SUBSIDIARY COMPANIES - ITC Ltd

SUBSIDIARY COMPANIES 

Russell Credit Limited 3 

Greenacre Holdings Limited 15 

Wimco Limited 22 

Prag Agro Farm Limited 40 

Pavan Poplar Limited 47 

Technico Pty Limited 54 

Technico Technologies Inc. 65 

Technico Agri Sciences Limited 69 

Technico Asia Holdings Pty Limited 82 

Technico Horticultural (Kunming) 

Company Limited 87 

Srinivasa Resorts Limited 95 

Fortune Park Hotels Limited 103 

Bay Islands Hotels Limited 113 

ITC Infotech India Limited 119 

ITC Infotech Limited 130 

ITC Infotech (USA), Inc. 137 

Pyxis Solutions, LLC. USA 143 

Wills Corporation Limited 147 

Gold Flake Corporation Limited 154 

Landbase India Limited 161 

BFIL Finance Limited 174 

MRR Trading & Investment 

Company Limited 182 

Surya Nepal Private Limited 186 

King Maker Marketing, Inc. 199

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 

31ST MARCH, 2012 

1. Your Directors hereby submit their Report and Accounts for the financial 

year ended on 31st March, 2012. 

2. COMPANY PERFORMANCE 

The overall performance of your Company has been satisfactory despite 

volatility in the financial markets. During the year, your Company has 

earned revenue of ` 40.25 crores from its operations, with total revenue 

being ` 40.58 crores. 

The financial results of your Company, summarised, are as under : 

For the year ended For the year ended 

31st March, 2012 31st March, 2011 

(`) (`) 

a. Profit Before Tax 37,34,51,860 22,59,80,993 

Less : Tax Expense 5,91,16,827 2,62,66,898 

b. Profit After Tax 31,43,35,033 19,97,14,095 

c. Add : Profit brought 

forward from previous years 72,03,34,978 56,05,63,702 

d. Surplus available for Appropriation 103,46,70,011 76,02,77,797 

e. Less : Transferred to Special 

Reserve under Section 45-IC of 

the Reserve Bank of India 

Act, 1934 6,28,67,007 3,99,42,819 

f. Balance carried forward to 

the following year 97,18,03,004 72,03,34,978 

3. DIRECTORS 

In accordance with the provisions of Article 143 of the Articles of 

Association of the Company, Mr. R. Tandon 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. 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; 

ii) 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; 

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. 

5. TRADE INVESTMENTS 

As stated in the Report of the Directors of the previous years, a petition 

was filed by an individual in the High Court at Calcutta, seeking an 

injunction against the Company’s Counter Offer to the shareholders 

of VST Industries Limited (VST), made in accordance with the Securities 

and Exchange Board of India (Substantial Acquisition of Shares & 

Takeovers) Regulations, 1997, as a competitive bid, pursuant to a Public 

Offer made by an Acquirer, which closed on 13th June, 2001. 

The High Court at Calcutta did not grant an injunction. However, 

transaction in the shares of VST pursuant to the Counter Offer by the 

Company and the other Acquirer is subject to the final Order of that 

Court, which is awaited. 

RUSSELL CREDIT LIMITED 

Similar petitions filed by an individual and two shareholders, in the 

High Court of Delhi at New Delhi and High Court of Judicature of 

Andhra Pradesh at Hyderabad, had earlier been dismissed by the 

respective High Courts. 

During the year, your Company sold investments aggregating ` 83.41 

crores in Hotel Leelaventure Limited to ITC Limited (ITC), the Holding 

Company, at book value. 

6. NON-BANKING FINANCIAL (NON-DEPOSIT ACCEPTING OR 

HOLDING) COMPANIES PRUDENTIAL NORMS (RESERVE BANK) 

DIRECTIONS, 2007 (‘NBFC REGULATIONS’) 

In terms of paragraphs 10 & 13 of the NBFC Regulations, the particulars 

as applicable to the Company are appended to the Balance Sheet. 

7. SUBSIDIARIES 

Particulars as required under Section 212 of the Companies Act, 1956, 

in respect of your Company’s subsidiary, Greenacre Holdings Limited, 

is attached to the Accounts of the Company. 

During the year under review, your Company sold its entire equity 

shareholding (comprising 9,12,38,170 equity shares of ` 1/- each) and 

50,00,000 Zero Coupon Redeemable Preference Shares of ` 100/- each 

held in Wimco Limited (Wimco) to ITC. Consequently, Wimco and its 

subsidiaries ceased to be subsidiaries of the Company with effect from 

29th September, 2011. Further, 55,00,000 5% Cumulative Redeemable 

Preference Shares of ` 100/- each, aggregating ` 55 crores, held by 

the Company in Wimco were redeemed during the year. Your Company 

also agreed that the cumulative dividend on the said Preference Shares 

aggregating ` 8.33 crores be waived. 

The Company also sold 2,26,06,065 ordinary shares of Technico Pty 

Limited (Technico), Australia, to ITC and with effect from 26th March, 

2012, Technico and its subsidiaries ceased to be subsidiaries of the 

Company. 

8. PARTICULARS OF EMPLOYEES 

Particulars of Employees as required under Section 217(2A) of the 

Companies Act, 1956, read with the Companies (Particulars of 

Employees) Rules, 1975 are provided in the Annexure to this Report. 

9. AUDITORS 

The Company’s Auditors, Messrs. A. F. Ferguson & Co., Chartered 

Accountants, retire at the ensuing Annual General Meeting of the 

Company, and being eligible, offer themselves for re-appointment. 

10. AUDIT COMMITTEE 

The Audit Committee of the Company comprises Mr. R. Tandon as 

Chairman and M/s. B. B. Chatterjee and Saradindu Dutta as Members. 

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, 

FOREIGN EXCHANGE EARNINGS AND OUTGO 

Considering the nature of business of your Company, no comment is 

required on conservation of energy and technology absorption. 

During the year under review, there has been no foreign exchange 

earnings. The foreign exchange outgo on account of purchase of fixed 

assets was ` 6,87,39,801/- (previous year ` 1,11,487/- on account of 

market research expenses). 

10th May, 2012 

Registered Office: 

Virginia House 

On behalf of the Board 

37, J. L. Nehru Road R. Tandon Director 

Kolkata 700 071 S. Dutta Director 

3

ANNEXURE TO THE REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2012 

Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and forming part of the Report of the Directors 

Employed throughout the year and in receipt of remuneration aggregating ` 60,00,000/- or more per annum 

Name Age Designation/ Gross Net Qualifications Experi- Date of Previous Employment/ 

(Years) Nature of Duties Remuneration Remuneration ence Commence- Position Held 

(Years) ment of 

Employment 

(`) (`) 

Sachidanand 53 Services on loan to 88,87,782/- 42,30,825/- B.Com (Hons.), 30 01.09.2007 COO, Technico Pty Ltd. - 

Madan fellow subsidiary company ACA and ACS Australia 

Notes : 

• Remuneration includes salary, performance bonus, allowances & other benefits / applicable 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) employee’s 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. 

10th May, 2012 






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, 2012, and also the 

Statement of Profit and Loss 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 Company’s 

Management. Our responsibility is to express an opinion on these 

financial statements based on our audit. 

2. 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. 

3. As required by the Companies (Auditor’s Report) Order, 2003 issued 

by the Central Government of India 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. 

4. Further to our comments in the Annexure referred to in paragraph 3 

above, we report as follows: 

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; 

(c) the Balance Sheet, the Statement of Profit and Loss 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 Statement of Profit and Loss 

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, 2012; 

ii) in the case of the Statement of Profit and Loss, 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, 2012 and taken on record by the Board of Directors, 

we report that none of the Directors is disqualified as on 31st March, 

2012 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) 

Shyamak R. Tata 

Kolkata Partner 

10th May, 2012 (Membership No. 38320)

ANNEXURE TO THE AUDITORS’ REPORT 

[Referred to in paragraph 3 thereof] 

In our opinion and according to the information and explanations given to 

us, the nature of the Company’s business/activities during the year are such 

that clauses 4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xviii), 

(xix) and (xx) of Companies (Auditor’s Report) Order 2003, are not applicable 

to the Company. In respect of the other clauses, we report as under: 

(i) In respect of its fixed assets: 

(a) The Company has maintained proper records showing full particulars, 

including quantitative details and situation of the fixed assets. 

(b) The fixed assets were physically verified during the year by the 

Management in accordance with a regular programme of 

verification, which, in our opinion, provides for physical verification 

of all the fixed assets at reasonable intervals. According to the 

information and explanations given to us, no material discrepancies 

were noticed on such verification. 

(c) During the year, in our opinion, a substantial part of fixed assets 

has not been disposed off by the Company. 

(ii) 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 the 

purchase of fixed assets and for the sale of services. Further, on the 

basis of our examination and according to the information and 

explanations given to us, we have neither come across nor have we 

been informed of any instance of major weaknesses in the aforesaid 

internal control systems. 

(iii) In our opinion, the Company has an internal audit system commensurate 

with the size of the Company and the nature of its business. 

(iv) (a) According to the information and explanations given to us and 

according to the books and records as produced and examined 

by us, in our opinion, the Company is regular in depositing 

undisputed statutory dues including provident fund, income-tax, 

sales tax, service tax, cess and other material statutory dues as 

applicable with the appropriate authorities. 

(b) As at 31st March, 2012, according to the records of the Company 

and the information and explanations given to us, there were no 

dues on account of income-tax, service tax and cess which have 

not been deposited on account of any dispute. The particulars of 


dues relating to sales tax that have not been deposited on account 

of any dispute are given below: 

Name of the Nature of Forum where Period to which Amount 

statute the dues pending the amount 

relates 

(`) 

Tamil Nadu Sales Tax Appellate 2003-04 1,78,605 

General Sales Tax Assistant 

Act & Central 

Sales Tax Act 

Commissioner 

Tamil Nadu Sales Tax Commercial 2004-05 19,24,395 

General Sales Tax 

Act & Central 

Sales Tax Act 

Tax Officer 

Tamil Nadu Sales Tax Commercial 2005-06 24,24,648 

General Sales Tax 

Act & Central 

Sales Tax Act 

Tax Officer 

The Central Sales Sales Tax Directorate of 2005-06 10,53,273 

Tax Act Commercial 

Taxes 

Out of the total disputed dues aggregating ` 55,80,921/- as above, 

` 45,27,648/- 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. 

(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 the Company and no significant 

fraud on the Company has been noticed or reported during the year. 

For A. F. Ferguson & Co 





10th May, 2012 (Membership No. 038320) 

5

6 


BALANCE SHEET AS AT 31ST MARCH, 2012 

Note As at As at 


(`) (`) (`) (`) 

I. Equity and Liability 

1. Shareholders' Funds 

a) Share capital 3 646,47,87,370 646,47,87,370 

b) Reserves and surplus 4 170,54,08,777 817,01,96,147 139,10,73,744 785,58,61,114 

2. Non-current liabilities 

a) Deferred tax liabilities (net) 5 29,50,109 38,32,369 

b) Long term provisions 6 4,34,136 33,84,245 16,02,093 54,34,462 

3. Current liabilities 

a) Other current liabilities 7 65,00,419 1,62,85,996 

b) Short term provisions 8 1,05,86,314 1,70,86,733 86,61,565 2,49,47,561 

Total 819,06,67,125 788,62,43,137 

II. Assets 

1. Non-current assets 

(a) Fixed assets 

i) Tangible assets 9 9,19,26,955 8,00,91,450 

ii) Capital work-in-progress 5,15,38,885 — 

14,34,65,840 8,00,91,450 

(b) Non-current investments 10 150,21,02,353 436,92,14,563 

(c) Long term loans and advances 11 2,91,00,583 167,46,68,776 13,91,61,977 458,84,67,990 

2. Current assets 

(a) Current portion of long term investment 12 — 55,00,00,000 

(b) Inventories 13 542,06,71,521 257,05,24,808 

(c) Trade receivables 14 1,05,78,077 2,89,29,010 

(d) Cash and cash equivalents 15 107,69,44,146 32,37,843 

(e) Short-term loans and advances 16 77,17,428 14,49,73,533 

(f) Other current assets 17 87,177 651,59,98,349 1,09,953 329,77,75,147 

Total 819,06,67,125 788,62,43,137 

The accompanying notes 1 to 24 are an integral part of the financial statements 

In terms of our report of even date 




Partner 

Kolkata, 10th May, 2012 


R. Tandon Director 

S. Dutta Director 

S. Jain Manager & Secretary 

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2012 

Note For the year ended For the year ended 


(`) (`) 

I Revenue from operations 18 40,24,70,536 27,09,14,216 

II Other income 19 33,79,025 62,82,188 

III Total revenue 40,58,49,561 27,71,96,404 

IV Expenses 

Employee benefits expense 20 1,56,58,832 1,56,07,205 

Finance cost 21 806 40,41,236 

Depreciation expense 9 1,23,81,897 1,20,83,725 

Other expenses 22 43,56,166 1,94,83,245 

Total expenditure 3,23,97,701 5,12,15,411 

V Profit before tax 37,34,51,860 22,59,80,993 

VI Tax expense: 

Current tax 23 5,99,99,087 2,76,31,424 

Deferred tax 23 (8,82,260) (13,64,526) 

VII Profit for the year 31,43,35,033 19,97,14,095 

Earnings per share (Face value ` 10/- each) 24(6) 0.49 0.31 

(Basic and Diluted) 






Partner 





S. Jain Manager & Secretary


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012 



(`) (`) 

A. Cash flow from operating activities 

Profit before tax 

Adjustments for: 

37,34,51,860 22,59,80,993 

Depreciation 1,23,81,897 1,20,83,725 

Interest expense on income tax 806 40,41,236 

Liabilities no longer required written back (14,018) — 

Provision on standard assets created/(released) during the year (5,39,420) 8,54,154 

Unrealised exchange gain — (24,72,500) 

Interest on Fixed Deposit (7,94,01,558) — 

Interest on Loans (2,02,11,743) (76,31,922) 

Dividend income from mutual funds held as stock-in-trade (16,67,85,437) (13,58,33,914) 

Dividend income from investment in equity instruments (4,34,70,632) (3,16,05,338) 

Proift on sale of fixed assets (469) (93,693) 

Operating profit before working capital changes 

Changes in working capital: 

7,54,11,286 6,53,22,741 

(Increase)/Decrease in stock-in-trade (285,01,46,713) 115,24,82,403 

(Increase)/Decrease in short term loans and advances 11,91,81,360 (9,42,25,615) 

(Increase)/Decrease in long term loans and advances 10,69,00,295 2,32,58,877 

(Increase)/Decrease in trade receivables 1,83,50,933 (1,37,08,494) 

(Increase)/Decrease in other current assets 22,776 20,214 

Increase/(Decrease) in other current liabilities 16,94,470 (2,46,471) 

Increase/(Decrease) in long term provisions (9,30,768) 2,79,753 

Increase/(Decrease) in short term provisions 27,54,924 (1,69,45,395) 

(260,21,72,723) 105,09,15,272 

Cash generated from operations before interest and dividend (252,67,61,437) 111,62,38,013 

Interest on Fixed Deposit 7,94,01,558 — 

Interest on Loans 2,02,11,743 76,31,922 

Dividend income from mutual funds held as stock-in-trade 16,67,85,437 13,58,33,914 

Dividend income from investment in equity instruments 4,34,70,632 3,16,05,338 

Cash generated from operations (221,68,92,067) 129,13,09,187 

Income tax (paid) / refunded during the year (3,92,91,188) 38,76,437 

Net cash (used in) / generated from operating activities (225,61,83,255) 129,51,85,624 

B. Cash flow from investing activities 

Purchase of fixed assets (8,14,20,128) (26,300) 

Sale of fixed assets 

Fixed deposit not considered as cash and cash equivalents 

56,64,310 33,09,995 

– placed (107,14,61,402) — 

Purchase of long term investments (11,59,58,219) (132,20,88,797) 

Sale of long term investments - subsidiaries 213,75,06,241 — 

Sale of long term investments - others 83,40,98,160 — 

Redemption of preference shares 55,00,00,000 — 

Net cash generated from / (used in) investing activities 225,84,28,962 (131,88,05,102) 

C. Cash flow from financing activities 

Interest expense on income tax (806) (40,41,236) 

Net cash flow used in financing activities (806) (40,41,236) 

Net increase/(decrease) in cash and cash equivalents 22,44,901 (2,76,60,714) 

Opening cash and cash equivalents 32,37,843 3,08,98,557 

Closing cash and cash equivalents 54,82,744 32,37,843 

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 Since the Company is an investment company, purchase and sale of investments and investment in fixed deposits have been considered as part 

of “Cash flow from investing activities” and dividend earned and interest earned on the same have been considered as part of “Cash flow from 

operating activities” 

3 Reconciliation of cash and cash equivalents with the Balance Sheet As at As at 


(`) (`) 

Cash and cash equivalents as above 54,82,744 32,37,843 

Add: Bank balances not considered as cash and cash equivalents 107,14,61,402 — 

Cash and cash equivalents as per balance sheet (refer note 15) 107,69,44,146 32,37,843 






Partner 






7

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2012 

1. Corporate Information 

Russell Credit Limited, a wholly owned subsidiary of ITC Limited is a 

Non Deposit taking Systemically Important Non-Banking Financial 

Company under the Reserve Bank of India Act, 1934. 

2. Significant Accounting Policies 

Basis of Accounting 

The Financial Statements are prepared on accrual basis under the 

historical cost convention. 

All assets and liabilities have been classified as current or non-current 

as per the Company’s normal operating cycle and other criteria set out 

in the Revised Schedule VI to the Companies Act, 1956 based on the 

nature of services. 

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 

Current Investments are stated 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. Investments are 

accounted for based on trade date. 

Investment Income 

Income from Investments is accounted for on an accrual basis, inclusive 

of related tax deducted at source. 

Inventories 

Inventories, comprising of Stock-in-Trade, has been valued at cost or 

at available market quotation or their fair values, whichever is lower, 

category wise, in compliance with the Prudential Norms prescribed by 

the Reserve Bank of India for Non-Banking Financial Companies. Stockin-Trade 

is accounted for based on trade date. 

Foreign Currency Translation 

Transactions in foreign currency are accounted for at the exchange 

rate prevailing on the date of transactions.Gains/Losses arising out of 

8 


fluctuations in the exchange rates are recognised in the Statement of 

Profit and Loss in the period in which they arise. 

Foreign Currency Monetary Assets and Monetary Liabilities are restated 

at the rates ruling at the year end and all exchange gains/losses arising 

therefrom are adjusted in the Statement of Profit and Loss except for 

those covered by forward contracts where the gains/losses arising from 

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 

Monthly contributions are made to 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 Statement 

of Profit and Loss 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. 

3. Share capital As at As at 


(`) (`) 

Authorised 

70,00,00,000 equity shares of ` 10/- each 

(2011 - 70,00,00,000 equity shares of ` 10/- each) 700,00,00,000 700,00,00,000 

Issued, Subscribed and Fully Paid-up 

700,00,00,000 700,00,00,000 

59,74,54,177 (2011 - 59,74,54,177) equity shares of ` 10/- each, fully paid up 597,45,41,770 597,45,41,770 

Issued, Subscribed but not Fully Paid-up 

7,54,22,400 (2011 - 7,54,22,400) equity shares of ` 10/- each, ` 6.50 per share paid up 49,02,45,600 49,02,45,600 

646,47,87,370 646,47,87,370 

(i) Reconcilliation of number of shares and amounts outstanding 

As at As at 


Particulars Equity Shares Equity Shares 

(Number) (`) (Number) (`) 


Equity Shares of ` 10/- each outstanding at the beginning and at the end 

of the year 59,74,54,177 597,45,41,770 59,74,54,177 597,45,41,770 


Equity Shares of ` 10/- each, ` 6.50 per share paid up, outstanding at the 

beginning and end of the year 7,54,22,400 49,02,45,600 7,54,22,400 49,02,45,600 

(ii) Details of the shareholders holding more than 5% of equity share 

of the company 

646,47,87,370 646,47,87,370 

As at As at 

Name of the shareholders 31st March, 2012 31st March, 2011 

No. of Shares held No. of Shares held 


(%) (Number) (%) (Number) 

ITC Limited – Holding Company 


100% 59,74,54,177 100% 59,74,54,177 

ITC Limited – Holding Company 100% 7,54,22,400 100% 7,54,22,400 

(iii) Rights, preferences and restrictions attached to the equity shares 

Equity Shares of the Company, having par value of ` 10/- per share , rank pari passu in all respects including voting rights and entitlement to dividend.


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2012 (Contd.) 

4. Reserves and surplus 

As at As at 


(`) (`) (`) (`) 

Capital reserve 

Balance at the beginning and at the end of the year 

General reserve 

2,87,67,445 2,87,67,445 


Special reserve u/s 45-IC of the Reserve Bank of India Act, 1934 

1,38,36,301 1,38,36,301 

Balance at the beginning of the year 62,81,35,020 58,81,92,201 

Add: Transferred from Statement of Profit and Loss 6,28,67,007 3,99,42,819 

Balance at the end of the year 

Surplus in Statement of Profit and Loss 

69,10,02,027 62,81,35,020 


Add: Profit for the year 31,43,35,033 19,97,14,095 

Less: Transferred to Special reserve u/s 45-IC of the Reserve Bank of 

103,46,70,011 76,02,77,797 

India Act, 1934 6,28,67,007 3,99,42,819 

Balance at the end of the year 97,18,03,004 72,03,34,978 

170,54,08,777 139,10,73,744 

5. Deferred tax liabilities (net) As at As at 


Deferred tax liabilities 

(`) (`) 

On fiscal allowances on fixed assets 51,05,252 56,16,364 

Deferred tax assets 

51,05,252 56,16,364 

On employees' seperation and retirement etc. 20,53,028 12,15,322 

Other timing differences — 2,91,543 

On provision on standard assets 1,02,115 2,77,130 

21,55,143 17,83,995 

29,50,109 38,32,369 

6 Long term provisions 

Provision for employee benefits 

Provision for compensated absences 

Provision - others 

1,32,735 10,63,503 

Contingent provision against standard assets 3,01,401 5,38,590 

4,34,136 16,02,093 

7 Other current liabilities As at As at 


Other payables (*) 

(`) (`) 

Dues to related parties Security deposit from the holding company 12,00,000 12,00,000 

Liability towards purchase of investments 5,43,336 1,20,09,363 

Liability towards expenses 39,26,799 29,58,297 

Statutory remittances 8,30,284 1,18,336 

65,00,419 1,62,85,996 

(*) There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also 

as at 31st March, 2012. 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 Short term provisions As at As at 


Current portion of long term employee benefits 

(`) (`) 

Provision for compensated absences 

Provision - others 

27,54,924 — 

Current taxation (net of advance income tax) 78,18,057 83,46,001 

Contingent provision against standard assets 13,333 3,15,564 

9. Tangible assets 

1,05,86,314 86,61,565 

GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK 

Particulars As at Additions Disposal As at Upto For the Disposal Up to As at As at 

commencement the end of 31st March, year 31st March, 31st March, 31st March, 

of the year the year 2011 2012 2012 2011 

(`) (`) (`) (`) (`) (`) (`) (`) (`) (`) 

Plant & equipment(*) 12,07,36,456 2,98,81,243 1,37,35,399 13,68,82,300 4,07,82,206 1,23,74,297 80,71,558 4,50,84,945 9,17,97,355 7,99,54,250 

Office equipment 1,60,000 — — 1,60,000 22,800 7,600 — 30,400 1,29,600 1,37,200 

TOTAL 12,08,96,456 2,98,81,243 1,37,35,399 13,70,42,300 4,08,05,006 1,23,81,897 80,71,558 4,51,15,345 9,19,26,955 8,00,91,450 

Previous Year 12,63,59,638 26,300 54,89,482 12,08,96,456 3,09,94,461 1,20,83,725 22,73,180 4,08,05,006 8,00,91,450 9,53,65,177 

*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 ` 13,68,56,001/- ( 2011 - ` 12,07,10,155/-) and Accumulated Depreciation is ` 4,50,82,871/- ( 2011 - ` 4,07,81,380/-). 

Depreciation for the year charged to Statement of Profit and Loss is ` 1,23,73,048/- (2011 - ` 1,20,80,356/-). 

The aggregate lease rental of ` 2,16,25,256/- (2011 - ` 2,09,09,256/-) is included in Lease and Other Rentals under Revenue from Operations (Note No. 18) 

9


10 


10. Non-current Investments 

(At cost) 

As at 31st March, 2012 As at 31st March, 2011 

Long term Investment Number Value Number Value 

(`) (`) 

A. Trade 

Investments in equity instruments 

Unquoted 

(i) of subsidiaries 

Equity shares of ` 10/- each, of Greenacre Holdings Limited, fully paid 4,20,60,166 42,10,33,674 4,20,60,166 42,10,33,674 

Equity Shares of ` 1/- each, of Wimco Limited, fully paid — — 9,12,38,170 55,02,65,126 

Ordinary shares of Technico Pty Limited no par value 

(ii) of associates 

— — 2,26,06,065 108,72,41,115 

Equity Shares of ` 10/- each, of Russell Investments Limited, fully paid 

Equity Shares of ` 10/- each, of Classic Infrastructure & Development 

42,75,435 4,27,56,850 42,75,435 4,27,56,850 

Limited, fully paid 37,50,000 3,76,88,280 37,50,000 3,76,88,280 

Equity Shares of ` 10/- each, of Divya Management Limited, fully paid 41,82,915 6,93,07,630 41,82,915 6,93,07,630 

Equity Shares of ` 10/- each, of Antrang Finance Limited, fully paid 

(iii) of joint venture companies 

43,24,634 4,39,56,071 43,24,634 4,39,56,071 

Equity Shares of ` 100/- each, of Maharaja Heritage Resorts Limited, fully paid 

Quoted 

(i) of associates 

90,000 90,00,000 90,000 90,00,000 

Equity Shares of ` 10/- each, of International Travel House Limited, fully paid 

(ii) of other entities 

36,26,633 21,21,58,031 36,26,633 21,21,58,031 

Equity Shares of ` 10/- each, of VST Industries Limited, fully paid 6,00,000 9,96,59,626 6,00,000 9,96,59,626 

Equity Shares of ` 2/- each of Hotel Leelaventure Limited, fully paid 

Investment in preference shares 

Unquoted 

of subsidiaries 

Zero Coupon Redeemable Preference shares of ` 100/- each, of Wimco Limited, 

31,36,834 10,44,92,191 1,79,29,513 83,40,98,160 

fully paid — — 50,00,000 50,00,00,000 

B. Other Investment 


Unquoted 

of other entities 

Class ‘G’ Shares of ` 48,000/- each, of Lotus Court Limited, fully paid 

Equity Shares of ` 100/- each, of 

2 2,34,00,000 2 2,34,00,000 

Adyar Property Holding Company Private Limited, ` 65/- per share paid (*) 311 43,86,50,000 311 43,86,50,000 

150,21,02,353 436,92,14,563 

Aggregate amount of quoted investments 41,63,09,848 1,14,59,15,817 

Aggregate market value of quoted investments 1,62,81,70,012 1,75,29,90,487 

Aggregate amount of unquoted investments 1,08,57,92,505 3,22,32,98,746 

(*) Uncalled liability on 311 partly paid-up shares of Adyar Property Holding Pvt. Ltd. @ ` 35/- per share : ` 10,885 /- (2011– ` 10,885/-). 

11 Long term loans and advances As at As at 


Unsecured, considered good 

(`) (`) 

Security deposits — 1,80,000 

Loans to related parties 2,00,00,000 12,30,53,750 

MAT credit entitlement — 31,61,098 

Deposits with Government authorities 

Secured, considered good 

3,13,508 3,13,508 

Term loan to others 87,87,075 1,24,53,621 

(secured by mortgage of immovable property and hypothecation of moveables and receivables) 

2,91,00,583 13,91,61,977 

12 Current portion of long term investment 

(at cost) As at As at 


Number Value Number Value 

(`) (`) 

Investment in preference shares in subsidiaries 

Unquoted 

5% Redeemable Cumulative Preference shares 

of ` 100/- each, of Wimco Limited, fully paid — — 55,00,000 55,00,00,000 

— 55,00,00,000 

Aggregate amount of unquoted investment — 55,00,00,000


14. Trade receivables 

As at As at 


(`) (`) 


Trade receivables outstanding for a 

period exceeding six months from the 

date they were due for payment 

Trade receivables outstanding for a period 

less than six months from the date 

— — 

they were due for payment 1,05,78,077 2,89,29,010 

15. Cash and cash equivalents 

1,05,78,077 2,89,29,010 

Cash on hand 1,002 4,345 

Cheques on hand 

Balances with banks 

— 3,03,800 

in current accounts 54,81,742 29,29,698 

in deposit account 107,14,61,402 — 

107,69,44,146 

Of the above, the balances that meet the 

definition of cash and cash equivalents 

32,37,843 

as per AS 3 Cash Flow Statements is 54,82,744 32,37,843 

16. Short term loans and advances 


13. Inventories 

(at lower of cost and fair value) 


Particulars Number Value Number Value 

Stock-in-trade 

Equity shares of ` 10/- each, fully paid up 

(`) (`) 

SKH Metals Limited (*) 40,000 1 40,000 1 

Patheja Brothers Forgings and Stampings Limited (*) 50,000 1 50,000 1 

Jind Textiles Limited (*) 5,00,000 1 5,00,000 1 

Taib Capital Corporation Limited (*) 2,45,000 1 2,45,000 1 

Sub - total 

Units of ` 10/- each, fully paid up 

4 4 

Birla Sun Life Short Term FMP - Series 7 Dividend Payout — — 4,80,00,000 48,00,00,000 

Birla Sun Life Short Term FMP-Series 25-Dividend - Payout 1,00,00,000 10,00,00,000 — — 

Birla FMP Fixed Term Plan - Series EW Dividend - Payout 1,50,00,000 15,00,00,000 — — 

Birla Sunlife Fixed Term Plan Series-DY Growth 1,00,00,000 10,00,00,000 — — 

BNP Paribas Fixed Term Fund Series 19F Cal.Qtrly.Div — — 1,00,00,000 10,00,00,000 

DSP BalckRock DMP-Series 39-12M-Dividend Payout 5,00,00,000 50,00,00,000 — — 

DSP FMP Series-38-12.5 M -Growth 4,50,00,000 45,00,00,000 — — 

DWS Fixed Term Fund - Series 72 - Dividend Plan Payout — — 1,00,00,000 10,00,00,000 

DWS Fixed Maturity Plan - Series 11- Dividend Plan-Payout 6,00,00,000 60,00,00,000 — — 

DWS Fixed Maturity Plan-Series 5-Growth Plan 1,00,00,000 10,00,00,000 — — 

HDFC FMP 370D January 2012(4) -Growth -Series XIX 4,00,00,000 40,00,00,000 — — 

ICICI Prudential FMP Series 63 - 1 Year Plan C- Dividend 4,00,00,000 40,00,00,000 — — 

IDFC Cash Fund - Super Inst Plan C Daily Dividend — — 99,91,870 9,99,43,679 

IDFC Fixed Maturity Plan Thirteen Month Series-7 Dividend 4,50,00,000 45,00,00,000 — — 

IDFC Fixed Maturity Plan Yearly Series 64-Dividend 2,50,00,000 25,00,00,000 — — 

IDFC Ultra Short Term Fund Daily Dividend 2,58,83,948 25,91,63,029 — — 

Kotak Floater Short Term - Daily Dividend — — 6,03,28,390 61,02,94,055 

Reliance Fixed Horizon Fund-XXI-Series 8-Growth Plan 1,50,00,000 15,00,00,000 — — 

Religare Fixed Maturity Plan - Series III - Plan A (12 Months) - Dividend — — 2,50,00,000 25,00,00,000 

Religare FMP Series XIII Plan F - Dividend Plan 

UTI - Fixed Income Interval Fund - Series II - Quaterly Interval Plan- IV - 

1,00,00,000 10,00,00,000 — — 

Institutional Dividend Plan - Payout 

Units of ` 1,000/- each, fully paid up 

— — 2,00,00,000 20,00,00,000 

DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend — — 7,30,056 73,02,87,070 

TATA Liquid Super High Investment Fund - Daily Dividend 8,97,974 100,08,10,435 — — 

Templeton India Treasury Management Account Super Institutional Plan- 

Daily Dividend Reinvestment 4,10,422 41,06,98,053 — — 

Sub - total 542,06,71,517 257,05,24,804 

TOTAL 542,06,71,521 257,05,24,808 

(*) Aggregate value of stock-in-trade written off 30,39,996 30,39,996 

As at As at 


(`) (`) 


Loan to related parties — 12,00,00,000 

Security deposit 1,80,000 — 

Advance to employees — 5,000 

Advance fringe benefit tax (net of provisions) 26,737 23,395 

MAT credit entitlement 35,21,913 2,16,00,000 

Advances towards gratuity fund 

Secured, considered good 

3,22,231 91,262 

Term loan to others 

(secured by mortgage of immovable 

property and hypothecation of moveables 

and receivables) 

36,66,547 32,53,876 

17. Other current assets 


77,17,428 14,49,73,533 

Interest on loan to others 87,177 1,09,953 

87,177 1,09,953 

11




(`) (`) 

18. Revenue from operations 

Profit/(loss) on sale of stock-in-trade (*) 

Dividend income from mutual funds held 

(3,001) 49,71,249 

as stock-in-trade 

Dividend income from investment in 

16,67,85,437 13,58,33,914 

equity instruments 

Interest Income 

4,34,70,632 3,16,05,338 

on loans 2,02,11,743 76,31,922 

from fixed deposit with bank 7,94,01,558 — 

Brokerage income 5,60,98,911 6,15,62,537 

Lease and other rentals 3,65,05,256 2,93,09,256 

40,24,70,536 27,09,14,216 

(*) Profit/(loss) on sale of stock-in-trade 

Sales 3570,56,12,281 5859,05,47,086 

Less : Purchases 3855,57,61,995 5743,30,93,434 

Add / (less) : increase/(decrease) in 

(285,01,49,714) 115,74,53,652 

closing stock-in-trade 285,01,46,713 (115,24,82,403) 

Profit /(loss) on sale of stock-in-trade (3,001) 49,71,249 

19 Other income 

Interest income 

Interest on income tax refund 

Net gain on foreign currency transaction 

3,448 693 

and translation 15,16,976 24,70,485 

Profit on sale of fixed assets 

Provision for standard assets released 

469 93,693 

during the year 5,39,420 — 

Liability no longer required written back 14,018 — 

Miscellaneous Income 13,04,694 37,17,317 

33,79,025 62,82,188 

20. Employee benefits expense 

Salaries and wages 1,27,89,306 1,02,39,097 

Contribution to provident and other funds 22,46,195 48,42,648 

Staff welfare expenses 6,23,331 5,25,460 

1,56,58,832 1,56,07,205 

21 Finance cost 

Interest on income tax 806 40,41,236 

806 40,41,236 

24. Additional notes to the financial statements 

1. Claims against the Company not acknowledged as debts : 

Sales tax claims disputed by the Company relating to issues of applicability- 

` 57,99,216/- (2011 – ` 56,20,611/-) . 

2. Guarantees and Counter Guarantees outstanding Nil (2011– ` 1,78,605/-) 

3. Loans to related parties in note 11 and 16 include : 

(a) Loan to a fellow subsidiary, balance as at the year end is as follows: 

Wimco Limited (*) – ` 2,00,00,000/- (2011- ` 10,00,00,000) 

(b) Interest free loans to fellow subsidiaries, balances as at the year end are 

as follows: 

Technico Pty Limited, Australia (#) – ` Nil (2011 – ` 2,30,53,750/-). 

Technico Agri Sciences Limited (#) – ` Nil (2011 – ` 12,00,00,000/-). 

(c) The maximum indebtedness during the year : 

Wimco Limited (*) – ` 55,00,00,000/- (2011- ` 30,00,00,000/-) 

Technico Pty Limited, Australia (#) – ` 2,30,53,750/- (2011– ` 2,30,53,750/-). 

Technico Agri Sciences Limited (#) – ` 12,00,00,000/- (2011 – 

` 12,00,00,000/-). 

(*) Subsidiary till 28.09.2011. Fellow subsidiary with effect from 29.09.2011 

(#) Subsidiary till 25.03.2012. Fellow subsidiary with effect from 26.03.2012 

4. Expenditure in foreign currency during the year: 

Market research expenses : ` Nil (2011 - ` 1,11,487/- ) 

5. Value of imports during the year (C.I.F. basis) : 

Capital Goods : ` 6,87,39,801 /- (2011-Nil) 

6. Earnings Per Share : For the year ended For the year ended 


Profit after tax (`) 31,43,35,033/- 19,97,14,095/- 

Weighted average number of equity 

shares outstanding 64,64,78,737 64,64,78,737 

Basic and diluted earnings per share in 

Rupees (Face Value – `10/- per share) ` 0.49 ` 0.31 

11. Maturity pattern of certain assets and liablities : 

7. The status of the petition filed by an individual in the High Court at Calcutta, 

seeking an injunction against the Company’s Counter Offer to the shareholders 

of VST Industries Limited, is outlined in the Report of the Directors. 

8. Segment Reporting - The Company operates in a single business segment i.e. 

Financial Services and in a single geographical segment. 

9. Capital to Risk Adequacy Ratio: 

Items 31st March, 2012 31st March, 2011 

(i) CRAR (%) 114.55 99.32 

(ii) CRAR - Tier I capital (%) 114.54 99.30 

(iii) CRAR - Tier II Capital (%) 0.01 0.02 

10. Exposure to Real Estate Sector: 

Category 31st March, 2012 31st March, 2011 

(a) Direct exposure 

(i) Residential Mortgages Nil Nil 

(ii) Commercial Real Estate Nil Nil 

(iii) Investments in Mortgage Backed 

Securities (MBS) and other 

securitised exposures - 

a. Residential, Nil Nil 

b. Commercial Real Estate Nil Nil 

(b) Indirect Exposure 

Fund based and non-fund based 

exposures on National Housing Bank 

(NHB) and Housing Finance 

Companies (HFCs). Nil Nil 

(` in Lakhs) 

1 to 30/31 

days 

(one month) 

Over 1 

month to 

2 months 

Over 2 

months to 

3 months 

Over 3 

months to 

6 months 

Over 6 

months to 

one year 

Over 

1 year to 

3 years 

Over 

3 years to 

5 years 

Over 

5 years 

Total 

Liabilities 

Borrowings from Banks — — — — — — — — — 

Market Borrowings 

Assets 

— — — — — — — — — 

Advances 

Investments 

— 

54206.72* 

— — — — — — — — 

1 — — — — — — 15021.02* 2 69227.74 

* 1 Investments classified as Inventories as per Note 13 

* 2 Investments classified as Non Current Investments as per Note 10 

12 




(`) (`) 

22 Other expenses 

Rent 9,28,371 8,28,000 

Bank, custodial and depository charges 

Repairs and maintenance 

29,828 3,61,036 

Buildings 1,68,240 1,68,240 

Electricity charges 4,37,098 3,92,347 

Travelling and conveyance 84,585 62,088 

Rates and taxes 24,204 24,600 

Professional and legal fees 

Payment to auditor 

13,71,144 3,39,348 

As auditors- statutory audit 1,50,000 1,50,000 

For taxation matters (*) 75,000 1,00,000 

For other matters (*) 1,50,000 2,00,000 

Reimbursement of expenses (*) 4,812 30,499 

Communication expenses 25,624 26,177 

Printing, stationery and periodicals 75,471 69,589 

Donation (**) — 1,50,00,000 

Provision for standard assets — 8,54,154 

Miscellaneous expenses 8,31,789 8,77,167 

43,56,166 1,94,83,245 

(*) Paid to the erstwhile auditors, ` Nil ( 2011- ` 3,30,499/-) a firm in which some 

of the partners of the statutory auditors firm are partners 

(**) Donation of ` 1,50,00,000/-, was made to All India Congress Committee of 

the Indian National Congress in 2011 

23 Tax expense 



(`) (`) 

Current tax 

- for the year 6,00,00,000 3,00,00,000 

- for earlier years (913) (23,68,576) 

(A) 5,99,99,087 2,76,31,424 

Deferred tax 

- for the year (8,82,260) (13,64,526) 

(B) (8,82,260) (13,64,526) 

(A+B) 5,91,16,827 2,62,66,898


12. Related Party Disclosures : 

(a) Relationships 

Holding Company ITC Limited 

Subsidiary Companies Greenacre Holdings Limited 

Fellow Subsidiaries Wimco Limited (*) 

Pavan Poplar Limited (*) 

Prag Agro Farm Limited (*) 

Technico Pty Limited (#) 

Technico Agri Sciences Limited (#) 

Technico Technologies Inc.(#) 

Technico Asia Holdings Pty Limited (#) 

Technico Horticultural (Kunming) Co. Limited (#) 

(*) Subsidiary till 28.09.2011. Fellow subsidiary w.e.f. 29.09.2011 

(#) Subsidiary till 25.03.2012. Fellow subsidiary w.e.f. 26.03.2012 

Key Management Personnel 

Mr. R. Tandon Non - Executive Chairman 

Mr. B. B. Chatterjee Non - Executive Director 

Mr. P. Banerjea Non - Executive Director 

Mr. S. Dutta Non - Executive Director 

Mr. S. Jain Manager and Company Secretary 

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 

Holding Company 31st March, 2012 31st March, 2011 

(`) (`) 

Sale of quoted investments* 83,40,98,160 Nil 

Sale of unquoted investments (at cost) 2,13,75,06,241 Nil 

Lease rentals received 1,48,80,000 84,00,000 

Miscellaneous income 6,20,104 Nil 

Rent, repairs and maintenance 3,00,111 2,76,240 

Miscellaneous expenses 4,37,098 4,95,246 

Reimbursement of expenses 1,31,000 2,13,935 

* Investments have been sold to the Holding Company at cost, the market 

value of such shares on the date of sale was ` 70,28,36,910/-. 

Balances as at 31st March, 2012 31st March, 2011 

Holding Company (`) (`) 

Security deposits received 12,00,000 12,00,000 

Payables Nil 9,000 

Fellow Subsidiary Companies For the year ended For the year ended 


Wimco Limited 

(`) (`) 

Subscription to Preference Share Capital Nil 50,00,00,000 

Intercorporate loan given 45,00,00,000 40,00,00,000 

Intercorporate loan repaid 53,00,00,000 30,00,00,000 

Interest on loan 1,85,24,727 55,49,918 

Sale of plant & machinery 

Technico Pty Limited 

26,53,676 NIl 

Intercorporate loan repaid 

Technico Agri Sciences Limited 

2,30,53,750 NIl 

Intercorporate loan repaid 12,00,00,000 NIl 

Balances as at 31st March, 2012 31st March, 2011 

Fellow Subsidiary Companies 

Loans Outstanding 

(`) (`) 

Technico Pty Limited Nil 2,30,53,750 

Technico Agri Sciences Limited Nil 12,00,00,000 

Wimco Limited 2,00,00,000 10,00,00,000 


Associates 31st March, 2012 31st March, 2011 

Dividend Income 

(`) (`) 

International Travel House Limited 

Travelling Expenses 

1,37,81,205 1,17,86,557 

International Travel House Limited 

Reimbursement of expense 

43,542 8,706 

Divya Management Limited 

Remuneration of managers on 

4,36,246 4,18,331 

deputation to subsidiaries, absorbed 1,24,77,141 (*) 1,12,05,286 

(*) Subsidiary till 25.03.2012. Fellow subsidiary w.e.f. 26.03.2012 

13. Employee Benefits : 

Contribution to Defined Contribution Schemes – ` 19,95,058/- (2011 – 

` 34,92,126/-) Defined Benefit Plans / Long Term Compensated Absences 

- As per Actuarial Valuations as on March 31, 2012 and recognised in the 

financial statements in respect of Employee Benefit Schemes: 



31st March, 2012 (`) 31st March, 2011 (`) 

Leave Leave 

Gratuity Encashment Gratuity Encashment 

Funded Unfunded Funded Unfunded 

I. Components of Employer Expenses 

1. Current Service Cost 3,30,026 2,01,636 3,00,629 1,41,669 

2. Interest Cost 1,57,471 87,739 41,370 62,700 

3. Expected Return on Plan Assets (1,85,625) Nil (1,39,680) Nil 

4. Curtailment Cost/(Credit) Nil Nil Nil Nil 

5. Settlement Cost/(Credit) Nil Nil Nil Nil 

6. Past Service Cost Nil Nil Nil Nil 

7. Actuarial Losses/(Gains) (50,735) 15,34,781 11,48,203 75,384 

8. Total expense recognised in the 

Statement of Profit & Loss (*) 

2,51,137 18,24,156 13,50,522 2,79,753 

II. Actual Returns 8.25% — 8% — 

III. Net Asset / (Liability) recognised in Leave Leave 

Balance Sheet Gratuity Encashment Gratuity Encashment 

1. Present Value of Defined Benefit 

Obligation 

21,77,769 28,87,659 19,08,738 10,63,503 

2. Fair Value of Plan Assets 25,00,000 Nil 20,00,000 Nil 

3. Status [Surplus/(Deficit)] 3,22,231 (28,87,659) 91,262 (10,63,503) 

4. Unrecognised Past Service Cost Nil Nil Nil Nil 

5. Net Asset/(Liability) recognised in 

Balance Sheet 

3,22,231 (28,87,659) 91,262 (10,63,503) 

Leave Leave 

IV. Change in Defined Benefit Obligations (DBO) Gratuity Encashment Gratuity Encashment 

1. Present Value of DBO at 19,08,738 10,63,503 5,17,123 7,83,750 

beginning of year 


3. Interest Cost 1,57,471 87,739 41,370 62,700 



6. Plan Amendments Nil Nil Nil Nil 

7. Acquisitions Nil Nil Nil Nil 

8. Actuarial (Gains)/Losses (2,18,466) 15,34,781 10,49,616 75,384 

9. Benefits Paid Nil Nil Nil Nil 

10. Present Value of DBO at the end 21,77,769 28,87,659 19,08,738 10,63,503 

of year 

(*) Gratuity expense has been recognised in “Contribution to provident and other funds” and leave 

encashment expense in “Salaries and wages” under Note 20. 



Leave Leave 

V. Change in Fair Value of Assets Gratuity Encashment Gratuity Encashment 

1. Plan Assets at Beginning of year 20,00,000 N.A. 14,92,000 N.A. 

2. Acquisition Adjustment Nil N.A. Nil N.A. 

3. Expected Return on Plan Assets 1,85,625 N.A. 1,39,680 N.A. 

4. Actuarial Gains/(Losses) (1,67,731) N.A. (98,587) N.A. 

5. Actual Company Contributions 4,82,106 N.A. 4,66,907 N.A. 

6. Benefits Paid Nil N.A. Nil N.A. 

7. Plan Assets at the End of year 25,00,000 N.A. 20,00,000 N.A. 

VI. Actuarial Assumptions 

1. Discount Rate (%) 8.25 8.25 8.00 8.00 

2. Expected Return on Plan Assets (%) 8.25 N.A. 8.00 N.A. 

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 


VII. Major Category of Plan Assets 

as a % of the Total Plan Assets 

1. Government Securities/Special 

Deposit with RBI 44.00% 45.50% 

2. High Quality Corporate Bonds 41.00% 40.00% 

3. Insurance Companies 7.00% 7.00% 

4. Mutual Funds 2.00% 3.30% 

5. Cash and Cash Equivalents 4.00% 3.40% 

6. Equity 1.00% 0.80% 

7. Term Deposit 1.00% 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. 

13


STATEMENT REGARDING SUBSIDIARY COMPANIES 

Pursuant to Section 212 of the Companies Act, 1956 

Sl Name of the Subsidiary Number of Equity Shares Extent of Holding Net aggregate amount of the Subsidiary’s Net aggregate amount of the Subsidiary’s 

No. Company held by the Company profits /(losses) not dealt with in the 

Company’s Accounts (`) 

profits /(losses) dealt with in the 

Company’s Accounts (`) 

For the Subsidiary’s For the previous For the Subsidiary’s For the previous 

financial year ended financial years of the financial year ended financial years of the 

31st March, 2012 Subsidiary since it 31st March, 2011 Subsidiary since it 

became the became the 

Company’s Subsidiary Company’s Subsidiary 

1. Greenacre Holdings Limited 4,20,60,166 Equity Shares 

of ` 10/- each 

100% 96,95,485/- 8,17,84,188/- Nil Nil 

Notes 

1. Technico Pty Limited and its subsidiaries - Technico Agri Sciences Limited, Technico Asia Holdings Pty Limited, Technico Technologies Inc. and Technico 

Horticultural (Kunming) Co. Limited ceased to be subsidiaries of the Company with effect from 26th March, 2012. 

2. Wimco Limited and its subsidiaries – Pavan Poplar Limited and Prag Agro Farm Limited ceased to be subsidiaries of the Company with effect from 

29th September, 2011. 






14 


For the year ended 

31st March, 2012 

(`) 



(`) 



(`) 



(`) 



(`) 

IX. Net Asset / (Liability) recognised 

in Balance Sheet (including 

experience adjustment impact) 

Gratuity 

Funded 

Leave 

Encashment 

Unfunded 

Gratuity 

Funded 

Leave 

Encashment 

Unfunded 

Gratuity 

Funded 

Leave 

Encashment 

Unfunded 

Gratuity 

Funded 

Leave 

Encashment 

Unfunded 

Gratuity 

Funded 

Leave 

Encashment 

Unfunded 

1. 

2. 

3. 

4. 

5. 

Present Value of Defined 

Benefit Obligation 

Fair Value on Plan Assets 

Status [Surplus / (Deficit)] 

Experience Adjustment of 

Plan Assets [Gain / (Loss)] 

Experience Adjustment of 

Obligation [(Gain) / Loss] 

21,77,769 

25,00,000 

3,22,231 

(1,62,106) 

(1,87,206) 

28,87,659 

Nil 

(28,87,659) 

N.A. 

15,78,168 

19,08,738 

20,00,000 

91,262 

(81,127 ) 

11,66,407 

10,63,503 

Nil 

(10,63,503 ) 

N.A. 

1,58,640 

5,17,123 

14,92,000 

9,74,877 

2,44,436 

(6,39,036 ) 

7,83,750 

Nil 

(7,83,750 ) 

N.A. 

1,25,154 

11,51,189 

8,15,033 

(3,36,156 ) 

Nil 

Nil 

4,98,931 

Nil 

(4,98,931 ) 

N.A. 

Nil 

13,22,680 

— 

(13,22,680 ) 

Nil 

Nil 

5,31,699 

Nil 

(5,31,699) 

N.A. 

Nil 

14. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial 

statements. Previous year’s figures have been regrouped / re-classified wherever necessary to correspond with the current year’s classification /disclosure. 






SCHEDULE TO THE BALANCE SHEET AS AT 31ST MARCH, 2012 

[as required in terms of Paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007] 

(` in Lakhs) 


Particulars Amount Amount 

Liabilities Side: Outstanding Overdue 

(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 Papers — — 

f) Other Loans — — 

Assets Side: Amount Outstanding 

(2) Break-up of Loans and Advances 

including bills receivables [other 

than those included in (4) below] 

(a) Secured 124.54 

(b) Unsecured 200.00 

(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 934.40 

(a) Financial lease — 

(b) Operating lease 934.40 

(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: 54,206.72 

(i) Shares: (a) Equity — 



(iii) Units of Mutual Funds 54,206.72 



(` in Lakhs) 

Long Term investment: Amount 

Outstanding 

1. Quoted: 4,163.10 

(i) Shares: (a) Equity 4,163.10 






2. Unquoted: 10,857.93 

(i) Shares: (a) Equity 10,857.93 






(5) Borrower group-wise classification of 

assets financed as in (2) and (3) above 

Amount Net of Provisions 

Secured Unsecured Total 

Category 

1. Related Parties 

(a) Subsidiaries — 200.00 200.00 

(b) Companies in the same group — — — 

(c) Other related parties — — — 

2. Other than related parties 124.54 934.40 1,058.94 

Total 124.54 1,134.40 1,258.94 

(6) Investor group-wise classification of all 

investments (current and long term) 

in shares and securities (both quoted 

and unquoted): 

Market Value/ Book Value 

Break-up or (Net of 

fair value or NAV Provisions) 

Category 

1. Related Parties 

(a) Subsidiaries 5,372.41 4,210.34 

(b) Companies in the same group 8,742.90 4,148.67 

(c) Other related parties — — 

2. Other than related parties 68,884.96 60,868.73 

Total 83,000.27 69,227.74 

(7) Other Information 

Particulars Amount (`) 

(i) Gross Non-Performing Assets — 

(a) Related Parties — 

(b) Other related parties — 

(ii) Net Non-Performing Assets — 

(a) Related Parties — 

(b) Other related parties — 

(iii) Assets acquired in satisfaction of debt —

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 



year ended 31st March, 2012. 

2. PERFORMANCE OF THE COMPANY 

During the year, your Company has earned revenue of ` 2.20 crores 

from its operations, with total revenue being ` 2.97 crores. The Company 

provides maintenance services for real estate assets such as office 

building. The Board of Directors of your Company continues to explore 

better growth opportunities. 




(`) (`) 


Less : Tax Expense 23,47,238 25,36,041 

b. Profit After Tax 96,95,485 84,31,989 



d. Balance carried forward to 


3. DIRECTORS 


Association of the Company, Mr. Saradindu Dutta will retire by rotation 

at the ensuing Annual General Meeting of the Company, and being 









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, 2012, and also the Statement 

of Profit and Loss 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 Company’s Management. Our responsibility 

is to express an opinion on these financial statements based on our audit. 

2. 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. 

3. As required by the Companies (Auditor’s Report) Order, 2003 issued 

by the Central Government of India 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. 


above, we report as follows: 

(a) we have obtained all the information and explanations which to 






(c) the Balance Sheet, the Statement of Profit and Loss and the Cash 

Flow Statement dealt with by this report are in agreement with the 

books of account; 

GREENACRE HOLDINGS LIMITED 












None of the employees of your Company is covered under the provisions 

of Section 217(2A) of the Companies Act, 1956, read with the Companies 

(Particulars of Employees) Rules, 1975. 

6. AUDITORS 

The Company’s Auditors, Messrs. A. F. Ferguson & Co., Chartered 

Accountants, retire at the ensuing Annual General Meeting of the 

Company, and being eligible, offer themselves for re-appointment. 


The Audit Committee of the Company comprises Mr. R. Tandon as 

Chairman and M/s. A. Nayak and Saradindu Dutta as Members. 

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, 

FOREIGN EXCHANGE EARNINGS AND OUTGO 


required on conservation of energy and technology absorption. There 

has been no foreign exchange earnings or outflow during the year 

under review. 

10th May, 2012 


ITC Centre 




(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss 

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 




accounting principles generally accepted in India: 

i) in the case of the Balance Sheet, of the state of affairs of the 


ii) in the case of the Statement of Profit and Loss, 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 


5. On the basis of the written representations received from the 

Directors as on 31st March, 2012 and taken on record by the 

Board of Directors, we report that none of the Directors is disqualified 

as on 31st March, 2012 from being appointed as a director in terms 

of Section 274(1) (g) of the Companies Act, 1956. 







15


(Referred to in paragraph 3 thereof) 

In our opinion and according to the information and explanations given 

to us, the nature of the Company’s business/activities during the year are 

such that clauses 4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), 

(xvi), (xviii), (xix) and (xx) of Companies (Auditor’s Report) Order 2003, 

are not applicable to the Company. In respect of the other clauses, we 

report as under: 

(i) In respect of its fixed assets: 

(a) The Company has maintained proper records showing full particulars, 

including quantitative details and situation of the fixed assets. 


Management in accordance with a regular programme of 

verification, which, in our opinion, provides for physical verification 

of all the fixed assets at reasonable intervals. According to the 

information and explanations given to us, no material discrepancies 

were noticed on such verification. 

(c) None of the fixed assets were disposed off during the year. 

(ii) In our opinion and according to the information and explanations 

given to us, there are adequate internal control systems commensurate 



basis of our examination and according to the information and 

explanations given to us, we have neither come across nor have we 

been informed of any instance of major weaknesses in the aforesaid 

internal control systems. 

(iii) In our opinion, the Company has an internal audit system commensurate 

with the size of the Company and the nature of its business. 

16 



Note 31st March, 2012 31st March, 2011 

(`) (`) (`) (`) 

I. Equity and Liability 

1. Shareholders’ Funds 

a) Share capital 3 42,06,01,660 42,06,01,660 

b) Reserves and surplus 4 11,72,45,509 53,78,47,169 10,75,50,024 52,81,51,684 

2. Non-current liabilities 

a) Other long-term liabilities 5 2,76,11,000 21,76,357 

b) Long-term provisions 6 16,06,387 2,92,17,387 18,69,022 40,45,379 

3. Current liabilities 

a) Trade payables 7 — 6,31,257 

b) Other current liabilities 8 1,14,49,652 3,82,83,482 

c) Short-term provisions 9 4,43,432 1,18,93,084 72,972 3,89,87,711 

Total 57,89,57,640 57,11,84,774 

II. Assets 

1. Non-current assets 

(a) Fixed assets 

Tangible assets 10 43,10,83,088 43,09,81,332 


(c) Deferred tax assets 12 6,06,561 7,65,830 

(d) Long-term loans and advances 13 34,72,278 50,14,88,627 34,68,278 50,15,42,140 

2. Current assets 

(a) Current investment 14 5,93,41,015 5,31,08,872 

(b) Inventories 15 1,23,71,911 1,23,71,911 

(c) Cash and cash equivalents 16 36,84,691 10,05,915 

(d) Short-term loans and advances 17 7,69,856 26,28,869 

(e) Other current assets 18 13,01,540 7,74,69,013 5,27,067 6,96,42,634 

Total 57,89,57,640 57,11,84,774 






Partner 


(iv) (a) According to the information and explanations given to us and 

according to the books and records as produced and examined 

by us, in our opinion, the Company is regular in depositing 

undisputed statutory dues including provident fund, employees’ 

state insurance, income-tax, service tax, cess and other material 

statutory dues as applicable with the appropriate authorities. 

(b) As at 31st March, 2012, according to the records of the Company 

and the information and explanations given to us, there were no 

dues on account of income-tax, service tax and cess which have 

not been deposited on account of any dispute. 

(v) 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. 

(vi) To the best of our knowledge and according to the information and 

explanations given to us, no fraud by the Company and no significant 

fraud on the Company has been noticed or reported during the year. 



(Registration No.112066W) 







A. Prasad Manager & Secretary




Partner 





Partner 






(`) (`) 

I Revenue from operations 19 2,20,40,402 2,19,19,628 

II Other income 20 76,59,546 52,49,603 

III Total revenue 2,96,99,948 2,71,69,231 

IV Expenses 

Changes in inventories of work-in-progress 21 — — 

Maintenance and service expenses 43,20,233 39,02,299 

Employee benefits expense 22 1,12,43,158 1,16,16,399 

Depreciation expense 10 1,81,744 1,81,744 

Other expenses 23 19,12,090 5,00,759 

Total expenses 1,76,57,225 1,62,01,201 

V Profit before tax 1,20,42,723 1,09,68,030 

VI Tax expense: 

Current tax 24 21,87,969 27,86,163 

Deferred tax 24 1,59,269 (2,50,122) 

VII Profit for the year 96,95,485 84,31,989 

Earnings per equity share (Face Value of ` 10/- each) 25(1) 0.23 0.20 







A. Prasad Manager & Secretary 




(`) (`) 




1,20,42,723 1,09,68,030 

Depreciation 1,81,744 1,81,744 

Loss on sale of current investments 989 1,02,400 

Liabilities no longer required written back (11,11,409) (6,35,326) 

Income from current investments (41,10,760) (26,17,910) 


Changes in working capital: 

70,03,287 79,98,938 

(Increase)/Decrease in short-term loans and advances (1,56,479) 3,75,622 

(Increase)/Decrease in long-term loans and advances (4,000) (1,78,000) 

(Increase)/Decrease in other current assets (7,74,473) (3,57,067) 

Increase/(Decrease) in trade payables (6,31,257) — 

Increase/(Decrease) in other current liabilities (2,57,22,421) 1,44,82,222 

Increase/(Decrease) in other long-term liabilities 2,54,34,643 (1,36,88,643) 

Increase/(Decrease) in short-term provisions 3,70,460 72,972 

Increase/(Decrease) in long-term provisions (2,62,635) 1,51,455 

(17,46,162) 8,58,561 

Cash generated from operations 52,57,125 88,57,499 

Income tax paid (1,72,476) (31,37,247) 

Net cash generated from operating activities 50,84,649 57,20,252 


Purchase of current investments (59,61,08,000) (71,40,72,784) 

Sale of current investments 59,17,92,037 71,37,99,111 

Dividend from investments 21,93,590 11,22,921 

Purchase of fixed assets (2,83,500) (90,00,000) 

Net cash used in investing activities (24,05,873) (81,50,752) 

C. Cash flow from financial activities — — 

Net cash flow used in financing activities — — 

Net increase/(decrease) in cash and cash equivalents 26,78,776 (24,30,500) 

Opening cash and cash equivalents 10,05,915 34,36,415 

Closing cash and cash equivalents (note 16) 36,84,691 10,05,915 

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: 


(`) (`) 

Cash on hand 19,409 15,251 

Balances with banks 36,65,282 9,90,664 

Cash and cash equivalents as per balance sheet (refer note 16) 



36,84,691 10,05,915 





17

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2012 

1. Corporate Information 

Greenacre Holdings Limited, a subsidiary of Russell Credit Limited, 

which in turn a wholly-owned subsidiary of ITC Limited, is engaged in 

the business of project management, property development and 

property maintenance. 



The financial statements are prepared on accrual basis under the 





nature of services. 

Fixed Assets 


expenses. 

Depreciation 



Investments 

Current Investments are stated 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. 

Investment Income 

Income from Investments is accounted for on an accrual basis, inclusive 


Method of Accounting - Projects 

The Company recognises revenue on projects using percentage 

of completion method of accounting, if work completed can be 

reasonably estimated. 

3. Share capital As at As at 


Authorised 

(`) (`) 

5,00,00,000 (2011 - 5,00,00,000) equity shares of ` 10/- each 50,00,00,000 50,00,00,000 


50,00,00,000 50,00,00,000 

4,20,60,166 (2011 - 4,20,60,166) equity shares of ` 10/- each, fully paid 42,06,01,660 42,06,01,660 

42,06,01,660 42,06,01,660 

(i) Reconciliation of number of shares and amounts outstanding 

Particulars As at As at 


Equity Shares Equity Shares 



Equity Shares of ` 10/- each outstanding at the beginning and at the end of the year 4,20,60,166 42,06,01,660 4,20,60,166 42,06,01,660 

4,20,60,166 42,06,01,660 4,20,60,166 42,06,01,660 

(ii) Details of the shareholders holding more than 5% of equity share of 

the company 

As at As at 

Name of the shareholders 31st March, 2012 31st March, 2011 

No. of Shares held No. of Shares held 


Russell Credit Limited - the holding company 100% 4,20,60,166 100% 4,20,60,166 

(iii) Rights, preferences and restrictions attached to the equity shares 

Equity Shares of the Company, having par value of ` 10/- per share , rank pari passu in all respects including voting rights and entitlement to dividend. 


As at As at 


(`) (`) (`) (`) 

General reserve 


Surplus in the statement of profit and loss 

1,37,70,978 1,37,70,978 


Add: Profit for the year 96,95,485 84,31,989 

18 


Revenue Recognition 

Service Income is recognised on rendering of service, net of taxes. 


Borrowing Costs that are directly attributable to the acquisition or 

construction of qualifying assets are capitalised as part of cost of such 



Contributions is made to the Provident Fund administered through 

duly constituted and approved independent trust, which is 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 Statement 

of Profit and Loss as income or expense. 

Lease Rentals 

Lease Rentals are accounted for on an accrual basis. 


Current tax is accounted as the amount of tax payable in respect of 


and tax laws. 

Deferred tax is accounted for on timing differences between taxable 


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 


Balance at the end of the year 10,34,74,531 9,37,79,046 

11,72,45,509 10,75,50,024 

5. Other long-term liabilities As at As at 


(`) (`) 

Others 

Security deposits 2,76,11,000 20,00,000 

[includes deposits from ultimate holding company 

` 2,20,00,000/- (2011- ` 20,00,000/-)] 

Liability towards gratuity fund — 1,76,357 

2,76,11,000 21,76,357


6. Long-term provisions As at As at 


Provision for employee benefits 

(`) (`) 

Provision for compensated absences 16,06,387 18,69,022 

16,06,387 18,69,022 

7. Trade payables 

Total outstanding dues other than micro and small enterprises (*) — 6,31,257 

— 6,31,257 

(*) There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also 



8. Other current liabilities As at As at 


(`) (`) 

Other payables (#) 

Statutory remittances 13,69,838 8,08,162 

Progress payments and advance received against projects 1,00,00,000 1,00,00,000 

Liabilties for expenses 79,814 11,92,155 

Security deposits — 2,60,90,000 

[includes deposits from ultimate holding company ` Nil (2011 – ` 2,00,00,000/-)] 

Liability towards gratuity fund — 1,93,165 

1,14,49,652 3,82,83,482 

(#) There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also 



9. Short-term provisions As at As at 


Current portion of long-term employee benefits 

(`) (`) 

Provision for compensated absences 4,43,432 72,972 

10. Tangible assets 

4,43,432 72,972 

GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK 

Particulars As at Additions As at Upto For the year Up to As at As at 

commencement the end 31st March, 2011 31st March, 2012 31st March, 2012 31st March, 2011 

of the year of the year 

(`) (`) (`) (`) (`) (`) (`) (`) 

Freehold land (*) 42,25,24,727 2,83,500 42,28,08,227 — — — 42,28,08,227 42,25,24,727 

Buildings (#) 1,10,04,119 — 1,10,04,119 25,70,431 1,79,367 27,49,798 82,54,321 84,33,688 

Plant and equipment 57,783 — 57,783 34,866 2,377 37,243 20,540 22,917 

Total 43,35,86,629 2,83,500 43,38,70,129 26,05,297 1,81,744 27,87,041 43,10,83,088 43,09,81,332 

Previous year 42,34,68,927 1,01,17,702 43,35,86,629 24,23,553 1,81,744 26,05,297 43,09,81,332 42,10,45,374 

(*) Includes land given on lease, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms. 

The Gross value of such assets is ` 28,21,78,478/- ( 2011 - ` 28,21,78,478/-) 

The aggregate lease rental of ` 10,00,000/- (2011 - ` 10,00,000 /-) is included in Lease rental income under Other income (Note No.20) 

(#) Represents 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/- ( 2011 - ` 1,10,04,119/-) and Accumulated depreciation is ` 27,49,798/- ( 2011 - ` 25,70,431 /-). 

Depreciation for the year charged to Statement of Profit and Loss is ` 1,79,367/- ( 2011 - ` 1,79,367/-). 

The aggregate lease rental of ` 11,89,500/- (2011 – ` 8,87,500 /-) is included in Lease rental income under Other income (Note No.20) 

11 Non-current investments 

(at cost) As at As at 


Long term - trade 

Unquoted 


Classic Infrastructure & 

(`) (`) 

Development Limited 

16,50,000 (2011-16,50,000) 

6,63,26,700 6,63,26,700 

equity shares of ` 10/- each fully paid up 6,63,26,700 6,63,26,700 

Aggregate amount of unquoted investments 6,63,26,700 6,63,26,700 

12. Deferred tax asset 

On fiscal allowances on fixed assets 13,428 15,859 

On employee benefits 5,93,133 7,49,971 

6,06,561 7,65,830 

13. Long term loans and advances 


Security deposit 1,55,000 1,55,000 

Project advances 32,90,278 32,90,278 

Advances to employees 27,000 23,000 

34,72,278 34,68,278 


14. Current investments As at As at 


(at lower of carrying cost and fair value) 

Other investments 

Unquoted 

Investments in mutual funds 

(`) (`) 

DSP BlackRock Liquidity Fund - 

Institutional Plan - Daily Dividend 

Nil (2011-23,102) Units of ` 1,000/- each 

— 2,31,08,872 

Kotak Quarterly Interval Plan Series 2 - Dividend 

Nil (2011- 29,99,641) Units of ` 10/- each 

— 3,00,00,000 

HDFC Cash Management Fund - Saving 

Plan-Daily Dividend Reinvestment 

30,10,706 (2011- Nil) Units of ` 10/- each 

Birla Sun Life Floating Rate - Long 

3,20,23,071 — 

Term Institutional Plan Daily Dividend - 

Reinvestment 2,73,17,944 — 

2,73,128 (2011- Nil) Units of ` 100/- each 5,93,41,015 5,31,08,872 

Aggregate amount of unquoted investments 


(At lower of cost and net realisable value) 

5,93,41,015 5,31,08,872 

Work-in-progress 

(project for property development) 

1,23,71,911 1,23,71,911 

1,23,71,911 1,23,71,911 

19



As at As at 


(`) (`) 

Cash on hand 

Balances with banks 

19,409 15,251 

in current accounts 36,65,282 9,90,664 

36,84,691 10,05,915 

17. Short term loans and advances 


Advances to employees 1,01,000 99,000 

Prepaid expenses 1,58,091 94,794 

Current taxation (net of provisions) 3,70,786 23,77,518 

Fringe benefit tax (net of provisions) — 8,760 

Advance towards gratuity fund 

Balances with government authorities 

1,30,296 — 

Service tax credit receivable 9,683 48,797 

7,69,856 26,28,869 


Lease rent receivable 

[includes ` 11,03,000/- (2011- ` 4,00,000/-) 

due from ultimate holding company, ITC Limited] 

13,01,540 4,18,200 

Accrued interest on income tax — 1,08,867 

13,01,540 5,27,067 

19. Revenue from operations For the year ended For the year ended 


(`) (`) 

Sale of services 2,20,40,402 2,19,19,628 

2,20,40,402 2,19,19,628 

20. Other income 

Dividend income from current investments 41,10,760 26,17,910 

Lease rental income 21,89,500 18,87,500 

Interest on income tax refund 2,47,877 1,08,867 

Liability no longer required written back 11,11,409 6,35,326 

76,59,546 52,49,603 

21. Changes in inventories of work-in-progress 

Opening work-in-progress 

Add: Expenditure incurred on projects 

1,23,71,911 1,23,71,911 

during the year — — 

Less: Closing work-in-progress 1,23,71,911 1,23,71,911 

— — 


Salaries and wages 97,38,609 88,15,749 


Staff welfare expense 5,95,952 11,05,908 

1,12,43,158 1,16,16,399 

23. Other expenses 


Insurance 2,395 4,354 

Travelling and conveyance 13,540 7,097 

Legal and professional 

Payment to auditor 

16,59,461 1,62,977 

As auditors - statutory audit 75,000 75,000 

For taxation matters (*) 37,500 50,000 

For other matters 4,000 — 

Communication expenses 9,795 11,322 

Loss on sale of current investments 989 1,02,400 

Miscellaneous expenses 61,912 46,321 

19,12,090 5,00,759 

(*) Paid to the erstwhile auditors, ` Nil ( 2011 - ` 50,000/) a firm in which some of 

the partners of the statutory auditors firm are partners 

24. Tax expense For the year ended For the year ended 


(`) (`) 

Current tax 

– for the year 23,00,000 32,00,000 

– for earlier years (1,12,031) (4,13,837) 

(A) 21,87,969 27,86,163 

Deferred tax 

– for the year 1,59,269 (2,50,122) 

(B) 1,59,269 (2,50,122) 

(A+B) 23,47,238 25,36,041 

20 


25. Additional notes to the financial statements 

1. Earnings Per Share : For the year ended For the year ended 


(`) (`) 

Profit after tax (`) 96,95,485 84,31,989 


shares outstanding 

Basic and diluted earnings per share 

4,20,60,166 4,20,60,166 

(Face Value – ` 10/- per share) ` 0.23 ` 0.20 

2. Segment reporting - The Company operates in a single business segment 

namely property maintenance and in a single geographical segment. 

3. Related party disclosures: 

a) Relationship: 

Holding Company Russell Credit Limited 

Ultimate Holding Company ITC Limited 

Fellow Subsidiary Company Landbase India Limited 

Employees’ Benefit Plans where there is significant influence: 

a) Greenacre Holdings Limited Provident Fund 

b) Greenacre Holdings Limited Gratuity Fund 


Mr. R. Tandon Non-Executive Chairman 

Mr. A. Nayak Non - Executive Director 

Mr. S. Dutta Non - Executive Director 

Ms. A. Prasad Manager and Company 

Secretary 

(b) Disclosure of transactions between the Company and Related Parties and the 

status of outstanding balances: 



Ultimate Holding 

Company ITC Ltd 

(`) (`) 

Lease rental income 19,60,000 18,20,000 

Sale of service 2,20,40,402 2,19,19,628 

Other reimbursements received 1,94,164 2,61,830 

Other reimbursements made 

Balances as at 

Ultimate Holding 

Company ITC Ltd 

16,758 26,332 

Security deposit received 2,20,00,000 2,20,00,000 

Other receivables 

Fellow Subsidiary Company 

Landbase India Ltd 

11,03,000 4,00,000 

Reimbursement of expenses 

Fellow Subsidiary Company 

Landbase India Ltd 

4,33,592 21,79,702 

Other payables 


Nil 11,17,702 

Remuneration of manager 

Contribution to Greenacre 

24,20,296 18,29,776 

Holdings Limited Provident Fund 

Contribution to Greenacre 

7,00,169 5,27,754 

Holdings Limited Gratuity Fund 6,02,820 2,35,195 

4. Employee Benefits: 

(a) Contribution to Defined Contribution Schemes – ` 8,05,595/- 

(2011 – ` 8,25,782/-) 

Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial 

Valuations as on March 31, 2012 and recognised in the financial statements 

in respect of Employee Benefit Schemes: 



Leave Leave 



I. Components of Employer Expenses 


2. Interest Cost 2,17,091 1,57,204 1,50,696 1,25,405 

3. Expected Return on Plan Assets (2,19,930) Nil (1,88,083) Nil 



6. Past Service Cost Nil Nil 2,17,055 Nil 

7. Actuarial Losses/(Gains) (1,40,734) (1,09,830) 4,77,594 2,70,421 

8. Total expense recognised in the 

Statement of Profit & Loss (*) 

1,03,002 1,80,797 8,68,960 5,24,427




II. Actual Returns 2,52,474 Nil 2,09,189 Nil 

III. Net Asset / (Liability) recognised in Leave Leave 

Balance Sheet Gratuity Encashment Gratuity Encashment 

1. Present Value of Defined Benefit 

Obligation 

28,42,884 20,49,819 27,27,984 19,41,994 

2. Fair Value on Plan Assets 29,73,180 Nil 23,58,462 Nil 

3. Status [Surplus/(Deficit)] 1,30,296 (20,49,819) (3,69,522) (19,41,994) 

4. Unrecognised Past Service Cost Nil Nil Nil Nil 

5. Net Asset/(Liability) recognised in 

Balance Sheet 

1,30,296 (20,49,819) (3,69,522) (19,41,994) 

Leave Leave 

IV. Change in Defined Benefit Obligations (DBO) Gratuity Encashment Gratuity Encashment 

1. Present Value of DBO at 

beginning of year 

27,27,984 19,41,994 20,89,233 17,17,567 


3. Interest Cost 2,17,091 1,57,204 1,50,696 1,25,405 



6. Plan Amendments Nil Nil Nil Nil 

7. Past Service Cost Nil Nil 2,17,055 Nil 

8. Actuarial (Gains)/Losses (1,55,601) (1,09,830) 4,70,360 2,70,421 

9. Benefits Paid (1,93,165) (72,972) (4,11,058) (3,00,000) 

10. Present Value of DBO at the end 

of year 

28,42,884 20,49,819 27,27,984 19,41,994 

(*) Gratuity expense has been recognised in “Contribution to provident and other 

funds” and leave encashment expense in “Salaries and wages” under Note 22. 




Leave Leave 



V. Change in Fair Value of Assets 

1. Plan Assets at Beginning of year 23,58,462 N.A. 23,43,602 N.A. 

2. Acquisition Adjustment Nil N.A. Nil N.A. 

3. Expected Return on Plan Assets 2,19,930 N.A. 1,88,083 N.A. 

4. Actuarial Gains/(Losses) (14,867) N.A. (7,234) N.A. 

5. Actual Company Contributions 6,02,820 N.A. 2,45,069 N.A. 

6. Benefits Paid (1,93,165) N.A. (4,11,058) N.A. 

7. Plan Assets at the end of year 29,73,180 N.A. 23,58,462 N.A. 

VI. Actuarial Assumptions For the year ended For the year ended 


Leave Leave 


1. Discount Rate (%) 8.25 8.25 8.00 8.00 

2. Expected Return on Plan Assets (%) 8.25 N.A. 8.00 N.A. 

VII. Major Category of Plan Assets As at As at 

as a % of the Total Plan Assets 31st March, 2012 31st March, 2011 

1. Government Securities/Special 

Deposit with RBI N.A. N.A. 

2. High Quality Corporate Bonds N.A. N.A. 

3. Insurance Companies 100% 100% 

4. Mutual Funds N.A. N.A. 

5. Cash and Cash Equivalents N.A. N.A. 

For the year ended For the year ended For the year ended For the year ended For the year ended 

31st March, 2012 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008 

(`) (`) (`) (`) (`) 

Gratuity Leave Gratuity Leave Gratuity Leave Gratuity Leave Gratuity Leave 

Encashment Encashment Encashment Encashment Encashment 

VIII. Net Asset / (Liability) recognised 

in Balance Sheet (including 

experience adjustment impact) 

Funded Unfunded Funded Unfunded Funded Unfunded Funded Unfunded Funded Unfunded 

1. Present Value of Defined 

Benefit Obligation 28,42,884 20,49,819 27,27,984 19,41,994 20,89,233 17,17,567 19,76,274 15,44,591 16,38,837 12,91,053 

2. Fair Value on Plan Assets 29,73,180 Nil 23,58,462 Nil 23,43,602 Nil 22,31,093 Nil 19,19,289 Nil 

3. Status [Surplus / (Deficit)] 1,30,296 (20,49,819) (3,69,522) (19,41,994) 2,54,369 (17,17,567) 2,54,819 (15,44,591) 2,80,452 (12,91,053) 

4. Experience Adjustment of 

Plan Assets [Gain / (Loss)] (8,203) N. A . (61,732) N.A . 79,276 N.A. Nil N.A. Nil N.A. 

5. Experience Adjustment of 

Obligation [(Gain) / Loss] (1,07,738) (66,852) 6,41,666 4,49,894 (58,958) (344) Nil Nil Nil Nil 

(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. 

(c) In the absence of detailed information regarding plan assets (of gratuity fund) which is funded with insurance company, the composition of each 

major category of plan assets, the percentage or amount for each category to the fair value of plan assets have not been disclosed. 

(d) The expected rate of returns on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect 

the capital and optimize returns within acceptable risk parameters, the plan assets are well diversified. 

5. The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted the 

disclosure and presentation made in the financial statements. Previous year’s figures have been regrouped / re-classified wherever necessary to correspond 

with the current year’s classification /disclosure. 






21

DIRECTORS’ REPORT 

TO THE MEMBERS OF WIMCO LIMITED 

Your Directors present their report for the financial year ended 

31st March, 2012. 

Company Performance 

Your Company’s turnover, which stood at ` 169.70 crores has seen a decline 

of 12% as compared to last year primarily on account of lower volumes in 

the Safety Matches Business. During the year under review, your Company 

incurred a net loss of ` 45.99 crores after taking into account a one-time 

cost of ` 36.87 crores, inter alia, for rationalising its operations. 

The income from Safety Matches Business for the year declined by 17% to 

` 152.89 crores from `184.78 crores earned in the previous year. Your 

Company continues to face challenges in its main business of Safety Matches 

due to steep increase in the prices of key raw materials on the one hand 

and growing competition from the small scale and cottage sector on the 

other. The recent budget announcement increasing the excise duty on the 

mechanised industry while reducing the duty on semi-mechanised industry 

has put your Company’s Safety Matches Business at a further disadvantage. 

Besides, the levy of discriminatory state level taxes on mechanised Safety 

Matches industry has compounded the challenge faced by the Company 

in the market place. 

In its pursuit to restructure the Safety Matches Business to make it viable, 

your Company, during the year, has implemented a Voluntary Retirement 

Scheme at the Kolkata unit, post suspension of operations at the said unit. 

With the above, your Company has discontinued operations at its Chennai, 

Ambarnath and Kolkata units. Insofar as the Bareilly unit is concerned, 

your Company has initiated steps to modernise the said unit. Meanwhile, 

the Company has made alternate arrangements for sourcing its volume 

requirements from external vendors. The outsourced volume has increased 

by 72% to 608 million boxes from 354 million boxes sold in the 

previous year. 

Pursuant to your approval at the last Annual General Meeting held on 

23rd September, 2011, for deployment of the assets of the Safety Matches 

Business that may be rendered surplus for alternate usage, your Company 

leased out its land located at Chennai to ITC Limited (ITC), the Holding 

Company, for a period of ten years at an initial lease rental of ` 2.40 crores 

per year and a non-interest bearing refundable security deposit of 

` 50 crores. The Company has also agreed in-principle to lease out its land 

and buildings located at Ambarnath to ITC for a period of ten years at an 

initial lease rental of ` 1.50 crores per year and a non-interest bearing 

refundable security deposit of ` 30 crores. 

The surplus movable assets of the Chennai, Ambarnath and Kolkata units, 

including plant & machinery, factory equipments, furniture & fixtures, are 

being suitably deployed, inter alia, at the Company’s Bareilly unit. Such 

deployment would assist the Company in optimising its supply-chain 

management. 

The Engineering Business recorded a turnover of ` 16.77 crores as compared 

to ` 14.04 crores in the previous year, registering a growth of 19%. It is 

your Company’s endeavour to increase value capture through continuous 

product development in the packaging machinery category. This Business 

is poised for further growth through new customer acquisitions. 

The income from the Agri (Forestry) Business during the year was ` 11.92 

crores as against ` 9.76 crores in the previous year, registering a growth 

of 22%. This Business is supplying high quality poplar and eucalyptus ETPs 

(Entire Transplants) to farmers in Northern India thereby providing 

employment and livelihood opportunities. Apart from creating a long-term 

sustainable supply of a critical raw material, our strategy of creating 

sustainable and meaningful linkages across the farmer community is helping 

us to contribute towards improving the green cover in the region. 

Dividend 

In view of the losses incurred during the year, your Directors are unable to 

recommend any dividend. 

Holding Company 

Consequent to transfer of 9,12,38,170 equity shares of the Company by 

Russell Credit Limited (Russell) to ITC, your Company became a direct 

subsidiary of ITC with effect from 29th September, 2011. 

Directors 

In accordance with the provisions of Articles 131, 132 and 133 of the 

Articles of Association of the Company, Mr. C. R. Dua and Mr. R. Tandon 

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. 

Share Capital 

(i) Rights Issue 

During the year, the Company made a rights issue of 9,42,30,000 

equity shares of ` 1/- each at a price of ` 6.50 per equity share, including 

a premium of ` 5.50 per share, to the existing shareholders of the 

company in the ratio of one rights equity share for every one fully paid 

up equity share held. Out of these, the Company received 1,739 valid 

AUDITORS’ REPORT 

TO THE MEMBERS OF WIMCO LIMITED 

We have audited the attached balance sheet of Wimco Limited 

(”the Company”) as at 31 March, 2012 and the related statement of profit 

and loss and cash flow statement for the year ended on that date, 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. 

We conducted our audit in accordance with auditing standards generally 


22 

WIMCO LIMITED 

applications for 9,16,25,147 rights equity shares representing 97.3% 

of the issue size. These shares were allotted on 27th March, 2012, 

consequent to which the paid-up equity capital of the Company 

increased from ` 9.42 crores to ` 18.59 crores. 

The remaining (unsubscribed) 26,04,853 shares were offered to and 

subscribed by Russell, a fellow subsidiary; the said shares were allotted 

on 25th April, 2012. With this, the paid-up capital of the Company 

stands increased to ` 18.84 crores as on that date. 

The proceeds of the aforesaid rights issue has been utilised for redemption 

of Preference Shares held by Russell, upgradation of existing infrastructure, 

meeting the working capital requirements and restructuring the 

operations of the Company. 

(ii) Preference Shares 

During the year, your Company redeemed 55,00,000, 5% Redeemable 

Cumulative Preference Shares of `100/- each, aggregating ` 55 crores, 

held by Russell. Further, the cumulative dividend payable on the 

aforesaid Preference Shares aggregating ` 8.33 crores, was waived by 

Russell. 

Directors’ Responsibility Statement 


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, 2012 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 Company’s 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 has not 

been 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, the Company’s expenditure on Research and 

Development on poplar, eucalyptus and other wood species was 

` 34.94 Lacs. 

C) Foreign Exchange Earnings and Outgo 

During the year, the Company earned foreign exchange of 

` 278.01 Lacs. The total outflow of foreign exchange was ` 629.98 lacs. 

Employees 

The relations between your Company and its employees have generally 

been cordial and harmonious during the year under review. 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 K.N. Grant 

15th June, 2012 Chairman 


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 (Auditor’s 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. 

2. 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 purpose 

of our audit; 

b) In our opinion, proper books of account as required by law have 



c) The balance sheet, statement of profit and loss and cash flow 

statement dealt with by this report are in agreement with the 


d) In our opinion, the balance sheet, statement of profit and loss 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 directors of 

the Company as at 31 March, 2012 and taken on record by the 

ANNEXURE TO THE AUDITORS’ REPORT - 31 MARCH, 2012 

(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 concern 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 301 of the Act. 

(vi) The Company has not accepted any deposits from the public. 

(vii) In our opinion, the Company has an internal 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 

Government for maintenance of cost records under Section 209(1)(d) of 

the Act in respect of generation of electricity from wind power and 

manufacture of matches 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, 

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. 

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, 2012 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 Nature of the Amount Period to Forum where 

Statute Dues (` in which the dispute is 

Lakhs) amount 

relates 

pending 

The Central 

Excise Act, 

1944 

Excise Duty 29.75 2006-2008 CESTAT, Kolkata 

Uttar Pradesh 

Sales Tax Act, 

1948 

Sales tax 0.75 2000-2004 High Court, Allahabad 

Central Sales tax 272.68 2005-2006 Appellate Authority, 

Sales Tax 

Act, 1956 

Kolkata 

Uttar Pradesh Sales tax 13.40 2007-2008 Joint Commissioner 

Sales Tax Act, 

1948 

Sales Tax, Bareilly 

Uttar Pradesh Sales tax 1.64 2009-2010 Additional Commissioner 

value added, Grade II (Appeal), 

Tax Act, 2008 Comercial Tax Bareilly 

Excludes ` 63.31 Lacs paid under protest. 

WIMCO LIMITED 

Board of Directors, we report that none of the directors is disqualified 

as on 31 March, 2012 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 


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, 2012; 

ii) in the case of the statement of profit and loss, of the loss 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 


For BSR & Co. 


Firm’s Registration No. : 101248W 

Bhavesh Dhupelia 

Mumbai Partner 

26th April, 2012 Membership No. : 042070 

(x) The accumulated losses of the Company at the end of the financial 

year are less than fifty percent of its net worth. However, it has incurred 

cash losses in the financial year as well as in the immediately preceding 

financial year. 

(xi) In our opinion and according to the information and explanations 

given to us, the Company has not defaulted in repayment of dues 

23

to its bankers. The Company did not have any outstanding debentures 

or outstanding dues to any financial institutions during the year. 

(xii) The Company has not granted any loans and advances on the basis 

of security by way of pledge of shares, debentures and other securities. 

(xiii) 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. 

(xiv) According to the information and explanations given to us, the 

Company is not dealing or trading in shares, securities, debentures 

and other investments. 

(xv) 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 institution. 

(xvi) The Company did not have any term loans outstanding during 

the year. 

(xvii) According to the information and explanations given to us and on 

overall examination of the balance sheet of the Company, we are of 

opinion that the funds raised on short-term basis have not been 

used for long-term investment. 

BALANCE SHEET AS AT MARCH 31, 2012 

As at As at 

Note March 31, 2012 March 31, 2011 

(` in Lacs) (` in Lacs) 

EQUITY AND LIABILITIES 

Shareholders’ Funds 

Share capital 1 6,858.55 11,442.30 

Reserves and surplus 

Non-current liabilities 

2 4,298.54 4,299.92 

Long-term borrowings 3 450.00 1,280.00 

Deferred tax liabilities (net) 4 — — 

Other long-term liabilities 5 5,652.68 172.35 

Long-term provisions 

Current liabilities 

6 87.97 84.53 

Short-term borrowings 7 25.84 23.30 

Trade payables 8 4,093.59 4,628.04 

Other current liabilities 9 427.64 657.67 

Short-term provisions 10 89.71 250.51 

TOTAL 21,984.52 22,838.62 

ASSETS 

Non-current assets 

Fixed assets 11 

Tangible assets 15,373.65 15,630.51 

Intangible assets 34.73 80.95 

Capital work-in-progress 23.38 104.99 

Non-current investments 12 599.15 599.10 

Long-term loans and advances 13 802.19 776.96 

Other non-current assets 

Current assets 

14 0.25 0.25 

Inventories 15 2,299.72 3,136.42 

Trade receivables 16 320.68 334.96 

Cash and cash equivalents 17 129.42 60.46 

Short-term loans and advances 18 2,399.87 2,113.16 

Other current assets 19 1.48 0.86 

TOTAL 21,984.52 22,838.62 

Segment information 29 

Related party disclosure 30 

Significant accounting policies 43 

The accompanying notes from 1 to 43 form an integral part of these financial statements. 

As per our report of even date. 

For BSR & Co. 


Firm’s Registration No.: 101248W 


Partner 

Membership No. 042070 

Place : Mumbai 

Date : 26th April, 2012 

24 

WIMCO LIMITED 

(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. 

(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. 

For BSR & Co. 


Firm’s Registration No. : 101248W 


Mumbai Partner 

26th April, 2012 Membership No. : 042070 


K. N. Grant Chairman 

V. M. Rajasekharan Managing Director 

S. K. Sipani Head - Finance & Company Secretary 

Place : Kolkata 

26th April, 2012

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2012 


March 31, 2012 March 31, 2011 


INCOME 

Revenue from sale of goods and services (gross) 20 18,154.35 20,857.78 

Less : Excise duty and taxes on sale of services 1,184.81 1,638.60 

Revenue from sale of goods and services (net) 16,969.54 19,219.18 

Other operating revenue 21 138.89 124.31 

Other income 22 204.96 117.65 

Total income 

EXPENDITURE 

17,313.39 19,461.14 

Cost of material consumed 23 7,603.68 11,605.88 

Cost of seeds 23 7.11 7.34 

Purchase of stock-in-trade 

Changes in Inventory of finished goods, 

3,611.74 1,888.20 

work-in-progress and stock-in-trade 24 634.31 69.33 

Employee benefits expense 25 2,500.48 3,429.98 

Finance cost 26 189.66 57.84 

Depreciation and amortisation expense 11 456.46 514.00 

Other expenses 27 3,222.05 4,107.15 

Total expenses 18,225.49 21,679.72 

(Loss) before exceptional items and taxation (912.10) (2,218.58) 

Exceptional items (see note 34) 3,687.26 3,746.46 

(Loss) before taxation (4,599.36) (5,965.04) 

Tax expenses — — 

(Loss) after taxation (4,599.36) (5,965.04) 

Earnings per equity share (`) - basic and diluted 28 (4.82) (6.67) 

Face value (`) 1.00 1.00 






For BSR & Co. 




Partner 




WIMCO LIMITED 






26th April, 2012 

25

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012 


March 31, 2012 March 31, 2011 



(Loss) before exceptional items and taxation 


(912.10) (2,218.58) 

Depreciation / amortisation 456.46 514.00 

Loss on sale of tangible assets (net) 0.38 0.81 

Provision no longer required written back (42.29) (60.10) 

Interest income (3.05) (2.56) 

Interest expenditure 189.66 57.84 

Operating (loss)/profit before working capital changes 


(310.94) (1,708.59) 

Trade and other receivables 14.28 (127.38) 

Loans and advances (5.82) 35.53 

Inventories 836.70 365.02 

Trade and other payables 4,162.20 (245.24) 

Cash generated from operations 4,696.42 (1,680.66) 

Income tax paid (net of refunds) (306.11) (365.15) 

Net cash generated from/(used in) operations before exceptional items 4,390.31 (2,045.81) 

Exceptional items (3,687.26) (3,746.46) 

Net cash generated from/(used in) operating activities 703.05 (5,792.27) 


Purchase of tangible/intangible assets (109.52) (132.68) 

Proceeds from sale of tangible/intangible assets 37.37 1.20 

Purchase of long-term investments (0.05) — 

Interest received 2.43 3.09 

Net cash generated from/(used in) investing activities (69.77) (128.39) 


Proceeds from rights issue of equity shares 5,955.63 — 

Proceeds from issue of zero coupon preference shares — 5,000.00 

Redemption of 5% redeemable cumulative preference shares (5,500.00) — 

Interest paid (189.95) (58.50) 

Borrowing from holding/subsidiary company — 988.02 

Repayment of borrowings to holding/subsidiary company (830.00) — 

Net cash generated from/(used in) financing activities (564.32) 5,929.52 

D. Net increase in cash and cash equivalents (A+B+C) 68.96 8.86 

E. Reconciliation 

Cash and cash equivalents at the beginning of the year 60.46 51.60 

Cash and cash equivalents at the end of the year 129.42 60.46 

68.96 8.86 

Cash and cash equivalents comprise of 

Cash on hand 7.57 10.47 

Balances with banks 121.85 49.99 

129.42 60.46 

Notes : 

1. The cash flow statement has been prepared under the "Indirect Method" as set out in Accounting Standard - 3 

on cash flow statement prescribed in Companies (Accounting Standard) Rules, 2006. 

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. 

For BSR & Co. 




Partner 




26 

WIMCO LIMITED 






26th April, 2012

WIMCO LIMITED 

NOTES TO THE ACCOUNTS 

As at As at 

March 31, 2012 March 31, 2011 


1. Share capital 

Authorised 

35,00,00,000 ( 2010-11: 35,00,00,000) Equity shares of ` 1 (2010-11: ` 1) each 

(see note (B)(I) (a),(c) and (d) below) 

113,00,000 (2010-11: 113,00,000) Redeemable preference shares of ` 100 each 

3,500.00 3,500.00 

(see note (B)(I) (d) below) 11,300.00 11,300.00 

Issued 

18,84,60,000 (2010-11: 9,42,30,000) Equity shares of ` 1 each (see notes (B)(I)(a), 

14,800.00 14,800.00 

(b), (c) and note (C) below) 

Nil (2010-11: 55,00,000 ) 5% Redeemable cumulative preference shares of 

1,884.60 942.30 

` 100 each (see note (B)(II) below) 

50,00,000 (2010-11: 50,00,000) Zero coupon preference shares of 

— 5,500.00 

` 100 each (see note (B)(III) below) 

Subscribed and paid up 

18,58,55,147 (2010-11: 9,42,30,000) Equity shares of ` 1 each fully paid up 

5,000.00 5,000.00 

(see notes B(I) (a), (b), (c), (d) and note (C) below) 


1,858.55 942.30 

` 100 each fully paid up (see note (B)(II) below) 

50,00,000 (2010-11: 50,00,000) Zero coupon preference shares of 

— 5,500.00 

` 100 each fully paid up (see note (B)(III) below) 5,000.00 5,000.00 

Total 6,858.55 11,442.30 

As at As at 

A) Reconciliation of number of shares March 31, 2012 March 31, 2011 

Equity shares No. of Shares ` in Lacs No. of Shares ` in Lacs 

Balance as at the beginning of the year 9,42,30,000 942.30 9,42,30,000 942.30 

Shares issued during the year - rights issue 9,16,25,147 916.25 — — 

Balance as at the end of the year 

5% Redeemable cumulative preference shares 

18,58,55,147 1,858.55 9,42,30,000 942.30 

Balance as at the beginning of the year 55,00,000 5,500 55,00,000 5,500 

Shares redeemed during the year 55,00,000 5,500 — — 


Zero coupon preference shares 

— — 55,00,000 5,500 

Balance as at the beginning of the year 50,00,000 5,000 — — 

Shares issued during the year — — 50,00,000 5,000 


B) Rights, preferences and restrictions attached to shares 

(I) Equity shares: 

50,00,000 5,000 50,00,000 5,000 

(a) The Ordinary Shares of the Company, having par value of ` 1/- per share, rank pari passu in all respects including entitlement to dividend. 

