etc. is reduced from the above cost because the entire farm cost is first added to the cost of plantation. G Agricultural produce/standing crops and plants are valued at 75% of their net realizable value.
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For and on behalf of the Board S. K. Sipani Director S. Limaye Director Dr. R. C. Dhiman Manager Kolkata, 3rd May 2011
ANNEXURE BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE Additional Information pursuant to part IV of Schedule VI to the Act I. Registration Details : Registration No. Balance Sheet Date 3 1 0 1 3 2 2 8 0 8 1 4 1 9 State Code 1 1 Application of Funds Net Fixed Assets 2 3 6 Net Current Assets 4 5 9 Accumulated Losses N N Private Placement N Total Liabilities 7 Sources of Funds Paid up Capital 5 5 1 Secured Loans N 0 I 0 L Reserves and Surplus 1 4 4 6 Unsecured Loans N I 0 L 2 8 5 0 I L Total Assets 7 2 8 5 0 N I L I L Investments 0 5 I 6 4 L N I L L Misc. Expenditure N I
Date
Month
Year
II. Capital raised during the year: (Amount in ` Thousands) Public Issue N Bonus Issue I L Rights Issue
IV. Performance of the Company : (Amount in ` Thousands) Turnover (Including other Income) 8 2 3 1 + Total Expenditure 7 7 8 2
Profit/Loss before Tax Profit/Loss after Tax + 4 4 9 4 4 (Please tick appropriate box + for profit, for loss) Dividend Rate (%) age Earnings per Share in ` 0 . 0 8 N I (Please tick appropriate box + for Earnings, for loss)
V. Generic Names of three Principal Products/Services of the Company (As per monetary terms) Item Code No.(ITC Code) Product Description N A N A O T P P O T P P L L I I C C A A B B L L E E
53
Mr Bhargavan Sumant (resigned effective 13 August 2010) Mr Sachidanand Madan (effective 25 August 2010) All the directors have been in office since the start of the financial year until the date of this report, unless otherwise stated. Corporate information Technico Pty Limited is a company limited by shares that is incorporated and domiciled in Australia. Its parent entity is Russell Credit Limited, a company registered in India and a wholly owned subsidiary of ITC Limited, a public company whose shares are listed on major stock exchanges in India. The registered office of Technico Pty Limited is located at: Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 Australia There were two employees on the rolls of the company at 31 March 2011. The company also utilises the services of consultants to support its operations. Principal activities The principal activities of your company during the financial year under review were anchored on horticulture technology together with its downstream implementation and commercialisation and activities associated therewith. The company owns the proprietary TECHNITUBER technology in this field and has undertaken commercialisation of such technology through its wholly owned subsidiaries in different geographies viz: Technico Agri Sciences Limited, India Technico Asia Holdings Pty Limited, Australia (TAHL) Technico Horticultural (Kunming) Co. Limited, China (100% subsidiary of TAHL) Technico Technologies Inc., Canada Technico ISC Pty Limited (TISCPL), a 100% subsidiary of the company and a dormant entity since its incorporation, was voluntarily deregistered on 3 November 2010. Review and results of operations Your company is focused on ensuring the continuous upgrading of the TECHNITUBER technology and customising its application across various
DIRECTORS DECLARATION FOR THE YEAR ENDED 31 MARCH 2011 In accordance with a resolution of the directors of Technico Pty Limited, we state that in the opinion of the directors : (a) the company is not a reporting entity as defined in the Australian Accounting Standards; (b) the financial statements and notes of the company are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the companys financial position as at 31 March 2011 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations; and (c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
On behalf of the Board Place : Sydney, Australia Date: 26th April 2011 Allan Hendry Director
AUDITORS INDEPENDENCE DECLARATION TO THE DIRECTORS OF TECHNICO PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 In relation to our audit of the financial report of Technico Pty Limited for the financial year ended 31 March 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. GILLESPIES Chartered Accountants Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 David Duff Dated: 26th April 2011 Partner
54
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011 2011 Notes CONTINUING OPERATIONS Sale of goods Cost of Sales: Other Cost of Sales Inventory Write Off and Write Down GROSS PROFIT Other Income Marketing Expenses MENA Expenses Research and Development Expenses Occupancy Expenses Administration Expenses: Other Administration Expenses Recovery/(Write Down) Investments and Loans Finance Costs Reversal of Provision for Employee Share Scheme PROFIT FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE Income Tax Expense Total comprehensive income attributable to members of Technico Pty Ltd Other comprehensive income Total comprehensive income for the period Profit from continuing operations after income tax expense Net profit for the period Net profit attributable to members of Technico Pty Limited 100,232 100,232 100,232 100,232 100,232 4,373,623 4,373,623 4,373,623 4,373,623 4,373,623 709,431 709,431 709,431 709,431 709,431 27,025,774 27,025,774 27,025,774 27,025,774 27,025,774 3 100,232 4,373,623 709,431 27,025,774 2(a) (861,993) 722,355 206,773 (203,741) (157,343) (3,705) (443,218) (20,889) (37,613,065) 31,519,960 9,022,540 (8,890,239) (6,865,662) (161,668) (19,339,817) (911,491) (1,045,559) 907,785 433,865 (32) (288,286) (105,220) (3,429) (646,623) 429,188 (17,817) (39,830,570) 34,582,070 16,528,087 (1,219) (10,982,255) (4,008,356) (130,628) (24,633,103) 16,349,917 (678,739) 2(a) 1,584,348 69,133,025 1,953,344 74,412,640 $ ` $ 2010 `
2(b)
55
STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2011 Contributed equity $ At 1 April 2009 Profit for the Period At 31 March 2010 Profit for the Period At 31 March 2011 43,989,182 43,989,182 43,989,182 Retained earnings $ (30,368,601) 709,431 (29,659,170) 100,232 (29,558,938) Share based payment reserve $
Contributed equity ` At 1 April 2009 Profit for the Period Share Issue At 31 March 2010 Profit for the Period At 31 March 2011 2,028,231,209 2,028,231,209 2,028,231,209
Retained earnings `
Total `
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57
The assets residual values, useful lives and amortisation methods are reviewed and adjusted, if appropriate, at each financial year end. Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (i) Non current assets held for sale Non current assets are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction. These assets have not been depreciated in this financial period. (j) Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use
58
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, 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, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (p) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which are recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (q) Employee benefits (i) Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within twelve months of the reporting date are recognised in other payables in respect of employees services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
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Income Tax Losses Future income tax benefits arising from revenue timing differences and tax losses of the parent entity amounted to $44,953 (2010: $75,554). This has not been brought to account at balance sheet date as realisation is not considered probable. The future income tax benefit will only be obtained if : (i) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised ; (ii) the conditions for deductibility imposed by tax legislation continue to be complied with ; and (iii) no changes in tax legislation adversely affect the economic entity in realising the benefit.
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(a) Terms and conditions relating to the above financial instruments: (i) cash at bank has a weighted average interest rate of 0% (2010: 0%); and (ii) deposits at call has a weighted average effective interest rate of 4.5% (2010: 4.5%). (b) Reconciliation of net profit / (loss) after tax to the net cash flows from operations: Net profit / (loss) Non-cash items: Amortisation of non-current assets Depreciation of non-current assets Decrease in value of inventories Provision for doubtful debts (Increase) / decrease in value of receivables in subsidiaries (Increase) / decrease in value of investments in subsidiaries Unrealised foreign currency revaluation (Profit) on sale of property, plant and equipment Employee benefits equity reserve Changes in assets and liabilities: (Increase) / decrease in trade and other receivables Decrease in inventories (Increase) / decrease in other current assets (Decrease) / increase in trade creditors and accruals (Decrease) in employee provisions Cash flows from operation (c) Financial facilities available At reporting date, the following financing facilities had been negotiated and were available: Total Facilities Bank Loans Loan from Russell Credit Ltd (parent company) Facilities used at reporting date Bank Loans Loan from Russell Credit Ltd. Note 5: Trade and other receivables Current Trade Debtors Provision for doubtful debts Other Debtors Non-Current Amounts receivable from wholly owned subsidiaries Provision for doubtful debts (a) Terms and conditions Terms and conditions relating to the above financial instruments: (i) current trade debtors are non-interest bearing and generally on 180 day terms; and (ii) other debtors are non-interest bearing and generally have repayment terms of 30 days. 2011 Notes Note 6: Other assets Current Prepayments Note 7: Other financial assets Non-current Shares in subsidiaries: At cost Provision for write-down Total other financial assets (a) Provision for write-down of subsidiaries The losses generated within the subsidiaries have resulted in a provision for write-down to net assets being recorded against the cost amount of the investment. $ ` $ 2010 `
709,431 4,788 896 16,590 (429,188) (566,525) (429) 656,387 (7,655) 384,295
27,025,774 182,399 34,133 631,996 (16,349,917) (21,581,770) (16,343) 25,005,063 (291,617) 14,639,718
(a)
(a)
26,910
1,240,753
16,298
670,866
(a)
61
Canada
100
India
100
327,725 327,725 191,765 (143,109) 48,656 439,281 (439,281) 376,381 158,237 (156,169) 2,068 2,068 158,237 (156,169) 376,381 2,068
15,110,580 15,110,580 8,841,805 (6,598,398) 2,243,407 20,254,149 (20,254,149) 17,353,987 7,295,912 (7,200,562) 95,350 95,350 7,295,912 (7,200,562) 17,353,987 95,350
327,725 327,725 191,765 (143,109) 48,656 439,281 (439,281) 376,381 158,237 (155,232) 3,005 3,005 158,237 (155,232) 376,381 3,005
13,489,980 13,489,980 7,893,527 (5,890,724) 2,002,803 18,081,904 (18,081,904) 15,492,783 6,513,430 (6,389,737) 123,693 123,693 6,513,430 (6,389,737) 15,492,783 123,693
327,725 327,725
15,110,580 15,110,580
327,725 327,725
13,489,980 13,489,980
48,656 48,656
2,243,407 2,243,407
48,656 48,656
2,002,803 2,002,803
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Note 14: Reserve and accumulated losses Accumulated losses Balance at the beginning of year Net (profit)/loss attributable to the members of Technico Pty Ltd. Total unavailable for appropriation Dividends paid or provided for Aggregate amount transferred (to)/from reserves Balance at the end of period 29,558,938 29,659,170 (100,232) 29,558,938 29,558,938 1,362,888,734 1,367,510,181 (4,621,447) 1,362,888,734 1,362,888,734 29,659,170 1,220,845,585 30,368,601 1,250,047,539 (709,431) (29,201,954)
29,659,170 1,220,845,585
29,659,170 1,220,845,585
Note 15: Contigent liabilities Estimates of material amounts of contingent liabilities, not provided for in the financial report
Note 16: Events subsequent to reporting date There are no subsequent events to be reported.
Note 17: Remuneration of auditors Amounts received or due and receivable by auditor: Audit of the entity by auditor/group auditor Other services in relation to the entity 70,000 15,000 85,000 3,054,450 654,525 3,708,975 62,700 62,700 2,388,557 2,388,557
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65
STATEMENT OF INCOME (LOSS) FOR THE YEAR ENDED MARCH 31, 2011 (Unaudited) 2011 ` 8,980,526 6,280,972 2,699,554 26,780 676,591 17,854 251,845 254,189 69,160 473,438 14,517 192,558 279,076 739,710 2,995,718 (296,164) (Unaudited) 2010 ` 5,272,759 7,627,601 (2,354,842) 19,482 704,110 24,522 179,998 210,068 281,348 97,453 471,595 13,383 202,021 72,338 637,575 2,913,893 (5,268,735)
2011 $ Sales Cost Of Sales Gross Profit (Loss) Expenses Advertising Amortization of capital assets Bank charges Bad debts Insurance Occupancy costs Office and supplies Professional services Staff training Telephone Vehicle and travel Wages and benefits 594 15,007 396 5,586 5,638 1,534 10,501 322 4,271 6,190 16,407 66,446 (6,569) Other Income Net revenue Support services (note 9) Net Income (Loss) For The Year 13,650 7,081 199,191 139,314 59,877
2010 $ 124,497 180,098 (55,601) 460 16,625 579 4,250 4,960 6,643 2,301 11,135 316 4,770 1,708 15,054 68,801 (124,402)
615,410 319,246
14,566 (109,836)
616,907 (4,651,828)
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2011 $ Cash Provided By (Required For): Operating Activities Net income (loss) for the year Items not affecting cash Amortization of capital assets Amortization capitalized to inventory Foreign currency fluctuations Changes in noncash operating working capital (note 7) Investing Activities Purchase of capital assets Financing Activities Capital stock issuance Repayment of longterm debt (10,000) (10,000) Increase In Cash During The Year Cash Position At Beginning Of Year Cash Position At End Of Year 15,150 18,067 33,217 (4,987) 15,007 40,026 62,114 (31,977) 30,137 7,081
2010 $
319,246 676,591 1,804,573 88,916 2,889,326 (1,470,624) 1,418,702 (229,352) (459,900) (459,900) 729,450 798,200 1,527,650
(109,836) 16,625 41,766 (51,445) (2,665) (54,110) (24,639) 80,000 80,000 1,251 16,816 18,067
(4,651,828) 704,110 1,768,895 (32,554) (2,211,377) (117,740) (2,329,117) (1,088,551) 3,534,400 3,534,400 116,732 681,468 798,200
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2011 1. Nature of Business Activities The company is a whollyowned subsidiary of Technico Pty Limited (Australia) and produces early generation seed potatoes for the North American Market. 2. Significant Accounting Policies Basis of Presentation The financial statements include Indian Rupee equivalent figures, arrived at by applying the year end exchange rate of CAD $1 = ` 45.99 (2010 CAD $1 = ` 44.18) to the balance sheet and the average annual exchange rate of CAD $1 = ` 45.085 (2010 CAD $1 = ` 42.3525) to the income statement as provided by the parent company. The company, with the consent of its parent company, has elected to prepare its financial statements in accordance with Canadian generally accepted accounting principles using the differential reporting option available to nonpublicly accountable enterprises described below: Class A Preferred Shares The companys Class A preferred shares, redeemable on the basis of 50% of after tax profits starting in the 2011 fiscal year and retractable by the holder should specified corporate obligations not be met, are recorded as equity rather than liabilities. In addition, the company has applied the following significant accounting policies without reference to differential reporting: Use of Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the recorded amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual amounts could differ from those estimates. Financial Instruments The carrying values of cash, accounts receivable and accounts payable and other liabilities approximate fair values due to the short term maturity of these instruments. The carrying amount of long term debt has not been determined because there is no ready market for this financial instrument. It is management's opinion that the company is Land Buildings Equipment not exposed to significant interest, currency or credit risks arising from financial instruments. Income taxes The company uses the asset and liability method to account for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Future income tax assets and liabilities are recognized for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes compared with tax purposes as well as the benefit of losses available to be carried forward to future years for tax purposes. A valuation allowance is recorded to reduce future income tax assets to the amount more likely than not to be realized. Inventory Inventory is valued at the lower of production cost and net realizable value. Inventory includes capitalized amortization of $40,026 (2010 $41,766). Revenue Revenue is recognized when products and services are delivered to the customer and ultimate collection is reasonably assured. Amortization Amortization of capital assets is recorded on a straight line basis at the following annual rates: Buildings 10% Equipment 13.34%, 20% 3. Capital Assets Accumulated Cost Amortization $ $ 46,564 285,348 277,738 609,650 216,220 228,238 444,458 2011 Net $ 46,564 69,128 49,500 165,192 2010 Net $ 46,564 97,663 71,010 215,237
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200,000 Class A preferred shares 200,000 1,287,998 11,992,628 3,219,300 8,773,328 270,766 11,962,442 10,000 441,800 Accounts receivable 7.
Changes In Non-Cash Operating Working Capital 2011 $ (42) (17,745) (21) (11,529) (2,640) 2011 ` (1,932) (816,093) (966) (530,219) (121,414) 2010 $ 224 (6,506) (65) 11,580 (7,898) (2,665) 2010 ` 9,896 (287,435) (2,872) 511,605 (348,934) (117,740)
260,766 11,520,642 Inventory Prepaid expenses Accounts payable and accrued liabilities Deferred revenue
Principal repayment of long-term debt over the next three years is as follows: $ 2012 2013 2014 70,000 100,000 90,766 260,766 5. Income Taxes A valuation allowance has been recorded to reduce the companys future income tax assets to $nil. The company has non-capital losses for income tax purposes of $1,197,811 which may be carried forward to reduce taxable income in future years. If not applied against taxable income, the non-capital losses will expire as follows: $ 2014 2026 2027 2028 2030 2031 205,382 366,483 283,750 214,636 115,010 12,550 1,197,811 ` 9,445,518 16,854,553 13,049,663 9,871,110 5,289,310 577,175 55,087,328 ` 3,219,300 4,599,000 4,174,328 11,992,628 8.
During the year, the company received a grant of $nil (2010-$7,175) from the government of New Brunswick in relation to land clearing and improvements. In 2010, this had been recorded as a reduction to the cost of land improvements in the financial statements. 9. Net Revenue-Support Services 2011 $ Revenue Expense-wages and salaries Net revenueSupport services 83,252 69,602 13,650 2011 ` 3,753,416 3,138,006 615,410 2010 $ 68,743 54,177 14,566 2010 ` 2,911,438 2,294,531 616,907
The company has investment tax credits of $33,409 available to reduce taxes payable of future years. The benefit of investment tax credits and non-capital losses carried forward have not been recorded in the financial statements due to the uncertainty that they may ever be realized.
Support services revenue is received entirely from ITC Infotech India Limited, a subsidiary company of ITC Limited (India), which is the ultimate parent company of Technico Pty Limited (Australia) and Technico Technologies Inc. (Canada). These related party transactions are recorded at the exchange amount as established and agreed to by the related parties and are subject to normal trade terms.
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69
Foreign Exchange Earnings and Outgo (` Crore) Foreign Exchange Earnings : Foreign Exchange Outgo :
On behalf of the Board For Technico Agri Sciences Ltd. Place : Hyderabad Dated : 26.04.2011 S. Sivakumar Chairman
dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011; (b) in the case of the profit and loss account, of the profit for the year ended on that date; and (c) in the case of cash flow statement, of the cash flows for the year ended on that date. For S.R. Batliboi & Co. Firm registration number: 301003E Chartered Accountants per Manoj Gupta Place : Gurgaon Partner Date : 26.04.2011 Membership No.: 83906
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BALANCE SHEET AS AT 31ST MARCH, 2011 Particulars SOURCES OF FUNDS : Shareholders Funds : Share Capital Reserves & Surplus Loan Funds Unsecured Loans TOTAL APPLICATION OF FUNDS : Fixed Assets : Gross Block Less : Accumulated Depreciation Net Block Capital Advances Investments Current Assets, Loans & Advances : Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions : Current Liabilities Provisions Schedules As at 31st March, 2011 (` in 000) As at 31st March, 2010 (` in 000)
1 2 3
4 192,340 81,822 110,518 110,518 222,762 370,494 18,379 1,140 6,635 396,648 224,089 1,982 226,071 170,577 503,857 187,242 74,639 112,603 426 113,029 156,322 346,871 10,801 38,889 6,132 402,693 236,976 1,416 238,392 164,301 65,976 499,628
5 6 7 8 9
10 11
Net Current Assets Profit and loss account TOTAL Significant accounting policies and notes to accounts 18 The schedules referred to above and notes to accounts form an integral part of the Balance Sheet. As per our report of even date For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011
For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011
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INCOME Sales Other Income Increase/(Decrease) in inventories TOTAL EXPENDITURE Personnel expenses Production and other expenses Purchase of finished goods for resale Depreciation Financial expenses TOTAL Profit before tax Tax Expense Net profit after tax Balance brought forward from previous year Balance carried to Balance Sheet Earnings per share Basic [Nominal value of shares ` 10 (Previous year: ` 10)] Diluted [Nominal value of shares ` 10 (Previous year: ` 10)] Significant accounting policies and notes to accounts As per our report of even date For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011
12 13 14
15 16 4 17
The Schedules referred to above and the notes to accounts form an integral part of the Profit & Loss account.
For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 Year ended 31st March, 2011 (` in 000) Year ended 31st March, 2010 (` in 000)
Particulars A. CASH FLOWS FROM OPERATING ACTIVITIES Net Profit/(Loss) before tax Adjustment for: Depreciation Profit on assets sold Loss on assets sold Assets written off Unrealised Foreign exchange loss/(Profit) Provision for doubtful debts Provision written back Interest Dividend on Investments Operating profit before working capital changes Movements in working capital : Decrease/(Increase) in sundry debtors Decrease/(Increase) in loans and advances Decrease/(Increase) in inventories Increase/(Decrease) in current liabilities Cash generated from operations Direct Taxes Paid (Fringe benefit tax) Net cash from operating activities B. CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets Purchase of current investments Sale/Redemption of current investments Proceeds from sale of fixed assets Dividend on Investments (received) Net cash used in investing activities
70,205 7,801 (2) 7 333 (529) (1,917) 290 (8,646) 67,542 (7,049) (503) (23,623) (10,404) 25,963 25,963 (5,636) (1,777,291) 1,710,888 8 8,609 (63,422)
140,207 7,625 (30) 66 876 206 258 (4,187) 2,743 (4,142) 143,622 (5,120) (1,217) (15,277) 121,072 243,080 (65) 243,015 (11,763) (881,500) 727,000 422 2,321 (163,520)
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SCHEDULES ANNEXED TO & FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2011 Particulars SCHEDULE 1 : SHARE CAPITAL Authorised :40,000,000 (Previous year 40,000,000) Equity shares of ` 10/- each Issued, Subscribed & Paid up : 37,962,800 (Previous year 37,962,800) Equity shares of ` 10/- each As at 31st March, 2011 (` in 000) 400,000 379,628 379,628 Of the above : Out of the above 37,962,794 (Previous year 37,962,794) shares are held by the holding company, Technico Pty Ltd., Australia. Balance 6 (Previous year 6) shares are held by Technico Pty Ltd. Australia, jointly with other share holders. SCHEDULE 2 : RESERVES & SURPLUS Profit & Loss Account 4,229 4,229 SCHEDULE 3 : UNSECURED LOANS Other Loans & Advances - From Body Corporate 120,000 (From Russell Credit Limited, the Indian parent of the holding company) 120,000 Note : (Repayable with in one year ` 120,000 thousands (Previous year ` Nil)) As at 31st March, 2010 (` in 000) 400,000 379,628 379,628
120,000 120,000
SCHEDULE 4 : FIXED ASSETS GROSS BLOCK Particulars Land-freehold Buildings Plant & machinery Furniture & fixtures Leasehold improvements Equipment & appliances Electric installation Vehicles Total Previous Year
As at 1st April, 2010 Additions Withdrawal/ As at 31st As at 1st during the Adjustments March, 2011 April, 2010 year
(` in 000)
DEPRECIATION
NET BLOCK
Withdrawal/ As at 31st As at 31st As at 31st For the year Adjustments March, 2011 March, 2011 March, 2010
15,193 46,548 101,320 2,377 4,951 8,730 4,492 3,631 187,242 180,183
15,193 46,548 106,639 2,322 5,029 8,486 4,492 3,631 192,340 187,242
15,193 32,710 48,356 838 4,459 4,430 2,680 1,852 110,518 112,603
15,193 34,023 47,799 941 4,907 4,650 2,893 2,197 112,603 110,118
Note :- Freehold land amounting to ` 328 thousand (Previous Year ` 328 thousand) is pending registration in the name of the Company.
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72,519 70,018 25,000 20,213 35,012 222,762 222,762 6,603 20,528 342,911 450 2 370,494
Less: Provision for doubtful debts Included in sundry debtors are : *Dues from : ITC Limited (ultimate holding company) Technico Pty Limited, Australia (parent company) SCHEDULE 8 : CASH AND BANK BALANCES Cash on hand Balances with scheduled banks : On current accounts On fixed deposit (Fixed deposits of ` 10 thousand is pledged with sales tax authorities) SCHEDULE 9 : LOANS AND ADVANCES (Unsecured, considered good ) Advances recoverable in cash or kind or for value to be received Tax deducted at source Advance FBT Deposits (Unsecured, Considered Doubtful) Advances recoverable in cash or kind or for value to be received Less: Provision for Doubtful Advances SCHEDULE 10 : CURRENT LIABILITIES Sundry creditors - Total outstanding dues of Micro and Small Enterprises* - Total outstanding dues to creditors other than Micro and Small Enterprises Advance received from customers Deposit from dealers Other liabilities * Refer Schedule 18 note no. 10 (a) SCHEDULE 11 : PROVISIONS Provision for Leave encashment
1,982 1,982
1,416 1,416
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248 1,937 1,067 35,087 9,914 194,161 1,783 6,513 49,458 7,759 1,503 3,989 66,408 394 265 2,501 1,389 441 165 61 393 333 14,346 400,115 290 190 480
10 1,974 1,024 31,051 8,623 208,459 1,650 4,999 51,786 7,343 2,667 3,881 56,592 378 320 3,650 1,392 441 165 45 258 1,225 876 13,905 402,714 2,743 173 2,916
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All assets costing ` 5,000 or below are fully depreciated in the year of addition. e) Impairment of Assets (i) The carrying amounts of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. (ii) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. f) Inventories Inventories are valued as follows: (i) Stores & Spares
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Geographical segment wise receivables (Gross): S. No. Particulars (a) (b) Receivable from Domestic Market Receivable from Overseas Market Total 2010-11 7,397 11,601 18,998
The Company has common assets for producing goods for domestic markets and overseas markets. Hence, separate figures for assets / addition to fixed assets cannot be furnished. 2. Earnings per Share (EPS) 2010-11 2009-10
S. No. Particulars (a) Total equity shares outstanding at the beginning and end of the year `10 (previous year `10) paid up on each share No. of Shares Paid up Value (` 000) Equivalent no. of Shares of `10 Weighted average number of equity shares outstanding during the year. Net Profit/(Loss) after tax (` 000) Basic earnings per share (`) Diluted earnings per share (`)
Related Party Disclosures (i) The list of related parties as identified by the management is as under : Relationship Ultimate Holding Company Holding Company of Technico Pty Ltd.
Name of the Party ITC Limited (ITC) Russell Credit Limited (RCL)
Technico Pty Limited Australia (TPL) Holding Company Technico Asia Holdings Pty Limited, Australia Fellow Subsidiary Technico Horticultural (Kunming) Company Limited, China Technico ISC Pty Limited, Australia. Fellow Subsidiary Fellow Subsidiary (Deregistered on 3rd November 2010) Enterprise under Common Control Director Whole Time Director Director Director Director
Technico Technologies Inc., Canada. Fellow Subsidiary ITC Infotech India Limited Mr. David Charles McDonald Mr. Sachidanand Madan Mr. Surampudi Sivakumar Mr. Arup Kumar Mukerji Mr. Ganesh Kumar Sundararaman
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Previous Year figures are given in the brackets. 4. The following investments were purchased and sold : Year 2010-11 a) 1,648,879 Units of ` 10 each of Birla Sun Life Savings Fund-Inst.Daily Dividend b) 2,941,864 Units of ` 12 each of Canara Robeco Treasury Advantage Inst.- Daily dividend c) 1,249,285 Units of ` 12 each of Canara Robeco Treasury AdvantageRetail Daily Dividend d) 1,000,000 Units of ` 10 each of Canara Robeco Interval Series 2QIP 2,Inst.Dividend e) 496,524 Units of ` 10 each of Canara Robeco Liquid Fund Daily Dividend f) 2,000,000 Units of ` 10 each of DSP Black Rock FMP 3M Series 22 - Dividend g) 52,458 Units of ` 1001 each of DSP Black Rock Money Manager Fund-Inst. Daily Dividend h) 97,488 Units of ` 1000 each of DSP Black Rock Liquidity Fund Inst. Plan Daily Dividend i) 44,725 Units of ` 119 each of ICICI Prudential Liquid Plan Inst. Daily Dividend j) 5,750,000 Units of ` 10 each of ICICI Prudential Interval Fund IV QIP-B Inst. Dividend k) 2,249,798 Units of ` 10 each of ICICI Prudential Interval Fund QIP Plan 1 - Retail Dividend. l) 2,499,950 Units of ` 10 each of ICICI Prudential Interval Fund V - MIP-A Dividend m) 999,774 Units of ` 100 each of ICICI Prudential Liquid Super Inst. Plan - Daily Dividend n) 599,101 Units of ` 10 each of JP Morgan India Liquid Fund - Retail Daily Dividend Plan o) 4,745,776 Units of ` 10 each of JP Morgan India Treasury Fund Super Inst. Daily Dividend p) 4,906,731 Units of ` 12 each of Kotak Floater Long Term - Daily Dividend q) 3,000,000 Units of ` 10 each of Kotak QIP Series 10 - Dividend r) 2,749,423 Units of ` 10 each of Kotak QIP Series 4 Dividend s) 1,099,980 Units of ` 10 each of Kotak QIP Series 8 - Dividend t) 2,500,000 Units of ` 10 each of Kotak FMP 6 M Series 9 - Dividend u) 6,921,384 Units of ` 10 each of Kotak Floater Fund Short Term v) 4,605,000 Units of ` 10 each of LIC Income Plus Fund - Daily Dividend Plan w) 3,000,000 Units of ` 10 each of Reliance Fixed Horizon Fund-XV Series 1 - Dividend Plan x) 3,000,000 Units of ` 10 each of Reliance Fixed Horizon Fund-XV Series 2 - Dividend Plan y) 15,437,778 Units of ` 11 each of Reliance Liquid Fund -Cash Plan - Daily Dividend z) 3,517,222 Units of ` 10 each of Reliance Interval Fund QIP- Series 1 - Inst. Dividend aa) 2,998,950 Units of ` 10 each of Reliance Monthly Interval Fund Series 2 - Inst. Dividend bb) 23,973 Units of ` 1001 each of Reliance Money Manager Fund Daily Dividend cc) 2,498,376 Units of ` 10 each of Reliance Interval Fund MIP - Series 1 - Inst Dividend Plan dd) 13,693,017 Units of ` 10 each of Reliance Liquidity Fund - Daily Dividend
5.
6. 7.
Employee benefit plans: The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. The Provident Fund being administered by a Trust (managed by the ultimate holding company of the Company) is a defined contribution scheme. Shortfall in the fund, if any, is adequately provided by the Company. The following table summarises the components of net benefit expense recognised in the profit and loss account, the funded/unfunded status and amounts recognised in the balance sheet for the Gratuity and Leave encashment.
78
Changes in the fair value of plan assets are as follows: Particulars 2010-11
Gratuity Leave Encashment
2009-010
Gratuity (Funded) Leave Encashment (Unfunded)
(` in 000) 2009-010
Gratuity Leave Encashment
Current service cost Interest cost on benefit obligation Expected return on plan assets Net actuarial (gain) / loss recognised in the year Past service cost Net benefit expense Actual return on plan assets Balance Sheet
Opening fair value of plan assets Expected return Contributions by employer Benefits paid Actuarial gains / (losses) Closing fair value of plan assets
141 (141)
253 (253)
The Company expects to contribute ` 400 (Previous year ` 443) thousands to gratuity fund in 2011-12. The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Particulars Investments with insurer 2010-11 100% 2009-10 100%
Details of Provision for Gratuity and Leave Encashment (` in 000) Particulars 2010-11
Gratuity Leave Encashment
2009-010
Gratuity Leave Encashment
The principal assumptions are the discount rate & salary increase. The discount rate is based upon the market yields available on Government bonds at the accounting date with a term that matches that of liabilities and the salary increase takes in to account of inflation, seniority, promotion and other relevant factors on long term basis. The principal assumptions used in determining gratuity obligations for the Companys plans are shown below: Particulars Discount rate Expected rate of return on plan assets 2010-11 (In %) 8.00 7.50 2009-10 (In %) 7.00 7.50
Defined benefit obligation Fair value of plan assets Less: Un-recognized past service cost Plan asset / (liability)
(1,519) 1,600 81
(1,982) (1,982)
(975) 993 18
(1,416) (1,416)
Changes in the present value of the defined benefit obligation are as follows: (` in 000) Particulars 2010-11
Gratuity Leave Encashment
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Amounts for the current and previous years are as follows: (` in 000) Particulars
2010-11
2009-010
Gratuity Leave Encashment
Gratuity
2009-10 2008-09 2007-08
Opening defined benefit obligation Interest cost Current service cost Past service cost Benefits paid Actuarial (gains)/losses on obligation Closing defined benefit obligation 9.
Defined benefit obligation Fair value of Plan assets Plan asset / (liability) Experience loss/(gain) on plan liabilities Experience loss/(gain) on plan assets
The Company adopted AS-15 (Revised 2005) Employee Benefits, during the year ended March 31, 2008. Since similar valuations for previous year ended March 31, 2007 is not available with the Company, therefore, disclosures as required by paragraph 120(n) of AS-15 (Revised 2005) have not been furnished in respect of that year.
