ON THE CONSOLIDATED FINANCIAL STATEMENTS OF PARAG · PDF fileINDEPENDENT AUDITORS’...

INDEPENDENT AUDITORS’ REPORT

ON THE CONSOLIDATED FINANCIAL STATEMENTS OF PARAG MILK FOODS PRIVATE LIMITED

To the Board of Directors of Parag Milk Foods Private Limited

We have audited the accompanying consolidated financial statements of Parag Milk Foods Private

Limited (“the Company”) and its subsidiary (the Company and its subsidiary constitute “the Group”)

which comprise the consolidated balance sheet as at March 31, 2014, and the consolidated

Statement of Profit and Loss and consolidated Cash Flow Statement for the year then ended and a

summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of these consolidated financial statements on the

basis of separate financial statements and other financial information regarding components that

give a true and fair view of the consolidated financial position, consolidated financial performance

and consolidated cash flows of the Group in accordance with accounting principles generally

accepted in India; this includes the design, implementation and maintenance of internal control

relevant to the preparation and presentation of the consolidated financial statements that give a

true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our

audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute

of Chartered Accountants of India. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about whether the

consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the consolidated financial statements. The procedures selected depend on the

auditors’ judgment, including the assessment of the risks of material misstatement of the

consolidated financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal control relevant to the Company’s preparation and presentation of

the consolidated financial statements that give a true and fair view in order to design audit

procedures that are appropriate in the circumstances. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of the accounting estimates

made by management, as well as evaluating the overall presentation of the consolidated financial

statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our qualified audit opinion.

Basis for Qualified Opinion

We draw attention to Note No. 28 (II) to the Financial Statements. As explained therein, consequent to action u/s 132 of the Income Tax Act, 1961 the Company has made during various financial years

declaration of additional income of amounts aggregating ` 3,410.77 lakhs for AY 2005-06 to AY 2011-12.

In its books of account, the Company has made only provision of ` 1,916.54 lakhs being tax and interest thereon for such additional income, as no consequential effect is considered necessary by the management as regard assets and income/profit of the Company.

Qualified Opinion

We report that the consolidated financial statements have been prepared by the Company’s

Management in accordance with the requirements of Accounting Standards (AS) 21, “Consolidated

financial statements” as notified pursuant to the Companies (Accounting Standards) Rules, 2006

and on the basis of the separate financial statements of Parag Milk Foods Private Limited and its

subsidiary.

In our opinion and to the best of our information and according to the explanations given to us

except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the

consolidated financial statements give a true and fair view in conformity with the accounting

principles generally accepted in India:

(a) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at March

31, 2014;

(b) in the case of the consolidated Statement of Profit and Loss, of the profit for the year ended

on that date; and

(c) in the case of the consolidated Cash Flow Statement, of the cash flows for the year ended on

that date.

For Haribhakti & Co.

Chartered Accountants

Firm Registration No.103523W

____________________

Nitin Jumani

Partner

Membership No.111700

Place: Pune

Date:

10th Annual Report

(` : in Lakhs)

As at As at

March 31, 2014 March 31, 2013

I. EQUITY AND LIABILITIES

(1) Shareholders' Funds

(a) Share capital 2(1) 1,596.96 1,596.96

(b) Reserves and surplus 2(2) 7,614.46 6,871.01

Minority Interest 0.71 0.75

9,212.13 8,468.72

(2) Non-current liabilities

(a) Long-term borrowings 2(3) 27,449.62 24,426.20

(b) Deferred tax liabilities (Net) 2(4) 521.73 950.75

(c) Other long term liabilities 2(5) 800.00 40.00

(d) Long term provisions 2 (6) 14.44 16.18

28,785.79 25,433.13

(3) Current liabilities

(a) Short-term borrowings 2(7) 23,711.08 20,316.00

(b) Trade payables 2(8) 12,540.93 9,236.87

(c) Other current liabilities 2(9) 7,713.26 6,124.72

(d) Short-term provisions 2(10) 91.94 5.85

44,057.21 35,683.44

TOTAL 82,055.13 69,585.29

II. ASSETS

(1) Non-current Assets

(a) Fixed Assets

(i) Tangible assets 2(11) 24,167.95 24,355.89

(ii) Intangible assets 67.63 32.16

(iii) Capital Work In Progress 3,338.04 298.42

(iv) Intangible assets under development 375.51 320.82

27,949.13 25,007.29

(b) Non-current investments 2(12) 33.79 30.96

(c) Long-term loans and advances 2(13) 10,191.76 9,365.39

(d) Other Non-current assets 2(14) 164.43 97.77

38,339.10 34,501.42

(2) Current Assets

(a) Inventories 2(14) 19,027.21 13,946.19

(b) Trade receivables 2(15) 16,729.06 15,245.74

(c) Cash and bank balances 2(16) 420.81 221.85

(d) Short-term loans and advances 2(17) 4,355.84 2,380.84

(e) Other Current assets 2(18) 3,183.11 3,289.25

43,716.03 35,083.87

TOTAL 82,055.13 69,585.29

Summary of Significant accounting policies followed by the Company 1

The accompanying notes are an integral part of the financial statements. 2

As per our report of even date

For Haribhakti & Co For and on behalf of the Board of Directors


FR No. 103523W

Nitin Jumani Devendra Shah Pritam Shah

Partner Chairman Managing Director

Membership No. 111700

Rachana Sanganeria

Company Secretary

Place: Pune Place: Pune

Date: 25th September ,2014 Date: 25th September ,2014

PARAG MILK FOODS PRIVATE LIMITED

Consolidated Balance Sheet as at March 31, 2014

Particulars Note No.

(` : in Lakhs)

Year ended Year ended

March 31, 2014 March 31, 2013

I. Revenue from operations 2(19) 108,352.56 92,765.69

II. Other income 2(20) 93.22 184.89

III. Total Revenue (I + II) 108,445.78 92,950.58

IV. Expenses:

Cost of materials consumed 2(21) 79,063.74 61,260.54

Changes in inventories of finished goods,

work-in-progress 2(22) (5,045.16) 308.76

Employee benefits expense 2(23) 4,764.35 3,979.41

Other expenses 2(24) 21,783.82 18,340.16

Finance costs 2(25) 4,490.95 4,035.82

Depreciation and amortization expense 2(11) 2,758.20 2,608.39

Total Expenses 107,815.90 90,533.08

V. Profit before tax (V - VI) 629.88 2,417.50

VI. Tax Expenses:

(1) Current Tax 14.36 261.81

(2) Deferred Tax 2(4) (429.02) (157.67)

(3) MAT Credit Entitlement (14.36) (62.30)

(4) Tax adjustments {Refer Note 2(29} 315.51 1,208.31

VII Profit/(Loss) for the year (V-VI) 743.41 1,167.35

VIII Earnings per equity share: (In Rs.) 2(27)

(1) Basic 4.66 7.31

(2) Diluted 3.22 5.06 (Nominal value per share Rs.10)

Summary of Significant accounting policies followed by the Company 1

The accompanying notes are an integral part of the financial statements. 2


For Haribhakti & Co, For and on behalf of the Board of Directors


FR No. 103523W

Devendra Shah Pritam Shah

Nitin Jumani Chairman Managing Director

Partner


Rachana Sanganeria

Company Secretary




Consolidated Profit and Loss for the year ended March 31, 2014

Particulars Note No.