Repayment of capital in the event of winding up of the Company will inter alia be subject to the provisions of the Articles of Association 

of the Company and as may be determined by the Company in General Meeting prior to such winding up. 

(b) During the year the Company had offered 9,42,30,000 equity shares of ` 1/- each for ` 6.50 per equity share, including premium of ` 5.50 

per share, to the existing equity shareholders of the Company on rights basis in the ratio of one rights equity share for every one fully paid 

up equity share held. Of these the Company has allotted 9,16,25,147 shares to the existing shareholders and has offered 26,04,853 unsubscribed 

shares to Russell Credit Limited at the same price as at the balance sheet date. Unsubscribed shares offered to Russell Credit Limited were 

allotted post balance sheet date (i.e. on April 25, 2012). These equity shares shall rank pari pasu in all respects with the existing equity share 

capital of the Company. 

(c) 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 lakhs to ` 5,720 Lakhs 

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 lakhs. 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. 

(d) Pursuant to the provisions of Section 94 of the Companies Act, 1956, Article 3 of the Articles of Association of the Company, the authorised 

share capital of ` 1,48,00,00,000 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 (three thousand five hundred lakhs) equity shares of ` 1 (rupee one) each and 1,13,00,000 (one hundred 

thirteen lakhs) redeemable preference shares of ` 100 (Rupees One Hundred) each. 

(II) 5% Redeemable cumulative preference shares: 

55,00,000, 5% Redeemable preference shares of ` 100 each were issued during the year 2007 to Russell Credit Limited, the erstwhile holding 

company. These preference shares were due for redemption on March 15, 2012 but the same was extended upto March 31, 2012 with the consent 

of Russell Credit Limited. On March 28, 2012 these preference shares were redeemed. Arrears of dividend on these shares were waived by Russell 

Credit Limited. 

(III) Zero coupon preference shares 

50,00,000, Zero coupon preference shares of ` 100 each, redeemable at 6% premium per annum, were issued during the year 2010 to Russell 

Credit Limited, the erstwhile holding company. These shares shall be redeemable on or before September 15, 2015. During the year Russell Credit 

Limited has transferred these shares to ITC Limited. 

C) Shares allotted as fully paid up pursuant to contracts for consideration other than cash 

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 debenture holders 

respectively. 

27


As at As at 

March 31, 2012 March 31, 2011 


D) Shares held by holding company and subsidiary of holding company 

Equity shares 

18,24,76,340 (2010-11: Nil) Equity shares of ` 1 each, fully paid up 

are held by ITC Limited (holding company effective September 29, 2011, 

was the ultimate holding company in 2010-11) 

Nil (2010-11: 9,12,38,170) Equity shares of ` 1 each, fully paid up were held 

by Russell Credit Limited (fellow subsidiary, was the holding company of 

1,824.76 — 

Wimco Limited till September 28, 2011) 

Preference shares 


` 100 each fully paid up held by Russell Credit Limited (fellow subsidiary, was 

— 912.38 

the holding company of Wimco Limited till September 28, 2011) 

Nil (2010-11: 50,00,000) Zero coupon preference shares of ` 100 each fully 

paid held by Russell Credit Limited (fellow subsidiary, was the holding company 

— 5,500.00 

of Wimco Limited till September 28, 2011) 

50,00,000 (2010-11: Nil) Zero coupon preference shares of ` 100 each fully 

paid held by ITC Limited (holding company effective September 29, 2011, was 

— 5,000.00 

the ultimate holding company in 2010-11) 5,000.00 — 

As at As at 

March 31, 2012 March 31, 2011 

E) Name of shareholders holding more than 5% of the shares of the Company 

Equity Shares 

ITC Limited (holding company effective September 29, 2011, 

was the ultimate holding company in 2010-11) 18,24,76,340 — 

98.18% — 

Russell Credit Limited (fellow subsidiary, was the holding company 

of Wimco Limited till September 28, 2011) — 9,12,38,170 

5% Redeemable cumulative preference shares 

— 96.82% 

Russell Credit Limited (fellow subsidiary, was the holding company 

of Wimco Limited till September 28, 2011) — 55,00,000 

Zero coupon preference shares 

— 100.00% 

Russell Credit Limited (fellow subsidiary, was the holding company of 

Wimco Limited till September 28, 2011) — 50,00,000 

— 100.00% 

ITC Limited (holding company effective September 29, 2011, was the 

ultimate holding company in 2010-11) 50,00,000 — 

100.00% — 

As at As at 


March 31, 2012 (` in Lacs) March 31, 2011 (` in Lacs) 

Capital reserve 29.96 29.96 

Capital redemption reserve 

Securities premium 

500.00 500.00 

Balance at the beginning of the year 0.27 0.27 

Add : On issue of equity shares (see note 1(B)(I)(b)) 5,039.38 — 

Less : Premium on zero coupon preference shares 441.68 0.27 

Revaluation reserve 

4,597.97 — 

Balance at the beginning of the year 4,587.14 — 

Add: On revaluation during the year (see note 11B) — 4,587.14 

4,587.14 4,587.14 

Capital subsidy 14.93 14.93 

General reserve as per the last balance sheet 

(Deficit) in the statement of profit and loss 

6,534.97 6,534.97 

Balance at the beginning of the year (7,367.07) (1,402.03) 

Add: (Loss) for the year (4,599.36) (5,965.04) 

(11,966.43) (7,367.08) 

Total 4,298.54 4,299.92 

3. Long-term borrowings 

Unsecured : 

Loans and advances from related parties 

Pavan Poplar Limited (wholly-owned subsidiary) 250.00 280.00 

Russell Credit Limited (fellow subsidiary, was the holding company of 

Wimco Limited till September 28, 2011) 200.00 1,000.00 

Total 450.00 1,280.00 

Terms of repayment of loans and advances 

Borrowings Terms of Repayment 

Pavan Poplar Limited Interest free, repayable by March 31, 2014. 

Russell Credit Limited Repayable within two years with an interest rate of 9.5% per annum. 

(6% per annum from date of loan till February 13, 2012) 

28 

WIMCO LIMITED


As at As at 

March 31, 2012 March 31, 2011 


4. Deferred tax 


Difference between book depreciation and depreciation under 

the Income Tax Act, 1961 


420.58 459.95 

On Unabsorbed depreciation as per Income Tax Act, 1961 682.58 577.45 

On Disallowance u/s 43B of the Income Tax Act, 1961 159.24 216.35 

On VRS cost u/s 35 DDA of the Income Tax Act, 1961 1,456.72 764.44 

On Provision for doubtful debts 152.94 156.59 

On Long-term capital loss as per Income Tax Act, 1961 223.10 261.63 

On Business loss as per Income Tax Act, 1961 2,765.04 1,874.18 

5,439.62 3,850.64 

Net deferred tax asset 420.58 459.95 

Deferred tax asset (net) recognised * 

*Deferred tax asset has been recognised only to the extent of the deferred 

tax liabilities as this amount is considered to be virtually certain of realisation. 

— — 

5. Other long-term liabilities 

Security deposit received from holding company 5,000.00 — 

Premium on zero coupon preference shares* 441.68 0.27 

Rent payable 211.00 172.08 

* Premium is payable to ITC Limited (holding company effective 

September 29, 2011, was the ultimate holding company in 2010-11). 

5,652.68 172.35 

6. Long-term provisions 

Provisions for employee benefits (see note 25) 

Provision for leave encashment 87.97 84.53 

87.97 84.53 

7. Short-term borrowings 

Unsecured : 

Short-term loans and advances from related parties 

Pavan Poplar Limited (wholly-owned subsidiary) 25.84 23.30 

25.84 23.30 


Total outstanding dues of micro enterprises and small enterprises (see note 36) — — 

Total outstanding dues of creditors other than micro enterprises and small enterprises 4,093.59 4,628.04 

9. Other current liabilities 

4,093.59 4,628.04 

Interest accrued but not due on deposits 8.41 8.70 

Advances from customers 83.96 131.94 

Deposit from customers 45.06 59.57 

Employee benefits payable 206.68 295.43 

Statutory dues payable* 74.07 155.86 

Rent payable 9.46 6.17 

*Statutory dues payable include 

427.64 657.67 

Wealth tax and withholding taxes 49.69 61.55 

Excise duty, custom duty and service tax 12.31 44.60 

VAT and Others 12.07 49.71 

74.07 155.86 

10. Short-term provisions 

WIMCO LIMITED 

Provisions for employee benefits (See Note 25) 

Provision for gratuity 87.77 249.22 

Provision for leave encashment 1.94 1.29 

89.71 250.51 

29


11. Fixed assets 

(` in Lacs) 

GROSS BLOCK ACCUMULATED DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCK 

Balance Additions Revaluation Disposal/ Balance As at Charge on account of Disposal/ As at As at As at 

Tangible assets and 

Intangible assets 

as at April 1, 

2011 

during the 

year 

during the 

year 

Adjustments as at March 31, 

during the year 2012 

April 1, 2011 

Depreciation Impairment 

Depreciation 

for the 

year 

Impairment Held for Sale Adjustments 

during the 

year 

March 31,2012 

Depreciation impairment 

March 31, 

2012 

March 31, 

2011 

Intangible assets 

Computer software 289.84 — — — 289.84 208.89 — 46.22 — — — 255.11 — 34.73 80.95 

Tangible assets 

Freehold land 

(see note 11A below) 12,187.45 — — — 12,187.45 — 167.73 — — — — — 167.73 12,019.72 12,019.72 

Leasehold land 247.28 — — — 247.28 0.66 246.62 — — — — 0.66 246.62 — — 

Buildings 

(see note - 11A below) 6,288.87 12.10 — 2.22 6,298.75 5,738.10 — 22.42 — — 2.04 5,758.48 — 540.27 550.77 

Plant and machinery 7,014.00 150.60 — 58.93 7,105.67 4,324.12 — 347.85 — — 26.69 4,645.28 — 2,460.39 2,689.88 

Computers 312.45 1.86 — — 314.31 275.40 — 5.16 — — — 280.56 — 33.75 37.05 

Office Equipments 207.86 2.95 — — 210.81 143.69 — 8.37 — — — 152.06 — 58.75 64.17 

Furniture and fittings 620.07 0.52 — 0.07 620.52 377.19 — 22.76 — — 0.06 399.89 — 220.63 242.88 

Motor cars, lorries, 

tractors and launches 148.56 23.09 — 25.37 146.28 122.52 — 3.68 — — 20.06 106.14 — 40.14 26.04 

2011-12 27,316.38 191.12 — 86.59 27,420.91 11,190.57 414.35 456.46 — — 48.85 11,598.18 414.35 15,408.38 15,711.46 

2010-11 22,496.54 238.40 4,587.14 5.70 27,316.38 10,680.26 414.35 514.00 — — 3.69 11,190.57 414.35 

Capital work-in-progress 23.38 104.99 

15,431.76 15,816.45 

11A. Assets given on operating lease 

11B. Based on the valuation report submitted by the approved valuers, during the year 2010-11, the Company revalued the freehold land at Chennai by ` 4,587.14 Lacs and the same has been transferred to revaluation reserve account. 

11C. The Company has received notice from the Special Tahsildar (Land Acquisition) Thiruvottiyur for compulsory acquisition of certain portion of land at Chennai. 

As at As at 

March 31, 2012 March 31, 2011 

(`in Lacs) (` in Lacs) 

12. Non-current investments 

Unquoted 

Trade investment 

A. Investment in government securities 

National savings certificates (pledged with various Mandi Samitis) 0.06 0.01 

Non-trade investment 

B. Investment in equity instruments 

(I) Investments in wholly-owned subsidiary companies 

0.06 0.01 

Pavan Poplar Limited 

55,10,004 ( 2010-11: 55,10,004 ) equity shares of ` 10 each, fully paid 

(including 6 Equity Shares held by nominees) 

599.06 599.06 

Prag Agro Farm Limited 

38,00,020 (2010-11: 38,00,020 ) equity shares of ` 10 each, fully paid 

(including 6 equity shares held by nominees) 

381.90 381.90 

Less : Provision for diminution (381.90) (381.90) 

(II) Investments in other companies 

Woodlands Multispeciality Hospital Limited (Formerly known as 

Woodlands Hospital & Medical Research Centre Limited) 22, (2010-11 : 22 ) 

599.06 599.06 

1/2% debentures of ` 100 each fully paid 

Mirage Advertising and Marketing Limited 12,488 (2010-11 : 12,488 ) 

0.02 0.02 

equity shares of ` 10 each fully paid 

Bilaspur Cane Development Corporation Limited 

1.25 1.25 

100 (2010-11: 100 ) equity shares of ` 10 each fully paid 0.01 0.01 

Less : Provision for diminution (1.25) (1.25) 

0.03 0.03 

Total non-current investments (at cost) - unquoted 982.30 982.25 

Less : aggregate provision for diminution in value (383.15) (383.15) 

599.15 599.10 

13. Long-term loans and advances 


Loan to subsidiary company (Prag Agro Farm Limited) 788.85 762.46 

Advances recoverable in cash (employee advances, contingent rent etc.) 13.34 14.50 

802.19 776.96 

30 

(` in Lacs) 

Tangible asset Year Ended March 31, 2012 Year Ended March 31, 2011 

Gross Block Accumulated Net Block Charge for Gross Block Accumulated Net Block Charge for 

Depreciation the year Depreciation the year 

Freehold Land 8,027.68 — 8,027.68 — — — — — 

Buildings 1,080.57 1,012.41 68.16 2.57 — — — — 

TOTAL 9,108.25 1,012.41 8,095.84 2.57 — — — — 

WIMCO LIMITED


WIMCO LIMITED 

As at As at 

March 31, 2012 March 31, 2011 


14. Other non-current assets 

Other bank balances (see note 17) 0.25 0.25 

0.25 0.25 


Raw materials (Includes in transit, ` 14.32 Lacs (2010-11: ` 58.30 Lacs))* 912.22 969.58 

Work-in-progress - (including plantations)* 445.72 441.62 

Finished goods - manufactured* 344.88 986.08 

Finished goods - traded 12.35 9.56 

Stores and spares* 584.55 729.58 

* Net of obsolescence 

2,299.72 3,136.42 


Trade receivables outstanding for a period exceeding six months from the 

date they are due for payment: 

Unsecured, considered good 61.20 52.71 

Unsecured, considered doubtful 471.43 471.43 

Less: Provision for doubtful debts (471.43) (471.43) 

61.20 52.71 

Others 259.48 282.25 

Total 320.68 334.96 


Balances with banks: 

- In Current accounts 38.77 39.88 

- Cash credit (including working capital demand loan) with banks* 82.30 9.33 

Cash on hand 

Other bank balances 

7.57 10.47 

In restricted bank accounts (non-current) 0.25 0.25 

Deposit of original maturity of more than 12 months (current) 0.78 0.78 

Less: Amounts disclosed under non-current assets (see note 14) (0.25) (0.25) 

129.42 60.46 

*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. 

18. Short-term loans and advances 

Other loans and advances - unsecured, considered good unless otherwise stated 

Sundry advances to suppliers, employees, etc. 

Considered good 346.29 277.01 

Considered doubtful 26.83 26.83 

373.12 303.84 

Less: Allowance for bad and doubtful loans and advances (26.83) (26.83) 

346.29 277.01 

Prepaid expenses 16.05 96.72 

Advances with government and public bodies# 

Deposits 

225.94 323.56 

Considered good 346.29 256.68 

Considered doubtful 11.10 11.10 

357.39 267.78 

Less: Provision for doubtful deposits (11.10) (11.10) 

346.29 256.68 

Current taxation (net of provisions ` 344.06 Lacs 2010-11: ` 344.06 lacs) 1,454.45 1,148.34 

Fringe benefits tax (net of provisions ` 49.80 Lacs 2010-11 : ` 49.80 Lacs) 10.85 10.85 

#Advances with government and public bodies 

2,399.87 2,113.16 

Excise duty, custom duty and service tax 151.59 271.36 

VAT 74.35 52.20 

225.94 323.56 


Interest accrued but not due on electricity deposits 1.48 0.86 

1.48 0.86 

31


Year Ended Year Ended 

March 31, 2012 March 31, 2011 


20. Sale of goods and services 

Sale of goods 

Finished goods (including plantations) 14,146.52 18,677.55 

Traded goods 3,957.50 2,104.49 

Sale of services 50.33 75.74 

18,154.35 20,857.78 

21. Other operating revenue 

Income from sale of 

-Scrap 69.68 81.71 

-Stores and spares 20.79 6.26 

-Raw materials 10.09 7.18 

Income from sale of energy 35.74 17.88 

Insurance claims 2.59 11.28 

138.89 124.31 

22. Other income 

Interest income on deposits and others 3.05 2.56 

Foreign exchange gain (net) 6.08 3.51 

Rent and other charges realised* 153.54 51.48 

Provisions / liabilities written back as no longer required 42.29 60.10 

* Includes income from operating lease of land and office 

building premises at various locations 

204.96 117.65 

23. Cost of material consumed 

(a) Raw materials including packing materials consumed 

Opening stock 969.58 1,183.09 

Purchases 7,546.32 11,392.37 

Less: Closing stock 

Cost of Raw materials including packing materials 

(912.22) (969.58) 

consumed (see note 39) 7,603.68 11,605.88 

(b) Cost of seeds 7.11 7.34 

Total 7,610.79 11,613.22 

24. Changes in Inventory of finished goods, 

work-in-progress and stock-in-trade 

(Increase)/decrease in stocks 

Stock at the end of the year 

Finished goods 344.88 986.08 

Work-in-progress (including plantations) 445.72 441.62 

Stock-in-trade 12.35 9.56 

Total (A) 

Less: Stock at the beginning of the year 

802.95 1,437.26 

Finished goods 986.08 785.31 

Work-in-progress (including plantations) 441.62 711.30 

Stock-in-trade 9.56 9.98 

Total (B) 1,437.26 1,506.59 

(Increase)/decrease in stocks (B-A) 634.31 69.33 


Salaries, wages and bonus 1,852.87 2,653.61 

Contribution to provident and other funds 479.89 502.14 

Workmen and staff welfare expenses 168.35 274.95 

2,501.11 3,430.70 

Less: Recoveries (0.63) (0.72) 

2,500.48 3,429.98 

32 

WIMCO LIMITED 

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 ` 14.80 lacs (2010-11: ` 27.58 lacs) has been recognised in the statement of profit and 

loss for the year.


Net Asset/(Liability) 

recognized in Balance Sheet 

(including experience 

adjustment impact) 

1 

2 

3 



Gratuity 

Leave 

Encashment 



Gratuity 

Leave 

Encashment 



Gratuity 

Leave 

Encashment 

WIMCO LIMITED 



Gratuity 

Leave 

Encashment 

Present Value of Defined 

Benefit Obligation 

367.47 89.93 763.22 85.83 1,066.53 110.90 951.89 94.21 

Fair Value on Plan assets 279.70 — 514.01 — 969.37 — 956.07 — 

Status [Surplus/(deficit)] (87.77) (89.93) (249.21) (85.83) (97.16) (110.90) 4.18 (94.21) 

There are no experience adjustments of plan assets / obligations as at March 31, 2012 

(` in Lacs) 

Gratuity 

Defined Benefit Plans 

Leave Encashment 

(Funded) (Unfunded) 

2011-12 2010-11 2011-12 2010-11 

Change in obligation during the year 

1. Obligation at the beginning of the year 763.22 1,066.52 85.83 110.90 

2. Service cost 18.79 41.93 14.13 32.09 

3. Interest cost 52.47 85.49 5.72 8.99 

4. Actuarial (gains) / losses 241.87 143.14 31.87 37.68 

5. Benefits’ payments (708.88) (573.86) (47.62) (103.83) 

6. Obligations at the end of the year 

Change in plan assets 

367.47 763.22 89.93 85.83 

1. Plan assets at the beginning of the year 514.01 969.37 — — 

2. Expected return on plan assets 30.57 88.58 — — 

3. Contribution by employers 444.00 32.00 — — 

4. Actual benefits paid (708.88) (573.86) — — 

5. Actuarial gains / (losses) — (2.09) — — 

6. Plan assets at the end of the year 

Reconciliation of present value of the obligation and the fair value of the plan assets 

279.70 514.00 — — 

1. Fair value of plan assets at the end of the year 279.70 514.01 — — 

2. Present value of the defined benefit obligation at the end of the year 367.47 763.22 89.93 85.83 

3. Asset /(liability) recognised in the balance sheet 

Cost for the period 

(87.77) (249.21) (89.93) (85.83) 

1. Service cost 18.79 41.93 14.13 32.09 

2. Interest cost 52.47 85.49 5.72 8.99 

3. Return on plan assets (30.57) (88.58) — — 

4. Actuarial (gains) / losses 241.87 143.14 31.87 37.68 

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 

282.56 181.98 51.72 78.76 

Actual return on plan assets 

Actuarial Assumptions: 

(30.57) (88.58) — — 

1. Discount Rate 8.25% 8.00% 8.25% 8.00% 

2. Salary escalation 4.00% 4.00% 4.00% 4.00% 

3. Expected return on plan assets 9.00% 9.00% — — 

(` in Lacs) 

A. Amounts recognised as an expense ` 82.83 lacs (2010-11: ` 78.76 lacs) for leave encashment in "contribution to provident and other funds". 

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 of India (LIC). 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 major class are not readily available. We understand that expected return on each 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. 

Provident fund liability: 

Eligible employees receive benefits from a provident fund, wherein, both the employee and the Company make monthly contributions equal to a 

specified percentage of the employee's salary. The company contributed ` 114.46 Lacs (including shortfall of ` 26.53 Lacs) and ` 164.48 Lacs (including 

shortfall of ` 10.51 Lacs) towards provident fund during the year ended March 31,2012 and March 31, 2011, respectively. The contributions other 

than for the employees of erstwhile Wimco Seedlings Limited, are made to a Trust administered by the Company. Pursuant to the Guidance Note on 

Valuation of Interest rate Guarantees on Exempt Provident Fund issued by the Institute of Actuaries of India during the year, based on an actuarial 

valuation at March 31, 2012 in this regard, plan assets at year end, at fair value stands at ` 2309.25 Lacs and present value of defined obligation at 

year end is ` 2303.74 Lacs. The key assumptions include: (a) Government of India bond yield at 8.57%; (b) Expected guaranteed interest rate at 8.25%; 

and (c) Remaining term of maturity at 9 years. 

33


26. Finance cost 


March 31, 2012 March 31, 2011 


Interest expense : 

Interest 185.25 55.50 

Other borrowing costs 4.41 2.34 

189.66 57.84 


Consumption of stores and spare parts 

(including provision made for obsolete spares) 412.36 671.24 

Power and fuel 439.04 765.27 

Rent* 

Repairs 

277.33 226.97 

- Buildings 46.37 37.44 

- Machinery 85.65 124.38 

- Others 56.46 80.00 

Rates and taxes 120.70 118.80 

Insurance 42.70 72.23 

Maintenance and upkeep 144.31 101.73 

Outward freight and handling charges 394.36 685.60 

Warehousing charges 23.56 27.80 

Advertising and sales promotion charges 25.15 41.02 

Commission to selling agents 0.77 0.12 

Bank charges 5.46 10.40 

Information technology services 82.07 138.36 

Travelling and conveyance 168.59 188.77 

Training and development 1.95 5.52 

Professional fees 173.49 114.36 

Postage and telephone charges 29.91 37.35 

Printing and stationery 15.91 16.49 

Loss on sale of fixed assets (net) 0.38 0.81 

Auditors' remuneration (see note -31) 16.99 16.30 

Directors' sitting fees 0.55 0.50 

Plantation, Cultivation and Harvesting Charges 193.06 151.75 

Miscellaneous expenses 464.93 473.94 

Total 3,222.05 4,107.15 

*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 

28. Earnings per share 

(Loss) after taxation 

Arrears of preference dividend and including preference 

(4,599.36) (5,965.04) 

dividend tax (see note 1(B)(iii)) — 320.67 

(Loss) attributable to equity shareholders (4,599.36) (6,285.71) 

Weighted average number of equity shares 95,481,710 94,230,000 

Earning per share - basic and diluted (`) (4.82) (6.67) 

Nominal value of an equity share (`) 1.00 1.00 

34 

WIMCO LIMITED


30. Related party disclosures 

1. Parties exercising control over the Company: 

Related Party Relationship 

ITC Limited Holding company effective September 

29, 2011, was the ultimate holding 

company in 2010-11 

Russell Credit Limited Fellow subsidiary, was the holding 

company of Wimco Limited till 

September 28, 2011 

WIMCO LIMITED 

29. Segment information for the year ended March 31, 2012 (` in lacs) 

Information about primary March 31, 2012 March 31, 2011 

business segments 

Revenue 

Match Engineering Forestry Unallocated Total Match Engineering Forestry Unallocated Total 

External 15,285.86 1,676.85 1,191.64 18,154.35 18,478.00 1,404.25 975.53 20,857.78 

Inter-segment 296.57 296.57 — — 329.32 329.32 

Total 

Less: Eliminations on account 

15,285.86 1,676.85 1,488.21 — 18,450.92 18,478.00 1,404.25 1,304.85 — 21,187.10 

of inter segment revenue (296.57) (296.57) (329.32) (329.32) 

Total revenue 

Result 

15,285.86 1,676.85 1,191.64 — 18,154.35 18,478.00 1,404.25 975.53 — 20,857.78 

Segment result 

Unallocated expenditure net 

(538.63) 236.68 821.09 519.14 (2,201.19) 173.84 736.45 (1,290.90) 

of unallocated income 

Operating Profit / (Loss) 

(1,244.63) (1,244.63) (872.40) (872.40) 

before exceptional items 

Exceptional Item 

(538.63) 236.68 821.09 (1,244.63) (725.49) (2,201.19) 173.84 736.45 (872.40) (2,163.30) 

(see note 34) 

Operating Profit / (Loss) after 

(3,687.26) (3,687.26) (3,746.46) (3,746.46) 

exceptional items (538.63) 236.68 821.09 (4,931.89) (4,412.75) (2,201.19) 173.84 736.45 (4,618.86) (5,909.76) 

Interest expenses — — — (189.66) (189.66) (57.84) (57.84) 

Interest income 0.40 — 0.10 2.55 3.05 2.56 2.56 

Provision for taxation — — 

Net Profit / (Loss) 

Other Information 

(538.23) 236.68 821.19 (5,119.00) (4,599.36) (2,201.19) 173.84 736.45 (4,674.14) (5,965.04) 

Segment assets 6,635.39 567.45 1,996.54 12,785.14 21,984.53 8,944.15 681.16 1,935.02 11,278.30 22,838.63 

Segment liabilities 1,043.05 302.26 414.30 9,067.82 10,827.44 2,102.31 304.93 472.21 4,216.96 7,096.41 

Capital expenditure 39.68 6.82 22.19 40.83 109.51 109.77 5.73 1.79 15.40 132.68 

Depreciation 337.17 4.75 3.66 110.88 456.46 406.07 8.65 3.33 95.95 513.99 

Information about Secondary Business Segments 

Revenue by Geographical Segments 

March 31, 2012 March 31, 2011 

India Outside India Total India Outside India Total 

Sales 17,898.21 256.15 18,154.35 20,573.15 284.64 20,857.79 

Carrying Amount of Segment Assets 21,984.53 — 21,984.53 22,778.81 — 22,778.81 

Capital Expenditure 109.51 — 109.51 132.68 — 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. 

(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. 

2. Parties over whom Company exercises control: 


Pavan Poplar Limited Subsidiary Company (Wholly owned) 

Prag Agro Farm Limited Subsidiary Company (Wholly owned) 

3. Other related Parties with whom the Company had transactions 


ITC Infotech India Limited Fellow subsidiary 

Russell Credit Limited Fellow subsidiary, was the holding 

company of Wimco Limited till 

September 28, 2011 

4. Directors of the Company 

Managing director VM Rajasekharan 

No remuneration is paid by the Company to the Managing Director 

in accordance with the terms of his appointment. 

35


5. Transaction with Related Parties 

36 

WIMCO LIMITED 

ULTIMATE HOLDING HOLDING COMPANY SUBSIDIARY COMPANIES Fellow Subsidiaries Total 

COMPANY 

` in Lacs 

ITC Ltd.* RUSSELL CREDIT Ltd.* ITC Limited * PPL PAFL RCL* ITC Infotech India Ltd. 

2011-12 2010-11 2011-12 2010-11 2011-12 2011-12 2010-11 2011-12 2010-11 2011-12 2011-12 2010-11 2011-12 2010-11 

Sale of goods 

and services 

Purchase of raw 

materials and 

7,070.07 18,536.43 8,405.84 2.05 5.35 4.14 4.88 15,482.10 18,546.66 

components 362.89 1,247.04 367.02 65.87 306.78 795.78 1,553.81 

Purchase of services 0.40 1.40 — 51.97 98.22 52.37 99.62 

Purchase of fixed assets 26.54 26.54 — 

Expenses reimbursed 102.02 603.23 137.26 2.61 3.96 0.19 15.31 242.09 622.51 

Interest Paid 56.85 55.50 128.39 185.25 55.50 

Expenses recovered — 0.14 5.59 0.53 0.85 12.61 38.60 18.73 39.59 

Rent received 

Loans and advances 

47.93 51.48 126.97 174.89 51.48 

given during the year 

Receipt towards 

repayment of loans 

32.14 55.02 32.14 55.02 

and advances given 

Outstanding loans 

5.75 28.51 5.75 28.51 

and advances (Dr) 

Loans and advances 

788.85 762.46 788.85 762.46 

taken during the year 

Repayment of loans 

and advances by 

37.57 127.10 4,300.00 4,000.00 210.49 2.45 1.33 200.00 4,750.50 4,128.43 

the Company 15.88 330.61 3,000.00 325.11 29.91 13.30 5,300.00 5,670.90 3,343.91 

Unsecured loans (Cr) 

Deposits received 

1,000.00 275.84 303.30 200.00 475.84 1,303.30 

during the year 5,000.00 5,000.00 — 

Outstanding receivables 87.06 59.53 59.53 87.06 

Outstanding payables 126.95 5,483.62 82.87 82.87 5,566.49 209.82 

Advance payable 2,567.08 2,474.14 2,474.14 2,567.08 

Issue of preference shares 

Redemption of 5% 

redeemable cumulative 

5,000.00 — 5,000.00 

preference shares 

Proceeds from rights 

5,500.00 5,500.00 — 

issue of equity shares 

* Refer 1 above 

5,930.48 5,930.48 — 


March 31, 2012 March 31, 2011 

31. Auditors' remuneration Payments to the auditor as (` in Lacs) (` in Lacs) 

a. Audit fees 15.50 15.50 

b. Out-of-pocket expenses 1.49 0.75 

Total 16.99 16.25 

32. Contingent liabilities and commitments (to the extent not provided for) 

Contingent liabilities 

1. Claims against the company not acknowledged as debts: 

A. Income tax matters relating to allowability of expenses, 

unabsorbed depreciation and brought forward losses, etc. 

B. Excise duty, sales tax and indirect taxes claims disputed 

13.56 1,048.71 

relating to issues of applicability and classification 

C. Local authority taxes / Cess/ Royalty on property, utilities etc. 

421.44 360.85 

disputed relating to issues of applicability and determination 380.53 342.09 

D. Third party claims arising from disputes relating to contracts 474.75 400.51 

E. Other matters 45.91 66.41 

1,336.19 2,218.57 

2. Other matters for which the Company is contingently liable 

A. Test bonds / special valuation bonds equivalent to CIF Value 

of exports of certain raw materials in respect of which additional 

liability of custom duty is not likely to exceed the amount. 

B. Claims have been filed by farmers in respect of disputes under 

241.00 241.00 

the WIMCO NABARD Poplar Scheme. 19.65 19.65


C. 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, 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 (2010-11: ` 235.35 lacs) 

where necessary formalities and entries have not been completed. 1,362.62 1,362.62 

Commitments 

Arrears of dividend on redeemable cumulative preference shares 

(excluding dividend tax). The entire amount of dividend has been 

2,959.46 3,841.84 

waived during the year 2011-12. 

The Company has issued letter of financial support to one of its 

subsidiary company, viz. Prag Agro Farm Limited. 

— 570.34 

— 570.34 

Total of contingent liability and commitments 2,959.46 4,412.18 

33. The Company suspended operations in its unit at Dhubri, Assam in an 

earlier year. The Company has provided accelerated depreciation on 

fixed assets (excluding land) aggregating to ` Nil (2010-11: ` 43.67 

lacs) and made provision for inventories of stores and spares aggregating 

` Nil (2010-11: ` 34.91 lacs). 

34. The Company has completed a voluntary separation scheme that has 

been accepted by all its workmen during the year at its Kolkata factory 

and during the financial year 2010-11 at its Chennai and Ambarnath 

factories. Consequently, the Safety Matches operations at these units 

stand suspended. 

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 these locations, 

amounting to ` 11,503.48 Lacs (2010-11: ` 11,677.90 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 Note 29–Segment Information. 

35. 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. 

36. Micro, small 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 March 31, 2012 and March 31, 2011. 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. 


March 31, 2012 March 31, 2011 


37. CIF value of imports 

Raw materials 627.26 819.20 

38. Expenditure in foreign currency 

Foreign travel 2.71 1.76 

39. Details of consumption and purchases 

WIMCO LIMITED 

(a) Details of raw materials/packing materials consumed 

Wood 1,798.57 2,408.81 

Splints and veneers 1,257.13 2,411.02 

Card board and paper 1,888.69 3,552.15 

Chemicals 1,259.51 2,494.81 

Others 1,399.78 739.09 

Total 

(b) Value of imported and indigenous materials consumed 

Raw materials 

7,603.68 11,605.88 

Imported 654.25 1,077.82 

Indigenous 6,949.43 10,528.06 

Stores and spare parts 

7,603.68 11,605.88 

Imported 34.47 0.12 

Indigenous 404.57 765.15 

(c) Purchase of traded goods 

439.04 765.27 

Matches 3,560.44 1,888.20 

Machines 51.30 — 

Total 3,611.74 1,888.20 

40. Earnings in foreign exchange 

Exports of goods calculated on FOB basis 278.01 277.50 

41. Unhedged foreign currency exposure not covered by forward contract 

Amount Amount 

(` in Lacs) (USD in Lacs) (` in Lacs) (USD in Lacs) 

Trade receivables 5.62 0.11 42.92 0.98 

42. Prior period comparatives 

The previous year’s figures have been re-grouped / re-arranged as necessary to conform to the present year’s classification consequent to notification 

of Revised Schedule VI under Companies Act, 1956 [see note 43 (1)]. 

37


43 - 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 (’the Act’) 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. 

During the year ended March 31, 2012 (effective April 1, 2011), the 

revised Schedule VI notified under the Act has become applicable to 

Wimco Limited (’the Company’) for preparation and presentation of 

its financial statements. Except for accounting for dividend on 

investments in subsidiary companies (See Note 8 below), the adoption 

of revised Schedule-VI does not impact recognition and measurement 

principles followed for preparation of financial statements. All assets 

and liabilities have been classified as current or non-current as per the 

Company’s normal operating cycle and other criteria set out in the 

revised Schedule VI. 

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 and the reported amounts of revenue and expenses 

for the period. 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 

Tangible Assets 

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 Rates % 

Building 1.63 to 3.34 

Plant, machinery and factory equipment 4.75 to 10.34 

Furniture and fittings/office equipment 6.33 

Computers 31.67 

Motor cars, lorries, tractors and launches 7.07 to 11.31 

Assets individually costing ` 5,000.00 or less are fully depreciated 

in the year of purchase. 

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. 

III. Assets identified as held for disposal are stated at lower of their 

book value and estimated net realisable value. 

Intangible Assets 

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. 

Impairment 

V. In accordance with AS 28, where there is an indication of impairment 

of the Company’s assets, the carrying amounts of the Company’s 

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 

Investments, which are readily realisable 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 long-term 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. 

5. 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 

38 

WIMCO LIMITED 

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. 

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 realisation / 

insurance claim for such trees is reduced from the total cost. Every year, 

plantation cost already incurred is compared with net realisable 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 Company’s technical expert. 

Cost includes all direct and indirect expenses in respect of the poplar 

plantation. 

Further, 75% of net realisable value of intercropping, waste, etc is 

reduced from the above cost because entire farm cost is first added to 

cost of plantation. 

(ii) Agricultural produce/standing crops and plants are valued at 75% of 

their net realisable value. 

(iii) Fuel wood arising from poplar trees and lying in stock is valued at 75% 

of their net realisable value. 

(iv) The Company has considered an average yield of 0.22 cmh per tree 

based on the evaluation carried out by the Company’s technical expert. 

6. Foreign Currency Transactions 

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 

year are recognized in the statement of profit and loss for 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 

statement of profit and loss. 

7. 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. 

Dividend income is recognised when the right to receive dividend is 

established. Accordingly, dividend declared by subsidiary company 

after the reporting date but pertaining to the current year is no longer 

recognised during the year as was mandated by the pre-revised Schedule VI. 

As no dividend has been declared by the Company’s subsidiaries, 

there is no impact of this change. 

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) 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 

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


In respect of other employees, the contributions are made to Company 

managed provident fund. 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 Company’s 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 statement 

of profit and loss during the period in which the employee renders the 

related service. 

The Company’s gratuity benefit scheme is a defined benefit plan funded 

through a policy taken with the LIC. 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 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 

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 recognised immediately in the Statement of Profit 

and Loss. 

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 recognised 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. 

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 straight 

line basis. 

13. Earnings per share (EPS) 

Basic earnings per share is computed by dividing the net profit for the 

period 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 period 

attributable to the equity shareholders by the weighted average number 

of equity and equivalent dilutive equity shares outstanding during the 

period, 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 Notes forming part of the Balance Sheet and Statement 

of Profit and Loss. 

For BSR & Co. 




Partner 




STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES 

WIMCO LIMITED 






26th April, 2012 

1. Name of the Subsidiary Company PAVAN POPLAR LIMITED PRAG AGRO FARM LIMITED 

2. Financial Year of the Subsidiary 

Company ended March 31, 2012 March 31, 2012 

3. Number of Shares held in Subsidiary 55,10,004 Equity Shares 38,00,020 Equity Shares of 

of ` 10 each. (Including ` 10 each (Including 6 Equity 

6 Equity Shares held by nominees Shares held by nominees of Wimco 

of Wimco Limited) Limited) 

4. Total issued Share Capital of the Equity Shares - 55,10,004 Equity Shares - 38,00,020 

Subsidiary Company Shares of ` 10 each. Shares of ` 10 each. 

5. Percentage of Shares held in the 

subscribed capital of the Subsidiary 

(including shares held by nominees) 

Equity Shares - 100% Equity Shares - 100% 

6. The net aggregate amount so far as 

it concerns members of the Company 

and is not dealt with in the 

Company’s accounts of Subsidiary 

(i) Profit/(Loss) for the financial year March 31, 2012 March 31, 2012 

ended (` in lacs) 

(ii) Profits/(Losses) for the previous 

financial years of the Subsidiary 

since it became the Company’s 

` 3.32 ` 6.18 

Subsidiary (` in lacs) ` 139.60 ` (748.92) 

7. The net aggregate amount so far as 

it concerns members of the Company 

and is dealt with in the Company’s 

account of Subsidiary 

(i) Profit for the financial year ended March 31, 2012 March 31, 2012 

(` in lacs) 

(ii) Profits for the 

previous financial years of 

the Subsidiary since it became the 

Company’s Subsidiary 

Nil Nil 

(` in lacs) Nil Nil 



K. N. Grant 


Chairman 



39


TO THE MEMBERS OF PRAG AGRO FARM LIMITED 

Your Directors present their report for the financial year ended on 

31st March, 2012. 


During the year, the Company’s turnover has declined to ` 131.73 Lakhs 

from ` 377.01 Lakhs as compared to previous year. The company has 

posted a profit after tax of ` 6.17 Lakhs as against a profit of ` 5.36 lakhs 

in the previous year. 

Dividend 

In view of accumulated losses, your Directors are unable to recommend 

any dividend for the year under review. 

Directors 

Mr. Dipes Chakraborti will retire by rotation at the ensuing Annual General 

Meeting of the Company and, being eligible, offer himself for re-election. 

Your Board has recommended his re-election. 


Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors 

confirm that - 


Standards have been followed and no significant departures have been 

made from the same; 

(ii) appropriate accounting policies have been applied consistently and 

judgements and estimates 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, 2012 and of the profit for that period; 

(iii) proper and sufficient care has been taken for the maintenance of 


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 Company’s Auditors M/s. BSR & Co., retire at the ensuing Annual 

General Meeting, and being eligible, offer themselves for re-appointment. 

COMPLIANCE CERTIFICATE 

CIN No. of the Company : U01100MH1997PLC128846 

Authorised Capital : ` 4,00,00,000/- 

To 

The Members, 

Prag Agro Farm Limited 

We have examined the registers, records, books and papers of PRAG AGRO 

FARM LIMITED (“the Company”) as required to be maintained under the 

Companies Act, 1956, (“the Act”) and the rules made thereunder and also 

the provisions contained in the Memorandum and Articles of Association 

of the Company for the financial year ended on 31st March, 2012. In our 

opinion and to the best of our information and according to the examinations 

carried out by us and explanations furnished to us by the Company, its 

officers and agents, we report that in respect of the aforesaid financial year 

under review: 

1. The Company has kept and maintained all registers as stated in Annexure 

‘A’ to this certificate, as per the provisions of the Act and the rules 

made thereunder and all entries therein have been duly recorded. 

2. The Company has filed the forms and returns as stated in Annexure 

‘B’ to this certificate, with the Registrar of Companies, Regional Director, 

Central Government, Company Law Board or other authorities within 

the time prescribed under the Act and the rules made thereunder. 

3. The Company, being a public limited company, this comment is not 

required. 

4. The Board of Directors duly met FOUR times respectively on 3rd 

May, 2011, 1st August, 2011, 2nd November, 2011 and 31st March, 

2012 in respect of which meetings proper notices were given and the 

proceedings were properly recorded and signed including the circular 

resolutions passed in the Minutes Book maintained for the purpose. 

5. There were no instances requiring the Company to close its Register 

of Members during the financial year under review. 

6. The Annual General Meeting for the financial year ended on 31st 

March, 2011 was held on 23rd September, 2011 after giving due 

notice to the members of the Company and the resolutions passed 

thereat were duly recorded in Minutes Book maintained for the purpose. 

7. No extraordinary general meeting was held during the financial year 

under review. 

8. The Company has not advanced any loans to its directors or persons 

or firms or companies referred to under Section 295 of the Act during 

the financial year under review. 

9. The Company has not entered into any contracts falling within the 

purview of Section 297 of the Act during the financial year under review. 

10. The Company has complied with the provisions of Section 301 of the 

Act during the financial year under review. 

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. 

40 

PRAG AGRO FARM LIMITED 


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 


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. 


During the year, there is no technology absorption and the Company 

has not incurred any expenses on research and development. 


There is no foreign exchange earning and outgo during the year. 

Employees 

None of the employees of the Company is covered under the provisions 





investors, banks, distributors, customers, suppliers and business associates 

and the dedication and hard work of its employees. 


S. K. Sipani Director 

Kolkata, 15th June, 2012 S. Limaye Director 

12. The Company has not issued any duplicate share certificates during 

the financial year under review. 

13. (i) There was no allotment/ transfer/ transmission of securities during 

the financial year. 

(ii) The Company has not declared any dividend including interim 

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 


(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. 

14. The Board of Directors of the Company is duly constituted. There was 

no appointment of directors, additional director, alternate directors 

and directors to fill casual vacancy during the financial year. 

15. The Company has not appointed any Managing Director/ Whole time 

Director/Manager during the financial year under review. 

16. The Company has not appointed any sole selling agents during the 

financial year under review. 

17. 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. 

18. 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. 

19. The Company has issued Nil Equity Shares during the financial year 

under review. 

20. The Company has not bought back any shares during the financial 

year under review. 

21. The Company has not issued any preference shares/debentures; therefore 

the comment is not required. 

22. 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. 

23. 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. 

24. As per the information given by the management, the amounts borrowed 

by the Company during the financial year ending 31st March, 2012

are within the borrowing limits of the Company and that necessary 

resolutions as per Section 293(1)(d) of the Act have been passed. 

25. The Company has not made any loans and investments or given 

guarantees or provided securities to other bodies corporate and 

consequently no entries have been made in the register kept for the 

purpose. 

26. The Company has not altered the provisions of the Memorandum with 

respect to situation of the Company’s registered office from one State 

to another during the financial year under review. 


respect to the objects of the Company during the financial year under 

review. 


respect to name of the Company during the financial year under review. 


respect to share capital of the Company during the financial year under 

review. 

Annexure A 

Statutory Registers as maintained by the Company: 

1. Register of Investments under Section 49. 

2. Register of Charges under Section 143. 

3. Register of Applications for and Allotment of Shares. 

4. Register of Members under Section 150. 

5. Registers and Returns under Section 163. 

6. Minutes Book of Board Meetings and General Meetings 

under Section 193. 

7. Books of Accounts under Section 209. 

8. Register of Contracts, Companies and Firms in which Directors are 

interested under Section 301. 

9. Register of Directors, Managing Director, Manager and Secretary under 

Section 303. 

10. Register of Directors’ Shareholdings under Section 307. 

Other Registers: 

1. Register of Transfers 


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, 2012 and the related statement of profit 













a reasonable basis for our opinion. 

As required by the Companies (Auditor’s 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 purpose 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, 2012 


(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 during the year. 

(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. In our opinion, the frequency of such verification 

is reasonable. 








30. The Company has not altered its Articles of Association during the 

financial year under review. 

31. As per the information given by the management, there was no 

prosecution initiated against or show cause notices received by the 

Company and no fines or penalties or any other punishment was 

imposed on the company during the financial year, for offences under 

the Act. 

32. As per the information given by the management, the Company has 

not received any money as security from its employees during the 


33. As per the information given by the management, the Company has 

not constituted a provident fund for its employees and therefore 

provisions of Section 418 of the Companies Act, 1956 with regard to 

deposit of contribution to provident fund are not applicable to the 

company. 

Name of CP Holder: Anchal R. Jain 

Chennai, 15th June 2012 CP Number: 5168 

Annexure B 

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, 2012. 

1. Form 23AC-XBRL/Form 23ACA-XBRL alongwith required documents 

u/s 220 of the Companies Act, 1956 for the year 2011 filed on 

25.11.2011 with normal filing fees. 

2. Form 20B alongwith Schedule V u/s 159 of the Companies Act, 1956 

for the year 2011 filed on 16.11.2011 with normal filing fees. 

3. Form 66 alongwith Compliance Certificate u/s 383A of the Companies 

Act, 1956 for the year 2011 filed on 18.10.2011 with normal 

filing fees. 

Name of CP Holder: Anchal R. Jain 

Chennai, 15th June, 2012 CP Number: 5168 

(c) the balance sheet, statement of profit and loss and cash flow statement 

dealt with by this report are in agreement with the books of account; 

(d) in our opinion, the balance sheet, statement of profit and loss 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 at 31 March, 2012 and taken on record by the Board 

of Directors, we report that none of the directors is disqualified as on 

31 March, 2012 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 


(ii) in the case of the statement of profit and loss, 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. 


Firm’s Registration No: 101248W 


Partner 

Mumbai, 26th April, 2012 Membership No: 042070 

(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, 

1956 (’the Act’). Accordingly, the provisions of paragraph 4(iii) of 

the Order are not applicable to the Company. 





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 the audit. 


given to us, there are no contracts and arrangements, the particulars 




41



(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 by the Company. 



amounts deducted/accrued in the books of account in respect of 

undisputed statutory dues including 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, Provident fund, Excise duty, Cess, Employees’ State 

Insurance and Investor Education and Protection Fund. 


undisputed amounts payable in respect of Income tax and other 

material statutory dues were in arrears as at 31 March, 2012 for a 

period of more than six months from the date they became payable. 


are no dues of Income tax which have not been deposited with 

the appropriate authorities on account of any dispute. 

(x) The Company has accumulated losses at the end of the financial year 

in excess of fifty percent of its net worth. The Company has not incurred 

cash losses in the current financial year and in the immediately 

preceding financial year. 

(xi) The Company did not have any outstanding dues to any financial 

institution, banks or debentureholders during the year. 




given to us, the Company is not a chit fund or a nidhi/mutual benefit 

fund/society. 

42 




and other investments. 


Company has not given any guarantee for loans taken by others from 

banks or financial institutions. 

(xvi) The Company did not have any term loans outstanding during 

the year. 

(xvii) 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. 



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. 




For BSR & Co. 




Partner 




March 31, 2012 March 31, 2011 

(`) (`) 



Share Capital 1 3,80,00,200 3,80,00,200 



2 (7,42,74,768) (7,48,92,319) 

Long-term borrowings 


3 7,88,84,854 7,62,46,057 

Trade payables 4 5,12,364 2,01,888 

Other current liabilities 5 1,29,640 67,866 

TOTAL 

ASSETS 


4,32,52,290 3,96,23,692 

Fixed assets 6 

Tangible assets 2,24,23,585 2,35,75,687 

Non-current investments 


7 34,000 32,000 

Inventories 8 1,42,26,213 99,06,202 

Trade receivables 9 7,78,273 7,10,108 

Cash and cash equivalent 10 76,625 18,499 

Short-term loans and advances 11 57,13,594 53,81,196 

TOTAL 4,32,52,290 3,96,23,692 






For BSR & Co. 


Firm’s Registration No: 101248W For and on behalf of the Board 


Partner S K Sipani Director 

Membership Number: 042070 S Limaye Director 

Mumbai, 26th April, 2012 Kolkata, 26th April, 2012



Note For the year ended 

March 31, 2012 


March 31, 2011 

INCOME 

(`) (`) 

Revenue from operations 

-Revenue from sale of goods 

Other operating revenue 

Other income 

12 

13 

14 

1,31,72,842 

500 

17,510 

3,77,00,687 

1,45,467 

2,435 

Total income 1,31,90,852 3,78,48,589 

Expenses 

Cost of seeds 

Purchases of stock-in-trade 

Changes in inventories of finished goods, work-in-progress 

and stock-in-trade 

Depreciation and amortisation expense 

Other expenses 

15 

16 

6 

17 

8,25,655 

62,58,146 

(43,20,011) 

11,52,102 

86,29,131 

11,74,466 

2,82,48,793 

(5,55,102) 

11,54,300 

71,66,285 

Total expense 1,25,45,023 3,71,88,742 


Tax expense 

Current tax 

6,45,829 

28,278 

6,59,847 

1,23,258 

Profit for the year 6,17,551 5,36,589 

Earnings per equity share 

Basic and diluted 

Face value (`) 

18 

0.16 

10.00 

0.14 

10.00 

Segment information 

Related party disclosure 

Significant accounting policies 

19 

21 

23 



For BSR & Co. 




Partner 

Membership Number: 042070 

S K Sipani Director 

S Limaye Director 

Mumbai, 26th April, 2012 Kolkata, 26th April, 2012 



March 31, 2012 


March 31, 2011 

(`) (`) 

A. CASH FLOW FROM OPERATING ACTIVITIES : 

Profit before Taxation 

Adjustments for : 

6,45,829 6,59,847 

Depreciation 



11,52,102 

(17,510) 

17,80,421 

11,54,300 

(2,435) 

18,11,712 


Trade, other payables & liabilities 

Inventories 

Loans and Advances 

Trade and other receivable 

3,72,250 

(43,20,011) 

(5,14,363) 

(68,165) 

(4,17,597) 

(5,55,102) 

(23,07,356) 

(4,50,748) 

Cash used in operations (27,49,868) (19,19,091) 

Taxes paid (net of refunds) 1,53,687 (7,14,384) 

Net cash used in operating activities (25,96,181) (26,33,475) 


Purchase of long-term investments (2,000) (5,000) 

Interest received 17,510 — 

Net cash generated from/(used in) investing activities 15,510 (5,000) 


Borrowing from holding Company 26,38,797 26,51,037 

Net cash generated from financing activities 26,38,797 26,51,037 

D. Net increase in cash and cash equivalents 58,126 12,562 


Cash and cash equivalents at beginning of the year 18,499 5,937 

Cash and cash equivalents at the end of the year 76,625 18,499 

58,126 12,562 

Notes : 

1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard - 3 on Cash Flow Statement prescribed 

in Companies (Accounting Standard) Rules,2006. 

2. Proceed from borrowing are shown net of repayments. 


For BSR & Co. 




Partner S K Sipani Director 

Membership Number: 042070 S Limaye Director 

Mumbai, 26th April, 2012 Kolkata, 26th April, 2012 

43



Authorised : 

4,000,000 (2010-11: 4,000,000) 

(`) (`) 

Equity Shares of ` 10 each 4,00,00,000 4,00,00,000 

(see notes (a), (b) and (c) below) 

Issued 

3,800,020 (2010-11: 3,800,020) 

4,00,00,000 4,00,00,000 

Equity Shares of ` 10 each 


3,80,00,200 3,80,00,200 

Subscribed and Paid-up 

3,800,020 (2010-11: 3,800,020) 

3,80,00,200 3,80,00,200 

Equity Shares of ` 10 each fully paid-up 


3,80,00,200 3,80,00,200 

Total 3,80,00,200 3,80,00,200 

a) Shares held by holding Company 

Equity shares 

3,800,020 (2010-11: 3,800,020) 

Equity shares of ` 10 each, fully paid up 

3,80,00,200 3,80,00,200 

b) 

are held by the holding company Wimco Limited and its nominees. 

Name of shareholders holding more than 5% of 

the shares of the Company 

Equity Shares 

Wimco Limited, the holding Company 38,00,020 38,00,020 

100% 100% 

c) Rights, preferences and restrictions attached to shares 

The Ordinary Shares of the Company, having par value of ` 10/- per share, rank 

pari passu in all respects including entitlement to dividend. Repayment of capital 

in the event of winding up of the Company will inter alia be subject to the 

provisions of the Articles of Association of the Company and as may be determined 

by the Company in General Meeting prior to such winding up. 

44 

As at As at 

March 31, 2012 March 31, 2011 


6. Fixed assets 

Amount in (`) 

Gross Block Accumulated Depreciation/Impairment NET BLOCK 

As at April 1, 2011 As at March 31, 2012 

As at Additions Disposed/ As at Depreciation As at As at 

Description April 1, 2011 during the Adjusted March 31, 2012 Depreciation Impairment Charged for Depreciation Impairment March 31, 2012 March 31,2011 


year during the year the Year 

Leasehold land 10,16,90,195 — — 10,16,90,195 2,72,52,052 5,10,01,947 11,41,995 2,83,94,047 5,10,01,947 2,22,94,201 2,34,36,196 

Building 1,79,500 — — 1,79,500 59,015 — 5,880 64,895 — 1,14,605 1,20,485 

Plant and machinery 45,500 — — 45,500 29,485 — 1,236 30,721 — 14,779 16,015 

Furniture and fixture 1,500 — — 1,500 1,500 — — 1,500 — — — 

Vehicle 36,500 — — 36,500 33,509 — 2,991 36,500 — — 2,991 

10,19,53,195 — — 10,19,53,195 2,73,75,561 5,10,01,947 11,52,102 2,85,27,663 5,10,01,947 2,24,23,585 2,35,75,687 

2010-11 10,19,68,195 — — 10,19,53,195 2,62,21,261 5,10,01,947 11,54,300 2,73,75,561 5,10,01,947 2,35,75,687 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

7. Non-current investments 

Unquoted : 

Trade investments 

Investment in government securities 

National savings certificates 

(pledged with various Mandi Samitis) 33,000 31,000 

Kissan vikas patra 1,000 1,000 

Total 34,000 32,000 

Total non-current investments (at cost) unquoted 


34,000 32,000 

Work-in-progress - agri produces 30,85,370 17,45,735 

Work-in-progress - poplar trees 1,10,99,108 81,60,467 

Finished goods 41,735 — 

Total 1,42,26,213 99,06,202 

(`) (`) 


(Deficit) in the statement of profit and loss 

Balance at the beginning of the year (7,48,92,319) (7,54,28,908) 

Less : Profit for the year 6,17,551 5,36,589 

(7,42,74,768) (7,48,92,319) 

3. Long-term borrowings 

Unsecured : 

Loans and advances from related parties 7,88,84,854 7,62,46,057 

7,88,84,854 7,62,46,057 

Borrowings Terms of repayment 

As at As at 

March 31, 2012 March 31, 2011 

Loans and advances from related party 

– Wimco Limited (holding company) Interest free, repayable by March 31, 2014. 


Total outstanding dues of micro enterprises 

and small enterprises (see note 20) 

Total outstanding dues of creditors other 

— — 

than micro enterprises and small enterprises 5,12,364 2,01,888 

Total 5,12,364 2,01,888 


Advances from customers 

Statutory dues payable 

1,00,000 50,000 

- (tax deducted at source -’TDS’) 29,640 17,866 

Total 1,29,640 67,866 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 



period less than six months from the 

date they are due for payment 

Unsecured, considered good 7,78,273 7,10,108 

Total 7,78,273 7,10,108 


Cash and cash equivalents 

Balances with bank : 

- In current accounts 64,491 6,408 

Cash on hand 12,134 12,091 

Total 76,625 18,499

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 


Other loans and advances - unsecured, 

considered good 

Sundry advances to supplier, employees etc. 10,686 2,37,260 

Commercial tax receivable 49,06,077 41,87,821 

Prepaid expenses 31,206 8,525 

Advance tax and tax deducted at source 7,65,625 9,47,590 

[net of provision ` 439,377(2010-11 : ` 411,099)] 

Total 

12. Revenue from sale of goods 

Sale of products 

57,13,594 53,81,196 

Finished goods 68,22,858 76,24,616 

Traded goods 63,49,984 3,00,76,071 

Total 


1,31,72,842 3,77,00,687 

Sale of scrap — 85,142 

Insurance claims 500 60,325 

Others — — 

Total 

14. Other Income 

500 1,45,467 

Interest Income 17,510 2,435 

Total 

15. Cost of seeds 

17,510 2,435 

Poplar ETP's 4,11,487 6,86,107 

Seeds 4,14,168 4,88,359 

Total 8,25,655 11,74,466 

16. Changes in inventory of finished goods, work-in-progress 

and stock in trade 



Finished goods 41,735 — 


Work-in-progress - poplar trees 1,10,99,108 81,60,467 

Total A 


1,42,26,213 99,06,202 

Finished goods — 48,330 


Work-in-progress - poplar trees 81,60,467 58,53,308 

Stock-in-trade — 13,61,494 

Total B 99,06,202 93,51,100 

(Increase) / decrease in stocks (B-A) (43,20,011) (5,55,102) 



March 31, 2012 March 31, 2011 

(`) (`) 


Power and fuel 11,31,900 9,84,162 

Deputation charges 13,20,458 12,18,507 

Consumption of stores and spare parts 4,877 3,265 

Rent 8,197 8,197 


Insurance 

Repairs 

84,170 34,865 

- Buildings 53,374 35,149 

- Others 3,06,685 2,49,021 

Outward freight and handling charges 82,059 99,521 

Plantation and cultivation 48,39,779 37,67,919 

Bank and credit card charges 22,702 81,938 

Travelling and conveyance 2,02,818 1,15,813 

Legal and professional fees 3,60,833 3,30,348 

Postage and telephone charges 23,222 29,372 

Printing and stationery 14,145 16,572 

Auditors' remuneration 1,03,640 1,04,940 


Total 


The computation of earnings 

per share is set out below: 

86,29,131 71,66,285 

Net Profit attributable to equity shareholders (A) (`) 

Weighted average number of equity shares 

6,17,551 5,36,589 

outstanding during the year 

Earnings per share of face value 

38,00,020 38,00,020 

(`) 10 each basic and diluted ((A)/(B)) 

19. Segment information 

0.16 0.14 

The Company’s activities involve, predominantly, business of growing and selling 

agricultural produce and trading of poplar wood 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- Segment Reporting. 

20. There are no Micro and Small Enterprises to whom the Company owes any amounts, 

which are outstanding for more than 45 days as at March 31, 2012 (March 31, 

2011` nil). 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. 


1. Parties exercising control over the Company 

ITC Limited – Ultimate holding company # 

Russell Credit Limited – Fellow subsidiary of holding company # 

(was holding company of Wimco Limited till 

September 28, 2011) 

Wimco Limited – Holding company 

# No transaction during the years 2011-12 and 2010-11. 

2. Other related parties with whom the Company had transactions 

Pavan Poplar Limited (PPL) – Fellow subsidiary 

3. Transaction with related parties 

Amounts in (`) 

HOLDING COMPANY FELLOW SUBSIDIARY COMPANY TOTAL 

PARTICULARS 

Wimco Limited PPL 

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 

Purchases 4,14,168 4,88,359 66,495 4,01,403 4,80,663 8,89,762 

Sales 65,86,845 3,06,77,595 1,83,750 82,250 67,70,595 3,07,59,845 

Expenses reimbursed 12,60,668 38,60,101 30,69,441 26,78,922 43,30,109 65,39,023 

Expenses recovered 19,466 15,31,412 23,606 20,266 43,072 15,51,678 

Loans taken 32,13,917 55,01,714 — — 32,13,917 55,01,714 

Loan repayment 

Outstanding unsecured 

5,75,164 28,50,677 — — 5,75,164 28,50,677 

loans 7,88,84,810 7,62,46,057 — — 7,88,84,810 7,62,46,057 


The previous year’s figures have been re-grouped / re-arranged as necessary to conform to the present year’s classification consequent to notification of Revised Schedule VI under 

the Companies Act, 1956. 

45

23. Significant accounting policies 

1. Basis of Accounting 


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 (’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. 



Prag Agro Farm Limited (’the Company’) for preparation and presentation 

of its financial statements. The adoption of revised Schedule-VI does 

not impact recognition and measurement principles followed for 

preparation of financial statements. All assets and liabilities have been 

classified as current or non-current as per the Company’s normal 

operating cycle and other criteria set out in the revised Schedule VI. 

The accumulated losses of the Company as at March 31, 2012 have 

resulted in erosion of Company’s net worth. However, based on the 

Company’s future plans and letter of support received from Wimco 

Limited (Holding Company), these accounts have been prepared on 

a going concern basis. 

2. Use of estimates 


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 and actual results could differ from 

those estimates. Any revision to accounting estimates is recognised 

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. 

Depreciation is computed on a straight-line basis at the following 

annual rates: 

Nature of Assets Rates % 

Plant, machinery 4.75 to 10.34 

Furniture and fittings 6.33 

Vehicles 7.07 to 11.31 

Building and civil works on leasehold land are charged on straight-line 

basis over the lesser of period of lease and useful life. 

Assets individually costing ` 5,000 or less are fully depreciated in the 

year of acquisition. 

Leasehold Land is carried at cost less accumulated amortisation and 

impairment loss, if any. The lease agreement is effective upto 2031. 

Accordingly, expenditure incurred on leasehold land is amortised on 

a straight-line basis over the remaining period of the lease. 

Impairment 

In accordance with AS 28, where there is an indication of impairment 

of the Company’s assets, the carrying amounts of the Company’s 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 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 or against 

revaluation surplus, where applicable. 


(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 realisation / insurance claim for such trees is reduced from the 

46 


total cost. Every year, plantation cost already incurred is compared 

with net realisable 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. 

Cost includes all direct and indirect expenses in respect of the poplar 

plantation. 

Further, 75% of net standard realisable value of intercropping, 

waste, etc is reduced from the above cost because entire farm cost 

is first added to the cost of plantation. 

(ii) Agriculture produce/standing crops and plants are valued at 75% 


5. Revenue recognition 

Revenue from sale of goods is recognised on transfer of all significant 

risks and rewards of ownership to the buyer. 

6. Contingencies and Provisions 


a past event that probably requires an outflow of resources and a 

reliable estimate can be made of the amount of the obligation. 



resources. Where there is a possible or a present obligation and the 

likelihood of outflow of resources is remote, no provision or disclosure 

is made. 

7. Taxation 

Income-tax expense comprises current tax and deferred tax charge or 

credit. Current tax is determined in accordance with the Income Tax 

Act 1961. 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 a 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 realised. As the Company is engaged in growing and selling 

agricultural produce, such income is exempt from income tax. 

Accordingly, there are no deferred tax assets/liabilities arising therefrom. 

8. Earnings per share (’EPS’) 

The basic earnings per share (’EPS’) is computed by dividing the net 

profit attributable to the equity shareholders for the period by the 

weighted average number of equity shares outstanding during the 

reporting period. Diluted EPS is computed by dividing the net profit 

attributable to the equity shareholders for the period by the weighted 

average number of equity and equivalent dilutive equity shares 

outstanding during the period, except where the results would be antidilutive. 

For BSR & Co. 




Partner 


Mumbai, 26th April, 2012 


S K Sipani Director 

S Limaye Director 

Kolkata, 26th April, 2012


TO THE MEMBERS OF PAVAN POPLAR LIMITED 

Your Directors present their Report and Accounts for the financial year ended on 

31st March, 2012. 


The Company’s turnover decreased to ` 71.47 lakhs as against previous year’s 

turnover of ` 82.19 Lakhs.The Company has posted a net profit of ` 3.32 lakhs 

as against a net profit of ` 4.43 lakhs during the previous year. 

Dividend 

Your Directors are unable to recommend dividend. 

Directors 

Mr. Dipes Chakraborti will retire by rotation at the ensuing Annual General Meeting 

of the Company and, being eligible, offer himself for re-election. Your Board has 



Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm 

that - 


Standards have been followed and no significant departures have been made 

from the same; 

(ii) appropriate accounting policies have been applied consistently and judgements 

and estimates 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, 2012 and of 

the profits 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. 

Audit Committee 

The Audit Committee comprises of M/s. S. Sipani, S. Limaye and D. Chakraborti. 


TO THE MEMBERS OF PAVAN POPLAR LIMITED 

We have audited the attached balance sheet of Pavan Poplar Limited 

(’the Company’) as at 31 March, 2012 and the related statement of profit 













a reasonable basis for our opinion. 

As required by the Companies (Auditor’s 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 purpose 

of our audit; 




(c) the balance sheet, statement of profit and loss and cash flow 

statement dealt with by this report are in agreement with the books 

of account; 

ANNEXURE TO THE AUDITORS’ REPORT – 31 MARCH, 2012 


(i) (a) The Company has maintained proper records showing full particulars, 


(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 

during the year. 

(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. In our opinion, the frequency of such verification 

is reasonable. 


PAVAN POPLAR LIMITED 

Auditors 

The Company’s Auditors, M/s BSR & Co., retire at the ensuing Annual General 

Meeting, and being eligible, offer themselves for re-appointment. 


Conservation of Energy, Technology Absorption, Foreign Exchange Earnings 

and Outgo 


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. 


There is no technology absorption during the year and the Company has 

not incurred any expenses on research and development. 


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. 



investors, banks, distributors, customers, suppliers and business associates and 

the dedication and hard work of its employees. 



Kolkata, 15th June, 2012 S. Limaye Director 

(d) in our opinion, the balance sheet, statement of profit and loss and 


Accounting Standards referred to in sub-section (3C) of Section 


(e) on the basis of written representations received from the directors 

of the Company as at 31 March, 2012 and taken on record by the 

Board of Directors, we report that none of the directors is disqualified 

as on 31 March, 2012 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 


(ii) in the case of the statement of profit and loss, 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. 




Partner 







(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. 





the sale of goods. The activities of the Company do not involve sale 

47

of services. We have not observed any major weakness inthe internal 

control system during the course of the audit. 


given to us, there are no contracts and arrangements, the particulars 






(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 by 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. 


undisputed amounts payable in respect of Provident Fund, Income 

tax and other material statutory dues were in arrears as at 31 

March, 2012 for a period of more than six months from the date 

they became payable. 


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. 


As at As at 


(`) ( ` ) 


Shareholders’ funds 

Share capital 1 5,51,00,040 5,51,00,040 



2 1,47,92,041 1,44,59,813 

Long-term provisions 


3 1,05,737 96,238 

Trade payables 4 4,53,050 3,30,276 

Other current liabilities 5 22,55,679 22,50,592 

Short-term provisions 6 7,97,064 6,12,827 

TOTAL 7,35,03,611 7,28,49,786 

ASSETS 


Fixed assets 

Tangible assets 7 2,24,54,437 2,36,05,946 

Long-term loans and advances 8 2,50,00,000 2,80,00,000 


Inventories 9 1,49,56,326 1,02,20,619 

Trade receivables 10 83,64,301 83,60,629 

Cash and cash equivalent 11 1,11,693 2,53,279 


Other current assets 13 — 68,802 

TOTAL 7,35,03,611 7,28,49,786 






For BSR & Co. 




Partner 

Membership No: 042070 


48 


(xi) The Company did not have any outstanding dues to any financial 

institution, banks or debentureholders during the year. 




given to us, the Company is not a chit fund or a nidhi/ mutual benefit 

fund/ society. 



and other investment. 



banks or financial institution. 

(xvi) The Company did not have any term loans outstanding during the 

year. 

(xvii) According to the information and explanations given to us and overall 

examination of the balance sheet of the Company, we are of opinion 

that funds raised on short-term basis have not been used for 

long-term investment. 



of the Act. 


year. 

(xx) The Company has not raised any money by public issues during the 

year. 




For BSR & Co. 




Partner 




S. Limaye Director 

Dr. R. C. Dhiman Manager 

Kolkata, 26th April, 2012

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2012 

For the Year ended For the Year ended 


(`) (`) 

INCOME 


-Revenue from sale of goods 71,47,389 82,18,773 

Other operating revenue 14 1,15,609 — 

Other income - interest on fixed deposits 11,047 12,356 

Total income 

Expenses 

72,74,045 82,31,129 

Cost of seeds 15 7,69,916 9,08,272 

Changes in inventories of finished goods, 

work-in-progress and stock-in-trade 16 (47,35,707) (29,55,638) 

Employee benefits expense 17 26,10,147 22,41,543 

Depreciation and amortisation expense 7 11,51,509 11,51,509 


Total expense 69,22,111 77,82,029 


Tax expense 

3,51,934 4,49,100 

Current tax 19,706 5,924 

Profit for the Year 3,32,228 4,43,176 

Earnings per equity share 20 

Basic and diluted 

Face value (`) 

0.06 

10.00 

0.08 

10.00 






For BSR & Co. 




Partner 



CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012 


March 31, 2012 March 31, 2011 

(`) (`) 


Profit before taxation 


3,51,934 4,49,100 

Depreciation 11,51,509 11,51,509 

Interest income (11,047) (12,356) 


Adjustment for 

14,92,396 15,88,253 

Trade, other payables & liabilities 3,13,768 4,37,920 

Inventories (47,35,707) (29,55,638) 

Trade and other receivable 11,474 (1,16,806) 

Loans and advances 26,828 (8,246) 

Cash used in operations (28,91,241) (10,54,517) 

Taxes paid (net of refunds) (6,905) (2,471) 

Net cash used in operating activities 


(28,98,146) (10,56,988) 

Interest received 11,047 12,356 

Net cash generated from investing activities 


11,047 12,356 

Loan repayment from holding Company 27,45,513 12,03,010 

Net cash generated from financing activities 27,45,513 12,03,010 

D. Net increase/(decrease) in cash and cash equivalents 


(1,41,586) 1,58,378 

Cash and cash equivalents at the beginning of the year 2,53,279 94,901 

Cash and cash equivalents at the end of the year 1,11,693 2,53,279 

Notes: 

1. The Cash Flow Statement has been prepared under the "Indirect Method" as set out in Accounting 

Standard - 3 on Cash Flow Statement prescribed in Companies (Accounting Standard) Rules, 2006. 


(1,41,586) 1,58,378 

For BSR & Co. 




Partner 








Kolkata, 26th April, 2012 






49


As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 


Authorised 

10,000,000 (2010-11: 10,000,000) 

equity shares of ` 10 each 

(See notes (a), (b) and (c) below) 10,00,00,000 10,00,00,000 

Issued 

5,510,004 (2010-11: 5,510,004) 

equity shares of ` 10 each 

10,00,00,000 10,00,00,000 


Subscribed and paid up 

5,510,004 (2010-11: 5,510,004) 

equity shares of ` 10 each fully paid-up 

5,51,00,040 5,51,00,040 


Total 

a) Shares held by holding Company 

Equity Shares 

5,510,004 (2010-11: 5,510,004) Equity 

shares of ` 10 each, fully paid up are held 

by the holding company Wimco Limited 

5,51,00,040 5,51,00,040 

and its nominees. 

b) Name of share holders holding more 

than 5% of the shares of the Company 

Equity Shares 

5,51,00,040 5,51,00,040 

Wimco Limited , the holding Company 55,10,004 55,10,004 

100% 100% 

c) Rights, preferences and restrictions attached to shares 

The Ordinary Shares of the Company, having par value of ` 10/- per share, rank 

pari passu in all respects including entitlement to dividend. Repayment of 

capital in the event of winding up of the Company will inter alia be subject 

to the provisions of the Articles of Association of the Company and as may be 

determined by the Company in General Meeting prior to such winding up. 

50 


As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 


General reserve 5,00,000 5,00,000 

Surplus in the statement of profit and loss 


Add : Profit for the year 3,32,228 4,43,176 

1,42,92,041 1,39,59,813 

Total 1,47,92,041 1,44,59,813 

3. Long-term provisions 

Provisions for employee benefits 

Provision for leave encashment 1,05,737 96,238 

Total 1,05,737 96,238 


Total outstanding dues of micro 

enterprises and small enterprises 

(see note 24) — — 

Total outstanding dues of creditors 

other than micro enterprises and 

small enterprises 4,53,050 3,30,276 

Total 4,53,050 3,30,276 


Advances from customers 3,12,279 3,56,753 

Employee benefits payable 2,32,180 1,97,121 

Statutory dues payable* 17,11,220 16,96,718 

Total 

*Statutory dues payable include 

22,55,679 22,50,592 

Tax deducted at source -'TDS' 33,853 22,885 

Provident fund 28,367 24,833 

Stamp duty 16,49,000 16,49,000 

17,11,220 16,96,718 

6. Short-term provisions 

Provisions for employee benefits : 

Provision for gratuity 7,77,486 6,11,359 

Provision for leave encashment 

Provision for income tax 

11,749 1,468 

(net of advance taxes ` 72,772) 7,829 — 

Total 7,97,064 6,12,827 

7. Fixed Assets 

GROSS BLOCK ACCUMULATED DEPRECIATION/IMPAIRMENT 

Amount In (`) 

NET BLOCK 

As at April 1, 2011 As at March 31, 2012 

As at Additions Deduction As at Charge As at As at 

Description April 1, during the during the, March 31, Depreciation Impairment for the Depreciation Impairment March 31, March 31, 

Tangible asset 

2011 year year 2012 year 2012 2011 

Leasehold land 4,49,33,855 — — 4,49,33,855 1,80,68,422 32,59,487 11,51,509 1,92,19,931 32,59,487 2,24,54,437 2,36,05,946 

Total 4,49,33,855 — — 4,49,33,855 1,80,68,422 32,59,487 11,51,509 1,92,19,931 32,59,487 2,24,54,437 2,36,05,946 

2010-11 4,49,33,855 — — 4,49,33,855 1,69,16,913 32,59,487 11,51,509 1,80,68,422 32,59,487 2,36,05,946 

8. Long Term Loans and Advances 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 


With holding company* 2,50,00,000 2,80,00,000 

Total 2,50,00,000 2,80,00,000 

*The loan is interest free, receivable by March 31, 2014 


Work-in-progress - Agri produces 30,07,884 26,36,806 

Work-in-progress - Poplar trees 1,18,90,551 75,66,664 

Finished goods 57,891 17,149 

Total 1,49,56,326 1,02,20,619 

As at As at 

March 31, 2012 

(`) 

March 31, 2011 

(`) 



period exceeding six months from 

the date they are due for payment 

Unsecured, considered good * 

Others 

82,87,088 83,60,629 

Unsecured, considered good 77,213 — 

Total 83,64,301 83,60,629 

*Includes amount due from Wimco Limited, holding company ` 82,87,088 

(2010 - 11 : ` 82,87,088) 



Balances with bank : 

- In current accounts 1,05,365 2,40,697 

Cash on hand 6,328 12,582 

Total 1,11,693 2,53,279


As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 



Receivable from holding company 

Sundry advances to supplier, 

25,84,034 23,29,547 

employees etc. 6,367 1,548 

Prepaid expenses 

Advance tax and tax deducted at source 

26,453 4,444 

(net of provision ` nil (2010-11 : ` 65,591) — 4,972 

Total 26,16,854 23,40,511 


Security deposits — 68,802 

Total — 68,802 


Insurance Claims 1,15,609 — 

Total 1,15,609 — 



As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

15. Cost of seeds 

Poplar ETP's 2,05,344 5,34,934 

Seeds 5,64,572 3,73,338 

Total 7,69,916 9,08,272 

16. Changes in inventory, work-in-progress and stock in trade 





Work-in-progress - Poplar trees 1,18,90,551 75,66,664 

Total A 1,49,56,326 1,02,20,619 




Work-in-progress - Poplar trees 75,66,664 42,25,965 

Total B 1,02,20,619 72,64,981 

(Increase) / decrease in stocks (B-A) (47,35,707) (29,55,638) 


March 31, 2012 March 31, 2011 

(`) (`) 

Salaries, wages and bonus 21,42,793 17,95,746 


Workmen and staff welfare expenses 1,11,720 1,02,942 

26,10,147 22,41,543 

(`) 

Defined Benefit Plans 

Gratuity ( Unfunded) Leave Encashment 

2011-12 2010-11 2011-12 2010-11 

Change in obligation during the year 

1. Obligation at the beginning of the year 6,11,359 4,42,430 97,706 80,073 

2. Service cost 36,013 36,910 25,809 25,493 

3. Interest cost 40,757 35,394 6,514 6,406 

4. Actuarial (Gains) /Losses 1,05,972 1,19,443 (12,543) (8,526) 

5. Benefits’ payments (16,615) (22,818) — (5,740) 

6. Obligations at the end of the year 

Change in plan assets 

7,77,486 6,11,359 1,17,486 97,706 

1. Plan assets at the beginning of the year — — — — 

2. Expected return on plan assets — — — — 

3. Contribution by employers 16,615 22,818 — 5,740 

4. Actual benefits paid (16,615) (22,818) — (5,740) 

5. Actuarial Gains/(Losses) — — — — 

6. Plan assets at the end of the year 

Reconciliation of present value of the obligation and the fair value of 

the plan assets 

— — — — 

1. Fair value of plan assets at the end of the year — — — — 

2. Present value of the defined benifit obligation at the end of the period 7,77,486 6,11,359 1,17,486 97,706 

3. Asset/(Liability) recognised in the balance sheet 

Cost for the period 

(7,77,486) (6,11,359) (1,17,486) (97,706) 

1. Service cost 36,013 36,910 25,809 25,493 

2. Interest cost 40,757 35,394 6,514 6,406 

3. Return on plan asset — — — — 

4. Actuarial (gains)/losses 1,05,972 1,19,443 (12,543) (8,526) 

5. Past service cost — — — — 

Net cost 

Actuarial assumptions : 

1,82,742 1,91,747 19,780 23,373 

1. Discount rate 8.25% 8.00% 8.25% 8.00% 

2. Salary escalation 4.00% 4.00% 4.00% 4.00% 

3. Expected return on plan assets N/A N/A N/A N/A 

Net asset/(liability) For the year ended For the year ended For the year ended For the year ended 

recognised in Balance Sheet March 31, 2012(`) March 31, 2011(`) March 31, 2010(`) March 31, 2009(`) 

(including experience Leave Leave Leave Leave 

adjustment impact) Gratuity Encashment Gratuity Encashment Gratuity Encashment Gratuity Encashment 

1. Present value of defined 

benefit obligation 7,77,486 1,17,486 6,11,359 97,706 4,42,430 80,073 4,17,806 99,795 

2. Status [surplus/(deficit)] (7,77,486) (1,17,486) (6,11,359) (97,706) (4,42,430) (80,073) (4,17,806) (99,795) 

There are no experience adjustments of plan assets / obligations as at March 31, 2012 (March 31, 2011: nil) 

A. Amounts recognised as an expense and included in note 17 - "employee benefits expense" ` 19,780 [2010-11: ` (23,373)] for leave encashment. 

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. 

51


21. Segment information 

The Company’s 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. 

22. No remuneration is payable to the Manager during the year. 

(2010-11: ` Nil) 

23. The Company has not appointed a whole-time Company Secretary as required 

by Section 383 A of the Companies Act, 1956 and accordingly, the financial 

statements have not been authenticated by a whole-time Company Secretary. 

52 



March 31, 2012 March 31, 2011 

(`) (`) 


Power and fuel 10,50,177 12,09,066 

Consumption of stores and spare parts 4,877 3,305 

Rent 7,760 7,760 


Insurance 

Repairs 

50,242 25,644 

- Buildings 40,573 35,142 

- Others 3,11,975 2,38,141 

Outward freight and handling charges 89,951 97,778 

Plantation and cultivation 47,58,077 41,24,413 

Bank and credit card charges 2,001 2,278 

Travelling and conveyance 1,85,440 79,997 

Legal and professional fees 3,93,194 3,96,459 

Postage and telephone charges 5,343 5,680 

Printing and stationery 8,957 8,188 

Auditors' remuneration 1,03,650 1,05,185 


Total 71,26,246 64,36,343 

As At As At 

March 31, 2012 March 31, 2011 

(`) (`) 

19. Contingent liabilities and commitments 

(to the extent not provided for) 

Contingent liabilities 

Claims against the Company 

not acknowledged as debts 

Local authority taxes -dispute relating 

to applicability and determination 6,64,524 6,64,524 

Other matters for which the Company is 

contingently liable 68,802 68,802 

Total 7,33,326 7,33,326 

24. There are no Micro and Small Enterprises, to whom the Company owes any 

amounts, which are outstanding for more than 45 days as at March 31, 2012 

(March 31, 2011 ` nil). 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. 

25. Related Party Disclosures 

1. Parties exercising control over the Company 

ITC Limited - Ultimate holding Company# 

Russell Credit Limited - Fellow Subsidiary of Holding Company# 

(was holding company of WIMCO Limited till 

September 28, 2011) 

WIMCO Limited - Holding Company 

# No transaction during the years 2011-12 and 2010-11 

2. Other related parties with whom the Company had transactions 

Prag Agro Farm Limited (PAFL) - Fellow Subsidiary Company 

3) Transaction with related parties 

Amount In (`) 

Particulars Holding Company Fellow Subsidiary Company Total 

Wimco Limited PAFL 

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 

Purchases 2,05,344 5,34,934 1,83,750 82,250 3,89,094 6,17,184 

Sales — — 66,495 4,01,403 66,495 4,01,403 

Expenses reimbursed 53,119 84,974 23,606 20,266 76,725 1,05,240 

Expenses recovered 2,61,250 3,96,196 30,69,441 26,78,922 33,30,691 30,75,118 

Loans given 2,45,232 1,32,653 — — 2,45,232 1,32,653 

Receipt towards 

loan repayment 29,90,745 13,29,671 — — 29,90,745 13,29,671 

Outstanding loans 

and advances 2,75,84,034 3,03,29,547 — — 2,75,84,034 3,03,29,547 

Outstanding debtors 82,87,088 82,87,088 — — 82,87,088 82,87,088 


As At As At 

March 31, 2012 March 31, 2011 


The computation of earnings 

per share is set out below: 

Net Profit attributable to equity 

shareholders (A) (`) 

Weighted average number of 

equity shares outstanding 

3,32,228 4,43,176 

during the year (B) (`) 

Earnings per share of face 

value `10 each basic and 

55,10,004 55,10,004 

diluted (A/B) 0.06 0.08 

The previous year’s figures have been re-grouped / re-arranged as necessary to conform to the present year’s classification consequent to notification of Revised Schedule 

VI under the Companies Act, 1956.



1. Basis of Preparation 


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 (’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. 



Pavan Poplar Limited (’the Company’) for preparation and presentation 

of its financial statements. The adoption of revised Schedule-VI does 

not impact recognition and measurement principles followed for 

preparation of financial statements. All assets and liabilities have been 

classified as current or non-current as per the Company’s normal 

operating cycle and other criteria set out in the revised Schedule VI. 



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 and 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. 

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 Company’s assets, the carrying amounts 

of the Company’s 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. 


● 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 realisation/insurance claim for such trees is reduced from the 

total cost. Every year, plantation cost already incurred is compared 

with the net realisable 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. 

● Cost includes all direct and indirect expenses in respect of the 

poplar plantation. 

● Further, 75% of net standard realisable value of intercropping, 

waste, etc. is reduced from the above cost because the entire farm 

cost is first added to the cost of plantation. 

● Agricultural produce/standing crops and plants are valued at 75% 


5. Retirement 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 recognised 

during the period. 

Contributions to the provident fund, which is a defined contribution 

scheme, are charged to the Profit and Loss Account in the period in 

which the liability is incurred. 


Post-employment benefits 

The Company’s gratuity benefit scheme is a defined benefit plan which 

is not funded. The Company’s 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. 

The present value of the obligation under such defined benefit plan 

is determined based on actuarial valuation using the Projected Unit 

Credit Method, which recognises 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 of 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 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. 

6. Revenue recognition 

Revenue from sale of goods is recognized on transfer of all significant 

risks and rewards of ownership to the buyer. 

7. Contingencies and Provisions 


a past event that probably requires an outflow of resources and a 

reliable estimate can be made of the amount of the obligation. 



resources and a reliable estimate can be made of the amount involved. 

Where there is a possible or a present obligation and the likelihood of 

outflow of resources is remote, no provision or disclosure is made. 

8. Taxation 

Income-tax expense comprises current tax and deferred tax charge or 

credit. Current tax is determined in accordance with the Income Tax 

Act, 1961. 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 a 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 realised. As the Company is engaged in growing and selling 

agricultural produce, such income is exempt from income tax. 

Accordingly, there are no deferred tax assets/liabilities arising therefrom. 

9. Earnings per share (‘EPS’) 

The basic earnings per share (’EPS’) is computed by dividing the net 


weighted average number of equity shares outstanding during the 

reporting period. Diluted EPS is computed by dividing the net 


weighted average number of equity and equivalent dilutive equity 

shares outstanding during the period, except where the results would 

be anti-dilutive. 

For BSR & Co. 




Partner 








53

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2012 

Your directors present their report on the company for the financial year 

ended 31 March 2012. 

Directors 

The names of the directors in office at any time during or since the end of 

the year are: 

Mr Surampudi Sivakumar Mr David Charles McDonald 

Mr Arup Kumar Mukerji Mr Allan Hendry 

Mr Sachidanand Madan 

All the directors have been in office since the start of the financial year until 

the date of this report. 

Corporate information 

On 26th March, 2012, ITC Limited acquired the entire shareholding of 

your Company, from its wholly owned subsidiary, Russell Credit Limited. 

Consequently with effect from the said date, your company became a 

direct subsidiary of ITC Limited, a public company registered in India and 

listed in National Stock Exchange and Bombay Stock Exchange 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 as at 31 March 

2012. 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, 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 

Review and results of operations 

Your company is focused on ensuring the continuous upgrading of the 

TECHNITUBER® Technology and customising its application across various 

geographies. Your company is also engaged in the marketing of 

TECHNITUBER® seeds to global customers by leveraging the production 

facilities of its subsidiaries in India, China and Canada. 

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 MARCH 2012 

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 company’s financial position as 

at 31 March 2012 and of their performance for the year ended on 

that date; and 

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF 

TECHNICO PTY LIMITED FOR THE YEAR ENDED 31 MARCH, 2012 

In relation to our audit of the financial report of Technico Pty Limited for 

the financial year ended 31 March 2012, to the best of my knowledge and 

belief, there have been no contraventions of the auditor independence 

54 

TECHNICO PTY LIMITED 

For the year under review, your company registered a turnover of 

A$1,126,878 (2011: A$1,584,348) and a net profit of A$111,374 (2011: 

A$100,232). The lower turnover was due to reduced orders from a large 

customer as well the strengthening of the Australian Dollar against the US 

Dollar and Euro which are the Company’s invoicing currencies. 

The property at Paddy’s River, Australia, held for sale for some years, was 

sold during the year and the sale proceeds along with the available cash 

balance was used to repay all outstanding loans of the Company. 

No dividends have been paid or declared during the financial year. 

Significant changes in the state of affairs 

No significant changes in the state of affairs occurred during the financial 

year. 

Significant events after balance sheet date 

There are no significant events after the balance sheet date to be reported. 

Future developments and results 

Further development of the TECHNITUBER® technology is being pursued. 

Environmental regulation and performance 

The company is not subject to any particular or significant environmental 

regulation. 

Indemnification and insurance of directors 

During the financial year, the company paid premiums in respect of a 

contract insuring all directors and officers of Technico Pty Limited for general 

directors’ and officers’ liability. The amount of the premium paid was 

$5,941 (2011: $6,304). 

The indemnification covers, on behalf of all directors and officers, all losses 

which they become legally obligated to pay on account of any claim first 

made against them during the policy period for a wrongful act committed 

before or during the policy period. 

Auditor independence 

The auditor’s independence declaration from Gillespies is on page 26 of 

this report. 

Signed in accordance with a resolution of the Board of Directors: 

Place: Sydney, Australia Allan Hendry 

Date: 26th April 2012 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. 

Place : Sydney, Australia 


Allan Hendry 

Date: 26th April 2012 Director 

requirements of the Corporations Act 2001 or any applicable code of 

professional conduct. 

GILLESPIES 


Suite 5, 20 Bundaroo Street 

BOWRAL NSW 2576 David Duff 

Dated: 26th April 2012 Partner

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO PTY 

LIMITED FOR THE YEAR ENDED 31 MARCH 2012 

We have audited the accompanying financial report, being a special purpose 

financial report of Technico Pty Limited, which comprises the statement of 

financial position as at 31 March 2012, the statement of comprehensive 

income, statement of changes in equity and statement of cash flows for 

the year then ended, notes comprising a summary of 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. 

The directors’ responsibility also includes such internal control as the directors 

determine is necessary to enable the preparation of a financial report that 

is free from material misstatement, whether due to fraud or error. 

Auditor’s responsibility 

Our responsibility is to express an opinion on the financial report based on 

our audit. We have conducted our audit in accordance with Australian 

Auditing Standards. Those standards require that we comply with relevant 

ethical requirements relating to audit engagements and plan and perform 

the audit to obtain reasonable assurance whether the financial report is 

free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about 

the amounts and disclosures in the financial report. The procedures selected 

depend on the auditor’s judgement, including the assessment of the risks 

of material misstatement of the financial report, whether due to fraud or 

error. In making those risk assessments, the auditor considers internal 

control relevant to the entity’s preparation of the financial report that gives 

a true and fair view in order to design audit procedures that are appropriate 

in the circumstance, but not for the purpose of expressing an opinion on 

the effectiveness of the entity’s internal control. An audit also includes 

evaluating the appropriateness of accounting policies used and the 

reasonableness of accounting estimates made by the directors, as well as 

evaluating the overall presentation of the financial report. 

We believe that the audit evidence we have obtained is sufficient and 

appropriate to provide a basis for our audit opinion. 

Independence 

In conducting our audit, we have complied with the independence 

requirements of the Corporations Act 2001. We confirm that the independence 

declaration required by the Corporations Act 2001, which has been given 

to the directors of Technico Pty Limited, would be in the same terms if 

given to the directors as at the time of the auditor’s report. 

Audit opinion 

In our opinion, the financial report of Technico Pty Limited is in accordance 


(a) giving a true and fair view of the company’s financial position as at 

31 March 2012 and of its performance for the year ended on that date; 

and 

(b) complying with Australian Accounting Standards to the extent described 

in note 1, and the Corporations Regulations 2001. 

Basis of accounting 


Without modifying our opinion, we draw attention to Note 1(a) to the 

financial report, which describes the basis of accounting. The financial 

report has been prepared for the purpose of fulfilling the directors’ financial 

reporting responsibilities under the Corporations Act 2001. As a result, the 

financial report may not be suitable for another purpose. 

GILLESPIES 


Dated: 26th April 2012 

Suite 5, 20 Bundaroo Street David Duff 

BOWRAL NSW 2576 Partner 

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2012 

2012 2011 

Notes $ ` $ ` 

Continuing Operations 

Sale of goods 

Cost of sales: 

2(a) 1,126,878 55,790,378 1,584,348 69,133,025 

Other cost of sales (682,737) (33,801,490) (861,993) (37,613,065) 

Inventory write off and write down — — — — 

GROSS PROFIT 444,141 21,988,888 722,355 31,519,960 

Other income 2(a) 242,426 12,002,220 206,773 9,022,540 

Marketing expenses (1,610) (79,709) — — 

Middle East & North Africa expenses (130,285) (6,450,254) (203,741) (8,890,239) 

Research and development expenses (149,970) (7,424,835) (157,343) (6,865,662) 

Occupancy expenses 

Administration Expenses: 

(3,727) (184,519) (3,705) (161,668) 

Other administration expenses (284,039) (14,062,430) (443,218) (19,339,817) 

Recovery/(write-down) investments and loans — — — — 

Finance costs 2(b) (5,562) (275,368) (20,889) (911,491) 

Reversal of provision for employee share scheme 

PROFIT FROM CONTINUING OPERATIONS BEFORE 

— — — — 

INCOME TAX EXPENSE 111,374 5,513,993 100,232 4,373,623 

Income tax expense 

Total comprehensive income attributable to members of 

3 — — — — 

Technico Pty Ltd 111,374 5,513,993 100,232 4,373,623 

Other comprehensive income — — — — 

Total comprehensive income for the period 111,374 5,513,993 100,232 4,373,623 

Profit from continuing operations after income tax expense 111,374 5,513,993 100,232 4,373,623 

Net profit for the period 111,374 5,513,993 100,232 4,373,623 

Net profit attributable to members of Technico Pty Limited 111,374 5,513,993 100,232 4,373,623 

55

56 


BALANCE SHEET AS AT 31 MARCH 2012 

2012 2011 

Notes $ ` $ ` 

Current Assets 

Cash and cash equivalents 4 271,411 14,360,356 446,554 20,589,489 

Trade and other receivables 5(a) 707,325 37,424,566 808,879 37,295,388 

Other 6 11,223 593,809 26,910 1,240,753 

989,959 52,378,731 1,282,343 59,125,630 

Non-current assets classified as held for sale 8 — — 376,381 17,353,987 

Total current assets 


989,959 52,378,731 1,658,724 76,479,617 

Receivables 5(b) — — 7,826 360,837 

Other financial assets 7 14,269,282 754,987,711 14,269,282 657,920,920 

Property, plant and equipment 8 909 48,095 2,068 95,350 

Intangible assets 9 21,471 1,136,031 24,955 1,150,613 

Total non-current assets 14,291,662 756,171,837 14,304,131 659,527,720 

Total assets 


15,281,621 808,550,568 15,962,855 736,007,337 

Trade and other payables 10 712,129 37,678,745 779,619 35,946,283 

Loans and borrowings 11 — — 230,000 10,604,725 

Provisions 12 27,874 1,474,813 22,992 1,060,104 

Total current liabilities 


740,003 39,153,558 1,032,611 47,611,112 

Loans and Borrowings 11 — — 500,000 23,053,750 

Provisions 12 — — — — 

Total non-current liabilities — — 500,000 23,053,750 

Total liabilities 740,003 39,153,558 1,532,611 70,664,862 

Net assets 

Equity 

14,541,618 769,397,010 14,430,244 665,342,475 

Contributed equity 13 43,989,182 2,327,467,620 43,989,182 2,028,231,209 

Accumulated Losses 14 (29,447,564) (1,558,070,610) (29,558,938) (1,362,888,734) 

Total equity 14,541,618 769,397,010 14,430,244 665,342,475 

STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2012 

Contributed Retained 

Share based 

payment 

equity earnings reserve Total 

$ $ $ $ 

At 1 April 2010 43,989,182 (29,659,170) — 14,330,012 

Profit for the Period — 100,232 — 100,232 

At 31 March 2011 43,989,182 (29,558,938) — 14,430,244 

Profit for the Period — 111,374 — 111,374 

At 31 March 2012 43,989,182 (29,447,564) — 14,541,618 

Share based 

Contributed Retained payment 

equity earnings reserve Total 

` ` ` ` 

At 1 April 2010 

Profit for the Period 2,327,467,620 (1,569,266,683) — 758,200,937 

Share Issue — 5,303,275 — 5,303,275 

At 31 March 2011 2,327,467,620 (1,563,963,408) — 763,504,212 

Profit for the Period — 5,892,798 — 5,892,798 

At 31 March 2012 2,327,467,620 (1,558,070,610) — 769,397,010

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AS 

AT 31 MARCH 2012 


Technico Pty Limited is a company limited by shares that is incorporated 

and domiciled in Australia. Its parent entity is ITC Limited, a public company 

listed in National Stock Exchange and Bombay Stock Exchange in India. 

