Itc Subsidiaries 2011 Complete

SUBSIDIARY COMPANIES
Russell Credit Limited Greenacre Holdings Limited Wimco Limited Prag Agro Farm Limited Pavan Poplar Limited Technico Pty Limited Technico Technologies Inc. Technico Agri Sciences Limited Technico Asia Holdings Pty Limited Technico Horticultural (Kunming) Company Limited Srinivasa Resorts Limited Fortune Park Hotels Limited Bay Islands Hotels Limited ITC Infotech India Limited ITC Infotech Limited ITC Infotech (USA), Inc. Pyxis Solutions, LLC. USA Wills Corporation Limited Gold Flake Corporation Limited Landbase India Limited BFIL Finance Limited MRR Trading & Investment Company Limited Surya Nepal Private Limited King Maker Marketing, Inc. 3 16 23 40 47 54 65 69 81 86 94 102 112 118 129 136 142 146 154 162 172 180 184 196
RUSSELL CREDIT LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2011 1. Your Directors hereby submit their Report and Accounts for the financial year ended on 31st March, 2011. COMPANY PERFORMANCE The overall performance of your Company has been satisfactory despite volatility in the financial markets. The financial results of your Company, summarised, are as under: For the year ended 31st March, 2011 (`) a. Profit Before Taxation Less : Provision for Taxation b. c. d. e. Profit After Taxation Add : Profit brought forward from previous years Surplus available for Appropriation Less : Transferred to Special Reserve under Section 45-IC of the Reserve Bank of India Act, 1934 Balance carried forward to the following year 22,59,80,993 2,62,66,898 19,97,14,095 56,05,63,702 76,02,77,797 For the year ended 31st March, 2010 (`) 49,00,38,941 7,07,64,762 41,92,74,179 22,51,44,359 64,44,18,538 7. 6. INVESTMENT IN VST INDUSTRIES LIMITED 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 Companys Counter Offer to the shareholders of VST Industries Limited, 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, while refusing to grant such an injunction, instructed that the acquisition of shares pursuant to the Counter Offer by the Company and the other Acquirer would be subject to the final Order of the High Court, which is still awaited. 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. 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. 8. 72,03,34,978 56,05,63,702 SUBSIDIARIES Particulars as required under Section 212 of the Companies Act, 1956, in respect of your Companys subsidiaries namely, Greenacre Holdings Limited, Wimco Limited, Pavan Poplar Limited, Prag Agro Farm Limited, Technico Pty Limited - Australia, Technico Asia Holdings Pty Limited Australia, Technico Technologies Inc.- Canada, Technico Horticultural (Kunming) Co. Limited - China and Technico Agri Sciences Limited are attached to the Accounts of the Company. Technico ISC Pty Limited - Australia, an erstwhile subsidiary of the Company, was deregistered with the Australian Securities & Investments Commission on 3rd November, 2010 and consequently ceased to exist. During the year, your Company subscribed to 50,00,000 Zero Coupon Redeemable Preference Shares of ` 100/- each, aggregating ` 50 crores, of Wimco Limited, a subsidiary company, redeemable on or before 15th September, 2015 at a premium of 6% per annum. Further the redemption date of 30,00,000 5% Cumulative Redeemable Preference Shares of ` 100/- each, aggregating ` 30 crores, held by your Company in Wimco Limited was extended by one year upto 15th March, 2012. Your Company also agreed that the 5% dividend for the year 2010-11, aggregating ` 2,75,000/-, on the outstanding 55,00,000 Preference Shares held by the Company in Wimco Limited be kept in abeyance. 9. 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. 10. AUDITORS The Companys 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. 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 Marketing Research Expenses was ` 1,11,487/- (previous year ` 9,74,036/-).
2.
3,99,42,819
8,38,54,836
f.
3.
DIRECTORS Mr. K. Vaidyanath, consequent to his retirement from the services of ITC Limited, the Holding Company, stepped down as the Chairman and Director of your Company with effect from close of work on 2nd January, 2011. Your Directors would like to place on record their sincere appreciation for the contribution made by Mr. Vaidyanath during his tenure with the Company. Mr. R. Tandon was appointed as the Chairman of the Board of Directors of your Company with effect from 3rd January, 2011. In accordance with the provisions of Article 143 of the Articles of Association of the Company, Mr. P. Banerjea 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.
RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THE COMPANIES ACT, 1956 The Board of Directors of your Company re-appointed Mr. Sharad Jain as Manager of the Company for a period of two years with effect from 1st July, 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 General Meeting. Appropriate resolution seeking your approval for re-appointment of Mr. Jain as Manager is appearing in the Notice convening the ensuing Annual General Meeting of the Company.
5.
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; 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;
ii)
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.
5th May, 2011 Registered Office: Virginia House 37, J. L. Nehru Road Kolkata 700 071
On behalf of the Board
R. Tandon S. Dutta
Director Director

ANNEXURE TO THE REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2011 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/ (Years) Nature of Duties
Gross Remuneration
Net Qualifications Remuneration
Experience (Years)
Date of Commencement of Employment
Previous Employment/ Position Held
(`) 1 Sachidanand Madan

Notes :
(`) 5 38,97,050 6 B.Com (Hons.), ACA and ACS 7 29 8 01.09.2007 9 COO, Technico Pty Ltd. Australia
2 52
3 Services on loan to subsidiary company
4 83,49,620
Remuneration includes salary, performance bonus, allowances & other benefits and taxable value of 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) employees 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.
5th May, 2011 Registered Office: Virginia House 37, J. L. Nehru Road Kolkata 700 071
R. Tandon S. Dutta
Director Director
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, 2011, the Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government 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. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows : (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 it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; Kolkata 5th May, 2011 For A. F. Ferguson & Co. Chartered Accountants (Registration No. 112066W) R. A. Banga Partner (Membership No. 037915) (d) in our opinion, the Balance Sheet, the Profit and Loss Account 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, 2011;
2.
(ii) in the case of the Profit and Loss Account, 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, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
3.
4.

ANNEXURE TO THE AUDITORS REPORT [Referred to in paragraph 3 of our report of even date] Having regard to the nature of the Companys business/activities clauses 4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xviii), (xix) and (xx) of CARO are not applicable. (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) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (ii) In our opinion and according to the information and explanations given to us, having regard to the 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 purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (iii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (iv) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Income-tax, Sales Tax, Service Tax, Custom Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable. Kolkata 5th May, 2011
Tamil Nadu General Sales Tax Act & Central Sales Tax Act Tamil Nadu General Sales Tax Act & Central Sales Tax Act Tamil Nadu General Sales Tax Act & Central Sales Tax Act The Central Sales Tax Act
(c) Details of dues which have not been deposited on 31st March, 2011 on account of dispute are given below:
Name of the statute Nature of Forum where Period to which the dues pending the amount relates Sales Tax Appellate Assistant Commissioner Commercial Tax Officer 2003-04 Amount (`) 3,96,900*
Sales Tax
2004-05
19,24,395*
Sales Tax
Commercial Tax Officer
2005-06
24,24,648*
Sales Tax Directorate of Commercial Taxes
2005-06
10,53,273
*Of the above, ` 47,45,943 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, except to the extent of the exemption granted under Section 49 of the Companies Act, 1956. (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 or on the Company has been noticed or reported during the year. For A. F. Ferguson & Co Chartered Accountants (Registration No. 112066W) R. A. Banga Partner (Membership No. 037915)

BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule (`) I. SOURCES OF FUNDS 1. Shareholders' Funds a) Capital b) Reserves and Surplus 2. Deferred Tax - Net Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less: Depreciation c) Net Block 2. Investments 3. Current Assets, Loans & Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances Less : Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Assets Total Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Interest on Loans Dividend Income Brokerage Income Profit on Sale of Stock-in-Trade (Net) Profit on Sale of Long Term Investments Lease and Other Rentals Other Income For the year ended 31st March, 2011 (`) 76,31,922 16,74,39,252 6,15,62,537 49,71,249 2,93,09,256 62,82,188 27,71,96,404 1,56,07,205 3,61,036 2,23,09,291 8,54,154 1,20,83,725 5,12,15,411 22,59,80,993 2,62,66,898 19,97,14,095 56,05,63,702 76,02,77,797 3,99,42,819 72,03,34,978 76,02,77,797 0.31 For the year ended 31st March, 2010 (`) 29,47,088 18,61,00,400 7,93,84,607 10,26,98,134 11,23,76,977 2,68,49,256 77,11,475 51,80,67,937 1,11,86,198 39,037 41,74,346 1,26,29,415 2,80,28,996 49,00,38,941 7,07,64,762 41,92,74,179 22,51,44,359 64,44,18,538 8,38,54,836 56,05,63,702 64,44,18,538 0.65 On behalf of the Board R. Tandon Director S. Dutta Director S. Jain Secretary 1 2 3 646,47,87,370 139,10,73,744 31st March, 2011 (`) (`) 646,47,87,370 119,13,59,649 31st March, 2010 (`)
785,58,61,114 38,32,369 785,96,93,483
765,61,47,019 51,96,895 766,13,43,914
4 12,08,96,456 4,08,05,006 5 6 7 8 9 10 257,05,24,808 2,89,29,010 32,37,843 4,23,461 29,40,46,649 289,71,61,771 1,62,85,996 2,04,88,305 3,67,74,301 286,03,87,470 785,96,93,483 8,00,91,450 491,92,14,563 372,30,07,211 1,52,20,516 3,08,98,557 2,56,93,674 20,82,94,622 400,31,14,580 45,23,102 1,77,29,144 2,22,52,246 398,08,62,334 766,13,43,914 12,63,59,638 3,09,94,461 9,53,65,177 358,51,16,403
4.
11 12
13 14 15 16 17 4
II. EXPENDITURE Employee Cost Financial Charges Establishment and Other Expenses Provision for Standard Assets Depreciation III. PROFIT Profit before Taxation Provision for Taxation Profit after Taxation Profit brought forward Available for appropriations IV. APPROPRIATIONS Special Reserve u/s 45-IC of the RBI Act, 1934 (Refer to Note 9 of Schedule 19) Profit carried forward
18
Earnings Per Share (Face Value ` 10/- each) 19(8) (Basic & Diluted) Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our report of even date For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011
On behalf of the Board R. Tandon S. Dutta S. Jain Director Director Secretary

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX ADJUSTMENTS FOR: Depreciation Interest Expense/(Income) on Income Tax (Net) Unrealised Exchange Gain Profit on Sale of Investments Liabilities no longer required written back Proft on Sale of Fixed Assets OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR: Trade and Other Receivables Stock-in-Trade Trade Payables Sale of Fixed Assets given on lease CASH GENERATED FROM OPERATIONS Income Tax Paid (Including Fringe Benefit Tax) NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets Purchase of Long Term Investments Investment in Subsidiary Company Sale of Long Term Investments NET CASH USED IN INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES Intercorporate Loans Received from Holding Company Intercorporate Loans Repaid to Holding Company Intercorporate Loans Given to Subsidiary Company Intercorporate Loans Repaid by Subsidiary Company NET CASH USED IN FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS 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 : Balance with Scheduled Banks - On Current Account Cash on Hand Cheques on Hand Cash and Bank Balances (Schedule 8) In terms of our report of even date For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011 SCHEDULES TO THE ACCOUNTS 1. CAPITAL As at 31st March, 2011 (`) As at 31st March, 2010 (`) On behalf of the Board R. Tandon Director S. Dutta Director S. Jain Secretary 22,59,80,993 1,20,83,725 40,40,543 (24,72,500) (93,693) 23,95,39,068 1,53,44,981 115,24,82,403 1,28,96,801 33,09,995 142,35,73,248 (1,71,09,502) 140,64,63,746 (26,300) (83,40,98,160) (50,00,00,000) (133,41,24,460) (40,00,00,000) 30,00,00,000 (10,00,00,000) (2,76,60,714) 3,08,98,557 32,37,843 For the year ended 31st March, 2010 (`) 49,00,38,941 1,26,29,415 (1,17,819) (30,67,500) (11,23,76,977) (13,11,033) (14,73,491) 38,43,21,536 (2,29,70,231) (359,91,71,908) (38,98,628) 1,21,75,000 (322,95,44,231) (5,20,24,750) (328,15,68,981) (70,17,45,488) (9,00,00,000) 414,21,59,162 335,04,13,674 661,20,00,000 (665,30,00,000) (4,10,00,000) 2,78,44,693 30,53,864 3,08,98,557
29,29,698 4,345 3,03,800 32,37,843
3,08,98,013 544 3,08,98,557
Authorised 70,00,00,000 Equity Shares of ` 10/- each (2010 - 70,00,00,000 Equity Shares of ` 10/- each) Issued, Subscribed and Paid up 59,74,54,177 (2010 - 59,74,54,177) Equity Shares of ` 10/- each, fully paid up (Of the above 59,74,04,170 Equity Shares allotted for consideration other than cash pursuant to a Scheme of Amalgamation) 7,54,22,400 (2010 - 7,54,22,400) Equity Shares of ` 10/- each, ` 6.50 per share paid up (Equity Shares allotted for consideration other than cash pursuant to a Scheme of Amalgamation) (All the above shares are held by the Holding Company, ITC Limited) 2. RESERVES AND SURPLUS (`) Special Reserve u/s 45-IC of the RBI Act, 1934 At the commencement of the year Add: Transferred from Profit and Loss Account Capital Reserve General Reserve Profit and Loss Account 58,81,92,201 3,99,42,819
700,00,00,000 700,00,00,000
700,00,00,000 700,00,00,000
597,45,41,770 49,02,45,600 646,47,87,370
597,45,41,770 49,02,45,600 646,47,87,370
As at 31st March, 2011 (`)
(`) 50,43,37,365 8,38,54,836
62,81,35,020 2,87,67,445 1,38,36,301 72,03,34,978 139,10,73,744
58,81,92,201 2,87,67,445 1,38,36,301 56,05,63,702 119,13,59,649

SCHEDULES TO THE ACCOUNTS (Contd.) 3. DEFERRED TAX - NET As at 31st March, 2011 (`) 56,16,364 56,16,364 12,15,322 2,91,543 2,77,130 17,83,995 38,32,369 GROSS BLOCK (AT COST) Additions Deletions (`) 26,300 26,300 (`) 54,89,482 54,89,482 1,53,75,621 DEPRECIATION For the Deletions year (`) 1,20,83,725 1,20,83,725 1,26,29,415 (`) 22,73,180 22,73,180 46,74,112 As at 31st March, 2010 (`) 60,53,773 60,53,773 2,60,342 5,96,536 8,56,878 51,96,895 NET BOOK VALUE As at 31st March, 2011 (`) 8,00,91,450 8,00,91,450 9,53,65,177
Deferred Tax Liabilities On fiscal allowances on fixed assets Deferred Tax Assets On employees' seperation and retirement etc. Other timing differences On Provision on Standard Assets
4.
FIXED ASSETS As at commencement of the year (`) 12,63,59,638 12,63,59,638 14,17,35,259 As at the end of the year (`) 12,08,96,456 12,08,96,456 12,63,59,638 Upto 31st March, 2010 (`) 3,09,94,461 3,09,94,461 2,30,39,158
Particulars
Plant & Machinery* TOTAL Previous Year
Up to 31st March, 2011 (`) 4,08,05,006 4,08,05,006 3,09,94,461
*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 ` 12,07,10,155/- ( 2010 - ` 12,61,99,637/-) and Accumulated Depreciation is ` 4,07,81,380/- ( 2010 - ` 3,09,74,204/-). Depreciation for the period charged to Profit and Loss Account is ` 1,20,80,356/- (2010 - ` 1,26,19,287/-). The aggregate lease rental of ` 2,09,09,256/- (2010 - ` 2,16,89,256/-) is included in Lease and Other Rentals in the Profit and Loss Account. 5. INVESTMENTS LONG TERM A. UNQUOTED SUBSIDIARY COMPANIES Equity Shares of ` 10/- each, of Greenacre Holdings Limited, fully paid Equity Shares of ` 1/- each, of Wimco Limited, fully paid Ordinary Shares of Technico Pty Limited no par value 5% Redeemable Cumulative Preference Shares of ` 100/each, of Wimco Limited, fully paid Zero Coupon Redeemable Preference Shares of ` 100/each, of Wimco Limited, fully paid TRADE INVESTMENTS Equity Shares of ` 100/- each, of Maharaja Heritage Resorts Limited, fully paid Equity Shares of ` 10/- each, of Russell Investments Limited, fully paid Equity Shares of ` 10/- each, of Classic Infrastructure & Development Limited, fully paid Equity Shares of ` 10/- each, of Divya Management Limited, fully paid Equity Shares of ` 10/- each, of Antrang Finance Limited, fully paid OTHER INVESTMENTS Class G Shares of ` 48,000/- each, of Lotus Court Limited, fully paid Equity Shares of ` 100/- each, of Adyar Property Holding Company Private Limited, ` 65/- per share paid B. QUOTED TRADE INVESTMENTS Equity Shares of ` 10/- each, of International Travel House Limited, fully paid Equity Shares of ` 10/- each, of VST Industries Limited, fully paid OTHER INVESTMENTS Equity Shares of ` 2/- each, of Hotel Leelaventure Limited, fully paid 2 2,34,00,000 2 2,34,00,000 As at 31st March, 2011 Number Value (`) As at 31st March, 2010 Number Value (`)
4,20,60,166 9,12,38,170 2,26,06,065 55,00,000 50,00,000
42,10,33,674 55,02,65,126 108,72,41,115 55,00,00,000 50,00,00,000
4,20,60,166 9,12,38,170 2,26,06,065 55,00,000
42,10,33,674 55,02,65,126 108,72,41,115 55,00,00,000
90,000 42,75,435 37,50,000 41,82,915 43,24,634
90,00,000 4,27,56,850 3,76,88,280 6,93,07,630 4,39,56,071
90,000 42,75,435 37,50,000 41,82,915 43,24,634
90,00,000 4,27,56,850 3,76,88,280 6,93,07,630 4,39,56,071
311
43,86,50,000 377,32,98,746
311
43,86,50,000 327,32,98,746
36,26,633 6,00,000
21,21,58,031 9,96,59,626
36,26,633 6,00,000
21,21,58,031 9,96,59,626
1,79,29,513
83,40,98,160 114,59,15,817 491,92,14,563
31,18,17,657 358,51,16,403
Total (A + B) Market Value of Quoted Investments: ` 175,29,90,487/- (2010 ` 81,15,00,078/-)

SCHEDULES TO THE ACCOUNTS (Contd.) 6. INVENTORIES (at lower of cost and fair value) STOCKS AND SHARES PARTICULARS Equity Shares of ` 10/- each, fully paid up Jind Textiles Limited Patheja Brothers Forgings and Stampings Limited SKH Metals Limited Taib Capital Corporation Limited Power Grid Corporation of India Limited Reliance Industries Limited Reliance Power Limited Equity Shares of ` 2/- each, fully paid up Suzlon Energy Limited Equity Shares of ` 1/- each, fully paid up GMR Infrastructure Limited Sub - Total Units of ` 10/- each, fully paid up Birla Sun Life Short Term FMP - Series 7 Dividend Payout Birla Sun Life Savings Fund - Institutional Plan Daily Dividend - Reinvestment BNP Paribas Fixed Term Fund Series 19F Cal.Qtrly.Div Canara Robeco Treasury Advantage Fund Super Instt Daily Div Reinvestment Fund DWS Fixed Term Fund - Series 72 - Dividend Plan Payout Fortis Money Plus Fund - Institutional Plan - Daily Dividend IDFC Cash Fund - Super Inst Plan C Daily Dividend JM Money Manager Fund - Super Plus Plan - Daily Dividend Kotak Floater Long Term - Daily Dividend Kotak Floater Short Term - Daily Dividend LIC Income Plus Fund Daily Dividend Reinvestment Plan Principal Cash Mgt. Liquid Option IP Premium Dividend Reinvest. Daily Religare Fixed Maturity Plan - Series III - Plan A (12 Months) - Dividend Religare Ultra Short Term Fund- Insti. Plan Daily Div Reinvestment UTI - Fixed Income Interval Fund - Series II - Quarterly Interval Plan- IV - Institutional Dividend Plan - Payout Units of ` 100/- each, fully paid up ICICI Prudential Flexible Income Plan Premium - Daily Dividend Plan Units of ` 1000/- each, fully paid up AIG Short Term Fund - Institutional Weekly Dividend DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend Sub - Total TOTAL 7. SUNDRY DEBTORS As at 31st March, 2011 (`) Good and Unsecured Other Debts 8. CASH AND BANK BALANCES With Scheduled Banks On Current Accounts Cash on Hand Cheques on Hand OTHER CURRENT ASSETS Good and Unsecured Deposits - Others Interest Receivable 2,89,29,010 2,89,29,010 As at 31st March, 2010 (`) 1,52,20,516 1,52,20,516 7,30,056 73,02,87,070 257,05,24,804 257,05,24,808 10. LOANS AND ADVANCES As at 31st March, 2011 (`) Good and Secured Loans to Others 1,57,07,497 (secured by mortgage of immovable property and hypothecation of moveables & receivables) Good and Unsecured Loans to Subsidiaries 24,30,53,750 Advances recoverable in cash or in kind or for value to be received 2,76,262 MAT Credit Entitlement 3,49,85,745 Fringe Benefit Tax (net of provisions) 23,395 29,40,46,649 As at 31st March, 2010 (`) 1,85,95,145 40,694 4,07,46,487 369,02,49,725 372,30,07,211 45,40,346 48,00,73,485 2,00,00,000 20,00,00,000 4,80,00,000 1,00,00,000 1,00,00,000 99,91,870 6,03,28,390 2,50,00,000 48,00,00,000 10,00,00,000 10,00,00,000 9,99,43,679 61,02,94,055 25,00,00,000 2,49,86,433 3,86,91,429 4,79,90,333 4,79,79,650 4,76,24,888 4,80,03,747 1,04,10,407 4,14,39,542 25,00,34,233 48,00,48,428 48,00,52,104 48,00,50,797 48,00,49,342 48,00,37,473 10,41,11,355 41,50,46,021 4 1,50,000 94,05,000 3,27,57,486 40,000 28,76,000 5,00,000 50,000 40,000 2,45,000 1 1 1 1 5,00,000 50,000 40,000 2,45,000 9,924 12,500 40,000 1 1 1 1 10,63,357 1,34,33,125 59,80,000 As at 31st March, 2011 Quantity Value (`) As at 31st March, 2010 Quantity Value (`)
29,29,698 4,345 3,03,800 32,37,843
3,08,98,013 544 3,08,98,557
14,05,81,250 11,71,877 4,79,14,186 32,164 20,82,94,622
9.
3,13,508 1,09,953 4,23,461
2,55,63,508 1,30,166 2,56,93,674

SCHEDULES TO THE ACCOUNTS (Contd.) 11. LIABILITIES As at 31st March, 2011 (`) Sundry Creditors Total outstanding dues of micro enterprises and small enterprises Total outstanding dues of creditors other than micro enterprises and small enterprises; * Sundry Deposits ** As at 31st March, 2010 (`) Rent Repairs and Maintenance Buildings Others Travelling and Conveyance Rates and Taxes Professional and Legal Fees Auditors Remuneration (Excluding Service Tax) Audit Fees Tax Audit Fees * Fees for Other Services * Reimbursement of Expenses * Communication Expenses Printing, Stationery and Periodicals Interest on Income Tax Donation (Schedule 19, Note 19) Miscellaneous Expenses 17. ESTABLISHMENT AND OTHER EXPENSES For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 8,28,000 1,68,240 3,92,347 62,088 24,600 3,39,348 8,02,333 1,68,240 3,22,316 53,820 44,665 6,02,980
1,50,85,996 12,00,000 1,62,85,996
33,23,102 12,00,000 45,23,102
* Includes due to Holding Company ` 9,000/- (2010 - ` NIL) ** Includes deposits from Holding Company ` 12,00,000/- (2010 - ` 12,00,000/-) 12. PROVISIONS As at 31st March, 2011 (`) Provision for Long Term Employee Benefits 10,63,503 Current Taxation (net of advance tax) 1,85,70,648 Contingent Provision against Standard Assets 8,54,154 2,04,88,305 As at 31st March, 2010 (`) 7,83,750 1,69,45,394 1,77,29,144
1,50,000 1,00,000 2,00,000 30,499 26,177 69,589 40,41,236 1,50,00,000 8,77,167 2,23,09,291
1,50,000 25,860 91,791 19,12,341 41,74,346
* Paid to the erstwhile auditors, a firm in which some of the partners of the statutory auditors firm are partners. 18. PROVISION FOR TAXATION For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Income Tax for the year Current Tax Deferred Tax (A) Less: Adjustments related for previous years Current Tax MAT Credit Entitlement Fringe Benefit Tax (B) 3,00,00,000 (13,64,526) 2,86,35,474 7,20,00,000 11,18,524 7,31,18,524
13. PROFIT/ (LOSS) ON SALE OF STOCK-IN-TRADE (NET) As at As at 31st March, 2011 31st March, 2010 (`) (`) Sales 5859,05,47,086 1944,55,29,392 Less: Purchases 5743,30,93,434 2294,20,03,166 115,74,53,652 (349,64,73,774) Add/Less: Increase/ (Decrease) in Closing Stock-in-Trade (115,24,82,403) 3 59,91,71,908 Profit/(Loss) on Sale of Stock-in-Trade 49,71,249 10,26,98,134 14. OTHER INCOME For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Foreign Exchange Gain 24,70,485 30,57,120 Profit on Sale of Fixed Assets 93,693 14,73,491 Interest on Income Taxes 1,17,819 Interest on Fringe Benefit Tax 693 Liabilities no longer required written back 13,11,033 Miscellaneous Income 37,17,317 17,52,012 62,82,188 77,11,475 15. EMPLOYEE COST For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 1,04,10,902 94,10,924 48,42,648 3,53,655 1,56,07,205 11,84,431 5,90,843 1,11,86,198
12,60,214 11,14,020 (5,658) 23,68,576
23,53,762 23,53,762 7,07,64,762
(A)-(B) 2,62,66,898
Salaries / Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses
16. FINANCIAL CHARGES For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Bank, Custodial and Depository Charges 3,61,036 3,61,036 39,037 39,037
19. NOTES TO THE ACCOUNTS 1. Uncalled liability on partly paid up shares : ` 10,885/- (2010 ` 10,885/-). 2. Dividend Income includes ` 3,15,17,837/- (2010 ` 15,82,97,176/-) from Long Term Investments. Of these ` 2,97,86,557 /- (2010 ` 8,10,38,209/-) are from Trade Investments and ` 17,31,280/- (2010 ` 7,72,58,967/-) are from Other than Trade Investments. Dividend from Stock In Trade is ` 13,59,21,414/- (2010 - ` 2,78,03,224/-) 3. Interest on Loans and Deposits is stated Gross, the amount of Income Tax deducted is ` 5,60,848/- (2010 ` 44,246/-) 4. Claims against the Company not acknowledged as debts : In respect of sales tax : ` 56,20,611/- (2010 ` 54,71,774/-). 5. Guarantees and Counter Guarantees outstanding ` 1,78,605 /- (2010 ` 3,27,442/-). 6. Loans and Advances include : Interest free loans to whollyowned subsidiaries, balances as at the year end are as follows : Technico Pty Limited, Australia ` 2,30,53,750/- (2010 ` 2,05,81,250/-). Technico Agri Sciences Limited ` 12,00,00,000/- (2010 ` 12,00,00,000/-). Loan to a subsidiary, balance as at the year end is as follows : Wimco Limited ` 10,00,00,000/- (2010 Nil) The maximum indebtedness during the year : Technico Pty Limited, Australia ` 2,30,53,750/- (2010 ` 2,05,81,250/-). Technico Agri Sciences Limited ` 12,00,00,000/- (2010 ` 12,00,00,000/-). Wimco Limited ` 30,00,00,000/- (2010 Nil)
10

SCHEDULES TO THE ACCOUNTS (Contd.) 7. 8. Expenditure in Foreign Currency during the year : Marketing Research Expenses : ` 1,11,487/- (2010 ` 9,74,036/-) Earnings Per Share For the year ended For the year ended 31st March, 2011 31st March, 2010 Profit after Taxation (`) 19,97,14,095/41,92,74,179/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) ` 0.31 ` 0.65 Transfer to Special Reserve of ` 3,99,42,819/- (2010 ` 8,38,54,836/-) has been made in accordance with the provisions of Section 45-IC of the Reserve Bank of India Act, 1934. 10. The status of the petition filed by an individual in the High Court at Calcutta, seeking an injunction against the Companys Counter Offer to the shareholders of VST Industries Limited, is outlined in the Report of the Directors. 11. Segment Reporting The Company operates in a single business segment i.e. Financial Services and in a single geographical segment. 12. The Reserve Bank of India (RBI) vide its Notification No. DNBS. 223/CGM (US) 2011 dated 17th January 2011 has issued directions to all NBFCs to make provision of 0.25% against standard assets with immediate effect. Accordingly, the Company has made provision of ` 8,54,154/- during the year against standard 9. 15. Maturity pattern of certain assets and liablities : 1 to 30/31 days (one month) Liabilities Borrowings from Banks Market Borrowings Assets Advances Investments 257.05*1 Over 1 month to 2 months Over 2 months to 3 months Over 3 months to 6 months Over 6 months to one year 55.00*2 Over 1 year to 3 years Over 3 year to 5 years Over 5 years (` in crores) Total assets which has been charged to Profit and Loss Account. Further, in terms of the Notification, the above provision is treated as Tier II Capital. 13. Capital to Risk Adequacy Ratio : Items i) CRAR (%) ii) CRAR - Tier I capital (%) iii) CRAR - Tier II Capital (%) 14. Exposure to Real Estate Sector : Category 31st March, 2011 a) Direct exposure (i) Residential Mortgages Nil (ii) Commercial Real Estate Nil (iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures a. Residential, Nil b. Commercial Real Estate Nil b) Indirect Exposure Fund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs). Nil 31st March, 2010 Nil Nil 31st March, 2011 99.32 99.30 0.02 31st March, 2010 100.38 100.38
Nil Nil
Nil
436.92*2
748.97
*1 Investments classified as Stock in Trade as per Schedule 6 *2 Investments classified as Long Term as per Schedule 4 16. Related Party Disclosures : (a) Relationships Holding Company Subsidiary Companies Particulars For the year ended 31st March, 2011 (`) Nil 2,76,240 4,95,246 2,13,935 For the year ended 31st March, 2010 (`) 4,40,229 2,76,240 5,41,648 Nil
ITC Limited Greenacre Holdings Limited Wimco Limited and its subsidiaries Pavan Poplar Limited Prag Agro Farm Limited Technico Pty Limited, Australia and its subsidiaries Technico Agri Sciences Limited Technico Technologies Inc., Canada Technico ISC Pty Limited, Australia (Deregistered on 3rd November, 2010) Technico Asia Holdings Pty Limited, Australia and its subsidiaries Technico Horticultural (Kunming) Co. Limited, China Key Management Personnel Mr. K. Vaidyanath Non - Executive Chairman (upto 2nd January, 2011) Mr. R. Tandon Non - Executive Chairman (w.e.f. 3rd January, 2011) Non - Executive Director (upto 2nd January, 2011) Mr. B. B. Chatterjee Non - Executive Director Mr. P. Banerjea Non - Executive Director Mr. S. Dutta Non - Executive Director 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 31st March, 2011 31st March, 2010 (`) (`) Holding Company Sale of Investments * Nil 387,31,40,993 Intercorporate Loan Taken Nil 661,20,00,000 Intercorporate Loan Repaid Nil 665,30,00,000 Lease Rentals Received 84,00,000 51,60,000
Miscellaneous Income Rent, Repairs and Maintenance Miscellaneous Expenses Reimbursement of Expenses
*Investments have been sold to the Holding Company at cost, the market value of such shares on the date of sale was ` Nil (2010 ` 1030.06 crores).
Balances as at Holding Company Security Deposits Received Payables
31st March, 2011 (`) 12,00,000 9,000 For the year ended 31st March, 2011 (`)
31st March, 2010 (`) 12,00,000 Nil For the year ended 31st March, 2010 (`)
Subsidiary Companies Greenacre Holdings Limited Subscription to Share Capital Nil Wimco Limited Subscription to Preference Share Capital 50,00,00,000 Intercorporate Loan given 40,00,00,000 Intercorporate Loan repaid 30,00,00,000 Interest on Loan 55,49,918 Sale of Plant & Machinery Nil Balances as at Subsidiary Companies Loans Outstanding Technico Pty Limited, Australia Technico Agri Sciences Limited Wimco Limited 31st March, 2011 (`)
9,00,00,000 Nil Nil Nil Nil 1,24,18,500 31st March, 2010 (`)
2,30,53,750 12,00,00,000 10,00,00,000
2,05,81,250 12,00,00,000 Nil
11