Particulars of Un-hedged Foreign Currency Exposure (` in 000) Particulars Debtors Debtors Currency AUD$ US$ ` 2010-11 251.60 11,601 2009-10 147.14 6,607 S.No. Particulars d) e) the amount of interest accrued and remaining unpaid at the end of each accounting year; and the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro Small and Medium Enterprise Development Act, 2006. 2010-11 2009-10
10. Supplementary Statutory Information a) Details of dues to Micro, Small and Medium Enterprises as per MSMED Act, 2006 S.No. Particulars a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of each accounting year the amount of interest paid by the buyer in terms of section 16, of the Micro Small and Medium Enterprise Development Act, 2006 along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under Micro Small and Medium Enterprise Development Act, 2006. 2010-11 2009-10
b) Earnings in foreign currency (` in 000) Particulars FOB value of Exports c) Expenditure in foreign currency (` in 000) Particulars Travelling Testing Charges, Temperature Data Loggers 2010-11 151 526 2009-10 139 102 2010-11 24,882 2009-10 34,503
b)
c)
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Production TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 10,128 Field Generated Seed Potatoes (qty. in MT) 50,403 Banana Tissue Culture Plantlets (qty. in 000 Nos.) 120 Purchase Field Generated Seed Potatoes (qty. in MT) 1,212 10,749 Insecticides and Fungicides (qty. in Kgs.) 8,791 5,498 Insecticides and Fungicides (qty. in Ltrs.) 1,070 617 Micronutrients (qty. in Kgs.) 1,624 1,015 Internal Consumption TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 4,101 Field Generated Seed Potatoes (qty. in MT) 9,197 Insecticides and Fungicides (qty. in Kgs.) 14 Insecticides and Fungicides (qty. in Ltrs.) 5 Micronutrients (qty. in Kgs.) 1 Losses/Shortages/Discarded Seed TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 744 Field Generated Seed Potatoes (qty. in MT) 2,230 Sales TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 5,588 21,755 Field Generated Seed Potatoes (qty. in MT) 39,859 446,589 Banana Tissue Culture Plantlets (qty. in 000 Nos.) Insecticides and Fungicides (qty. in Kgs.) 8,774 6,213 Insecticides and Fungicides (qty. in Ltrs.) 1,065 675 Micronutrients (qty. in Kgs.) 1,623 1,251
10,095 51,182
212
1,762
4,272 9,146
Opening Stock TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 6,946 19,873 8,441 18,538 Field Generated Seed Potatoes (qty. in MT) 50,194 320,615 45,172 307,082 Standing crops 736 Banana Tissue Culture Plantlets (qty. in 000 Nos.) Insecticides and Fungicides (qty. in Kgs.) Insecticides and Fungicides (qty. in Ltrs.) Micronutrients (qty. in Kgs.) Closing Stock TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 6,641 20,528 6,946 19,873 Field Generated Seed Potatoes (qty. in MT) 50,523 342,911 50,194 320,615 Standing crops Banana Tissue Culture Plantlets (qty. in 000 Nos.) 120 450 Insecticides and Fungicides (qty. in Kgs.) 3 2 Insecticides and Fungicides (qty. in Ltrs.) Micronutrients (qty. in Kgs.) b) Consumption of Plantlets and Chemicals and fertilisers (` in 000) Particulars 2010-11 % 2009-10 % Imported Indigenous 2,185 100.00 1,984 100.00 Total 2,185 100.00 1,984 100.00 c) Consumption of Consumables (` in 000) Particulars 2010-11 % 2009-10 % Imported Indigenous 1,067 100.00 1,024 100.00 Total 1,067 100.00 1,024 100.00 d) Consumption of Packing Stores (` in 000) Particulars 2010-11 % 2009-10 % Imported Indigenous 35,087 100.00 31,051 100.00 Total 35,087 100.00 31,051 100.00
3,486 2,147
3,832
14,056
35,079 529,043
12. Previous years figures has been regrouped and/or rearranged wherever necessary to make their classification comparable with that of the current year. For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011 For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE I Registration No. State Code Balance Sheet Date 98646 55 31st March, 2011 (` 000) 503,857 503,857 379,628 4,229 120,000 110,518 222,762 170,577 V IV Performance of the Company Turnover (including other income) Total expenditure Profit/(loss) before tax Profit/(loss) after tax Earning per equity share (in `) Dividend rate percentage - Equity shares Generic Names of Principal Products of the company Item Code No. (ITC Code) : Product Description : Item Code No. (ITC Code) : Product Description : 07011000 TECHNITUBER Seed Potatoes 07011000 Field Generated Seed Potatoes 497,913 427,708 70,205 70,205 1.85 1.85 N/A
II
Capital raised during the year Public issue Right issue Bonus issue Private placement III Position of mobilization and deployment of funds Total liabilities Total assets Source of funds Paid up capital Reserve & Surplus Secured loans Unsecured loans Application of funds Net fixed assets Intangible assets Capital work in progress Capital advances Investments Net current assets Misc expenditure Profit & Loss Account
- Basic - Diluted
For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011
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DIRECTORS DECLARATION FOR THE YEAR ENDED 31 MARCH 2011 In accordance with a resolution of the directors of Technico Asia Holdings Pty Limited, we state that in the opinion of the directors: (a) the company is not a reporting entity as defined in the Australian Accounting Standards; (b) the financial statements and notes of the company are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the companys financial position as at 31 March 2011 and of their performance for the year ended on that date; and Sydney, Australia 26 April 2011 On behalf of the Board: Allan Hendry Director (ii) complying with Accounting Standards and Corporations Regulations; and (c) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
AUDITORS INDEPENDENCE DECLARATION TO THE DIRECTORS OF TECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 In relation to our audit of the financial report of Technico Asia Holdings Pty Limited for the financial year ended 31 March 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. GILLESPIES Chartered Accountants Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 David Duff 26 April 2011 Partner
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 We have audited the accompanying financial report, being a special purpose financial report of Technico Asia Holdings Pty Limited, which comprises the statement of financial position as at 31 March 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary or significant accounting policies and other explanatory information, and the directors declaration. Directors responsibility for the financial report The directors of the company are responsible for the preparation of the financial report and have determined that the basis of preparation described in note 1 to the financial report is appropriate to meet the requirements of the Corporations Act 2001 and is appropriate to meet the needs of the members.
81
INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011 2011 Notes CONTINUING OPERATIONS Sale of goods Cost of sales: Other Cost of Sales Inventory Write Off and Write Down GROSS PROFIT Other Income Marketing Expenses Research and Development Expenses Occupancy Expenses Administration Expenses: Other Administration Expenses Recovery Investments and Loans Finance Costs Other revenues/(expenses) from ordinary activities PROFIT FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE Income tax expense NET PROFIT ATTRIBUTABLE TO MEMBERS OF TECHNICO ASIA HOLDINGS PTY LIMITED 516,236 19,666,010 516,236 19,666,010 516,236 19,666,010 $ ` $ 2010 `
82
Total $
At 1 April 2009 Profit for the Period At 31 March 2010 Profit for the Period At 31 March 2011
Contributed
At 1 April 2009 Profit for the Period At 31 March 2010 Profit for the Period At 31 March 2011
83
NOTES TO FORMING PART OF THE FINANCIAL STATEMENTS AS AT 31 MARCH 2011 Note 1: Statement of significant accounting policies (a) Basis of preparation and going concern The financial report is a special purpose financial report prepared for distribution to members of the company to fulfil the directors financial reporting requirements under Chapter 2M of the Corporations Act 2001. The accounting policies used in the preparation of this report, as described below, are in the opinion of the directors, appropriate to meet the needs of members. The financial report has been prepared on a historical cost basis and is presented in Australian dollars. The supplementary information in INR (Indian Rupees), which is unaudited, have been arrived at by applying the year end inter-bank exchange rate of 1 AUD = INR 46.1075 for the current year balance sheet (2010: INR 41.1625) and the average rate of 1 AUD = INR 43.6350 for the current year income statement (2010: INR 38.0950) and have been included in the financial report as required by the Indian holding company of the parent entity. The directors have determined that the company is not a reporting entity. Consequently the requirements of Accounting Standards issued by the AASB and other professional reporting requirements do not have mandatory applicability to Technico Asia Holdings Pty Limited in relation to the year ended 31 March 2011. However, the directors have determined that in order for the financial report to give a true and fair view of the companys results of operations and state of affairs, the requirements of Accounting Standards and other professional reporting requirements in Australia relating to the measurement and recognition of assets, liabilities, revenues, expenses and equity should be complied with. Accordingly, the directors have prepared the financial report in accordance with the following Accounting Standards: AASB 101: AASB 107: AASB 108: Presentation of Financial Statements Cash Flow Statements Accounting Policies, Changes in Accounting Estimates and Errors be impaired. The assessment includes estimates and assumptions of future events including anticipated rates of growth, gross margins, together with the application of a discount rate. These assumptions correspond with the best estimates of management at reporting date. (c) Receivables Trade/other receivables are recognised and carried at the original amount less any provision for doubtful debts. A provision is recognised when collection of the full amount is no longer probable. Bad debts are written off as incurred. (d) Other financial assets Investments in controlled entities are recorded at cost less impairment of the investment value. (e) Impairment of assets The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the company makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the assets value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset. (f) Payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the company prior to the end of the financial year that are unpaid and arise when the company becomes obliged to make future payments in respect of the purchase of these goods and services. (g) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
AASB 1048: Interpretation and Application of Standards (b) Significant accounting judgements, estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Investment in subsidiaries The carrying value of the investment in subsidiaries is assessed at each reporting date as to whether there is an indication that the asset may
84
Provision for write-down of subsidiaries The losses generated within the subsidiaries have resulted in a provision for write-down to net assets being recorded against the cost amount of the investment. Percentage of equity interest held by the consolidated entity country of incorporation (%) Technico Horticultural (Kunming) Co. Ltd. China 100 Investment (Provision for diminution) 2011 $ 3,684,522 (2,714,786) 969,736 Note 4: Trade and other payables 2011 $ Current Trade creditors Terms and conditions relating to the above financial instruments: (i) trade creditors are non-interest bearing and are normally settled on 30 day terms. Note 5: Loans and borrowings Current Loans and borrowings Note 6: Contributed equity Issued and paid up capital 3,684,522 Ordinary shares fully paid Terms and conditions of contributed equity Ordinary shares Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company. Note 7: Reserves and accumulated losses 2011 $ Accumulated losses Balance at beginning of year Net profit attributable to the members of Technico Asia Holdings Pty Ltd. Total available for appropriation Dividends paid or provided for Aggregate amount transferred (to)/ from reserves Balance at end of period Note 8: Events subsequent to reporting date There are no subsequent events to be reported. (2,714,786) (2,714,786) (2,714,786) (125,171,995) (125,171,995) (125,171,995) (3,231,022) 516,236 (2,714,786) (2,714,786) (132,996,943) 21,249,564 (111,747,379) (111,747,379) ` $ 2010 ` 3,684,522 169,884,098 3,684,522 151,664,137 (i) ` $ 2010 ` ` 169,884,098 (125,171,995) 44,712,103 $ 3,684,522 (2,714,786) 969,736 2010 ` 151,664,137 (111,747,379) 39,916,758
85
REPORT OF THE AUDITOR TO THE MANAGEMENT OF TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED We have audited the attached financial statements of Technico Horticultural (Kunming) Company (the Company), including the balance sheet as at 31 December 2010, and the income and Statement of Changes In Equity, cash flow statement, notes to financial statements for the year ended 31 December 2010. 1. Responsibility of the Companys management for the financial statements The Companys responsibility is to prepare these financial statements in accordance with the requirements of The Accounting Standards for PRC Enterprises and The Accounting Systems of PRC Enterprises, which includes (1) designing, implementing and maintaining the internal controls relative to the preparation of these financial statements, so that there arent material misstatements in these financial statements led by fraud and error; (2) selecting and using proper accounting policies and making rational accounting estimates. 2. Responsibility of the certified public accounts Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Independent Auditing Standards of China. The standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 3. Audit opinion In our opinion, the financial statements have been prepared in accordance with the requirements of The Accounting Standards for PRC Enterprises and The Accounting Systems of PRC Enterprises. The financial statements fairly present the financial position of the Company as at 31 December 2010, operating results and cash flows for the year then ended in all material resects. Yunnan Tianying Certified Public Accountants Certified Public Accountants Certified Public Accountants Kunming, The Peoples Republic of China 15 March 2011
86
87
88
89
90
Provision for impairment: At the end of each period, The Company examines its fixed assets and if market value of the fixed asset has declined continually, become obsolete in technology, been not in use in the long term, or been damage, and the recoverable amount of the fixed asset is less than its carrying amount, the provision for impairment is determined according to the difference of the recoverable amount of the fixed asset lower than its carrying amount on an item-by-item basis. (10) Intangible assets An intangible asset, which is acquired separately, is recorded based on the actual purchase price paid. The cost of an intangible asset is amortized evenly over its expected useful life starting in the month in which it is obtained. If the expected useful life exceeds the beneficial period stipulated in the relevant contract or the effective period stipulated by law, the amortization period of an intangible asset is determined in accordance with the following rules: a. If the relevant contract stipulates the beneficial period but the law does not stipulate the effective period, the amortization period is not longer than the beneficial stipulated by the relevant contract; b. If the relevant contract does not stipulate the beneficial period but the law stipulates the effective period, the amortization period is not longer than the effective period stipulated by law; c. If the relevant contract stipulates the beneficial period but the law also stipulate the effective period, the amortization period is not longer than the shorter of the beneficial period and the effective period. If the relevant contract does not stipulate the beneficial period and the law does not stipulate the effective period, the amortization period does not exceed 10 years. If an intangible asset is no longer expected to be able to generate any economic benefits that flow to the enterprise, the carrying amount of the intangible asset is written off and is recognized as gain or loss the current period. The Company reviews the carrying amount of the intangible asset at the end of each period. The difference of the expected receivable amount lower than the carrying amount of the intangible asset is recognized as provision for impairment on an item-by-item basis. (11) Long-term prepaid expense Long-term prepaid expenses are recorded based on the actual payments and amortized on the straight-line basis in the beneficial period. The expenses (except for acquiring fixed assets), which occur in the preparative duration, are recorded as long-term expense, and are amortized in the month starting the operating (12) Principle for recognition of revenue a. Revenue from the sale of goods The revenue is recognized when all the following conditions have been satisfied: the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; the enterprise retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; it is probable that the economic benefits will flow to the Company; the relevant amount of revenue and costs can be measured reliably.
If any receivable is evidently different from the others, the specific identification method is made for the receivable item. (8) Inventories Inventories, which are recorded at actual cost, include finished goods, work-in-progress and raw material. For the unrecoverable inventory cost due to the damage, partly or wholly obsolescence, or market price lower than the cost, the provision for decline in value of inventories is determined according to the difference of the actual cost lower than net realizable value on an item-by-item basis, at the end of the period. (9) Fixed assets and depreciation Fixed assets are recorded based on the actual cost. At the inception of a lease, the fixed assets by a lessee under a finance lease are recorded at an amount equal to the lower of the carrying amount of the leased asset originally recorded in the books of the lessor and the present value of the minimum lease payments. (If the
91
4.
(1) Cash Items Cash on hand Cash in bank Total (2) Account receivable 2009-12-31 The age of accounts receivable Within 1 year Total (3) Other receivables 2009-12-31 Length after occurrence Within 1 year Total (4) Advances to suppliers Length after occurrence Within 1 year Total 2009-12-31 RMB 5,688.00 5,688.00 Percentage 100.00% 100.00% 2010-12-31 RMB Percentage RMB 596.15 596.15 Percentage 100.00% 100.00% Provision for bad debts RMB 21,076.59 21,076.59 2010-12-31 Percentage 100.00% 100.00% Provision for bad debts RMB Percentage Provision for bad debts RMB 2,914,353.58 2,914,353.58 2010-12-31 Percentage 100.00% 100.00% Provision for bad debts 14,571.77 14,571.77 2009-12-31 RMB 42,762.49 2,473,270.19 2,516,032.68 2010-12-31 RMB 17,182.14 2,621,980.47 2,639,162.61
(5) Inventories and provision for loss on realization of inventory 2009-12-31 Items RMB Provision for loss on realization of inventory 2010-12-31 RMB Provision for loss on realization of inventory
Finished goods Work-in-progress Total (6) Fixed assets Items Cost Total Capex Accumulated depreciation Total Depreciation Fixed assets depreciation reserves Net book value
92
The amortization term is 50 years, and there have been 37 years and 6 months left by 31 December 2010. (8) Advances from customers Length after occurrence Within 1 Year Total (9) Other payables Length after occurrence Within 1 Year Total (10) Long-term account payable 2009-12-31 RMB 8,340.65 2010-12-31 RMB 52,514.58 2009-12-31 RMB 2010-12-31 RMB 104,468.00 104,468.00 2009-12-31 RMB 2010-12-31 RMB 227,500.00 227,500.00
The amount due to investor is unsecured, interest free and has no fixed term of repayment. (11) Paid-in capital Investors Technico China Pty Ltd. Total (12) Primary operating profit Operating revenue 6,276,666.75 (13) Finance expense Items Interest expense Less: Interest income Foreign exchange loss Other Total 5. Contingencies Up to 31 December 2010, there are no material contingencies for the Company. 6. Promised events Up to 31 December 2010, there are no material promised events for the Company. 7. Non-adjusting events subsequent to the balance sheet date Not material non-adjusting events subsequent to the balance sheet date for the Company. 8. Other material events stated Up to 31 December 2010, there are no other material matters specially stated for the Company. 18,767.38 43,095.65 4,211.17 28,539.44 From 2010-1-1 to 2010-12-31 Operating cost 4,204,581.45 2009-12-31 RMB 19,013,598.02 19,013,598.02 Proportion 100.00% 100.00% Add RMB Less RMB 2010-12-31 RMB 19,013,598.02 19,013,598.02 Proportion 100.00% 100.00%
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2.
3.
4.
Partha Mitra Partner Membership No. : 50553 For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants
3.
94
4.
5.
6. 7. 8. 9.
Sales Tax on 1,75,868 purchase from unregistered dealers 5,46,539 Exclusion of Service Tax in computation of VAT liability 10,90,519
Partha Mitra Partner Membership No. : 50553 For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants
April 1, 2005 to Honble High January 31, Court of 2008 Andhra Pradesh, Hyderabad.
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule SOURCES OF FUNDS 1. Shareholders Funds a) Capital b) Reserves and Surplus 2. Deferred Tax Liability - Net Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less : Depreciation c) Net Block d) Capital Work-in-Progress 2. Investments 3. Current Assets, Loans and Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances Less : 4. Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Assets Total Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. Partha Mitra Membership Number : 50553 Partner For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011 I. As at 31st March, 2011 (` ) ( `) 24,00,00,000 70,09,02,800 As at 31st March, 2010 (` ) (` ) 24,00,00,000 66,42,74,561
1 2 3
87,23,50,271 33,55,26,226 53,68,24,045 11,80,396 67,52,586 1,81,45,548 14,78,05,377 67,81,685 2,82,99,931 20,77,85,127 8,49,21,970 5,88,01,654 14,37,23,624
5 6 7 8 9 10
53,80,04,441 41,95,15,914
86,79,90,775 31,07,14,418 55,72,76,357 84,57,834 1,01,47,562 2,42,74,108 12,45,77,394 78,76,786 2,89,72,895 19,58,48,745 8,20,90,710 5,86,85,199 14,07,75,909
56,57,34,191 36,57,88,690
11 12
6,40,61,503 1,02,15,81,858
5,50,72,836 98,65,95,717
On behalf of the Board G. Sivakumar Reddy Chairman George Verghese Managing Director
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13 14 15 16
17
18 Basic and Diluted Earnings Per Share (`) Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. Partha Mitra Membership Number : 50553 Partner For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
On behalf of the Board G. Sivakumar Reddy Chairman George Verghese Managing Director For the year ended 31st March, 2011 ( `) (` ) For the year ended 31st March, 2010 ( `) (` )
A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX 12,84,58,341 14,11,21,394 ADJUSTMENT FOR Depreciation 3,56,59,372 3,38,66,514 Interest Income (81,49,906) (1,03,50,560) Fixed Assets Discarded - Net 60,47,258 5,17,237 Income from Current Investments (1,98,13,756) (1,16,59,377) Profit on Sale of Current Investments - Net (46,98,742) Liability no longer required written back (36,60,275) Provision for doubtful debts/Bad Debts Written Off 6,22,506 1,07,05,199 17,04,981 93,80,053 OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 13,91,63,540 15,05,01,447 ADJUSTMENT FOR Trade & Other Receivables 50,95,193 19,50,137 Inventories 33,94,976 33,84,763 Trade Payables 59,99,212 1,44,89,382 (1,14,68,923) (61,34,023) CASH GENERATED FROM OPERATIONS 15,36,52,922 14,43,67,424 Income Tax Paid (3,57,23,600) (3,16,94,066) NET CASH FROM OPERATING ACTIVITIES 11,79,29,322 11,26,73,358 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (1,28,23,747) (4,18,96,452) Sale of Fixed Assets 68,121 9,05,024 Purchase of Current Investments (2,58,33,43,606) (91,32,78,690) Sale/Redemption of Current Investments 2,52,96,16,381 87,41,27,828 Interest Received 81,25,353 1,00,85,937 Income from Current Investments 1,98,13,756 1,63,58,119 NET CASH USED IN INVESTING ACTIVITIES (3,85,43,742) (5,36,98,234) C. CASH FLOW FROM FINANCING ACTIVITIES Dividends etc., paid (4,80,00,000) (4,80,00,000) Income Tax on Dividend Paid (81,57,600) (81,57,600) NET CASH USED IN FINANCING ACTIVITIES (5,61,57,600) (5,61,57,600) NET INCREASE IN CASH AND CASH EQUIVALENTS 2,32,27,981 28,17,524 OPENING CASH AND CASH EQUIVALENTS 12,45,77,394 12,17,59,870 CLOSING CASH AND CASH EQUIVALENTS 14,78,05,375 12,45,77,394 CASH AND CASH EQUIVALENTS COMPRISE: Cash and Bank Balances 14,78,05,375 14,78,05,375 12,45,77,394 12,45,77,394 This is the Cash Flow Statement referred to in our Report of even date. Note: 1. The above Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard - 3 on Cash Flow Statements 2. Previous Years Figures have been regrouped and/or rearranged wherever considered necessary to conform to those of current year. Partha Mitra Membership Number : 50553 Partner For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011
On behalf of the Board G. Sivakumar Reddy Chairman George Verghese Managing Director
96
As at 31st March, 2011 (` ) (` ) 1. CAPITAL Authorised 2,40,00,000 Equity Shares of ` 10/- each
24,00,00,000 24,00,00,000
24,00,00,000 24,00,00,000
24,00,00,000
24,00,00,000
24,00,00,000
* Includes 1,63,20,477 Equity Shares of ` 10/- each fully paid up, held by the Holding Company, ITC Limited.
24,00,00,000
2.
RESERVES AND SURPLUS Capital Reserve General Reserve At the Commencement of the year Add : From Profit and Loss Account Profit & Loss Account
94,603
3.
DEFERRED TAX LIABILITY - NET Deferred Tax Liabilities Depreciation - Timing difference Less: Deferred Tax Assets Employee Benefits Other Timing Differences Deferred Tax Liability - Net
8,19,61,949
8,35,31,280
4. FIXED ASSETS
Original Cost as at March 31, 2010 (`) 1,00,00,000 30,25,76,934 33,11,00,505 1,75,61,941 19,11,22,980 1,56,28,415 86,79,90,775 84,57,834 87,64,48,609 84,60,07,951 Additions Withdrawals Original Cost as at March 31, 2011 (`) 1,00,00,000 30,55,09,578 33,51,81,715 1,65,13,349 19,04,45,547 1,47,00,082 87,23,50,271 11,80,396 87,35,30,667 87,64,48,609 Depreciation for the year (`) 49,32,582 1,63,14,884 22,67,907 1,07,47,491 13,96,508 3,56,59,372 3,56,59,372 3,38,66,514 Depreciation on Withdrawals (`) 2,71,338 40,41,259 18,11,142 37,95,492 9,28,333 1,08,47,564 1,08,47,564 12,22,140 Depreciation Net Block up to as at March 31, 2011 March 31, 2011 (`) (`) 6,52,66,585 12,80,47,237 1,40,68,121 12,23,01,269 58,43,014 33,55,26,226 33,55,26,226 31,07,14,418 1,00,00,000 24,02,42,993 20,71,34,478 24,45,228 6,81,44,278 88,57,068 53,68,24,045 11,80,396 53,80,04,441 56,57,34,191
Particulars Freehold Land Buildings Plant and Machinery Computers etc. Furniture and Fixtures Motor Vehicles Capital Work-in-Progress Total Previous Year
(`) 11,12,000 53,54,947 18,44,634 39,50,920 9,28,333 1,31,90,834 1,98,37,058 3,30,27,892 2,58,05,427
97
6.
INVENTORIES Food, Beverage, etc. Stores and Spare Parts SUNDRY DEBTORS Over Six months old Good and Unsecured Doubtful Other Debts Good and Secured Good and Unsecured
10,000
7.
1,40,101 1,10,230 1,86,913 1,80,05,447 1,84,42,691 1,10,230 1,86,913 1,81,45,548 51,32,077 1,34,33,865 10,21,200 12,82,18,235 14,78,05,377
48,60,654 1,10,230 3,42,778 1,94,13,454 2,47,27,116 1,10,230 3,42,778 2,42,74,108 27,93,980 1,06,50,022 10,21,200 11,01,12,192 12,45,77,394
14,34,72,768
Less : Provision for Doubtful Debts Less : Deposits from normal Trade Debtors - Contra 12,12,18,596 8. 10,10,87,326 CASH AND BANK BALANCES Cash and Cheques on Hand With Scheduled Banks On Current Accounts On Margin Money* On Deposit Accounts *Pledged with Bank for Bank Guarantee ` 10,21,200/(Previous Year ` 10,21,200/-) 9. OTHER CURRENT ASSETS Good and Unsecured Deposits with Government, Public Bodies and Others Interest Accrued on Deposits/Investments
41,95,15,914
36,57,88,690
During the year, the following current investments were purchased and sold; 01) Purchased 1,20,76,653.716 Units of JM Money Manager Fund Super Plus Plan - Daily Dividend at a cost of ` 12,08,30,543/02) Purchased 1,28,20,971.204 Units of LIC MF Income Plus Fund - Daliy Dividend Plan at a cost of ` 12,82,09,712/03) Purchased 1,00,08,102.2634 Units of JP Morgan India Liquid Fund - Super Inst. Daily Dividend Plan at a cost of ` 10,01,60,086/04) Purchased 1,50,32,086.4437 Units of JP Morgan India Liquid Fund - Super Inst. Daily Dividend Plan-reinvest at a cost of ` 15,04,39,617/05) Purchased 1,69,75,073.3157 Units of JP Morgan India Treasury Fund - Super Inst. Daily Dividend Plan-reinvest at a cost of ` 16,99,01,811/06) Purchased 81,95,202.2932 Units of Kotak Liquid Institutional Premium Dalily Dividend at a cost of ` 10,02,11,753/07) Purchased 1,40,53,545.365 Unit of Kotak Floater Long Term - Daily Dividend at a cost of ` 14,16,56,926/08) Purchased 72,89,023.6445 Units of Canara Robeco Treasury Advantage Super Inst. Daily Div Reinv Fund at a cost of ` 9,04,35,645/09) Purchased 1,17,99,832.3036 Units of Canara Robeco Treasury Advantage Super Inst. Daily Div Reinv Fund at a cost of ` 14,64,01,699.37p 10) Purchased 1,49,40,742.1891 Units of Canara Robeco Liquid Super Inst. Daily Div Reinv Fund at a cost of ` 15,02,29,162/11) Purchased 89,73,526.0975 Units of Canara Robeco Liquid Super Inst. Daily Div Reinv Fund at a cost of ` 9,02,28,804/12) Purchased 1,12,54,532.241 Units of TATA Floater Fund - Daily Dividend at a cost of ` 11,29,45,983/13) Purchased 1,10,139.405 Units of DSP Black Rock Liquidty Fund - Inst Plan-Daily DivReinvest Dividend at a cost of ` 11,01,74,220/14) Purchased 93,283.135 Units of DSP Black Rock Money Manager-Fund - Inst. PlanDaily Div-Reinvest Dividend at a cost of ` 9,33,57,761/15) Purchased 1,50,59,972.533 Units of Religare Liquid Fund - Super Inst. Daily Dividend at a cost of ` 15,07,17,193/16) Purchased 1,50,04,817.980 Units of Religare Ultra Short Term Fund - Inst. Daily Dividend at a cost of ` 15,03,04,762/17) Purchased 80,42,253.190 Units of Birla Sun Life Savings Fund-Inst. Daily DividendReinvestment at a cost of ` 8,04,77,219/18) Purchased 80,06,358.984 Units of Birla Sun Life Cash plus - Inst. Daily DividendReinvestment at a cost of ` 8,02,19,713/19) Purchased 99,53,939.050 Units of Sundaram Money Fund Super Inst. Daily Dividend Reinvest at a cost of ` 10,01,88,000/-
10. LOANS AND ADVANCES Good and Unsecured Advances recoverable in cash or in kind or for value to be received* 80,82,343 Advances with Government and Public Bodies 12,95,179 Advance Fringe Benefit Tax (Net of Provision of ` 67,46,417/-) (Previous Year - ` 67,46,417/-) 5,76,328 Advance Income Tax (Net of Provision of ` 39,84,40,872/-) (Previous Year - ` 36,06,40,872/-) 1,83,46,081 2,82,99,931 * Includes Capital Advances of ` 11,08,434/- (Previous Year ` 16,91,377/-). 11. LIABILITIES Sundry Creditors Dues to Micro and Small enterprises Dues to Others 6,50,55,632 Advances from Customers 82,07,612 Other Liabilities 73,69,962 Sundry Deposits 44,75,677 8,51,08,882 Less : Deposits from Normal Trade Debtors Contra 1,86,913 8,49,21,970 # # There is no outstanding amount to be credited to Investor Education & Protection Fund. 12. PROVISIONS Provision for Retirement Benefits Proposed Dividend Income Tax on Proposed Dividend 28,29,454 4,80,00,000 79,72,200 5,88,01,654
78,23,082 12,95,179
5,76,328
1,92,78,306 2,89,72,895
25,27,599 4,80,00,000 81,57,600 5,86,85,199 For the year ended 31st March, 2010 (`) 26,23,95,208 20,70,52,404 3,96,30,405 50,90,78,017
For the year ended 31st March, 2011 (`) 13. INCOME FROM OPERATIONS (NET)* Rooms 27,74,07,224 Food and Beverage 20,64,23,667 Recreation and Services 4,31,79,593 52,70,10,483
* Income from operations are stated at net of tax amounting to ` 4,34,70,627/(Previous year ` 4,04,43,017/-) Income from operations are stated at gross, the amount of tax deducted thereon is ` 44,13,024/- (Previous Year - ` 76,37,005/-)
98
29,53,873
15,50,541
ii) Contingent Liability a) Claims against the Company not acknowledged as debts : i) The Commercial Tax Officer has raised a Value Added Tax (VAT) demand along with interest and penalty under the APVAT Act, 2005 for the period from April 01, 2005 to January 31, 2008 towards exclusion of service tax in the computation of VAT liability. The Company filed an appeal with the Honble High Court of Andhra Pradesh against the demand. 19,85,698 ii) Additional Tax assessed by department consequent to disallowance of certain expenses pertaining to Assessment Year 2006-07. 13,10,283 iii) Managing Directors Remuneration Salary Other Perquisites Contribution to Provident Fund & Other Funds 22,84,140 6,21,511 3,75,690 32,81,341
19,85,698
iv) Earnings in Foreign Exchange *Includes ` 21,05,47,557/(Previous Year - ` 22,21,82,704/-) being Earnings during the year through International Credit Cards & Travel Agencies etc. as certified by Bankers. v) Expenditure in Foreign Currency during the year (On payment basis) Hotel Reservation / Marketing Expenses / Others Technical & Consultancy Fees vi) Value of Imports during the year (CIF Basis) Capital Goods Other Goods
21,66,72,748
23,01,67,803
(`) vii) Value of Consumption of Raw Materials, Stores & Supplies a) Raw Materials Indigenous 6,19,50,321 Imported 6,19,50,321 b) Stores & Supplies Indigenous 1,41,88,684 Imported 9,04,829 1,50,93,513
2011 %
viii) The Company is exempted from disclosure of quantitative details as per Notification S.O. 301 (E) dated Feb.8 2011 exercised the powers conferred by sub-section (3) of section 211 of the Companies Act, 1956 (1 of 1956), the Central Government, Issued by Ministry of Corporate Affairs The same is subject to the consent of the Board of Directors at the board meeting. ix) x) The Company operates in one operating segment i.e., Hoteliering and within one Geographical segment i.e. India. The Companys significant lease arrangements are in respect of operating leases for residential premises. These leasing arrangements, which are not non-cancellable, are for a period of 11 months or longer and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as Rent under Schedule 16.
99
xii) Related Party Disclosures Under Accounting Standard 18 i) Holding Company : ITC Limited ii) Other Related Parties with whom transactions have taken place during the year : Fellow Subsidiary Companies : Fortune Park Hotels Limited Surya Nepal Private Limited ITC Infotech India Limited Other entities under control of Holding company : ITC Sangeet Research Academy
iii) Key Management Personnel : Board of Directors G. Sivakumar Reddy - Chairman Nakul Anand - Vice Chairman & Director S. C. Sekhar - Director N. R. Pradeep Reddy - Director B. N. Suresh Reddy - Director George Verghese - Managing Director Dipak Haksar - Director
(`)
Relatives of Key Management Personnel (*) 2011 8,00,000 1,18,31,620 2010 6,30,000 1,18,31,620
1. 2. 3. 4.
5. 6. 7. 8. 9. 10.
Sale of Goods Sale of Services Purchase of Goods Purchase of Services - Hotel Services - Service Fee - Rent towards Godown Reimbursement of Contractual Remuneration Expenses recovered Expenses reimbursed Dividend Payments Sale of Fixed Assets Balance outstanding at the year end : i) Debtors/Receivables ii) Creditors/Payables
Note : Details of remuneration to the Managing Director is given in the note (iii) of the Notes to Accounts and for other members the remuneration for the year is ` Nil. (*) M/s G. Sulochanamma M/o G. Sivakumar Reddy, G. Samyuktha Reddy W/o G. Sivakumar Reddy, G. Pranav Reddy S/o G. Sivakumar Reddy, G. Rachita Reddy D/o G. Sivakumar Reddy, N. Shailaja Reddy W/o N. R. Pradeep Reddy, G. Bharati Reddy W/o B. N. Suresh Reddy. xiii) Previous Years figures have been regrouped/rearranged wherever necessary.
100
On behalf of the Board G. Sivakumar Reddy Chairman George Verghese Managing Director
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 5 3 1 1 9 0 2 3 2 0 1 1 State Code 0 1 Application of Funds Net Fixed Assets 5 3 6 8 Net Current Assets 6 4 0 2 6 4 1 Investments 4 1 9 5 Misc. Expenditure N . A . Accumulated Losses N . A . IV. Performance of Company (Amount in Rs. Thousands) Turnover * 5 6 0 * Includes Other Income 4
Date
Month
Year
II. Capital raised during the year (Amount in ` Thousands) Public Issue N . A Bonus Issue N . A . . Rights Issue N . A . Private Placement N . A .