The registered office of Technico Pty Limited is located at: 

Suite 5, 

20 Bundaroo Street 

BOWRAL NSW 2576 

Australia 

The company employed two employees at 31 March 2012. The company 

also utilises the services of consultants to support its operations. 

Note 1: Statement of significant accounting policies 

(a) Basis of preparation 

The directors have prepared the financial statements on the basis that 

the company is a non-reporting entity because there are no users 

dependent on general purpose financial statements. The financial 

statements are therefore special purpose financial statements that have 

been prepared in order to meet the requirements of the Corporations 

Act 2001. 

The financial report is prepared for distribution to members of the 

company to fulfil the directors’ financial reporting requirements under 

Chapter 2M of the Corporations Act 2001, wherein the company is 

considered to be a large proprietary company. 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 are unaudited, have been arrived at by 

applying the year end inter-bank exchange rate of 1 AUD = INR 52.9100 

for the current year balance sheet (2011: INR 46.1075) and the average 

rate of 1 AUD = INR 49.5088 for the current year income statement 

(2011: INR 43.6350), and have been included in the financial report 

as required by 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 Pty Limited in relation to the 


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2012 

2012 2011 

$ ` $ ` 

Cash flow from operating activities 

Receipts from customers 1,228,432 60,818,194 1,572,611 68,620,881 

Receipts of sundry income 126,840 6,279,696 188,577 8,228,557 

Payments to suppliers and employees (1,249,568) (61,864,612) (1,720,209) (75,061,320) 

Goods and services tax (paid)/received (36,739) (1,818,904) 19,817 864,715 

Interest received 17,136 848,383 18,196 793,982 

Borrowing costs (5,562) (275,368) (20,889) (911,491) 

Net cash flows from operating activities 

Cash flow from investing activities 

80,539 3,987,389 58,103 2,535,324 

Proceeds from sale of property, plant and equipment 474,832 23,508,363 — — 

Payments for protection of technology (514) (25,448) (1,771) (77,278) 

Net cash flows (used in)/from investing activities 

Cash flows from financing activities 

447,318 23,482,915 (1,771) (77,278) 

Repayment of borrowings (730,000) (36,141,424) — — 

Net cash flows (used in)/from financing activities (730,000) (36,141,424) — — 

Net increase/(decrease) in cash held (175,143) (8,671,120) 56,332 2,458,046 

ADD OPENING CASH BROUGHT FORWARD 446,554 — 390,222 — 

Cash and cash equivalents at end of period 271,411 14,360,356 446,554 20,589,489 

year ended 31 March 2012. However, the directors have determined 

that in order for the financial report to give a true and fair view of the 

company’s 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: Presentation of Financial Statements 

AASB 107: Cash Flow Statements 

AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors 

AASB 1048: Interpretation and Application of Standards 

The material accounting policies that have been adopted in the 

preparation of these statements are as follows: 

Going concern 

Though the company has accumulated losses of $29,447,564 as at 31 

March 2012 (2011: $29,558,938), the management believe that the 

application of the going concern basis of accounting is appropriate 

due to the expected cash flows of the company over the next twelve 

months and the belief that the company is an important part of the 

business plans of ITC limited, the parent entity. Any exposure of the 

parent entity in the Company is limited to equity or fund based 

commitments. 

(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 

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. 

57

(c) Foreign currency translation 

The functional and presentation currency of Technico Pty Limited is 

Australian dollars ($). 

Transactions in foreign currencies are initially recorded in the functional 

currency by applying the exchange rates ruling at the date of transaction. 

Monetary assets and liabilities denominated in foreign currencies are 

retranslated at the rate of exchange ruling at the balance sheet date. 

All exchange differences in the financial report are taken to profit or 

loss. 

(d) Cash and cash equivalents 

Cash and cash equivalents in the balance sheet comprise cash at bank 

and in hand and short-term deposits with an original maturity of three 

months or less. 

For the purposes of the cash flow statement, cash and cash equivalents 

consist of cash and cash equivalents as defined above, net of outstanding 

bank overdrafts. 

(e) Receivables 

Trade 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. 

(f) Other financial assets 

Investments in controlled entities are recorded at cost less impairment 

of the investment value. 

(g) 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 asset’s recoverable amount. An asset’s 

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 asset’s 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 cashgenerating 

unit exceeds its recoverable amount, the asset or cashgenerating 

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. 

(h) Property, plant and equipment 

Plant and equipment is stated at cost less accumulated depreciation 

and any accumulated impairment losses. 

Depreciation is calculated on a straight-line basis over the estimated 

useful life of the assets as follows: 

Class of fixed asset 2012 2011 

Buildings 6.70 % 6.70 % 

Plant and equipment 13-27 % 13-27 % 

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. 

58 


(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 

of a specific asset or assets and the arrangement conveys a right to use 

the asset. 

Operating lease payments are recognised as an expense in the income 

statement on a straight-line basis over the lease term. Lease incentives 

are recognised in the income statement as an integral part of the total 

lease expense. 

Finance leases, which transfer to the company substantially all the risks 

and benefits incidental to ownership of the leased item, are capitalised 

at the inception of the lease at the fair value of the leased property or, 

if lower, the present value of the minimum lease payments. Lease 

payments are apportioned between the finance charges and reduction 

of the lease liability so as to achieve a constant rate of interest on the 

remaining balance of the liability. Finance charges are recognised as 

an expense in profit and loss. 

(k) 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. 

(l) Provisions 

Provisions are recognised when the company has a present obligation 

(legal or constructive) as a result of a past event, it is probable that an 

outflow of resources embodying economic benefits will be required to 

settle the obligation and a reliable estimate can be made of the amount 

of the obligation. 

When the company expects some or all of a provision to be reimbursed, 

for example under an insurance contract, the reimbursement is 

recognised as a separate asset but only when the reimbursement is 

virtually certain. The expense relating to any provision is presented in 

the income statement net of any reimbursement. Provisions are 

measured at the present value of management best estimate of the 

expenditure required to settle the present obligation at the balance 

sheet date. 

If the effect of the time value of money is material, provisions are 

discounted using a current pre-tax rate that reflects the risks specific 

to the liability. When discounting is used, the increase in the provision 

due to the passage of time is recognised as a borrowing cost.. 

(m) 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. 

(n) Revenue recognition 

Revenue is recognised to the extent that it is probable that the economic 

benefits will flow to the company and the revenue can be reliably 

measured. The following recognition criteria must also be met before 

revenue is recognised: 

Sale of goods 

Revenue from the sale of goods is recognised upon the delivery of 

goods to customers. 

Interest 

Interest revenue is recognised on a proportional basis taking into account 

the interest rates applicable to the financial assets. 

Rendering of services 

Revenue from the provision of services is recognised when control of 

the right to be compensated for the services and the stage of completion 

can be reliably measured. 

(o) Taxation 

Current tax assets and liabilities are measured at the amount expected 

to be recovered from or paid to the taxation authorities. The tax rates 

and tax laws used to compute the amount are those that are enacted 

or substantively enacted by the balance sheet date. 

Deferred income tax is provided on all temporary differences at the 

balance sheet date between the tax basis of assets and liabilities and their 

carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable 

temporary differences except: 

• when the deferred income tax liability arises from the initial 

recognition of goodwill or of an asset or liability in a transaction 

that is not a business combination and that, at the time of the 

transaction, affects neither the accounting profit nor taxable profit 

or loss; or 

• when the taxable temporary difference is associated with investments 

in subsidiaries, associates or interests in joint ventures, and the 

timing of the reversal of the temporary difference can be controlled 

and it is probable that the temporary difference will not reverse 

in the foreseeable future. 

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 

expected future payments to be made in respect of services provided 

by employees up to the reporting date using the projected unit 

credit method. Consideration is given to expected future wage 

and salary levels, experience of employee departures, and periods 

of service. Expected future payments are discounted using market 

yields at the reporting date on national government bonds with 

terms to maturity and currencies that match, as closely as possible, 

the estimated future cash outflows. 

(r) Intangibles other than goodwill on acquisition 

Technology, patents and trademarks 

Intangibles include TECHNITUBER® technology of the company and 

trademarks and are considered to have finite lives, and are amortised 

over the useful lives and assessed for impairment whenever there is an 

indication that the intangible asset may be impaired. If benefit is no 

longer expected to be received, the asset will be written down to its 

net realisable value. 

(s) Comparatives 

When required by Accounting Standards, comparative figures have 

been adjusted to conform to changes in presentation for the current 


59

60 


NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2012 

2012 2011 

$ ` $ ` 

Note 2: Revenues and Expenses 

Revenue and Expenses from Continuing Activities 

(a) Revenue 

Sale of goods 1,126,878 55,790,378 1,584,348 69,133,025 

Finance revenue 17,136 848,383 18,196 793,982 

Agronomy support income 48,208 2,386,720 69,670 3,040,050 

Sundry income 78,632 3,892,976 118,907 5,188,508 

Profit on sale of assets 98,450 4,874,141 — — 

Breakdown of finance revenue: 

1,369,304 67,792,598 1,791,121 78,155,565 

Bank interest 

(b) Finance costs 

17,136 848,383 18,196 793,982 

Bank loans and overdrafts 

(c) Depreciation, amortisation and costs of inventories included in the income statement 

Depreciation of non-current assets: 

5,562 275,368 20,889 911,491 

Buildings — — — — 

Plant and equipment 880 43,568 937 40,886 

Total depreciation of non-current assets 

Amortisation of non-current assets: 

880 43,568 937 40,886 

Leased plant and equipment — — — — 

Technology and trademarks 3,998 197,936 4,520 197,230 

Total amortisation of non-current assets 3,998 197,936 4,520 197,230 

Total depreciation and amortisation expenses 

Cost of inventories recognised as an expense includes 

4,878 241,504 5,457 238,116 

write down of inventory to net realisable value 

(d) Employee benefit expense 

— — — — 

Wages and salaries 208,444 10,319,812 290,259 12,665,451 

Workers’ compensation costs 190 9,407 830 36,217 

Annual leave provision 1,479 73,224 7,740 337,735 

Share options 

Note 3: Income tax 

The major components of income tax expenses are: 

Income statement 

Current income tax 

— — — — 

Current income tax charge — — — — 

Adjustments in respect of current income tax of previous years 

Deferred income tax 

— — — — 

Relating to origination and reversal of temporary differences — — — — 

Income tax expense reported in the income statement 

A reconciliation between income tax expense and the product of 

accounting profit before income tax multiplied by the company’s 

applicable income tax rate is as follows : 

Accounting profit before income from continuing operations at the 

— — — — 

statutory income tax rate of 30% 33,412 1,654,188 30,070 1,312,104 

Amortisation of technology (101) (5,000) (101) (4,407) 

Movement in employee entitlements 1,465 72,530 1,556 67,896 

Write back or write down of investments in wholly owned subsidiaries — — — — 

Non-deductible expenses/timing differences 

(Recoupment of prior year tax losses)/Future 

(38,828) (1,922,328) 13,428 585,931 

income tax benefits not brought to account 4,052 200,610 (44,953) (1,961,524) 

Income tax attributable to ordinary activities — — — — 

Income Tax Losses 

Future income tax benefits arising from revenue timing differences and tax losses of the parent entity amounted to $4,052 (2011: $(44,953)). 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.


NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2012 (Contd.) 

2012 2011 

Notes $ ` $ ` 

Note 4: Cash and cash equivalents 

Current 

Cash at Bank 8,5558 452,804 11,583 534,063 

Deposits at Call 262,853 13,907,552 434,971 20,055,426 

(a) Terms and conditions relating to the above financial instruments: 

271,411 14,360,356 446,554 20,589,489 

(i) cash at bank has a weighted average interest rate of 0% (2011: 0%); and 

(ii) deposits at call has a weighted average effective interest rate of5.21% (2011: 4.5%). 

(b) Reconciliation of net profit/(loss) 

after tax to the net cash flows from operations: 

Net profit/(loss) 

Non-cash items: 

111,374 5,513,993 100,232 4,373,623 

Amortisation of non-current assets 3,998 197,936 4,520 197,230 

Depreciation of non-current assets 880 43,568 937 40,886 

Decrease in value of inventories — — — — 

Provision for doubtful debts — — — — 

Decrease/(increase) in value of receivables in subsidiaries 7,826 387,456 (5,525) (241,083) 

(Increase)/decrease in value of investments in subsidiaries — — — — 

Unrealised foreign currency revaluation — — — — 

(Profit) on sale of property, plant and equipment — — — — 

Employee benefits equity reserve — — — — 

(Profit)/loss on sale of assets (98,450) (4,874,141) — — 

(Profit)/loss on disposal of assets 

Changes in assets and liabilities: 

278 13,763 — — 

(Increase)/decrease in trade and other receivables 101,554 5,027,817 (11,737 ) (512,144) 

Decrease in inventories — — — — 

Decrease/(increase) in other current assets 15,687 776,644 (10,612 ) (463,055) 

(Decrease) in trade creditors and accruals (67,490) (3,341,349) (24,900 ) (1,086,511) 

Increase in employee provisions 4,882 241,702 5,188 226,378 

Cash flows from operations 

(c) Financing facilities available 

At reporting date, the following financing facilities had been 

negotiated and were available: 

Total facilities 

80,539 3,987,389 58,103 2,535,324 

Bank loans — — 230,000 10,604,725 

Loan from Russell Credit Ltd (parent company until 26 March 2012) 

Facilities used at reporting date 

— — 500,000 23,053,750 

Bank loans — — 230,000 10,604,725 

Loan from Russell Credit Ltd 

Note 5: Trade and other receivables 

Current 

— — 500,000 23,053,750 

Trade debtors (a) 704,310 37,265,042 809,015 37,301,659 


704,310 37,265,042 809,015 37,301,659 

Other debtors (a) 3,015 159,524 (136) (6,271) 

Non-current 

707,325 37,424,566 808,879 37,295,388 

Amounts receivable from wholly owned subsidiaries — — 7,826 360,837 


(a) Terms and conditions 

Terms and conditions relating to the above financial instruments: 

— — 7,826 360,837 

(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. 

$ ` $ ` 

Note 6: Other assets 

Current 

Prepayments 9,148 484,021 26,910 1,240,753 

Interest accrual 2,075 109,788 — — 

11,223 593,809 26,910 1,240,753 

Note 7: Other financial assets 

Non-current 

Shares in subsidiaries: 

At cost 18,180,409 961,925,440 18,180,409 838,253,208 

Provision for write-down (a) (3,911,127) (206,937,729) (3,911,127 ) (180,332,288) 

Total other financial assets 

(a) Provision for write-down of subsidiaries 

14,269,282 754,987,711 14,269,282 657,920,920 

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. 

61


62 


Interest in subsidiaries 

Percentage of equity Investment 

interest held by the (Provision for diminution) 

consolidated entity 

country of 

2012 2011 

incorporation % $ ` $ ` 

Technico Asia Holdings Pty Ltd 

(formerly known as Technico China Pty Ltd) Australia 100 3,684,522 194,948,059 3,684,522 169,884,098 

(2,714,786) (143,639,327) (2,714,786) (125,171,995) 

969,736 51,308,732 969,736 44,712,103 

Technico Technologies Inc Canada 100 1,196,341 63,298,402 1,196,341 55,160,293 

(1,196,341) (63,298,402) (1,196,341) (55,160,293) 

— — — — 

Technico Agri Sciences Ltd India 100 13,299,546 703,678,979 13,299,546 613,208,817 

— — — — 

13,299,546 703,678,979 13,299,546 613,208,817 

2012 2011 

Notes $ ` $ ` 

Note 8: Property, plant and equipment 

Non-current 

Land and buildings 

Land at cost — — 327,725 15,110,580 

Accumulated amortisation and impairment — — — — 

Net carrying amount transferred to assets held for sale — — 327,725 15,110,580 

Buildings at cost 191,765 8,841,805 

Accumulated depreciation and impairment — — (143,109) (6,598,398) 

Net carrying amount transferred to assets held for sale — — 48,656 2,243,407 

Plant and equipment at cost 439,281 20,254,149 

Accumulated depreciation and impairment — — (439,281) (20,254,149) 

Net carrying amount transferred to assets held for sale 

Total net carrying amount of land and buildings transferred 

— — — — 

to assets held for sale — — 376,381 17,353,987 

Plant and equipment at cost 2,838 150,158 158,237 7,295,912 

Accumulated depreciation and impairment (1,929) (102,063) (156,169) (7,200,562) 

Net carrying amount 909 48,095 2,068 95,350 

Total net carrying amount of plant and equipment 909 48,095 2,068 95,350 

Total property, plant and equipment at cost 2,838 150,158 158,237 7,295,912 

Accumulated depreciation, amortisation and impairment (1,929) (102,063) (156,169) (7,200,562) 

Total property, plant and equipment transferred to assets held for sale — — 376,381 17,353,987 

Total property, plant and equipment 

Land 

Balance at beginning of the year - net of accumulated 

909 48,095 2,068 95,350 

depreciation and impairment 327,725 17,339,930 327,725 15,110,580 

Disposals 

Balance at end of the year - net of accumulated 

(327,725) (17,339,930) — — 

depreciation and impairment 

Buildings at cost 


— — 327,725 15,110,580 

depreciation and impairment 48,656 2,574,389 48,656 2,243,407 

Disposals (48,656) (2,574,389) — — 

Depreciation expense 


— — — — 

depreciation and impairment 

Plant and equipment at cost 


— — 48,656 2,243,407 

depreciation and impairment 2,068 109,418 3,005 138,553 

Additions — — — — 

Disposals (278) (14,709) — — 

Depreciation expense 


(881) (46,614) (937) (43,203) 

depreciation and impairment 909 48,095 2,068 95,350



2012 2011 

Notes $ ` $ ` 

Note 9: Intangible assets 

Non-current 

TECHNITUBER® technology, patents and trademarks at cost 3,407,514 180,291,566 3,407,000 157,088,253 

Less: Accumulated amortisation (3,386,043) (179,155,535) (3,382,045) (155,937,640) 

21,471 1,136,031 24,955 1,150,613 

Movement in intangibles 

Balance at beginning of the year 24,955 1,320,369 27,704 1,277,362 

Additions 514 27,196 1,771 81,657 

Amortisation expense (3,998) (211,534) (4,520) (208,406) 

Balance at the end of the year 21,471 1,136,031 24,955 1,150,613 

Note 10: Trade and other payables 

Current 

Trade creditors 537,480 28,438,067 577,402 26,622,563 

Sundry creditors and accruals 174,649 9,240,678 202,217 9,323,720 

712,129 37,678,745 779,619 35,946,283 


(i) trade creditors are non-interest bearing and are normally settled on 180 day terms; and 

(ii) balance due to sundry creditors is non-interest bearing and is normally settled on 30 day terms. 

2012 2011 

Notes $ ` $ ` 

Note 11: Loans and borrowings 

Current 

Russell Credit Limited - unsecured (non-interest bearing) — — — — 

Bank loan - secured (interest bearing) — — 230,000 10,604,725 

Non-current 

— — 230,000 10,604,725 

Bank loan - secured (interest bearing) — — — — 

Russell Credit Limited - unsecured (non-interest bearing) — — 500,000 23,053,750 

— — 500,000 23,053,750 

2012 2011 

Notes $ ` $ ` 

Note 12: Provisions 

Current 

Employee entitlements 

Non-Current 

27,874 1,474,813 22,992 1,060,104 

Employee entitlements — — — — 

Note 13: Contributed equity 

(a) Issued and paid up capital 

Ordinary shares fully paid 22,606,065 shares (2011: 22,606,065) 44,098,046 2,333,227,614 44,098,046 2,033,250,656 

Discount on issue (108,864) (5,759,994) (108,864 ) (5,019,447) 

43,989,182 2,327,467,620 43,989,182 2,028,231,209 

63

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2012 (Contd.) 

(b) 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. 

2012 2011 

$ ` $ ` 

Note 14: Reserve and accumulated losses 

Accumulated losses 29,447,564 1,558,070,610 29,558,938 1,362,888,734 

Balance at beginning of year 29,558,938 1,563,963,408 29,659,170 1,367,510,181 

Net (profit)/loss attributable to the members of Technico Pty Ltd (111,374) (5,892,798) (100,232) (4,621,447) 

Total unavailable for appropriation 29,447,564 1,558,070,610 29,558,938 1,362,888,734 

Dividends paid or provided for — — — — 

Aggregate amount transferred (to)/from reserves — — — — 

Balance at end of period 29,447,564 1,558,070,610 29,558,938 1,362,888,734 

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. 2012 2012 2011 2011 

$ ` $ ` 

Note 17: Remuneration of auditors 

Amounts received or due and receivable by auditor: 

Audit of the entity by auditor/group auditor 53,000 2,623,966 70,000 3,054,450 

Other services in relation to the entity 7,000 346,562 15,000 654,525 

64 


60,000 2,970,528 85,000 3,708,975

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2012 

Your directors submit their Report for the financial year ended 31 March 

2012. 

Directors 

The following directors held office since the start of the financial year until 

the date of this report: 

Ms Bhavani Parameswar 

Mr David Charles McDonald 



Technico Technologies Inc. is a company limited by shares that is incorporated 

and domiciled in Canada. It is a wholly owned subsidiary of Technico Pty 

Ltd, a company incorporated in Australia. On 26th March, 2012, ITC Limited, 

India acquired from its wholly owned subsidiary, Russell Credit Limited the 

entire shareholding of your Companyís parent company, Technico Pty Limited 

(Technico), Australia. 

The registered office of Technico Technologies Inc is located at: 

Stewart McKelvey Stirling Scales 

Suite 600, Frederick Square, 

77 Westmoreland 

Fredericton, New Brunswick 

E3B 5B4 Canada 

Employees 

The company operates through employees engaged on seasonal & casual 

basis with technical and management support from its parent entity. 


The principal activities of your company during the financial year under 

review were production of TECHNITUBER® seed potatoes for sale in the 

Canadian and export markets and production of early generation field seed 

potatoes under a joint farming arrangement with local potato farmers. 

INDEPENDENT AUDITOR'S REPORT 

To the Shareholder of Technico Technologies Inc. 

We have audited the accompanying financial statements of Technico 

Technologies Inc., which comprise the balance sheet as at March 31, 2012 

and the statements of income, retained earnings (deficit) and cash flows 

for the year then ended, and a summary of significant accounting policies 

and other explanatory information. 

Management's Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of 

these financial statements in accordance with Canadian accounting standards 

for private enterprises, and for such internal control as management 

determines is necessary to enable the preparation of financial statements 

that are free from material misstatement, whether due to fraud or error. 

Auditor's Responsibility 

Our responsibility is to express an opinion on these financial statements 

based on our audit. We conducted our audit in accordance with Canadian 

generally accepted auditing standards. Those standards require that we 

comply with ethical requirements and plan and perform the audit to obtain 

reasonable assurance about whether the financial statements are free from 

material misstatement. 


the amounts and disclosures in the financial statements. The procedures 


ASSETS 

TECHNICO TECHNOLOGIES INC. 


The TECHNITUBER® brand continues to gain recognition in Canada, though 

overall volumes are still small. 

Technico Technologies Inc., Canada registered sales of Canadian Dollar (C$) 

0.26 million (previous year C$ 0.20 million) and posted a net profit of C$ 

0.02 million (previous year C$ 0.01 million). The increase in sales revenue 

is due to increase in volumes and prices of Field Seed potatoes. 

No dividends have been paid or declared during the financial year. 

Auditors 

The Company has engaged M/s Teed Saunders Doyle & Co as auditors for 

the year under review whose report is annexed to the financial report. 

Future developments and results 

Your company’s early generation seed potato continues to show its superior 

quality and although volumes to date are small, interest has been stronger 

for the product. The future focus of this business will be to build on the 

reputation of its technology and its isolated seed production environment 

to obtain a price premium commensurate with the quality and performance. 

The company will continue to build on exports to new markets. 


Your company is not subject to any particular or significant environmental 

regulation. 

Place: New Jersey, USA Bhavani Parameswar 

Date: 2nd May 2012 Director 

selected depend on the auditor's judgement, 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 entity's preparation and fair presentation 

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 entity's internal control. An audit also 

includes evaluating the appropriateness of accounting policies used and 

the reasonableness of accounting estimates made by management, as well 

as evaluating the overall presentation of the financial statements. 



Opinion 

In our opinion, these financial statements present fairly, in all material 

respects, the financial position of Technico Technologies Inc. as at March 

31, 2012 and the results of its operations and its cash flows for the year 

then ended in accordance with Canadian accounting standards for private 

enterprises. 

Place : Fredericton, New Brunswick Teed Saunders Doyle & Co. 

Date : April 11, 2012 Chartered Accountants 

2012 2012 2011 2011 

$ ` $ ` 


Cash 85,409 4,359,275 33,217 1,527,650 

Accounts receivable 3,060 156,182 2,921 134,337 

Inventory 206,154 10,522,100 224,193 10,310,636 

Prepaid expenses 2,753 140,513 2,780 127,852 

297,376 15,178,070 263,111 12,100,475 

Property and Equipment (note 6) 127,541 6,509,693 165,192 7,597,180 

424,917 21,687,763 428,303 19,697,655 

65


STATEMENT OF RETAINED EARNINGS (DEFICIT) FOR THE YEAR ENDED MARCH 31, 2012 

(Unaudited) (Unaudited) 

2012 2012 2011 2011 

$ ` $ ` 

Deficit At Beginning Of Year (1,134,337) (52,168,158) (1,141,418) (50,427,846) 

Net Income For The Year 

Change In Unrealized Foreign Exchange 

15,724 762,928 7,081 319,246 

During The Year — (5,688,778) — (2,059,558) 

Deficit At End Of Year (1,118,613) (57,094,008) (1,134,337) (52,168,158) 

66 


2012 2012 2011 2011 

$ ` $ ` 

Current Liabilities 

Accounts payable and accrued liabilities 18,306 934,338 13,876 638,157 

Current portion of longterm debt 39,166 1,999,033 8,265 380,107 

57,472 2,933,371 22,141 1,018,264 

Unamortized Government Assistance (note 5) 31,672 1,616,539 43,407 1,996,288 

LongTerm Debt (note 8) 169,928 8,673,125 209,094 9,616,233 

259,072 13,223,035 274,642 12,630,785 

SHAREHOLDERS' EQUITY 

Capital Stock (note 11) 1,284,458 65,558,736 1,287,998 59,235,028 

Deficit (1,118,613) (57,094,008) (1,134,337) (52,168,158) 

165,845 8,464,728 153,661 7,066,870 

424,917 21,687,763 428,303 19,697,655 

Approved By The Board: 

Bhavani Parameswar Director 

STATEMENT OF INCOME FOR THE YEAR ENDED MARCH 31, 2012 

2012 2012 2011 2011 

$ ` $ ` 

Sales 257,922 12,514,375 199,191 8,980,526 

Cost Of Sales 165,231 8,017,008 139,314 6,280,972 

Gross Profit (Loss) 

Expenses 

92,691 4,497,367 59,877 2,699,554 

Advertising and trade shows 7,816 379,232 594 26,780 

Agronomy and marketing 12,039 584,132 — — 

Amortization of property and equipment 12,619 612,274 15,007 676,591 

Bank charges 625 30,325 396 17,854 

Insurance 5,711 277,098 5,586 251,845 

Interest on longterm debt 11,735 569,382 12,184 549,316 

Occupancy costs 6,166 299,174 5,638 254,189 

Office and supplies (recoveries) (329) (15,963) 1,534 69,160 

Professional services 9,000 436,680 10,501 473,438 

Staff training 35 1,698 322 14,517 

Telephone 3,523 170,936 4,271 192,558 

Vehicle and travel 3,307 160,456 6,190 279,076 

Wages and benefits 16,455 798,397 16,407 739,710 

88,702 4,303,821 78,630 3,545,034 

Other Income 

3,989 193,546 (18,753) (845,480) 

Government assistance Interest subsidy 11,735 569,382 12,184 549,316 

Net revenue Support services (note 12) — — 13,650 615,410 

11,735 569,382 25,834 1,164,726 

Net Income For The Year 15,724 762,928 7,081 319,246

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEAR ENDED MARCH 31, 2012 

1. Nature of Business Activities 

The company is a wholly-owned subsidiary of Technico Pty Limited 

(Australia) and produces early generation seed potatoes for the North 

American Market. 

2. First Time Adoption of Accounting Standards For Private Enterprises 

During the year, the company adopted accounting standards for private 

enterprises. These financial statements are the first prepared in 

accordance with these standards. The standards have been prepared 

retrospectively, but resulted in no changes to beginning equity, assets 

or liabilities. 


Basis of Presentation 

The financial statements include Indian Rupee equivalent figures, arrived 

at by applying the year-end exchange rate of CAD $1 = Rs. 51.04 

(2011 CAD $1 = Rs. 45.99) to the balance sheet and the average annual 

exchange rate of CAD $1 = Rs. 48.52 (2011 CAD $1 = Rs. 45.085) to 

the income statement as provided by the parent company. 

Financial Instruments 

Financial instruments are recorded at fair value when acquired or issued. 

In subsequent periods, financial assets with actively traded markets 

are reported at fair value, with any unrealized gains and losses reported 

in income. All other financial instruments are reported at amortized 

cost, and tested for impairment at each reporting date. Transaction 

costs on the acquisition, sale or issue of the financial instruments are 

expensed when incurred. 

Measurement Uncertainty 

The preparation of financial statements in conformity with Canadian 

accounting standards for private enterprises requires management to 

make estimates and assumptions that affect the reported amount of 

net assets and liabilities at the date of the financial statements and the 

reported amounts of revenues and expenses during the period. Such 

estimates are periodically reviewed and any adjustments necessary are 

reported in earnings in the period in which they become known. Actual 

results could differ from these estimates. 

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2012 


2012 2012 2011 2011 

$ ` $ ` 

Cash Provided By (Required For): 

Operating Activities 

Net income for the year 

Items not affecting cash 

15,724 762,928 7,081 319,246 

Amortization of property and equipment 12,619 612,274 15,007 676,591 

Amortization capitalized to inventory 32,208 1,562,732 40,026 1,804,573 

Foreign currency fluctuations — 320,335 — 88,916 

60,551 3,258,269 62,114 2,889,326 

Changes in non-cash operating working capital (note 10) 22,359 1,141,203 (31,977) (1,470,624) 

Investing Activities 

82,910 4,399,472 30,137 1,418,702 

Purchase of property and equipment (7,178) (366,365) (4,987) (229,352) 

Financing Activities 

Capital stock issuance (redemption) (3,540) (180,682) — — 

Repayment of long-term debt (8,265) (421,846) 2,184 100,442 

Unamortized government assistance (11,735) (598,954) (12,184) (560,342) 

(23,540) (1,201,482) (10,000) (459,900) 

Increase In Cash During The Year 52,192 2,831,625 15,150 729,450 

Cash Position At Beginning Of Year 33,217 1,527,650 18,067 798,200 

Cash Position At End Of Year 85,409 4,359,275 33,217 1,527,650 

Inventory 

Inventory is valued at the lower of production cost and net realizable 

value. Inventory includes capitalized amortization of $32,208 (2011 

$40,026). 

Revenue 

Revenue is recognized when products and services are delivered to the 

customer and ultimate collection is reasonably assured. 

3. Significant Accounting Policies (continued) 

Amortization 

Amortization of property and equipment is recorded on a straight-line 

basis at the following annual rates: 

Buildings 10% 

Equipment 13.34%, 20% 

Change in Accounting Policy Income Taxes 

In the current year, upon adoption of Canadian accounting standards 

for private enterprises, the company has adopted the taxes payable 

method of accounting for income taxes. Under this method, only 

current income tax assets and liabilities are recognized. Previously, the 

company accounted for future income taxes which were reduced by 

a valuation allowance to reduce future tax assets to the amount more 

likely than not to be realized. The adoption of this new accounting 

policy has been applied retroactively but has resulted in no changes 

to recorded amounts in the financial statements. 

4. Financial Instruments 

Credit Risk 

Credit risk arises from the potential that a counter party will fail to 

perform its obligations. The company is exposed to credit risk from 

customers. In order to reduce its credit risk, the company reviews a 

new customer's credit history before extending credit and conducts 

regular reviews of its existing customers' credit performance. An 

allowance for doubtful accounts is established based upon factors 

surrounding the credit risk of specific accounts, historical trends and 

other information. 

67

5. 

Liquidity Risk 

Liquidity risk is the risk that an entity will encounter difficulty in meeting 

obligations associated with financial liabilities. The company is exposed 

to this risk mainly in respect of its receipt of funds from its customers 

and other related sources and the payment of funds for accounts 

payables and longterm debt. 

Government Assistance 

During the year, the company received government grants totalling 

$13,098 which have been applied to reduce expenses as follows: 

2012 2012 2011 2011 

$ ` $ ` 

Advertising 

and trade shows 

Agronomy 

3,281 159,194 — — 

and marketing 9,817 476,321 — — 

13,098 635,515 — — 

6. Property and Equipment 

Accumulated 2012 2011 

Cost Amortization Net Net 

$ $ $ $ 

Land 46,564 — 46,564 46,564 

Buildings 289,698 245,045 44,653 69,128 

Equipment 280,566 244,242 36,324 49,500 

616,828 489,287 127,541 165,192 

68 

` ` ` ` 

Land 2,376,627 — 2,376,627 2,141,478 

Buildings 14,786,186 12,507,097 2,279,089 3,179,197 

Equipment 14,320,089 12,466,112 1,853,977 2,276,505 

31,482,902 24,973,209 6,509,693 7,597,180 

7. Unamortized Government Assistance 

Unamortized government assistance represents the unamortized amount 

of interest subsidy relative to a non-market rate loan received from the 

Atlantic Canada Opportunities Agency. The amortization of the loan 

interest subsidy is recorded as other income in the statement of income. 

8. LongTerm Debt 

2012 2012 2011 2011 

$ ` $ ` 

Non-interest bearing loan 

payable to the Atlantic 

Canada Opportunities 

Agency, net of an 

unamortized fair value 

discount of $31,672 

(2011 $43,407) at 4.5%, 

in four annual installments 

of $50,000 and one 

payment of $40,766, 

unsecured, due August 2016. 209,094 10,672,158 217,359 9,996,340 

Less current portion 39,166 1,999,033 8,265 380,107 

169,928 8,673,125 209,094 9,616,233 

Principal repayment of long-term debt over the next five years is as follows: 

$ ` 

2013 39,166 1,999,033 

2014 41,416 2,113,873 

2015 43,666 2,228,713 

2016 45,916 2,343,553 

2017 38,930 1,986,987 

209,094 10,672,159 


9. Income Taxes 

The company has non-capital losses for income tax purposes of 

$1,205,506 which may be carried forward to reduce taxable income 

in future years. If not applied against taxable income, the noncapital 

losses will expire as follows: 

$ ` 

2014 205,382 10,482,697 

2026 366,483 18,705,292 

2027 283,750 14,482,600 

2028 214,636 10,955,021 

2030 115,010 5,870,110 

2031 12,550 640,552 

2032 7,695 392,753 

1,205,506 61,529,025 

The company has investment tax credits of $34,039 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. 

10. Changes In Non-Cash Operating Working Capital 

2012 2012 2011 2011 

$ ` $ ` 

Accounts receivable (139) (7,095) (42) (1,932) 

Inventory 18,039 920,711 (17,745) (816,093) 


Accounts payable 

27 1,378 (21) (966) 

and accrued liabilities 4,432 226,209 (11,529) (530,219) 

Deferred revenue — — (2,640) (121,414) 

22,359 1,141,203 (31,977) (1,470,624) 

11. Capital Stock 

2012 2012 2011 2011 

$ ` $ ` 

Authorized 

An unlimited number of 

common shares 

200,000 non-voting, 

non-cumulative, 

non-participating, 

redeemable and 

retractable Class 

A preferred shares 

Issued 

1,087,999 Common 

shares 

196,460 

Class A preferred shares 

1,087,998 55,531,418 1,087,998 50,037,028 

(2011 200,000 shares) 196,460 10,027,318 200,000 9,198,000 

1,284,458 65,558,736 1,287,998 59,235,028 

The company's Class A preferred shares are redeemable on the basis 

of 50% of aftertax profits of the preceding fiscal year and are fully 

retractable by the holder should specified corporate obligations not 

be met. During the year, the company redeemed 3,540 Class A preferred 

shares (2011 nil Class A preferred shares) 

12. Net Revenue Support Services 

2012 2012 2011 2011 

$ ` $ ` 

Revenue — — 83,252 3,753,416 

Expense wages and salaries — — 69,602 3,138,006 

Net revenue Support services — — 13,650 615,410 

Support services revenue is generated 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.

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 

2012 

Your Directors submit their Report for the financial year ended 31st March, 

2012. 

During the year under review, production of potato in India estimated at 

37.5 million MT recorded an all time high leading to surplus stocks and 

low prices. As a result, the demand for seed potato and its prices were also 

depressed. Consequently, your Company experienced a muted growth in 

turnover. However, your Company leveraged its market standing, product 

quality, on-field performance and strong trade & customer relationship, to 

drive a price premium for its seed potatoes and deliver 11.5% growth in 

profits over the previous year. During the year, the company also repaid 

its outstanding loan from Russell Credit Limited in accordance with agreed 

terms. 

On 26th March, 2012, ITC Limited acquired from its wholly owned subsidiary, 

Russell Credit Limited, the entire shareholding of your Company’s holding 

company, Technico Pty Limited, Australia. The ultimate holding company 

continues to leverage your Company’s leadership in the production of early 

generation seed potatoes and strength in agronomy not only for sourcing 

the chip stock for the ‘Bingo!’ brand of its Branded Packaged Foods business 

but also in servicing the seed potato requirements of its farmer base anchored 

to its e-Choupal system. 

FINANCIAL RESULTS 

Particulars 2011-12 

(` Crore) 

2010-11 

Turnover 48.20 47.65 

Profit before interest, depreciation & tax 8.68 7.83 

Financial expenses 0.03 0.03 

Depreciation 0.82 0.78 

Profit before tax 7.83 7.02 

Profit after tax 7.83 7.02 

Balance carried forward to Balance Sheet 8.25 0.42 

COMPANY’S PERFORMANCE 

(A) PRODUCTION OF TECHNITUBER® SEED POTATOES 

During the year under review, your Company produced 94.71 lakh 

TECHNITUBER® seed potatoes (Previous Year 101.28 lakhs) at its facility 

at Manpura, Himachal Pradesh. The lower production was mainly attributable 

to change in size specifications by our customers. 

(B) FIELD OPERATIONS 

Higher than normal temperature during the time of sowing, heavy unseasonal 

rain and late blight disease affected the Rabi 2012 crop for potato in India 

and led to a decline of about 10% for the country as a whole and about 4% 

for your Company. As a result, your Company’s field generated seed potato 

production stood at 48,395 MT against 50,403 MT in the previous year. 

Your Company has continued to reinforce the competency of its Agronomy 

team and upgrade the capacity of relevant potato farmers through the 

adoption of modern farm practices, superior inputs and more effective 

irrigation techniques. This, coupled with its strong focus on quality has 

enabled it to continuously improve the quality of its seed and maintain the 

largest early generation seed potato pipeline for Processing and Table Potato 

varieties in India. 

(C) MARKETING 

Your Company sold 40,178 MT of seed potato / potato during the year 

(previous financial 39,859 MT). 

Your Company continues to be the only exporter of seed potatoes from 

India. During the year, your Company exported 42.90 lakh TECHNITUBER® 

seed potatoes (previous year: 46.78 lakh) and 200.40 MT of early generation 

seed potatoes (previous year: 546.09 MT). Your company continued to 

provide quality farm inputs to its farmers at competitive prices. 

TECHNICO AGRI SCIENCES LIMITED 

Your Company recognises that its business is subject to climatic, agricultural 

and cyclical risks but looks forward to continued delivery of superior 

performance premised on the strong demand for its seed potatoes from 

loyal customer and farmer bases fuelled by the technology of its parent 

and the expertise of its employees. 

EMPLOYEES 

Your Directors recognise the key role of employees in creating and delivering 

value to farmers, customers and shareholders and wish to place on record 

their appreciation of the dedication and commitment of every employee 

of the Company, which has led to sustaining its performance even in the 

difficult business circumstances that prevailed during the year under review. 



(Particulars of Employees) Rules 1975. 

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN 

EXCHANGE EARNINGS AND OUTGO 

The information with regard to technology absorption and foreign exchange 

earnings and outgo in terms of Companies (Disclosure of Particulars in the 

Report of Board of Directors) Rules, 1988 is annexed. 

DIRECTORS 

In accordance with the provisions of Articles 122 and 123 of the Articles 

of Association of the Company, Mr. Arup Kumar Mukerji and Mr. David 

McDonald 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. 

AUDIT COMMITTEE 

The Audit Committee of the Company comprises of Mr. Surampudi Sivakumar 

as Chairman, and Mr. David Charles McDonald and Mr. Arup Kumar Mukerji 

as Members. 

DIRECTOR’S RESPONSIBILITY STATEMENT 

As required under Section 217 (2AA) of the Companies Act, 1956, your 

Directors confirm having: 

a) followed in the preparation of the Annual Accounts, the applicable 

accounting standards with proper explanation relating to material 

departures if any; 

b) 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; 

c) 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 your Company and for 

preventing and detecting fraud and other irregularities; and 

d) prepared the Annual Accounts on a going concern basis. 

AUDITORS 

The Company’s Auditors, M/s. S. R. Batliboi and Co., Chartered Accountants, 

retire at the ensuing Annual General Meeting of the Company and, being 

eligible, offer themselves for re-appointment. 

On behalf of the Board of Directors 

For Technico Agri Sciences Limited 

Place : Gurgaon S. Sivakumar 

Dated : 26th April,2012 Chairman 

69

ANNEXURE TO THE REPORT OF DIRECTORS 

Information under Section 217(1)(e) of the Companies Act, 1956, read 

with Companies (Disclosure of Particulars in the Report of Board of Directors) 

Rules 1988 and forming part of the Directors Report:- 

Research and Development (R&D) 

Your Company continues to be engaged in Research and Development 

activities in both TECHNITUBER® seed potato production as well as field 

generated seed potato production with the objectives of reducing 

consumption of water and fertilisers, using new chemicals to minimise 

disease pressure, enhancing yield etc. In order to further leverage its tissue 

culture capabilities, the Company has undertaken trial production of banana 

tissue culture plantlets and its test marketing in select states. 

Technology Absorption, Adaptation and Innovation 

Based on the efforts made towards technology absorption, your Company 

achieved smooth plant operation since the declaration of commercial 

production. Field progeny of the seed potatoes produced with the use of 

TECHNITUBER® Seed Potato Technology has exhibited qualitative and 

quantitative improvement over traditional product at affordable cost. 

a) Technology Imported : Production Facility at Manpura, Himachal 

Pradesh, is based on TECHNITUBER® Seed 

Potato Technology from Technico Pty Limited, 

Australia. 


TO THE MEMBERS OF TECHNICO AGRI SCIENCES LIMITED 

1. We have audited the attached Balance Sheet of Technico Agri Sciences 

Limited as at March 31, 2012 and also the Statement of profit and loss 

and the cash flow statement for the year ended on that date annexed 


management. Our responsibility is to express an opinion on these 


2. 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 


the accounting principles used and significant estimates made by 

management, as well as evaluating the overall financial statement 


our opinion. 

3. As required by the Companies (Auditor’s Report) Order, 2003 (as 

amended) issued by the Central Government of India in terms of subsection 

(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. 

4. Further to our comments in the Annexure referred to above, we report 

that: 

i. We have obtained all the information and explanations, which to 



ii. In our opinion, proper books of account as required by law have 



iii. The balance sheet, statement of profit and loss and cash flow 

Annexure referred to in paragraph 3 of our report of even date 

RE: TECHNICO AGRI SCIENCES LIMITED (‘THE COMPANY’) 

(i) (a) The Company has maintained proper records showing full 

particulars, including quantitative details and situation of fixed 

assets. 


Management in accordance with a regular programme of verification 

which, in our opinion, is reasonable having regard to the size of 

the Company and the nature of its assets. According to information 

and explanation given to us, no material discrepancies were noticed 

on such verification. 

(c) There was no substantial disposal of fixed assets during the year. 

(ii) (a) The management has conducted physical verification of inventories 

at reasonable intervals during the year. 

(b) 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) The Company is maintaining proper records of inventory and no 

material discrepancies were noticed on physical verification. 

(iii) (a) According to the information and explanations given to us, 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. Accordingly, the 

provisions of clause 4(iii)(a) to (d) of the Order are not applicable 

to the Company and hence not commented upon. 

(e) According to information and explanations given to us, the Company 

has not taken any loans, secured or unsecured, from companies, 

70 


b) 

c) 

d) 

Year of import : 2000 

] 

Whether technology The absorption of the technology has taken 

fully absorbed : place through two-phase production. Your 

Company has been successfully producing 

If not fully absorbed, TECHNITUBER® seed potatoes (G0) in its 

areas where this has production facility at Manpura. Subsequent 

not taken place, reasons stage multiplications have been successfully 

therefore and future undertaken in leased and contract farms. 

plans of action : However, the company continues to refine 

and improve upon the technology by 

drawing on the technical expertise of the 

parent company. 

Foreign Exchange Earnings and Outgo (` crore) 

Foreign Exchange Earnings : 1.97 

Foreign Exchange Outgo : 0.08 

Place: Gurgaon 

On behalf of the Board of Directors 

For Technico Agri Sciences Limited 

S Sivakumar 

Dated: 26th April, 2012 Chairman 

statement dealt with by this report are in agreement with the 


iv. In our opinion, the balance sheet, statement of profit and loss and 


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, 2012, and taken on record by the Board 

of Directors, we report that none of the directors is disqualified as 

on March 31, 2012 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 




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, 2012; 

(b) in the case of the statement of profit and loss, 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 


per Manoj Gupta 

Place : Gurgaon Partner 

Date : April 26, 2012 Membership No.: 83906 

firms or other parties covered in the register maintained under 

section 301 of the Companies Act, 1956. Accordingly, the provisions 

of clause 4(iii)(e) to (g) of the Order are not applicable to the 

Company and hence not commented upon. 



with the size of the Company and the nature of its business, for the 

purchase of inventory and fixed assets and for the sale of goods and 

services. During the course of our audit, we have not observed any 

major weakness or continuing failure to correct any major weakness 

in the internal control system of the company in respect of these areas. 

(v) (a) In our opinion, there are no contracts or arrangements that need 

to be entered in the register maintained under Section 301 of the 

Companies Act, 1956. Therefore, provision of clause 4(v) (b) of 

the Companies (Auditor’s Report) Order, 2003 (as amended) is 

not applicable to the Company. 


(vii) The Company is covered as part of the internal audit function operated 

by its parent company, which is commensurate with the size of the 

Company and the nature of its business. 

(viii)To the best of our knowledge and as explained, the Central Government 

has not prescribed maintenance of cost records under clause (d) of 

sub-section (1) of section 209 of the Companies Act, 1956 for the 

products of the Company. 

(ix) (a) The Company is regular in depositing with appropriate authorities

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 

applicable to it. The provisions relating to investor education and 

protection fund are not applicable to the Company. 

(b) According to the information and explanations given to us, no 

undisputed amounts payable in respect of provident fund, 

employees’ state insurance, income-tax, wealth-tax, service tax, 

sales-tax, customs duty, excise duty, cess and other undisputed 

statutory dues were outstanding, at the year end, for a period of 

more than six months from the date they became payable. 

(c) According to the information and explanation given to us, there 

are no dues of income-tax, sales-tax, wealth-tax, service tax, customs 

duty, excise duty and cess which have not been deposited on 

account of any dispute. 

(x) The Company has no accumulated losses at the end of the financial 

year and it has not incurred cash losses in the current and immediately 


(xi) Based on our audit procedures and as per the information and 

explanations given by the management, we are of the opinion that 

the Company has not defaulted in repayment of dues to a financial 

institution, bank or debenture holders. 

(xii) According to the information and explanations given to us and based 

on the documents and records produced before us, the Company has 

not granted loans and advances on the basis of security by way of 

pledge of shares, debentures and other securities. 

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual 

benefit fund / society. Therefore, the provisions of clause 4(xiii) of the 

Companies (Auditor’s Report) Order, 2003 (as amended) are not 

applicable to the Company. 

(xiv) In our opinion, the Company is not dealing in or trading in shares, 

securities, debentures and other investments. Accordingly, the provisions 


of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as 

amended) are not applicable to the Company. 



bank or financial institutions. 

(xvi) The Company did not have any term loans outstanding during the 

year. 

(xvii) According to the information and explanations given to us and on 

an overall examination of the balance sheet of the Company, we report 

that no funds raised on short-term basis have been used for long-term 

investment. 

(xviii)The Company has not made any preferential allotment of shares to 

parties or companies covered in the register maintained under section 

301 of the Companies Act, 1956. 


year. 

(xx) The Company has not raised any money through a public issue during 

the year. 

(xxi) Based upon the audit procedures performed for the purpose of 

reporting the true and fair view of the financial statements and as per 

the information and explanations given by the management, we 

report that no fraud on or by the Company has been noticed or 

reported during the year. 





Place : Gurgaon Partner 

Date : April 26, 2012 Membership No.: 83906 


(Amount in ` '000) 

As at As at 

Particulars 

Equity and Liabilities 


Notes 31st March, 2012 31st March, 2011 

Share Capital 1 3,79,628 3,79,628 

Reserves and Surplus 2 82,520 4,229 


4,62,148 3,83,857 

Long-term provisions 3 2,060 1,697 


2,060 1,697 

Short-term Borrowings 4 — 1,20,000 

Trade Payables 5 1,15,325 1,74,126 

Other Current Liabilities 5 61,771 49,963 

Short-term provisions 3 207 285 

1,77,303 3,44,374 

TOTAL 

Assets 

Non-current Assets 

Fixed Assets 

6,41,511 7,29,928 

Tangible Assets 6.1 1,08,378 1,10,518 

Intangible Assets 6.2 — — 

Intangible Assets under development 1,050 — 

Long-term Loans and Advances 7 1,564 1,497 

Other Non-current Assets 8.2 23 21 


1,11,015 1,12,036 

Current investments 9 84,292 2,22,762 

Inventories 10 4,22,264 3,70,494 

Trade Receivables 8.1 16,047 17,750 

Cash and Cash equivalents 11 1,241 1,130 

Short-term Loans and Advances 7 5,741 5,127 

Other Current Assets 8.2 911 629 

5,30,496 6,17,892 

Total 6,41,511 7,29,928 

Nature of Operations 21 

Summary of significant accounting policies 22 

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

As per our report of even date 

For S.R. Batliboi & Co. For and on behalf of the Board of Directors of Technico Agri Sciences Limited 



per Manoj Gupta Arup Kumar Mukerji Sachidanand Madan Sanjeev Madan 

Partner Director Director and Company Vice President 

Membership no.: 83906 Secretary (Finance) 


Date: 26 April 2012 

71


72 

Particulars 




Particulars Notes For the year ended For the year ended 

INCOME 


Revenue from operations (net) 12 4,96,999 4,78,981 

Other Income 13 22,679 18,932 

Total Revenue (I) 

EXPENSES 

5,19,678 4,97,913 

Cost of Raw material and Components consumed 14 43,523 37,272 

Purchase of Traded Goods 15 18,617 17,879 

(Increase)/decrease in Inventories of Finished Goods, 

Work-in-progress and Traded Goods 

15 (48,787) (23,403) 

Employee Benefits expense 16 27,776 24,836 


TOTAL (II) 4,32,851 4,19,617 

Earnings before interest,tax,depreciation and 

amortization (EBITDA) (I) - (II) 

86,827 78,296 

Depreciation and Amortization expense 18 8,260 7,801 

Finance costs 19 276 290 

Profit/(loss) before tax 78,291 70,205 

Tax expenses — — 

Profit/(loss)after tax 

Earnings per equity share [nominal value of share ` 10 

78,291 70,205 

(31 March 2011:` 10)] 

Basic 

20 

Computed on the basis of total profit for the year 

Diluted 

`2.06 `1.85 

Computed on the basis of total profit for the year `2.06 `1.85 

Nature of Operations 21 

Summary of significant accounting policies 22 

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



Firm registration Number : 301003E 



Partner 




For and on behalf of the Board of Directors of Technico Agri Sciences Limited 

Arup Kumar Mukerji Director 

Sachidanand Madan Director and Company Secretary 

Sanjeev Madan Vice President (Finance) 






Profit before tax 78,291 70,205 

Non-cash adjustment to reconcile profit before tax to net cash flows 

Depreciation/amortization 8,260 7,801 

Impairment/other write off on Tangible/Intangible assets — 333 

Loss/(profit) on sale of fixed assets (1) 5 

Unrealized Foreign Exchange (gain)/loss (739) (529) 

Interest expense 276 290 

Dividend income (12,316) (8,646) 

Provision written back (6,476) (1,917) 

Operating profit before Working Capital changes 67,295 67,542 

Movements in Working Capital : 

Increase/(decrease) in Trade Payables (58,801) (11,593) 

Increase/(decrease) in Long-term provisions 363 — 

Increase/(decrease) in Short-term provisions (78) — 

Increase/(decrease) in Other Current Liabilities 18,284 1,189 

Decrease/(increase) in Trade Receivables 2,442 (7,049) 

Decrease/(increase) in Inventories (51,770) (23,623) 

Decrease/(increase) in Long-term Loans and Advances (67) — 

Decrease/(increase) in Short-term Loans and Advances (614) (503) 

Decrease/(increase) in Other Current Assets (282) — 

Decrease/(increase) in other Non-current Assets (2) (10) 

Cash generated from/(used in) Operations (23,230) 25,953 

Net cash flow from/(used in) operating activities (A) (23,230) 25,953 

Cash flows from investing activities 

Purchase of Fixed Assets, including Intangible Assets, CWIP and Capital Advances (7,178) (5,636) 

Proceeds from sale of Fixed Assets 9 8 

Purchase of Current Investments (21,08,364) (17,77,291) 

Proceeds from sale/maturity of Current Investments 22,47,126 17,10,888 

Dividends received 12,024 8,609 

Net cash flow from/(used in) investing activities (B) 1,43,617 (63,422)


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012 (Contd) 



Particulars 



Repayment of Short-term Borrowings (1,20,000) — 

Interest paid (276) (290) 

Net Cash flow from/(used in) in financing activities (C) (1,20,276) (290) 

Net increase/(decrease) in Cash and Cash equivalents (A + B + C) 111 (37,759) 

Cash and Cash equivalents at the beginning of the year 1,130 38,889 

Cash and Cash equivalents at the end of the year 

Components of Cash and Cash equivalents 

1,241 1,130 

Cash on Hand 21 50 

With banks- on Current Account 1,220 1,080 

Total Cash and Cash equivalents (note 11) 1,241 1,130 



Firm registration Number : 301003E 



Partner 








NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012 

1. Share Capital (Amount in ` '000) 


31 March 2012 31 March 2011 

Authorized 

40,000,000 (31 March 2011: 40,000,000) equity shares of `10/- each 4,00,000 4,00,000 


37,962,800 (31 March 2011 : 37,962,800) equity shares of `10/- each 3,79,628 3,79,628 

Total issued, Subscribed and Fully Paid-up Share capital 3,79,628 3,79,628 

a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting period 


31 March 2012 31 March 2011 

Numbers (Amount in ` '000) Numbers (Amount in ` '000) 

At the beginning of the period 3,79,62,800 3,79,628 3,79,62,800 3,79,628 

Issued during the period — — — — 

Outstanding at the end of the period 3,79,62,800 3,79,628 3,79,62,800 3,79,628 

b. Terms/rights attached to Equity Shares 

I. The company has only one class of equity shares having par value of `10 per share. 

II. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company. The distribution 

will be in proportion to the number of equity shares held by the shareholders. 

c. Shares held by Holding Company 

Out of equity shares issued by the company, shares held by its holding company are as below: 

Name of the Company As at As at 

31 March 2012 31 March 2011 

Numbers (Amount in ` '000) Numbers (Amount in ` '000) 

Technico Pty Ltd., the Holding Company 

Equity shares of `10 each fully paid 3,79,62,794 3,79,628 3,79,62,794 3,79,628 

Technico Pty Ltd., the Holding Company , jointly with other share holders 

Equity shares of `10 each fully paid 6 0 6 0 

d. Details of Shareholders holding more than 5% shares in the company 

Name of the Shareholders As at As at 

31 March 2012 31 March 2011 

Numbers % holding Numbers % holding 

Equity shares of `10 each fully paid 

Technico Pty Ltd., the holding company 3,79,62,794 99.99% 3,79,62,794 99.99% 

73

74 


NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2012 (contd) 

2. Reserves and Surplus (Amount in ` '000) 


31 March 2012 31 March 2011 

Surplus/(deficit) in the statement of Profit and Loss 

Balance as per last financial statements 4,229 (65,976) 

Profit for the year 78,291 70,205 

Net surplus in the statement of Profit and Loss 82,520 4,229 

Total Reserves and Surplus 82,520 4,229 

3. Provisions (Amount in ` '000) 

Long-term Short-term 


31 March 2012 31 March 2011 31 March 2012 31 March 2011 

Provision for Employee Benefits 

Provision for Leave benefits 2,060 1,697 207 285 

2,060 1,697 207 285 

4. Short-term Borrowings (Amount in ` '000) 


31 March 2012 31 March 2011 

Interest Free Loan from body corporate 

(from Russell Credit Limited, the then 100% holding Company of 

— 1,20,000 

Technico Pty Limited, Australia, the holding Company) 

The above amount includes 

— 1,20,000 

Secured Borrowings — — 

Unsecured Borrowings — 1,20,000 

Note : As per agreed terms, the unsecured loan which was due for repayment 

by 30 September 2011, was repaid on 29 September 2011. 

5. Other Current Liabilities (Amount in ` '000) 


31 March 2012 31 March 2011 

Trade payables (refer note 29 for details of dues to 

micro and small enterprises) — — 

Trade Payables other than Micro and Small Enterprises 

Other Liabilities 

1,15,325 1,74,126 

- Advances from Customers 60,228 48,644 

- Deposit from Dealers 240 240 

- Other Payables 1,303 1,079 

61,771 49,963 

1,77,096 2,24,089 

6.1. Tangible Assets (Amount in ` '000) 

Particulars Land Buildings Plant Furniture Licenced Office Computers, Vehicles Total 

and and Properties - Equipment Servers & 

Equipment Fixtures Building Other IT 

Improvements equipments 

At Cost 

At 1 April 2010 15,193 46,548 1,10,120 2,377 4,951 1,051 3,371 3,631 1,87,242 

Additions — — 5,713 17 78 51 203 — 6,062 

Disposals — — (74) (72) — (385) (433) — (964) 

At 31 March 2011 15,193 46,548 1,15,759 2,322 5,029 717 3,141 3,631 1,92,340 

Additions — — 5,175 — — 20 933 — 6,128 

Disposals — — — — — (9) — (9) 

At 31 March 2012 15,193 46,548 1,20,934 2,322 5,029 728 4,074 3,631 1,98,459 

Depreciation 

At 1 April 2010 — 12,525 56,652 1,436 44 286 2,262 1,434 74,639 

Charge for the year — 1,313 5,200 90 526 44 283 345 7,801 

Disposals — — (33) (42) — (129) (414) — (618) 

At 31 March 2011 — 13,838 61,819 1,484 570 201 2,131 1,779 81,822 

Charge for the year — 1,313 5,682 91 531 32 266 345 8,260 

Disposals — — — — — (1) — — (1) 

At 31 March 2012 

Net Block 

— 15,151 67,501 1,575 1,101 232 2,397 2,124 90,081 

At 31 March 2011 15,193 32,710 53,940 838 4,459 516 1,010 1,852 1,10,518 

At 31 March 2012 15,193 31,397 53,433 747 3,928 496 1,677 1,507 1,08,378 

Note : 

1. Land is free hold and Land amounting to `328 thousand (Previous Year `328 thousand) is pending registration in the name of the Company. 

2. Land amounting `10,199 thousand (Previous Year `10,199 thousand) has been given to Ultimate Parent Company on operating lease.

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2012 (contd) 

6.2 Intangible Assets (Amount in ` '000) 

Particulars 

Gross block 

Technical 

know now 

Total 

At 1 April 2010 93,837 93,837 

Purchase — — 

Internal development — — 

At 31 March 2011 93,837 93,837 

Purchase/Acquisitions through amalgamation — — 


Amortization 

93,837 93,837 

At 1 April 2010 93,837 93,837 

Charge for the year — — 

At 31 March 2011 93,837 93,837 

Charge for the year — — 


Net block 

93,837 93,837 

At 31 March 2011 — — 

At 31 March 2012 — — 

8. Trade Receivables and Other Assets 

8.1 Trade Receivables (Amount in ` '000) 

Non-current Current 


31 March 31 March 31 March 31 March 

2012 2011 2012 2011 

Unsecured, considered 

good unless stated otherwise 

Outstanding for a period 

exceeding six months from 


Secured, considered good — — — — 

Unsecured, considered good — — — — 

Doubtful — — 589 619 

— — 589 619 

Provision for doubtful receivables — — (589) (619) 

(A) — — — — 

Other receivables 


Unsecured, considered good — — 16,047 17,750 

Doubtful — — — — 

— — 16,047 17,750 

Provision for doubtful receivables — — — — 

(B) — — 16,047 17,750 

Total (A + B) — — 16,047 17,750 


7. Loans and Advances (Amount in ` '000) 




2012 2011 2012 2011 

Security deposit 


Unsecured, considered good 1,319 1,497 183 — 

Doubtful — — — — 

(A) 1,319 1,497 183 — 

Advances recoverable in 

Cash or kind 

Secured considered good — — — — 

Unsecured considered good — — 824 959 

Doubtful — — 393 393 

— — 1,217 1,352 

Provision for doubtful 

advances — — 393 393 

(B) — — 824 959 

Other loans and advances 

Prepaid expenses 245 — 1,020 1,487 

Balances with Statutory/ 

Government authorities — — 3,714 2,681 

(C) 245 — 4,734 4,168 

Total (A+ B + C ) 1,564 1,497 5,741 5,127 

8.2 Other Assets 

Non-current 


Current 



2012 2011 2012 2011 


unless stated otherwise 

Non-current Bank Balances 

(note11) 

10 10 — — 

(A) 

Others 

Interest accrued on 

10 10 — — 

Fixed Deposits 

Other receivables from 

13 11 — — 

related parties (note 24(ii)) — — 911 629 

(B) 13 11 911 629 

Total (A + B) 23 21 911 629 

9. Current Investments (Amount in ` '000) 


(At lower of carrying cost and fair value) Unquoted mutual funds 

1,498,322 units (Previous Year 3,500,865 units) - Tata Fixed Income Portfolio Fund Scheme 

31 March 2012 31 March 2011 

A2 Institutional Monthly Dividend Reinvestment 15,000 35,012 

192,295 units (Previous Year Nil) - Birla Sun Life Floating Rate Fund-STP-IP-Daily Dividend Reinvestment 19,233 — 

4,706,409 units (Previous Year Nil) - HDFC Cash Management Fund - Savings Plan-Daily Dividend Reinvestment 50,059 — 

Nil (Previous Year 72,496 units) - DSP Black Rock Liquidity Fund-Inst Plan -Daily Dividend Reinvestment — 72,519 

Nil (Previous Year 6,921,384 units) - Kotak Floater Fund Short Term-Daily Dividend Reinvestment — 70,018 

Nil (Previous Year 2,498,376 units) - Reliance Interval Fund MIP- Series 1- Inst. Dividend Plan Reinvestment — 25,000 

Nil (Previous Year 2,019,065 units) - Reliance Interval Fund QIP- Series 1 Inst. Dividend Plan Reinvestment — 20,213 

84,292 2,22,762 

Aggregate amount of unquoted investments - Fair value ` 84,386 thousands (previous year ` 2,23,552 thousands) 84,292 2,22,762 

75

Notes to financial statements for the year ended 31 March 2012 

10. Inventories (valued at lower of cost and net realizable value) 



Raw Materials and Components 

(including stock-in-transit ` Nil 

31 March 2012 31 March 2011 

(31 March 2011: ` Nil)) (refer note 14) 8,006 4,770 

Work-in-progress (refer note 15) 1,139 — 

Finished Goods (refer note 15) 4,00,440 3,52,869 

Traded Goods (including stock-in-transit 

` Nil(31 March 2011: ` Nil)) (refer note 15) 11,099 11,022 

Stores and Spares 1,580 1,833 

4,22,264 3,70,494 

11. Cash and Cash equivalents 





2012 2011 2012 2011 

Balances with Banks: 

On current accounts — — 1,220 1,080 

Cash on hand — — 21 50 

Other Bank balances 

Deposits with maturity for 

— — 1,241 1,130 

more than 12 months 10 10 — — 

76 

10 10 — — 

Amount disclosed under noncurrent 

assets (note 8.2) (10) (10) — — 

— — 1,241 1,130 

12. Revenue from Operations (Amount in ` '000) 

Particulars for the year ended for the year ended 

Revenue from Operations 

Sale of products 

31 March 2012 31 March 2011 

Finished Goods 4,55,933 4,64,849 

Traded Goods 

Other operating revenue 

26,026 11,634 

Sale of old empty bags 5,733 366 

Excess Provision written back 6,476 1,917 

Other 2,831 215 


Details of products sold 

4,96,999 4,78,981 



Finished Goods sold 

31 March 2012 31 March 2011 

TECHNITUBER® Seed Potatoes 19,631 21,755 

Field Generated Seed Potatoes 4,35,886 4,43,094 

Banana Tissue Culture Plantlets 416 — 

Traded Goods sold 

4,55,933 4,64,849 

Field Generated Seed Potatoes 16,864 3,495 

Insecticides,Fungicides and Micronutrients 9,162 8,139 

26,026 11,634 

4,81,959 4,76,483 


Particulars 

Interest income on 



for the year ended for the year ended 

31 March 2012 31 March 2011 

Bank deposits 

Dividend income on 

2 1 

Current investments 12,316 8,646 

Commission on Sales — 269 

Rental income 8,523 8,424 

Exchange difference (net) 1,760 976 

Profit on sale of assets 1 2 

Miscellaneous income 77 614 

10,361 10,285 

22,679 18,932 

14. Cost of Raw Material and 

Components Consumed 

Particulars for the year ended 


for the year ended 

31 March 2012 31 March 2011 

Inventory at the beginning of the year 4,770 4,526 

Add: Purchases 46,759 37,516 

51,529 42,042 

Less: inventory at the end of the year 

Cost of Raw Material and 

8,006 4,770 

Components Consumed 43,523 37,272 

Details of Raw Material and 

Components Consumed 




31 March 2012 31 March 2011 

Plantlets 545 248 

Chemicals and Fertilisers 3,054 1,937 

Packing stores 39,924 35,087 

43,523 37,272 

Details of Inventory 

Particulars As at 


As at 

Raw Materials and Components 

31 March 2012 31 March 2011 

Plantlets — — 

Chemicals and Fertilisers 398 955 

Packing stores 7,608 3,815 

8,006 4,770 

15. (Increase)/decrease 

in Inventories 




Inventories at the end of the year 

31 March 2012 31 March 2011 

Traded goods 11,099 11,022 

Work-in-progress 1,139 — 


Inventories at the beginning of the year 

4,12,678 3,63,891 

Traded goods 11,022 1,893 

Work-in-progress — — 


3,63,891 3,40,488 

(Increase)/decrease in Inventories (48,787) (23,403)


Details of purchase of Traded Goods (Amount in ` '000) 


31 March 2012 31 March 2011 

Field Generated Seed Potatoes 

Insecticides, Fungicides and 

10,161 10,749 

Micronutrients 8,456 7,130 

18,617 17,879 

Details of Inventory 

Particulars As at 


As at 

Traded Goods 

31 March 2012 31 March 2011 


Insecticides, Fungicides and Micronutrients 78 2 

Work-in-progress 

11,099 11,022 

Banana Tissue Culture Plantlets 1,139 — 

1,139 — 

Finished Goods 


Field Generated Seed Potatoes 3,81,438 3,31,891 

Banana Tissue Culture Plantlets 112 450 

4,00,440 3,52,869 

16. Employee Benefits Expense 




31 March 2012 31 March 2011 

Salaries, Wages and Bonus 24,704 21,853 

Contribution to Provident and Other fund 1,000 829 

Gratuity expense (note 28) 325 379 

Staff Welfare expenses 1,747 1,775 

27,776 24,836 

17. Other Expenses 




SPC 

31 March 2012 31 March 2011 

Consumption of Stores and Spares 1,172 1,067 

Seed Farming Charges 2,00,426 1,94,161 

Power and Fuel 9,712 9,914 

Freight and forwarding charges 59,656 49,458 

Rent 4,661 3,989 

Storage and Handling cost 79,441 66,408 

Contract Labour 9,440 10,349 

Rates and Taxes 295 394 

Insurance 

Repairs and Maintenance 

1,439 1,503 

- Plant and Machinery 2,541 2,501 

- Buildings 35 265 

- Others 1,396 1,389 

Advertising and Sales Promotion 315 426 

Sales Commission 551 625 

Travelling and Conveyance 8,245 7,759 

Telephone, Postage and Telegram expenses 1,941 1,863 

Printing and Stationery 485 410 





31 March 2012 31 March 2011 

Legal and Professional fees 1,359 989 

Payment to Auditor (Refer details below) 668 655 

Provision for Doubtful Debts and Advances — 393 

Loss on sale of Fixed Assets (net) 

Impairment/other write off on 

— 7 

Tangible/Intangible assets — 333 


Above expenses include Research and 

3,91,722 3,63,033 

Development expenses 699 636 

Payment to Auditor 




31 March 2012 31 March 2011 

As Auditor: 

Audit Fee 441 441 

Tax Audit Fee 165 165 

Reimbursements 62 49 

668 655 

18. Depreciation and 

Amortization expense 




31 March 2012 31 March 2011 

Depreciation of Tangible assets 8,260 7,801 

8,260 7,801 

19. Finance Costs 




31 March 2012 31 March 2011 

Interest 276 290 

276 290 

20. Earnings per share (EPS) 




31 March 2012 31 March 2011 

Profit/(loss) after tax 

Net profit/(loss) for 

78,291 70,205 

calculation of basic EPS 78,291 70,205 

Net profit as above 

Net profit/(loss) for 

78,291 70,205 

calculation of diluted EPS 78,291 70,205 

Numbers Numbers 


shares in calculating basic EPS 


3,79,62,800 3,79,62,800 

shares in calculating diluted EPS 

Earnings per share 

Basic [Nominal value of shares 

3,79,62,800 3,79,62,800 

`10 (Previous Year: `10)] 

Diluted [Nominal value of shares 

`2.06 `1.85 

`10 (Previous Year: `10)] `2.06 `1.85 

77

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012 

21. Nature of Operations 

The Company is in the business of producing and selling TECHNITUBER® 

Seed Potatoes and Field Generated Seed Potatoes. The Company’s 

production process comprises TECHNITUBER® Seed Potatoes (i.e. G-0) 

and Field Generated Seed Potatoes which can itself have several stages 

like G-1, G-2 and so on. During the G-0 stage, the TECHNITUBER® 

Seed Potatoes are produced under a controlled environment in the 

nurseries maintained at the facility situated at Vill. Manpura, Distt. 

Solan, Himachal Pradesh. The TECHNITUBER® Seed Potatoes produced 

in the G-0 stage are taken for field plantation for further production 

of next stage i.e. G-1, which is again taken for subsequent production 

for another generation and so on depending on the production and 

sales strategy. The Company also supplies Agri Inputs comprising 

Insecticides, Fungicides and Micronutrients to the farmers associated with 

the Company for growing Field Generated Seed Potatoes. The Company 

has also started trial production of Tissue Culture Plantlets of Banana in 

the facility situated at Vill. Manpura, Distt. Solan, Himachal Pradesh. 

On 26th March, 2012, ITC Limited acquired the entire shareholding 

of your Company’s parent company, Technico Pty Limited (Technico), 

Australia, from Russell Credit Limited. Consequently with effect from 

the said date, Technico became a direct subsidiary of ITC Limited. 

22. Statement of Significant Accounting Policies 

a) Basis of Preparation 

The financial statements have been prepared to comply in all material 

respects with the notified accounting standards by the Companies 

Accounting Standards Rules, 2006 (as amended) and the relevant 

provisions of the Companies Act, 1956. The financial statements have 

been prepared under the historical cost convention on an accrual basis. 

The accounting policies have been consistently applied by the Company 

and are consistent with those used in the previous year. 

b) Use of Estimates 


accepted accounting principles requires management to make estimates 

and assumptions that affect the reported amounts of assets and liabilities 

and disclosure of contingent liabilities at the date of the financial 

statements and the results of operations during the reporting period 

end. Although these estimates are based upon management’s best 

knowledge of current events and actions, actual results could differ 

from these estimates. 

c) Fixed Assets 

Fixed Assets are stated at historical cost less accumulated depreciation 

and impairment losses, if any. Cost comprises the purchase price and 

any attributable cost of bringing the asset to its working condition for 

its intended use. 

d) Depreciation 

Depreciation on Fixed Assets, except for Leasehold Improvements and 

part of Plant and Machinery used in field operations, is provided on 

straight-line method at the rates prescribed in Schedule XIV to the 

Companies Act, 1956 which are not lower than rates based on estimated 

useful lives of the respective assets. Leasehold Improvements are 

depreciated over the period of Primary lease and part of Plant and 

Machinery used in field operations is depreciated over five to eight 

years which is determined based on technical evaluation. 

Assets Rates (SLM) Rates Schedule XIV 

Buildings 1.63% - 3.34% 1.63% - 3.34% 

Plant and Equipment 4.75% - 20% 4.75% 

Office Equipment 4.75% 4.75% 

Furniture and Fixtures 6.33% 6.33% 

Vehicles 

Computers,Servers and 

9.5% 9.5% 

other IT equipments 16.21% 16.21% 

Licenced Properties- Over the Primary 

Building Improvements Lease Period — 

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. 

78 


(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 

At cost or net realizable value, whichever is lower, arrived at on 

FIFO basis 

(ii) TECHNITUBER® Seed Potatoes, Field Generated Seed Potatoes 

and Banana Tissue Culture Plantlets 

At cost or net realizable value whichever is lower. Cost for this 

purpose includes all direct costs incurred up to the stage of production 

of the respective inventories. Borrowing costs relating to generation 

of TECHNITUBER® Seed Potatoes, Field Generated Seed Potatoes 

and Banana Tissue Culture Plantlets which takes substantial period 

of time to get ready for sale are also included to the extent they 

relate to the period till such stocks are ready for sale. Cost is 

determined on FIFO basis for TECHNITUBER® Seed Potatoes and 

Banana Tissue Culture Plantlets and weighted average basis for Field 

Generated Seed Potatoes. 

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. 

(iii) Insecticides, Fungicides and Micronutrients 

At cost or net realizable value, whichever is lower, arrived at on 

FIFO basis 

g) Foreign Currency Transactions 

(i) Initial Recognition 

Foreign currency transactions are recorded in the reporting currency, 

by applying to the foreign currency amount, the exchange rate 

between the reporting currency and the foreign currency at the 

date of the transaction. 

(ii) Conversion 

Foreign currency monetary items are reported using the closing 

rate. Non-monetary items which are carried in terms of historical 

cost denominated in a foreign currency, are reported using the 

exchange rate at the date of the transaction and non-monetary 

items which are carried at fair value or other similar valuation 

denominated in a foreign currency, are reported using the exchange 

rates that existed when the values were determined. 

(iii) 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 those 

arising from investments in non-integral operations. 

h) Investment 

Investments that are readily realisable and intended to be held for not 

more than a year are classified as current investments. All other investments 

are classified as long-term investments. Current investments are carried 

at lower of cost and fair value, determined on an individual investment 

basis. Long-term investments are carried at cost. However, provision for 

diminution in value is made to recognise a decline other than temporary 

in the value of the investments. 

i) Borrowing Cost 

Borrowing costs consist of interest and other costs that an entity incurs 

in connection with the borrowing of funds. Borrowing costs directly 

attributable to the acquisition, construction or production of an asset 

that necessarily takes a substantial period of time to get ready for its 

intended use or sale are capitalized as part of the cost of the respective 

asset. All other borrowing costs are expensed in the period they occur. 

j) 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. 

(i) Sale of Goods 

Revenue from sale of goods is recognized on transfer of risks and 

rewards, which coincides with the dispatch of goods to the customers. 

(ii) Interest 

Revenue from interest (incl. of tax deducted at source) is recognized 

on a time proportion basis taking into account the amount 

outstanding and the rate applicable.


(iii) Dividend 

Revenue from dividend is recognised when the right to receive 

payment is established at the balance sheet date. 

(iv) Rental Income 

Rental income is recognised in the Profit and Loss Account as per 

lease terms. 

k) Retirement Benefits 

(i) Retirement benefits in the form of Provident Fund are a defined 

contribution scheme and the contributions are charged to the 

Profit and Loss Account of the year, when the contributions to the 

respective funds are due. There are no other obligations other than 

the contribution payable to the respective trusts. 

(ii) Gratuity liability is a defined benefit obligation and is provided for 

on the basis of an actuarial valuation on projected unit credit 

method made at the end of each financial year. 

The Company has taken a Policy with Life Insurance Corporation 

of India (LIC) to cover the gratuity liability with respect to the 

employees and the premium paid to LIC is charged to Profit & 

Loss Account. The difference between the actuarial valuation of 

the gratuity with respect to employees at the year-end and the 

contribution paid to LIC is further adjusted in the books of accounts. 

(iii) Short term compensated absences and Long term compensated 

absences are provided for based on actuarial valuation at the year 

end. The actuarial valuation is done as per projected unit credit 

method. 

(iv) Actuarial gains/losses are immediately charged off to profit and 

loss account and are not deferred. 

l) Income Tax 

Tax expense comprises of current and deferred tax. Current income 

tax is measured at the amount expected to be paid to the tax authorities 

in accordance with the Indian Income Tax Act. Deferred income tax 

reflects the impact of current year timing differences between taxable 

income and accounting income for the year and reversal of timing 

differences of earlier years. 

Deferred tax is measured based on the tax rates and the tax laws 

enacted or substantively enacted at the balance sheet date. Deferred 

tax assets are recognised only to the extent that there is reasonable 

certainty that sufficient future taxable income will be available against 

which such deferred tax assets can be realised. If the Company has 

unabsorbed depreciation or carry forward tax losses, deferred tax assets 

are recognised only if there is virtual certainty supported by convincing 

evidence that such deferred tax assets can be realized against future 

taxable profits. 

At each balance sheet date the Company re-assesses unrecognised 

deferred tax assets. It recognises unrecognised deferred tax assets to 

the extent that it has become reasonably certain or virtually certain, 

as the case may be, that sufficient future taxable income will be available 

against which such deferred tax assets can be realised. 

m) Leases 

Leases where the lessor effectively retains substantially all the risks and 

benefits of ownership over the leased term are classified as operating 

leases. 

Where the Company is the lessee, the operating lease payments are 

recognized as an expense in the Profit and Loss Account over the lease 

term. 

Where the Company is the lessor, the assets subject to operating leases 

are included in the fixed assets and lease income is recognised in the 

Profit and Loss Account over the lease term. 

n) Earnings Per Share 

Basic earnings per share are calculated by dividing the net profit or 

loss for the period attributable to equity shareholders (after deducting 

attributable taxes) by the weighted average number of equity shares 

outstanding during the period. Partly paid equity shares are treated 

as a fraction of an equity share to the extent that they were entitled 

to participate in dividends relative to a fully paid equity share during 

the reporting period. 

For the purpose of calculating diluted earnings per share, the net profit 

or loss for the period attributable to equity shareholders and the 

weighted average number of shares outstanding during the period are 

adjusted for the effects of all dilutive potential equity shares. 

o) Provisions 

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 its present 

value and are determined based on best 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 best estimates. 


p) Cash and Cash equivalents 

Cash and cash equivalents in the cash flow statement comprise cash 

on hand and at bank and short-term deposits with maturity of three 

months or less. 

q) Identification of Segments 

(i) Primary segment- Business Segment 

The Company’s Operations predominantly comprise of only one 

segment i.e. Seed Potatoes. In view of the same, separate segmental 

information is not required to be given as per the requirements of 

Accounting Standard 17. 

(ii) Secondary Segment- Geographical Segment 

The analysis of geographical segment is based on the geographical 

location of the customers. The geographical segments considered 

for disclosure are as follows: 

Revenue from domestic market includes sales to customers located 

within India. 

Revenue from overseas market includes sales to customers located 

outside India. 

23. Segment Reporting 

Geographical segment wise revenue (`. in ‘000) 

S. No. Particulars 2011-12 2010-11 

(a) Revenue from Domestic Market 462,290 451,601 

(b) Revenue from Overseas Market 19,669 24,882 

Total 481,959 476,483 

Geographical segment wise receivables (Gross): (`. in ‘000) 

S. No. Particulars 2011-12 2010-11 

(a) Receivable from Domestic Market 3,144 6,768 

(b) Receivable from Overseas Market 13,492 11,601 

Total 16,636 18,369 

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. 

24. Related Party Disclosures 

(i) The list of related parties as identified by the management is as under: 

Name of the Party Relationship 

ITC Limited (ITC) Ultimate Holding Company 

Russell Credit Limited (RCL) Enterprise under Common Control 

(Holding Company of Technico Pty Ltd. 

till 26th March 2012) 

Technico Pty Limited, Australia (TPL) Holding Company 

ITC Infotech India Limited Enterprise under Common Control 

Mr. David Charles McDonald Director 

Mr. Sachidanand Madan Whole Time Director 

Mr. Surampudi Sivakumar Director 

Mr.Arup Kumar Mukerji Director 

Mr. Ganesh Kumar Sundararaman Director 

(ii) The following transactions were carried out with the related parties 

and the balances of these related parties as at March 31, 2012 for 

the period then ended are presented here in below: 

(` in ‘000) 

Ultimate Holding Common 

Particulars Holding Company Control 

Company 

(ITC) 

(TPL) 

Sale of Seed Potatoes 7,687 14,674 — 

(3,516) (15,385) (—) 

Rental income 8,523 — — 

(8,424) (—) (—) 

Services Received 3,145 — 109 

(2,957) (—) (—) 

Expenses Reimbursed 613 — — 

(627) (—) (—) 

Expenses Recovered 95 1,528 — 

(45) (677) (—) 

Loan Outstanding — 

(120,000) 

Loan repaid — — 120,000 

(—) (—) (—) 

Accounts receivable 911 13,492 — 

(1,059) (11,601) (—) 

Other Payable 594 — — 

(164) (—) (—) 

Previous year figures are given in the brackets. 

79


25. In accordance with Accounting Standard 22 on "Accounting for Taxes 

on Income" as notified under the Companies Accounting Standards 

Rules, 2006 (as amended), on conservative basis, deferred tax assets 

have not been accounted for in the books of accounts, since the 

estimation of future taxable profits cannot be made with virtual certainty 

against which such Deferred Tax Assets would be realised. 

26. Estimated amount of contracts remaining to be executed on capital 

account and not provided for ` Nil (Previous Year ` Nil). 

27. Operating Lease 

General description of the Company's operating lease arrangements: 

The Company has entered into operating lease arrangements primarily 

for Office premises, Godowns etc. Some of the significant terms and 

conditions for the arrangements are: 

• agreements can generally be terminated by lessee/either parties by 

serving one to three months notice or by paying the notice period 

rent in lieu thereof; 

• the lease is generally renewable on the expiry of lease period subject 

to mutual agreement; 

• the Company has no obligation towards the owner in case of 

damage to the property on account of risk factors like fire, flood, riots, 

natural calamities, etc. 

(` in ‘000) 

Particulars Year ended Year ended 

March 31, 2012 March 31, 2011 

Lease rentals charged to the 

profit and loss account. 4,661 3,989 

28. 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 interest, 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. 

80 

Profit and Loss account 

Net employee benefit expense (recognised in Employee Cost) 

(` in ‘000) 

Particulars 2011-12 2010-11 

Gratuity Leave Gratuity Leave 

Encashment Encashment 

(Funded) (Unfunded) (Funded) (Unfunded) 

Current service cost 347 144 313 130 

Interest cost on benefit 

obligation 119 152 77 107 

Expected return on plan 

assets (143) — (97) — 

Net actuarial (gain)/loss 

recognised in the year 2 273 (11) 470 

Past service cost — — 97 — 

Net benefit expense 325 569 379 707 

Actual return on plan assets 151 — 190 — 

Balance Sheet 


Details of Provision for Gratuity and Leave Encashment 

Particulars 2011-12 2010-11 

(` in ‘000) 



Defined benefit obligation (1,840) (2,266) (1,519) (1,982) 

Fair value of plan assets 1,874 — 1,600 — 

Less: Un-recognized 

past service cost — — — — 

Plan asset/(liability) 34 (2,266) 81 (1,982) 

Changes in the present value of the defined benefit obligation are as follows: 

(` in ‘000) 

Particulars 2011-12 2010-11 



Opening defined benefit 

obligation 1,519 1,982 975 1,416 

Interest cost 119 152 77 107 

Current service cost 347 144 313 130 

Past service cost — — 97 — 

Benefits paid (155) (285) (25) (141) 

Actuarial (gains)/losses 

on obligation 10 273 81 470 

Closing defined benefit 

obligation 1,840 2.266 1,519 1,982 

Changes in the fair value of plan assets are as follows: 


(` in ‘000) 

2010-11 



Opening fair value of 

plan assets 1,600 — 993 — 

Expected return 143 — 97 — 

Contributions by employer 278 285 442 141 

Benefits paid (155) (285) (25) (141) 

Actuarial gains / (losses) 8 — 93 — 

Closing fair value of 

plan assets 1,874 — 1,600 — 

The Company expects to contribute ` 450 (Previous year ` 400) 

thousands to gratuity fund in 2012-13. 

The major categories of plan assets as a percentage of the fair value of 

total plan assets are as follows: 

Particulars 2011-12 2010-11 

Investments with insurer 100% 100% 

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 inflation, seniority, promotion 

and other relevant factors on long term basis. 

The principal assumptions used in determining gratuity obligations for 

the Company’s plans are shown below: 

Particulars 2011-12 2010-11 

(In %) (In %) 

Discount rate 8.25 8.00 

Expected rate of return on plan assets 8.25 7.50


Amount for the current and previous year are as follows: (` in ‘000) 

Particulars Gratuity 

S.No. Particulars 2011-12 2010-11 

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 

b) 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 

c) 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 

d) the amount of interest accrued and 

remaining unpaid at the end of each 

accounting year; and 

e) 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 

30. Particulars of Un-hedged Foreign Currency Exposure 


36. Previous years’ figures have been regrouped and/or rearranged wherever necessary to make their classification comparable with that of the current year. 


Firm Registration No. : 301003E 



Partner 


Gurgaon, April 26, 2012 

2011-12 2010-11 2009-10 2008-09 2007-08 

Defined benefit obligation (1,840) (1,519) (975) (790) (746) 

Fair value of Plan assets 1,874 1,600 993 779 813 

Plan asset / (liability) 34 81 18 (11) 67 

Experience loss/(gain) on 

plan liabilities 

11 81 (61) (253) 127 

Experience loss/(gain) on 

plan assets 

(8) (93) 57 94 2 

29.Details of dues to Micro and Small Enterprises as per MSMED Act,2006 

(` in ‘000) 

Particulars Currency 2011-12 2010-11 

Debtors AUD$ 254.99 251.60 

` 13,492 11,601 

31. Earnings in foreign currency 


(` in ‘000) 

2010-11 

FOB value of Exports 19,669 24,882 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

32. Expenditure in foreign currency 


(` in ‘000) 

2010-11 

Travelling 109 151 

Testing Charges,Temperature Data Loggers 652 537 

33. Particulars regarding Purchase, Sales and Stock 

(` in ‘000) 

2011-12 2010-11 

Particulars Value Value 

Purchase 


Insecticides, Fungicides and Micronutrients 8,456 7,130 

Sales 




Insecticides, Fungicides and Micronutrients 9,162 8,139 

Opening Stock 




Insecticides, Fungicides and Micronutrients 2 — 

Closing Stock 



Banana Tissue Culture Plantlets 112 450 

Insecticides, Fungicides and Micronutrients 78 2 

34. Consumption of Plantlets, Chemicals and fertilisers and 

Packing Stores 

(` in ‘000) 

Particulars 2011-12 % 2010-11 % 

Imported — — — — 

Indigenous 43,523 100.00 37,272 100.00 

Total 43,523 37,272 

35. Consumption of Consumables 

Particulars 2011-12 % 2010-11 

(` in ‘000) 

% 


Indigenous 1,172 100.00 1,067 100.00 

Total 1,172 100.00 1,067 





81

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH, 2012 

Your directors present their report on the company for the financial year ended 

31 March, 2012. 

Directors 

The names of the directors in office at any time during or since the end of the 

year are: 

Mr David Charles McDonald 


Mr Arup Kumar Mukerji 

Mr Allan Hendry 


Technico Asia Holdings Pty Limited is a company limited by shares that is 

incorporated and domiciled in Australia. It is a wholly owned subsidiary of 

Technico Pty Ltd, a company incorporated in Australia. During the year under 

review, ITC Limited, India acquired from its wholly owned subsidiary, Russell 

Credit Limited the entire shareholding of your Company’s parent company, 

Technico Pty Limited (Technico), Australia. 

The registered office of Technico Asia Holdings Pty Limited is located at: 

82 

Suite 5, 

20 Bundaroo Street, 

BOWRAL NSW 2576, 

Australia 

The company had no employees during the year. 


During the year, the entity did not have any activity other than holding 100% 

of the shares of Technico Horticultural (Kunming) Co. Limited, China. 


During the year, the company earned a profit of A$ nil [2011: nil]. 

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 MARCH, 2012 

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 


(i) giving a true and fair view of the company’s financial position as 

at 31 March, 2012 and of their performance for the year ended 

on that date; and 

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF 

TECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED 

31 MARCH, 2012 

In relation to our audit of the financial report of Technico Asia Holdings Pty 

Limited for the financial year ended 31 March, 2012, to the best of my 

knowledge and belief, there have been no contraventions of the auditor 

INDEPENDENT AUDIT REPORT TO THE DIRECTORS OF TECHNICO ASIA 

HOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH, 2012 

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, 2012, 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. 

TECHNICO ASIA HOLDINGS PTY LIMITED 

Significant events after balance date 

There are no significant events after the balance date to be reported. 


The company is not subject to any particular or significant environmental 

regulation. 

Indemnification and insurance of directors 

Indemnification 

The company has not, during or since the financial year, indemnified or agreed 

to indemnify a current or former director or officer or auditor of the company 

or of any related body corporate against a liability incurred whilst engaged as 

a director or officer or auditor. 

Insurance 

The company has not, during or since the financial year, paid any insurance 

premium or agreed to pay a premium insuring directors, officers and auditors 

of the company against liabilities for costs and expenses incurred in defending 

civil or criminal proceedings. 

Auditor independence 

The auditor’s independence declaration from Gillespies is on page 12 of this 

report. 

Signed in accordance with a resolution of the Board of Directors: 

Place: Sydney, Australia Allan Hendry 

Dated: 26th April, 2012 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. 

Place: Sydney, Australia On behalf of the Board: 

26 April, 2012 Allan Hendry Director 

independence requirements of the Corporations Act 2001 or any applicable 

code of professional conduct. 

GILLESPIES 




Dated: 26 April, 2012 Partner 

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.

The directors’ responsibility also includes such internal control as the directors 

determine is necessary to enable the preparation of a financial report that 

is free from material misstatement, whether due to fraud or error. 

Auditor’s responsibility 

Our responsibility is to express an opinion on the financial report based on 

our audit. We have conducted our audit in accordance with Australian 

Auditing Standards. Those standards require that we comply with relevant 

ethical requirements relating to audit engagements and plan and perform 

the audit to obtain reasonable assurance whether the financial report is 

free from material misstatement. 


the amounts and disclosures in the financial report. The procedures selected 

depend on the auditor’s judgement, including the assessment of the risks 

of material misstatement of the financial report, whether due to fraud or 

error. In making those risk assessments, the auditor considers internal 

control relevant to the entity’s preparation of the financial report that gives 

a true and fair view in order to design audit procedures that are appropriate 

in the circumstance, but not for the purpose of expressing an opinion on 

the effectiveness of the entity’s internal control. An audit also includes 


reasonableness of accounting estimates made by the directors, as well as 

evaluating the overall presentation of the financial report. 



INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH, 2012 


Independence 

In conducting our audit, we have complied with the independence 

requirements of the Corporations Act 2001. We confirm that the independence 

declaration required by the Corporations Act 2001, which has been given 

to the directors of Technico Asia Holdings Pty Limited, would be in the 

same terms if given to the directors as at the time of the auditor’s report. 

Audit opinion 

In our opinion, the financial report of Technico Asia Holdings Pty Limited 

is in accordance with the Corporations Act 2001, including: 

(a) giving a true and fair view of the company’s financial position as at 

31 March, 2012 and of its performance for the year ended on that 

date; and 

(b) complying with Australian Accounting Standards to the extent described 

in note 1, and the Corporations Regulations 2001. 


Without modifying our opinion, we draw attention to Note 1(a) to the 

financial report, which describes the basis of accounting. The financial 

report has been prepared for the purpose of fulfilling the directors’ financial 

reporting responsibilities under the Corporations Act 2001. As a result, the 

financial report may not be suitable for another purpose. 

GILLESPIES 




26 April 2012 Partner 

2012 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 Ltd — — — — 

83

84 


BALANCE SHEET AS AT 31 MARCH, 2012 

2012 2011 

Notes $ ` $ ` 


Cash and cash equivalents — — — — 

Trade and other receivables 2 — — — — 

Inventories — — — — 

Other — — — — 



— — — — 

Receivables — — — — 

Other financial assets 3 969,736 51,308,732 969,736 44,712,103 

Property, plant and equipment — — — — 

Intangible assets — — — — 

Total non-current assets 969,736 51,308,732 969,736 44,712,103 

Total assets 


969,736 51,308,732 969,736 44,712,103 

Trade and other payables 4 — — — — 

Loans and borrowings 5 — — — — 

Provisions — — — — 



— — — — 

Interest free loans and borrowings — — — — 

Provisions — — — — 

Total non-current liabilities — — — — 

Total liabilities — — — — 

Net assets 

Equity 

969,736 51,308,732 969,736 44,712,103 

Contributed equity 6 3,684,522 194,948,059 3,684,522 169,884,098 

Accumulated losses 7 (2,714,786) (143,639,327) (2,714,786) (125,171,995) 

Total equity 969,736 51,308,732 969,736 44,712,103 

STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH, 2012 


Equity Earnings Total 

$ $ $ 

At 1 April 2010 3,684,522 (2,714,786) 969,736 

Profit for the period — — 516,236 

At 31 March 2011 3,684,522 (2,714,786) 969,736 

Profit for the period — — — 

At 31 March 2012 3,684,522 (2,714,786) 969,736 


Equity Earnings Total 

` ` ` 

At 1 April 2010 194,948,059 (143,639,327) 51,308,732 


At 31 March 2011 194,948,059 (143,639,327) 51,308,732 


At 31 March 2012 194,948,059 (143,639,327) 51,308,732


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2012 

2012 2011 

Notes $ ` $ ` 


Net cash flows (used in)/from operating activities — — — — 

Cash flow from financing activities 

Net cash flows (used in)/from financing activities — — — — 

Net increase/(decrease) in cash held — — — — 

Add Opening Cash Brought Forward — — — — 

Cash and cash equivalents at end of period — — — — 

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 

AS AT 31 MARCH, 2012 

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 52.9100 

for the current year balance sheet (2011: INR 46.1075) and the average 

rate of 1 AUD = INR 49.5088 for the current year income statement 

(2011: INR 43.6350) 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, 2012. However, the directors 

have determined that in order for the financial report to give a true 

and fair view of the company’s 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: Presentation of Financial Statements 

AASB 107: Cash Flow Statements 

AASB 108: Accounting Policies, Changes in Accounting Estimates 

and Errors 

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 

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 asset’s recoverable amount. An asset’s 

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 asset’s 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. 