SCHEDULES TO THE ACCOUNTS (Contd.) Particulars For the year ended 31st March, 2011 (`) For the year ended 31st March, 2010 (`) For the year ended 31st March, 2011 (`) For the year ended 31st March, 2010 (`)
Associates Dividend Income International Travel House Limited Travelling Expenses International Travel House Limited Reimbursement of Expense Divya Management Limited In addition, remuneration of managers on deputation, absorbed 1,17,86,557 8,706 4,18,331 1,12,05,286 1,08,79,899 1,231 3,87,334 94,27,460
Leave Leave IV. Change in Defined Benefit Obligations (DBO) Pension Gratuity Encashment Pension Gratuity Encashment N.A. 1. Present Value of DBO at Beginning of Period 2. Current Service Cost 3. Interest Cost 4. Curtailment Cost/(Credit) 5. Settlement Cost/(Credit) 6. Plan Amendments 7. Acquisitions 8. Actuarial (Gains)/Losses 9. Benefits Paid 10. Present Value of DBO at the End of the Period V. Change in Fair Value of Assets 1. 2. 3. 4. 5. 6. 7. Plan Assets at Beginning of Period Acquisition Adjustment Expected Return on Plan Assets Actuarial Gains/(Losses) Actual Company Contributions Benefits Paid Plan Assets at the End of Period N.A. N.A. N.A. N.A. N.A. N.A. N.A. 14,92,000 Nil 1,39,680 (98,587) 4,66,907 Nil 20,00,000 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 8,15,033 Nil 77,053 1,39,083 4,60,831 Nil 14,92,000 N.A. N.A. N.A. N.A. N.A. N.A. N.A. Funded Unfunded N.A. Funded Unfunded N.A. 5,17,123 7,83,750 N.A. 11,51,189 4,98,931 N.A. 3,00,629 1,41,669 N.A. 41,370 62,700 N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. 10,49,616 75,384 N.A. Nil Nil N.A. 19,08,738 10,63,503 N.A. 37,295 1,24,740 N.A. 73,197 34,925 N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. (7,44,558) 1,53,021 N.A. Nil (27,867) N.A. 5,17,123 7,83,750
17. Employee Benefits : Contribution to Defined Contribution Schemes ` 34,92,126 /- (2010 ` 7,23,600/-) Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes : For the year ended 31st March, 2011 (`) For the year ended 31st March, 2010 (`)
Leave Leave Pension Gratuity Encashment Pension Gratuity Encashment N.A. I. Components of Employer Expenses 1. 2. 3. 4. 5. 6. 7. 8. Current Service Cost Interest Cost Expected Return on Plan Assets Curtailment Cost/(Credit) Settlement Cost/(Credit) Past Service Cost Actuarial Losses/(Gains) Total expense recognised in the Statement of Profit & Loss Account N.A. 3,00,629 1,41,669 N.A. 37,295 1,24,740 N.A. 41,370 62,700 N.A. 73,197 34,925 N.A. (1,39,680) N.A. N.A. (77,053) N.A. N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. 11,48,203 75,384 N.A. (8,83,645) 1,53,021 N.A. 13,50,522 2,79,753 N.A. (8,50,206) 3,12,686 Funded Unfunded N.A. Funded Unfunded
VI. Actuarial Assumptions 1. Discount Rate (%) 2. Expected Return on Plan Assets (%) N.A. N.A. 8.00 8.00 8.00 N.A. N.A. N.A. 7.00 7.00 7.00 N.A.
II. Actual Returns III. Net Asset / (Liability) recognised in Balance Sheet 1. Present Value of Defined Benefit Obligation 2. Fair Value of Plan Assets 3. Status [Surplus/(Deficit)] 4. Unrecognised Past Service Cost 5. Net Asset/(Liability) recognised in Balance Sheet
N.A.
8%
8% N.A.
7%
7%
N.A. 19,08,738 10,63,503 N.A. 5,17,123 7,83,750 N.A. 20,00,000 N.A. N.A. 14,92,000 N.A. N.A. 91,262 (10,63,503) N.A. 9,74,877 (7,83,750) N.A. Nil Nil N.A. Nil Nil N.A. 91,262 (10,63,503) N.A. 9,74,877 (7,83,750)
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 31st March, 2011 31st March, 2010 VII. Major Category of Plan Assets as a % of the Total Plan Assets 1. Government Securities/Special Deposit with RBI 45.50% 45.30% 2. High Quality Corporate Bonds 40.00% 38.90% 3. Insurance Companies 7.00% 8.10% 4. Mutual Funds 3.30% 3.20% 5. Cash and Cash Equivalents 3.40% 3.30% 6. Equity 0.80% 1.20% 7. Term Deposit 0.00% 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. For the year ended 31st March, 2009 (`) Pension N.A. N. A . N. A . N. A . N. A . N. A . Gratuity Funded Leave Encashment Unfunded For the year ended 31st March, 2008 (`) Pension N.A. Gratuity Funded Leave Encashment Unfunded
For the year ended 31st March, 2011 (`) Pension IX. Net Asset / (Liability) recognised in Balance Sheet (including experience adjustment impact) 1. Present Value of Defined Benefit Obligation 2. Fair Value on Plan Assets 3. Status [Surplus / (Deficit)] 4. Experience Adjustment of Plan Assets [Gain / (Loss)] 5. Experience Adjustment of Obligation [(Gain) / Loss] N.A. N. A . N. A . N. A . N. A . N. A . Gratuity Funded Leave Encashment Unfunded
For the year ended 31st March, 2010 (`) Pension N.A. N. A . N. A . N. A . N. A . N. A . Gratuity Funded Leave Encashment Unfunded
19,08,738 10,63,503 20,00,000 N.A. 91,262 (10,63,503) (81,127) 11,66,407 Nil 1,58,640
5,17,123 7,83,750 14,92,000 N.A. 9,74,877 (7,83,750) 2,44,436 (6,39,036) N.A. 1,25,154
11,51,189 4,98,931 8,15,033 N.A. (3,36,156) (4,98,931) Nil Nil N.A. Nil
N. A . 13,22,680 5,31,699 N. A . Nil N.A. N. A . (13,22,680) (5,31,699) N. A . N. A . Nil Nil N.A. Nil
18.
Amounts recognised as expense is included in Schedule 15 as below : Leave Encashment of ` 2,79,753/- [2010 ` 3,12,686/-] in Salaries Wages and Bonus and Gratuity of ` 13,50,522/- (2010 ` 4,60,831/-) in Contribution to Provident and Other Funds. 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, 2011. This information as required to be disclosed
19. 20.
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. During the year a donation of ` 1,50,00,000/- (2010 ` Nil) was made to All India Congress Committee of the Indian National Congress. Figures for the previous year have been regrouped / re-arranged wherever necessary.
12

SCHEDULES TO THE ACCOUNTS (Contd.) 20. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Financial Statements are prepared on accrual basis under the historical cost convention. 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. Stock-in-Trade 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. Stock-in-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 fluctuations in the exchange rates are recognised in the Profit and Loss Account 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 Profit and Loss Account except for those covered by forward contract rates where the gains / losses arising from STATEMENT REGARDING SUBSIDIARY COMPANIES Pursuant to Section 212 of the Companies Act, 1956
Sl No. Name of the Subsidiary Company Country of Incorporation Number of Equity Shares held by the Company Extent of Holding Net aggregate amount of the Subsidiarys profits /(losses) not dealt with in the Companys Accounts (`) For the Subsidiarys financial year ended 31st March, 2011 For the previous financial years of the Subsidiary since it became the Companys Subsidiary Net aggregate amount of the Subsidiarys profits /(losses) dealt with in the Companys Accounts (`) For the Subsidiarys financial year ended 31st March, 2011 For the previous financial years of the Subsidiary since it became the Companys Subsidiary
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 Regular monthly contributions are made to various 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 Profit and Loss Account 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. On behalf of the Board Kolkata 5th May, 2011 R Tandon S. Dutta S. Jain Director Director Secretary
1.
Greenacre Holdings Limited
India
4,20,60,166 Equity Shares of ` 10/- each 2,26,06,065 Ordinary Shares without par value 3,79,62,800 Equity Shares of ` 10/- each
36,84,522 Ordinary Shares without par value
100%
84,31,989
7,33,52,199
Nil
Nil
2.
Technico Pty Limited
Australia
100%
43,73,623
2,51,29,109
Nil
Nil
3.
Technico Agri Sciences Limited (a 100% Subsidiary of Technico Pty Limited)

Technico Asia Holdings Pty Limited (a 100% Subsidiary of Technico Pty Limited)
India
100%
7,02,04,947
22,32,75,598
Nil
Nil
4.
Australia
100%
1,96,66,010
Nil
Nil
5.
Technico Horticultural (Kunming) Co. Limited* (a 100% Subsidiary of Technico Asia Holdings) Technico Technologies Inc. (a 100% Subsidiary of Technico Pty Limited) Wimco Limited
China
Registered Capital paid US $ 2.3m 10,87,999 Common Shares without par value 9,12,38,170 Equity Shares of ` 1/- each 53,35,061 Equity Shares of ` 10/- each 36,79,369 Equity Shares of ` 10/- each
100%
31,50,034
11,60,934
Nil
Nil
6.
Canada
100%
3,19,246
91,50,145
Nil
Nil
7.
India
96.825%
(57,75,64,807)
(9,19,44,026)
Nil
Nil
8.
Pavan Poplar Limited (a 100% Subsidiary of Wimco Limited) Prag Agro Farm Limited (a 100% Subsidiary of Wimco Limited)
India
96.825%
4,29,105
(11,34,015)
Nil
Nil
9.
India
96.825%
5,19,552
(4,76,432)
Nil
Nil
* The financial year of Technico Horticultural (Kunming) Co. Limited ends on 31st December, 2010.
13

SCHEDULES TO THE ACCOUNTS (Contd.)
Notes: 1. 2. Wimco Limited held 100% of the subscribed and paid-up equity share capital of Pavan Poplar Limited and Prag Agro Farm Limited. Technico Pty Limited held 100% of the total subscribed and paid-up capital of Technico Agri Sciences Limited, Technico Asia Holdings Pty Limited, Technico Technologies Inc. Technico Asia Holdings Pty Limited held 100% of the total subscribed and paid-up capital of Technico Horticultural (Kunming) Co. Limited. There has been no change in the Companys interest in Technico Horticultural (Kunming) Co. Limited between 31st December, 2010 and 31st March, 2011. Further there has been no material change in the fixed assets, investments, loans and borrowings of Technico Horticultural (Kunming) Co. Limited during the aforesaid period.
On behalf of the Board R. Tandon S. Dutta S. Jain Director Director Secretary
3.
Kolkata, 5th May, 2011
SCHEDULE TO THE BALANCE SHEET AS AT 31ST MARCH, 2011 [as required in terms of Paragraph 13 of Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007]
Particulars Liabilities Side: (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 Paper f) Other Loans Break-up of outstanding public deposits inclusive of interest accrued thereon but not paid. Assets Side: (2) Break-up of Loans and Advances including bills receivables [other than those included in (4) below] (a) Secured (b) Unsecured (3) Break-up of Leased Assets and stock on hire and hypothecation loans counting towards EL/HP activities (i) Lease assets including lease rentals under sundry debtors (a) Financial lease (b) Operating lease (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: (i) Shares:(a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual Funds (iv) Government Securities (v) Others (please specify) Amount Outstanding (` in Lakhs) Amount Overdue Assets Side: Long Term 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: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual Funds (iv) Government Securities (v) Others (please specify) (5) Borrower group-wise classification of assets financed as in (2) and (3) above 157.07 2,430.54 Secured Category 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 Category 1. Related Parties (a) Subsidiaries (b) Companies in the same group (c) Other related parties 2. Other than related parties Total (7) Other Information Particulars (i) Gross Non-Performing Assets (a) Related Parties (b) Other than related parties (ii) Net Non-Performing Assets (a) Related Parties (b) Other than related parties (iii) Assets acquired in satisfaction of debt Book Value (Net of Provisions) Amount Net of Provisions Unsecured Total (` in Lakhs) Amount Outstanding 11,459.16 11,459.16 37,732.99 27,232.99 10,500.00
Amount Outstanding
1,236.82 1,236.82
157.07 157.07
2,430.54 1,236.82 3,667.36
2,430.54 1,393.89 3,824.43
25,705.25 25,705.25
25,847.38* 8,906.92 41,353.65 76,107.95
31,085.39 4,148.67 39,663.33 74,897.38
* Subsidiaries having further step down subsidiaries have been considered on a consolidated basis. Amount (`)
14

BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date
0 6 1 6 8 4 of 1994 3 1 0 3
Application of Funds State Code

2 1
Net Fixed Assets

8 0 0 9 1
Investments
4 9 1 9 2 1 5
2 0 1 1
Date II.
Month
Year
Net Current Assets

2 8 5 6 5 5 5
Misc. Expenditure
N I L
Capital raised during the year (Amount in ` Thousands) Public Issue

N I L
Accumulated Losses
N I L L
Rights Issue
N I
Bonus Issue
N I L
Private Placement
N I L
IV.
Performance of Company (Amount in ` Thousands) Total Expenditure

5 1 2 1 5
Turnover (Including other Income)

2 7 7 1 9 6
III.
Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities

7 8 5 5 8 6 1
Total Assets
7 8 5 5 8 6 1
+
Profit/Loss Before Tax

2 2 5 9 8 1
+
Profit/Loss After Tax

1 9 9 7 1 4
Sources of Funds Paid-up Capital

6 4 6 4 7 8 7 #
(Please tick appropriate box + for profit, for loss) Reserves & Surplus
1 3 9 1 0 7 4
Earning Per Share in `

0 . 3 1
Dividend Rate %
N I L
# Includes 59,74,04,170 Equity Shares of ` 10/- each, fully paid up, and 7,54,22,400 Equity Shares of ` 10/- each, partly paid up, issued on Amalgamation. Secured Loans
N I L
V.
Generic Names of Three Principal Services of Company Item Code No. (ITC Code) Service Description Not Applicable Investments Lending Asset Financing
Unsecured Loans
N I L
Audit Committee : Mr. R. Tandon, Chairman, M/s. B. B. Chatterjee and S. Dutta, Members
15
GREENACRE HOLDINGS LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH 2011 1. 2. Your Directors hereby submit their Report and Accounts for the financial year ended on 31st, March 2011. PERFORMANCE OF THE COMPANY Your Company continues to provide maintenance services for real estate assets such as office building and there was no change in the business activities of the Company during the year under review. The financial results of your Company, summarised, are as under : For the year ended 31st March, 2011 (`) a. b. c. d. Profit Before Taxation Less : Provision for Taxation Profit After Taxation Add : Profit brought forward from previous years Balance carried forward to the following year 1,09,68,030 25,36,041 84,31,989 8,53,47,057 9,37,79,046 For the year ended 31st March, 2010 (`) 1,03,04,705 25,44,041 77,60,664 7,75,86,393 8,53,47,057 the approval of the Members of the Company at the next General Meeting. Appropriate resolution seeking your approval for re-appointment of Ms. Prasad as Manager is appearing in the Notice convening the ensuing Annual General Meeting of the Company. 5. 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. PARTICULARS OF EMPLOYEES 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. AUDITORS The Companys 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. 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. There has been no foreign exchange earnings or outflow during the year under review.
Your Board of Directors is looking at various options to increase the Companys future revenues including by enhancement of maintenance charges. 3. DIRECTORS Mr. K. Vaidyanath, consequent to his retirement from the services of ITC Limited, the Ultimate Holding Company, stepped down as the Chairman and Director of your Company with effect from close of work on 2nd January, 2011. Your Directors would like to place on record their sincere appreciation for the contribution made by Mr. Vaidyanath during his tenure with the Company. Mr. R. Tandon was appointed as the Chairman of the Board of Directors of your Company with effect from 3rd January, 2011. In accordance with the provisions of Article 143 of the Articles of Association of the Company, Mr. A. Nayak 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. RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THE COMPANIES ACT, 1956 The Board of Directors of your Company re-appointed Ms. Anjali Prasad as Manager of the Company for a period of three years with effect from 1st October, 2010, in terms of the provisions of Section 269 of the Companies Act, 1956, read with Schedule XIII thereto, subject to
6.
7.
8.
5th May, 2011 Registered Office : ITC Centre 37, J. L. Nehru Road Kolkata - 700 071
On behalf of the Board R. Tandon S. Dutta Director Director
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, 2011, the Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government 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. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows : (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 it appears from our examination of those books; 5. (c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account 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, 2011; (ii) in the case of the Profit and Loss Account, 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. On the basis of the written representations received from the Directors as on 31st March, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 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) Kolkata 5th May, 2011 R. A. Banga Partner (Membership No. 037915)
2.
3.
4.
16

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date) Having regard to the nature of the Companys business / activities clauses 4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix) and (xx) of CARO are not applicable. (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) 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 is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and the sale of services. During the course of our audit, we have not observed any major weakness in such internal control system. (iii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (iv) According to the information and explanations given to us in respect of statutory dues: Kolkata 5th May, 2011 (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Employees State Insurance, Incometax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Provident Fund, Income-tax, Employees State Insurance, Service Tax,Cess and other material statutory dues in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable. (c) There were no dues on account of Income-tax, Service Tax, and Cess which have not been deposited as on 31st March, 2011 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 or on the Company has been noticed or reported during the year. For A. F. Ferguson & Co. Chartered Accountants (Registration No.112066W) R. A. Banga Partner (Membership No. 037915)
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule (`) I. SOURCES OF FUNDS 1. Shareholders Funds a) Capital b) Reserves and Surplus Total II. APPLICATION OF FUNDS 1. Fixed Assets a) c) 2. 3. 4. Gross Block Net Block 4 5 6 7 8 9 10 1,23,71,911 4,18,200 10,05,915 2,63,867 58,93,350 1,99,53,243 Less : 5. Current Liabilities and Provisions a) Liabilities 11 12 4,06,72,777 23,11,516 4,29,84,293 Net Current Liabilities Total Notes to the Accounts Significant Accounting Policies 18 19 (2,30,31,050) 52,81,51,684 3,98,15,142 17,17,567 4,15,32,709 (1,96,10,695) 51,97,19,695 b) Provisions b) Less: Depreciation Investments Deferred Tax Assets Current Assets, Loans and Advances a) c) e) Inventories Cash and Bank Balances Loans and Advances 1,23,71,911 15,000 34,36,415 1,55,000 59,43,688 2,19,22,014 b) Sundry Debtors d) Other Current Assets 3 43,35,86,629 26,05,297 43,09,81,332 11,94,35,572 7,65,830 42,34,68,927 24,23,553 42,10,45,374 11,77,69,308 5,15,708 1 2 42,06,01,660 10,75,50,024 52,81,51,684 42,06,01,660 9,91,18,035 51,97,19,695 31st March, 2011 (`) (`) 31st March, 2010 (`)
The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date. For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011 On behalf of the Board R. Tandon S. Dutta A. Prasad Director Director Secretary
17

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Service Income Other Income For the year ended 31st March, 2011 (`) 2,19,19,628 52,49,603 2,71,69,231 1,16,16,399 5,00,759 39,02,299 1,81,744 1,62,01,201 1,09,68,030 25,36,041 84,31,989 8,53,47,057 9,37,79,046 0.20 For the year ended 31st March, 2010 (`) 2,21,01,848 45,98,643 2,67,00,491 1,01,68,848 21,60,173 38,85,023 1,81,742 1,63,95,786 1,03,04,705 25,44,041 77,60,664 7,75,86,393 8,53,47,057 0.20
13
II. EXPENDITURE Employee Cost Project Expenses Management and Other Expenses Maintenance and Service Expenses Depreciation
14 15 16 3
III. PROFIT Profit before Taxation Provision for Taxation 17 Profit after Taxation Profit brought forward Profit carried to Balance Sheet Earnings Per Share (Face Value ` 10/- each) 18(2) (Basic & Diluted) Notes to the Accounts 18 Significant Accounting Policies 19 The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our Report of even date. For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011
On behalf of the Board R. Tandon S. Dutta A. Prasad Director Director Secretary
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Liabilities no longer required written back Dividend from Current Investments Interest on Income Tax Loss on Sale of Current Investments Excess of Cost over Fair Value of Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Paid NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Current Investments Sale of Current Investments Dividend from Current Investments Purchase of Land NET CASH USED IN INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Share Capital NET CASH FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS 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 : Balance with Scheduled Banks - On Current Account Cash on Hand Cheques on Hand Cash and Bank Balances (Schedule 8) In terms of our report of even date For A. F. Ferguson & Co. Chartered Accountants R. A. Banga Partner Kolkata, 5th May, 2011 1,09,68,030 1,81,744 (6,35,326) (26,17,910) 102 1,02,400 79,99,040 (1,10,647) 9,69,208 88,57,601 (31,37,349) 57,20,252 (71,40,72,784) 71,37,99,111 11,22,921 (90,00,000) (81,50,752) (24,30,500) 34,36,415 10,05,915 For the year ended 31st March, 2010 (`) 1,03,04,705 1,81,742 (28,18,643) 7,11,929 27,695 84,07,428 6,31,160 (4,58,644) 85,79,944 (27,26,123) 58,53,821 (140,48,94,452) 143,94,81,968 28,18,643 (13,02,28,547) (9,28,22,388) 9,00,00,000 9,00,00,000 30,31,433 4,04,982 34,36,415
9,90,664 15,251 10,05,915
25,34,415 20,000 8,82,000 34,36,415 On behalf of the Board R. Tandon S. Dutta A. Prasad Director Director Secretary
18

SCHEDULES TO THE ACCOUNTS 1. CAPITAL As at 31st March, 2011 (`) Authorised 5,00,00,000 Equity Shares of ` 10/- each (2010 - 5,00,00,000 Equity Shares of ` 10/- each) Issued, Subscribed & Paid-up 4,20,60,166 (2010 - 4,20,60,166) Equity Shares of ` 10/- each, fully paid up (All the above shares are held by the Holding Company, Russell Credit Limited. The Ultimate Holding Company is ITC Limited.) 50,00,00,000 As at 31st March, 2010 (`) General Reserve 50,00,00,000 Profit and Loss Account 2. RESERVES AND SURPLUS As at As at 31st March, 2011 31st March, 2010 (`) (`) 1,37,70,978 9,37,79,046 10,75,50,024 50,00,00,000 50,00,00,000 1,37,70,978 8,53,47,057 9,91,18,035
42,06,01,660
42,06,01,660
42,06,01,660 3. FIXED ASSETS
42,06,01,660
GROSS BLOCK (AT COST ) Particulars As at commencement of the year (`) 41,24,07,025 1,10,04,119 57,783 42,34,68,927 29,32,40,380 Additions during the year (`) 1,01,17,702 1,01,17,702 13,02,28,547 As at the end of the year (`) 42,25,24,727 1,10,04,119 57,783 43,35,86,629 42,34,68,927 Upto 31st March, 2010 (`) 23,91,064 32,489 24,23,553 22,41,811
DEPRECIATION For the year (`) 1,79,367 2,377 1,81,744 1,81,742 Upto 31st March 2011 (`) 25,70,431 34,866 26,05,297 24,23,553
Freehold Land Building* Plant and Machinery TOTAL Previous Year
NET BOOK VALUE As at 31st March, 2011 (`) 42,25,24,727 84,33,688 22,917 43,09,81,332 42,10,45,374
* 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 ` 1,10,04,119/- ( 2010 - ` 1,10,04,119/-) and Accumulated Depreciation ` 25,70,431/- ( 2010 - ` 23,91,064/-) Depreciation for the year charged to Profit and Loss Account is ` 1,79,637/- ( 2010 - ` 1,79,637/-). The aggregate lease rental received is included in Other Income (Schedule 13) 4. INVESTMENTS As at 31st March, 2011 (`) A. UNQUOTED Long Term TRADE INVESTMENTS Classic Infrastructure & Development Limited 16,50,000 (2010 16,50,000) Equity Shares of ` 10/- each, fully paid As at 31st March, 2010 (`) As at 31st March, 2011 (`) 5. DEFERRED TAX - NET Deferred Tax Assets On fiscal allowances on fixed assets On employees' seperation and retirement etc. 6,63,26,700 6,63,26,700 B. Current OTHER INVESTMENTS AIG Short Term Fund - Institutional Weekly Dividend Nil (2010 40,667) Units of ` 1,000/ each DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend 23,102 (2010 - Nil) Units of ` 1,000/- each Kotak Quarterly Interval Plan Series 2 - Dividend 29,99,641(2010 - Nil) Units of ` 10/- each LIC MF Liquid Plan - Dividend Nil (2010 9,76,707 ) Units of ` 10/- each Total (A + B) 4,07,18,261 7. 6,63,26,700 6,63,26,700 6. INVENTORIES Work-in-Progress (at lower of cost and net realisable value) 1,23,71,911 1,23,71,911 SUNDRY DEBTORS Good and Unsecured Other Debts [includes ` 4,00,000/- (2010 - Nil) due from Ultimate Holding Company ITC Limited] 4,18,200 15,000 1,23,71,911 1,23,71,911 15,859 7,49,971 7,65,830 18,368 4,97,340 5,15,708 As at 31st March, 2010 (`)
2,31,08,872
8. CASH AND BANK BALANCES With Scheduled Banks On Current Accounts Cheques on Hand Cash on Hand
4,18,200
15,000
3,00,00,000
9,90,664 15,251 10,05,915
25,34,415 8,82,000 20,000 34,36,415
1,07,24,347
9.
OTHER CURRENT ASSETS Good and Unsecured Deposits Interest Receivable 1,55,000 1,08,867 2,63,867 1,55,000 1,55,000
5,31,08,872 11,94,35,572
5,14,42,608 11,77,69,308
19

SCHEDULES TO THE ACCOUNTS (Contd.) As at 31st March, 2011 (`) 10. LOANS AND ADVANCES Good and Unsecured Advances recoverable in cash or in kind or for value to be received Project Advances Staff Advances Other Advances Current Taxation (net of provisions) Fringe Benefit Tax (net of provisions) 11. LIABILITIES Sundry Creditors Total Outstanding dues of micro enterprises and small enterprises; Total Outstanding dues of creditors other than micro enterprises and small enterprises Progress payments and advances against projects Sundry Deposits * Other liabilities As at 31st March, 2010 (`) 18. NOTES TO THE ACCOUNTS 1. During the year, the following Current Investments were purchased and sold: (i) (ii) 11,90,278 1,22,000 21,94,794 23,77,518 8,760 58,93,350 11,90,278 2,17,000 25,01,214 20,25,263 9,933 59,43,688 (iii) (iv) (v) (vi) 8,11,736 (vii) 14,17,650 (viii) (ix) (x) (xi) (xii) (xiii) (xiv) 18,87,500 26,17,910 1,08,867 6,35,326 52,49,603 94,92,363 16,94,742 4,29,294 1,16,16,399 1,23,71,911 1,23,71,911 1,23,71,911 41,288 4,354 7,097 1,62,977 75,000 50,000 102 1,02,400 17,80,000 28,18,643 45,98,643 91,72,942 5,71,409 4,24,497 1,01,68,848 1,23,71,911 1,23,71,911 1,23,71,911 43,038 4,471 27,227 11,74,211 75,000 43,795 7,11,929 (xv) (xvi) (xvii) 574 Units of AIG Short Term Fund Institutional Weekly Dividend at cost of ` 5,74,412/10,11,297 Units of Birla Sun Life Cash Plus - Instl - Daily Dividend Reinvestment at cost of ` 1,09,24,339/23,64,053 Units of BNP Paribas Money Plus Institutional Plan Daily Dividend at cost of ` 2,36,51,820/23,59,579 Units of BNP Paribas Overnight Fund - Institutional Daily Dividend at cost of ` 2,36,02,874/14,92,777 Units of Canara Robeco Liquid Fund - Institutional Daily Dividend Reinvest at cost of ` 1,50,09,874/7,28,558 Units of Canara Robeco Treasury Advantage Institutional Daily Dividend Fund at cost of ` 90,39,290/10,00,000 Units of DSP BlackRock FMP - 3M Series 22 - Dividend Payout at cost of ` 1,00,00,000/9,84,409 Units of DSP BlackRock Liquidity Fund - Regular PlanDaily Dividend at cost of ` 98,53,939/9,023 Units of DSP BlackRock Money Manager Fund Regular Daily Dividend at cost of ` 90,43,148/97,322 Units of DWS Insta Cash Plus Fund - Regular Plan Daily Dividend - Reinvest at cost of ` 10,02,517/30,00,000 Units of HDFC FMP 100D September 2010 (2) Dividend - Series XIV, Option: Payout at cost of ` 3,00,00,000/8,012 Units of ICICI Prudential Liquid Super Institutional Plan Div - Daily at cost of ` 8,01,339/14,28,204 Units of JM High Liquidity Fund- Super Institutional Plan - Daily Dividend at cost of ` 1,43,05,609/12,31,196 Units of JM Money Manager Fund Super Plus PlanDaily Dividend at cost of ` 1,23,18,485/2,10,101 Units of JP Morgan India Liquid Fund - Retail - Daily Dividend Plan - Reinvest at cost of ` 21,04,161/78,81,997 Units of JP Morgan India Liquid Fund Super Inst. Daily Dividend Plan- Reinvest at cost of ` 7,88,82,236/48,00,686 Units of JP Morgan India Treasury Fund - Super Inst. Daily Div Plan - Reinvest at cost of ` 4,80,49,584/-
1,00,00,000 1,00,00,000 2,80,90,000 2,80,90,000 17,71,041 3,07,492 4,06,72,777 3,98,15,142 *Includes Deposits from Ultimate Holding Company, ITC Limited ` 2,20,00,000/(2010 - ` 2,20,00,000/-) 12. PROVISIONS Provision for Retirement Benefits 23,11,516 17,17,567 23,11,516 17,17,567 For the year ended 31st March, 2011 (`) 13. OTHER INCOME Lease Rentals Income from Current Investments-others Interest on Income Tax Liability no longer required written back 14. EMPLOYEE COST Salaries/Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses 15. PROJECT EXPENSES Opening Work-in-progress Add : Expenditure incurred on Projects during the year Less : Closing Work-in-progress Project Expenses 16. MANAGEMENT AND OTHER EXPENSES Rates and Taxes Insurance Travelling Legal and Consultancy Charges Auditors' Remuneration (excluding Service Tax ) - Audit Fees - Tax Audit Fees * Interest - Others Loss on Sale of Current Investments Excess of carrying cost over Fair Value of Investments Miscellaneous Expenses For the year ended 31st March, 2010 (`)
(xviii) 30,00,000 Units of Kotak FMP Series 31 - Dividend at cost of ` 3,00,00,000/(xix) (xx) (xxi) (xxii) 9,92,894 Units of Kotak Floater Long Term - Daily Dividend at cost of ` 1,00,08,173/8,17,854 Units of Kotak Liquid (Institutional) - Daily Dividend at cost of ` 1,00,00,798/6,12,325 Units of LIC Nomura MF Income Plus Fund - Daily Dividend Plan at cost of ` 61,23,252/10,57,727 Units of LIC Nomura MF Liquid Fund - Dividend Plan at cost of ` 1,16,14,791/-
(xxiii) 13,35,655 Units of Principal Cash Management Fund - Liquid Option - Instl. Plan - Dividend Reinvestment - Daily at cost of ` 1,33,59,490/(xxiv) 21,36,855 Units of Reliance Liquid Fund - Cash Plan - Daily Dividend Option at cost of ` 2,38,07,770/(xxv) 22,300 Units of Religare Liquid Fund - Institutional Daily Dividend at cost of ` 2,23,05,169/-
(xxvi) 61,93,687 Units of Sundaram Money Fund Inst. - Daily Div Rein at cost of ` 6,25,27,130/(xxvii) 5,952 Units of Templeton India Treasury Management Account Regular Plan - Daily Dividend Reinvestment at cost of ` 90,01,172/(xxviii) 58,968 Units of Templeton India Treasury Management Account Institutional Plan - Daily Dividend Reinvestment at cost of ` 5,90,07,390/(xxix) 59,00,593 Units of Templeton India Ultra Short Bond Fund Institutional Plan - Daily Dividend Reinvestment at cost of ` 5,90,71,426/(xxx) 9,01,852 Units of Templeton India Ultra Short Bond Fund Retail Plan - Daily Dividend Reinvestment at cost of ` 90,28,085/(xxxi) 18,346 Units of UTI Liquid Cash Plan Institutional - Daily Income Option - Reinvestment at cost of ` 1,87,02,686/(xxxii) 18,734 Units of UTI Treasury Advantage Fund- Institutional Plan (Daily Dividend Option) - Reinvestment at cost of ` 1,87,37,944/-
27,695 57,541 52,807 5,00,759 21,60,173 * Paid to the erstwhile auditors, a firm in which some of the partners of the statutory auditors firm are partners. 17. PROVISION FOR TAXATION Income Tax for the year - Current Tax 32,00,000 26,00,000 - Deferred Tax (2,50,122) (55,959) 29,49,878 25,44,041 Less: Adjustments related to previous years-Net - Current Tax 4,17,167 - Fringe Benefit Tax (3,330) 25,36,041 25,44,041
20