(` : in Lakhs)

Year ended Year ended March 31, 2014 March 31, 2013

A. Cash Flow from Operating Activities

Net Profit before taxation 629.88 2,417.50

Adjustments for:

Depreciation on fixed assets 2,758.20 2,608.39

Provision for doubtful debts 388.95 115.70

Bad debts 5.27 -

Provision for doubtful advances 82.00 10.10

Loss on impairment of fixed assets 49.29 46.57

Interest expense 4,490.95 4,030.96

Deduct:

Dividend Income 0.02 0.02

Interest income 34.81 21.07

Operating Profit before Working Capital changes 8,369.72 9,208.13

Adjustments for :

(Increase) in inventories (5,081.02) (5.73)

(Increase) in trade receivables (1,877.54) (3,317.38)

Increase in other long term liabilites 760.00 -

(Increase) in other non current assets (66.66) (97.77)

(Increase) in short term loans and advances (1,936.51) (2,629.84)

(Increase) in long term loans and advances (826.35) (3,672.31)

(Decrease) in other current liabilties 1,180.96 13.46

Increase in trade payables 3,304.06 757.60

Increase/(Decrease) in provisions (197.86) (490.53)

CASH GENERATED FROM OPERATIONS 3,628.80 (234.35)

Direct taxes paid (net of refunds) (47.64) (1,291.23)

Net Cash inflow from/ (outflow) from Operating activities 3,581.15 (1,525.58)

B. Cash Flow from Investing Activities

Purchase of fixed assets (5,789.31) (2,293.93)

Sale of fixed assets 39.98 -

Payment of Capital Creditors 407.58 (368.87)

Investments in mutual fund (2.83) (30.42)

Interest and dividend received 34.83 21.09

Net Cash (outflow) from Investing activities (5,309.75) (2,672.13)

C. Cash Flow from Financing Activities

Proceeds from issuance of Share Capital - 15.92

Proceeds from Share Premium ( net of fund raising expenses) - 238.96

Proceeds from Non Convertible Debentures - 1,800.00

Proceeds from Compulsory Convertible Debentures - 7,000.00

Proceeds from long term borrowings 7,719.82 5,764.03

Proceeds from short term borrowings (net) 3,727.10 (132.29)

Proceeds from Unsecured Loan (net) (332.02) 1,143.42

Repayment of long term borrowings (4,696.38) (7,627.29)

Interest paid (4,490.95) (4,030.96)

Net Cash inflow from Financing activities 1,927.57 4,171.79

Net (decrease) in cash and cash equivalents (A+B+C) 198.98 (25.92)

Cash and Cash Equivalents at the beginning of the year

Cash in hand 77.49 38.98

Bank balances 144.35 208.78

221.84 247.76

Cash and Cash Equivalents at the end of the year

Cash in hand 163.77 77.49

Bank balances 257.04 144.35 420.81 221.84


For Haribhakti & Co For and on behalf of the Board of Directors


FR No. 103523W

Nitin Jumani Devendra Shah Pritam Shah

Partner Chairman Managing Director


Rachana Sanganeria

Company Secretary



PARAG MILK FOODS PRIVATE LIMITEDConsolidated Cash Flow Statement for the year ended March 31, 2014


Notes on Consolidated financial statements for the year ended March 31, 2014

NOTE 1: Significant Accounting Policies on Consolidated Accounts

A. Corporate Information

Parag Milk Foods Private Limited is incorporated in the state of Maharashtra, India. The Company is

vertically integrated company and engaged in the business of procurement of cow milk mainly in

western and southern region. The company undertakes processing of the milk and manufacture the

various value added products namely cheese, butter, ghee, fresh cream, milk powder etc. which are

marketed under its registered brand name “Gowardhan” and “Go”. The Company is both a national and

an international player.

B. Basis of Consolidation

a) The Consolidated Financial Statements (CFS) of the Group are prepared under Historical Cost Convention under going concern basis in accordance with Generally Accepted Accounting Principles in India and the Accounting Standard-21 on “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India (ICAI), to the extent possible in the same format as that adopted by the parent Company for its separate financial statements by regrouping, recasting or rearranging figures, wherever considered necessary.

b) The CFS is prepared using uniform accounting policies for transactions and other events in similar transactions.

c) The consolidation of financial statements of the parent Company and its subsidiaries is done to the extent possible on a line-by-line by adding together like items of assets, liabilities, incomes and expenses. All significant inter group transactions, unrealized inter-company profits and balances have been eliminated in the process of consolidation. Minority interest in subsidiaries represents the minority shareholders proportionate share of the net assets and net income.

d) The CFS includes the Financial Statements of the parent company and the subsidiaries (as listed in the table below).Subsidiaries are consolidated from the date on which effective control is acquired and are excluded from the date of transfer/disposal.

Sr. No Name of the Company Proportion of Ownership Interest

1 Bhagyalaxmi Dairy Farms Pvt Ltd. 99.99%

C. Significant Accounting Policies

a) Basis of Preparation of Financial Statements

The financial statements are 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 (‘the

Act’), and the accounting principles generally accepted in India and comply with the accounting

standards 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.

These financial statements are presented in Indian rupees and rounded off to nearest Lakhs unless otherwise stated.



b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in

India (Indian GAAP) requires management to make estimates and assumptions that affect the reported

amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date

of the financial statements. The estimates and assumptions used in the accompanying financial

statements are based upon management’s evaluation of the relevant facts and circumstances as of the

date of financial statements which in management's opinion are prudent and reasonable. Actual results

may differ from the estimates used in preparing the accompanying financial statements. Any revision to

accounting estimates is recognised prospectively in current and future periods.

c) Inventories

Inventories are valued at lower of cost or net realizable value. Basis of determination of cost remain as

follows:

Items Methodology of Valuation

Raw materials, components, stores and

spares, Trading goods, and Packing

Materials

Lower of Cost/NRV, Cost is determined on a weighted

average method. Materials and other items held for use in the

production of inventories are not written down below cost if the

finished products in which they will be incorporated are

expected to be sold at or above cost.

Work-in-progress and finished goods

Lower of Cost/NRV, Cost is determined on a weighted

average method. Cost includes direct materials and labour

and a proportion of manufacturing overheads based on normal

operating capacity.

Goods in Transits are valued exclusive of custom duty, where applicable

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs

of completion and estimated costs necessary to make the sale.

d) Cash flow statement

The cash flow statement is prepared using the “indirect method” set out in Accounting Standard 3 “Cash

Flow Statements” and presents the cash flows by operating, investing and financing activities of the

Company.

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand

and short term investments with an original maturity of three months or less.



e) Depreciation

• Leasehold improvement includes all expenditure incurred on the leasehold premises that have future economic benefits. Leasehold Improvements are amortized over the period of lease or estimated period of useful life of such improvement, whichever is lower.

• Depreciation on other fixed assets is provided on Straight Line Method on a pro rata basis over its economic useful lives, estimated by the management or at the rates prescribed under Schedule XIV of the Act whichever is higher.

• Depreciation on assets sold, discarded or demolished during the year, is being provided at

their respective rates on pro rata basis up to the date on which such assets are sold, discarded or demolished.

• Intangible assets are amortized over their estimated useful life.

• Assets costing less than or equal to ` 5,000 are depreciated fully in the year of purchase.

f) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the

Company and the revenue can be reliably measured.

• Sales of goods Revenue from sale of goods is recognised on transfer of all significant risks and rewards of

ownership to the buyer which is normally on dispatch of goods. Sales are stated net of returns and

trade discount. Sales tax and VAT are excluded.

• Service Income Service income is recognised as per the terms of the contract when the related services are

rendered. It is stated net of service tax.

• Interest income Interest income is recognized on time proportion basis.

• Other Income

Export incentive, income from investment, sales tax refund on account of “Mega Project” and

other service income are accounted on accrual basis. Export entitlements and benefits are

recognized in the profit and loss account when the right to receive credit in accordance with

the terms of the scheme is established in respect of exports made. Dividend income is

accounted for when the right to receive income is established

g) Tangible fixed assets

Fixed Assets are stated on cost less accumulated depreciation. The total cost of assets comprises its purchase price, freight, duties, taxes and any other incidental expenses directly attributable to bringing the asset to the working condition for its intended use.