85

Note 4: Trade and other payables 

2012 2011 

$ ` $ ` 

Current 

Trade creditors (i) — — — — 


(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 3,684,522 194,948,059 3,684,522 169,884,098 

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 

2012 2011 

$ ` $ ` 

Accumulated losses 

Balance at beginning of year 

Net profit attributable to the members 

(2,714,786) (143,639,327) (2,714,786) (125,171,995) 

of Technico Asia Holdings Pty Ltd. — — — — 

Total available for appropriation (2,714,786) (143,639,327) (2,714,786) (125,171,995) 

Dividends paid or provided for — — 

Aggregate amount transferred (to)/ from reserves — — — — 

Balance at end of period (2,714,786) (143,639,327) (2,714,786) (125,171,995) 

Note 8: Events subsequent to reporting date 

There are no subsequent events to be reported. 

86 


Note 2: Trade and Other Receivables 

2012 2011 

$ ` $ ` 

Current 

Trade and other receivables — — — — 

Note 3: Other Financial Assets 

Non-current 

Shares in subsidiaries: 

At cost 3,684,522 194,948,059 3,684,522 169,884,098 

Provision for write-down (2,714,786) (143,639,327) (2,714,786) (125,171,995) 

Total other financial assets 969,736 51,308,732 969,736 44,712,103 

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 Investment 

interest held by the (Provision for diminution) 

consolidated entity 2012 2011 

country of incorporation (%) $ ` $ ` 

Technico Horticultural (Kunming) Co. Ltd. China 100 3,684,522 194,948,059 3,684,522 169,884,098 

(2,714,786) (143,639,327) (2,714,786) (125,171,995) 

969,736 51,308,732 969,736 44,712,103

MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2011 

Your management submits its report for the financial year ended 

31 December 2011. 

Corporate Information 

Technico Horticultural (Kunming) Co Ltd (”Company”) is domiciled in 

Yunnan Province, People’s Republic of China. Its parent entity is Technico 

Asia Holdings Pty Ltd (formerly Technico China Pty Ltd), a company 

incorporated in Australia. 

The registered office of the Company is located at, 

A-38 Yanglin Industrial Development Zone, 

Songming, 

Yunnan Province, 

People’s Republic of China. 

Employees 

There were 39 employees on the rolls of the Company as at 31 December, 

2011. 


The Company is primarily engaged in production and supply of 

TECHNITUBER® Seed potatoes to export markets. 

AUDITOR’S REPORT 

TECHNICO HORTICULTURAL (KUNMING) CO., LTD. 

We have audited the accompanying financial statements of Technico 

Horticultural (Kunming) Company, which comprise the balance sheet as 

at 31 December 2011, and the income statement, the statement of changes 

in owners' equity and the cash flow statement for the year then ended, 

and the notes to the financial statements. 

1. Management's responsibility for the financial statements 

Management of Technico Horticultural (Kunming) Company is 

responsible for the preparation and fair presentation of these financial 

statements. This responsibility includes: (1) preparing the financial 

statements in accordance with Accounting Standards for Business 

Enterprises and “The Accounting Systems of PRC Enterprises” to achieve 

fair presentation of the financial statements; (2) designing, implementing 

and maintaining internal control which is necessary to enable that the 

financial statements are free from material misstatement, whether due 

to fraud or error. 

2. Auditor’s responsibility 

Our responsibility is to express an audit opinion on these financial 

statements based on our audit. We conducted our audit in accordance 

with China Standards on Auditing. China Standards on Auditing require 

that we comply with the Code of Ethics for Chinese Certified Public 

Accountants and plan and perform the audit to obtain reasonable 

assurance about whether the financial statements are free from material 

misstatement. 

An audit involves performing audit procedures to obtain audit evidence 

about the amounts and disclosures in the financial statements. 

The procedures selected depend on the auditor’s judgment, including 

TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED 

Business Review 

For the year under review, the Company achieved a turnover of CNY 

2,436,679 (2010: CNY 6,283,417) and incurred a loss of CNY 864,982 

(2010: Profit of CNY 460,074). The current year loss is on account of a 

one off lower sales order from its largest customer during the year. The 

company expects higher orders in the coming year. 

In view of the accumulated losses, no dividends have been paid or declared 

during the financial year. 

Auditors 

The Company has engaged M/s Yunnan Tianying Certified Public 

Accountants as auditors for the year under review whose report is annexed 

to the financial report. 


Your Company complies with the applicable environmental regulations 

set by the Songming Environmental Bureau. 

Place : Songming Min Zhang 

Date : 2 May 2012 Legal Representative 

the assessment of the risks of material misstatement of the financial 

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

assessments, Certified Public Accountants consider the internal control 

relevant to the preparation and fair presentation 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 internal control. An audit also includes 


reasonableness of accounting estimates made by management, as well 

as evaluating the overall presentation of the financial statements. 



3. Opinion 

In our opinion, the financial statements of Technico Horticultural 

(Kunming) Company present fairly, in all material respects, the company's 

financial position as of 31 December 2011, and the company's results 

of operations and cash flows for the year then ended in accordance 

with Accounting Standards for Business Enterprises and “The Accounting 

Systems of PRC Enterprises”. 

Yunnan Tianying Certified Public Accountants 

Kunming, The People’s Republic of Chinese 

1 April 2012 

87

BALANCE SHEET AS ON 31st DECEMBER 2011 

Technico Horticultural ( Kunming ) Co. Ltd. 

ITEMS LINENO 31/Dec/10 31/Dec/10 31/Dec/11 31/Dec/11 

CNY ` CNY ` 

CURRENT ASSETS 1 

Cash and cash equivalents 2 2,639,163 18,090,140 4,166,979 35,541,001 

Transaction monetary assets 3 0 0 0 0 

Short-term investments 4 0 0 0 0 

Notes receivable 5 0 0 0 0 

Accounts receivable 6 2,899,782 19,876,554 0 0 

Advance to suppliersd debts 7 0 0 0 0 

Dividend receivable 8 0 0 0 0 

Interest receivable 9 0 0 0 0 

Other notes receivable 10 21,077 1,44,469 1,119 9,548 

Inventoriesns 11 1,746,182 11,969,208 2,323,817 19,820,304 

Including Raw materials 12 0 0 0 0 

Finished goods 13 1,746,182 11,969,208 1,997,526 17,037,296 

In one year expired noncurrent assets 14 0 0 0 0 

Other current assets 15 20,381 139,700 16,063 137,005 

Total current assets 16 7,326,584 5,02,20,072 65,07,979 55,507,858 

NONCURRENT ASSETS 17 0 0 0 0 

Financial assets available for sale 18 0 0 0 0 

Hold investment due 19 0 0 0 0 

Long-term investment on bonds 20 0 0 0 0 

Long-term account receivable 21 0 0 0 0 

Long-term investment on stocks 22 0 0 0 0 

Right to trade in previously non-tradable shares 23 0 0 0 0 

Investment real eastate 24 0 0 0 0 

Fixed assets-cost 25 26,071,597 178,707,760 26,069,704 222,353,718 

Less Accumulated depreciationes 26 20,414,802 139,933,261 20,856,048 177,885,403 

Fixed assets-net value 27 5,656,795 38,774,499 5,213,656 44,468,315 

Less Fixed assets depreciation reserves 28 0 0 0 0 

Fixed assets-net equity 29 5,656,795 38,774,499 5,213,656 44,468,315 

Construction in progress liab 30 0 0 0 0 

Project goods and material 31 0 0 0 0 

Liquidation of fixed assets 32 0 0 0 0 

Productive living assets 33 0 0 0 0 

Oil and gas assets 34 0 0 0 0 

Intangible assets 35 1,537,031 10,535,581 1,496,044 12,760,056 

Including right to use land 36 1,537,031 10,535,581 1,496,044 12,760,056 

Development expenditures 37 0 0 0 0 

Business reputation 38 0 0 0 0 

Cost-book value differentials 39 0 0 0 0 

Long-term deferred and prepaid expenses 40 0 0 0 0 

Deferred income tax assets 41 0 0 0 0 

Deferred taxes debit 42 0 0 0 0 

Other noncurrent assets 43 0 0 0 0 

Including specially approved reserving materials 44 0 0 0 0 

Total noncurrent assets 45 7,193,826 49,310,080 6,709,700 57,228,371 

TOTAL ASSETS 46 14,520,410 99,530,151 13,217,679 112,736,229 

CURRENT LIABILITIES 47 0 0 

Short term loans 48 0 0 0 0 

Transaction financial liabilities 49 0 0 0 0 

Warrants payable 50 0 0 0 0 

Notes payable 51 0 0 0 0 

Accounts payable 52 0 0 0 0 

Advances from customers 53 227,500 1,559,399 0 0 

88 

TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED

BALANCE SHEET AS AT 31 DECEMBER 2011 (Contd.) 

Technico Horticultural (Kunming) Co. Ltd. 


ITEMS LINE NO 31 Dec 2010 31 Dec 2010 31 Dec 2011 31 Dec 2011 

CNY ` CNY ` 

Employee pay payable 54 284,836 1,952,412 160,855 1,371,965 

Including: accrued wages 55 282,682 1,937,645 157,842 1,346,269 

accrued welfarism 

Including: staff and workers 

56 2,154 14,767 3,013 25,695 

bonus and welfare fund 57 0 0 0 0 

Taxes and dues payable 58 0 0 0 0 

Including: Taxes payable 59 0 0 0 0 

Interest payable 60 0 0 0 0 

Dividends payable 61 0 0 0 0 

Other payables 62 104,468 716,076 35,000 298,522 

Due within one year of noncurrent liabilities 63 0 0 0 0 

Other current liabilities 64 0 0 0 0 

Total current liabilities 65 616,804 4,227,886 195,855 1,670,487 

NONCURRENT LIABILITIES : 66 0 0 0 0 

Long-term loans 67 0 0 0 0 

Bonds payable 68 0 0 0 0 

Long-term account payable 69 52,515 359,961 35,715 304,620 

Special payable 70 0 0 0 0 

Projected liabilities 71 0 0 0 0 

Deferred income tax liabilities 72 0 0 0 0 

Deferred taxes credit 73 0 0 0 0 

Other noncurrent liabilities 74 0 0 0 0 

Including: special reserve fund 75 0 0 0 0 

Total non-current liabilities 76 52,515 359,961 35,715 304,620 

Total liabilities 77 669,319 4,587,847 231,570 1,975,107 

OWNERS' EQUITY : 78 0 0 0 0 

Practical capital collected (or share capital) 79 19,013,598 130,328,708 19,013,598 162,170,780 

National capital 80 0 0 0 0 

Collective capital 81 0 0 0 0 

Legal person’s capital 82 0 0 0 0 

Including: State-owned legal person’s capital 83 0 0 0 0 

Collective legal person’s capital 84 0 0 0 0 

Personal capital 85 0 0 0 0 

Foreign businessmen’s capital 86 19,013,598 130,328,708 19,013,598 130,033,997 

Less: Investment returned 87 0 0 0 0 

Net paid in capital 88 19,013,598 130,033,997 19,013,598 130,033,997 

Capital reserves 89 42,667 292,458 42,667 363,912 

Less: treasury stock 90 0 0 0 0 

Surplus reserves 91 0 0 0 0 

Including: Legal surplus 92 0 0 0 0 

Free surplus reserves 93 0 0 0 0 

Reserve fund 94 0 0 0 0 

Enterprise expension fund 95 0 0 0 0 

Profits capitalizad on return of investment 96 0 0 0 0 

Unaffirmed investment loss 97 0 0 0 0 

Undistributed profit 98 (5,205,173) (32,730,721) (6,070,155) (39,384,075) 

Including: cash dividends 

*Margin of Translation of Foreign 

99 0 0 0 0 

Currency Financial Statements 100 0 (2,653,430) 0 019,747,289 

Total equity attributable to equity holders of the Parent 101 13,851,091 94,942,304 12,986,109 110,761,122 

*minority stockholders’ interest 102 0 0 0 0 

Total owners’ equity 103 13,851,091 94,942,304 12,986,109 110,761,122 

Less: assets loss 104 0 0 0 

Total owners’ equity : net value less loss on assets) 105 13,851,091 94,942,304 12,986,109 110,761,122 

TOTAL LIABILITIES AND OWNERS’ EQUITY 106 14,520,410 99,530,151 13,217,679 112,736,229 

89

INCOME AND PROFIT DISTRIBUTION STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011 


ITEMS LINE NO 2010 2010 2011 2011 

CNY ` CNY ` 

Gross operating income 1 6,283,417 43,021,298 2,436,679 18,742,689 

Including: operating income 2 6,283,417 43,021,298 2,436,679 18,742,689 

Including: main business income 3 6,276,667 42,975,082 2,436,679 18,742,689 

Other business income 4 6,750 46,216 0 0 

Gross operating cost 5 5,831,987 39,930,448 3,334,161 25,646,030 

Including: operating cost 6 4,204,581 28,787,928 1,727,325 13,286,408 

Including: main business cost 7 4,204,581 28,787,928 1,727,325 13,286,408 

Other business expense 8 0 0 0 0 

Business tax and surcharges 9 0 0 0 0 

Selling expenses 10 419,288 2,870,782 251,197 1,932,183 

Adminisstrative expenses 11 1,179,578 8,076,333 1,296,270 9,970,777 

Including: Business entertainment 12 0 0 0 0 

Research and development expense 13 0 0 0 0 

Financial Expenses 14 28,539 195,404 59,369 456,661 

Including: Interest exchange 15 0 0 0 0 

Interest income 16 18,767 128,496 53,669 412,817 

Foreign exchange profit and loss 17 43,096 295,067 109,051 838,813 

Asset impairment losses 18 0 0 0 0 

Other 19 0 0 0 0 

Add: Changes in fair value of the profit and loss 20 0 0 0 0 

Investment income 21 0 0 0 0 

Including for the investment benefits 

from the invested business 

and the united business and joint venture 22 0 0 0 0 

Operating profit 23 451,430 3,090,850 (897,482) (6,903,341) 

Add Non-operating income 24 10,453 71,571 32,500 249,987 

Including income from disposal of long term assets 25 0 0 0 

Income from non-monetary assets exchange 26 0 0 0 

Government grants (subsidy income) 27 0 0 0 

Income from debt restructuring 28 0 0 0 

Less Non-operating expenses 29 1,809 12,388 0 0 

Including loss on disposal of long-term assts 30 0 0 0 

Loss on non-monetary assets exchange 31 0 0 

Loss on debt restructuring 32 0 0 

TOTAL PROFIT 33 460,074 3,150,034 (864,982) (6,653,355) 

Less Income tax expense 34 

Add unaffirmed investment loss 35 

NET INCOME 36 460,074 3,150,034 (864,982) (6,653,355) 

Less minority interest income 37 

Net income attributable to equity holders of the 38 460,074 3,150,034 (864,982) (6,653,355) 

90 

TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011 



ITEMS LINE NO CNY ` 

1. Cash Flow from Operating Activities 1 

Cash from selling commodities or offering labor 2 51,86,232 3,98,91,977 

Refund of tax and fee received 3 28,900 2,22,296 

Other cash received related to operating activities 4 53,669 4,12,817 

Cash InflowSubtotal 5 52,68,801 4,05,27,090 

Cash paid for commodities or labor 6 17,47,641 1,34,42,680 

Cash paid to and for employees 7 14,26,208 1,09,70,246 

Taxes and fees paid 8 2,25,989 17,38,288 

Other cash paid related to operating activities 9 3,39,676 26,12,754 

Cash Outflow Subtotal 10 37,39,514 2,87,63,969 

Cash flow generated from operating activitiesNet Amount 11 15,29,287 1,17,63,122 

2. Cash Flow from Investing Activities 12 0 0 

Cash from investment withdrawal 13 0 0 

Cash from investment income 

Net cash from disposing fixed assets, 

14 0 0 

intangible assets and other long-term assets 

Net cash inflows of disposal of subsidiaries 

15 3,600 27,691 

and other business entities 16 0 0 

Other cash received related to investing activities 17 0 0 

Cash Inflow Subtotal 

Cash paid for buying fixed assets, 

18 3,600 27,691 

intangible assets and other long-term investment 19 5,070 38,998 

Cash paid for investment 

Net cash outflows of procurement of 

20 0 0 

subsidiaries and other business units 21 0 0 

Other cash paid related to investing activities 22 0 0 

Cash Outflow Subtotal 23 5,070 38,998 

Cash flow generated from investing activities Net Amount 24 -1,470 -11,307 

3. Cash Flow from Financing Activities 25 0 

Cash received from accepting investment 26 0 

Including cash inflows from minority investment in subsidiaries 27 0 

Borrowings 28 0 0 

Other cash received related to financing activities 29 0 

Cash Inflow Subtotal 30 0 0 

Cash paid for debt 31 0 

Cash paid for dividend ,profit or interest 32 0 0 

Including: dividends and earnings paid to minorities by subsidiaries 33 0 

Other cash paid related to financing activities 34 0 

Cash Outflow Subtotal 35 0 0 

Cash flow from financing activities Net Amount 36 0 0 

4. Foreign Currency Translation Gains (Losses) 37 0 34,89,012 

5. Net Increase Of Cash and Cash Equivalents 38 15,27,817 1,52,40,827 

Add: cash and cash equivalents beginning bal. 39 26,39,163 2,03,00,175 

6. cash and cash equivalents ending bal. 40 41,66,979 3,55,41,001 

91


1. Brief information on the Company 

Technico Horticultural (Kunming) Co., Ltd. (the “company”) was 

established as a wholly foreign-owned enterprise invested by Technico 

Asia Holdings Pty Limited., under the “laws of the People’s Republic 

of China (the “PRC”) on Enterprises Operated Exclusively with Foreign 

Capital” and through the approval by the Foreign Economic and Trade 

Department of Yunnan province in the certification Dian zi (1997) 

No.0049. The Company of the registered capital USD2,300,000.00 

was registered, with the business license number of Qi Du Zong zi 

No.000716, on 8 December 1997. The tenure of the Company is 50 

years and may be extended upon application by the board of directors 

and approval of the relevant government authorities. The principal 

activities of the Company are the development, production and supply 

of microtuber potato. 

2. Significant accounting policies and accounting estimates 

(1) Accounting regulations 

The Company implements “The Accounting Standards for 

Enterprises” and “The Accounting Regulations of Enterprises” and 

the supplementary stipulate. 

(2) Fiscal year 

The fiscal year for the Company is from 1 January to 31 December 

of each calendar year. 

(3) Accounting currency 

The Company’s financial records are maintained and the financial 

statements are stated in Renminbi (”RMB”). 

(4) Accounting basis and principle 

The accounting basis of The Company is accrual principle, and the 

accounting principle is historical cost principle. 

(5) Foreign currency transactions 

All foreign currency transactions have been translated into RMB 

at the market rates of exchange prevailing on the dates of 

transactions. Monetary assets and liabilities denominated in foreign 

currencies at the balance sheet date are translated into RMB at the 

market rates of exchange ruling at that date. The resulting exchange 

gains or losses are capitalized if they have relation to acquiring 

fixed assets before the fixed assets intended-use have been 

commenced; or are accounted as long-term prepaid expense AIin 

the preparative duration, or are dealt with in the profit and loss 

account in the operating duration, if they have not relation to 

acquiring fixed assets. 

(6) Cash equivalents 

Cash equivalents are the short-term investments, which are held 

by the Company at the short-term (generally within 3 months 

from the purchasing date to the date due), are easy in currency 

and conversion to known-account cashes, are of little value 

fluctuations. 

(7) Allowances for uncollectible accounts 

The Company uses the allowance method in which the allowances 

for uncollectible accounts for the receivable items (including the 

accounts receivable and other receivable) are recognized in the 

aging receivable account method and are dealt with in the profit 

and loss account at the balance sheet. The aging receivable account 

method is made as follows: 

a. Within 1 year, at 0.5 percent on the amount of the part; 

b. 1-2 year, at 10 percent on the amount of the part; 

c. 2-3 year, at 30 percent on the amount of the part. 

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 

proportion of the recorded amount of the leased assets to the total 

amount of assets is lower than 30 percent, the leased assets are 

recorded at an amount equal to the total minimum lease payments.) 

92 


The standard about fixed asset: House and building, machinery 

and equipment, Motor vehicle and so on of the useful life more 

than one year, and non-principle operating equipment of the unit 

value over 2000 yuan and the useful life more than two years 

Depreciation is calculated on the straight-line basis to write off the 

cost of each asset over its estimated useful life after deducting the 

estimated residual value. The categories, useful life and residual 

value, annual depreciation rate are as follows: 

Category Estimated Annual Residual 

useful life depreciation 

rate 

value 

House and building 20 years 4.50% 10.00% 

Production equipment 10 years 9.00% 10.00% 

Motor vehicle 5 years 18.00% 10.00% 

Office equipment and other 5 years 18.00% 10.00% 

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.

NOTES TO FINANCIAL STATEMENTS (Contd.) 

b. Revenue from rendering of services 

When the provision of services is started and completed within 

the same accounting year, revenue is recognized at the time 

of completion of the services, and receipt of money or holding 

the qualification of acquiring money; 

When the provision of services is started and completed in 

different accounting year, the total income and the completion 

degree involving the service contract can be estimated reliably, 

it is probable that the economic benefits will flow to the 

Company, the outcome of a transaction involving the rendering 

of services can be estimated reliably, the service revenue is 

(2) Account receivable 


recognized at the balance sheet date by the use of the 

percentage of completion method. 

The revenue referred to above is recognized when all the 

following conditions have been satisfied: 

a. It is probable that the economic benefits will flow to the 

Company; 

b. The amount of the revenue can be measured reliably. 

(13) Corporation income tax 

Corporation income tax is accounted on the tax payable basis. 

3. Tax 

VAT: According to the relevant tax laws in the PRC, the Company is exempted from VAT for the sales of the agricultural produce harvested by the 

Company. 

Corporation income tax is accounted on the tax payable basis at a rate of 25% on its taxable income. However, according to the new income 

tax-laws in the PRC, the Company is an agricultural production company which is exempted from corporate income tax. 

4. Notes to significant items in the financial statements 

(1) Cash 

Items 2010-12-31 2011-12-31 

RMB RMB 

Cash on hand 17,182.14 39,164.12 

Cash in bank 2,621,980.47 4,127,815.37 

Total 2,639,162.61 4,166,979.49 

2010-12-31 2011-12-31 

Provision for Provision for 

The age of accounts receivable RMB Percentage bad debts RMB Percentage bad debts 

Within 1 year 2,914,353.58 100.00% 14,571.77 

Total 2,914,353.58 100.00% 14,571.77 

(3) Other receivables 

2010-12-31 2011-12-31 

Provision for Provision for 

Length after occurrence RMB Percentage bad debts RMB Percentage bad debts 

Within 1 year 21,076.58 100.00% 619.44 55.34% 

1-2 year 500.00 44.66% 

Total 21,076.58 100.00% 1,119.44 100.00% 

(4) Inventories and provision for loss on realization of inventory 

2010-12-31 2011-12-31 

Provision Provision 

Items RMB for loss on RMB for loss on 

realization realization 

of inventory of inventory 

Finished goods 1,419,890.62 1,997,525.67 

Work-in-progress 326,291.82 326,291.82 

Total 1,746,182.44 2,323,817.49 

(5) Fixed assets 

Items Cost 2010-12-31 Add Less 2011-12-31 

Total Capex 

Accumulated depreciation 

26,071,596.82 5,070.00 6,963.00 26,069,703.82 

Total Depreciation 

Fixed assets depreciation reserves 

20,414,802.17 448,208.62 6,963.00 20,856,047.79 

Net book value 5,656,794.65 5,213,656.03 

93

NOTES TO FINANCIAL STATEMENTS (Contd.) 

(6) Intangible assets 

(7) Advances from customers 

Length after occurrence 2010-12-31 2011-12-31 

RMB RMB 

Within 1 Year 227,500.00 

Total 227,500.00 

(8) Other payable 

2010-12-31 2011-12-31 

Length after occurrence RMB RMB 

Within 1 Year 1,04,468.00 35,000.00 

Total 1,04,468.00 35,000.00 

(9) Long-term account payable 

2010-12-31 2011-12-31 

RMB RMB 

52,514.58 35,715.01 

The amount due to investor is unsecured, interest free and has no fixed term of repayment. 

94 


2010-12-31 Add Less 2011-12-31 

Items RMB RMB RMB RMB 

Land-use-right 2,049,375.00 2,049,375.00 

Amortization 512,343.75 40,987.50 553,331.25 

Total 1,537,031.25 40,987.50 1,496,043.75 

The amortization term is 50 years, and there have been 36 years and 6 months left by 31 December 2011. 

(10) Paid-in capital 

Investors 2010-12-31 Add Less 2011-12-31 

RMB Proportion RMB RMB RMB Proportion 

Technico Asia Holding 

Pty Ltd. 19,013,598.02 100.00% 19,013,598.02 100.00% 

Total 19,013,598.02 100.00% 19,013,598.02 100.00% 

(11) Primary operating profit 

Operating Operating 

revenue cost 

2,436,678.74 1,727,324.65 

(12) Finance expense 

Items From 2011-1-1 

to 2011-12-31 

Interest expense 

Less: Interest income 53,669.09 

Foreign exchange loss 109,051.44 

Other 3,986.78 

Total 59,369.13 

5. Contingencies 

Up to 31 December 2011, there are no material contingencies for the Company. 

6. Promised events 

Up to 31 December 2011, 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 2011, there are no other material matters specially stated for the Company.



Your Directors submit their Report for the financial year ended 31st March, 2012. 

Performance and Hotel Operations 

During the year under review, your Company recorded an income of ` 57.66 crores 

(previous year - ` 56.04 crores), Pre-tax profit of ` 11.89 crores (previous year - 

` 12.85 crores) and Post-tax profit of ` 9.40 crores (previous year - ` 9.26 crores) after 

providing for income tax of ` 2.49 crores (previous year ` 3.59 crores). Earnings Per 

Share for the year stands at ` 3.92 (previous year - ` 3.86). Cash flows from Operations 

were ` 10.41 crores during the year (previous year - ` 11.69 crores). 

Your Directors are pleased to recommend a Dividend of ` 2/- (previous year - ` 2/-) 

per Equity Share of ` 10/- each for the year ended 31st March, 2012. Your Board further 

recommends a transfer to General Reserve of ` 0.75 crores (previous year - 

` 0.75 crores). 

Political instability and influx of new inventory, with internationally benchmarked 

offerings, catering to various segments of the market mix, has adversely affected the 

financial performance of the company. The impetus towards continued focus on quality 

and superior guest experience is reflected in your hotel ranking 1st in the Global 

Distribution System (GDS) and Value Index Growth. 

Proactive steps taken to contain costs have resulted in improving the bottom line of 

the Company appreciably in a year of intense market competition and high inflation. 

Awards 

The hotel’s culinary excellence has been recognised with Times Food Guide accolades 

for ‘Kebabs & Kurries’ and ‘Dakshin’ as the best in their category. In addition the 

‘Marco Polo’ bar received the award for best outlet in its category during the year. 

Conservation of Energy, Foreign Exchange Earnings and Outgo 

Your Company has obtained LEED (Leadership in Energy and Environment Design) 

Platinum certification from US Green Building Council (USGBC) in the Existing Building 

(EB) category, as part of a holistic approach towards sustainability. This has helped 

achieve significant energy savings. 

Your Company continued its efforts to improve energy usage efficiency and increase 

contributions from renewable sources of energy. 

During the year, your Company earned ` 21.52 crores in foreign exchange (previous 

year - ` 21.67 crores) and its foreign exchange outgo was ` 1.64 crores (previous 

year - ` 1.69 crores). 

Directors 

The Board of Directors at its meeting held on 27th April, 2012, reappointed, subject 

to the approval of the Members, Mr George Verghese as the Managing Director of the 

Company for a period of three years effective 1st June, 2012. The resolution seeking 

your approval to such appointment appears in the Notice convening the 27th Annual 

General Meeting of the Company. 

AUDITORS’ REPORT TO THE MEMBERS OF SRINIVASA RESORTS LIMITED 

1. We have audited the attached Balance Sheet of Srinivasa Resorts Limited (the 

“Company”) as at March 31, 2012, and the related Statement of Profit and Loss 

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 Company’s Management. Our responsibility is to express an 

opinion on these financial statements based on our audit. 

2. 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 (Auditor’s Report) Order, 2003, as amended by 

the Companies (Auditor’s 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; 

(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 AUDITORS’ REPORT 

Referred to in paragraph 3 of the Auditors’ Report of even date to the members of 

Srinivasa Resorts Limited on the financial statements as of and for the year ended 

March 31, 2012. 

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 of by the Company 


2. (a) The inventory has been physically verified by the Management during the 

year. In our opinion, the frequency of verification is reasonable. 

In accordance with the provisions of Article 151 of the Articles of Association of the 

Company, Mr. S.C.Sekhar and Mr. Dipak Haksar will retire by rotation at the ensuing 

Annual General Meeting and being eligible, offer themselves for re-appointment. 

Human Resource 

Your Company continues to attract and retain talent of the highest quality. Your 

Company has initiated various training and development programmes to sustain 

competitive edge. 

Your Directors place on record their sincere appreciation of the efforts made and the 

support rendered by 391 employees deployed in the Company’s hotel. 

Particulars of Employees 

None of the employees fall under the purview of the provisions of Section 217(2A) of 

the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 

1975. 

Auditors 

Your Company’s Auditors, Messrs. Lovelock & Lewes, Chartered Accountants, retire 

at the ensuing Annual General Meeting and being eligible, offer themselves for 

re-appointment. 

Audit Committee 

The Audit Committee of the Company comprises of Mr. S.C. Sekhar as Chairman and 

Messrs. N. R. Pradeep Reddy and Dipak Haksar as Members. 


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; 

(ii) 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 your Company at the end of the financial 

year and of the profit of your Company for that period; 

(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 your Company and for preventing and detecting fraud 

and other irregularities; and 

(iv) prepared the Annual Accounts on a going concern basis. 


Place: Gurgaon Gunupati Sivakumar Reddy 

Date : 27th April, 2012 Chairman 

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement 

dealt with by this report are in agreement with the books of account; 

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss 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, as on 

March 31, 2012 and taken on record by the Board of Directors, none of the 

directors is disqualified as on March 31, 2012 from being appointed as a 

director in terms of clause (g) of sub-section (1) of Section 274 of the Act; 

(f) In our opinion and to the best of our information and according to the 

explanations given to us, the said financial statements together with the 

notes thereon and attached thereto give, in the prescribed manner, the 

information required by the Act, 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 March 31, 2012; 

(ii) in the case of the Statement of Profit and Loss, of the profit for the year 

ended on that date; and 

(iii) in the case of the Cash Flow Statement, of the cash flows for the year 

ended on that date. 



SRINIVASA RESORTS LIMITED 

For Lovelock & Lewes 


Firm’s Registration Number : 301056E 

Sunit Kumar Basu 

Partner 

Membership No. : 55000 

(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. (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. 

95

ANNEXURE TO AUDITORS’ REPORT (contd.) 

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 and 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. 

5. 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. 

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 the 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, investor 

education and protection fund, employees’ state insurance, income tax, sales 

tax, wealth tax, service tax, customs duty, excise duty 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 and excise duty as at March 31, 2012 

which have not been deposited on account of a dispute, are as follows: 

Name of Period to Forum where 

the Nature of dues Amount (`)* which the the dispute 

statute amount relates is pending 

A.P. General Sales Tax on 1,75,868 Financial year Sales Tax 

Sales Tax purchase from 1997-1998 Appeallate 

Act, 1957 unregistered dealers 5,46,539 Financial year Tribunal, 

1998-1999 Andhra Pradesh. 

A.P. Value Exclusion of Service 10,90,519 April 1, 2005 to Hon’ble High 

Added Tax Tax in computation January 31, Court of Andhra 

Act, 2005 of liability 2008 Pradesh, Hyderabad. 

Income Tax Disallowance of 3,64,267 Financial year Hon’ble High 

Act, 1961 certain expenses 2001-02 Court of Andhra 

Pradesh, Hyderabad. 

*Net of amount paid under protest 

96 


10. The Company has no accumulated losses as at March 31, 2012 and it has not 

incurred any cash losses in the financial year ended on that date or in the 

immediately preceding financial year. 

11. The Company has not granted any loans and advances on the basis of security 

by way of pledge of shares, debentures and other securities. 

12. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit 

fund/ societies are not applicable to the Company. 

13. In our opinion, the Company is not a dealer or trader in shares, securities, 

debentures and other investments. 

14. 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. 

15. The Company has not obtained any term loans. 

16. 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. 

17. 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. 

18. The Company has not issued any debentures during the year and does not have 

any debentures outstanding as at the year end. 

19. The Company has not raised any money by public issues during the year. 

20. 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 any such case by the Management. 

21. The other clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), v(b), and (xi) of paragraph 

4 of the Companies (Auditor’s Report) Order 2003, as amended by the Companies 

(Auditor’s Report) (Amendment) Order, 2004, are not applicable in the case of 

the Company for the year, since in our opinion there is no matter which arises 

to be reported in the aforesaid Order. 



Firm’s Registration Number : 301056E 


Place: Gurgaon Partner 

Date : 27th April, 2012 Membership No. : 55000 


I. EQUITY AND LIABILITIES 

Note No. 31st March, 2012 

(`) 


(`) 

1. Shareholders’ Funds 

a) Share Capital 3 24,00,00,000 24,00,00,000 

b) Reserves and Surplus 4 73,90,78,791 70,09,02,800 

2. Non-Current Liabilities 

(a) Deferred Tax Liability (Net) 5 7,93,17,125 8,06,79,058 

(b) Long-Term Provisions 6 9,29,455 12,35,850 

3. Current Liabilities 

(a) Trade Payables 7 6,66,19,723 6,50,55,632 

(b) Other Current Liabilities 8 2,24,55,058 2,32,05,563 

(c) Short-Term Provisions 9 5,84,20,254 5,75,65,804 

Total 1,20,68,20,406 1,16,86,44,707 

II. ASSETS 

1. Non-Current Assets 

(a) Fixed Assets 10 

(i) Tangible Assets 52,34,38,718 53,68,24,045 

(ii) Capital Work-in-progress 1,14,48,224 11,80,396 

(b) Non-current Investments 11 10,000 10,000 

(c) Long-Term Loans and Advances 12 1,00,84,427 45,09,942 

(d) Other Non-current Assets 13 10,21,200 10,21,200 

2. Current Assets 

(a) Current Investments 14 46,37,96,619 41,95,05,914 

(b) Inventories 15 80,62,138 67,52,586 

(c) Trade Receivables 16 1,77,56,038 2,14,84,773 

(d) Cash and Bank balances 17 14,82,65,757 14,67,84,177 

(e) Short-term Loans and Advances 18 1,90,70,116 2,82,19,997 

(f) Other Current Assets 19 38,67,169 23,51,677 

Total 1,20,68,20,406 1,16,86,44,707 

Summary of Significant Accounting Policies 

Notes are an integral part of these financial statements 

This is the Balance Sheet referred to in our Report of even date. 



Firm Registration Number : 301056E 

2 


Partner 

Membership Number : 55000 


Gunupati Sivakumar Reddy Chairman 


George Verghese Managing Director 


Hemanshi Khanna Secretary


I. Revenue from Operations 

Note No. 31st March, 2012 

(`) 


(`) 

Revenue from Sale of Services (Gross) 

Less : Taxes (Service tax and Luxury tax) 

57,97,69,049 

5,73,24,351 

57,04,81,111 

4,34,70,627 

Revenue from Sale of Services (Net) 

Other Operating Revenue 

52,24,44,698 

75,66,747 

52,70,10,484 

52,44,199 

Revenue from Operations (Net) 20 53,00,11,445 53,22,54,683 

II. Other Income 21 4,65,66,243 2,81,20,928 

III. Total Revenue (I+II) 

Expenses: 

57,65,77,688 56,03,75,611 

Cost of materials consumed 

Employee Benefit Expense 

Depreciation and Amortization Expense 

Other Expenses 

22 

23 

10 

24 

6,41,73,818 

10,77,07,354 

3,49,81,547 

25,08,21,612 

6,19,50,321 

9,71,44,358 

3,56,59,372 

23,71,63,219 

IV. Total Expenses 45,76,84,331 43,19,17,270 

V. Profit before tax (III-IV) 11,88,93,357 12,84,58,341 

VI. Tax Expense: 

(a) Current Tax 

[Net of ` 27,07,501/- (Previous Year : ` Nil) on account of 

reversal of tax liability pertaining to earlier years) 

2,62,92,499 3,75,00,000 

(b) Deferred Tax (13,61,933) (16,42,098) 

VII. Profit/(Loss) for the period (V-VI) 9,39,62,791 9,26,00,439 

VIII. Earning Per Equity Share 25 

(a) Basic 3.92 3.86 

(b) Diluted 3.92 3.86 

Summary of Significant Accounting Policies 

Notes are an integral part of these financial statements 

2 

This is the Statement of Profit and Loss referred to in our Report of even date. 





Partner 






A. CASH FLOW FROM OPERATING ACTIVITIES 

NET PROFIT BEFORE TAX 

ADJUSTMENT FOR: 

Depreciation 

Interest on Deposits 

Loss on Fixed Assets sold/discarded 

Dividend from Investments 

Liability no longer required written back 

Provision for Doubtful Debts/Bad Debts Written Off 


(`) (`) 

11,88,93,357 

3,49,81,547 

(1,32,82,683) 

4,82,624 

(2,90,38,221) 

(16,41,916) 

3,27,717 (81,70,932) 


(`) (`) 

12,84,58,341 

3,56,59,372 

(81,49,906) 

60,47,258 

(1,98,13,756) 

(36,60,275) 

6,22,506 1,07,05,199 

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 

ADJUSTMENT FOR 

Trade Receivables 

Inventories 

Other Receivables 

Trade Payables 

Other Payables 

30,73,426 

(13,09,553) 

(24,81,928) 

71,33,163 

(3,06,395) 

11,07,22,425 

61,08,713 

23,22,695 

33,94,976 

(15,87,925) 

88,60,952 

4,77,485 

13,91,63,540 

1,34,68,183 

CASH GENERATED FROM OPERATIONS 

Income Tax Paid 

11,68,31,138 

(1,27,59,021) 

15,26,31,723 

(3,57,23,600) 

NET CASH FROM OPERATING ACTIVITIES 10,40,72,117 11,69,08,123 

B. CASH FLOW FROM INVESTING ACTIVITIES 

Purchase of Fixed Assets 

Sale of Fixed Assets 

Purchase of Current Investments 

Sale/Redemption of Current Investments 

Interest on Deposits 

Dividend from Investments 

(4,20,22,059) 

2,43,268 

(3,12,90,32,262) 

3,08,47,41,556 

1,04,12,939 

2,90,38,221 

(1,28,23,745) 

68,121 

(2,58,33,43,606) 

2,52,96,16,381 

81,25,353 

1,98,13,756 

NET CASH USED IN INVESTING ACTIVITIES (4,66,18,337) (3,85,43,740) 

C. CASH FLOW FROM FINANCING ACTIVITIES 

Dividends paid 

Dividend distribution tax paid 

(4,80,00,000) 

(79,72,200) 

(4,80,00,000) 

(81,57,600) 

NET CASH USED IN FINANCING ACTIVITIES (5,59,72,200) (5,61,57,600) 

NET INCREASE IN CASH AND BANK BALANCES 14,81,580 2,22,06,783 

OPENING CASH AND BANK BALANCES 14,67,84,177 12,45,77,394 

CLOSING CASH AND BANK BALANCES 

CASH AND BANK BALANCES COMPRISE: 

14,82,65,757 14,67,84,177 

Cash and Cash Equivalents 60,04,205 1,85,65,942 

Other Bank Balances 

This is the Cash Flow Statement referred to in our Report of even date. 

Note: 

14,22,61,552 14,82,65,757 12,82,18,235 14,67,84,177 

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 Year’s Figures have been regrouped and/or rearranged wherever considered necessary to conform to those of current year. 





Partner 







Hemanshi Khanna Secretary 




Hemanshi Khanna Secretary 

97

NOTES TO THE FINANCIAL STATEMENTS 

1. General Information 

Srinivasa Resorts Limited, subsidiary of ITC Limited, is in the business 

of Hoteliering. The Company was incorporated on December 20, 1984. 

2. Summary of Significant Accounting Policies 

I) Convention 

To prepare financial statements in accordance with applicable 

Accounting Standards in India. A summary of important accounting 

policies is set out below. 

II) 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. 

III) Fixed Assets 

To state fixed Assets at cost of acquisition inclusive of inward freight, 

duties and taxes and incidental expenses related to acquisition. In 

respect of major projects involving construction, related pre-operational 

expenses form part of the value of the assets capitalised. 

IV) Depreciation 

To calculate Depreciation on fixed assets in a manner that amortises 

the cost of assets after commissioning, over their estimated useful 

lives or, where specified, lives based on the rates specified in Schedule 

XIV to the Companies Act, 1956, whichever is lower, by equal annual 

instalments. 

V) Investments 

To state Current Investments at lower of cost and fair value; and 

Long Term Investments at cost. Where applicable, provision is made 

to recognize a decline, other than temporary, in valuation of Long 

Term investments. 

VI) Inventories 

To state inventories at lower of cost and net realisable value. The 

cost is calculated on weighted average method. Cost comprises 

expenditure incurred in the normal course of business in bringing 

such inventories to its location. Obsolete and slow moving inventories 

are identified at the time of physical verification of inventories and, 

where necessary, provision is made for such inventories. 

VII) Turnover 

To recognize Gross Sales after delivery of goods and rendering of 

services net of Sales Tax / Value Added Tax recovered from customers 

but including all other applicable taxes. Net sales are stated after 

deducting such applicable taxes. 

VIII) Investment Income 

To account for Income from Investments on an accrual basis, inclusive 



IX) Proposed Dividend 

To provide for Dividends (including Dividend Distribution Tax thereon) 

in the books of account as proposed by the Directors, pending 

approval at the Annual General Meeting. 

X) Employee Benefits 

To make regular monthly contributions to Provident Fund which are 

in the nature of defined contribution scheme and such paid/payable 

amounts are charged against revenue. The contributions in respect 

of provident fund and family pension are statutorily deposited with 

the Government of India. 

To determine the liabilities towards gratuity and leave encashment 

by an independent actuarial valuation as per requirements of 

Accounting Standard - 15 (revised 2005) on “Employee benefits”. 

To determine actuarial gains or losses and to recognise such gains 

or losses immediately in Profit and Loss Account as income or expense. 

The contributions in respect of gratuity fund are made to Life 

Insurance Corporation. 

XI) Taxes on Income 

To provide Current tax as the amount of tax payable in respect of 

taxable income for the period, measured using the applicable tax 

rates and tax laws. 

To provide Deferred tax on timing differences between taxable 


measured using the tax rates and tax laws that have been enacted 

or substantially enacted by the Balance Sheet date. 

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. 

XII) Foreign Currency Translations 

To account for transactions in foreign currencies at the exchange 

rate prevailing on the date of the transaction. Gains/Losses arising 

out of fluctuations in the exchange rates are recognised in the Profit 

and Loss in the period in which they arise. To account for gains / 

losses in the Profit and Loss account on foreign exchange rate 

fluctuation relating to monetary items at the year end. 

XIII) Financial and Management Information Systems 

The books of account and other records have been designed to 

facilitate compliance with the relevant provisions of the Companies 

Act, 1956 on one hand, and meet the internal requirements of 

information and systems for Planning, Review and Internal Control 

(designed and based on “Uniform System of Accounts for Hotels”), 

on the other. 


As at As at 


(`) (`) 

3. Share Capital 

(a) Authorised 

2,40,00,000 (Previous Year: 2,40,00,000) Equity Shares of ` 10/- each 24,00,00,000 24,00,00,000 

(b) Issued, Subscribed & Paid Up 

24,00,00,000 24,00,00,000 

2,40,00,000 (Previous Year: 2,40,00,000) Equity Shares of ` 10/- each, fully paid 24,00,00,000 24,00,00,000 

Total 

3.1 Rights, Preferences, and restrictions attached to shares 

24,00,00,000 24,00,00,000 

The Ordinary Shares of the Company, having par value of ` 10/- per share, rank pari passu in all respects including entitlement to dividend. Repayment 

of capital in the event of winding up of the Company will inter alia be subject to the provisions of the Articles of Association of Company and as may 

be determined by the Company in General Meeting prior to such winding up. 


3.2 Equity Shares held by Holding Company Nature of Relationship 

ITC Limited Holding Company 1,63,20,477 1,63,20,477 

3.3 Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company 


No. of Shares held % of Holding No. of Shares held % of Holding 

(a) ITC Limited 1,63,20,477 68.00% 1,63,20,477 68.00% 

(b) G Siva Kumar Reddy 13,04,230 5.43% 13,04,230 5.43% 

(c) G Sulochanamma 15,00,000 6.25% 15,00,000 6.25% 

As at As at 

4. Reserves & Surplus 

(a) Capital Reserves 


(`) 


(`) 


(b) General Reserve 

94,603 94,603 

Balance as at the beginning of the year 6,96,43,117 6,21,43,117 

98 

Add: Transferred from surplus in Statement of Profit and Loss during the year 75,00,000 75,00,000 

Balance as at the end of the year 7,71,43,117 6,96,43,117


NOTES TO THE FINANCIAL STATEMENTS (Contd.) 


(`) (`) 

(c) Surplus in Statement of Profit and Loss 

Balance as at the beginning of the year 63,11,65,080 60,20,36,841 

Add: Net Profit for the current year 

Less: Appropriations 

9,39,62,791 9,26,00,439 

Proposed Dividends 4,80,00,000 4,80,00,000 

Dividend Distribution Tax on Proposed Dividend 77,86,800 79,72,200 

Transfer to General Reserve 75,00,000 75,00,000 

Balance as at the end of the year 66,18,41,071 63,11,65,080 

Total (a+b+c) 73,90,78,791 70,09,02,800 

5. Deferred Tax Liability (Net) 

(a) Deferred Tax Liability 

Depreciation - Timing difference 

Less: 

(b) Deferred Tax Assets 

8,08,08,745 8,19,61,949 

Employee Benefits 11,55,986 9,39,874 

Other Timing Differences 3,35,634 3,43,017 

Deferred Tax Liability (Net) 

5.1 Deferred Tax Assets and Deferred Tax Liabilities have been offset 

as they relate to the same governing taxation laws. 

7,93,17,125 8,06,79,058 

6. Long Term Provisions 

(a) Provision for Employee Benefits 9,29,455 12,35,850 

Total 9,29,455 12,35,850 

7. Trade Payables 

(a) Trade Payables 

- Dues to Micro and Small Enterprises — — 

- Dues to Others 6,66,19,723 6,50,55,632 

Total 6,66,19,723 6,50,55,632 

7.1 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, 2012. 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. Other Current Liabilities 

(a) Advances from Customers 1,19,39,285 1,15,46,837 

(b) Sundry Deposits 44,91,295 44,75,677 

(c) Statutory Liabilities 65,38,982 73,69,962 

2,29,69,562 2,33,92,476 

Less: Deposits from normal Trade Debtors - Contra 5,14,504 1,86,913 

Total 

8.1 There is no outstanding amount to be credited to Investor Education & Protection Fund. 

2,24,55,058 2,32,05,563 

9. Short Term Provisions 

(a) Provision For Employee Benefits 

(b) Others 

26,33,454 15,93,604 

Proposed Dividend 4,80,00,000 4,80,00,000 

Dividend Distribution Tax on Proposed Dividend 77,86,800 79,72,200 

Total 5,84,20,254 5,75,65,804 

10. FIXED ASSETS (`) 

Gross Block Depreciation Net Book 

Sr. Particulars April 1, Additions Disposals March 31, April 1, For the Disposals March 31, March 31, March 31, 

No. 2011 2012 2011 year 2012 2012 2011 

I Tangible Assets 

a Land - Freehold 1,00,00,000 — — 1,00,00,000 — — — — 1,00,00,000 1,00,00,000 

b Buildings 30,55,09,578 6,42,716 — 30,61,52,294 6,52,66,585 49,96,434 — 7,02,63,019 23,58,89,275 24,02,42,993 

c Plant and Equipment 33,22,77,709 1,59,63,816 23,01,986 34,59,39,539 12,72,01,799 1,60,64,194 16,32,459 14,16,33,534 20,43,06,005 20,50,75,910 

d Furniture & Fixtures 19,04,45,547 17,66,331 14,26,441 19,07,85,437 12,23,01,269 1,08,74,856 14,26,441 13,17,49,684 5,90,35,753 6,81,44,278 

e Vehicles (Cars) 1,47,00,082 — — 1,47,00,082 58,43,014 14,00,334 — 72,43,348 74,56,734 88,57,068 

f Office Equipment 13,72,834 47,317 2,66,654 11,53,497 4,69,342 61,657 2,10,290 3,20,709 8,32,788 9,03,492 

g Computers, etc. 1,80,44,521 39,01,931 6,99,172 2,12,47,280 1,44,44,217 15,84,072 6,99,172 1,53,29,117 59,18,163 36,00,304 

Total 87,23,50,271 2,23,22,111 46,94,253 88,99,78,129 33,55,26,226 3,49,81,547 39,68,362 36,65,39,411 52,34,38,718 53,68,24,045 

(Previous Year) 86,79,90,775 1,75,50,330 1,31,90,834 87,23,50,271 31,07,14,418 3,56,59,372 1,08,47,564 33,55,26,226 53,68,24,045 

II. Capital Work-inprogress 

11,80,396 2,75,79,709 1,73,11,881 1,14,48,224 — — — — 1,14,48,224 11,80,396 

Total 11,80,396 2,75,79,709 1,73,11,881 1,14,48,224 — — — — 1,14,48,224 11,80,396 

99


100 


As at As at As at As at 



11. Non Current Investments 

18. Short Terms Loans and Advances 

12. 

Other Investments (Non quoted) 

- Government Securities - National 

Savings Certificates 

(Deposits with or for deposit 

with authorities) 

Total 

Long Term Loans and Advances 

10,000 

10,000 

10,000 

10,000 

(a) Advance Recoverable in cash or in 

kind or for value to be received 

(Unsecured, considered good) 

(b) Advance Fringe Benefit Tax 

(Net of Provision of ` 33,53,052/- 

Previous Year ` 67,46,417/-) 

(c) Advance Income Tax 

(Net of Provision of ` 42,40,04,972/-) 

1,08,40,433 

6,47,499 

82,69,088 

5,76,328 

(a) Capital Advances (Unsecured, 

(Previous Year - ` 39,84,40,872/-) 60,95,684 1,83,46,081 

Considered Good) 72,30,336 11,08,434 

(d) Other Deposits 14,86,500 10,28,500 

(b) Security Deposit (Unsecured, 

Total 1,90,70,116 2,82,19,997 

Considered Good) 28,54,091 34,01,508 19. Other Current Assets 

Total 1,00,84,427 45,09,942 

Interest accrued on Deposits 38,67,169 23,51,677 

13. Other Non Current Assets 

Total 38,67,169 23,51,677 

14. 

On Margin Money with maturity 

period more than 12 months* 10,21,200 

*Pledged with Bank for Bank 

Guarantee ` 10,21,200/- 

(Previous Year - ` 10,21,200/-) 

Total 10,21,200 

Current Investments 

Investments in Mutual Funds (Unquoted) 

(a) Reliance Liquid Fund - cash plan - 

Daily dividend reinvestment — 

Nil (Previous Year - 1,80,75,388.699) 

Units of ` 11.1415 each 

(b) Birla Sun Life Cash Plus - 

Daily dividend reinvestment — 

Nil (Previous Year - 1,10,09,991.284) 


(c) Religare Liquid Fund - Daily dividend reinvestment — 

Nil (Previous Year - 1,07,719.814) 


(d) Sundaram Money Fund Super Daily 14,52,10,714 

dividend reinvestment 1,43,83,992.02 

(Previous Year - Nil) Units of ` 10.0953 each 

(e) Birla Sun Life Floating Rate Fund - 16,81,09,611 

10,21,200 

10,21,200 

20,13,86,943 

11,03,14,608 

10,78,04,363 

— 

— 

20. 

21. 

22. 

Revenue from Operations (Net) 

(a) Revenue from Sale of Services 

- Rooms 

- Food and Beverage 

- Recreation and Services 

(b) Other Operating Revenue 

Total 

Other Income 

(a) Interest on Deposits 

- with Banks 

- with Others 

(b) Dividend from Investments 

(c) Miscellaneous Income 

Total 

Cost of Material Consumed 

Consumption of Food, Beverages, etc. 

Opening Stock 

Add: Purchases 

Less: Closing Stock 



28,15,03,058 

20,30,89,014 

3,78,52,626 

75,66,747 

53,00,11,445 

1,32,82,683 

1,57,266 

2,90,38,221 

40,88,073 

4,65,66,243 

47,78,609 

6,52,62,305 

7,00,40,914 

58,67,096 



27,74,07,224 

20,64,23,667 

4,31,79,593 

52,44,199 

53,22,54,683 

81,49,906 

1,57,266 

1,98,13,756 

— 

2,81,20,928 

76,98,913 

5,90,30,017 

6,67,28,930 

47,78,609 

Daily dividend reinvestment 

Total 6,41,73,818 6,19,50,321 

(f) 

16,80,759.96 (Previous Year - Nil) 


Reliance Liquid Fund Treasury Plan - 

Daily dividend reinvestment 15,04,76,294 — 

23. Employee Benefit Expenses 

(a) Salaries, Wages and Bonus * 

(b) Contribution to Provident and 

Other Funds 

8,68,42,963 

37,86,792 

7,97,60,647 

27,07,193 

98,43,158.06 (Previous Year - Nil) 

(c) Workmen and Staff Welfare Expenses 1,70,77,599 1,46,76,518 


Total 10,77,07,354 9,71,44,358 

15. 

Total 

Inventories (Valued at Cost or below) 

46,37,96,619 41,95,05,914 

* Includes reimbursement to Group Companies 

` 3,50,07,214/- (Previous Year : ` 3,35,72,192/-) 

(a) Food, Beverage etc. 58,67,096 47,78,609 24. Other Expenses 

(b) Stores & Spares 21,95,042 19,73,977 

(a) Consumption of Stores and Supplies 1,73,92,003 1,50,93,513 

Total 80,62,138 67,52,586 

(b) Power and Fuel 4,52,56,000 4,17,45,279 

16. Trade Receivables 

(a) Outstanding for more than six months from 

the date these are due for payment 

Unsecured, Considered Good 

Doubtful 

(b) Others 

17,06,897 

1,12,065 

20,03,271 

1,10,230 

(c) Rent 

(d) Repairs - Building 

- Machinery 

- Others 

(e) Insurance 

(f) Rates and Taxes 

(g) Advertising/Sales Promotion 

54,04,960 

69,83,250 

1,30,27,800 

42,95,781 

26,05,848 

1,67,98,183 

68,81,960 

55,87,704 

62,73,089 

85,57,237 

43,03,491 

33,40,467 

83,58,594 

56,25,640 

Secured, Considered Good 5,14,505 1,86,913 

(h) Electronic Data Processing 53,83,379 34,97,217 

Unsecured, Considered Good 1,60,49,140 1,94,81,502 

(i) Travelling and Conveyance 73,41,038 98,27,024 

Less: Provision for Doubtful Debts 

Less: Deposits from normal 

Trade Debtors - Contra 

1,83,82,607 

1,12,065 

5,14,504 

2,17,81,916 

1,10,230 

1,86,913 

(j) Guest Transport 

(k) Training 

(l) Legal Expenses 

(m) Postage, Telephone, Telex etc. 

(n) Commission paid to Travel Agents 

24,39,162 

12,33,345 

4,43,320 

59,08,291 

20,13,128 

23,34,960 

11,33,270 

80,000 

49,35,378 

8,49,053 

Total 1,77,56,038 2,14,84,773 

(o) Bank & Credit Card Charges 67,04,319 72,90,800 

17. Cash and Bank Balances 

Cash and Cash Equivalents 

(a) Cash on Hand 

(b) Bank Balance 

On Current Accounts 

5,81,718 

50,37,026 

5,47,299 

1,34,33,865 

(p) Technical & Consultancy Fees 

(q) Hotel Reservation/Marketing.Expenses 

(r) Contract Services 

(s) Printing & Stationary 

(t) Loss on Exchange (Net) 

(u) Loss on Fixed Assets sold/discarded 

4,42,32,547 

1,63,74,365 

2,37,95,514 

12,93,172 

2,93,550 

4,82,624 

4,89,64,699 

1,60,56,431 

1,99,40,857 

15,92,757 

25,196 

60,47,258 

(c) Cheques on Hand 3,85,461 45,84,778 

(v) Provision for Doubtful Debts 1,12,065 — 

Sub Total (A) 


On Deposit Accounts 

- Maturity of greater than 3 months but 

less than 12 months (original maturity) 

- Maturity of greater than 12 months 

(original maturity) 

On Margin Money* 

60,04,205 

12,95,08,317 

1,07,18,235 

20,35,000 

1,85,65,942 

11,75,00,000 

1,07,18,235 

— 25. 

(w) Bad Debts Written off 2,15,652 

(x) Miscellaneous Expenses * 1,39,10,356 

Total 25,08,21,612 

* Includes Auditors' Remuneration and Expenses 

- Audit Fees 7,50,000 

- Tax Audit Fees 75,000 

- Reimbursement of Expenses 20,000 

Earnings Per Share 

6,22,506 

1,50,80,799 

23,71,63,219 

7,50,000 

75,000 

17,500 

*Pledged with Bank for Bank Guarantee 

(a) Profit after Taxation 9,39,62,791 9,26,00,439 

` 20,35,000/- (Previous Year Nil) 

Sub Total (B) 

Total 

14,22,61,552 

14,82,65,757 

12,82,18,235 

14,67,84,177 

(b) Weighted average number of 


(c) Basic and diluted earnings per share 

in ` (Face value - ` 10/- per share) 

2,40,00,000 

3.92 

2,40,00,000 

3.86



As at As at 


26. The Estimated Amount of Contracts remaining to be executed on Capital Account and 

not provided for (Net of advances ` 72,30,336/- Previous Year ` 11,08,434/-) 

27. Contingent Liability 

Claims against the Company not acknowledged as debts : 

1,43,62,036 29,53,873 

i) Indirect Taxation Matters 19,85,698 19,85,698 

ii) Direct Taxation Matters 17,86,570 13,10,283 

28. Earnings in Foreign Exchange 

* Includes ` 18,13,86,179/- (Previous Year - ` 21,05,47,557/-) being Earnings during the year 

through International Credit Cards & Travel Agencies etc. as certified by Bankers. 

29. Expenditure in Foreign Currency during the year 

21,52,40,721 21,66,72,748 

Hotel Reservation / Marketing Expenses 1,59,41,638 1,56,38,715 

Technical & Consultancy Fees 4,16,822 12,83,389 

30. Value of Imports during the year (CIF Basis) 

1,63,58,460 1,69,22,104 

Capital Goods 1,13,67,718 11,23,590 

Other Goods 19,34,174 9,04,829 

1,33,01,892 20,28,419 



31. Value of Consumption of Raw Materials, Stores & Supplies (`) % (`) % 

(a) Raw Materials 

Indigenous 6,41,73,818 100.00 6,19,50,321 100.00 


(b) Stores & Supplies 

6,41,73,818 100.00 6,19,50,321 100.00 

Indigenous 1,54,57,829 88.88 1,41,88,684 94.01 

Imported 19,34,174 11.12 9,04,829 5.99 

1,73,92,003 100.00 1,50,93,513 100.00 

32. The Company operates in one operating segment i.e., Hoteliering and within one geographical segment i.e. India. 

33. The Company's significant lease arrangements are in respect of operating leases for residential premises. These leasing arrangements, which are 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 Note 24. 

34. Employee Benefits : 

a) As per Actuarial Valuations as on March 31, 2012 and recognised in the financial statements in respect of Employee Benefit Schemes : 

For the year ended March 31, 2012 For the year ended March 31, 2011 

Leave Leave 



(`) (`) (`) (`) 

I Components of Employer Expense 

1 Current Service Cost 8,33,645 4,71,959 7,56,542 4,57,647 

2 Interest Cost 3,95,382 1,01,518 3,46,239 58,319 

3 Expected Return on Plan Assets (3,24,114) — (2,95,557) — 

4 Curtailment Cost/(Credit) — — — — 

5 Settlement Cost/(Credit) — — — — 

6 Past Service Cost — — — — 

7 Actuarial Losses/(Gains) 1,14,178 (5,38,237) (3,19,004) 27,776 

8 Total expense recognised in the 

statement of Profit & Loss Account 10,19,091 35,240 4,88,220 5,43,742 

The Gratuity Expense has been recognised in “Contribution to Provident and Other Funds” and Leave Encashment in “Salaries/Wages and Bonus” under Note 23. 

II Actual Returns 3,37,521 — 3,22,696 — 

III Net Asset/(Liability) recognised in Balance Sheet 

1 Present Value of Obligation 60,04,512 12,71,090 52,36,642 13,02,107 

2 Fair Value on Plan Assets 37,12,693 — 37,09,295 — 

3 Status [Surplus/(Deficit)] (22,91,819) (12,71,090) (15,27,347) (13,02,107) 

4 Unrecognised Past Service Cost — — — — 

5 Net Asset/(Liability) recognised in Balance Sheet (22,91,819) (12,71,090) (15,27,347) (13,02,107) 

IV Change in Defined Benefit Obligations (DBO) 

1 Present Value of DBO at the Beginning of Period 52,36,642 13,02,107 48,07,308 7,96,811 

2 Current Service Cost 8,33,645 4,71,959 7,56,542 4,57,647 

3 Interest Cost 3,95,382 1,01,518 3,46,239 58,319 

4 Curtailment Cost/(Credit) — — — — 

5 Settlement Cost/(Credit) — — — — 

6 Plan Amendments — — — — 

7 Acquisitions — — — — 

8 Actuarial (Gains)/Losses 1,27,585 (5,38,237) (2,91,865) 27,776 

9 Benefits Paid (5,88,742) (66,257) (3,81,582) (38,446) 

10 Present Value of DBO at the End of Period 60,04,512 12,71,090 52,36,642 13,02,107 

V Change in Fair Value of Assets 

1 Plan Assets at the Beginning of Period 37,09,295 — 30,76,520 — 

2 Acquisition Adjustment — (2,865) — 

3 Expected Return on Plan Assets 3,24,114 — 2,95,557 — 

4 Actuarial Gains/(Losses) 13,407 — 27,139 — 

5 Actual Company Contribution 2,54,619 66,257 6,94,526 38,446 

6 Benefits Paid (5,88,742) (66,257) (3,81,582) (38,446) 

7 Plan assets at the End of Period 37,12,693 — 37,09,295 — 

VI Actuarial Assumptions 

1 Discount Rate (%) 8.00 8.00 8.00 8.00 

2 Expected Return on Plan Assets (%) 9.15 — 9.15 — 

VII 

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. 

Major Categories of Plan Assets as a % of the Total Plan Assets 

1 Insurance Companies 100% — 100% — 

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 optimised returns within acceptable risk parameters, the plan assets are well diversified. 

101


102 


b) Contribution to Provident Fund and Employee State Insurance Scheme charged to the Statement of Profit and Loss (included in Note 23) ` 30,22,320/- 

(Previous Year: ` 29,10,634/-) 

35. Related Party Disclosures Under Accounting Standard 18 

i) Holding Company : ITC Limited 

iii) Key Management Personnel : 

ii) Other Related Parties with whom transactions have taken 

Board of Directors 

place during the year : 

G. Sivakumar Reddy - Chairman 

Fellow Subsidiary Companies : Surya Nepal Private Limited 

Nakul Anand - Vice Chairman & Director 

ITC Infotech India Limited 

S. C. Sekhar - Director 

N. R. Pradeep Reddy - Director 

B. N. Suresh Reddy - Director 

George Verghese - Managing Director 

Dipak Haksar - Director 

iv) Summary of transactions during the year : (`) 

Sr. Subsidiaries Key - Management Relatives of Key 

No. Particulars Holding Company Personnel Management Personnel (*) 

ITC India Infotech Ltd Others 

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 

a Sale of Goods 9,135 4,866 — — — — — — — — 

b Sale of Services 1,59,10,664 86,19,352 — — — — — — — — 

c Purchase of Goods 1,20,58,211 59,87,296 15,97,046 — 2,004 1,47,808 — — — — 

d Purchase of Services 

- Hotel Services 24,82,293 35,08,353 —— — — — — — — — 

- Service Fee 4,03,32,625 4,50,26,573 3,86,050 3,08,840 — — — — — — 

e Interest Income — — — — — — — — — — 

f Dividend Income — — — — — — — — — — 

g Rent Paid — — — — — — — — 3,60,000 8,00,000 

h Reimbursement of 

Contractual Remuneration 3,50,07,214 3,35,72,192 — —— — — — — — — 

i Expenses recovered 2,29,97,488 1,32,24,959 — — — — — — — — 

j Expenses reimbursed 1,80,63,704 1,61,18,234 — — 2,940 23,001 — — — — 

k Remuneration — — — — — — 37,37,559 32,81,341 — — 

l Dividend Payments 3,26,40,954 3,26,40,954 — — — — 26,08,460 26,08,460 1,18,31,620 1,18,31,620 

m Sale of Fixed Assets — — — — — — — — — — 

n Balance outstanding at 

the year end : 

- Debtors/Receivables 2,72,956 1,77,726 — — — — — — — — 

- Creditors/Payables 1,46,71,923 1,36,22,236 — — — 5,843 — — — — 

- * 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. 

36. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the 

notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, 

the previous year figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition 

and measurement principles followed for preparation of Financial statements. 





Partner 







Hemanshi Khanna Secretary




2012. 

Financial Performance 

During the year under review, your Company recorded net revenue of 

` 2077.72 lacs (previous year - ` 1801.45 lacs) and earned a net profit of 

` 495.66 lacs (previous year - ` 411.73 lacs) after providing for income tax of 

` 221.88 lacs (previous year - ` 190.45 lacs). Earnings Per Share for the year 

stands at ` 110.15 (previous year - ` 91.49). 

Your Directors are pleased to recommend a dividend of ` 10/- (previous year 

` 7/-) per equity share of ` 10/- each for the year ended 31st March, 2012. 

Your Board further recommends a transfer to General Reserve of ` 49.57 lacs 

(previous year - ` 41.17 lacs). 

The Company has expertise in operating and managing hotels in the 'mid 

market to upscale' segment in India with a wide marketing and reservation 

network. It has forged new alliances during the year taking the total number 

of properties under the Fortune brand to 67, with a total inventory of 5164. 

Of these, 40 properties are operating hotels, 4 hotels are slated to be 

commissioned during the course of the financial year 2012-13 and remaining 

23 hotel projects are under various stages of development. 

The Company is renowned for superior product and service excellence that 

has enabled a premium positioning for the ‘Fortune’ brand in the Indian 

hospitality sector. ‘My Fortune’ is the latest addition to the bouquet of brands 

being offered by Fortune Hotels. These hotels offer a perfect blend of traditional 

Indian hospitality with new age technology, while catering to the upscale 

business traveller. With its globally benchmarked product and service excellence 

and customer centricity the Company is well positioned to sustain its leadership 

position in the industry. 

The Company has won the following awards in the financial year 2011-2012: 

- Hospitality India Award for the ‘Best First Class Hotel Chain, 2011’. 

- SATTE award for ‘Leading Mid - market chain, 2012’. 

Fortune Select Exotica, Navi Mumbai has been awarded ‘World Luxury Hotel 

Award’ for the year 2010 and 2011. 


Your Company has introduced an ‘Eco Friendly’ rating scheme under which 

all hotels operating under the ‘Fortune’ brand are audited and rated based on 

various parameters. These include the adoption of ‘Star Rated’ energy appliances, 

CFL and LED lighting, intelligent lighting controls, usage of renewable energy 

etc. This scheme will catalyze energy conservation and adoption of eco friendly 

practices at all hotels operating under your Company’s brand. 

There was no foreign exchange income during the year (previous year - Nil) but 

there was a foreign exchange outgo of ` 13.04 lacs (previous year - ` 8.79 lacs). 


Company No. : U55101DL1995PLC099973 

Nominal Capital : ` 2 Crores 

The Members of 

Fortune Park Hotels Limited. 

25, Community Centre, 

Basant Lok, Vasant Vihar, 

New Delhi – 110 057 

We have examined the registers, records, books and papers of Fortune Park 

Hotels Limited (hereinafter referred to as ‘the Company’) as required to be 

maintained under the Companies Act, 1956 (the Act) and the Rules made 

thereunder, the provisions contained in the Memorandum and Articles of 

Association of the Company and also the audited Annual Accounts, Auditors’ 

Report on the said annual accounts for the financial year ended 31st March, 

2012 (‘financial year’). In our opinion and to the best of our information 

and according to the examination carried out by us and explanations and 

confirmation furnished to us by the Company, its officers and agents, we 

certify that in respect of the financial year: 

1. The Company has kept and maintained registers as stated in “Annexure: 

A” to this Certificate, as per the provisions of the Act and the Rules 

made thereunder and all entries therein have been duly recorded. 

2. The Company has duly filed the forms and returns as stated in “Annexure: 

B” to this certificate, with the Registrar of Companies, Regional Director, 

Central Government, Company Law Board or other authorities within 

the time prescribed under the Act and the Rules made thereunder. 

3. The Company, being a Public Limited Company, comments are not 

required. 

4. The Board of Directors duly met 4 (Four) times respectively on 28th 

April, 2011, 27th September, 2011, 16th December, 2011 & 26th 

March, 2012 in respect of which meetings proper notices were given 

the proceeding were properly recorded and signed and kept in the 

Minutes Book maintained for the purpose. There was no resolution 

passed, by circulation. 

5. The Company has not closed its Register of Members during the 


FORTUNE PARK HOTELS LIMITED 

Directors 

In accordance with the provisions of Article 143 of the Articles of Association 

of the Company, Mr. Nakul Anand will retire by rotation at the forthcoming 

Annual General Meeting of the Company and being eligible, offers himself for 

re-appointment. 


None of the employees fall under the purview of the provisions of Section 

217(2A) of the Companies Act, 1956, read with the Companies (Particulars 

of Employees) Rules, 1975. 

Compliance Certificate under Companies Act, 1956 

A certificate issued by M/s. P B & Associates, Company Secretaries, in terms 

of the provisions of Section 383 A of the Companies Act, 1956, to the effect 

that the Company has complied with the applicable provisions of the said Act 

is attached to this Report. 

Auditors 

The Company’s Auditors, Messrs. Price Waterhouse, Chartered Accountants, 

retire at the ensuing Annual General Meeting and being eligible, offer themselves 

for re-appointment. 




(i) followed in the preparation of the Annual Accounts the applicable 

accounting standards with proper explanations relating to material 

departures if any; 


judgements 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; 


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; and 



Place: Gurgaon Chandrasekhar Subrahmoneyan Director 

Date : 27th April, 2012 Arun Pathak Director 

6. The Annual General Meeting for the financial year ended on 31st 

March, 2011 was held on 28th June, 2011 after giving due notice to 

the Members of the Company and other concerned and the resolutions 

passed thereat were duly recorded in Minutes Book maintained for the 

purpose. 

7. No extraordinary general meeting was held during the financial year. 

8. The Company has not advanced any loans to its Directors or persons 

or firms or companies referred to under Section 295 of the Act. 

9. The Company has not entered into any contract falling within the 

purview of Section 297 of the Act. 

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 


13. The Company has: 

(i) not made any allotment/transfer/transmission of securities during 


(ii) deposited the amount of final dividend declared in the separate 

Bank Account, 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. 

103

14. The Board of Directors of the Company is duly constituted. There was 

no appointment of additional director/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. 

16. The Company has not appointed any sole selling agents during the 




such authorities prescribed under the various provisions of the Act 


18. 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. 

19. The Company has not issued any shares, debentures or other securities 


20. The Company has not bought back any shares during the financial 

year. 

21. The Company has neither preference capital nor debentures, thus the 

comments on the same are not required. 

22. There were no transactions necessitating the Company to keep in 

abeyance the rights to dividend, rights shares and bonus shares pending 

registration of the transfer of shares. 

23. The Company has not invited or accepted any deposits including any 

unsecured loans falling within the purview of Section 58A during the 


24. The Company has not made any borrowings during the financial year. 

25. The Company, during the financial year, has made investments in 

mutual funds issued by the trusts and fixed deposits which are not 

covered under the provisions of section 372A, of the Act, thus no 

104 


ANNEXURE – ‘A’ 

Registers maintained by the Company (As on March 31, 2012) 

Sl. Particulars Relevant Section 

No. of the Act 

1. Minutes Book of the meetings of the Board of Directors of the Company 193 

2. Minutes Book of General Body Meetings of the Members of the Company 193 

3. Copies of Annual Returns 159 

4. Register of Members 150 

5. Register of Particulars of Directors, Managing Director, Manager and Secretary 303 

6. Register of Directors’ Shareholding 307 

7. Register(s) of contracts, companies and firms in which Directors are interested 301(3) 

8. Books of Accounts 209 

9. Register of Investments 372A 

10. Register of Share Transfer 

ANNEXURE – ‘B’ 

A. Forms & Returns filed with the Registrar of Companies, New Delhi (During the Year ended on March 31, 2012) 

Sl. Particulars of Forms & Returns Filed Date of Whether Additional 

No. Filing 

prescribed time 

filed within Fees paid 

1. Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March, 2011 12th July, 2011 Yes No 

2. Form 20B for Annual Return u/s 159 of the Act, made upto 28th June, 2011 

i.e. the date of AGM for the financial year ended 31st March, 2011 24th August, 2011 Yes No 

3. Form 23ACXBRL and Form 23ACAXBRL for Annual Accounts u/s 220 for the year ended 31st March, 2011 29th November, 2011 Yes No 

B. Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil 

AUDITORS’ REPORT 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, 2012, and the related Statement 

of Profit and Loss 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 Company’s 






financial statements are free of material misstatement. An audit includes 




Management, as well as evaluating the overall financial statement 


our opinion. 

entries are made in the register kept for the purpose. However, there 

were no loans made or guarantees given or the securities provided to 

other bodies corporate during the financial year. 


respect to situation of the Company's Registered Office from one State 

to another during the year under scrutiny. 


respect to the objects of the Company during the year under scrutiny. 


respect to name of the Company during the year under scrutiny. 


respect to Share Capital of the Company during the year under scrutiny. 

30. The Company has not altered its Articles of Association during the 


31. There was no prosecution initiated against or show cause notices 

received by the Company for alleged offences under the Act. Similarly, 

no fines, penalties or punishment under the Act, was imposed on the 

Company during the financial year. 

32. The Company has not received any money as security from its employees 


33. The Company has not constituted a separate provident fund trust for 

its employees or class of its employees as contemplated under Section 

418 of the Act. 

For PB & Associates 

Company Secretaries 

Pooja Bhatia 

Place: Gurgaon LLB, ACS 

Date : 27th April, 2012 CP : 6485 

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended 

by the Companies (Auditor’s 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. 


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 


of those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow 

Statement dealt with by this report are in agreement with the books 

of account; 

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss 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, 

as on March 31, 2012 and taken on record by the Board of Directors, 

none of the directors is disqualified as on March 31, 2012 from 

being appointed as a director in terms of clause (g) of sub-section 

(1) of Section 274 of the Act; 

(f) In our opinion and to the best of our information and according to 

the explanations given to us, the said financial statements together 

with the notes thereon and attached thereto give, in the prescribed 

manner, the information required by the Act, and give a true and 


Referred to in paragraph 3 of the Auditors’ Report of even date to the 

members of Fortune Park Hotels Limited on the financial statements as 

of and for the year ended March 31, 2012. 

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 


4. In our opinion and according to the information and explanations 

given to us , there is an adequate internal control system commensurate 



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 exceeding the value of Rupees Five 

Lakhs in respect of any party during the year. 

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 the 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 and service tax as at March 31, 2012 which 

have not been deposited on account of a dispute, are as follows: 


fair view in conformity with the accounting principles generally 


(i) in the case of the Balance Sheet, of the state of affairs of the 

company as at March 31, 2012; 

(ii) in the case of the Statement of Profit and Loss, of the profit for 


(iii) in the case of the Cash Flow Statement, of the cash flows for 

the year ended on that date. 

For Price Waterhouse 

Firm Registration Number: 012754N 


Abhishek Rara 


Date : 27th April, 2012 Membership Number 77779 

Name Nature Amount Period to Forum where the 

of the of dues (`) which the dispute is pending 

statute amount 

relates 

Income Demand u/s Assessment Income Tax 

Tax Act, 156 of 17,29,041 Year Appellate Tribunal 

1961 Income Tax 

Act, 1961 

2001-02 

Finance Demand u/s Customs, Excise and 

Act,1994 73(1)(a)of The 45,70,992 2003-04 to Service Tax Appellate 

Finance Act, 

1994 

18-04-2006 Tribunal 

Income Demand u/s Assessment CIT (Appeals) 

Tax Act, 156 of Income 3,18,993 Year Amount withheld 

1961 Tax Act, 1961 2008-09 by department 

under Protest * 

Income Demand u/s Assessment CIT (Appeals) 

Tax Act, 156 of Income 6,46,426 Year 

1961 Tax Act, 1961 2009-10 

*decided in favor of the Company subsequent to the year end. 

10. The Company has no accumulated losses. 

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 


13. The provisions of any special statute applicable to chit fund / nidhi / 

mutual benefit fund/societies are not applicable to the Company. 



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. 


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 during the year; and 

does not have any debentures outstanding as at the year end. 


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 any such case by the Management. 


Firm Registration Number: 012754N 


Abhishek Rara 


Date : 27th April, 2012 Membership Number 77779 

105

BALANCE SHEET As at March 31, 2012 As at March 31, 2011 

Note (`) (`) (`) (`) 


Shareholders' Funds 

Share Capital 2 45,00,080 45,00,080 

Reserves and Surplus 

Non - Current Liabilities 

3 16,18,88,887 16,63,88,967 11,75,52,727 12,20,52,807 

Other Long - Term Liabilities 4 1,66,40,345 1,18,75,435 

Long - Term Provisions 


5 2,36,69,849 4,03,10,194 2,05,06,415 3,23,81,850 

Trade Payables 6 2,19,87,591 1,72,26,899 

Other Current Liabilities 7 95,68,407 1,18,56,376 

Short - Term Provisions 8 89,70,545 4,05,26,543 42,19,274 3,33,02,549 

Total 

Assets 

Non - Current Assets 

Fixed Assets 

24,72,25,704 18,77,37,206 

Tangible Assets 9 42,37,464 38,68,539 

Intangible Assets 10 9,19,471 51,56,935 13,65,648 52,34,187 

Deferred Tax Assets (Net) 


11 1,12,41,120 92,52,375 

Current Investments 12 7,15,48,707 4,40,82,435 

Trade Receivables 13 5,06,77,278 4,16,93,840 

Cash and Bank Balances 14 6,36,03,479 4,49,07,304 

Short - Term Loans and Advances 15 1,93,64,986 1,95,05,775 

Other Current Assets 16 2,56,33,199 23,08,27,649 2,30,61,290 17,32,50,644 

Total 24,72,25,704 18,77,37,206 

The notes are an integral part of these financial statements 


For PRICE WATERHOUSE 

Firm’s Registration No : 012754N 


Abhishek Rara 

Partner 

Membership Number 77779 



STATEMENT OF PROFIT AND LOSS 


Chandrasekhar Subrahmoneyan Director 

Arun Pathak Director 

Year ended Year ended 

March 31, 2012 March 31, 2011 

Note (`) (`) (`) (`) 

Revenue From Operations (Gross) 22,08,42,101 19,40,40,210 

Less : Service Tax (2,06,26,699) (1,80,68,543) 

Revenue From Operations (Net) 19 20,02,15,402 17,59,71,667 

Other Income 20 75,56,494 41,73,492 

Total Revenue 

Expenses : 

20,77,71,896 18,01,45,159 

Employee Benefits Expense 21 8,72,03,137 7,37,16,613 

Depreciation and Amortisation Expense 22 13,52,338 14,56,422 

Other Expenses 23 4,74,61,901 4,47,54,551 

Total Expenses 13,60,17,376 11,99,27,586 


Tax expense: 

7,17,54,520 6,02,17,573 

Current Tax 2,41,77,000 1,94,10,000 

Deferred Tax (19,88,745) 2,21,88,255 (3,65,204) 1,90,44,796 

Profit for the year 

Earnings Per Equity Share 

[Nominal value per share: 

4,95,66,265 4,11,72,777 

` 10/- (2011: ` 10/-)] 25 

Basic and Diluted 110.15 91.49 

The notes are an integral part of these financial statements. 



Firm Registration No : 012754N 


Abhishek Rara 

Partner 




106 




Arun Pathak Director

CASH FLOW STATEMENT 


March 31, 2012 March 31, 2011 

(`) (`) 

A. Cash Flow from Operating Activities 



7,17,54,520 6,02,17,573 

Depreciation and Amortisation Expense 13,52,338 14,56,422 

Bad Debts Written Off 9,93,513 37,66,756 

Loss on sale of fixed assets 29,676 54,684 

Interest Income (39,00,221) (25,86,009) 

Dividend Income (36,56,273) (15,64,562) 

Loss on sale of Investment from Mutual Funds — 2,27,892 


Changes in Working Capital : 

6,65,73,553 6,15,72,756 

Increase/(Decrease) in Trade Payables 47,60,692 46,39,173 

Increase/(Decrease) in Provisions 63,45,674 28,72,420 

Increase/(Decrease) in Other Current Liabilities (22,87,969) 69,62,729 

Increase/(Decrease) in Other Long - Term Liabilities 47,64,910 42,87,365 

(Increase)/Decrease in Trade Receivables (99,76,951) (1,00,12,315) 

(Increase)/Decrease in Loans and Advances (3,21,861) (8,53,452) 

(Increase)/Decrease in Other Current Assets (89,65,547) (1,96,01,181) 

Cash Generated from Operations 6,08,92,501 4,98,67,495 

Taxes paid (net of refunds) (2,37,14,350) (2,16,18,886) 

Net cash generated from operating activities 3,71,78,151 2,82,48,609 


Purchase of assets (13,46,412) (9,70,788) 

Sale of assets 41,651 50,916 

Purchases of current investments (18,96,56,273) (42,22,98,020) 

Sale of current investments 16,21,90,001 39,51,70,527 

Interest received 33,51,290 21,08,263 

Dividend Received 36,56,273 15,64,562 

Net cash used in investing activities (2,17,63,470) (2,43,74,540) 

C. Cash flow from Financing Activities 

Dividend Paid (31,50,056) (27,00,048) 

Dividend Distribution Tax (5,11,018) (4,48,451) 

Net cash used in Financing Activities (36,61,074) (31,48,499) 

Net increase in cash and cash equivalents (A+B+C) 1,17,53,607 7,25,570 

Cash and Cash equivalents at the beginning of the year 1,75,07,304 1,67,81,734 

Cash and Cash equivalents at the end of the year 

Notes: 

2,92,60,911 1,75,07,304 

1 Cash and cash equivalents comprise of: 

Cash on Hand 82,888 18,249 

Cheques on Hand 32,91,891 21,35,892 

Balances with Banks 2,58,86,132 1,53,53,163 

Total 2,92,60,911 1,75,07,304 

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. 




Abhishek Rara 

Partner 





1 SIGNIFICANT ACCOUNTING POLICIES 

i) CONVENTION 

To prepare financial statements in accordance with applicable 

Accounting Standards notified u/s 211(3C) of the Companies Act, 

1956. A summary of important accounting policies is set out below. 

The financial statements have also been prepared in accordance with 

relevant presentational requirements of the Companies Act, 1956. 

To prepare financial statements in accordance with the historical cost 

convention. 

ii) REVENUE 

To recognise Revenue from Operations (net) at the time of rendering 

of services after deducting taxes and duties from invoiced value. 

iii) FIXED ASSETS 

To state Fixed Assets at cost of acquisition inclusive of inward freight, 

duties and taxes and incidental expenses related to acquisition. 

To capitalize software where it is expected to provide future enduring 

economic benefits. The costs are capitalised in the year in which the 

relevant software is implemented for use. 




Arun Pathak Director 

iv) DEPRECIATION/AMORTISATION 

To calculate depreciation / amortisation on Fixed Assets/ Intangible 

Assets in a manner that amortises the cost of the assets after 

commissioning, over their estimated useful lives or lives based on the 

rates specified in Schedule XIV to the Companies Act, 1956, whichever 

is lower, by equal annual instalments. To amortise capitalised software 

costs over a period of five years. 

v) INVESTMENT 

To state Current Investments at lower of cost and fair value; and 

Long-Term Investments at cost. Where applicable, provision is made 

to recognise a decline, other than temporary, in valuation of 

Long-Term Investments. 

vi) INVESTMENT INCOME 

To account for Income from Investments on an accrual basis, inclusive 


vii) EMPLOYEE BENEFITS 

To make regular monthly contributions to the State administered 

107


108 

Provident Fund which are charged against revenue. To provide for 

long-term defined benefit scheme of gratuity and compensated 

absences on the basis of actuarial valuation on the Balance Sheet date 

based on the Projected Unit Credit Method. In respect of gratuity, the 

Company funds the benefits through annual contributions to Life 

Insurance Corporation of India (LIC) under its Group Gratuity Scheme. 

The actuarial valuation of the liability towards the Gratuity Retirement 

benefits of the employees is made on the basis of certain assumptions 

with respect to the variable elements affecting the computations 

including estimation of interest rate of earnings on contributions to LIC. 

To recognise the actuarial gains or losses in the statement of Profit & 

Loss as income or expense in the period in which they occur. 

viii) PROPOSED DIVIDEND 

To provide for Dividend (including income tax thereon) in the books 

of account as proposed by the Directors, pending approval at the 

Annual General Meeting. 

ix) FOREIGN CURRENCY TRANSLATIONS 

To account for transactions in foreign currency at the exchange rates 

prevailing on the date of the transactions. Gains/Losses arising out of 

fluctuations in the exchange rates are recognised in statement of profit 

& loss in the period in which they arise. 

To account for gains / losses in the statement of profit and loss on 

foreign exchange rate fluctuations relating to monetary items at the 

year end. 


As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

2 Share Capital 

Authorised 

2,000,000 (March 31, 2011: 2,000,000) 

equity shares of ` 10/- each 

Issued, Subscribed & Paid up 

450,008 (March 31, 2011: 450,008) 

2,00,00,000 2,00,00,000 

equity shares of ` 10/- each 45,00,080 45,00,080 

45,00,080 45,00,080 

(a) Reconciliation of number of equity shares 

As at As at 

March 31, 2012 March 31, 2011 

No. of Amount No of Amount 

Shares in ` Shares in ` 

Balance as at the 

beginning of the year 


4,50,008 45,00,080 4,50,008 45,00,080 

end of the year 4,50,008 45,00,080 4,50,008 45,00,080 

(b) Rights, preferences and restrictions attached to shares 

The Ordinary Shares of the Company, having par value of ` 10/- per share, 

rank pari passu in all respects including entitlement to dividend. Repayment 

of capital in the event of winding up of the Company will inter alia be subject 

to the provisions of the Articles of Association of Company and as may be 

determined by the Company in General Meeting prior to such winding up. 

(c) Shares held by Holding Company 

As at As at 

March 31, 2012 March 31, 2011 

Equity Shares of ` 10/- each 

fully paid up held by: 

ITC Limited, the Holding Company 

Held by management personnel 

4,50,002 4,50,002 

as nominees of ITC Limited 6 6 

(d) Details of shares held by shareholders holding more than 

5% of the aggregate shares in the Company 

As at As at 

March 31, 2012 March 31, 2011 

ITC Limited, the Holding Company 4,50,002 99.98% 4,50,002 99.98% 

Held by management personnel 

as nominees of ITC Limited 

6 0.02% 6 0.02% 


x) BORROWING COSTS 

To capitalise the borrowing costs that are directly attributable to the 

acquisition or construction of that capital asset. Other borrowing costs 

are recognised as an expense in the period in which they are incurred. 

xi) TAXES ON INCOME 

To provide Current tax as the amount of tax payable in respect of 


and tax laws. To provide Deferred tax 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 substantively enacted tax rates by the balance sheet date. 

Not to recognise Deferred tax assets on unabsorbed depreciation and 

carry forward of losses unless there is virtual certainty that there will 


xii) FINANCIAL AND MANAGEMENT INFORMATION SYSTEMS 

To practice an integrated Accounting System which unifies both 

Financial Books and Costing Records. The books of account and other 

records have been designed to facilitate compliance of the relevant 

provisions of the Companies Act, 1956 on one hand, and meet the 

internal requirements of information and systems for Planning, Review 

and Internal Control , on the other. 


Place: Gurgaon Chandrasekhar Subrahmoneyan Director 

Date : April 27, 2012 Arun Pathak Director 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

3 Reserves And Surplus 

Capital Reserve 

General Reserve 

30,00,000 30,00,000 

Balance as at beginning of the year 

Add : Transferred from Surplus in the 

1,10,99,511 69,82,233 

Statement of Profit and Loss during the year 49,56,626 41,17,278 

Balance as at end of the year 


1,60,56,137 1,10,99,511 

Balance as at beginning of the year 10,34,53,216 7,00,58,791 

Profit for the year 

Less : Appropriations 

Proposed Dividend on 

4,95,66,265 4,11,72,777 

Equity Shares for the year 

Dividend Distribution tax on 

(45,00,080) (31,50,056) 

Proposed Dividend on Equity Shares (7,30,025) (5,11,018) 

Transfer to General Reserve (49,56,626) (41,17,278) 

Balance as at end of the year 14,28,32,750 10,34,53,216 

16,18,88,887 11,75,52,727 

4 Other Long - Term Liabilities 

Advance from customers 1,07,24,255 89,24,255 

Income received in advance 59,16,090 29,51,180 

1,66,40,345 1,18,75,435 

5 Long - Term Provisions 

Provisions for employee Benefits: 

Provision for leave encashment 

(Refer Note 21) 1,36,26,899 1,23,25,265 

Provision for loyalty bonus 1,00,42,950 81,81,150 

2,36,69,849 2,05,06,415 

6 Trade Payables 

Total outstanding dues of micro 

and small enterprises 

Total outstanding dues of trade payables 

— — 

other than micro and small enterprises 2,19,87,591 1,72,26,899 

2,19,87,591 1,72,26,899 

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.


As at As at 

March 31, 2012 March 31 , 2011 

(`) (`) 

7 Other Current Liabilities 

Advance from customers 

Statutory dues including Provident 

27,64,935 39,23,171 

Fund and Tax deducted at Source 31,66,079 46,36,407 

Employees Bonus, LTA etc. payable 31,08,553 25,91,298 

Income received in advance 5,28,840 7,05,500 

95,68,407 1,18,56,376 

9 Tangible Assets 


As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

8 Short - Term Provisions 

Provision for employee benefits: 

Provisions for Leave Encashment 

(Refer note 21) 5,80,840 — 

Provision for Loyalty Bonus 

Other Provisions: 

Provision for Proposed 

31,59,600 5,58,200 

Dividend on Equity Shares 

Provision for dividend distribution tax 

45,00,080 31,50,056 

on proposed dividend on Equity Shares 7,30,025 5,11,018 

89,70,545 42,19,274 

(Amount in `) 

Gross Block Depreciation Net Block 

As at Disposal/ As at As at For the Disposal/ As at As at As at 

Particulars April 1, 2011 Additions Adjustments March 31, April 1, year Adjustments March 31, March 31, March 31, 

2012 2011 2012 2012 2011 

Office Equipment 6,20,085 — 97,861 5,22,224 2,15,884 64,662 82,839 1,97,707 3,24,517 4,04,201 

Plant & Machinery 

(Computers) 

56,19,352 13,30,178 1,45,872 68,03,658 29,53,869 7,63,529 89,568 36,27,830 31,75,828 26,65,483 

Furniture and Fixtures 13,90,481 16,234 — 14,06,715 6,16,647 74,061 — 6,90,708 7,16,007 7,73,834 

Vehicle 41,150 — — 41,150 16,129 3,909 — 20,038 21,112 25,021 

Total 76,71,068 13,46,412 2,43,733 87,73,747 38,02,529 9,06,161 1,72,407 45,36,283 42,37,464 38,68,539 

Previous Year 75,32,784 9,70,788 8,32,504 76,71,068 35,98,092 9,31,341 7,26,904 38,02,529 38,68,539 

10 Intangible Assets 

(Amount in `) 

Gross Block Amortisation Net Block 

As at Disposal/ As at As at For the Disposal/ As at As at As at 

Particulars April 2011 Additions Adjustments March 31, April 1, 2011 year Adjustments March 31, March 31, March 31, 

2012 2012 2012 2011 

Computer Software 26,25,404 — — 26,25,404 12,59,756 4,46,177 — 17,05,933 9,19,471 13,65,648 

Total 26,25,404 — — 26,25,404 12,59,756 4,46,177 — 17,05,933 9,19,471 13,65,648 

Previous Year 26,25,404 — — 26,25,404 7,34,675 5,25,081 — 12,59,756 13,65,648 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

11 Deferred Tax Assets (Net) 

Deferred Tax Asset : 

On Provision for doubtful debts 37,23,823 37,23,823 

On Other timing differences 82,87,278 63,03,913 

Deferred Tax Liabilities : 

1,20,11,101 1,00,27,736 

Depreciation (7,69,981) (7,75,361) 

Break-up of Deferred Tax Assets and 

Liabilities into major components of 

the respective balances is as under : 

1,12,41,120 92,52,375 

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 

92,52,375 88,87,171 

income tax return 

(ii) Tax impact of Expenses allowed 

as deduction under Income Tax Act 

5,380 (42,974) 

on actual payment 

(iii) Tax impact of expenses charged 

in the financial statements but 

allowable as deduction in future 

— (11,77,889) 

years under income tax 19,83,365 15,86,067 

Net Deferred Tax Asset (Net) 19,88,745 3,65,204 

III. Closing Deferred Tax Asset 1,12,41,120 92,52,375 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

12 Current Investments 

At Cost or market value whichever is less: 

Mutual Funds (Unquoted) 

Religare Liquid Fund Inst. Daily Dividend 

(0 Units: Previous Year 44,703 Units) 

JP Morgan India Liquid Fund Super 

Int. Daily Dividend Plan-Reinvest 

— 4,40,82,435 

(71,49,222.85 units: Previous Year 0 units) 7,15,48,707 — 

7,15,48,707 4,40,82,435 

Aggregate amount of 

unquoted investment 7,15,48,707 4,40,82,435 

13 Trade Receivables 



exceeding six months from the 

date they are due for payment 59,88,459 48,86,030 

Others 

Unsecured, considered doubtful 


exceeding six months from the 

4,46,88,819 3,68,07,810 

date they are due for payment 92,21,083 92,21,083 

Less: Provision for doubtful debts (92,21,083) (92,21,083) 

5,06,77,278 4,16,93,840 

109


As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

14 Cash and Bank Balances 


Cash on hand 82,888 18,249 

Cheques on hand 

Bank Balances 

32,91,891 21,35,892 

- In Current accounts 

- Term Deposits 

1,58,86,132 1,03,53,163 

(less than 3 months maturity) 1,00,00,000 50,00,000 


Term Deposits with maturity more 

2,92,60,911 1,75,07,304 

than 3 months but less than 12 months 3,43,42,568 2,74,00,000 

6,36,03,479 4,49,07,304 

15 Short - Term Loans and Advances 


Other Loans and Advances 

Advance Income Tax (Net of Provisions) 1,77,74,911 1,82,37,561 

Prepaid expenses 15,90,075 12,48,114 

Others — 20,100 

1,93,64,986 1,95,05,775 

16 Other Current Assets 


Security Deposits 5,76,181 4,23,181 

Interest Accrued on deposits with banks 18,00,317 12,51,386 

Gratuity 27,11,385 24,24,026 

Contractual reimbursable expenses 


2,05,45,316 1,89,62,697 

Contractual reimbursable expenses 22,56,258 22,56,258 

Less: Provision for doubtful debts (22,56,258) (22,56,258) 

2,56,33,199 2,30,61,290 

17 Contingent Liabilities 

Claims against the Company 

not acknowledged as debts 

Income tax Matters 6,46,426 6,81,738 

Service tax Matter 45,70,992 45,70,992 

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 ` 6,46,426/for 

Assessment year 2009 -10 (March 31, 2011: ` 6,81,738/- for Assessment 

year 2007 - 08 and 2008 - 09). 

c It is not practicable for the Company to estimate the timings of cash outflows, 

if any, in respect of the above pending resolution of the respective proceedings 

110 

The reconciliation of opening and closing balances of the present value of defined benefit obligations are as under : 



March 31, 2012 March 31, 2011 

(`) (`) 

18 Proposed Dividend 

The Final Dividend proposed for the year is as follows 

On Equity Shares of ` 10 each: 

Amount of Dividend Proposed 45,00,080 31,50,056 

Dividend Per Equity Share ` 10/- per share ` 7/- per share 

19 Revenue from Operations (Net) 

Management Consultancy 

and Other Services 20,02,15,402 17,59,71,667 

20,02,15,402 17,59,71,667 

20 Other Income 

Interest Income on Deposits 32,15,160 18,29,712 

Interest on Income Tax Refund 6,85,061 7,56,297 

Dividend Income from Mutual Funds 36,56,273 15,64,562 

Miscellaneous Income — 22,921 

75,56,494 41,73,492 

21 Employee Benefits Expense 

Salaries, Wages and Bonus 

Reimbursement of 

14,83,78,006 11,76,24,723 

Contractual Remuneration 

Contribution to Provident and 

3,18,98,193 2,78,85,505 

Other Funds [Refer note (b) below] 73,25,578 54,32,593 

Gratuity [Refer note (a) below] 7,64,481 20,53,162 

Staff Welfare Expenses 91,72,958 67,84,774 

19,75,39,216 15,97,80,757 

Less : Recoveries (11,03,36,079) (8,60,64,144) 

8,72,03,137 7,37,16,613 

The Company has accounted for the Defined Benefit Plan / Other long term 

employee benefit and contribution scheme as under: 

(a) Defined Benefit Plan / Other long-term employee benefit: 

Gratuity : The employees are entitled to gratuity that is computed as halfmonth’s 

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 through trust. 