NOTES TO ACCOUNTS (Contd.) 2. Earnings per share: Profit after Taxation (`) Weighted average number of Equity Shares outstanding 4,20,60,166 3,84,84,824 Basic and Diluted Earnings Per Share (Face Value - ` 10/- per share) ` 0.20 ` 0.20 Remuneration of Manager: Salaries : ` 15,88,800/- (2010 ` 13,65,000/-) Provident Fund : ` 75,456/(2010 ` 63,000/-) Other Benefits : ` 1,65,520/(2010 ` 1,59,565/-) Total : ` 18,29,776/- (2010 ` 15,87,565/-) The reappointment and the remuneration of ` 9,62,494/- from 1st October, 2010 are both subject to the approval of the members at the forthcoming Annual General Meeting. Segment Reporting - The Company operates in a single business segment namely Property Maintenance and in a single geographical segment. 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
Key Management Personnel Mr. K. Vaidyanath Non - Executive Chairman (upto 2nd January, 2011) Mr. R. Tandon Non - Executive Chairman (w.e.f. 3rd January, 2011) Non - Executive Director (upto 2nd January, 2011) Mr. A. Nayak Non - Executive Director Mr. S. Dutta Non - Executive Director
For the year ended 31st March, 2011 84,31,989/-
For the year ended 31st March, 2010 77,60,664/-
3.
4. 5.
(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 31st March, 2011 31st March, 2010 (`) (`) Holding Company Russell Credit Limited Issue of Equity Shares Nil 9,00,00,000/Ultimate Holding Company : ITC Ltd Lease Rental Income 18,20,000/17,20,000/Maintenance Income 2,19,19,629/2,21,01,849/Other Reimbursements received 2,61,830/1,91,280/Other Reimbursements made 26,332/7,292/Balances as at Ultimate Holding Company : ITC Ltd Security Deposit Received Other Receivables Particulars Fellow Subsidiary Company Landbase India Ltd Reimbursement of Expenses Balances as at 31st March, 2011 (`) 2,20,00,000/4,00,000/31st March, 2010 (`) 2,20,00,000 /Nil
For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 21,79,702/31st March, 2011 (`) 95,87,277/31st March, 2010 (`)
Employee Benefits: Contribution to Defined Contribution Schemes ` 8,25,782/- (2010 ` 5,57,243/-) Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes: For the year ended For the year ended 31st March, 2011 (`) 31st March, 2010 (`) Leave Leave Pension Gratuity Encashment Pension Gratuity Encashment N.A. Funded Unfunded N.A. Funded Unfunded I. Components of Employer Expenses 1. Current Service Cost N.A. 2,11,698 1,28,601 N.A. 1,79,096 1,02,564 2. Interest Cost N.A. 1,50,696 1,25,405 N.A. 1,33,418 1,06,858 3. Expected Return on Plan Assets N.A. (1,88,083) Nil N.A. (1,60,114) Nil 4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 6. Past Service Cost N.A. 2,17,055 Nil N.A. Nil Nil 7. Actuarial Losses/(Gains) N.A. 4,77,594 2,70,421 N.A. (1,38,234) (344) 8. Total expense recognised in the N.A. 8,68,960 5,24,427 N.A. 14,166 2,09,078 Statement of Profit & Loss Account II. Actual Returns N.A. 2,09,189 N.A. N.A. 1,93,153 N.A. III. Net Asset / (Liability) recognised in Balance Sheet 1. Present Value of Defined Benefit Obligation N.A. 27,27,984 19,41,994 N.A. 20,89,233 17,17,567 2. Fair Value of Plan Assets N.A. 23,58,462 N.A. N.A. 23,43,602 N.A. 3. Status [Surplus/(Deficit)] N.A. (3,69,522) (19,41,994) N.A. 2,54,369 (17,17,567) 4. Unrecognised Past Service Cost N.A. Nil Nil N.A. Nil Nil 5. Net Asset/(Liability) recognised in N.A. (3,69,522) (19,41,994) N.A. 2,54,369 (17,17,567) Balance Sheet IV. Change in Defined Benefit Obligations (DBO) 1. Present Value of DBO at the N.A. 20,89,233 17,17,567 N.A. 19,76,274 15,44,591 Beginning of Period 2. Current Service Cost N.A. 2,11,698 1,28,601 N.A. 1,79,096 1,02,564 3. Interest Cost N.A. 1,50,696 1,25,405 N.A. 1,33,418 1,06,858 4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil 6. Plan Amendments N.A. Nil Nil N.A. Nil Nil 7. Past Service Cost N.A. 2,17,055 Nil N.A. Nil Nil 8. Actuarial (Gains)/Losses N.A. 4,70,360 2,70,421 N.A. (58,958) (344) 9. Benefits Paid N.A. (4,11,058) (3,00,000) N.A. (1,40,597) (36,102) 10. Present Value of DBO at the End N.A. 27,27,984 19,41,994 N.A. 20,89,233 17,17,567 of the Period V. Change in Fair Value of Assets 1. Plan Assets at Beginning of Period N.A. 23,43,602 N.A. N.A. 22,31,093 N.A. 2. Acquisition Adjustment N.A. Nil N.A. N.A. Nil N.A. 3. Expected Return on Plan Assets N.A. 1,88,083 N.A. N.A. 1,60,114 N.A. 4. Actuarial Gains/(Losses) N.A. (7,234) N.A. N.A. 79,276 N.A. 5. Actual Company Contributions N.A. 2,45,069 N.A. N.A. 13,716 N.A. N.A. N.A. (1,40,597) N.A. 6. Benefits Paid N.A. (4,11,058) 7. Plan Assets at the End of Period N.A. 23,58,462 N.A. N.A. 23,43,602 N.A. VI. Actuarial Assumptions 1. Discount Rate (%) N.A. 8.00 8.00 N.A. 7.00 7.00 2. Expected Return on Plan Assets (%) N.A. 8.00 N.A. N.A. 7.00 N.A. VII. Major Category of Plan Assets as a % of the Total Plan Assets As at 31st March, 2011 1. Government Securities/Special Deposit with RBI 2. High Quality Corporate Bonds 3. Insurance Companies 4. Mutual Funds 5. Cash and Cash Equivalents For the year ended 31st March, 2009 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded N.A. N.A. 100% N.A. N.A. As at 31st March, 2010 N.A. N.A. 100% N.A. N.A.
6.
Fellow Subsidiary Company Landbase India Ltd Other Payables 11,17,702/Nil Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Contribution to Greenacre Holdings Limited Provident Fund 3,35,206/3,00,942/Contribution to Greenacre Holdings Limited Gratuity Fund 2,35,195/2,764/For the year ended 31st March, 2011 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded VIII. Net Asset / (Liability) recognized in Balance Sheet (including experience adjustment impact) 1. Present Value of Defined Benefit Obligation 2. Fair Value on Plan Assets 3. Status [Surplus / (Deficit)] 4. Experience Adjustment of Plan Assets [Gain / (Loss)] 5. Experience Adjustment of Obligation [(Gain) / Loss]
For the year ended 31st March, 2010 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded
For the year ended 31st March, 2008 (`) Pension Gratuity Leave Encashment N.A. Funded Unfunded
N. A . 27,27,984 19,41,994 N. A . 23,58,462 N.A. N. A . (3,69,522) (19,41,994) N. A . N. A . (61,732) 6,41,666 N.A. 4,49,894
N. A . N. A . N. A . N. A . N. A .
20,89,233 17,17,567 23,43,602 N.A. 2,54,369 (17,17,567) 79,276 (58,958) N.A. (344)
N. A . N. A . N. A . N. A . N. A .
19,76,274 15,44,591 22,31,093 N.A. 2,54,819 (15,44,591) Nil Nil N.A. Nil
N. A . N. A . N. A . N. A . N. A .
16,38,837 12,91,053 19,19,289 N.A. 2,80,452 (12,91,053) Nil Nil N.A. Nil
21

SCHEDULES TO THE ACCOUNTS (Contd.) (a) Amounts recognised as expense is included in Schedule 14 as below : Leave Encashment of ` 5,24,427/- (2010 ` 2,09,078/-) in Salaries Wages and Bonus and Gratuity of ` 8,68,960/- (2010 ` 14,166/-) in Contribution to Provident and Other Funds. (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 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 return 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. 7. 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, 2011. 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. Figures for the previous year have been regrouped/re-arranged wherever necessary. 19. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements are prepared on accrual basis under the historical cost convention. 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. Investment Income Income from Investments is accounted for on an accrual basis, inclusive of related tax deducted at source. Method of Accounting - Projects The Company follows the proportionate completion method under which a portion of the estimated revenue is recognised taking into account the extent of completion of projects. Revenue Recognition Service Income is recognized on rendering of service. 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. Employee Benefits Monthly 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 Profit and Loss Account as income or expense. Lease Rentals Lease Rentals are accounted for on an accrual basis. 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.
On behalf of the Board R. Tandon Director S. Dutta Director A. Prasad Secretary
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Application of Funds
0 4 9 4 6 7 0 3 Month 2 0 1 1 Year
State Code
2 1
Net Fixed Assets
Investments
3 0 2 2
9 8 2 6
1 5
1 9
4 3 N I
6 L
Balance Sheet Date 3 1 Date
Net Current Assets * *Includes Deferred Tax Asset Accumulated Losses Rights Issue
Misc. Expenditure
II. Capital raised during the year (Amount in ` Thousands) Public Issue
L
Total Expenditure
N
Bonus Issue
N I
Private Placement
L L
IV. Performance of Company (Amount in ` Thousands) Turnover (Including other Income)
N I
N I
2 7 +
1 6
1 6
2 0
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities Total Assets
Profit/Loss before Tax
5
Sources of Funds
2 8
1 5
2 8
1 5
Profit/Loss after Tax + 1 0 9 6 8 8 4 3 (Please tick appropriate box + for Profit, for Loss) Dividend Rate %
Earnings per Share in `
0
Reserves & Surplus
Paid up Capital
2 0
6 0
N I
2
L
0 7
5 5
I
0
L
V. Generic Names of Three Principal Services of Company Item Code No. Service Description Not Applicable Project Management Property Maintenance Property Development
Secured Loans
Unsecured Loans N
Audit Committee : Mr. R. Tandon, Chairman, M/s. A. Nayak and S. Dutta, Members
22
WIMCO LIMITED
DIRECTORS REPORT TO THE MEMBERS OF WIMCO LIMITED Your Directors present their report for the financial year ended 31st March 2011. Company Performance Your Companys turnover, which stood at ` 192.19 crores has seen a decline by 10% as compared to last year primarily on account of lower volumes in the Matches business. During the year under review, the Company incurred a net loss of ` 59.65 crores after taking into account a one-time cost of ` 37.46 crores, inter alia, for restructuring of the Companys operations at Chennai and Ambarnath. The income from Matches business for the year has decreased by 10% to ` 184.78 crores from ` 205.85 crores earned in the previous year. Your Company is facing challenge in its main business of Matches due to steep rise in input costs on one hand and growing competition from small scale and cottage sector on the other hand. Your Company, with a view to making its Matches business viable, restructured its operations in the Matches Factories at Chennai and Ambarnath. Alternative arrangements have been put in place to ensure continued supplies of Companys products in the market. The income from the engineering business during the year was ` 14.04 crores as compared to ` 14.36 crores in the previous year. Your Company is working towards increasing its value capture through continuous product development in packaging machinery. This business is poised for growth through new customer acquisitions, both in the domestic and overseas market. The income from the seedling business during the year was ` 9.76 crores as against ` 9.33 crores in the previous year. The Agro Forestry business of your Company is supplying high quality poplar ETPs (Entire Transplants) to farmers in Northern India. Apart from creating a long-term sustainable supply of a critical raw material, your Companys strategy of creating sustainable and meaningful linkages across the farmer community is helping us to contribute towards improving the green environment in the region. The initiatives taken by your Company during the year to restructure its operations, coupled with the possibility of alternative usage of land now rendered surplus, are expected to yield positive results in the years to come. In furtherance of the objective of restructuring, the Company is also exploring the possibility of raising further funds. Dividend In view of the losses incurred during the year, your Directors are unable to recommend any dividend. Further, the 5% Dividend on the outstanding 55,00,000 Redeemable Cumulative Preference Shares of the Company has been kept in abeyance. Directors Mr. Rajeev Gopal ceased to be the Managing Director of your Company with effect from 30th December, 2010 consequent to withdrawal of nomination by the Holding Company i.e. Russell Credit Limited (RCL). Pursuant to nomination by RCL, the Board of Directors (the Board) of your Company appointed Mr. V. M. Rajasekharan as Additional Director and Managing Director of the Company with effect from 7th January, 2011. By virtue of the provisions of Section 260 of the Companies Act, 1956, Mr. Rajasekharan will vacate his office at the ensuing Annual General Meeting of the Company. Your Board has recommended for the approval of the Members the appointment of Mr. Rajasekharan as Managing Director of your Company for a period of three years with effect from the date of the ensuing Annual General Meeting of the Company. Appropriate resolution seeking the approval of the Members to such appointment is appearing in the Notice convening the ensuing Annual General Meeting of the Company. In accordance with the provisions of Article 131, 132 and 133 of the Articles of Association of the Company, Mr. R. L. Auddy and Mr. Dipak Dutta 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. Redemption and Issue of Preference Shares Pursuant to the approval of the members at the last Annual General Meeting, 50,00,000 Zero Dividend Redeemable Cumulative Preference Shares of ` 100 each, aggregating ` 50 crores, were issued for cash at par to RCL. AUDITORS REPORT TO THE MEMBERS OF WIMCO LIMITED We have audited the attached balance sheet of Wimco Limited (the Company) as at 31 March 2011 and the related profit and loss account and cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys 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 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. 1. As required by the Companies (Auditors 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, the redemption date of 30,00,000 5% Redeemable Cumulative Preference Shares of ` 100 each, aggregating ` 30 crores, held by RCL in the Company was extended from 15th March, 2011 to 15th March, 2012, after receiving consent from RCL. Directors Responsibility Statement As required under Section 217(2AA) of the Companies Act, 1956, your 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, 2011 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 Companys 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 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. B) Technology Absorption Investment made in upgraded match manufacturing machinery have benefited the Company in waste reduction and enhancement of process efficiency and product consistency. During the year, the Companys expenditure on Research and Development was ` 21.35 lacs. C) Foreign Exchange Earnings and Outgo During the year, the Company earned foreign exchange of ` 277.50 lacs. The total outflow on account of foreign exchange was ` 820.96 lacs. Employees The relations between the Company and its employees have generally been cordial and harmonious during the year under review. The operations at the Companys Kolkata Factory has been suspended due to industrial unrest with effect from 29th April, 2011. 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. Kolkata 3rd May 2011 For and on behalf of the Board K.N. Grant Chairman
23
WIMCO LIMITED
2. a) Further to our comments in the Annexure referred to above, we report that: 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; 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) ii) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2011; in the case of the profit and loss account, of the loss of the Company for the year ended on that date; and
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, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211of the Act; e) On the basis of written representations received from directors of the Company as at 31 March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; 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. Chartered Accountants Firms Registration No. : 101248W Kolkata 3rd May 2011 Bhavesh Dhupelia Partner Membership No. : 042070
ANNEXURE TO THE AUDITORS REPORT - 31 MARCH 2011 (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 concem 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 301of the Act. 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. There were no dues on account of cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. 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 2011 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 Statute Nature of the Dues Amount (` in Lakhs) 48.51 Period to which the amount relates 2006-2008 Forum where dispute is pending Additional Commissioner Excise, Kolkata III Member, Tribunal Trade Tax, Bareilly High Court, Allahabad
The Central Excise Act, 1944 Uttar Pradesh Sales Tax Act, 1948 Uttar Pradesh Sales Tax Act, 1948 Central Sales Tax Act, 1956 Income-Tax Act, 1961
Excise Duty
Sales tax
1.32 0.14
1977-1978 1996-1997 2000-2004
Sales tax
0.75
Sales tax
272.68
2005-2006
(vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an intemal 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 Govemment for maintenance of cost records under Section 209(1)(d) of the Act in respect of generation of electricity from wind power 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,
Appellate Authority, Kolkata Commissioner of Income Tax (Appeal), Mumbai Commissioner of Income Tax (Appeal), Mumbai Commissioner of Income Tax (Appeal), Mumbai
Income-tax
39.65 365.23 313.36
2002-2003 2007-2008 2008-2009
(x)
The accumulated losses of the Company at the end of the financial year are less than fifty percent of its net wroth. However, it has incurred cash losses in the financial year as well as in the immediately preceding financial year.
24
WIMCO LIMITED
(xi) (xii) (xiii) The Company did not have any outstanding dues to any banker, financial institution or debentureholders during the year. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 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. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. 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. The Company did not have any term loans outstanding during the year. 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. (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 during the year. (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.
(xiv)
(xv)
(xvi) (xvii)
For BSR & Co. Chartered Accountants Firms Registration No. : 101248W Kolkata 3rd May 2011 Bhavesh Dhupelia Partner Membership No. : 042070
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule SOURCES OF FUNDS : Shareholders Funds : Share Capital Reserves & Surplus Loan Funds : Unsecured Loans 31st March, 2011 (` in Lacs) 11,442.30 5,132.03 16,574.33 3 1,303.29 1,303.29 TOTAL APPLICATION OF FUNDS : Fixed Assets : Gross Block Less : Accumulated Depreciation Provision for Impairment Net Block Capital Work-In-Progress Investments Deferred Tax Asset (Net) Current Assets, Loans & Advances : Plantation Work-In-Progress Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions : Current Liabilities Provisions Net Current Assets Profit and Loss Account Less : Adjusted against General Reserve (As per contra in Schedule 2) TOTAL Notes to the Accounts Segment Information Related Party Disclosure Significant Accounting Policies 18 19 20 21 17,877.62 4 27,316.38 11,190.57 414.35 15,711.46 104.99 5 6 204.77 2,931.65 329.84 60.71 2,836.28 6,363.25 5,390.30 342.98 5,733.28 629.97 7,367.07 6,534.97 832.10 17,877.62 1,402.03 1,402.03 15,816.45 599.10 210.55 3,290.89 207.83 51.60 2,561.88 6,322.75 5,882.82 216.00 6,098.82 223.93 12,435.67 22,496.54 10,680.26 414.35 11,401.93 210.71 11,612.64 599.10 315.27 315.27 12,435.67 6,442.30 5,678.10 12,120.40 31st March, 2010 (` in Lacs)
1 2
7 8 9 10 11
The Schedules referred to above and the annexed notes form an integral part of the Accounts. This is the Balance Sheet referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani
For and on behalf of the Board Chairman Managing Director Head - Finance & Company Secretary Kolkata, 3rd May 2011
25
WIMCO LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule For the year ended 31st March, 2011 (` in Lacs) 20,857.78 1,638.60 22,954.32 1,642.12 For the year ended 31st March, 2010 (` in Lacs)
INCOME Sales and Services Less : Excise Duty Other Income EXPENDITURE Cost of Trading Products Sold Cost of Seeds Raw Materials Consumed Decrease in Stocks Employee Costs Other Costs Interest Depreciation 1,888.20 7.34 11,476.53 69.33 3,244.42 4,436.24 55.28 514.00 21,691.34 (2,218.58) 3,746.46 (5,965.04) (5,965.04) (1,402.03) (7,367.07) (6.67) 1.00 1,080.86 5.45 13,187.00 1,132.54 3,489.83 4,883.87 (15.18) 495.21 24,259.58 (1,623.95) (1,623.95) (1,623.95) 221.92 (1,402.03) (2.06) 1.00 12 13 19,219.18 253.58 19,472.76 21,312.20 1,323.43 22,635.63
14 15 16 17 4
(LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION Exceptional Item ( See Note 4 of Schedule 18) : (LOSS) BEFORE TAXATION Income Tax Expenses (LOSS) AFTER TAXATION (Loss)/Profit Brought Forward Balance Carried to Balance Sheet Earnings per share (`) - Basic and Diluted (See Note 13 of Schedule 18) Face Value (`) Notes to the Accounts 18 Segment Information 19 Related Party Disclosure 20 Significant Accounting Policies 21 The Schedules referred to above and the annexed notes form an integral part of the Accounts. This is the Profit and Loss Account referred to in our report of even date.
For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani
26
WIMCO LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (` in Lacs) A. CASH FLOW FROM OPERATING ACTIVITIES : (LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION Adjustments for : Depreciation Interest Expense Interest Income Provisions Written Back Profit/Loss on sale of fixed assets (net) Fixed assets/Inventory written off Provision/Write off of Doubtful/Bad Debts, Advances & Deposits (Net) Operating Loss Before Working Capital Changes Adjustments for : Inventories Sundry Debtors Loans and Advances Current Liabilities and Provisions Income Tax Paid 200.75 (122.01) 90.22 (305.04) (136.08) (365.15) (2,045.56) Exceptional Item NET CASH FLOW/(USED IN) FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets Proceeds from sale of/advance against sale of Fixed Assets Interest Received NET CASH FLOW FROM/(USED IN) INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Borrowings : Issue of Zero Coupon Preference Shares Cash Credit / Working Capital Demand Loan Loan from Subsidiary / Holding Company Interest Paid (Net) NET CASH FLOW (USED IN)/FROM FINANCING ACTIVITIES D. NET DECREASE IN CASH AND CASH EQUIVALENTS : (A+B+C) E. RECONCILIATION : CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR (Refer Schedule 9) CASH AND CASH EQUIVALENTS - AT THE END OF THE YEAR (Refer Schedule 9)* *Includes ` 0.25 lacs in restricted bank account. Notes : 1. The Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard -3 on Cash Flow Statement. 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. 6. Previous years figures have been regrouped wherever necessary. This is the Cash Flow Statement referred to in our report of even date. (132.68) 1.20 3.09 (128.39) (3,746.46) (5,792.02) (362.93) 405.05 17.14 59.26 183.06 1,599.20 (12.83) 328.88 29.84 1,945.09 (198.53) (2,218.58) 514.00 57.84 (2.56) (60.10) 0.81 164.27 674.26 (1,544.32) 495.21 3.04 (18.22) (28.31) (917.50) 506.38 19.85 60.45 (1,563.50) For the year ended 31st March, 2010 (` in Lacs) (1,623.95)
5,000.00 988.02 (58.50) 5,929.52 9.11 51.60 60.71 9.11
(245.04) 0.65 (2.35) (246.74) (4.42) 56.02 51.60 (4.42)
For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani
27
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS SCHEDULE 1 SHARE CAPITAL As at 31st March, 2011 (` in Lacs) As at 31st March 2010 (` in Lacs)
Authorised : 35,00,00,000 (2009-10 : 55,00,00,000) Equity Shares of ` 1 (2009-10: ` 1) each (See Note (a) and (e) below) 113,00,000 (2009-10 : 93,00,000) Redeemable Preference Shares of ` 100 each (See Note (e) below)
3,500.00 11,300.00 14,800.00
5,500.00 9,300.00 14,800.00
Issued, Subscribed and Paid Up : 9,42,30,000 (2009-10 : 9,42,30,000) Equity Shares of ` 1 each fully paid up (See Notes (a), (b) and (c) below) 50,00,000 (2009-10: NIL ) Zero Coupon Preference Shares of ` 100 each fully paid ( See note (f) below ) 55,00,000 (2009-10 : 55,00,000) 5% Redeemable Cumulative Preference Shares of ` 100 each fully paid up
942.30 5,000.00 5,500.00 11,442.30
942.30 5,500.00 6,442.30
Notes : Of the above : (a) 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 lacs to ` 5,720 lacs 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 lacs.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. (b) 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 debentureholders respectively. (c) 42,50,000 equity shares have been allotted as fully paid by way of bonus shares by capitalisation of reserves. (d) 9,12,38,170 (2009-10 : 9,12,38,170 ) equity shares of ` 1 each and 55,00,000 (2009-10: 55,00,000), 5% Redeemable Cumulative Preference shares of ` 100 each are held by Russel Credit Limited, the holding company. Out of these, 30,00,000 preference shares were due for redemption on March 15, 2011 but the same was extended upto March 15, 2012 with the consent of Russel Credit Limited. Further 25,00,000 preference shares are due for redemption on March 15, 2012. (e) Pursuant to the provision of Section 94 of the Companies Act, 1956, Article 3 of the Articles of Association of the Company, the Authorised Share Capital of ` 148,00,00,000 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 (Thirty Five Crores) Equity shares of ` 1 (Rupee One) each and 1,13,00,000 (One Crore Thirteen Lakhs ) Redeemable Preference shares of ` 100 (Rupees One Hundred) each. (f) 50,00,000, Zero coupon Preference Shares of ` 100 each, redeemable at 6% premium per annum were issued during the year to Russel Credit Limited. These shares shall be redeemable on or before 15th September, 2015. SCHEDULE 2 RESERVES AND SURPLUS As at 31st March, 2011 (` in Lacs) 29.96 14.93 0.27 0.27 500.00 6,534.97 6,534.97 0.27 500.00 6,534.97 1,402.03 0.27 As at 31st March, 2010 (` in Lacs) 29.96 14.93
Capital Reserve Capital Subsidy Securities Premium Account Less : Adjusted towards premium on Redeemable Preference Shares ( See note 1(d) of Schedule 18 ) Capital Redemption Reserve Balance at the beginning of the year Add : Transfer from General Reserve General Reserve as per last Balance Sheet Less : Profit and Loss Account (As Per contra) Revaluation Reserve Balance at the beginning of the year Add : Revaluation Reserve ( See note in Schedule 4 )
500.00
500.00
5,132.94
4,587.14
4,587.14 5,132.03
5,678.10
SCHEDULE 3 LOAN FUNDS Unsecured Loans Pavan Poplar Limited (See Note below) ( Subsidiary Company) Note: The said loan is interest free, with no stipulation as to repayment terms. Russell Credit Limited ( Holding Company ) 303.29 1,000.00 1,303.29 315.27 315.27
28
WIMCO LIMITED
SCHEDULE 4 FIXED ASSETS
GROSS BLOCK Cost/Valuation Additions as at April 1, during the 2010 year Revaluation Deduction/ Cost/Valuation during the Adjustments as at March 31, year during the year 2011 As at April 1, 2010 Depreciation Intangible Assets Leasehold Land Computer Software Tangible Assets Freehold Land Buildings Plant Machinery Factory Equipment Furniture and Fittings/ Computers/Office Equipment Motor Cars, Lorries, Tractors and Launches 2010-11 2009-10 247.28 288.54 7,600.31 6,274.71 1,117.47 5,287.32 408.82 1,117.83 154.26 22,496.54 22,825.97 1.30 14.16 0.96 171.64 27.79 22.55 238.40 996.08 4,587.14 4,587.14 5.70 5.70 1,325.51 247.28 289.84 12,187.45 6,288.87 1,118.43 5,458.96 436.61 1,140.38 148.56 27,316.38 22,496.54 0.66 158.04 5,696.65 455.06 3,252.11 264.06 733.68 120.00 10,680.26 10,516.63 Impairment 246.62 167.73 414.35 414.35 ACCUMULATED DEPRECIATION / IMPAIRMENT Charge on account of Deductions/ As at March 31,2011 Depreciation Impairment Held for Sale Adjustments during the for the year Depreciation impairment year 50.85 41.45 76.52 263.76 12.61 62.60 6.21 514.00 495.21 3.69 0.66 208.89 5,738.10 531.58 3,515.87 276.67 796.28 122.52 246.62 (` in Lacs) NET BLOCK As at As at March 31, March 31, 2011 2010
DESCRIPTION
80.95
130.50 7,432.58 578.06 662.41 2,035.21 144.76 384.15 34.26 11,401.93 210.71 11,612.64
167.73 12,019.72 550.77 586.85 1,943.09 159.94 344.10 26.04
3.69 11,190.57 331.58 10,680.26
414.35 15,711.46 414.35 104.99 15,816.45
Capital Work in Progress [including capital advances ` Nil (2009-10: ` 6.06 Lacs)] Notes: Based on the valuation report submitted by the approved valuers the Company has revalued the land at Chennai by ` 4587.14 Lacs and the same has been transferred to revaluation reserved account.
SCHEDULE 5 INVESTMENTS LONG TERM INVESTMENTS (UNQUOTED) (i) Government Securities (trade) National Savings Certificates (pledged with various Mandi Samitis) (ii) Investments in wholly owned subsidiary companies Pavan Poplar Limited 55,10,004 (2009-10: 55,10,004) Equity Shares of ` 10 each, fully paid (including 6 Equity Shares held by nominees) Prag Agro Farm Limited 38,00,020 (2009-10: 38,00,020) Equity Shares of ` 10 each, fully paid (including 6 Equity Shares held by nominees) Less : Provision for Diminution (iii) Other Investments (Non-trade) Woodlands Hospital & Medical Research Centre Ltd. (Formerly known as The East India Clinic Limited) 22, (2009-10: 22) 1/2% Debentures of ` 100 each fully paid Mirage Advertising and Marketing Limited 12,488 (2009-10: 12,488) Equity Shares of ` 10 each fully paid Bilaspur Cane Development Corporation Limited 100 (2009-10: 100) Equity Shares of ` 10 each Less : Provision for Diminution
As at 31st March, 2011 (` in Lacs) 0.01
As at 31st March, 2010 (` in Lacs) 0.01
599.06
599.06
381.90 980.96 980.97 381.90 599.07
381.90 980.96 980.97 381.90 599.07
0.02 1.25 0.01 1.28 1.25 0.03 599.10
0.02 1.25 0.01 1.28 1.25 0.03 599.10 599.10
Aggregate of Unquoted Investments - At Book Value SCHEDULE 6 DEFERRED TAX ASSETS (NET) Deferred Tax Liability - Difference between book depreciation and depreciation under the Income Tax Act, 1961. Less : Deferred Tax Assets - On Unabsorbed depreciation as per Income Tax Act, 1961* - On disallowance u/s 43B of the Income Tax Act, 1961* - On VRS Cost u/s 35 DDA of the Income Tax Act 1961* - On Provision for Doubtful Debts - On Long Term Capital Loss as per Income Tax Act.1961* - On Business Loss as per Income Tax Act, 1961* 577.45 216.35 764.44 156.59 261.63 1,874.18 3,850.64
599.10
459.95 623.62 36.84 156.59 1,372.65 2,189.69 459.95
442.52
442.52
*Deferred tax asset which is on account of unabsorbed depreciation/carry forward losses/disallowances has been recognised only to the extent of the deferred tax liabilities as this amount is considered to be virtually certain of realisation. SCHEDULE 7 INVENTORIES (See Note 3 of Schedule 18) Stores and Spares Raw Materials * [including in transit ` 58.30 Lacs (2009 - 10 ` NIL)] Semi-finished goods * Finished Goods * Trading goods * Net of obsolescence 729.58 969.58 236.85 986.08 9.56 2,931.65 811.76 1,183.09 500.75 785.32 9.97 3290.89
29
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (` in Lacs) SCHEDULE 8 SUNDRY DEBTORS (Unsecured and considered good) Considered Good (including debtors over six months old ` 52.71 lacs (2009-10: ` 47.72 lacs)) Considered Doubtful (over six months old) Less : Provision For Doubtful Debts SCHEDULE 9 CASH AND BANK BALANCES Cash in Hand [ including cheques : ` NIL ( 31.03.2010 : ` NIL ) ] Balances with Scheduled Banks in: Current Accounts * (includes ` 0.25 lacs (2009-10: ` 0.25 lacs) lying in 'Restricted' Bank Account) Deposit Accounts Cash Credit (including working capital demand loan) with Banks is 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. 60.71 SCHEDULE 10 LOANS AND ADVANCES (Unsecured, considered good - Unless otherwise stated) Loans to Subsidiary Companies (See Note 5 of Schedule 18) Sundry Advances and Claims Receivables Considered Good Considered Doubtful Less: Provision for Doubtful Advances 328.94 26.83 355.77 26.83 328.94 Prepaid Expenses Balance with Customs, Port Trust, Excise Authorities, etc Deposits - Considered Good - Considered Doubtful Less : Provision for Doubtful Deposits Advance Tax and Tax Deducted at Source (Net of Provision for Taxation ` 446.77 lacs (2009-10: ` 429.56 lacs)) Fringe Benefits Tax [(Net of Provision ` 49.80 lacs (2009-10: ` 49.80 lacs)] 254.94 11.10 266.04 11.10 254.94 1,088.49 10.85 2,836.28 96.72 293.88 256.54 11.10 267.63 11.10 256.54 740.56 10.85 2,561.88 431.12 26.83 457.95 26.83 431.12 33.71 353.15 762.46 735.95 51.60 471.43 471.43 329.84 329.84 10.47 49.46 0.78 50.24 44.40 0.78 45.18 471.43 471.43 207.83 207.83 6.42 As at 31st March 2010 (` in Lacs)
SCHEDULE 11 CURRENT LIABILITIES AND PROVISIONS Current Liabilities Advances Received from Customers Sundry Creditors (See Note 7 of Schedule 18) [Due to ultimate holding company ` 2606.97 lacs, (2009-10 : ` 3,016.56 lacs)] Dealers' Deposits Due to Subsidiaries Interest Accrued but not Due Provisions : Leave Encashment Diminution in value of machinery Gratuity 131.94 5,107.22 64.37 5,660.20
59.57 82.87 8.70 5,390.30 85.82 7.94 249.22 342.98 5,733.28
66.02 82.87 9.36 5,882.82 110.90 7.94 97.16 216.00 6,098.82
SCHEDULE 12 SALES & SERVICES Sales (Net of Sales Tax) [tax deducted at source ` 365.11 lacs (2009-10: ` 215.28 lacs)] Technical Fees, Service Charges etc. [tax deducted at source ` 0.74 lacs (2009-10: ` 0.07 lacs)]
20,782.04 75.74 20,857.78
22,932.34 21.99 22,954.32
30
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS For the year ended 31st March, 2011 (` in Lacs) SCHEDULE 13 OTHER INCOME Provisions/Liabilities Written Back As No Longer Required (Net) Insurance Claims Exchange Loss (Net) Income from Sale of Energy Profit on sale of fixed assets (net) Other Receipts [includes sale of scrap and materials ` 95.15 lacs (2009-10 : ` 107.79 lacs)] and Lease/Rental Income ` NIL (2009-10 : ` 12.50 lacs) [tax deducted at source ` 5.15 lacs (2009-10 : ` 11.67 lacs)] SCHEDULE 14 (INCREASE)/DECREASE IN STOCK Plantation work in progress: Opening Stock Closing Stock Semi-finished Goods: Opening Stock Closing Stock 210.55 204.77 5.78 500.75 236.85 263.90 Finished and Trading Goods/Agriculture Produce: Opening Stock Closing Stock 795.29 995.64 (200.35) 69.33 SCHEDULE 15 EMPLOYEE COSTS Salaries, Wages and Bonus Contribution to Provident and Other Funds Staff and Workers Welfare Expenses SCHEDULE 16 OTHER COSTS Stores and Spares Consumed ( Including provision made for obsolete spares ) Power and Fuel Rent (See Note 14 of Schedule 18) Rates and Taxes Repairs and Maintenance: Machinery Buildings Others Insurance Directors Sitting Fees Freight and Transport CFAs/Stockists Costs Fixed assets/Inventory written off Provision/Write off of Doubtful/Bad Debts, Advances and Deposits (Net) Travelling and Conveyance Export Commission Advertisement Sales Promotion Loss on sale of fixed assets (net) Exchange Loss (Net) Plantation, Cultivation and Harvesting Charges Measurement and Extraction charges Commission to brokers Other Expenses 2,462.97 505.42 276.03 3,244.42 671.24 765.27 254.77 112.95 124.41 37.44 147.02 72.23 0.50 661.64 28.55 129.36 201.32 15.00 7.38 16.16 0.81 151.75 22.49 0.12 1,015.83 4,436.24 SCHEDULE 17 INTEREST Cash Credit (including Working Capital Demand Loan) Others Less : Interest Income On Income Tax Refund Others 57.84 57.84 2.56 12.80 5.42 1.87 1.17 3.04 2,741.15 455.37 293.31 3,489.83 763.86 833.47 247.04 44.06 147.70 58.88 168.48 45.78 0.60 601.24 65.28 506.38 19.85 210.78 22.99 14.16 2.66 134.00 16.04 8.32 972.30 4,883.87 1,905.54 795.29 1,110.25 1,132.54 500.15 500.75 (0.60) 233.44 210.55 22.89 60.10 11.28 3.51 17.88 160.81 28.31 26.38 26.07 917.50 325.17 For the year ended 31st March, 2010 (` in Lacs)
253.58
1,323.43
2.56 55.28
18.22 (15.18)
31
WIMCO LIMITED
SCHEDULE 18 - NOTES TO THE ACCOUNTS 1. (a) (b) (c) (d) 2. (a) Commitments:
Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is ` Nil (2009-10: ` Nil). The Company has issued letter of financial support to one of its subsidiary companies, viz., Prag Agro Farm Limited. Arrears of dividend on redeemable cumulative preference shares aggregate ` 570.34 lacs (2009-10: ` 295.34 lacs) excluding dividend tax. Premium on Redeemable preference shares remaining to be adjusted against profit of the Company ` 141.42 lacs. Contingencies: Claims against the Company not acknowledged as debts ` 2,218.57 lacs (2009-10: ` 1,501.05 lacs). These comprise: G Excise Duty, Sales Tax and Indirect Taxes claims disputed by the Company relating to issues of applicability and classification, etc. aggregating ` 360.85 lacs (2009-10: ` 329.43 lacs) G Local authority taxes / Cess / Royalty on property, utilities, etc claims disputed by the Company relating to issues of applicability and determination aggregating ` 342.09 lacs (2009-10: ` 341.08 lacs) G Third party claims arising from disputes relating to contracts aggregating to ` 400.51 lacs (2009-10: ` 382.01 lacs) G Other matters ` 1,115.12 lacs (2009-10: ` 448.52 lacs) [(includes Income Tax ` 1,048.72 lacs (2009-10: ` 370.13 lacs) excluding interest)] (b) Test bonds / special valuation bonds aggregating ` 241 lacs (2009-10: ` 241 lacs) equivalent to CIF value of imports of certain raw materials in respect of which additional liability of customs duty is not likely to exceed the above amount. (c) Claims have been filed by farmers in respect of disputes under the WIMCO NABARD Poplar Scheme amounting to ` 19.65 lacs (2009-10: ` 23.60 lacs). (d) 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, aggregating ` 1,362.62 lacs (2009-10: ` 1,362.62 lacs) 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 (2009-10: ` 235.35 lacs), where necessary formalities and entries have not been completed. 3. The Company suspended operations in its unit at Dhubri, Assam in an earlier year. Based on internal assessment as supported by a technical evaluation carried out in the previous year, fixed assets (excluding land) aggregating ` 43.67 lacs (2009-10: ` 43.67 lacs) and inventories of stores and spares aggregating ` 34.91 lacs (2009-10: ` 34.91 lacs) at Dhubri, were considered to be in good condition and usable. During the year, the Company has provided accelerated depreciation on these assets and made a provision for the stores & spares. 4. During the year, the Company has completed a voluntary separation scheme that has been accepted by all its workmen at its Chennai and Ambernath factories. Consequently, the Safety Matches operations at these units stand suspended and related assets being released for alternate use. 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 Chennai and Ambernath locations, amounting to ` 9,859.22 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 Schedule No.19 - Segment Information. 5. In respect of Loans and Advances from Subsidiary Company (Prag Agro Farm Limited), maximum amount due at any time during the year ` 762.46 lacs (2009-10: ` 735.95 lacs). Interest free loans where no repayment schedule has been specified represents amounts advanced from time to time in previous years and current year to provide financial support to the subsidiary company. 6. 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. 7. 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 as at 31st March 2011 and 31st March 2010. 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. Remuneration to Auditors 2010-11 (` in lacs) Audit Fees Out-of -Pocket expenses 9. (a) Annual Licensed Capacity Matches Unit Million boxes 2010-11 5,000 2009-10 5,000 15.50 0.75 2009-10 (` in lacs) 15.50 0.71
8.
(b) Annual Installed Capacity (As certified by the Management) Unit Matches (on 3 shift basis, 300 working days) (c) OPENING STOCK * Unit Own Production Matches Machines Foresty Wood (From own trees)# Trading Matches Total Plantation work in progress Agricultural Produce/ plants # Poplar ETPs # Poplar and Kadam trees Total 31.03.2011 Quantity Amount (` in lacs) 135 7 744.32 35.71 5.29 Million boxes 2 9.97 795.29 7.75 98.15 104.65 210.55 8 31.03.2010 Quantity Amount (` in lacs) 324 6 1,805.66 51.46 48.42 1,905.54 9.38 96.60 127.46 233.44 Million boxes 2010-11 5,000 2009-10 5,000
Million boxes Numbers
Numbers
83,087
98,185
32
WIMCO LIMITED
(d) ACTUAL PRODUCTION Matches Machines (e) Unit Million Boxes Numbers 2010-11 2,675 54 2009-10 3,344 51
COST OF TRADING PRODUCTS PURCHASED Unit Matches Machines Total Million boxes Numbers 2010 - 2011 Quantity Amount (` in lacs) 352 1,888.20 1,888.20 2009 - 2010 Quantity Amount (` in lacs) 195 2 1,010.98 10.13 1021.11
(f)
COST OF PURCHASES-FORESTRY Unit Seeds/Others Wood (Traded) Total N.A.
2010 - 2011 Quantity Amount (` in lacs) N.A. 7.34 0.00 7.34
2009 - 2010 Quantity Amount (` in lacs) N.A. 5.45 0.00 5.45
(g)
DETAILS OF SALES Unit Own Production Manufacturing Matches Machines Forestry Agricultural produce /plants # $ Poplar and Kadam wood (from own trees) # $ Poplar ETPs Trading Matches Machines
2010 - 2011 Quantity Amount (` in lacs) 2,634 57 16,357.36 1,344.65 51.43 103.47
2009 - 2010 Quantity Amount (` in lacs) 3,533 50 19,421.83 1,396.86 36.37 60.94 4.11 201 2 835.87 1,163.18 17.29 22,932.34
Million Boxes Numbers
Million Million boxes Numbers
3.85 352
820.64 2,104.49 0 20,782.04
(h)
Closing Stock* Unit Own Production Matches Machines Forestry Wood (from own trees) # Trading Matches Total Plantation work in progress Agricultural Produce/plants # Poplar ETPs # Poplar and Kadam trees Total Million boxes Numbers
31.03.2011 Quantity Amount (` in lacs) 176 4 977.22 8.86
31.03.2010 Quantity Amount (` in lacs) 135 7 744.32 35.71 5.29 2 9.97 795.29 7.75 98.15 104.65 210.55
Million boxes
9.56 995.64 4.80 114.67 85.30 204.77
Numbers
63,115
83,087
* Includes adjustments for shortage/excess and the effects of reduction of stock items to realisable value. # Due to the typical nature of the product, it is not possible to state quantities. $ Includes free issues and damages and is net of sales returns. 10. DETAILS OF RAW MATERIALS AND COMPONENTS CONSUMED* Unit Wood Splints and Veneers Cardboard and Paper Chemicals Others CMHub Million Tonnes Tonnes 2010 - 2011 Quantity Amount (` in lacs) 21,670 1,03,159 9,867 5,254 2,408.81 2,411.02 3,552.15 2,494.81 609.74 11,476.53 1,077.82 10,398.71 11,476.53 2009 - 2010 Quantity Amount (` in lacs) 26,570 1,53,573 12,574 6,807 2,539.20 2,716.84 3,276.97 2,927.05 1,726.94 13,187.00 617.31 12,569.69 13,187.00
Imported Indigenous * includes shortages/excesses/damages due to flood 11. (a) Value of Imports calculated on C.I.F. basis Raw Material Spares (b) Expenditure in Foreign currency Travelling (c) Earnings in Foreign Exchange Exports of Goods calculated on FOB basis
% 9 91
% 5 95
819.20 Nil 1.76 277.50
555.00 33.80 1.17 39.66
33
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS 12. UNHEDGED FOREIGN CURRENCY EXPOSURES NOT COVERED BY FORWARD CONTRACTS : 31.03.2011 Amount (in lacs) Sundry Debtors Sundry Creditors 13. EARNINGS PER SHARE (Loss) after taxation (` in lacs) Arrears of preference dividend and including Preference dividend tax (` in lacs) (Loss) attributable to equity shareholders (` in lacs) Weighted Average Number of equity shares Earnings per share (`) - Basic and Diluted Nominal value of an equity share (`) 14. 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. 15. Research and development expenses incurred during the year as ascertained by the management, amounting to ` 21.35 lacs (2009-10: ` 17.53 Lacs) have been charged to appropriate heads of expenses. 16. EMPLOYEE DEFINED BENEFITS 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 ` 27.58 lacs (2009-10; ` 27.50 lacs) has been recognised to the profit and loss account for the year. ` in lacs Defined Benefit Plans Gratuity (Funded) 2010-11 Change in obligation during the year ended March 31, 2011 1. 2. 3. 4. 5. 6. Obligation at the beginning of the year Service Cost Interest Cost Actuarial (Gains)/Losses Benefits payments Obligations at the end of the year 1,066.52 41.93 85.49 143.14 (573.86) 763.22 951.89 57.51 71.39 99.87 (114.14) 1,066.53 110.90 32.09 8.99 37.68 (103.83) 85.83 94.21 30.20 7.07 5.35 (25.92) 110.90 2009-10 Leave Encashment (Unfunded) 2010-11 2009-10 ` 0.98 Amount (in lacs) ` 42.92 Amount (in lacs) USD 0.03 2010-11 (5,965.04) 320.67 (6,285.61) 9,42,30,000 (6.67) 1.00 31.03.2010 Amount (in lacs) ` 1.25 2009-10 (1,623.95) 320.67 (1,944.62) 9,42,30,000 (2.06) 1.00
Change in Plan Assets 1. 2. 3. 4. 5. 6. Plan assets at the beginning of the year Expected return on plan assets Contribution by employers Actual benefits paid Actuarial Gains/(Losses) Plan assets at the end of the year 969.37 88.58 32.00 (573.86) (2.09) 514.01 956.07 86.05 39.54 (114.14) 1.85 969.37
Reconciliation of present value of the obligation and the fair value of the plan assets 1. 2. 3. Fair value of plan asset at the end of the year Present value of the defined benefit obligations at the end of the period Asset/(Liability) recognised in the balance sheet 514.01 763.22 (249.21) 969.37 1,066.53 (97.16) 85.83 (85.83) 110.90 (110.90)
Cost for the period 1. 2. 3. 4. 5. Service Cost Interest Cost Return on Plan Assets Actuarial (Gains)/Losses Past Service Cost 41.93 85.49 (88.58) 143.14 181.98 57.51 71.39 (86.05) 99.87 142.72 32.09 8.99 37.68 78.76 30.20 7.07 5.35 42.62
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. Actual return on plan assets Acturial Assumptions: 1. 2 3 Discount Rate Salary escalation Expected return on plan assets
(88.58) 8.00% 4.00% 9.00%
(86.05) 7.00% 3.50% 9.00%
8.00% 4.00%
7.00% 3.50%
34
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS Net Asset/(Liability) recognized in Balance Sheet (including experience adjustment impact) 1 Present Value of Defined Benefit Obligation For the year ended 31st March, 2011 (` in Lacs) Gratuity 763.22 514.01 (249.21) Leave Encashment 85.83 (85.83) For the year ended 31st March, 2010 (` in Lacs) Gratuity 1,066.53 969.37 (97.16) Leave Encashment 110.90 (110.90) For the year ended 31st March, 2009 (` in Lacs) Gratuity 951.89 956.07 4.18 Leave Encashment 94.21 (94.21) For the year ended 31st March, 2008 (` in Lacs) Gratuity 899.42 836.38 (63.04) Leave Encashment 103.10 (103.10)
2 Fair Value on Plan Assets 3 Status [Surplus/(Deficit)]
There are no experience adjustments of Plan Assets / Obligations as at 31 March 2011. A. Amounts recognised as an expense and included in Schedule 17 - "Salaries, Wages and Bonus" ` 78.76 lacs (2009-10: ` 42.62 lacs) for leave encashment and in "Contribution to Provident and Other Funds" ` 181.98 lacs (2009-10: ` 142.72 lacs) for gratuity. 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 (LIC) of India. 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 expected return on each major class are not readily available. We understand that 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. 17. PROVIDENT FUND LIABILITY In terms of the Guidance on implementing the revised AS 15, the provident fund set up by the Company is treated as a defined benefit plan since the Company has to meet the interest shortfall, if any. However, as at the year-end no shortfall remains unprovided for. As advised by an independent actuary, it is not practicable/feasible to actuarially value the provident fund liability. 18. PRIOR PERIOD COMPARATIVES The previous years figures have been re-grouped or re-arranged as necessary to conform to the present years presentation. SCHEDULE 19 NOTES TO SEGMENT INFORMATION: (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. Segment information for the year ended March 31, 2011 (I) Information about Primay Business Segments: Match 2010-11 Revenue External Inter-Segment Total Revenue Less: Eliminations on account of Inter Segment Revenue Total Revenue Result Segment Result Unallocated expenditure net of unallocated income Operating Profit/(Loss) before exceptional items Exceptional item (See Note 4 of Schedule 18) Operating Profit/(Loss) after exceptional items Interest Expenses Interest Income Net Profit/(Loss) Other Information Segment assets Segment liabilities Capital Expenditure Depreciation 18,478.00 18,478.00 18,478.00 (2,201.19) (2,201.19) (2,201.19) (2,201.19) 8,944.15 2,102.31 109.77 406.07 2009-10 20,585.02 20,585.02 20,585.02 (2,246.44 ) (2,246.44 ) (2,246.44 ) (2,246.44 ) 14,872.71 2,625.96 356.82 375.16 Engineering 2010-11 2009-10 1,404.25 1,404.25 1,404.25 173.84 173.84 173.84 173.84 681.16 304.93 5.73 8.65 1,436.14 1,436.14 1,436.14 230.58 230.58 230.58 230.58 717.47 319.86 2.26 9.16 Forestry 2010-11 2009-10 975.53 329.32 1,304.85 (329.32) 975.53 736.45 736.45 736.45 736.45 1,935.02 472.21 1.79 3.33 933.17 245.06 1,178.23 (245.06 ) 933.17 683.74 683.74 683.74 683.74 2,133.60 465.03 0.08 3.70 Unallocated 2010-11 2009-10 ` in lacs Total 2010-11 2009-10 20,857.78 329.32 21,187.10 (329.32) 20,857.78 (1,290.90) (872.39) (2,163.30) (3,746.46) (5,909.76) (57.84) 2.56 (5,965.04) 22,778.81 7,036.57 132.68 514.00 22,954.33 245.06 23,199.39 (245.06) 22,954.33 (1,332.12) (307.00) (1,639.12) (1,639.12) (3.05) 18.22 (1,623.95) 18,534.48 6,414.09 362.94 495.21
(872.39) (872.39) (3,746.46) (4,618.86) (57.84) 2.56 (4,674.14) 11,218.48 4,157.12 15.40 95.95
(307.00 ) (307.00 ) (307.00 ) (3.05 ) 18.22 (291.83 ) 810.70 3,003.24 3.78 107.19
35
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS
(II) Information about Secondary Business Segments
India 2010-11 2009-10
Outside India 2010-11 2009-10
Total 2010-11 2009-10 22,954.32 18,534.48 362.94
Revenue by Geographical Segments: Sales 20,573.15 22,913.44 284.63 40.88 20,857.78 Carrying Amount of Segment Assets 22,778.81 18,533.23 1.25 22,778.81 Capital Expenditure 132.68 362.94 132.68 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. SCHEDULE 20 - RELATED PARTY DISCLOSURES : 1. Parties exercising control over the Company : Related Party ITC Limited Russell Credit Limited 2. Relationship Ultimate holding company Holds 96.82% of the equity share capital 4. 3.
Other related Parties with whom the Company had transactions Fellow subsidiaries ITC Infotech India Limited Directors of the Company : Managing Director Rajeev Gopal (upto 29th December,2010) VM Rajasekharan (w.e.f. 7th January, 2011)
Parties over whom Company exercises control : Subsidiary Companies (Wholly owned) Pavan Poplar Limited (PPL) Prag Agro Farm Limited (PAFL)
No remuneration is paid by the Company to the Managing director in accordance with the terms of his appointment.
5.
Transaction with related parties ULTIMATE HOLDING COMPANY ITC Ltd. 2010-11 2009-10 21,044.91 1,400.00 2,381.31 0.48 435.12 63.98 400.00 1,400.00 259.82 505.79 2,770.59 HOLDING COMPANY RUSSELL CREDIT Ltd. 2010-11 55.50 4,000.00 3,000.00 1,000.00 5,000.00 2009-10 124.19 2010-11 5.35 3.96 0.85 1.33 13.30 303.30 82.87 SUBSIDIARY COMPANIES PPL 2009-10 5.12 4.01 1.74 15.50 12.00 315.27 82.87 2010-11 4.88 306.78 15.31 33.72 55.02 28.51 762.46 PAFL 2009-10 14.80 307.79 46.59 19.68 118.30 53.05 735.95 Fellow Subsidiaries ITC Infotech India Ltd. 2010-11 98.22 2009-10 84.09 2010-11 18,546.66 1,553.81 99.62 678.00 34.71 51.48 55.02 28.51 762.46 4,128.43 3,343.91 1,303.30 87.06 209.82 2,567.08 5,000.00
` in Lacs Total 2009-10 21,064.83 1,400.00 2,689.10 84.57 124.19 485.72 21.42 63.98 118.30 53.05 735.95 415.50 1,412.00 315.27 259.82 588.66 2,770.59
Sale of goods & services Sale of Fixed Asset Purchase of raw materials and components Purchase of Services Purchase of Fixed Assets Expenses Reimbursed Expenses Recovered Rent Received Loans & Advances given during the year Receipt towards Repayment of Loans and advances given Outstanding Loans and Advances (Dr) Loans & Advances taken during the year Repayment of loans & Advances by the Company Unsecured Loans (Cr) Outstanding Receivables Outstanding Payables Advance Payable Issue of Preference Shares
18,536.43 1,247.04 1.40 603.23 0.14 51.48 127.10 330.61 87.06 126.95 2,567.08
SCHEDULE 21 - 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 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. 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. 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 (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 Building Plant, machinery and factory equipment Furniture and fittings/office equipment Computers Motor cars, lorries, tractors and launches Rates % 1.63 to 3.34 4.75 to 10.34 6.33 31.67 7.07 to 11.31
Assets individually costing ` 5,000.00 or less are fully depreciated in the year of purchase.
36
WIMCO LIMITED
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. 7. year are recognized in the profit and loss account of 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 profit and loss account. 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. 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), fringe benefits tax 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 in the profit and loss account during the period in which the employee renders the related service. In respect of other employees, the contributions made to Company managed provident fund are charged to profit and loss account as incurred. 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 Companys 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 profit and loss account during the period in which the employee renders the related service. The Companys gratuity benefit scheme is a defined benefit plan funded through a policy taken with the LIC. The Companys 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
III. Assets identified as held for disposal are stated at lower of their book value and estimated net realisable value. 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. V. In accordance with AS 28, where there is an indication of impairment of the Companys assets, the carrying amounts of the Companys 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 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. 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 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.
5.
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 realization/ insurance claim for such trees is reduced from the total cost. Every year, plantation cost already incurred is compared with net realizable 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 Companys technical expert. Cost includes all direct and indirect expenses in respect of the poplar plantation. Further, 75% of net realizable value of intercropping, waste, etc is reduced from the above cost because entire farm cost is first added to cost of plantation. Agricultural produce / standing crops and plants are valued at 75% of their net realizable value. Fuel wood arising from poplar trees and lying in stock is valued at 75% of their net realizable value. Livestock is valued at 75 % of their net realizable value. The Company has considered an average yield of 0.22 cmh per tree based on the evaluation carried out by the Companys technical expert and further certified by an external technical expert. Foreign Currency Transaction 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
(ii) (iii) (iv) (v)
6.
37
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS 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 recognized immediately in the profit and loss account. 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. 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. For BSR & Co. Chartered Accountants Firms Registration No.: 101248W Bhavesh Dhupelia Partner Membership No. 042070 Kolkata, 3rd May 2011 K. N. Grant V. M. Rajasekharan S. K. Sipani 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 straightline basis. 13. Earnings per share (EPS) Basic earnings per share is computed by dividing the net profit for the year 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 year attributable to the equity shareholders by the weighted average number of equity and equivalent dilutive equity shares outstanding during the year, 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 Schedules forming part of the Balance Sheet and Profit and Loss Account and to the above notes.
ANNEXURE BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (Additional Information pursuant to Part IV of Schedule VI of The Act) I. Registration Details Registration No.
1 0 8 2
State Code
1 1
Application of Funds Net Fixed Assets