Cow Capitalization - The Cow capitalization is done on cost basis. All the expenses borne till the calf becomes capable of giving milk (milking) are capitalized. Once the calf starts giving milk all expenses thereafter are charged to P & L account and are not capitalized. At the end of the year the Calf’s / Cows are valued at cost or market value whichever is less. The cost is calculated based on actual expenses incurred in respect of group of cows which is based on their age group. Market values are based on the current selling rate based on milking capacity of the cow in surrounding area.



Projects under commissioning and other Capital Work in progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

h) Intangible assets Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. The costs relating to acquisition of trademark are capitalised as ‘Intangible Assets’ and amortised on a straight line basis over a period of ten years, which is the management’s estimate of the useful life of such trademark.

i) Expenditure on new projects & substantial expansion during construction period

Expenditure directly related to construction and installation period is included under Capital Work In Progress and the same is transferred to fixed assets on the completion of its construction.

j) Foreign Currency Transactions

• Initial recognition

Foreign currency transactions are recorded in the reporting currency which is Indian Rupee, by

applying to the foreign currency amount the exchange rate between the reporting currency and the

foreign currency at the date of the transaction.

• Conversion

Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are

translated at the year-end at the closing exchange rate and the resultant exchange differences are

recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at

cost.

• Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting monetary items of

the Company at rates different from those at which they were initially recorded during the year, or

reported in previous financial statements, are recognised as income or as expenses in the year in

which they arise except exchange differences on long term foreign currency monetary

items related to acquisition of fixed assets, which are included in the cost of fixed assets.

k) Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that (i)

the company will comply with the conditions attached to them , and (ii) the grant/subsidy will be

received.

l) Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments.



Investments are classified under Non-current and current categories.

‘Non-current Investments’ are carried at acquisition /amortized cost. A provision is made for diminution

other than temporary on an individual basis.

‘Current Investments’ are carried at the lower of cost or fair value on an individual basis.

m) Retirement and Other Employee Benefits

• Short term employee benefit

All employee benefits payable wholly within twelve months of rendering the service are classified as

short-term employee benefits. These benefits include short term 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 as an expense during the

period. Benefits such as salaries and wages, etc. and the expected cost of the bonus / ex-gratia are

recognised in the period in which the employee renders the related service.

• Post employment employee benefits

Defined Contribution schemes

Company’s contributions to the Provident Fund and Employee’s State Insurance Fund are charged

to the Statement of Profit and Loss of the year when the contributions to the respective funds are

due.

Defined benefits plans

The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s 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, carried out by an independent actuary at each Balance Sheet date, using the Projected Unit Credit Method, which recognizes each period of service as giving rise to an 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 of the obligation under defined benefit plan are based

on the market yields on Government Securities as at the Balance Sheet date.

Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

Other long term employee benefits

Company’s liabilities towards compensated absences to employees are accrued on the basis of

valuations, as at the Balance Sheet date, carried out by an independent actuary using Projected

Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of

changes in actuarial assumptions and are recognised immediately in the Statement of Profit and

Loss.

n) Borrowing Cost

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that takes

substantial period of time to get ready for their intended use are capitalized along with the respective

fixed asset up to the date such asset is ready for use. Other borrowing costs are charged to the

Statement of Profit and Loss.



o) Segment Reporting

The Company has identified manufacturing and processing of milk & milk products as its sole operating segment and the same has been treated as primary segment. The Company secondary geographical segments have been identified based on the location of Customers and are demarcated into Indian and Overseas revenue earnings.

Segment Policies

The Company prepares its segment information on conformity with the accounting policies adopted for preparing and presenting the financial statements as a Company as a whole.

p) Leases

Assets taken under leases, where the company assumes substantially all the risks and rewards of

ownership are classified as Finance Leases. Such assets are capitalized at the inception of the lease at

the lower of fair value or the present value of minimum lease payments and a liability is created for an

equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as

to obtain a constant periodic rate of interest on outstanding liability for each period.

Assets taken under leases, where the lessor effectively retains substantially all the risks and benefits of

ownership of the leased term, are classified as operating leases. Operating lease payments are

recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease

term.

q) Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to

equity shareholders by the weighted average number of equity shares outstanding during the period.

Diluted earnings per share are calculated after adjusting effects of potential equity shares (PES).PES are those shares which will convert into equity shares at a later stage. Profit / loss is adjusted by the expenses incurred on such PES. Adjusted profit/loss is divided by the weighted average number of ordinary plus potential equity shares.

r) Taxation

Income-tax expense comprises current tax, deferred tax charge or credit, minimum alternative tax

(MAT).

Current tax

Provision for current tax is made for the tax liability payable on taxable income after considering tax allowances, deductions and exemptions determined in accordance with the prevailing tax laws.

Deferred tax

Deferred tax liability or asset is recognized for timing differences between the profits/losses offered for income tax and profits/losses as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date.



Deferred tax asset is recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax asset is recognized only if there is a virtual certainty of realization of such asset. Deferred tax asset is reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

Minimum alternative tax

Minimum alternative tax (MAT) obligation in accordance with the tax laws, which give rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax during the specified period. Accordingly, it is recognized as an asset in the Balance Sheet when it is probable that the future economic benefit associated with it will flow to the Company and the asset can be measured reliably.

s) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset or a

group of assets (cash generating unit) may be impaired. If any such indication exists, the Company

estimates the recoverable amount of the asset or a group of assets. 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. If such recoverable amount of the asset or the

recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying

amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an

impairment loss and is recognized in the Statement of Profit and Loss. After impairment, depreciation is

provided on the revised carrying amount of the asset over its remaining useful life.

Value in use is the present value of estimated future cash flow expected to arise from the continuing use

of the assets and from its disposal at the end of its useful life.

If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer

exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount

subject to a maximum of depreciable historical cost.

t) Provisions and Contingencies

A provision is recognised when an enterprise has a present obligation as a result of past event and it is

probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are

determined based on management estimate required to settle the obligation at the Balance Sheet date.

These are reviewed at each Balance Sheet date and adjusted to reflect the current management

estimates.

Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events

and the existence of which will be confirmed only by the occurrence or non-occurrence of future events

not wholly within the control of the Company.

When there is an obligation in respect of which the likelihood of outflow of resources is remote, no

provision or disclosure is made.

Note 2:

1 - SHARE CAPITAL (` : in Lakhs)

a. Details of authorised, issued and subscribed and paid up share capital

Particulars As at

March 31, 2014

As at

March 31, 2013

Authorised Capital

20,000,000 (P.Y. 20,000,000 shares) Equity Shares of Rs. 10/- each 2,000.00 2,000.00

Issued, subscribed and fully paid up shares

159,69,464(P.Y. 159,69,464 shares) Equity Shares of Rs. 10/- each fully paid up 1,596.96 1,596.96

1,596.96 1,596.96

b. Shareholders holding more than 5 % shares in the company is set out below:

No of Equity

shares held

Percentage of

Holding

No of Equity

shares held

Mr. Devendra Prakash Shah 4,856,944 30.41% 4,856,944 30.41%

Mr. Pritam Parkash Shah 3,053,296 19.12% 3,053,296 19.12%

Mr. Prakash Babulal Shah 2,239,112 14.02% 2,239,112 14.02%

Mr. Parag Parkash Shah 1,631,096 10.21% 1,631,096 10.21%

Mrs. Netra Pritam Shah 1,224,802 7.67% 1,177,480 7.37%

c. Reconciliation of number of shares

Number Rs. Number

Shares outstanding at the beginning of the year 15,969,464 159,694,640 15,810,272 158,102,720

Shares Issued during the year - - - -

Shares bought back during the year - - - -

Shares outstanding at the end of the year 15,969,464 159,694,640 15,810,272 158,102,720

d. Information on equity shares alloted without receipt of cash or alloted as bonus shares or shares bought back

Particulars

Fully paid up pursuant to contract(s) without payment being received in cash -

Fully paid up by way of bonus shares 11,857,704

e. Terms/rights attached to equity shares


Notes on Consolidated financial statement as at 31st March, 2014

Name of Shareholder

As at March 31, 2014 As at March 31, 2013

Percentage of

Holding

The Company has only one class of equity shares having a par value of Rs.10 per share.Each holder of equity shares is entitled to one vote per

In the event of liquidation of the company,the holders of equity shares will be entitled to receive remaining assets of the Company,after distribution of

Particluars

As at March 31, 2014 As at March 31, 2013

Rs.

