1.Corporate information ADF Foods Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and National Stock Exchange in India. The Company is engaged in the manufacture and selling of food products like pickles, chutneys, ready to eat items, paste and sauces, frozen foods, spices etc. The Company caters mainly to International markets and domestic market. 2.Significant accounting policies a.Basis of brparation of financial statements: The financial statements of the Company have been brpared on accrual basis under the historical cost convention and ongoing concern basis in accordance with the Generally Accepted Accounting Principles in India ('Indian GAAP') to comply with the Accounting Standards specified under section 133 of The Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of The Companies Act, 2013 ('the Act') / The Companies Act, 1956, as applicable. Current / non-current classification 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 Schedule III to the Companies Act, 2013. An asset is classified as current when it satisfies any of the following criteria; (a)it is expected to be realized in, or is intended for sale or consumption in, the entity's normal operating cycle; (b)it is held primarily for the purpose of being traded; (c)it is expected to be realized within twelve months after the balance sheet date; or (d)it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the balance sheet date. All other assets are classified as non-current. A liability is classified as current when it satisfies any of the following criteria; (a)it is expected to be settled in, the entity's normal operating cycle; (b)it is held primarily for the purpose of being traded; (c)it is due to be settled within twelve months after the balance sheet date; or (d)the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. All other liabilities are classified as non-current. 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 above which are in accordance with the Schedule III to the Act. Based on the nature of services 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 and non-current classification of assets and liabilities. b.Use of estimates The brparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities, revenues and expenses and disclosures relating to contingent liabilities as at the date of financial statements. Changes in estimates are recognized in the year these arise. c.Fixed Assets i)Tangible assets Tangible fixed assets are carried at cost less accumulated debrciation and impairment if any. Cost comprises the purchase price or construction cost including any attributable cost of bringing the asset to its working condition for its intended use. ii)Intangible assets Intangible fixed assets are carried at cost less accumulated amortization and impairment if any. Cost comprises the purchase consideration paid for brands and goodwill and any attributable cost of bringing internally generated asset to its working condition for its intended use. iii)Capital work in progress Capital work in progress includes the acquisition/commissioning cost of assets under expansion/acquisition and pending commissioning. Expenditure of revenue nature related to such acquisition/expansion is also treated as capital work in progress and capitalized along with the asset on completion of the expansion project or otherwise on commencement of commercial use of the asset. d. Debrciation i) Tangible assets Debrciation has been provided under the straight-line method on all Fixed Assets at the rates specified as per Schedule II to the Companies Act, 2013 except in case of carboys and pallets where a lower rate of debrciation i.e. five years under straight line method is applied based on technical advice obtained by the company. Debrciation on additions to assets or where any asset has been sold or discarded, is calculated on a pro-rata basis from the date of such addition or up to the date of such sale or discard as the case may be. ii)Intangible assets Intangible assets are amortized over a period of 5 years in the case of Goodwill and over a period of 10 years in the case of Brands purchased / acquired. iii)Leasehold land Cost of leasehold land is amortized over the balance period of the lease. iv)Impairment of Assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the balance sheet date there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciable historical cost. e. Valuation of stock i) In determining cost of raw materials, packing materials, traded items, semi-finished goods, finished goods, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their brsent location and condition. Damaged, unserviceable and inert stocks are suitably written down. ii) Traded goods and finished goods are valued at cost or net realizable value whichever is lower. Cost of finished goods and semi-finished goods includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their brsent location. f. Employee benefits i) Short Term Employee Benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and they are recognised in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid. ii)Post-employment benefits (a)Defined contribution plans Defined contribution plans are Employee Provident Fund scheme and Employee State Insurance scheme for eligible employees. The Company's contribution to defined contribution plans is recognised in the Statement of Profit and Loss in the financial year to which they relate. (b)Defined benefit plans (i)Compensated absences Accumulated leave, which is expected to be utilized within the next l2 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss and are not deferred. (ii)Gratuity scheme The Company operates defined benefit plan for its employees, viz., gratuity. The costs of providing benefit under these plans are determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they occur in the Statement of Profit and Loss. g.Foreign Currency transactions Transactions in foreign currencies are recorded at the exchange rate brvailing on the date of transaction. Exchange differences arising on foreign exchange transaction settled during the year are recognized in Statement of Profit and Loss of the year. Monetary assets and liabilities denominated in foreign currencies which are outstanding as at the year-end are translated at the closing exchange rate and the resultant exchange differences are recognized in the Statement of Profit and Loss. Forward contracts, other than those entered to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard 11 ["the effect of changes in foreign exchange rates']. Exchange differences arising on such contracts are recognized in the period in which they arise. The brmium / discount on a foreign currency forward contract is accounted as expense / income over the period of the contract. Gains and losses arising on account of roll over / cancellation of forward contracts are recognized as income / expenses of the period in which such rollover / cancellation takes place. The Company has adopted Accounting Standard 30, Financial Instruments; Recognition and Measurement (AS 30) issued by ICAI to the extent the adoption of AS 30 does not conflict with existing Accounting Standards brscribed by Companies (Accounting Standards) Rules, 2006 and other authoritative pronouncements. Accordingly, the resultant gains or losses or fair valuation / settlement of the derivative contracts covered under Accounting Standard (AS) 30 ["Financial instruments; Recognition and Measurement"] are recognized in the Statement of Profit and Loss or balance sheet as the case may be after applying the test of hedge effectiveness. Where the hedge is effective, the gains or