NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS

I. Significant Accounting Policies:

A. Basis of Accounting:

The financial statements are brpared under the historical cost convention on an accrual basis and in accordance with generally accepted accounting principles in India (GAAP) and in compliance with the applicable accounting standards and provisions of the Companies Act, 2013 (here after referred to 'the Act').

The brparation of financial statements in conformity with GAAP requires that the management of the Corporation makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Examples of such estimates include the useful lives of fixed assets, provision for doubtful debts / advances, future obligations in respect of retirement benefit plans, etc. Difference between actual results and estimates are recognised in the period in which the results are known / materialise.

B. Current-non-current classification:

The Schedule III to the Act requires assets and liabilities to be classified either Current or Non-current.

a. An asset shall be classified as current when it satisfies any of the following criteria:

i) it is expected to be realized in, or is intended for sale or consumption in, the company's normal operating cycle;

ii) it is held primarily for the purpose of being traded;

iii) it is expected to be realized within twelve months after the reporting date; or

iv) it is Cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

Current assets include the current portion of non-current financial assets.

b. All assets other than current assets shall be classified as non-current.

c. A liability shall be classified as current when it satisfies any of the following criteria:

i) it is expected to be settled in the company's normal operating cycle;

ii) it is held primarily for the purpose of being traded;

iii) it is due to be settled within twelve months after the reporting date; or

iv) the company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Current liabilities include the current portion of non-current financial liabilities.

d. All liabilities other than current liabilities shall be classified as non-current.

C. Method of Debrciation of Tangible Fixed Assets:

Debrciation in respect of all tangible assets is provided on straight line method over the useful lives of assets based on the evaluation. Debrciation on such assets which are purchased / sold during the period is proportionately charged and for the assets acquired prior to 1 st April, 2014, the carrying amount as on 1st April, 2014 is debrciated over the remaining useful life based on an evaluation. The useful life of fixed assets is as follows:

D. Valuation of Tangible Fixed Assets:

i) Fixed Assets are valued at cost of acquisition or construction. They are stated at historical costs or other amounts substituted for historical costs (vide note (ii) below). In respect of new projects br-operative expenses including financing costs attributable to the acquisition / construction of fixed assets (net of income during trial run) upto the date of commencement of commercial production is included in cost.

ii) The Land and Building of the Auto electric component division as on 1 st April, 2006 and the Plant and Machinery of South India Branches (Plantations) as on 30th September, 1985 other than additions during that year were revalued on the basis of the then brsent worth as per valuation made by the external valuers and are stated at revalued amounts. The resultant increase was credited to Revaluation Reserve on the respective dates.

iii) Expenditure in respect of new crops including cost of development is capitalised until the year of maturity of the Plantation.

iv) Fixed Assets held by non-integral foreign branches are stated at cost by converting at the closing rate of exchange at the balance sheet date.

E. Intangible Assets:

Intangible assets are recognised as per the criteria specified in Accounting Standard (AS 26) "Intangible Assets" as notified under section 133 of the Act read with Companies (Accounts) Rules, 2014.

Technical know-how fees for new product development is amortised over the period not exceeding five years, of agreement with supplier of technology.

Goodwill rebrsents the excess of costs of business acquired over the fair market value of net tangible and identifiable intangible assets.

Amortisation in respect of all the intangible assets is provided on straight line method over the useful lives of assets based on the evaluation and for the assets acquired prior to 1st April, 2014, the carrying amount as on 1st April, 2014 is amortised over the remaining useful life based on an evaluation. The useful life of such intangible assets is as follows:

The Company believes the useful lives as given above best rebrsent the useful life of these assets based on internal assessment where necessary, which is different from the useful lives as brscribed under Part C of Schedule II of the Companies Act, 2013.

F. Impairment of Assets:

Management evaluates at regular intervals, using external and internal sources whether there is an impairment of any asset. Impairment occurs where the carrying value exceeds the brsent value of future cash flows expected to arise from the continuing use of the asset and its net realisable value on eventual disposal. Any loss on account of impairment is expensed as the excess of the carrying amount over the higher of the asset's net realisable value or brsent value as determined.

G. Valuation of Investments:

i) Long Term Investments are shown at cost. However, when there is a decline, other than temporary, in the value of a long term investment, the carrying amount is reduced to recognise the decline.

ii) Current Investments are valued at cost or fair / market value whichever is lower.

iii) Long Term Investments include investments in shares of companies registered outside India. They are stated at cost by converting at the rate of exchange brvalent at the time of acquisition thereof, except in case of investment by non-integral foreign branches. Investments made by such foreign branches, are stated at cost by converting at the closing rate of exchange at the balance sheet date.