Other long-term employee benefits: 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 is unfunded. 

Gratuity Leave Encashment 


March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 

(i) Present Value of Defined Benefit Obligation 

` ` ` ` 

Balance at the beginning of the year 32,77,067 14,44,078 1,23,25,265 73,24,864 

Current Service Cost 21,66,120 19,68,440 24,68,454 24,32,235 

Interest Cost 2,52,610 1,06,719 8,67,276 5,17,813 

Actuarial (Gains)/Losses (11,13,179) (27,056) 21,72,406 37,54,767 

Benefits Paid (4,30,256) (2,20,173) (36,25,662) (17,04,414) 

Past Service Costs — 5,059 — — 

Balance at the end of the year 41,52,362 32,77,067 1,42,07,739 1,23,25,265 

(ii) Fair Value of Plan Assets 

Balance at the beginning of the year 57,01,093 26,20,979 — — 

Expected return on plan assets 5,65,418 3,74,493 — — 

Actuarial Gains/(Losses) (24,348) (3,74,493) — — 

Contribution by the Company 10,51,840 33,00,287 36,25,662 17,04,414 

Benefits Paid (4,30,256) (2,20,173) (36,25,662) (17,04,414) 

Settlements — — — — 

Balance at the end of the year 68,63,747 57,01,093 — — 

Actual return on Plan Assets 5,46,248 2,38,675 — — 

(iii) Assets and Liabilities recognised in the Balance Sheet 

(Refer Note 5, 8 and 16) 

Present Value of Defined Benefit Obligation 41,52,362 32,77,067 1,42,07,739 1,23,25,265 

Less: Fair Value of Plan Assets (68,63,747) (57,01,093) — — 

Less: Unrecognised Past Service Costs — — — — 

Amounts recognised as Liability/(Assets) (27,11,385) (24,24,026) 1,42,07,739 1,23,25,265


The reconciliation of opening and closing balances of the present value of defined benefit obligations are as under : (Contd.) 


Gratuity Leave Encashment 

Year ended Year ended Year ended Year ended 


(iv) Expense recognised in the Statement of Profit and Loss ` ` ` ` 

Current Service Cost 21,66,120 19,68,440 24,68,454 24,32,235 

Interest Cost 2,52,610 1,06,719 8,67,276 5,17,813 

Expected return on Plan Assets (5,65,418) (3,74,493) — — 

Actuarial (Gains)/Losses (10,88,831) 3,47,437 21,72,406 37,54,767 

Past Service Costs — 5,059 — — 

Settlements — — — — 

Curtailments — — — — 

Total Expense 7,64,481 20,53,162 55,08,136 67,04,815 

(v) Major Category of Plan Assets as a % of total Plan Assets 

Life Insurance Corporation of India (100%) 68,63,747 57,01,093 — — 

(vi) Actuarial Assumptions 

Discount Rate 8.25% p.a. 8.00% p.a. 8.25% p.a. 8.00% p.a. 

Expected Return on Plan Assets 9.00% p.a. 9.00% p.a. N/A N/A 

Salary Growth Rate 5.00% p.a. 5.00% p.a. 5.00% p.a. 5.00% p.a. 

The estimates of future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant factors, such as demand 

and supply factors in the employment market 

Year ended Year ended Year ended Year ended Year ended 

March 31, 2012 March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 

(vii) Amounts recognised in current year and previous four years 

Gratuity 

` ` ` ` ` 

Defined Benefit Obligation 41,52,362 32,77,067 14,44,078 11,84,312 5,40,083 

Plan Asset 68,63,747 57,01,093 26,20,979 15,94,197 5,11,554 

Surplus/(Deficit) 27,11,385 24,24,026 11,76,901 4,09,885 (28,529) 

Experience adjustments in Plan Liabilities [(Gain)/Loss] (11,13,179) (27,056) (7,07,222) (1,17,615) 89,555 

Experience adjustments in Plan Assets [Gain/(Loss)] 

Leave Encashment 

(24,348) (3,74,493) 63,387 2,55,902 (84,277) 

Defined Benefit Obligation 1,42,07,739 1,23,25,265 73,24,864 59,51,196 27,09,612 

Plan Asset — — — — — 

Surplus/(Deficit) (1,42,07,739) (1,23,25,265) (73,24,864) (59,51,196) (27,09,612) 

Experience adjustments in Plan Liabilities [(Gain)/Loss] 21,72,406 37,54,767 7,53,622 23,88,633 10,30,408 

Experience adjustments in Plan Assets [Gain/(Loss)] 

(viii) Expected Contribution to the Funds in the next year 

— — — — — 

Gratuity 11,04,432 10,51,840 — — — 

(b) State Plans (Contribution Scheme): 

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 Company's contribution during the 

year that has been charged to revenue amounts to ` 65,46,313/- 

(Previous Year ` 47,68,338/-) 


March 31, 2012 March 31, 2011 

` ` 

22 Depreciation and Amortization 

Expense [Refer Note 9 & 10] 

Depreciation on Tangible Assets 9,06,161 9,31,341 

Amortization on Intangible Assets 4,46,177 5,25,081 

13,52,338 14,56,422 

23 Other Expenses 

Power and Fuel 20,15,361 17,53,372 

Rent [Refer Note 27] 46,02,219 30,81,488 

Insurance 98,068 60,068 

Repairs - Others 16,68,817 16,06,616 

Rates and Taxes 2,06,671 — 

Information Technology Services 20,52,656 15,83,309 

Travelling and Conveyance 1,31,78,745 1,13,23,773 

Legal Expenses 8,00,300 14,55,680 

Consultancy/Professional Fees 26,85,569 29,17,302 

Printing and Stationery 11,87,842 6,40,675 

Communication Expenses 29,63,569 25,84,481 

Advertising/Sales Promotion 1,33,39,158 1,20,41,693 

Bad Debts written off 9,93,513 37,66,756 

Loss on Sale of Investment — 2,27,892 

Loss on Sale of Fixed Assets 29,676 54,684 

Miscellaneous Expenses 12,97,731 13,87,621 

Bank Charges 

Payment to Auditors 

As auditor: 

17,006 44,141 

- Audit Fee 2,50,000 1,50,000 

- Tax Audit Fee 50,000 50,000 

- Reimbursement of Expenses 25,000 25,000 

4,74,61,901 4,47,54,551 


March 31, 2012 March 31, 2011 

` ` 

24 Expenditure in Foreign Currency 

Foreign Travel 2,99,697 4,01,411 

Other Expenses 10,05,121 4,78,479 

13,04,818 8,79,890 

25 Earnings Per Equity Share 

Profit after Tax 

Weighted average number 

4,95,66,265 4,11,72,777 

of shares outstanding 4,50,008 4,50,008 

Basic and Diluted earnings per share (in `) 

(Face value - ` 10/- per share) 

110.15 91.49 

26 Related Party disclosures under Accounting Standard 18 

a) Names of related parties and nature of relationship: 

i) Where control exists 


ii) Other Related Parties with whom transactions have taken place during 

the year : 

Fellow Subsidiaries Srinivasa Resorts Limited 

Bay Islands Hotels Limited 

Landbase India Limited 

Associate of Holding Company International Travel House Limited 

Joint Venture of Holding Company Maharaja Heritage Resorts Limited 

Key Management Personnel Board of Directors 

Nakul Anand 

S. C. Sekhar 

Arun Pathak 

Gaj Singh Jodhpur 

111


112 

b) Summary of Transactions/Balances (`) : 

Transactions/Balances Holding Company Fellow Subsidiaries Other Related Parties 

31-03-2012 31-03-2011 31-03-2012 31-03-2011 31-03-2012 31-03-2011 

1. Receipt of Management & Consultancy fees* 

* Inclusive of Service Tax - ` 7,53,109/- 

(Previous Year - ` 3,32,017/-) 

80,64,845 36,62,128 — — — — 

2. Purchase of Services 1,26,357 9,17,671 — — 47,86,900 40,15,041 

3. Sale of Fixed Assets — — — 50,917 — — 

4. Rent Paid 6,49,055 4,95,840 — — — — 

5. Recovery of Contractual Remuneration 16,02,447 6,22,690 — — — — 

6. Reimbursement of Contractual Remuneration 3,18,98,193 2,78,85,505 — — — — 

7. Dividend Payments 31,50,056 27,00,048 — — — — 

8. Expense Recovered during the year 

(Amount recovered on account of payments 

made on behalf of related parties) 1,05,70,737 1,23,04,443 — 10,498 — — 

9. Expense Reimbursed during the year 

(Amount paid to related parties on account 

of payments made by them on behalf of 

the Company) 1,02,02,848 79,13,338 — — 7,41,752 2,80,134 

10. Closing Balance 

(i) Trade Receivables 3,725 3,725 — — — — 

(ii) Trade Payables 52,56,551 22,35,053 — — 1,99,123 5,15,541 

c) Information regarding Significant Transactions/Balances (`): 


Transactions with Holding Company Fellow Subsidiaries Other Related Parties 

31-03-2012 31-03-2011 31-03-2012 31-03-2011 31-03-2012 31-03-2011 

1. Receipt of Management & Consultancy fees 

ITC Limited 

80,64,845 36,62,128 — — — — 

2. Purchase of Services 

ITC Limited 1,26,357 9,17,671 — — — — 

International Travel House Limited — — — — 47,86,900 40,15,041 

3. Sale of Fixed Assets 

Landbase India Limited — — — 50,917 — — 

4. Rent Paid 


5. Recovery of Contractual Remuneration 


6. Reimbursement of Contractual Remuneration 

ITC Limited 3,18,98,193 2,78,85,505 — — — — 

7. Dividend Payments 


8. Expense Recovered during the year 

(Amount recovered on account of payments 

made on behalf of related parties) 

ITC Limited 1,05,70,737 1,23,04,443 — — — — 

Landbase India Limited — — — 10,498 — — 

9. Expense Reimbursed during the year 

(Amount paid to related parties on account 

of payments made by them on 

behalf of the Company) 

ITC Limited 1,02,02,848 79,13,338 — — — — 

Maharaja Heritage Resorts Limited — — — — 7,41,752 2,80,134 

10. Closing Balance 

(i) Trade Receivables 


(ii) Trade Payables 

3,725 3,725 — — — — 


International Travel House Limited — — — — 1,99,123 5,15,541 

27 Lease Arrangements 

The Company's significant leasing arrangements are in respect of operating leases for premises (residential, office etc.). These leasing arrangements 

which are 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 Note 23. 

28 Segment Reporting 

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. 

29 Previous Year Figures 

The financial statements for the year ended March 31, 2012 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies 

Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 

31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified / regrouped to conform to this 

year’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed 

for preparation of financial statements. 




Abhishek Rara 

Partner 






Arun Pathak Director




2012. 

Financial Performance 

During the year under review, your Company earned an income of ` 136.70 

lacs (previous year - ` 112.42 lacs) and post-tax profits of ` 91.84 lacs (previous 

year - ` 75.94 lacs) after providing for income tax of ` 38.45 lacs (previous 

year - ` 30.27 lacs). Earnings Per Share for the year stands at ` 773.40 (previous 

year - ` 639.53). Cash flows from Operations were ` 70.15 lacs during the year 


Your Directors are pleased to recommend a dividend of ` 65/- (previous year 

- ` 50/-) per equity share of ` 100/- each for the year ended 31st March, 2012. 

Your Board further recommends a transfer to General Reserve of ` 9.18 lacs 


The Company has an Operating License Agreement with ITC Limited which 

in turn has Operating and Marketing Services Agreement with Fortune Park 

Hotels Limited having expertise in operating and maintaining four/ three star 

categories of hotels in India having a wide spread marketing and reservation 

network for the operations of the hotel. The Company’s hotel in Port Blair is 

known as ‘Fortune Resort Bay Island’. 

During the year your Company’s treasury operations continued to remain 

focused on proactively investing surplus funds in Bank Fixed Deposits. The 

process to invest in liquid mutual funds are being explored to enhance the 

yields. 


Considering the fact that the hotel is under an operating licence with ITC 

Limited, no comment is made on conservation of energy. However, your 

Company’s hotel viz., Fortune Resort Bay Island continues to focus on energy 

conservation, safety and environment. 

The foreign exchange earnings of the hotel during the year were ` 54.26 lacs 

as against ` 34.44 lacs in the previous year. 

Directors 

In accordance with the provisions of Article 143 of the Articles of Association 

of the Company, Mr. Nakul Anand and Mr. Arun Pathak will retire by rotation 

at the forthcoming Annual General Meeting and being eligible, offer themselves 



Company No. : U74899DL1976PLC105131 

Nominal Capital : 

The Members of 

` 1.2 Crores 

Bay Islands Hotels Limited 

25, Community Centre 

Basant Lok, Vasant Vihar 

New Delhi - 110 057 

We have examined the registers, records, books and papers of M/s Bay Islands 

Hotels Limited (hereinafter referred to as ‘the Company’) as required to be 

maintained under the Companies Act, 1956 (the Act) and the Rules made 

thereunder, the provisions contained in the Memorandum and Articles of 

Association of the Company and also the audited Annual Accounts, Auditors’ 

Report on the said annual accounts for the financial year ended 31st March, 

2012 (‘financial year’). In our opinion and to the best of our information and 

according to the examination carried out by us and explanations and confirmation 

furnished to us by the Company, its officers and agents, we certify that in 

respect of the financial year: 

1. The Company has kept and maintained Registers as stated in “Annexure: 

A” to this Certificate, as per the provisions of the Act and the Rules made 

thereunder and all entries therein have been duly recorded. 

2. The Company has duly filed the forms and returns as stated in “Annexure: 

B” to this certificate, with the Registrar of Companies, Regional Director, 

Central Government, Company Law Board or other authorities within the 

time prescribed under the Act and the Rules made thereunder. 

3. The Company, being a Public Limited Company, comments are not required. 

4. The Board of Directors duly met 4 (Four) times respectively on 28th April 

2011; 27th September 2011; 16th December 2011 and 26th March 2012 

in respect of which meetings proper notices were given and the proceeding 

were properly recorded and signed. There was no resolution passed by 

circulation. 

5. The Company has not closed its Register of Members during the financial 

year. 

6. The Annual General Meeting for the financial year ended on 31st March, 

2011 was held on 28th June, 2011 after giving due notice to the members 

of the Company and other concerned and the resolutions passed thereat 

were duly recorded in Minutes Book maintained for the purpose. 

7. No Extraordinary General Meeting was held during the financial year. 

8. The Company has not advanced any loans to its Directors or persons or 

firms or companies referred to under Section 295 of the Act. 

9. The Company has not entered into any contracts falling within the purview 

of Section 297 of the Act. 

BAY ISLANDS HOTELS LIMITED 


None of the employees fall under the purview of the provisions of Section 

217(2A) of the Companies Act, 1956, read with Companies (Particulars of 

Employees) Rules, 1975. 

Compliance Certificate under Companies Act, 1956 

A certificate issued by M/s P B & Associates, Company Secretaries, in terms of 

the provisions of Section 383A of the Companies Act, 1956 to the effect that 

the Company has complied with the applicable provisions of the said Act is 

attached to this Report. 

Auditors 

The Company’s Auditors Messrs. S B Dandekar & Co., Chartered Accountants 

retire at the ensuing Annual General Meeting and being eligible, offer themselves 





(i) followed in the preparation of the Annual Accounts the applicable accounting 

standards with proper explanations relating to material departures if any; 


judgements 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; 


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; and 



Place: Gurgaon Mohan Swarup Bhatnagar Director 

Date : 28th April, 2012 Chandrasekhar Subrahmoneyan Director 

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 


13. The Company has: 

(i) not made any allotment/transfer/transmission of securities during the 


(ii) deposited the amount of final dividend declared in the separate Bank 

Account, within 5 days of declaration. 

(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. There was no 

appointment of additional director/ 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. 

16. The Company has not appointed any sole selling agents during the financial 

year. 



such authorities prescribed under the various provisions of the Act during 


18. 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. 

19. The Company has not issued any shares, debentures or other securities 


20. The Company has not bought back any shares during the financial year. 

21. The Company has neither preference capital nor debentures, thus the 

comments on the same are not required. 

113

22. There were no transactions necessitating the Company to keep in abeyance 

the rights to dividend, rights shares and bonus shares pending registration 

of the transfer of shares. 

23. The Company has not invited/accepted any deposits including any unsecured 

loans falling within the purview of Section 58A of the Act during the 


24. The Company has not made any borrowings during the financial year. 

25. The Company, during the financial year, has made investments in fixed 

deposits, which are not covered under the provisions of section 372A, of 

the Act, thus no entries are made in the register kept for the purpose. 

However, there were no loans made or guarantees given or the securities 

provided to other bodies corporate during the financial year. 


respect to situation of the Company's Registered Office from one State to 

another during the year under scrutiny. 


respect to the objects of the Company during the year under scrutiny. 


respect to name of the Company during the year under scrutiny. 

ANNEXURE – 'A' 

Registers maintained by the Company (As on March 31, 2012) 

Sl. Particulars Relevant Section 

No. of the Act 

1. Minutes Book of the meetings of the Board of 

Directors of the Company 193 

2. Minutes Book of General Body Meetings of 

the Members of the Company 193 

3. Copies of Annual Returns 159 

4. Register of Members 150 

5. Register of Particulars of Directors, Managing 

Director, Manager and Secretary 303 

6. Register of Directors’ Share holding 307 

7. Register(s) of contracts, companies and firms 

in which Directors are interested 301(3) 

8. Books of Accounts 209 

9. Register of Share Transfer 

REPORT OF THE AUDITORS TO THE MEMBERS 

We have audited the attached Balance Sheet of BAY ISLANDS HOTELS 

LIMITED as at 31st March, 2012 and the Statement of Profit & Loss and 

Cash Flow Statement for the year ended on that date annexed thereto. 





accepted in India. Those standards require that we plan and perform our 


are free of material misstatement. An audit includes examination, on a test 

basis, evidence supporting the amount and disclosures in the financial 


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, as amended 

by the Companies (Auditor’s 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. We have obtained all the information and explanations, which to the 

best our knowledge and belief were necessary for the purpose of our 

audit. 

2. 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. 

3. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash 

Flow Statement dealt with by this Report are in agreement with the 

books of account. 

114 



respect to Share Capital of the Company during the year under scrutiny. 

30. The Company has not altered its Articles of Association during the financial 

year. 

31. There was no prosecution initiated against or show cause notices received 

by the Company for alleged offences under the Act. Similarly, no fines, 

penalties or punishment under the Act was imposed on the Company 


32. The Company has not received any money as security from its employees 


33. The Company has not constituted a separate provident fund trust for its 

employees or class of its employees as contemplated under Section 418 

of the Act. 

For PB & Associates 

Company Secretaries 

Pooja Bhatia 

Place: New Delhi LLB, ACS 

Date : 28th April, 2012 CP: 6485 

ANNEXURE – 'B' 

A. Forms & Returns filed with the Registrar of Companies, New Delhi 

(During the Year ended March 31, 2012) 

Sl. Particulars of Date of Whether Additional 

No. Forms & Returns Filed Filing filed within Fees paid 

prescribed 

time 

1. Form 23AA u/s 209 for confirming 1st April Yes No 

the notice of address at which 

books of account are kept 

2011 

2. Form 66 for Compliance 12th July Yes No 

Certificate u/s 383A of the Act, 

for the financial year ended 


2011 

3. Form 20B for Annual Return 19th Yes No 

u/s 159 of the Act, made upto August 

28th June 2011 i.e. the date of 

AGM for the financial year 

ended 31st March, 2011 

2011 

4. Form 23ACXBRL and Form 30th Yes No 

23ACAXBRL for Annual Accounts November 

u/s 220 of the Act for the year 

ended 31st March, 2011 

2011 

B. Forms & Returns filed with the Regional Director, Central Government 

or other authorities : Nil 

4. In our opinion the Balance Sheet, Statement of Profit & Loss 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. 

5. On the basis of representations received from Directors as on 

31st March, 2012, and taken on record by the Board of Directors, none 

of the Directors is disqualified as on 31st March, 2012, in terms of 

clause (g) of subsection (1) of Section 274 of the Companies Act, 1956. 

6. 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, 2012; 

• In case of the Statement of Profit & Loss, of the Profit of the 

Company for the year ended on that date; and 

• In case of the Cash Flow Statement of the cash flows for the year 


KEDARASHISH BAPAT 

Partner 

Membership No : 57903 

For S.B. DANDEKAR & COMPANY 


Port Blair, 28th April, 2012 Firm’s Registration No : 301009E


Statement on matters specified in paragraphs 4 & 5 of the Companies 

(Auditor’s Report) Order 2003, as amended by the Companies (Auditor’s 

Report) Amendment Order 2004 issued by the Central Government in 

terms of Section 227(4A) of the Companies Act, 1956, for the year ended 

31st March, 2012. 

1. The Company is maintaining proper records to show full particulars, 


The fixed assets have been physically verified by the management at 

reasonable intervals during the year, and no material discrepancies were 

noticed on such verification. 

No substantial part of the fixed assets of the Company have been disposed 

off during the year. 

2. As the company does not hold any inventory, clause (ii) of para 4 of the 

Order is not applicable. 

3. The Company has neither taken nor granted any loans, secured or unsecured 

from or to companies, firms or other parties covered in the register 

maintained under Section 301 of the Companies Act, 1956. As such provisions 

of sub-clause (b), (c) and (d) of clause (iii) of the Order are not applicable. 

4. The Company has an internal control procedure commensurate with the 

size of the Company and nature of the business, for the purchase of fixed 

assets. We have not come across or have been informed of any major 

weaknesses in the internal control procedures. 

5. There are no transactions which require to be entered into a register in 

pursuance of Section 301 of the Companies Act, 1956, and hence provisions 

of clause (v)(b) of the Order are not applicable. 

6. In accordance with information and explanations given to us, the provisions 

of Section 58A and 58AA of the Companies Act, 1956, and rules framed 

thereunder, and directions issued by the Reserve Bank of India are inapplicable 

to the Company since it has not accepted any deposits from the public. 

7. As per clause (vii) of the Order provisions for internal audit are not applicable 

as the paid up capital of the Company is less than Rs. 50 lakhs. 

8. As explained to us the Central Government has not prescribed any rules 

for maintenance of cost records for the Company under clause (d) of 

subsection (1) of Section 209 of the Companies Act, 1956. 

9. The Company is regular in depositing of all undisputed statutory dues 

including Provident Fund, Investor Education and Protection Fund, 

Employees' State Insurance, Income-tax, Sales-tax, Custom Duty, Excise 

Duty, cess and any other statutory dues, so far as applicable to the Company, 

with the appropriate authorities. The Company has no disputed statutory 

dues. 

10. The Company has no accumulated losses as at 31st March, 2012. It has 

not incurred any cash losses in the financial year as well as in the immediately 




Partner 




Port Blair, 28th April, 2012 Firm’s Registration No : 301009E 

BALANCE SHEET AS AT 31ST MARCH, 2012 As at As at 

Note No. 31st March, 2012 31st March, 2011 

(`) (`) (`) (`) 



Share Capital 1 11,87,500 11,87,500 

Reserves & Surplus 2 10,88,90,684 11,00,78,184 10,14,29,708 10,26,17,208 

— — 

Non Current Liabilities 


- — — 

Trade Payables 3 19,303 19,303 

Short-Term Provisions 4 8,97,092 6,90,071 

Total 

ASSETS 

Non Current Assets 

11,09,94,579 10,33,26,582 

Fixed Assets 5 

Tangible Assets 7,16,76,692 7,27,73,585 

Deferred Tax Asset (Net) 


6 28,68,769 24,08,258 

Trade Receivables 7 33,29,935 30,63,436 


Short Term Loans and Advances 9 2,29,681 7,23,000 

Other Current Assets 10 9,58,877 5,10,180 

3,64,49,118 2,81,44,739 

Total 11,09,94,579 10,33,26,582 

Significant Accounting Policies 16 

The notes referred to above form an integral part of Balance Sheet. 



Partner 




Firm’s Registration No : 301009E 

Place: Port Blair 


11. In accordance with the information and explanations given to us, the 

Company has no dues of any financial institution or Bank or debenture 

holder. 

12. The Company has not granted any loan and/or advance on the basis of 

security by way of pledge of shares, debentures and other securities and 

hence the matter regarding deficiencies in documents in respect of such 

loans and advances is inapplicable. 

13. The Company is not a Nidhi, Mutual Benefit Fund or Society and hence 

we have no comments to make regarding matters concerning such 

organisations. 

14. The Company is not dealing in shares, securities, debentures or other 

investments and hence we have no comment to make regarding matters 

relating to maintenance of records of transactions in such shares etc. 

15. In accordance with the information and explanation given to us, the 


banks or financial institutions. 

16. In accordance with the information given to us, the Company has not 

taken any term loans. 


Company has not applied any short-term borrowings for purpose of 

long- term investments or vice versa. 


Company has not made any preferential allotment of equity shares to 

parties covered in the register maintained under Section 301 of the 

Companies Act, 1956, during the year. 

19. No debentures have been issued by the Company and there are no 

outstanding debentures as at the year end and hence clause (xix) of the 

Order is not considered applicable. 

20. No public issue has been made by the Company and hence we have no 

comments regarding the matter of end use of money raised through such 

public issue. 

21. In accordance with our audit as per generally accepted auditing practices 

and the information and explanation given to us, no fraud by or on the 

Company has been noticed or reported during the year nor have we been 

informed of any such case by the management. 


Mohan Swarup Bhatnagar Director 




115


Note No. For the year ended For the year ended 


(`) (`) 

Revenue from Operations 11 1,14,70,178 99,60,456 

Other Income 12 22,00,340 12,81,560 

Total Revenue 

Expenses 

1,36,70,518 1,12,42,016 

Employee benefits Expense 13 2,37,954 1,76,598 

Depreciation and amortization expense 2,65,233 2,72,411 

Other Expenses 14 1,38,359 1,71,905 

Total Expenses 6,41,546 6,20,914 

Profit Before Taxation 

Tax expense for the year 

1,30,28,972 1,06,21,102 

Current Tax 43,05,355 33,57,873 

Deferred Tax (4,60,511) (3,31,205) 

Profit (Loss) for the period 91,84,128 75,94,434 

Basic and Diluted Earnings Per Share (`) 15 773.40 639.53 

Significant Accounting Policies 16 

The notes referred to above form an integral part of the Statement of Profit and Loss. 

This is the Statement of Profit & Loss referred to in our Report of even date. 


Partner 








(Figures for the previous year have been rearranged to conform with the revised presentation) 



(`) (`) (`) (`) 

A. NET PROFIT BEFORE TAX 


1,30,28,972 1,06,21,102 

Depreciation 2,65,233 2,72,411 

Profit on sale of Fixed Asset (1,20,400) — 

Interest Income (20,79,940) (19,35,107) (12,81,560) (10,09,149) 



1,10,93,865 96,11,953 

Trade and Other Receivables (2,66,499) (11,03,088) 

Trade Payables — (2,66,499) 8,273 (10,94,815) 

CASH GENERATED FROM OPERATIONS 1,08,27,366 85,17,138 

Income Tax Paid 38,12,036 38,96,512 

NET CASH FROM OPERATING ACTIVITIES 70,15,330 46,20,626 

B. CASH FLOW FROM INVESTING ACTIVITIES: 

Sale of Fixed Assets 1,26,000 — 

Interest Received 16,31,243 17,57,243 10,33,120 10,33,120 

NET CASH FROM INVESTING ACTIVITIES 17,57,243 10,33,120 

C. CASH FLOW FROM FINANCIAL ACTIVITIES: 

Dividends Paid (5,93,750) (5,93,750) 

Income Tax on Dividend Paid (96,321) (6,90,071) (98,614) (6,92,364) 

NET CASH FLOW USED IN FINANCING ACTIVITIES (6,90,071) (6,92,364) 

NET INCREASE IN CASH AND CASH EQUIVALENTS 80,82,502 49,61,382 

OPENING CASH AND CASH EQUIVALENTS 2,38,48,123 1,88,86,741 

CLOSING CASH AND CASH EQUIVALENTS 

CASH AND CASH EQUIVALENTS COMPRISE : 

3,19,30,625 2,38,48,123 

Cash and Bank Balances 

The above Cash Flow Statement has been prepared under the “Indirect Method” 

as set out in the Accounting Standard - 3 Cash Flow Statements. 


For and on behalf of 

3,19,30,625 2,38,48,123 


Partner 







116 











Date : 27th April, 2012


(Figures for the previous year have been rearranged 

to conform with the revised presentation) 

As at As at 


(`) (`) 

1. SHARE CAPITAL 

Authorised 

90,000 Equity Shares of ` 100/- each 

30,000 13.5% Redeemable Cumulative 

90,00,000 90,00,000 

Preference Shares of ` 100/- each 30,00,000 30,00,000 

Issued, Subscribed & Paid-up 

11,875 Equity Shares of ` 100/- each 

1,20,00,000 1,20,00,000 

fully paid-up 11,87,500 11,87,500 

11,87,500 11,87,500 

The above shares are held by the Holding Company-ITC Limited. 

Reconciliation of number of equity shares 

As at As at 


No. of Shares Amount in ` No. of Shares Amount in ` 


beginning of the year 11,875 11,87,500 11,875 11,87,500 


end of the year 11,875 11,87,500 11,875 11,87,500 

Shares in the Company held by each shareholder 

holding more than 5 percent shares 

As at As at 

Name of Shareholder 31st March, 2012 31st March, 2011 

No. of % of No. of % of 

Shares held Holding Shares held Holding 

ITC Limited 11,875 100 11,875 100 

The Ordinary Shares of the Company, having par value of ` 100/- per share, 

rank pari passu in all respects including entitlement to dividend. Repayment of 

capital in the event of winding up of the Company will inter alia be subject to 

the provisions of the Articles of Association of Company and as may be determined 

by the Company in General Meeting prior to such winding up. 

5. FIXED ASSETS - Tangible Assets 

6. DEFERRED TAX ASSET (NET) 

As at 


(`) 

As at 


(`) 

Deferred Tax Assets 

Less : 

Deferred Tax Liability 

— 

— 

— 

— 

Depreciation - Timing Difference (28,68,769) (24,08,258) 

(28,68,769) (24,08,258) 

Net Deferred Tax Assets 28,68,769 24,08,258 

7. 

In view of the Company’s current financial performance and the future profit 

projections, the Company expects to fully recover the deferred tax assets. 

TRADE RECEIVABLES 

Trade receivables outstanding for 

a period exceeding six months from 


Trade receivables outstanding for 

— — 

a period less than six months from 

the date they are due for payment — — 

Good and Secured — — 

Good and Unsecured 33,29,935 30,63,436 

33,29,935 30,63,436 


As at As at 


(`) (`) (`) (`) 

2. RESERVES & SURPLUS 

Revaluation Reserve 

At the commencement 

of the year 6,35,58,766 6,43,84,826 

Less : Depreciation 8,26,060 6,27,32,706 8,26,060 6,35,58,766 

Subsidy Reserve 



43,38,099 43,38,099 

of the year 

Add : Transferred from 

35,87,205 28,27,762 

current years surplus 

Surplus 


9,18,413 45,05,618 7,59,443 35,87,205 

of the year 

Add: Net Profit/(Net Loss) 

2,99,45,638 2,38,00,718 

for the current year 91,84,128 75,94,434 

Less: Proposed Dividend 

Less: Income Tax on 

(7,71,875) (5,93,750) 

Proposed Dividends 

Less: Transfer to 

(1,25,217) (96,321) 

General Reserve (9,18,413) 3,73,14,261 (7,59,443) 2,99,45,638 

10,88,90,684 10,14,29,708 

3. TRADE PAYABLES 

Sundry Creditors 

Total outstanding dues of 

Micro and small enterprises 

Total outstanding dues of creditors 

— — 

other than Micro and small Enterprise 19,303 19,303 

19,303 19,303 

4. 

There is no amount due and outstanding to be 

credited to Investor Education and Protection Fund 

SHORT TERM PROVISIONS 

Provision for proposed dividend 7,71,875 5,93,750 

Tax on proposed dividend 1,25,217 96,321 

8,97,092 6,90,071 

Gross Block Accumulated Depreciation Net Block 

Original Cost/ Additions on Additions Withdrawals Original Cost Accumulated Depreciation Depreciation Depreciation Net Block Net Block 

Professional Amalgama- during the during the Professional Depreciation for the year on upto as at as at 

Particulars Valuation as tions year year Valuation as as at withdrawals 31.03.2012 31.03.2011 31.03.2012 

at 31.03.2011 at 31.03.2012 31.03.2011 

(`) (`) (`) (`) (`) (`) (`) (`) (`) (`) (`) 

1. Land 5,70,00,000 — — — 5,70,00,000 — — — — 5,70,00,000 5,70,00,000 

2. Building 3,89,89,750 — — — 3,89,89,750 2,32,35,310 10,81,283 — 2,43,16,593 1,57,54,440 1,46,73,157 

3. Plant & Machinery 68,60,259 — — 13,01,414 55,58,845 68,41,114 10,010 12,95,814 55,55,310 19,145 3,535 

4. Office Equipment 1,85,415 — — — 1,85,415 1,85,415 — — 1,85,415 — — 

5. Furniture & Fittings 4,07,319 — — — 4,07,319 4,07,319 — — 4,07,319 — — 

TOTAL 10,34,42,743 — — 13,01,414 10,21,41,329 3,06,69,158 10,91,293 12,95,814 3,04,64,637 7,27,73,585 7,16,76,692 

Previous Year 10,34,42,743 — — — 10,34,42,743 2,95,70,687 10,98,471 — 3,06,69,158 7,38,72,056 7,27,73,585 

Note: All assets mentioned above have been given under an Operating Lease to the Holding Company. 

As at As at 


(`) (`) 

8. CASH AND BANK BALANCES 

With Scheduled Banks on Current Accounts 27,19,441 33,89,178 

Deposit with Scheduled Banks 2,92,11,184 2,04,58,945 

3,19,30,625 2,38,48,123 

9. SHORT TERM LOANS AND ADVANCES 

Current Taxation (net of provisions) 2,29,681 7,23,000 

10. OTHER CURRENT ASSETS 

2,29,681 7,23,000 

Interest accrued on investment 9,58,877 5,10,180 

9,58,877 5,10,180 



(`) (`) 

11. REVENUE FROM OPERATIONS 

Operating Licence Fee 1,14,70,178 99,60,456 

1,14,70,178 99,60,456 

117

NOTES TO THE ACCOUNTS (Contd.) 



(`) (`) 

12. OTHER INCOME 

Interest on Fixed Deposit 20,79,940 12,81,560 

Profit on sale of Fixed Asset 1,20,400 — 

13. EMPLOYEE BENEFITS EXPENSE 

22,00,340 12,81,560 

Salaries/Wages and Bonus 85,35,415 65,29,223 

Contribution to Provident Fund 6,59,198 3,76,126 

Contribution to Gratuity Fund 3,26,558 4,94,498 

Workmen and Staff Welfare Expenses 2,03,574 1,29,800 

97,24,745 75,29,647 

Less: Recoveries (94,86,791) (73,53,049) 

2,37,954 1,76,598 

16. SIGNIFICANT ACCOUNTING POLICIES 

Convention 

To prepare financial statements in accordance with applicable Accounting 

Standards in India. A summary of important accounting policies is set out 

below. The financial statements have also been prepared in accordance 

with the relevant presentational requirements of the Companies Act, 1956. 


To prepare Financial Statements in accordance with the historical cost 

convention, modified by revaluation of certain fixed assets as and when 

undertaken. 

Fixed Assets 

To state Fixed Assets at cost of acquisition inclusive of inward freight, duties 

and taxes and incidental expenses related to acquisition. 

Depreciation 

To calculate depreciation on fixed assets in a manner that amortises the 

cost of the assets after commissioning, over their estimated useful lives or 

lives based on the rates specified in Schedule XIV to Companies Act, 1956, 

whichever is lower, by equal annual installments. 

Revaluation of Assets 

As and when Fixed Assets are revalued, to adjust the provision for depreciation 

on such revalued Fixed Assets, where applicable, in order to make allowance 

for consequent additional diminution in value on considerations of age, 

condition and unexpired useful life of such fixed assets; to transfer to 

Revaluation Reserve, the difference between the written up value of the 

Fixed Assets revalued and depreciation adjustment and to charge Revaluation 

Reserve Account with depreciation on that portion of the value which is 

written up. 


Income from operating licence fees is booked on accrual basis in accordance 

with the provisions of operating licence agreement / arrangements with 

the licencee viz, ITC Limited. 

Proposed Dividend 

To provide for Dividends (including income tax thereon) in the books of 

account, as proposed by the Directors, pending approval at the Annual 

General Meeting. 


To make regular monthly contributions to Provident Fund which are in the 

nature of defined contribution scheme and such paid/payable amounts 

are charged against revenue. The contribution in respect of Gratuity Fund 

is made to Life Insurance Corporation. 


To provide current tax as the amount of tax payable in respect of taxable 

income for the period, using the applicable tax rates and tax laws. 

To provide Deferred Tax 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 substantively 

enacted by the Balance Sheet date. 

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 realize such assets. 

118 




(`) (`) 

14. OTHER EXPENSES 

Consumption of Stores and Spare Parts 32,800 30,000 

Travelling and Conveyance 36,000 70,375 

Miscellaneous Expenses 69,559 71,530 

Miscellaneous Expenses includes 

1,38,359 1,71,905 

Audit Fees 13,236 13,236 

Tax Audit Fees 

15. EARNINGS PER SHARE 

6,067 6,067 

Profit/(Loss) after Taxation 


91,84,128 75,94,434 


Basic and diluted earnings per share in 

11,875 11,875 

rupees (face value - ` 100/- per share) 773.40 639.53 

17. GENERAL INFORMATION: 

Bay Islands Hotels Limited, a fully owned subsidiary of ITC Limited, owns 

a hotel in Port Blair known as ‘Fortune Resort Bay Island’. The Hotel 

Operations are under an Operating Licence Agreement with ITC Limited. 

18. 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, 2012. 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 the information available with the Company. 

19. The Company operates in a single reportable segment and hence the 

disclosure requirements of AS-17 are not applicable. 

20. RELATED PARTY DISCLOSURES 

Related party disclosures under Accounting Standard 18 are as follows 

i) Holding Company : ITC Limited 

ii) Key Management Personnel: 


Nakul Anand 

S.C.Sekhar 

Mohan Bhatnagar 

Arun Pathak 

G.H.C. Jadwet 

iii) Summary of transactions during the year (Rupees) : 

(a) Transactions with Holding Company:- 

2011-12 2010-11 

1. Rent Received 1,14,70,178 99,60,456 

2. Expenses Reimbursed 3,76,313 3,38,195 

3. Expenses Recovered 1,26,000 — 

4. Reimbursement of Contractual 

Remuneration 94,86,791 73,53,049 

5. Dividend Payment 5,93,750 5,93,750 

6. Balance as on 31st March, 12 

(i) Debtors /Receivables 33,29,935 30,63,436 

(b) Transaction with Key Management Personnel - Nil 

(Previous Year - Nil). 

21. Previous Year's figures have been regrouped/rearranged wherever necessary. 


Partner 











Date : 27th April, 2012



Your Directors take pleasure in submitting their Report for the financial year 

ended 31st March, 2012. 

FINANCIAL RESULTS 

Key aspects of your Company’s consolidated financial performance and 

standalone financial results are tabulated below: 

(` Lakhs) 

Consolidated(*) Standalone 

Year Ended March 31, 2012 2011 2012 2011 

Total Income 82990 63601 56623 42642 

Total Expenditure 75073 59972 51630 40481 

Operating Profit 7917 3629 4993 2161 

Depreciation 1500 1285 1446 1222 

Profit before Tax 6417 2344 3547 939 

Provision for Tax 1393 512 678 193 

Profit after Tax 5024 1832 2869 746 

(*) including ITC Infotech Limited, UK and ITC Infotech (USA), Inc.,(I2A), wholly 

owned subsidiaries of the Company, and Pyxis Solutions, LLC, USA, a wholly 

owned subsidiary of I2A. 

BUSINESS REVIEW 

Whilst the global IT services industry continued to be buffeted in 2011 by 

the headwinds of volatility in currency markets and macroeconomic 

uncertainties, particularly in Europe, which adversely impacted technology 

spends, your Company has delivered robust results. 

Despite such challenging circumstances, your Company’s consolidated 

Total Income grew by over 30% to ` 830 crores. Operating Profit grew by 

118% and Profit after Tax by 174%. This performance represents the 

outcome of the strategy set and action plans that is built on the foundation 

of: (i) domain-led differentiation across identified industry verticals, 

(ii) geographic expansion to leverage emerging growth opportunities 

aligned to capabilities and (iii) sharp focus on delivery excellence, designed 

to demonstrate continuous value addition to clients while enhancing service 

productivity. 

Apart from enlarging the in-house domain-based solutioning capabilities, 

the initiatives also provided a fillip to partnered co-innovation with leading 

independent software vendors (ISVs), with concomitant benefits in the 

market. With a view to securing the future, specific development programmes 

have been implemented to embrace disruptive technologies such as cloud 

computing, social media and mobile computing. 

As in the past, there was a selective expansion of market presence in high 

potential geographies to leverage market opportunities and also to serve 

as a measure of risk mitigation in the event of challenges in other markets. 

Emerging geographies such as EMEA and Asia Pacific are growing at 1.5 

times that of mature geographies. In the Report of the Directors for the 

year ended 31st March, 2011, your Company’s renewed focus on India 

and Asia Pacific was highlighted. Continuing the trend, during 2011-12, 

branches were set up in Hong Kong, France, Germany and South Korea 

(Republic of Korea). 

In addition, an important milestone in the evolution of your Company’s 

delivery capability has been the commissioning of a new Development 

Centre at Pune during 2011-12. Another development centre at Trivandrum 

is planned to be commissioned in the first quarter of 2012-13. 

While the quality of delivery continues to delight global customers, your 

Company has also been contributing in a meaningful manner to enhancing 

the competitiveness of its parent, ITC Limited’s other businesses. Your 

Company has also implemented a pioneering coalition loyalty programme 

for two of the parent’s businesses on the world-leading Siebel technology. 

The Company launched its first software product “OptSustain” in the Indian 

market during the year, which assists customers with managing and reporting 

corporate sustainability performance; a notable addition to the Company’s 

intellectual property. 

ITC INFOTECH INDIA LIMITED 

An externally administered customer satisfaction survey reveals that customers 

have awarded your Company high scores, which are understood to be at 

topmost levels obtaining in the industry. While the scores validate the worldclass 

quality of service, retaining such scores for the second consecutive 

year stands testimony to the commitment continuously raising the levels 

of service to meet growing market expectations. 

The overall service delivery capability of your Company continues to earn 

global recognition. Your Company was featured for the sixth consecutive 

year in the 2011 Global Services 100 survey, conducted by Global Services 

and Neo Advisory. Leading analyst firms such as Gartner and Forrester 

Research, Inc. continue to highlight your Company’s capabilities in industry 

and technology reports, e.g. Forrester’s report on “Cloud strategies of the 

leading IT global service providers” identifies ITC Infotech as one of the 

20 leading global ITO and telecom providers considered for the report. 

Uncertain economic conditions continue to persist, particularly in developed 

markets which account for about 80% of IT services spends. With a portfolio 

of differentiated solutions, expanding market presence and excellence in 

delivery, your Company is confident of sustaining the robust growth achieved 

in the year under review. 

WHOLLY OWNED SUBSIDIARIES - FINANCIAL PERFORMANCE 

Key aspects of financial performance of your Company’s wholly owned 

subsidiaries are tabulated below : 

ITC Infotech (USA), Inc 

Consolidated(*) 

ITC Infotech Limited 

(millions) (millions) 

US$ ` US$ ` GBP ` GBP ` 

Year Ended March 31, 2012 2012 2011 2011 2012 2012 2011 2011 

Total Revenue 49.85 2395.43 38.43 1713.97 24.35 1870.89 22.22 1595.63 

Net Profit 0.30 1.44 0.01 0.32 2.13 163.35 1.03 74.31 

(*) including Pyxis Solutions, LLC, its wholly owned subsidiary 

During the year under review, Pyxis Solutions, LLC, declared and paid 

US$500,000 (` 240 lakhs) as dividend for the financial year 2011-12 

[previous year - US$ 750,000 (` 334.50 lakhs)] by way of distribution to 

its Sole Member i.e. ITC Infotech (USA), Inc. 

TALENT MANAGEMENT 

The talent management strategy aims to support the ambitious growth 

plans by positioning your Company as the employer of choice for existing 

and prospective employees. Towards this end, sharply focused initiatives 

encompassing recruitment, training, engagement and retention are being 

implemented and continuously refined. Training inputs to employees, apart 

from those that are generally prevalent among leading global IT service 

companies, also include programmes specially designed by international 

experts and the unique advantage of induction in the parent company’s 

businesses, thus defining the domain edge that is integral to your Company’s 

service offering. The spawning of many employee leagues has served to 

deepen employee bonding. The broad spectrum of services, coupled with 

growing client engagements across the world, has created workplace 

challenges necessary to motivate employees, offer attractive career growth 

opportunities and minimise attrition. 

DIRECTORS’ RESPONSIBILITY STATEMENT 


Directors confirm: 

(i) that in the preparation of the Annual Accounts for the financial year 

ended 31st March, 2012, 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 judgements 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 

119


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, 

2012 have been prepared on a going concern basis. 

OTHER INFORMATION 

I. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION 

In view of the nature of activities that are being carried on by your 

Company, particulars as required under Section 217(1)(e) of the 

Companies Act, 1956 and Rules 2A and 2B of the Companies (Disclosure 

of Particulars in the Report of Board of Directors) Rules, 1988 concerning 

conservation of energy and technology absorption respectively are not 

applicable to your Company. 

Your Company being a software solution provider requires minimal 

energy consumption and every endeavour has been made to ensure 

the optimal use of energy, avoid wastage and conserve energy. 

During the year under review your Company piloted an Enthalpy based 

air conditioning system thereby leading to energy savings as fresh air 

bleed is carried in the evenings or during periods when the ambient 

temperature is low. 

II. FOREIGN EXCHANGE EARNINGS AND OUTGO 

The foreign exchange earnings (FOB- Accrual basis) of your Company 

during the year were ` 42452.69 lakhs (previous year ` 31357.68 lakhs) 

while the outgoings (on accrual basis) were ` 12325.98 lakhs (previous 

year ` 9327.08 lakhs). 

III. PARTICULARS OF EMPLOYEES 

The particulars of employees in terms of Section 217(2A) of the 

Companies Act, 1956 read with Companies (Particulars of Employees) 

Rules, 1975, as amended, is given in Annexure “A”. 

DIRECTORS 

In accordance with the provisions of Section 256 of the Companies Act, 

1956 and Articles 143 & 144 of the Articles of Association of the Company, 

Mr. S. Puri and Mr. A. Nayak will retire by rotation at the ensuing Sixteenth 

ANNEXURE ‘A’ TO THE REPORT OF DIRECTORS 

FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2012 

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 ` 60,00,000 /- or more p.a. 

Bangalore, 8th May, 2012 

120 


Annual General Meeting (AGM) of the Company and, being eligible, offer 

themselves for re-election. 

The Board of Directors of your Company (’the Board’) at its meeting held 

on 1st March, 2012 re-appointed Mr. Sumant Bhargavan as Managing 

Director of the Company, subject to your approval and such other approvals 

as may be necessary, for a further period of three years with effect from 

1st April, 2012. Appropriate resolution seeking your approval to Mr. Sumant’s 

appointment is included in the Notice convening the AGM of the Company. 


The Audit Committee of your Company comprises Mr. B. B. Chatterjee 

(Chairman of the Committee), Mr. A. Nayak, Mr. R. Tandon and Mr. S. Puri, 

all non-executive Directors of your Company. The Managing Director, the 

Chief Financial Officer, the Statutory Auditors and the Internal Auditors are 

Permanent Invitees to the Committee. The Company Secretary serves as 

the Secretary to the Committee. 

AUDITORS 

M/s. Lovelock & Lewes, Statutory Auditors, retire at the AGM and, being 

eligible, offer themselves for re-appointment. 

ACKNOWLEDGEMENTS 

Your Directors thank the customers and vendors for their continued support. 

Your Directors place on record their appreciation of the vital contribution 

made by employees at all levels; your Company’s consistent growth was 

made possible by their hard work, solidarity, co-operation and support. 

Bangalore, 8th May, 2012 On behalf of the Board 



37 J. L. Nehru Road 

Kolkata 700 071 B. Sumant Managing Director 

India. S. Sivakumar Vice Chairman 

Gross Net Experience Date of Previous Employment / 

Name Age Designation / Nature of Duties Remuneration (`) Remuneration (`) Qualifications (Years) Joining Position held 

1 2 3 4 5 6 7 8 9 

BABU V.V.R. 57 Sr Vice President - IT Services 7188936 3801865 M.Sc., M.Phil. 35 1-Oct-00 ITC Ltd. Divisional Head - 

India Operations (ISD) 

Employed for a part of the year and in receipt of remuneration aggregating ` 5,00,000/- or more per month 

SATYANARAYANA K.P.P. 58 General Manager - MIS 888641 793806 B.Com. (Hons.) 32 1-Oct-00 ITC Ltd. 

PGDCA MIS Manager 

SINGH PARMINDER 39 Head - Business Development 865106 742878 B.Com., PGDBM 17 1-Aug-09 Wipro Ltd. 

(India) National Sales Manager 

Notes : 

1. Remuneration includes salary, performance effectiveness pay, allowances, incentives, other benefits/applicable perquisites except contribution to the approved Group Pension under the 

Defined Benefit 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. 

2. Net Remuneration comprises cash income less (a) income tax & 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 Company’s rules. 

4. None of the above employees is a relative of any Director of the Company. 


B. Sumant Managing Director 

S. Sivakumar Vice Chairman

AUDITORS’ REPORT TO THE MEMBERS OF ITC INFOTECH INDIA LIMITED 

1. We have audited the attached Balance Sheet of ITC INFOTECH INDIA 

LIMITED (”the Company”), as at 31st March, 2012, the related Statement 

of Profit and Loss and the 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 

Company’s Management. Our responsibility is to express an opinion 

on these financial statements based on our audit. 










our opinion. 

3. As required by the Companies (Auditor’s Report) Order, 2003, as 

amended by the Companies (Auditor’s 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. 




the best of our knowledge and belief, were necessary for the 






[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 31st March, 2012] 

1. (a) The Company is maintaining proper records showing full particulars 


(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. 


given to us, no substantial part of fixed assets has been disposed 

off 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. 




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. 


given to us, there are no contracts or arrangements referred to in 


(c) The Balance Sheet, the Statement of Profit and Loss 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 Statement of Profit and Loss 

and the 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; 


as on 31st March, 2012 and taken on record by the Board of 

Directors, none of the directors, who have given the said 

representations to the Company, is disqualified as on 31st March, 

2012 from being appointed as a director in terms of clause (g) of 

sub-section (1) of Section 274 of the Act; 

(f) In our opinion and to the best of our information and according 

to the explanations given to us, the said financial statements 

together with the notes thereon and attached thereto give, in the 

prescribed manner, the information required by the Act, and give 

a true and fair view in conformity with the accounting principles 




(ii) in the case of the Statement of Profit and Loss, of the profit 

for the year ended on that date; and 




Firm Registration Number: 301056E 



Place : Bangalore Partner 

Date : 8th May, 2012 Membership Number: 55000 

Section 301 of the Act, the particulars of which needs to be entered 

into the register maintained under that Section. 


the meaning of Sections 58A and 58AA of the Act and the Rules framed 

there under. 

6. In our opinion, the Company has an internal audit system commensurate 

with its size and nature of its business. 



Company is regular in depositing the undisputed statutory dues 

including provident fund, employees’ state insurance, income tax, 

sales tax, service tax, customs duty, cess and other material statutory 

dues as applicable with the appropriate authorities in India. Investor 

education and protection fund, wealth tax and excise duty are not 

applicable to the Company for the current year. 


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. Investor 

education and protection fund, 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, 2012, and 

it has not incurred any cash losses during the financial year ended on 

that date or in the immediately preceding financial year. 

9. 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. 




121




given to us, on an overall basis, the unsecured loans in the nature of 

term loans taken from the holding company have been applied for the 

purposes for which they were obtained. 

13. On the basis of an overall examination of the balance sheet of the 

Company, in our opinion and according to the information and 






15. The Company has not raised any money by public issues during the 

year. 



122 






Place : Bangalore Partner 

Date : 8th May, 2012 Membership Number: 55000 


As at As at 

Notes 31st March, 2012 31st March, 2011 

(`) (`) 

I EQUITY AND LIABILITIES 

1 Shareholders’ funds 

(a) Share capital 2 85,20,00,000 85,20,00,000 

(b) Reserves and surplus 3 85,07,55,353 56,38,09,242 

2 Non-current liabilities 

(a) Long-term provisions 4 6,76,06,616 6,84,24,650 

3 Current liabilities 

(a) Short-term borrowings 5 57,00,00,000 1,49,25,00,000 

(b) Trade payables 6 22,91,66,677 19,61,68,972 

(c) Other current liabilities 7 71,92,28,469 31,35,03,488 

(d) Short-term provisions 8 12,26,43,193 8,61,42,638 

TOTAL 3,41,14,00,308 3,57,25,48,990 

II ASSETS 

1 Non-current assets 

(a) Fixed assets 9 

(i) Tangible assets 58,03,26,316 29,27,90,800 

(ii) Intangible assets 3,81,30,702 5,33,22,652 

(iii) Capital work-in-progress 1,92,22,099 48,20,840 


(c) Deferred tax assets (net) 11 7,60,67,526 6,12,96,983 

(d) Long-term loans and advances 12 2,15,82,514 1,99,49,493 

2 Current assets 

(a) Trade receivables 13 1,36,21,64,274 1,27,65,10,676 

(b) Cash and bank balances 14 19,06,11,521 63,33,88,608 

(c) Short-term loans and advances 15 25,27,66,577 32,70,46,337 

(d) Other current assets 16 94,692 3,29,88,514 

TOTAL 3,41,14,00,308 3,57,25,48,990 

Significant Accounting Policies 

The Notes referred to above form an integral part of the Balance Sheet. 


1 





Partner 


Place : Bangalore 

Date : 8th May, 2012 




nor have we been informed of such case by the Management. 

17. The other clauses, (ii)(a), (ii)(b), (ii)(c), (iii)(b), (iii)(c), (iii)(d), (iii)(f), 

(iii)(g), (v)(b), (viii), (xiii), (xiv) and (xix) of paragraph 4 of the Companies 

(Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s 

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. 


B. Sumant Managing Director 

S. Sivakumar Vice Chairman 

R. Batra Chief Financial Officer S. V. Shah Company Secretary



Notes For the year ended For the year ended 


(`) (`) 

I Revenue from Operations 17 5,63,10,51,222 4,21,39,16,281 

II Other Income 18 3,12,76,112 5,02,49,477 

Total Revenue 5,66,23,27,334 4,26,41,65,758 

III Expenses 

Employee Benefits Expense 19 3,73,36,40,650 2,93,58,02,198 

Other Expenses 20 1,42,92,99,786 1,11,22,49,756 

Depreciation and Amortisation 9 14,46,45,985 12,22,30,455 

Total Expenses 5,30,75,86,421 4,17,02,82,409 

IV Profit before Tax 35,47,40,913 9,38,83,349 

V Tax Expenses 21 

Current Tax 8,25,65,345 1,13,21,011 

Deferred Tax (1,47,70,543) 79,87,933 

6,77,94,802 1,93,08,944 

VI Profit after Tax 28,69,46,111 7,45,74,405 

Earnings Per Share (Face value ` 10 each) 


28 3.37 0.88 

Significant Accounting Policies 

The Notes referred to above form an integral part of the Statement of Profit and Loss. 





1 


Partner 







(`) (`) (`) (`) 

(Figures for the previous year have been rearranged to conform 

with the revised presentation) 


ADJUSTMENTS FOR : 

35,47,40,913 9,38,83,349 

Depreciation and Amortisation 14,46,45,985 12,22,30,455 

Fixed Assets - Loss on Sale / Write off (net) 33,09,836 10,25,906 

Unrealised (Gain) / Loss on Exchange 1,18,12,090 (33,46,501) 

Provision for Doubtful Loans & Advances 13,32,442 7,38,951 

Interest on Loans, Deposits etc (62,32,678) (3,63,60,697) 

Provision for Doubtful Debts 55,03,985 — 

Liability no longer required written back (87,30,894) (23,56,798) 

15,16,40,766 8,19,31,316 



50,63,81,679 17,58,14,665 

Trade and Other Receivables (12,50,19,075) (36,99,65,576) 

Trade and Other Payables 48,31,36,102 35,81,17,027 (1,44,39,477) (38,44,05,053) 

CASH FROM OPERATIONS 86,44,98,706 (20,85,90,388) 

Income Tax Paid (1,07,98,353) 5,00,04,984 

NET CASH (USED IN) / FROM OPERATING ACTIVITIES 87,52,97,059 (25,85,95,372) 

B. CASH FLOW FROM INVESTING ACTIVITIES : 

Purchase of Fixed Assets (43,47,00,646) (17,95,55,139) 

Interest Received 3,91,26,500 36,67,301 

NET CASH (USED IN) / FROM INVESTING ACTIVITIES (39,55,74,146) (17,58,87,838) 

C. CASH FLOW FROM FINANCING ACTIVITIES : 

Proceeds from Short-Term Borrowings 3,03,85,00,000 2,39,61,00,000 

Repayments of Short-Term Borrowings (3,96,10,00,000) (2,01,25,00,000) 

NET CASH (USED IN) / FROM FINANCING ACTIVITIES (92,25,00,000) 38,36,00,000 

NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (44,27,77,087) (5,08,83,210) 



CASH AND CASH EQUIVALENTS COMPRISE : 

19,06,11,521 63,33,88,608 

Cash and Bank Balances 18,93,51,297 63,26,86,429 

Unrealised (Loss)/Gain on Foreign Currency Cash and Cash Equivalents 


12,60,224 19,06,11,521 7,02,179 63,33,88,608 





Partner 




B. Sumant 


Managing Director 


R. Batra Chief Financial Officer S. V. Shah Company Secretary 

B. Sumant 




R. Batra Chief Financial Officer S. V. Shah Company Secretary 

123


Note No. 

NATURE OF OPERATIONS 

ITC Infotech India Limited (”the Company”) is a wholly owned subsidiary of ITC 

Limited (”the Holding Company”) providing information technology solutions and 

software development services. 

1 SIGNIFICANT ACCOUNTING POLICIES 

a) Convention 

To prepare financial statements in accordance with applicable Accounting Standards 

in India. A summary of important accounting policies, which have been applied 

consistently, is set out below. The financial statements have also been prepared in 

accordance with relevant presentational requirements of the Companies Act, 1956. 

b) Basis of Accounting 

To prepare financial statements in accordance with the historical cost convention. 

c) Revenue Recognition 

To recognise revenues from services performed on a “time and material” basis, as 

and when the services are performed. 

To recognise revenues from services performed on “time bound fixed-price 

engagements” using the percentage of completion method of accounting, if work 

completed can be reasonably estimated. The cumulative impact of any revision in 

estimates of the percentage of work completed is reflected in the period in which 

the change becomes known. Provisions for estimated losses on such engagements 

are made during the period in which a loss becomes probable and can be reasonably 

estimated. 

To recognise revenue from trading in software packages / licenses / hardware upon 

delivery to customer. 

To treat amounts received or billed in advance of services performed as unearned 

revenue. Unbilled revenue, included in debtors, represents amounts recognised 

based on services performed in advance of billing in accordance with contract terms. 

d) Fixed Assets 

To state fixed assets at actual cost less accumulated depreciation. The actual cost 

capitalised includes material cost, freight, installation cost, duties and taxes, finance 

charges and other incidental expenses incurred during the construction / installation 

stage. 

To capitalise software where it is expected to provide future enduring economic 

benefits. Capitalisation costs include license fees and costs of implementation / 

system integration services. The costs are capitalised in the year in which the relevant 

software is implemented for use. 

e) Capital Work-in-Progress 

To treat cost of assets not put to use before the year-end as capital work-in-progress. 

f) Depreciation 

To calculate depreciation on fixed assets on the straight-line method over their 

estimated useful lives at the rates, which are not less than those prescribed under 

Schedule XIV of the Companies Act, 1956. 

The cost of and the accumulated depreciation for fixed assets sold, retired or otherwise 

disposed off are removed from the stated values and the resulting gains and / or 

losses are included in the Statement of Profit and Loss. 

The estimated useful lives of fixed assets are as follows: 

Buildings 25 years 

Plant and Machinery - Computers / Computer Accessories 3 to 5 years 

Other Equipment 5 years 

Furniture and Fixtures 5 years 

Motor Vehicles 5 years 

Leasehold Improvements Shorter of lease period or estimated useful lives 

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. 

g) 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 asset’s net 

124 


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. 

h) 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. 

i) Proposed Dividend 

To provide for Dividends as proposed by the Directors in the books of accounts, 

pending approval at the Annual General Meeting. 

j) Research and Development 

To charge off all revenue expenditure incurred on research and development in the 

year it is incurred. Assets purchased for research and development activities are 

included in fixed assets. 

k) Taxes on Income 

To provide and determine current tax as the amount of tax payable in respect of 

taxable income for the period. 

To provide and recognise 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 

losses unless there is virtual certainty that there will be sufficient future taxable 

income available to realise such assets. 

l) Foreign Currency Translation 

To account for transactions in foreign currency at the exchange rate prevailing on 

the date of transactions. Gains / losses arising out of fluctuations in the exchange 

rates are recognized in the Statement of Profit and Loss in the period in which 

they arise. 

To account for differences between the forward exchange rates and the exchange 

rates at the date of transactions, as income or expense over the life of the contracts. 

To account for profit / loss arising on cancellation or renewal of forward exchange 

contracts as income / expense for the period. 

To account for gains / losses on foreign exchange rate fluctuations relating to current 

assets and liabilities at the Balance Sheet date. 

To translate the financial statements of the foreign branch offices of the Company 

using the same principles and procedures stated above as the operations of such 

branches are integral in nature. 

m) Employee Benefits 

To make regular monthly contributions to various Provident Funds which are in the 

nature of defined contribution scheme and to charge such paid / payable amounts 

against revenue. To administer through duly constituted and approved independent 

trusts such Funds. 

To administer through duly constituted and approved independent trusts, various 

Gratuity and Pension Funds which are in the nature of defined benefit schemes. The 

liabilities towards such schemes including employee leave encashment are ascertained 

by an independent actuarial valuation as per the requirements of Accounting 

Standard - 15 (revised 2005) on “Employee Benefits”. To determine actuarial gains 

or losses as the difference between the actual and expected returns on plan assets, 

effect of changes in discount rates, unexpectedly high or low rates of employee 

turnover, early retirements, mortality or increase in salary benefits and the effect of 

changes in any other actuarial assumptions and to recognise such gains and losses 

immediately in the Statement of Profit and Loss as income or expense. 

n) Claims 

To disclose claims against the Company not acknowledged as debts after a careful 

evaluation of the facts and legal aspects of the matter involved. 

o) Segment Reporting 

To identify segments having regard to the dominant source and nature of risks and 

returns and the internal organisation and management structure.



As at 


(`) 

As at 


(`) 

As at 


(`) 

As at 


(`) 

2 SHARE CAPITAL 

5 SHORT-TERM BORROWINGS 

Authorised: 

8,60,00,000 (2011 - 8,60,00,000) 

Equity Shares of ` 10 each 

Issued, subscribed and paid-up: 

86,00,00,000 86,00,00,000 

Short-Term Unsecured Loans 

From Related Party 

(Interest-free Loan from the 

Holding Company, ITC Limited) 

57,00,00,000 1,49,25,00,000 

8,52,00,000 (2011 - 8,52,00,000) 

Equity Shares of ` 10 each 85,20,00,000 85,20,00,000 

Terms of repayment for loans outstanding 

as at 31st March, 2012 

(All Equity Shares are held by ITC Limited, 

(i) ` 44,75,00,000 repayable within 5 years from 

the Holding Company. The Equity Shares of the 

the date of disbursement or on demand 

Company, having par value of ` 10 per share, 

rank pari passu in all respects including 

(ii) ` 12,25,00,000 repayable on 

19th December, 2012. 

entitlement to dividend. Repayment of capital 

in the event of winding up of the Company will 

inter alia be subject to the provisions of the 

6 TRADE PAYABLES 

57,00,00,000 1,49,25,00,000 

3 

Articles of Association of Company and as may be 

determined by the Company in General Meeting 

prior to such winding up). 

85,20,00,000 

RESERVES AND SURPLUS 

85,20,00,000 

7 

Dues to Micro and Small Enterprises 

Dues to other than Micro and Small Enterprises 

OTHER CURRENT LIABILITES 

— 

22,91,66,677 

22,91,66,677 

— 

19,61,68,972 

19,61,68,972 


Balance at the beginning of the year 

Add : Profit for the year 

56,38,09,242 

28,69,46,111 

85,07,55,353 

48,92,34,837 

7,45,74,405 

56,38,09,242 


Employee 

Statutory Dues 

Other Liabilities 

46,67,86,350 

10,06,93,031 

15,17,49,088 

71,92,28,469 

15,48,93,100 

9,47,37,933 

6,38,72,455 

31,35,03,488 

4 LONG-TERM PROVISIONS 


Provision for Retirement Benefits 6,76,06,616 

6,76,06,616 

6,84,24,650 

6,84,24,650 

8 SHORT-TERM PROVISIONS 


Provision for Retirement Benefits 12,26,43,193 

12,26,43,193 

8,61,42,638 

8,61,42,638 

9. FIXED ASSETS 

GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK 

As at Additions Withdrawals / As at As at For the On As at As at As at 

DESCRIPTION 1st April, Adjustment 31st March, 1st April, year Withdrawals 31st March, 31st March, 31st March, 

2011 2012 2011 /Adjustment 2012 2012 2011 

(`) (`) (`) (`) (`) (`) (`) (`) (`) (`) 

(i) TANGIBLE ASSETS 

Leasehold 

Improvements 13,06,49,788 14,17,59,642 1,22,366 27,22,87,064 7,41,48,900 2,54,36,034 84,650 9,95,00,284 17,27,86,780 5,65,00,888 

Plant and Equipments 18,44,11,560 12,46,32,823 21,84,160 30,68,60,223 10,00,53,746 3,10,17,948 18,71,191 12,92,00,503 17,76,59,720 8,43,57,814 

Office Equipments 1,66,93,493 8,37,837 10,00,703 1,65,30,627 1,11,89,731 1,38,992 9,36,141 1,03,92,582 61,38,045 55,03,762 

Computers etc. 28,80,67,738 8,21,71,272 3,04,37,987 33,98,01,023 17,18,22,383 4,56,25,672 2,82,72,769 18,91,75,286 15,06,25,737 11,62,45,355 

Furniture and Fixtures 9,26,10,959 5,70,50,747 39,98,025 14,56,63,681 6,24,27,978 1,33,88,323 32,68,654 7,25,47,647 7,31,16,034 3,01,82,981 

SUB TOTAL 71,24,33,538 40,64,52,321 3,77,43,241 1,08,11,42,618 41,96,42,738 11,56,06,969 3,44,33,405 50,08,16,302 58,03,26,316 29,27,90,800 


(ii) INTANGIBLE ASSETS 

54,40,00,793 18,12,41,799 1,28,09,054 71,24,33,538 33,59,65,646 9,54,60,240 1,17,83,148 41,96,42,738 29,27,90,800 

Capitalised Software 31,13,36,940 1,38,47,066 — 32,51,84,006 25,80,14,288 2,90,39,016 — 28,70,53,304 3,81,30,702 5,33,22,652 

SUB TOTAL 31,13,36,940 1,38,47,066 — 32,51,84,006 25,80,14,288 2,90,39,016 — 28,70,53,304 3,81,30,702 5,33,22,652 


(iii) CAPITAL 

WORK-IN-PROGRESS 

30,08,51,251 1,21,08,277 16,22,588 31,13,36,940 23,28,66,661 2,67,70,215 16,22,588 25,80,14,288 5,33,22,652 

Capital Work-in-Progress 1,92,22,099 48,20,840 

GRAND TOTAL 1,02,37,70,478 42,02,99,387 3,77,43,241 1,40,63,26,624 67,76,57,026 14,46,45,985 3,44,33,405 78,78,69,606 63,76,79,117 35,09,34,292 

31st March, 2011 84,48,52,044 19,33,50,076 1,44,31,642 1,02,37,70,478 56,88,32,307 12,22,30,455 1,34,05,736 67,76,57,026 35,09,34,292 

As at As at 


(`) (`) 

10 NON-CURRENT INVESTMENT 

Long-Term, Non-Trade Investments - 

Unquoted (At Cost) Subsidiary Companies 

ITC Infotech Limited (UK) 

6,85,815 (2011 - 6,85,815) Equity Shares 

of GBP 1 each, fully paid-up 

6,86,85,837 6,86,85,837 

ITC Infotech (USA), Inc. 

1,82,000 (2011 - 1,82,000) Common Shares 

without par value, fully paid-up 

80,17,48,250 80,17,48,250 

11 DEFERRED TAX ASSETS (NET) 

Deferred Tax Assets 

On provision for employees' separation 

87,04,34,087 87,04,34,087 

and retirement etc. 6,17,26,551 5,25,37,421 

On provision for doubtful debts and advances 1,12,43,858 94,55,578 

On fiscal allowances on fixed assets 30,97,117 — 

Less : Deferred Tax Liabilities 

7,60,67,526 6,19,92,999 

On fiscal allowances on fixed assets 

(Deferred tax assets and deferred tax liabilities 

have been offset as they relate to the same 

governing tax laws) 

— 6,96,016 

7,60,67,526 6,12,96,983 

As at As at 


(`) (`) 

12 LONG-TERM LOANS AND ADVANCES 

Good and Unsecured 

Loans to Employees 

Deposits with Government, Public Bodies 

1,39,82,453 1,78,02,216 

and Others 76,00,061 21,47,277 

13 TRADE RECEIVABLES 

Trade receivables outstanding for a period 

exceeding six months from the date 

they are due for payment 

2,15,82,514 1,99,49,493 

Unsecured, considered good 10,39,02,274 5,23,56,509 

Unsecured, considered doubtful 2,28,62,560 1,73,58,575 

12,67,64,834 6,97,15,084 

Less: Provision for doubtful debts (2,28,62,560) (1,73,58,575) 

Others 

10,39,02,274 5,23,56,509 

Unsecured, considered good * 

* Includes Unbilled Revenue ` 4,63,03,834 

(2011 - ` 4,72,03,828) 

1,25,82,62,000 1,22,41,54,167 

1,36,21,64,274 1,27,65,10,676 

125

14 CASH AND BANK BALANCES 

Cash and Cash Equivalents 

Cash in Hand 1,26,193 1,08,067 

Cheques, demand drafts on hand 

Balances with banks : 

2,31,13,426 81,20,108 

On Current Accounts 


16,69,71,902 10,47,60,433 

On Deposit Account* 

*includes ` 4,00,000 (2011 - ` 4,00,000) 

held as margin money 

4,00,000 52,04,00,000 

19,06,11,521 63,33,88,608 

15 SHORT - TERM LOANS AND ADVANCES 


Advances recoverable in Cash or in kind 

or for value to be received 6,88,59,555 4,85,53,808 

Loans to Employees 

Advance Tax 

1,13,47,510 1,07,17,361 

(Net of Provision for Income Tax) 

(Net of Provision for Indian Income Tax 

` 18,38,28,849 (2011 - ` 10,86,28,179) 

and Provision for Tax for Overseas Branches 

` 1,04,17,544 (2011 - ` 82,13,694)) 

Deposits with Government, 

16,83,87,610 26,17,51,308 

Public Bodies and Others 

Doubtful and Unsecured 

Advances recoverable in Cash or in kind 

41,71,902 60,23,860 

or for value to be received 93,30,338 80,40,083 

Loans to Employees 24,62,234 24,20,047 

Less : Provision for Short - Term Loans 

1,17,92,572 1,04,60,130 

and Advances (1,17,92,572) (1,04,60,130) 

25,27,66,577 32,70,46,337 

16 OTHER CURRENT ASSETS 


Interest accrued on Deposits, 

Loans, Advances, etc. 94,692 3,29,88,514 

94,692 3,29,88,514 



(`) (`) 

17 REVENUE FROM OPERATIONS 

Sale of Services 

Exports 4,24,51,02,468 3,13,57,67,526 

Domestic 1,27,64,37,254 1,07,54,56,957 

Resale of Hardware and Software 

(includes Exports 2012 ` 1,66,107 

( 2011 ` Nil)) 

10,07,80,606 3,35,000 

Other Operating Revenues 87,30,894 23,56,798 

5,63,10,51,222 4,21,39,16,281 

18 OTHER INCOME 

Interest on Deposits - Gross 62,32,678 3,63,60,697 

Interest Others 2,11,01,644 1,10,48,423 

Sale of Scrap etc. 5,84,337 1,31,734 


3,12,76,112 5,02,49,477 

19 EMPLOYEE BENEFITS EXPENSE 

Salaries and Bonus 

Contribution to Provident and 

3,51,57,92,634 2,79,27,29,043 

Other Funds (Refer Note 26) 15,08,67,208 9,74,06,337 

Workmen and Staff Welfare Expenses 3,04,84,979 2,27,79,861 

Reimbursement of Contractual Remuneration 3,64,95,829 2,28,86,957 

3,73,36,40,650 2,93,58,02,198 

126 

As at As at 


(`) (`) 




(`) (`) 

20 OTHER EXPENSES 

Rent 4,72,13,851 4,01,23,527 

Rates and Taxes 18,76,941 15,71,771 

Insurance 2,66,32,892 2,30,22,871 

Travelling and Conveyance 38,17,46,903 29,40,21,493 

Recruitment Expenses 4,08,83,559 5,34,38,423 

Communication 3,13,79,423 2,81,38,724 

Power and Fuel 5,17,49,172 4,11,04,659 

Outsourcing Charges 47,09,35,852 30,92,25,973 

Software and Related Expenses 6,83,02,431 5,50,35,756 

Purchase of Hardware and Software for Resale 7,18,46,424 94,500 

Business Development Expenses 

Repairs and Maintenance 

2,94,11,565 3,28,89,928 

- Buildings 2,36,64,432 1,30,36,883 

- Machinery 1,66,04,349 1,27,77,866 

- Others 45,62,153 64,10,177 

Legal, Professional and Consultancy Expenses 7,53,09,553 4,02,54,953 

Doubtful and Bad Debts 55,03,985 — 

Doubtful and Bad Loans and Advances 13,32,442 7,38,951 

Fixed Assets Discarded 

Auditors' Remuneration and Expenses 

33,09,836 10,25,906 

(Refer Note 29) 18,19,291 17,62,409 

Training and Development 2,50,80,948 2,04,68,167 

Bank Charges 35,37,112 16,70,776 

Printing and Stationery 31,31,141 25,48,127 

Loss on Exchange (Net) 2,54,52,952 11,86,43,132 

Miscellaneous Expenses 1,80,12,579 1,42,44,784 

21 TAX EXPENSES 

1,42,92,99,786 1,11,22,49,756 

Current Tax 

(including tax on foreign branches 

` 95,75,838 (2011 - ` 83,22,746) 

Adjustment for earlier year based on 

14,22,69,602 3,64,13,124 

completed assessment 6,46,016 (1,62,98,956) 

Deferred Tax (1,47,70,543) 79,87,933 

MAT Credit (6,03,50,273) (87,93,157) 

22 Commitments and Contingencies 

6,77,94,802 1,93,08,944 

a) Estimated amount of contracts remaining to be executed on capital account (net 

of advances ` Nil, 2011 - ` Nil) ` 1,89,06,870 (2011 - ` 2,23,23,643). 

b) Claims against the Company not acknowledged as debts ` 8,25,74,741 

(2011 - ` 6,29,59,452) comprising certain claims relating to income tax disputed 

by the Company. 

23 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 also as at 

31st March, 2012. 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. 

24 The Company’s 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 9 years generally, and are usually renewable 

by mutual consent on mutually agreeable terms. The aggregate lease rentals payable 

` 4,54,93,100 (2011- ` 40,123,527) are charged as Rent under Note 20 to the Accounts. 

The Company has one non cancellable leasing arrangement with a lock-in period of 

3 years for which the lease rentals of ` 17,20,751 (2011 - ` Nil) has been charged 

as Rent under Note 20 to the Accounts. 

The future minimum lease payment for the non-cancellable operating lease are as 

follows: 


Within 1 year ` 41, 40,864 Nil 

2 to 3 years ` 66,36,727 Nil 

25 The Company uses forward exchange contracts to hedge against its foreign 

currency exposure relating to the underlying transaction and firm commitments. 

The use of foreign exchange forward contracts reduces the risk or cost to the 

Company. The Company does not use the foreign exchange forward contracts 

for trading or speculation purposes. The information on such outstanding contracts 

as at the year end is as follows: 


Currency Pair Currency Buy Sell Buy Sell 

GBP - USD GBP — 11,46,697 — 14,70,000 

EUR - USD EUR — 50,92,637 — 2,32,00,000 

USD - INR USD — 1,42,71,435 — 3,89,95,429 

AUD - USD AUD — 10,00,000 — 31,90,000 

USD - DKK DKK 96,00,000 — 4,79,78,225 — 

USD - SEK SEK 6,00,000 — 10,60,000 — 

USD - NOK NOK — — 24,00,000 —


26 Employee Benefits 

(a) The following table sets out the Defined Benefit Plans / Long-Term Compensated Absences - as per Actuarial Valuation as on 31st March, 2012 and recognised in the financial 

statements in respect of Employee Benefit Schemes : 

For the year ended 31st March, 2012 For the year ended 31st March, 2011 

(`) (`) 

Leave Leave 

Pension Gratuity Encashment Pension Gratuity Encashment 

I. Components of Employer Expense Funded Unfunded Funded Unfunded 

1 Current Service Cost 1,92,58,933 1,31,75,100 1,32,33,474 1,71,66,880 1,29,15,384 1,31,79,845 

2 Interest cost 1,39,54,205 87,42,798 62,08,573 1,39,33,619 72,54,149 55,93,649 

3 Expected Return on Plan Assets (1,02,58,875) (73,21,875) — (93,36,000) (70,80,000) — 

4 Curtailment Cost / (Credit) — — — — — — 

5 Settlement Cost / (Credit) — — — — — — 

6 Past Service Cost — — — — — — 

7 Actuarial Losses / (Gains) (19,48,079) 62,01,024 (55,02,246) (2,73,39,272) 15,56,917 (14,29,551) 

8 Total expense recognised in the Statement of 

Profit & Loss 2,10,06,184 2,07,97,047 1,39,39,801 (55,74,773) 1,46,46,450 1,73,43,943 

The Pension and Gratuity Expenses have been recognised in “Contribution to Provident and Other Funds” and Leave Encashment in “Salaries & Bonus” under Note 19. 

II. Actual Returns 89,00,000 56,00,000 — 1,00,00,000 64,00,000 — 

III. Net Asset / (Liability) recognised in Balance Sheet 

1 Present Value of Defined Benefit Obligation 19,33,48,060 12,85,20,357 8,27,48,463 17,48,41,782 10,98,23,310 8,17,02,196 

2 Fair Value on Plan Assets 12,67,00,000 8,77,00,000 — 12,20,00,000 8,98,00,000 — 

3 Status [Surplus/(Deficit)] (6,66,48,060) (4,08,20,357) (8,27,48,463) (5,28,41,782) (2,00,23,310) (8,17,02,196) 

4 Unrecognised Past Service Cost — — — — — — 

Short-Term Retirement benefits (5,92,24,503) (4,08,20,357) (2,25,65,404) (4,64,57,133) (2,00,23,310) (1,96,62,195) 

Long-Term Retirement benefits (74,23,557) — (6,01,83,059) (63,84,649) — (6,20,40,001) 

5 Net Asset / (Liability) recognised in Balance Sheet (6,66,48,060) (4,08,20,357) (8,27,48,463) (5,28,41,782) (2,00,23,310) (8,17,02,196) 

IV. Change in Defined Benefit Obligations (DBO) 

1 Present Value of DBO at Beginning of Period 17,48,41,782 10,98,23,310 8,17,02,196 17,79,23,852 9,25,76,860 7,54,82,968 

2 Current Service Cost 1,92,58,933 1,31,75,100 1,32,33,474 1,71,66,880 1,29,15,384 1,31,79,845 

3 Interest Cost 1,39,54,299 87,42,798 62,08,573 1,39,33,619 72,54,149 55,93,649 

4 Curtailment Cost / (Credit) — — — — — — 

5 Settlement Cost / (Credit) — — — — — — 

6 Plan Amendments — — — — — — 

7 Acquisitions — — — — — — 

8 Actuarial (Gains) / Losses (33,06,954) 44,79,149 (55,02,246) (2,66,75,381) 8,76,917 (14,29,551) 

9 Benefits Paid (1,14,00,000) (77,00,000) (1,28,93,534) (75,07,188) (38,00,000) (1,11,24,715) 

10 Present Value of DBO at the End of Period 19,33,48,060 12,85,20,357 8,27,48,463 17,48,41,782 10,98,23,310 8,17,02,196 

V. Change in Fair Value of Assets 

1 Plan Assets at Beginning of Period 12,20,00,000 8,98,00,000 — 11,14,00,000 8,72,00,000 — 

2 Acquisition Adjustment — — — — — — 

3 Expected Return on Plan Assets 1,02,58,875 73,21,875 — 93,36,000 70,80,000 — 

4 Actuarial Gains / (Losses) (13,58,875) (17,21,875) — 6,64,000 (6,80,00) — 

5 Actual Company Contributions 72,00,000 — 1,28,93,534 81,07,188 — 1,11,24,715 

6 Benefits Paid (1,14,00,000) (77,00,000) (1,28,93,534) (75,07,188) (38,00,000) (1,11,24,715) 

7 Plan Assets at the End of Period 12,67,00,000 8,77,00,000 — 12,20,00,000 8,98,00,000 — 

VI. Actuarial Assumptions For the year ended 31st March, 2012 For the year ended 31st March, 2011 

1 Discount Rate (%) 8.25% 8% 

2 Expected Return on Plan Assets (%) 8.25% 8% 

3 Long-term rate of compensation increase (%) 

– Management Staff 10% 10% 

– Others — 10% 

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 For the year ended 31st March, 2012 For the year ended 31st March, 2011 

1 Government Securities / Special Deposit with RBI 34% 33% 

2 High Quality Corporate Bonds 31% 34% 

3 Insurance Companies 26% 27% 

4 Mutual Funds 2% 4% 

5 Cash and Cash Equivalents 8% 3% 

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. 

127

128 


IX. For the year ended 31st March, 2012 For the year ended 31st March, 2011 For the year ended 31st March, 2010 For the year ended 31st March, 2009 

` ` ` ` 

Leave Leave Leave Leave 

Net Asset / (Liability) recognised in Balance Sheet 

(Including experience adjustment impact) 

Pension Gratuity Encashment Pension Gratuity Encashment Pension Gratuity Encashment Pension Gratuity Encashment 

1 Present Value of Defined Benefit Obligation 19,33,48,060 12,85,20,357 8,27,48,463 17,48,41,782 10,98,23,310 8,17,02,196 17,79,23,852 9,25,76,860 7,54,82,968 14,77,39,740 6,71,76,921 6,06,48,572 

2 Fair Value of Plan Assets 12,67,00,000 8,77,00,000 — 12,20,00,000 8,98,00,000 — 11,14,00,000 8,72,00,000 — 11,35,00,000 9,18,00,000 — 

3 Status [Surplus / (Deficit)] (6,66,48,060) (4,08,20,357) (8,27,48,463) (5,28,41,782) (2,00,23,310) (8,17,02,196) (6,65,23,852) (53,76,860 ) (7,54,82,968) (3,42,39,740) 2,46,23,079 (6,06,48,572 ) 

4 Experience Adjustment of Plan Assets [Gain / (Loss)] (10,48,000) (15,08,000) — (91,40,000) (22,79,000) — 16,28,500 (1,04,70,250 ) — 10,05,000 40,02,500 — 

5 Experience Adjustment of Obligation [(Gain) / Loss] (5,08,889) 62,39,146 (55,71,828) (16,21,251) 62,46,134 28,44,651 (1,18,77,125) (55,18,904 ) (6,72,376) 2,14,94,741 75,60,838 43,52,583 

(b) Amounts towards Defined Contribution Plans (approved Provident Fund administered through a duly constituted trust upto 31st March, 2012 and the Company is in 

the process of transferring such fund to the Regional Provident Fund Commissioner) have been recognised under “Contribution to Provident and Other Funds” in 

Note 19 ` 9,48,75,647 (2011 ` 7,89,05,203). 

27 Quantitative details 

The Company is engaged in providing information technology solutions and software 

development services. The purchase, production and sale of such software cannot 

be expressed in any generic unit. 

28 Earnings per share 



` ` 

(a) Profit after Taxation 28,69,46,111 7,45,74,405 

(b) Weighted average number 

of Equity Shares 8,52,00,000 8,52,00,000 

(c) Earnings Per Share 3.37 0.88 

(Face value of ` 10 per share) 


29 Auditors’ Remuneration and Expenses 

(Net of service tax credit) 

Audit Fees 11,00,000 11,00,000 

Tax Audit Fees 2,00,000 2,00,000 

Fees for Other services 3,26,976 2,84,173 

Reimbursement of Expenses 1,92,315 1,78,236 

18,19,291 17,62,409 

30 Value of Imports during the year 

(C.I.F. Basis) 

Capital Goods 5,81,71,990 6,58,47,076 

5,81,71,990 6,58,47,076 

31 Expenditure in Foreign Currency 

during the year 

(On Accrual Basis) 

Travel 18,78,74,481 16,99,68,021 

Professional, Consultancy and Account 

Management Fees 44,33,40,717 28,74,76,149 

Software and Related Expenses 13,65,870 30,34,764 

Expenditure of foreign branches 57,27,30,154 46,29,75,090 

Others 2,72,86,941 92,54,405 

1,23,25,98,163 93,27,08,429 

32 Earnings in foreign exchange during the year 

(F.O.B. – Accrual Basis) 

Sale of Services and 

Resale of Software 4,24,52,68,575 3,13,57,67,526 

4,24,52,68,575 3,13,57,67,526 

33. 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. 


` ` 

SECONDARY SEGMENT INFORMATION 

(GEOGRAPHICAL SEGMENTS) : 

Segment Revenue 

India 1,37,70,51,753 1,07,57,91,957 

Rest of the World 4,24,52,68,575 3,13,57,67,526 

Total Revenue 

Segment Assets * 

5,62,23,20,328 4,21,15,59,483 

India 2,09,81,02,839 1,68,02,11,366 

Rest of the World 1,31,32,97,469 1,89,23,37,624 

Total Assets 

Capital Expenditure * 

3,41,14,00,308 3,57,25,48,990 

India 43,47,00,646 17,95,55,139 

Rest of the World — — 

Total Capital Expenditure 43,47,00,646 17,95,55,139 

* Fixed Assets and Capital Expenditure 

have been considered on the basis 

of physical location. 

34. RELATED PARTY DISCLOSURES 

(i) HOLDING COMPANY: 


(ii) ENTERPRISES WHERE CONTROL EXISTS: 

Wholly Owned Subsidiaries: 

lTC Infotech Limited (UK) 


Pyxis Solutions LLC. 

(iii) OTHER RELATED PARTIES WITH WHOM THE COMPANY HAD TRANSACTIONS, etc. 

Fellow Subsidiary Companies: 

Surya Nepal Private Limited 

Wimco Limited 

Technico Agri Sciences Limited 

Technico Technologies Inc. 

Srinivasa Resorts Limited 

Landbase India Limited 

(iv) KEY MANAGEMENT PERSONNEL 

Non-Executive Directors Management Committee Members 

Mr. Y. C. Deveshwar - Chairman Mr. B. Sumant - Managing Director 

Mr. S. Sivakumar - Vice Chairman Mr. R. Batra 

Mr. A. Nayak Mr. A. Talwar 

Mr. B. B. Chatterjee Mr. S. Janardhanan 

Mr. S. Puri Mr. V. V. R. Babu 

Mr. R. Tandon Mr. S. K. Gupta 

Mr. V. V. Rajasekhar 

Mr. A. Maheshwari 

Mr. S. V. Shah 

Mr. V. Sreenivasan (w.e.f. 1st July, 2011)


5. DISCLOSURE OF TRANSACTIONS BETWEEN THE COMPANY AND RELATED PARTIES AND THE STATUS OF OUTSTANDING BALANCES AS ON 31ST MARCH 

Description 

Holding Company Wholly Owned Subsidiaries Fellow Subsidiaries Key Management Personnel 

2012 2011 2012 2011 2012 2011 2012 2011 

ITC Infotech ITC Infotech Pyxis Solutions ITC Infotech ITC Infotech Pyxis Solutions 

Limited (UK) (USA), INC. LLC Limited (UK) (USA), INC. LLC 

` ` ` ` ` ` ` ` ` ` ` ` 

Sale of Goods / Services 91,28,51,772 83,10,67,971 38,26,62,278 86,38,92,757 2,01,11,115 37,61,47,120 56,70,65,514 1,68,98,332 70,95,676 1,25,86,479 — — 

Purchase of Goods / Services 37,88,047 45,73,881 37,47,73,011 — — 24,67,15,727 27,03,589 — — 32,02,321 — — 

Rent paid 1,39,33,282 1,05,65,530 — — — — — — — — — –– 

Remuneration to Key Managerial Personnel — — — — — — — — — — 3,78,46,983 4,15,16,313 

Reimbursement of Contractual Remuneration 3,64,95,829 2,28,86,957 — — — — — — — — — –– 

Remuneration of managers on 

deputation recovered 17,96,029 11,09,309 — — — — — — — — — –– 

Expenses recovered 22,73,846 41,39,281 73,02,820 2,58,88,632 — 32,87,992 2,55,91,005 — — 10,489 — — 

Expenses reimbursed 6,75,51,822 4,79,88,196 1,29,57,637 2,05,45,598 — 34,76,269 1,85,78,281 — — — — –– 

Receipt towards Loan Repayment — — — — — — — — — — 7,91,761 2,43,500 

Interest recovered on Loans — — — — — — — — — — 10,307 12,718 

Loans received 3,03,85,00,000 2,39,61,00,000 — — — — — — — — — –– 

Loan repaid 3,96,10,00,000 2,01,25,00,000 — — — — — — — — — –– 

Balances as on 31st March — — — — — — — — — — — — 

i) Debtors / Receivables 96,38,027 1,80,90,356 8,07,08,913 35,20,96,438 19,17,784 6,93,10,266 31,47,62,165 14,76,451 — 39,87,635 — — 

ii) Loans Taken 57,00,00,000 1,49,25,00,000 — — — — — — — — — — 

iii) Loans Given — — — — — — — — — — 9,13,258 14,12,466 

iv) Creditors / Payables 93,87,302 81,32,468 20,53,14,450 2,05,45,598 — 16,47,00,500 2,81,57,825 — — — 19,64,762 — 

35 The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to 

the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared as per Revised Schedule VI. 

Accordingly, the previous year figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previous year figures does not 

impact recognition and measurement principles followed for preparation of financial statements. 

STATEMENT REGARDING SUBSIDIARY COMPANIES 

PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 

Sl. Name of the Subsidiary Number of Extent of Profits / (Losses) so far it concerns the Profits / (Losses) so far it concerns the 

No. Company Shares held Holding members of the Holding Company members of the Holding Company 

by the and not dealt with in the books of and dealt with in the books of 

Company Account of the Holding Company Account of the Holding Company 

For the Financial For the Previous For the Financial For the Previous 

Year of the Financial Year(s) Year of the Financial Year(s) 

Subsidiary since it became Subsidiary since it became 

a Subsidiary a Subsidiary 

1 ITC INFOTECH LIMITED, (UK) (*) 685,815 100% GBP 21,25,817 GBP 41,80,399 NIL NIL 

INR 17,31,69,053 INR 34,05,35,303 

2 ITC INFOTECH (USA), INC. (**) 182,000 100% USD 7,11,869 (USD 10,72,695) NIL NIL 

INR 3,62,19,895 (INR 5,45,78,722) 

3 PYXIS SOLUTIONS LLC. (**) Note 100% USD 88,419 USD 14,20,016 NIL NIL 

INR 44,98,759 INR 7,22,50,414 

The financial year of all the subsidiaries ended on 31 March, 2012. 

(*) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of GBP 1 = INR 81.46 

(**) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of USD 1 = INR 50.88 

Note – Pyxis 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. 

B. Sumant 



Place : Bangalore S. Sivakumar Vice Chairman 

Date : 8th May, 2012 R. Batra Chief Financial Officer S. V. Shah Company Secretary 

129

REPORT OF THE DIRECTORS 

Your Directors present their Report together with the Audited Financial 

Statements for the year ended 31st March, 2012. 

The Company is a wholly owned subsidiary of ITC Infotech India Limited, 

incorporated in India. 


The Company is engaged in providing IT services, software development 

and support services. 

Key performance indicators 

GBP (million) 

Year Ended March 31, 2012 2011 

Total Income 24.35 22.22 

Cost of Sales 17.06 16.00 

Gross Profit 7.29 6.22 

Operating Profit 2.97 1.45 

Profit before Tax 2.98 1.45 

Profit after Tax 2.13 1.03 

Business review 

Your Company’s results substantially improved with Total Income, Operating 

Profit and Profit After Tax growing by 10%, 105% and 107% respectively, 

through greater market penetration, improved realisations and effective 

operations and cost management. 

Your Company’s focus on identified Business Verticals has resulted in 

acquisition of several marquee customers in the Banking, Financial Services 

and Insurance sector. Market development activities in Europe, South Africa 

and Middle East have enabled acquisition of several clients in these regions 

with potential for significant business opportunities. 

While the overall business environment in Europe remains pessimistic, and 

IT budgets are under severe pressure, this also presents new opportunities 

for your Company in its chosen focus areas as exemplified in the current 

year. 