Aggregate No of

2 - RESERVES AND SURPLUS ( ` :in Lakhs)

Particulars As at

March 31, 2014

As at

March 31, 2013

a. Securities Premium Account

Opening Balance 832.68 593.72

Add : Securities premium credited on Share issue - 238.96

Closing Balance 832.68 832.68

b. General Reserve

Opening Balance 200.00 200.00

(+) Transfer from Profit and Loss account - -


c. Capital Reserve on Consolidation

Opening balance 30.20 30.20

(+) Transfer from Profit and Loss account - -


d. Surplus

Opening balance 5,808.13 4,640.73

(+) Net Profit for the current year 743.42 1,167.38

(-) Minority Interest (0.03) (0.02)

(-) Transfer to Reserves - -

Closing Balance 6,551.58 5,808.13

Grand Total 7,614.45 6,871.01

3 - LONG-TERM BORROWINGS

Particulars As at

March 31, 2014

As at

March 31, 2013

Secured

(A) Term loans

a) Indian rupee loan from banks (Refer note a. below) 10,481.26 11,530.59

Less: Current maturities of long term debt 3,513.94 2,634.12

6,967.32 8,896.47

b) Foreign currency loan from banks (Refer note b. below) 6,080.63 815.84

Less: Current maturities of long term debt - 815.84

6,080.63 0.00

c) From financial institutions (Refer note c. below) 106.29 150.22

Less: Current maturities of long term debt 43.93 43.93

62.36 106.29

(B) Hire purchase loans (Refer note d. below) 55.76 52.93

Less: Current maturities of long term debt 16.45 15.54

39.31 37.39

Grand Total (A+B) 13,149.62 9,040.15

Unsecured

(A) Compulsory Convertible debentures (CCDs) (Refer note e. below) 12,500.00 12,500.00

(B) 0% Non Convertible Debentures (NCDs) to Promoters (Refer note f. below) 1,800.00 1,800.00

(C) From Financial Institutions (Refer note g. below) 1,088.97 2,011.05

Less: Current maturities of long term debt 1,088.97 925.00

- 1,086.05

Total 14,300.00 15,386.05

Total Of Secured And Un-Secured Loans 27,449.62 24,426.20

a.

b.

c.

d.

e.

f.

g. Loan from financial instituions of Rs 1088.97 Lakhs (P.Y Rs.2011.05 Lacs ) carries interest @ 16.00%.The loans is repayable in 6 installments starting from the

respective date of finance.

The Company has made an issue of 18,000,000 Non Convertible Debentures of nominal value of Rs. 10 each aggregating Rs. 1800.00 Lakhs. The life of such

debentures is 10 years from the issue date which carries zero % interest.

The Company has made an issue of 125,000,000 Compulsory Convertible Debentures of nominal value of Rs. 10 each aggregating Rs. 12500.00 Lacs. The life of

such debentures is 10 years from the issue date which carries zero % interest; however the same can be converted into equity shares at any time, at the option of

the Investors on or prior to the maturity date or in case of IPO of the company. Pursuant to certain conditions, these debentures may be put back to the Company at

the option of the investors in fiscal year ending March 31, 2014 or thereafter.(of the above, Rs. 12500.00 Lakh is guaranteed by Directors and / or others).

Indian rupee loan from financial instituions of Rs 106.29 Lakhs (P.Y. Rs .150.22 Lakhs) carries interest @ 12.46%.The loan is repayable in 8 monthly installments

along with interest .The loan is secured by factory premises, machinery situated at the Company’s premises and collateral security of hypothecation of stock and

book debts, pledge of certain equity shares of the Company held by promoters and personal guarantee of promoter directors.

Hire purchase loan from banks of Rs. 55.76 Lakhs(P.Y. Rs.52.93 Lakhs) carries interest @ 9.38% to 11.49 % p.a .The loans is repayable in 36 to 60 monthly

installments of Rs 17,550/- to Rs.1,02,750/- each along with interest starting from the respective date of finance.The loan is secured by specific assets financed

(Vehicle).Of the above, Rs. 55.76 lakhs is guaranteed by Promoters Directors)

PARAG MILK FOODS PRIVATE LIMITED Notes on Consolidated financial statement as at 31st March, 2014

Indian rupee loan from banks of Rs. 10,481.26 Lakhs (P.Y. Rs.11,530.59 Lakhs ) carries interest @ 11.40%-14.20%.The loans is repayable in 10-84 monthly

installments along with interest .The loan is secured by the factory premises,machinery situated at the Company's premises and collateral security of hypothecation

of entire current assets and entire fixed assets in the favour of the consortium members and personal guarantee of promoter directors.

Foreign currency loan from bank of Rs.6080.63 Lakhs (P.Y. Rs 815.84 Lakhs) bank carries interest @ 4.30 %.The loans is repayable in 12 approximately equal semi

annual installments along with interest starting from June ,2016.The loan is secured by first pari passu charge on entire fixed assets of the Company (except hire

purchase ) and hypothecation charge on entire current assets of Company along with other consortium members and personal guarantees of directors

( `: in Lakhs)

4 - DEFERRED TAX LIABILITY (Net)

The major components of deferred tax liability / asset as recongised in the financial statement is as follows:

Particulars As at

March 31, 2014

As at

March 31, 2013

Deferred Tax Liability

1,248.80 1,392.12

1,248.80 1,392.12

Deferred Tax Asset

Provision for Employee benefits 2.01 1.68

Provision for Bad debts 212.14 98.26

Expenses disallowed under Sec 43B 38.81 4.09

Brought forward business losses 474.11 337.34

727.07 441.37

Net 521.73 950.75

Deferred Tax Charge / (Credit) for the year 209.09 (157.67)

5 - OTHER LONG-TERM LIABILITIES

Particulars As at

March 31, 2014

As at

March 31, 2013

Security Deposits - 40.00

Deposit from Customer 800.00 -

-

Total 800.00 40.00

6 - LONG-TERM PROVISIONS

Particulars As at

March 31, 2014

As at

March 31, 2013

Gratuity 14.44 16.18

14.44 16.18

7 - SHORT-TERM BORROWINGS

Particulars As at

March 31, 2014

As at

March 31, 2013

Loans repayable on demand (Secured)

Cash credit from banks (Refer note a. below) 23,576.81 14,866.71

Cash credit (foreign currency) from banks (Refer note a. below) 108.74 5,091.75

Total 23,685.55 19,958.46

Loans repayable on demand (Unsecured)

- From Banks - -

- From Directors {Refer Note 2.(33)} 25.52 275.03

- From Shareholders {Refer Note 2.(33)} - 82.51

Grand Total 25.52 357.54

Total Of Secured And Un-Secured Loans 23,711.07 20,316.00

a. Cash credit from banks is secured by hypothecation of inventories and book debts and fixed assets, personal guarantee of promoter directors.The cash

credit is repayable on demand and carries interest @ 12.95 to 14.25% (In case of foreign currency,rate of interest LIBOR+ 4.25%).



Fixed Assets: Impact of difference between Income Tax depreciation and depreciation charged for the financial

reporting.