Total Expenditure 4 3 1 9 1
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 1 6 5 3 0 4 1 Sources of Funds Paid up Capital 2 4 0 0 Secured Loans N . A . 9 0 0 Reserves and Surplus 7 0 0 9 0 Unsecured Loans N . A . 2 Total Assets 1 6 5 3 0
Profit/Loss Before Tax Profit/Loss After Tax + 1 2 8 4 5 8 9 2 6 0 0 (Please tick appropriate box + for profit, for loss) Dividend Rate % 6 2 0
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) Item Code No. Product Description H ** N O T E . L A S .
** No item code has been assigned to Hotels under the Indian Trade Classification.
Audit Committee : Chairman: Mr. S. C. Sekhar, Members: M/s. N. R. Pradeep Reddy & Dipak Haksar Permanent Invitees: Representative of Statutory Auditors.
101
10. The Company was not required to make any entries in the register maintained under Section 301 (1) of the Act. However, it has made necessary entries in register maintained under Section 301 (3) of the Act. 11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, Members or Central Government. 12. The Company has not issued any duplicate share certificate during the financial year. 13. The Company has: (i) not made any allotment/transfer/transmission of securities during the financial year. (ii) deposited the amount of final dividend declared in the separate Bank Account, on 29th June 2010 (within 5 days). (iii) paid dividends to all the members within a period of 30 days from the date of declaration and that there is no Unclaimed / Unpaid Dividend, which is required to be transferred to a Special Account. (iv) not transferred any amount in Investor Education and Protection Fund as there is no unpaid dividend, application money due for refund, matured deposits, matured debentures and the interest accrued thereon, which have remained unclaimed or unpaid for a period of seven years. (v) duly complied with the requirements of Section 217 of the Act 14. The Board of Directors of the Company is duly constituted and the appointment of Additional Director has been duly made. However, there was no appointment of Alternate Directors / Directors to fill the casual vacancy. 15. The Company has not appointed any Managing Director/Whole-time Director/Manager during the financial year.
102
For PB & Associates Company Secretaries Pooja Bhatia LLB, ACS CP : 6485
Relevant Section of the Act 193 193 159 150 303 307 301(3) 209 372A
1. 2. 3. 4. 5. 6. 7. B.
Form 32 u/s 303 of the Act for appointment of Mr. Arun Pathak as an Additional Director and resignation of Mr. M Riaz Ahmed from directorship on 26th March, 2010 12th April, 2010 Form 32 u/s 303 of the Act for the change in designation of Mr. Arun Pathak from Additional Director to Director in the Annual General Meeting held on 28th June 2010 6th July, 2010 Form 23AC and From 23ACA for Annual Accounts u/s 220 for the year ended 31st March 2010 12th July, 2010 Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March 2010 12th July, 2010 Form 20B for Annual Return u/s 159 of the Act, made upto 28th June 2010 i.e. the date of AGM for the financial year ended 31st March 2010 26th August, 2010 Form 32 u/s 303 of the Act for resignation of Mr. Pawan Verma from directorship on 6th September 2010 1st October, 2010 Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st October, 2010 Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil
No No No No No No No
REPORT OF THE AUDITORS TO THE MEMBERS OF FORTUNE PARK HOTELS LIMITED 1. We have audited the attached Balance Sheet of Fortune Park Hotels Limited (the Company) as at March 31, 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (a) We have obtained all the information and explanations which, to
3.
2.
4.
103
(f)
ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of the Auditors Report of even date to the members of Fortune Park Hotels Limited on the financial statements for the year ended March 31, 2011. 1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets. (b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable. (c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year. 2. The Company does not hold any inventory. Therefore the provisions of clauses (2) (a), (2) (b) and (2) (c) of paragraph 4 of the Order are not applicable to the Company. 3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. (b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. 4. In our opinion and according to the information and explanations given to us , there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system. 5. (a) According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section. Accordingly, the question of commenting on transactions made in pursuance of such contracts or arrangements does not arise. (b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time. 6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. 7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 8. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company. 9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues including provident fund, income - tax, service tax, cess and other material statutory dues as applicable with the appropriate authorities. (b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax as at March 31, 2011 which have not been deposited on account of a dispute, are as follows: Name of the statute Income Tax Act, 1961 Nature of dues Demand u/s 156 of Income Tax Act, 1961 Amount (`) Period to which the amount relates Assessment Year 2001-02 Forum where the dispute is pending CIT (Appeals) ruled in favour of the Company by its order dated December 13, 2004. The Income Tax department had then filed an appeal in Income Tax Appelate Tribunal in the financial Year 2005-06 Customs, Excise and Service Tax Appellate Tribunal CIT (Appeals) Amount withheld by department under Protest CIT (Appeals) Amount withheld by department under Protest
17,29,041
Finance Demand u/s Act,1994 73(1)(a)of The 45,70,992 Finance Act, 1994 Income Demand u/s Tax Act, 156 of Income 3,62,745 1961 Tax Act, 1961 Income Tax Act, 1961 Demand u/s 156 of Income 3,18,993 Tax Act, 1961
10. The Company has no accumulated losses as at March 31, 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year. 11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date. 12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company. 14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. 15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year. 16. The Company has not obtained any term loans. 17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment. 18. The Company has not made any preferential allotment of shares to parties and companies covered the register maintained under Section 301 of the Act during the year. 19. The Company has not issued any debentures. 20. The Company has not raised any money by public issues during the year. 21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management. For Price Waterhouse Firm Registration Number: 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779
104
12,20,52,807 12,20,52,807
8,45,41,104 8,45,41,104
Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less : Depreciation c) Net Block 2. Investments 3. Deferred Tax Assets 4. Current Assets, Loans and Advances a) Sundry Debtors b) Cash and Bank Balances c) Other Current Assets d) Loans and Advances Less : 5. Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Assets Total Notes to the Accounts Significant Accounting Policies
3 1,02,96,472 50,62,285 4 5 6 7 8 9 6,06,56,537 4,49,07,304 16,74,567 2,19,29,801 12,91,68,209 52,34,187 4,40,82,435 92,52,375 4,57,48,441 3,44,90,402 13,79,605 1,86,04,707 10,02,23,155 1,01,58,188 43,32,767 58,25,421 1,71,82,834 88,87,171
10 11
17 18
The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Gross Income from Operations Less : Service Taxes Net Income from Operations Other Income For the year ended 31st March, 2011 (`) (`) 19,40,40,210 1,80,68,543 12 13 17,59,71,667 41,73,492 18,01,45,159 11,84,71,164 14,56,422 11,99,27,586 6,02,17,573 1,90,44,796 4,11,72,777 7,00,58,791 11,12,31,568 41,17,278 31,50,056 5,11,018 10,34,53,216 11,12,31,568 91.49 For the year ended 31st March, 2010 (` ) (`) 16,18,65,166 1,47,86,670 14,70,78,496 21,10,770 14,91,89,266 11,44,92,487 13,49,129 11,58,41,616 3,33,47,650 1,20,41,385 2,13,06,265 5,40,31,651 7,53,37,916 21,30,626 27,00,048 4,48,451 7,00,58,791 7,53,37,916 47.35 On behalf of the Board S. C. Sekhar Arun Pathak Director Director
II. EXPENDITURE Operating and Administrative Expenses Depreciation III. PROFIT Profit before Taxation Provision for Tax Profit after Taxation Profit brought Forward Available for Appropriation IV. APPROPRIATIONS General Reserve Proposed Dividend Income Tax on Proposed Dividend Profit Carried Forward
14 3
15
16 Basic and Diluted Earnings Per Share (`) Notes to the Accounts 17 Significant Accounting Policies 18 The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011
105
For the year ended 31st March, 2010 (`) 3,33,47,650 13,49,129 (13,53,678) (4,24,318) 13,068 1,14,77,341 (3,32,774) 4,40,76,418 (22,94,159) 27,21,229 4,45,03,488 (2,15,90,813) 2,29,12,675 (9,99,729) 8,999 (1,04,24,318) 12,97,312 4,24,318 33,32,774 (63,60,644) (22,50,040) (3,82,395) (26,32,435) 1,39,19,596 2,05,70,806 3,44,90,402
2,27,892 5,78,06,000 (1,58,41,520) 1,75,94,347 5,95,58,827 (2,16,18,886) 3,79,39,941 (9,70,788) 50,916 (42,22,98,020) 21,08,263 15,64,562 39,51,70,527 (2,43,74,540) (27,00,048) (4,48,451) (31,48,499) 1,04,16,902 3,44,90,402 4,49,07,304
2. The above cash flow statement has been prepared under the indirect method set out in AS-3 notified u/s 211 (3C) of The Companies Act, 1956 . 3. Figures in brackets indicate cash outgo. 4. Previous period figures have been regrouped and recasted, wherever necessary to conform to the current period classification. This is the cash flow statement referred to in our Report of even date. For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011
SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (`) 1. CAPITAL Authorised 20,00,000 Equity Shares of ` 10/- each Issued, Subscribed and Paid-up *4,50,008 Equity Shares of ` 10/- each * Includes 4,50,002 Equity Shares of ` 10/each fully paid-up held by the Holding Company, ITC Limited and 6 shares held by ITC Limited jointly with Management personnel As at 31st March, 2010 (`) 2. RESERVES AND SURPLUS Capital Reserve General Reserve At the commencement of the year Add : From Profit and Loss Account Profit and Loss Account At the commencement of the year Add : From Profit and Loss Account 69,82,233 41,17,278 1,10,99,511 30,00,000 48,51,607 21,30,626 69,82,233 30,00,000 As at 31st March, 2011 (`) (`) As at 31st March, 2010 ( `) (`)
2,00,00,000
2,00,00,000
45,00,080 45,00,080
45,00,080 45,00,080
106
Particulars
Intangible Assets Capitalised software 26,25,404 Tangible Assets Plant and Machinery - Office Equipment 7,15,084 Computers 53,35,980 Furniture and Fixtures 14,40,570 Motor Vehicle 41,150 Total 1,01,58,188 Previous Year 86,06,272
As at As at 31st March, 2011 31st March, 2010 (`) (`) 4. INVESTMENTS Unquoted Current Fortis Money Plus Regular Plan Daily Dividend 0 Units (Previous Year - 3,85,798 Units) of ` 10/- each J P Morgan India Liquid Plus Fund Retail - Daily Dividend Plan - Reinvested 0 Units (Previous Year -3,17,180 Units) of ` 10/- each LIC Mutual Fund Income Plus - Daily Dividend Plan 0 Units ( Previous Year - 6,11,006 Units) of ` 10/- each Canara Robeco Treasure Advantage Retail Daily Dividend Fund 0 Units ( Previous Year - 3,25,447 Units) of ` 12.40/- each Religare Liquid Fund Inst. Daily Dividend 44073 Units (Previous Year - 0 Units) of ` 1000.23 each 9. LOANS AND ADVANCES Good and Unsecured Advances recoverable in cash or in kind or for value to be received 38,58,167 Current Tax [ Net of Provisions of ` 1,94,10,000/(Previous Year ` 1,76,00,000/-)]
61,10,066
Sundry Creditors Total outstanding dues of micro and small enterprises Total outstanding dues of creditors other than micro and small enterprises Advance from Customers Other Liabilities
40,37,853
4,40,82,435 4,40,82,435
1,71,82,834
5.
DEFERRED TAX ASSETS / (LIABILITY)-(NET) Deferred Tax Assets On Expenditure for the current year allowed under Income Tax Act, 1961 on payment/actual basis only On Provision for Doubtful Debts Less : Deferred Tax Liability Depreciation - Timing Difference Net Deferred Tax Assets (7,75,361) 92,52,375 (7,32,387) 88,87,171
11. PROVISIONS [Refer Note (vii) 0n Schedule 17] Provision for Employee Benefits Proposed Dividend 63,03,913 37,23,823 60,73,060 35,46,498 Income Tax on Proposed Dividend 2,11,48,385 31,50,056 5,11,018 2,48,09,459 1,60,62,646 27,00,048 4,48,451 1,92,11,145
For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 12. NET INCOME FROM OPERATIONS Management Consultancy and Other Services 17,59,71,667 17,59,71,667 13. OTHER INCOME 14,70,78,496 14,70,78,496
6.
SUNDRY DEBTORS Over 6 months old Good and Unsecured Doubtful and Unsecured Other Debts Good and Unsecured Less : Provision for Doubtful Debts 81,12,658 1,14,77,341 5,25,43,879 7,21,33,878 1,14,77,341 6,06,56,537 1,32,29,474 1,14,77,341 3,25,18,967 5,72,25,782 1,14,77,341 4,57,48,441 38,85,873 1,28,95,861 1,77,08,668 3,44,90,402
Interest on Deposits* Interest on Income Tax Refunds Dividend from Current Investment Profit on Sale of Investments Others * The income from Interest on Deposits is stated gross, the amount of Income Tax deducted thereon is ` 1,82,972/(Previous Year - ` 1,35,369/-) 14. OPERATING AND ADMINISTRATIVE EXPENSES Salaries, Wages and Bonus [includes ` 70,94,899/(Previous Year - ` 26,27,324/-) on account of compensated absences] Contribution to Provident and Other Funds
7.
CASH AND BANK BALANCES Cash and Cheques in hand With Scheduled Banks On Current Accounts On Deposit Accounts 21,54,141 1,03,53,163 3,24,00,000 4,49,07,304
8.
OTHER CURRENT ASSETS Good and Unsecured Deposits with Government, Public Bodies and Others Interest Accrued on Deposit with Bank 4,23,181 12,51,386 16,74,567 4,22,993 9,56,612 13,79,605
11,76,24,723
9,45,18,882
74,85,755
38,20,619
107
67,84,774
42,36,824
Less : Recoveries Consumption of Stores and Supplies Power and Fuel Rent [Refer Note (v) on Schedule 17] Insurance Repairs - Others Advertising/Sales Promotion Traveling and Conveyance Legal Expenses Postage, Telephones etc. Bank Charges Technical and Consultancy Fees Bad Debts Written Off Provision for Doubtful and Bad Debts Interest on delayed Payment of Service Tax Fixed Assets Discarded Loss on Sale of Current Investment Miscellaneous Expenses
2,78,85,505 2,66,28,527 15,97,80,757 12,92,04,852 8,60,64,144 7,37,16,613 6,58,88,511 6,33,16,341 6,40,675 17,53,372 30,81,488 60,068 31,89,925 1,20,41,693 1,13,23,773 14,55,680 25,84,481 44,141 29,17,302 37,66,756 14,236 54,684 2,27,892 15,98,385 11,84,71,164 6,65,197 13,73,777 29,10,837 57,823 25,88,651 1,53,44,166 77,37,850 12,14,605 25,04,456 27,874 24,69,879 16,71,441 1,14,77,341 13,068 11,19,181 11,44,92,487
15. PROVISION FOR TAXATION Income Tax for the year : Current Tax Deferred Tax
16. EARNINGS PER SHARE Profit after Taxation Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (Face value - ` 10/- per share) 17. NOTES TO THE ACCOUNTS
i)
Expenditure in Foreign Currency (On Payment Basis) : Travelling ` 4,01,411/(Previous year - ` 1,72,812/-), Others ` 9,69,897/- (Previous year - ` 3,53,100).
ii) Following are the details of investments purchased and sold/redeemed during the year.
S.No.
Particulars
For the Year ended For the Year ended 31st March, 2011 31st March, 2010 Units Purchased Purchase Unit Sold Units Purchased Purchase Unit Sold in numbers at cost (in `) in Numbers in numbers at cost (in `) In numbers 5,164 4,317 5,11,529 32,82,764 29,92,104 30,03,797 30,00,262 30,03,744 30,379 30,397 30,677 36,18,956 37,59,678 37,66,834 44,073 52,629 48,539 51,15,287 4,07,29,582 2,99,44,678 3,00,64,708 3,00,35,923 3,00,53,357 3,03,85,453 3,04,20,052 3,07,01,425 4,49,00,744 3,77,35,893 3,80,27,315 4,40,82,435 42,22,98,020 3,90,962 3,21,497 11,22,535 36,08,211 29,92,104 30,03,797 30,00,262 30,03,744 30,379 30,397 30,677 36,18,956 37,59,678 37,66,834 15,573 12,026 6,11,006 3,25,447 1,55,779 1,20,619 61,10,067 40,37,853 1,04,24,318 2,50,000 50,000
Fortis Money Plus Regular Plan Daily Dividend Fidelity Fixed Maturity Plan Series 1 Plan B Retail Growth JP Morgan India Liquid Plus Fund - Retail - Daly Div Plan- Rein LIC Mutual Fund Income Plus - Daily Dividend Plan DSP Black Rock Fixed Maturity Plan 12M Series 3 - Regular Growth Maturity Canara Robeco Treasure Advantage Retail Daily Dividend Fund JP Morgan India Liquid Fund - Super Inst - Daily Div Plan - Reinvestment JP Morgan India Treasury Fund - Super Inst - Daily Div plan - Reinvestment Templeton India Ultra Short Bond Fund Inst Plan - Daily Div Reinvestment Fortis Money Plus Institutional Plan Daily Dividend UTI Treasury Advantage Fund Inst Plan Daily Div. Reinvestment UTI Floating Rate Fund Short Term Plan Ins. Daily-Dividend DSP Black Rock Money Manager Fund Inst Plan Daily Dividend Canara Robeco Treasure Advantage Inst Daily Div Fund Sundaram Ultra ST Fund Inst Div Rein Daily Sundaram Money Fund Inst.Daily Div Rein Religare Liquid Fund Inst.Daily Dividend Total
iii) Contingent Liabilities a) The Company has received demand for service tax amounting to ` 45,70,992 (inclusive of cess and penalty) dated March 10, 2010 from Additional Commissioner, Service Tax pertaining to service tax on reimbursement of salary received by the Company during the period from 2003 to 2006. The Company has filed its appeal before the CESTAT for the same. b) Demands from Income Tax Authorities under appeal amounting to ` 6,81,738 for Assessment year 2007-08 and 2008-09 (previous year ` Nil) for iv) The Company, based on the information available on the status of the suppliers, does not have any dues to enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. v) The Companys Significant leasing arrangements are in respect of operating leases for premises (residential, office etc.).These leasing arrangements which are not non-cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent under Schedule 14.
vi) The Company operates in one operating segment i.e. Hoteliering and within one geographical segment i.e. India and accordingly. in accordance with Accounting Standard 17- Segment Reporting,no segment Disclosures have been made. vii) The Company has accounted for the long term defined benefits and contribution schemes as under: A) Defined Benefit Schemes: (a) Gratuity The employees are entitled to gratuity that is computed as half-months salary, for every completed year of service and is payable on retirement / termination. The Company makes provision of such gratuity liability in the books of accounts on the basis of actuarial valuation. The Company pays contribution to Life Insurance Corporation to fund its plan. (b) Other Benefit The employees are entitled for leave for each year of service and part thereof and subject to the limits specified, the unavailed portion of such leaves can be accumulated or encashed during/at the end of the service period. The plan in unfunded.
108
(Amount in `) For the Year ended 31st March, 2010 Gratuity Leave encashment/ compensated absences
11,84,312 9,85,528 84,943 (7,07,222) (1,03,483) 14,44,078 15,94,197 1,58,069 63,387 9,08,809 (1,03,483) 26,20,979 59,51,196 14,74,374 3,99,328 7,53,622 (12,53,656) 73,24,864 12,53,656 (12,53,656)
* Included under operating and Administrative Expenses. Investment details of plan assets 100% of the plan assets are lying in the Gratuity fund administered through Life Insurance Corporation of India (LIC) under its Group Gratuity Scheme. The principal assumptions used in determining post-employment benefit obligations are shown below :
2011 (in %) Discount Rate Future salary increases Expected return on plan assets 8.00 p.a. 5.00 p.a. 9.00 p.a. 2010 (in %) 7.50 p.a. 5.00 p.a. 7.50 p.a.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Net Assets (Liabilities) recognised in Balance Sheet (Including experience adjustment Impact) 1. 2. 3. 4. 5. Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus(Deficit)] Experience Adjustment of Plan Assets [Gain/(Loss)] Experience Adjustment of Plan Obligation [Gain/(Loss)] For the year ended March 31,2011 Gratuity Leave Encashment 32,77,067 1,23,25,265 57,01,093 24,24,026 (1,23,25,265) (3,74,493) (27,056)
For the year ended March 31,2010 Gratuity Leave Encashment 1,44,4078 26,20,979 11,76,901 63,387 (7,07,222) 73,24,864
For the year ended For the year ended March 31,2009 March 31,2008 Gratuity Leave Gratuity Leave Encashment Encashment 11,84,312 15,94,197 4,09,885 2,55,902 (1,17,615) 59,51,196
(73,24,864)
(59,51,196)
27,09,612
(27,09,612)
37,54,767
7,53,622
23,88,633
10,30,408
B) State Plans : The Company deposits an amount determined at a fixed percentage of basic pay every month to the State administered Provident Fund for the benefit of the employees. Accordingly, the Companys contribution during the year that has been charged to revenue amounts to ` 47,68,338/- Previous year ` 35,54,620/viii) Related party disclosures under Accounting Standard 18 i) Holding Company : ITC Limited ii) Fellow Subsidiary Companies with Whom Transactions have taken place during the year: a. Srinivasa Resorts Limited b. Bay Islands Hotels Limited c. Landbase India Limited
iii) Other Related Parties with Whom Transactions have taken place during the year: a. International Travel House Limited ( Associate of Holding Company) b. Maharaja Heritage Resorts Limited (Joint venture of Holding Company) iv) Key Management Personnel : Board of Directors Nakul Anand S. C. Sekhar Arun Pathak Pawan Verma((Resigned on 6 September,2010) H. H. Maharaja Gaj Singh
109
Holding Company 31-03-2011 36,62,128 9,17,671 4,95,840 1,74,666 2,78,85,505 27,00,048 1,22,17,266 31-03-2010 30,98,641 3,56,858 4,95,840 2,66,28,527 22,50,040 1,41,32,520
Fellow Subsidiaries 31-03-2011 50,917 4,48,024 97,675 31-03-2010 36,855 5,04,027 2,47,412
3,49,672 1,26,813
1,19,982
2,80,134 4,36,376
3,45,241 3,07,426
10.
Information regarding Significant Transactions/Balance Transaction with 1. 2. Receipt of Management & Consultancy fees ITC Limited Purchase of Goods/Service ITC Limited Srinivasa Resorts Limited International Travel House Limited Sale of Fixed Assets Landbase India Limited Rent Paid ITC Limited Recovered of Contractual Remuneration ITC Limited Bay Island Hotels Limited Reimbursement of Contractual Remuneration ITC Limited Dividend Payments ITC Limited Expense Recovered during the year (Amount recovered on account of payments made on behalf of related parties) ITC Limited Bay Island Hotels Limited Landbase India Limited Expense Reimbursed during the year (Amount paid to related parties on account of payments made by them on your behalf) ITC Limited Srinivasa Resorts Limited Bay Island Hotels Limited Maharaja Heritage Resorts Limited Landbase India Limited Closing Balance (i) Debtors/Receivables ITC Limited (ii) Creditors/Payables ITC Limited Bay Island Hotels Limited International Travel House Limited Holding Company 31-03-2011 36,62,128 31-03-2010 30,98,641 Fellow Subsidiaries 31-03-2011 31-03-2010 Other Related Parties 31-03-2011 31-03-2010
50,917 4,48,024
36,855 5,04,027
36,73,382
17,85,688
3. 4. 5.
6. 7. 8.
1,22,17,266
1,41,32,520
87,177 10,498
2,19,473 27,939
9.
3,49,672 1,26,813
3,752 1,16,230
2,80,134 4,35,376
10.
ix) Taxation Deferred Tax : Break-up of Deferred Tax Assets and Liabilities into major Components of the respective balances is as under : I. Balance brought forward - Deferred Tax Asset II. For the Year: i) Tax impact of difference between carrying amount of fixed assets in the financial statements and the income tax return ii) Tax impact of Expenses allowed as deduction under Income Tax Act on actual payment iii) Tax impact of expenses charged in the financial statements but allowable as deductionin future years under income tax Net Deferred Tax Asset III. Closing Deferred Tax Asset
Year ended Year ended March 31,2011 March 31,2010 88,87,171 (42,974) (11,77,889) 15,86,067 3,65,204 92,52,375 33,28,556 (8,903) 39,12,626 16,54,892 55,58,615 88,87,171
x) Previous Years figures have been regrouped/rearranged wherever necessary to conform with current years presentation.
110
ii)
iii)
iv)
v)
vi)
vii)
For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011 On behalf of the Board S. C. Sekhar Arun Pathak Director Director
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 3 9 1 9 0 9 3 7 2 3 0 1 1 State Code 5 5 Application of Funds Net Fixed Assets 5 2 Net Current Assets 6 3 4 Accumulated Losses N . A . 3 8 4 3 Investments 4 4 0 Misc. Expenditure Deferred Tax Asset-Net 9 2 5 2 8 2
Date
Month
Year
II. Capital raised during the year (Amount in ` Thousands) Public Issue N . A Bonus Issue N . A . Rights Issue N . A . Private Placement N . A .
Total Expenditure 1 1 9 9 2
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 8 7 7 Sources of Funds Paid-up Capital 4 5 Secured Loan N . A . Reserves & Surplus 1 1 7 5 5 Unsecured Loan N . A . Total Assets 1 8 7 7
Profit/Loss before Tax Profit/Loss after Tax + 6 0 2 1 8 4 1 1 7 3 (Please tick appropriate box + for profit, for loss) Earnings per Share in ` 9 1 . 4 Dividend Rate % 9 7 0
V. Generic Names of Three Principal Products / Services of Company (as per monetary terms) Item Code No. Product Description H ** N O T E . L A S .
** No item code has been assigned to Hotels under the Indian Trade Classification.
111
112
26.
ANNEXURE 'A' Registers maintained by the Company (As on March 31, 2011) Sl. Particulars No. 1. Minutes Book of the meetings of the Board of Directors of the Company 2. Minutes Book of General Body Meetings of the Members of the Company 3. Copies of Annual Returns 4. Register of Members 5. Register of Particulars of Directors, Managing Director, Manager and Secretary 6. Register of Directors Share holding 7. Register(s) of contracts, companies and firms in which Directors are interested 8. Books of Accounts 9. Register of Share Transfer
Sl. Particulars of No. Forms & Returns Filed Relevant Section of the Act 193 193 159 150 303 307 301(3) 209
Date of Filing
ANNEXURE 'B' A. Forms & Returns filed with the Registrar of Companies, New Delhi (During the Year ended on March 31, 2011) Sl. Particulars of Date of Whether Additional No. Forms & Returns Filed Filing filed within Fees paid prescribed time 1. Form 32 u/s 303 for the appointment of Mr. Arun Pathak as Additional Director and resignation of Mr. M. Riaz Ahmed from directorship on 26th March 2010 13th April 2010 Yes No
2. Form 32 u/s 303 for the change in designation of Mr. Arun Pathak from Additional Director to Director in the Annual General Meeting held on 28th June 2010 6th July 2010 Yes No 3. Form 23AC and Form 23ACA for Annual Accounts u/s 220 of the Act for the year ended 31st March, 2010 12th July 2010 Yes No 4. Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March 2010 12th July 2010 Yes No 5. Form 20B for Annual Return u/s 159 of the Act, made upto 28th June 2010 i.e. the date of AGM for the financial year ended 31st March 2010 26th August 2010 Yes No 6. Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st October 2010 Yes No The following form does not correspond to the financial year in review but are relevant for issuing the Compliance Certificate. 7. Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st April 2011 Yes No B. Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil
REPORT OF THE AUDITORS TO THE MEMBERS We have audited the attached Balance Sheet of BAY ISLANDS HOTELS LTD. as at 31st March, 2011 and the Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examination, on a test basis, evidence supporting the amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors Report) Amendment Order 2004 issued by the Central Government of India in terms of section 227(4A) of the Companies Act 1956, and on the basis of such checks and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order. Further to our comments in the Annexure, we report that:1. 2. 3. We have obtained all the information and explanations, which to the best our knowledge and belief were necessary for the purpose of our audit. In our opinion proper books of accounts, as required by law, have been kept by the Company, so far as appears from our examination of those books. In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E 4. In our opinion the Balance Sheet, Profit & Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in clause C of subsection 3 of section 211 of the Companies Act 1956. On the basis of representations received from Directors as on 31st March 2011 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 in terms of clause (g) of subsection (1) of section 274 of the Companies Act 1956. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements along with the statement of significant accounting policies and notes thereon give the information required by the Companies Act 1956, in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India; In case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2011; and In case of the Profit & Loss Account of the Profit of the Company for the year ended on that date. In case of the Cash Flow Statement of the cash flows for the year ended on that date.
5.
6.
113
Port Blair, 29th April, 2011 As at 31st March, 2011 (`) (`) 11,87,500 10,14,29,708
1 2
II. APPLICATION OF FUNDS 1. Fixed Assets (a) Gross Block (b) Less : Depreciation (c) Net Block 2. 3. Deferred Tax Asset (Net) Current Assets, Loans & Advances (a) Sundry Debtors (b) Cash and Bank Balances (c) Other Current Assets (d) Loans and Advances Less : Current Liabilities and Provisions (a) Liabilities (b) Provisions
10,26,17,208 10,26,17,208
9,65,38,905 9,65,38,905
3 10,34,42,743 3,06,69,158 7,27,73,585 4 5 6 7 8 30,63,436 2,38,48,123 5,10,180 7,23,000 2,81,44,739 24,08,258 19,60,348 1,88,86,741 5,17,645 2,31,575 2,15,96,309 10,34,42,743 2,95,70,687 7,38,72,056 20,77,053
9 10
Net Current Assets Total Notes to the Accounts 15 Significant Accounting Policies 16 The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011
On behalf of the Board Mohan Bhatnagar Director S. C. Sekhar Director Gurgaon, 28th April, 2011
114
11
II. EXPENDITURE Operating and Administrative Expenses Depreciation III. PROFIT/(LOSS) Profit before Taxation Taxation for the year Profit after Taxation Profit Brought Forward from Previous Year Available for Appropriation IV. APPROPRIATIONS General Reserve Proposed Dividend Tax on Proposed Dividend Profit Carried Forward
12
13
Basic and Diluted Earnings Per Share (`) 14 Notes to the Accounts 15 Significant Accounting Policies 16 The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit & Loss Account referred to in our Report of even date. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 (Figures for the previous year have been rearranged to conform with the revised presentation)
On behalf of the Board Mohan Bhatnagar Director S. C. Sekhar Director Gurgaon, 28th April, 2011
For the year ended 31st March, 2011 (`) (`) A. NET PROFIT BEFORE TAX Adjustments for: Depreciation Interest OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Adjustments for: Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Paid NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES: Interest Received NET CASH FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCIAL ACTIVITIES: Dividends Paid Income Tax on Dividend Paid NET CASH FLOW USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS COMPRISE : Cash and Bank Balances Per our Report attached to the Balance Sheet KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011 1,06,21,102 2,72,411 (12,81,560)
For the year ended 31st March, 2010 (`) (`) 94,62,445 2,74,471 (16,05,895)
(10,09,149) 96,11,953
(13,31,424) 81,31,021
(11,03,088) 8,273
29,81,340
10,33,120
9,73,411
(5,93,750) (98,614)
(5,93,750) (1,00,908)
On behalf of the Board Mohan Bhatnagar Director S. C. Sekhar Director Gurgaon, 28th April, 2011
115
11,87,500 11,87,500
11,87,500 11,87,500
The above shares are held by the Holding Company, ITC Limited 3. FIXED ASSETS Particulars Original Cost/ Additions Professional Valuation during the as at 01.04.2010 year (`) 1. Land 2. Building 3. Plant & Machinery 4. Furniture & Fittings Total Previous Year 5,70,00,000 3,89,89,750 70,45,674 4,07,319 10,34,42,743 10,34,42,743 As at 31st March, 2011 (`) 4. DEFERRED TAX ASSET (NET) Deferred Tax Assets Unabsorbed Depreciation/Losses MAT Credits Less : Deferred Tax Liability Depreciation - Timing Difference Net Deferred Tax Assets 5. SUNDRY DEBTORS Over 6 months old Good and Unsecured Doubtful and Unsecured Other Debts Good and Secured Good and Unsecured Less : Provision for Doubtful Debts Less : Deposits from normal Trade Debtors - Contra 6. (24,08,258) (24,08,258) 24,08,258 (`) As at 31st March, 2010 (`) (20,77,053) (20,77,053) 20,77,053 Withdrawals during the year (`)
RESERVES & SURPLUS Revaluation Reserve At the commencement of the year 6,43,84,826 6,52,10,886 Less : Depreciation 8,26,060 6,35,58,766 8,26,060 6,43,84,826 Subsidy Reserve 43,38,099 43,38,099 General Reserve At the commencement of the year 28,27,762 21,48,382 Add : Transferred from Profit & Loss Account 7,59,443 35,87,205 6,79,380 28,27,762 Balance in Profit & Loss Account 2,99,45,638 2,38,00,718 10,14,29,708 9,53,51,405
Original Cost/ Depreciation Professional for the year Valuation as at 31.03.2011 (`) 5,70,00,000 3,89,89,750 70,45,674 4,07,319 10,34,42,743 10,34,42,743 (`) 10,81,283 17,188 10,98,471 11,00,531
As at As at 31st March, 2011 31st March, 2010 (`) (`) 10. PROVISIONS Income Tax (Provision for Taxation) Provision for Proposed Dividend Tax on Proposed Dividend Provision for Tax (net of advance tax) 5,93,750 96,321 6,90,071 5,93,750 98,614 3,03,119 9,95,483
For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 11. OTHER INCOME Interest on Fixed Deposit 12,81,560 Interest on Income Tax Refund A/Y 2006-07 Miscellaneous Income 12,81,560 16,05,895 25,285 49,018 16,80,198
19,60,348 19,60,348 19,60,348 10,916 1,88,75,825 1,88,86,741 5,17,645 5,17,645 1,82,557 49,018 2,31,575
7.
CASH AND BANK BALANCES With Scheduled Banks on Current Accounts 33,89,178 Deposit with Scheduled Banks 2,04,58,945 2,38,48,123 OTHER CURRENT ASSETS Interest accrued on investment 5,10,180 5,10,180 LOANS AND ADVANCES Income Tax-Refund Due for the year 2008-09 1,82,557 Income Tax-Refund Due for the year 2009-10 49,018 Income Tax-Refund Due for the year 2010-11 4,91,425 7,23,000 LIABILITIES Sundry Creditors Total outstanding dues to Micro and small enterprises Total outstanding dues to creditors other than Micro and small Enterprises There is no amount due and outstanding to be credited to Investor Education and Protection Fund.