With a growing funnel in its chosen service lines, and a sales organisation 

aligned to and sharply focused on driving its value proposition in each of 

these service lines, your Company looks forward to 2012-13 with confidence. 

Financial risk management objectives and policies 

The objective of financial risk management is to protect the value of the 

Company’s financial assets against possible erosion due to adverse 

materialisation of risks related to credit, liquidity, interest rate and foreign 

currency exposures. 

The existence of financial assets exposes the Company to a number of 

financial risks. The main risks are market risk due to currency risk, credit risk 

and liquidity risk. 

a) Market risk - currency risk 

The Company is exposed to translation and transaction foreign exchange 

risk. Approximately 14% of its sales are in US dollars and the Company 

pays its major supplier, its parent company, mostly in US dollars. It limits 

its exposure by holding foreign currency in currency bank accounts. It does 

not currently hold any hedging instruments but foreign exchange 

management is kept under regular review. 

b) Credit risk 

The Company’s principal financial assets are cash and trade debtors. There 

is no credit risk associated with cash and so the principal credit risk arises 

on trade debtors. However, the Company's customers are mostly blue chip 

companies and the Company has no history of significant bad debts. 

INDEPENDENT AUDITORS’ TO THE MEMBERS OF ITC INFOTECH 

LIMITED 

We have audited the financial statements of ITC Infotech Limited for the 

year ended 31 March, 2012 which comprise the profit and loss account, 

the balance sheet, cash flow statement, the statement of total recognised 

gains and losses and the related notes. The financial reporting framework 

that has been applied in their preparation is applicable law and United 

Kingdom Accounting Standards (United Kingdom Generally Accepted 

Accounting Practice). 

Respective responsibilities of directors and auditors 

As explained more fully in the Statement of Directors’ responsibilities the 

directors are responsible for the preparation of the financial statements and 

for being satisfied that they give a true and fair view. Our responsibility is 

to audit and express an opinion on the financial statements in accordance 

with applicable law and International Standards on Auditing (UK and 

130 

c) Liquidity risk 

The Company seeks to manage financial risk by ensuring sufficient liquidity 

is available to meet foreseeable needs and to invest cash assets safely and 

profitably. 

Directors 

The Directors in office at the end of the year are listed below. All served 

on the Board throughout the year, unless indicated otherwise. The interests 

of the Directors in the shares of the Company as at 31st March, 2012 and 

1st April, 2011 were as follows: 

2012 and 2011 

Ordinary Shares 

Y. C.Deveshwar — 

S.Sivakumar — 

B. B. Chatterjee — 

S. Puri — 

B.Sumant — 

R.Tandon — 

Mr. B. B. Chatterjee, Director, and Mr. Y. C. Deveshwar, Director & Chairman, 

will retire by rotation at the Annual General Meeting and, being eligible, 

offer themselves for re-election. 

Statement of directors' responsibilities 

UK Company Law requires the Directors to prepare financial statements for 

each financial year, which give a true and fair view of the affairs of the 

Company and of the profit or loss of the Company for that year. In preparing 

those financial statements, the Directors are required to: 

i. select suitable accounting policies and then apply them consistently; 

ii. make judgements and estimates that are reasonable and prudent; 

iii. prepare the financial statements on the going concern basis unless it 

is inappropriate to presume that the Company will continue in business; 

The Directors are responsible for keeping proper accounting records, for 

safeguarding the assets of the Company and for taking reasonable steps 

for the prevention and detection of fraud and other irregularities. 

In so far as the directors are aware: (i) there is no relevant audit information 

of which the Company's auditors are unaware; and (ii) they have taken all 

steps that ought to have been taken to make themselves aware of any 

relevant audit information and to establish that the auditors are aware of 

that audit information. 

Based on a careful consideration of various facts and circumstances including, 

inter-alia, orders in hand and cash reserves, the Directors are of the opinion 

that there are no material uncertainties that may cast significant doubt 

about the Company's ability to continue as a going concern. 

Auditors 

PricewaterhouseCoopers LLP, Auditors, offer themselves for re-appointment 

in accordance with the provisions of Section 485 of the Companies Act, 

2006. 

Approved by the Board on 7th May, 2012 and signed on behalf of the 

Board by 

ITC Infotech Limited 

Norfolk House 

118, Saxon Gate West 

Milton Keynes 

MK9 2DN 

ITC INFOTECH LIMITED 

B. Sumant S. Sivakumar 

Director Vice Chairman 

Ireland). Those standards require us to comply with the Auditing Practices 

Board’s Ethical Standards for Auditors. 

This report, including the opinions, has been prepared for and only for the 

company’s members as a body in accordance with Chapter 3 of Part 16 

of the Companies Act 2006 and for no other purpose. We do not, in giving 

these opinions, accept or assume responsibility for any other purpose or 

to any other person to whom this report is shown or into whose hands it 

may come save where expressly agreed by our prior consent in writing. 

Scope of the audit of the financial statements 

An audit involves obtaining evidence about the amounts and disclosures 

in the financial statements sufficient to give reasonable assurance that the 

financial statements are free from material misstatement, whether caused 

by fraud or error. This includes an assessment of: whether the accounting

policies are appropriate to the company’s circumstances and have been 

consistently applied and adequately disclosed; the reasonableness of 

significant accounting estimates made by the directors; and the overall 

presentation of the financial statements. In addition, we read all the financial 

and non-financial information in the annual report to identify material 

inconsistencies with the audited financial statements. If we become aware 

of any apparent material misstatements or inconsistencies we consider the 

implications for our report. 

Opinion on financial statements 

In our opinion the financial statements: 

• give a true and fair view of the state of the company’s affairs as at 

31 March, 2012 and of its profit for the year then ended; 

• have been properly prepared in accordance with United Kingdom 

Generally Accepted Accounting Practice; and 

• have been prepared in accordance with the requirements of the 

Companies Act 2006. 

Opinion on other matter prescribed by the Companies Act 2006 

In our opinion the information given in the Directors’ Report for the financial 

year for which the financial statements are prepared is consistent with the 



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. 

Mike Robinson (Senior Statutory Auditor) 

For and on behalf of PricewaterhouseCoopers LLP 

Chartered Accountants and Statutory Auditors 

Milton Keynes 

21 May, 2012 

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH, 2012 

Unaudited Unaudited 

Note 2012 2012 2011 2011 

£ ` £ ` 

Turnover 2 24,347,804 1,870,885,259 22,224,843 1,595,632,603 

Cost of sales 17,059,773 1,310,872,957 16,002,587 1,148,905,734 

Gross profit 7,288,031 560,012,302 6,222,256 446,726,869 

Other operating charges 3 4,317,416 331,750,246 4,775,531 342,859,248 

Operating profit 4 2,970,615 228,262,056 1,446,725 103,867,621 

Operating profit before foreign exchange gain/(loss) 2,944,562 226,260,144 1,546,776 111,050,782 

Foreign exchange gain/(loss) 26,053 2,001,913 100,051 7,183,161 

Interest receivable and similar income 6 6,542 502,687 4,285 307,642 

Profit on ordinary activities before taxation 2,977,157 228,764,743 1,451,010 104,175,263 

Tax on profit on ordinary activities 7 851,340 65,416,965 416,021 29,868,228 

Profit for the financial year 

All of the activities of the company are classed as continuing. 

2,125,817 163,347,778 1,034,989 74,307,035 

There is no material difference between the profit on ordinary activities before taxation and the profit for the financial years stated above and their historical 

costs equivalents 

The accompanying accounting policies and notes form part of these financial statements. 

BALANCE SHEET AS AT 31 MARCH, 2012 


Note 2012 2012 2011 2011 

£ ` £ ` 

Fixed assets 



8 21,607 1,660,282 31,059 2,229,882 

Debtors 9 6,001,667 461,168,091 6,730,710 483,231,324 

Loans and advances 56,418 4,335,159 108,752 7,807,850 

Deferred tax recoverable 10 2,532 194,559 3,694 265,211 

Cash at bank 4,983,977 382,968,793 2,612,614 187,572,622 

11,044,594 848,666,603 9,455,770 678,877,007 

Creditors: amounts falling due within one year 11 3,525,944 270,933,537 4,082,681 293,116,082 

Net Current Assets 7,518,650 577,733,066 5,373,089 385,760,925 

Total assets less current liabilities 

Capital and reserves 

7,540,257 579,393,348 5,404,148 387,990,807 

Called-up equity share capital 15 685,815 52,698,025 685,815 49,238,075 

Profit and loss account 16 6,854,442 526,695,323 4,718,333 338,752,732 

Shareholders’ funds 17 7,540,257 579,393,348 5,404,148 387,990,807 

HS Garewal G Bindal 

President Financial Controller 


These financial statements were approved by the directors on 

7th May, 2012 and are signed on their behalf by: 

B. Sumant S. Sivakumar 

Director Vice Chairman 

131

132 


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2012 


Note 2012 2012 2011 2011 

£ ` £ ` 

Net cash inflow/(outflow) from operating activities 

Returns on investments and servicing of finance 

18 3,008,231 231,152,470 852,194 61,183,268 

Interest received 

Net cash inflow from returns on investments and 

2,199 168,971 4,285 307,642 

servicing of finance 2,199 168,971 4,285 307,642 

Taxation 

Capital expenditure 

(632,790) (48,623,583) (222,070) (15,943,516) 

Payments to acquire tangible fixed assets (6,277) (482,325) (7,822) (561,580) 

Net cash outflow from capital expenditure (6,277) (482,325) (7,822) (561,580) 

Increase/(Decrease) in cash 18 2,371,363 182,215,533 626,587 44,985,814 


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH, 2012 


2012 2012 2011 2011 

£ ` £ ` 

Profit for the financial year 2,125,817 163,347,778 1,034,989 74,307,035 

Currency translation of (loss) / gain of retained earnings of 

overseas branches 10,292 790,837 832 59,733 

Total recognised gains and losses relating to the financial year 2,136,109 164,138,615 1,035,821 74,366,768 



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 (comprising the pro-forma financial information disclosed in 

Indian Rupees) requested by the parent company has been arrived at by applying the year end interbank exchange rate of GBP 1 = ` 76.84 

(2011: GBP 1 = ` 71.80) as provided by the parent company. The supplementary information has not been audited. 

1. Principal accounting policies 


These financial statements are prepared on the going concern basis, under the historical cost convention, and in accordance with the Companies Act 

2006 and applicable accounting standards in the United Kingdom. The principal accounting policies, which have been applied consistently throughout 

the year, are set out below. 

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 - 25% 

Fixtures and fittings - 25% 

Computer equipment 

Leased assets 

- 25% 

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. 

2. Turnover 

The turnover and profit before tax are attributable to the one principal activity of the company. 

An analysis of turnover is given below: 


2012 2012 2011 2011 

£ ` £ ` 

United Kingdom 17,539,289 1,347,718,967 16,133,769 1,158,323,945 

India 4,782,616 367,496,213 3,606,992 258,963,991 

US 129,455 9,947,322 236,794 17,000,625 

Singapore 190,461 14,635,023 9,676 694,688 

Europe 1,653,783 127,076,686 2,203,074 158,169,698 

Other 52,200 4,011,048 34,538 2,479,656 

24,347,804 1,870,885,259 22,224,843 1,595,632,603 

3. Other operating charges 

Administrative expenses 4,556,845 350,147,970 4,775,531 342,859,248 

Provision for leave encashment no longer required (239,429) (18,397,724) — — 

4,317,416 331,750,246 4,775,531 342,859,248 

4. Operating profit 

Operating profit is stated after charging: 

Depreciation of owned fixed assets 

Auditor’s remuneration: 

15,729 1,208,616 17,138 1,230,422 

- audit fees 19,750 1,517,590 20,775 1,491,541 

- non-audit fees – taxation and other services 3,250 249,730 14,505 1,041,386 

Loss / (gain) on foreign exchange 

Operating lease costs: 

(26,053) (2,001,913) 100,051 7,183,161 

Land and buildings 41,919 3,221,056 53,191 3,818,848 

Plant and equipment 1,809 139,004 1,809 129,877 

5. Directors and employees 

The average number of staff employed by the company during the financial year amounted to: 

2012 2011 

No. No. 

Staff 

The aggregate payroll costs of the above were: 

232 210 


2012 2012 2011 2011 

£ ` £ ` 

Wages and salaries 10,020,001 769,936,877 8,719,581 626,022,318 

Social security costs 997,985 76,685,167 787,840 56,562,973 

Remuneration in respect of directors was nil (2011: £nil). 

11,017,986 846,622,044 9,507,421 682,585,291 

6. Interest receivable & similar income 

Bank interest receivable 2,199 168,971 4,285 307,642 

Other miscellaneous income 4,343 333,716 — — 

6,542 502,687 4,285 307,642 

133


2012 2012 2011 2011 

£ ` £ ` 

7. Taxation on ordinary activities 

(a) Analysis of charge in the year 

Current tax: 

- UK Corporation tax on profits of the year 612,937 47,098,079 350,140 25,138,302 

- Adjustment in respect of previous years 237,241 18,229,598 81,345 5,840,164 

- Foreign Tax – Current Year — — 3,864 277,416 

– Prior Year — — (23,994) (1,722,649) 

Total current tax 

Deferred tax: 

850,178 65,327,677 411,355 29,533,233 

Origination and reversal of timing differences 1,162 89,288 4,666 334,995 

Tax on profit on ordinary activities 

Taxation on ordinary activities 

(b) Factors affecting current tax charge 

The tax assessed on the profit on ordinary activities for the year is higher 

than the standard rate of corporation tax in the UK of 26% (2011 - 28%). 

851,340 65,416,965 416,021 29,868,228 

Profit on ordinary activities before taxation 2,977,157 228,764,743 1,451,010 104,175,263 

Profit on ordinary activities multiplied by rate of tax 776,736 59,684,393 406,283 29,169,074 

Expenses not deductible for tax purposes 29,221 2,245,342 30,851 2,214,962 

Movement in capital allowances (1,062) (81,604) (1,785) (128,154) 

Adjustments to tax charge in respect of previous periods 45,283 3,479,546 (23,994) (1,722,649) 

Total current tax (note 6(a)) 850,178 65,327,677 411,355 29,533,233 

The standard rate of corporation tax in the UK changed from 28% to 26% with effect from 1 April, 2011. Accordingly, the company’s profits for this 

accounting period are taxed at an effective rate of 26%. 

Finance Act 2011 received Royal Assent on 19 July, 2011, and included legislation in respect of corporation tax rate changes as follows: 

- A reduction in the main rate of corporation tax to 26% with effect from 1 April, 2011; 

- A reduction in the main rate of corporation tax to 25% with effect from 1 April, 2012. 

Deferred tax assets and liabilities at 31 March, 2012 have been measured using the rate of 24%. 

The 2012 Budget included an announcement that the main rate will be reduced by an additional 1% to 24% on 1 April, 2012. Further reductions in 

the main rate of corporation tax to 23% effective from 1 April, 2013 and 22% effective from 1 April, 2014 are expected to be enacted. However, these 

proposed rate reductions had not been substantively enacted at the balance sheet date of 31 March, 2012 and have therefore not been reflected in 

these financial statements. 

It has also been previously announced that capital allowances rates will reduce to 18% writing down allowances per annum on the main plant and 

machinery pool and 8% writing down allowances per annum on the special rate pool, both changes becoming effective from 1 April, 2012. 

The impact of these changes is not expected to be material to the balance sheet. 

134 


8. Tangible fixed assets 

Unaudited Fixtures Unaudited Unaudited 

Leasehold Leasehold and Fixtures and Computer Computer Unaudited 

improvements improvements fittings fittings equipment equipment Total Total 

£ ` £ ` £ ` £ ` 

Cost 

At 1 April, 2011 50,965 3,916,151 60,215 4,626,921 175,666 13,498,175 286,846 22,041,247 

Additions — — — — 6,277 482,325 6,277 482,325 

At 31 March, 2012 

Depreciation 

50,965 3,916,151 60,215 4,626,921 181,943 13,980,500 293,123 22,523,572 

At 1 April, 2011 40,207 3,089,506 53,974 4,147,362 161,606 12,417,805 255,787 19,654,673 

Charge for the year 4,965 381,532 2,958 227,293 7,806 599,813 15,729 1,208,638 

At 31 March, 2012 

Net book value 

45,172 3,471,038 56,932 4,374,655 169,412 13,017,618 271,516 20,863,311 

At 31 March, 2012 5,793 445,134 3,283 252,266 12,531 962,882 21,607 1,660,282 

At 31 March, 2011 10,758 826,645 6,241 479,558 14,060 1,080,370 31,059 2,386,574 

For simplicity, the brought forward Rupee amounts at 1 April, 2011 have been translated at the 31 March, 2012 exchange rate. 

9. Debtors 


2012 2012 2011 2011 

£ ` £ ` 

Trade debtors 4,460,994 342,782,778 5,295,551 380,194,084 

Amounts owed by group undertakings 1,538,248 118,198,976 1,367,764 98,198,616 

Prepayments and accrued income 2,425 186,337 67,395 4,838,624 

6,001,667 461,168,091 6,730,710 483,231,324



2012 2012 2011 2011 

£ ` £ ` 

10. Deferred taxation 

The deferred tax included in the Balance sheet is as follows: 

Deferred tax asset 

The movement in the deferred taxation account during the year was: 

2,532 194,559 3,694 265,211 

Balance brought forward 3,694 283,847 8,360 600,206 

Profit and loss account movement arising during the year (1,162) (89,288) (4,666) (334,995) 

Balance carried forward 

The balance of the deferred taxation account consists of the tax effect 

of timing differences in respect of: 

2,532 194,559 3,694 265,211 

Excess of depreciation over taxation allowances on fixed assets 2,532 194,559 3,694 265,211 

11. Creditors: amounts falling due within one year 


2012 2012 2011 2011 

£ ` £ ` 

Trade creditors 304,317 23,383,718 839,628 60,281,092 

Corporation tax 339,095 26,056,060 121,707 8,737,954 

Other taxation and social security 835,952 64,234,552 937,259 67,290,510 

Other creditors 2,046,580 157,259,207 2,184,087 156,806,526 

12. Leasing commitments 

3,525,944 270,933,537 4,082,681 293,116,082 

At 31 March, 2012 the company had annual commitments under non-cancellable operating leases as set out below. 

2012 2011 

Unaudited Unaudited Unaudited Unaudited 

Land & Land & Other Other Land & Land & Other Other 

Buildings Buildings Items Items Buildings Buildings Items Items 

£ ` £ ` £ ` £ ` 

Operating leases which 

expire: 

Within 1 year 62,878 4,831,546 — — — — — — 

Within 1 to 2 years — — — — — — — — 

Within 2 to 5 years — — 1,809 139,004 60,941 4,375,259 1,809 129,877 

13. Capital commitments 

62,878 4,831,546 1,809 139,004 60,941 4,375,259 1,809 129,877 

There were no capital commitments at 31 March, 2012 or 31 March, 2011. 

14. Contingent liabilities 

There were no contingent liabilities at 31 March, 2012 or 31 March, 2011. 


Authorised share capital: 


2012 2012 2011 2011 

£ ` £ ` 

1,629,700 Ordinary shares of £1 each 

Allotted, called up and fully paid: 

1,629,700 125,226,148 1,629,700 117,004,312 


2012 2012 2011 2011 

No. £ ` No. £ ` 

Ordinary shares of £1 each 685,815 685,815 52,698,025 685,815 685,815 49,238,075 

16. Profit and loss account Unaudited 

£ ` 

At 1 April 2011 4,718,333 362,556,708 

Profit for the financial year 2,125,817 163,347,778 

Other recognised losses and gains 10,292 790,837 

At 31 March 2012 6,854,442 526,695,323 


135

17. Reconciliation of movements in shareholders’ funds 

18. Notes to the statement of cash flows 


2012 2012 2011 2011 

£ ` £ ` 

Reconciliation of operating profit to net cash inflow/ 

(outflow) from operating activities 

Operating profit 2,970,615 228,262,057 1,446,725 103,867,621 

Foreign exchange movement 10,292 790,837 832 59,733 

Depreciation 15,729 1,208,616 17,138 1,230,423 

Miscellaneous Income 4,343 333,716 — — 

Decrease/ (Increase) in debtors 781,377 60,041,009 (1,015,648) (72,918,448) 

(Decrease)/Increase in creditors (774,125) (59,483,765) 403,147 28,943,939 

Net cash inflow/(outflow) from operating activities 

Reconciliation of net cash flow to movement in net funds 

3,008,231 231,152,470 852,194 61,183,268 

Increase/ (decrease) in cash in the period 2,371,363 182,215,533 626,587 44,985,814 

Movement in net funds in the period 2,371,363 182,215,533 626,587 44,985,814 

Net funds at 1 April, 2011 2,612,614 200,753,260 1,986,027 142,586,808 

Net funds at 31 March, 2012 

Analysis of changes in net funds 

4,983,977 382,968,793 2,612,614 187,572,622 

At At Cash Cash At At 

1 April 2011 1 April 2011 flows flows 31 March 2012 31 March 2012 

£ ` £ ` £ ` 

Net cash: 

Cash in hand and at bank 2,612,614 200,753,260 2,371,363 182,215,533 4,983,977 382,968,793 

Net funds 2,612,614 200,753,260 2,371,363 182,215,533 4,983,977 382,968,793 


19. 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. 

136 



2012 2012 2011 2011 

£ ` £ ` 

Profit for the financial year 2,125,817 163,347,778 1,034,989 74,307,035 

Other recognised losses and gains 10,292 790,837 832 59,733 

Net addition to shareholders' funds 2,136,109 164,138,615 1,035,821 74,366,768 

Opening shareholders' funds 5,404,148 415,254,733 4,368,327 313,624,039 

Closing shareholders' funds 7,540,257 579,393,348 5,404,148 387,990,807 

For simplicity, the brought forward Rupee amounts at 1 April, 2011 have been translated at the 31 March, 2012 exchange rate.

REPORT OF THE DIRECTORS 

Your Directors present their Report together with the Audited Financial Statements 

for the year ended 31st March, 2012. 

The Corporation is a wholly owned subsidiary of ITC Infotech India Limited, 

incorporated in India. 

Principal Activities 

The Corporation is engaged in providing IT services, software development and 

support services. 

Financial Results (US$ million) 


Consolidated(*) 

Year Ended March 31 2012 2011 

Total Revenue 49.85 38.43 

Operating Income before Amortization 1.19 0.82 

Net Cash Flow provided by Operating activities 0.93 1.25 

(*) including Pyxis Solutions, LLC, a wholly owned subsidiary of the Corporation. 


During 2011, spends on IT services in the United States grew by 4.4%, representing 

the second consecutive year of growth post the recent recession. The overhang of 

global economic uncertainties continued to reflect upon IT spending patterns, with 

customers adopting a save-to-invest approach across the business verticals serviced 

by the Corporation. While early signs of an uptick in budget allocations became 

visible, actual allocations to projects continued to be carefully calibrated. 

In the midst of such uncertain market conditions, the Corporation is pleased to 

report another year of significant growth. Total Revenues grew by 30% to US$ 

49.85 million, while Operating Income before Amortization grew by 45% to US$ 

1.19 million. The robust growth rates are outcomes of the Corporation’s successful 

domain centric service delivery and marketplace strategies. 

Several value added solutions were launched including some which were 

co-innovated with leading independent software vendors. These solutions addressed 

critical business challenges such as shrinking time-to-market on new product 

launches, managing complex global infrastructure, ensuring design integrity, 

insightfully segmenting clients and many more areas that enhance competitiveness. 

INDEPENDENT AUDITORS’ REPORT 



We have audited the accompanying special-purpose balance sheets of ITC Infotech 

(USA), Inc. as of March 31, 2012 and 2011, and the related special-purpose 

statements of operations and accumulated deficit, and cash flows for each of the 

years then ended. The financial statements are the responsibility of the Company's 

management. Our responsibility is to express an opinion on these financial statements 

based on our audits. 

We conducted our audits 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 Company’s internal control over financial reporting. Accordingly, 

we express no such opinion. An audit also includes examining, on a test basis, 

evidence supporting the amounts and disclosures in the financial statements, 

assessing the accounting principles used and significant estimates made by 

management, as well as evaluating the overall financial statement presentation. 

We believe that our audits provide 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, 

Solution capability aligned to market needs enabled the Corporation to add several 

marquee customers, thus sustaining the pace of growth. 

The expanded customer base, the strong sales funnel and the bank of marketrelevant 

capabilities, augur well for the year 2012-13. 

Wholly Owned Subsidiary - Pyxis Solutions, LLC (Pyxis) 

Pyxis primarily provides high end, domain-based software quality consulting to 

marquee clients in the financial services industry. During 2011, growth in IT services 

spends in the US financial services industry lagged that of overall IT services growth. 

The sector posted a growth of only 1.5 per cent compared to the overall growth 

of 4.4 per cent, and continued to be characterized by sporadic rate cuts and 

furloughs. Amidst challenging market conditions, Pyxis’ focus was on client retention, 

cost management and strengthening solution capability aligned to market needs. 

Pyxis was chosen by its largest client to support a high visibility project that was 

revived after being put on hold due to market conditions. Further, the strength of 

Pyxis’ capability enabled major new client acquisition towards the end of the financial 

year. The increased client activity and the efforts towards successful client retention 

present attractive growth possibilities in the next financial year. 

During the year under review, Pyxis declared and paid US$ 500,000 (previous 

year - US$ 750,000) as dividend for the financial year 2011-12 by way of distribution 

to the Corporation, the Sole Member of Pyxis. 

Directors 

M/s. Y. C. Deveshwar, S. Sivakumar, B. B. Chatterjee, (Ms) B. Parameswar, S. Puri, 

B. Sumant and R. Tandon, Directors of the Corporation, will retire at the Annual 

Meeting, and, being eligible, offer themselves for re-appointment. 

Auditors 

M/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Corporation, offer 

themselves for re-appointment as Auditors of the Corporation to audit the Financial 

Statements of the Corporation for the financial year ending 31st March, 2013. 


B. Sumant Director 

May 7, 2012 S. Sivakumar Vice Chairman 

as described in Note B[1], the Company does not consolidate Pyxis Solutions, LLC, 

a 100% owned subsidiary and is not intended to be a presentation in conformity 

with generally accepted accounting principles. 

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, 2012 and 2011 and the results of its operations and its cash flows for 

each of the years then ended in accordance with the Basis of Presentation as 

described in Note B[1]. 

As discussed in Note B[1] to the financial statements, the Indian Rupee equivalent 

figures have been included in the financial statements as required by the parent 

company, and is not a representation in conformity with accounting principles 

generally accepted in the United States of America. 

This report is 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 

Edison, New Jersey 

May 7, 2012 

ITC INFOTECH (USA), INC. 

137

138 


BALANCE SHEET 


$ ` $ ` 

ASSETS 

CURRENT ASSETS 


Accounts receivable, net of allowance for doubtful 

accounts of $465,493 (` 22,366,938) and 

3,430,992 164,859,166 2,286,054 101,958,008 

$396,427 (` 17,680,644) for 2012 and 2011, respectively 10,195,797 489,908,046 9,390,245 418,804,927 

Due from ITC Infotech Ltd. (UK), net 40,036 1,923,730 — — 

Advances to employees 231,334 11,115,599 103,965 4,636,839 

Deferred income taxes 1,095,009 52,615,182 1,119,362 49,923,546 


EQUIPMENT, SOFTWARE, FURNITURE AND FIXTURES AND 

14,993,168 720,421,723 12,899,626 575,323,320 

LEASEHOLD IMPROVEMENTS 562,739 27,039,609 660,722 29,468,201 

Less: Accumulated depreciation and amortization 486,250 23,364,313 533,432 23,791,067 

76,489 3,675,296 127,290 5,677,134 

INTANGIBLE ASSETS 14,184,523 681,566,330 14,184,523 632,629,729 

Less: Accumulated amortization 2,792,438 134,176,646 2,024,938 90,312,235 

11,392,085 547,389,684 12,159,585 542,317,491 

Other assets, principally unsecured advances 251,898 12,103,699 292,829 13,060,173 

LIABILITIES AND STOCKHOLDER'S EQUITY 

CURRENT LIABILITIES 

26,713,640 1,283,590,402 25,479,330 1,136,378,118 

Accounts payable 1,153,203 55,411,404 1,171,826 52,263,440 

Accrued expenses and other current liabilities 1,665,422 80,023,527 1,274,087 56,824,280 

Accrued payroll and payroll taxes 553,605 26,600,720 491,350 21,914,210 

Due to ITC Infotech Ltd. (UK), net — — 165 7,359 

Due to Pyxis Solutions, LLC., net 29,888 1,436,118 75,797 3,380,546 

Due to ITC Infotech India Ltd., net 6,512,588 312,929,853 6,359,410 283,629,686 


NON-CURRENT LIABILITIES 

9,914,706 476,401,622 9,372,635 418,019,521 

Deferred income taxes 

COMMITMENTS AND CONTINGENCIES (see Note G) 

STOCKHOLDER'S EQUITY 

Capital stock, no par value; 185,000 shares authorised; 

182,000 shares issued and outstanding at 

138,597 6,659,586 158,227 7,056,924 

March 31, 2012 and 2011 200,000 9,610,000 200,000 8,920,000 

Additional paid-in capital 18,000,000 864,900,000 18,000,000 802,800,000 

Accumulated deficit (1,539,663) (73,980,806) (2,251,532) (100,418,327) 

Total stockholder's equity 16,660,337 800,529,194 15,948,468 711,301,673 

The accompanying notes are an integral part of these financial statements 

Date : May 7, 2012 

26,713,640 1,283,590,402 25,479,330 1,136,378,118 

G Satish 

Financial Controller 


L. N. Balaji B. Sumant S. Sivakumar 

President Director Vice Chairman


STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT 

For the year ended For the year ended For the year ended For the year ended 


$ ` $ ` 

Revenues 

Service fees 33,064,146 1,588,732,216 24,966,387 1,113,500,860 

Account management fees - affiliates 177,931 8,549,585 114,337 5,099,430 

Project fees 11,017,012 529,367,427 7,252,758 323,473,007 

Total revenues 

Cost of revenues, principally 

employment costs and fees charged 

44,259,089 2,126,649,228 32,333,482 1,442,073,297 

by affiliates 34,432,400 1,654,476,820 25,264,653 1,126,803,524 

Gross profit 9,826,689 472,172,408 7,068,829 315,269,773 

General and administrative expenses 8,726,432 419,305,058 6,273,750 279,809,250 

Operating income before amortization 1,100,257 52,867,350 795,079 35,460,523 

Amortization of intangible assets 767,500 36,878,375 767,500 34,230,500 

Operating income 332,757 15,988,975 27,579 1,230,023 

Other income 505,642 24,296,098 757,663 33,791,770 

Income before income tax expense 

Income tax expense 

838,399 40,285,073 785,242 35,021,793 

Current 121,806 5,852,778 38,467 1,715,628 

Deferred 4,724 226,988 14,208 633,677 

Total income tax expense 126,530 6,079,766 52,675 2,349,305 

Net income 711,869 34,205,307 732,567 32,672,488 

Accumulated deficit at beginning of year (2,251,532) (108,186,113) (2,984,099) (133,090,815) 

Accumulated deficit at end of year (1,539,663) (73,980,806) (2,251,532) (100,418,327) 



Date : May 7, 2012 

STATEMENT OF CASH FLOW 


$ ` $ ` 

Cash flows from operating activities 

Net income 

Adjustments to reconcile net income (loss) to net cash 

provided by (used in) operating activities 

711,869 34,205,307 732,567 32,672,488 

Depreciation and amortization 851,585 40,918,659 879,272 39,215,531 

Deferred income taxes 4,724 226,988 14,208 633,677 

Bad debt expense 

(Increase) decrease in assets 

838,417 40,285,937 — — 

Accounts receivable (1,643,970) (78,992,759) (2,602,700) (116,080,420) 

Due from ITC lnfotech Ltd. (UK), net (40,200) (1,931,610) — — 

Advances to employees (127,369) (6,120,080) (47,028) (2,097,449) 

Security deposits and other advances 

Increase (decrease) in liabilities 

40,932 1,966,783 (121,613) (5,423,940) 

Accounts payable (18,623) (894,835) (122,840) (5,478,664) 

Accrued expenses and other liabilities 391,335 18,803,647 157,925 7,043,455 


Due to ITC Infotech Ltd. (UK), net — — (78,804) (3,514,658) 

Due to Pyxis Solutions, LLC., net (45,909) (2,205,927) 75,797 3,380,546 

Due to ITC Infotech India Ltd., net 153,175 7,360,059 2,314,283 103,217,022 

Net cash provided by operating activities 

Cash flows from investing activities 

1,178,222 56,613,570 1,380,618 61,575,563 

Capital expenditures (33,284) (1,599,296) (52,636) (2,347,566) 

Increase in goodwill acquired (see Note C) — — (598,741) (26,703,849) 

Net cash used in investing activities (33,284) (1,599,296) (651,377) (29,051,415) 

Cash flows from financing activities — — — — 

Net cash provided by financing activities — — — — 

Net increase in cash and cash equivalents 1,144,938 55,014,274 729,241 32,524,148 

Cash and cash equivalents at beginning of year 2,286,054 109,844,892 1,556,813 69,433,860 

Cash and cash equivalents at end of year 

Supplemental disclosures of cash flow information: 

3,430,992 164,859,166 2,286,054 101,958,008 

Income taxes paid were $24,519 (` 1,178,138) and $44,865 (` 2,000,979) during 2012 and 2011, respectively. 


Date : May 7, 2012 

G Satish 


G Satish 



President Director Vice Chairman 



President Director Vice Chairman 

139


March 31, 2012 and 2011 

NOTE A - BUSINESS BACKGROUND AND PRINCIPAL TRANSACTIONS 

WITH AFFILIATES 

ITC Infotech (USA), Inc. (the “Company”), a New Jersey corporation, is 

principally engaged in the information technology services business. Majority 

of its customers are commercial entities and software developers throughout 

the United States of America. The work is usually performed under contracts 

which specify fixed hourly rates (which depend upon the skill level of the 

employee staffed at the customer’s location) and which vary in length, but 

are typically less than two years in duration. The Company generates revenue 

through specific projects, whereby the Company and its overseas affiliates 

undertake the responsibility to deliver specific software solutions (”Project 

Business”) on a contractual basis. Substantially all of these contracts for 

Project Business were co-sourced, in terms of the marketing agreement with 

its affiliates (see Note D), or fulfilled with resources drawn from affiliates, on 

a contractual basis, to supplement the Company’s resources. The Company 

either receives fees from affiliates for client account management in respect 

of work contracted between ITC Infotech India Ltd. or ITC Infotech Ltd. (UK) 

with clients in the United States, or incurs subcontract costs for technical 

services provided by affiliates to support customer contracts entered into by 

the Company. 

The Company is a wholly owned subsidiary of ITC Infotech India Ltd. (”Infotech 

India”), an Indian company. There are 185,000 common shares authorised 

of which 182,000 have been issued, and are outstanding, to Infotech India. 

ITC Infotech Ltd. (”Infotech UK”) is also a wholly owned subsidiary of 

ITC Infotech India Ltd. 

The Company acquired 100% of the membership interests of Pyxis Solutions, 

LLC (”Pyxis”) on August 11, 2008. Pyxis was formed as a New York State 

limited liability company in 2000. One of the founder members of Pyxis also 

owns a majority interest in an entity performing similar services in Singapore 

(”Pyxis Singapore”). Pyxis is principally engaged in the information technology 

services business offering Quality Assurance (QA) solutions and testing services. 

Its customers are commercial entities throughout the United States of America. 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

1) Basis of Presentation 

As required by the parent company the financial statements of the Company 

are not prepared in accordance with accounting principles generally accepted 

in the United States as this presentation does not consolidate the results of 

its wholly owned subsidiary Pyxis. So accordingly, these financial statements 

do not purport to follow US GAAP. Furthermore, as permitted by accounting 

principles generally accepted in the United States, the impact of the acquisition 

of Pyxis was not pushed-down to Pyxis. Accordingly, the intangible assets 

presented herein relate to the excess purchase price over the fair value of 

current assets and liabilities. These financial statements are presented in U.S. 

dollars. However, as required by the parent company, the Indian Rupee 

equivalent figures, arrived at by applying the average interbank exchange 

rate of US$1 = 48.05 (2011 US$1 = Rs. 44.60) as provided by the parent 

company, have been included solely for informational purposes and is not 

in conformance with the provisions of FASB ASC 830-30 - Foreign Currency 

Matters - Translation of Financial Statements and U.S. GAAP. 

2) Recognition of Revenue 

Service Revenue 

Service revenues are based upon hours worked by Company employees on 

customer assignments and are recognized when the work is performed. 

Revenue is determined by multiplying the hours worked by the contractual 

billing rates. Substantially all customers are invoiced weekly, biweekly, or 

monthly. 

Project Revenue 

Revenues on the project business are recognized as earned, typically in the 

month the service is performed. Costs associated with the use of subcontractors 

to fulfill such project business are recognized in the same period. 

In accordance with Accounting Standards Codification Topic (”ASC”) 605, 

“Revenue Recognition”, the Company recognizes revenues on delivery when 

a non-cancellable agreement has been executed, fees are fixed and 

determinable and collection is considered probable unless there is significant 

uncertainty about customer acceptance, in which case revenues are recognised 

upon such acceptance. Losses on contracts are recognised when determinable. 

3) Account Management Fees 

Fees for client account management in respect of work contracted by Infotech 

India and Infotech UK with clients in the United States are billed monthly at 

a predetermined rate applied on the amount billed by Infotech India and 

Infotech UK, to its clients. 

140 


4) Cash and Cash Equivalents 

For purposes of reporting cash flows, the Company considers all cash accounts 

which are not subject to withdrawal restrictions or penalties, and certificates 

of deposit with maturities of ninety days or less, when purchased, to be cash 

or cash equivalents. 

5) Accounts Receivable 

Credit is extended based on evaluation of a customer’s financial condition 

and, generally, collateral is not required. Accounts receivable are generally 

due within 30 to 60 days and are stated at amounts due from customers net 

of an allowance for doubtful accounts. Accounts outstanding longer than 

the contractual payment terms are considered past due. The Company 

creates an allowance for accounts receivable based on historical experience 

and management’s evaluation of outstanding accounts receivable. Accounts 

are written off when they are deemed uncollectible. 

6) Equipment, Software, Furniture and Fixtures and Leasehold 

Improvements 

Equipment, purchased or internally developed software, furniture and fixtures 

and leasehold improvements are stated at cost. Depreciation is provided 

under the straight line method based upon the estimated useful lives of the 

assets, with such lives ranging up to five years. 

7) Income Taxes 

The Company accounts for income taxes pursuant to ASC 740, “Income 

Taxes” (”ASC 740”). ASC 740 requires recognition of deferred tax assets and 

liabilities for the expected future tax consequences of events that have been 

included in the financial statements or tax returns. Under this method, 

deferred tax assets and liabilities are determined based on the differences 

between the financial reporting and tax bases of assets and liabilities using 

enacted tax rates in effect for the year in which the differences are expected 

to reverse. Future tax benefits, such as net operating loss carry forwards, are 

recognised to the extent that realisation of these benefits is considered to 

be more likely than not. If the future realisation of such benefits is uncertain, 

then a valuation allowance is provided. 

The Company provides for income tax in accordance with the Financial 

Accounting Standards Board (”FASB”) issued ASC 740-10, “Income Taxes” 

(”ASC 740-10”). ASC 740-10 provides recognition criteria and a related 

measurement model for uncertain tax positions taken or expected to be 

taken in income tax returns. ASC 740-10 requires that a position taken or 

expected to be taken in a tax return be recognised in the financial statements 

when it is more likely than not that the position would be sustained upon 

examination by tax authorities. Tax positions that meet the more likely than 

not threshold are then measured using a probability weighted approach 

recognising the largest amount of tax benefit that is greater than 50% likely 

of being realised upon ultimate settlement. There were no significant matters 

determined to be unrecognised tax benefits taken or expected to be taken 

in a tax return that have been recorded in the Company’s financial statements 

for the year ended March 31, 2012. The income tax returns of the Company 

are subject to examination by the IRS and other taxing authorities, generally 

for three years after they are filed. 

8) Use of Estimates 

In preparing financial statements in conformity with accounting principles 

generally accepted in the United States of America, management is required 

to make estimates and assumptions that affect the reported amounts of 

assets and liabilities and disclosure of contingent assets and liabilities at the 

date of the financial statements, as well as the reported amounts of revenues 

and expenses during the reporting period. Although actual results could 

differ from those estimates, in the opinion of management such estimates 

would not materially affect the financial statements. 

9) Reclassifications 

Certain prior year amounts have been reclassified to conform to the current 

year presentation. 

10) Advertising Costs 

Advertising costs are expensed as incurred. 

11) Long-Lived Assets 

The Company follows ASC 360, “Property, Plant and Equipment”. Accordingly, 

whenever events or circumstances indicate that the carrying amount of an 

asset may not be recoverable, the Company assesses the recoverability of 

the asset. No impairment charge has been recorded in fiscal years ended 

March 31, 2012 or 2011.

12) Intangible Assets 

Intangible assets are stated at fair value at the date of Pyxis acquisition and 

are amortized on the straight line method over their estimated useful life of 

4 to 8 years. Goodwill is not amortized but is subjected to annual impairment 

testing. 

13) Impairment of Goodwill 

The Company tests goodwill for impairment annually on March 31 at the 

reporting unit level using a fair value approach, in accordance with the 

provisions of ASC 350, “Intangibles - Goodwill and Other”. Annual testing 

resulted in no impairments of goodwill in fiscal years ended March 31, 2012 

and 2011. If an event occurs or circumstances change that would more likely 

than not reduce the fair value of a reporting unit below its carrying value, 

goodwill will be evaluated for impairment between annual tests. 

14) Fair Value Measurements 

The Company’s financial instruments include cash and cash equivalents, 

accounts receivable from customers, advances, other assets, accounts payable, 

and accruals which are short-term in nature. The Company believes the 

carrying amounts of these financial instruments reasonably approximate their 

fair value. 

ASC 820 “Fair Value Measurements” (”ASC 820”) defines fair value, establishes 

a common framework for measuring fair value under the U.S. GAAP, and 

expands disclosures about fair value measurements for financial and 

non-financial assets and liabilities. 

15) Capitalised Software Costs 

Costs incurred for development of computer software for internal use of the 

Company are capitalised. Any costs incurred in the preliminary stages of 

development and in the operating stages of the software are expensed 

immediately. Capitalised software costs are amortized over a period of five 

years or over the estimated useful lives, whichever is lower. There were no 

such costs capitalised in fiscal years ended March 31, 2012 or 2011. 

16) Subsequent Events 

The Company evaluated all events or transactions that occurred after March 

31, 2012 up through May 7, 2012, the date when the financial statements 

were available to be issued. 

NOTE C - ACQUISITION OF MEMBERSHIP INTERESTS 

On August 11, 2008, the Company acquired 100% of the membership 

interests of Pyxis for $12,434,878 (Rs. 597,495,888). Accordingly, Pyxis 

became a wholly owned subsidiary from that date. In connection with the 

Membership Interest Purchase Agreement (”MIPA”), each of the two founder 

members of Pyxis, receive certain allocable portion of Pyxis’s earning as 

“contingent payments”. The first of such contingent payment, “Contingent 

Anniversary Payment”, was contingent on Pyxis’s earnings before interest, 

taxes, depreciation and amortization (EBITDA) as determined from the “First 

Anniversary Income Statement” in accordance with the terms of meeting or 

exceeding the target EBITDA. The second and last such payment, “Second 

Anniversary Payment”, was computed on Pyxis’s EBITDA as determined from 

the “Second Anniversary Income Statement”. 

The Company recorded this acquisition as a purchase, and the results of 

Pyxis’s operations were included from the date of acquisition. The fair value 

of current assets and liabilities approximated their book value at the date of 

acquisition. For income tax purposes, Pyxis is considered a disregarded entity, 

and accordingly, its results of operations are included in the income tax 

return of the Company from the date of acquisition and forward. For income 

tax purposes, the Company has recognised intangible assets on a steppedup 

basis and such intangible assets are being amortized over 15 years. 

In accordance with MIPA, based on Pyxis’s EBITDA for the year ended August 

31, 2009, the Company paid the founder members of Pyxis $1,083,668 

(Rs. 52,070,247) towards contingent anniversary payment, computed on 

the basis of the first anniversary income statement. This payment is reflected 

as an increase in goodwill in accordance with ASC 805. The Contingent 

Anniversary Payment was made from the Company’s internal cash accruals. 

In accordance with MIPA, based on Pyxis’s EBITDA for the year ended August 

31, 2010, the Company paid the founder members of Pyxis $598,741 

(Rs. 28,769,505). This payment is reflected as an increase in goodwill in 

accordance with ASC 805. The Second Anniversary Payment was made from 

the Company’s internal cash accruals. 

In accordance with MIPA, the Company had provided an irrevocable standby 

letter of credit, expired on April 30, 2011 for $4,650,000 (Rs. 223,432,500), 

to each of the two founder members of Pyxis as a security for full and timely 

discharge of payments. The Company received the funding for this acquisition 

from an additional contribution of capital from its parent company of 

$13,500,000 (Rs. 648,675,000) in 2009. 


After paying the Second Anniversary Payment, as above, the irrevocable 

standby letter of credit, to each of the two founder members of Pyxis, was 

closed on December 6, 2010. 

The total purchase price for the acquisition of membership interest 

and allocation thereof, is as follows: 

Purchase price $ 12,434,878 ` 597,495,888 

Transaction costs 493,755 23,724,928 

Total purchase price at the time of acquisition 12,928,633 621,220,816 

Contingent anniversary payment 1,083,668 52,070,247 

Second anniversary payment 598,741 28,769,505 

Total purchase price 

Allocation of purchase price 

14,611,042 702,060,568 

Current assets acquired 2,567,021 123,345,359 

Less: Current liabilities assumed 957,064 45,986,925 

Net assets acquired (working capital) 1,609,957 77,358,434 

Identifiable intangible assets (see Note F) 5,390,000 258,989,500 

Goodwill (see Note F) 5,502,156 264,378,596 

Add: Deferred tax benefit adjusted 426,520 20,494,286 

Total purchase price at the time of acquisition 

Add: Contingent anniversary payment added to 

12,928,633 621,220,816 

goodwill (see Note C and Note F) 

Add: Second anniversary payment added to 

1,083,668 52,070,247 

goodwill (see Note C and Note F) 598,741 28,769,505 

Total purchase price $ 14,611,042 ` 702,060,568 

NOTE D - RELATED PARTY TRANSACTIONS 

The Company had transactions with the following parties: 

Year ended March 31, 

2012 2012 2011 2011 

$ (`) $ (`) 

Transactions with Infotech India 

Costs for project consultations / 

other expenses, included in cost of 

revenues / general and 

administrative expenses 

Project / other expenses 

$17,600,501 845,704,060 $12,424,265 554,122,219 

reimbursements from Infotech India 

Service / account management fees 

515,468 24,768,238 562,030 25,066,538 

recognised as revenue 

Transactions with Infotech UK 

Service / account management fees / 

— — 53,262 2,375,485 

others, recognised as revenue 


other expenses, included in cost of 

revenues / general and 

119,275 5,731,151 61,075 2,723,945 

administrative expenses 

Project / other expense 

209,165 10,050,369 366,423 16,342,466 

reimbursements from Infotech UK 

Transactions with Pyxis 

Service / account management fees / 

— — 556 24,798 

others, recognised as revenue 


other expense reimbursements, 

included in cost of revenues / 

58,656 2,818,421 — — 

general and administrative expenses 

Other expense reimbursements 

184,240 8,852,732 241,176 10,756,450 

from Pyxis 

Other expense reimbursements 

508,597 24,438,098 233,665 10,421,459 

to Pyxis 604 29,041 29,149 1,300,045 

Rent paid includes $106,217 (` 5,103,727) and $95,048 (` 4,239,141) towards 

rent paid to King Maker Marketing Inc. (see Note G) for the fiscal years ended 

March 31, 2012 and 2011 respectively. 

Accounts receivable includes $0 (` 0) and $38,277 (` 1,707,154) receivable from 

Pyxis Solutions Pte. Ltd. for the fiscal years ended March 31, 2012 and 2011, 

respectively. 

NOTE E - ACCOUNTS RECEIVABLE 

Accounts receivable includes both billed and unbilled receivable. Changes 

in the allowance for doubtful accounts in 2012 and 2011 are as follows: 

2012 2012 2011 2011 

$ (`) $ (`) 

Beginning balance 396,427 19,048,317 396,427 17,680,644 

Increase to allowance 838,417 40,285,937 — — 

Accounts written off (769,351) (36,967,316) — — 

Provision written back — — — — 

Ending balance 465,493 22,366,938 396,427 17,680,644 

Unbilled receivables were approximately $ 1,091,194 (` 52,431,872) and 

$818,623 (` 36,510,586) as at March 31, 2012 and 2011 respectively. 

141

NOTE F - INTANGIBLE ASSETS 

The Company has assets arising on acquisition of membership interest in accordance with ASC 805,”Business Combinations” (”ASC 805”). Accordingly, the 

components of intangible assets (including goodwill) as at March 31, 2012 and 2011, are as follows: 

2012 2011 

Identifiable Estimated Currency Gross Accumulated Net carrying Gross carrying Accumulated Net carrying 

intangible useful life carrying amortization amount amount amortization amount 

assets amount 

Trade name 8 $ 300,000 136,438 163,562 300,000 98,938 201,062 

` 14,415,000 6,555,846 7,859,154 13,380,000 4,412,635 8,967,365 

Non-compete 4 $ 90,000 81,863 8,137 90,000 59,363 30,637 

agreement ` 4,324,500 3,933,517 390,983 4,014,000 2,647,590 1,366,410 

Customer 8 $ 3,900,000 1,773,699 2,126,301 3,900,000 1,286,199 2,613,801 

relationship ` 187,395,000 85,226,237 102,168,763 173,940,000 57,364,475 116,575,525 

Know how 5 $ 1,100,000 800,438 299,562 1,100,000 580,438 519,562 

` 52,855,000 38,461,046 14,393,954 49,060,000 25,887,535 23,172,465 

Total $ 5,390,000 2,792,438 2,597,562 5,390,000 2,024,938 3,365,062 

` 258,989,500 134,176,646 124,812,854 240,394,000 90,312,235 150,081,765 

Goodwill $ 7,184,566 — 7,184,566 7,184,566 — 7,184,566 

(see Note C) ` 345,218,396 — 345,218,396 320,431,644 — 320,431,644 

Net assets acquired (working $ 1,609,957 — 1,609,957 1,609,957 — 1,609,957 

capital) (see Note C) ` 77,358,434 77,358,434 71,804,082 71,804,082 

Total intangible assets $ 14,184,523 2,792,438 11,392,085 14,184,523 2,024,938 12,159,585 

` 681,566,330 134,176,646 547,389,684 632,629,726 90,312,235 542,317,491 

Amortization of identifiable intangible assets for the years ended March 31, 

2012 and 2011 was $767,500 (Rs. 36,878,375) and $767,500 (` 34,230,500), 

respectively. At March 31, 2012 the expected amount of amortization of 

identifiable intangible assets, over the next five years are as follows: 

2012-2013 $ 753,137 ` 36,188,233 

2013-2014 604,562 29,049,204 

2014-2015 525,000 25,226,250 

2015-2016 525,000 25,226,250 

2016-2017 189,863 9,122,917 

Total amortization expense $ 2,597,562 ` 124,812,854 

NOTE G - COMMITMENTS AND CONTINGENCIES 

LEASES 

The Company has leased offices and storage spaces under non-cancellable 

operating leases, some of these expiring through fiscal 2017. One such office 

has been leased from King Maker Marketing Inc. whose parent Company 

(ITC Limited) is same as the Company’s ultimate parent company. Total rent 

and other reimbursements to King Maker Marketing Inc. was approximately 

$106,217 (Rs. 5,103,727) and $95,048 (Rs. 4,239,141) for the fiscal years 

ended March 31, 2012 and 2011, respectively. Total rent expense under all 

facilities leases was approximately $158,950 (Rs 7,637,546) and $152,898 

(` 6,819,251) for the fiscal years ended March 31, 2012 and 2011, respectively. 

In addition, the Company has entered into various non-cancellable operating 

leases for the rental of equipment. 

The future minimum annual lease payments as at March 31, 2012 are as 

follows: 

Offices Equipment Total 

$ ` $ ` $ ` 

2012-2013 151,436 7,276,500 4,309 207,047 155,745 7,483,547 

2013-2014 153,417 7,371,687 3,320 159,526 156,737 7,531,213 

2014-2015 155,437 7,468,748 2,991 143,718 158,428 7,612,466 

2015-2016 157,498 7,567,779 2,991 143,718 160,489 7,711,497 

2016-2017 

Total Minimum 

78,804 3,786,532 2,991 143,718 81,795 3,930,250 

Lease Payments 696,592 33,471,246 16,602 797,727 713,194 34,268,973 

NOTE H - INCOME TAXES 

The provision for income taxes consists of the following: 

Year ended March 31, 

$ 2012 2012(`) $ 2011 2011(`) 

Federal Taxes 

Current — — — — 

Deferred 39,456 1,895,861 (155,075) (6,916,345) 

State and local taxes 

Current 33,123 1,591,560 38,467 1,715,628 

Deferred (34,732) (1,668,873) (1,178) (52,539) 

Foreign Taxes 88,683 4,261,218 170,461 7,602,561 

Total current expense $ 126,530 ` 6,079,766 $ 52,675 ` 2,349,305 

As a result of the Pyxis acquisition, the Company’s amortizable tax basis 

goodwill exceeds it financial reporting goodwill. Under ASC 740, this is 

known as component 2 goodwill. No tax benefit is recorded for amortization 

142 


of component 2 goodwill until such deduction reduces taxes payable. As at 

March 31, 2012, no tax benefit related to the amortization of component 

2 goodwill has been recorded. 

The Company’s 2012 and 2011 expected Federal income tax provision was 

offset by the utilisation of net operating loss carry forwards. 

Deferred tax assets and liabilities consist of the following: 

$ 2012 2012(`) $ 2011 2011 (`) 

Net Operating Loss 

carry forwards 

19,720 947,546 281,844 12,570,242 

Other temporary 

differences (net) 

488,445 23,469,782 294,789 13,147,589 

Foreign tax 

credit carry-over 

423,309 20,339,997 359,564 16,036,575 

Federal Alternate 

Minimum Tax carry over 

24,938 1,198,271 24,938 1,112,235 

Net deferred tax asset $ 956,412 ` 45,955,596 $ 961,135 ` 42,866,641 

As at March 31, 2012, the Company has NOL of approximately $57,999 

(` 2,786,852) available to offset future taxable income, as summarised below. 

For the financial year ended March 31, 2011, Other Assets included a sum 

of $ 170,461 (` 7,602,561) being deferred tax asset created on foreign tax 

credits. This amount has been reclassified under deferred tax asset in the 

current year’s presentation. 

Operating loss carry forwards for Federal income tax purposes will expire 

as follows: 

Year Expiring Expiring 

Amount ($) Amount (`) 

March, 2025 1,329 63,858 

March, 2026 10,805 519,180 

March, 2027 17,343 833,331 

March, 2028 22,564 1,084,200 

March, 2030 5,958 286,282 

$ 57,999 ` 2,786,851 

NOTE I - CONCENTRATION OF CUSTOMER SALES 

A significant portion of the Company’s 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 33% (13%, 12% and 8%) and approximately 

37% (18%, 11% and 8%) of the Company’s net revenues for the years ended 

March 31, 2012 and 2011, respectively. Accounts receivable from these 

customers approximated 26% (9%, 9%, and 8%) and 32% (14%, 14%, and 

4%) of total accounts receivable as at March 31, 2012 and 2011, respectively. 

NOTE J - CONCENTRATION OF CREDIT RISK 

Financial instruments that potentially subject the Company to concentrations 

of credit risk consist principally of cash deposits. Accounts at each institution 

are insured by the Federal Deposit Insurance Corporation up to regulatory 

limits. The Company has not experienced any losses in such accounts.

REPORT OF THE CHIEF EXECUTIVE OFFICER TO THE SOLE MEMBER, ITC 

INFOTECH (USA), INC. 

I take pleasure in presenting my Report together with the Audited Financial 

Statements of the Company for the financial year ended 

31st March, 2012. 

Principal Activities 

Your Company is engaged in providing Software Testing and Quality 

Assurance services primarily for the Banking, Financial Services & Insurance 

business segments. 


Pyxis primarily provides high-end, domain-based quality consulting to 

marquee clients in the financial services industry. 

During 2011, growth in IT services spends in the US financial services 

industry lagged that of overall IT services growth. The sector posted a 

growth of only 1.5 per cent compared to the overall growth of 4.4 per 

cent, and continued to be characterised by sporadic rate cuts and furloughs. 

Amidst challenging market conditions, your Company’s focus was on client 

retention, cost management and strengthening solution capability aligned 

to market needs. Your Company was chosen by its largest client to support 

a high visibility project that was revived after being put on hold due to 

INDEPENDENT AUDITORS’ REPORT 

ITC Infotech (USA), Inc., sole member of Pyxis Solutions, LLC. 

We have audited the accompanying balance sheets of Pyxis Solutions, LLC 

as of March 31, 2012 and 2011, and the related statements of operations 

and member’s equity and cash flows for each of the years then ended. The 

financial statements are the responsibility of the Company’s management. 


based on our audits. 

We conducted our audits 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 controls 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 

Company’s 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, and 

assessing the accounting principles used and significant estimates made by 

market conditions. Further, the strength of Pyxis’ capability enabled major 

new client acquisition towards the end of the financial year. The increased 

client activity and the efforts towards successful client retention present 

attractive growth possibilities in the next financial year. 

During the year under review your Company registered a Turnover of 

US$5.84 million (previous year - US$6.34million) and a Net Income of 

US$0.09 million (previous year - US$0.02million). 

Your Company declared and paid US$ 500,000 (previous year - US$750,000) 

as dividend for the financial year 2011-12 by way of distribution to the Sole 

Member. 

Auditors 

M/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Company, 

offer themselves for re-appointment as Auditors of the Company to audit 

the Financial Statements of the Company for the financial year ending 31st 

March, 2013. 

Amar Singh Duggal 

May 7, 2012 Chief Executive Officer 


presentation. We believe that our audits provide a reasonable basis for our 

opinion. 

In our opinion, the financial statements referred to above present fairly, in 

all material respects, the financial position of Pyxis Solutions, LLC as of 

March 31, 2012 and 2011, and the results of its operations and their cash 

flows for each of the years then ended in conformity with accounting 

principles generally accepted in the United States of America. 

As discussed in Note B[1], the Indian Rupee equivalent figures have been 

included in the financial statements as required by ITC Infotech India 

Limited, the ultimate parent company for informational purpose only, and 

is not intended to be a presentation in conformity with accounting principles 


EisnerAmper LLP 

Edison, New Jersey 

May 7, 2012 

PYXIS SOLUTIONS, LLC. USA 



$ ` $ ` 

Assets 



Accounts receivable, net of allowance for doubtful 

accounts of $ 8,391 (` 403,188) for 2012 and 

1,549,410 74,449,151 1,800,796 80,315,502 

$ 8,391 (` 374,239) for 2011, respectively 951,422 45,715,827 985,224 43,940,990 

Due from ITC Infotech (USA), Inc., net 29,888 1,436,118 75,797 3,380,546 

Advances to employees — — 4,713 210,200 

Prepaid expenses 11,030 529,992 11,211 500,011 


Computer equipment, net of accumulated 

depreciation of $1,120 (` 53,816) and $814 

2,541,750 122,131,088 2,877,741 128,347,249 

(`36,304) for 2012 and 2011 respectively 102 4,901 407 18,152 

Liabilities and Member’s Equity 


2,541,852 122,135,989 2,878,148 128,365,401 

Accounts payable 86,000 4,132,300 86,000 3,835,600 

Accrued expenses and other current liabilities 375,891 18,061,562 290,493 12,955,988 


Due to ITC Infotech India Ltd., net 37,696 1,811,293 33,108 1,476,617 


Commitments and contingencies (Note F) 

673,460 32,359,753 598,175 26,678,605 

Member’s equity 1,868,392 89,776,236 2,279,973 101,686,796 

2,541,852 122,135,989 2,878,148 128,365,401 

Date : May 7, 2012 

V. Sawhney Greg Zvi Brener A. Duggal 

Financial Controller Chief Operating Officer Chief Executive Officer 


143

144 


STATEMENT OF OPERATIONS AND MEMBER’S EQUITY FOR THE YEAR ENDED 31ST MARCH, 2012 

Year Ended Year Ended Year Ended Year Ended 


$ ` $ ` 

Revenue 

Service Fees 5,836,637 280,450,408 6,337,487 282,651,920 

Total revenue 

Cost of revenue, principally 

5,836,637 280,450,408 6,337,487 282,651,920 

employment cost and subcontractor fees 4,713,368 226,477,332 5,122,152 228,447,979 

Gross profit 1,123,269 53,973,076 1,215,335 54,203,941 

General and administrative expenses 1,037,293 49,841,929 1,194,272 53,264,531 

Operating income 85,976 4,131,147 21,063 939,410 

Other income 2,443 117,386 3,609 160,961 

Net income 88,419 4,248,533 24,672 1,100,371 

Member’s equity at the beginning of year 2,279,973 109,552,703 3,005,301 134,036,425 

Member’s distribution (500,000) (24,025,000) (750,000) (33,450,000) 

Member’s equity at the end of year 1,868,392 89,776,236 2,279,973 101,686,796 

Date : May 7, 2012 

STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2012 



Financial Controller Chief Operating Officer Chief Executive Officer 



$ ` $ ` 

Cash flows from operating activities 

Net income 

Adjustments to reconcile net income to net cash 

provided by operating activities 

88,419 4,248,533 24,672 1,100,371 

Depreciation and amortization 

Changes in assets and liabilities 

305 14,655 305 13,603 

Accounts receivable 33,802 1,624,186 620,966 27,695,084 

Due from ITC Infotech (USA), Inc. 45,909 2,205,927 (75,797) (3,380,546) 

Advances to employees 4,713 226,460 (4,713) (210,200) 

Trade advance — — 48,500 2,163,100 

Prepaid expenses 181 8,697 5,901 263,185 

Accrued expenses and other current liabilities 85,398 4,103,374 55,440 2,472,624 

Accrued payroll and payroll taxes (14,701) (706,383) (47,898) (2,136,251) 

Due to ITC Infotech India Ltd., net 4,588 220,453 (4,254) (189,728) 

Net cash provided by operating activities 


248,614 11,945,902 623,122 27,791,242 

Member’s distribution (500,000) (24,025,000) (750,000) (33,450,000) 

Net cash used in financing activities (500,000) (24,025,000) (750,000) (33,450,000) 

Net decrease in cash and cash equivalents (251,386) (12,079,098) (126,878) (5,658,758) 

Cash and cash equivalents at beginning of the year 1,800,796 86,528,249 1,927,674 85,974,260 

Cash and cash equivalents at end of the year 1,549,410 74,449,151 1,800,796 80,315,502 

Date : May 7, 2012 



Financial Controller Chief Operating Officer Chief Executive Officer


March 31, 2012 and 2011 

NOTE A - BUSINESS BACKGROUND AND PRINCIPAL TRANSACTIONS WITH AFFILIATES 

Pyxis Solutions, LLC. (the “Company”) is principally engaged in the information 

technology services business offering Quality Assurance (QA) solutions and 

testing services. Its customers are commercial entities throughout the United 

States of America. The work is usually performed under contracts which 

specify fixed hourly rates (which depend upon the skill level of the consultant 

staffed at the customer’s location) and which vary in length, but are typically 

more than one year in duration. The Company was formed as a New York 

State limited liability company in 2000. 

The Company became a wholly owned subsidiary of ITC Infotech (USA), 

Inc. (the “Parent Company”) on August 11, 2008 as a result of the acquisition 

of 100% of the membership interest by ITC Infotech (USA), Inc. 

One of the founding members of the Company, who is also the CEO of the 

Company, owns a majority interest in entities performing similar services 

in India and Singapore. Similarly, both the founding members of the 

Company equally own the entire interest in an entity performing similar 

services in the United Kingdom. See Note D for transactions with these 

related parties. 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

1. Basis of presentation 

The financial statements of the Company are prepared in accordance 

with accounting principles generally accepted in the United States of 

America, the country of formation. The amounts are represented in 

U.S. dollars. As required by ITC Infotech India Limited, the 

parent’s parent company, the Indian Rupee equivalent figures, arrived 

at by applying the average interbank exchange rate of US$1 = ` 48.05 

(2011: US$1 = ` 44.60) as provided by the parent’s parent company, 

have been included solely for informational purposes and is not in 

conformance with the provisions of FASB ASC 830-30 – Foreign Currency 

Matters – Translation of Financial Statements and U.S. GAAP. 

2. Recognition of revenue 

Service revenue 

Service revenue is based upon hours worked by the Company employees 

on customer assignments and is recognised when the work is performed. 

Revenue is determined by multiplying the hours worked by the 

contractual billing rates. Substantially all customers are invoiced 

bi-weekly or monthly. 


For purposes of reporting cash flows, the Company considers all cash 

accounts which are not subject to withdrawal restrictions or penalties, 

and certificates of deposit with maturities of ninety days or less, when 

purchased, to be cash or cash equivalents. 

4. Accounts receivable and allowance for doubtful accounts 

Credit is extended based on evaluation of a customer’s financial 

condition and, generally, collateral is not required. Accounts receivable 

are generally due within 30 to 60 days and are stated at amounts due 

from customers net of an allowance for doubtful accounts. Accounts 

outstanding longer than the contractual payment terms are considered 

past due. The Company creates an allowance for accounts receivable 

based on historical experience and management’s evaluation of 

outstanding accounts receivable. Accounts are written off when they 

are deemed uncollectible. 

5. Computer equipment 

Computer equipment is stated at cost. Depreciation is provided under 

the straight-line method based upon the estimated useful lives of the 

assets, with such lives ranging up to four years. 

6. Income Taxes 

As a result of the Company electing to be a disregarded entity, it is not 

liable for any federal or state income taxes and is not entitled to any 

tax benefits resulting from operating losses. The Parent Company does 

not allocate any of its tax liabilities or benefits to the Company. 



In preparing financial statements in conformity with accounting principles 

generally accepted in the United States of America, management is 

required to make estimates and assumptions that affect the reported 

amounts of assets and liabilities and disclosure of contingent assets 

and liabilities at the date of the financial statements, as well as the 

reported amounts of revenue and expenses during the reporting period. 

Although actual results could differ from those estimates, in the opinion 

of the management such estimates would not materially affect the 


8. Foreign currency translation 

The Company maintains a foreign currency bank account denominated 

in GBP (Pound Sterling). Foreign currency transaction gains resulting 

from exchange rate fluctuations on transactions denominated in foreign 

currencies totaled $96 (` 4,613) and $1,619 (` 72,207) as of March 31, 

2012 and 2011, respectively, and are included in Other Income in the 

accompanying statements of operations. 

9. Subsequent events 

The Company evaluated subsequent events from March 31, 2012 

through May 7, 2012, the date the financial statements were available 

to be issued. 

NOTE C - ACQUISITION OF MEMBERSHIP INTERESTS 

On August 11, 2008, the membership interests of the founders were 

acquired by the Parent Company. As permitted by accounting principles 

generally accepted in the United States, the impact of the purchase was 

not “pushed-down” to the Company. Accordingly, the financial statements 

presented do not reflect the adjustment of any asset, liability or equity 

accounts to fair value on such date, and the amounts presented do reflect 

a continuity of operations and basis of presentation. 

NOTE D - RELATED PARTY TRANSACTIONS 

The Company has entered into various transactions with its related parties 

as follows: 


March 31, March 31, March 31, March 31, 

2012 2012 2011 2011 

$ ` $ ` 

Transactions with ITC 

Infotech (USA ), Inc. 

Service / Account 

Management fees / others 

recognised as revenue 

by Pyxis 


other expenses, included in 

184,240 8,852,732 241,176 10,756,450 

cost of revenue 


reimbursements incurred 

58,656 2,818,421 — — 

by Pyxis 


reimbursements incurred 

604 29,022 29,149 1,300,045 

by Parent Company 

Transactions with ITC 

Infotech India Ltd. 


other expenses, included in 

508,597 24,438,086 233,665 10,421,459 

cost of revenue 421,552 20,255,574 371,314 16,560,604 

Trade advance of $48,500 (` 2,163,100) receivable from Pyxis Singapore 

as of March 31, 2010 was received during the year 2010-11. 

NOTE E - ACCOUNTS RECEIVABLE 

Accounts receivable consist of trade accounts receivable and unbilled 

accounts receivable (representing services performed prior to the balance 

145


sheet dates, but not invoiced to the customer until thereafter). Unbilled 

receivables were $ 205,032 (` 9,851,788) and $ 456,983 (` 20,381,442) 

as of March 31, 2012 and 2011, respectively. 

NOTE F - COMMITMENTS AND CONTINGENCIES 

Leases 

The Company has leased office space under a non-cancellable operating 

lease expiring March 31, 2015. Total rent expense under this lease 

was $73,524 (` 3,532,828) and $48,955 (` 2,183,393) for years ending 

March 31, 2012 and 2011, respectively. In addition, the Company has entered 

into a non-cancellable operating lease for rental of equipment expiring 

through 2014. Total expense under this lease for years ending March 31, 

2012 and 2011 was $2,976 (` 142,997) and $2,171 (` 96,827), respectively. 

The future minimum annual lease payments at March 31, 2012 are as follows: 

Office Rent Equipment Total 

Year $ ` $ ` $ ` 

2012-13 63,261 3,039,691 2,391 114,888 65,652 3,154,579 

2013-14 63,261 3,039,691 1,196 57,468 64,457 3,097,159 

2014-15 42,174 2,026,461 — — 42,174 2,026,461 

Total minimum 

lease payments 168,696 8,105,843 3,587 172,356 172,283 8,278,199 

146 


NOTE G - CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS 

A significant portion of the Company’s sales are to several key customers. 

Two such customers accounted for approximately 80% and approximately 

60% of the Company’s net revenues for the year ended March 31, 2012 

and 2011 respectively. These two customers accounted for approximately 

87% and 49% of total accounts receivable at March 31, 2012 and 2011, 

respectively. 


of credit risk consist principally of cash deposits. Accounts at each institution 

are insured by the Federal Deposit Insurance Corporation (FDIC) up to 

regulatory limits. The Company has not experienced any losses in 

such accounts. 

NOTE H - EMPLOYMENT AGREEMENT 

The Parent Company entered into consultation agreements with Mr. Amar 

Duggal and Mr. Greg Zvi Brener through their respective companies, as 

the Company’s Chief Executive Officer and Chief Operating Officer, 

respectively during the year 2010-11. The term of these consultation 

agreements are for a period of two years (expiring November 2012). 

NOTE I - MEMBER’S DISTRIBUTION 

The Company paid a dividend of $500,000 (` 24,025,000) by way of 

distribution to the Parent Company, on March 5, 2012. 

The Company paid a dividend of $750,000 (` 33,450,000) by way of 

distribution to the Parent Company, on March 31, 2011.

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 





Your Company has earned a total revenue of ` 80.83 lakhs in the year 

under review. The temporary surplus funds of the Company have been 

invested in debt mutual funds and bank fixed deposits. The Board of 

Directors of your Company continues to explore business opportunities 

for growth and sustainability. 




(`) (`) 

a. Profit Before Tax 67,07,971 44,20,739 

Less : Tax Expense 1,80,000 1,33,419 

b. Profit After Tax 65,27,971 42,87,320 





3. DIRECTORS 


Association of the Company, Mr. B. B. Chatterjee will retire by rotation 










AUDITORS’ REPORT TO THE MEMBERS OF WILLS CORPORATION LIMITED 

1 We have audited the attached Balance Sheet of Wills Corporation Limited, 

as at 31st March 2012, and the related Statement of Profit and Loss and 

Cash Flow Statement for the year ended on that date annexed thereto, 

collectively hereinafter referred to as financial statements, which we have 

signed under reference to this report. 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. 

2 We conducted our audit in accordance with the auditing standards 









our opinion. 

3 As required by the Companies (Auditor’s Report) Order, 2003, as amended 

by the Companies (Auditor’s Report) (Amendment) Order, 2004, 

collectively referred to as ‘Order’, issued by the Government of India 

in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 

of India (’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 said 

Order. 

4 Further to our comments in the Annexure referred to in paragraph 3 


(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 












and 






6. AUDITORS 

The Company’s Auditors, Messrs. L. B. Jha & Co., Chartered Accountants, 

retire at the ensuing Annual General Meeting of the Company, and 

being eligible, offer themselves for re-appointment. 

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN 





under review. 

2nd May, 2012 




Kolkata 700 071 

WILLS CORPORATION LIMITED 





Statement dealt with by this report are in agreement with the books 

of account; 

(d) In our opinion the Balance Sheet, Statement of Profit and Loss and 



of the Act; 

(e) On the basis of written representations received from the directors 

and taken on record by the Board of Directors, none of the directors 

is disqualified as on 31st March 2012, from being appointed as a 

director in terms of clause (g) of sub-section (1) of Section 274 of 

the Act; 

(f) In our opinion and to the best of our information and according to 

the explanations given to us, the said financial statements together 

with the notes thereon and attached thereto give in the prescribed 

manner the information required by the Act and also give a true 

and fair view in conformity with the accounting principles generally 



Company as at 31st March 2012; 

(ii) in the case of the Statement of Profit and Loss, of the profit for 



the year ended on that date.. 

Kolkata 

2nd May, 2012 

For L. B. Jha & Co. 


(Registration No. 301088E) 

Kamal Kumar Bhanja 

Partner 


147

ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF WILLS 

CORPORATION LIMITED 

(Referred to in paragraph 3 of the Auditors’ Report of even date) 

1. (a) The Company has maintained proper records showing full particulars 


(b) The fixed assets 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. 


given to us, no substantial part of fixed assets has been disposed of 

by the Company during the year. 

2. The Company does not have any inventory. 


unsecured, to/ from companies, firms or other parties covered in the 


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) In our opinion and according to the information and explanations 

given to us, the particulars of contracts or arrangements referred to 

in Section 301 of the Act have been entered in the register required 

to be maintained under that section. 


given to us, the 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 have been made at prices which 

are 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. 


with the size and nature of its business. 

8. (a) According to the information and explanations given to us and the 

records of the Company examined by us, in our opinion, the 



148 


including provident fund, income-tax, sales-tax, wealth 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, there are no dues of 

income-tax, sales tax, wealth tax, service tax, and cess which have 

not been deposited on account of any dispute. 


information and explanation given to us, the Company has neither 

borrowed moneys from any financial institution or bank nor has issued 

any debentures during the year. 

10. 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. 


12. On the basis of an overall examination of the Balance Sheet of the 


explanations given to us, there are no funds raised on a short-term basis, 

which have been used for long-term investment. 

13 According to the records of the Company examined by us and the 

information and explanation given to us, 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. 

14 In our opinion clauses vii,xii to xiv,xix and xx of paragraph 4 of the Order 

are not applicable to the Company for the current year. 

15 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. 

Kolkata 

2nd May, 2012 


(`) (`) (`) (`) 


(1) Shareholder's Funds 

(a) Share Capital 2 4,88,56,260 4,88,56,260 

(b) Reserves and Surplus 

(2) Non-Current Liabilities 

3 3,54,44,360 8,43,00,620 2,89,16,389 7,77,72,649 

(a) Long-Term Liabilities 4 20,00,000 20,00,000 

(b) Long-Term Provisions 

(3) Current Liabilities 

5 2,28,134 22,28,134 1,97,252 21,97,252 

(a) Other Current Liabilities 6 67,024 67,024 82,019 82,019 

Total 8,65,95,778 8,00,51,920 

II. ASSETS 

(1) Non-Current Assets 

(a) Fixed Assets 


(b) Other Non-Current Assets 

(2) Current Assets 

8 56,563 44,37,120 56,563 45,30,275 

(a) Current Investments 9 — 7,43,79,207 

(b) Cash and Cash Equivalents 10 8,19,98,231 6,31,864 

(c) Short-Term Loans and Advances 11 69,633 1,07,937 

(d) Other Current Assets 12 90,794 8,21,58,658 4,02,637 7,55,21,645 

Total 8,65,95,778 8,00,51,920 

The accompanying Notes 1 to 17 are an integral part of the Financial Statements 





Partner 

Kolkata, 2nd May, 2012 





Partner 





T. Ghosal Secretary





Revenue 

(`) (`) 

Other Income 13 80,83,264 56,35,695 

Total Revenue 

Expenses 

80,83,264 56,35,695 

Employee Benefits Expense 14 11,82,344 10,07,316 

Depreciation and Amortisation Expense 7 93,155 93,155 

Other Expenses 15 99,794 1,14,485 


Profit before Tax 

Tax Expense: 

67,07,971 44,20,739 

Current Tax 16 1,80,000 1,33,419 

Profit for the year 65,27,971 42,87,320 

Earning per equity share (Face Value of ` 10/- each) 

(Basic & Diluted) 

17(2) 1.34 0.88 






Partner 





T. Ghosal Secretary 




(`) (`) 


ADJUSTMENTS FOR: 

67,07,971 44,20,739 

Depreciation 93,155 93,155 

Dividend Income (60,83,930) (40,87,622) 

Interest on Income Tax (8,729) 332 

Profit on Sale of Current Investments (601) (624) 

Liability no longer required written back (19,374) — 



6,88,492 4,25,980 

Current Assets, Loans and Advances 3,11,843 (4,01,309) 

Current Liabilities and Provisions 35,261 1,17,845 

CASH GENERATED FROM OPERATIONS 10,35,596 1,42,516 

Income Tax Refund / (Payment) (1,41,698) (2,01,962) 

NET CASH FROM OPERATING ACTIVITIES 8,93,898 (59,446) 


Income from Current Investments 37,78,800 9,32,535 

Purchase of Current Investments (76,55,60,000) (108,26,49,132) 

Sale of Current Investments 84,22,44,940 108,19,93,924 

Interest on Income Tax 8,729 — 

NET CASH USED IN INVESTING ACTIVITIES 8,04,72,469 2,77,327 

C. CASH FLOW FROM FINANCING ACTIVITIES 

Interest on Income Tax — (332) 

NET CASH FROM FINANCING ACTIVITIES — (332) 

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 8,13,66,367 2,17,549 

OPENING CASH AND CASH EQUIVALENTS 6,31,864 4,14,315 


Notes: 

8,19,98,231 6,31,864 

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: 

Fixed Deposit with Banks 8,11,00,000 — 

Balance with Scheduled Banks - On Current Account 8,97,861 3,19,632 

Cash in Hand 370 — 

Cheques on Hand — 3,12,232 

Cash and Bank Balances (Note 10) 

The accompanying Notes 1 to 17 are an integral part of the Financial Statement. 



8,19,98,231 6,31,864 




Partner 

R. Tandon 

S. Dutta 

Director 

Director 



149


Note 1. SIGNIFICANT ACCOUNTING POLICIES 

150 


The financial statements are prepared on accrual basis under the 





nature of products/services and the time between the acquisition of 

assets for processing and their realization in cash and cash equivalents. 

Fixed Assets 


expenses. 

Depreciation 



Investments 

It is corporate policy that Current Investments are stated 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 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 Statement of Profit and Loss except for those covered by forward 

contract rates where the gains / losses arising from such restatement 

are recognized over the period of such contracts. 


Borrowing cost that are directly attributable to the acquisition or 

construction of qualifying assets, are capitalized as part of cost of such 


Lease Rentals 

Lease Rentals are accounted for on accrual basis. 

Retirement Benefits 

Liability for leave encashment and gratuity payable to employees is 

provided for at the year-end on actuarial basis. 


Current tax is provided as the amount of tax payable in respect of 


Deferred Tax is provided on timing differences between taxable income 


Deferred tax assets is not recognised on unabsorbed depreciation and 



2. Share Capital As at As at 


Authorised 

(`) (`) 

50,00,000 (2011-50,00,000) Equity Shares of ` 10 each 5,00,00,000 5,00,00,000 

Issued,Subscribed and Paid-up 

5,00,00,000 5,00,00,000 

48,85,626 (2011-48,85,626) Equity Shares of ` 10 each, fully paid 4,88,56,260 4,88,56,260 

4,88,56,260 4,88,56,260 

(i) Reconciliation of number of shares and amounts outstanding As at As at 


Particulars Equity Shares Equity Shares 


Equity Shares of ` 10/- each, outstanding at the beginning and 

end of the year 48,85,626 4,88,56,260 48,85,626 4,88,56,260 

(ii) Details of the Shareholders holding more than 5% of Equity Shares 

of the Company 

48,85,626 4,88,56,260 48,85,626 4,88,56,260 

As at As at 


Name of the Shareholder No. of Shares held No. of Shares held 


ITC Limited - Holding Company 100% 48,85,626 100% 48,85,626 

(iii) Other disclosures 

No shares were either issued otherwise than for payment being received in cash or bought back or alloted fully paid up bonus shares in the 

preceeding five years from the date of this Balance Sheet. 

Equity Shares of the Company, having a par value of ` 10/- per share, rank pari passu in all respects including voting rights and entitlement to dividend. 

3. Reserves and Surplus As at As at 


(`) (`) 


Balance at the beginning and at the end of the year 11,15,201 11,15,201 


At the beginning of the year 2,78,01,188 2,35,13,868 

Add: From Statement of Profit and Loss 65,27,971 42,87,320 

At the end of the year 3,43,29,159 2,78,01,188 

3,54,44,360 2,89,16,389


4. Long-Term Liabilities 

As at As at 


(`) (`) 

Security Deposits 

(from Holding Company) 

20,00,000 20,00,000 

20,00,000 20,00,000 

5. Long-Term Provisions 

As at As at 


(`) (`) 

Provision for Employee Benefits: 

Provision for Gratuity 1,11,862 96,256 

Provision for Compensated Absences 1,16,272 1,00,996 

2,28,134 1,97,252 





As at As at 


(`) (`) 

Liability towards Expenses 


20,224 45,304 

Statutory Remittances (TDS Payable) 46,800 36,715 

67,024 82,019 

GROSS BLOCK DEPRECIATION NET BLOCK 

Particulars 

As at As at Upto 31st For the Upto 31st As at 31st As at 31st 

commencement the end March, 2011 year March, 2012 March, 2012 March, 2011 

of the year of the year 

(`) (`) (`) (`) (`) (`) (`) 

Plant and Machinery 3,42,348 3,42,348 3,42,348 — 3,42,348 — — 

Building (*) 

Given on operating lease 

57,15,053 57,15,053 12,41,341 93,155 13,34,496 43,80,557 44,73,712 

T O T A L 60,57,401 60,57,401 15,83,689 93,155 16,76,844 43,80,557 44,73,712 

Previous Year 60,57,401 60,57,401 14,90,534 93,155 15,83,689 44,73,712 45,66,867 

* Operating lease with respect to the building is for three years and is non-cancellable and renewable on mutually agreeable terms. 

8. Other Non-Current Assets 

As at As at 


(`) (`) 

Sundry Deposits 56,563 56,563 

56,563 56,563 

9. Current Investments 


As at As at 


(`) 

DSP BlackRock Liquidity Fund - Institutional Plan - 

(`) 

Daily Dividend 

Nil (2011 - 74,356 ) Units of ` 1,000 each 

— 7,43,79,207 

— 7,43,79,207 

Aggregate value of unquoted investments — 7,43,79,207 

10. Cash and Cash Equivalents 

As at As at 


(`) (`) 

Balances with Banks 

Balances in Current Account 8,97,861 3,19,632 

Deposit Accounts 8,11,00,000 — 


Cash on Hand 370 — 

8,19,98,231 6,31,864 

11. Short-Term Loans and Advances 

As at As at 


(`) (`) 


Advance Income Tax (net of provisions) 69,633 1,07,339 

Advance Fringe Benefit Tax (net of provisions) — 598 

69,633 1,07,937 

12. Other Current Assets 

As at As at 


(`) (`) 


Lease Rent Receivable 

(due from holding company ITC Limited) 

— 4,00,000 

Interest Accrued and Not Due on Fixed Deposits 89,461 — 

Prepaid Expense 1,333 2,637 

90,794 4,02,637 




(`) (`) 


From Current Investments 60,83,930 40,87,622 

Rental Income 9,60,000 8,20,000 

Profit on Sale of Current Investments 601 624 

Interest On Fixed Deposit 89,461 — 

Interest On Income Tax Refund 8,729 — 

Liability no longer required written back 19,374 — 

Other Non Operating Income 9,21,169 7,27,449 

80,83,264 56,35,695 




(`) (`) 

Salaries and Wages 11,14,196 8,79,656 

Retirement Benefits 30,882 89,854 

Staff Welfare Expense 37,266 37,806 

11,82,344 10,07,316 

151





(`) (`) 

Rates and Taxes 41,278 43,278 

Insurance 3,299 1,971 

Professional Fees 5,465 12,500 

Filing Fees 


1,010 2,040 

As auditors- statutory audit 18,000 18,000 

For taxation matters (*) 5,000 10,000 

For other matters (*) 7,500 7,500 

Travelling and Conveyance 730 1,866 

Postage, Telephone, Telex, etc. 1,376 2,839 

Miscellaneous Expense 16,136 14,491 

* Paid to erstwhile auditors 

99,794 1,14,485 

16. Current Tax 



(`) (`) 

Income Tax for the year 

- Current Tax 1,80,000 1,00,000 

1,80,000 1,00,000 

Adjustments relating to previous years 

- Current Tax — 33,472 

- Fringe Benefit Tax — (53) 

Net Current Tax Liability 1,80,000 1,33,419 

17. Additional Notes to the Financial Statements 

17.1. The Revised Schedule VI has become effective from 1st April, 2011 for the preparation 

of finanacial statements. This has significantly impacted the disclosure and presentation 

made in the financial statements. Previous year’s figures have been regrouped/reclassified 

wherever necessary to correspond with current year’s classification/disclosure. 

17.6. Employee Benefits : 

152 


17.2. Earnings per Share 



Profit after Taxation (`) 65,27,971 42,87,320 


Equity Shares outstanding 

48,85,626 48,85,626 

Basic and Diluted Earnings Per Share 

(Face Value - ` 10/- per share) 

` 1.34 ` 0.88 

17.3. The incidence of Deferred Tax being insignificant, is not considered. 

17.4 Related Party Disclosures : 

(a) Relationships : 




Mr. B. B. Chatterjee Non-Executive Director 

Mr. S. Dutta Non-Executive Director 

Mr. T. Ghosal Company Secretary 

(b) Disclosure of transaction between the Company and Related Parties and the 

status of outstanding balances : 




(`) (`) 

Postage, Telephone, Telex etc. 1,376 2,839 

Miscellaneous Expenses Nil 11,030 

Rental Income 9,60,000 8,20,000 


Balance as at 31st March, 2012 31st March, 2011 


(`) (`) 

Receivables Nil 4,00,000 

Security Deposit Received 


20,00,000 20,00,000 

Remuneration paid 11,41,562 9,17,462 

17.5 Segment Reporting - The Company operates in a single business and geographical 

segment. 

Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2012 and recognised in the financial statements 




(`) (`) 



Unfunded Unfunded Unfunded Unfunded 


1 Current Service Cost 17,709 9,964 16,232 9,166 

2 Interest Cost 7,941 8,332 3,645 4,426 

3 Expected Return on Plan Assets Nil Nil Nil Nil 

4 Curtailment Cost/(Credit) Nil Nil Nil Nil 

5 Settlement Cost/(Credit) Nil Nil Nil Nil 

6 Past Service Cost Nil Nil 12,411 Nil 

7 Actuarial Losses/(Gains) (10,044) (3,020) 11,892 32,082 

8 Total expense recognised in the Statement of Profit & Loss Account 15,606 15,276 44,180 45,674 

The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost. 

II Actual Returns Nil Nil Nil Nil 


1 Present Value of Defined Benefit Obligation 1,11,862 (1,16,272) (96,256) (1,00,996) 

2 Fair Value on Plan Assets Nil Nil Nil Nil 

3 Status [Surplus/(Deficit)] (1,11,862) (1,16,272) (96,256) (1,00,996) 

4 Unrecognised Past Service Cost Nil Nil Nil Nil 

5 Net Asset/(Liability) recognised in Balance Sheet (1,11,862) (1,16,272) (96,256) (1,00,996)





VII Major Category of Plan Assets as a % of the Total Plan Assets 

1 Government Securities/Special Deposit with RBI N. A. N. A. 

2 High Quality Corporate Bonds N. A. N. A. 

3 Insurance Companies N. A. N. A. 

4 Mutual Funds N. A. N. A. 

5 Cash and Cash Equivalents N. A. N. A. 



(`) 



(`) 



(`) (`) 





1 Present Value of DBO at Beginning of Period 96,256 1,00,996 52,076 55,322 


3 Interest Cost 7,941 8,332 3,645 4,426 

4 Past Service Cost Nil Nil 12,411 Nil 



7 Plan Amendments Nil Nil Nil Nil 

8 Acquisitions Nil Nil Nil Nil 

9 Actuarial (Gains)/Losses (10,044) (3,020) 11,892 32,082 

10 Benefits Paid Nil Nil Nil Nil 

11 Present Value of DBO at the End of Period 1,11,862 1,16,272 96,256 1,00,996 


1 Plan Assets at Beginning of Period N.A. N.A. N.A. N.A. 

2 Acquisition Adjustment N.A. N.A. N.A. N.A. 

3 Expected Return on Plan Assets N.A. N.A. N.A. N.A. 

4 Actuarial Gains/(Losses) N.A. N.A. N.A. N.A. 

5 Actual Company Contributions N.A. N.A. N.A. N.A. 

6 Benefits Paid N.A. N.A. N.A. N.A. 

7 Plan Assets at the End of Period N.A. N.A. N.A. N.A. 


1 Discount Rate (%) 8.25 8.25 8.00 8.00 

2 Expected Return on Plan Assets (%) Nil Nil Nil 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. 


The expected rates of return on plan assets are 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. 



(`) 



(`) 



(`) 



Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded 

IX Net Asset / (Liability) recognized in Balance Sheet 

(including experience adjustment impact) 

1 Present Value of Defined Benefit Obligation 1,11,862 1,16,272 96,256 1,00,996 52,076 55,322 62,516 69,134 47,897 54,062 

2 Fair Value on Plan Assets Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

3 Status [Surplus/(Deficit)] (1,11,862) (1,16,272) (96,256) (1,00,996) (52,076) (55,322) (62,516) (69,134) (47,897) (54,062) 

4 Experience Adjustment of Plan Assets [ Gain / (Loss) ] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

5 Experience Adjustment of Obligation [ (Gain) / Loss ] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

17.7 There are no Micro and Small Enterprises, to whom the Company owes any dues, as at 31st March 2012. 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. 





153


ON 31ST MARCH, 2012 




Your Company has earned a total revenue of ` 3.58 crores in the year 

under review. The temporary surplus funds of the Company have been 

invested in debt mutual funds and bank fixed deposits. The Company 

also remains committed to its growth strategies through its joint venture 

interest in ITC Filtrona Limited. 




(`) (`) 


Less : Tax Expense (8,802) (88,486) 

b. Profit After Tax 3,48,83,393 2,96,95,954 





3. DIRECTORS 


Association of the Company, Mr. B. B. Chatterjee will retire by rotation 




4. RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THE 

COMPANIES ACT, 1956 

The Board of Directors of your Company re-appointed Ms. Nidhi Bajaj 

as Manager of the Company for a period of two years with effect 

from 1st October, 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 Annual General Meeting. Appropriate resolution seeking 

your approval for re-appointment of Ms. Bajaj as Manager is 

appearing in the Notice convening the ensuing Annual General Meeting 

of the Company. 

AUDITORS' REPORT TO THE MEMBERS OF GOLD FLAKE CORPORATION 

LIMITED 

1 We have audited the attached Balance Sheet of Gold Flake Corporation 

Limited, as at 31st March 2012, and the related Statement of Profit 

and Loss and Cash Flow Statement for the year ended on that date 

annexed thereto, collectively hereinafter referred to as financial 

statements, which we have signed under reference to this report. These 

financial statements are the responsibility of the company’s management. 


based on our audit. 

2 We conducted our audit in accordance with the auditing standards 









our opinion. 

3 As required by the Companies (Auditor’s Report) Order, 2003, as 


2004, collectively referred to as ‘Order’, issued by the Government of 

India in terms of sub-section (4A) of Section 227 of Companies Act, 

1956 of India (’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 said 

Order. 

4 Further to our comments in the Annexure referred to in paragraph 3 


(a) We have obtained all the information and explanations, which to 



(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 


154 





















7. AUDITORS 

The Company’s Auditors, Messrs. L. B. Jha & Co., Chartered Accountants, 

retire at the ensuing Annual General Meeting of the Company, and 

being eligible, offer themselves for re-appointment. 


The Audit Committee of the Company comprises Mr. B. B. Chatterjee 

as Chairman and M/s. R. Tandon and Saradindu Dutta as Members. 

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN 





under review. 

2nd May, 2012 

Registered Office : 



Kolkata 700 071 

GOLD FLAKE CORPORATION LIMITED 





Statement dealt with by this report are in agreement with the 


(d) In our opinion the Balance Sheet, Statement of Profit and Loss and 


accounting standards referred to in sub-section (3C) of Section 


(e) On the basis of written representations received from the directors 

and taken on record by the Board of Directors, none of the directors 

is disqualified as on 31st March 2012, from being appointed as a 

director in terms of clause (g) of sub-section (1) of Section 274 of 

the Act; 



together with the notes thereon and attached thereto give in the 

prescribed manner the information required by the Act and also 

give a true and fair view in conformity with the accounting principles 



company as at 31st March 2012; 


for the year ended on that date; and 


the year ended on that date.. 






2nd May, 2012 Membership No. 14722

ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF GOLD FLAKE 

CORPORATION LIMITED 

(Referred to in paragraph 3 of the Auditors’ Report of even date) 

1. (a) The company has maintained proper records showing full particulars 


(b) The fixed assets 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. 


given to us, no substantial part of fixed assets has been disposed 

of by the company during the year. 

2. The company does not have any inventory. 

3. The company has neither granted nor taken any loans, secured or 

unsecured, to/ from companies, firms or other parties covered in the 




with the size of the company and the nature of its business for 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) In our opinion and according to the information and explanations 

given to us, the particulars of contracts or arrangements referred 

to in Section 301 of the Act have been entered in the register 

required to be maintained under that section. 


given to us, the 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 have been made at prices 

which are 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 the size and nature of its business. 


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, wealth tax, 





Partner 



service tax, customs duty, excise duty, cess and other material 

statutory dues as applicable with the appropriate authorities. 


the records of the company examined by us, there are no dues of 

income-tax, sales tax, wealth tax, service tax, customs duty, excise 

duty and cess which have not been deposited on account of any 

dispute. 

9. According to the records of the company examined by us and the 

information and explanation given to us, the company has neither 

borrowed moneys from any financial institution or bank nor has issued 

any debentures during the year. 


given to us, the company has not given any guarantee for loans taken 

by others from banks or financial institutions. 

11. The company has not obtained any term loans. 


company, in our opinion and according to the information and 


basis, which have been used for long-term investment. 

13. According to the records of the company examined by us and the 

information and explanation given to us, 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. 

14. In our opinion clauses vii,xii to xiv, xix and xx of paragraph 4 of the 

Order are not applicable to the company for the current year. 


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. 