1 5 8 1 6 4 5
Investments
5 9 9 1 0
Balance Sheet Date 3 1 0 3 2 0 1 1 Date Month Year II. Capital raised during the year (Amount in ` Thousands) Public Issue
N I L
Deferred Tax
N I L
Net Current Assets

6 2 9 9 7
Miscellaneous Expenditure
N I L
Accumulated Losses
8 3 2 1 0
Rights Issue
N I L
IV.
Performance of the Company: (Amount in ` Thousands) Turnover/Other Income Total Expenditure

1 9 4 7 2 7 6 2 1 6 9 1 3 4
Bonus Issue
N I L
Private Placement
5 0 0 0 0 0
Profit / Loss Before Tax

5 9 6 5 0 4
Profit / Loss After Tax

5 9 6 5 0 4
III.

2 3 6 1 0 9 0
(Please tick appropriate box + for profit, for loss) Earnings per Share in ` - Basic and Diluted +
6 . 6 7
Dividend rate (%)

N I L
Total Assets
2 3 6 1 0 9 0
(Please tick appropriate box + for earnings, for loss) V. Generic Names of Three Principals Products / Services of the Company (as per monetary terms) Item Code No. (ITC Code)
3 6 0 5 0 0 0 1 1 0

1 1 4 4 2 3 0
Reserves & Surplus

5 1 3 2 0 3
Product Description
M A T C H E S M A C H I N E R Y E N T I R E T R A N S P L A N T S
Secured Loans
N I L
Unsecured Loans
1 3 0 3 2 9 8 4 2 2 3 0 0 0 0 6 0 2 9 0 . 0 9
38
WIMCO LIMITED
SCHEDULES TO THE ACCOUNTS STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
1. Name of the Subsidiary Company PAVAN POPLAR LIMITED PRAG AGRO FARM LIMITED
2. 3.
Financial Year of the Subsidiary Company ended Number of Shares held in Subsidiary
March 31, 2011 55,10,004 Equity Shares of ` 10 each. (Including 6 Equity Shares held by nominees of Wimco Limited) Equity Shares - 55,10,004 Shares of ` 10 each. Equity Shares - 100%
March 31, 2011 38,00,020 Equity Shares of ` 10 each (Including 6 Equity Shares held by nominees of Wimco Limited) Equity Shares - 38,00,020 Shares of ` 10 each. Equity Shares - 100%
4. 5.
Total issued Share Capital of the Subsidiary Company Percentage of Shares held in the subscribed capital of the Subsidiary (including shares held by nominees) The net aggregate amount so far as it concerns members of the Company and is not dealt with in the Companys accounts of Subsidiary (i) Profit / (Loss) for the financial year ended (` in lacs) (ii) Profits / (Losses) for the previous financial years of the Subsidiary since it became the Companys Subsidiary (` in lacs)
6.
March 31, 2011 ` 4.43
March 31, 2011 ` 5.37
` 135.17
` (754.29)
7.
The net aggregate amount so far as it concerns members of the Company and is dealt with in the Companys account of Subsidiary (i) Profit for the financial year ended (` in lacs) (ii) Profits for the previous financial years of the Subsidiary since it became the Companys Subsidiary (` in lacs) March 31, 2011 Nil March 31, 2011 Nil
Nil
Nil For and on behalf of the Board
Place : Kolkata Date : 3rd May 2011
K. N. Grant Chairman V. M. Rajasekharan Managing Director S. K. Sipani Head - Finance & Company Secretary
39
PRAG AGRO FARM LIMITED

DIRECTORS REPORT TO THE MEMBERS OF PRAG AGRO FARM LIMITED Your Directors present their report for the financial year ended on 31st March 2011. Company Performance During the year, the Companys turnover has declined to ` 3.77 crores from ` 3.92 crores as compared to last year. Consequently, current years net profit after tax has decreased to ` 5.37 lakhs as against a profit of ` 6.21 lakhs in the last financial year. Dividend In view of accumulated losses, your Directors are unable to recommend any dividend for the year under review. Directors Mr. S. Bhatia resigned as Director of the Company on 9th July 2010. Your Directors would like to place on record their appreciation for the contribution made by him during his tenure with the Company. Mr. Dipes Chakraborti was appointed Director of the Company with effect from 25th June 2010. Mr. S. Limaye will retire by rotation at the ensuing Annual General Meeting of the Company and, being eligible, offers himself for re-election. Your Board has recommended his re-election. Directors Responsibility Statement Pursuant to Section 217(2AA) of the Companies Act, 1956, your 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 applied consistently and judgments 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 2011 and of the profit 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. 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, 2011. 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 seven times respectively on 5th May, 2010, 25th June, 2010, 1st July, 2010, 9th July, 2010, 20th October, 2010, 15th December, 2010 and 31st March, 2011 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, 2010 was held on 9th September, 2010 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. 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
Auditors The Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. Your Board has recommended their re-appointment. 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 A) Conservation of Energy 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. B) Technology Absorption During the year, there is no technology absorption and the Company has not incurred any expenses on research and development. C) Foreign Exchange Earnings and Outgo 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. 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, 3rd May 2011 S. Limaye Chairman
14. 15. 16. 17.
18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.
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 financial year. (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. The Board of Directors of the Company is duly constituted and the appointment of additional director and additional director as director has been duly made. The Company has not appointed any Managing Director/ Whole time Director/Manager during the financial year under review. The Company has not appointed any sole selling agents during the financial year under review. 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. 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. The Company has issued Nil Equity Shares during the financial year under review. The Company has not bought back any shares during the financial year under review. The Company has not issued any preference shares/ debentures; therefore the comment is not required. 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. 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. The Company has not made any borrowings during the financial year under review. The Company has not made any loans or advances or given guarantees or provided securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose. The Company has not altered the provisions of the Memorandum with respect to situation of the companys registered office from one State to another during the financial year under review. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the financial year under review. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the financial year under review. The Company has not altered the provisions of the Memorandum with
40

respect to share capital of the company during the financial year under review. 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 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 not received any money as security from its employees during the financial year. 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 CP Number: 5168
Chennai, 3rd May 2011 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, 2011. 1. Form 23AC/ Form 23ACA alongwith Balance Sheet and other required documents u/s 220 of the Companies Act, 1956 for the year 2010 filed on 30.09.2010 with normal filing fees. 2. Form 20B alongwith Schedule V u/s 159 of the Companies Act, 1956 for the year 2010 filed on 03.11.2010 with normal filing fees. 3. Form 66 alongwith Compliance Certificate u/s 383A of the Companies Act, 1956 for the year 2010 filed on 29.09.2010 with normal filing fees. 4. Form 32 u/s 303(2) of the Companies Act, 1956 for Resignation of Director filed on 03.06.2010 with additional filing fees. 5. Form 32 u/s 303(2) and 264(2) of the Companies Act, 1956 for Appointment of Additional Director and Resignation of Director filed on 23.07.2010 with normal filing fees. 6. Form 32 u/s 303(2) of the Companies Act, 1956 for Appointment of Additional Director as Director filed on 24.09.2010 with normal filing fees. Chennai, 3rd May 2011 Name of CP Holder: Anchal R. Jain CP Number: 5168
AUDITORS REPORT 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, 2011 and the related profit and loss account and the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys 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 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. As required by the Companies (Auditors 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 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 THE AUDITORS REPORT 31 MARCH 2011 (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 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. (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. ln the opinion, the inventory of such verification is reasonable. (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) 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,
(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the balance sheet, profit and loss account 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 of 31 March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March, 2011 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 Company as at 31 March, 2011; (ii) in the case of the profit and loss account, 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. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070
Kolkata, 3rd May 2011
(iv)
(v)
(vi) (vii) (viii) (ix)
1956 (the Act). Accordingly, the provisions of paragraph 4 (iii) of the Order are not applicable to the Company. 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 purchases, of inventory and fixed assets and with regard to 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 audit. ln 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. The Company has not accepted any deposits from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. 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/services rendered by the Company. (a) According to the information and explanations given to us and
41

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 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. There are no dues on account of Cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax and other material statutory dues were in arrears as at 31 March, 2011 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 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 debenture holders during the year. (xii) 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 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) In our opinion and according to the information and explanations given to us, the Company is not dealing in 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 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 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. (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. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule As at 31st March, 2011 (`) SOURCES OF FUNDS Shareholders Funds Share Capital Loan Funds Unsecured Loans Total Application of Funds Fixed Assets Gross Block Less : Accumulated Depreciation Provision for Impairment Net Block Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions Current Liabilities Net Current Assets Profit and Loss Account Total Notes to the Accounts Related Party Disclosure Significant Accounting Policies 12 13 14 4 5 6 7 8 9 2,69,754 2,69,754 1,57,46,251 7,48,92,319 11,42,46,257 6,87,351 6,87,351 1,14,09,325 7,54,28,908 11,15,95,220 As at 31st March, 2010 (` )
1 2
3,80,00,200 7,62,46,057 11,42,46,257
3,80,00,200 7,35,95,020 11,15,95,220
3 10,19,53,195 2,73,75,561 5,10,01,947 2,35,75,687 32,000 99,06,202 7,10,108 18,499 53,81,196 1,60,16,005 10,19,53,195 2,62,21,261 5,10,01,947 2,47,29,987 27,000 93,51,100 73,900 5,937 26,65,739 1,20,96,676
The Schedules referred to above and the annexed notes form an integral part of this Balance Sheet. This is the Balance Sheet referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
For and on behalf of the Board S K Sipani S Limaye Director Director
42