12. OPERATING AND ADMINISTRATIVE EXPENSES Salaries, Wages and Bonus 75,29,647 65,90,803 Less : Recovered from ITC Ltd. (73,53,049) (64,37,146) Salaries, Wages and Bonus 1,76,598 153,657 Consumption of Stores and Spare Parts 30,000 30,000 Travelling and Conveyance 70,375 90,000 Miscellaneous Expenses 71,530 97,480 3,48,503 Miscellaneous Expenses include : Audit Fees Tax Audit Fees 13. PROVISION FOR TAXATION Income Tax on : Tax on Current Years Profits Add : Deferred Tax Expense/(Credit) 13,236 6,067 3,71,137 11,030 4,964
8.
9.
33,57,873 (3,31,205)
19,303 19,303
11,030 11,030
30,26,668 14. EARNINGS PER SHARE Profit/(Loss) after Taxation 75,94,434 Weighted average number of equity shares outstanding 11,875 Basic and diluted earnings per share in Rupees 639.53 (face value - ` 100/- per share)
116
4.
5.
6.
7.
(b) Transaction with Key Management Personnel - Nil (Previous Year - Nil) 5. Previous Years figures have been regrouped/rearranged wherever necessary. 16. SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS To prepare Financial Statements in accordance with the historical cost convention, generally accepted accounting principles in India and relevant presentational requirements of the Companies Act, 1956. 2. FIXED ASSETS To state Fixed Assets at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.
KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011
On behalf of the Board Mohan Bhatnagar Director S. C. Sekhar Director Gurgaon, 28th April, 2011
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 1 3 0 1 5 0 1 3 3 2 1 0 1 1 State Code 5 5 Application of Funds Net Fixed Assets 7 2 7 Net Current Assets 2 7 4 Accumulated losses N . A . 7 3 4 5 Investments N . A . Misc. Expenditure N . A . Deferred Tax Liability-Net - 2 4 0 8
Date
Month
Year
II. Capital raised during the year (Amount in ` Thousands) Public Issue N . A Bonus Issue N . A . Rights Issue N . A . Private Placement N . A .
IV. Performance of Company (Amount in ` Thousands) Turnover* 1 1 * Includes Other Income + 2 4 2 Total Expenditure 6 2 0
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 0 0 2 Sources of Funds Paid-up Capital 1 1 Secured Loan N . A . Reserves & Surplus 1 0 1 4 2 Unsecured Loan N . A . Total Assets 1 0 0 2
+ Profit/Loss Before Tax Profit/Loss After Tax 7 5 9 4 1 0 6 2 1 (Please tick appropriate box + for profit, for loss) Earnings per Share in ` 6 3 9 . 5 Dividend Rate % 3 5 0
V. Generic Names of Three Principal Products / Services of Company (as per monetary terms) Item Code No. Product Description H ** N O T E . L A S .
** No item code has been assigned to Hotels under the Indian Trade Classification.
117
(*) including ITC Infotech Limited, UK and ITC Infotech (USA), Inc.,(I2A), wholly owned subsidiaries of the Company, and Pyxis Solutions, LLC, a wholly owned subsidiary of I2A. BUSINESS REVIEW In the wake of the economic recovery, global IT spends improved in 2010. While this was largely driven by increased investments in software and hardware, software services are expected to grow over the next 24 months as companies will need to implement the application and enterprise systems post their investments in hardware and software. Understandably, growth in IT Services has been relatively moderate. Further, in the US, although the recessionary conditions eased towards the latter part of the financial year, client budgets continued to be tightly monitored. These trends reflect the continuing uncertainty during the economic recovery. In line with its peers in the mid tier of the IT services industry, the ITC Infotech Group (Group) has delivered a top line growth of approximately 13%. Your Companys aspiration to scale up rapidly required large investments in building differentiated capability and strengthening sales and technical delivery teams. While the investments, predominantly in manpower, have impacted the profits this year, the capabilities built are expected to strengthen the platform of growth over the next few years. Some of these capabilities include solutions in the areas of customer loyalty, end-to-end transformational services in IT outsourcing and Global Reporting Initiative based sustainability reporting. The Group continues to invest and focus on continuously improving program management and processes to ensure the highest levels of quality in technical delivery to its customers. Your Companys delivery processes have been accorded a maturity Level 3 in the Software Engineering Institutes (SEI) Capability Maturity Model Integration framework. The Groups investments, as mentioned above, in building differentiated capabilities are enabling it to provide end to end transformational services. Further, the Group has maintained its partnerships with some of the leading Independent Software Vendors (ISVs) in building niche solutions to address white spaces and strong joint go-to-market initiatives. Your Company has been ranked 26th in the Leaders Category for the 2011 Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP); this is the fifth consecutive year that your Company has featured in this prestigious list. In addition, your Company has featured in 8 sub-lists, placing it amongst the Top 20 companies globally in some categories such as Best 20 Leaders by Industry Focus - Financial Services (Banking, Markets), Best 20 Leaders by Industry Focus - Retail and Consumer Goods. The partner co-innovation strategy and the focused strategy in launching solutions which demonstrate value to clients in addressing some of their critical business challenges such as effective client relationship management and lowering the cost of operations, have yielded encouraging results in terms of the acquisition of several marquee, high potential clients and a
(*) including Pyxis Solutions, LLC, its wholly owned subsidiary During the year under review, Pyxis Solutions, LLC, declared and paid US$750,000 (` 334.50 lakhs) as dividend for the financial year 2010-11 (previous year - Nil) by way of distribution to its Sole Member i.e. ITC Infotech (USA), Inc. TALENT MANAGEMENT To support the quantum growth plans of your Company, talent management has been an area of focus and, as expected, there has been a build-up of pressure on availability of quality talent. The aim has been to recruit, retain, nurture and engage high quality people to enable optimum delivery of services. Your Company has put in place a process of growing and nurturing talent internally through continuous employee engagement and training programs. While internal communication channels spanned a broader and deeper spectrum to sense every pulse of the organisation, talent engagement as a whole has become a collaborative effort with concentrated participation from all spheres of the organisation. DIRECTORS RESPONSIBILITY STATEMENT As required under Section 217(2AA) of the Companies Act, 1956 your Directors confirm: (i) that in the preparation of the Annual Accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed and there are no material departures; (ii) having selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit of your Company for that period; (iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; (iv) that the Annual Accounts for the financial year ended 31st March, 2011 have been prepared on a going concern basis.
118
B. Sumant S. Sivakumar
ANNEXURE A TO THE REPORT OF DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2011 Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and forming part of the Directors' Report Employed throughout the year and in receipt of remuneration aggregating ` 6,000,000 /- or more p.a. Name 1 BABU V.V.R. GUPTA S.K. JANARDHANAN S. TALWAR A. Age 2 56 55 53 52 Gross Designation / Nature of Duties Remuneration (`) 3 Sr Vice President - IT Services Sr Vice President - IT Services Sr Vice President - IT Services 4 8403527 6126275 6988173 Net Remuneration (`) Qualifications 5 4381262 4220265 4518224 3530941 6 M.Sc., M.Phil. M.Tech. M.Sc. M.B.A. Experience (Years) 7 34 33 31 27 Date of Joining 8 1-Oct-00 1-Oct-04 1-Oct-00 9-Apr-01 Previous Employment / Position held 9 ITC Ltd. Divisional Head India Operations (ISD) Vmokasha Technologies Exe. - Vice President ITC Ltd. Head - ITC IT Services Reliance Telecom Ltd. Vice President - HRD
Employed for a part of the year and in receipt of remuneration aggregating ` 500,000/- or more per month AITHANI K.S. 52 On secondment to subsidiary company 2154386 1594829 M.Tech. 28 1-Oct-00 ITC Infotech Ltd. U.K. Chief Executive Officer
Notes : 1. Remuneration includes salary, performance effectiveness pay, allowances, one time deferred income, other benefits/applicable perquisites except contribution to the approved Group Pension under the Defined Benefit Scheme and Gratutity Funds and provisions for leave encashment which are actuarially determined on an overall Company basis. The term remuneration has the meaning assigned to it in Section 198 of the Companies Act, 1956. 2. Net Remuneration comprises cash income less (a) income tax, surcharge & education cess deducted at source and (b) managers own contribution to provident fund. 3. All appointments are / were contractual in accordance with terms & conditions as per Companys rules. 4. None of the above employees is a relative of any Director of the Company. On behalf of the Board B. Sumant S. Sivakumar Managing Director Vice Chairman
119
2.
3.
4.
For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000
ANNEXURE TO AUDITORS REPORT [Referred to in paragraph 3 of the Auditors Report of even date to the members of ITC INFOTECH INDIA LIMITED (the Company) on the financial statements as at and for the year ended March 31 2011] 1. (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. (b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed. (c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed of by the company during the year. 2. The company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of fixed assets and for the sale of services. The activities of the company did not involve purchase of inventory and sale of goods during the year. Further, on the basis of our examination of the books and records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses, if any, in the aforesaid internal control system. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements referred to in section 301 of the Act, the particulars of which needs to be entered into the register maintained under that section. 5. The company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. In our opinion, the company has an internal audit system commensurate with its size and nature of its business. (a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is regular in depositing the undisputed statutory dues including provident fund, income tax, sales tax, service tax, customs duty, cess and other material statutory dues as applicable with the appropriate authorities in India. Employees' state insurance, wealth tax, and excise duty are not applicable to the company for the current year. (b) According to the information and explanations given to us and the records of the company examined by us, there are no dues of income tax, sales tax, service tax, customs duty and cess which have not been deposited on account of any dispute. Wealth tax and excise duty are not applicable to the company for the current year. 8. The company has no accumulated losses as at 31st March, 2011, and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year. The Company has neither taken any loans from a financial institution or bank nor issued any debentures during the year nor were there any such amounts due for repayment as at the balance sheet date.
6. 7.
3.
9.
10. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 11. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the
4.
120
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule I. SOURCES OF FUNDS : 1. Shareholders Funds Capital 2. Reserves and Surplus 3. Loan Funds Unsecured Loans Total As at 31st March, 2011 (`) As at 31st March, 2010 (`)
1 2 3
II. APPLICATION OF FUNDS : 1. Fixed Assets (a) Gross Block (b) Less: Depreciation and Amortisation (c) Net Block (d) Capital Work-in-Progress 2. Investments 3. Deferred Tax - Net 4. Current Assets, Loans and Advances (a) Sundry Debtors (b) Cash and Bank Balances (c) Other Current Assets (d) Loans and Advances Less: 5. Current Liabilities and Provisions (a) Liabilities (b) Provisions Net Current Assets Total Notes to the Accounts Segment Reporting Related Party Disclosures Significant Accounting Policies The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011
4 1,023,770,478 677,657,026 346,113,452 4,820,840 350,934,292 870,434,087 61,296,983 1,276,510,676 633,388,608 41,159,651 338,824,693 2,289,883,628 844,852,044 568,832,307 276,019,737 18,615,777 294,635,514 870,434,087 69,284,916 887,537,207 684,271,818 7,074,969 317,932,349 1,896,816,343
5 6 7 8 9 10
11 12
18 19 20 21
On behalf of the Board B. Sumant S. Sivakumar S. V. Shah Managing Director Vice Chairman Company Secretary
R. Batra
121
13 14
II. EXPENDITURE Personnel Expenses Operating and Administrative Expenses Depreciation and Amortisation III. PROFIT BEFORE TAXATION Provision for Taxation IV. PROFIT AFTER TAXATION, CARRIED FORWARD Earnings Per Share (Face value ` 10 each) (Basic and Diluted) Notes to the Accounts Segment Reporting Related Party Disclosures Significant Accounting Policies The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
15 16
17 18 (vii) 18 19 20 21
On behalf of the Board B. Sumant S. Sivakumar S. V. Shah Managing Director Vice Chairman Company Secretary
R. Batra
For the year ended 31st March, 2011 (`) (Figures for the previous year have been rearranged to conform with the revised presentation) A. NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Fixed Assets - Loss on Sale / Write off (Net) Unrealised (Gain) / Loss on Exchange (Net) Provision for Doubtful Deposits, Loans & Advances Interest on Loans, Deposits etc Provision for Doubtful Debts Liability no longer required written back (`) (`)
93,883,349 122,230,455 1,025,906 (3,346,501) 738,951 (36,360,697) (2,356,798) 81,931,316 175,814,665 (384,405,053) (208,590,388) 50,004,984 (258,595,372) (185,910,018) 228,524,437 93,459,231 1,199,193 (37,155,101) 9,721,179 (48,360,358) (352,817) (8,040,172)
439,069,901
B.
C.
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables (369,965,576) Trade Payables (14,439,477) CASH FROM OPERATIONS Income Tax Paid NET CASH (USED IN) / FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (179,555,139) Interest Received 3,667,301 NET CASH (USED IN) / FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Long Term Borrowings 2,396,100,000 Repayments of Long Term Borrowings (2,012,500,000) NET CASH (USED IN) / FROM FINANCING ACTIVITIES NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS COMPRISE : Cash and Bank Balances 632,686,429 Unrealised (Loss)/Gain on Foreign Currency Cash and Cash Equivalents 702,179
(84,961,431) 48,654,611 (175,887,838) 1,482,500,000 (1,994,000,000) 383,600,000 (50,883,210) 684,271,818 633,388,608 686,148,858 (1,877,040) (511,500,000) (181,848,048) 866,119,866 684,271,818 (36,306,820)
633,388,608
684,271,818
This is the Cash Flow Statement referred to in our Report of even date.
For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011
On behalf of the Board B. Sumant S. Sivakumar S. V. Shah Managing Director Vice Chairman Company Secretary
R. Batra
122
852,000,000 852,000,000
852,000,000 852,000,000
378,900,000
1,108,900,000
4. FIXED ASSETS GROSS BLOCK Description As at 31st March, 2010 (`) Additions Withdrawals As at 31st March, 2011 (`) As at 31st March, 2010 (`) DEPRECIATION AND AMORTISATION For the On As at year Withdrawals 31st March, 2011 (`) (`) (`) 5,378,478 3,867,468 2,537,202 1,622,588 13,405,736 74,148,900 111,243,477 171,822,383 62,427,978 258,014,288 677,657,026 NET BLOCK As at 31st March, 2011 (`) As at 31st March, 2010 (`)
(`)
(`)
Leasehold Improvements Plant and Machinery Computers etc. Furniture and Fixtures Capitalised Software Capital Work-in-Progress Total Previous Year
111,504,365 19,145,423 150,994,108 55,979,696 218,799,604 73,538,919 62,702,716 32,577,761 300,851,251 12,108,277 844,852,044 193,350,076 844,852,044 193,350,076 779,001,536 75,449,083
130,649,788 57,091,425 17,057,475 5,868,751 201,105,053 90,928,907 25,693,048 4,270,785 288,067,738 138,749,422 36,940,429 2,669,518 92,610,959 49,195,892 15,769,288 1,622,588 311,336,940 232,866,661 26,770,215 14,431,642 1,023,770,478 568,832,307 122,230,455 14,431,642 1,023,770,478 568,832,307 122,230,455 9,598,575 844,852,044 483,772,458 93,459,231
56,500,888 54,412,940 89,861,576 60,065,201 116,245,355 80,050,182 30,182,981 13,506,824 53,322,652 67,984,590 346,113,452 276,019,737 4,820,840 18,615,777 350,934,292 294,635,514 276,019,737 As at 31st March, 2010 (`) 255,870 1,229,742 138,926,794 520,400,000
As at 31st March, 2011 (`) 5. INVESTMENTS Long Term, Unquoted (at Cost) Other than trade Subsidiary Companies ITC Infotech Limited, U.K. 685,815 (2010 - 685,815) Equity Shares of GBP 1 each, fully paid-up ITC Infotech (USA), Inc. 182,000 (2010 - 182,000) Common Shares without par value, fully paid-up
As at 31st March, 2010 (`) 8. CASH AND BANK BALANCES Cash in Hand Cheques in Hand Balances with Scheduled Banks On Current Accounts On Deposit Accounts *
68,685,837
68,685,837
801,748,250 870,434,087
801,748,250 870,434,087
6. DEFERRED TAX - NET Deferred Tax Assets On employees separation and retirement On provision for doubtful debts and advances On unabsorbed depreciation Deferred Tax Liabilities On fiscal allowances on fixed assets 696,016 61,296,983 7. SUNDRY DEBTORS Over six months old Good and Unsecured - From Others Doubtful and Unsecured - From Others Other Debts Good and Unsecured - From Holding Company - From Subsidiaries * - From Others * Less: Provision for Doubtful Debts 76,504,636 17,358,575 14,702,066 17,358,575 8,624,060 69,284,916 52,537,421 9,455,578 61,992,999 50,095,713 9,204,408 18,608,855 77,908,976
* including marked as Lien ` Nil (2010 - ` 514,700,000) for corporate guarantee extended on behalf of wholly owned subsidiary (refer Note (ii)(c) of Schedule 18 and ` 400,000 (2010 ` 400,000) held as margin money Balances with other Banks On Current Account - Fokus Bank, Norway Maximum balance outstanding at any time during the year : ` 9,491,410 (2010 - ` 17,761,390) - Danske Bank AS, Denmark Maximum balance outstanding at any time during the year ` 68,605,449 (2010 - ` 68,075,470) - Nordea Bank, Finland Maximum balance outstanding at any time during the year ` 2,244,525 (2010 - ` 5,224,731) - Nordea Bank, Sweden Maximum balance outstanding at any time during the year ` 2,187,957 (2010 - ` 1,721,176) - Deutsche Bank, Netherland Maximum balance outstanding at any time during the year ` 1,557,343 (2010 - ` Nil) - Standard Bank, South Africa Maximum balance outstanding at any time during the year ` 909,593 (2010 - ` Nil) - Westpac Bank, Australia Maximum balance outstanding at any time during the year ` 4,315,000 (2010 - ` Nil)
1,440,280
1,172,265
9,983,736
20,225,641
727,431
1,936,648
901,938
124,858
10,182
736,189
262,203
633,388,608
684,271,818
123
Income Tax Provision Adjusted for Previous Years (16,298,956) 7,987,933 (8,793,157) 19,308,944
509,672,460
533,652,343
15. PERSONNEL EXPENSES Salaries and Bonus 2,792,729,043 Contribution to Provident and Other Funds 97,406,337 Staff Welfare Expenses 22,612,828 Reimbursement of Contractual Remuneration 22,886,957 2,935,635,165 16. OPERATING AND ADMINISTRATIVE EXPENSES Rent Rates and Taxes Insurance Travelling and Conveyance Communication 2,370,795,731 139,424,819 20,296,446 17,438,198 2,547,955,194
17,750,000 27,100,000
5,902,650
124
I.
Components of Employer Expense 1 2 3 4 5 6 7 8 Current Service Cost Interest cost Expected Return on Plan Assets Curtailment Cost / (Credit) Settlement Cost / (Credit) Past Service Cost Actuarial Losses / (Gains) Total expense recognised in the Statement of Profit & Loss Account
The Pension and Gratuity Expenses have been recognised in Contribution to Provident and Other Funds and Leave Encashment in Salaries & Bonus under Schedule15. Pension II. Actual Returns 10,000,000 Gratuity 6,400,000 Pension 9,500,000 Gratuity (4,200,000)
III. Net Asset / (Liability) recognised in Balance Sheet 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10 V. 1 2 3 4 5 6 7 1 2 3 Present Value of Defined Benefit Obligation Fair Value on Plan Assets Status [(Surplus) / Deficit] Unrecognised Past Service Cost Net Asset /(Liability) recognised in Balance Sheet Present Value of DBO at Beginning of Period Current Service Cost Interest Cost Curtailment Cost / (Credit) Settlement Cost / (Credit) Plan Amendments Acquisitions Actuarial (Gains) / Loss Benefits Paid Present Value of DBO at the End of Period Plan Assets at Beginning of Period Acquisition Adjustment Expected Return on Plan Assets Actuarial Gains / (Loss) Actual Company Contributions Benefits Paid Plan Assets at the End of Period Discount Rate (%) Expected Return on Plan Assets (%) Long term rate of compensation increase (%) Management Staff Others 174,841,782 122,000,000 (52,841,782) (52,841,782) 177,923,852 17,166,880 13,933,619 (26,675,381) (7,507,188) 174,841,782 111,400,000 9,336,000 664,000 8,107,188 (7,507,188) 122,000,000 109,823,310 89,800,000 (20,023,310) (20,023,310) 92,576,860 12,915,384 7,254,149 876,917 (3,800,000) 109,823,310 87,200,000 7,080,000 (680,000) (3,800,000) 89,800,000 8.0% 8.0% 10.0% 10.0% 81,702,196 (81,702,196) (81,702,196) 75,482,968 13,179,845 5,593,649 (1,429,551) (11,124,715) 81,702,196 11,124,715 (11,124,715) 177,923,852 111,400,000 (66,523,852) (66,523,852) 147,739,756 20,059,515 9,708,283 18,516,298 (18,100,000) 177,923,852 113,500,000 7,871,500 1,628,500 6,500,000 (18,100,000) 111,400,000 92,576,860 87,200,000 (5,376,860) (5,376,860) 67,176,937 12,805,221 4,690,763 8,303,939 (400,000) 92,576,860 91,800,000 6,270,250 (10,470,250) (400,000) 87,200,000 7.0% 7.0% 10.0% 10.0% 75,482,968 (75,482,968) (75,482,968) 60,648,572 12,192,983 3,884,500 9,068,329 (10,311,416) 75,482,968 10,311,416 (10,311,416)
The estimates of future salary increases considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. VII. Major Category of Plan Assets as a % of the Total 1 2 3 4 5 Government Securities / Special Deposit with RBI High Quality Corporate Bonds Insurance Companies Mutual Funds Cash and Cash Equivalents For the year ended 31st March, 2011 33.0% 34.0% 27.0% 4.0% 3.0% For the year ended 31st March, 2010 30.0% 32.0% 32.0% 4.0% 3.0%
VIII. Basis used to determine the Expected Rate of Return on Plan Assets The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect the capital and optimise return within acceptable risk parameters, the plan assets are well diversified. IX. For the year ended 31st March, 2011 ` Leave Pension Gratuity Encashment 109,823,310 89,800,000 (20,023,310) (2,279,000) 6,246,134 81,702,196 (81,702,196) 2,844,651 For the year ended 31st March, 2010 ` Leave Pension Gratuity Encashment 177,923,852 111,400,000 (66,523,852) 1,628,500 (11,877,125) 92,576,860 87,200,000 (5,376,860) (10,470,250) (5,518,904) For the year ended 31st March, 2009 ` Leave Pension Gratuity Encashment 67,176,921 91,800,000 24,623,079 4,002,500 7,560,838 For the year ended 31st March, 2008 ` Leave Pension Gratuity Encashment 46,191,902 79,600,000 33,408,098 (2,170,113) (1,894,354) 49,181,562 (49,181,562) 4,209,505
Net Asset / (Liability) recognised in Balance Sheet (Including experience adjustment impact) 1 2 3 4 5
Present Value of Defined Benefit Obligation 174,841,782 Fair Value of Plan Assets 122,000,000 Status [Surplus / (Deficit)] (52,841,782) Experience Adjustment of Plan Assets [Gain / (Loss)] (9,140,000) Experience Adjustment of Obligation [(Gain) / Loss] (1,621,251)
(b) Amounts towards Defined Contribution Plans have been recognised under Contribution to Provident and Other Funds in Schedule 15: ` 78,905,203 (2010 ` 59,724,521)
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(a) Profit after Taxation (b)Weighted average number of Equity Shares (c) Earnings Per Share (Face value of ` 10 per share) (Basic and Diluted)
(viii) Auditors Remuneration and Expenses (Including service tax considered under other services) Audit Fees 1,100,000 Tax Audit Fees 200,000 Fees for Other services 284,173 Reimbursement of Expenses 178,236 1,762,409 (ix) Value of Imports during the year (C.I.F. Basis) Capital Goods (x) 65,847,076 65,847,076 Expenditure In Foreign Currency during the year (On Payment Basis) 166,871,935
* Fixed Assets and Capital Expenditure have been considered on the basis of physical location. 20. RELATED PARTY DISCLOSURES 1. HOLDING COMPANY: ITC Limited 2. ENTERPRISES WHERE CONTROL EXISTS: Wholly Owned Subsidiaries:
49,991,159 49,991,159
lTC Infotech Limited ITC Infotech (USA), Inc. Pyxis Solutions LLC. 3. OTHER RELATED PARTIES WITH WHOM THE COMPANY HAD TRANSACTIONS, etc.
(xi)
152,444,701 4,546,412 460,078,492 6,095,419 790,036,959 Earnings in foreign exchange during the year (F.O.B. Realisation Basis) Sale of services including reimbursement of expenses 2,815,864,769 2,815,864,769
Travel Professional, Consultancy and Account Management Fees Software and Related Expenses Expenditure of overseas branches Others
Fellow Subsidiary Companies: Surya Nepal Private Limited Wimco Limited Technico Agri Sciences Limited Technico Technologies Inc. Srinivasa Resorts Limited 4. KEY MANAGEMENT PERSONNEL Non-Executive Directors Mr. Y. C. Deveshwar - Chairman (w.e.f. 3rd January, 2011) Mr. K. Vaidyanath (till 2nd January, 2011) Mr. S. Sivakumar - Vice Chairman Mr. A. Nayak Mr. B. B. Chatterjee Mr. S. Puri Mr. R. Tandon (w.e.f. 3rd January, 2011) Mr. R. Srinivasan (till 30th April, 2010) Management Committee Members Mr. B. Sumant - Managing Director Mr. R. Batra Mr. A. Talwar Mr. K. S. Aithani (till 31st May, 2010) Mr. S. Janardhanan Mr. V. V. R. Babu Mr. S. K. Gupta Mr. V. V. Rajasekhar Mr. A. Maheshwari (w.e.f. 6th August, 2010) Mr. A. Jagannath (w.e.f. 6th August, 2010) Mr. S. V. Shah (w.e.f. 6th August, 2010)
3,046,099,079 3,046,099,079
(xii) Previous years figures have been regrouped / rearranged wherever necessary. 19. SEGMENT REPORTING The Company operates in a single business segment - information technology, which is its primary segment. The geographical segments are secondary segments and have been identified accordingly as India and Rest of the World. In view of only one business segment, disclosure of information relating to primary segment is not applicable.
5. DISCLOSURE OF TRANSACTIONS BETWEEN THE COMPANY AND RELATED PARTIES AND THE STATUS OF OUTSTANDING BALANCES AS ON 31ST MARCH Holding Company 2011 2010 ` Sale of Goods / Services Purchase of Goods / Services Rent paid Remuneration to Key Managerial Personnel Reimbursement of Contractual Remuneration Remuneration of managers on deputation recovered Expenses recovered Expenses reimbursed Receipt towards Loan Repayment Interest recovered on Loans Loans received Loan repaid Balances as on 31st March, i) Debtors / Receivables ii) Loans Taken iii) Loans Given iv) Creditors / Payables v) Corporate Guarantee Outstanding 831,067,971 4,573,881 10,565,530 22,886,957 ` 719,355,031 3,849,095 8,167,183 17,438,198 ITC Infotech Limited ` 376,147,120 246,715,727 3,287,992 3,476,269 69,310,266 164,700,500 Wholly Owned Subsidiaries 2011 ITC Infotech Pyxis Solution ITC Infotech (USA), INC. LLC Limited ` ` ` 567,065,514 2,703,589 25,591,005 18,578,281 314,762,165 28,157,825 16,898,332 1,476,451 413,122,924 135,587,021 1,611,842 816,954 80,737,925 43,259,492 2010 ITC Infotech Pyxis Solutions (USA), INC. LLC ` ` 428,931,322 6,622,859 13,785,799 8,129,896 187,314,899 14,425,645 369,685,586 15,714,052 1,677,547 Fellow Subsidiaries 2011 2010 ` 12,586,479 3,202,321 10,489 3,987,635 ` 8,782,377 3,051,562 772,100 Key Management Personnel 2011 2010 ` 41,516,313 243,500 12,718 1,412,466 ` 33,209,276 463,529 28,543 2,419,878 1,116,472
1,109,309 4,139,281 3,514,001 47,988,196 38,291,933 2,396,100,000 1,482,500,000 2,012,500,000 1,994,000,000 18,090,356 1,492,500,000 1,108,900,000 8,132,468 3,957,956
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Capitalised software costs are amortised on the straight-line method over a period of five years or over the estimated useful lives, as is appropriate. Impairment of Assets Impairment loss, if any, is provided to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Investments To state Current Investments at lower of cost and fair value; and Long Term Investments, including in Joint Ventures and Associates, at cost. Where applicable, provision is made to recognise a decline, other than temporary, in valuation of Long Term Investments.
For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011 On behalf of the Board
B. Sumant Managing Director S. Sivakumar Vice Chairman R. Batra Chief Financial Officer S. V. Shah Company Secretary
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(*) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of GBP 1 = INR 71.80 (**) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of USD 1 = INR 44.60 NotePyxis Solutions LLC. is a New York Limited Liability Company and does not have any share capital. ITC Infotech (USA), Inc., holds 100% membership interest of Pyxis Solutions LLC. On behalf of the Board Place : Bangalore Date : 9th May, 2011 B. Sumant S. Sivakumar S. V. Shah Managing Director Vice Chairman Company Secretary
R. Batra
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956)
I. Registration Details Registration No. Balance Sheet Date II. 7 7 3 4 1 3 1 Date 0 3 Month 1 1 Year Rights Issue N I Bonus Issue N I L L N I Private Placement N I L L State Code 2 1 IV. Performance of Company (Amount in ` Thousands) Turnover (Including other Income) 4 2 6 4 1 6 6 Total Expenditure 4 1 7 0 2 8 2
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 3 5 7 2 5 4 9 Sources of Funds Paid-up Capital 8 5 2 0 0 0 Unsecured Loans 1 4 9 2 5 0 0 Application of Funds Net Fixed Assets 3 5 0 9 3 4 Current Assets 2 2 8 9 8 8 4 Accumulated Losses N I L Total Assets 3 5 7 2 5 4 9 Reserves & Surplus 5 6 3 8 0 9 Current Liabilities and Provisions 6 6 4 2 4 0 Investments 8 7 0 4 3 4 Misc. Expenditure N I L Deferred Tax - Net 6 1 2 9 7
8 8
V.
Generic Names of Principal Products / Services of Company (as per monetary terms) Item Code No. (ITC Code) 8 5 2 4 9 0 0 9
Product Description
C O M P U T E R
S O F
T W A R E
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B. Sumant Director
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Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit.
PRINCIPAL ACCOUNTING POLICIES Basis of accounting The financial statements have been prepared under the historical cost convention. The principal accounting policies of the company are set out below and remain unchanged from the previous year. Financial instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. Turnover Turnover is the total amount receivable by the company for goods supplied and services provided, excluding VAT and trade discounts. Turnover from services performed on a time and materials basis is recognised as income as and when the services are performed. Turnover from software projects performed on a time bound fixed price basis is recognised as income at the point at which the milestone agreed with the customer is achieved. Fixed assets All fixed assets are initially recorded at cost. Depreciation Depreciation is calculated to write down the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows: Leasehold improvements Fixtures and fittings Computer equipment Leased assets All leases are operating leases and the payments made under them are charged to the profit and loss account on a straight-line basis over the lease term. Deferred taxation Deferred tax is recognised on all timing differences where the transactions or events that give the company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet date. Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities are translated at the rate of exchange ruling at the balance sheet date. All exchange differences are dealt with through the profit and loss account except that gains and losses arising from the retranslation of the opening retained earnings in overseas branches are adjusted against the reserves. Recruitment costs Legal costs and other charges incurred to obtain visas and other required immigration papers for recruits, recruitment fees and relocation costs are charged to the Profit & Loss Account when such costs are incurred. 25% 25% 25%
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BALANCE SHEET AS AT 31 MARCH 2011 Unaudited Note Fixed assets Tangible assets Current assets Debtors Loans and advances Deferred tax recoverable Cash at bank Creditors: amounts falling due within one year Net Current Assets Total assets less current liabilities Capital and reserves Called-up equity share capital Profit and loss account Shareholders funds 14 15 16 10 9 8 6,730,710 108,752 3,694 2,612,614 9,455,770 4,082,681 5,373,089 5,404,148 685,815 4,718,333 5,404,148 483,231,324 7,807,850 265,211 187,572,622 678,877,007 293,116,082 385,760,925 387,990,807 49,238,075 338,752,732 387,990,807 5,837,704 53,688 8,360 1,986,027 7,885,779 3,557,827 4,327,952 4,368,327 685,815 3,682,512 4,368,327 396,730,352 3,648,648 568,146 134,970,416 535,917,562 241,790,038 294,127,524 296,871,446 46,609,960 250,261,486 296,871,446 7 31,059 2,229,882 40,375 2,743,922 2011 2011 ` 2010 Unaudited 2010 `
These financial statements were approved by the directors on 9th May 2011 and are signed on their behalf by: V. Sreenivasan Resident Officer A. Sreenivasan Financial Controller B. Sumant Director S. Sivakumar Vice Chairman
The accompanying accounting policies and notes form part of these financial statements.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2011 Note Net cash inflow/(outflow) from operating activities Returns on investments and servicing of finance Interest received Net cash inflow from returns on investments and servicing of finance Taxation Capital expenditure Payments to acquire tangible fixed assets Net cash outflow from capital expenditure Increase/(Decrease) in cash 17 (7,822) (7,822) 626,587 (561,580) (561,580) 44,985,814 (29,974) (29,974) 1,051,837 (2,037,027) (2,037,027) 71,482,865 4,285 4,285 (222,070) 307,642 307,642 (15,943,516) 3,087 3,087 (749,899) 209,765 209,765 (50,963,064) 17 2011 852,194 Unaudited 2011 ` 61,183,268 2010 1,828,623 Unaudited 2010 ` 124,273,191
The accompanying accounting policies and notes form part of these financial statements.