H. Employee Benefits:

a) Short term employee benefits:

Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related service is rendered.

b) Post-employment benefits:

i) Provident and Family Pension Fund

The eligible employees of the Corporation are entitled to receive post employment benefits in respect of provident and family pension fund, in which the Corporation make monthly contributions at a specified percentage of the employees' eligible salary (currently 12% of employees' eligible salary). Employees contribute a minimum of 12%, the excess being voluntary contribution.

The contributions are made to the provident fund managed by the trust set up by the Corporation or to the Regional Provident Fund Commissioner (RPFC) which are charged to the Statement of Profit and Loss as incurred. The schemes are considered as defined contribution plan.

ii) Superannuation

The eligible employees of the Corporation are entitled to receive post employment benefits in respect of superannuation fund in which the Corporation makes annual contribution at a specified percentage of the employees' eligible salary. The contributions are made to the ICICI Prudential Life Insurance Co. Ltd. Superannuation is classified as Defined Contribution Plan as the Corporation has no further obligations beyond making the contribution. The Corporation's contribution to Defined Contribution Plan is charged to statement of profit and loss as incurred.

iii) Gratuity

The Corporation has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees.

The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of f ive years of service. The Corporation accounts for gratuity benefits payable in future based on an independent external actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

c) Other Long-Term Employee Benefits - Compensated Absences:

The Corporation provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The Corporation makes provision for compensated absences based on an independent actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Statement of Profit and Loss.

I. Provisions, Contingent Liabilities And Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.

J. Valuation of Inventories:

i) Stores and spare parts are valued at lower of cost or net realisable value. Cost is calculated on weighted average basis.

ii) Raw materials are valued at lower of cost or net realisable value. The cost includes purchase price as well as incidental expenses and is calculated on weighted average basis.

iii) Tea stock is valued at cost or net realizable value whichever is lower and inclusive of cess on excise duty. Timber, coffee, pepper and cardamom in stock are valued at since realized / contracted rates or realizable value.

iv) Work-in-progress is valued at cost or net realisable value whichever is lower. Cost is arrived on the basis of absorption costing.

v) Manufactured finished goods of all divisions are valued at cost or net realisable value whichever is lower. Cost is determined on the basis of absorption costing including excise duty paid / provided on packed finished goods.

vi) Traded Finished goods of all divisions are valued at cost or net realisable value whichever is lower.

vii) Real Estate under development comprises of Freehold / Leasehold Land and Buildings at cost, converted from Fixed Assets into Stock-in -Trade and expenses related / attributable to the development / construction of the said properties. The same is valued at lower of cost or net realizable value.

K. Foreign Currency Transactions:

i) Foreign Branches: (Non-integral operations)

a) All assets and liabilities, both monetary and non-monetary are translated at the closing rate;

b) Income and expense items are translated at the average rate brvailing during the year; and

c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment in the branch.

ii) Other Transactions:

a) 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.

b) 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.

c) Exchange Differences:

The brmium or discount arising at the inception of forward exchange contracts is amortised as expenses or income over the life of the respective contracts. The difference between year-end conversion rate and rate on the date of contract is recognized as exchange difference. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

L. Export Benefits / Incentives:

Export benefits / incentives in respect of import duty benefits under DEPB scheme or Duty draw back scheme are accounted on accrual basis on the basis of exports made under the said schemes.

M. Revenue Recognition:

i) Revenue in respect of insurance / other claims, interest etc., is recognised only when it is reasonably certain that the ultimate collection will be made.

ii) Sale of products is recognised when the risks and rewards of ownership are passed on to the customers and no significant uncertainty as to its measurability and collectability exists.

iii) Sale of timber is accounted based on sale agreement/sale in auction.

iv) Sale of pepper is accounted based on confirmed contract of sale.

v) Dividend income is accounted when the right to receive payment is established and known. Interest income is recognised on the time proportion basis.

N. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related / attributed to the acquisition / construction of qualifying fixed assets are capitalised up to the date when such assets are ready for its intended use and all other borrowing costs are recognised as an expense in the period in which they are incurred.

O. Segment Accounting Policies:

a) Segment assets and liabilities:

All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment assets and liabilities do not include inter-corporate deposits, share capital, reserves and surplus, borrowings, and income tax (both current and deferred).

b) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to segment. It does not include interest income on inter-corporate deposits, interest expense and income tax.