losses are recognized in the "Hedging Reserve" which forms part of "Reserves and Surplus" in the Balance Sheet, while the same is recognized in the Statement of Profit and Loss where the hedge is ineffective. The amount recognized in the "Hedging Reserve" is transferred to the Statement of Profit and Loss in the period in which the underlying Hedge item affects the Statement of Profit and Loss. h.Revenue recognition Revenue from sale of goods is recognized on transfer of all significant risk and rewards of ownership to the buyer on dispatch of goods and is net of sales return, taxes and excise duty. Scrap sales are accounted upon sales. Dividend income is recognized when the right to receive payment is established. Interest, export benefits and other income are recognized on accrual basis. i. Research and development Research and Development costs (other than the cost of fixed assets acquired) are charged as expenses in the year in which these are incurred. j. Provisions and contingencies The Company creates a provision when there exist a brsent obligation as a result of past events and that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or brsent obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made. k. Investments Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements 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 recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss. l. Lease accounting i) Where the Company is lessee Leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and brsent value of 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 recognized as finance costs in the Statement of Profit and Loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized. A leased asset is debrciated on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule II to the Companies Act, 2013, whichever is lower. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalized asset is debrciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life envisaged in Schedule II to the Companies Act, 2013. Where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, such leases are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. ii)Where the Company is the lessor Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including debrciation, are recognized as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Statement of Profit and Loss. m. Borrowing costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. 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. Government grants and subsidies Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with the conditions attached to them, and (ii) the grant/subsidy will be received. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. Taxation Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of the 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 recognized using the tax rates and tax loss that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to that extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date to reassess realization. P. Contingent liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Q. Earnings per share Basic earnings per share is calculated by dividing the net profit for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods brsented is adjusted for events, such as bonus shares, other than conversion and potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity share holders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares. 3. Share warrants / share capital Out of the total amount of f 4,004.35 lacs received from the brferential allotment of the Shares and Warrants issued from time to time, the Company has utilized these funds in the manner summarized below: 1.The Company is engaged mainly in the business of manufacturing and exporting food products like pickles, chutneys, ready to eat items, paste and sauces, frozen foods, spices, etc. local and overseas, which is the only business segment of the Company. The local turnover being less than 10% of the total turnover of the Company, separate geographical segment information has not been given in the financial statements. Hence there are no separate reportable segments, as required by the Accounting Standard 17 on "Segment Reporting" notified under the Companies (Accounting Standards) Rules, 2006 which continue to apply under Section 133 of The Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs. 2.The Company held majority share holding in Power Brands (Foods) Private Limited ('PBFPL'). It brsently holds 2,08,85,992 fully paid Equity Shares of Rs. 10/- each (including 20,75,992 Equity Shares acquired at Rs. 330.08 lacs in Financial Year 2012-13). PBFPL is brsently under voluntary liquidation process. Pursuant to a special resolution passed on November 5, 2012 by its members, PBFPL went into the members' voluntary liquidation. In the course of liquidation process, the voluntary liquidator, with the prior approval of the members vide their special resolution dated March 8, 2013, distributed PBFPL's intangible asset - Ashoka brand and part of cash and bank balance to its Shareholders in proportion to their respective shareholding in PBFPL while retaining certain other fixed and current assets to meet its contingent and other liabilities. By virtue of the above distribution, the Company received Ashoka brand in the financial year 2012-13 (valued at Rs. 2,935.99 lacs by an independent valuer) in lieu of its investment in PBFPL's equity shares of Rs. 2,211.08 lacs. Accordingly, the Company capitalised the said brand in its books at Rs. 2,935.99 lacs in the said financial year after adjusting the same against the investment value of Rs. 2,211.08 lacs and carried the balance of Rs. 724.91 lacs to the credit of the Statement of Profit and Loss as an exceptional item in that year. During the current Financial Year, the voluntary liquidator, with the prior approval of the members vide their special resolution dated 10th November 2014, distributed PBFPL's immovable property situated at Sewree, Mumbai and part of cash and bank balance to its Shareholders in proportion to their respective share holding in PBFPL while retaining certain other current assets to meet with its contingent and other liabilities. The excess value of assets so received over the investment value in Equity Shares of PBFPL has been accounted for in the Company's Statement of Profit & Loss under the head exceptional item. Consequently, the investment in Equity Shares of PBFPL stand fully realised. However, pending completion of liquidation process, the Company has not surrendered the said shares to the Voluntary liquidator and they have been shown under the head "Investment" at nil value. 3.The Corresponding figures and details pertaining to the Previous Year have been traced from the Financial statements for the year ended March 31, 2014 audited solely by one of the current joint auditors vide their report dated May 28, 2014. 4.Previous Year's figures have been regrouped / restated wherever necessary to conform to current year's classification. 5.Figures have been rounded off to the nearest lacs. As per our report of even date For D.P. Ghevaria & Co. Chartered Accountants Firm's Registration Number I03I76W D.P. Ghevaria Proprietor, Membership Number 032431 For and on behalf of the Board Ashok H. Thakkar Chairman, DIN: 00087465 Bimal R. Thakkar Managing Director & C.E.O., DIN: 00087404 For Kalyaniwalla & Mistry Chartered Accountants Firm Registration Number I04607W Farhad M. Bhesania Partner, Membership Number I27355 Bhavesh R. Thakkar Executive Director & C.F.O. DIN: 00939805 Shalaka Ovalekar Company Secretary Place: Mumbai Date: 28th May 2015 |