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The accompanying accounting policies and notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011 Supplementary information - Indian Rupee amounts The financial statements of ITC Infotech Limited are prepared in accordance with accounting principles generally accepted in the United Kingdom, the country of incorporation, and are presented in GBP. The supplementary information requested by the parent company has been arrived at by applying the year end interbank exchange rate of GBP 1 = ` 71.80 (2010: GBP 1 = ` 67.96) as provided by the parent company. The supplementary information has not been audited. 1. Turnover The turnover and profit before tax are attributable to the one principal activity of the company. An analysis of turnover is given below: 2011 United Kingdom India US Malaysia Europe Other 16,133,769 3,606,992 236,794 9,676 2,203,074 34,538 22,224,843 2. Other operating charges Administrative expenses 3. Operating profit Operating profit is stated after charging: Depreciation of owned fixed assets Auditors remuneration: - audit fees - non audit fees taxation and other services Loss / (Gain) on foreign exchange Operating lease costs: Land and buildings Plant and equipment 4. 17,138 20,775 14,505 100,051 53,191 1,809 1,230,422 1,491,541 1,041,386 7,183,161 3,818,848 129,877 21,823 19,976 9,202 134,280 53,720 1,714 1,483,075 1,357,569 625,368 9,125,667 3,650,815 116,502 4,775,531 342,859,248 4,736,471 321,890,541 Unaudited 2011 ` 1,158,323,945 258,963,991 17,000,625 694,688 158,169,698 2,479,656 1,595,632,603 2010 14,928,120 1,813,678 127,222 38,628 2,528,083 5,410 19,441,141 Unaudited 2010 ` 1,014,515,028 123,257,536 8,645,975 2,625,150 171,808,549 367,683 1,321,219,921
Directors and employees The average number of staff employed by the company during the financial year amounted to: 2011 No. Staff The aggregate payroll costs of the above were: 2011 Wages and salaries Social security costs 8,719,581 787,840 9,507,421 Remuneration in respect of directors was nil (2010: nil). Unaudited 2011 ` 626,022,318 56,562,973 682,585,291 2010 7,219,807 712,939 7,932,746 Unaudited 2010 ` 490,658,097 48,451,336 539,109,433 210 2010 No. 176
5.
132
Total
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March 2011 exchange rate. 8. Debtors Unaudited 2011 5,295,551 1,367,764 67,395 6,730,710 9. Deferred taxation The deferred tax included in the Balance sheet is as follows: Deferred tax assets The movement in the deferred taxation account during the year was: Balance brought forward Profit and loss account movement arising during the year Balance carried forward The balance of the deferred taxation account consists of the tax effect of timing differences in respect of: Excess of depreciation over taxation allowances on fixed assets 3,694 265,211 8,360 568,146 8,360 (4,666) 3,694 600,206 (334,995) 265,211 9,659 (1,299) 8,360 656,423 (88,277) 568,146 3,694 265,211 8,360 568,146 2011 ` 380,194,084 98,198,616 4,838,624 483,231,324 2010 5,746,154 23,972 67,578 5,837,704 Unaudited 2010 ` 390,508,615 1,629,158 4,592,579 396,730,352
Trade debtors Amounts owed by group undertakings Prepayments and accrued income Corporation Tax
133
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March, 2011 exchange rate. 16. Reconciliation of movements in shareholders funds Unaudited 2011 Profit for the financial year Other recognised losses and gains Net addition to shareholders funds Opening shareholders funds Closing shareholders funds 1,034,989 832 1,035,821 4,368,327 5,404,148 2011 ` 74,307,035 59,733 74,366,768 313,624,039 387,990,807 2010 688,041 (19,176) 668,865 3,699,462 4,368,327 Unaudited 2010 ` 46,759,237 (1,303,201) 45,456,036 251,415,410 296,871,446
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March, 2011 exchange rate.
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At 1 April 2010 Net cash: Cash in hand and at bank Net funds 1,986,027 1,986,027
At 1 April 2010 `
Cash flows
Cash flows `
At 31 March 2011
At 31 March 2011 `
142,586,808 142,586,808
626,587 626,587
44,985,814 44,985,814
2,612,614 2,612,614
187,572,622 187,572,622
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March 2011 exchange rate. 18. Controlling related party The immediate parent undertaking is ITC Infotech India Limited, which is incorporated in India and is a wholly owned subsidiary of ITC Limited. This is the smallest group of undertakings for which consolidated accounts are being drawn up including this company. The ultimate parent undertaking and controlling related party is ITC Limited, which is incorporated in India. This is the largest group of undertakings for which consolidated accounts are being drawn up including this company. As a wholly owned subsidiary of ITC Infotech India Limited, which is itself a wholly owned subsidiary of ITC Limited, the company is exempt from the requirements of FRS8 to disclose transactions with other members of the group headed by ITC Limited.
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(*)including Pyxis Solutions, LLC, a wholly owned subsidiary of the Corporation. Business Review The Corporation is pleased to report another year of strong growth even as the US economy gradually began emerging from the historic recessionary crisis. Recent analyst estimates for 2010 based on data from the US Department of Commerce indicates growth in IT consulting services and IT outsourcing at 2.8% and 5.7% respectively, reversing the de-growth in IT purchases during 2009. Driven by aggressive growth in new client acquisition and focused account management, the Corporations Total Revenue increased by 24% over that of the previous year. The smart upturn in the Corporations financial performance validates the robustness of its strategy of investing proactively to create unique domain-led solutions towards enhancing the competitiveness of clients across identified industry verticals. In particular, these solutions enabled demonstrable value to clients in addressing some of their critical business challenges such as effective client relationship management, collaborative product development to shrink time to market, and lowering cost of operations. Although the recessionary conditions eased towards the latter part of the financial year, client budgets continue to be tightly monitored. Several CIO surveys by leading analysts indicate that (a) new project funding was largely sourced from savings in cost of operations and (b) the focus was on quickening ROI on projects. These trends reflect the continuing uncertainty during the economic recovery. Consequently, the Corporations margins remained under pressure, despite the gradual renegotiation of prices upwards for some customers. The margins during the financial year 2010-11 reflect the impact of (a) cost management initiatives (b) partnered approach to co-innovation where feasible and (c) growing share of higher order consulting services. The partnered co-innovation strategy has yielded encouraging results in terms of acquisitions of several marquee, high potential clients and a growing funnel of prospects. The Corporation has begun implementing some business transformation projects for clients, with salutary impact on margins, and more importantly in building market standing for the future. The high scores in the customer satisfaction survey, independently conducted by a reputed firm, serves to validate the Corporations worth as a value-adding business partner. AMPER, POLITZINER & MATTIA, LLP Report of the Independent Auditors' to the members of ITC Infotech (USA), Inc. and its group Companies Board of Directors ITC Infotech (USA), Inc. We have audited the accompanying special-purpose balance sheet of ITC Infotech (USA), Inc. as of March 31, 2011, and the related special-purpose statements of operations and accumulated deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The special-purpose financial statements as of and for the year ended March 31, 2010 were audited by Amper, Politziner & Mattia, LLP, whose practice was combined with the practice of Eisner LLP to form EisnerAmper LLP as of August 16, 2010 and whose report dated May 10, 2010, expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying special-purpose financial statements were prepared for the purpose of reporting to the members of ITC Infotech (USA), Inc., and its Companies and is not intended to be a presentation in conformity with generally accepted accounting principles. The Company does not include the financial position of Pyxis Solutions, LLC, a 100% owned subsidiary, as required under accounting principles generally accepted in the United States (US GAAP). Accordingly, this does not purport to be presented under US GAAP. The Indian Rupee equivalent figures have been included in the financial statements as required by the parent company, and is not intended to be a representation in conformity with accounting principles generally accepted in the United States of America. In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of ITC Infotech (USA), Inc. as of March 31, 2011 and the results of its operations and its cash flows for the year then ended, in accordance with the Basis of Presentation as described in Note B. This report intended solely for the information and use of the board of directors and management of ITC Infotech (USA), Inc. and its group Companies and is not intended to be and should not be used by anyone other than these specified parties.
EisnerAmper LLP
136
On behalf of the Board Date : May 9, 2011 G Satish Financial Controller L. N. Balaji President B. Sumant Director S. Sivakumar Vice Chairman
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25,264,653 7,068,829 6,273,750 795,079 767,500 27,579 757,663 785,242 38,467 14,208 52,675 732,567 (2,984,099) (2,251,532)
1,126,803,524 315,269,773 279,809,250 35,460,523 34,230,500 1,230,023 33,791,770 35,021,793 1,715,628 633,677 2,349,305 32,672,488 (133,090,815) (100,418,327)
16,930,121 5,863,881 5,749,625 114,256 767,500 (653,244) 145,505 (507,739) (19,014) 48,157 29,143 (536,882) (2,447,217) (2,984,099)
760,162,433 263,288,257 258,158,163 5,130,094 34,460,750 (29,330,656) 6,533,175 (22,797,481) (853,729) 2,162,250 1,308,521 (24,106,002) (109,880,043) (133,986,045)
STATEMENT OF CASH FLOWS March 31, 2011 $ Cash flows from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization Deferred income taxes Bad debt expense (Increase) decrease in assets Accounts Receivable Due from ITC lnfotech Ltd. (UK), net Advances to employees Security deposits and other advances Increase (decrease) in liabilities Accounts payable Accrued expenses and other liabilities Accrued payroll and payroll taxes Due to ITC Infotech Ltd. (UK), net Due to Pyxis Solutions, LLC. Due to ITC Infotech India Ltd., net Net cash provided by operating activities 732,567 March 31, 2011 ` 32,672,488 March 31, 2010 $ (536,882) March 31, 2010 ` (24,106,002)
879,272 14,208 (2,602,700) (47,028) (121,613) (122,840) 157,925 179,551 (78,804) 75,797 2,314,283 1,380,618
39,215,531 633,677 (116,080,420) (2,097,449) (5,423,940) (5,478,664) 7,043,455 8,007,975 (3,514,658) 3,380,546 103,217,022 61,575,563
872,716 48,157 180,800 (3,375,236) 245,109 (388) (287,021) 443,372 51,929 46,112 78,969 2,268,706 36,343 (25,811) (1,083,668) 290,758 (818,721) (782,378) 2,339,191 1,556,813
39,184,954 2,162,249 8,117,920 (151,548,096) 11,005,394 (17,421) (12,887,243) 19,907,403 2,331,612 2,070,429 3,545,708 101,864,899 1,631,806 (1,158,914) (48,656,693) 13,055,029 (36,760,578) (35,128,772) 105,029,676 69,900,904
Cash flows from investing activities Capital expenditures (52,636) (2,347,566) Increase in goodwill acquired (see Note C) (598,741) (26,703,849) Notes receivable Net cash used in investing activities (651,377) (29,051,415) Cash flows from financing activities Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents 729,241 32,524,148 Cash and cash equivalents at beginning of year 1,556,813 69,433,860 Cash and cash equivalents at end of year 2,286,054 101,958,008 Supplemental disclosures of cash flow information: Income taxes paid were $44,865 (` 2,000,979) and $260,384 (` 11,691,242) during 2011 and 2010, respectively. The accompanying notes are an integral part of these statements
On behalf of the Board Date : May 9, 2011 G Satish Financial Controller L. N. Balaji President B. Sumant Director S. Sivakumar Vice Chairman
138
139
Beginning balance Increase to allowance Accounts written off Provision written back Ending balance
Unbilled receivables were approximately $ 818,623 (` 36,510,586) and $ 492,777 (` 22,125,687) as at March 31, 2011 and 2010 respectively.
140
$ ` $ ` $ ` $ ` $ ` $ ` $ `
Amortization of identifiable intangible assets for the year ended March 31, 2011 and 2010 was $767,500 (`34,230,500) and $767,500 (`34,460,750), respectively. At March 31, 2011 the expected amount of amortization of identifiable intangible assets, over the next five years are as follows: 2011-2012 $767,500 `34,230,500 2012-2013 753,137 33,589,910 2013-2014 604,562 26,963,465 2014-2015 525,000 23,415,000 2015-2016 525,000 23,415,000 Total amortization expense $3,175,199 `141,613,875 NOTE G - COMMITMENTS AND CONTINGENCIES LEASES The Company has leased offices, storage spaces under non cancelable operating leases, some of these expiring through fiscal 2015. One such office has been leased from King Maker Marketing Inc. whose parent Company (ITC Limited) is same as the Companys ultimate parent Company. Total rent and other reimbursements to King Maker Marketing Inc. was approximately $ 95,048 (` 4,239,141) and $ 96,476 (` 4,331,772) for the years ended March 31, 2011 and 2010, respectively. Total rent expense under all facilities leases was approximately $ 152,898 (` 6,819,251) and $ 142,313 (` 6,389,854) for the years ended March 31, 2011 and 2010, respectively. In addition, the Company has entered into various non-cancelable operating leases for the rental of equipment. The future minimum annual lease payments as at March 31, 2011 are as follows: Offices Equipment Total $ ` $ ` $ ` 2011-2012 128,179 5,716,783 4,175 186,205 132,354 5,902,988 2012-2013 22,467 1,002,028 4,175 186,205 26,642 1,188,233 2013-2014 3,845 171,487 3,845 171,487 2014-2015 2,142 95,533 2,142 95,533 2015-2016 Total Minimum Lease Payments 150,646 6,718,811 14,337 639,430 164,983 7,358,241 NOTE H - INCOME TAXES The provision for income taxes consists of the following: Year ended March 31, $ 2011 2011(`) $ 2010 2010(`) Federal Taxes Current (130,898) (5,877,320) Deferred (155,075) (6,916,345) 45,686 2,051,301 State and local taxes Current 38,467 1,715,628 111,884 5,023,592 Deferred (1,178) (52,539) 2,471 110,948 Foreign Taxes 170,461 7,602,561 Total current expense $ 52,675 ` 2,349,305 $ 29,143 ` 1,308,521
As a result of the Pyxis acquisition, the Companys amortizable tax basis goodwill exceeds it financial reporting goodwill. Under ASC 740, this is known as Component II goodwill. No tax benefit is recorded for amortization of Component II goodwill until such deduction reduces taxes payable. As of March 31, 2011, no tax benefit related to the amortization of Component II goodwill has been recorded. The Companys 2011 and 2010 expected Federal income tax provision was offset by the utilization of net operating loss carry forwards. Deferred tax assets and liabilities consist of the following: $ 2011 Net Operating Loss carry forwards Other temporary differences (net) Federal Alternate Minimum Tax carry over Net deferred tax asset $ 790,674 ` 35,264,060 $ 804,882 ` 36,139,202 281,844 483,892 24,938 2011(`) 12,570,242 21,581,583 1,112,235 $ 2010 288,059 491,885 24,938 2010 (`) 12,933,849 22,085,637 1,119,716
As at March 31, 2011, the Company has NOL of approximately $ 800,517 (` 35,703,058) available to offset future taxable income, as summarized below. Operating loss carry forwards for Federal income tax purposes will expire as follows: Year March, 2024 March, 2025 March, 2026 March, 2027 March, 2028 Expiring Amount ($) 314,278 435,527 10,805 17,343 22,564 $ 800,517 NOTE I - CONCENTRATION OF CUSTOMER SALES A significant portion of the Companys sales are to several key customers, some of which are also agencies providing software consulting services to commercial entities and software developers. Three such key customers accounted for approximately 37% (18%, 11% and 8%) and approximately 36% (16%, 14% and 6%) of the Companys net revenues for the years ended March 31, 2011 and 2010, respectively. Accounts receivable from these customers approximated 32% (14%, 14% and 4%) and 35% (22%, 5% and 8%) of total accounts receivable as at March 31, 2011 and 2010, respectively. Expiring Amount (`) 14,016,799 19,424,504 481,903 773,498 1,006,354 ` 35,703,058
141
May 9, 2011
BALANCE SHEET AS AT 31ST MARCH, 2011 March 31, 2011 $ Assets Current Assets Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $ 8,391 (` 374,239) for 2011 and $ 8,391 (` 376,756) for 2010, respectively Due from ITC Infotech (USA), Inc. Advances to employees Trade advance Prepaid expenses Total Current Assets Computer Equipment, net of accumulated depreciation of $814 (` 36,304) and $509 (`22,854) for 2011 and 2010 respectively Liabilities and Members Equity Current liabilities Accounts payable Accrued expenses and other current liabilities Accrued payroll and payroll taxes Due to ITC Infotech India Ltd., net Total Current Liabilities Commitments and contingencies Members equity March 31,2011 ` March 31, 2010 $ March 31, 2010 `
1,800,796
80,315,502
1,927,674
86,552,563
407 2,878,148
18,152 128,365,401
712 3,600,188
31,969 161,648,442
3,861,400 10,553,880 10,617,593 1,677,554 26,710,427 134,938,015 161,648,442 A. Duggal Chief Executive Officer
142
STATEMENTS OF CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2011 Year Ended March 31, 2011 $ Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Changes in assets and liabilities Accounts receivable Due from ITC Infotech (USA), Inc. Advances to employees Trade advance Prepaid expenses Accounts payable Accrued expenses and other current liabilities Accrued payroll and payroll taxes Due to ITC Infotech India Ltd., net Net cash provided by operating activities Cash flows from financing activities Members distribution Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (750,000) (750,000) (126,878) 1,927,674 1,800,796 (33,450,000) (33,450,000) (5,658,758) 85,974,260 80,315,502 627,466 1,300,208 1,927,674 28,173,224 58,379,339 86,552,563 620,966 (75,797) (4,713) 48,500 5,901 55,440 (47,898) (4,254) 623,122 27,695,084 (3,380,546) (210,200) 2,163,100 263,185 2,472,624 (2,136,251) (189,728) 27,791,242 70,374 (11,101) 50,524 (63,771) (76,263) 37,362 627,466 3,159,793 (498,435) 2,268,528 (2,863,318) (3,424,209) 1,677,554 28,173,224 305 13,603 305 13,695 24,672 1,100,371 620,036 27,839,616 Year Ended March 31, 2011 ` Year Ended March 31, 2010 $ Year Ended March 31, 2010 `
143
241,176
10,756,450
58,192
2,612 ,821
233,665
10,421,459
83,224
3,736,758
29,149
1,300,045
144
2,821,441 2,391 106,639 2,821,441 2,391 106,639 2,821,441 1,196 1,880,960 53,342
Total minimum lease payments 231,957 10,345,283 5,978 266,620 237,935 10,611,903 NOTE G - CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS 41,820 1,877,718 A significant portion of the Companys sales are to several key customers. Two such customers accounted for approximately 60% and approximately 40% of the Companys net revenues for the year ended March 31, 2011 and for the year ended March 31, 2010 respectively. These two customers accounted for approximately 49% and 55% of total accounts receivable at March 31, 2011 and 2010 respectively. NOTE H - EMPLOYMENT AGREEMENT In connection with employment agreements (Agreements), the Companys Chief Executive Officer and the Chief Operating Officer agree that the term of these Agreements are for a period of two years (expiring August 2010). These Agreements provide for certain minimum level of base salary and other amounts of contingent compensation to be earned, all of which are defined in the Agreements. In November 2010, the employment agreements terminated and ITC Infotech (USA), Inc. entered into consultation agreements with Mr. Amar Duggal and Mr. Zvi Brener as the Companys Chief Executive Officer and Chief Operating Officer, respectively. NOTE I - MEMBERS DISTRIBUTION On March 28, 2011 the Company proposed a distribution of $ 750,000 (` 33,450,000) to ITC Infotech (USA), Inc. (sole member), which was approved and paid on March 31, 2011.
95,483
4,287,187
Trade advance of $48,500 (` 2,163,100) receivable from Pyxis Singapore as of March 31, 2010 was received during the current year. NOTE E - ACCOUNTS RECEIVABLE Accounts receivable consist of trade accounts receivable and unbilled accounts receivable (representing services performed prior to the balance sheet dates, but not invoiced to the customer until thereafter). Unbilled receivables were approximately $ 456,983 (` 20,381,442) and $ 407,430 (` 18,293,607) as of March 31, 2011 and 2010 respectively. NOTE F - COMMITMENTS AND CONTINGENCIES Leases The Company has leased office space under a non-cancelable operating lease expiring March 31, 2015. Total rent expense under this lease for year ending March 31, 2011 was $ 48,955 (` 2,183,393) and $ 63,261 (` 2,840,419) for year ending March 31, 2010. In addition, the Company has entered into a non-cancelable operating lease for rental of equipment during the current year. Total expense under this lease for year ending March 31, 2011 was $ 2,171 (` 96,827).
145
5th May, 2011 Registered Office: Virginia House 37 J. L. Nehru Road Kolkata 700 071 On behalf of the Board R. Tandon Director S. Dutta Director
AUDITORS REPORT TO THE MEMBERS OF WILLS CORPORATION LIMITED We have audited the attached Balance Sheet of WILLS CORPORATION LIMITED, as at 31st March 2011, the Profit and Loss Account and Cash Flow Statement for the year ended on that date and annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account ; iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement, dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. v. On the basis of written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a Director in terms of clause (g) sub-section (1) of section 274 of the Companies Act,1956 ;
2.
vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India : (a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011. (b) In the case of the Profit and Loss Account, of the profit for the year ended on that date. (c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) Kolkata 5th May, 2011 S. K. Chatterjea Partner Membership No. 005629
3.
ii.
146
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule (`) I. SOURCES OF FUNDS 1. Shareholders' Funds a) Capital b) Reserves and Surplus 31st March, 2011 (`) (`) 31st March, 2010 (`)
1 2
4,88,56,260 2,46,29,069 7,34,85,329 7,34,85,329 60,57,401 14,90,534 44,73,712 7,43,79,207 45,66,867 7,05,68,289 4,14,315 57,891 39,393 5,11,599
TOTAL II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less: Depreciation c) Net Block 2. Investments 3. Current Assets, Loans and Advances a) Cash and Bank Balances b) Other Current Assets c) Loans and Advances 4. Less : Current Liabilities and Provisions a) Liabilities b) Provisions
60,57,401 15,83,689
8 9
Net Current Liabilities TOTAL Notes to the Accounts 13 Significant Accounting Policies 14 The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011
147
10
II. EXPENDITURE Employee Cost Loss on Sale of Current Investments (net) Operating and Establishment Expenses Depreciation III. PROFIT Profit before Taxation Provision for Taxation Profit after Taxation Profit brought forward Available for appropriations IV. APPROPRIATIONS Profit carried forward Earnings Per Share (Face Value ` 10/- each) (Basic & Diluted) Notes to the Accounts Significant Accounting Policies
11 3
12
The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Dividend Income Interest on Income Tax (Net) Profit on Sale of Current Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Refund/(Payment) NET CASH USED IN OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Income from Current Investments Purchase of Current Investments Sale of Current Investments NET CASH FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES NET CASH FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS Notes : 1 The above Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 Cash Flow Statement. 2 CASH AND CASH EQUIVALENTS : Balance with Scheduled Banks - On Current Account Cash on Hand Cheques on Hand Cash and Bank Balance (Schedule 5) In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 2,17,549 4,14,315 6,31,864 44,20,739 93,155 (40,87,622) 332 (624) 4,25,980 (4,01,309) 1,17,845 1,42,516 (2,02,294) (59,778) 9,32,535 (108,26,49,132) 108,19,93,924 2,77,327
For the year ended 31st March, 2010 (`) 49,52,085 93,155 (40,59,174) 3,14,620 13,00,686 1,39,098 (20,161) 14,19,623 15,98,562 30,18,185 18,13,433 (111,17,41,285) 110,67,69,713 (31,58,139) (1,39,954) 5,54,269 4,14,315
148
* Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms 4. INVESTMENTS As at As at 31st March, 2011 31st March, 2010 (`) (`) UNQUOTED Current Other Investments Canara Robeco Interval Series 2 - Quarterly Plan 2 - Inst Dividend Fund NIL (2010 - 30,00,000) Units of ` 10/- each 3,00,00,000 8. Good and Unsecured Current Taxation (net of provisions) Fringe Benefit Tax (net of provisions) 7. LOANS AND ADVANCES As at As at 31st March, 2011 31st March, 2010 (`) (`) 1,07,339 598 1,07,937 36,455 2,938 39,393
LIABILITIES As at As at 31st March, 2011 31st March, 2010 (`) (`) Sundry Creditors Total outstanding dues of micro enterprises and small enterprises Total outstanding dues of creditors other than micro enterprises and small enterprises Others Liabilities Security Deposits*
DSP BlackRock Liqudity Fund - Institutional Plan Daily Dividend 7,43,79,207 74,356 (2010 - NIL) Units of ` 1,000/- each LIC MF Liquid Fund - Dividend Plan NIL (2010 - 36,94,710) Units of ` 10/- each 7,43,79,207 5. CASH AND BANK BALANCES
4,05,68,289 7,05,68,289
As at As at 31st March, 2011 31st March, 2010 (`) (`) With Scheduled Banks On Current Accounts Cheques on Hand Cash on Hand 3,19,632 3,12,232 6,31,864 4,14,185 130 4,14,315
* Includes deposits from Holding Company ` 20,00,000/- (2010 - ` 20,00,000/-) 9. PROVISIONS As at As at 31st March, 2011 31st March, 2010 (`) (`) Provision for Retirement Benefits As at As at 31st March, 2011 31st March, 2010 (`) (`) 1,97,252 1,97,252 1,07,398 1,07,398
6.
10. OTHER INCOME For the year ended 31st March, 2011 (`) Miscellaneous Income Provision no longer required written back 7,27,449 7,27,449 For the year ended 31st March, 2010 (`) 5,51,659 24,252 5,75,911
149
Provision for Taxation included in the Profit and Loss Account represents Current Tax. The incidence of Deferred Tax being insignificant, is not considered. Related Party Disclosures : (a) Relationships : Holding Company Key Management Personnel Mr. K. Vaidyanath Mr. R. Tandon Mr. B. B. Chatterjee Mr. S. Dutta Non Executive Chairman (Upto 2nd January, 2011) Non-Executive Chairman (w.e.f. 3rd January, 2011) Non-Executive Director (Upto 2nd January, 2011) Non-Executive Director Non-Executive Director ITC Limited
4.
(b) Disclosure of transaction between the Company and Related Parties and the status of outstanding balances : Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 2,839/11,030/8,20,000/7,27,674/31st March, 2011 (`) 4,00,000/Nil 20,00,000/3,622/11,030/7,20,000/5,51,659/31st March, 2010 (`) Nil Nil 20,00,000/-
Holding Company Postage, Telephone, Telex etc. Miscellaneous Expenses Rental Income Miscellaneous Income Balance as at Holding Company Receivables Payables Security Deposit Received 5.
Segment Reporting - The Company operates in a single business and geographical segment.
150
The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost. II. Actual Returns III. Net Asset/(Liability) recognised in Balance Sheet 1. 2. 3. 4. 5. Present Value of Defined Benefit Obligation Fair value on Plan Assets Status [Surplus / (Deficit)] Unrecognised Past Service Cost Net Asset/(Liability) recognised in Balance Sheet N.A. N.A. N.A. N.A. N.A. 96,256 N.A. (96,256) Nil (96,256) 1,00,996 N.A. (1,00,996) Nil (1,00,996) N.A. N.A. N.A. N.A. N.A. 52,076 N.A. (52,076) Nil (52,076) 55,322 N.A. (55,322) Nil (55,322) N.A. Nil Nil N.A. Nil Nil
IV. Change in Defined Benefit Obligations (DBO) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Present Value of DBO at Beginning of Period Current Service Cost Interest Cost Past Service Cost Curtailment Cost/(Credit) Settlement Cost/(Credit) Plan Amendments Acquisitions Actuarial (Gains)/Losses Benefits Paid Present Value of DBO at the End of Period N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 52,076 16,232 3,645 12,411 Nil Nil Nil Nil 11,892 Nil 96,256 55,322 9,166 4,426 Nil Nil Nil Nil Nil 32,082 Nil 1,00,996 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 62,516 (9,202) (2,873) Nil Nil Nil Nil Nil 1,635 Nil 52,076 69,134 (7,864) (3,105) Nil Nil Nil Nil Nil (2,843) Nil 55,322
V. Change in Fair value of Assets 1. 2. 3. 4. 5. 6. 7. Plan Assets at Beginning of Period Acquisition Adjustment Expected Return on Plan Assets Actuarial Gains/(Losses) Actual Company Contributions Benefits Paid Plan Assets at the End of Period N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
VI.Actuarial Assumptions 1. 2. Discount Rate (%) Expected Return on Plan Assets (%) N.A. N.A. 8.00 Nil 8.00 Nil N.A. N.A. 7.00 Nil 7.00 Nil
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand factors in the employment market.
151
For the year ended 31st March, 2009 (`) Leave Pension Gratuity
For the year ended 31st March, 2008 (`) Leave Pension Gratuity Leave
Encashment
Gratuity
Encashment
Encashment
N.A. Unfunded Unfunded IX. Net Asset/(Liability) recognised in Balance Sheet (including experience adjustment impact) 1. 2. 3. 4. 5. 7. Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus/(Deficit)] Experience Adjustment of Plan Assets [Gain/(Loss)] Experience Adjustment of Obligation [(Gain) /Loss] N.A. N.A. N.A. N.A. N.A. 96,256 1,00,996 N.A. Nil Nil N.A. Nil Nil (96,256) (1,00,996)
(52,076) (55,322)
(62,516) (69,134)
(47,897) (54,062)
There are no Micro, Small and Medium Enterprises, to whom the Company owes any dues, as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises
Development Act, 2006 has been determined to the extent such parties have been identified based on information available with the Company. 8. Figures for the previous year have been regrouped / re-arranged wherever necessary.
14. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Financial Statements are prepared on accrual basis under the historical cost convention. Fixed Assets Fixed Assets are stated at cost including any incidental acquisition expenses. Depreciation Depreciation is provided on Straight Line basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. Investments To state Current Investments at lower of cost and fair value; and Long Term Investments, including in Joint Ventures and Associates, at cost. Where applicable, provision is made to recognise a decline, other than temporary, in valuation of Long Term Investments. Inventories The inventories are valued at cost or below. The average cost is computed on the basis of weighted average method. Foreign Currency Liabilities Foreign Currency Liabilities are restated at the rates ruling at the year end and all exchange gains / losses arising there from are adjusted in the Profit and Loss Account except for those covered by forward contract rates where the gains / losses arising from such restatement are recognized over the period of such contracts. Kolkata, 5th May, 2011 On behalf of the Board R. Tandon Director S. Dutta Director T. Ghosal Secretary Borrowing Costs Borrowing cost that are directly attributable to the acquisition or construction of qualifying assets, are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue. Lease Rentals Lease Rentals are being accounted for on an accrual basis. Retirement Benefits Liability for Leave Encashment and Gratuity payable to employees is provided for at the year-end on actuarial basis. Taxes on Income To provide Current Tax as the amount of tax payable in respect of taxable income for the period. To provide Deferred Tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognise Deferred Tax Assets on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.
152
BALANCE SHEET ABSTRACT AND COMPANYS GEtNERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date
0 0 0 8 7 1 4 9 3 1 0 3 2 0 1 1
Total Expenditure
1 2 1 5
Date II.
Month
Year
+
+
Rights Issue
N I
Bonus Issue
N I L
Private Placement
N I L
V. III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities
7 7 7 7 3
Generic Names of Principal Products/Services of Company (As per monetary terms) Item Code No. (ITC Code)
N . A .
Total Assets
7 7 7 7 3
N . A .