P. Financial Derivatives and commodity hedging transactions:

Outstanding derivative contracts are not marked to market at each balance sheet date. The Corporation assesses the foreseeable losses in respect of such contracts and provision is made for such estimated losses, wherever necessary. Realized gains and losses on such contracts and interest costs in foreign currencies are accounted for at the time of settlement of the underlying transactions.

Q. Taxes on Income:

Income Taxes are accounted for in accordance with Accounting Standard (AS 22) - "Accounting for Taxes on Income", as notified under Section 133 of the Act read with read with Companies (Accounts) Rules, 2014. Income Tax comprises both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using the substantively enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed debrciation under tax laws, are recognised, only if there is virtual certainty of its realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of its realisation.

R. Earnings per Share:

The basic and diluted earnings per share (EPS) is computed by dividing Net Profit after tax for the year by weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date.

S. Leases:

i) Lease transactions entered into prior to 1st April, 2002:

a) Lease rentals in respect of assets acquired under lease are charged to Statement of Profit & Loss.

ii) Lease transactions entered into on or after 1st April, 2002:

a) Assets acquired under lease where the Corporation has substantially all the risks and rewards incidental to ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value or the brsent value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

b) Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors, are classified as operating leases. Lease rentals are charged to the Statement of Profit & Loss on accrual basis.

2 Managerial Remuneration :

a) The Corporation, during the financial year 2014-15 had paid remuneration to one of its Managing Directors, Mr. Ness Wadia Rs.289.98 Lakhs (excluding retirals of Rs. 58.75 Lakhs) which was in excess of limits specified in Schedule V of the Companies Act, 2013. The Central Government vide its letter dated 6th November, 2015 had approved increased remuneration payable to him for the financial year 2014­15 upto Rs.227.92 lakhs. The Corporation vide its letter dated 4th December, 2015 has rebrsented to the Central Government for payment of remuneration of Rs.298.98 Lakhs; response to which is awaited. Pending disposal of the Corporation's rebrsentation, the differential amount of Rs.62.06 lakhs has been shown as recoverable from him.

b) Although there has been no increase in remuneration paid to Mr. Ness Wadia for FY 2015-2016, in view of inadequacy of profits, the Corporation has made an application to the Central Government for approval to the payment of the same remuneration of Rs. 289.98 Lakhs (excluding retirals of Rs. 58.75 Lakhs) to Mr. Ness Wadia as it is in excess of the limits brscribed by Schedule V of the Companies Act, 2013.

The application has been made to the Central Government as Mr. Ness Wadia holds direct and indirect interest in the capital of the Corporation, although the condition of holding professional qualification is satisfied under the General Circular 07/2015 dated 10th April, 2015 issued by Ministry of Corporate Affairs.

3 Export benefits / Incentives are accounted on accrual basis. Accordingly, on the Balance Sheet date, in respect of Exports made, estimated benefit of Rs. 171.48 Lakhs (Previous year Rs. 345.03Lakhs) has been taken into account for the year as incentive on accrual basis under the pass book scheme. Subsequent to that, the Corporation has utilized the said entitlement of Rs. 124.61 Lakhs (Previous year Rs. 302.87 Lakhs

4 In the earlier years the Corporation took up development of Real Estate in the vacant properties at Pune, Coimbatore and Mumbai; and converted these assets as stock in trade at cost. Cost incurred during the year which are attributable and are allocated to development of real estate activities is in accordance with the Guidance note on Real Estate Transactions (Revised 2012) issued by Institute of Chartered Accountants of India.

5 Figures in respect of current year and those for the Previous Year have been rounded off to the nearest thousand and are exbrssed in terms of decimals of Lakhs.

As per our attached report of even date.

For B S R & Co.LLP

Chartered Accountants

Firm's Registration No. 101248W / W-100022

For and on behalf of the Board of Directors

The Bombay Burmah Trading Corporation, Limited

CIN :L99999MH1863PLC000002

Vijay Bhatt

Partner

Membership No. 036647

Ness Wadia

Managing Director DIN :00036049

N H Datanwala

Vice President

Corporate and Company Secretary

Dr. (Mrs) Sheela Bhide

Director

DIN :01843547

Jeh Wadia

Director

DIN :00088831

Nusli N Wadia

Chairman DIN :00015731

A K Hirjee

Vice Chairman DIN :00044765

Amit Chhabra

Chief Financial Officer

M L Apte

Director DIN :00003656

Place : Mumbai,

Dated : 27th May, 2016