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule INCOME Sales and services Other Income EXPENDITURE (Increase)/Decrease in Stock Purchases Other Costs Depreciation/Amortisation TOTAL Profitbefore taxation Less: Provision for taxation Income Tax Profit after taxation Profit and Loss Account Balance Brought Forward Balance Carried Forward 10 For the year ended 31st March, 2011 ( `) 3,77,00,687 1,47,902 3,78,48,589 (5,55,102) 2,94,23,259 71,66,285 11,54,300 3,71,88,742 6,59,847 1,23,258 5,36,589 (7,54,28,908) (7,48,92,319) For the year ended 31st March, 2010 (` ) 3,92,27,646 1,879 3,92,29,525 (41,16,186) 3,26,67,944 87,89,971 11,54,300 3,84,96,029 7,33,495 1,12,915 6,20,580 (7,60,49,488) (7,54,28,908) 0.16 10
11 3
Earnings per share - Basic and Diluted (Refer Note 4 of Schedule 12) 0.14 Face Value (`) 10 Notes to the Accounts 12 Related Party Disclosure 13 Significant accounting policies 14 The Schedules referred to above and the annexed notes form an integral part of this Profit and Loss Account. This is the Profit and Loss Account referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 ( `) ( `) A. CASH FLOW FROM OPERATING ACTIVITIES : Profit before Taxation Adjustments for : Interest Income Profit on sale of fixed assets Depreciation Operating Profit Before Working Capital Changes Adjustments for : Loans and Advances Debtors Inventories Current Liabilities Direct Taxes Paid NET CASH FLOW USED IN OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Investment NET CASH FLOW USED IN INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES Loans (repaid to)/taken from Holding Company NET CASH FLOW FROM FINANCING ACTIVITIES D. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS : (A+B+C) E. RECONCILIATION CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS- AT THE END OF THE YEAR (5,000) 6,59,847 (2,435) 11,54,300 18,11,712 (21,21,896) (6,36,208) (5,55,102) (4,17,597) (37,30,803) (7,14,384) (26,33,476)
For and on behalf of the Board S K Sipani S Limaye Director Director
For the year ended 31st March, 2010 ( `) 7,33,495 (1,879) (16,040) 11,54,300 18,69,876 (14,64,874) (73,900) (41,16,186) (11,74,728) (68,29,688) (3,90,652) (53,50,464) (5,000) (5,000)
(5,000)
26,51,037
26,51,037 12,561 5,937 18,499 12,562
53,13,720 53,13,720 (25,704) 31,641 5,937 (25,705)
Notes : 1. The Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 on Cash Flow Statement. 2. Cash and cash equivalents represent cash and bank balances only. 3. Previous years figures have been regrouped wherever necessary. This is the Cash Flow Statement referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
For and on behalf of the Board S K Sipani Director S Limaye Director Kolkata, 3rd May 2011
43

SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (`) SCHEDULE 1 - SHARE CAPITAL Authorised : 40,00,000 (2009-10: 40,00,000) Equity Shares of ` 10 Each Issued, Subscribed and Paid-up : 38,00,020 (2009-10: 38,00,020) Equity Shares of ` 10 each fully paid. Notes: the above includes 38,00,000 (2009-10: 38,00,000) fully paid Equity Shares of ` 10 each issued for consideration other than cash to Wimco Limited, the Holding Company. All the above Equity Shares are held by Wimco Limited, the holding Company and its Nominees. SCHEDULE 2 - UNSECURED LOAN Wimco Limited (Holding Company) (Above loans are interest free, with no stipulation as to repayment terms) SCHEDULE 3 - FIXED ASSETS
Gross Block Up to 01.04.2010 Description As at 01.04.2010 Additions during the year Deduction during the year As at 31.03.2011 Depreciation Impairment Charge for the year Accumulated Depreciation/Impairment Up to 31.3.2011 Deduction / Adjustment Depreciation Impairment During the Year 2,72,52,052 59,015 29,485 1,500 33,509 2,73,75,561 2,62,21,261 5,10,01,947 5,10,01,947 5,10,01,947 NET BLOCK As at 31.03.2011 As at 31.03.2010 (`)
4,00,00,000 3,80,00,200 3,80,00,200
4,00,00,000 3,80,00,200 3,80,00,200
7,62,46,057 7,62,46,057
7,35,95,020 7,35,95,020
Intangible Asset Leasehold Land 10,16,90,195 Tangible Asset Building 1,79,500 Plant and Machinery 45,500 Furniture and Fixture 1,500 Vehicle 36,500 Total 10,19,53,195 2009-10 10,19,68,195
10,16,90,195 1,79,500 45,500 1,500 36,500 10,19,53,195 10,19,53,195
2,61,08,828 53,135 28,249 1,500 29,549 2,62,21,261 2,50,66,961
5,10,01,947 5,10,01,947 5,10,01,947
11,43,224 5,880 1,236 3,960 11,54,300 11,54,300
2,34,36,196 1,20,485 16,015 2,991 2,35,75,687 2,47,29,987
2,45,79,420 1,26,365 17,251 6,951 2,47,29,987
SCHEDULE 4 - INVESTMENTS National Saving Certificates Kissan Vikas Patra (lodged with the local authorities) SCHEDULE 5 - INVENTORIES Semi Finished Produce Finished Goods/Produce SCHEDULE 6 - SUNDRY DEBTORS Unsecured - Considered Good Over six months Debts outstanding for less than six months SCHEDULE 7 - CASH AND BANK BALANCES Cash in Hand Balance with a Scheduled Bank in Current Account SCHEDULE 8 - LOANS AND ADVANCES Advances recoverable in Cash or in Kind or for value to be received Advance tax [net of provision for tax ` 347,602 (2009-10 : ` 224,344)] Advance Fringe Benefit Tax [net of provision for tax ` 63,497 (2009-10 : ` 63,497)] Prepaid Expenses Interest accrued on investment Advance to suppliers
SCHEDULE 9 - CURRENT LIABILITIES AND PROVISIONS Current Liabilities Sundry Creditors Advance received from customers Other Liabilities
As at 31st March, 2011 ( `) 31,000 1,000 32,000 99,06,202 99,06,202 7,10,108 7,10,108 12,091 6,408 18,499 42,48,146 9,45,094
2,496 8,525 5,439 1,71,496 53,81,196 2,01,888 50,000 17,866 2,69,754
As at 31st March, 2010 ( `) 26,000 1,000 27,000 79,41,276 14,09,824 93,51,100 73,900 73,900 2,947 2,990 5,937 17,80,152 3,53,968
2,496 8,040 3,004 5,18,079 26,65,739 6,16,755 50,000 20,596 6,87,351 SCHEDULE 10 - OTHER INCOME Sale of scrap Insurance claim Interest Income SCHEDULE 11 - OTHER COSTS Plantation and Cultivation Deputation Charges Travelling and Conveyance Power and Fuel Rent Rates and Taxes Freight outward Legal and Professional fees (includes prior year expenses : ` 2,03,276) Insurance Auditors Remuneration Audit Fees Out of pocket expenses Repairs and Maintenance Building Plant and Machinery Others Communication Printing and Stationery Bank Charges Tools Consumed Other Expenses

85,142 60,325 2,435 1,47,902 37,67,919 12,18,507 1,15,813 9,84,162 8,197 50,332 99,521 3,30,348 34,865 1,00,000 4,940 20,638 1,09,699 1,53,833 29,372 16,572 81,938 3,265 36,364 71,66,285
As at 31st March, 2010 ( `) 1,879

1,879 47,16,814 13,80,698 1,94,079 12,25,787 8,197 39,292 1,41,563 5,32,327 12,011 1,00,000 5,120 16,024 1,30,321 1,24,186 35,475 22,044 42,724 5,120 58,189 87,89,971
44

SCHEDULES TO THE ACCOUNTS SCHEDULE 12 - NOTES TO THE ACCOUNTS
1. Pursuant to the amalgamation of the holding company, WIMCO Seedlings Limited (WSL) with WIMCO Limited, all amounts recoverable / payable by WSL to the Company stand transferred to WIMCO Limited with effect from 1 April 2007. Consequent to the merger, the Company has become a wholly owned subsidiary of WIMCO Limited. 2. The Company is yet to obtain possession of certain portion of leasehold land since the demarcation in the land revenue records is yet to be completed, and additionally is in dispute, for which Court proceedings are in progress. 3. The order passed by the District Magistrate authorizing the State revenue authorities to take possession of the land leased to the Company has been stayed by the Order of the High Court. 4. Earnings per share : The computation of earnings per share is set out below: 2010-11 Net Profit attributable to equity shareholders (A) (`) Weighted Average number of equity shares outstanding during the year (B) (`) Earnings per Share of face value ` 10 each basic and diluted [(A)/(B)] 5. Segment information The Companys 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 17Segment Reporting. 5,36,589 38,00,020 0.14 2009-10 6,20,580 38,00,020 0.16 6. Quantitative details: Particulars (a) OPENING STOCK Semi Finished - Agriculture produce * Finished stock - Agriculture produce * Wood (b) PURCHASE - Wood * - Seeds * - Poplar ETPs (c) SALES - Wheat - Paddy - Sugarcane - Wood * - Others * (d) CLOSING STOCK Semi Finished - Agriculture produce * Finished stock - Wood - Agriculture produce * Unit 2010-11 Quantity ` 2009-10 Quantity `
CMH 172.3167 21,233 3,253 211 8,229
79,41,276 48,330 13,61,494 2,82,48,793 6,86,107 4,88,359 41,11,307 1,89,493 17,36,943 3,00,76,071 15,86,873
67,254 2,821 2,217 12,349
51,68,334 66,580 3,07,15,712 4,72,644 14,79,588 34,39,189 18,40,747 27,61,776 3,01,75,476 10,10,458
Nos Qtls Qtls Qtls
CMH
99,06,202
172.3167
79,41,276 13,61,494 48,330
*Due to typical nature of the product, it is not possible to state quantities. 7. 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, 2011 and March 31, 2010. 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. Information with regard to other matters specified in paragraphs 4-A, 4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 is either nil or not applicable to the Company for the current as well as previous financial year. 9. Previous year's figures have been re-grouped / re-arranged wherever necessary to conform to current years presentation.
SCHEDULE 13 - RELATED PARTY DISCLOSURES

1. Parties exercising control over the Company : ITC Limited - Ultimate Holding Company # Russell Credit Limited - Holding Company of WIMCO Limited # WIMCO Limited - Holding Company
# No transaction during the years 2010 -11 and 2009-10. 2. Other related parties with whom the Company had transactions Pavan Poplar Limited (PPL) - Fellow subsidiary
3. Transaction between related parties HOLDING COMPANY PARTICULARS Wimco Limited 2010-11 Purchases Sales Expenses Reimbursed Expenses Recovered Loans taken Loan repayment Loans given Receipts towards loan repayments Outstanding unsecured loans 4,88,359 3,06,77,595 38,60,101 15,31,412 55,01,714 28,50,677 7,62,46,057 2009-10 14,79,588 3,07,78,982 19,68,371 46,59,459 1,18,29,924 53,04,704 7,35,95,020 2010-11 4,01,403 82,250 26,78,922 20,266 FELLOW SUBSIDIARY COMPANY PPL 2009-10 1,33,300 16,450 30,19,498 4,277 2010-11 8,89,762 3,07,59,845 60,50,664 15,51,678 55,01,714 28,50,677 7,62,46,057 2009-10 16,12,888 3,07,95,432 49,87,869 46,63,736 1,18,29,924 53,04,704 7,35,95,020 TOTAL Amounts in (`)
SCHEDULE 14 - SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Accounting The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with provisions of the Companies Act, 1956, and the accounting principles generally accepted in India and comply with 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. The accumulated losses of the Company as at March 31, 2011 have resulted in erosion of Companys net worth. At the year-end, the Companys current assets exceeded its current liabilities by ` 1,57,46,251 (2009-10: ` 1,14,09,325) and its total liabilities exceeded its current assets by ` 6,04,99,806 (2009-10: ` 6,21,85,695). These accounts have been prepared on a going concern basis as the Company has received a letter of financial support from WIMCO Limited (Holding Company). 2. Use of estimates The preparation of financial statements in conformity with generally 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. 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.
45

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 straightline basis over the period of lease. 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 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, where there is an indication of impairment of the Companys assets, the carrying amounts of the Companys 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. 4. Inventories (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 realization/insurance claim for such trees is reduced from the total cost. Every year, plantation cost already incurred is compared with net realizable 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 realizable 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% of their net realizable value. 5. Revenue recognition Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership to the buyer. 6. Contingencies and Provisions A provision is created where there is a present obligation as a result of a past event that probably requires 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 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 there from. 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 year 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 year by the weighted average number of equity and equivalent dilutive equity shares outstanding during the year, except where the results would be anti-dilutive. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
For and on behalf of the Board S. K. Sipani Director S. Limaye Director Kolkata, 3rd May 2011
ANNEXURE BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (Additional Information pursuant to Part IV of Schedule VI to The Act) I. Registration Details: Registration No. Balance Sheet Date 3 1 Date 1 2 8 0 8 4 1 8 State Code 1 1 Application of Funds Net Fixed Assets 2 3 5 7 Net Current Assets 1 5 7 4 Investments 6 6 3 Misc. Expenditure N I L Accumulated Losses 7 4 9 3 6 IV. Performance of the Company: (Amount in ` Thousands) Turnover (including other income) 3 + 7 8 4 9 Total Expenditure 3 7 1 8 9 2
0 3 2 Month
1 Year
II. Capital raised during the year: (Amount in ` Thousands) Public Issue N I L N Rights Issue I L
Bonus Issue N I L
Private Placement N I L

III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 Sources of Funds Paid up Capital 3 8 0 0 0 Reserves and Surplus N I L 1 4 5 1 6 1 Total Assets 1 4 5 1 6
Profit / Loss Before Tax Profit / Loss After Tax + 6 6 0 5 3 7 (Please tick appropriate box + for profit, for loss) Dividend Rate % Earnings per Share in ` 0 . 1 4 N I L (Please tick appropriate box + for Earnings, for loss)
Secured Loans N I L
Unsecured Loans 7 6 2 4 6
V. Generic Names of Three Principal Products/Services of the Company: (As per monetary terms) N O T Item Code No. (ITC Code) A P P L I C A B L E Product Description N O T A P P L I C A B L E
46
PAVAN POPLAR LIMITED

DIRECTORS REPORT TO THE MEMBERS OF PAVAN POPLAR LIMITED Your Directors present their Report and Accounts for the financial year ended on 31st March 2011. Company Performance The Companys turnover increased to ` 82.18 lakhs as against last years turnover of ` 68.73 lakhs. Consequently, the Company has earned a net profit of ` 4.43 lakhs as against a net loss of ` 1.80 lakhs incurred in the last financial year. Dividend Your Directors are unable to recommend dividend. Directors Mr. S. Bhatia resigned as Director of the Company on 9th July 2010. Your Directors would like to place on record their appreciation for the contribution made by him during his tenure with the Company. Mr. Dipes Chakraborti was appointed Director of the Company with effect from 25th June 2010. Mr. S. Limaye will retire by rotation at the ensuing Annual General Meeting of the Company and, being eligible, offers himself for re-election. Your Board has recommended his re-election. Directors Responsibility Statement Pursuant to Section 217(2AA) of the Companies Act, 1956, your 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 applied consistently and judgments 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 2011 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. AUDITORS REPORT TO THE MEMBERS OF PAVAN POPLAR LIMITED We have audited the attached balance sheet of Pavan Poplar Limited (the Company) as at 31 March 2011 and the related profit and loss account and cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys 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 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. As required by the Companies (Auditors 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 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 THE AUDITORS REPORT 31 MARCH 2011 (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 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. (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 the opinion, the inventory of such verification is reasonable. (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 balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the balance sheet, profit and loss account 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 of 31 March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2011 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 Company as at 31 March 2011; (ii) in the case of the profit and loss account, 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. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070
Audit Committee The Audit Committee comprises of M/s. S. Sipani, S. Limaye and D. Chakraborti. Auditors The Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. Your Board has recommended their re-appointment. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo A) Conservation of Energy 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. B) Technology Absorption There is no technology absorption during the year and the Company has not incurred any expenses on research and development. C) Foreign Exchange Earnings and Outgo 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. 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 S. Limaye Chairman
(iii)
(iv)
(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. 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. 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 purchases of inventory and fixed assets and with regard to 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 audit.
47

(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. The Company has not accepted any deposits from the public. (xii) 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 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) In our opinion and according to the information and explanations given to us, the Company is not dealing in 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. (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.
(vi)
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (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/services rendered by the Company. (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, 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. There are no dues on account of Cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax, Provident fund and other material statutory dues were in arrears as at 31 March 2011 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 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. The Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.
For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070
(xi)
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule SOURCES OF FUNDS Shareholders Funds Share Capital Reserves & Surplus APPLICATION OF FUNDS Fixed Assets Gross Block Less : Accumulated Depreciation / Amortisation : Provision for Impairment Net Block Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities & Provisions Current Liabilities Provisions Net Current Assets As at 31st March, 2011 (` ) 5,51,00,040 1,44,59,813 6,95,59,853 As at 31st March, 2010 (` ) 5,51,00,040 1,40,16,637 6,91,16,677
1 2
3 4,49,33,855 1,80,68,422 32,59,487 2,36,05,946 4 5 6 7 1,02,20,619 83,60,629 2,53,279 3,04,09,313 4,92,43,840 25,80,868 7,09,065 32,89,933 4,59,53,907 6,95,59,853 4,49,33,855 1,69,16,913 32,59,487 2,47,57,455 72,64,981 83,02,080 94,901 3,15,49,273 4,72,11,235 23,29,510 5,22,503 28,52,013 4,43,59,222 6,91,16,677
8 9
Notes to the Accounts 13 Related Party Disclosure 14 Significant Accounting Policies 15 The Schedules referred to above and the annexed notes form an integral part of this Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070 Kolkata, 3rd May 2011
For and on behalf of the Board S. K. Sipani Director S. Limaye Director Dr. R. C. Dhiman Manager Kolkata, 3rd May 2011
48

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule For the year ended 31st March, 2011 ( `) 82,18,773 12,356 82,31,129 (29,55,638) 9,08,272 22,41,543 64,36,343 11,51,509 77,82,029 4,49,100 5,924 4,43,176 1,35,16,637 1,39,59,813 0.08 13 14 15 For the year ended 31st March, 2010 (` ) 68,72,985 14,228 68,87,213 (24,01,231) 8,87,228 17,49,906 56,80,661 11,51,509 70,68,073 (1,80,860)
INCOME Sales Other Income EXPENDITURE (Increase)/Decrease in Stock Purchases Employee Costs Other Costs Depreciation/Amortisation
10
11 12 3
Profit /(Loss) before Taxation Less: Provision for taxation Current Tax Profit /(Loss) after Taxation Balance in profit and loss account brought forward Profit and loss account balance carried forward Earnings per share (in ` ) - Basic and Diluted (Refer Note 7 of Shedule 13) Notes to the Accounts Related Party disclosure Significant Accounting Policies
(1,80,860) 1,36,97,497 1,35,16,637 (0.03)
The Schedules referred to above and the annexed notes form an integral part of this Profit and Loss Account. This is Profit and Loss Account referred to in our report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070 Kolkata, 3rd May 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES : (Loss)/Profit before Taxation Adjustments for : Interest Income Amortisation Operating Profit Before Working Capital Changes Adjustments for : Debtors Inventory Loans and Advances Current Liabilities and Provisions Direct Taxes Paid NET CASH FLOW FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES : Interest Received Loan to Holding Company NET CASH FLOW USE IN INVESTING ACTIVITIES C. NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS : (A+B+C) D. RECONCILIATION CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR Cash and Bank Balances CASH AND CASH EQUIVALENTS - AT THE END OF THE YEAR Cash and Bank Balances Notes : 1. The Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 on Cash Flow Statement. 2. Cash and cash equivalents represent cash and bank balances only. 3. Previous years figures have been regrouped wherever necessary. This is the Cash Flow Statement referred to in our Report of even date. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership No: 042070 Kolkata, 3rd May 2011 (58,549) (29,55,638) (60,511) 4,37,920 (`) 4,49,100 (12,356) 11,51,509 15,88,253 (4) (24,01,231) (2,685) 1,37,132) For the year ended 31st March, 2010 (`) (`) (1,80,860) 11,51,509 9,70,649
(26,36,778) (2,471) (10,50,996)
(22,66,788) (6,454) (13,02,593)
12,356 11,97,018 12,09,374 1,58,378
(64,717) (64,717) (13,67,310)
94,901 2,53,279 1,58,378
14,62,211 94,901 (13,67,310)
49

SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (`) SCHEDULE 1 - SHARE CAPITAL Authorised : 1,00,00,000 (2009 -10: 1,00,00,000) equity shares of ` 10 each Issued, subscribed and paid up capital : 55,10,004 (2009 -10: 55,10,004) equity shares of ` 10 each fully paid up. 10,00,00,000 5,51,00,040 10,00,00,000 5,51,00,040 As at 31st March, 2010 (` )
Of the above, 38,00,000 (2009 -10: 38,00,000) equity shares of ` 10 each were issued for consideration other than cash. 55,10,004 (2009-10: 55,10,004) equity shares are held by Wimco Limited, the holding company and its nominees. SCHEDULE 2 - RESERVES AND SURPLUS General Reserve Profit & Loss Account SCHEDULE 3 - FIXED ASSETS
GROSS BLOCK ACCUMULATED DEPRECIATION/AMORTISATION/IMPAIRMENT Accumulated as at April, 2010 Description Intangible Asset Leasehold Land Total 2009-10 4,49,33,855 4,49,33,855 4,49,33,855 4,49,33,855 4,49,33,855 4,49,33,855 1,69,16,913 1,69,16,913 1,57,65,404 32,59,487 32,59,487 32,59,487 11,51,509 11,51,509 11,51,509 1,80,68,422 1,80,68,422 1,69,16,913 32,59,487 32,59,487 32,59,487 2,36,05,946 2,36,05,946 2,47,57,455 As at 31st March, 2010 (`) 80,073 4,42,430 5,22,503 2,47,57,455 2,47,57,455 As at 1st April, 2010 Additions during the year As at 31st March, 2011 Depreciation Impairment Charge for the period Accumulated as at 31st March, 2011 Depreciation Impairment As at 31st March, 2011 As at 31st March, 2010 NET BLOCK
5,00,000 1,39,59,813 1,44,59,813
5,00,000 1,35,16,637 1,40,16,637

(`)
SCHEDULE 4 - INVENTORIES
Semi Finished Produce Finished Goods/Produce 1,02,03,470 17,149 1,02,20,619 71,85,406 79,575 72,64,981
SCHEDULE 9 - PROVISIONS
Leave encashment Gratuity 97,706 6,11,359 7,09,065
SCHEDULE 5 - SUNDRY DEBTORS

Unsecured, considered good [Refer Note (1) (ii) of Schedule 13] Debts outstanding for a period exceeding six months. Other debts 83,60,629 83,60,629 82,88,092 13,988 83,02,080
SCHEDULE 10 - OTHER INCOME

Provision no longer required written back Interest on fixed deposit with bank (tax deducted at source `2,471) 12,356 12,356 14,228 14,228 14,82,309 46,860 1,42,401 78,336 17,49,906 36,85,120 97,278 11,24,056 7,760 28,845 66,679 2,21,241 11,182 1,00,000 5,400 2,55,460 3,792 14,680 2,412 5,120 1,002 50,634 56,80,661
SCHEDULE 11 - EMPLOYEE COSTS

Salary, wages and bonus Staff welfare expenses Contribution to provident & other funds Leave encashment Gratuity 18,20,403 44,472 1,61,548 23,373 1,91,747 22,41,543
(Debtors include ` 82,87,088 (2009-10: ` 82,87,088) due from Wimco Limited, the holding company)
SCHEDULE 6 - CASH AND BANK BALANCES

Cash in Hand Balance with Scheduled Banks in Current Accounts 12,582 2,40,697 2,53,279 6,292 88,609 94,901
SCHEDULE 12 - OTHER COSTS

Plantation & cultivation Travelling & conveyance Power & fuel Rent Rates and taxes Freight outward Legal and professional fees (Includes prior year expenses: ` 2,07,526) Insurance Auditors remuneration Statutory audit fees Out of pocket expenses Repair & maintenance Communication Printing & stationary Bank charges Tools consumed Donation Bed Debts written off Others expenses 41,24,413 79,997 12,09,066 7,760 33,963 97,778 3,96,459 25,644 1,00,000 5,185 2,73,283 5,680 8,188 2,278 3,305 501 1,004 61,839 64,36,343
SCHEDULE 7 - LOANS AND ADVANCES

Unsecured and considered good Loans and advances to Wimco Limited, 3,03,29,547 the Holding company [Refer Note (1) (i) of Schedule 13] Maximum amount outstanding at any time during the year ` 3,25,26,184 (2009-10: ` 3,23,72,244) Advances recoverable in cash or in kind or for value to be received 5,992 Security Deposit 68,802 Income tax 4,972 [Net of Provision for tax ` 65,591 (2009-10 ` 59,667)] 3,04,09,313 3,15,26,565
14,283 8,425
3,15,49,273 6,42,785 16,86,725 23,29,510
SCHEDULE 8 - CURRENT LIABILITIES

Sundry Creditors Other current liabilities 8,84,150 16,96,718 25,80,868
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SCHEDULES TO THE ACCOUNTS (Contd.) SCHEDULE 13 - NOTES TO THE ACCOUNTS
1. Pursuant to the amalgamation of the holding company, Wimco Seedlings Limited (WSL) with Wimco Limited, all amounts recoverable / payable by WSL to the Company stand transferred to Wimco Limited with effect from 1 April, 2007. Consequent to the merger, the Company has become a wholly owned subsidiary of Wimco Limited. The following amounts are due from Wimco Limited, the holding company: i) The Company had in earlier years granted loans to erstwhile Wimco Greens (AOP) of which the Company was a member. The balance outstanding from Wimco Greens as on March 31, 2002 amounted to ` 5,40,38,549. On merger of Wimco Greens with erstwhile Wimco Seedlings Limited, the loan was taken over by WSL. The balance recoverable amount as on March 31, 2011, is ` 3,03,29,547 (2009-10: ` 3,15,26,565). ii) Debtors include amount due ` 82,87,088 (2009-10: ` 82,87,088). Claims against the Company not acknowledged as debts ` 7,33,326 (2009-10: ` 6,64,524). These comprise: G Local authority Taxes / Cess / Royalty on property, utilities etc. claims disputed by the Company relating to issues of applicability and determination aggregating ` 6,64,524 (2009-10: ` 6,64,524). Also refer note 3 below. G Other matters ` 68,802 (2009-10: ` Nil). Certain legal formalities in respect of the land leased to Wimco Seedlings Limited (now amalgamated with Wimco Limited) are pending for which the Company has agreed to bear the costs. Accordingly, a liability of ` 16,49,000 was created in the books of account in an earlier year. The Company received Show-cause notice from the local authority to pay ` 23,13,524 against this liability which has been disputed by the Company. The Company is yet to obtain possession of certain portion of leasehold land since the demarcation in the land revenue records is yet to be completed and, additionally, is in dispute for which Court proceedings are in progress. The order passed by the District Magistrate authorizing the State revenue authorities to take possession of the land leased to the Company has been stayed by the order of the High Court. Employee Defined Benefits The following table sets out the status as required under AS 15 (Revised). (`) Defined Benefit Plans Gratuity Leave Encashment ( Unfunded) (Unfunded) 2010-11 Change in obligation during the year ended March 31, 2011 1. Obligation at period beginning 2. Service Cost 3. Interest cost 4. Actuarial (Gains) / Losses 5. Benefits payments 6. Obligations at period end 4,42,430 4,17,806 36,910 35,394 1,19,443 (22,818) 28,882 31,335 18,119 53,712 80,073 25,493 6,406 (5,740) 97,706 99,795 21,327 7,485 5,494 80,073 Actuarial Assumptions : 1. Discount Rate 2. Salary Escalation 3. Expected return on plan assets 8.00% 4.00% N/A 7.00% 3.50% N/A 8.00% 4.00% N/A 7.00% 3.50% N/A 2009-10 2010-11 2009-10 (`) Defined Benefit Plans Gratuity Leave Encashment ( Unfunded) (Unfunded) 2010-11 Change in plan Assets 1. Plan assets at the beginning of the year 2. Expected return on plan assets 3. Contribution by employers 4. Actual benefits paid 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 obligations at the end of the period 6,11,359 3. Asset recognised in the balance sheet Cost for the period 1. Service cost 2. Interest Cost 3. Expected Return on Plan Asset 4. Actuarial (Gains)/Losses Net cost Actual return on plan assets 36,910 35,394 1,19,443 1,91,747 28,882 31,335 18,119 78,336 25,493 6,406 21,327 7,485 (6,11,359) (4,42,430) (97,706) (80,073) 4,42,430 97,706 80,073 22,818 (22,818) Nil 53,712 5,740 5,494 2009-10 2010-11 2009-10
2.
(53,712) (5,740) (5,494) Nil Nil Nil
3.
4.
5.
6.
(8,526) (43,040) 23,373 (14,228)
(8,526) (43,040)
6,11,359 4,42,430
Schedules to the financial statements as at and for the year ended March 31, 2011 Net Asset/(Liability) recognized in Balance Sheet (including experience adjustment impact) 1 Present Value of Defined Benefit Obligation 2. Fair Value on Plan Assets 3. Status [Surplus /(Deficit)] 4. Experience Adjustment of Plan Assets [Gain/(Loss)] 5. Experience Adjustment of Obligation [(Gain)/(Loss)] For the year ended 31st March, 2011(`) Gratuity 6,11,359 (6,11,359) Leave Encashment 97,706 (97,706) For the year ended 31st March, 2010(`) Gratuity 4,42,430 (4,42,430) Leave Encashment 80,073 (80,073) For the year ended 31st March, 2009(`) Gratuity 4,17,806 (4,17,806) Leave Encashment 99,795 (99,795) For the year ended 31st March, 2008(`) Gratuity 3,95,023 (3,95,023) Leave Encashment 66,823 (66,823)
A. Amounts recognised as an expense and included in Schedule 11 - Salaries, Wages and Bonus ` 23,273 [2009-10: ` (14,228)] for leave encashment and in Contribution to Provident and Other Funds ` 1,91,747 (2009-10: ` 78,336) for gratuity. 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. 7. Earnings per share : 2010-11 Profit /(Loss) for the year after taxation (`) (A) 4,43,176 Weighted Average number of Equity Shares (B) 55,10,004 outstanding during the year Earnings per Share - Basic and Diluted (`) (A/B) 0.08 10 Nominal Value of an Equity Share (`) 2009-10 (1,80,860) 55,10,004 (0.03) 10 8. Segment information The Companys 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. 9. No remuneration is payable to the Manager during the year (2009-10 : ` Nil).
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10. Quantitative details : Particulars (a) OPENING STOCK Semi Finished - Agriculture produce * Finished stock - Agriculture produce * (b) PURCHASE - Poplar ETPs - Seeds * (c) SALES - Sugarcane - Paddy - Wheat - Others * (d) CLOSING STOCK Semi Finished - Agriculture produce * Finished stock - Agriculture produce * Nos 23,258 Unit 2010-11 Quantity ` 2009-10 Quantity `
71,85,406 79,575 5,34,934 3,73,338 9,08,272 Qtls Qtls Qtls 8,570 214 5,679 18,23,726 2,08,440 52,57,004 9,29,603 23,272
48,63,750 5,11,984 3,75,244 8,87,228 7,172 15,17,572 3,982 44,69,696 8,85,717
11. Information with regard to other matters specified in paragraphs 4-A, 4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 are either nil or not applicable to the Company for the current as well as previous financial year. 12. The Company has not appointed a whole-time Company Secretary as required by Section 383 A of The Companies Act, 1956 and accordingly, the accounts have not been authenticated by a whole-time Company Secretary. 13. 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 31st March 2011 and 31st March 2010. 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. 14. Prior year's figures have been regrouped/rearranged wherever necessary to conform to current years presentation. SCHEDULE 14 RELATED PARTY DISCLOSURES a) Parties exercising control over the Company: ITC Limited # - Ultimate holding Company of WIMCO Limited Russell Credit Limited # - Holding Company of WIMCO Limited WIMCO Limited - Holding Company # No transaction during the financial years 2010-11 and 2009-10 b) Other related parties with whom the Company had transactions Prag Agro Farm Limited (PAFL) - Fellow Subsidiary Company
(`)
1,02,03,470 17,149
71,85,406 79,575
* Due to typical nature of the product, it is not possible to state quantities.

c) Transaction between related parties PARTICULARS HOLDING COMPANY Wimco Limited 2010-11 Purchase of raw materials and components Sales Expenses Reimbursed Expenses Recovered Loans given Receipts towards Loan Repayments Loans Taken Loan repayment Outstanding Loans and Advances Outstanding Debtors 5,34,934 2009-10 5,11,984 2010-11 82,250
FELLOW SUBSIDIARY COMPANY PAFL 2009-10 16,450 2010-11 6,17,184
TOTAL 2009-10 5,28,434
84,974 3,96,196 1,32,653 13,29,671 3,03,29,547 82,87,088
1,742,04 4,00,803 15,50,102 12,00,000 3,15,26,565 82,87,088
4,01,403 20,266 26,78,922
1,33,300 4,277 30,19,498
4,01,403 1,05,240 30,75,118 1,32,653 13,29,671 3,03,29,547 82,87,088
1,33,300 1,78,481 34,20,301 15,50,102 12,00,000 3,15,26,565 82,87,088
Certain assets of holding company are being used free of cost for administrative convenience. SCHEDULE 15 - SIGNIFICANT ACCOUNTING POLICIES 1. Basis of Preparation The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 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. Use of estimates The preparation of financial statements in conformity with generally 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. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. 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 Companys assets, the carrying amounts
2.
3.
of the Companys 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. 4. Inventories G 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 realization/insurance claim for such trees is reduced from the total cost. Every year, plantation cost already incurred is compared with the net realizable 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. G Cost includes all direct and indirect expenses in respect of the poplar plantation. G Further, 75% of net standard realizable value of intercropping, waste, etc. is reduced from the above cost because the entire farm cost is first added to the cost of plantation. G Agricultural produce/standing crops and plants are valued at 75% of their net realizable value.
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SCHEDULES TO THE ACCOUNTS (Contd.) 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 recognized 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 Companys gratuity benefit scheme is a defined benefit plan which is not funded. The Companys 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 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 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 profit and loss account. 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 provision is created where there is a present obligation as a result of a past event that probably requires 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 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, 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 there from. 9. Earnings per share (EPS) The basic earnings per share (EPS) is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity and equivalent dilutive equity shares outstanding during the year, except where the results would be anti-dilutive. For BSR & Co. Chartered Accountants Firms Registration No: 101248W Bhavesh Dhupelia Partner Membership Number: 042070 Kolkata, 3rd May 2011
ANNEXURE BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE Additional Information pursuant to part IV of Schedule VI to the Act I. Registration Details : Registration No. Balance Sheet Date 3 1 0 1 3 2 2 8 0 8 1 4 1 9 State Code 1 1 Application of Funds Net Fixed Assets 2 3 6 Net Current Assets 4 5 9 Accumulated Losses N N Private Placement N Total Liabilities 7 Sources of Funds Paid up Capital 5 5 1 Secured Loans N 0 I 0 L Reserves and Surplus 1 4 4 6 Unsecured Loans N I 0 L 2 8 5 0 I L Total Assets 7 2 8 5 0 N I L I L Investments 0 5 I 6 4 L N I L L Misc. Expenditure N I
Date
Month
Year
II. Capital raised during the year: (Amount in ` Thousands) Public Issue N Bonus Issue I L Rights Issue
IV. Performance of the Company : (Amount in ` Thousands) Turnover (Including other Income) 8 2 3 1 + Total Expenditure 7 7 8 2
III. Position of mobilisation and deployment of Funds: (Amount in ` Thousands)
Profit/Loss before Tax Profit/Loss after Tax + 4 4 9 4 4 (Please tick appropriate box + for profit, for loss) Dividend Rate (%) age Earnings per Share in ` 0 . 0 8 N I (Please tick appropriate box + for Earnings, for loss)
V. Generic Names of three Principal Products/Services of the Company (As per monetary terms) Item Code No.(ITC Code) Product Description N A N A O T P P O T P P L L I I C C A A B B L L E E
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TECHNICO PTY LIMITED