Secured Loans
N I L
Unsecured Loans
N I L
Investments
7 4 3 7 9
Misc. Expenditure
N I L
Accumulated Losses
N I L
153
ii)
AUDITORS' REPORT TO THE MEMBERS OF GOLD FLAKE CORPORATION LIMITED We have audited the attached Balance Sheet of GOLD FLAKE CORPORATION LIMITED, as at 31st March, 2011, the Profit and Loss Account and Cash Flow Statement for the year ended on that date and annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted our audit in accordance with Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 2. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 3. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement, dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; v. On the basis of written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a Director in terms of clause (g) sub-section (1) of Section 274 of the Companies Act,1956; vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India : (a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; (b) In the case of the Profit and Loss Account, of the profit for the year ended on that date; (c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) Kolkata 5th May, 2011 S. K. Chatterjea Partner (Membership No. 005629)
154
(Referred to in paragraph 3 thereof) 1. a. The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets. b. In our opinion, the fixed assets have been physically verified by the management at reasonable intervals, having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory were noticed. c. During the year, in our opinion, and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company. 2. According to the information and explanations given to us and as per the books and records of the Company examined by us, there was no stock held by the Company at any time during the year. 3. a. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. As the Company has not granted any loans, secured or unsecured to parties covered in the Register maintained under Section 301 of the Companies Act, 1956, paragraphs (iii) (b), (c) and (d) of the Order are not applicable. b. The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. As the Company has not taken any loans, secured or unsecured from parties covered in the Register maintained under Section 301 of the Companies Act, 1956, paragraphs (iii ) (f) and (g) of the Order are not applicable. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for purchase of fixed assets. Further, on the basis of our examination, and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weakness in the aforesaid internal control systems. 5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956. 6. The Company has not accepted any deposit from the public. 7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule
8.
a. According to the information and explanations given to us, and according to the books and records examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including Income Tax, Cess and other material statutory dues as applicable to it with the appropriate authorities during the year. b. According to the information and explanations given to us, there are no undisputed dues, including Income Tax, Cess which were outstanding for more than 6 months as at 31st March, 2011. c. According to the information and explanations given to us, there are no undisputed dues, including Income tax, Cess which were outstanding as at 31st March, 2011. The Company does not have accumulated losses as at 31st March, 2011, and has not incurred cash losses during the year ended on that date and in the immediately preceding financial year. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks and financial institutions. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956, during the year. The Company has not raised money by public issue during the year. According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported. The nature of the Companys activities during the year ended 31st March, 2011 indicate that the provisions of clauses 4(viii), (xi), (xiii), (xvi), (xvii), (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) S. K. Chatterjea Partner (Membership No. 005629)
(`)
1 2
Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less : Depreciation c) Net Block 2. Investments 3. Current Assets, Loans and Advances a) Cash and Bank Balances b) Other Current Assets c) Loans and Advances Less : 4. Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Liabilities
3 90,943 90,666 4 5 6 7 4,04,876 5,000 99,941 5,09,817 277 23,93,34,181 3,13,399 5,500 3,850 3,22,749 90,943 90,583 360 20,98,16,120
8 9
Total Notes to the Accounts 12 Significant Accounting Policies 13 The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date. For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011
155
12 13
The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our report of even date. For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 On behalf of the Board R. Tandon Director S. Dutta Director N. Bajaj Secretary
156
157
2,25,00,000
2,25,00,000
88,486 (88,486)
6. OTHER CURRENT ASSETS As at As at 31st March, 2011 31st March, 2010 (`) (`) Good and Unsecured Deposits Others 5,000 5,000 5,000 500 5,500
7. LOANS AND ADVANCES As at As at 31st March, 2011 31st March, 2010 (`) (`) Good and Unsecured Income Tax (net of provisions) Fringe Benefit Tax (net of provisions) 97,091 2,850 99,941 3,850 3,850
8. LIABILITIES As at As at 31st March, 2011 31st March, 2010 (`) (`) Sundry Creditors Total outstanding dues of micro enterprises and small enterprises Total outstanding dues of creditors other than micro enterprises and small enterprises Security Deposits
9. PROVISIONS As at As at 31st March, 2011 31st March, 2010 (`) (`) Provision for Retirement Benefits Provision for Income Tax (net of advance payment) 30,769 30,769 13,674 11,494 25,168
12.NOTES TO THE ACCOUNTS 1. Uncalled liability in respect of partly paid up 1,39,125 shares is ` 1,25,21,250/(2010 - ` 2,29,55,625/-). 2. Dividend Income represents ` 2,02,50,000/- (2010 - ` 2,02,50,000/-) from Long Term Investments. 3. During the year, the following Current Investments were purchased and sold: (i) 30,24,614 Units of Birla Sun Life Cash Plus - Instl. - Daily Dividend Reinvestment at cost of ` 3,26,72,792/(ii) 18,369 Units of Birla Sun Life Cash Plus - Retail - Daily Dividend Reinvestment at cost of ` 3,00,689/(iii) 1,42,39,190 Units of BNP Paribas Money Plus Institutional Plan Daily Dividend at cost of ` 14,24,47,520/(iv) 1,42,07,394 Units of BNP Paribas Overnight Fund Institutional Daily Dividend at cost of ` 14,21,16,562/(v) 2,98,908 Units of Canara Robeco Interval Series 2 - Quaterly Plan 2 - Inst Dividend Fund at cost of ` 29,89,098/(vi) 33,02,579 Units of Canara Robeco Liquid Super Instt Daily Div Reinvest Fund at cost of ` 3,32,07,433/(vii) 25,91,080 Units of Canara Robeco Treasury Advantage Super Instt Daily Div Reinv Fund at cost of ` 3,21,47,792/(viii) 20,00,000 Units of DSP BlackRock FMP - 3M Series 22 - Dividend Payout at cost of ` 2,00,00,000/(ix) 31,995 Units of DSP BlackRock Liquidity Fund - Institutional Plan Daily Dividend at cost of ` 3,20,04,688 /(x) 22,517 Units of DSP BlackRock Liquidity Fund - Regular Plan - Daily Dividend at cost of ` 2,25,392 /(xi) 32,039 Units of DSP BlackRock Money Manager Fund - Institutional Plan - Daily Dividend at cost of ` 3,20,64,427/(xii) 1,07,045 Units of DWS Insta Cash Plus Fund - Regular Plan Daily Dividend - Reinvest at cost of ` 11,02,675/(xiii) 30,00,000 Units of Fidelity FMP Series 2 - Plan B - Dividend at cost of ` 3,00,00,000/(xiv) 70,00,000 Units of HDFC FMP 100 D September 2010 (2) - Dividend Series XIV, Option: Payout at cost of ` 7,00,00,000/(xv) 1,001 Units of ICICI Prudential Liquid Super Institutional Plan - Div Daily at cost of ` 1,00,167/(xvi) 9,273 Units of ING Liquid Fund - Daily Dividend Option at cost of ` 1,00,026/(xvii) 1,10,72,903 Units of JM High Liquidity Fund - Super Institutional Plan - Daily Dividend at cost of ` 11,09,11,736/(xviii) 1,10,50,735 Units of JM Money Manager Fund Super Plus Plan Daily Dividend at cost of ` 11,05,65,918/(xix) 20,036 Units of JP Morgan India Liquid Fund - Retail - Daily Dividend Plan - Reinvest at cost of ` 2,00,658/(xx) 1,61,22,772 Units of JP Morgan India Liquid Fund - Super Inst. Daily Dividend Plan - Reinvest at cost of ` 16,13,55,093/(xxi) 91,59,467 Units of JP Morgan India Treasury Fund - Super Inst. Daily Div Plan - Reinvest at cost of ` 9,16,76,194/(xxii) 70,00,000 Units of Kotak FMP Series 31- Dividend at cost of ` 7,00,00,000/(xxiii) 1,09,29,775 Units of Kotak Floater Long Term - Daily Dividend at cost of ` 11,01,69,948/-
158
Financial Statements of ITC Filtrona Limited are drawn up according to the Financial Year Ended as at 31st December. The Companys interests in this Joint Venture is reported as Long Term Investment (Schedule 4) and stated at cost. However, the Companys share of each of the assets, liabilities, income and expenses, etc. (each without elimination of the effect of transactions between the Company and the Joint Venture) related to its interests in the Joint Venture are : As at 31st December, 2010 (`) ASSETS 1. Fixed Assets (net) 2. Current Assets, Loans and Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances II LIABILITIES 1. Current Liabilities and Provisions a) Liabilities b) Provisions 2. Deferred Tax (net) III INCOME 1. Sales 2. Other Income IV EXPENSES 1. Raw Materials, etc. 2. Manufacturing, Selling, etc. Expenses 3. Depreciation 4. Provision for Taxation V OTHER MATTERS 1. Capital Expenditure Commitments I 9,48,62,622 13,11,96,676 2,58,10,436 1,61,92,143 11,17,319 2,62,36,800 As at 31st December, 2009 (`) 9,27,63,260 12,04,43,314 3,33,30,218 1,06,45,004 8,66,371 2,30,04,589
5. Remuneration of Manager : Salaries : ` 5,84,200/- (2010 - ` 3,59,000/-) Other Benefits : ` 47,981/- (2010 - ` 30,004/-) 6. Related Party Disclosures : (a) Relationships Holding Company ITC Limited Joint Venture ITC Filtrona Limited Key Management Personnel Mr. K. Vaidyanath Non-Executive Chairman (upto 2nd January, 2011) Mr. R. Tandon Non-Executive Chairman (w.e.f. 3rd January, 2011) Non-Executive Director (upto 2nd January, 2011) Mr. B. B. Chatterjee Non-Executive Director Mr. S. Dutta Non-Executive Director (b) Disclosure of transaction between the Company and Related Party : Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Joint Venture Company Dividend Received 2,02,50,000 / 2,02,50,000 / Holding Company Miscellaneous Income 5,03,364 / 3,18,930 / Miscellaneous Expenses 11,030 / 11,030 / -
9,64,04,964 2,58,55,745 75,14,132 63,27,37,162 1,20,70,435 53,07,15,980 4,15,59,788 1,21,44,300 1,94,88,031 2,41,88,020
9,41,02,406 2,62,09,589 69,26,101 62,20,83,565 1,01,73,869 49,94,12,190 4,51,78,429 1,19,71,602 2,50,21,076 Nil
9. Segment Reporting : The Company operates in a single business and geographical segment.
10. Employee Benefits : Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes: For the year ended 31st March, 2011 (`) Pension Gratuity For the year ended 31st March, 2010 (`) Gratuity
Pension
N.A. I. Components of Employer Expense 1. 2. 3. 4. 5. 6. 7. 8. Current Service Cost Interest Cost Expected Return on Plan Assets Curtailment Cost/(Credit) Settlement Cost/(Credit) Past Service Cost Actuarial Losses/(Gains) Total expense recognised in the Statement of Profit & Loss Account N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
Unfunded
N.A.
Unfunded
The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost.
159
Pension
N.A. II. Actual Returns III. Net Asset/(Liability) recognised in Balance Sheet 1. Present Value of Defined Benefit Obligation 2. Fair value on Plan Assets 3. Status [Surplus/(Deficit)] 4. Unrecognised Past Service Cost 5. Net Asset/ (Liability) recognised in Balance Sheet IV. Change in Defined Benefit Obligations (DBO) 1. Present Value of DBO at Beginning of Period 2. Current Service Cost 3. Interest Cost 4. Curtailment Cost/(Credit) 5. Settlement Cost/(Credit) 6. Plan Amendments 7. Acquisitions 8. Actuarial (Gains)/Losses 9. Bentfits Paid 10. Present Value of DBO at the End of Period V. Change in Fair value of Asset 1. Plan Assets at Beginning of Period 2. Acquisition Adjustment 3. Expected Return on Plan Assets 4. Actuarial Gains/(Losses) 5. Actual Company Contributions 6. Benefits Paid 7. Plan Assets at End of Period VI. Actuarial Assumptions 1. Discount Rate (%) 2. Expected Return on Plan Assets (%) N.A.
Unfunded 8%
N.A. N.A.
N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
5,568 4,956 445 Nil Nil Nil Nil 2,443 Nil 13,412
8,106 2,552 648 Nil Nil Nil Nil 6,051 Nil 17,357
N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
2,734 2,936 191 Nil Nil Nil Nil (293) Nil 5,568
5,308 1,432 372 Nil Nil Nil Nil 994 Nil 8,106
N.A. N.A.
8.00 Nil
8.00 Nil
N.A. N.A.
7.00 Nil
7.00 Nil
The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors, such as supply and demand factors in the employment market. As at 31st March, 2011 VII.Major Category of Plan Assets as a % of the Total Plan Assets 1. Government Securities/Special Deposit with RBI 2. High Quality Corporate Bonds 3. Insurance Companies 4. Mutual Funds 5. Cash and Cash Equivalents N.A. N.A. N.A. N.A. N.A. As at 31st March, 2010 N.A. N.A. N.A. N.A. N.A.
VIII. Basis used to determine the Expected Rate of Return on Plan Assets The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified. For the year ended 31st March, 2011 (`) Pension Gratuity For the year ended 31st March, 2010 (`) Leave Pension
Encashment
For the year ended 31st March, 2009 (`) Leave Pension Gratuity
For the year ended 31st March, 2008 (`) Leave Pension Gratuity Leave
Encashment
Gratuity
Encashment
Encashment
N.A. Unfunded Unfunded IX. Net Asset /(Liability) recognised in Balance Sheet (including experience adjustment impact) 1. 2. 3. 4. 5. Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus/(Deficit)] Experience Adjustment of Plan Assets [Gain/(Loss)] Experience Adjustment of Obligation [(Gain)/Loss] N.A. 13,412 17,357 N.A. N.A. N.A. N.A. (13,412) (17,357) N.A. Nil Nil N.A. Nil Nil
5,568 8,106 N.A. N.A. (5,568) (8,106) Nil Nil Nil Nil
2,734 5,308 N.A. N.A. (2,734) (5,308) Nil Nil Nil Nil
N.A. 2,371 2,250 N.A. N.A. N.A. N.A. (2,371) (2,250) N.A. Nil Nil N.A. Nil Nil
160
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date
0 0 0 0 8 3 1 4 3 1 0 3 2 0 1 1
Total Expenditure
7 2 8
Date II.
Month
Year
+
+
Rights Issue
N I
Dividend Rate %
N I L
Bonus Issue
N I L
Private Placement
N I L
V. III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities
2 3 9 3 1 6
Generic Names of Principal Products/Services of Company (As per monetary terms) Item Code No. (ITC Code)
N . A .
Total Assets
2 3 9 3 1 6
N . A .
Secured Loans
N I L
Unsecured Loans
N I L
Investments
2 3 9 3 3 4
Misc. Expenditure
N I L
Accumulated Losses
N I L
161
AUDITORS REPORT TO THE MEMBERS OF LANDBASE INDIA LIMITED 1. We have audited the attached Balance Sheet of Landbase India Limited (the Company) as at March 31, 2011 and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the Order), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that : (a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act; On the basis of written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; In our opinion and to the best of our information and according to the explanations given to us, the said financial statements
(b)
2.
(c)
(d)
3.
(e)
(f)
162
ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF LANDBASE INDIA LIMITED Referred to in paragraph 3 of the Auditors Report of even date to the members of Landbase India Limited on the financial statements for the year ended March 31, 2011. 1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets. The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year. The inventory has been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable. There is no inventory lying with third parties. In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business. On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. (b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess as at March 31, 2011 which have not been deposited on account of a dispute, are as follows : Amount (`) Period to which the amount relates A.Y. 2001-02 A.Y. 2003-04 A.Y. 2005-06 A.Y. 2005-06 Forum where the dispute is pending Income Tax Appellate Tribunal Income Tax Appellate Tribunal Income Tax Appellate Tribunal Commissioner of Income Tax (Appeals)
(b)
Name of the Nature of the Statute dues Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961
(c)
2.
(a)
(b)
(c)
10. The accumulated losses of the Company as at March 31, 2011 are not more than fifty percent of its net worth and it has incurred cash losses in the financial year ended on that date and in the immediately preceding financial year. 11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date. 12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company. 14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. 15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year. 16. The Company has not obtained any term loans. 17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment. 18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. 19. The Company has not issued any debentures and there are no debentures outstanding as at year end. 20. The Company has not raised any money by public issues during the year or in earlier years. 21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants
3.
(a)
(b)
4.
In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section. Accordingly, the question of commenting on transactions made in pursuance of such contracts or arrangements does not arise. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for any of the products of the Company. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including investor education and protection fund, employees state insurance, entertainment duty, income-tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities.
5.
6.
7. 8.
9.
163
1 2
Total II. APPLICATION OF FUNDS 1. Fixed Assets Gross Block Less : Depreciation Net Block Capital Work-in-Progress 2. Investments 3. Current Assets, Loans and Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances Less : Current Liabilities and Provisions a) Current Liabilities b) Provisions Net Current Liabilities
10 11
4. Profit and Loss Account Total Significant Accounting Policies 16 Notes to the Accounts 17 The Schedules referred to above form an integral part of the Accounts. This is the Balance Sheet referred to in our Report of even date. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants Gurgaon, 28th April, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Income from Operations Other Income
For and on behalf of the Board of Directors S. C. Sekhar B. Hariharan Managing Director Director
For the year ended 31st March, 2011 (`) 9,22,66,606 1,00,27,302 10,22,93,908
For the year ended 31st March, 2010 (`) 8,76,19,576 19,21,857 8,95,41,433
12 13
II. EXPENDITURE Raw Material, Merchandising etc. Consumed and Expenditure incurred on Construction Operating and Administrative Expenses Depreciation on Fixed Assets(net) III. PROFIT Profit /(Loss) before Taxation Current and Deferred Tax Profit /(Loss) after Taxation Profit /(Loss) Brought Forward Profit /(Loss) Carried Forward Earnings Per Share (Face Value ` 10/- each)
14 15 5
17 (6)
17 (5)
Significant Accounting Policies 16 Notes to the Accounts 17 The Schedules referred to above form an integral part of the Accounts. This is the Profit and Loss Account referred to in our Report of even date. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants Gurgaon, 28th April, 2011
For and on behalf of the Board of Directors S. C. Sekhar B. Hariharan Managing Director Director
164
Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants Gurgaon, 28th April, 2011
For and on behalf of the Board of Directors S. C. Sekhar B. Hariharan Managing Director Director
165
50,00,00,000
50,00,00,000
1,26,00,00,000
1,01,00,00,000
1,76,00,00,000 * Out of the above Nil (Previous Year 4,60,00,000) shares have been allotted by the way of rights issue to the exisiting shareholders. 2. RESERVES AND SURPLUS General Reserve 6,11,62,181 6,11,62,181 3. FIXED ASSETS (At Cost) [Refer Note (B) & (C) of Schedule 16 & Note 14 of Schedule 17]
GROSS BLOCK As at 1st April, 2010 (`) Additions (`) Deduction/ Adjustments (`) As at 31st March, 2011 (`) As at 1st April, 2010 (`) DEPRECIATION For the year** (`) Deduction/ Adjustments (`) As at 31st March, 2011 (`)
1,51,00,00,000
Particulars
Tangible Assets Land (Freehold) Building* Plant & Machinery-Others Plant & Machinery-Golf Course Office & Other Equipment Furniture & Fixtures Computers Vehicles Golf Carts Tents TOTAL Capital Work-in-Progress Previous Year
52,20,40,459 23,10,99,859 24,36,83,433 22,57,78,037 26,78,969 64,41,877 61,88,803 79,33,474 1,50,92,071 56,68,191 1,26,66,05,173 1,19,16,29,929
3,11,30,282 4,50,059 74,03,170 6,04,303 20,85,654 10,43,047 10,18,197 55,90,759 27,39,620 5,20,65,091 7,49,75,244
55,31,70,741 11,31,739 23,04,18,179 51,55,706 24,59,30,897 22,57,78,037 10,22,515 22,60,757 6,37,785 78,89,746 5,92,633 66,39,217 1,95,774 87,55,897 34,81,718 1,72,01,112 56,68,191 27,39,620 1,78,86,061 1,30,07,84,203 1,26,66,05,173
5,02,05,491 12,52,07,635 13,35,20,838 12,26,874 43,94,433 28,59,844 28,35,016 90,15,914 42,39,497 33,35,05,542 30,14,05,853
36,96,339 1,24,09,477 1,07,24,458 1,33,329 6,78,550 9,94,620 8,32,197 19,53,467 17,57,488 3,31,79,925 3,20,99,689
5,34,40,487 13,45,63,731 14,42,45,296 7,77,178 45,21,352 32,84,247 35,77,873 74,87,677 3,28,795 35,22,26,636 33,35,05,542
55,31,70,741 17,69,77,692 11,13,67,166 8,15,32,741 14,83,579 33,68,394 33,54,970 51,78,024 97,13,435 24,10,825 94,85,57,567 20,43,88,532 93,30,99,631
52,20,40,459 18,08,94,368 11,84,75,798 9,22,57,199 14,52,095 20,47,444 33,28,959 50,98,458 60,76,157 14,28,694 93,30,99,631 8,20,51,975
* Building includes Vehicular Roads of ` 45,95,709/- (Previous Year ` 45,95,709/- ) which have been fully depreciated over a period of five years as per Note C of Schedule 16. ** Depreciation includes ` 5,24,998 / - (Previous Year ` 21,443 / -) on Assets used for the Resort Project transferred to Capital Work-in-Progress and ` 1,16,058 / - (Previous Year ` Nil) transferred on Inventory on Golf Huts work in progress used for the same.
As at 31st March, 2011 (`) (`) 4. INVESTMENTS (Refer Note (E) of Schedule 16) (Unquoted - Long-Term, Non-Trade) Gilt Facilities India Private Ltd. 545 Redeemable Preference Shares (0.5%) of ` 1,00,000/each fully paid 5,45,00,000 Less : Provision for Diminution in Investments 5,44,99,900 Prime Golf Ranking Private Limited 150 Equity Shares of ` 1/- each fully paid
As at 31st March, 2010 (`) (`) 6. SUNDRY DEBTORS (Unsecured) Debts Outstanding for a period exceeding six months Considered Good Considered Doubtful Other Debts Considered Good Total Debts Less : Provision for doubtful debts
5. INVENTORIES [Refer Note (F) of Schedule 16] Merchandising Stock Food & Beverage Stock Stores and Spares Stock of Parking Slot/Servant Qtrs Work in Progress-Golf Huts
9,09,456 5,56,797 69,84,013 13,19,908 39,37,186 1,37,07,360 13,19,908 1,66,43,020 1,66,43,020 49,646 1,23,37,806 1,23,37,806
7. CASH AND BANK BALANCES Cash in hand Cheques in hand Balance With Scheduled Banks on Current Accounts Dividend Accounts (including interest) Fixed Deposit - Margin Money*
5,90,32,811 192 1,47,87,557 7,40,09,721 * Pledged against Guarantees and Letter of Credit issued by Bank
Less: Provision for Slow Moving stock of parking slot/servant quarters 13,19,908 Less: Provision for Slow Moving stock of stores and spares 49,646
8. OTHER CURRENT ASSETS (Unsecured - considered good) Interest Accrued on Fixed Deposits
21,12,291 21,12,291
13,67,568 13,67,568
166
As at 31st March, 2011 (`) (`) 9. LOANS AND ADVANCES (Unsecured) Advances recoverable in cash or in kind or for value to be received Considered good* Considered doubtful
14. RAW MATERIAL, MERCHANDISING, ETC. CONSUMED AND EXPENDITURE INCURRED ON CONSTRUCTION 1) Raw Material (Food & Beverage) Opening Stock Add : Purchases Less : Closing Stock 2) Merchandising Opening Stock Add : Purchases Less : Closing Stock 3) Laburnum Project Expenses Opening Balance Stock of Parking Slots & Servant Quarters and Material at Site Less : Provision for Parking Slots & Servant Quarter 4) Golf Hut Project Expenses Opening Balance Add : Expenses during the year Salaries, Wages and Bonus Travelling & Conveyance Vehicle Maintenance Legal & Professional Charges Printing & stationery Miscellaneous exp Depreciation Less : Closing Stock
For the year ended 31st March, 2011 (`) (`) 5,56,797 51,95,014 57,51,811 5,23,182 9,09,456 23,77,022 32,86,478 14,80,690
For the year ended 31st March, 2010 (`) (`) 6,34,478 55,52,575 61,87,053 5,56,797 11,61,900 6,02,477 17,64,377 9,09,456
7,79,91,854 1,33,64,810 6,49,767 7,86,41,621 1,33,64,810 Less Provision for doubtful advances 6,49,767 7,79,91,854 1,33,64,810 Security Deposits Considered good 5,30,128 13,15,128 Advance Tax (Net of Provision for tax amounting to ` 18,86,593 2,41,06,02 64,00,427 (Previous Year ` 18,86,593) 8,09,32,584 2,10,80,365
52,28,629
56,30,256
18,05,788
8,54,921
* Includes capital advances amounting to ` 6,49,54,041/- (Previous Year ` 13,47,153/-) 10. CURRENT LIABILITIES Sundry Creditors Total outstanding dues of creditors other than micro & small enterprises (Refer Note 4 on Schedule 17) 4,51,14,907 1,86,45,221 Other Liabilities 40,56,181 36,38,910 Investor Education and Protection Fund shall be credited by the following amount : Unpaid Dividend 157 157 Advances received against Golf Membership 3,40,36,642 3,04,63,786 Payments received against Golf Membership pending approval 20,000 32,18,133 Security Deposit against Golf Membership (Refer Note 3 on Schedule 17) 31,10,08,793 31,08,75,115 34,50,65,435 34,45,57,034 Less : Membership Subscription Receivable 2,10,09,662 32,40,55,773 2,01,61,382 32,43,95,652 37,32,27,018 11. PROVISIONS (Refer Note (G) of Schedule 16 and Note 15 of Schedule 17) Provision for Employee Benefits 18,28,935 18,28,935 For the year ended 31st March, 2011 12. INCOME FROM OPERATIONS Membership Fee Food and Beverage Sales Proshop Income Caddie Rental Cart Rental Green Fee Health Club and Other Facilities Tented Accomodation Rental Income Sponsorship Income 3,48,75,001 1,14,11,552 29,33,959 72,56,493 54,52,356 2,43,36,452 21,99,514 8,86,993 29,14,286 9,22,66,606 3,44,17,396 1,34,38,499 19,29,367 74,08,340 37,65,112 2,24,57,321 10,06,580 24,70,685 7,26,276 8,76,19,576 14,61,778 14,61,778 For the year ended 31st March, 2010 34,66,79,940
39,37,186 11,582 55,037 3,336 27,54,165 16,249 3,949 1,16,059 68,97,563 68,97,563 70,34,417
31,92,661
7,44,525
13. OTHER INCOME Interest received On Fixed Deposits Gross* Income Tax Refund Others Miscellaneous Receipts Sale of Scrap Liabilities Written Back *[Tax deducted at source ` 2,11,549/(Previous year - ` 88,717/-)]
15. OPERATING AND ADMINISTRATIVE EXPENSES (Refer Note 14 & 15 of Schedule 17) Salaries, Wages and Bonus 4,18,62,621 4,02,42,303 Contribution to Provident and Other Funds [Includes ` 4,20,660/(Previous Year ` 72,724/-) towards provision for Gratuity] 17,77,934 11,15,228 Welfare Expenses 10,17,351 4,46,57,906 10,35,246 4,23,92,777 Rent 5,93,745 7,64,728 Rates & Taxes 11,90,061 6,10,304 Travelling & Conveyance 29,08,655 30,99,703 Vehicle Maintenance 17,37,246 17,20,715 Communication Expenses 12,98,567 14,35,851 Power & Fuel 1,19,76,468 1,01,80,779 Consumption of Other Consumables 37,52,692 34,99,547 Insurance 11,92,824 7,86,486 Repair and Maintenance Building 7,69,749 6,83,145 Plant and Machinery 8,46,650 5,50,430 Others 32,16,482 48,32,881 18,83,966 31,17,541 Golf Course Maintenance [excluding debited to other heads ` 74,99,247/(Previous Year ` 53,21,852/-)] 51,56,170 50,40,585 Business Promotion 2,48,336 1,61,655 Printing & Stationery 53,083 51,407 Auditors Remuneration Audit Fee 6,61,800 6,61,800 Out of Pocket Expenses 55,600 7,17,400 57,900 7,19,700 Legal & Professional Charges 54,44,139 98,62,640 Advertisement & Sales Promotion 10,000 21,000 Hire Charges 12,16,052 12,25,029 Club Promotion Expenses 15,826 55,606 Sundry Balances written off 8,85,043 Loss on Assets sold & written off 34,15,657 Subscription fees written off 6,53,024 Filing Fees for increase in Authorised Capital 1,18,50,000 Miscellaneous Expenses 42,28,919 25,19,648 9,52,99,651 10,00,00,744
167
6. Accounting for Taxes on Income : In view of the significant carry forward income tax losses (business and depreciation) and there being no virtual certainty of profits in the near future, net deferred tax asset as at March 31, 2011 has not been recognised in the books of accounts. 7. Value of Imports calculated on CIF basis during the year in respect of : For the year ended March 31, 2011 (`) Capital Goods Total 75,60,411 75,60,411 For the year ended March 31, 2010 (`) 18,51,547 18,51,547 March 31, 2010 (`) 76,49,661 March 31, 2010 (`) 38,57,845
8. Expenditure in Foreign Currency (Cash Basis) : March 31, 2011 (`) Professional & Consultancy 68,59,370 9. Earnings in Foreign Exchange (Accrual) : March 31, 2011 (`) Service Income 35,58,156
168
a) Opening Stock Golf Equipment * Golf Apparel etc Total b) Purchases Golf Equipment * Golf Apparel etc Total c) Turnover (at selling price) Golf Equipment * Golf Apparel etc Total d) Closing Stock Golf Equipment * Golf Apparel etc Total
iii) Fellow Subsidiaries with whom transactions have taken place : M/s Fortune Park Hotels Limited M/s Green Acre Holdings Limited iv) Associate Companies with whom transactions have taken place : M/s International Travel House Limited M/s Classic Infrastructure Development Limited
9,981 23,77,022 9,981 23,77,022 12,217 22,60,435 12,217 22,60,435 13 6,72,888 6,286 8,07,802 6,299 14,80,690
*Quantitative details reflects only high value golf equipment v)Details of Transaction carried out during the financial year ended March 31, 2011 with related party in the ordinary course of business :
S. No Particular Holding Company Current Year 1 Sale of Services Previous Year Fellow Subsidiaries Current Year Previous Year Associates Current Year Previous Year
(in `)
2 3 4
8 9 10 11 i)
ii)
ITC Limited Purchase of Fixed Assets Fortune Park Hotels Limited Commission Income on Consignment Sales ITC Limited Purchase of services ITC Limited International Travel House Limited Fortune Park Hotels Limited Expenses Recovered ITC Limited Green Acre Holdings Limited Classic Infrastructure & Development Limited Fortune Park Hotels Limited International Travel House Limited Expenses Reimbursed ITC Limited Fortune Park Hotels Limited International Travel House Limited Project Expenses Reimbursed ITC Limited Fortune Park Hotels Limited International Travel House Limited Repayment of Advances received ITC Limited Repayment Loans ITC Limited Advances Received ITC Limited Balances Outstanding at the year end Debtors/Receivables Green Acre Holdings Limited Classic Infrastructure Development Limited International Travel House Limited Creditors/Payables ITC Limited Fortune Park Hotels Limited Green Acre Holdings Limited
39,47,268
10,87,529
11,17,702
17,549 5,364
9,301 4,111
169
14. The Board of Directors had approved a detailed plan in Financial Year 2009-10 of the Green Bharat Project (resort project) of the Company which is proposed to be completed by 2012-13. The Capital work-in-progress amounting to ` 20,43,88,532/- (Previous Year ` 8,20,51,975/-) includes ` 20,37,98,840/- (Previous Year ` 8,14,62,283/-) relating to the Resort project. Details of project management expenses directly attributable to resort project, transferred to capital work in progress relating to resort project are as under: Particulars Opening Balance as at April 1, 2010 Add : Expenses incurred Salaries, Wages and Bonus Welfare Expenses Rates & Taxes Travelling & Conveyance Vehicle Maintenance Power & Fuel Insurance Technical & Professional Charges Repairs & Maintenance - P & M Repairs & Maintenance - Others Printing & Stationary Miscellaneous Expenses Hire Charges Depreciation Sum Total Closing Balance as at March 31 2011 2010-11 8,14,62,283 2009-10 7,03,59,545
In accordance with Accounting Standard 15, actuarial valuation was done in respect of the aforesaid plans based on the following assumptions
Employees Gratuity Fund (Unfunded) Assumptions As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Discount Rate Salary Escalation Rate Normal Retirement age Attrition Rate
Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
Employees Gratuity Fund (A) Changes in the Present Value of Obligation As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Present value of Obligation as at April 1, 2010 Interest Cost Current Service Cost Benefits Paid Actuarial (gain)/ loss due to change in assumption/ interest guarantee Present value of Obligation as at March 31, 2011
Employees Gratuity Fund (B) Amount recognised in the Balance Sheet As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Liability at the end of the year Ending Assets Funded Status Asset/(Liability) Unrecognised Past Service Cost Asset / (Liability) recognised in the Balance Sheet
(9,00,003) (9,00,003)
(7,02,851) (7,02,851)
(6,30,127) (6,30,127)
(4,70,063) (4,70,063)
(4,49,746) (4,49,746)
170
Current Service Cost Interest Cost Net Actuarial (Gain)/Loss to be recognised Expense Recognised in P & L**
III. Other Long Term Benefits Leave Encashment Year ended March 31, 2011 Asset / (Liability) recognised in the Balance Sheet * Amount recognised in the Income Statement** (8,88,261) 3,12,720 Year ended March 31, 2010 (7,10,926) 2,49,355
Provision for employee benefits as disclosed under Schedule 11 includes ` 40,671/- (Previous Year ` 48,001/-) provided for short term leave of the employees. Leave encashment is included in Salary, Wages and Bonus and Contribution to Provident Fund, ESIC and Provision for Gratuity is included in Contribution to Provident and Other Funds (Refer Schedule 15)
**
18. Previous year figures have been regrouped and reclassified wherever necessary to conform to current years classification.
Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firms Registration Number : 012754N Chartered Accountants Gurgaon, 28th April, 2011
For and on behalf of the Board S. C. Sekhar B. Hariharan Managing Director Director
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 3 4 1 7 0 3 3 3 2 1 0 1 1 State Code 5 5 Application of Funds Net Fixed Assets 1 1 5 2 9 Net Current Assets (1 9 6 7 Accumulated Losses 8 6 4 9 Turnover 1 0 2 0 0 +
Date
Month
Year
1 6) 3 2
II. Capital raised during the year (Amount in ` Thousands) Public Issue N I L Bonus Issue N I L Rights Issue N I L Private Placement 2 5 0 0
Total Expenditure 1 3 4 8 7
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 8 2 1 1 Sources of Funds Paid up Capital 1 7 6 0 0 Reserves & Surplus 6 1 1 Unsecured Loans N I L Share Application Pending Allotment N I L Secured Loans N I L Total Assets 8 2 1 1
(Please tick appropriate box, + for Profit, for Loss) Dividend Rate % N I L
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) N . A . Item Code No. (ITC Code) Product Description N . A .