( `: in Lakhs)



8 - TRADE PAYABLES

Particulars As at

March 31, 2014

As at

March 31, 2013

Trade Payables *

Due to Micro and Small Enterprises {Refer Note 2.(35)} 66.97 63.76

Other than Micro and Small Enterprises 12,473.96 9,173.11

12,540.93 9,236.87

9 - OTHER CURRENT LIABILITIES

Particulars As at

March 31, 2014

As at

March 31, 2013

Current maturities of long term borrowings {Refer Note no. 2(3)} 4,646.84 4,418.89

Current maturities of hire purchase loans {Refer Note no. 2(3)} 16.45 15.54

Payables for machinery* 604.05 196.47

Employee Benefits Payable 311.78 289.29

Deposits from Customers 316.84 58.87

Advance from Customers 817.09 230.28

Other Statutory Liabilities 507.10 465.05

Interest accrued but not due on borrowings 74.07 172.19

Provision for expenses 419.03 278.14

Total 7,713.25 6,124.72

10 - SHORT-TERM PROVISIONS

Particulars As at

March 31, 2014

As at

March 31, 2013

Provision for employee benefits:

Gratuity 3.23 5.29

Others:

Income Tax (net off advance tax) 87.18 -

Wealth tax 1.53 0.56

Total 91.94 5.85

* The Company has no payable to Micro and Small Enterprises as defined in the "Micro, Small and Medium Enterprises Development Act, 2006" as at

March 31, 2014. The identification of Micro, Small and Medium Enterprises is based on the management's knowledge/confirmation of their status.

* The Company has no payable to Micro and Small Enterprises as defined in the "Micro, Small and Medium Enterprises Development Act, 2006" as at

March 31, 2014 except as stated above in respect of few parties on account of Principal amount which is subsequently paid in time. The identification of

Micro, Small and Medium Enterprises is based on the management's knowledge/confirmation of their status.

11 - FIXED ASSETS ( `: in Lakhs)

As at

April 1, 2013

Additions

during the

Year

Deletions

As at

March 31,

2014

As at

April 1, 2013

Depreciation

charge for

the year

Deletions

As at

March 31,

2014

As at

March 31,

2014

As at

March 31,

2013

A.Tangible Assets

Land - Owned 663.89 663.89 - - 663.89 663.89

Buildings 8,046.50 177.65 8,224.15 960.52 271.96 - 1,232.48 6,991.66 7,085.98

Leasehold Building Improvements 55.91 86.70 - 142.61 55.91 28.90 - 84.81 57.80 -

Plant & Machinery 22,021.58 1,560.23 74.06 23,507.75 7,847.92 2,375.08 66.06 10,156.94 13,350.81 14,173.66

Furniture & Fixtures 103.11 17.28 3.35 117.04 19.07 10.46 1.57 27.96 89.08 84.05

Office Equipment 115.25 24.50 - 139.75 18.81 10.58 - 29.39 110.36 96.45

Computers 111.03 21.36 - 132.39 48.05 20.05 - 68.10 64.29 62.99

Vehicles 292.74 35.79 39.98 288.55 121.83 25.72 19.58 127.97 160.58 170.91

Cows 2,010.41 669.12 2,679.53 0.08 0.01 0.09 2,679.44 2,010.32

Total 33,420.42 2,592.63 117.39 35,895.66 9,072.19 2,742.76 87.21 11,727.74 24,167.92 24,348.25

Previous Year 31,760.25 2,339.99 670.56 33,429.68 7,123.36 2,601.98 651.54 9,073.79 24,355.89 24,636.90

B.Intangible Assets

Brands/Trademarks 8.27 8.27 3.10 2.19 5.29 2.98 5.17

Computer software 52.01 28.36 80.37 17.36 11.02 28.38 51.98 34.65

Website Development - 14.89 14.89 - 2.21 2.21 12.67 -

Total 60.28 43.25 - 103.53 20.46 15.42 - 35.88 67.63 39.82

Previous Year 39.60 11.43 - 51.03 12.46 6.41 - 18.87 32.16 27.14

Grand Total (A+B) 33,480.70 2,635.88 117.39 35,999.19 9,092.65 2,758.18 87.21 11,763.62 24,235.55 24,388.08

Previous Year (A+B) 31,799.84 2,351.43 670.56 33,480.71 7,135.82 2,608.39 651.54 9,092.66 24,388.05 24,664.04

a.

b.

12 - NON-CURRENT INVESTMENTS

Parag Bhagyalaxmi Elimination

As at

March 31,

2014

As at

March 31,

2013

Trade Investments 1,776.44 (1,776)

Investments in Equity instruments 0.16 0.16 0.16

Other Investments

Investments in Mutual Funds 33.26 33.26 30.42

Other Investments 0.38 0.38 0.38

1,810.24 - (1,776.44) 33.80 30.96

Details of Trade Investments & Other Investments

31-Mar-14 March 31,

2013

31-Mar-14 March 31,

2013 A Trade Investments

1 Investments in Equity instruments

a Sharad Sahakari Bank Ltd. Other Unquoted Fully Paid - - 0.16 0.16 Yes

B Other Investments

Investment in Mutual Fund

a Union KBC Mutual Fund Other Quoted Fully Paid - - 33.26 30.42 No

Other Investments

a Rupee Bank Ltd. Other Unquoted Fully Paid - - 0.38 0.38 Yes

33.80 30.96

Particulars 31-Mar-14 31-Mar-13

Aggregate amount of quoted investments [Market value of Rs.33.26 Lacs (P.Y. Rs. 30.42 Lacs)] 33.26 30.42

Aggregate amount of unquoted investments [Market value of Rs 0.54 Lacs (P.Y. Rs. 0.54 Lacs)] 0.54 0.54

Sr.

No.

Name of the Body Corporate Subsidiary /

Associate /

JV/Others

Quoted /

Unquoted



PARTICULARS

Gross Block Accumulated Depreciation

Partly

Paid / Fully

paid

Extent of Holding (%)

Net Block

As per the provisions of the Accounting Standard 16 - 'Borrowing costs' notified pursuant to the Companies (Accounting Standard) Rules, 2006, the Company has capitalised borrowing costs of Rs.708.51

Lacs. (Previous year Rs. 239.28 Lakhs) to the cost of fixed assets.

In accordance with Notification No. GSR 225(E) dated March 31, 2009 issued by Ministry of Company Affairs, the company has adjusted foreign exchange gain / (loss) of Rs 216.69 Lacs [Previous year Rs.

0.35 Lacs] arising on reporting of long term foreign currency monetary item against the historical cost of fixed assets.

Amount Whether

stated at

Cost

Particulars

( `: in Lakhs)

13 - LONG-TERM LOANS AND ADVANCES

Particulars As at

March 31, 2014

As at

March 31, 2013

a. Capital Advances

Considered good (Unsecured ) 9,633.86 8,871.72

Considered Doubtful - 10.10

Less: Provision for doubtful deposits - (10.10)

9,633.86 8,871.72

b. Security Deposits

Considered good (Unsecured ) 557.89 493.67

557.89 493.67

Grand Total (a + b) 10,191.75 9,365.39

14- OTHER NON-CURRENT ASSETS

Particulars As at

March 31, 2014

As at

March 31, 2013

Margin Money with original maturity for more than 12 months 164.43 97.77

164.43 97.77

15 - INVENTORIES

(Valued at cost or net realisable value,whichever is less )

Particulars As at

March 31, 2014

As at

March 31, 2013

543.08 367.74

b. Work-in-progress 7,354.13 4,311.42

c. Finished goods 9,347.39 7,344.93

d. Stores and spares * 1,782.60 1,922.10

{* includes goods in transit Rs Nil (P.Y.Rs.211.12 Lacs)}

19,027.20 13,946.19

16 - TRADE RECEIVABLES

Particulars As at

March 31, 2014

As at

March 31, 2013

-


Considered Doubtful 679.91 282.11

Less: Provision for doubtful debts 680.01 (282.11)