DIRECTORS REPORT FOR THE YEAR ENDED 31 MARCH 2011 Your directors present their report on the company for the financial year ended 31 March 2011. Directors The names of the directors in office at any time during or since the end of the year are: Mr Surampndi Sivakumar Mr Arup Kumar Mukerji Mr David Charles McDonald Mr Allan Hendry (effective 25 August 2010) 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. For the year under review, your company registered a turnover of A$1,584,348 (2010: A$1,953,344) and a net profit of A$100,232 (2010: A$709,431). It may be recalled that the profits for the previous year included A$0.51 million on account of reversal of the earlier write down of the companys investment in its subsidiary Technico Asia Holdings Pty Ltd, Australia. Further, sales and post tax profits for the year under review were adversely affected by the appreciation in the Australia Dollar versus the US Dollar, which is the invoicing currency for the company. The property at Paddys River, Australia could not be sold due to a depressed real estate market. The company has recently engaged a reputed real estate advisory firm to facilitate disposal of the said property. 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 $6,304 (2010: $6,303). 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 auditors independence declaration from Gillespies is on page 26 of this report. Signed in accordance with a resolution of the Board of Directors:
Mr Bhargavan Sumant (resigned effective 13 August 2010) Mr Sachidanand Madan (effective 25 August 2010) All the directors have been in office since the start of the financial year until the date of this report, unless otherwise stated. Corporate information Technico Pty Limited is a company limited by shares that is incorporated and domiciled in Australia. Its parent entity is Russell Credit Limited, a company registered in India and a wholly owned subsidiary of ITC Limited, a public company whose shares are listed on major stock exchanges 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 at 31 March 2011. 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 together with 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 Technico ISC Pty Limited (TISCPL), a 100% subsidiary of the company and a dormant entity since its incorporation, was voluntarily deregistered on 3 November 2010. Review and results of operations Your company is focused on ensuring the continuous upgrading of the TECHNITUBER technology and customising its application across various
Place: Sydney, Australia Date: 26th April 2011
Allan Hendry Director
DIRECTORS DECLARATION FOR THE YEAR ENDED 31 MARCH 2011 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 companys financial position as at 31 March 2011 and of their performance for the year ended on that date; and (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.
On behalf of the Board Place : Sydney, Australia Date: 26th April 2011 Allan Hendry Director
AUDITORS INDEPENDENCE DECLARATION TO THE DIRECTORS OF TECHNICO PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 In relation to our audit of the financial report of Technico Pty Limited for the financial year ended 31 March 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. GILLESPIES Chartered Accountants Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 David Duff Dated: 26th April 2011 Partner
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INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 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 2011, 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. Auditors 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 auditors 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 entitys 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 entitys 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 auditors report. Audit opinion In our opinion, the financial report of Technico Pty Limited is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the companys financial position as at 31 March 2011 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 Chartered Accountants Dated: 26th April 2011 Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 David Duff Partner
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011 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 MENA Expenses Research and Development Expenses Occupancy Expenses Administration Expenses: Other Administration Expenses Recovery/(Write Down) Investments and Loans Finance Costs Reversal of Provision for Employee Share Scheme PROFIT FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE Income Tax Expense Total comprehensive income attributable to members of Technico Pty Ltd Other comprehensive income Total comprehensive income for the period Profit from continuing operations after income tax expense Net profit for the period Net profit attributable to members of Technico Pty Limited 100,232 100,232 100,232 100,232 100,232 4,373,623 4,373,623 4,373,623 4,373,623 4,373,623 709,431 709,431 709,431 709,431 709,431 27,025,774 27,025,774 27,025,774 27,025,774 27,025,774 3 100,232 4,373,623 709,431 27,025,774 2(a) (861,993) 722,355 206,773 (203,741) (157,343) (3,705) (443,218) (20,889) (37,613,065) 31,519,960 9,022,540 (8,890,239) (6,865,662) (161,668) (19,339,817) (911,491) (1,045,559) 907,785 433,865 (32) (288,286) (105,220) (3,429) (646,623) 429,188 (17,817) (39,830,570) 34,582,070 16,528,087 (1,219) (10,982,255) (4,008,356) (130,628) (24,633,103) 16,349,917 (678,739) 2(a) 1,584,348 69,133,025 1,953,344 74,412,640 $ ` $ 2010 `
2(b)
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BALANCE SHEET AS AT 31 MARCH 2011 2011 Notes CURRENT ASSETS Cash and Cash Equivalents Trade and Other Receivables Other Non-Current Assets Classified as Held for Sale Total Current Assets Non-Current Assets Receivables Other Financial Assets Property, Plant and Equipment Intangible Assets Total Non-Current Assets Total Assets CURRENT LIABILITIES Trade and Other Payables Loans and Borrowings Provisions TOTAL CURRENT LIABILITIES Non-Current Liabilities Loans and Borrowings Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Accumulated Losses TOTAL EQUITY 13 14 43,989,182 (29,558,938) 14,430,244 2,028,231,209 (1,362,888,734) 665,342,475 43,989,182 1,810,704,704 (29,659,170) (1,220,845,585) 14,330,012 589,859,119 10 11 12 779,619 230,000 22,992 1,032,611 11 12 500,000 500,000 1,532,611 14,430,244 35,946,283 10,604,725 1,060,104 47,611,112 23,053,750 23,053,750 70,664,862 665,342,475 804,519 500,000 17,804 1,322,323 230,000 230,000 1,552,323 14,330,012 33,116,013 20,581,520 732,857 54,430,120 9,467,375 9,467,375 63,897,495 589,859,119 5(b) 7 8 9 4 5(a) 6 8 $ 446,554 808,879 26,910 1,282,343 376,381 1,658,724 7,826 14,269,282 2,068 24,955 14,304,131 15,962,855 ` 20,589,489 37,295,388 1,240,753 59,125,630 17,353,987 76,479,617 360,837 657,920,920 95,350 1,150,613 659,527,720 736,007,337 $ 390,222 797,142 16,298 1,203,662 376,381 1,580,043 2,301 14,269,282 3,005 27,704 14,302,292 15,882,335 2010 ` 16,062,513 32,812,358 670,866 49,545,737 15,492,783 65,038,520 94,715 587,359,320 123,693 1,140,366 588,718,094 653,756,614
STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2011 Contributed equity $ At 1 April 2009 Profit for the Period At 31 March 2010 Profit for the Period At 31 March 2011 43,989,182 43,989,182 43,989,182 Retained earnings $ (30,368,601) 709,431 (29,659,170) 100,232 (29,558,938) Share based payment reserve $
Total $ 13,620,581 709,431 14,330,012 100,232 14,430,244
Contributed equity ` At 1 April 2009 Profit for the Period Share Issue At 31 March 2010 Profit for the Period At 31 March 2011 2,028,231,209 2,028,231,209 2,028,231,209
Retained earnings `
Share based payment reserve `
Total `
(1,400,220,271) 32,710,090 (1,367,520,181) 4,621,447 (1,362,888,734)
628,010,938 32,710,090 660,721,028 4,621,447 665,342,475
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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2011 2011 Notes CASH FLOW FROM OPERATING ACTIVITIES Receipts from Customers Receipts of Sundry Income Payments to Suppliers and Employees Goods and Services Tax (GST) Received Interest Received Borrowing Costs Receipts from Management Fees NET CASH FLOWS FROM OPERATING ACTIVITIES Cash Flow from Investing Activities Proceeds from Sale of Property, Plant and Equipment Payments for Protection of Technology Purchase of Property, Plant and Equipment Loans to Related Parties NET CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES Cash Flows from Financing Activities Investment in Subsidiary Proceeds from Issue of Shares Repayment of Borrowings 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 2011 Corporate Information Technico Pty Limited is a company limited by shares that is incorporated and domiciled in Australia. Its parent entity is Russell Credit Limited, a company registered in India and a wholly owned subsidiary of 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 2011. 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 ` (Indian Rupees), which are unaudited, have been arrived at by applying the year end inter-bank exchange rate of 1 AUD = ` 46.1075 for the current year balance sheet (2010: ` 41.1625) and the average rate of 1 AUD = ` 43.6350 for the current year income statement (2010: ` 38.0950), 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 year ended 31 March 2011. However, the directors have determined that in order for the financial report to give a true and fair view of the companys 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 $29,558,938 as at 31 March 2011 (2010 : $29,659,170), 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 and a key element of the strategic investment portfolio of Russell Credit Limited, the parent entity. Any exposure of the parent entity in the Company is limited to equity or fund based commitments in accordance with the terms of approval of its regulator in India. (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. $ 1,572,611 188,577 (1,720,209) 19,817 18,196 (20,889) 58,103 (1,771) (1,771) 56,332 390,222 446,554 ` 68,620,881 8,228,557 (75,061,320) 864,715 793,982 (911,491) 2,535,324 (77,278) (77,278) 2,458,046 20,589,489 $ 1,403,409 417,316 (1,460,752) 25,590 16,549 (17,817) 384,295 (10,441) (2,838) (13,279) (87,048) (87,048) 283,968 106,254 390,222 2010 ` 53,462,866 15,897,653 (55,647,347) 974,851 630,434 (678,739) 14,639,718 (397,750) (108,114) (505,184) (3,316,094) (3,316,094) 10,817,760 16,062,513
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(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 assets recoverable amount. An assets 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 assets 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. (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 Buildings Plant and equipment 2011 6.70 % 13-27 % 2010 6.70 % 13-27 % 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
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. (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
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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. 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 financial year. (t) Adoption of new and revised accounting standards During the current year, the company has adopted the revised Australian Accounting Standard AASB 101: Presentation of Financial Statements, which became mandatory. The adoption of this standard has impacted the recognition, measurement and disclosure of certain transactions. The following is an explanation of the impact the adoption of this standard has had on the financial statements of Technico Pty Ltd. AASB 101: Presentation of Financial Statements In September 2007, the Australian Accounting Standards Board revised AASB 101, and as a result there have been changes to the presentation and disclosure of certain information within the financial statements. Below is an overview of the key changes and the impact on the companys financial statements. Disclosure impact Terminology changes The revised version of AASB 101 contains a number of terminology changes, including the amendment of the names of the primary financial statements. These changes are not expected to impact the financial performance or financial position of the company. Reporting changes in equity The revised AASB 101 requires all changes in equity arising from transactions with owners in their capacity as owners to be presented separately from the non-owner changes in equity. Owner changes in equity are to be presented in the statement of changes in equity, with non owner changes in equity presented in the statement of comprehensive income. The previous version of AASB 101 required that owner changes in equity be presented in the income statement. The impact of this change is that dividends recognised as distributions to owners and dividends per share are now disclosed in Note 4 to the financial statements. Statement of comprehensive income The revised AASB 101 requires all income and expenses to be presented in either one statement the statement of comprehensive income, or two statements a separate income statement and a statement of comprehensive income. The previous version of AASB 101 required only the presentation of a single income statement. The companys financial statements now contain a statement of comprehensive income. Other comprehensive income The revised version of AASB 101 introduces the concept of other comprehensive income which comprises of income and expense that are not recognised in profit or loss as required by other Australian Accounting Standards. Items of other comprehensive income are to be disclosed in the statement of comprehensive income. Entities are also required to disclose the income tax relating to each component of other comprehensive income. The previous version of AASB 101 did not contain an equivalent concept. The impact of this requirement is the disclosure within Note 3 to the financial statements, which reflects the grossed up value of each item of other comprehensive income and the income tax expense / benefit attributed to the item.
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
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NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 2011 $ Note 2: Revenues and Expenses Revenue and Expenses from Continuing Activities (a) Revenue Sale of Goods Finance Revenue Agronomy Support Income Sundry Income Breakdown of Finance Revenue: Bank Interest (b) Finance Costs Bank Loans and Overdrafts (c) Depreciation, Amortisation and Costs of Inventories Included in the Income Statement Depreciation of Non Current Assets: Buildings Plant and Equipment Total Depreciation of Non Current Assets Amortisation of Non Current Assets: Leased Plant and Equipment Technology and trademarks Total Amortisation of Non Current Assets Total Depreciation and Amortisation Expenses Cost of Inventories Recognised as an Expense Includes Write Down of Inventory to Net Realisable Value (d) Employee Benefit Expense Wages and Salaries Workers Compensation Costs Annual Leave Provision 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 Expenses reported in the Income Statement A reconciliation between income tax expense and the product of accounting profit before income tax multiplied by the companys applicable income tax rate is as follows : Accounting profit before income from continuing operations at the statutory income tax rate of 30% Amortisation of Technology Movement in employee entitlements Write Back or Write Down of Investments in Wholly Owned Subsidiaries Non deductible expenses/timing differences (Recoupment of prior year tax losses) / Future income tax benefits not brought to account Income Tax Attributable to Ordinary Activities 290,259 830 7,740 12,665,451 36,217 337,735 436,782 3,892 3,943 16,639,210 148,266 150,209 1,584,348 18,196 69,670 118,907 1,791,121 18,196 20,889 69,133,025 793,982 3,040,050 5,188,508 78,155,565 793,982 911,491 1,953,344 16,549 417,316 2,387,209 16,549 17,817 74,412,640 630,434 15,897,653 90,940,727 630,434 678,739 ` $ 2010 `
937 937 4,520 4,520 4,520
40,886 40,886 197,230 197,230 197,230
896 896 4,788 4,788 4,788
34,133 34,133 182,399 182,399 182,399
30,070 (101) 1,556 13,428 (44,953)
1,312,104 (4,407) 67,896 585,931 (1,961,524)
212,829 (100) (2,297) (164,004) 29,125 (75,554)
8,107,732 (3,829) (87,485) (6,247,721) 1,109,513 2,878,211
Income Tax Losses Future income tax benefits arising from revenue timing differences and tax losses of the parent entity amounted to $44,953 (2010: $75,554). 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.
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NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 (Contd.) 2011 Notes Note 4: Cash and cash equivalents Current Cash at Bank Deposits at Call $ ` $ 2010 `
11,583 434,971 446,554
534,063 20,055,426 20,589,489
15,946 374,276 390,222
656,377 15,406,136 16,062,513
(a) Terms and conditions relating to the above financial instruments: (i) cash at bank has a weighted average interest rate of 0% (2010: 0%); and (ii) deposits at call has a weighted average effective interest rate of 4.5% (2010: 4.5%). (b) Reconciliation of net profit / (loss) after tax to the net cash flows from operations: Net profit / (loss) Non-cash items: Amortisation of non-current assets Depreciation of non-current assets Decrease in value of inventories Provision for doubtful debts (Increase) / decrease in value of receivables in subsidiaries (Increase) / decrease in value of investments in subsidiaries Unrealised foreign currency revaluation (Profit) on sale of property, plant and equipment Employee benefits equity reserve Changes in assets and liabilities: (Increase) / decrease in trade and other receivables Decrease in inventories (Increase) / decrease in other current assets (Decrease) / increase in trade creditors and accruals (Decrease) in employee provisions Cash flows from operation (c) Financial facilities available At reporting date, the following financing facilities had been negotiated and were available: Total Facilities Bank Loans Loan from Russell Credit Ltd (parent company) Facilities used at reporting date Bank Loans Loan from Russell Credit Ltd. Note 5: Trade and other receivables Current Trade Debtors Provision for doubtful debts Other Debtors Non-Current Amounts receivable from wholly owned subsidiaries Provision for doubtful debts (a) Terms and conditions Terms and conditions relating to the above financial instruments: (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. 2011 Notes Note 6: Other assets Current Prepayments Note 7: Other financial assets Non-current Shares in subsidiaries: At cost Provision for write-down Total other financial assets (a) 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. $ ` $ 2010 `
100,232 4,520 937 (5,525) (11,737) (10,612) (24,900) 5,188 58,103
4,373,623 197,230 40,886 (241,083) (512,144) (463,055) (1,086,511) 226,378 2,535,324
709,431 4,788 896 16,590 (429,188) (566,525) (429) 656,387 (7,655) 384,295
27,025,774 182,399 34,133 631,996 (16,349,917) (21,581,770) (16,343) 25,005,063 (291,617) 14,639,718
230,000 500,000 230,000 500,000
10,604,725 23,053,750 10,604,725 23,053,750
230,000 500,000 230,000 500,000
9,467,375 20,581,250 9,467,375 20,581,250
(a)
809,015 809,015 (136) 808,879 7,826 7,826
37,301,659 37,301,659 (6,271) 37,295,388 360,837 360,837
795,057 795,057 2,085 797,142 2,301 2,301
32,726,534 32,726,534 85,824 32,812,358 94,715 94,715
(a)
26,910
1,240,753
16,298
670,866
(a)
18,180,409 (3,911,127) 14,269,282
838,253,208 (180,332,288) 657,920,920
18,180,411 (3,911,129) 14,269,282
748,351,168 (160,991,848) 587,359,320
61

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 Interest in subsidiaries Percentage of equity interest held by the consolidated entity country of incorporation Technico Asia Holdings Pty Ltd. (formerly known as Technico China Pty Ltd.) Australia Investment (Provision for diminution) 2011 2010 % 100 $ 3,684,522 (2,714,786) 969,736 Technico ISC Pty Ltd. Australia 100 1,196,341 (1,196,341) 13,299,546 13,299,546 ` 169,884,098 (125,171,995) 44,712,103 55,160,293 (55,160,293) 613,208,817 613,208,817 2011 Notes Note 8: Property, plant and equipment Non-current Land and building Land at cost Accumulated amortisation and impairment Net carrying amount transferred to assets held for sale Buildings at cost Accumulated depreciation and impairment Net carrying amount transferred to assets held for sale Plant and equipment at cost Accumulated depreciation and impairment Net carrying amount transferred to assets held for sale Total net carrying amount of land and buildings transferred to assets held for sale Plant and equipment at cost Accumulated depreciation and impairment Net carrying amount Total net carrying amount of plant and equipment Total property, plant and equipment at cost Accumulated depreciation, amortisation and impairment Total property, plant and equipment transferred to assets held for sale Total property, plant and equipment Land Balance at beginning of the year net of accumulated depreciation and impairment Additions Balance at end of the year net of accumulated depreciation and impairment Buildings at cost Balance at beginning of the year net of accumulated depreciation and impairment Additions Depreciation expense Balance at end of the year net of accumulated depreciation and impairment Plant and equipment at cost Balance at beginning of the year net of accumulated depreciation and impairment Additions Disposals Depreciation expense Balance at end of the year net of accumulated depreciation and impairment $ ` $ $ 3,684,522 (2,714,786) 969,736 2 (2) 1,196,341 (1,196,341) 13,299,546 13,299,546 ` 151,664,137 (111,747,379) 39,916,758 82 (82) 49,244,386 (49,244,386) 547,442,562 547,442,562 2010 `
Technico Technologies Inc.
Canada
100
Technico Agri Sciences Ltd. (formerly known as Chambal Agritech Ltd.)
India
100
327,725 327,725 191,765 (143,109) 48,656 439,281 (439,281) 376,381 158,237 (156,169) 2,068 2,068 158,237 (156,169) 376,381 2,068
15,110,580 15,110,580 8,841,805 (6,598,398) 2,243,407 20,254,149 (20,254,149) 17,353,987 7,295,912 (7,200,562) 95,350 95,350 7,295,912 (7,200,562) 17,353,987 95,350
327,725 327,725 191,765 (143,109) 48,656 439,281 (439,281) 376,381 158,237 (155,232) 3,005 3,005 158,237 (155,232) 376,381 3,005
13,489,980 13,489,980 7,893,527 (5,890,724) 2,002,803 18,081,904 (18,081,904) 15,492,783 6,513,430 (6,389,737) 123,693 123,693 6,513,430 (6,389,737) 15,492,783 123,693
327,725 327,725
15,110,580 15,110,580
327,725 327,725
13,489,980 13,489,980
48,656 48,656
2,243,407 2,243,407
48,656 48,656
2,002,803 2,002,803
3,005 (937) 2,068
138,553 (43,203) 95,350
1,063 2,838 (896) 3,005
43,756 116,819 (36,882) 123,693
62

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 (b) Assets pledged as security Included in the balances of land, buildings and equipment are assets over which a property charge and first mortgage have been granted as security over bank loans (see note 11). The terms of the first mortgage and charge preclude the assets from being used as security for further mortgages without the permission of the first mortgage holder. Assets under lease are pledged as security for the associated lease liabilities. (c) Non-current assets held for sale The assets held for sale correspond to the land, buildings and equipment at the Paddys River TECHNITUBER facility. 2011 Notes Note 9: Intangible assets Non current TECHNITUBER technology, patents and trademarks at cost Less: Accumulated amortisation 3,407,000 (3,382,045) 24,955 Movement in intangibles Balance at beginning of the year Additions Amortisation expense Balance at the end of the year Note 10: Trade and other payables Current Trade creditors Sundry Creditors & Accruals 577,402 202,217 779,619 Terms and conditions relating to the above financial instruments: (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. 2011 Notes Note 11: Loans and borrowings Current Russell Credit Limited unsecured (non interest bearing) Bank loan secured (interest bearing) (b) 230,000 230,000 Non current Bank loan secured (interest bearing) Russell Credit Limited unsecured (non interest bearing) (a) (b) 500,000 500,000 (a) The bank loan with the ANZ bank is secured over the land, buildings and plant and equipment at Paddys River. An amount of $25,129 is being held on term deposit as security against the loan of $230,000. The loan was redrawn at the completion of the initial two year term in December 2009. The loan is repayable after three years (maximum term) from date of redraw. The effective interest rate is 9.08%. (b) Russell Credit Limited, has provided an interest free loan for an amount of $500,000 to meet working capital requirement of the company. The loan is repayable by August 2012. 2011 Notes Note 12: Provisions Current Employee entitlements Non-Current Employee entitlements Note 13: Contributed equity (a) Issued and paid up capital Ordinary shares fully paid 22,606,065 shares (2010: 22,606,065) Discount on issue 44,098,046 (108,864) 43,989,182 2,033,250,656 (5,019,447) 2,028,231,209 44,098,046 (108,864 ) 43,989,182 1,815,185,818 (4,481,114) 1,810,704,704 22,992 106,104 17,804 732,857 $ ` $ 2010 ` 23,053,750 23,053,750 230,000 230,000 9,467,375 9,467,375 10,604,725 10,604,725 500,000 500,000 20,581,250 20,581,250 $ ` $ 2010 ` 26,622,563 9,323,720 35,946,283 541,052 263,467 804,519 22,271,053 10,844,960 33,116,013 27,704 1,771 (4,520) 24,955 157,088,253 (155,937,640) 1,150,613 1,277,362 81,657 (208,406) 1,150,613 3,405,229 (3,377,525) 27,704 22,051 10,441 (4,788) 27,704 140,167,739 (139,027,373) 1,140,366 907,674 429,778 (197,086) 1,140,366 $ ` $ 2010 `
63

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 (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. 2011 Notes $ ` $ 2010 `
Note 14: Reserve and accumulated losses Accumulated losses Balance at the beginning of year Net (profit)/loss attributable to the members of Technico Pty Ltd. Total unavailable for appropriation Dividends paid or provided for Aggregate amount transferred (to)/from reserves Balance at the end of period 29,558,938 29,659,170 (100,232) 29,558,938 29,558,938 1,362,888,734 1,367,510,181 (4,621,447) 1,362,888,734 1,362,888,734 29,659,170 1,220,845,585 30,368,601 1,250,047,539 (709,431) (29,201,954)
29,659,170 1,220,845,585
29,659,170 1,220,845,585
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.
Note 17: Remuneration of auditors Amounts received or due and receivable by auditor: Audit of the entity by auditor/group auditor Other services in relation to the entity 70,000 15,000 85,000 3,054,450 654,525 3,708,975 62,700 62,700 2,388,557 2,388,557
64
TECHNICO TECHNOLOGIES INC.

DIRECTORS REPORT FOR THE YEAR ENDED 31 MARCH 2011 Your directors submit their report for the financial year ended 31 March 2011. Directors The following directors held office since the start of the financial year until the date of this report, unless otherwise stated: Ms. Bhavani Parameswar Mr. David Charles McDonald Mr. Sachidanand Madan Corporate information 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. 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 casual basis with technical and management support from its parent entity. Principal activities 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. Review and results of operations The TECHNITUBER brand continues to gain recognition though overall volumes are still small. The company expects its operations to improve AUDITORS REPORT To the Shareholder of Technico Technologies Inc. We have audited the accompanying financial statements of Technico Technologies Inc., which comprise the statement of financial position as at March 31, 2011 and the statements of income (loss), retained earnings and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles using a differential reporting option available to nonpublicly accountable enterprises, as described in Note 2 to the financial statements. 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. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, 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. Auditors' 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 BALANCE SHEET AS AT MARCH 31, 2011 2011 $ ASSETS Current Assets Cash Accounts receivable Inventory Prepaid expenses 33,217 2,921 224,193 2,780 263,111 Capital Assets (note 3) 165,192 428,303 1,527,650 134,337 10,310,636 127,852 12,100,475 7,597,180 19,697,655 18,067 2,879 206,448 2,759 230,153 215,237 445,390 798,200 127,194 9,120,873 121,893 10,168,160 9,509,172 19,677,332 (Unaudited) 2011 ` 2010 $ (Unaudited) 2010 ` material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of Technico Technologies Inc. as at March 31, 2011 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Place : Fredericton, New Brunswick Date : April 7, 2011 Teed Saunders Doyle & Co. Chartered Accountants further with stronger market demand, better product mix and its seed potatoes commanding premium. The company continued to provide the services of skilled information technology professionals to ITC Infotech India Limited (wholly owned subsidiary of ITC Limited the ultimate holding entity of the company) and made a net margin of C$13,650 (Previous year - C$14,566). However, ITC Infotech India Limited has informed that it may not be requiring this service from the company in future. Technico Technologies Inc., Canada registered sales of Canadian Dollar (C$) 0.20 million (previous year C$ 0.12 million) and posted a net profit of C$ 0.01 million (previous year loss of C$ 0.11 million). For the first time the company exported 30,000 number of TECHNITUBER seed to Turkey out of its Canada facility. 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 companys 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. Environmental regulation and performance Your company is not subject to any particular or significant environmental regulation. Place: New Jersey, USA Date: 12th April 2011 Bhavani Parameswar Director
65

BALANCE SHEET AS AT MARCH 31, 2011 2011 $ LIABILITIES Current Liabilities Accounts payable and accrued liabilities Current portion of long-term debt Deferred revenue LongTerm Debt (note 4) SHAREHOLDERS EQUITY Capital Stock (note 6) Deficit 1,287,998 (1,134,337) 153,661 428,303 Approved By The Board : V R Bhavani Director STATEMENT OF RETAINED EARNINGS (DEFICIT) FOR THE YEAR ENDED MARCH 31, 2011 2011 $ Deficit At Beginning Of Year Net Income (Loss) For The Year Change In Unrealized Foreign Exchange During The Year Deficit At End Of Year (1,141,418) 7,081 (1,134,337) (Unaudited) 2011 ` (50,427,846) 319,246 (2,059,558) (52,168,158) 2010 $ (1,031,582) (109,836) (1,141,418) (Unaudited) 2010 ` (41,804,861) (4,651,828) (3,971,157) (50,427,846) 59,235,028 (52,168,158) 7,066,870 19,697,655 1,287,998 (1,141,418) 146,580 445,390 56,903,753 (50,427,846) 6,475,906 19,677,332 13,876 70,000 83,876 190,766 274,642 638,157 3,219,300 3,857,457 8,773,328 12,630,785 25,404 10,000 2,640 38,044 260,766 298,810 1,122,349 441,800 116,635 1,680,784 11,520,642 13,201,426 (Unaudited) 2011 ` 2010 $ (Unaudited) 2010 `
STATEMENT OF INCOME (LOSS) FOR THE YEAR ENDED MARCH 31, 2011 (Unaudited) 2011 ` 8,980,526 6,280,972 2,699,554 26,780 676,591 17,854 251,845 254,189 69,160 473,438 14,517 192,558 279,076 739,710 2,995,718 (296,164) (Unaudited) 2010 ` 5,272,759 7,627,601 (2,354,842) 19,482 704,110 24,522 179,998 210,068 281,348 97,453 471,595 13,383 202,021 72,338 637,575 2,913,893 (5,268,735)
2011 $ Sales Cost Of Sales Gross Profit (Loss) Expenses Advertising Amortization of capital assets Bank charges Bad debts Insurance Occupancy costs Office and supplies Professional services Staff training Telephone Vehicle and travel Wages and benefits 594 15,007 396 5,586 5,638 1,534 10,501 322 4,271 6,190 16,407 66,446 (6,569) Other Income Net revenue Support services (note 9) Net Income (Loss) For The Year 13,650 7,081 199,191 139,314 59,877
2010 $ 124,497 180,098 (55,601) 460 16,625 579 4,250 4,960 6,643 2,301 11,135 316 4,770 1,708 15,054 68,801 (124,402)
615,410 319,246
14,566 (109,836)
616,907 (4,651,828)
66

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2011 (Unaudited) 2011 ` (Unaudited) 2010 `
2011 $ Cash Provided By (Required For): Operating Activities Net income (loss) for the year Items not affecting cash Amortization of capital assets Amortization capitalized to inventory Foreign currency fluctuations Changes in noncash operating working capital (note 7) Investing Activities Purchase of capital assets Financing Activities Capital stock issuance Repayment of longterm debt (10,000) (10,000) Increase In Cash During The Year Cash Position At Beginning Of Year Cash Position At End Of Year 15,150 18,067 33,217 (4,987) 15,007 40,026 62,114 (31,977) 30,137 7,081
2010 $
319,246 676,591 1,804,573 88,916 2,889,326 (1,470,624) 1,418,702 (229,352) (459,900) (459,900) 729,450 798,200 1,527,650
(109,836) 16,625 41,766 (51,445) (2,665) (54,110) (24,639) 80,000 80,000 1,251 16,816 18,067
(4,651,828) 704,110 1,768,895 (32,554) (2,211,377) (117,740) (2,329,117) (1,088,551) 3,534,400 3,534,400 116,732 681,468 798,200
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2011 1. Nature of Business Activities The company is a whollyowned subsidiary of Technico Pty Limited (Australia) and produces early generation seed potatoes for the North American Market. 2. Significant Accounting Policies Basis of Presentation The financial statements include Indian Rupee equivalent figures, arrived at by applying the year end exchange rate of CAD $1 = ` 45.99 (2010 CAD $1 = ` 44.18) to the balance sheet and the average annual exchange rate of CAD $1 = ` 45.085 (2010 CAD $1 = ` 42.3525) to the income statement as provided by the parent company. The company, with the consent of its parent company, has elected to prepare its financial statements in accordance with Canadian generally accepted accounting principles using the differential reporting option available to nonpublicly accountable enterprises described below: Class A Preferred Shares The companys Class A preferred shares, redeemable on the basis of 50% of after tax profits starting in the 2011 fiscal year and retractable by the holder should specified corporate obligations not be met, are recorded as equity rather than liabilities. In addition, the company has applied the following significant accounting policies without reference to differential reporting: Use of Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the recorded amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual amounts could differ from those estimates. Financial Instruments The carrying values of cash, accounts receivable and accounts payable and other liabilities approximate fair values due to the short term maturity of these instruments. The carrying amount of long term debt has not been determined because there is no ready market for this financial instrument. It is management's opinion that the company is Land Buildings Equipment not exposed to significant interest, currency or credit risks arising from financial instruments. Income taxes The company uses the asset and liability method to account for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Future income tax assets and liabilities are recognized for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes compared with tax purposes as well as the benefit of losses available to be carried forward to future years for tax purposes. A valuation allowance is recorded to reduce future income tax assets to the amount more likely than not to be realized. Inventory Inventory is valued at the lower of production cost and net realizable value. Inventory includes capitalized amortization of $40,026 (2010 $41,766). Revenue Revenue is recognized when products and services are delivered to the customer and ultimate collection is reasonably assured. Amortization Amortization of capital assets is recorded on a straight line basis at the following annual rates: Buildings 10% Equipment 13.34%, 20% 3. Capital Assets Accumulated Cost Amortization $ $ 46,564 285,348 277,738 609,650 216,220 228,238 444,458 2011 Net $ 46,564 69,128 49,500 165,192 2010 Net $ 46,564 97,663 71,010 215,237
67