0 6
0 2
Audit Committee : Chairman: Mr. Rajiv Tandon, Members: Mr. B. Hariharan and Mr. Nakul Anand Permanent Invitees: Representative of Statutory Auditors
171
accounting standards with proper explanation relating to material departures; ii) selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
Gross operating Profit/ (Loss) Less: Interest and finance charges Profit / (Loss) before depreciation and taxation Less: Depreciation & Impairment loss Profit / (Loss) before Taxation Less: Provision for Taxation Profit / (Loss) after Taxation Brought forward from previous year Transfer from General Reserve Balance carried to Balance Sheet
iii) taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) prepared the annual accounts on a going concern basis. Dividend In view of the accumulated loss, your Board regrets that the Company is not in a dividend paying position. Particulars of Employees The Company has no employee in the category specified under Section 217 (2A) of the Companies Act, 1956. Subsidiary Companies BFIL Securities Limited Your Companys subsidiary is in the process of Members voluntary winding up. MRR Trading & Investment Company Limited With a view to acquire office space in Mumbai, by way of tenancy rights, your Company had acquired the entire equity share capital of MRR Trading & Investment Company Limited after obtaining the necessary approval from the Central Government. The tenanted space is being utilized as Corporate Office of your Company. Directors Sri Jagdish Singh retires at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. The Company has no activities relating to Conservation of Energy and Technology Absorption. There has been no foreign exchange earnings or outgo. Deposits The Company has not accepted any deposits during the year under the Companies (Acceptance of Deposits) Rules, 1975. As at 31st March 2011, the Company does not hold any Fixed Deposits. Acknowledgements: The Directors have pleasure in recording their appreciation of the assistance extended to the Company by various officials of the Central and State Governments and Commercial Banks. On behalf of the Board Kolkata, 30th April, 2011 P. K. Sen Director Jagdish Singh Director
The gross operating loss for the year ended March 31, 2011 was ` 43.57 lakhs, compared to a profit of ` 52.86 lakhs in the previous year and after providing depreciation, the net loss for the year was ` 46.08 lakhs as against a net profit of ` 50.15 lakhs in the previous year. Economic Scenario Recoveries of non-performing assets continued to be muted at ` 9.11 lakhs for the year. Your Company continues to vigorously pursue various legal cases initiated against defaulting clients. Operations During the last fourteen years your Company has concentrated on recoveries and has collected a total of ` 9,665.83 lakhs including by way of property settlements. The collections were largely utilized for repayment of debts ` 955.05 lakhs (Inter corporate deposits), ` 687.39 lakhs (Non-convertible debentures), ` 161.08 lakhs (Bill Rediscounting), ` 1,571.43 lakhs (Fixed Deposits), ` 528.67 lakhs (Financial Institutions), ` 4,371.72 lakhs (Banks) and ` 470 lakhs (Repayment of Loan from Holding Company), an aggregate of ` 8,745.34 lakhs. Your Company has prepared the annual accounts on a going concern basis and continues to concentrate its efforts towards recovery of its dues. The future plans for the Company will be reviewed post settlement of major outstandings. For AY 2002-2003, an appeal filed with the Commissioner Income Tax on imposition of penalty of ` 76.56 lakhs was disallowed with regard to negotiated out of court settlement with one of the defaulting parties. This matter is now in appeal before the Income Tax Appellate Tribunal Mumbai (ITAT) which is pending. Though your Company prima facie believes that it has a strong case, as a matter of abundant caution, a provision has been made in the books of the Company for the demanded amount. Your Company has no other external liabilities outside the ITC Group. Reserve Bank of India directions to NBFCs Your Company has made provisions as per the Reserve Bank of Indias Directions. Directors Responsibility Statement Your Directors have: i) followed, in the preparation of the annual accounts, the applicable
AUDITORS REPORT TO THE MEMBERS OF BFIL FINANCE LIMITED. 1. We have audited the attached Balance Sheet of BFIL Finance Limited (the Company) as at March 31, 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the Order), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. Further to our comments in paragraph 3 above, we report that:
2.
4.
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
172
ANNEXURE TO AUDITORS REPORT [Referred to in paragraph 3 of the Auditors Report of even date to the members of BFIL Finance Limited (the Company) on the financial statements as at and for the year ended March 31, 2011] 1. (a) The Company is generally maintaining adequate records to show the particulars of fixed assets, commensurate with the size of the company and the nature of its business. (b) All the fixed assets of the company are physically verified by the management according to a phased program designed to cover all the items over a period of two years, except for the leased assets where parties have defaulted in payment of lease rentals and the Company has initiated legal proceedings for recovering the dues, accordingly no physical verification of such leased assets have been carried out during the year. (c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year. 2. (a) The inventory has been physically verified by the management at the year end. However, in respect of stock-on-hire, the Company has initiated legal proceedings for recovering its dues and no physical verification was carried out. In our opinion, the frequency of verification of stock-in-trade is reasonable. (b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material. 3. The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable, with the appropriate authorities. (b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2011, which have not been deposited on account of a dispute, are as follows:
Name of the statute Nature of dues Amount (Rupees) Period to which Forum where the the amount relates dispute is pending 1996-97 to 1999-2000 1996-97 Joint Commissioner (A), Trade Tax, Kanpur Deputy Commissioner (A), Commercial taxes, Jaipur CIT(A), Mumbai
UP Trade tax Lease tax 37,21,426 Act, 1948 Rajasthan Sales tax Act, 1994 Income tax Act, 1961 Lease tax 4,88,211
76,56,074
A.Y 2002-03
8.
The companys accumulated losses as at March 31, 2011 are more than fifty percent of its net worth and has incurred cash losses during the financial year ended on date and in the immediately preceding financial year. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.
9.
10. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year. 11. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company. 12. In our opinion, the company has not entered into any transactions and contracts relating to dealing or trading in shares, securities, debentures and other investments during the year. However, the company as at March 31, 2011 holds certain securities as stock-in-trade and such securities have been held by the company in its own name. 13. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment. 14. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management. 15. The Clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), (iv), (viii), (xv), (xvi), (xviii), (xix) and (xx) of paragraph 4, of the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report)(Amendment) Order, 2004 are not applicable in the case of the company for the current year, since in our opinion there is no matter which arises to be reported in the aforesaid order.
4.
5.
6. 7.
For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Kolkata, April 30, 2011 Membership No: 50553
173
1 2
3 22,02,12,551 (12,36,54,186) (3,53,45,463) 6,12,12,902 2,81,72,250 (5,66,83,562) 4 3,06,66,715 2,39,03,734 67,62,981 67,62,981 1,000 8,29,760 5,66,654 33,77,752 47,75,166 7,66,146 76,56,074 (36,47,054) 60,33,32,791 67,54,11,077 3,27,01,590 4,30,23,750 3,06,66,715 2,39,03,734 67,62,981 67,62,981 1,000 11,57,788 1,45,281 13,04,069 5,94,001 7,10,068 59,87,24,863 67,54,11,077 23,15,68,059 (12,99,44,168) (3,75,32,804) 6,40,91,087 2,81,72,250 (5,93,10,941) 3,29,52,396 4,30,23,750
4.
Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets/(Liabilities) Profit and Loss Account - Debit Balance
9 10
Notes to the Accounts 13 Schedues 1 to 10, 13 and Statement on Significant Accounting Policies form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For Lovelock & Lewes Firm registration No. 301056E Chartered Accountants Partha Mitra, Partner Membership No. 50553 Kolkata, 30th April, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule INCOME Other Income EXPENDITURE Personnel, Operating and Administration Expenses Depreciation and Impairment loss For the year ended 31st March, 2011 52,24,974 52,24,974 (Amount in Rupees) For the year ended 31st March, 2010 69,92,944 69,92,944 On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary
11
12
PROFIT BEFORE TAXATION Provision for Taxation PROFIT AFTER TAXATION Surplus / (Deficit) Brought forward from previous year Balance carried to Balance Sheet Notes to the Accounts 13 Basic and Diluted Earnings per Share (`) Schedules 11 to 13 and Statement on Significant Accounting Policies form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. For Lovelock & Lewes Firm registration No. 301056E Chartered Accountants Partha Mitra, Partner Membership No. 50553 Kolkata, 30th April, 2011
On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary
174
3.
FIXED ASSETS
Gross Block (at cost) As at Additions Deductions As at 1st April, during during 31st March, 2010 the period the period 2011 Buildings Office Equipment Furniture and Fixtures Leasehold Improvement LEASED ASSETS Plant and Machinery Total Previous Year 19,63,24,915 23,15,68,059 23,70,72,144 1,13,55,508 18,49,69,407 9,94,81,170 1,08,59,437 29,68,955 1,48,05,658 66,09,094 1,08,59,437 29,68,955 66,09,094 As at 1st April, 2010 28,36,555 54,82,051 Depreciation Lease Terminal Adjustment
Net Block
On withdrawals As at As at As at As at As at For the and 31st March, 31st March, 31st March, 31st March, 31st March, year adjustments 2011 2011 2010 2011 2010 75,14,770 28,54,972 55,38,404 33,44,667 1,13,983 10,70,690 35,20,703 1,32,400 11,27,043 18,417 56,353
73,38,734 1,76,036
1,48,05,658 1,48,05,658
1,48,05,658
65,40,788 9,29,40,382 3,53,45,463 3,75,32,804 5,66,83,562 5,93,10,941 65,40,788 12,36,54,186 3,53,45,463 3,75,32,804 6,12,12,902 6,40,91,087 19,97,530 12,99,44,168 3,75,32,804 3,91,43,894 6,40,91,087 6,62,57,774 2,81,72,250 2,81,72,250
Capital Work-in-Progress
Leasehold Improvement represents the amount incurred on renovation of the premises of the wholly owned subsidiary, MRR Trading & Investment Co. Ltd. which holds the tenancy rights. Capital Work-in-Progress represents ` 2,81,72,250 (2010 : ` 2,81,72,250) being value of property received towards settlement of dues pending registration. Depreciation as at the year end include impairment loss as under : (Amount in Rupees) As at 31st March, 2011 Buildings Furniture and Fixtures Total 32,00,858 48,86,754 80,87,612 31st March, 2010 32,00,858 48,86,754 80,87,612
(Amount in Rupees) As at 31st March, 2011 4. INVESTMENTS Unquoted (At Cost) Long Term:
Government / Trust Securities (other than trade) National Savings Certificate fully paid (deposited with Government Authorities) Kisan Vikas Patra fully paid (deposited with Government Authorities) Less : Provision for doubtful investments Trade Investments: Subsidiary Company MRR Trading & Investment Company Limited (includes 50,000 Equity Shares of ` 10/- each fully paid) Less: Diminution in value of investments 5,06,44,520 5,06,44,520
(Amount in Rupees) As at 31st March, 2011 5. STOCK-IN-TRADE (Valued at Cost or Market Value whichever is lower) Stock of Shares & Securities Quoted - Fully paid 3 Equity Shares of ` 10/- each of Ultra Tech CemCo Limited Unquoted- Fully paid 5,40,000 Optionally Fully Convertible Debentures of G-Tech Stone Limited 5,94,00,000 Less: Provision for erosion in value 5,94,00,000 As at 31st March, 2010
5,000
5,000
1,000
1,000
5,000
5,000
10,000 10,000
10,000 10,000
1,000
6. SUNDRY DEBTORS (Unsecured, considered doubtful) Over 6 months : Lease and hire purchase debtors Trade debtors
175
8,29,760
11,57,788
The Company has not recognized the net deferred tax assets, in respect of accumulated losses and unabsorbed depreciation in view of the uncertainty of availing the benefit in future. The earnings considered in ascertaining the Companys Earnings Per Share (EPS) comprise net profit / (loss) after taxation. The number of shares used in computing basic and diluted EPS is the weighted average number of shares outstanding during the year. Profit / (Loss) after Taxation (Amount in `) Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (Face value - ` 10/- per share) 7. 2010-11 (46,07,928) 2009-10 50,14,842
Information with regard to matters in clauses 3, 4(A), 4(C) and 4(D) of part II of Schedule VI of the Companies Act, 1956 to the extent that they are either Nil or not applicable to the Company, have not been given. Segment Reporting The Company operates in a single business segment and hence no further disclosure is being made. Related Parties Disclosures: a) Relationships: Holding Company - ITC Limited Subsidiary Company MRR Trading & Investment Company Limited b) Key Management Personnel Mr. Anil Seth - Non-Executive Director Mr. P. K. Sen - Non-Executive Director Mr. Jagdish Singh - Non-Executive Director Mr. V. Radhakrishnan - Manager & Company Secretary c) Disclosure of transactions between the Company and related parties and the status of outstanding balances as at the year end :(Amount in Rupees)
Particulars Holding Company Repayment of unsecured loan Rent Balance as at the year end Receivables 0% Non-Convertible Debentures Loans from Holding Company Subsidiary Company Re-imbursement of expenses 2010-11 NIL 42,00,000 33,65,400 15,00,00,000 32,54,11,077 1,70,463 2009-10 45,00,000 13,50,000 NIL 15,00,00,000 32,54,11,077 1,70,179
8. 9.
* Includes ` 76,56,074 towards provision for disputed penalty for the A. Y. 2002 - 03 under Income Tax Act, 1961 13. NOTES TO THE ACCOUNTS 1. The financial statements have been prepared on a going concern basis. There are no operational activities. The Company continued recovery of its dues in the normal course of business. The Company will examine options for further business opportunities, on improvement of collections from debtors. No provision has been made for Income Tax during the current financial year because of carry forward loss under Income Tax Act.
176
(5,94,00,000)
11. Previous years figures have been regrouped wherever necessary to conform to the current years classification. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES GENERAL These accounts have been prepared under the historical cost convention and on accrual system based on the principle of going concern. Income recognition and provisioning for Non-performing Assets, consisting of Lease and Hire Purchase Assets, Bills Discounted and Other Loans and Advances, is done as per Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 and as amended from time to time. REVENUE RECOGNITION As per the directives of the Reserve Bank of India, revenue is recognized upon realization, on Non-Performing Assets. Revenue is not recognized on the grounds of prudence until realized in respect of liquidated damages, penalties and delayed payment charges, as recovery of the amounts is uncertain. INVESTMENTS All investments are stated at cost i.e. cost of acquisition, inclusive of expenses incidental to acquisition where applicable. Provision for any permanent diminutions in value of investments is made which is considered to be appropriate. Income from investments is stated in revenue account in the year in which it is accrued and at gross value. STATEMENT REGARDING SUBSIDIARY COMPANIES: Pursuant to Section 212(1) and (3) of the Companies Act, 1956 MRR TRADING & INVESTMENT COMPANY LIMITED (a) Holding Companys interest: 50,000 Equity Shares of ` 10/- each, fully paid-up (b) Net aggregate amount of Subsidiarys profit/(loss) not dealt with in the Holding Companys accounts: (Amount in `) (i) for the Subsidiarys financial year ended March 31, 2011 Nil STOCK-IN-TRADE Stock of securities are stated at cost or market price whichever is lower. Stock-on-hire is valued at agreement value less amounts receivable. FIXED ASSETS All fixed assets including assets given on lease are valued at cost inclusive of direct and incidental expenses related to acquisition. Depreciation of fixed assets is provided on written down value method on pro-rata basis in accordance with the rates prescribed under amended Schedule XIV of the Companies Act, 1956. Leasehold improvements (excluding electrical installations) are being depreciated @ 5% on written down value and Electrical Installations included in Leasehold improvements are being depreciated @ 15%. All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment loss (being the excess of carrying value over the recoverable value of the asset) is charged to the profit and loss account in the respective financial years. The impairment loss recognized in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon re-assessment in the subsequent years.
(Amount in `) (ii) for the previous financial years (4,16,160) (c) Net aggregate amount of Subsidiarys profit/(loss) dealt with in the Holding Companys accounts: (i) for the Subsidiarys financial year ended March 31, 2011 Nil (ii) for the previous financial years Nil
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date
0 1 3 1 6 4 6 6 2 0 3 1 1
State Code
1 1
Investments
4 3 0 2 4
Misc. Expenditure
Date II.
Month
Year
Accumulated Losses
6 0 3 3 3 3
Rights Issue
IV.
Bonus Issue
Private Placement
III.
(Please tick appropriate box + for profit, for loss) Earnings per Share (`)
( 0 . 2 3 )
Total Assets
6 7 5 4 1 1
V.
Generic Names of Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC Code)
N O T N O T A P P L I C A B L E A P P L I C A B L E
Product Description
Secured Loans
0
Unsecured Loans
4 7 5 4 1 1
Kolkata, 30th April, 2011 Audit Committee : Mr. Anil Seth, Chairman, M/s. P. K. Sen, J. Singh Members.
On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary
177
(6,60,376) (52,68,304)
(24,01,894) 26,12,948
The above cash flow statement has been prepared under the Indirect Method as set out in AS-3 on Cash Flow Statements. The comparitive figures for the previous year have been re-arranged to conform with the revised presentation of the accounts. This is the Cash Flow Statement referred to in our report of even date.
For Lovelock & Lewes Firm registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No. 50553 Kolkata, April 30, 2011
On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary Kolkata, April 30, 2011
SCHEDULE TO THE BALANCE SHEET OF A NON-DEPOSIT TAKING NON-BANKING FINANCIAL COMPANY AS AT 31ST MARCH, 2011 [as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Prudential Norms (Reserve Bank) Directions, 2007] Particulars Liabilities side: Loans and advances availed by the NBFCs inclusive of interest accrued thereon but not paid:
(a) Debentures: Secured : Unsecured (from Holding Company) (other than falling within the meaning of public deposits) (b) Deferred Credits (c) Term Loans (d) Inter-corporate loans and borrowing (from Holding Company) (e) Commercial Paper (f) Other Loans (` In lakhs) Amount outstanding (ii) Stock on hire including hire charges under sundry debtors: (a) Assets on hire (b) Repossessed Assets (iii) Other loans counting towards AFC activities (a) Loans where assets have been repossessed (b) Loans other than (a) above 4. Nil Nil 3,254.11 Nil Nil Nil Nil Nil Nil Nil Break-up of Investments: Current Investments: (1) Quoted: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual funds (iv) Government Securities (v) Others (2) Unquoted: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual funds (iv) Government Securities (v) Others Long Term investments: Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
(` In lakhs)
Amount outstanding Nil 1,500.00 Amount overdue Nil Nil
1.
Assets side:
Amount outstanding
2.
Break-up of loans and advances including bills receivables [other than those included in (4) below]:
(a) Secured (b) Unsecured Nil 978.87
3.
Break-up of Leased Assets and stock on hire and other assets counting towards AFC activities
(i) Lease assets including lease rentals under sundry debtors (a) Financial lease (b) Operating lease
1.
961.09 Nil
Quoted:
(i) Shares: (a) Equity (b) Preference Nil Nil
178
(` In lakhs) 6. Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):
Category Market value/Break up or fair value or NAV Book value (Net of provisions)
2.
1.
5.
Borrower group-wise classification of all assets financed as in (2) and (3) above : Category 1. Related Parties** (a) Subsidiaries (b) Companies in the same group (c) Other related parties Other than related parties TOTAL Amount net of provisions Secured Unsecured Total Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 7.
Related Parties** (a) Subsidiaries (b) Companies in the same group (c) Other related parties 2. Other than related parties TOTAL ** As per Accounting Standard of ICAI
2.
179
2.
3.
4.
ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of the Auditors Report of even date to the members of MRR Trading & Investment Company Limited on the financial statements for the year ended March 31, 2011 1. The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act. 2. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section. Accordingly, commenting on transactions made in pursuance of such contracts or arrangements does not arise. 3. The companys accumulated losses as at March 31, 2011 is more than fifty percent of its net worth and has not incurred cash losses during the financial year ended on date and in the immediately preceding financial year. 4. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management. The Clauses (i)(a), (i)(b), (i)(c), (ii)(a), (ii)(b), (ii)(c), (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), (iv), (vi), (vii), (viii), (ix)(a), (ix)(b), (xi), (xii), (xiii)(a), (xiii)(b), (xiii)(c), (xiii)(d), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of paragraph 4, of the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report)(Amendment) Order, 2004 are not applicable in the case of the company for the current year, since in our opinion there is no matter which arises to be reported in the aforesaid order. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553
5.
180
SOURCES OF FUNDS 1. Shareholders Funds a) Capital TOTAL APPLICATION OF FUNDS 1. Current Assets, Loans and Advances a) Cash and Bank Balances b) Loans and Advances Less: Current Liabilities and Provisions a) Current Liabilities - Sundry Creditors 2. Net Current Assets Debit Balance in Profit & Loss Account TOTAL Notes to the Accounts Schedules 1 to 5 form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Kolkata, April 30, 2011 On behalf of the Board 5 2 3 89,956 7,120 97,076 13,236 83,840 4,16,160 5,00,000 89,956 7,120 97,076 13,236 83,840 4,16,160 5,00,000 1 5,00,000 5,00,000 5,00,000 5,00,000
P. K. Sen M. Yelamanda
Director Director
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule For the year ended 31st March, 2011 (`) (`) 83,592 61,872 11,625 138 13,236 1,70,463 1,70,463 (4,16,160) (4,16,160) 5 0.00 0.00 81,696 61,872 13,309 66 13,236 1,70,179 1,70,179 (4,16,160) (4,16,160) For the year ended 31st March, 2010 (`) (`) 3,67,612 (3,67,612)
INCOME Income Less: Refunded to the Holding Company TOTAL EXPENDITURE Rent Rates and Taxes Water Charges Bank Charges Audit Fees Less: Expenses reimbursed by the Holding Company TOTAL Profit/(Loss) Before Taxation Provision for Taxation Profit/(Loss) After Taxation Balance Carried Forward from previous year Balance Carried to Balance Sheet Notes to the Accounts Earnings Per Share Schedule 5 forms an integral part of the Profit and Loss Account. This is the Profit & Loss Account referred to in our report of even date. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Kolkata, April 30, 2011
P. K. Sen M. Yelamanda
Director Director
181
1. The financial statements have been prepared on a going concern basis. 2. Significant Accounting Policies (a) The accounts have been prepared on historical cost basis. (b) All revenue and expenses are accounted on accrual basis. 3. 4. Segment Reporting - The Company operates in a single business segment and hence no further disclosure is being made. Related Parties Disclosures : a) Relationships : Holding Company - BFIL Finance Limited b) Key Management Personnel Mr. P. K. Sen Mr. J. Singh c) Director Director Director
5,00,000
5,00,000
Mr. M. Yelamanda -
2.
CASH AND BANK BALANCES Balances with Scheduled Bank - on Current Account 89,956 89,956 89,956 89,956
Disclosure of transactions between the Company and related parties and the status of outstanding balances as at the year end. Particulars Holding Company BFIL Finance Limited Expenses Re-imbursed Receivables as at the year end 2010-11 (`) 2009-10 (`)
3.
LOANS AND ADVANCES Deposits with Government, Public Bodies, etc. 7,120 7,120 7,120 7,120 5.
1,70,463
1,70,179
4.
CURRENT LIABILITIES - SUNDRY CREDITORS Dues to Micro, Small and Medium enterprises Others 13,236 13,236 13,236 13,236
The earnings considered in ascertaining the Companys Earnings Per Share (EPS) comprise net Profit /Loss after Taxation. The number of shares used in computing basic and diluted EPS is the weighted average number of shares outstanding during the year.
Description
Profit/(loss) after taxation (Amount in `) Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (face value - ` 10/- per share) 6.
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date
1 1 3 1 2 3 2 5 9 0 3 1 1
State Code
1 1
Investments
Misc. Expenditure
Date II.
Month
Year
Accumulated Losses
4 1 6
Rights Issue
IV.
Bonus Issue
Private Placement
III.
(Please tick appropriate box + for profit, for loss) Earnings per Share (`)
0 . 0 0
Total Assets
5 0 0
V.
Generic Names of Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC CODE) Product Description
N O T N O T A P P L I C A B L E A P P L I C A B L E
Secured Loans
Unsecured Loans
182
The above cash flow statement has been prepared under the Indirect Method as set out in AS-3 on Cash Flow Statements. The comparitive figures for the previous year have been re-arranged to conform with the revised presentation of the accounts.
This is the Cash Flow Statement referred to in our report of even date For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Kolkata, April 30, 2011
183
184
Y. C. Deveshwar Chairman
Annexure I Sl. No. Name of Director Number of Ordinary shares of NRs. 100/- each held singly and/or jointly as on 32nd Asadh 2067 (16th July 2010) Nil Nil Nil Nil 67,212 600 Nil
1. 2. 3. 4. 5. 6. 7.
Annexure II THE AMOUNT OF REMUNERATION, ALLOWANCE AND FACILITIES PAID TO DIRECTOR, MANAGING DIRECTOR, CHIEF EXECUTIVE AND OFFICIALS During the financial year 2066/67, the following amounts were paid to the Directors. Board Meeting Fee paid NRs. 58,824 (` 36,765) Incidental expenses paid NRs. 40,000 (` 25,000) Payment to/on behalf of Managing Director for the financial year 2066/67: Salary Allowances NRs. 49,20,000 (` 30,75,000) NRs. 60,34,809 (` 37,71,756)
In addition to the above, the Company also provided the following to the Managing Director: Fully furnished accommodation with gas, electricity, water, three domestic helpers, furnishings and necessary security at his residence. Airfares incurred for the Managing Director and his family for the purpose of Leave Travel & Reporting Trips. Entrance fees and annual subscription charges for two clubs. Personal accident insurance. Company car with driver and telephone at residence. Payment to/on behalf of officials for the financial year 2066/67: Salary NRs. 1,00,69,580 (` 62,93,488) Allowances NRs. 1,14,44,917 (` 71,53,073) In addition to the above, some of the officials have been provided the following as per their terms of appointment: Accommodation with gas, electricity, water, security guard, domestic help, gardener and furnishings. Airfares incurred for the Managers and their families for the purpose of leave Travel & Reporting Trips. Entrance fees and annual subscription charges for clubs as applicable. Personal accident insurance. Company car with driver and telephone at residence. Annexure III MANAGEMENT EXPENSES The expenses incurred by the Company for its management and administration for the financial year 2066/67 comprising telephone, telex, fax, legal and service fees, bank charges, rates & taxes, printing & stationery, entertainment, rent, electricity, fuel & water, repair & improvement, travel & conveyance, insurance premium, postage, board meeting fees, donations and charity, books & periodicals, miscellaneous expenses etc. amounted to NRs. 44,07,35,185 (` 27,54,59,491).
AUDITORS REPORT TO THE SHAREHOLDERS OF SURYA NEPAL PRIVATE LIMITED We have audited the accompanying Balance Sheet of Surya Nepal Private Limited as at Asadh 32, 2067 (July 16, 2010), the related Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with Nepal Standards on Auditing or relevant practices. Those Standards or relevant practices require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. We report that: a) We have obtained all the information and explanations which to the best of our knowledge and belief were considered necessary for the purpose of our audit; b) The enclosed Balance Sheet, Profit and Loss Account and the Statement of Cash Flow have been prepared as per the provisions of Company Act, 2063 of Nepal and the same are in conformity with the books of account maintained by the Company; c) The books and records of the Company have been maintained accurately as required by law; d) In our opinion and to the best of our information and according to the explanations given to us the enclosed financial statements read with the notes attached thereto, in accordance with Nepal Accounting Standards or relevant practices, give a true and fair view of: i) in the case of Balance Sheet, the state of affairs of the Company as at Asadh 32, 2067 (July 16, 2010). ii) in the case of Profit & Loss Account, the profit of the Company for the year ended on Asadh 32, 2067 (July 16, 2010). iii) in the case of the Statement of Cash Flow, the cash flows of the Company for the year ended on Asadh 32, 2067 (July 16, 2010). In our opinion and to the best of our information and according to the explanations given to us and from our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in Nepal, we have neither come across cases where the Board of Directors or any member thereof or any employee of the Company has acted contrary to the provisions of Law relating to the accounts or committed any misappropriation or caused loss or damage to the Company nor any fraud relating to the accounts committed in the Company.
e)
Nem Lal Amatya Partner N Amatya & Co. Chartered Accountants Date : 18th Aswin 2067 (4th October 2010) Place : Kolkata
185
Schedule CAPITAL & LIABILITIES SHARE CAPITAL AND RESERVES (a) Share Capital (b) Reserves & Surplus Total ASSETS (1) Fixed Assets (a) Gross Block (b) Less : Accumulated Depreciation (c) Net Block (d) Capital Work-in-Progress and In-transit (2) Investments (3) Deferred Tax Asset (Net) (Refer 2G of Schedule 17) (4) Current Assets (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Loans and Advances Total Less: Current Liabilities and Provisions (a) Liabilities (b) Provisions Total Net Current Assets Total Notes to the Accounts and Contingent Liabilities 17 9 10 5 6 7 8 4 3 1 2
The schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date.
K N Grant Director Nem Lal Amatya Partner N. Amatya & Co. Chartered Accountants
Y C Deveshwar Chairman Partha Mitra Partner Lovelock & Lewes Chartered Accountants
186
Schedule Gross Revenue Less: Duties Net Sales Raw Materials Consumed, etc. Cost of Sales Gross Profit Other Income Total Manufacturing, Admin, Selling Expenses etc. Provision For Employees Bonus Operating Profit Depreciation Loss on Fixed Assets sold / discarded (Net) Profit before Taxation Provision for Taxation Profit after Taxation Transferred from General Reserve Available for Appropriation Appropriation Provision For Employees Housing Interim Dividend Second Interim Dividend Proposed Final Dividend Balance Carried Over to Balance Sheet 11 12
17
The schedules referred to above form an integral part of the Profit & Loss Account. This is the Profit & Loss Account referred to in our Report of even date.
K N Grant Director Nem Lal Amatya Partner N. Amatya & Co. Chartered Accountants
Y C Deveshwar Chairman Partha Mitra Partner Lovelock & Lewes Chartered Accountants
187
Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) Cash and Cash Equivalents (Opening Balance) Cash and Cash Equivalents (Closing Balance) Cash and Cash Equivalents Comprises: Cash and Bank Balances Unrealised Loss/(Gain) on Foreign Currency Cash and Cash Equivalents
91,66,48,884 8,93,315
57,29,05,553 5,58,322
1,82,00,46,229 (19,76,097)
1,13,75,28,893 (12,35,061)
Total
91,75,42,199
57,34,63,875
1,81,80,70,132
1,13,62,93,832
K N Grant Director Nem Lal Amatya Partner N. Amatya & Co. Chartered Accountants
Y C Deveshwar Chairman Partha Mitra Partner Lovelock & Lewes Chartered Accountants
188
Balance as at 31st Asadh 2065 (15th July 2008) Net Profit for the year Transfer to Employees Housing Reserve Issue of Bonus Shares Transfer to Profit and Loss Appropriation Account Dividend Transfer to Reserve Total Balance as at 31st Asadh 2066 (15th July 2009) Net Profit for the year Transfer to Employees Housing Reserve Dividend Transfer to Reserve Total Balance as at 32nd Asadh 2067 (16th July 2010)
33,60,00,000
21,00,00,000
76,13,300 2,34,21,75,719 1,46,38,59,824 (1,68,00,00,000)(1,05,00,00,000) (65,08,79,260) (40,67,99,538) 76,13,300 76,13,300 1,12,96,459 21,89,526 21,89,526 1,34,85,985 70,60,286 13,68,454 13,68,454 84,28,740
1,68,00,00,000 1,05,00,00,000
(2,33,08,79,260)(1,45,67,99,538) 11,60,52,244
1,97,43,46,180 1,23,39,66,363 1,97,43,46,180 1,23,39,66,363 9,85,97,909 (15,77,56,654) (9,85,97,909) 9,85,97,909 23,19,60,247 (21,89,526) (13,68,454) (1,81,44,00,000)(1,13,40,00,000)(1,81,44,00,000)(1,13,40,00,000)
2,01,60,00,000 1,26,00,00,000
2,41,28,03,659 1,50,80,02,287
SCHEDULES TO THE ACCOUNTS Figures in NRs. As at 32nd Asadh 2067 (16th July 2010) SCHEDULE 1 : SHARE CAPITAL Authorised 6,50,00,000 Ordinary Shares of NRs. 100.00 each Issued, Subscribed & Paid up 2,01,60,000 Ordinary Shares of NRs. 100.00 each, fully paid Out of the above; 1. 2. 3. 4. 1,68,00,000 Ordinary Shares were issued as fully paid up bonus shares in 2065/66(2008/09). 28,00,000 Ordinary Shares were issued as fully paid up bonus shares in 2060/61(2003-04). 2,80,000 Ordinary Shares were issued as fully paid up bonus shares in 2052/53 (1995-96). 1,18,94,400 Ordinary Shares are held by the Holding Company, ITC Limited. 2,01,60,00,000 2,01,60,00,000 1,26,00,00,000 1,26,00,00,000 2,01,60,00,000 2,01,60,00,000 1,26,00,00,000 1,26,00,00,000 6,50,00,00,000 4,06,25,00,000 6,50,00,00,000 4,06,25,00,000 Figures in ` As at 32nd Asadh 2067 (16th July 2010) Figures in NRs. As at 31st Asadh 2066 (15th July 2009) Figures in ` As at 31st Asadh 2066 (15th July 2009)
Reconciliation of number of Shares outstanding: Number of Shares At the beginning of the year Add: Issue of Bonus Share At the end of the year 2,01,60,000 2,01,60,000 33,60,000 1,68,00,000 2,01,60,000
Figures in NRs. As at 31st Asadh 2066 (15th July 2009) SCHEDULE 2 : RESERVES & SURPLUS Capital Reserve Revaluation of Land Revenue Reserve General Reserve Housing Fund Provision for Employee Housing Surplus Profit & Loss Account 23,68,57,479 21,33,79,740 1,12,96,459 1,21,81,280
Figures in `
Figures in NRs.
Figures in `
Figures in NRs.
Figures in `
Addition
Addition
Withdrawal
As at As at 32nd Asadh 2067 32nd Asadh 2067 Withdrawal (16th July 2010) (16th July 2010)
21,89,526 21,89,526
13,68,454 13,68,454
189
190
GROSS BLOCK ` NRs. Withdrawals/ Adjustments 7,60,42,520 8,47,762 23,63,951 46,70,808 27,99,586 8,67,24,627 14,32,47,505 22,99,72,132 88,23,56,160 55,14,72,600 2,93,53,63,403 1,83,46,02,127 1,10,13,80,892 14,37,32,582 3,35,14,69,043 2,09,46,68,152 1,23,51,49,076 8,95,29,691 36,06,01,827 22,53,76,142 77,19,68,172 68,83,63,057 5,42,02,891 2,99,08,67,216 1,86,92,92,010 1,23,51,49,076 77,19,68,172 22,44,55,190 22,44,55,190 13,79,83,391 17,49,741 5,25,78,018 3,28,61,260 1,48,00,993 92,50,620 30,63,441 29,19,255 4,90,97,420 3,06,85,888 2,70,00,537 1,68,75,336 43,22,405 14,77,469 6,60,12,749 4,12,57,969 91,69,867 57,31,167 43,58,240 27,23,900 27,01,503 19,14,651 14,02,84,494 14,02,84,494 8,62,39,619 5,29,851 2,64,73,908 1,65,46,192 1,14,53,354 71,58,345 19,85,299 12,40,812 4,75,26,575 2,09,53,76,681 1,30,96,10,426 1,08,43,24,353 67,77,02,721 19,72,61,429 12,32,88,393* 6,77,54,154 7,49,733 10,09,168 43,60,954 21,19,737 7,59,93,746 7,59,93,746 42,15,207 48,01,40,449 30,00,87,780 8,83,99,972 5,52,49,983 1,34,64,376 84,15,235 22,11,87,991 13,82,42,495 Withdrawals/ Adjustments For the year For the year Withdrawals/ Adjustments Withdrawals/ Adjustments NRs. NRs. Additions 4,74,85,738 1,53,87,884 2,80,25,152 10,80,319 73,34,432 24,40,169 74,18,405 10,91,72,099 29,46,26,508 40,37,98,607 95,83,25,445 NRs. As at 32.03.2067 (16.07.2010) NRs. As at 31.03.2066 (15.07.2009) ` ` ` DEPRECIATION NET BLOCK ` As at 32.03.2067 (16.07.2010) ` As at 31.03.2066 (15.07.2009) NRs . As at 32.03.2067 (16.07.2010) 10,18,64,348 4,23,46,346 1,21,38,31,628 4,68,583 6,30,730 27,25,596 13,24,836 1,26,88,920 1,25,18,939 2,69,61,988 1,57,44,697 4,74,96,091 1,38,36,10,520 4,74,96,091 1,38,36,10,520 26,34,504 1,23,51,49,076 ` As at 32.03.2067 (16.07.2010) 6,36,65,218 75,86,44,768 79,30,574 78,24,337 1,68,51,243 98,40,435 NRs. As at 32.03.2067 (16.07.2010) 22,11,87,991 37,82,76,101 88,15,45,053 1,37,84,988 5,34,93,810 2,21,35,432 3,68,33,321 ` As at 32.03.2067 (16.07.2010) 13,82,42,495 23,64,22,562 NRs. As at 31.03.2066 (15.07.2009) 14,52,10,811 36,71,19,862 55,09,65,658 1,04,22,54,605 86,15,618 3,34,33,632 1,38,34,645 2,30,20,825 1,41,39,803 4,74,71,745 2,28,63,421 2,87,07,160 ` As at 31.03.2066 (15.07.2009) 9,07,56,757 22,94,49,913 65,14,09,128 88,37,379 2,96,69,839 1,42,89,638 1,79,41,976 86,47,56,575 1,60,72,56,696 1,00,45,35,435 1,66,77,67,407 1,04,23,54,630 36,06,01,827 22,53,76,142 3,24,46,920 2,02,79,325 86,47,56,575 1,96,78,58,523 1,22,99,11,577 1,70,02,14,327 1,06,26,33,955 77,19,68,172 1,70,02,14,327 1,06,26,33,955
NRs.