5,238.81 3,471.70

Other Debts


Considered Doubtful - 8.95

Less: Provision for doubtful debts - -

12,850.27 11,774.04

Grand Total 18,089.08 15,245.74



Total

a. Raw Materials and components

Outstanding for a period exceeding six months from the date they are due for payment

( `: in Lakhs)



17 - CASH AND BANK BALANCES

As at

March 31, 2014

As at

March 31, 2013

I. Cash and Cash Equivalents

a) Cash on hand 163.77 77.49

b) Balances with banks

-In Current Accounts 144.03 45.78

-In deposits with original maturity of less than 3 months - 19.91

II. Other bank balances

-Margin money with original maturity for more than 3 months but 113.01 78.67

less than 12 months

Grand Total (a+b) 420.81 221.85

18 - SHORT-TERM LOANS AND ADVANCES

Particulars As at

March 31, 2014

As at

March 31, 2013

a) Advance Recoverable in Cash or in Kind

Considered good (Unsecured) 83.64 125.58

83.64 125.58

b) Loans and Advances

Considered good (Unsecured) 3,337.41 1,562.63

Considered Doubtful (Unsecured) - 0.70

Less: Provision for doubtful debts - (0.70)

3,337.41 1,562.63

c) Other loans and advances *

Considered good (Unsecured) 934.78 692.63

Considered Doubtful (Unsecured) 82.00 -

Less: Provision for doubtful debts (82.00) -

934.78 692.63

Total 4,355.83 2,380.84

* Includes balance with government authorities i.e export duty receivable,MAT credit receivable and VAT credit receivable & Income tax (net off provisions)

19 - OTHER CURRENT ASSETS

Particulars As at

March 31, 2014

As at

March 31, 2013

Interest Receivables - -

Electricity Duty Receivable 15.69 238.84

Sales Tax Receivable 3,167.42 3,050.41

3,183.11 3,289.25

Particulars

( `: in Lakhs)

20 - REVENUE FROM OPERATIONS

Particulars Year Ended

March 31, 2014

Year Ended

March 31, 2013

Sale of Products (Gross) 103,714.33 89,571.67

Other Operating Revenues

Processing Charges {TDS Rs.42.91 Lacs (P.Y. Rs. 31.52 Lacs)} 2,250.26 1,521.42

Export Benefits and Incentives 712.40 134.97

PSI Incentive (Sales Tax) 1,675.57 1,537.63

108,352.56 92,765.69

21 - OTHER INCOME


March 31, 2014

Year Ended

March 31, 2013

Interest income on

-Bank deposits {TDS Rs 2.39 Lacs (P.Y. Rs 1.05 Lacs)} 34.81 21.07

-Others

Dividend Income from long term Investments 0.02 0.02

Profit on sale of investments - 102.86

Other non-operating income 51.58 60.94

86.41 184.89

22 - COST OF RAW MATERIAL CONSUMED


March 31, 2014

Year Ended

March 31, 2013

Inventory at the beginning of the year 367.74 407.02

Add: Purchases 79,239.08 61,221.26

Less: Inventory at the end of the year 543.08 367.74

79,063.74 61,260.54

Details of Raw Material Consumed


March 31, 2014

Year Ended

March 31, 2013

Raw Milk 64,513.71 54,266.12

Others 14,550.03 6,994.42

79,063.74 61,260.54

23 - CHANGES IN INVENTORY OF FINISHED GOODS, WORK-IN-PROGRESS


March 31, 2014

Year Ended

March 31, 2013

Inventories at the beginning of the year

Finished Goods 7,344.93 7,509.67

Work-In-Progress 4,311.42 4,455.44

11,656.35 11,965.11

Inventories at the end of the year

Finished Goods 9,347.39 7,344.93

Work-In-Progress 7,354.13 4,311.42

16,701.52 11,656.35

(5,045.17) 308.76

24 - EMPLOYEE BENEFIT EXPENSES


March 31, 2014

Year Ended

March 31, 2013

Salaries,wages and bonus 4,326.55 3,653.50

Contributions to -

Provident & other fund 111.28 84.44

Gratuity 23.47 4.53

Staff welfare expenses 303.05 236.94

4,764.35 3,979.41



( `: in Lakhs)



25 -OTHER EXPENSES


March 31, 2014

Year Ended

March 31, 2013

Consumption of stores and spares 5,714.02 4,817.89

Transport, Octroi & Freight 3,854.02 2,683.71

Laboratory Expenses 21.65 22.69

Power and Fuel 3,915.26 3,819.98

Rent,Rates & taxes 421.52 236.05

Insurance 153.75 114.20

Repairs and maintaince

-Plant and machinery 548.52 562.69

-Building 44.43 46.15

-Others 185.35 198.81

Other Factory Expenses 63.14 57.62

Carriage Outward 3,066.68 2,288.26

ETP Expenses 15.50 13.51

Security Charges 164.20 142.48

Advertisements 608.42 1,044.11

Sales Promotion Expenses 681.24 688.28

Commission on Sales 405.47 450.25

Agency Charges for Export 113.58 32.35

Fees And Subscriptions 41.14 23.66

Travelling & Conveyance 380.43 311.67

Communication Costs 70.83 65.71

Printing and Stationery 33.40 32.51

Legal & Professional Fees 293.44 242.02

Director's remmuneration 234.00 120.00

Auditor's remmuneration * 18.77 21.53

Bad debts 5.27 -

Provision for doubtful debts 388.95 115.70

Provision for doubtful advances 82.00 10.10

Loss on impairment of fixed assets 9.77 18.39

Loss on assets 39.53 28.18

Donations 23.62 2.03

Miscellaneous Expenses 185.93 129.63

21,783.83 18,340.16

*Payment to auditor

Particulars

Year Ended

March 31, 2014

Year Ended

March 31, 2013

As auditor:

Audit fees 18.10 16.85

Other Services 0.39 3.93

Reimbursement of expenses 0.27 0.74

Total 18.76 21.52

26 - FINANCE COST


March 31, 2014

Year Ended

March 31, 2012

Interest expense

-term loans 906.02 813.89

-working capital loans 3,298.64 3,018.55

Bank Charges & Commission 286.29 203.38

4,490.95 4,035.82

( `: in Lakhs)

27 - EARNINGS PER EQUITY SHARES


March 31, 2014

Year Ended

March 31, 2013

Basic Earnings per Share

Profit/(Loss) attributable to Equity shareholders 743.41 1,167.35

Weighted average number of equity shares 159.70 159.70

Basic Earnings Per Share 4.66 7.31

Face value per Share 10 10

Dilutive Earnings per Share

Profit after adjusting interest on petential equity shares 743.41 1,167.35

Add: Interest saved

Less: Tax savings

743.41 1,167.35

Weighted average number of equity share after considering potential equity shares 159.70 159.69

Add :Protential convetible debentures 71.14 71.14

230.83 230.83

Dilutive Earnings per Share 3.22 5.06



The basic earnings per equity share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of

equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of

shares considered for deriving basic earnings per share and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive

potential shares, unless the results would be anti dilutive. The EPS is calculated as under:


Notes on Consolidated financial statements for the year ended 31st March, 2014

28. I. Contingent Liabilities &Commitments

a. Guarantees given by Banks on behalf of the Company ` 232.86 Lakhs (Previous year ` 279.71 Lakhs).

b. Corporate guarantees given by Company for loans taken by its subsidiary Company & suppliers from Banks /Financial institutions to the tune of ` 4,290 Lakhs (Previous Year ` 4,450.00 Lakhs).

c. Estimated amount of contracts remaining to be executed on capital account (net of advances already made) and not provided for is `.191.53 Lakhs (PY: ` 1094.85 Lakhs).

