Company Background

Barbeque-Nation Hospitality Limited (“The Company”) was incorporated on 13th October 2006 under the Companies Act, 1956. The Company is primarily engaged in the business of operating casual dining restaurant chain in India.

1 Significant Accounting Policies

1.1 The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (Accounting Standards) Rules, 2006 (as amended) (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Companies Act, as applicable 1956. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year

1.2 Use of estimates

The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Revenue recognition

Revenue from sale of food and beverages is recognized when it is earned and no uncertainity exists as to its realization or collection. Sales are net of Sales tax, Service tax and other Taxes. Sales tax under the composition scheme is also excluded.

Revenue from displays and sponsorships are recognized based on the period for which the products or the
sponsor’s advertisements are promoted/displayed.

In respect of gift vouchers, the income is recognised when the vouchers are redeemed by the customers or on completion of the validity period.

1.4 Other income

Dividend is recognised when the right to receive the same is established. Interest income is accounted on accrual basis

1.5 Fixed assets

Fixed assets are carried at cost less accumulated debrciation / amortisation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.

Projects under which tangible fixed assets are not yet ready for their intended use are carried as Capital Work in Progress, comprising direct costs, related incidental expenses and attributable interest.


Subsequent expenditure on fixed assets after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance.

Fixed assets acquired and put to use for project purpose are capitalised and debrciation thereon is included in the project cost till the project is ready for its intended use.

Intangible assets are stated at their cost of acquisition, less accumulated amortization and impairment losses. An intangible asset is recognized, where it is probable that the future economic benefits attributable to the asset will flow to the enterprise and where its cost can be reliably measured. The debrciable amount of intangible assets is allocated over the best estimate of its useful life on a straight-line basis.

The Company capitalizes software costs where it is reasonably estimated that the software has an enduring useful life.

1.6 Debrciation and amortisation

Debrciation is charged on fixed assets, except leasehold improvements, as per the straight-line method at the rates and in the manner brscribed under Schedule XIV to the Companies Act, 1956.

Leasehold improvements are debrciated over the term of the respective leases.

Intangible assets are amortised over their estimated useful lives as follows:
a) Liquor licenses with perpetual term purchased for restaurant chain business are debrciated over the lease term of the respective restaurants.
b) Goodwill on purchase of restaurants from the Holding Company is amortised over ten Years
c) Software is debrciated over the management’s estimate of its useful life of five years.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.


1.7 Inventories

Inventories are valued at the lower of cost on FIFO basis and net realizable value, after providing for obsolescence and damage.

Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

1.8 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.9 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.




1.10 Foreign currency transactions

Foreign currency transactions are accounted at the rate brvailing on the date of transaction. Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost. Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

Exchange difference arising due to repayment or restatement of liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed assets.

1.11 Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

1.12 Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

1.13 Employee benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences.

Defined contribution plans:

The Company's contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.


Defined benefit plans:

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. Actuarial gains/ losses are taken to Statement of Profit and Loss .

Short term employee benefits:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service.

Long term employee 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 service are recognised as a liability at the brsent value of the defined benefit obligation as at the balance sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.


1.14 Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset are is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

1.15 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.

1.16 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

1.17 Earnings per share (EPS)

Basic EPS is computed by dividing the profit / (loss) attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the profit / (loss) attributable to equity shareholders by the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares outstanding during the year.


1.18 Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance sheet date for their realisability.


1.19 Impairment of assets

The carrying values of assets at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use

1.20 Provisions and contingencies

A provision is recognized when the Company has a brsent 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 (excluding retirement benefits) are not discounted to their brsent value and are determined based on the 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. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

1.21 Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no reasonable uncertainty in availing / utilising the credits.

1.22 Operating cycle

Based on the nature of activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

Barbeque-Nation Hospitality Limited
Notes forming part of the financial statements

25 Employee benefit plans
25.1 Defined contribution plans
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.1,70,84,253/- (Year ended 31 March, 2013 Rs.1,07,02,200/-) for Provident Fund contributions and Rs. 92,19,489/- (Year ended 31 March, 2013 Rs.51,16,625/-) for Employee State Insurance scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
25.2 Defined benefit plans
The Company offers the following employee benefit schemes to its employees:
25.2a Gratuity (included as part of gratuity expenses in Note 20 employee benefits expense)
The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:
(Rs. in Lakhs)
Particulars Year ended March 31, 2014 Year ended March 31, 2013
Components of employer's expense
Current service cost 35.19 19.50
Interest cost 3.74 2.24
Expected return on plan assets (1.15) (1.00)
Actuarial losses/(gains) (2.51) (3.07)
Total expense recognised in the Statement of Profit and Loss 35.27 17.67

Actual contribution and benefit payments for the year
Actual benefit payments - -
Actual contributions - -

Net asset / (liability) recognised in the Balance Sheet
Present value of defined benefit obligation 83.16 46.74
Fair value of plan assets (13.96) (12.75)
Net asset / (liability) recognised in the Balance Sheet 69.20 33.99

Change in defined benefit obligations (DBO) during the year
Present value of DBO at beginning of the year 46.74 28.01
Current service cost 35.19 19.50
Interest cost 3.74 2.24
Actuarial (gains) / losses (2.51) (3.01)
Benefits paid - -
Present value of DBO at the end of the year 83.16 46.74

Change in fair value of assets during the year
Plan assets at beginning of the year 12.81 11.75
Expected return on plan assets 1.15 1.00
Actual company contributions - -
Actuarial gain / (loss) - -
Benefits paid - -
Plan assets at the end of the year 13.96 12.75

Composition of the plan assets is as follows:

Category of Assets at the end of the year
Insurer Managed Funds 13.96 12.75
Others Nil Nil
Total 13.96 12.75

Actuarial assumptions
Discount rate 8.75% 8%
Expected return on plan assets 9% 9%
Salary escalation 10% 5%
Mortality tables IALM 2006-08 Ultimate 60 IALM 2006-08 Ultimate 60
Estimate of amount of contribution in the immediate next year 76,293 41,538

"The expected rate of return on plan assets is determined after considering several applicable factors such as the composition of the plan assets, investment strategy, market scenario, etc.. In order to protect the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.
The discount rate is based on the brvailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations"
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.

Experience Adjustments:
Rs. in lakhs
2013-14
Gratuity:
Present value of DBO 83.16
Fair value of plan assets 13.96
Funded status [surplus / (deficit)] 69.19
Experience gain / (loss) adjustments on plan liabilities 0.06
Experience gain / (loss) adjustments on plan assets 8.28

The details of experience adjustments arising on account of plan assets and liabilities for the years 2009-2013 as required by Accounting Standard (AS)-15 "Employee Benefits" are not available in valuation report.

25.2b "For the year ended
31 March, 2014"
Actuarial assumptions for long-term compensated absences
Discount rate 8.50%
Expected return on plan assets Nil
Salary escalation 10%
Attrition 40%

The discount rate is based on the brvailing market yields of Government of India securities as at the balance sheet date for the estimated term of the obligations.
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.