Accumulated Cost Amortization ` ` Land Buildings Equipment 2,141,478 13,123,155 12,773,171 28,037,804 4. LongTerm Debt 2011 $ Non-interest bearing loan payable to the Atlantic Canada Opportunities Agency in annual installments of $70,000, $100,000 and $90,766, unsecured, due August 2013. 260,766 Less current portion 70,000 190,766 2011 ` 2010 $ 2010 ` 9,943,958 10,496,666 20,440,624 2011 Net ` 2,141,478 3,179,197 2,276,505 7,597,180 2010 Net ` 2,057,198 4,314,752 3,137,222 9,509,172 6. Capital Stock 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 1,087,998 50,037,028 9,198,000 59,235,028 1,087,998 200,000 1,287,998 48,067,752 8,836,000 56,903,752 2011 ` 2010 $ 2010 `
200,000 Class A preferred shares 200,000 1,287,998 11,992,628 3,219,300 8,773,328 270,766 11,962,442 10,000 441,800 Accounts receivable 7.
Changes In Non-Cash Operating Working Capital 2011 $ (42) (17,745) (21) (11,529) (2,640) 2011 ` (1,932) (816,093) (966) (530,219) (121,414) 2010 $ 224 (6,506) (65) 11,580 (7,898) (2,665) 2010 ` 9,896 (287,435) (2,872) 511,605 (348,934) (117,740)
260,766 11,520,642 Inventory Prepaid expenses Accounts payable and accrued liabilities Deferred revenue
Principal repayment of long-term debt over the next three years is as follows: $ 2012 2013 2014 70,000 100,000 90,766 260,766 5. Income Taxes A valuation allowance has been recorded to reduce the companys future income tax assets to $nil. The company has non-capital losses for income tax purposes of $1,197,811 which may be carried forward to reduce taxable income in future years. If not applied against taxable income, the non-capital losses will expire as follows: $ 2014 2026 2027 2028 2030 2031 205,382 366,483 283,750 214,636 115,010 12,550 1,197,811 ` 9,445,518 16,854,553 13,049,663 9,871,110 5,289,310 577,175 55,087,328 ` 3,219,300 4,599,000 4,174,328 11,992,628 8.
(31,977) (1,470,624) Government Assistance
During the year, the company received a grant of $nil (2010-$7,175) from the government of New Brunswick in relation to land clearing and improvements. In 2010, this had been recorded as a reduction to the cost of land improvements in the financial statements. 9. Net Revenue-Support Services 2011 $ Revenue Expense-wages and salaries Net revenueSupport services 83,252 69,602 13,650 2011 ` 3,753,416 3,138,006 615,410 2010 $ 68,743 54,177 14,566 2010 ` 2,911,438 2,294,531 616,907
The company has investment tax credits of $33,409 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 due to the uncertainty that they may ever be realized.
Support services revenue is received 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.
68
TECHNICO AGRI SCIENCES LIMITED

DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2011 Your Directors submit their Report for the financial year ended 31st March, 2011. During the year under review, your Companys leadership in the production of early generation seed potatoes and strong agronomy skills continued to be leveraged by the ultimate holding companys Branded Packaged Foods business in its chip stock sourcing operations for the Bingo! brand of potato chips as well as by the Agri Commodities business in servicing the seed potato requirements of its extensive farmer base supported by its eChoupal system. Further, your Company has embarked upon the distribution of farm inputs for seed potatoes at competitive prices, to meet the needs of its farmer base. This initiative has been well received by farmers. In the year under review, a record potato crop drove down the table potato prices. Consequently, sales realisation for seed potatoes were also lower compared to the prices achieved in the previous financial year. While this resulted in lower post tax profits relative to the previous year, your Company was successful in wiping out its accumulated losses and looks forward to the future with confidence. FINANCIAL RESULTS (` Crore) Particulars Turnover Profit before interest, depreciation & tax Financial expenses Depreciation Profit before tax Profit after tax Balance of (loss) brought forward Balance carried forward to Balance Sheet COMPANYS PERFORMANCE (A) PRODUCTION OF TECHNITUBER SEED POTATOES During the year under review, your Companys facility at Manpura, Himachal Pradesh produced 101.28 lakh TECHNITUBER seed potatoes as against 100.95 lakh produced during the previous financial year. (B) FIELD OPERATIONS Your Companys field generated seed potato production was slightly lower by 1.5% at 50,403 MT (previous year 51,182 MT). Your Company has continued to focus on adopting modern agronomy practices using the TECHNITUBER Seed Potato Technology, upgrading the capabilities of its team as well as farmers through continuous training and introducing appropriate mechanisation. This coupled with its strong emphasis on quality by maintaining an early generation seed potato pipeline and stringent field inspections has enabled your Company to maintain its product superiority in the market. Based on its substantial R&D programme, agronomy practices for different varieties and locations continue to be updated on a regular basis, thus giving better returns to farmers. During the year, new varieties of seed potatoes have been introduced by your Company to meet specific region/industry requirements. Your Company is also encouraging use of drip irrigation amongst farmers to improve both farm yields and product quality at substantially reduced water consumption. Trials have been set up in UP, Punjab etc. to demonstrate these benefits to farmers. Investments have also been made in a modern grading machine to help farmers grade their harvested potatoes better and faster. (C) MARKETING Your Company expanded its marketing reach to cover new regions in India which resulted in increased sales volumes by 14 % over the previous financial year from 35079 MT to 39859 MT, thus minimising the impact of the sharp reduction in selling prices. Your Company continues to be the only exporter of TECHNITUBER seed potatoes and field generated seed potatoes from India. During the year, your Company exported 46.78 lakh TECHNITUBER seed potatoes (previous year: 33.24 lakh) and 546.09 MT of early generation seed potatoes to Saudi Arabia and Pakistan (previous year: 628.40 MT). 2010-11 47.65 7.85 0.05 0.78 7.02 7.02 (6.60) 0.42 2009-10 54.31 15.07 0.29 0.76 14.02 14.02 (20.62) (6.60) Your Company recognizes that the business is subject to agricultural and cyclical risks. However, the strength of the TECHNITUBER Seed Potato Technology, the expertise of its employees and the loyalty of its farmers, distributors and customers, have enabled it to deliver superior performance in the field and command a premium over competition even in depressed market conditions to minimise these risks. 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 a significant improvement in your Companys operations. 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. 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 The Board of Directors of the Company has re-appointed Mr. Sachidanand Madan as Wholetime Director of the Company for a period of three years with effect from 1st June, 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 General Meeting. Appropriate resolution seeking your approval for re-appointment of Mr. Madan as Wholetime Director is appearing in the Notice convening the ensuing Annual General Meeting of the Company. In accordance with the provisions of Articles 122 and 123 of the Articles of Association of the Company, Mr. Sachidanand Madan and Mr. Surampudi Sivakumar 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. DIRECTORS 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 Companys 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 For Technico Agri Sciences Ltd. Place : Hyderabad Dated : 26.04.2011 S. Sivakumar Chairman
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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) The 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 plans to test market the same next year. Technology Absorption, Adaptation and Innovation Based on the efforts made towards technology absorption, the 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. AUDITORS REPORT 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, 2011 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 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 (Auditors 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 the best of our knowledge and belief were necessary for the purposes of our audit; ii. 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; iii. The balance sheet, profit and loss account and cash flow statement 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. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified 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 carried out at the end of the year. (iii) (a) As informed, 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) (b), (c) & (d) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (e) As informed, 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 Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (f) & (g) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company. (v) (a) According to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301. Accordingly, the provisions of clause 4 (v) (b) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (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)To the best of our knowledge and as explained, the Central Government b) Year of import : c) Whether technology fully absorbed : d) If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action : 2000 The absorption of the technology has taken place through two-phase production. The Company has been successfully producing TECHNITUBER seed potatoes (G0) in its production facility at Manpura. Subsequent stage multiplications have been successfully undertaken in leased and contract farms. However, the company continues to refine and improve upon the technology by drawing on the technical expertise of the parent entity. 2.22 0.07
Foreign Exchange Earnings and Outgo (` Crore) Foreign Exchange Earnings : Foreign Exchange Outgo :
On behalf of the Board For Technico Agri Sciences Ltd. Place : Hyderabad Dated : 26.04.2011 S. Sivakumar Chairman
dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, profit and loss account 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 Companies Act, 1956. v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 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 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; (a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011; (b) in the case of the profit and loss account, 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 Chartered Accountants per Manoj Gupta Place : Gurgaon Partner Date : 26.04.2011 Membership No.: 83906
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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, cess and other material statutory dues applicable to it. Further, since the Central Governrnent has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. (b) 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, custom duty, service tax, 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, 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 preceding financial year. (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 banks. The Company has no outstanding dues in respect of financial institutions and debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to 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 (Auditors 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 (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from 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. (xix) The Company did not have any outstanding debentures during the 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 course of our audit. For S.R. Batliboi & Co. Firm registration number: 301003E Chartered Accountants per Manoj Gupta Place : Gurgaon Partner Date : 26.04.2011 Membership No.: 83906
BALANCE SHEET AS AT 31ST MARCH, 2011 Particulars SOURCES OF FUNDS : Shareholders Funds : Share Capital Reserves & Surplus Loan Funds Unsecured Loans TOTAL APPLICATION OF FUNDS : Fixed Assets : Gross Block Less : Accumulated Depreciation Net Block Capital Advances Investments Current Assets, Loans & Advances : Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less : Current Liabilities and Provisions : Current Liabilities Provisions Schedules As at 31st March, 2011 (` in 000) As at 31st March, 2010 (` in 000)
1 2 3
379,628 4,229 120,000 503,857
379,628 120,000 499,628
4 192,340 81,822 110,518 110,518 222,762 370,494 18,379 1,140 6,635 396,648 224,089 1,982 226,071 170,577 503,857 187,242 74,639 112,603 426 113,029 156,322 346,871 10,801 38,889 6,132 402,693 236,976 1,416 238,392 164,301 65,976 499,628
5 6 7 8 9
10 11
Net Current Assets Profit and loss account TOTAL Significant accounting policies and notes to accounts 18 The schedules referred to above and notes to accounts form an integral part of the Balance Sheet. As per our report of even date For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011
For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011
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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Particulars Schedules Year ended 31st March, 2011 (` in 000) 476,483 21,430 23,403 521,316 24,836 400,115 17,879 7,801 480 451,111 70,205 70,205 (65,976) 4,229 1.85 1.85 18 Year ended 31st March, 2010 (` in 000) 543,099 18,112 14,132 575,343 20,119 402,714 1,762 7,625 2,916 435,136 140,207 140,207 (206,183) (65,976) 3.69 3.69
INCOME Sales Other Income Increase/(Decrease) in inventories TOTAL EXPENDITURE Personnel expenses Production and other expenses Purchase of finished goods for resale Depreciation Financial expenses TOTAL Profit before tax Tax Expense Net profit after tax Balance brought forward from previous year Balance carried to Balance Sheet Earnings per share Basic [Nominal value of shares ` 10 (Previous year: ` 10)] Diluted [Nominal value of shares ` 10 (Previous year: ` 10)] Significant accounting policies and notes to accounts As per our report of even date For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011
12 13 14
15 16 4 17
The Schedules referred to above and the notes to accounts form an integral part of the Profit & Loss account.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 Year ended 31st March, 2011 (` in 000) Year ended 31st March, 2010 (` in 000)
Particulars A. CASH FLOWS FROM OPERATING ACTIVITIES Net Profit/(Loss) before tax Adjustment for: Depreciation Profit on assets sold Loss on assets sold Assets written off Unrealised Foreign exchange loss/(Profit) Provision for doubtful debts Provision written back Interest Dividend on Investments Operating profit before working capital changes Movements in working capital : Decrease/(Increase) in sundry debtors Decrease/(Increase) in loans and advances Decrease/(Increase) in inventories Increase/(Decrease) in current liabilities Cash generated from operations Direct Taxes Paid (Fringe benefit tax) Net cash from operating activities B. CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets Purchase of current investments Sale/Redemption of current investments Proceeds from sale of fixed assets Dividend on Investments (received) Net cash used in investing activities
70,205 7,801 (2) 7 333 (529) (1,917) 290 (8,646) 67,542 (7,049) (503) (23,623) (10,404) 25,963 25,963 (5,636) (1,777,291) 1,710,888 8 8,609 (63,422)
140,207 7,625 (30) 66 876 206 258 (4,187) 2,743 (4,142) 143,622 (5,120) (1,217) (15,277) 121,072 243,080 (65) 243,015 (11,763) (881,500) 727,000 422 2,321 (163,520)
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CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 (Contd) Particulars C. CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds of short term borrowings/vehicle loan Interest Net cash generated from/(used in) financing activities Net increase in cash and cash equivalents (A+B+C) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year COMPONENTS OF CASH AND CASH EQUIVALENTS Cash on hand Balances with scheduled banks: On current accounts On fixed deposit (including fixed deposits of ` 10 thousand pledged with sales tax authorities) As per our report of even date For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011 For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011 Year ended 31st March, 2011 (` in 000) (290) (290) (37,749) 38,889 1,140 50 1,080 10 1,140 Year ended 31st March, 2010 (` in 000) (39,612) (2,743) (42,355) 37,140 1,749 38,889 44 38,835 10 38,889
SCHEDULES ANNEXED TO & FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2011 Particulars SCHEDULE 1 : SHARE CAPITAL Authorised :40,000,000 (Previous year 40,000,000) Equity shares of ` 10/- each Issued, Subscribed & Paid up : 37,962,800 (Previous year 37,962,800) Equity shares of ` 10/- each As at 31st March, 2011 (` in 000) 400,000 379,628 379,628 Of the above : Out of the above 37,962,794 (Previous year 37,962,794) shares are held by the holding company, Technico Pty Ltd., Australia. Balance 6 (Previous year 6) shares are held by Technico Pty Ltd. Australia, jointly with other share holders. SCHEDULE 2 : RESERVES & SURPLUS Profit & Loss Account 4,229 4,229 SCHEDULE 3 : UNSECURED LOANS Other Loans & Advances - From Body Corporate 120,000 (From Russell Credit Limited, the Indian parent of the holding company) 120,000 Note : (Repayable with in one year ` 120,000 thousands (Previous year ` Nil)) As at 31st March, 2010 (` in 000) 400,000 379,628 379,628
120,000 120,000
SCHEDULE 4 : FIXED ASSETS GROSS BLOCK Particulars Land-freehold Buildings Plant & machinery Furniture & fixtures Leasehold improvements Equipment & appliances Electric installation Vehicles Total Previous Year
As at 1st April, 2010 Additions Withdrawal/ As at 31st As at 1st during the Adjustments March, 2011 April, 2010 year
(` in 000)
DEPRECIATION
NET BLOCK
Withdrawal/ As at 31st As at 31st As at 31st For the year Adjustments March, 2011 March, 2011 March, 2010
15,193 46,548 101,320 2,377 4,951 8,730 4,492 3,631 187,242 180,183
5,385 17 78 582 6,062 11,445
66 72 826 964 4,386
15,193 46,548 106,639 2,322 5,029 8,486 4,492 3,631 192,340 187,242
12,525 53,521 1,436 44 4,080 1,599 1,434 74,639 70,065
1,313 4,791 90 526 523 213 345 7,801 7,625
29 42 547 618 3,051
13,838 58,283 1,484 570 4,056 1,812 1,779 81,822 74,639
15,193 32,710 48,356 838 4,459 4,430 2,680 1,852 110,518 112,603
15,193 34,023 47,799 941 4,907 4,650 2,893 2,197 112,603 110,118
Note :- Freehold land amounting to ` 328 thousand (Previous Year ` 328 thousand) is pending registration in the name of the Company.
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SCHEDULES ANNEXED TO & FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2011 (Contd.) Particulars SCHEDULE 5 : INVESTMENTS Current, other than trade (At lower of carrying cost and fair value) In units of mutual fund unquoted 72,496 units DSP Black Rock Liquidity Fund-Inst Plan Daily Dividend 6,921,384 units Kotak Floater Fund Short Term 2,498,376 units Reliance Interval Fund MIP- Series 1 -Inst. Dividend Plan 2,019,065 units Reliance Interval Fund QIP- Series 1 Inst. Dividend Plan 3,500,865 units Tata Fixed Income Portfolio Fund Scheme A-2 Institutional 1 9,023,874 units LIC Income Plus Fund Daily Dividend 5,326,222 units Canara Robeco Treasury Advantage Fund Daily Dividend Aggregate amount of unquoted investments - Fair value ` 223,552 thousands (previous year ` 156,322 thousands) SCHEDULE 6 : INVENTORIES Stores and spares TECHNITUBER Seed Potatoes* Field Generated Seed Potatoes** Banana Tissue Culture Plantlets Insecticides, Fungicides and Micronutrients Includes borrowing cost (Amount ` in thousand) * ` 6 (Previous year ` 56) ** ` 153 (Previous year ` 1,147) SCHEDULE 7 : SUNDRY DEBTORS Debts outstanding for a period exceeding six months Unsecured, Considered doubtful Other debts Unsecured, considered good* 619 619 18,379 18,379 18,998 619 18,379 1,798 1,798 10,801 10,801 12,599 1,798 10,801 As at 31st March, 2011 (` in 000) As at 31st March, 2010 (` in 000)
72,519 70,018 25,000 20,213 35,012 222,762 222,762 6,603 20,528 342,911 450 2 370,494
90,239 66,083 156,322 156,322 6,383 19,873 320,615 346,871
Less: Provision for doubtful debts Included in sundry debtors are : *Dues from : ITC Limited (ultimate holding company) Technico Pty Limited, Australia (parent company) SCHEDULE 8 : CASH AND BANK BALANCES Cash on hand Balances with scheduled banks : On current accounts On fixed deposit (Fixed deposits of ` 10 thousand is pledged with sales tax authorities) SCHEDULE 9 : LOANS AND ADVANCES (Unsecured, considered good ) Advances recoverable in cash or kind or for value to be received Tax deducted at source Advance FBT Deposits (Unsecured, Considered Doubtful) Advances recoverable in cash or kind or for value to be received Less: Provision for Doubtful Advances SCHEDULE 10 : CURRENT LIABILITIES Sundry creditors - Total outstanding dues of Micro and Small Enterprises* - Total outstanding dues to creditors other than Micro and Small Enterprises Advance received from customers Deposit from dealers Other liabilities * Refer Schedule 18 note no. 10 (a) SCHEDULE 11 : PROVISIONS Provision for Leave encashment
1,059 11,601 50 1,080 10 1,140
3,750 6,607 44 38,835 10 38,889
2,446 2,462 219 1,508 393 7,028 393 6,635
1,522 1,709 219 2,682 6,132 6,132
174,126 48,644 240 1,079 224,089
187,637 47,752 240 1,347 236,976
1,982 1,982
1,416 1,416
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SCHEDULES ANNEXED TO & FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011 Particulars SCHEDULE 12 : SALES TECHNITUBER Seed Potatoes Field Generated Seed Potatoes Insecticides, Fungicides and Micronutrients Year ended 31st March, 2011 (` in 000) 21,755 446,589 8,139 476,483 SCHEDULE 13 : OTHER INCOME Excess Provision written back Dividend Income from short term investments Rental income Exchange difference (net) Profit on sale of assets Miscellaneous income SCHEDULE 14 : INCREASE / (DECREASE) IN INVENTORIES Opening Stock TECHNITUBER Seed Potatoes Field Generated Seed Potatoes Standing crop Banana Tissue Culture Plantlets Insecticides, Fungicides and Micronutrients Less : Closing Stock TECHNITUBER Seed Potatoes Field Generated Seed Potatoes Standing crop Banana Tissue Culture Plantlets Insecticides, Fungicides and Micronutrients Increase / (Decrease) in inventories SCHEDULE 15 : PERSONNEL EXPENSES Salaries, wages, bonus and other allowances Contribution to provident and other funds Gratuity expense (Refer Schedule 18 note no.8) Workmen and staff welfare expenses SCHEDULE 16 : PRODUCTION AND OTHER EXPENSES Consumption of Stores - Plantlets - Chemicals and fertilisers - Consumables - Packing Stores Power and fuel Seed farming charges Land management charges ( Net ) Contract labour Freight and cartage Travelling Insurance Lease Rent Storage and handling cost Rates and taxes Repair and maintenance : - Building - Plant and machinery - Others Auditors remuneration : - Audit fee including service tax - Tax audit fee including service tax - Out of pocket expenses Bad & Doubtful Debts Provision for Doubtful Debts and Advances Exchange difference (net) Assets written off Miscellaneous expenses SCHEDULE 17 : FINANCIAL EXPENSES Interest on cash credit Bank charges Year ended 31st March, 2010 (` in 000) 14,056 529,043 543,099
1,917 8,646 8,424 976 2 1,465 21,430
4,187 4,142 8,424 30 1,329 18,112
19,873 320,615 340,488 20,528 342,911 450 2 363,891 23,403
18,538 307,082 736 326,356 19,873 320,615 340,488 14,132
21,853 829 379 1,775 24,836
16,306 809 204 2,800 20,119
248 1,937 1,067 35,087 9,914 194,161 1,783 6,513 49,458 7,759 1,503 3,989 66,408 394 265 2,501 1,389 441 165 61 393 333 14,346 400,115 290 190 480
10 1,974 1,024 31,051 8,623 208,459 1,650 4,999 51,786 7,343 2,667 3,881 56,592 378 320 3,650 1,392 441 165 45 258 1,225 876 13,905 402,714 2,743 173 2,916
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SCHEDULE-18 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1. Nature of Operations The Company is in the business of producing and selling TECHNITUBER Seed Potatoes and Field Generated Seed Potatoes. The Companys production process comprises TECHNITUBER Seed Potatoes (i.e. G0) 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. During the year the Company has started supplying Agri Inputs comprising Insecticides, Fungicides and Micronutrients to the farmers associated with the Company for growing Field Generated Seed Potatoes. During the year the Company has also started production of Tissue Culture Plantlets of Banana in the facility situated at Vill. Manpura, Distt. Solan, Himachal Pradesh. 2. 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 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 The preparation of financial statements in conformity with generally 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 managements 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 years which is determined based on technical evaluation. Assets Buildings Electric Installation Plant and Machinery Equipment and Appliances Furniture and Fittings Vehicles Leasehold Improvements Rates (SLM) 1.63% - 3.34% 4.75% 4.75% - 20% 4.75% - 16.21% 6.33% 9.5% Over the Primary Lease Period Rates Schedule XIV 1.63% - 3.34% 4.75% 4.75% 4.75% - 16.21% 6.33% 9.5% At cost, arrived at on FIFO basis or net realizable value, whichever is lower. (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 weighted average basis. 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, arrived at on FIFO basis or net realizable value, whichever is lower. 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.
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. (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
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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 of the employees and the premium paid to LIC is charged to Profit & Loss Account. The difference between the actuarial valuation of the gratuity of employees at the year-end and the contribution paid to LIC is further adjusted in the books of accounts. (iii) Short term compensated absences are provided for based on estimates. 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 3. (b) 3. 1. of three months or less. q) Identification of Segments (i) Primary segment- Business Segment The Companys 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. Notes on Accounts Segment Reporting Geographical segment wise revenue S. No. Particulars (a) (b) Revenue from Domestic Market Revenue from Overseas Market Total 2010-11 451,601 24,882 476,483 (` in 000) 2009-10 508,596 34,503 543,099 (` in 000) 2009-10 5,992 6,607 12,599
Geographical segment wise receivables (Gross): S. No. Particulars (a) (b) Receivable from Domestic Market Receivable from Overseas Market Total 2010-11 7,397 11,601 18,998
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. 2. Earnings per Share (EPS) 2010-11 2009-10
S. No. Particulars (a) Total equity shares outstanding at the beginning and end of the year `10 (previous year `10) paid up on each share No. of Shares Paid up Value (` 000) Equivalent no. of Shares of `10 Weighted average number of equity shares outstanding during the year. Net Profit/(Loss) after tax (` 000) Basic earnings per share (`) Diluted earnings per share (`)
37,962,800 379,628 37,962,800
37,962,800 379,628 37,962,800
37,962,800 70,205 1.85 1.85
37,962,800 140,207 3.69 3.69
(c) (d) (e)
Related Party Disclosures (i) The list of related parties as identified by the management is as under : Relationship Ultimate Holding Company Holding Company of Technico Pty Ltd.
Name of the Party ITC Limited (ITC) Russell Credit Limited (RCL)
Technico Pty Limited Australia (TPL) Holding Company Technico Asia Holdings Pty Limited, Australia Fellow Subsidiary Technico Horticultural (Kunming) Company Limited, China Technico ISC Pty Limited, Australia. Fellow Subsidiary Fellow Subsidiary (Deregistered on 3rd November 2010) Enterprise under Common Control Director Whole Time Director Director Director Director
Technico Technologies Inc., Canada. Fellow Subsidiary ITC Infotech India Limited Mr. David Charles McDonald Mr. Sachidanand Madan Mr. Surampudi Sivakumar Mr. Arup Kumar Mukerji Mr. Ganesh Kumar Sundararaman
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(ii) The following transactions were carried out with the related parties and the balances of these related parties as at March 31, 2011 for the period then ended are presented here in below: (` in 000) Ultimate Holding Holding Common Particulars Holding Company Company Control Company of TPL (TPL) (ITC) (RCL) Sale of Seed Potatoes Purchase Rental Income Services Received Expenses Reimbursed Expenses Recovered Loan Outstanding Accounts Receivable Other Payable 3,516 (5,377) () (225) () 8,424 (8,424) () 2,957 (1,347) () 627 (512) () 45 () () 120,000 () (120,000) 1,059 (3,750) () 164 (1,454) () 15,385 (11,862) () () () () 677 (693) () 11,601 (6,607) () () () () (74) (10) () () () (77) ee) 2,397,459 Units of ` 10 each of Templeton India Ultra Short Bond Fund Retail Plan- Daily Dividend ff) 36,492 Units of ` 1000 each of UTI Treasury Advantage FundInstitutional Plan - Daily Dividend gg) 1,987,755 Units of ` 13 each of UTI Fixed Income Interval Fund - MIP-II hh) 3,738 Units of ` 1070 each of UTI Liquid Cash Plan Regular - Daily Income Option ii) 1,992,905 Units of ` 10 each of Tata Floater Fund - Daily Dividend jj) 31,404 Units of ` 1115 each of Tata Liquid Super High Investment Fund - Daily Dividend kk) 3,500,865 Units of ` 10 each of Tata Fixed Income Portfolio Fund Scheme A2 Inst. I ll) 4,500,000 Units of ` 10 each of Fidelity FMP Series 4 - Plan B Dividend mm)2,480,405 Units of ` 10 each of DWS Money Plus Fund Inst. Daily Dividend nn) 5,746,954 Units of ` 10 each of JM Money Manager Fund Super Plus Plan - Daily Dividend oo) 998,293 Units of ` 10 each of Religare Ultra Short Term Fund Inst. Daily Dividend pp) 139,890 Units of ` 1001 each of Religare Liquid Fund - Super Inst. Daily Dividend qq) 1,000,000 Units of ` 10 each of Sundaram Interval Fund QIP A Inst. Dividend rr) 1,008,288 Units of ` 10 each of Sundaram Money Fund Inst. Daily Dividend Year 2009-10 a) 5,996,822 units of ` 10 each of JM Money Manager Fund Daily Dividend b) 2,417,970 units of ` 10 each of Canara Robeco Treasury Advantage Fund - Daily Dividend c) 5,798,203 units of ` 10 each of Fortis Money Plus Fund - Daily Dividend d) 9,649,905 units of ` 10 each of Kotak Liquid - Daily Dividend e) 11,955,599 units of ` 10 each of Kotak Floater Long Term - Daily Dividend f) 87,981 units of ` 1000 each of UTI Treasury Advantage Fund Daily Dividend g) 9,750,000 units of ` 10 each of LIC income Plus Fund - Daily Dividend h) 3,996,443 units of ` 10 each of JP Morgan India Treasury Fund Daily Dividend i) 232,790 units of ` 1000 each of Reliance Money Manager Fund - Daily Dividend 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. Estimated amount of contracts remaining to be executed on capital account and not provided for ` Nil (Previous Year ` 474 thousand). 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 Lease rentals charged to the profit and loss account. 8. Year ended March 31, 2011 3,989 Year ended March 31, 2010 3,881
Previous Year figures are given in the brackets. 4. The following investments were purchased and sold : Year 2010-11 a) 1,648,879 Units of ` 10 each of Birla Sun Life Savings Fund-Inst.Daily Dividend b) 2,941,864 Units of ` 12 each of Canara Robeco Treasury Advantage Inst.- Daily dividend c) 1,249,285 Units of ` 12 each of Canara Robeco Treasury AdvantageRetail Daily Dividend d) 1,000,000 Units of ` 10 each of Canara Robeco Interval Series 2QIP 2,Inst.Dividend e) 496,524 Units of ` 10 each of Canara Robeco Liquid Fund Daily Dividend f) 2,000,000 Units of ` 10 each of DSP Black Rock FMP 3M Series 22 - Dividend g) 52,458 Units of ` 1001 each of DSP Black Rock Money Manager Fund-Inst. Daily Dividend h) 97,488 Units of ` 1000 each of DSP Black Rock Liquidity Fund Inst. Plan Daily Dividend i) 44,725 Units of ` 119 each of ICICI Prudential Liquid Plan Inst. Daily Dividend j) 5,750,000 Units of ` 10 each of ICICI Prudential Interval Fund IV QIP-B Inst. Dividend k) 2,249,798 Units of ` 10 each of ICICI Prudential Interval Fund QIP Plan 1 - Retail Dividend. l) 2,499,950 Units of ` 10 each of ICICI Prudential Interval Fund V - MIP-A Dividend m) 999,774 Units of ` 100 each of ICICI Prudential Liquid Super Inst. Plan - Daily Dividend n) 599,101 Units of ` 10 each of JP Morgan India Liquid Fund - Retail Daily Dividend Plan o) 4,745,776 Units of ` 10 each of JP Morgan India Treasury Fund Super Inst. Daily Dividend p) 4,906,731 Units of ` 12 each of Kotak Floater Long Term - Daily Dividend q) 3,000,000 Units of ` 10 each of Kotak QIP Series 10 - Dividend r) 2,749,423 Units of ` 10 each of Kotak QIP Series 4 Dividend s) 1,099,980 Units of ` 10 each of Kotak QIP Series 8 - Dividend t) 2,500,000 Units of ` 10 each of Kotak FMP 6 M Series 9 - Dividend u) 6,921,384 Units of ` 10 each of Kotak Floater Fund Short Term v) 4,605,000 Units of ` 10 each of LIC Income Plus Fund - Daily Dividend Plan w) 3,000,000 Units of ` 10 each of Reliance Fixed Horizon Fund-XV Series 1 - Dividend Plan x) 3,000,000 Units of ` 10 each of Reliance Fixed Horizon Fund-XV Series 2 - Dividend Plan y) 15,437,778 Units of ` 11 each of Reliance Liquid Fund -Cash Plan - Daily Dividend z) 3,517,222 Units of ` 10 each of Reliance Interval Fund QIP- Series 1 - Inst. Dividend aa) 2,998,950 Units of ` 10 each of Reliance Monthly Interval Fund Series 2 - Inst. Dividend bb) 23,973 Units of ` 1001 each of Reliance Money Manager Fund Daily Dividend cc) 2,498,376 Units of ` 10 each of Reliance Interval Fund MIP - Series 1 - Inst Dividend Plan dd) 13,693,017 Units of ` 10 each of Reliance Liquidity Fund - Daily Dividend
5.
6. 7.
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 fund, 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.
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Profit and Loss account Net employee benefit expense (recognised in Employee Cost) (` in 000) Particulars 2010-11
Gratuity (Funded) Leave Encashment (Unfunded)
Changes in the fair value of plan assets are as follows: Particulars 2010-11
Gratuity Leave Encashment
2009-010
Gratuity (Funded) Leave Encashment (Unfunded)
(` in 000) 2009-010
Current service cost Interest cost on benefit obligation Expected return on plan assets Net actuarial (gain) / loss recognised in the year Past service cost Net benefit expense Actual return on plan assets Balance Sheet
313 77 (97) (11) 97 379 190
130 107 470 707
220 54 (66) (4) 204 9
123 77 246 446
Opening fair value of plan assets Expected return Contributions by employer Benefits paid Actuarial gains / (losses) Closing fair value of plan assets
993 97 442 (25) 93 1,600
141 (141)
779 66 233 (28) (57) 993
253 (253)
The Company expects to contribute ` 400 (Previous year ` 443) thousands to gratuity fund in 2011-12. The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Particulars Investments with insurer 2010-11 100% 2009-10 100%
Details of Provision for Gratuity and Leave Encashment (` in 000) Particulars 2010-11
2009-010
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 of inflation, seniority, promotion and other relevant factors on long term basis. The principal assumptions used in determining gratuity obligations for the Companys plans are shown below: Particulars Discount rate Expected rate of return on plan assets 2010-11 (In %) 8.00 7.50 2009-10 (In %) 7.00 7.50
Defined benefit obligation Fair value of plan assets Less: Un-recognized past service cost Plan asset / (liability)
(1,519) 1,600 81
(1,982) (1,982)
(975) 993 18
(1,416) (1,416)
Changes in the present value of the defined benefit obligation are as follows: (` in 000) Particulars 2010-11
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. Amounts for the current and previous years are as follows: (` in 000) Particulars
2010-11
2009-010
Gratuity
2009-10 2008-09 2007-08
Opening defined benefit obligation Interest cost Current service cost Past service cost Benefits paid Actuarial (gains)/losses on obligation Closing defined benefit obligation 9.
975 77 313 97 (25) 81 1,519
1,416 107 130 (141) 470 1,982
790 54 220 (28) (61) 975
1,223 77 123 (253) 246 1,416
Defined benefit obligation Fair value of Plan assets Plan asset / (liability) Experience loss/(gain) on plan liabilities Experience loss/(gain) on plan assets
(1,519) 1,600 81 81 (93)
(975) 993 18 (61) 57
(790) 779 (11) (253) 94
(746) 813 67 127 2
The Company adopted AS-15 (Revised 2005) Employee Benefits, during the year ended March 31, 2008. Since similar valuations for previous year ended March 31, 2007 is not available with the Company, therefore, disclosures as required by paragraph 120(n) of AS-15 (Revised 2005) have not been furnished in respect of that year.
Particulars of Un-hedged Foreign Currency Exposure (` in 000) Particulars Debtors Debtors Currency AUD$ US$ ` 2010-11 251.60 11,601 2009-10 147.14 6,607 S.No. Particulars d) e) the amount of interest accrued and remaining unpaid at the end of each accounting year; and 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. 2010-11 2009-10
10. Supplementary Statutory Information a) Details of dues to Micro, Small and Medium Enterprises as per MSMED Act, 2006 S.No. Particulars 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 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 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. 2010-11 2009-10
b) Earnings in foreign currency (` in 000) Particulars FOB value of Exports c) Expenditure in foreign currency (` in 000) Particulars Travelling Testing Charges, Temperature Data Loggers 2010-11 151 526 2009-10 139 102 2010-11 24,882 2009-10 34,503
b)
c)
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11. Additional information pursuant to the provisions of Part II of Schedule VI to the Companies Act, 1956. a) Particulars regarding Production, Sales and Stock (` in 000) Particulars 2010-11 Qty. Value 2009-10 Qty. Value Particulars 2010-11 Qty. Value (` in 000) 2009-10 Qty. Value
Production TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 10,128 Field Generated Seed Potatoes (qty. in MT) 50,403 Banana Tissue Culture Plantlets (qty. in 000 Nos.) 120 Purchase Field Generated Seed Potatoes (qty. in MT) 1,212 10,749 Insecticides and Fungicides (qty. in Kgs.) 8,791 5,498 Insecticides and Fungicides (qty. in Ltrs.) 1,070 617 Micronutrients (qty. in Kgs.) 1,624 1,015 Internal Consumption TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 4,101 Field Generated Seed Potatoes (qty. in MT) 9,197 Insecticides and Fungicides (qty. in Kgs.) 14 Insecticides and Fungicides (qty. in Ltrs.) 5 Micronutrients (qty. in Kgs.) 1 Losses/Shortages/Discarded Seed TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 744 Field Generated Seed Potatoes (qty. in MT) 2,230 Sales TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 5,588 21,755 Field Generated Seed Potatoes (qty. in MT) 39,859 446,589 Banana Tissue Culture Plantlets (qty. in 000 Nos.) Insecticides and Fungicides (qty. in Kgs.) 8,774 6,213 Insecticides and Fungicides (qty. in Ltrs.) 1,065 675 Micronutrients (qty. in Kgs.) 1,623 1,251
10,095 51,182
212
1,762
4,272 9,146
Opening Stock TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 6,946 19,873 8,441 18,538 Field Generated Seed Potatoes (qty. in MT) 50,194 320,615 45,172 307,082 Standing crops 736 Banana Tissue Culture Plantlets (qty. in 000 Nos.) Insecticides and Fungicides (qty. in Kgs.) Insecticides and Fungicides (qty. in Ltrs.) Micronutrients (qty. in Kgs.) Closing Stock TECHNITUBER Seed Potatoes (qty. in 000 Nos.) 6,641 20,528 6,946 19,873 Field Generated Seed Potatoes (qty. in MT) 50,523 342,911 50,194 320,615 Standing crops Banana Tissue Culture Plantlets (qty. in 000 Nos.) 120 450 Insecticides and Fungicides (qty. in Kgs.) 3 2 Insecticides and Fungicides (qty. in Ltrs.) Micronutrients (qty. in Kgs.) b) Consumption of Plantlets and Chemicals and fertilisers (` in 000) Particulars 2010-11 % 2009-10 % Imported Indigenous 2,185 100.00 1,984 100.00 Total 2,185 100.00 1,984 100.00 c) Consumption of Consumables (` in 000) Particulars 2010-11 % 2009-10 % Imported Indigenous 1,067 100.00 1,024 100.00 Total 1,067 100.00 1,024 100.00 d) Consumption of Packing Stores (` in 000) Particulars 2010-11 % 2009-10 % Imported Indigenous 35,087 100.00 31,051 100.00 Total 35,087 100.00 31,051 100.00
3,486 2,147
3,832
14,056
35,079 529,043
12. Previous years figures has been regrouped and/or rearranged wherever necessary to make their classification comparable with that of the current year. For S.R. Batliboi & Co. Firm Registration No. : 301003E Chartered Accountants per Manoj Gupta Partner Membership No. 83906 Gurgaon, April 26, 2011 For and on behalf of the Board of Directors of Technico Agri Sciences Limited Arup K Mukerji Sachidanand Madan Sanjeev Madan Director Director and Company Secretary General Manager (Finance) Hyderabad, April 26, 2011
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE I Registration No. State Code Balance Sheet Date 98646 55 31st March, 2011 (` 000) 503,857 503,857 379,628 4,229 120,000 110,518 222,762 170,577 V IV Performance of the Company Turnover (including other income) Total expenditure Profit/(loss) before tax Profit/(loss) after tax Earning per equity share (in `) Dividend rate percentage - Equity shares Generic Names of Principal Products of the company Item Code No. (ITC Code) : Product Description : Item Code No. (ITC Code) : Product Description : 07011000 TECHNITUBER Seed Potatoes 07011000 Field Generated Seed Potatoes 497,913 427,708 70,205 70,205 1.85 1.85 N/A
II
Capital raised during the year Public issue Right issue Bonus issue Private placement III Position of mobilization and deployment of funds Total liabilities Total assets Source of funds Paid up capital Reserve & Surplus Secured loans Unsecured loans Application of funds Net fixed assets Intangible assets Capital work in progress Capital advances Investments Net current assets Misc expenditure Profit & Loss Account
- Basic - Diluted
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TECHNICO ASIA HOLDINGS PTY LIMITED