d. Claims against the Company not acknowledged as debt amounting ` 7,06,75,766/- (including interest of ` 2,03,72,730) being claim made by France International Trade, Rennes, vide Special Civil Suit No. 692/2012 in the Court of Honourable Civil Judge, Senior Division, Pune for damaged goods supplied by the Company.

e. During the year the sales tax assessment has been completed in respect of FY2006-07 and FY 2009-10 and the department has raised demand of ` 148.98 Lakhs and ` 684.21 Lakhs, the company has preferred appeal against the order and have paid part payment amounting to ` 35.00 Lakhs, and ` 55.00 Lakhs under protection. The management and the tax consultant are of the view that the company has strong case and the demand are not sustainable

II. Income Tax

During financial year (FY) 2010-11, Income Tax Authorities had conducted a search/survey on the

Company, its subsidiary and promoter Directors (the Group). Consequent to this, to avoid protracted

litigations the Company had declared in that year `1,300 lakhs towards purchases of milk and ` 226

lakhs towards inventory, i.e. aggregate additional income of ` 1,526 lakhs. As such declaration of `

1300 lakhs was not acceptable to the tax authorities and in order to avoid acrimonious and long

drawn litigation the company had filed an application with the settlement commission in March 2013

and had offered during FY 2012-13 further additional income of ` 2,762.47 lakhs in respect of AY.

2006-07 to AY 2011-12 and paid tax and interest thereon of `1,536.19 lakhs. In the financial

statements for FY 2012-13, the effect has been given only for the sum of ` 1,536.19 Lakhs.

Thereafter, as per order dated 23rd June 2014 of the settlement commission u/s 245D(4) of the Income

Tax Act, 1961, the Company has further offered additional income of Rest. `551 lakhs for the above

AYs. In the financial statements for FY 2013-14 the effect has been given only for ` 551 lakhs, being

the tax and interest thereon for such additional income. There is no other consequential impact of all

such declarations of income on the financial statements for FY 2012.13 and FY 2013-14.

During the financial year 2010-11, Income Tax Authorities had conducted a search/survey on the Company. Consequent to this search/survey, the Income tax authorities have made an addition of ` 533.15 lakhs to the returned income of the Company and demanded additional tax and interest of ` 215.85 lakhs for the assessment years 2006 – 07 to 2011 - 12. The Company has not accepted the additions and demand made by the income tax authorities and has made an appeal to Commissioner (Appeals).

Further the proceedings are under process and the consequential effect, if any, of the outcome of these proceedings on the assets, liabilities and profits of the Company and further tax liabilities, if any, is currently not ascertainable.

III. The year end foreign currency (FC) exposures that has been hedged by a derivative instrument or

otherwise :Nil



IV. The year end foreign currency (FC) exposures that are un hedged by a derivative instrument or

otherwise are as follows:

Particulars Currency

As at

March 31, 2014

As at

March 31, 2013

` In

Lakhs FC in Lakhs ` In Lakhs FC in Lakhs

Payables in foreign Currency

- Sundry Creditors

-Cash Credit Account

EURO

USD

USD

62.25

-

-

0.75

-

-

45.93

5.98

5,159.16

0.66

0.13

93.08

Secured Loans -Secured Loans

-Commitment fees accrued

-Interest accrued but not due

USD

USD

USD

5,991.95

4.10

84.60

99.70

0.07

1.41

815.84

-

-

15.00

-

-

Receivables in foreign currency USD 107.31 1.79 521.08 9.58

Advance from trade receivables in foreign currency

USD

AED

406.72

-

6.77

-

2.97

12.64

0.05

0.40

Advance to Suppliers in foreign

currency

AUD

EURO

513.88

14.60

9.30

0.18

703.03

6.48

12.60

0.09

29. Tax Adjustments (Net)

Tax adjustments of ` 315.51 Lakhs (P.Y. 1,208.31 Lakhs) represents Income Tax amounting to

`380.35 Lakhs provided based on the order received by the Company from the Settlement

Commission.

30. Disclosure pursuant to Accounting Standard – 15 ‘Employee Benefits’

a. General Description

i). Contribution to Provident Fund (Defined Contribution)

The Company’s provident fund scheme (including pension fund scheme for eligible employees) is a defined

contribution plan. The expenses charged to the Statement of Profit and Loss under the head Contribution to

Provident Fund is ` 103.39 Lakhs (PY ` 84.44 Lakhs)

ii). Gratuity (Defined benefit plan)

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of

service gets a gratuity on death or resignation or retirement at 15 days salary (last drawn salary) for each

completed year of service. The Company during the year provided ` 23.47 lakhs (PY: ` 17.83 lakhs) towards

gratuity.



b. The following tables set out disclosures prescribed by AS 15 in respect of company’s funded and

unfunded gratuity plan.

i) Changes in the present value of defined benefit obligation representing reconciliation of opening and closing balances thereof:

(` in Lakhs) Particulars Year ended

March 31, 2014

Year ended

March 31, 2013

Present value of obligation as at the beginning of the year: 63.60 57.41

Interest cost 7.24 4.72

Current service cost 26.93 24.11

Benefits paid (1.64) (1.79)

Actuarial (gain) / loss on obligation (9.73) (6.71)

Closing Present value of obligation 86.40 77.73

ii) Changes in the Fair Value of Plan Assets

(` in Lakhs) Particulars As at

March 31, 2014

As at

March 31, 2013

Present value of plan assets as at beginning of the year 58.44 35.02

Expected return on plan assets 5.50 3.57

Contributions 22.43 20.92

Benefits paid (1.64) (1.79)

Actuarial gains / (losses) 0.31 0.72

Fair value of plan assets as at end of the year * 85.04 58.44

* All the funds under the Plan Assets are managed by insurer.

iii) Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets

(` in Lakhs)

Particulars As at

March 31, 2014

As at

March 31, 2013

Present value of obligation as at end of the year 102.71 79.91

Fair value of plan assets as at end of the year 85.04 58.44

Funded Asset recognized in the Balance Sheet 6.21 5.17

Unfunded Asset recognized in the Balance Sheet 11.46 16.31

Shown under - “Provision” 17.67 21.47

iv) The amounts recognised in the Balance Sheet are as follows: (` in Lakhs) Particulars As at

March 31, 2014

As at

March 31, 2013

Present value of obligation as at the end of the year 102.71 79.91

Value of assets 85.04 58.44

Net liability recognised in balance sheet 17.67 21.47



v) The amounts recognized in the Statement of Profit and Loss are as follows: (` in Lakhs) Particulars Year ended

March 31, 2014

Year ended

March 31, 2013

Current service cost 26.93 24.11

Past service cost NIL NIL

Interest cost 7.24 4.72

Expected return on plan assets (5.50) (3.57)

Net actuarial (gain) / loss recognized in the year (10.04) (7.44)

Expenses recognized in the statement of profit and loss 18.63 17.83

vi) Percentage of each category of plan assets to total fair value of plan assets as at March 31, 2014: Not Applicable

vii) Components of Experience Adjustments

(` in Lakhs)

Particulars

Year ended

March 31,

2014

March 31,

2013

March 31,

2012

March 31,

2011

Actuarial (Gains) and Losses

on obligations 5.58 (22.03) 11.79 (0.50)

Actuarial (Gains) and Losses

on plan assets (0.31) (0.72) (0.42) -

Actuarial (Gains)/Losses

recognized for the year 5.27 (22.75) 11.37 (0.50)

viii) Actuarial assumption: (` in Lakhs)


March 31, 2014

Year Ended

March 31, 2013

Discount Rate 9.16% 8.05%

Rate of increase in compensation levels(p.a) 6.00% 5.00%

Rate of return on Plan Assets(for funded scheme) 8.00% 8.00%

Expected average remaining working lives of the

employees(years)

36.50 Years 30.67 Years

‘* The estimates of future salary increase, considered in actuarial valuation, taken on account of inflation, seniority, promotion & other relevant factors such as supply and demand in the employment market.