Description
` As at 31.03.2066 (15.07.2009)
Additions
14,52,10,811
9,07,56,757
7,59,77,180
Buildings
1.65
45,55,19,834
28,46,99,896
2,46,20,615
4,48,40,243
2,55,93,157
1,59,95,724
17,28,513
Vehicles
5.30
5,66,41,612
3,54,01,006
1,17,35,088
Computers
7.30
4,98,63,958
3,11,64,974
39,04,270
Office Equipments
5.30
4,35,08,153
2,71,92,596
1,18,69,451
Total
2,90,29,16,483 1,81,43,22,802
17,46,75,360
3,24,46,920
2,02,79,325
47,14,02,412
Grand Total
2,93,53,63,403 1,83,46,02,127
64,60,77,772
Previous Year
* Includes additional depreciation amounting NRs. 4,04,53,995 (` 2,52,83,747) arising from change in estimated useful life of certain plant and machinery.
2,66,137 21,60,000 24,23,264 10,26,983 15,63,247 3,60,69,509 5,91,03,177 10,26,12,317 10,26,983 10,15,85,334 1,20,394 1,99,00,000 1,82,92,668 54,026 87,82,81,796 91,66,48,884
1,66,336 13,50,000 15,14,540 6,41,864 9,77,029 2,25,43,443 3,69,39,486 6,41,32,698 6,41,864 6,34,90,834 75,246 1,24,37,500 1,14,32,918 33,766 54,89,26,123 57,29,05,553
6,29,249 12,45,925 10,95,970 24,70,751 6,21,25,275 5,51,67,298 12,27,34,468 10,95,970 12,16,38,498 1,04,257 4,45,639 2,02,57,739 53,114 1,79,91,85,480 1,82,00,46,229
3,93,281 7,78,703 6,84,981 15,44,219 3,88,28,297 3,44,79,561 7,67,09,042 6,84,981 7,60,24,061 65,161 2,78,524 1,26,61,087 33,196 1,12,44,90,925 1,13,75,28,893
191
SCHEDULE 11 : GROSS REVENUE Domestic : Cigarette Garments Matches Exports : Garments SCHEDULE 12 : DUTIES Excise Duty Sticker Charges SCHEDULE 13 : RAW MATERIALS CONSUMED ETC. Leaf Casing Materials Wrapping Materials Fabrics, Trims etc Purchase and Contract Manufacturing Charges Adjustment of overheads loaded, etc. on Finished Goods Opening Closing
Note : Includes write down of inventories amounting to NRs. 1,31,63,896 (` 82,27,435) {(2065-66 NRs. 36,43,460 (` 22,77,163)} SCHEDULE 14 : OTHER INCOME Interest Received Less : Interest paid on Trading Debts Interest on Short Term /Call Deposit with Bank Gain on Foreign Exchange (Net) Interest from Investments Liability no longer required written back Provision for doubtful advance/debts written back Miscellaneous Income SCHEDULE 15 : MANUFACTURING, ADMIN, SELLING EXPENSES ETC. Salaries, Wages & Allowances Contribution to Provident Fund Labour & Staff Welfare Uniform Rent Electricity, Fuel & Water Rates & Taxes Insurance Premium Repairs & Improvement - Depreciable Assets Safety & Pollution Control Cost Maintenance to Other Properties Consumable Stores & Spares Freight Product Development Advertising Travel & Conveyance Training & Recruitment Expenses Postage, Telephone, Telex, Fax etc. Bank Charges and Commission Audit Fees Legal Fees Printing & Stationery Consultancy, Service Charges & Other Fees Licence Fee Entertainment Sales Promotion Board Meeting Fees Donations & Charity Books & Periodicals Membership Fee Claims and Advances Written off Provision for Doubtful Debts and Advances Provision for Retirement Benefits Loss on Foreign Exchange (Net) Miscellaneous Expenses {Refer 2F of Schedule 17} SCHEDULE 16 : PROVISION FOR TAXATION Current Tax Deferred Tax 67,68,502 20,00,883 47,67,619 8,14,64,792 56,83,125 68,987 92,78,210 10,12,62,733 42,30,314 12,50,552 29,79,762 5,09,15,495 35,51,953 43,117 57,98,881 6,32,89,208 54,28,543 23,83,212 30,45,331 9,35,10,614 23,86,834 56,83,125 3,13,355 2,72,695 1,21,51,907 11,73,63,861 33,92,840 14,89,508 19,03,332 5,84,44,134 14,91,771 35,51,953 1,95,847 1,70,434 75,94,942 7,33,52,413
25,92,90,147 84,74,071 1,89,85,556 26,25,683 4,43,93,855 8,10,81,841 11,03,162 3,97,57,392 9,80,67,962 50,62,937 1,76,83,275 1,43,45,842 3,99,72,863 1,13,12,113 15,50,29,004 7,19,48,263 1,14,50,044 92,68,988 33,01,067 8,00,000 7,95,800 24,25,855 4,71,76,273 14,07,498 45,50,713 9,18,76,468 58,824 6,76,250 3,78,212 4,27,457 17,41,531 49,98,812 3,20,862 1,30,04,516 1,06,37,93,136 92,08,35,261 (1,25,37,129) 90,82,98,132
16,20,56,341 52,96,294 1,18,65,973 16,41,052 2,77,46,159 5,06,76,151 6,89,476 2,48,48,370 6,12,92,476 31,64,336 1,10,52,046 89,66,151 2,49,83,039 70,70,071 9,68,93,128 4,49,67,664 71,56,278 57,93,118 20,63,167 5,00,000 4,97,375 15,16,159 2,94,85,170 8,79,686 28,44,196 5,74,22,792 36,765 4,22,656 2,36,383 2,67,160 10,88,457 31,24,258 2,00,539 81,27,823 66,48,70,709 57,55,22,038 (78,35,706) 56,76,86,332
23,10,86,780 75,82,495 1,69,10,622 14,65,479 4,47,82,685 8,36,77,379 69,27,710 3,25,99,423 10,67,97,769 47,43,343 1,63,12,708 1,33,00,274 3,61,81,760 96,64,849 13,00,90,726 4,29,30,856 72,10,959 78,69,019 21,63,289 4,50,000 8,70,300 20,16,446 3,31,72,252 13,74,006 35,87,127 10,23,71,917 23,529 13,16,977 2,69,878 9,34,532 3,58,160 62,40,537 1,49,13,303 1,29,20,527 98,31,17,616 66,99,12,880 98,25,136 67,97,38,016
14,44,29,237 47,39,059 1,05,69,139 9,15,924 2,79,89,178 5,22,98,362 43,29,819 2,03,74,639 6,67,48,606 29,64,589 1,01,95,442 83,12,671 2,26,13,600 60,40,531 8,13,06,704 2,68,31,785 45,06,849 49,18,137 13,52,056 2,81,250 5,43,938 12,60,279 2,07,32,657 8,58,754 22,41,954 6,39,82,448 14,706 8,23,111 1,68,674 5,84,082 2,23,850 39,00,336 93,20,814 80,75,329 61,44,48,509 41,86,95,550 61,40,710 42,48,36,260
192
2.
Notes to the Accounts A. For the year ended 32nd Asadh 2067, the Board of Directors of the Company at its meeting held on 18th Aswin 2067 (4th October 2010) have: a) declared interim dividend of NRs. 12.50 (` 7.81) per share and b) recommended final dividend of NRs. 77.50 (` 48.44) per share. B. Claims against the Company not acknowledged as debts: a) Demands raised by Revenue Authorities on theoretical production of cigarettes: The Company has been receiving Show Cause Notices (SCNs) and demands from Excise, Income Tax and VAT authorities. The basis of all these SCNs and demands is an untenable contention by the Revenue authorities that the Company could have produced more cigarettes than it has actually produced in a given year, by applying an input-output ratio allegedly submitted by the Company in the year 2047-48 and, that, the Company is liable to pay taxes on such cigarettes that could have been theoretically produced and sold. This, despite the fact that the Companys cigarette factory is under physical control of the Revenue authorities and cigarettes produced are duly accounted for and certified as such by the Revenue authorities. It may be pointed out that such levy of taxes on such theoretical production of cigarettes has absolutely no basis in law. The Honble Supreme Court of Nepal has, during the year, passed judgements in favour of your Company, with regard to certain Excise and Income Tax demands on the issue of theoretical production. These are summarised below: (i) Excise Related: 1. For the financial years 2050-51 & 2051-52 (1993-94 & 1994-95), Revenue authorities had raised a Excise demand for NRs. 13,59,81,616 (` 8,49,88,510), which was quashed by a Division Bench of the Supreme Court on 8th April 1998. Government filed a review petition on 8th October 1998. The Full Bench of the Supreme Court on 29th October 2009 decided the matter in favour of the Company. Our counsel appearing in the matter has opined that this verdict will add substantial strength to the Companys case in all other matters relating to the issue of theoretical production. 2. An Excise demand dated 12th July 2005 for NRs. 37,17,24,680 (` 23,23,27,925) for the financial years 2055-56 to 2059-60 (1998-99 to 2002-03) was issued to the Company by the Inland Revenue Office. On 21st September 2006 the Company challenged the demand in the Supreme Court, which on 1st April 2010, has decided the matter in favour of the Company. (ii) Income Tax Related: An Income Tax demand dated 13th October 2006 for the financial year 2058-59 (2001-02) was issued to the Company for an amount of NRs. 16,07,61,328 (` 10,04,75,830) related to the matter of theoretical production. On 7th November 2006, the Company filed a writ petition before the Supreme Court seeking that the said demand order be quashed. The Supreme Court, on 1st April 2010, has decided the matter in favour of the Company. Following is the status on other demands issued to the Company on the same matter which are based on similar untenable contention by the Revenue authorities: (i) Excise Demand for NRs. 27,80,26,266 (` 17,37,66,416) 1. A demand letter dated 22nd February 2008 was issued to the Company by the Inland Revenue Office, Simra, Bara. The demand of NRs. 14,95,15,509 (` 9,34,47,193) by way of Excise duty, relate to the financial years 2060-61 to 2062-63 (2003-04 to 2005-06). The Company filed a writ petition in the Supreme Court on 1st April 2008 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 2nd April 2008 and directed issue of Show Cause Notices to the respondents, and the hearing on the matter is pending. 2. A demand letter dated 30th November 2008 was issued to the Company by the Inland Revenue Office, Simra, Bara. The demand of NRs. 12,85,10,757 (` 8,03,19,223) by way of Excise duty, relate to the financial year 2063-64 (2006-07). The Company had filed a writ petition in the Supreme Court on 31st December 2008 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 6th January 2009 and directed issue of Show Cause Notices to the respondents, and the hearing on the matter is pending. (ii) VAT Demand for NRs. 36,50,65,785 (` 22,81,66,116) 1. A demand letter dated 7th August 2006 for the financial year 2058-59 (2001-02) was issued to the Company by the Large Taxpayers Office, Kathmandu. Of a total demand of NRs. 7,54,63,766 (` 4,71,64,854), the basis of a demand for NRs. 7,54,51,113 (` 4,71,56,946) is theoretical production. An administrative review petition on the Value Added Tax matter was filed before the Director General on 1st September 2006, and the matter is pending. 2. A demand letter dated 8th August 2007 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial year 2059-60 (2002-03). The total demand is for NRs. 5,72,38,860 (` 3,57,74,288) and the basis of demand is theoretical production. The Company has filed a writ petition in the Supreme Court on 11th September 2007 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 12th September 2007 and directed issue of Show Cause Notices to the respondents, and the hearing on the matter is pending. 3. A demand letter dated 5th August 2008 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial year 2060-61 (2003-04). Of a total demand of NRs. 1,13,28,199 (` 70,80,124), the basis of a demand for NRs. 1,07,18,107 (` 66,98,817) is theoretical production. The Company has filed a writ petition in the Supreme Court on 1st September 2008 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 5th September 2008 and directed issue of Show Cause Notices to the respondents and the hearing on the matter is pending. 4. A demand letter dated 10th July 2009 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial years 2061-62 to 2063-64 (2004-05 to 2006-07). The total demand is for
193
b)
C.
D.
F. G.
* Includes NRs. 39,44,756 (` 24,65,473) paid to former Managing Director as per terms and conditions approved by the Shareholders. **Post employment benefits are actuarially determined on overall basis for all employees. Miscellaneous Expenses include reimbursement of expenses to statutory auditors amounting to NRs. 68,410 (` 42,756) {(2065-66 NRs. 2,48,754 (` 1,55,471))}. The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing difference are as under: Particulars As at 31st Asadh 2067 (16th July 2010) In NRs. Deferred Tax Asset On employees separation and retirement On fiscal allowance on fixed assets On doubtful advance Deferred Tax Liability On finished goods Deferred Tax Net 1,08,20,523 2,22,01,471 12,66,614 3,42,88,608 53,01,893 2,89,86,715 In ` 67,62,827 1,38,75,919 7,91,634 2,14,30,380 33,13,683 1,81,16,697 As at 31st Asadh 2066 (15th July 2009) In NRs. 1,36,75,628 77,30,612 9,60,155 2,23,66,395 59,16,809 1,64,49,586 In ` 85,47,268 48,31,632 6,00,097 1,39,78,997 36,98,006 1,02,80,991
H.
Explanation of the relationship between tax expenses and accounting profit: Particulars For the Year ended 32nd Asadh 2067 (16th July 2010) In NRs. 2,88,26,44,312 88,00,80,163 In ` 1,80,16,52,695 55,00,50,102 For the Year ended 31st Asadh 2066 (15th July 2009) In NRs. 2,12,05,91,000 64,81,82,492 In ` 1,32,53,69,375 40,51,14,057
Accounting Profit Tax at the applicable tax rate (Cigarette manufacturing @ 30%, Garments Manufacturing @ 20% and Trading @ 25%) Factors affecting tax charge for the year Effect of : Unused Tax Losses not recognised Expenses not deductible for tax purposes Movement in other timing differences Reduction in opening deferred taxes resulting from reduction in tax rate Total Tax Expense
194
3.
Disclosure of transactions between the Company and related parties and the status of outstanding balances as on 16th July, 2010:
For the year ended 32nd Asadh, 2067 (16th July, 2010) Holding Company Fellow Subsidiaries In ` 6,02,16,584 In NRs. 59,820 23,03,064 In ` 37,388 14,39,415 1,31,55,061 98,824 69,19,105 12,24,946 43,24,441 7,65,591 82,21,913 61,765 34,79,199 51,20,000 Key Management Personnel In NRs. In ` Holding Company
For the year ended 31Asadh, 2066 (15th July, 2009) Fellow Subsidiaries In ` In NRs. In ` Key Management Personnel In NRs. In `
In NRs. Sale of Goods /Services Purchase of Goods /Services Payment to Managing Director Sitting Fees / Incidental Expenses to Other Directors Machine Hire Charges Rent Received Dividend Payments Expenses recovered Expenses reimbursed Advances Given (after adjustment of purchase) Issue of Bonus Share Balances as on 16th July Debtors Advances/Other Receivables Creditors / Payables
K. L.
In NRs.
9,63,46,535
22,10,73,693 13,81,71,058 1,18,74,63,779 74,21,64,862 31,29,830 19,56,144 72,53,846 48,529 21,74,499 32,00,000 45,33,654 30,331
1,98,87,64,823 1,24,29,78,014
51,54,24,000 32,21,40,000 97,54,500 84,70,386 4,56,037 60,96,563 52,93,991 2,85,023 2,36,848 1,48,030
50,22,62,979 31,39,14,362
99,12,00,000 61,95,00,000
3,82,29,509
2,38,93,443
Figures have been rounded off to the nearest rupee. Previous Years figures have been regrouped and/or rearranged wherever necessary.
K N Grant Director Nem Lal Amatya Partner N. Amatya & Co. Chartered Accountants
Y C Deveshwar Chairman Partha Mitra Partner Lovelock & Lewes Chartered Accountants
195
The accompanying Notes to Financial Statements are an integral part of these statements.
STATEMENTS OF INCOME AND RETAINED EARNINGS For the year ended 31st March, 2011 $ SALES Revenues, net of customer returns Less quick pay discounts Net sales COST OF SALES MSA SETTLEMENT CHARGES, NET Gross profit OPERATING EXPENSES Income (loss) from operations OTHER Business service income Reserve for inventory write-off Loss on diposal of property and equipment Interest income Other income Income before provision for income taxes PROVISION FOR INCOME TAXES Net Income RETAINED EARNINGS, beginning of year RETAINED EARNINGS, end of year 37,105,170 (1,552,876) 35,552,294 27,138,915 8,413,379 3,068,464 5,344,915 4,828,352 516,563 360,000 (74,400) (1,499) 80,825 1,960 366,886 883,449 (361,846) 521,603 5,022,928 5,544,531 For the year ended 31st March, 2011 ` 1,659,320,351 (69,487,319) 1,589,833,032 1,214,978,284 374,854,748 137,306,093 237,548,655 216,056,681 21,491,974 16,109,100 (3,317,868) (67,077) 3,616,717 87,705 16,428,577 37,920,551 (16,191,704) 21,728,847 225,529,513 247,258,360 For the year ended 31st March, 2010 $ 54,201,154 (1,687,326) 52,513,828 38,299,134 14,214,694 8,939,313 5,275,381 5,310,056 (34,675) 360,000 (355,000) 102,550 12,253 119,803 85,128 (27,668) 57,460 4,965,468 5,022,928 For the year ended 31st March, 2010 ` 2,581,247,900 (80,671,056) 2,500,576,844 1,852,522,704 648,054,140 427,388,555 220,665,585 253,873,778 (33,208,193) 17,211,600 (15,939,500) 4,902,916 585,815 6,760,831 (26,447,362) (1,322,807) (27,770,169) 253,299,682 225,529,513
The accompanying Notes to Financial Statements are an integral part of these statements.
196
The accompanying Notes to Financial Statements are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS March 31, 2011 and 2010 NOTE 1 - ORGANIZATION King Maker Marketing, Inc. (Company) is organized and headquartered in New Jersey. Its business is to import and distribute tobacco products to licensed wholesale distributors and retailers throughout the United States. The Company employs an independent warehouse located in Illinois. The Company has significant transactions with ITC Limited (ITC), its sole stockholder, which is organized under the laws of the Republic of India. The Company is subject to the inherent risks associated with the industry, such as new or increased taxes/assessments, as well as litigation. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company uses the accrual basis of accounting. b. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires that management make estimates and assumptions relevant to the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results may differ from estimates. c. Fair Value Measurement Fair value is defined as an exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability between market participants on the measurement date. d. Cash and Cash Equivalents The Companys cash and cash equivalents are defined as cash and short-term highly liquid investments with an original maturity of three or fewer months. The Company has a restricted cash deposit balance of $1.6 million as collateral for a letter of credit issued in order to securitize a U.S. Customs Bond posted for $2.1 million. e. Inventory Inventory consists mainly of cigarettes. The lower of cost (first-in, first out) or market method has been used in determining the inventory value and includes applicable duty, federal excise taxes, tobacco buyout costs, FDA User Fee, MSA, freight-in, storage, and other direct costs. f. Property and Equipment, Net Property and equipment are carried at cost less accumulated depreciation. Major additions and improvements are capitalized, and replacements, maintenance, and repairs that do not improve or extend the useful life of an asset are expensed as incurred. When equipment is retired or otherwise
disposed of, the appropriate accounts are relieved of costs and accumulated depreciation, and any resultant gain or loss is credited or charged to operations.The Company uses the straight-line method of depreciation and depreciates equipment and fixtures over 5 to 7 years; software over 3 to 5 years, and leasehold improvements over 7 to 40 years. Long-lived assets to be held and used are tested for recoverability whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the excess of the assets carrying amount over the fair value of the assets. There were no impairment losses deemed necessary for the years ended March 31, 2011 and 2010. g. Revenue Recognition/Accounts Receivable The Company recognizes revenue when title is transferred as the product is shipped. Trade discounts are offered to customers on invoiced prices, which are reflected in net sales. Accounts receivable are charged to bad debt expense as they are deemed uncollectible based upon managements periodic review of the accounts. Management considers accounts receivable to be fully collectible, and, therefore, no allowance is considered necessary as of March 31, 2011 and 2010. Revenues are reflected net of customer returns. Total customer returns were $539,626 and $371,869 for the years ended March 31, 2011 and 2010, respectively. h. Shipping and Handling Expenses Shipping and handling expenses are classified under operating expenses. A portion of the expenses relating to inbound receipt of materials is classified under cost of goods sold. i. Marketing and Promotion Costs The Companys policy is to expense marketing and promotion costs as incurred. Total marketing and promotion costs, which are included in operating expenses, were $1,274,442 and $1,511,664 for the years ended March 31, 2011 and 2010, respectively. j. Income Tax The Company follows the asset and liability approach to account for income taxes. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company presently discloses or recognizes income tax positions based on managements estimate of whether it is reasonably possible or probable that a liability has been incurred for unrecognized income taxes. Management has concluded that the Company has taken no uncertain tax positions that require adjustment in its financial statements.The Companys federal and state tax returns are subject to examination by taxing authorities. The Company is no longer subject to tax examination for the year ended March 31, 2006, and prior.
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b. Legal Matters In the ordinary course of business, the Company may be a defendant in legal matters. Management does not believe the impact of such matters will have a material effect on the financial position or results of operations of the Company. NOTE 8 - RELATED PARTY TRANSACTIONS The Company has in place an Exclusive Distribution, Private Label Supply, and a Controlled Label Distribution Agreement with ITC. These agreements designate ITC as the sole supplier to the Company, and the Company as the exclusive importer and distributor for all ITC manufactured tobacco products in the United States, Canada, and Mexico. Purchases for the years ended March 31, 2011 and 2010, from ITC were $4,791,774 and $5,746,131, respectively. At March 31, 2011 and 2010, respectively, the Company owed ITC $71,390 and $-0-. At March 31, 2011 and 2010, respectively, $1,561 and $27,946 is due from ITC. Furthermore, the Company billed approximately $360,000 to ITC for expenses related to business services for the years ended March 31, 2011 and 2010. NOTE 9 - SETTLEMENT CHARGES, NET The Company is a signatory to the Master Settlement Agreement (MSA) as a Subsequent Participating Manufacturer (SPM) as stated in Amendment No. 11 to the MSA, dated February 11, 1999. The MSA is similar to the Agreement reached by the major cigarette manufacturers. However, it provides small cigarette manufacturers, such as the Company, exemption from liability for any market share in 1998 (base year). These companies are defined in the MSA as SPMs. Under the MSA, the Company is required to pay annually, a proportionate share of the ultimate liability as stipulated in the MSA, based on the additional market share gained by the Company over and above the base year, as measured by the federal excise tax paid units of the Company and as calculated by an independent auditor. The Company estimates its relative market share gain as defined in the MSA and the resultant settlement contribution required. The MSA contributions are subject to several revisions and recalculations by the independent auditor. MSA settlement charges are as follows:
Estimated cost based on current activity, net of credits Change in estimate of MSA settlement costs based on actual results for calendar year end March 31, 2011 $ ` 4,257,259 190,501,697 March 31, 2010 $ ` 9,455,918 452,087,440
Capital structure
Common stock, no par value, 1,000 shares authorized, 204 shares issued and outstanding 4,080
NOTE 4 - APPAREL BUSINESS During fiscal year ended 2009, the Company made a foray into the apparel business. The Company has leased office space in New York City and hired personnel to develop business opportunities. The revenues and inventory on account of this business included in the financial statements are $238,539 and $74,400, respectively, for 2011. The inventory as of March 31, 2011, is fully reserved for write-off. The revenues and inventory for 2010 were $26,556 and $165,833, respectively. On August 24, 2010, the Board of Directors approved the winding down of the apparel business. NOTE 5 - ROLL - YOUR - OWN AND CIGARETTE INVENTORY WRITE-OFF On April 1, 2009, the federal excise tax increased by approximately 160% on cigarettes and 2,170% on roll-your-own (RYO) tobacco, which significantly impacted the Company in the year ended March 31, 2010, with substantive loss of the RYO business and increased costs. Effective June 22, 2010, the FDA mandated packaging changes, which required that all current design packaging manufactured before the due date be sold into commerce by July 22, 2010. For the year ended March 31, 2010, management reserved for write-off, an amount of $355,000 for the projected unsaleable inventory based on items most at risk of being liquidated by that date. As of March 31, 2011, the Company wrote-off the $355,000 plus an additional $253,000 of the remaining unsaleable inventory, totaling $608,000. NOTE 6 - PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following:
March 31, 2011 $ ` 100,248 4,470,560 19,847 885,077 74,082 3,303,687 194,177 8,659,323 166,448 7,422,749 27,729 1,236,575 March 31, 2010 $ ` 111,257 4,995,439 19,847 891,130 74,082 3,326,782 205,186 9,212,851 164,864 7,402,349 40,322 1,810,502
Equipment and fixtures Leasehold improvements Computer software Less accumulated depreciation
Depreciation expense for property and equipment was $ 11,094 and $ 17,054 for the years ended March 31, 2011 and 2010, respectively.
The Company disputes a portion of the calculated settlement amount as allowed by the MSA. Under the agreement, the Company has four years to formally protest. The total amount disputed is approximately $7.7 million as of March 31, 2011. There has been no resolution to these disputes to date. An arbitration panel as provided under the MSA has commenced hearings on some of those disputes as of September 2010. Further, the Company also disagrees with the independent auditors treatment of unapplied recalculation credits due to the Company of $533,110. The Company is unable to avail itself to these credits at this time as well. NOTE 10 - TOBACCO BUYOUT As required by Title VI of the American Jobs Creation Act of October 2004, and related regulations thereof, the Company is required to pay its share of the Tobacco Buyout assessment issued by the Commodity Credit Corporation, USDA. This assessment is for a ten-year period commencing January 2005, and is payable quarterly. Each quarterly payment is based on the Companys market share as determined by the federal excise tax paid units during the previous quarter per the rules and regulations notified. Total payments for the years ended March 31, 2011 and 2010, were $1,209,161 and $1,755,349, respectively. NOTE 11 - PROFIT-SHARING PENSION PLAN The Company offers a profit-sharing pension plan for all eligible employees. Employees become eligible as long as they are twenty-one years of age and have credited twelve months of service. To continue in the plan, employees must have a minimum of 1,000 hours of employment annually and be on the payroll at the end of each plan year, with some exceptions. Employees become fully vested with six or more years of service. Contributions to the Plan are discretionary, with a 3% minimum, under certain circumstances, on an employees Social Security base income. Expenses for the years ended March 31, 2011 and 2010, were $133,306 and $128,246, respectively. NOTE 12 - CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments, and accounts receivable. The Company deposits its cash and short-term investments at two major financial institutions in the United States. At times, the Companys cash balances exceed the current insured amount under the Federal Deposit Insurance Corporation. With respect to accounts receivable, concentration of credit risk is limited due to the large number of customers and their dispersion across various geographic regions. The Company had no customers that exceeded 10% of total sales for the year ended March 31, 2011. The Company had one customer that exceeded 10% of total sales for the year ended March 31, 2010. As of March 31, 2010, accounts receivable for this customer was $38,597.
NOTE 7 - COMMITMENTS AND CONTINGENCIES a. Leases The Companys main office is located in Paramus, New Jersey. It has also leased an office for its apparel division in the garment district in New York City from April 2008 to June 2011. Rent expense for the years ended March 31, 2011 and 2010, was approximately $134,000 and $133,000, respectively. The Company leases two additional offices in Paramus, New Jersey, which are across the hall from the main office, with the same terms and an annual rent of approximately $95,000 and $96,000 for the years ended March 31, 2011 and 2010, respectively. These offices are sublet to ITC Infotech, Inc. (an ITC Group Company) for the full term of the lease. ITC Infotech, Inc. has fully reimbursed the Company for the rent expense under the lease for the years ended March 31, 2011 and 2010. The Company leases accommodations for its managers seconded from ITC Ltd. India to ease their transition to the United States. The Company pays monthly rent, which is included in the employees payroll for tax purposes. These amounts were approximately $24,600 and $26,400 for the years ended March 31, 2011 and 2010, respectively. The Company leases automobiles under noncancelable operating leases with 36-month terms. Vehicle lease expense was $16,807 and $14,328 for the years ended March 31, 2011 and 2010, respectively. Quarterly rental payments for the leasing of office equipment (postage meter) are included in operating expense. Future minimum lease payments as of March 31, 2011, are: 2012 $ 202,149 2013 57,792 2014 9,842 Total minimum payments required $ 269,783 Total rental expense for all operating leases, less sublease rentals recovered, is as follows:
March 31, 2011 $ ` 228,652 10,231,605 95,048 4,253,160 133,604 5,978,445 March 31, 2010 $ `
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The difference between the statutory rate and the rate reflected in the financial statements is due to state taxes. The Companys total deferred tax assets (liabilities) arise from basis differences summarized as follows: Year ended 31st March, 2011 $ Deferred tax assets Inventory Deferred tax liabilities Depreciation SUPPLEMENTAL INFORMATION COST OF SALES Year ended Year ended 31st March, 2011 31st March, 2011 $ ` 2,765,160 124,155,684 18,489,982 827,380,470 4,644,548 207,834,234 1,209,161 54,107,536 439,161 19,651,576 241,386 10,801,541 205,777 9,208,109 114,842 5,138,950 27,782 1,243,189 14,555 651,307 28,152,354 1,260,172,596 (1,013,439) (45,194,312) 74,400 3,317,868 27,138,915 1,214,978,284 Net Year ended Year ended Sales 31st March, 2010 31st March, 2010 % $ ` 7.8 4,247,918 215,454,401 52.0 28,893,010 1,381,374,808 13.1 5,587,497 267,138,232 3.4 1,755,349 83,923,236 1.2 230,508 11,020,587 0.7 158,634 7,584,292 0.6 463,273 22,149,082 0.3 37,280 1,782,357 0.1 37,462 1,791,058 0.0 8,363 399,835 79.1 41,419,294 1,992,617,888 (2.9) (3,120,160 ) (140,095,184) 0.2 355,000 15,939,500 76.3 38,299,134 1,852,522,704 Net Sales % 8.1 55.0 10.6 3.3 0.4 0.3 0.9 0.1 0.1 0.0 78.9 (5.9) 0.7 72.9 51,938 (91,993) Year ended 31st March, 2011 ` 2,316,175 (4,102,428 ) Year ended 31st March, 2010 $ 191,903 (53,238 ) Year ended 31st March, 2010 ` 8,616,445 (2,390,386)
Beginning inventory Cigarette tax, duty, and harbor processing fees Cigarette purchases Tobacco buyout expense FDA Other expenses / purchases Storage Freight-in Customs brokerage Destruction charges Ending inventory prior to reserve Provision for inventory write-off
SUPPLEMENTAL INFORMATION OPERATING EXPENSES Year ended 31st March, 2011 $ 1,274,442 1,084,734 611,980 340,795 292,262 246,736 137,026 133,604 133,306 128,033 103,593 90,831 90,316 55,060 34,751 32,539 27,250 11,094 4,828,352 Year ended 31st March, 2011 ` 57,028,093 48,539,135 27,384,575 15,249,724 13,077,994 11,040,819 6,131,571 5,978,445 5,965,110 5,729,157 4,635,528 4,064,460 4,041,415 2,463,797 1,555,020 1,456,039 1,219,369 496,429 216,056,681 Net Sales % 3.6 3.1 1.7 1.0 0.8 0.7 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.1 0.1 0.1 0.0 13.6 Year ended 31st March, 2010 $ 1,511,664 1,224,358 841,729 305,679 204,447 329,763 89,865 133,144 128,246 93,873 96,451 84,797 78,865 63,928 39,921 38,347 27,925 17,054 5,310,056 Year ended 31st March, 2010 ` 72,272,655 58,536,556 40,243,063 14,614,513 9,774,611 15,765,969 4,296,446 6,365,615 6,131,441 4,488,068 4,611,322 4,054,145 3,770,536 3,056,398 1,908,624 1,833,370 1,335,094 815,352 253,873,778 Net Sales % 2.9 2.3 1.6 0.6 0.4 0.6 0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.0 10.1
Marketing and promotion Salaries Shipping and handling Professional fees Fees and Licenses Travel Office supplies and expense Rent Pension General insurance Group insurance Payroll tax Miscellaneous/other expenses Dues and subscriptions Auto Telephone/communication Training and placement fees Depreciation
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