2nd May, 2012 Membership No. 14722 


(`) (`) (`) (`) 


(1) Shareholder's Funds 

(a) Share Capital 2 15,99,83,850 15,99,83,850 

(b) Reserves and Surplus 

(2) Non-current Liabilities 

3 11,42,15,500 27,41,99,350 7,93,32,107 23,93,15,957 

(a) Long-Term Liabilities 4 4,64,204 4,64,204 

(b) Long-Term Provisions 

(3) Current Liabilities 

5 40,756 5,04,960 30,769 4,94,973 

(a) Other Current Liabilities 6 21,424 21,424 33,345 33,345 

Total 27,47,25,734 23,98,44,275 

II. ASSETS 

(1) Non-current Assets 

(a) Fixed Assets 

Tangible Assets 7 — 277 

(b) Non-Current Investments 


8 6,00,63,750 6,00,63,750 6,00,63,750 6,00,64,027 

(a) Current Investments 9 — 17,92,70,431 

(b) Cash and Cash Equivalents 10 21,43,84,266 4,04,876 

(c) Short Term Loans and Advances 11 54,987 1,04,941 

(d) Other Current Assets 12 2,22,731 21,46,61,984 — 17,97,80,248 

Total 27,47,25,734 23,98,44,275 

The accompanying notes 1 to 17 are an integral part of the Financial Statements 





N. Bajaj Manager & Secretary 

155

156 





Revenue 

(`) (`) 

Other Income 13 3,57,71,334 3,03,35,101 

Total Revenue 

Expenses 

3,57,71,334 3,03,35,101 

Employee Benefits Expense 14 8,31,792 6,49,276 

Depreciation and Amortisation Expense 7 277 83 

Other Expenses 15 64,674 78,274 


Profit before Tax 

Tax Expense: 

3,48,74,591 2,96,07,468 

Current Tax 16 (8,802) (88,486) 

Profit for the year 3,48,83,393 2,96,95,954 

Earning per equity share (Face Value of ` 10/- each) 

(Basic & Diluted) 

17(3) 2.18 1.86 






Partner 





Partner 





N. Bajaj Manager & Secretary 




(`) (`) 

A. CASH FLOW FROM OPERATING ACTIVITIES 

Net Profit before Tax 


3,48,74,591 2,96,07,468 

Depreciation 277 83 

Income from Investments in Equity Shares (2,02,50,000) (2,02,50,000) 

Income from Investments in Mutual Fund (1,46,32,150) (95,71,661) 

Interest on Income Tax (9,890) (9,032) 

Accrued Interest on Fixed Deposit (2,22,731) — 

Loss/(Gain) on Sale of Current Investments — (1,044) 



(2,39,903) (2,24,186) 

Receivables and Other Assets (2,22,731) 500 

Liabilities and Provisions (1,932) 20,586 

CASH GENERATED FROM OPERATIONS (4,64,566) (2,03,100) 

Income Tax Refund/(Payment) 58,635 (19,099) 

NET CASH USED IN OPERATING ACTIVITIES (4,05,931) (2,22,199) 


Income from Investments in Equity Shares 2,02,50,000 2,02,50,000 

Income from Investments in Mutual Fund 68,00,788 29,60,033 

Accrued Interest on Fixed Deposit 2,22,731 — 

Purchase of Long Term Investment — (1,04,34,376) 

Purchase of Current Investments (244,85,50,000) (294,78,61,223) 

Sale of Current Investments 263,56,51,912 293,53,90,210 

Interest income from Income Tax 9,890 9,032 

NET CASH FROM INVESTING ACTIVITIES 21,43,85,321 3,13,676 

C. CASH FLOW FROM FINANCING ACTIVITIES — — 

NET CASH FLOW USED IN FINANCING ACTIVITIES — — 

NET INCREASE IN CASH AND CASH EQUIVALENTS 21,39,79,390 91,477 

OPENING CASH AND CASH EQUIVALENTS 4,04,876 3,13,399 

CLOSING CASH AND CASH EQUIVALENTS 21,43,84,266 4,04,876 

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: 

Fixed Deposit with Banks 21,35,00,000 — 

Balance with Scheduled Banks - On Current Account 8,83,296 1,67,988 

Cash in Hand 970 — 


Cash and Bank Balances (Note 10) 



21,43,84,266 4,04,876 




N. Bajaj Manager & Secretary


1 Significant Accounting Policies 


The Financial Statements are prepared on accrual basis under the 





nature of products/services. 

Fixed Assets 


expenses. 

Depreciation 

Depreciation is provided on ‘Written Down Value’ basis at the rates 

prescribed in Schedule XIV to the Companies Act, 1956. 

Investments 

Current Investments are stated at lower of cost or fair value; and Non 

Current 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 therefrom are adjusted in 

the Statement of Profit and Loss except for those covered by forward 

contract rates where the gains / losses arising from such restatement 

are recognised over the period of such contracts. 


Borrowing cost that are directly attributable to the acquisition or 

construction of qualifying assets, are capitalised as part of cost of such 

assets. All other borrowing cost are charged to revenue. 

Lease Rentals 

Lease Rentals are accounted for on accrual basis. 

Retirement Benefits 

Liability for leave encashment and gratuity payable to employees is 

provided for at the year-end on actuarial basis. 


Current tax is provided as the amount of tax payable in respect of 


Deferred tax is provided on timing differences between taxable income 


Deferred tax assets is not recognised on unabsorbed depreciation and 



2. Share Capital As at As at 


(`) (`) 

Authorised 

2,00,00,000 (2011 - 2,00,00,000) Equity Shares of ` 10/- each 20,00,00,000 20,00,00,000 

Issued, Subscribed & Paid-up 

20,00,00,000 20,00,00,000 

1,59,98,385 (2011- 1,59,98,385) Equity Shares of ` 10/- each, fully paid 15,99,83,850 15,99,83,850 

15,99,83,850 15,99,83,850 

(i) Reconciliation of number of shares and amounts outstanding As at As at 


Equity Shares Equity Shares 

Particulars 

Equity Shares of ` 10/- each, outstanding at the beginning and 


end of the year 1,59,98,385 15,99,83,850 1,59,98,385 15,99,83,850 

1,59,98,385 15,99,83,850 1,59,98,385 15,99,83,850 

(ii) Details of the Shareholders holding more than 5% of 

equity shares of the company 

As at As at 


Name of the Shareholder No. of Shares held No. of Shares held 


ITC Limited-Holding Company 100% 1,59,98,385 100% 1,59,98,385 

(iii) Other disclosures 

100% 1,59,98,385 100% 1,59,98,385 

No shares were either issued otherwise than for payment being received in cash or bought back or alloted fully paid up bonus shares in the 

preceeding five years from the date of this Balance Sheet. 

Equity Shares of the Company, having a par value of ` 10/- per share, rank pari passu in all respects including voting rights and entitlement to dividend. 

3. Reserves and Surplus As at As at 



(`) (`) 

At the beginning and at the end of the year 


87,26,223 87,26,223 


Add: Profit for the year 3,48,83,393 2,96,95,954 


11,42,15,500 7,93,32,107 

157


4. Long-Term Liabilities 

As at As at 


(`) (`) 

Sundry Liabilities 4,64,204 4,64,204 

4,64,204 4,64,204 

5. Long-Term Provisions 

As at As at 


(`) (`) 


Provision for Gratuity 18,414 13,412 

Provision for Compensated Absences 22,342 17,357 

40,756 30,769 



158 



As at As at 


(`) (`) 

Liability for Expenses 


20,224 25,930 

Statutory Remittances (TDS Payable) 1,200 7,415 

21,424 33,345 


Particulars 

As at As at Upto 31st For the Upto 31st As at 31st As at 31st 

31st March, 31st March, March, 2011 year March, 2012 March, 2012 March, 2011 

2011 2012 

(`) (`) (`) (`) (`) (`) (`) 

Plant and Machinery 85,853 85,853 85,739 114 85,853 — 114 

Furniture and Fixtures 5,090 5,090 4,927 163 5,090 — 163 

T O T A L 90,943 90,943 90,666 277 90,943 — 277 

Previous Year 90,943 90,943 90,583 83 90,666 277 360 

8. Non-Current Investments 

(at cost) 

As at As at 


(`) (`) 

Long Term - Trade 

Unquoted 

Investments In Equity Instruments 

Associate 

ATC Limited 

55,650 (2011 - 55,650) Equity Shares of 

` 100/- each, fully paid 

1,39,125 (2011 - 1,39,125) Equity Shares of 

83,47,500 83,47,500 

` 100/- each, ` 70/- paid 

Joint Venture 

ITC Filtrona Limited 

22,50,000 (2011 - 22,50,000) Equity Shares of 

2,92,16,250 2,92,16,250 

` 10/- each, fully paid 2,25,00,000 2,25,00,000 

6,00,63,750 6,00,63,750 

Aggregate value of unquoted investments 6,00,63,750 6,00,63,750 

9. Current Investments 


As at As at 


(`) (`) 

Other Investments 

Unquoted 

Investments in Mutual Funds 

DSP BlackRock Liquidity Fund-Institutional Plan- 

Daily Dividend 

Nil (2011-1,79,214) units of `1,000/- each 

— 17,92,70,431 

— 17,92,70,431 

Aggregate value of unquoted investments — 17,92,70,431 

10. Cash and Cash Equivalents 

As at As at 


(`) (`) 

Balances with Banks 

Current Accounts 8,83,296 1,67,988 

Deposit Accounts 21,35,00,000 — 

Cheques on hand — 2,36,888 

Cash on hand 970 — 

21,43,84,266 4,04,876 

11. Short-Term Loans and Advances 

As at As at 


(`) (`) 


Advance Income Tax ( net of provisions ) 49,987 97,091 

Advance Fringe Benefit Tax ( net of provisions ) — 2,850 

Sundry Deposits 5,000 5,000 

54,987 1,04,941 

12. Other Current Assets 

As at As at 


(`) (`) 

Interest accrued on Fixed Deposit 2,22,731 — 

2,22,731 — 




(`) (`) 


Long Term Investments 2,02,50,000 2,02,50,000 

Current Investments 1,46,32,150 95,71,661 

Interest on Income Tax Refund 9,890 9,032 

Interest on Fixed Deposit 2,22,731 — 

Profit on Sale of Current Investments 119 1,044 

Other Non Operating Income 6,56,444 5,03,364 

3,57,71,334 3,03,35,101





(`) (`) 

Salaries and Wages 7,95,296 6,06,184 

Retirement Benefits 9,987 17,095 

Staff Welfare Expense 26,509 25,997 

8,31,792 6,49,276 

15. Other Expense 



(`) (`) 

Rates and Taxes 


7,430 8,750 

As auditors- statutory audit 18,000 18,000 

For taxation matters * 5,000 10,000 

For other matters * 7,500 7,500 

Filing Fees 2,570 3,800 

Travelling Expense 980 128 

Professional Fees 7,464 14,500 

Insurance Expense 662 662 

Miscellaneous Expense 15,068 14,934 

* Paid to the erstwhile auditors 

64,674 78,274 

16. Current Tax 



(`) (`) 

Income Tax for the year: 

– Current Tax 1,000 — 

Adjustments related to previous years - Net 

1,000 — 

– Current Tax and Fringe Benefit Tax (9,802) (88,486) 

Net Current Tax Liability 

17 Additional Notes to the Financial Statements 

(8,802) (88,486) 

17.1 The Revised Schedule VI has become effective from 1st April, 2011 for the preparartion 

of financial statements. This has significantly impacted the disclosure and presentation 

made in the financial statements. Previous year’s figures have been regrouped/reclassified 

wherever necessary to correspond with the current year’s classification/disclosure. 

17.2 Uncalled liability in respect of partly paid-up 1,39,125 shares of ATC Limited @ ` 90/per 

share is ` 1,25,21,250/- (2011- ` 1,25,21,250/-). 

17.3 Earnings Per Share: 



Profit after Taxation (`) 3,48,83,393 2,96,95,954 


Equity Shares outstanding 

1,59,98,385 1,59,98,385 

Basic and Diluted Earnings Per Share 

(Face Value - ` 10/- per share) 

` 2.18 ` 1.86 

17.4 Related Party Disclosures : 

(a) Relationships : 


Joint Venture ITC Filtrona Limited 



Mr. B. B. Chatterjee Non-Executive Director 

Mr. S. Dutta Non-Executive Director 

Ms. N. Bajaj Manager and Company Secretary 


(b) Disclosure of transaction between the Company and Related Party : 



Joint Venture Company 

(`) (`) 

Dividend Received 


2,02,50,000 2,02,50,000 


Miscellaneous Expenses 


Nil 11,030 

Remuneration of Manager 8,21,805 6,32,181 

17.5 The incidence of Deferred Tax being insignificant, is not considered. 

17.6 Interest in Joint Venture : 

The Company’s interests, as a venturer, in jointly controlled entity (incorporated Joint 

Ventures) is : 

Name Country of Percentage of 

Incorporation Voting Power as at 


ITC Filtrona Limited India 50 

Financial Statements of ITC Filtrona Limited are drawn up according to the Financial 

Year ending on 31st December. 

The Company’s interests in this Joint Venture is reported as Non Current Investment 

(Note 8) and stated at cost. However, the Company’s 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 As at 31st 

December, 2011 December, 2010 

(`) (`) 

I. ASSETS 

1. Fixed Assets (net) 

2. Current Assets, Loans and Advances 

9,77,24,297 9,48,62,622 

a) Inventories 16,12,75,618 13,11,96,676 

b) Sundry Debtors 3,84,75,452 2,58,10,436 

c) Cash and Bank Balances 1,50,45,705 1,61,92,143 

d) Other Current Assets 10,75,497 11,17,319 

e) Loans and Advances 3,17,33,488 2,64,38,300 

II. LIABILITIES 

1. Current Liabilities and Provisions 

a) Liabilities 13,00,33,066 9,66,06,464 

b) Provisions 2,80,42,496 2,58,55,745 

2. Deferred Tax (net) 

III. INCOME 

68,25,000 75,14,132 

1. Sales 82,14,76,495 63,27,37,162 


IV. EXPENSES 

31,09,132 19,33,851 

1. Raw Materials, etc. 67,21,67,916 52,05,79,396 

2. Manufacturing, Selling, etc. Expense 6,12,46,496 4,15,59,788 

3. Depreciation 1,30,20,940 1,21,44,300 

4. Provision for Taxation 2,50,60,868 1,94,88,031 

V. OTHER MATTERS 

1. Capital Commitments 4,84,70,000 2,41,88,020 

17.7 Segment Reporting : 

The Company operates in a single business and geographical segment. 

159


160 


17.8 Employee Benefits : 

Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2012 and recognised in the financial statements 




(`) 



(`) 

Gratuity Leave 

Encashment 

Gratuity Leave 

Encashment 




2 Interest Cost 1,106 1,432 445 648 

3 Expected Return on Plan Assets Nil Nil Nil Nil 



6 Past Service Cost Nil Nil Nil Nil 

7 Actuarial Losses/(Gains) (1,385) 749 2,443 6,051 

8 Total expense recognised in the Statement of Profit & Loss Account 5,002 4,985 7,844 9,251 

II Actual Returns 


— — — — 

1 Present Value of Defined Benefit Obligation 18,414 22,342 13,412 17,357 

2 Fair Value of Plan Assets Nil Nil Nil Nil 

3 Status [Surplus/(Deficit)] (18,414) (22,342) (13,412) (17,357) 

4 Unrecognised Past Service Cost Nil Nil Nil Nil 

5 Net Asset/(Liability) recognised in Balance Sheet (18,414) (22,342) (13,412) (17,357) 


1 Present Value of DBO at Beginning of Period 13,412 17,357 5,568 8,106 


3 Interest Cost 1,106 1,432 445 648 



6 Plan Amendments Nil Nil Nil Nil 

7 Acquisitions Nil Nil Nil Nil 

8 Actuarial (Gains)/Losses (1,385) 749 2,443 6,051 

9 Benefits Paid Nil Nil Nil Nil 

10 Present Value of DBO at the End of Period 18,414 22,342 13,412 17,357 


1 Plan Assets at Beginning of Period N.A. N.A. N.A. N.A. 

2 Acquisition Adjustment N.A. N.A. N.A. N.A. 

3 Expected Return on Plan Assets N.A. N.A. N.A. N.A. 

4 Actuarial Gains/(Losses) N.A. N.A. N.A. N.A. 

5 Actual Company Contributions N.A. N.A. N.A. N.A. 

6 Benefits Paid N.A. N.A. N.A. N.A. 

7 Plan Assets at the End of Period N.A. N.A. N.A. N.A. 


1 Discount Rate (%) 8.25 8.25 8.00 8.00 

2 Expected Return on Plan Assets (%) Nil Nil Nil Nil 


VII Major Category of Plan Assets as a % of the Total Plan Assets 

1 Government Securities/Special Deposit with RBI N. A. N. A. 

2 High Quality Corporate Bonds N. A. N. A. 

3 Insurance Companies N. A. N. A. 

4 Mutual Funds N. A. N. A. 

5 Cash and Cash Equivalents N. A. N. A. 


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. 



(`) 



(`) 



(`) 



(`) 



(`) 



Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded 

IX Net Asset / (Liability) recognized in Balance Sheet 

(including experience adjustment impact) 

1 Present Value of Defined Benefit Obligation 18,414 22,342 13,412 17,357 5,568 8,106 2,734 5,308 2,371 2,250 

2 Fair Value of Plan Assets Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

3 Status [Surplus/(Deficit)] (18,414) (22,342) (13,412) (17,357) (5,568) (8,106) (2,734) (5,308) (2,371) (2,250) 

4 Experience Adjustment of Plan Assets [Gain/(Loss)] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

5 Experience Adjustment of Obligation [Gain/(Loss)] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 

17.9 There are no Micro and Small Enterprises, to whom the Company owes any dues, as at 31st March 2012. 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. 





N. Bajaj Manager & Secretary

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31st 

MARCH, 2012 

Your Directors submit their Report and Accounts for the financial year ended 

31st March, 2012. 

FINANCIAL PERFORMANCE 

During the year under review, your Company earned a gross income of 

` 1056.90 lakhs (previous year ` 1022.94 lakhs) and incurred a net loss of 

` 321.57 lakhs (previous year ` 325.79 lakhs). 

OPERATIONS 

The Company owns and operates ‘Classic Golf Resort’, a Jack Nicklaus 

Signature Golf Course, 45 Kms from Delhi. The Golf Resort continues to 

hold prestigious Golf Tournaments which has received extensive electronic 

media coverage. 

Golf based resorts present attractive long-term prospects in view of their 

growing popularity all over the world. Work towards creating a destination 

luxury resort hotel at the Classic Golf Resort is under construction and the 

project is estimated to be completed by second quarter of 2013. 

During the year, the Company issued and allotted 23,00,000 Redeemable 

Preference Shares of ` 100/- each for cash at par, aggregating ` 23 Crores, 

to ITC Limited, the Holding Company. The total preference capital of the 

Company subsequent to the above issue stands at ` 149 Crores. The 

proceeds from the said issue are being utilised towards the construction 

of the destination resort. 

CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGN 


The applicable information pursuant to Section 217(1)(e) of the Companies 

Act, 1956 read with the Companies (Disclosure of Particulars in the Report 

of Board of Directors) Rules, 1988 is given below : 

(a) Conservation of Energy 

The dedicated electricity feeder at The Classic Golf Resort continues to yield 

savings during operations. Efforts to conserve electricity by operating only 

necessary lighting, fittings and fixtures and judicious use of diesel generating 

sets continue. 

(b) Technology Absorption 

The provisions of Clause B of Rule 2 of the aforesaid Rules are not attracted, 

as the Company has not imported any technology during the year under 

review. 

(c) Foreign Exchange Earnings and Outgo 

i) Earnings: During the year under review, gross foreign exchange earnings 

of the Company were ` 66.43 lakhs (previous year ` 35.58 lakhs) 

ii) Outgo: Foreign exchange outgo during the year under review 

was ` 111.70 lakhs (previous year ` 68.59 lakhs). 

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, 2012, and the related 

Statement of Profit and Loss 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 Company’s Management. Our responsibility is to express an 

opinion on these financial statements based on our audit. 










our opinion. 

3. As required by the Companies (Auditor's Report) Order, 2003, as 

amended by the Companies (Auditor's Report) (Amendment) Order, 



Act, 1956’ of India (the ’Act’) and on the basis of such checks of the 



LANDBASE INDIA LIMITED 

DIRECTORS 

In accordance with Articles 106 and 107 of the Articles of Association of 

the Company, Mr. Nakul Anand will retire by rotation at the forthcoming 

Annual General Meeting and being eligible, offers himself for re-election. 

Your Board of Directors has recommended his re-election. 

PARTICULARS OF EMPLOYEES 

None of the employees of the Company fall under the purview of the 

provisions of Section 217(2A) of the Companies Act, 1956 read with the 

Companies (Particulars of Employees) Rules, 1975. 

AUDITORS 

The Board has recommended the re-appointment of M/s. Price Waterhouse, 

Chartered Accountants, as Auditors of the Company from the conclusion 

of the ensuing Annual General Meeting. 


The Audit Committee of the Company comprises of Mr. Rajiv Tandon as 

Chairman and Messrs Nakul Anand and Bhagwateshwaran Hariharan as 

members. 

DIRECTORS’ RESPONSIBILITY STATEMENT 


Directors confirm having: 

a) followed in the preparation of the Annual Accounts the applicable 

accounting standards along with proper explanations relating to material 


b) 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 loss of the Company for that period; 

c) taken proper and sufficient care for the maintenance of adequate 


Act, 1956 for safeguarding the assets of the Company and for preventing 

and detecting fraud and other irregularities; 

d) prepared the Annual Accounts on a going concern basis. The significant 

accounting policies and required disclosures followed are appearing in 

Notes, in the Annual Accounts. 

Place : Gurgaon 


Chandrasekhar Subrahmoneyan Managing Director 

Date : 27th April, 2012 Bhagwateshwaran Hariharan Director 

the Annexure a statement on the matters specified in paragraphs 4 and 

5 of the Order. 















of the Act; 


as on March 31, 2012 and taken on record by the Board of 

Directors, none of the directors is disqualified as on March 31, 

2012 from being appointed as a director in terms of clause (g) of 

sub-section (1) of Section 274 of the Act; 



161

162 







(ii) in the case of the Statement of Profit and Loss, of the loss for 




members of Landbase India Limited on the financial statements for the year 

ended March 31, 2012. 

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. 



of by the Company during the year. 

2. (a) The inventory has been physically verified by the Management 

during the year. In our opinion, the frequency of verification 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. (a) The Company has not granted any loans only, secured or 

unsecured, to companies, firms or other parties covered in the 

register maintained under Section 301of 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 301of the Act. 




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. 

5. 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. 



there under. 


with its size and nature of its business. 



the Act for any of the products of the Company, 




including provident fund, employees’ state insurance, income-tax, 

sales-tax, wealth tax, service tax, customs duty, excise duty, cess 

and other material statutory dues as applicable with the appropriate 

authorities. 





Firm Registration Number : 12754N 


Abhishek Rara 

Partner 

Gurgaon, 27th April, 2012 Membership No : 077779 


the records of the Company examined by us, there are no dues 

of sales-tax, wealth-tax, service-tax, customs duty, excise duty and 

cess which have not been deposited on account of any dispute. 

The particulars of dues of income-tax as at March 31, 2012 which 

have not been deposited on account of a dispute, are as follows: 

Name of the Nature of Amount Period to which Forum where 

Statute dues (`) the amount the dispute is 

relates pending 

Income Tax Income Tax 11,59,41,813 A.Y. 2001-02 Income Tax 

Act, 1961 Appellate Tribunal 

Income Tax Income Tax 32,98,817 A.Y. 2003-04 Income Tax 


Income Tax Income Tax 13,82,55,172 A.Y. 2005-06 Income Tax 


10. The accumulated losses of the Company as at March 31, 2012 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 





holders as at the balance sheet date. 




mutual benefit fund/societies are not applicable to the Company. 














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. 






nor have we been informed of such case by the Management. 




Abhishek Rara 

Partner 

Gurgaon, 27th April, 2012 Membership No : 077779


Note No. As at As at 


(`) (`) (`) (`) 



Share Capital 1 1,99,00,00,000 1,76,00,00,000 

Reserves and Surplus 2 (83,59,26,536) 1,15,40,73,464 (80,37,69,458) 95,62,30,542 

Non-current Liabilities 

Other Long Term Liabilities 3 31,63,07,991 31,07,10,096 

Long-Term Provisions 


4 18,33,528 31,81,41,519 17,94,668 31,25,04,764 


Other Current Liabilities 6 6,50,97,010 4,71,98,230 

Short-Term Provisions 7 6,87,450 7,21,12,551 34,267 5,67,47,816 

TOTAL 

II. ASSETS 

Non Current Assets 

Fixed Assets 

1,54,43,27,534 1,32,54,83,122 

Tangible Assets 8 95,24,40,789 94,84,15,213 

Intangible Assets 9 7,41,126 1,42,355 

Capital Work-in-Progress 8 45,17,33,199 20,43,88,532 

Non-Current Investments 10 150 250 

Long-Term Loans and Advances 11 3,93,27,354 6,53,12,367 

Other Non-Current Assets 


12 1,41,74,975 1,45,84,17,593 1,68,06,693 1,23,50,65,410 

Inventories 13 2,93,44,221 1,66,43,021 

Trade Receivables 14 57,64,921 46,42,528 


Short-Term Loans and Advances 16 1,54,69,478 98,16,844 

Other Current Assets 17 58,000 8,59,09,941 93,155 9,04,17,712 

TOTAL 

The Notes referred to above form an integral part of the Accounts. 

1,54,43,27,534 1,32,54,83,122 





Abhishek Rara 

Partner 


Gurgaon, 27th April, 2012 




Bhagwateshwaran Hariharan Director 


Particulars Note No. For the year ended 


(`) 



(`) 

Revenue from Operations (Net) 18 10,08,45,697 9,90,76,298 

Other Income 19 48,44,942 32,17,610 

Total Revenue 10,56,90,639 10,22,93,908 

Expenses: 

Cost of Material Consumed 20 (a) 57,66,252 52,28,629 

Purchase of Stock in Trade 20 (b) 24,68,399 23,77,022 

Changes in Inventories of Finished Goods, Stock in Process, 

Manufactured Components (Intermediates) and stock in Trade 

20 (c) (1,31,96,963) (35,31,611) 

Employee Benefits expense 21 4,66,71,761 4,46,69,487 

Depreciation and Amortisation expense 22 3,22,93,556 3,26,54,928 

Other Expense 23 6,38,44,712 5,34,74,482 

Total Expense 13,78,47,717 13,48,72,937 

Profit/(Loss) Before Tax 

Tax Expense: 

(3,21,57,078) (3,25,79,029) 

Current Tax — — 

Deferred Tax — — 

Profit/(Loss) for the year (3,21,57,078) (3,25,79,029) 

Earnings Per Equity Share: 

Basic & Diluted 

28 (0.64) (0.65) 

The Notes referred to above form an integral part of the Accounts. 

The Statement of Profit and Loss referred to in our Report of even date. 




Abhishek Rara 

Partner 






163


(Figures for the previous year have been rearranged to 


conform with the revised presentation) 


(`) (`) (`) (`) 

A. Cash Flow from Operating Activities 

NET PROFIT BEFORE TAX 


(3,21,57,078) (3,25,79,029) 

Depreciation 3,22,59,371 3,26,31,559 

Amortisation 34,185 23,369 

Interest Income (48,44,942) (32,15,895) 

Fixed Assets - Loss on Sale - Net 30,05,284 34,15,657 

Write off of subscription fees — 6,53,022 

Write off of Long Term Investment/Joint Venture 100 

Doubtful and Bad Debts 2,25,756 — 

Amortisation of Miscellaneous Expenditure 10,53,348 10,53,347 

Liability no longer required written back (3,73,983) 3,13,59,119 (61,20,555) 2,84,40,504 



(7,97,959) (41,38,525) 

Increase/(Decrease) in Trade Payables (28,13,245) 1,21,16,769 

Increase/(Decrease) in Provisions 6,92,043 3,67,158 

Increase/(Decrease) in Other Current Liabilities 1,78,98,780 1,99,18,264 

Increase/(Decrease) in Other long term Liabilities 55,97,895 6,40,183 

(Increase)/Decrease in Trade Receivables (13,48,149) 3,41,381 

(Increase)/Decrease in Inventories (1,27,01,200) (43,05,215) 

(Increase)/Decrease in Loans & Advances (32,90,905) (16,97,759) 

(Increase)/Decrease in Other non- current Current Assets 34,09,587 74,44,804 32,90,413 3,06,71,194 

CASH GENERATED FROM OPERATIONS 66,46,845 2,65,32,669 

Income Tax paid (34,15,077) 39,89,826 

NET CASH FROM OPERATING ACTIVITIES 32,31,768 3,05,22,495 

B. Cash Flow from Investing Activities 

Purchase of Fixed Assets (1,46,09,329) (11,52,58,732) 

Capital Work-in-Progress (24,69,11,029) (12,18,11,559) 

Sale of Fixed Assets 2,37,517 — 

Interest Received 41,02,230 (25,71,80,611) 24,71,171 (23,45,99,120) 

NET CASH USED IN INVESTING ACTIVITIES (25,71,80,611) (23,45,99,120) 

C. Cash Flow from Financing Activities 

Proceeds from issue of Share Capital 23,00,00,000 23,00,00,000 25,00,00,000 25,00,00,000 

NET CASH USED IN FINANCING ACTIVITIES 23,00,00,000 25,00,00,000 

NET INCREASE IN CASH AND CASH EQUIVALENTS (2,39,48,843) 4,59,23,375 


CLOSING CASH AND CASH EQUIVALENTS 3,52,73,321 5,92,22,166 

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 : 

Cash and Cash Equivalents as above 4,98,427 1,89,161 

Balance in Statutory Restricted Accounts 3,47,74,894 5,90,33,003 

Other Restricted Balances — — 

Unrealised (Loss) / Gain on Foreign Currency Cash and Cash Equivalents - Net — — 

Cash and Bank Balances 3,52,73,321 5,92,22,164 

164 

The Statement of Cash Flow referred to in our Report of even date 




Abhishek Rara 

Partner 






Bhagwateshwaran Hariharan Director



As at As at 


(`) (`) (`) (`) 

NOTE 1 

SHARE CAPITAL 

Authorised 

50,000,000 Equity Shares (Previous Year 

50,000,000 Equity Share) of ` 10/- each 

50,00,00,000 50,00,00,000 

15,000,000 Redeemable Preference Shares 

(Previous Year 15,000,000) of ` 100 /- each 

Issued, Subscribed and Paid up 

1,50,00,00,000 2,00,00,00,000 1,50,00,00,000 2,00,00,00,000 

50,000,000 (Previous Year 50,000,000) 

Equity Shares of ` 10/- each fully paid up. 

50,00,00,000 50,00,00,000 

14,900,000 (Previous Year 12,600,000) Redeemable Preference Shares 

of ` 100/- each fully paid up 

1,49,00,00,000 1,26,00,00,000 

TOTAL 1,99,00,00,000 1,76,00,00,000 

As at As at 


Number of Amount Number of Amount 

Shares (`) Shares (`) 

(a) Reconciliation of number of shares 

Equity Shares: 

Balance as at beginning of the year 5,00,00,000 50,00,00,000 5,00,00,000 50,00,00,000 

Add: Shares issued — — — — 

Balance as at end of the year 

Preference Share: 

5,00,00,000 50,00,00,000 5,00,00,000 50,00,00,000 

Balance as at beginning of the year 1,26,00,000 1,26,00,00,000 1,01,00,000 1,01,00,00,000 

Add: Shares issued 23,00,000 23,00,00,000 25,00,000 25,00,00,000 

Balance as at end of the year 1,49,00,000 1,49,00,00,000 1,26,00,000 1,26,00,00,000 

(b)Rights, preferences and restrictions attached to Shares 

Equity Shares : This class of shares having a par value of ` 10/- per share. Each shareholder is eligible for one vote per share held. In the event of 

liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion 

to their shareholding. 

Preference Shares : This class of Preference Shares having a par value of ` 100/- per Share, are not entitled to any dividend. They are redeemable on 

or after 5 years from the date of allotment and carry a call/put option exerciseable any time after 3 years after giving 3 month’s notice to either party. 

As at As at 


(`) (`) 

(c) Shares held by holding company and subsidiary of holding company 

Equity Shares 

50,000,000 shares (March 31, 2011: 50,000,000 shares) 

held by ITC Limited, the Holding Company along with its nominees 

Preference Shares 

50,00,00,000 50,00,00,000 

14,900,000 shares (March 31,2011: 12,600,000 shares) 

held by ITC Limited, the Holding Company 

1,49,00,00,000 1,26,00,00,000 

(d)Details of shares held by shareholders holding more than 5% 

of the aggregate shares of the Company 

Equity Shares 

ITC Limited, the Holding Company 5,00,00,000 5,00,00,000 

Preference Shares 

100% 100% 

ITC Limited, the Holding Company 1,49,00,000 1,26,00,000 

100% 100% 

165


As at As at 


NOTE 2 

RESERVES AND SURPLUS 

(`) (`) (`) (`) 

General Reserve/(Deficit) 

Surplus/(Deficit) in the statement of Profit and Loss 

6,11,62,181 6,11,62,181 

At the commencement of the year (86,49,31,639) (83,23,52,610) 

Add: Net Profit/(Net Loss) For the current year (3,21,57,078) (89,70,88,717) (3,25,79,029) (86,49,31,639) 

TOTAL (83,59,26,536) (80,37,69,458) 

NOTE 3 

OTHER LONG-TERM LIABILITIES 

Membership Deposits (Refer Note 26) 31,55,18,793 31,39,08,793 

Less: Subscription Fees receivable 

Others 

1,80,91,337 29,74,27,456 2,10,09,662 29,28,99,131 

– Income received in advance 1,88,80,535 1,78,10,965 

TOTAL 31,63,07,991 31,07,10,096 

NOTE 4 

LONG-TERM PROVISIONS 

Provision for Employee Benefits: (Also refer Note 21) 

Provision for Gratuity 10,81,654 9,00,003 

Provision for Compensated Absenses 7,51,874 8,94,665 

TOTAL 18,33,528 17,94,668 

NOTE 5 

TRADE PAYABLES 

Dues from Micro and Small Enterprises — — 

Dues other than Micro and Small Enterprises (Refer Note 27) 63,28,091 95,15,319 

TOTAL 63,28,091 95,15,319 

NOTE 6 

OTHER CURRENT LIABILITIES 

Sundry Deposits 2,65,961 2,50,961 

Income Received in Advance 1,36,98,055 1,33,25,677 

Advances from customers 1,98,441 9,01,730 

Statutory dues including Provident Fund and Tax Deducted at source 27,81,496 43,72,608 

Provision for Expenses under Capital Contracts 2,46,48,773 1,65,35,421 

Retention Money under Capital Contracts 39,68,654 38,09,949 

Other Payables 1,95,35,630 80,01,884 

TOTAL 6,50,97,010 4,71,98,230 

NOTE 7 

SHORT-TERM PROVISIONS 


Provision for Gratuity 1,85,134 — 

Provision for Compensated Absenses 5,02,316 34,267 

TOTAL 6,87,450 34,267 

NOTE 8 

TANGIBLE ASSETS (At Cost) 

166 



Particulars As at 1st Additions Withdrawals/ As at 31st As at 1st For the year** Withdrawals/ As at 31st As at 31st As at 31st 

Own Assets 

April, 2011 Adjustments March, 2012 April, 2011 Adjustments March, 2012 March, 2012 March, 2011 

Land (Freehold) 55,31,70,741 2,84,74,980 — 58,16,45,721 — — — — 58,16,45,721 55,31,70,741 

Building* 23,04,18,179 25,06,485 — 23,29,24,664 5,34,40,487 36,88,070 — 5,71,28,557 17,57,96,107 17,69,77,692 

Plant & Machinery 24,59,30,897 78,76,227 69,81,896 24,68,25,228 13,45,63,731 1,19,68,651 39,11,669 14,26,20,713 10,42,04,515 11,13,67,166 

Golf Course 22,57,78,037 — — 22,57,78,037 14,42,45,296 1,07,24,458 — 15,49,69,754 7,08,08,283 8,15,32,741 

Office & Other Equipment 22,60,757 38,246 3,53,943 19,45,060 7,77,178 1,04,313 2,06,599 6,74,892 12,70,168 14,83,579 

Furniture & Fixtures 78,89,746 5,27,333 1,84,829 82,32,250 45,21,352 3,47,452 1,78,393 46,90,411 35,41,839 33,68,394 

Computers 64,64,129 5,38,115 4,08,609 65,93,635 32,51,514 9,74,401 4,08,607 38,17,308 27,76,327 32,12,615 

Vehicles 87,55,897 — 57,966 86,97,931 35,77,873 8,31,809 39,179 43,70,503 43,27,428 51,78,024 

Golf Carts 1,72,01,112 — 13,50,329 1,58,50,783 74,87,677 26,84,044 13,50,325 88,21,396 70,29,387 97,13,434 

Tented Accomodation 27,39,620 — — 27,39,620 3,28,795 13,69,811 — 16,98,606 10,41,014 24,10,825 

TOTAL 1,30,06,09,115 3,99,61,386 93,37,572 1,33,12,32,929 35,21,93,903 3,26,93,009 60,94,772 37,87,92,140 95,24,40,789 94,84,15,211 

Capital Work-in-Progress — — 45,17,33,199 20,43,88,615 

Previous Year 1,26,66,05,173 5,20,65,091 1,78,86,061 1,30,07,84,203 33,35,05,542 3,31,79,925 1,44,58,831 35,22,26,636 94,85,57,567 

Note: 

* Building includes vehicular roads of ` 45,95,709/- (Previous Year ` 45,95,709/- ) which have been fully depreciated over a period of five years 

** Capital Work-in-progress includes depreciation amounting to ` 433,638 / - (Previous Year ` 524,998 / -) on Assets used for the Resort Project & stock in progress include depreciation amounting to 

` 147,235/- (Previous Year ` 116,058/-) pertaining to Golf Hut Project. 

(in `)



NOTE 9 

INTANGIBLE ASSETS (At Cost) (in `) 


As at 1st Additions Withdrawals/ As at 31st As at 1st For the year** Withdrawals/ As at 31st As at 31st As at 31st 

Particulars April, 2011 Adjustments/Intra 

group transfers 

March, 2012 April, 2011 Adjustments March, 2012 March, 2012 March, 2011 

Computer Software 1,75,088 6,32,956 — 8,08,044 32,733 34,185 — 66,918 7,41,126 1,42,355 

TOTAL 1,75,088 6,32,956 — 8,08,044 32,733 34,185 — 66,918 7,41,126 1,42,355 

As at As at 


(`) (`) (`) (`) 

NOTE 10 

NON CURRENT INVESTMENTS 

Other Investments 

Others: 

Gilt Facilities India Private Ltd. 

— — 

545 Redeemable Preference Shares (0.5%) of ` 100,000/- each fully paid — 5,45,00,000 

Less: Provision for diminution in Investments 

Prime Golf Ranking Private Ltd. 

— — 5,44,99,900 100 

150 Equity Share (March 31, 2011: 150 Equity Share) of ` 1/- each fully paid 150 150 150 150 

TOTAL 150 250 

NOTE 11 

LONG-TERM LOANS AND ADVANCES 

Capital Advances 



3,85,67,354 6,45,52,367 

Advance recoverable in cash or kind — — 

Unsecured, considered good 7,60,000 7,60,000 

Tax paid under protest 6,49,767 6,49,767 

Less: Provision for doubtful loans and advances 6,49,767 7,60,000 6,49,767 7,60,000 

TOTAL 3,93,27,354 6,53,12,367 

NOTE 12 

OTHER NON-CURRENT ASSETS 

Margin Money Deposits 

(Against guarantee issued by Banks) 

1,13,77,970 1,47,87,557 

Interest Accrued on Loans and Deposits 27,97,005 20,19,136 

TOTAL 1,41,74,975 1,68,06,693 

NOTE 13 

INVENTORIES 

Raw Materials including Packing Material 4,33,967 5,23,182 

Stock in Process - Golf Huts 1,94,66,598 68,97,563 

Stock in Trade - Proshop 21,08,618 14,80,690 

Stock of parking slot/servant quarters 13,19,908 13,19,908 

Stores and Spare Parts 73,84,684 77,91,232 

Less: Provision for Slow Moving Inventory of parking slot/servant quarters (13,19,908) (13,19,908) 

Less: Provision for Slow Moving stores and spares (49,646) (13,69,554) (49,646) (13,69,554) 

TOTAL 2,93,44,221 1,66,43,021 

NOTE 14 

TRADE RECEIVABLES 


Outstanding for a period exceeding six months from the date they are due for 4,14,223 5,64,132 

Others 53,50,698 57,64,921 40,78,396 46,42,528 


Outstanding for a period exceeding six months from the date they are due for 7,28,444 5,02,688 

Less: Provision for doubtful debts 7,28,444 5,02,688 

TOTAL 57,64,921 46,42,528 

NOTE 15 

CASH AND BANK BALANCE 

Balances with banks on Current Account 3,47,74,894 5,90,33,003 

Cheques, drafts on hand 1,00,000 — 

Cash on hand 3,98,427 1,89,161 

TOTAL 3,52,73,321 5,92,22,164 

167


As at As at 


NOTE 16 

SHORT-TERM LOANS AND ADVANCES 

Sundry Deposits 

(`) (`) (`) (`) 



Advance Income Tax [Net of provision of ` 1,886,593 

6,32,836 5,30,128 

(March 31, 2011: ` 1,886,593)] 24,28,819 24,10,602 

Balance with Government Authorities 67,13,702 33,16,842 

SFIS Credit Entitlement 7,33,883 — 

Prepaid Expenses 27,30,724 10,61,776 

Unsecured, considered good 22,29,514 1,48,36,642 24,97,496 92,86,716 

TOTAL 

NOTE 17 

OTHER CURRENT ASSETS 

1,54,69,478 98,16,844 

Interest accrued on Loans, Deposits etc. 58,000 93,155 

TOTAL 58,000 93,155 



NOTE 18 

REVENUE FROM OPERATIONS (GROSS) 

Sale of Products 

(`) (`) 

Food and Beverage Sale 1,15,61,459 1,14,11,553 

Proshop Items 

Sale of Services 

29,06,179 1,44,67,638 28,84,601 1,42,96,154 

Caddie Rental 75,99,632 72,56,493 

Cart Income 68,90,278 54,52,356 

Green Fees 2,54,45,155 2,43,36,451 

Health Club & Other Facilities 22,59,892 21,99,514 

Proshop Income 22,263 49,358 

Tented Accomodation Income 11,50,713 8,86,993 

Sponsorship Income 29,85,166 4,63,53,099 32,14,288 4,33,95,453 

Membership Income 

Other Operating Income 

3,82,94,878 3,48,75,000 

Liability Written Back 3,73,983 61,20,555 

SFIS Income 7,33,883 — 

Others 6,22,216 17,30,082 3,89,136 65,09,691 

TOTAL 

NOTE 19 

OTHER INCOME 


10,08,45,697 9,90,76,298 

On Fixed Deposits 35,18,239 21,14,818 

Income Tax Refund 78,027 8,80,000 

Others 12,48,676 48,44,942 2,21,077 32,15,895 

Others — 1,715 

TOTAL 

NOTE 20 

(a) Cost of Materials Consumed (including Packing Materials) 

48,44,942 32,17,610 

Opening Stock 5,23,182 5,56,797 

Purchases 56,77,037 51,95,014 

Less:Closing Stock 4,33,967 57,66,252 5,23,182 52,28,629 

(b)Purchases of Stock in Trade 

(c) Changes in inventories of Stock in Trade and stock in progress 

Stock in Trade and stock in progress 

24,68,399 23,77,022 

Opening Stock 83,78,253 48,46,642 

Less: Closing Stock 2,15,75,216 (1,31,96,963) 83,78,253 (35,31,611) 

TOTAL 

(d) Changes in inventory of stock in progress and stock in trade 


Stock at end of the year 

(49,62,312) 40,74,040 


Stock in Progress - Golf Huts 1,94,66,598 68,97,563 

TOTAL (A) 

Less: Stock at beginning of the year: 

2,15,75,216 83,78,253 


Stock in Progress - Golf Huts 68,97,563 39,37,186 

TOTAL (B) 83,78,253 48,46,642 

Increase/(Decrease) in Stocks (A-B) 1,31,96,963 35,31,611 

168 

LANDBASE INDIA LIMITED


Employer’s Contribution As at As at 

March 31, 2012 March 31, 2011 

Provident Fund 11,45,123 9,62,615 

Employee’s State Insurance Corporation 4,52,609 3,94,659 

15,97,732 13,57,274 

(A) Present Value of Defined Benefit Obligation 

Employee’s Gratuity Fund As at As at 

March 31, 2012 March 31, 2011 

Balance at the beginning of the year 9,00,003 7,02,851 

Interest Cost 74,250 47,288 

Current Service Cost 3,89,155 4,18,916 

Benefits paid 

Actuarial (gain)/ loss due to change 

— (2,23,508) 

in assumption/ interest guarantee (96,620) (45,544) 

Balance at the end of the year 12,66,788 9,00,003 

(B) Assets and Liabilities recognised in the Balance Sheet 

Employee’s Gratuity Fund 


NOTE 21 

EMPLOYEE BENEFITS EXPENSE 

Salaries / Wages and Bonus 4,37,44,007 4,22,94,862 

Contribution to Provident and Other Funds 15,97,732 13,57,274 

Workmen and Staff Welfare Expenses 13,30,022 10,17,351 

TOTAL 4,66,71,761 4,46,69,487 

The details of liabilities recognized by the Company in respect of long term defined benefits and contribution schemes in accordance with Accounting 

Standard 15 (Revised 2005) for its employees are given below. 

The Company has classified the various benefits provided to the employees as under: 

I. Defined Contribution Plan 

Contribution to Regional Provident Fund Commissioner (State Plans) 

Contribution to Employee’s State Insurance Corporation (ESIC) 

II. Defined Benefit Plans - Gratuity for employees 

During the current year the Company has recognized the following amounts in the Statement of Profit & Loss: 

As at As at As at As at As at 

March 31, 2012 March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 

Liability at the end of the year (12,66,788) (9,00,003) (7,02,851) (6,30,127) (4,70,063) 

Ending Assets — — — — — 

Funded Status asset/(liability) — — — — — 

Unrecognised Past Service Cost — — — — — 

Asset/(Liability) recognised in the Balance Sheet (12,66,788) (9,00,003) (7,02,851) (6,30,127) (4,70,063) 

(C) Expense recognised in Statement of Profit and Loss 

Employee’s Gratuity Fund As at As at 

March 31, 2012 March 31, 2011 

Current Service Cost 3,89,155 4,18,916 

Interest Cost 74,250 47,288 

Net Actuarial (Gain)/Loss To Be Recognised (96,620) (45,544) 

Expense Recognised in P& L** 3,66,785 4,20,660 



(`) (`) 

Actuarial Assumptions 

In accordance with Accounting Standard 15, actuarial valuation was done in respect of the aforesaid plans based on the following assumptions – 

Assumptions March 31, 2012 March 31, 2011 March 31, 2010 March 31, 2009 

Employee’s Gratuity Fund (Unfunded) 

Discount Rate 8.25% 8.00% 7.50% 7.00% 

Salary Escalation Rate 5.00% 5.00% 5.00% 5.00% 

Normal Retirement Age 58 years 58 years 58 years 58 years 

Attrition Rate 10% p.a 10% p.a 10% p.a 10% p.a 

169


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. 

Other Long-Term Benefits – Leave Encashment 


March 31, 2012 March 31, 2011 

Asset/(Liability) recognised in the Balance Sheet* (12,05,352) (8,88,260) 

Amount recognised in the Income Statement** 3,51,538 3,12,720 

170 


* Provision for compensated absences as disclosed under Note 8 includes ` 48,838/- (Previous Year ` 34,267/-) provided for short-term leave of the employees. 

** Leave encashment and Provision for Gratuity are included in Salary, Wages and Bonus. Contribution to Provident Fund and ESIC is included in Contribution 

to Provident and Other Funds (Refer Note 21) 



(`) (`) 

(d) Expected Contribution to the Funds in the next year 

Grauity 4,00,000 3,66,785 

NOTE 22 

DEPRECIATION AND AMORTISATION EXPENSE 

Depreciation on Tangible Assets 3,22,59,371 3,26,31,559 

Amortisation on Intangible Assets 34,185 23,369 

TOTAL 3,22,93,556 3,26,54,928 

NOTE 23 

OTHER EXPENSES 

Power and Fuel 1,43,46,429 1,19,76,468 

Consumption of Stores and Spare Parts 46,38,955 51,56,168 

Rent 5,72,000 5,93,745 

Rates and Taxes 23,03,928 11,90,061 

Insurance 

Repairs 

14,21,271 11,92,824 

- Buildings 17,01,739 7,69,749 

- Machinery 7,67,465 8,46,650 

- Others 28,04,054 32,16,482 

Maintenance and Upkeep 47,13,718 37,68,941 

Advertising / Sales Promotion 2,34,045 2,74,162 

Travelling and Conveyance 28,88,997 29,63,692 

Vehicle Maintenance 18,70,955 17,40,582 

Hire Charges 12,08,741 12,16,052 

Legal Expenses 25,34,820 37,65,779 

Consultancy / Professional fees 1,28,96,347 44,32,525 

Communication, Postage and Telegram Expenses 12,91,491 12,98,567 

Bad Debts written off 2,25,756 — 

Loss on Assets sold & written offs 30,05,284 34,15,657 

Auditors Remuneration 9,11,520 7,17,400 

Provision for doubtful debts — 6,53,022 

Miscellaneous Expenses 35,07,197 42,85,956 

NOTE 24 

DETAILS OF EXPENSES CAPITALISED TO CWIP 

6,38,44,712 5,34,74,482 

The Board of Directors had approved a detailed plan in Financial Year 2009-10 of the Green Bharat Project (resort project) of the Company. The Capital 

work-in-progress amounting to ` 45,17,33,199/- (Previous Year ` 20,43,88,532/-) relates 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 Resort Project (Capital Work-in-Progress) Stock in Process-Golf Hut 


Opening Balance as at April 1, 2011 

Add:- Expenses Incurred 

11,16,49,051 8,14,62,283 68,97,563 39,37,186 

Salaries, Wages and Bonus 50,63,451 54,77,110 4,603 11,582 

Welfare Expenses 11,16,360 — — — 

Rates & Taxes 4,46,417 5,06,288 6,40,040 

Travelling & Conveyance 12,78,757 21,22,497 1,88,663 55,037 

Vehicle Maintenance 3,18,196 56,482 — 3,336 

Power & Fuel 3,74,759 1,75,749 — — 

Insurance 3,34,199 16,904 — — 

Legal & Professional Charges 2,59,35,562 1,97,56,882 1,10,38,237 27,54,165 

Repairs & Maintenance - Plant & Machinery 1,14,964 5,447 — — 

Repairs & Maintenance - Others 1,92,305 4,87,470 — — 

Printing & stationery 5,78,682 4,26,970 — 16,249 

Miscellaneous exp. 22,72,609 6,17,184 60,000 3,949 

Hire Charges 4,98,076 12,788 — — 

Consumption of Stores — — 4,90,258 — 

Bank Charges 14,844 — — — 

Depreciation 4,33,638 5,24,997 1,47,235 1,16,059 

TOTAL 3,89,72,819 3,01,86,768 1,25,69,036 29,60,377 

Closing Balance as at March 31, 2012 15,06,21,870 11,16,49,051 1,94,66,599 68,97,563


As at As at 


(`) (`) 

NOTE 25 

CONTINGENT LIABILITIES 

A) Claims against the Company 

not acknowledged as debts: 

(a) Income Tax matters 38,55,05,802 38,55,05,802 

(b) Legal Cases 

(c) Bank Guarantees given to 

2,92,745 6,32,716 

Government Authorities 1,13,77,970 1,14,77,970 

(d) Letter of Credits given to vendors NIL 33,00,000 

(a) The Company had received Income Tax demands of ` 11,59,41,813/- 

(Previous Year ` 11,59,41,813/-) for Assessment Year 2001-02, 

` 32,98,817/- (Previous Year ` 32,98,817/-) for the Assessment Year 

2003-04 and ` 26,62,65,172/- (Previous Year ` 26,62,65,172/-), for 

Assessment Year 2005-06. All the assessments are currently under 

appeal with Income Tax Authorities. 

(b) Pertaining to legal suits against the Company for recovery of dues/ 

compensation aggregating to ` 2,92,745/- (Previous Year ` 6,32,716/-) 

plus future interest, the amount of which is unascertainable, under 

litigation. As opined by Company’s lawyers, the chances of suit 

succeeding are remote and accordingly Company does not foresee 

any liability in this regard. 

In the opinion of the management, the likelihood of the appeal 

being decided against the Company is highly unlikely, hence no 

provision of these amounts has been considered necessary in the 

books of account. 

It is not practicable for the Company to estimate the timings of cash 

outflows, if any, in respect of above pending resolution of the 

respective proceedings. 

B) Outstanding Capital Commitments 

As at As at 


(`) (`) 

Estimated value of contracts in 26,91,45,076 41,81,13,474 

capital account remaining to 

be executed 

NOTE 26 

Non Current Liabilities include ` 31,10,18,793/- (Previous Year 

` 31,10,08,793/-) as deposits received from individuals towards golf 

memberships and ` 45,00,000/- (Previous Year ` 29,00,000/-) received 

from Corporate towards Golf Memberships. These represent long term 

tradable memberships which, are to be refunded at the time of termination 

of the membership. 

NOTE 27 

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 at March 31, 2012. This information as required to be disclosed 

under the MSME Development Act, 2006 has been determined to the 

extent such parties have been identified on the basis of information available 

with the Company. 

NOTE 28 

EARNING PER SHARE 

Basic/Diluted Earnings Per Share As at As at 


(`) (`) 

Net Profit/(Loss) after tax available 

for Equity Shareholders (`) (3,21,57,078) (3,25,79,029) 

Weighted Average Number of Equity 

Shares outstanding during the year 5,00,00,000 5,00,00,000 

Nominal Value of Equity Shares (`) 10 10 

Basic/Diluted (Loss)/Earnings per 

Share of ` 10/- each (0.64) (0.65) 


NOTE 29 

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, 2012 has not been recognized 

in the books of accounts. 

NOTE 30 

VALUE OF IMPORTS CALCULATED ON CIF BASIS DURING THE YEAR IN RESPECT OF 



(`) (`) 

Capital Goods 30,68,070 75,60,411 

NOTE 31 

EXPENDITURE IN FOREIGN CURRENCY 

(Accrual Basis): 

Professional & Consultancy 1,11,70,798 68,59,370 

NOTE 32 

EARNINGS IN FOREIGN EXCHANGE 

(Accrual Basis): 

Service Income 66,42,973 35,58,156 

NOTE 33 

VALUE OF INDIGENOUS AND IMPORTED RAW MATERIAL, STORES & SPARES CONSUMED 

DURING THE PERIOD & PERCENTAGE OF EACH TO THE TOTAL CONSUMPTION 

(a) Details of Raw Material/Packing Material consumed 

Raw Material 57,66,252 52,28,629 

TOTAL 57,66,252 52,28,629 

(b) Value of imported and indigenous materials consumed 

PARTICULARS For the year ended For the year ended 

March 31, 2012 March 31, 2011 

Value (`) % Value (`) % 

Raw Material - F&B 


Indigenous 57,66,252 100 52,28,629 100 

TOTAL 57,66,252 100 52,28,629 100 

Stores & Spares 

Imported 16,88,550 36 18,99,400 37 

Indigenous 29,50,405 64 32,56,768 63 

TOTAL 46,38,955 100 51,56,168 100 

(c) Purchase of Traded Goods 

Proshop 24,68,399 23,77,022 

TOTAL 24,68,399 23,77,022 

NOTE 34 

SEGMENT REVENUE, RESULT & OTHER INFORMATION 

The Company carries on activities primarily under the Leisure & Hospitality 

segment and operates within one geographical segment in India. Hence 

the segment disclosure has not been provided. 

NOTE 35 

RELATED PARTY DISCLOSURE 

(i) Names of related parties and nature of relationship: 


(ii) Other Related Parties with whom transactions have taken place 

during the year: 

Fellow Subsidiaries M/s Fortune Park Hotels Limited 

M/s Greenacre Holdings Limited 

Associates M/s International Travel House Limited 

M/s Classic Infrastructure and Development Limited 

(iii) Key Management Personnel: 

Mr. Nakul Anand Chairman 

Mr. S.C. Sekhar Managing Director 

Mr. Rajiv Tandon Director 

Mr. B. Hariharan Director 

Mr. Ravi Puri Chief Executive Officer 

Mr. Atul Kumar Head of Finance & Commercial 

171


172 


iv) Details of Transaction carried out during the financial year ended March 31, 2012 with related party in the ordinary course of business : 

(Consolidated) (Amount in `) 

S. No Particulars Holding Company Fellow Subsidiaries Associates KMP 

March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March March 

31, 2012 31, 2011 

1 Sale of Services 65,313 4,05,434 — — 8,574 — 58,560 79,002 

2 Purchase of Fixed Assets — — — 50,917 — — — — 

3 Sale of Fixed Assets 2,58,691 — — — — — — — 

4 Purchase of services 1,75,883 5,38,802 3,72,263 — 3,32,973 3,25,434 — — 

5 Expenses Recovered 9,65,840 5,99,840 4,33,591 21,79,702 — 23,915 — — 

6 Expenses Reimbursed 87,58,222 94,56,522 — 10,498 — — — — 

7 Project Expenses Reimbursed 27,22,688 25,17,869 — — — 16,690 — — 

8 Balances Outstanding 

at the year end 

i) Debtors/Receivables — — — 11,17,702 9,301 13,412 — — 

ii) Creditors/Payables 1,48,40,338 39,47,268 — — 5,789 — — — 

v) Disclosure in respect of transactions which are more than 10% of the total transactions of the same type with related parties (Amount in `) 

S. No Particulars Holding Company Fellow Subsidiaries Associates KMP 

March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March March 

31, 2012 31, 2011 

1 Sale of Services 

— ITC Limited 65,313 4,05,434 — — — — — — 

KMP — — — — — — 58,560 79,002 

2 Purchase of Fixed Assets 

Fortune Park Hotels Limited — — — 50,917 — — — — 

3 Sale of Fixed Assets 

— ITC Limited 2,58,691 — — — — — — — 

4 Purchase of services 

— ITC Limited 

— International Travel 

1,75,883 5,38,802 — — — — — — 

House Limited — — — — 3,32,973 3,25,434 — — 

— ITC Infotech India Limited — — 3,72,263 — — — — — 

5 Expenses Recovered 

— ITC Limited 

— Greenacre 

9,65,840 5,99,840 — — — — — — 

Holdings Limited — — 4,33,591 21,79,702 — — — — 

6 Expenses Reimbursed 

— ITC Limited 87,58,222 94,56,522 — — — — — — 

7 Project Expenses Reimbursed 

— ITC Limited 27,22,688 25,17,869 — — — — — — 

8 Balances Outstanding 

at the year end 

i) Debtors/Receivables 

— Greenacres 

Holdings Limited — — — 11,17,702 — — — — 

— CIDL — — — — 9,301 — — — 

ii) Creditors/payables 

— ITC Limited 1,48,40,338 39,47,268 — — — — — — 

NOTE 36 

PREVIOUS YEAR FIGURES - The financial statements for the year ended March 31, 2012 had been prepared as per the then applicable, pre-revised schedule 

VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act 1956, the financial statements for the 

year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this 

year’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for 

preparation of financial statements. 

NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2012 

NOTE 37 

SIGNIFICANT ACCOUNTING POLICIES 

Convention 

To prepare financial statements in accordance with applicable Accounting 

Standards notified under Section 211(3C) of the Companies Act, 1956 and 

the relevant provisions of the Companies Act, 1956, in India. A summary 

of important accounting policies is set out below. The financial statements 

have also been prepared in accordance with relevant presentational 

requirements of the Companies Act, 1956. 


To prepare financial statements in accordance with the historical cost 

convention. 

Tangible and Intangible Assets 

To state Fixed Assets at cost of acquisition inclusive of inward freight, duties 

and taxes and incidental expenses related to acquisition. In respect of 

major projects involving construction, related pre-operational expenses


form part of the value of assets capitalised. Expenses capitalised also include 

applicable borrowing costs, if any. 

To capitalise software where it is expected to provide future enduring 

economic benefits. Capitalisation costs include licence fees and costs of 

implementation/system integration services. 

All upgradation/enhancements are generally charged off as revenue 

expenditure unless they bring similar significant additional benefits. 

Depreciation 

To calculate depreciation on Fixed Assets and Intangible Assets in a manner 

that amortises the cost of the assets after commissioning, over their estimated 

useful lives or lives based on the rates specified in Schedule XIV to the 

Companies Act, 1956, whichever is lower, by equal annual instalments 

except for the following assets on which based on management’s assessment 

of useful life, depreciation has been provided at higher rates: 

Rate (%) 

Golf Carts 20 

Tents 50 

Vehicular Roads 20 

Assets costing less than ` 5,000/- are fully depreciated in the year. 

Investments 

To state Long-Term Investments at cost. Where applicable, provision is 

made to recognise a decline, other than temporary in valuation of Long- 

Term Investments. 

Inventories 

To state inventories including work-in-progress at lower of cost and net 

realisable value. The cost is calculated on weighted average method. Cost 

comprises expenditure incurred in the normal course of business in bringing 

such inventories to its location and includes, where applicable, appropriate 

overheads based on normal level of activity. Obsolete, slow moving and 

defective inventories are identified at the time of physical verification of 

inventories and, where necessary, provision is made for such inventories. 

Stock in progress - Golf huts includes cost of work-in-progress properties. 

Cost included in inventory includes development expenses, cost of services 

and other overheads relating to projects and is valued at lower of 

cost/estimated cost and estimated net realisable value. 


i) Consequent to the completion of the Laburnum Project the Company 

had disclosed the unsold stock of Parking Slots and Servant Quarters 

under inventory and the revenue on account of the sale of such stock 

is being accounted for on accrual basis. 

ii) Membership Income 

a) Revenue from Corporate membership fee is accounted for over the 

period of membership. 

b) Entrance fees are accounted for in the year of receipt. 

c) Interest charged on delayed receipt of Subscription is accounted for 

on receipt basis. 

iii) Green Fee Income, Caddie Rental, Cart Rental, Income from Health 

Club and other facilities and Income from Food & Beverage Sales is 

recognized at the time such services are rendered to the customer. 




Abhishek Rara 

Partner 




iv) Sale of merchandising stock (Proshop Income) is recognised at the time 

of delivery of goods to the customer. 


i) To make regular contributions to State plan namely Employee’s Provident 

Fund and Employee’s State Insurance Fund are charged to revenue 

every year. 

ii) Company has Gratuity (Unfunded Plan) which are in the nature of 

defined benefit/schemes. To determine the liabilities towards such 

schemes, as applicable, and towards employee leave encashment by 

an independent actuarial valuation as per the requirements of Accounting 

Standard - 15 (revised 2005) on ‘Employee Benefits’. To determine 

actuarial gains or losses and to recognise such gains or losses immediately 

in Statement of Profit and Loss as income or expense. Other long-term 

benefit of the Company includes leave encashment/ compensated 

absence, the liability for which is determined on the basis of an actuarial 

valuation at the end of the year using the projected unit credit method. 


To provide Current tax as the amount of tax payable in respect of taxable 

income for the period, measured using the applicable tax rates and tax laws. 

To provide Deferred tax 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. 

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. 

Foreign Currency Translation 

To account for transactions in foreign currency at the exchange rate 

prevailing on the date of transactions. Gains/Losses arising out of fluctuations 

in the exchange rates are recognised in the Statement of Profit and Loss 

in the period in which they arise. 

To account for gains/losses in the Statement of Profit and Loss on foreign 

exchange rate fluctuations relating to monetary items at the year end. 

Provisions and Contingent Liabilities 

A provision is recognised when there is a present obligation as a result of 

a past event, it is probable that an outflow of resources will be required to 

settle the obligation and in respect of which reliable estimate can be made. 

A disclosure for a contingent liability is made when there is a possible 

obligation 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 in respect of which the likelihood of outflow of resources is 

remote, no provision or disclosure is made. 

Financial and Management Information Systems 

To practise an Integrated Accounting System which unifies Financial Books. 

The books of account and other records have been designed to facilitate 

compliance with the relevant provisions of the Companies Act on one hand, 

and meet the internal requirements of information and systems for Planning, 

Review and Internal Control on the other. 




173



Your Directors hereby present the Annual Report and Audited Accounts of 

the Company for the financial year ended 31st March, 2012. 


31.03.2012 31.03.2011 

(` Lakhs) (` Lakhs) 

Gross operating Profit/(Loss) 44.98 (43.57) 

Less: Interest and finance charges 0.00 0.00 

Profit/(Loss) before depreciation 

and taxation 44.98 (43.57) 

Less: Depreciation & Impairment loss 2.37 2.51 

Profit/(Loss) before Taxation 42.61 (46.08) 

Less: Provision for Taxation — — 

Profit/(Loss) after Taxation 42.61 (46.08) 

Brought forward from previous year (6,033.33) (5,987.25) 

Transfer from General Reserve — — 

Balance carried to Balance Sheet (5,990.71) (6,033.33) 

The gross operating profit for the year ended March 31, 2012 was ` 44.98 

lakhs, compared to a loss of ` 43.57 lakhs in the previous year and after 

providing depreciation, the net profit for the year was ` 42.61 lakhs as 

against a net loss of ` 46.08 lakhs in the previous year. 

Economic Scenario 

Recoveries of non-performing assets continued to be muted at ` 7.50 lakhs 

for the year. Your Company continues to vigorously pursue various legal 

cases initiated against defaulting clients. 

Operations 

During the last fifteen years your Company has concentrated on recoveries 

and has collected a total of ` 9,673.33 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. 

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 India’s 

Directions. 


Your Directors have: 

i) followed, in the preparation of the annual accounts, the applicable 


departures; 

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, 2012, and the related Statement of 

Profit and Loss 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 Company’s 












our opinion. 



174 

BFIL FINANCE LIMITED 

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; 



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. 


The Company has no employee in the category specified under Section 

217 (2A) of the Companies Act, 1956. 

Subsidiary Companies 

BFIL Securities Limited 

Your Company’s subsidiary got dissolved on 25th November, 2011. 

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 and Registered Office of your Company. 

Directors 

Sri Anil Seth 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 2012, 

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. 


Anil Seth P.K. Sen 

Secunderabad, 02 May, 2012 Director Director 



Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the 



the Annexure a statement on the matters specified in paragraphs 

4 and 5 of the Order. 



(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; 

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement 

dealt with by this report are in agreement with the books of account;



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, as 

on March 31, 2012 and taken on record by the Board of Directors, 

none of the directors is disqualified as on March 31, 2012 from being 

appointed as a director in terms of clause (g) of sub-section (1) of 

Section 274 of the Act; 

(f) In our opinion and to the best of our information and according to the 

explanations given to us, the said financial statements together with 

the notes thereon and attached thereto give, in the prescribed manner, 

the information required by the Act, and give a true and fair view in 

conformity with the accounting principles generally accepted in India: 



members of BFIL Finance Limited on the financial statements as of and 

for the year ended March 31, 2012 

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 two 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 


of by the Company during the year. 

2. (a) The inventory has been physically verified by the Management 

during the year. 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. 

There were no discrepancies noticed on physical verification of 

inventory as compared to book records. 


unsecured, to companies, firms or other parties covered in the register 










there under. 


with its size and the nature of its business. 




8. (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 income tax, service tax 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, service tax, as at March 31, 2012 which has 

not been deposited on account of a dispute, are as follows: 


(i) in the case of the Balance Sheet, of the state of affairs of the company 

as at March 31, 2012; 

(ii) in the case of the Statement of Profit and Loss, of the profit for the 

year ended on that date; and 

(iii) in the case of the Cash Flow Statement, of the cash flows for the year 



Firm Registration No. 301056E 



Partner 

Hyderabad, May 02, 2012 Membership No: 55000 

Name of Nature Amount Period to which Forum where the 

the statute of dues (Rupees) the amount relates dispute is pending 

UP Trade tax Lease tax 37,01,037 1996-97 to Joint Commissioner (A), 

Act, 1948 1999-2000 Trade Tax, Kanpur 

Rajasthan Lease tax 4,88,211 1996-97 Deputy Commissioner 

Sales tax (A), Commercial taxes, 

Jaipur 

Income tax Penalty 76,56,074 A.Y 2002-03 Income Tax Appellate 

Act, 1961 Tribunal, Mumbai 

9. The accumulated losses of the Company exceeded fifty percent of its 

net worth as at March 31, 2012. The Company has not incurred cash 

losses in the financial year ended on March 31, 2012 and it has incurred 

cash losses in the immediately preceding financial year. 




holders as at the balance sheet date. 


of security by way of pledge of shares, debentures and other securities 



mutual benefit fund / societies are not applicable to the Company. 

13. 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, 2012 holds certain securities as stock-in-trade and such 

securities have been held by the company in its own name. 












18. The Company issued unsecured non-convertible debentures in earlier 

years, aggregating Rs. 150,000,000 which is outstanding at the yearend, 

in respect of which it is not required to create security or charge. 








21. The Clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g) and (iv) of paragraph 

4, of the Companies (Auditor’s Report) Order, 2003, as amended by the 

Companies (Auditor’s 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. 





Partner 

Hyderabad, May 02, 2012 Membership No: 55000 

175

BALANCE SHEET 

(All amounts in `, unless otherwise stated) 


176 






Share Capital 3 20,00,00,000 20,00,00,000 


Non-current Liabilities 

4 (59,90,71,464) (60,33,32,791) 

Long-term borrowing 


5 47,54,11,077 47,54,11,077 


Other current liabilities 7 4,54,280 6,60,630 

Short-term provisions 8 76,56,074 76,56,074 

Total 8,45,57,314 8,05,00,506 

Assets 


Fixed Assets 


Capital work-in-progress 2,81,72,250 2,81,72,250 

Non-current investments 


10 4,30,23,750 4,30,23,750 

Inventories 11 1,000 1,000 

Trade Receivables 12 — — 

Cash and Bank balances 13 78,81,625 8,29,760 


Other current assets 15 31,92,237 33,77,752 

Total 8,45,57,314 8,05,00,506 


This is the Balance Sheet referred to in our report of even date 


Firm Registration No. 301056E For and on behalf of the Board of Directors 

Chartered Accountants Anil Seth Director 

Sunit Kumar Basu, Partner P.K. Sen Director 

Membership No. 55000 V. Radhakrishnan Manager & 

Hyderabad, 02 May, 2012 Company Secretary 



REVENUE 

Other Income 16 67,95,144 52,24,974 

TOTAL REVENUE 

EXPENSES 

67,95,144 52,24,974 

Employee Benefit Expense 17 98,100 98,100 

Depreciation and Amortization Expenses 18 2,36,623 2,50,806 

Other Expense 19 21,99,094 94,83,996 

TOTAL EXPENSES 25,33,817 98,32,902 

PROFIT/(LOSS) BEFORE TAX 

Tax Expense 

42,61,327 (46,07,928) 



PROFIT/(LOSS) FOR THE YEAR 

Earnings per equity share: 

[Nominal Value per share: ` 10 (2011: ` 10)] 

42,61,327 (46,07,928) 

Basic and Diluted 


0.21 (0.23) 

This is the Statement of Profit and Loss referred to in our report of even date. 


Firm Registration No. 301056E For and On behalf of the Board of Directors 


Sunit Kumar Basu, Partner P. K. Sen Director 

Membership No. 55000 V. Radhakrishnan Manager & 

Hyderabad, May 02, 2012 Company Secretary




1 General Information 

BFIL Finance Limited (the 'Company') is registered as Non-Banking 

Finance Company and was engaged in the business of Leasing, Hire 

purchase and other allied finance activities. Currently, there are no 

operational activities and the Company continues to pursue recovery 

of its old dues in the normal course of business. 

2 Summary of significant accounting policies 

2.1 Basis of preparation 

These financial statements have been prepared in accordance with 

the generally accepted accounting principles in India under the 

historical cost convention on accrual basis based on the principle of 

going concern. 


as per the Company’s normal operating cycle and other criteria set 

out in the Schedule VI to the Companies Act, 1956. Based on the 

nature of products and the time between the acquisition of assets 

for processing and their realisation in cash and cash equivalents, the 

Company has ascertained its operating cycle as 12 months for the 

purpose of current – non current classification of assets and liabilities. 

2.2 Tangible Assets 

All tangible assets including assets given on lease are valued at cost 

inclusive of direct and incidental expenses related to acquisition. 

Depreciation on tangible assets is provided on written down value 

method on pro-rate 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 

Lease hold improvements are being amortised @ 15%. 

All the tangible 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 statement of profit and loss in the 

respective financial year. The impairment loss recognized in the prior 




A. Cash Flow from Operating Activities: 

Profit/(Loss) before taxation 


42,61,327 (46,07,928) 

Depreciation/Amortization 2,36,623 2,50,806 

Provision no longer required written back (7,50,000) (9,11,182) 

Interest Income (45,144) (63,724) 

Operating Profit Before Working Capital Changes 

Changes in Working Capital : 

37,02,806 (53,32,028) 

Increase/(Decrease) in trade payables 1,831 1,72,145 

Increase/(Decrease) in other current liabilities (2,06,350) 76,56,074 

(Increase)/Decrease in short-term loans and advances (6,04,514) (4,21,373) 

(Increase)/Decrease in trade receivables 7,50,000 9,11,182 

(Increase)/Decrease in other current assets 33,62,948 (33,77,752) 

Cash Generated from Operations 70,06,721 (3,91,752) 

Taxes paid — — 

Net cash generated from operations activities 70,06,721 (3,91,752) 

B. Cash flow from Investing Activities 

Interest received 45,144 63,724 

Investments in bank deposits (Refer note 2 below) (38,178) (5,45,682) 

Net cash from investing activities 6,966 (4,81,958) 

C. Cash flow from Financing Activities — — 

Net increase in cash and cash equivalents 70,13,687 (8,73,710) 

Cash and Cash equivalents at the beginning of the year 2,84,078 11,57,788 

Cash and Cash equivalents at the end of the year 72,97,765 2,84,078 

Cash and cash equivalents comprise of: 

Cash on Hand — — 

Balances with Banks 72,97,765 2,84,078 

Total 72,97,765 2,84,078 

1. The above cash flow statement has been prepared under the “Indirect Method” as set out in AS-3 on ‘Cash Flow Statements’. 

2. “Other bank balances” included under Cash and Bank balances represent investment in fixed deposits with banks,maturing beyond 3 months. Such 

balances have been excluded from opening and closing balances of Cash and Cash equivalents and movements in such balances have been shown 

under “Investing Activities”. 

3. The comparative 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. 


Firm Registration No. 301056E For and on behalf of the Board of Directors 


Sunit Kumar Basu P. K. Sen Director 

Partner V. Radhakrishnan Manager & 

Membership No. 55000 Company Secretary 

Hyderabad, May 02, 2012 Hyderabad, May 02, 2012 

years is reversed where the recoverable value exceeds the carrying 

value of the asset upon re-assessment in the subsequent years. 

2.3 Investments 

All investments are stated at cost i.e. cost of acquisition, inclusive of 

expense incidental to acquisition where applicable. Provision for any 

permanent diminutions in the 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. 

2.4 Inventories 

Stock in trade comprising stock of securities are stated at cost or 

market price whichever is lower. Stock on hire is valued at agreement 

value less amount receivable. 

2.5 Revenue Recognition 

As per the directives of the Reserve Bank of India, revenue is recognised 

upon realisation, on Non-Performing Assets. 

Revenue is not recognized on the grounds of prudence until realised 

in respect of liquidated damages, penalties and delayed payment 

charges, as recovery of the amounts is uncertain. 

2.6 Current and Deferred Tax 

Tax expense for the period, comprising current tax and deferred tax, 

are included in the determination of the net profit or loss for the 

period. Current tax is measured at the amount expected to be paid 

to the tax authorities in accordance with the taxation laws prevailing 

in the respective jurisdictions. 

Deferred tax is recognised for all the timing differences, subject to 

the consideration of prudence in respect of deferred tax assets. 

Deferred tax assets are recognised and carried forward only to the 

extent that there is a reasonable certainty that sufficient future taxable 

income will be available against which such deferred tax assets can 

be realised. Deferred tax assets and liabilities are measured using 

the tax rates and tax laws that have been enacted or substantively 

enacted by the Balance Sheet date. 

177




178 


As at As at 


3.1 Break up of Share Capital 

Authorised: 

30,000,000 (2011:30,000,000) equity shares of Rs. 10 each 30,00,00,000 30,00,00,000 

1,000,000 (2011: 1,000,000) cumulative redeemable/convertible preference share of Rs. 100 each 

Issued: 

10,00,00,000 10,00,00,000 

20,000,000 (2011:20,000,000) equity shares of Rs. 10 each 

Subscribed and paid up: 

20,00,00,000 20,00,00,000 

20,000,000 (2011:20,000,000) equity shares of Rs. 10 each 20,00,00,000 20,00,00,000 

Total 20,00,00,000 20,00,00,000 

3.2 Rights, preferences and restrictions attached to shares 

Equity Shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share 

held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential 

amounts, in proportion to their shareholding. 

3.3 Out of the above shares, 19,999,994 shares are held by ITC Limited, the holding company and the balance 6 shares are held by nominees of the 

holding company jointly with the holding company. There is no movement in the shareholder's equity during the year, including the previous year. 

4 Reserves and Surplus 

Surplus/(Deficit) in Statement of Profit and Loss 

Balance as at the beginning of the year (60,33,32,791) (59,87,24,863) 

Profit/(Loss) fot the year 42,61,327 (46,07,928) 

Balance as at the end of the year (59,90,71,464) (60,33,32,791) 

5 Long-term borrowings 

5.1 Break up of Long-term borrowings 

Unsecured: 

1,500,000-0% Non-convertible debentures of Rs. 100 each issued to holding company. 15,00,00,000 15,00,00,000 

Loans from holding company (Interest free) 32,54,11,077 32,54,11,077 

Total 47,54,11,077 47,54,11,077 

5.2 Above Long-term borrowings are repayable on April 01,2013. 


Trade Payables (Refer note 25 below) 1,07,347 1,05,516 

Total 1,07,347 1,05,516 

7 Other current liabilities 

Statutory dues including Tax deducted at Source 4,54,280 6,60,630 

Total 4,54,280 6,60,630 

8 Short-term provisions 

8.1 Break up of Short-term provisions 

Provision for litigation/disputes 76,56,074 76,56,074 

Total 76,56,074 76,56,074 

8.2 Provision for litigation/disputes 

Balance as at the beginning of the year 76,56,074 — 

Additions during the year — 76,56,074 

Balance as at the end of the year 76,56,074 76,56,074 

Classified as Current 76,56,074 76,56,074 

Total 76,56,074 76,56,074 

8.3 Provision for litigation/disputes represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters 

in litigation.



9 Tangible Assets 

9.1 Break up of Tangible Assets 

Gross Block (at cost) Depreciation Lease Terminal Adjustment Net Block 

Own Assets 1st April, Disposals/ 31st March, 1st April, For the Disposals/ 31st March, 31st March, 31st March, 31st March, 31st March, 

2011 Adjustments 2012 2011 year Adjustments 2012 2012 2011 2012 2011 

Buildings 

(Refer Note 9.4 below) 

1,08,59,437 1,08,59,437 — 75,14,770 1,67,234 76,82,004 — — — — 33,44,667 

Office equipment 29,68,955 — 29,68,955 28,54,972 15,854 — 28,70,826 — — 98,129 1,13,983 

Furniture and fixtures 1,48,05,658 — 1,48,05,658 1,48,05,658 — — 1,48,05,658 — — — — 

Leasehold improvement 66,09,094 — 66,09,094 55,38,404 53,535 — 55,91,939 — — 10,17,155 10,70,690 

Total (A) 

Assets given on Lease: 

3,52,43,144 1,08,59,437 2,43,83,707 3,07,13,804 2,36,623 76,82,004 2,32,68,423 — — 11,15,284 45,29,340 

Plant and Machinery 18,49,69,407 — 18,49,69,407 9,29,40,382 — — 9,29,40,382 3,53,45,463 3,53,45,463 5,66,83,562 5,66,83,562 

Less: Provision for 

doubtful Leased Assets 

— — — — — — — — — (5,66,83,562) (5,66,83,562) 

Total (B) 18,49,69,407 — 18,49,69,407 9,29,40,382 — — 9,29,40,382 3,53,45,463 3,53,45,463 — — 

Total (A) + (B) 22,02,12,551 1,08,59,437 20,93,53,114 12,36,54,186 2,36,623 76,82,004 11,62,08,805 3,53,45,463 3,53,45,463 11,15,284 45,29,340 

March 31, 2011 23,15,68,059 1,13,55,508 22,02,12,551 12,99,44,168 2,50,806 65,40,788 12,36,54,186 3,53,45,463 3,75,32,804 6,12,12,902 6,40,91,087 

Notes: 

9.2 Leasehold Improvement represents the amount incurred on renovation of the premises of the wholly owned subsidiary, MRR Trading & Investment Company Limited, which holds the tenancy rights. 

9.3 Capital work in progress amounting to Rs. 28,172,250 (2011: Rs. 28,172,250) represents the value of the property received towards settlement of dues, for which the registration is pending. 

9.4 Disposal represents transfer of own assets to assets held for sale. (Refer Note 21 below) 

9.5 Depreciation as at the year end on own assets includes impairment loss as under: 

As at As at 


Buildings 32,00,858 32,00,858 

Furniture and Fixtures 48,86,754 48,86,754 

Total 80,87,612 80,87,612 

As at As at 


10. Non-current Investment 

Trade Investments - Unquoted equity 

instruments (valued at cost unless 

stated otherwise) 

Investment in subsidiaries: 

50,000 (2011: 50,000) equity shares of 

Rs. 10 each held in MRR Trading & 

Investment Company Limited. 

(Net of provision aggregating to 

Rs. 7,620,770 [2011: Rs. 7,620,770] 

for other than temporary diminution) 

Other investments 

Government and trust securities: 

4,30,23,750 4,30,23,750 

National Saving Certificate 

(Net of provision aggregating to Rs. 5,000 

[2011: Rs. 5,000]) 

— — 

Kisan Vikas Patra 

(Net of provision aggregating to 

Rs. 5,000 [2011: Rs. 5,000]) 

— — 

Total 4,30,23,750 4,30,23,750 

Aggregate amount of unquoted investments 4,30,23,750 4,30,23,750 

Aggregate provision for diminution in 

value of investments 


(valued at cost or market value 

whichever is less) 

Stock in Trade 

Quoted equity instruments: 

3 (2011:3) equity shares of Rs. 10 each of 

76,30,770 76,30,770 

Ultra Tech Cemco Limited 

Unquoted investments: 

540,000 (2011: 540,000) Optionally fully 

convertible debentures of G-Tech Stone 

Limited – Rs. 59,400,000 

1,000 1,000 

(2011 Rs. 59,400,000) — — 

(Net of provision for erosion in value Rs. 59,400,000 

[2011: Rs. 59,400,000]) 


As at As at 


Stock on hire 

(Net of provision for doubtful assets amounting to 

Rs.23,903,734 [2011: Rs. 23,903,734] and 

unmatured finance charges amounting to 

Rs. 6,762,982 [2011: Rs. 6,762,982]) — — 

Total 



Outstanding for a period exceeding 6 months 

from the date they are due for payment 

1,000 1,000 

Lease and Hire purchase receivables 4,46,12,700 4,55,34,170 

Trade receivables 9,39,55,367 9,39,55,367 

Less: Provision for doubtful receivables (13,85,68,067) (13,94,89,537) 

Total 

13. Cash and Bank balances 

Cash and Cash equivalents 

Bank balance 

— — 

In current account 22,97,765 2,84,078 

Demand deposits (Less than 3 months maturity) 50,00,000 — 

Other bank balances 

72,97,765 2,84,078 

Deposits with maturity more than 3months 

but less than 12 months 

5,83,860 5,45,682 

Total 78,81,625 8,29,760 


Advance Income Tax 11,71,168 5,66,654 

Total 11,71,168 5,66,654 


Unsecured, considered good: 

Interest accrued on deposits 14,804 12,352 

Dues from the Holding Company — 33,65,400 

Assets held for sale (at lower of cost and 

net realisable value) 

(Refer Note 21 below) 

31,77,433 — 

Total 31,92,237 33,77,752 

179



180 

As at As at 



Interest Income 45,144 63,724 

Dividend Income — 68 

Service Income 60,00,000 42,00,000 

Provision no longer required written back 7,50,000 9,11,182 

Miscellaneous Income — 50,000 

Total 67,95,144 52,24,974 

17. Employee Benefit Expense 

Salaries, Wages and Bonus 98,100 98,100 

Total 98,100 98,100 

18. Depreciation and Amortization Expenses 

Depreciation 1,83,088 1,94,453 

Amortization 53,535 56,353 

Total 2,36,623 2,50,806 


Professional and Legal fees 17,77,658 14,92,951 

Travelling Expenses 85,703 29,806 

Audit Fee 75,000 75,000 

Tax Audit Fee 25,000 25,000 

Reimbursement of expenses (including service tax) 17,978 15,100 

Reimbursement of expenses incurred by 

Subsidiary Company 

1,72,944 1,70,463 

Miscellaneous Expenses 44,811 76,75,676 

Total 21,99,094 94,83,996 

20. Contingent Liabilites 

Claims against the Company not 37,21,426 37,21,426 

acknowledged as debts Lease tax 

on account of non-accrual of lease rental 

Total 37,21,426 37,21,426 

21. Assets held for Sale 

On February 14, 2012, the Board of Directors of the Company has approved the 

plan for disposing the Buildings. Carrying Amount as at March 31, 2012 is 

Rs. 3,177,433 (March 31, 2011: Rs. 3,344,667). 

22. Taxes on Income 

22.1 No provision has been made for Current tax during the year because of carry 

forward loss under the Income Tax Act. 

22.2 The Company has not recognized the net deferred tax assets, in respect of 

accumulated losses and unabsorbed depreciation in view of the uncertinity of 

availing the benefit in near future. Break up of such net deferred tax asset is given 

below: 

Deferred Tax Liabilities: 

Depreciation 

Deferred Tax Assets: 

(1,38,69,220) (1,21,99,728) 

Accumulated business losses 1,77,12,028 10,70,58,857 

Unabsorbed depreciation 7,48,51,668 7,93,70,975 

Deferred Tax Asset/(Liability) 7,86,94,476 17,42,30,104 


As at As at 



Profit/(Loss) after tax 42,61,327 (46,07,928) 

Weighted average number of equity shares 2,00,00,000 2,00,00,000 

Basic and Diluted earnings per share 

(face value of Rs. 10) 

0.21 (0.23) 

The earnings considered in ascertaining the Company's Earning Per Share (EPS) 

comprise net profit / (loss) after taxation. The number of shares considered in 

computing Basic and Diluted EPS is the weighted average number of shares 

outstanding during the year. 

24. Segment Reporting 

The Company operates in a single business segment and hence no further disclosure 

is being made. 

25. Micro, Small and Medium Enterprise Development Act, 2006 

There are no Micro and Small enterprises, to which the company owes dues, or 

with which the company had transactions during the year, based on the information 

available with the company. 


(a) Names of related parties and nature of relationship: 

Where control exists 

Holding Company: ITC Limited 

Subsidiary Company: 

Limited. 

(b) Transactions/Balances 

MRR Trading & Investment Company Limited 

Holding Company Subsidiary Company 

31st March 31st March 31st March 31st March 

2012 2011 2012 2011 

Transactions: 

Service Income 60,00,000 42,00,000 — — 


Balances at the year end 

— — 1,72,944 1,70,463 

Receivables — 33,65,400 — — 

0% Non-Convertible debentures 15,00,00,000 15,00,00,000 — — 

Unsecured Loans (Interest free) 32,54,11,077 32,54,11,077 — — 

27. The financial statements for the year ended March 31, 2011 had been prepared as 

per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. 

Consequent to the notification of Revised Schedule VI under the Companies Act, 

1956, the financial statements for the year ended March 31,2012 have been prepared 

as per Revised Schedule VI. Accordingly, the previous year figures have also been 

reclassified to conform to current year’s classification. The adoption of Revised 

Schedule VI for previous year figures does not impact recognition and measurement 

principles followed for preparation of financial statements. 

STATEMENT REGARDING SUBSIDIARY COMPANIES: 

Pursuant to Section 212(1) and (3) of the Companies Act, 1956 

MRR TRADING & INVESTMENT COMPANY LIMITED 

(a) Holding Company’s interest: 

50,000 Equity Shares of Rs.10/- each, fully paid-up 

(b) Net aggregate amount of Subsidiary’s profit/(loss) not dealt with in the Holding Company’s accounts: 

(Amount in Rs.) 

(i) for the Subsidiary’s financial year ended March 31, 2012 Nil 

(ii) for the previous financial years (416,160) 

(c) Net aggregate amount of Subsidiary’s profit/(loss) dealt with in the Holding Company’s accounts: 

(i) for the Subsidiary’s financial year ended March 31, 2012 Nil 

(ii) for the previous financial years Nil


Balance Sheet of a Non-Deposit Taking Non-Banking Financial Company as at March 31, 2012 

(as required in terms of Paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Prudential Norms (Reserve Bank) Directions, 2007) 

(All amount in Rupees' Lacs, unless otherwise stated) 

Liabilities side: 

Amount Amount 

outstanding overdue 

(1) 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) 

1,500.00 — 

(b)Deferred Credits — — 

(c) Term Loans 

(d)Inter-corporate loans and borrowing 

— — 

(from Holding Company) 3,254.11 — 

(e) Commercial Paper — — 

(f) Other Loans — — 

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 951.27 

(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 961.09 

(b) Operating lease — 

(ii) Stock on hire including hire charges under sundry debtors: 

(a) Assets on hire 358.54 

(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: Amount 

Current Investments: outstanding 

1. Quoted: 

(i) Shares: 

(a) Equity 

— 



(iii) Units of Mutual funds — 


(v) Others — 

2. Unquoted: 

(i) Shares: 

(a) Equity — 


(ii) Debentures and Bonds 

(iii) Units of Mutual funds 

— 


(v) Others 

Long Term investments: 

— 

1. Quoted: 

(i) Shares: 

(a) Equity — 


(ii) Debentures and Bonds 

(iii) Units of Mutual funds 

— 

(iv) Government Securities 

(v) Others 

— 

2. Unquoted: 

(i) Shares: 

(a) Equity 

— 



(iii) Units of Mutual funds — 


(v) Others 430.24 

(5) Borrower group-wise classification of all assets financed as in (2) and (3) above : 

Amount net of provisions 

Secured Unsecured Total 

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 Book value (net of provision) 

1. Related Parties** 

(a) Subsidiaries 430.24 430.24 

(b) Companies in the same group — — 

(c) Other related parties — — 

2. Other than related parties — — 

Total 

** As per Accounting Standard of ICAI 

430.24 430.24 

(7) Other Information 

Amount 

(i) Gross Non-Performing Assets 

(a) Related parties — 

(b) Other than related parties (refer note 1 below) 3,542.05 

(ii) Net Non-Performing Assets — 

(a) Related parties — 

(b) Other than related parties — 

(iii)Assets acquired in satisfaction of debt 390.32 

Notes: 

1 Of the above, Rs. 1,849.69 lacs relates to the assets given on lease. The corresponding net block value of such assets are Rs. 566.83 lacs as at 

March 31, 2012. 

181



The Directors hereby submit their report for the financial year ended 

31st March, 2012. 

Operations 

The operations of the Company during the year under review resulted in 

no loss / no profit. 

Fixed Deposits 

The Company has not accepted deposits under the Companies (Acceptance 

of Deposits) Rules, 1975. 


The Company has no employee in the category specified under Section 

217 (2A) of the Companies Act, 1956. 

Conservation of energy, technology absorption, foreign exchange 

earnings and outgo 

The Company has no activities relating to Conservation of Energy and 

Technology Absorption. There has been no foreign exchange earnings or 

outgo during the year. 

Directors 

Sri P. K. Sen, Director retires at the forthcoming Annual General Meeting 

and being eligible, offers himself for re-appointment. 

AUDITORS’ REPORT TO THE MEMBERS OF MRR TRADING & 

INVESTMENT COMPANY LIMITED 

1. We have audited the attached Balance Sheet of MRR Trading & 

Investment Company Limited (the ‘Company’) as at March 31, 2012, 

and the related Statement of Profit and Loss 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 Company’s Management. Our responsibility is to 

express an opinion on these financial statements based on our audit. 










our opinion. 



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. 











members of MRR Trading & Investment Company Limited on the financial 

statements for the year ended March 31, 2012 


unsecured, to companies, firms or other parties covered in the register 










there under. 


with its size and the nature of its business. 




6 The accumulated losses of the Company exceeded fifty percent of its 

net worth as at March 31, 2012. The Company has not incurred cash 

182 



Your Directors have: 

i) Followed, in the preparation of the annual accounts, the applicable 


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 which resulted in no 

profit / no loss for that period; 

iii) Taken proper and sufficient care for the maintenance of adequate 




iv) Prepared the annual accounts on a going concern basis. 


Hyderabad P. K. Sen Director 

2nd May, 2012 M. Yelamanda Director 




(d) In our opinion, the Balance Sheet, Statement of Profit and Loss 

and Cash Flow Statement dealt with by this report comply with 

the accounting standards referred to in sub-section (3C) of Section 



as on March 31, 2012 and taken on record by the Board of Directors, 

none of the directors is disqualified as on March 31, 2012 from 

being appointed as a director in terms of clause (g) of sub-section 

(1) of Section 274 of the Act; 










(nil) for the year ended on that date; and 







Partner 

Hyderabad, 2nd May, 2012 Membership No: 55000 

losses in the financial year ended on March 31, 2012 and in the 

immediately preceding financial year. 



8. The provisions of any special statute applicable to chit fund/ nidhi/ 

mutual benefit fund/ societies are not applicable to the Company. 

9. 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. 











301 of the Act during the year.

ANNEXURE TO AUDITORS’ REPORT (Contd.) 

14. The Company has not issued any debentures during the year; and does 

not have any debentures outstanding as at the year end. 








17. 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), (ix)(a), (ix)(b) and (xi) of paragraph 4, of the 


Companies (Auditor’s Report) Order, 2003, as amended by the Companies 

(Auditor’s 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. 





Partner 

Hyderabad, 2nd May, 2012 Membership No: 55000 

BALANCE SHEET 




(`) (`) 



Share Capital 3 5,00,000 5,00,000 



4 (4,16,160) (4,16,160) 

Trade Payables 5 13,483 13,236 

Total 

Assets 


97,323 97,076 

Long-term loans and advances 


6 7,120 7,120 

Cash and Bank balances 7 90,203 89,956 

Total 



97,323 97,076 





For and on behalf of the Board of Directors 

Partner P. K. Sen Director 

Membership No: 55000 M. Yelamanda Director 

Hyderabad, 2nd May, 2012 Hyderabad, 2nd May, 2012 




(`) (`) (`) (`) 

Revenue 

Operating Income — — 

Total Revenue 

Expenses 

— — 

Other expense 8 1,72,944 1,70,463 

Less: Expenses reimbursed by the Holding Company 1,72,944 1,70,463 

Total Expenses — — 

Profit/(Loss) before tax 

Tax expense 

— — 



Profit/(Loss) for the year 

Earnings per equity share: 

[Nominal Value per share: Rs.10 (2011: Rs.10)] 

— — 

Basic and Diluted 


This is the Statement of Profit and Loss referred to in 

our report of even date. 

— — 






Partner P. K. Sen Director 

Membership No: 55000 M. Yelamanda Director 

Hyderabad, 2nd May, 2012 Hyderabad, 2nd May, 2012 

183

184 






(`) (`) 

A. Cash Flow from Operating Activities: 

Profit/(Loss) before taxation 

Changes in Working Capital: 

— — 

Increase/(Decrease) in trade payables 247 — 

Cash Generated from Operations 247 — 

Taxes paid — — 

Net cash generated from operations activities 247 — 

B. Cash flow from Investing Activities: — — 

C. Cash flow from Financing Activities: — — 

Net increase in cash and cash equivalents 247 — 

Cash and cash equivalents at beginning of year 89,956 89,956 

Cash and cash equivalents at end of year 90,203 89,956 

Cash and cash equivalents comprise of: 

Cash on Hand — — 

Balances with Banks 90,203 89,956 

Total 90,203 89,956 

1. The above cash flow statement has been prepared under the “Indirect Method” as set out in AS-3 on ‘Cash Flow Statements’. 

2. 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. 





Partner 


Hyderabad, 2nd May, 2012 

Notes to the financial statements 

1 General Information 

MRR Trading & Investment Company Limited is a wholly owned 

subsidiary of BFIL Finance Limited. MRR is having tenancy rights in a 

commercial premise at Eucharistic Congress Building No.1, 4th Floor, 

5 Convent Street, Colaba, Mumbai 400 039. The premise is owned by 

Roman Catholic Cathedral Trust. 