31. Information pursuant to para 5(viii) of the General Instructions to the Statement of Profit and Loss

i) Value of Imports on C.I.F Basis: (` in Lakhs)


March 31, 2014

Year Ended

March 31, 2013

Value of Imports (C.I.F. Value)

Components and spare parts 385.59 266.25

Capital goods (including CWIP) 79.39 236.43



ii) Expenditure in Foreign Currency (` In Lakhs)


March 31, 2014 Year Ended

March 31, 2013

Expenditure in Foreign Currency

Foreign Travel 14.08 1.10

Sales Promotion 16.43 30.39

Commission on Sales 7.51 8.05

Interest Expenses 9.46 71.38

Bank Charges 1.21 -

iii) Earnings in Foreign Currency

(` In Lakhs)

Particulars Year Ended March 31, 2014

Year Ended March 31, 2013

Earnings in Foreign Exchange

Export of goods on F.O.B. Basis 14,968.66 4,948.58

(b). Consumption of raw materials: (` in lakhs)

(c). Consumption of components and spare parts:

(` in Lakhs)

Particulars Year Ended March 31, 2014 Year Ended March 31, 2013

Amount Percentage Amount Percentage

Imported 385.59 7% 266.25 5%

Indigenous 5,276.80 93% 4,540.21 95%

Total 5,662.39 100% 4,806.46 100%

32. Related Party disclosures

In accordance with the requirements of Accounting Standard 18, “Related Party Disclosures” notified pursuant to the Companies (Accounting Standards) Rules, 2006”, the details of related party transactions are given below:

Particulars Year Ended March 31, 2014 Year Ended March 31, 2013

Amount Percentage Amount Percentage

Imported - - - -

Indigenous 79,063.74 100% 61,260.54 100%

Total 79,063.74 100% 61,260.54 100%



a. List of related parties:

b) Details of Related party transactions during the year:

The Company has identified the following related party transactions as per Accounting Standard 18, notified

pursuant to the Companies (Accounting Standards) Rules, 2006: (` in Lakhs)

Nature of Transactions Key Management

Personnel (a)

Relatives of Key

Management Personnel (b)

Purchases of Raw Material

13.20 -

(16.18) -

Rent Paid

Devendra Shah

Pritam Shah

Preeti Shah

Netra Shah

3.90

(3.90)

4.50

(4.50)

-

(-)

-

(-)

-

(-)

-

(-)

-

(-)

-

(-)

Salary and Perquisites

Parag Shah

Akshali Shah

-

(-)

-

(-)

24.00

(24.00)

1.67

(2.33)

Director’s Remuneration

Devendra Shah

Pritam Shah

120.00

(66.00)

114.00

(54.00)

-

(-)

-

(-)

Nature of relationship Name of related parties

a.) Key Management Personnel Mr. Devendra Shah – Chairman

Mr. Pritam Shah – Director

Mr. Parag Shah – Director

b.) Relatives of Key Management Personnel

Mr. Prakash Shah

Mrs. Rajani Shah

Mrs. Priti Shah

Mrs. Netra Shah

Miss. Akshali Shah

Mr. Poojan Shah

Mrs. Archana Shah



Nature of Transactions Key Management

Personnel (a)

Relatives of Key

Management Personnel (b)

Amount received (in respect

of loans)

Devendra Shah

Pritam Shah

Netra Shah

Others

501.39 -

(1,358.62) (-)

2,277.58 -

(1,032.73) (-)

- 120.00

(-) (648.00)

0.01 2.00

(5.62) (125.13)

Amount repaid (in respect of

loans)

Devandra Shah

Pritam Shah

Netra Shah

Preeti Shah

Others

755.35

(1,741.49)

2,273.11

(4,805.72)

-

(-)

-

(-)

0.03

(5.63)

-

(-)

-

(-)

176.19

(616.58)

26.03

(35.19)

2.29

(77.72)

Balances outstanding as at March 31, 2014

Loans Repayable

Devendra Shah

Pritam Shah

Others

10.74

(264.70)

13.98

(9.51)

0.80

(0.82)

-

(-)

-

(-)

-

(82.51)

Payable

Parag Shah

Devendra Shah

-

(-)

0.05

(1.47)

25.54

(15.43)

-

(-)

Receivable

Akshali Shah

-

(-)

0.10

(-0.30)

* Disclosure of liability for guarantee for secured and unsecured loans obtained has been restricted to the

amount of liability outstanding as at the Balance Sheet date.

No amount pertaining to related parties has been provided for as doubtful debts. Also, no amount has been

written off/written back during the year.



The Company granted corporate guarantee to its subsidiary in securing financial assistance. Further details are

set out in Note no 28 of the financial statements.

Note: 1. Figures in Italics and under brackets are of the previous year.

33. Segmental Information:

i) Primary (Business) Segment:

In accordance with the requirements of the Accounting Standard 17 “Segment Reporting”, the Company’s business consists of one reportable business segment i.e., “Manufacturing & Processing of Milk & Milk Products”, hence no separate disclosures pertaining to attributable Revenue, Profits, Assets, Liability, Capital Employed are given.

ii) Secondary (Geographical) Segment:

Secondary segment reporting is performed on the basis of geographical location of the customers. The

operation of the Company comprises local sales and export sales. The management views the Indian market

and export market as distinct geographical segments. The following is the distribution of the Company’s sale

by geographical markets:

(‘ in Lakhs)

Particulars 2013-14 2012-13

Within India

Outside India

Total Within India

Outside India

Total

Segment Revenue 93,383.90 14,968.66 108,352.56 87,976.40 4,789.30 92,765.70

Carrying Amount of Tangible and Intangible Assets

27,949.14 - 27,949.14 25,007.29 - 25,007.29

Additions to Fixed Assets

2,635.88 - 2,635.88 2,351.43 - 2,351.43

Carrying value of assets (other than fixed assets)

53,470.21 635.79 54,106.00 43,347.41 1,230.59 44,578.00

34. Operating Lease

The Company has taken official premises and furniture on a non-cancellable operating lease for its Mumbai

offices; the operating lease payments for which are recognized on a straight line basis over the lease term after

equalizing the rent over entire tenure. The Company has not given any sub lease during the year.

Particulars Amount

(Rs. In Lakhs)

Lease payments for the year 53.77

Not later than one year 147.95

Later than one year and not later than five years 83.93

Later than five years -



35. Amounts due to Micro, Small and Medium Enterprises:

As per the requirement of section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 following information are been disclosed. This information takes into account only those Suppliers who have responded to the enquiries made by the Company for this purpose. ( ` in Lakhs)

Sr.

No

Particulars Year ended

March 31,2014

Year ended

March 31,2013

i) a) The Principal amount remaining unpaid to any supplier at the end of

the accounting year included in Trade Payables.

66.97 63.76

b) The interest due on above 0.50 -

ii) The amount of interest paid by the buyer in term of Section 16 of the

Act

- -

iii) The amount of the payment made to the supplier beyond the appointed

day during the accounting year.

- -

iv) The amount of interest accrued and remaining unpaid at the end of

financial year.

0.50 -

v) The amount of interest due and payable for the period of delay in

making payment (which have been paid but beyond the due date during

the year) but without adding the interest specified under this Act.

- -

vi) The amount of further interest remaining due & payable in the

succeeding years

- -

36. Previous year’s figures have been regrouped/reclassified wherever necessary, to confirm to current year’s classification.

As per our report of even date attached

For Haribhakti & Co.LLP For and an behalf of the Board of Directors Chartered Accountants Firm Registration No: 103523W

Nitin Jumani Devendra Shah Pritam Shah Partner Chairman Managing Director Membership No. F-111700 Rachana Sanganeria Company Secretary

Place: Pune Place: Pune Date:25th September, 2014 Date: 25th September, 2014

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