2 Summary of significant accounting policies 

2.1 Basic of preparation 

These financial statements have been prepared in accordance with the 

generally accepted accounting principles in India under the historical 

cost convention on accrual basis based on the principle of going concern. 



in the Schedule VI to the Companies Act, 1956. Based on the nature 

of products and the time between the acquisition of assets for processing 

and their realisation in cash and cash equivalents, the Company has 

ascertained its operating cycle as 12 months for the purpose of 

current – non current classification of assets and liabilities. 


3.1 Break up of Share Capital 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

Authorised: 

50,000 (2011:50,000) 


Issued: 

50,000 (2011:50,000) 


Subscribed and paid up: 

50,000 (2011:50,000) 


Total 5,00,000 5,00,000 


P. K. Sen Director 

M. Yelamanda Director 

3.2 Rights, preferences and restrictions attached to shares 

Equity Shares: The company has one class of equity shares having a 

par value of Rs.10 per share. Each shareholder is eligible for one vote 

per share held. In the event of liquidation, the equity shareholders are 

eligible to receive the remaining assets of the Company after distribution 

of all preferential amounts, in proportion to their shareholding. 

3.3 Out of the above shares, 49,994 shares are held by BFIL Finance Limited, 

the holding company and the balance 6 shares are held by nominees 

of the holding company jointly with the holding company. There is no 

movement in the shareholder's equity during the year, including the 

previous year. 

4 Reserves and Surplus 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

Surplus/(Deficit) in Statement 

of Profit and Loss 

Balance as at the beginning of the year (4,16,160) (4,16,160) 

Profit/(Loss) for the year — — 

Balance as at the end of the year (4,16,160) (4,16,160) 


Trade Payables (Refer note 11 below) 13,483 13,236 

Total 13,483 13,236 

6 Long-term loans and advances 

Balances with Government Authorities 7,120 7,120 

Total 7,120 7,120 

7 Cash and Bank balances 

Cash and Cash equivalents 

Bank balance in current account 90,203 89,956 

Total 90,203 89,956

Notes to the financial statements (Contd.) 


8 Other expense 

As at As at 

March 31, 2012 March 31, 2011 

(`) (`) 

Rent 85,560 83,592 

Rates & Taxes 61,872 61,872 

Water Charges 

Payment to Auditors 

7,009 11,625 

Audit Fee 

Reimbursement of Expenses 

12,000 12,000 

(including service tax) 1,483 1,236 

Professional Fees 4,965 — 

Bank Charges 55 138 

Total 1,72,944 1,70,463 

9 Earnings per share 

Profit/(Loss) after tax 


— — 

equity shares 

Basic and Diluted earnings per 

50,000 50,000 

share (face value of Rs. 10) — — 

10 

The earnings considered in ascertaining the Company's Earning Per 

Share (EPS) comprise net profit/(loss) after taxation. The number of 

shares considered in computing Basic and Diluted EPS is the weighted 

average number of shares outstanding during the year. 

Segment Reporting 

The Company operates in a single business segment and hence no 

further disclosure is being made. 


11 Micro, Small and Medium Enterprise Development Act, 2006 

There are no Micro and Small enterprises, to which the company owes 

dues, or with which the company had transactions during the year, 

based on the information available with the company. 

12 Related party disclosures 

(a) Names of related parties and nature of relationship: 

Where control exists 

Holding Company: BFIL Finance Limited 

(b) Transactions/Balances 


March 31, 2012 March 31, 2011 

(`) (`) 

Transactions: 


Balances at the year end 

1,72,944 1,70,463 

Receivables — — 

13 The financial statements for the year ended March 31, 2011 had been 

prepared as per the then applicable, pre-revised Schedule VI to the 

Companies Act, 1956. Consequent to the notification of Revised 

Schedule VI under the Companies Act, 1956, the financial statements 

for the year ended March 31,2012 have been prepared as per Revised 

Schedule VI. Accordingly, the previous year figures have also been 

reclassified to conform to current year’s classification. The adoption of 

Revised Schedule VI for previous year figures does not impact recognition 

and measurement principles followed for preparation of financial 

statements. 

185

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 32ND 

ASADH 2068 (16TH JULY, 2011) 

Your Directors are pleased to submit their Report and Audited Accounts of your 

Company for the year ended 32nd Asadh 2068 (16th July, 2011). 

SOCIO-ECONOMIC ENVIRONMENT 

The unsettled political environment in Nepal continued through the year under 

review. Intermittent disruptions and industrial unrest were palpable. Workers 

at the industrial belts of Biratnagar and Simra including those at the company’s 

factories, went on strike in March 2011 demanding, inter alia, a 100% increase 

in wages. While the Company’s factories resumed operations after 8 days of 

strike, the Company was forced to declare an indefinite lockout from 16th 

June, 2011 at its garments manufacturing Unit at Biratnagar after Company 

officials were locked inside the factory premises by agitating workers who were 

illegally demanding wages for the period when they stayed away from work. 

The industry-wide dispute on minimum wages is pending before the Supreme 

Court of Nepal for resolution. 

In its Economic Survey, the Government of Nepal, has estimated GDP growth 

for the financial year ended mid July 2011 at 3.5% against 4% in the previous 

year with Industry growing only at 1.4% compared to 3.3 % last year. 

During the year, the Tobacco Products (Control and Regulation) Act was 

promulgated, which lays down the legal framework for regulation of production, 

sale, distribution and consumption of tobacco products. Whilst the legal cigarette 

industry accounts for almost 50% of the overall tobacco consumption in Nepal, 

the balance 50% is consumed mainly in the form of smuggled cigarettes (6%) 

bidi and khaini/other smokeless tobacco products (44%). The legal cigarette 

Industry contributes about 91% of the Government’s revenue from tobacco 

with a share of about 4.6% of the Government’s total tax revenue. Other forms 

of tobacco products, constituting a significant share of tobacco consumption 

being lightly taxed/evasion prone contribute only 9% of the government’s 

revenue from tobacco, and constitute less than half percent of the Government’s 

total tax revenue. 

A recent report on Tobacco Control in Nepal published by Ministry of Health 

and Population inter alia has highlighted the low taxation on bidis and lack of 

uniform taxation on all forms of tobacco products as some of the weaknesses 

in the Government’s tobacco industry related policies. The twin impacts of 

discriminatory taxation and regulatory policy framework against the legal 

cigarette industry has led to steady and continuous erosion of legal cigarette’s 

share in the overall tobacco basket, leading to several unintended and adverse 

consequences like increase in smuggling of cigarettes and other tobacco 

products and increase in consumption of lightly taxed/tax evaded tobacco 

products etc. The World Health Organisation (WHO) in its Technical Manual 

on Tobacco Administration recognising such impact has highlighted the 

importance of increasing taxes and prices for all tobacco products. 

The Tobacco control legislation which took effect from 7th August 2011 

incorporated certain provisions that place the legal cigarette industry at a 

disadvantage and are out of step with those followed in neighbouring countries. 

These are likely to encourage smuggling of cigarettes, evasion of taxes, as well 

as fuel further growth in consumption of other forms of tobacco over cigarettes. 

The disproportionate size of warning on cigarette packs, proposed to be 

implemented from November 2011, may lead to increased smuggling of 

cigarette packs with less stringent/no health warnings. Further, the absence of 

standards on declaration of nicotine and absence of definition and standards 

on declaration of “other harmful ingredients” for all tobacco products would 

encourage sale of tobacco products with inadequate/no declarations such as 

smuggled cigarettes and non-cigarette tobacco products like bidis, chewing 

tobacco, khaini etc. by creating the perception in the minds of consumers that 

these products are “safer”. The non-cigarette tobacco products are manufactured 

mainly in the unorganised sectors and are therefore also prone to tax evasion. 

Therefore, such discriminatory tobacco control policies, as enunciated above, 

lead to a skewed pattern of Tobacco consumption thereby not supporting the 

objectives of Tobacco control and sub-optimising tax revenue collections of 

the Government. As a responsible member of the industry, your Company is 

committed to a pragmatic and purposeful policy for the country’s tobacco 

industry and continues to represent to the Government for reconsideration of 

186 

Legal Cigarettes 50% 

Smuggled cigarettes 6% 

Other Tobacco Products 44% 

From legal cigarettes 91% 

From other tobacco products 9% 

CONSUMPTION SHARE TAX REVENUE SHARE 

Source: WHO Survey & Industry Estimates Source: Industry Estimates 

SURYA NEPAL PRIVATE LIMITED 

certain provisions of the Tobacco Control legislation that may not be consistent 

with the approach of creating a pragmatic and purposeful policy framework. 

COMPANY PERFORMANCE 

Amidst the challenging operating environment, the company maintained its 

growth trajectory during the year under review. For the year ended 32nd Asadh 

2068 (July 16, 2011), the company recorded a 19% growth in sales with Gross 

Turnover (net of VAT) increasing to NRs. 1,328 ( ` 830) Crores from NRs.1,116 

(` 697.5) Crores in the previous year. The Profits after Tax at NRs. 254 

(` 158.8) Crores increased by 29% and return on net worth increased to 110% 

from 90% in the previous year. Cash generated from operations at NRs 198 

(` 123.8) Crores was however lower by NRs. 43 (` 26.9) Crores as compared 

to previous year due to higher Trade Advances and increased Inventory. 

CONTRIBUTION TO THE EXCHEQUER 

Your Company retained its status as the single largest private sector contributor 

to the Government Exchequer, accounting for about 3.5% of the total revenues 

of the Government of Nepal. Your Company paid NRs. 710 (` 443.7) Crores 

by way of Excise Duty, VAT, Income Tax and other taxes during the year {Previous 

Year: NRs. 622 (Rs. 389) Crores}. 

Your Company’s Excise Duty contribution to the exchequer constitutes nearly 

16% of Government’s total Excise revenue while the VAT and Income Tax 

contribution constitutes nearly 3% of Government’s total VAT & Income Tax 

revenue. The corporate income tax policy of the Government for multi business 

corporations like your Company, provides limited scope for setting of losses 

arising out of other businesses with profits of the cigarette business. This acts 

as a disincentive to the business diversification plans of your Company. Your 

Company continues to represent to the government to widen the scope of 

business loss set off to create an investment friendly environment which will 

also support your Company’s business diversification. 

EMPLOYMENT GENERATION 

Your Company, through its multiple businesses, continues to provide 

directly/indirectly livelihood to est. 130000 people in the country which includes 

12000 farmers and est. 30000 farm labourers. As a responsible corporate citizen 

of the country, your Company will continue to create enablers for generating 

employment and economic surpluses for the nation. 

BUSINESS SEGMENTS 

CIGARETTE BUSINESS 

Brand Portfolio 

The Company continues to invest in providing consumers a wide range of 

choices at laddered price points and in upgrading product quality. 

Keeping in mind the wide income dispersion of Nepal, operating at several 

price points is imperative to satisfy consumer needs for the modern form of 

tobacco consumption and also to counter the menace of illegal smuggling, 

both at the premium end of the market as well as the lower end of the price 

table. 

The current specific duty structure is optimal for meeting the objectives of 

fulfilling consumer needs at different price points, quality upgradation and 

revenue collection for the Government in a transparent and litigation free 

manner. 

Distribution and Supply Chain Management 

Amidst challenging circumstances, the company’s proactive supply chain and 

inventory management system ensured uninterrupted supplies to the trade 

and consumers. 

Manufacturing, Quality and Projects 

On the manufacturing front, your company continued to invest in new 

technology cigarette making and packing lines, additional infrastructure, and 

development of human talent to reinforce superior and consistent product 

quality and to augment capacity. The construction of a second cigarette factory 

near Pokhara has commenced and will position the company well for servicing 

consumer demand for its products over the longer term. 

Your Company has entered into Project Coordination Agreements for the 

Pokhara Cigarette Factory Project and Kathmandu Housing, Corporate Office 

and Warehousing Project with the Central Projects office of the Holding 

Company, ITC Limited (ITC), India, to leverage ITC’s vast experience and 

expertise in setting up Cigarette factories and world class energy saving Green 

Buildings. The approval from the Department of Industries, Nepal has also been 

received for implementation of above Project Co-ordination agreements. 

Energy 

Energy conservation and efficiency continue to engage your Company’s attention 

as areas of critical priority. Accordingly, several energy saving initiatives were 

implemented during the year to reduce the energy consumption per unit. 

Environment Health and Safety 

Institutionalising systems relating to Environment, Health and Safety has enabled 

benchmarked work environment for all employees.

Leaf Tobacco 

Despite the agro-climatic challenges of growing tobacco in Nepal, your 

Company’s continuous engagement with tobacco farmers from the stage of 

seed development to crop harvesting have assisted in enhancing productivity 

and quality at the farm level thereby improving returns for the farmers. 

Encouraged by the interventions of the company, farmers have stepped up the 

acreage under tobacco cultivation. Inputs provided by your Company, facilitated 

improvements in quality of domestic grades over a period of time. 

GARMENT BUSINESS - EXPORT 

A disturbed labour and IR situation prevailing in Biratnagar Industrial belt, led 

to frequent disruption of operations at the Garments Manufacturing Unit. 

Consequently, your Company could not execute export orders on schedule, 

leading to cancellation of orders by customers, who have also ceased to place 

further orders. This has rendered continuity of export operations unviable. 

Given the above circumstances, your Company decided to close down the 

Garments Manufacturing Unit at Biratnagar and to that effect has signed a final 

settlement agreement with the non-management staff at Biratnagar. 

GARMENT BUSINESS - DOMESTIC 

In the domestic garments market, “John Players” continued to retain its 

leadership status in the branded apparel segment while the company’s mass 

market brand, “Springwood”, positioned as an alternative to low price imports 

from China and South East Asia, has further consolidated its position in the 

‘value for money’ segment. 

MATCHES BUSINESS 

In the Safety Matches business, the Company’s brand “Tir”, has established a 

strong consumer franchise within a few years of its launch and has grown nearly 

20% during the year. 

BUSINESS ADVISORY SERVICES 

Your Company has entered into the Business Advisory Services Agreement with 

ITC, for sourcing of business advisory services in various areas like identification 

of world-class technology, sharing of best practices, quality protocols and 

systems, identification and evaluation of overseas vendors and Audits in the 

area of Process and systems, construction projects and environment, health 

and safety. The approval of the Department of Industries, Nepal has also been 

received for this purpose. 

DIVIDEND 

Your Directors have declared an Interim Dividend of NRs. 15.50 (` 9.69) per 

Ordinary Share for the year ended 32nd Asadh 2068 (July 16, 2011). The 

consequent outflow on this account, including Dividend Tax, amounts to 

NRs. 31.25 (` 19.53) Crores. Your Board has also recommended a Final Dividend 

of NRs. 96 (` 60) per Ordinary Share. 

All dividends during the year have been paid within the prescribed period and 

there were no unclaimed dividends lying with the Company. 

FINANCE 

In the context of growth initiatives taken by your Company, agreement has 

been entered into with ITC for a loan facility of NRs.195 (` 121.87) Crores. The 

approvals for the agreement have been received from the Department of 

Industries, Nepal and Nepal Rashtra Bank. 

TAX MATTERS 

As reported last year the Hon’ble Supreme Court of Nepal, during the year 

2009-10, had passed judgements in favour of your Company, with regard to 

certain Excise and Income Tax demands on the issue of theoretical production. 

The Inland Revenue Department, citing the judgements passed in favour of 

your Company by the Hon’ble Supreme Court of Nepal, on 11th February, 

2011 decided the following administrative review petitions in favor of the 

Company: 

1. VAT demand - NRs. 7.55 (` 4.7) Crores for the financial year 

2058-59 (2001-02). 

2. Income Tax demand (received during the year) — NRs. 4.91 (` 3.07) 

Crores for the financial year 2062-63 (2005-06). 

All other pending Show Cause Notices (SCNs) and demands related to excise, 

income tax and VAT received from time to time on the issue of theoretical 

production, are similarly based on an untenable contention by the Revenue 

authorities that the Company could have produced more cigarettes than it has 

actually produced in a given year, based on 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. This, despite the fact that the Company’s cigarette factory is under 

‘physical control’ of the Revenue authorities and the cigarettes produced are 

duly accounted for and certified as such by the Revenue authorities. The 

cumulative demands on the Company on account of theoretical production 

that remains pending stand at NRs. 80.44 (` 50.27) Crores and comprise: 

(a) Excise Demands - NRs. 27.80 (` 17.37) Crores. No fresh demand has 

been received during the year. 

(b) VAT Demands - NRs. 28.96 (` 18.10) Crores. No fresh demand has 

been received during the year. 

(c) Income Tax Demands - NRs. 23.68 (` 14.80) Crores. No fresh demand, 

except for NRs 4.91 (` 3.07) Crores for the financial year 2062-63 

(2005-06) as mentioned above, has been received during the year. 


Out of the above NRs. 80.44 (` 50.27) Crores, demands aggregating 

NRs. 66.81 (` 41.76) Crores are under appeal before Supreme Court and 

demands aggregating NRs. 13.63 (` 8.52) Crores are under appeal before 

Revenue Tribunal / DG-Inland Revenue Department. 

Your Company has been advised by its eminent counsel that the cases made 

out by the Department have no legal or factual basis and that the demand 

notices being raised against your Company are not sustainable, particularly in 

the light of the decision passed on 29th October 2009 in favour of the Company 

by the Full Bench of the Hon’ble Supreme Court on similar matters. The 

subsequent decisions of the Supreme Court of Nepal and the Inland Revenue 

Department have further reinforced this position. 

RISK MANAGEMENT 

Your Company’s Corporate Governance Policy lays down the structure, roles 

and responsibilities of the key entities in the governance process and also 

mandates periodic reviews of the key areas of operations. In addition, your 

Company has amongst others, robust policies, procedures and internal control 

systems covering areas such as Finance & Accounting and Information Technology. 

During the year, your Company has initiated a Company-wide implementation 

of a robust Enterprise Resource Planning (ERP) system which is expected to 

significantly augment the quality of business processes and systems. 

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES 

Your Company continued with its commitment towards social development 

and welfare and initiated construction of a school building for the local 

community around its second cigarette factory site near Pokhara. At Simra, 

your company continued to support the local community and administration 

by inter alia providing aid towards school construction, repair of police counters, 

irrigation development for farmers, health camps etc. 

PROMOTION OF TOURISM AND SPORTS 

Your Company continued to remain committed to its role as a responsible 

corporate citizen and promoted Tourism and Sports in the country under Surya 

Nepal Khelparyatan. In association with Nepal Tourism Board and Nepal Golf 

Association, your Company sponsored the country’s most premier professional 

Golf tournament — the ‘Surya Nepal Masters’ and initiated the Surya Nepal 

Junior Golf program for identifying and encouraging young and upcoming 

talent. 

EMPLOYEES 

The Directors of your Company place on record their sincere appreciation for 

the contribution made by the employees during the year. 

Your Company continues to provide best of employment conditions, including 

facilities like housing, medical etc. 

DIRECTORS 

There were no changes in the composition of the Board of Directors during 

the year. 

The numbers of shares held by your Directors in the Company as on 

32nd Asadh 2068 are annexed to this Report (Annexure I). The Directors have 

confirmed that none of them or their close relatives has any direct involvement 

or any personal interest in any transaction of sale or purchase or any kind of 

contract or arrangement connected with the business of the Company. No 

amounts are due to the Company from any of the Directors, Managing Director 

or their close relatives. 

The details of payments made during the year to the Directors, Managing 

Director and other Officials, by way of Board meeting fees etc., are also annexed 

to this Report (Annexure II). 

Details of Management expenses for the year 2067 / 68 are also annexed to 

this Report (Annexure III). 

AUDITORS 

M/s. N Amatya & Company, Chartered Accountants, Kathmandu, Nepal and 

M/s. Lovelock & Lewes, Chartered Accountants, Kolkata, India retire at the 

ensuing Annual General Meeting. 

M/s. N Amatya & Company being eligible, have offered themselves for 

reappointment. M/s. Lovelock & Lewes, Chartered Accountants, Kolkata, India 

have not offered themselves for reappointment. The Board of Directors have 

recommended for approval of Shareholders the appointment of M/s. N Amatya 

& Company, Chartered Accountants, Kathmandu, Nepal and M/s. T. R. Upadhya 

& Co, Chartered Accountants, Kathmandu, Nepal as Joint Statutory Auditors 

of the Company to hold such office from the conclusion of this Annual General 

Meeting till the conclusion of the next Annual General Meeting. 

FUTURE OUTLOOK 

Your Company will continue to explore and pursue opportunities for profitable 

growth and looks forward to the future with optimism and confidence. 


3rd Aswin 2068 Y. C. Deveshwar K. N. Grant Sanjiv Keshava 

(20th September 2011) Chairman Director Managing Director 

187

Annexure I 

Sl. No. Name of Director Number of Ordinary Shares of 

NRs. 100/- each held singly and / or 

jointly as on 32nd Asadh 2068 

(16th July-2011) 

1. Y. C. Deveshwar Nil 

2. A. K. Mukerji Nil 

3. B. B. Chatterjee Nil 

4. K. N. Grant Nil 

5. S. R. Pandey 67,212 

6. S. SJB Rana 600 

7. Sanjiv Keshava Nil 

Annexure II 

THE AMOUNT OF REMUNERATION, ALLOWANCE AND FACILITIES PAID TO 

DIRECTOR, MANAGING DIRECTOR, CHIEF EXECUTIVE AND OFFICIALS 

During the financial year 2067/68 (2010-11), the following amounts were paid 

to the Directors. 

Board Meeting Fee paid NRs. 41,176 (`. 25,735) 

Incidental expenses paid NRs. 7,500 (`. 4,687) 

Payment to/on behalf of the Managing Director for the financial year 2067/68: 

Salary - NRs. 51,00,000 (`. 31,87,500) 

Allowances - NRs. 70,29,830 (`. 43,93,644) 

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, 2068 (July 16, 2011), 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 


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 

188 


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 2067/68: 

Salary - NRs. 1,47,10,172 (` 91,93,857) 

Allowances - NRs.1,27,06,855 (` 79,41,784) 

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 2067/68 (2010-11) comprising postage, telephone, telex, 

fax, legal and service fees, bank charges, rates & taxes, printing & stationery, 

business entertainment, rent, electricity, fuel & water, repair & improvement, 

travel & conveyance, insurance premium, board meeting fees, donations, books 

& periodicals, miscellaneous expenses etc. amounted to NRs. 57,59,30,351 

(`35,99,56,469). 

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, 2068 (July 16, 2011); 

ii) in the case of Profit & Loss Account, the profit of the Company for 

the year ended on Asadh 32, 2068 (July 16, 2011); 

iii) in the case of the Statement of Cash Flow, the cash flows of the 

Company for the year ended on Asadh 32, 2068 (July 16, 2011). 

e) 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. 

Nem Lal Amatya Partha Mitra 

Partner Partner 

N Amatya & Co. Lovelock & Lewes 

Chartered Accountants Chartered Accountants 

Date : 3rd Aswin 2068 

(20th September 2011) 

Place : Kolkata

BALANCE SHEET AS AT 32ND ASADH 2068 (16TH JULY, 2011) 

CAPITAL & LIABILITIES 

ASSETS 

SHARE CAPITAL AND RESERVES 

Figures in NRs. Figures in Rs. Figures in NRs. Figures in Rs. 


32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067 

Schedule (16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010) 

(a) Share Capital 1 2,01,60,00,000 1,26,00,00,000 2,01,60,00,000 1,26,00,00,000 

(b) Reserves & Surplus 2 69,29,87,549 43,31,17,214 39,68,03,659 24,80,02,287 

Total 2,70,89,87,549 1,69,31,17,214 2,41,28,03,659 1,50,80,02,287 

(1) Fixed Assets 3 

(a) Gross Block 3,84,86,37,474 2,40,53,98,421 2,99,08,67,216 1,86,92,92,010 

(b) Less: Accumulated Depreciation 1,62,70,82,817 1,01,69,26,761 1,38,36,10,520 86,47,56,575 

(c) Net Block 2,22,15,54,657 1,38,84,71,660 1,60,72,56,696 1,00,45,35,435 

(d) Capital Work-in-Progress and In-transit 14,41,22,586 9,00,76,616 36,06,01,827 22,53,76,142 

(2) Investments 4 10,98,82,338 6,86,76,461 10,98,82,338 6,86,76,461 

(3) Deferred Tax Asset (Net) (Refer 2F of Schedule 18) 1,09,15,022 68,21,889 2,89,86,715 1,81,16,697 


(a) Inventories 5 2,16,88,04,144 1,35,55,02,590 1,36,57,74,940 85,36,09,337 

(b) Sundry Debtors 6 9,22,76,414 5,76,72,759 10,15,85,334 6,34,90,834 

(c) Cash and Bank Balances 7 1,43,24,218 89,52,636 91,66,48,884 57,29,05,553 

(d) Loans and Advances 8 1,89,82,87,023 1,18,64,29,388 60,98,42,066 38,11,51,291 

Total 4,17,36,91,799 2,60,85,57,373 2,99,38,51,224 1,87,11,57,015 

Less: Current Liabilities and Provisions 

(a) Short Term Borrowings 9 73,32,47,775 45,82,79,859 — — 

(b) Liabilities 10 85,19,70,328 53,24,81,457 78,13,71,014 48,83,56,884 

(c) Provisions 11 2,36,59,60,750 1,47,87,25,469 1,90,64,04,127 1,19,15,02,579 

Total 3,95,11,78,853 2,46,94,86,785 2,68,77,75,141 1,67,98,59,463 

Net Current Assets 22,25,12,946 13,90,70,588 30,60,76,083 19,12,97,552 

Total 2,70,89,87,549 1,69,31,17,214 2,41,28,03,659 1,50,80,02,287 

Notes to the Accounts and Contingent Liabilities 18 — — — — 

The schedules referred to above form an integral part of the Balance Sheet. 



Subhraketan Mitra Sanjiv Keshava Saurya SJB Rana K N Grant Y C Deveshwar 

Head of Finance Managing Director Alternate Director Director Chairman 

S R Pandey A K Mukerji B B Chatterjee Nem Lal Amatya Partha Mitra 

Director Director Director Partner Partner 

N. Amatya & Co. Lovelock & Lewes 

Date: 3rd Aswin 2068 (20th September 2011) Chartered Accountants Chartered Accountants 

189

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 32ND ASADH 2068 (16TH JULY, 2011) 

190 


Figures in NRs. Figures in ` Figures in NRs. Figures in ` 



Schedule (16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010) 

Gross Revenue 12 13,27,66,46,095 8,29,79,03,809 11,15,51,95,592 6,97,19,97,245 

Less: Duties 13 4,24,33,49,162 2,65,20,93,226 3,87,87,93,937 2,42,42,46,211 

Net Sales 9,03,32,96,933 5,64,58,10,583 7,27,64,01,655 4,54,77,51,034 

Raw Materials Consumed, etc. 14 3,41,16,08,705 2,13,22,55,441 2,92,35,79,313 1,82,72,37,071 

Cost of Sales 3,41,16,08,705 2,13,22,55,441 2,92,35,79,313 1,82,72,37,071 

Gross Profit 5,62,16,88,228 3,51,35,55,142 4,35,28,22,342 2,72,05,13,963 

Other Income 15 6,06,11,071 3,78,81,920 10,12,62,733 6,32,89,208 

Total 5,68,22,99,299 3,55,14,37,062 4,45,40,85,075 2,78,38,03,171 

Manufacturing, Admin, Selling Expenses etc. 16 1,29,55,93,597 80,97,46,001 1,06,37,93,136 66,48,70,709 

Provision for Employees' Bonus 35,26,02,982 22,03,76,864 27,24,88,766 17,03,05,479 

Operating Profit 4,03,41,02,720 2,52,13,14,197 3,11,78,03,173 1,94,86,26,983 

Interest 3,25,26,939 2,03,29,337 — — 

Depreciation 26,97,01,443 16,85,63,403 22,44,55,190 14,02,84,494 

Loss on Fixed Assets sold / discarded (Net) 17,05,951 10,66,219 1,07,03,671 66,89,794 

Profit before Taxation 3,73,01,68,387 2,33,13,55,238 2,88,26,44,312 1,80,16,52,695 

Provision for Taxation 17 1,18,61,44,497 74,13,40,311 90,82,98,132 56,76,86,332 

Profit after Taxation 2,54,40,23,890 1,59,00,14,927 1,97,43,46,180 1,23,39,66,363 

Available for Appropriation 2,54,40,23,890 1,59,00,14,927 1,97,43,46,180 1,23,39,66,363 

Appropriation 

Provision for Employees' Housing 20,41,38,568 12,75,86,605 15,77,56,654 9,85,97,909 

Interim Dividend 31,24,80,000 19,53,00,000 25,20,00,000 15,75,00,000 

Proposed Final Dividend 1,93,53,60,000 1,20,96,00,000 1,56,24,00,000 97,65,00,000 

Balance Carried Over to Balance Sheet 9,20,45,322 5,75,28,322 21,89,526 13,68,454 

Notes to the Accounts and Contingent Liabilities 18 

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. 

2,54,40,23,890 1,59,00,14,927 1,97,43,46,180 1,23,39,66,363 






Date: 3rd Aswin 2068 (20th September 2011) Chartered Accountants Chartered Accountants

CASH FLOW STATEMENT FOR THE YEAR ENDED 32ND ASADH 2068 (16TH JULY, 2011) 





(16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010) 

A Cash Flow From Operating Activities 

Net Profit Before Tax 


3,73,01,68,387 2,33,13,55,242 2,88,26,44,312 1,80,16,52,695 

Depreciation 26,97,01,443 16,85,63,402 22,44,55,190 14,02,84,494 

Interest 3,25,26,939 2,03,29,337 — — 

Interest from Investments (56,83,125) (35,51,953) (56,83,125) (35,51,953) 

Interest on Short-Term/Call Deposits (3,39,86,968) (2,12,41,855) (8,14,64,792) (5,09,15,495) 

Unrealised Loss/(Gain) on Foreign Exchange (Net) 4,71,157 2,94,473 8,93,315 5,58,322 

Loss on Fixed Assets sold/discarded (Net) 17,05,951 10,66,219 1,07,03,671 66,89,794 

Provision for Doubtful Debts and Advance 2,20,118 1,37,574 17,41,531 10,88,457 

Provision for Sales Return 95,23,511 59,52,194 26,57,100 16,60,688 

Provision for Doubtful Advance/Debts written back (25,82,676) (16,14,173) (68,987) (43,117) 

Operating Profit Before Working Capital Changes 


4,00,20,64,737 2,50,12,90,460 3,03,58,78,215 1,89,74,23,885 

Trade and Other Receivables (1,26,66,75,623) (79,16,72,264) (40,25,09,616) (25,15,68,509) 

Inventories (80,30,29,204) (50,18,93,253) (26,11,89,671) (16,32,43,544) 

Trade Payables 4,73,62,619 2,96,01,637 4,00,27,379 2,50,17,111 

Cash Generated From Operation 1,97,97,22,529 1,23,73,26,580 2,41,22,06,307 1,50,76,28,943 

Income Tax Paid (1,14,42,15,434) (71,51,34,646) (92,51,49,911) (57,82,18,694) 

Net Cash From Operating Activities (A) 83,55,07,095 52,21,91,934 1,48,70,56,396 92,94,10,249 

B Cash Flow From Investing Activities 

Purchase of Fixed Assets (66,50,42,172) (41,56,51,358) (50,28,30,267) (31,42,68,917) 

Proceeds from Disposal of Fixed Assets 38,899 24,312 27,210 17,006 

Interest Received 3,98,38,715 2,48,99,197 8,89,22,631 5,55,76,644 

Net Cash Used in Investing Activities (B) (62,51,64,558) (39,07,27,849) (41,38,80,426) (25,86,75,267) 

C Cash Flow From Financing Activities 

Net Increase/(Decrease) in Cash 

Credit/Overdraft Facilities 73,32,47,775 45,82,79,859 — — 

Interest Paid (3,10,43,821) (1,94,02,388) — — 

Dividends Paid (1,81,44,00,000) (1,13,40,00,000) (1,97,56,80,000) (1,23,48,00,000) 

Net Cash Used in Financing Activities (C) (1,11,21,96,046) (69,51,22,529) (1,97,56,80,000) (1,23,48,00,000) 

Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) (90,18,53,509) (56,36,58,444) (90,25,04,030) (56,40,65,018) 

Cash and Cash Equivalents (Opening balance) 91,66,48,884 57,29,05,553 1,82,00,46,229 1,13,75,28,893 

Cash and Cash Equivalents (Closing balance) 

Cash and Cash Equivalents Comprises: 

1,47,95,375 92,47,109 91,75,42,199 57,34,63,875 

Cash and Bank Balances 1,43,24,218 89,52,636 91,66,48,884 57,29,05,553 

Unrealised Loss/(Gain) on Foreign Currency Cash and Cash Equivalents 4,71,157 2,94,473 8,93,315 5,58,322 

Total 


1,47,95,375 92,47,109 91,75,42,199 57,34,63,875 






Date: 3rd Aswin 2068 (20th September 2011) Chartered Accountants Chartered Accountants 

191

STATEMENT OF CHANGE IN EQUITY FOR THE YEAR ENDED 32ND ASADH 2068 (16TH JULY, 2011) 

SCHEDULE 2 : RESERVES & SURPLUS 

192 


Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` 

Share Capital Share Capital Revaluation Revaluation General General Employees' Employees' Surplus Surplus Total Total 

Reserve Reserve Reserve Reserve Housing Housing 

Reserve Reserve 

Balance as at 31st Asadh 2066 (15th July, 2009) 2,01,60,00,000 1,26,00,00,000 1,21,81,280 76,13,300 1,12,96,459 70,60,286 21,33,79,740 13,33,62,338 — — 2,25,28,57,479 1,40,80,35,924 

Net Profit for the year — — — — — — — — 1,97,43,46,180 1,23,39,66,363 1,97,43,46,180 1,23,39,66,363 

Transferred to Employees' Housing Reserve — — — — — — 15,77,56,654 9,85,97,909 (15,77,56,654) (9,85,97,909) — — 

Issue of Bonus Shares — — — — — — — — — — — — 

Dividend — — — — — — — — (1,81,44,00,000)(1,13,40,00,000)(1,81,44,00,000)(1,13,40,00,000) 

Transferred to Reserve — — — — 21,89,526 13,68,454 — — (21,89,526) (13,68,454) — — 

Total — — — — 21,89,526 13,68,454 15,77,56,654 9,85,97,909 — — 15,99,46,180 9,99,66,363 

Balance as at 32nd Asadh 2067 (16th July, 2010) 2,01,60,00,000 1,26,00,00,000 1,21,81,280 76,13,300 1,34,85,985 84,28,740 37,11,36,394 23,19,60,247 — — 2,41,28,03,659 1,50,80,02,287 

Net Profit for the year — — — — — — — — 2,54,40,23,890 1,59,00,14,927 2,54,40,23,890 1,59,00,14,927 

Transferred to Employees' Housing Reserve — — — — — — 20,41,38,568 12,75,86,605 (20,41,38,568) (12,75,86,605) — — 

Dividend — — — — — — — — (2,24,78,40,000)(1,40,49,00,000)(2,24,78,40,000)(1,40,49,00,000) 

Transferred to Reserve — — — — 9,20,45,322 5,75,28,322 — — (9,20,45,322) (5,75,28,322) — — 

Total — — — — 9,20,45,322 5,75,28,322 20,41,38,568 12,75,86,605 — — 29,61,83,890 18,51,14,927 

Balance as at 32nd Asadh 2068 (16th July, 2011) 2,01,60,00,000 1,26,00,00,000 1,21,81,280 76,13,300 10,55,31,307 6,59,57,062 57,52,74,962 35,95,46,852 — — 2,70,89,87,549 1,69,31,17,214 

SCHEDULES TO THE ACCOUNTS 





SCHEDULE 1: SHARE CAPITAL 

Authorised 

65,000,000 Ordinary Shares of 

NRs. 100/-each 

Issued, Subscribed & Paid up 

20,160,000 Ordinary Shares of 

6,50,00,00,000 4,06,25,00,000 6,50,00,00,000 4,06,25,00,000 

NRs.100/- each, fully paid 2,01,60,00,000 1,26,00,00,000 2,01,60,00,000 1,26,00,00,000 

Out of the above: 

2,01,60,00,000 1,26,00,00,000 2,01,60,00,000 1,26,00,00,000 

1. 16,800,000 Ordinary Shares were issued as fully paid up bonus shares in 2065/66 (2008/09). 

2. 2,800,000 Ordinary Shares were issued as fully paid up bonus shares in 2060/61 (2003/04). 

3. 280,000 Ordinary Shares were issued as fully paid up bonus shares in 2052/53 (1995/96). 

4. 11,894,400 Ordinary Shares are held by the Holding Company, ITC Limited. 

Reconciliation of number of Shares outstanding: 

Number of Shares 



Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` 



(16th July, 2010) (16th July, 2010) Addition Addition Withdrawal Withdrawal (16th July, 2011) (16th July, 2011) 

Capital Reserve 

Revaluation of Land 

Revenue Reserve 

1,21,81,280 76,13,300 — — — — 1,21,81,280 76,13,300 


Housing Fund 

1,34,85,985 84,28,741 9,20,45,322 5,75,28,322 — — 10,55,31,307 6,59,57,063 

Provision for Employee Housing 

Surplus 

37,11,36,394 23,19,60,246 20,41,38,568 12,75,86,605 — — 57,52,74,962 35,95,46,851 

Profit & Loss Account — — 9,20,45,322 5,75,28,322 9,20,45,322 5,75,28,322 — — 

39,68,03,659 24,80,02,287 38,82,29,212 24,26,43,249 9,20,45,322 5,75,28,322 69,29,87,549 43,31,17,214

SCHEDULES TO THE ACCOUNTS (Contd.) 

SCHEDULE 3 - FIXED ASSETS 


Basic NRs. ` NRs. ` NRs. ` NRs. ` NRs. ` NRs. ` NRs. ` NRs . ` NRs. ` NRs. ` 

Description Depreciation As at As at As at As at As at As at As at As at As at As at As at As at 

Rates 32.03.2067 32.03.2067 Additions Additions Withdrawals/ Withdrawals/ 32.03.2068 32.03.2068 32.03.2067 32.03.2067 For For Withdrawals/ Withdrawals/ 32.03.2068 32.03.2068 32.03.2068 32.03.2068 32.03.2067 32.03.2067 

(%) (16.07.2010) (16.07.2010) Adjustments Adjustments (16.07.2011) (16.07.2011) (15.07.2010) (16.07.2010) the year the year Adjustments Adjustments (16.07.2011) (16.07.2011) (16.07.2011) (16.07.2011) (16.07.2010) (16.07.2010) 

Land & Land Development 22,11,87,991 13,82,42,495 2,46,02,000 1,53,76,250 — — 24,57,89,991 15,36,18,745 — — — — — — — — 24,57,89,991 15,36,18,745 22,11,87,991 13,82,42,495 

Buildings 1.65 48,01,40,449 30,00,87,780 2,69,73,891 1,68,58,682 13,98,788 8,74,243 50,57,15,552 31,60,72,219 10,18,64,348 6,36,65,218 1,44,29,132 90,18,208 7,98,572 4,99,108 11,54,94,908 7,21,84,318 39,02,20,644 24,38,87,901 37,82,76,101 23,64,22,562 

Plant & Machinery 5.30 2,09,53,76,681 1,30,96,10,426 78,95,67,813 49,34,79,883 1,94,73,766 1,21,71,104 2,86,54,70,728 1,79,09,19,205 1,21,38,31,628 75,86,44,768 24,03,75,146* 15,02,34,466 1,94,61,896 1,21,63,685 1,43,47,44,878 89,67,15,549 1,43,07,25,850 89,42,03,656 88,15,45,053 55,09,65,658 

Furniture & Fixtures 3.40 & 5.30 2,64,73,908 1,65,46,192 31,15,330 19,47,081 18,37,353 11,48,346 2,77,51,885 1,73,44,927 1,26,88,920 79,30,574 17,82,241 11,13,901 16,51,924 10,32,453 1,28,19,237 80,12,022 1,49,32,648 93,32,905 1,37,84,988 86,15,618 

Vehicles 5.30 6,60,12,749 4,12,57,969 1,47,58,106 92,23,816 6,39,852 3,99,908 8,01,31,003 5,00,81,877 1,25,18,939 78,24,337 49,69,576 31,05,985 3,55,089 2,21,931 1,71,33,426 1,07,08,391 6,29,97,577 3,93,73,486 5,34,93,810 3,34,33,632 

Computers 7.30 4,90,97,420 3,06,85,888 87,46,902 54,66,814 31,09,777 19,43,611 5,47,34,545 3,42,09,091 2,69,61,988 1,68,51,243 43,43,794 27,14,871 29,58,591 18,49,119 2,83,47,191 1,77,16,995 2,63,87,354 1,64,92,096 2,21,35,432 1,38,34,645 

Office Equipments 5.30 5,25,78,018 3,28,61,260 1,79,80,212 1,12,37,635 15,14,460 9,46,538 6,90,43,770 4,31,52,357 1,57,44,697 98,40,435 38,01,554 23,75,972 10,03,074 6,26,921 1,85,43,177 1,15,89,486 5,05,00,593 3,15,62,871 3,68,33,321 2,30,20,825 

Total 2,99,08,67,216 1,86,92,92,010 88,57,44,254 55,35,90,161 2,79,73,996 1,74,83,750 3,84,86,37,474 2,40,53,98,421 1,38,36,10,520 86,47,56,575 26,97,01,443 16,85,63,403 2,62,29,146 1,63,93,217 1,62,70,82,817 1,01,69,26,761 2,22,15,54,657 1,38,84,71,660 1,60,72,56,696 1,00,45,35,435 

Capital Work-in-Progress and 

in Transit 36,06,01,827 22,53,76,142 62,84,22,353 39,27,63,970 84,49,01,594 52,80,63,496 14,41,22,586 9,00,76,616 — — — — — — — — 14,41,22,586 9,00,76,616 36,06,01,827 22,53,76,142 


Grand Total 3,35,14,69,043 2,09,46,68,152 1,51,41,66,607 94,63,54,131 87,28,75,590 54,55,47,246 3,99,27,60,060 2,49,54,75,037 1,38,36,10,520 86,47,56,575 26,97,01,443 16,85,63,403 2,62,29,146 1,63,93,217 1,62,70,82,817 1,01,69,26,761 2,36,56,77,243 1,47,85,48,276 1,96,78,58,523 1,22,99,11,577 

Previous Year 2,93,53,63,403 1,83,46,02,127 64,60,77,772 40,37,98,607 22,99,72,132 14,37,32,582 3,35,14,69,043 2,09,46,68,152 1,23,51,49,076 77,19,68,172 22,44,55,190 14,02,84,494 7,59,93,746 4,74,96,091 1,38,36,10,520 86,47,56,575 1,96,78,58,523 1,22,99,11,577 

* Includes additional depreciation amounting to NRs. 3,41,81,855 (` 2,13,63,659) {2066-67- (2009-10) NRs. 4,05,53,995 (` 2,52,83,747) arising from change in estimated useful life of certain plant and machinery.} 

193

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SCHEDULE 4 : INVESTMENTS – LONG TERM 

Investment in Stocks issued by Nepal Government 

5% Bikash Rinpatra, 2071* 

Investment in Promissory Note issued by Nepal Government 

8,42,50,000 5,26,56,250 8,42,50,000 5,26,56,250 

6.5% Bikash Rinpatra, 2075* 2,56,32,338 1,60,20,211 2,56,32,338 1,60,20,211 

* Pledged with a bank for obtaining letter of credit, guarantee facilities. 

SCHEDULE 5 : INVENTORIES 

10,98,82,338 6,86,76,461 10,98,82,338 6,86,76,461 

Stores & Supplies (including in-transit) 6,70,00,391 4,18,75,244 6,94,63,908 4,34,14,943 

Raw Materials (including in-transit) 94,15,55,595 58,84,72,247 78,11,22,138 48,82,01,335 

Stock-In-Process 

Finished Goods 

4,88,97,470 3,05,60,919 2,48,30,840 1,55,19,275 

At Cost 1,10,59,49,490 69,12,18,431 47,09,44,945 29,43,40,591 

At Net Realisable Value 54,01,198 33,75,749 1,94,13,109 1,21,33,193 

SCHEDULE 6 : SUNDRY DEBTORS 

(Receivable within twelve months, unless otherwise stated) 

Due for more than six months 

2,16,88,04,144 1,35,55,02,590 1,36,57,74,940 85,36,09,337 

Good and Secured 


2,22,269 1,38,918 2,66,137 1,66,336 

From Holding Company 21,60,000 13,50,00 21,60,000 13,50,000 

From Others 32,06,036 20,03,773 24,23,264 15,14,540 

Doubtful and Unsecured - From Others 

Due for less than six months - Considered good 

— — 10,26,983 6,41,864 

Secured 

Unsecured 

15,27,117 9,54,448 15,63,247 9,77,029 

From Holding Company 2,07,51,909 1,29,69,943 3,60,69,509 2,25,43,443 

From Others 6,44,09,083 4,02,55,677 5,91,03,177 3,69,39,486 

9,22,76,414 5,76,72,759 10,26,12,317 6,41,32,698 

Less : Provision for Doubtful Debts — — 10,26,983 6,41,864 

SCHEDULE 7 : CASH AND BANK BALANCES 

9,22,76,414 5,76,72,759 10,15,85,334 6,34,90,834 

Cash on Hand 74,092 46,308 1,20,394 75,246 

Cheques on Hand 

Cash At Bank 

— — 1,99,00,000 1,24,37,500 

Current Account 70,93,018 44,33,135 1,82,92,668 1,14,32,918 

Savings Account (Provident Fund) 54,417 34,011 54,026 33,766 

Short-Term Call Deposits 71,02,691 44,39,182 87,82,81,796 54,89,26,123 

SCHEDULE 8 : LOANS & ADVANCES 

(Recoverable within twelve months, unless otherwise stated) 

1,43,24,218 89,52,636 91,66,48,884 57,29,05,553 

Receivables from Holding Company (Net) 1,68,47,71,406 1,05,29,82,129 36,84,74,089 23,02,96,306 

Loan/Advance to Employees 

[Includes NRs. 8,85,60,703 (` 5,53,50,439) 

{(2066-67(2009-10) - NRs. 9,59,90,118 (` 5,99,93,824)} 

recoverable after twelve months] 

10,16,24,407 6,35,15,254 11,05,75,415 6,91,09,634 

Margin Money Deposit 1,60,198 1,00,124 1,10,355 68,972 

Advance to Others 3,66,07,793 2,28,79,870 4,83,94,692 3,02,46,682 

Prepaid Expenses 41,52,510 25,95,318 43,52,841 27,20,526 

Accrued Interest Receivable 8,32,749 5,20,468 10,01,371 6,25,857 

Deposits : With Government Authorities 6,42,86,000 4,01,78,750 6,80,01,045 4,25,00,653 

With Others 1,22,89,993 76,81,246 1,67,05,865 1,04,41,165 

1,90,47,25,056 1,19,04,53,159 61,76,15,673 38,60,09,795 

Less : Provision for Doubtful Advance 64,38,033 40,23,771 77,73,607 48,58,504 

SCHEDULE 9 : SHORT TERM BORROWINGS 

Secured 

1,89,82,87,023 1,18,64,29,388 60,98,42,066 38,11,51,291 

Cash Credit/Overdraft Facilities from Banks * 73,32,47,775 45,82,79,859 — — 

*Secured by charge over certain land and building of the Company. 

73,32,47,775 45,82,79,859 — — 

SCHEDULE 10 : CURRENT LIABILITIES 

(Payable within twelve months, unless otherwise stated) 

Interest Accrued but not due - Short Term Borrowings 14,83,118 9,26,949 — — 

Retention Money 77,01,794 48,13,621 78,11,885 48,82,428 

Sundry Creditors 62,57,55,214 39,10,97,009 50,55,30,502 31,59,56,564 

Advances From Wholesale Dealers 19,07,97,357 11,92,48,348 24,85,24,613 15,53,27,883 

Deposits From Wholesale Dealers 59,00,000 36,87,500 59,50,000 37,18,750 

Other Liabilities 2,03,32,845 1,27,08,030 1,35,54,014 84,71,259 

85,19,70,328 53,24,81,457 78,13,71,014 48,83,56,884 

SCHEDULE 11: PROVISIONS 

Provision for Income Tax 7,73,04,106 4,83,15,066 5,34,46,736 3,34,04,210 

[Net of payment of Income Tax Advance/Deposits amounting to 

NRs. 1,17,90,32,927 (` 73,68,95,579) 

2066-67 (2009-10) NRs. 95,17,97,108 (` 59,48,73,193)}] 

Provision for Retirement and Other Employee Benefits 4,08,16,644 2,55,10,403 3,85,57,391 2,40,98,369 

Provision for Interim Dividend 31,24,80,000 19,53,00,000 25,20,00,000 15,75,00,000 

Provision for Proposed Final Dividend 

1,93,53,60,000 1,20,96,00,000 1,56,24,00,000 97,65,00,00 

2,36,59,60,750 1,47,87,25,469 1,90,64,04,127 1,19,15,02,579




SCHEDULE 12 : GROSS REVENUE 

Domestic : 


32nd Asadh 2068 

(16th July, 2011) 



(16th July, 2011) 



(16th July, 2010) 



(16th July, 2010) 

Cigarette 12,79,09,40,843 7,99,43,38,027 10,78,63,71,147 6,74,14,81,967 

Garments 8,68,42,480 5,42,76,550 7,47,59,603 4,67,24,752 

Matches 

Export : 

9,51,45,565 5,94,65,978 7,97,26,289 4,98,28,931 

Garments 30,37,17,207 18,98,23,254 21,43,38,553 13,39,61,595 

SCHEDULE 13 : DUTIES 

13,27,66,46,095 8,29,79,03,809 11,15,51,95,592 6,97,19,97,245 

Excise Duty 4,17,66,29,284 2,61,03,93,303 3,81,42,13,414 2,38,38,83,384 

Sticker Charges 6,67,19,878 4,16,99,923 6,45,80,523 4,03,62,827 

SCHEDULE 14 : RAW MATERIALS CONSUMED ETC. 

4,24,33,49,162 2,65,20,93,226 3,87,87,93,937 2,42,42,46,211 

Leaf 1,88,13,51,475 1,17,58,44,672 1,63,54,05,858 1,02,21,28,661 

Casing Materials 2,15,25,431 1,34,53,394 1,90,27,953 1,18,92,471 

Wrapping Materials 1,09,78,30,138 68,61,43,836 94,39,19,217 58,99,49,511 

Fabrics, Trims etc. * 31,17,06,854 19,48,16,784 20,38,49,632 12,74,06,020 

Purchase and Contract Manufacturing Charges 12,68,40,185 7,92,75,116 10,19,73,039 6,37,33,149 

Allocation of overheads etc. on Finished Goods 

3,43,92,54,083 2,14,95,33,802 2,90,41,75,699 1,81,51,09,812 

Opening 4,46,25,318 2,78,90,824 6,40,28,932 4,00,18,083 

Closing (7,22,70,696) (4,51,69,185) (4,46,25,318) (2,78,90,824) 

Note: 

3,41,16,08,705 2,13,22,55,441 2,92,35,79,313 1,82,72,37,071 

* Includes write down of Inventories amounting to NRs. 5,69,71,291 (` 3,56,07,057) {2066-67 (2009-10) - NRs 1,28,18,439 (` 80,11,524)} 

SCHEDULE 15 : OTHER INCOME 

Interest Received 1,03,99,820 64,99,888 67,68,502 42,30,314 

Less: Interest paid on Trading Debts 17,16,584 10,72,865 20,00,883 12,50,552 

86,83,236 54,27,023 47,67,619 29,79,762 

Interest on Short Term/Call Deposit with Bank 3,39,86,968 2,12,41,855 8,14,64,792 5,09,15,495 

Interest from Investments 56,83,125 35,51,953 56,83,125 35,51,953 

Provision for doubtful advance/debts written back 25,82,676 16,14,173 68,987 43,117 

Miscellaneous Income 96,75,066 60,46,916 92,78,210 57,98,881 

SCHEDULE 16 : MANUFACTURING, ADMIN, SELLING EXPENSES ETC. 

6,06,11,071 3,78,81,920 10,12,62,733 6,32,89,208 

Salaries, Wages & Allowances 30,54,02,776 19,08,76,735 25,92,90,147 16,20,56,341 

Contribution to Provident Fund 97,93,702 61,21,064 84,74,071 52,96,294 

Labour & Staff Welfare 2,30,62,861 1,44,14,288 2,16,11,239 1,35,07,024 

Rent 5,54,74,912 3,46,71,820 4,43,93,855 2,77,46,159 

Electricity, Fuel & Water 10,37,85,608 6,48,66,005 8,10,81,841 5,06,76,151 

Rates & Taxes 52,16,431 32,60,269 11,03,162 6,89,476 

Insurance Premium 4,13,42,734 2,58,39,209 3,97,57,392 2,48,48,370 

Repairs & Improvement - Depreciable Assets 13,01,98,565 8,13,74,103 9,80,67,962 6,12,92,476 

Maintenance - Other Properties 2,75,12,667 1,71,95,417 1,93,23,349 1,20,77,093 

Safety & Pollution Control Cost 74,83,639 46,77,274 50,62,937 31,64,336 

Consumable Stores & Spares * 6,06,18,465 3,78,86,541 1,43,45,842 89,66,151 

Freight 4,59,23,670 2,87,02,294 3,99,72,863 2,49,83,039 

Product Development 79,03,015 49,39,384 1,13,12,113 70,70,071 

Advertising 1,73,65,559 1,08,53,474 1,27,60,233 79,75,146 

Market Research 82,26,057 51,41,286 59,05,501 36,90,938 

Retail Accessories 8,61,88,601 5,38,67,876 7,02,58,297 4,39,11,436 

Trade Marketing Expenses 11,45,86,315 7,16,16,447 10,42,11,218 6,51,32,010 

Travel & Conveyance 7,27,99,377 4,54,99,611 7,19,48,263 4,49,67,664 

Training & Recruitment Expenses 1,12,12,593 70,07,871 1,14,50,044 71,56,278 

Postage, Telephone, Telex, Fax etc. 89,25,505 55,78,441 92,68,988 57,93,118 

Bank Charges and Commission 37,44,539 23,40,337 33,01,067 20,63,167 

Audit Fees 8,00,000 5,00,000 8,00,000 5,00,000 

Legal Fees 11,41,700 7,13,563 7,95,800 4,97,375 

Printing & Stationery 1,69,33,624 1,05,83,515 1,62,92,910 1,01,83,069 

Consultancy / Professional Service Charges & Other Fees 7,25,02,379 4,53,13,987 6,74,01,607 4,21,26,004 

Licence Fee 20,12,329 12,57,706 14,07,498 8,79,686 

Business Entertainment Expenses 59,88,919 37,43,074 45,50,713 28,44,196 

Promotion & Sponsorship 1,65,35,426 1,03,34,641 1,36,66,913 85,41,821 

Board Meeting Fees 41,176 25,735 58,824 36,765 

Donations 6,41,000 4,00,625 6,76,250 4,22,656 

Books & Periodicals 3,72,053 2,32,533 3,78,212 2,36,383 

Membership Fee 11,69,665 7,31,041 4,27,457 2,67,160 

Provision for Doubtful Debts and Advances 2,20,118 1,37,574 17,41,531 10,88,457 

Provision for Retirement and Other Employee Benefits 80,51,568 50,32,230 49,98,812 31,24,258 

Loss on Foreign Exchange (Net) 5,90,526 3,69,079 3,20,862 2,00,539 

Miscellaneous Expenses {Refer 2E of Schedule 18}** 2,18,25,523 1,36,40,952 1,73,75,363 1,08,59,602 

1,29,55,93,597 80,97,46,001 1,06,37,93,136 66,48,70,709 

* Includes provision for obsolescence of spares, relating to plant & machinery with no residual useful life, for NRs. 3,90,35,987 (` 2,43,97,492) 

{2066-67 (2009-10) NRs. 17,54,507 (` 10,96,567)}. 

** Includes provision for sales return, relating to Garments domestic business, for NRs. 95,23,511 (` 59,52,194) 

{2066-67 (2009-10) - NRs. 26,57,100 (` 16,60,688)} 

195

196 






(16th July, 2011) 



(16th July, 2011) 



(16th July, 2010) 



(16th July, 2010) 

SCHEDULE 17 : PROVISION FOR TAXATION 

Current Tax 1,16,80,72,804 73,00,45,503 92,08,35,261 57,55,22,038 

Deferred Tax 1,80,71,693 1,12,94,808 (1,25,37,129) (78,35,706) 

1,18,61,44,497 74,13,40,311 90,82,98,132 56,76,86,332 

SCHEDULE 18 - NOTES TO THE ACCOUNTS 


i) Convention 

These financial statements have been prepared in accordance with applicable Accounting 

Standards and generally accepted accounting principles in Nepal. A summary of significant 

accounting policies, which have been applied consistently, is set out below. The financial 

statements have also been prepared in accordance with the relevant presentational 

requirements of the Company Act, 2063 of Nepal. 

ii) Basis of Accounting 

These financial statements have been prepared in accordance with the historical cost 

convention modified by revaluation of certain freehold land as detailed in (iii) below. 

The preparation of the accounts requires management to make estimates and assumptions 

that affect the reported amounts of revenues, expenses, assets and liabilities at the date 

of the financial statements. The key estimates and assumptions are set out in the 

accounting policies below, together with the related notes to the accounts. 

The most significant items include: 

a) The estimation of and accounting for retirement benefit costs. The determination 

of the carrying value of assets and liabilities, as well as the charge for the year, 

involves judgements made in conjunction with independent actuaries. These involve 

estimates about uncertain future events including life expectancy of members, 

attrition rate, salary increases as well as discount rates. 

b) The estimation of provisions for taxation, which are subject to uncertain future 

events, may extend over several years and so the amount and/or timing may differ 

from current assumptions. The accounting policy for taxation is disclosed below 

in point no. (xiv) including the recognised deferred tax assets and liabilities. 

iii) Fixed Assets 

Freehold land acquired up to 17.12.2043 (31.03.1987) was revalued and the resultant 

increase in the value of such land was credited to Capital Reserve. Subsequent acquisition 

of the above asset and the other assets are stated at cost of acquisition inclusive of inward 

freight, duties and taxes and incidental expenses related to acquisition. 

Depreciation on fixed assets has been provided on straight-line basis at the rates prescribed 

by the erstwhile Income Tax (First Amendment) Rules, 2039. The said rates have further 

been increased by 33 1/3 % as allowed by the Industrial Enterprises Act, 2049. Additional 

depreciation arising from a change in estimated useful life of assets is charged against 

revenue. 

Impairment loss, if any, ascertained as per Nepal Accounting Standard -18 ‘Impairment 

of Assets’ issued by Institute of Chartered Accountants of Nepal, is recognised. 

iv) Inventories 

Inventories are valued at cost or net realisable value whichever is lower. The cost is 

calculated on weighted average method. Cost comprises expenditure incurred in the 

normal course of business in bringing such inventories to its location and includes, where 

applicable, appropriate overheads based on normal level of activity. 

Obsolete, slow moving and defective inventories are identified at the time of physical 

verification and where necessary provision is made for such inventories. 

v) Investments 

Long Term Investments are valued at cost. Provision is made where there is a permanent 

fall in the valuation of such Investments. 

vi) Sales 

Net sales are stated after deducting taxes, duties and sticker charges from invoiced value 

of goods sold. 

vii) Investment Income 

Income from investments is accounted for on an accrual basis, inclusive of related tax 

deducted at source. 

viii) Foreign Exchange Transaction 

Foreign Exchange transactions are recorded at the exchange rate prevailing on the date 

of transactions or where applicable at the exchange rate covered by forward contracts. 

Gains/Losses arising out of fluctuations in the exchange rates are recognised in the Profit 

and Loss Account in the period in which they arise. Differences between the forward 

exchange rates and the exchange rates at the date of transactions are recognised as 

income or expense over the life of the contracts. Profit/loss arising on cancellation or 

renewal of forward exchange contracts is recognised as income/expense for the period. 

Gains/losses on account of foreign exchange rate fluctuations relating to monetary items 

are accounted for in the Profit and Loss Account at the year end. 

ix) Lease Rentals 

Operating lease rental are charged to the profit and loss account as incurred. 

x) Retirement Benefits 

(a) Gratuity 

Liability for gratuity benefits payable to the employees is actuarially determined 

at the year end and provided for. 

(b) Provident Fund 

Regular monthly contributions are made to Provident Funds, which are charged 

against revenue. 

(c) Leave Encashment and Other Retirement Benefits 

Leave encashment and other retirement benefits, wherever applicable, are determined 

on the basis of actuarial valuation at the year end and provided for. 

xi) Bonus 

Bonus is provided as per the provisions of the Bonus Act, 2030. 

xii) Employees’ Housing 

Employees’ Housing is provided as per the provisions of Labour Act, 2048. 

xiii) Cash and Cash Equivalents 

Cash and cash equivalents represent cash and cheques on hand and balance in bank 

accounts. 

xiv) Tax on Income 

Provision for current tax is made with reference to profit for the period covered by the 

financial statements as per the provisions of Income Tax Act, 2058. 

Deferred Tax is recognised and provided for on timing differences between taxable 

income and accounting income subject to consideration of prudence. 

Deferred tax assets are recognised to the extent it is probable that future taxable profit 

will be available against which the temporary difference, unused tax losses and unused 

tax credit can be utilised, unless the deferred tax asset arises from the initial recognition 

of an asset or liability in a transaction. 

Deferred tax is determined using the tax rates that have been enacted or substantively 

enacted at the balance sheet date and are expected to apply when the related deferred 

tax asset is realised or deferred tax liability is settled. 

xv) Dividend 

Final Dividend is provided for as proposed by the Directors, pending approval at the 

Annual General Meeting. Interim dividend is provided for as declared by the Board of 

Directors and confirmed at the Annual General Meeting. 

2. Notes to the Accounts 

A. For the year ended 32nd Asadh 2068, the Board of Directors of the Company at its 

meeting held on 3rd Aswin 2068 (20th September 2011) have: 

a) declared interim dividend of NRs. 15.50 (` 9.69) per share and 

b) recommended final dividend of NRs. 96 (` 60) per share. 

B. Claims against the Company not acknowledged as debts: 

a) Demands raised by Revenue Authorities on theoretical production of cigarettes: 

Excise, Income Tax and VAT authorities issued Show Cause Notices (SCNs) and 

raised demands to recover taxes for different years on theoretical production of 

cigarettes. The basis for 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 (1990-91) 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 Company’s 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. 

As reported last year, the above basis of theoretical production has been rejected 

by the Supreme Court of Nepal vide its orders dated 29th October 2009 and 

1st April 2010. In the said order of the Supreme Court of Nepal dated 1st April, 

2010, the Excise demands {(for the financial years 2055-56 to 2059-60 (1998-99 

to 2002-03)} and Income Tax demands {for the financial year 2058-59(2001-02)} 

were set aside. During the year, citing the aforesaid decisions of the Supreme Court 

of Nepal, the Inland Revenue Department has, on 11th February 2011 decided the 

following administrative review petitions in favour of the Company relating to 

theoretical production: 

(i) Value Added Tax-NRs. 7,54,51,113 (` 4,71,56,946) for the financial year 

2058- 59 (2001-02). 

(ii) Income Tax - NRs. 4,90,70,474 (` 3,06,69,046) for the financial year 2062-63 

(2005-06). 

The Company’s counsel appearing in the matter has opined that the verdict of the 

Supreme Court of Nepal dated 29th October 2009, which was delivered by a Full Bench 

of the Court, will add substantial strength to Company’s case in all the other matters 

relating to the issue of theoretical production. 

Following is the status of pending demands and Show Cause Notices received from the 

Revenue Authorities based on similar untenable contention: 

Excise Demands and Show Cause Notice 

1. Excise demand letter dated 22nd February 2008 for NRs. 14,95,15,509 

(` 9,34,47,193) relating to the financial years 2060-61 to 2062-63 (2003-04 to 

2005-06). The Company’s writ petition, challenging the demand, has been admitted 

by the Supreme Court of Nepal on 2nd April 2008 and it has issued Show Cause 

Notices to the respondents. 

2. Excise demand letter dated 30th November 2008 for NRs. 12,85,10,757 

(` 8,03,19,223) relating to the financial year 2063-64 (2006-07). The Company’s 

writ petition, challenging the demand, has been admitted by the Supreme Court 

of Nepal on 6th January 2009 and it has issued Show Cause Notices to the 

respondents. 

3. Show Cause Notice dated 19th January 2010 seeking to demand NRs. 19,65,37,807 

(`12,28,36,129) by way of Excise Duty for the financial year 2064-65 (2007-08). 

Company’s writ petition challenging the Notice was admitted by the Supreme 

Court of Nepal. On 7th March 2010, Supreme Court of Nepal issued interim order 

directing Inland Revenue Department not to raise demand, pending final disposal 

of the writ petition.


VAT Demands 

4. VAT demand letter dated 8th August 2007 for NRs. 5,72,38,860 (` 3,57,74,288) 

relating to the financial year 2059-60 (2002-03). The Company’s writ petition, 

challenging the demand, has been admitted by the Supreme Court of Nepal on 

12th September 2007 and it has issued Show Cause Notices to the respondents. 

5. VAT demand letter dated 5th August 2008 for NRs. 1,07,18,107 (` 66,98,817) 

relating to the financial year 2060-61 (2003-04). The Company’s writ petition, 

challenging the demand, has been admitted by the Supreme Court of Nepal on 

5th September 2008 and it has issued Show Cause Notices to the respondents. 

6. VAT demand letter dated 10th July 2009, for NRs. 10,69,66,056 (` 6,68,53,785) 

relating to the financial years 2061-62 to 2063-64 (2004-05 to 2006-07). 

The Company’s writ petition, challenging the demand, has been admitted by the 

Supreme Court of Nepal on 9th August 2009 and it has issued Show Cause Notices 

to the respondents. 

7. VAT demand letter dated 14th May 2010, for NRs. 11,46,91,649 (` 7,16,82,281) 

relating to the financial year 2064-65 (2007-08). The Company has filed an 

administrative review petition before the Director General on 11th July 2010, and 

the matter is pending. 

Income Tax Demands 

8. Income Tax demand letter dated 12th August 2007 for NRs. 19,60,92,971 

(` 12,25,58,107) relating to the financial year 2059-60 (2002-03). The Company’s 

writ petition, challenging the demand, has been admitted by the Supreme Court 

of Nepal on 12th September 2007 and it has issued Show Cause Notices to the 

respondents. 

D. Remuneration to Managing Director: 


32nd Asadh 2068 32nd Asadh 2067 

(16th July 2011) (16th July 2010) 

In NRs. In ` In NRs. In ` 

Salary, Bonus etc. (Short Term) 1,48,93,852 93,08,658 1,31,55,061 82,21,913 

Post Employment Benefits * * * * 

Total 

*Post employment benefits are actuarially determined on overall basis for all employees. 

1,48,93,852 93,08,658 1,31,55,061 82,21,913 

E. Miscellaneous Expenses include reimbursement of expenses to statutory auditors amounting to NRs. 99,633 (` 62,271) {2066-67 - NRs. 68,410 (` 42,756)}. 

F. The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing difference are as under: 

As at As at 


(16th July 2011) (16th July 2010) 


Deferred Tax Asset 

On employees’ separation and retirement 1,05,98,101 66,23,813 1,08,20,523 67,62,827 

On fiscal allowance on fixed assets 14,30,310 8,93,944 2,22,01,471 1,38,75,919 

On doubtful advance 9,60,155 6,00,097 12,66,614 7,91,634 

On provision for inventories 98,36,065 61,47,541 — — 

2,28,24,631 1,42,65,395 3,42,88,608 2,14,30,380 

Deferred Tax Liability 

On finished goods 1,19,09,609 74,43,506 53,01,893 33,13,683 

Deferred Tax - Net 1,09,15,022 68,21,889 2,89,86,715 1,81,16,697 

G. Reconciliation between tax expenses and accounting profit: 


9. Income Tax demand letter dated 15th September 2008 for the financial year 

2060-61 (2003-04). Out of total demand of NRs. 2,25,36,944 (` 1,40,85,590), 

the basis of the demand for NRs. 1,91,39,653 (` 1,19,62,283) is on theoretical 

production. The Company’s writ petition, challenging the demand, has been 

admitted by the Supreme Court of Nepal on 8th December 2008 and it has issued 

Show Cause Notices to the respondents. 

10. Income Tax demand letter dated 16th October 2009 for the financial year 2061- 

62 (2004-05). Out of a total demand of NRs. 2,26,26,609 (` 1,41,41,631), the 

basis of the demand for NRs. 2,15,65,409 (` 1,34,78,381) is on theoretical production. 

The Company has filed an administrative review petition before the Director General, 

Inland Revenue Department on 18th December 2009. However, the Director 

General without dealing with the issues raised by the Company, summarily dismissed 

the petition by an order dated 2nd March 2010. The Company thereafter filed an 

appeal before the Revenue Tribunal, on 17th June 2010, and the matter is pending. 

The Management considers that all the demands and show cause notice listed above 

have no legal or factual basis. Accordingly, the Management is of the view that there is 

no liability that is likely to arise, particularly in the light of the decisions in favour of the 

Company by the Supreme Court of Nepal and the Inland Revenue Department. 

b) Other demands raised on account of: 

1. Income Taxes for various assessment years amounting to NRs. 10,32,83,725 

(` 6,45,52,328) {Previous year - NRs. 10,32,83,725 (` 6,45,52,328)} 

(net of provision made for the above assessment years) against which the 

Company has filed appeals with the appropriate authorities/Courts. 

2. Value Added Tax matters under dispute, pertaining to financial years 

2055-56 to 2057-58, amounting to NRs. 31,00,750 (`19,37,969) 

{Previous year - NRs. 31,00,750 (` 19,37,969)}, which are under 

appeal /reassessment. 

C. Estimated amount of contracts remaining to be executed on capital account 

NRs. 50,11,25,637 (` 31,32,03,523) {2066-67 NRs. 38,94,00,452 (` 24,33,75,283)}. 



(16th July 2011) (16th July 2010) 


Accounting Profit 3,73,01,68,387 2,33,13,55,238 2,88,26,44,312 1,80,16,52,695 

Tax at the applicable tax rate 

(Cigarette manufacturing @ 30%, Garments 

Manufacturing @ 20% and Trading @ 25%) 1,14,10,55,678 71,31,59,799 88,00,80,163 55,00,50,102 

Factors affecting tax charge for the year 

Effect of : 

Unused Tax Losses not recognised 4,48,30,483 2,80,19,052 2,72,77,870 1,70,48,668 

Expenses not deductible for tax purposes 2,58,336 1,61,460 9,40,099 5,87,562 

Total Tax Expense 1,18,61,44,497 74,13,40,311 90,82,98,132 56,76,86,332 

H. Capital 

The Company is not subject to any capital adequacy norms under regulations presently in force. Employees Housing Reserve is set aside as required by law. It is the Company’s policy to maintain 

a sound capital base that is supportive of the Company’s business plans. Return on Capital employed is monitored based on Asset Turnover & Profitability ratio. 

197


198 

I. Related party Disclosures 

Nature of relationship and name of the related parties: 

1. Holding Company 

ITC Limited, India 

2. Fellow Subsidiaries 

a) Srinivasa Resorts Limited, India 

b) Fortune Park Hotels Limited, India 

c) Bay Islands Hotels Limited, India 

d) Russell Credit Limited, India and its subsidiaries 

i. Greenacre Holdings Limited, India 

ii. Wimco Limited, India and its subsidiaries 

Pavan Poplar Limited, India 

Prag Agro Farm Limited, India 

iii. Technico Pty Limited, Australia and its subsidiaries 

Technico ISC Pty. Limited, Australia (deregistered on 03.11.2010) 

Technico Agri Sciences Limited, India 

Technico Technologies Inc., Canada 

Technico Asia Holdings Pty Limited, Australia and its subsidiary 

Technico Horticultural (Kunming) Co. Limited, China 

e) ITC Infotech India Limited, India and its subsidiaries 

i. ITC Infotech Limited, United Kingdom 

ii. ITC Infotech (USA), Inc., United States of America and its subsidiary 

Pyxis Solutions, LLC, United States of America 

Disclosure of transactions between the Company and related parties during the year and outstanding balances as on 16th July 2011: 


f) Wills Corporation Limited, India 

g) Gold Flake Corporation Limited, India 

h) Landbase India Limited, India 

i) BFIL Finance Limited, India and its subsidiary 

MRR Trading & Investment Company Limited, India 

j) King Maker Marketing, Inc., United States of America 

The above list does not include: 

a) ITC Global Holdings Pte. Limited, Singapore 

(under liquidation) and its subsidiaries 

i. Hup Hoon Traders Pte. Limited, Singapore 

(struck off w.e.f. 31.03.2011 by the Registrar of Companies, Signapore) 

ii. AOZT “Hup Hoon”, Moscow 

iii. Hup Hoon Impex SRL, Romania 

b) BFIL Securities Limited (a subsidiary of BFIL Finance Ltd.) 

which is under voluntary winding up proceedings. 

3. Key Management Personnel: 

Y. C. Deveshwar Chairman & Non-Executive Director 

S. Puri Alternate Director to Mr Y C Deveshwar 

A. K. Mukerji Non-Executive Director 

B. B. Chatterjee Non-Executive Director 

K. N. Grant Non-Executive Director 

S. R. Pandey Non-Executive Director 

S. SJB Rana Non-Executive Director 

Saurya SJB Rana Alternate Director to Mr. S. SJB Rana 

S. Keshava Managing Director 


32nd Asadh 2068 (16th July 2011) 32nd Asadh 2067 (16th July 2010) 

Holding Company Fellow Key Management Holding Company Fellow Key Management 

Subsidiaries Personnel Subsidiaries Personnel 

In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` 

Sale of Goods/Services 15,62,97,542 9,76,85,964 2,23,496 139,685 9,63,46,535 6,02,16,584 59,820 37,388 

Purchase of Goods/ Services 2,37,43,65,594 1,48,39,78,496 58,86,072 36,78,795 1,98,87,64,823 1,24,29,78,014 23,03,064 14,39,415 

Payment to Managing Director 1,48,93,852 93,08,658 1,31,55,061 82,21,913 

Sitting Fees/ Incidental 

Expenses to Other Directors 48,676 30,423 98,824 61,765 

Machine Hire Charges 1,32,14,370 82,58,981 69,19,105 43,24,441 

Rent Received 12,24,946 7,65,591 

Dividend Payments 1,07,04,96,000 66,90,60,000 1,16,56,51,200 72,85,32,000 

Expenses recovered 78,12,677 48,82,923 35,280 22,050 91,83,785 57,39,866 12,073 7,546 

Expenses reimbursed 82,49,302 51,55,814 58,02,919 36,26,824 

Advances Given 2,92,33,70,637 1,82,71,06,648 50,22,62,979 31,39,14,362 

Issue of Bonus Share 

Balances as on 16th July 

— Debtors 2,29,11,909 1,43,19,943 3,82,29,509 2,38,93,443 

— Advances/Other Receivables 1,84,54,29,165 1,15,33,93,228 50,46,56,336 31,54,10,210 

— Creditors / Payables 16,06,57,760 10,04,11,100 13,61,82,247 8,51,13,904 

J. Figures have been rounded off to the nearest rupee. 

K. Previous Year’s figures have been regrouped and/or rearranged wherever necessary. 






Date: 3rd Aswin 2068 (20th September 2011) Chartered Accountants Chartered Accountants

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 


King Maker Marketing, Inc. 

Paramus, New Jersey 

We have audited the accompanying balance sheets of King Maker Marketing, 

Inc. (”Company”) as of March 31, 2012 and 2011, and the related statements 

of income and retained earnings and cash flows for the years then ended. 



statements based on our audits. 

We conducted our audits in accordance with auditing standards generally 

accepted in the United States of America. Those standards require that we 

plan and perform the audits 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 

audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in 

all material respects, the financial position of King Maker Marketing, Inc. 

KING MAKER MARKETING, INC. 

as of March 31, 2012 and 2011, and the results of its operations and its 

cash flows for the years then ended in conformity with accounting principles 


Our audits were conducted for the purpose of forming an opinion on the 

financial statements taken as a whole. The supplemental information on 

page 199 is presented for purposes of additional analysis and is not a 

required part of the financial statements. Such information is the responsibility 

of management and was derived from and relates directly to the underlying 

accounting and other records used to prepare the financial statements. The 

information has been subjected to the auditing procedures applied in the 

audits of the financial statements and certain additional procedures, including 

comparing and reconciling such information directly to the underlying 

accounting and other records used to prepare the financial statements or 

to the financial statements themselves, and other additional procedures in 

accordance with auditing standards generally accepted in the United States 

of America. In our opinion, the information is fairly stated in all material 

respects in relation to the financial statements as a whole. 

Albany, New York 

April 15, 2012 Bollam, Sheedy, Torani & Co. LLP 

BALANCE SHEETS 


ASSETS 

CURRENT ASSETS 


Restricted cash 

Accounts receivable 

Accounts receivable, other 

Inventory, net of reserve for write-off 

Due from related parties, net 


Income tax receivable 


$ 

5,983,342 

1,622,167 

313,569 

300,659 

1,391,673 

1,782 

410,733 

— 

27,875 

` 

304,402,524 

82,527,746 

15,952,823 

15,296,027 

70,801,364 

90,659 

20,896,041 

— 

1,418,141 

$ 

7,362,492 

1,600,000 

457,226 

282,809 

939,039 

— 

306,417 

77,852 

51,938 

` 

328,330,331 

71,352,000 

20,389,994 

12,611,867 

41,876,444 

— 

13,664,666 

3,471,810 

2,316,175 

10,051,800 511,385,325 11,077,773 494,013,288 

PROPERTY AND EQUIPMENT, net 25,381 1,291,258 27,729 1,236,575 

OTHER ASSETS 10,390 528,591 26,110 1,164,375 

10,087,571 513,205,174 11,131,612 496,414,238 

LIABILITIES AND STOCKHOLDER'S EQUITY 

CURRENT LIABILITIES 

Accounts payable 713,978 36,323,631 1,040,653 46,407,921 

Income tax payable 260,712 13,263,723 — — 

Due to related parties, net — — 69,829 3,114,024 

Accrued settlement charges 2,830,593 144,006,419 4,188,026 186,765,019 

Accrued expenses and other 137,521 6,996,381 192,500 8,584,538 

3,942,804 200,590,154 5,491,008 244,871,502 

LONG-TERM LIABILITIES 

Deferred income taxes 117,129 5,958,938 91,993 4,102,428 

COMMITMENTS AND CONTINGENCIES 

STOCKHOLDER'S EQUITY 

Common stock, voting, no par value, 1,000 shares authorized; 

204 shares issued and outstanding 4,080 181,948 4,080 181,948 

Retained earnings 6,023,558 281,037,523 5,544,531 250,852,733 

Foreign Exchange Translation Reserve — 25,436,611 — (3,594,373) 

6,027,638 306,656,082 5,548,611 247,440,308 

10,087,571 513,205,174 11,131,612 496,414,238 

The accompanying Notes to Financial Statements are an integral part of these statements. 

STATEMENTS OF INCOME AND RETAINED EARNINGS 



$ 



` 



$ 



` 

SALES 

Revenues, net of customer returns 28,360,745 1,353,800,163 37,105,170 1,660,367,133 

Less quick pay discounts (1,408,994) (67,258,329) (1,552,876) (69,487,319) 

Net sales 26,951,751 1,286,541,834 35,552,294 1,590,879,814 

COST OF SALES 20,315,910 962,461,528 27,138,915 1,214,978,284 

6,635,841 324,080,306 8,413,379 375,901,530 

MSA SETTLEMENT CHARGES, NET 2,176,098 103,876,038 3,068,464 137,306,093 

Gross profit 4,459,743 220,204,268 5,344,915 238,595,437 

OPERATING EXPENSES 3,794,799 181,144,730 4,828,352 216,056,681 

Income (loss) from operations 

OTHER 

664,944 39,059,538 516,563 22,538,756 

Business service income — — 360,000 16,109,100 

Reserve for inventory write-off — — (74,400) (3,317,868) 

Loss on disposal of property and equipment (4,562) (217,767) (1,499) (67,077) 

Interest income 104,987 5,011,554 80,825 3,616,717 

Other income 18,703 892,788 1,960 87,705 

119,128 5,686,575 366,886 16,428,577 

Income before provision for income taxes 784,072 44,746,113 883,449 38,967,333 

PROVISION FOR INCOME TAXES 305,045 14,561,323 361,846 16,191,704 

Net income 479,027 30,184,790 521,603 22,775,629 

RETAINED EARNINGS, beginning of year 5,544,531 250,852,733 5,022,928 228,077,104 

RETAINED EARNINGS, end of year 6,023,558 281,037,523 5,544,531 250,852,733 


199

STATEMENTS OF CASH FLOWS YEAR ENDED MARCH 31, 2012 

For the year For the year For the year For the year 

ended 31st ended 31st ended 31st ended 31st 

March, 2012 March, 2012 March, 2011 March, 2011 

$ ` $ ` 

CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES 

Net income 

Adjustments to reconcile net income to net cash 

provided (used) by operating activities 

479,027 30,184,790 521,603 22,775,629 

Depreciation 7,714 368,228 11,094 496,429 

Loss on disposal of property and equipment 4,562 217,767 1,499 67,077 


(Increase) decrease in 

49,199 2,754,500 178,720 7,997,273 

Accounts receivable 143,657 4,437,170 20,238 902,514 

Accounts receivable, other (17,850) (2,684,159) (56,569) (2,522,695) 

Inventory (378,234) (28,924,920) 1,751,722 78,385,180 

Due from related parties (71,611) (3,204,684) 97,775 43,60,276 

Prepaid expenses (104,316) (7,231,375) 135,450 60,40,393 

Income taxes receivable 338,564 16,735,533 358,872 16,003,897 

Other assets 

Increase (decrease) in 

15,720 635,784 500 22,298 

Accounts payable (326,675) (10,084,290) (545,133) (24,312,932) 

Reserve for inventory write-off (74,400) (3,317,868) 74,400 3,317,868 

Accrued settlement charges (1,357,433) (42,758,601) (5,933,057) (264,614,342) 

Accrued expenses and other (54,979) (1,588,157) (37,909) (1,690,552) 

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES 

(1,347,055) (44,460,281) (3,420,795) (152,771,688) 

Payments for the purchase of property and equipment (9,928) (505,087) — — 

Net decrease in cash and cash equivalents (1,356,983) (44,965,368) (3,420,795) (152,771,688) 

CASH AND CASH EQUIVALENTS, beginning of year 8,962,492 399,682,331 12,383,287 556,009,586 

Foreign Exchange Translation Reserve — (32,213,307) — 3,555,568 

CASH AND CASH EQUIVALENTS, end of year 

SUPPLEMENTAL CASH FLOW INFORMATION 

7,605,509 386,930,270 8,962,492 399,682,331 

Cash paid during the year for Income taxes 97,476 4,959,092 183,127 8,166,549 



March 31, 2012 and 2011 

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. 

A summary of the significant accounting policies consistently applied in 

the preparation of the accompanying financial statements follows. 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

a. Basis of Accounting and Financial Statement Presentation 

The financial statements are prepared in conformity with accounting 

principles generally accepted in the United States of America (GAAP). 

b. Use of Estimates 

The preparation of financial statements requires management to make 

estimates and assumptions that affect the reported amounts of assets and 

liabilities, disclosure of contingent assets and liabilities at the date of the 

financial statements, and the reported amounts of 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 Company’s cash and cash equivalents are defined as cash and shortterm 

highly liquid investments with an original maturity of three or fewer 

months. The Company has a restricted cash deposit balance of $1,622,167 

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 and includes bonded and available 

for sale inventory. The lower of cost (first manufactured, first out) or market 

method has been used in determining the inventory value. The available 

for sale inventory includes the cost of the cigarettes plus, applicable duty, 

federal excise taxes, tobacco buyout costs, FDA User Fee, MSA, freight-in, 

storage, and other direct costs. The available for sale inventory amounts 

to approximately $313,000 and $91,000 as of March 31, 2012 and 2011, 

respectively. The bonded inventory includes cost of the cigarettes, plus 

freight-in, storage, and other direct costs. The bonded inventory amounts 

to approximately $1,078,000 and $848,000 as of March 31, 2012 and 

2011, respectively. 

200 


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 asset’s carrying 

amount over the fair value of the assets. There were no impairment losses 

deemed necessary for the years ended March 31, 2012 and 2011. 

g. Revenue Recognition/Accounts Receivable 

The Company recognises 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 management’s 

periodic review of the accounts. Management considers accounts receivable 

to be fully collectible, and, therefore, no allowance is considered necessary 

as of March 31, 2012 and 2011. 

Revenues are reflected net of customer returns. Total customer returns were 

$542,703 and $539,626 for the years ended March 31, 2012 and 2011, 

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 Company’s policy is to expense marketing and promotion costs as 

incurred. Total marketing and promotion costs, which are included in 

operating expenses, were $950,480 and $1,274,442 for the years ended 

March 31, 2012 and 2011, respectively. 

j. Income Tax 

The Company records income taxes using the asset and liability method 

whereby deferred tax assets and liabilities are determined based on the 

difference between the financial statement and tax bases of assets and 

liabilities as measured by the enacted tax rates which will be in effect when 

these differences reverse. Deferred tax expense is the result of changes in 

deferred tax assets and liabilities.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued 

When income tax returns are filed, some tax positions taken are highly 

certain to be sustained upon examination by the taxing authorities, while 

other tax positions are subject to uncertainty about the technical merits of 

the position or the amount of the position’s tax benefit that would be 

ultimately sustained. The portion of the benefits associated with tax positions 

taken that exceeds the amount measured as previously described is reflected 

as a liability for unrecognized tax benefits in the accompanying balance 

sheets and includes, where applicable, accrued interest and/or penalties 

attributable to the unrecognized tax benefits. 

The Company presently discloses or recognises income tax positions based 

on management’s 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 material tax position that 

requires an adjustment in the financial statements as of March 31, 2012. 

The Company’s tax returns are subject to examination by the respective 

taxing authorities. The Company is no longer subject to tax examination 

for the years ended March 31, 2009, and prior. 

k. Subsequent Events 

The Company has evaluated subsequent events that provide additional 

evidence about conditions that existed at the financial statement date 

through April 15, 2012, the date the financial statements were available 

to be issued. 

NOTE 3 - STOCKHOLDER’S EQUITY 

ITC Limited is the sole owner of the Company. The Company’s Certificate 

of Incorporation provides for the capital structure to consist of one thousand 

(1,000) shares of voting common stock, all of which are without par value, 

and all of which are of the same class. ITC Limited was issued 204 shares 

of voting common stock representing the capital on the books of $4,080. 

March 31, March 31, 

2012 2011 

$ $ 

Capital structure 

Common stock, no par value, 1,000 shares authorized, 

204 shares issued and outstanding 4,080 4,080 

NOTE 4 - APPAREL BUSINESS 

During fiscal year ended 2009, the Company made a foray into the apparel 

business. The Company exited the apparel business in July 2011. The 

revenues on account of this business included in the financial statements 

were $11,588 and $238,539, respectively, for the years ended March 31, 

2012 and 2011. The inventory as of March 31, 2011, was fully reserved for 

write-off. As of March 31, 2012, the inventory was fully written off since 

the Company is no longer in the apparel business. 

NOTE 5 - PROPERTY AND EQUIPMENT, NET 

Property and equipment, net, consist of the following: 

March 31, 2012 March 31, 2011 

$ ` $ ` 

Equipment and fixtures 110,045 5,598,539 100,248 4,470,560 

Leasehold improvements 13,306 676,943 19,847 885,077 

Computer software 74,082 3,768,922 74,082 3,303,687 

197,433 10,044,404 194,177 8,659,323 

Less accumulated depreciation 172,052 8,753,146 166,448 7,422,749 

25,381 1,291,258 27,729 1,236,575 

Depreciation expense for property and equipment was $7,714 and $11,094 

for the years ended March 31, 2012 and 2011, respectively. 

NOTE 6 - COMMITMENTS AND CONTINGENCIES 

a. Leases 

The Company’s main office is located in Paramus, New Jersey. It had 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, 2012 and 2011, was approximately $103,000 and $134,000, 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 $106,000 and $95,000 for the years ended March 

31, 2012 and 2011, 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, 2012 and 2011. 

The Company leases accommodations for its managers seconded from ITC 

Ltd. India to ease their transition to the United States. These amounts were 

approximately $26,400 and $24,600 for the years ended March 31, 2012 

and 2011, respectively. 

The Company leases automobiles under noncancellable operating leases 

with 36-month terms. Vehicle lease expense was $13,668 and $16,807 for 

the years ended March 31, 2012 and 2011, 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, 2012, are as follows: 

2013 $ 190,169 

2014 189,379 

2015 183,128 

2016 186,791 

2017 190,526 

Thereafter 48,183 

Total minimum payments required $ 988,176 


Total expenses under all operating leases, less sublease rentals recovered, 

is as follows: 

March 31, 2012 March 31, 2011 

$ ` $ ` 

Minimum rentals 223,177 10,653,354 246,560 11,032,944 

Less sublease rentals 106,217 5,070,268 95,048 4,253,160 

116,960 5,583,086 151,512 6,779,783 

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 7 - 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, 2012 and 2011, from ITC were 

$3,859,671 and $4,791,774, respectively. At March 31, 2011, the Company 

owed ITC $71,390. At March 31, 2012 and 2011, respectively, $1,782 and 

$1,561 is due from ITC. 

Furthermore, the Company billed approximately $360,000 to ITC for 

expenses related to business services for the year ended March 31, 2011. 

NOTE 8 - 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. 

MSA settlement charges are as follows: 

March 31, 2012 March 31, 2011 

$ ` $ ` 

Costs based on current activity, 

net of credits 2,691,752 128,490,782 4,257,259 190,501,697 

Adjustment to prior period MSA 

settlement costs based on 

actual results for calendar year end (515,654) (24,614,744) (1,188,795) (53,195,604) 

2,176,098 103,876,038 3,068,464 137,306,093 

The MSA allows the Company, following payment of assessed settlement 

charges, to separately account those amounts which it challenges. As of 

March 31, 2012, the maximum recoverable amount, which is subject to 

arbitration, is approximately $8.0 million. An arbitration panel, as provided 

under the MSA, has been constituted as of September 2010. 

Furthermore, the Company also has unapplied recalculation credits due to 

the Company of $479,025. 

NOTE 9 - 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 Company’s 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, 2012 and 2011, were 

$907,300 and $1,209,161, respectively. 

NOTE 10 - PROFIT-SHARING PENSION PLAN 

The Company offers a profit-sharing pension plan (Plan) for all eligible 

employees. Employees become eligible as long as they are twenty-one years 

of age and have twelve months of credited 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 employee’s Social Security base income. Expenses for the years ended 

March 31, 2012 and 2011, were $47,240 and $133,306, respectively. 

For the year ended March 31, 2012, the Company utilized their forfeiture 

account balance in the Plan to reduce the required case contribution made. 

The forfeiture balance utilized amounted to $62,394. 

NOTE 11 - CONCENTRATION OF CREDIT RISK 


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 Company’s 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 one customer which accounted for 

approximately 11% of total sales for the year ended March 31, 2012. As 

of March 31, 2012, this customer represented approximately 14% of total 

accounts receivable, which has been recovered before the date of this 

report. The Company had no customers that exceeded 10% of total sales 

for the year ended March 31, 2011. 

201

NOTE 12 - INCOME TAXES 

Income taxes consist of the following components: 


31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011 

$ ` $ ` 

Current income tax expense 

Federal 206,243 98,45,010 124,572 5,574,286 

States 49,603 2,367,799 58,554 2,620,145 

Total current 

Deferred income tax expense 

255,846 12,212,809 183,126 8,194,431 

Federal (42,933) (2,049,407) (148,157) (6,629,655) 

States (6,267) (299,155) (30,563) (1,367,618) 

Total deferred 

Total income tax expense 

(49,200) (2,348,562) (178,720) (7,997,273) 

Federal 249,175 11,894,369 272,729 12,203,941 

States 55,870 2,666,954 89,117 3,987,763 

305,045 14,561,323 361,846 16,191,704 

The Company’s effective income tax rate varies from the federal statutory rate primarily as the result of state taxes, net of federal effect. 

Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows: 


31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011 

$ ` $ ` 


Inventory 


27,875 1,418,141 51,938 2,316,175 

Property and Equipment (8,524) (433,659) (7,713) (343,961) 

Accounts receivable, other (62,706) (3,190,168) (84,280) (3,758,467) 

Prepaid expenses (45,899) (2,335,112) — — 

SUPPLEMENTAL INFORMATION – COST OF SALES 

(117,129) (5,958,938) (91,993) (4,102,428) 

Year ended Year ended Net Year ended Year ended Net 

31st March, 2012 31st March, 2012 Sales 31st March, 2011 31st March, 2011 Sales 

$ ` % $ ` % 

Beginning inventory 939,039 41,876,444 3.5 2,765,160 124,155,684 7.8 

Cigarette tax, duty, and harbor processing fees 15,322,735 731,430,755 56.9 18,489,982 827,380,470 52.0 

Cigarette purchases 3,859,671 184,241,395 14.3 4,644,548 207,834,234 13.1 

Tobacco buyout expense 907,300 43,309,966 3.4 1,209,161 54,107,536 3.4 

FDA 470,124 22,441,369 1.7 439,161 19,651,576 1.2 

Other expenses/purchases 2,502 119,433 0.0 241,386 10,801,541 0.7 

Storage 110,978 5,297,535 0.4 205,777 9,208,109 0.6 

Freight-in 72,506 3,461,074 0.3 114,842 5,138,950 0.3 

Customs brokerage 20,249 966,586 0.1 27,782 1,243,189 0.1 

Destruction charges 2,479 118,335 0.0 14,555 651,307 0.0 

21,707,583 1,033,262,892 80.5 28,152,354 1,260,172,596 79.1 

Ending inventory prior to reserve (1,391,673) (70,801,364) (5.2) (1,013,439) (45,194,312) (2.9) 

Provision for inventory write-off — — — 74,400 3,317,868 0.2 

20,315,910 962,461,528 75.3 27,138,915 1,214,978,284 76.3 

SUPPLEMENTAL INFORMATION – OPERATING EXPENSES 

202 


Year ended Year ended Net Year ended Year ended Net 

31st March, 2012 31st March, 2012 Sales 31st March, 2011 31st March, 2011 Sales 

$ ` % $ ` % 

Marketing and promotion 950,480 45,371,163 3.5 1,274,442 57,028,093 3 . 6 

Salaries 920,289 43,929,995 3.4 1,084,734 48,539,135 3 . 1 

Shipping and handling 535,373 25,556,030 2.0 611,980 27,384,575 1 . 7 

Professional fees 330,962 15,798,471 1.2 340,795 15,249,724 1 . 0 

Travel 161,904 7,728,487 0.6 246,736 11,040,819 0 . 7 

Fees and licenses 137,429 6,560,173 0.5 292,262 13,077,994 0 . 8 

Rent 102,325 4,884,484 0.4 133,604 5,978,445 0 . 4 

Group insurance 97,163 4,638,076 0.4 103,593 4,635,528 0 . 3 

General insurance 82,220 3,924,772 0.3 128,033 5,729,157 0 . 4 

Payroll tax 80,190 3,827,870 0.3 90,831 4,064,460 0 . 3 

Miscellaneous/other expenses 77,619 3,705,143 0.3 90,316 4,041,415 0 . 3 

Office supplies and expense 76,749 3,663,614 0.3 137,026 6,131,571 0 . 4 

Dues and subscriptions 75,369 3,597,739 0.3 55,060 2,463,797 0 . 2 

Pension 47,240 2,255,001 0.2 133,306 5,965,110 0 . 4 

Training and placement fees 45,075 2,151,655 0.2 27,250 1,219,369 0 . 1 

Auto 40,078 1,913,123 0.1 34,751 1,555,020 0 . 1 

Telephone/communication 26,620 1,270,706 0.1 32,539 1,456,039 0 . 1 

Depreciation 7,714 368,228 0.0 11,094 496,429 0 . 0 

3,794,799 181,144,730 14.1 4,828,352 216,056,681 13.6

SUBSIDIARY COMPANIES - ITC Ltd

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