DIRECTORS REPORT FOR THE YEAR ENDED 31 MARCH, 2011 Your directors present their report on the company for the financial year ended 31 March, 2011. 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. Sachidanand Madan Mr. Arup Kumar Mukerji Mr. Allan Hendry (effective 18 August 2010) Corporate information 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. The registered office of Technico Asia Holdings Pty Limited is located at: Suite 5, 20 Bundaroo Street BOWRAL NSW 2576, Australia The company had no employees during the year. Principal activities During the year, the entity did not have any activity other than holding 100% of the shares of Technico Horticultural (Kunming) Co Limited, China. Review and results of operations During the year, the company earned a profit of A$ Nil [2010: A$0.51 million]. It may be recalled that the profit recorded in the previous year was on account of reversal of the previous write down of its investment in its subsidiary, Technico Sydney, Australia 26th April 2011 Allan Hendry Director Horticultural (Kunming) Co. Ltd., China so as to reflect this investment at the net book value of the underlying assets of the Chinese company. Significant events after balance date There are no significant events after the balance date to be reported. Environmental regulation and performance 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 auditors independence declaration from Gillespies is on page 12 of this report. Signed in accordance with a resolution of the Board of Directors:
DIRECTORS DECLARATION FOR THE YEAR ENDED 31 MARCH 2011 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 with the Corporations Act 2001, including: (i) giving a true and fair view of the companys financial position as at 31 March 2011 and of their performance for the year ended on that date; and Sydney, Australia 26 April 2011 On behalf of the Board: Allan Hendry 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.
AUDITORS INDEPENDENCE DECLARATION TO THE DIRECTORS OF TECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 In relation to our audit of the financial report of Technico Asia Holdings Pty Limited for the financial year ended 31 March 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. GILLESPIES Chartered Accountants Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 David Duff 26 April 2011 Partner
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011 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 2011, 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. 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.
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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. Auditors 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 auditors 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 entitys 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 entitys 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. Suite 5, 20 Bundaroo Street BOWRAL NSW 2576 26 April 2011 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 auditors 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 companys financial position as at 31 March 2011 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 Chartered Accountants David Duff Partner
INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011 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 LIMITED 516,236 19,666,010 516,236 19,666,010 516,236 19,666,010 $ ` $ 2010 `
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BALANCE SHEET AS AT 31 MARCH 2011 2011 Notes CURRENT ASSETS Cash and Cash Equivalents Trade and Other Receivables Inventories Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Receivables Other Financial Assets Property, Plant and Equipment Intangible Assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and Other Payables Loans and Borrowings Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest free loans and borrowings Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Accumulated Losses TOTAL EQUITY 6 7 4 5 $ 969,736 969,736 969,736 969,736 3,684,522 (2,714,786) 969,736 ` 44,712,103 44,712,103 44,712,103 44,712,103 169,884,098 (125,171,995) 44,712,103 $ 969,736 969,736 969,736 969,736 3,684,522 (2,714,786) 969,736 2010 ` 39,916,758 39,916,758 39,916,758 39,916,758 151,664,137 (111,747,379) 39,916,758
STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2011 Contributed Equity $ Retained Earnings $
Total $
At 1 April 2009 Profit for the Period At 31 March 2010 Profit for the Period At 31 March 2011
3,684,522 3,684,522 3,684,522
(3,231,022) 516,236 (2,714,786) (2,714,786)
453,500 516,236 969,736 969,736
Contributed
Contributed Equity ` 169,884,098 169,884,098 169,884,098
Retained Earnings ` (148,974,347) (23,802,352) (125,171,995) (125,171,995)
Total ` 20,909,751 23,802,352 44,712,103 44,712,103
At 1 April 2009 Profit for the Period At 31 March 2010 Profit for the Period At 31 March 2011
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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2011 Notes CASH FLOW FROM OPERATING ACTIVITIES 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 2011 $ ` 2010 $ `
NOTES TO FORMING PART OF THE FINANCIAL STATEMENTS AS AT 31 MARCH 2011 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 46.1075 for the current year balance sheet (2010: INR 41.1625) and the average rate of 1 AUD = INR 43.6350 for the current year income statement (2010: INR 38.0950) 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 2011. However, the directors have determined that in order for the financial report to give a true and fair view of the companys 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: AASB 107: AASB 108: Presentation of Financial Statements Cash Flow Statements Accounting Policies, Changes in Accounting Estimates and Errors 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 assets recoverable amount. An assets 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 assets 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.
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
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Note 2: Trade and Other Receivables 2011 $ Current Trade and other receivables Note 3: Other Financial Assets Non-current Shares in subsidiaries: At cost Provision for write-down Total other financial assets 3,684,522 (2,714,786) 969,736 169,884,098 (125,171,995) 44,712,103 3,684,522 (2,714,786) 969,736 151,664,137 (111,747,379) 39,916,758 ` $ 2010 `
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 interest held by the consolidated entity country of incorporation (%) Technico Horticultural (Kunming) Co. Ltd. China 100 Investment (Provision for diminution) 2011 $ 3,684,522 (2,714,786) 969,736 Note 4: Trade and other payables 2011 $ Current Trade creditors Terms and conditions relating to the above financial instruments: (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 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 2011 $ Accumulated losses Balance at beginning of year Net profit attributable to the members of Technico Asia Holdings Pty Ltd. Total available for appropriation Dividends paid or provided for Aggregate amount transferred (to)/ from reserves Balance at end of period Note 8: Events subsequent to reporting date There are no subsequent events to be reported. (2,714,786) (2,714,786) (2,714,786) (125,171,995) (125,171,995) (125,171,995) (3,231,022) 516,236 (2,714,786) (2,714,786) (132,996,943) 21,249,564 (111,747,379) (111,747,379) ` $ 2010 ` 3,684,522 169,884,098 3,684,522 151,664,137 (i) ` $ 2010 ` ` 169,884,098 (125,171,995) 44,712,103 $ 3,684,522 (2,714,786) 969,736 2010 ` 151,664,137 (111,747,379) 39,916,758
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TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED

MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2010 Your management submit their report for the financial year ended 31 December 2010. Corporate Information Technico Horticultural (Kunming) Co Ltd (Company) is domiciled in Yunnan Province, Peoples 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, Peoples Republic of China. Employees There were 44 employees on the rolls of the Company as at 31 December, 2010. Principal activities The Company is primarily engaged in production and supply of TECHNITUBER seed potatoes to export markets. Place : Songming Date : 15 March 2011 Min Zhang Legal Representative Business Review For the year under review, the Company achieved a turnover of CNY 6,283,417 (2009: CNY 4,262,165) and made a net profit of CNY 460,074 (2009: Loss of CNY 1,696,763). Current year profit is on account of higher sales and reduction in overhead costs. The business continues to focus on TECHNITUBER seed potato exports. 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. Environmental regulation and performance Your Company complies with the applicable environmental regulations set by the Songming Environmental Bureau.
REPORT OF THE AUDITOR TO THE MANAGEMENT OF TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED We have audited the attached financial statements of Technico Horticultural (Kunming) Company (the Company), including the balance sheet as at 31 December 2010, and the income and Statement of Changes In Equity, cash flow statement, notes to financial statements for the year ended 31 December 2010. 1. Responsibility of the Companys management for the financial statements The Companys responsibility is to prepare these financial statements in accordance with the requirements of The Accounting Standards for PRC Enterprises and The Accounting Systems of PRC Enterprises, which includes (1) designing, implementing and maintaining the internal controls relative to the preparation of these financial statements, so that there arent material misstatements in these financial statements led by fraud and error; (2) selecting and using proper accounting policies and making rational accounting estimates. 2. Responsibility of the certified public accounts Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Independent Auditing Standards of China. The standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditors judgment, 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 entitys preparation 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 3. Audit opinion In our opinion, the financial statements have been prepared in accordance with the requirements of The Accounting Standards for PRC Enterprises and The Accounting Systems of PRC Enterprises. The financial statements fairly present the financial position of the Company as at 31 December 2010, operating results and cash flows for the year then ended in all material resects. Yunnan Tianying Certified Public Accountants Certified Public Accountants Certified Public Accountants Kunming, The Peoples Republic of China 15 March 2011
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BALANCE SHEET AS AT 31 DECEMBER 2010 Printed by Technico Horticultural (Kunming) Co. Ltd. ITEMS LINE NO 31 Dec 2009 CNY CURRENT ASSETS : Cash and cash equivalents Transaction monetary assets Short-term investments Notes receivable Accounts receivable Advance to suppliers debts Dividend receivable Interest receivable Other notes receivable Inventories Including : Raw materials Finished goods In one year expired noncurrent assets Other current assets Total current assets NON CURRENT ASSETS: Financial assets available for sale Hold investment due Long-term investment on bonds Long-term account receivable Long-term investment on stocks Right to trade in previously non-tradable shares Investment real eastate Fixed assets-cost Less: Accumulated depreciations Fixed asset-net value Less: Fixed assets depreciation reserves Fixed asset-net equity Construction in progress liab. Project goods and material Liquidation of fixed assets Productive living assets Oil and gas assets Intangible assets Including: right to use land Development expenditures Business reputation Cost-book value differentials Long-term deferred and prepaid expenses Deferred income tax assets Deferred taxes debit Other noncurrent assets Including: specially approved reserving materials Total noncurrent assets TOTAL ASSETS CURRENT LIABILITIES: Short term loans Transaction financial liabilities Warrants payable Notes payable Accounts payable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 2,516,033 0.00 0.00 0.00 0.00 5,688 0.00 0.00 596 3,554,054 0.00 3,227,762 0.00 20,457 6,096,828 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26,039,135 20,035,549 6,003,586 0.00 6,003,586 0.00 0.00 0.00 0.00 0.00 1,578,019 1,578,019 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7,581,605 13,678,433 0.00 0.00 0.00 0.00 0.00 0.00 17,207,147 0.00 0.00 0.00 0.00 38,900 0.00 0.00 4,077 24,306,177 0.00 22,074,667 0.00 139,906 41,696,208 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 178,081,643 137,023,118 41,058,525 0.00 41,058,525 0.00 0.00 0.00 0.00 0.00 10,792,070 10,792,070 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 51,850,596 93,546,803 0.00 0.00 0.00 0.00 0.00 0.00 2,639,163 0.00 0.00 0.00 2,899,782 0.00 0.00 0.00 21,077 1,746,182 0.00 1,746,182 0.00 20,381 7,326,584 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26,071,597 20,414,802 5,656,795 0.00 5,656,795 0.00 0.00 0.00 0.00 0.00 1,537,031 1,537,031 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7,193,826 14,520,410 0.00 0.00 0.00 0.00 0.00 0.00 18,090,140 0.00 0.000 0.00 19,876,554 0.00 0.00 0.0 144,469 11,969,208 0.00 11,969,208 0.00 139,700 50,220,072 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0 178,707,760 139,933,261 38,774,499 0.00 38,774,499 0.00 0.00 0.00 0.00 0.00 10,535,581 10,535,581 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 49,310,080 99,530,151 0.00 0.00 0.00 0.00 0.00 0.00 31 Dec 2009 ` 31 Dec 2010 CNY 31 Dec 2010 `
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BALANCE SHEET AS AT 31 DECEMBER 2010 (Contd.) Printed by Technico Horticultural (Kunming) Co. Ltd. ITEMS Advances from customers Employee pay payable Including: Accrued wages Accrued welfarism Including: Staff and worker bonus and welfare fund Taxes and dues payable Including:Taxes payable Interest payable Dividends payable Other payables Due within one year of noncurrent liabilities Other current liabilities Total current liabilities NONCURRENT LIABILITIES: Long-term loans Bonds payable Long-term account payable Special payable Projected liabilities Deferred income tax liabilities Deferred taxes credit Other noncurrent liabilities Including: special reserve fund Total non-current liabilities Total liabilities OWNERS EQUITY: Practical capital collected (or share capital) National capital Collective capital Legal persons capital Including: State-owned legal persons capital Collective legal persons capital Personal capital Foreign businessmens capital Less: Investment returned Net paid in capital Capital reserve Less: treasury stock Surplus reserves Including: Legal surplus Free surplus reserves Reserve fund Enterprise expansion fund Profits capitalized on return of investment Unaffirmed investment loss Undistributed profit Including: cash dividends *Margin of Translation of Foreign Currency Financial Statements Total equity attributable to equity holders of the parent *minority stockholders interest Total owners equity Less: assets loss Total owners equity (net value less on assets) TOTAL LIABILITIES AND OWNERS EQUITY LINE NO 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 0.00 0.00 8,341 0.00 0.00 0.00 0.00 0.00 0.00 8,341 287,416 0.00 19,013,598 0.00 0.00 0.00 0.00 0.00 0.00 19,013,598 0.00 19,013,598 42,667 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (5,665,247) 0.00 0.00 13,391,017 0.00 13,391,017 0.00 13,391,017 13,678,433 0.00 0.00 57,042 0.00 0.00 0.00 0.00 0.00 0.00 57,042 1,965,637 0.00 130,033,997 0.00 0.00 0.00 0.00 0.00 0.00 130,033,997 0.00 130,033,997 291,797 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (35,880,754) 0.00 (2,863,872) 91,581,167 0.00 91,581,167 0.00 91,581,167 93,546,803 0.00 0.00 52,515 0.00 0.00 0.00 0.00 0.00 0.00 52,515 669,319 0.00 19,013,598 0.00 0.00 0.00 0.00 0.00 0.00 19,013,598 0.00 19,013,598 42,667 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (5,205,173) 0.00 0.00 13,851,091 0.00 13,851,091 0.00 13,851,091 14,520,410 0.00 0.00 359,961 0.00 0.00 0.00 0.00 0.00 0.00 359,961 4,587,847 0.00 130,328,708 0.00 0.00 0.00 0.00 0.00 0.00 130,328,708 0.00 130,033,997 292,458 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (32,730,721) 0.00 (2,653,430) 94,942,304 0.00 94,942,304 0.00 94,942,304 99,530,151 31 Dec 2009 CNY 0.00 279,075 278,242 834 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 279,075 31 Dec 2009 ` 0.00 1,908,595 1,902,894 5,701 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,908,595 31 Dec 2010 CNY 227,500 284,836 282,682 2,154 0.00 0.00 0.00 0.00 0.00 104,468 0.00 0.00 616,804 31 Dec 2010 ` 1,559,399 1,952,412 1,937,645 14,767 0.00 0.00 0.00 0.00 0.00 716,076 0.00 0.00 4,227,886
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INCOME AND PROFIT DISTRIBUTION STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010 Printed by Technico Horticultural (Kunming) Co. Ltd. ITEMS Gross operating income Including: Operating income Including: main business income Other business income Gross operating cost Including: Operating cost Including: main business cost Other business expense Business tax and surcharges Selling expenses Administrative expenses Including: Business entertainment Research and development expense Financial Expenses Including: Interest exchange Interest income Foreign exchange profit and loss Asset impairment losses Other Add: Changes in fair value of the profit and loss Investment income Including: for the investment benefits from the invested business and the united business and joint venture Operating profit Add: Non-operating income Including: income from disposal of long term assets Income from non-monetary assets exchange Government grands (subsidy income) Income from debt restructuring Less: Non-operating expenses Including: Loss on disposal of long-term assets Loss on non-monetary assets exchange Loss on debt restructuring TOTAL PROFIT Less: Income tax expense Add: unaffirmed investment loss NET INCOME Less: Minority interest income Net income attributable to equity holders of the Parent LINE NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 2009 CNY 4,262,165 4,262,165 4,255,608 6,557 5,977,790 2,656,154 2,656,154 0.00 0.00 1,501,373 1,712,212 0.00 0.00 108,052 6,426 16,504 101,245 0.00 0.00 0.00 0.00 0.00 (1,715,625) 44,696 0.00 0.00 0.00 0.00 25,834 0.00 0.00 0.00 (1,696,763) 0.00 0.00 (1,696,763) 0.00 (1,696,763) 2009 ` 29,875,223 29,875,223 29,829,262 45,961 41,900,722 18,618,047 18,618,047 0.00 0.00 10,523,722 12,001,577 0.00 0.00 757,376 45,042 115,684 709,664 0.00 0.00 0.00 0.00 0.00 (12,025,499) 313,294 0.00 0.00 0.00 0.00 181,081 0.00 0.00 0.00 (11,893,287) 0.00 0.00 (11,893,287) 0.00 (11,893,287) 2010 CNY 6,283,417 6,283,417 6,276,667 6,750 5,831,987 4,204,581 4,204,581 0.00 0.00 419,288 1,179,578 0.00 0.00 28,539 0.00 18,767 43,096 0.00 0.00 0.00 0.00 0.00 451,430 10,453 0.00 0.00 0.00 0.00 1,809 0.00 0.00 0.00 460,074 0.00 0.00 460,074 0.00 460,074 2010 ` 43,021,298 43,021,298 42,975,082 46,216 39,930,448 28,787,928 28,787,928 0.00 0.00 2,870,782 8,076,333 0.00 0.00 195,404 0.00 128,496 295,067 0.00 0.00 0.00 0.00 0.00 3,090,850 71,571 0.00 0.00 0.00 0.00 12,388 0.00 0.00 0.00 3,150,034 0.00 0.00 3,150,034 0.00 3,150,034
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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010 Printed by Technico Horticultural (Kunming) Co. Ltd. ITEMS 1. Cash Flow from Operating Activities Cash from selling commodities or offering labor Refund of tax and fee received Other cash received related to operating activities Cash Inflow Subtotal Cash paid for commodities or labor Cash paid to and for employees Taxes and fees paid Other cash paid related to operating activities Cash Outflow Subtotal Cash flow generated from operating activities Net Amount 2. Cash Flow from Investing Activities Cash from investment withdrawal Cash from investment income Net cash from disposing fixed assets, intangible assets and other long term assets Net cash inflows of disposal of subsidiaries and other business entities Other cash received related to investing activities Cash Inflow Subtotal Cash paid for buying fixed assets, intangible assets and other long term investments Cash paid for investment Net cash outflows of procurement of subsidiaries and other business units Other cash paid related to investing activities Cash Outflow Subtotal Cash flow generated from investing activities Net Amount 3. Cash Flow from Financing Activities Cash received from accepting investment Including: cash inflows from minority investment in subsidiaries Borrowings Other cash received related to financing activities Cash Inflow Subtotal Cash paid for debt Cash paid for dividend, profit or interest Including: dividends and earnings paid to minorities by subsidiaries Other cash paid related to financing activities Cash Outflow Subtotal Cash flow from financing activities Net Amount 4. 5. Foreign Currency Translation Gains (Losses) Net Increase Of Cash and Cash Equivalents Add: cash and cash equivalents beginning bal. 6. Cash and cash equivalents ending bal. 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 0.00 0.00 172,487 - 122,487 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4,211 0.00 0.00 4,211 - 4,211 0.00 123,130 2,516,033 2,639,163 0.00 0.00 1,180,984 - 838,644 0.00 0.00 0.00 0.00 0.00 0.00 0.00 28,833 0.00 0.00 28,833 - 28,833 20,322 863,368 17,226,773 18,090,140 19 20 172,487 0.00 1,180,984 0.00 16 17 18 0.00 0.00 50,000 0.00 0.00 342,340 15 50,000 342,340 LINE NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 3,717,490 10,453 266,809 3,994,752 1,815,037 1,706,912 222,975 0.00 3,744,924 249,828 0.00 0.00 0.00 25,452,912 71,571 1,826,786 27,351,269 12,427,196 11,686,886 1,526,664 0.00 25,640,746 1,710,523 0.00 0.00 0.00 RMB `
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NOTES TO FINANCIAL STATEMENTS 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 Peoples 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 Companys 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 in 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 amount of cash and 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. b. c. Within 1 year, at 0.5 percent on the amount of the part; 1-2 year, at 10 percent on the amount of the part; 2-3 year, at 30 percent on the amount of the part. House and building Production equipment Motor vehicle Office equipment and other 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.) 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 useful life depreciation rate 20 years 10 years 5 years 5 years 4.50% 9.00% 18.00% 18.00% Residual value 10.00% 10.00% 10.00% 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.
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
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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 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. Corporate income tax: 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 for its agricultural income. transaction involving the rendering of services can be estimated reliably, the service revenue is 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.
4.
Notes to significant items in the financial statements
(1) Cash Items Cash on hand Cash in bank Total (2) Account receivable 2009-12-31 The age of accounts receivable Within 1 year Total (3) Other receivables 2009-12-31 Length after occurrence Within 1 year Total (4) Advances to suppliers Length after occurrence Within 1 year Total 2009-12-31 RMB 5,688.00 5,688.00 Percentage 100.00% 100.00% 2010-12-31 RMB Percentage RMB 596.15 596.15 Percentage 100.00% 100.00% Provision for bad debts RMB 21,076.59 21,076.59 2010-12-31 Percentage 100.00% 100.00% Provision for bad debts RMB Percentage Provision for bad debts RMB 2,914,353.58 2,914,353.58 2010-12-31 Percentage 100.00% 100.00% Provision for bad debts 14,571.77 14,571.77 2009-12-31 RMB 42,762.49 2,473,270.19 2,516,032.68 2010-12-31 RMB 17,182.14 2,621,980.47 2,639,162.61
(5) Inventories and provision for loss on realization of inventory 2009-12-31 Items RMB Provision for loss on realization of inventory 2010-12-31 RMB Provision for loss on realization of inventory
Finished goods Work-in-progress Total (6) Fixed assets Items Cost Total Capex Accumulated depreciation Total Depreciation Fixed assets depreciation reserves Net book value
3,227,762.42 326,291.82 3,554,054.24
1,419,890.62 326,291.82 1,746,182.44
2009-12-31 26,039,134.83 20,035,548.71 6,003,586.12
Add 172,487.03 467,469.25
Less 140,025.00 88,215.75
2010-12-31 26,071,596.86 20,414,802.21 5,656,794.65
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NOTES TO FINANCIAL STATEMENTS (Contd.) (7) Intangible assets Items Land-use-right Amortization Total 2009-12-31 RMB 2,049,375.00 471,356.25 1,578,018.75 40,987.50 Add RMB Less RMB 2010-12-31 RMB 2,049,375.00 512,343.75 1,537,031.25
The amortization term is 50 years, and there have been 37 years and 6 months left by 31 December 2010. (8) Advances from customers Length after occurrence Within 1 Year Total (9) Other payables Length after occurrence Within 1 Year Total (10) Long-term account payable 2009-12-31 RMB 8,340.65 2010-12-31 RMB 52,514.58 2009-12-31 RMB 2010-12-31 RMB 104,468.00 104,468.00 2009-12-31 RMB 2010-12-31 RMB 227,500.00 227,500.00
The amount due to investor is unsecured, interest free and has no fixed term of repayment. (11) Paid-in capital Investors Technico China Pty Ltd. Total (12) Primary operating profit Operating revenue 6,276,666.75 (13) Finance expense Items Interest expense Less: Interest income Foreign exchange loss Other Total 5. Contingencies Up to 31 December 2010, there are no material contingencies for the Company. 6. Promised events Up to 31 December 2010, 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 2010, there are no other material matters specially stated for the Company. 18,767.38 43,095.65 4,211.17 28,539.44 From 2010-1-1 to 2010-12-31 Operating cost 4,204,581.45 2009-12-31 RMB 19,013,598.02 19,013,598.02 Proportion 100.00% 100.00% Add RMB Less RMB 2010-12-31 RMB 19,013,598.02 19,013,598.02 Proportion 100.00% 100.00%
93
SRINIVASA RESORTS LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2011
Your Directors submit their Report and Accounts for the financial year ended 31st March, 2011. Performance and Hotel Operations During the year under review, your Company recorded an income of ` 56.04 crores (previous year - ` 54.57 crores), pre-tax profit at ` 12.85 crores (previous year ` 14.11 crores) and post-tax profit at ` 9.26 crores (previous year - ` 9.62 crores) after providing for income tax of ` 3.59 crores (previous year - ` 4.49 crores). Earnings Per Share for the year stands at ` 3.86 (previous year - ` 4.01). Cash flows from Operations were ` 15.37 crores during the year (previous year - ` 14.44 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 2011. Your Board further recommends a transfer to General Reserve of ` 0.75 crores (previous year - ` 0.75 crores). The political volatility in the State of Andhra Pradesh partially prevailed in the financial year 2010-11 as well, making the growth static. The Company however took various technical initiatives to maintain the contemporariness of the hotel property and made additional capital expenditure which in turn would enhance the quality of guest experience. In a continuous endeavour towards sustainable growth, the Company has applied for the LEED Certification from USGBC and the first review report received in March 2011. Awards The Company received Times Food Guide awards for Kebabs & Kurries and Dakshin for best restaurants in their respective categories. Foreign Exchange Earnings and Outflow During the year, your Company earned foreign exchange of ` 21.67 crores (previous year - ` 23.02 crores). The utilization of foreign exchange was ` 1.89 crores (previous year - ` 2.64 crores). Energy / Environment and Safety The thrust on energy conservation continues, resulting in savings in energy costs. Your Company continues to focus on hygiene, safety and environment. Directors The Board of Directors at its meeting held on 28th April, 2011, reappointed, subject to the approval of the Members, Mr George Verghese as the Managing Director of the Company for a period of one year effective 1st June, 2011. The resolution seeking your approval to such appointment appears in the Notice convening the 26th Annual General Meeting of the Company. In accordance with the provisions of Article 151 of the Articles of Association of the Company, Mr. B. N. Suresh Reddy and Mr. G. Sivakumar Reddy will be retiring by rotation at the forthcoming 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. The relationship between the staff and the management continued to be cordial. Your Directors place on record their sincere appreciation of the efforts made and the support rendered by the employees of the Company. 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 The Companys Auditors, Messrs. Lovelock & Lewes, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. 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 along 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. Other Information The Audit Committee of the Company reviewed the financial statements for the year under review at its meeting held on 28th April, 2011 and recommended the same for the approval of the Board of Directors. On behalf of the Board Gurgaon, 28th April, 2011 G. Sivakumar Reddy Chairman
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, 2011, and the related Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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 (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. Further to our comments 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; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account 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, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 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, 2011; (ii) in the case of the Profit and Loss Account, 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.
2.
3.
4.
Gurgaon, 28th April, 2011
Partha Mitra Partner Membership No. : 50553 For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants
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 for the year ended March 31, 2011. 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 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. (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.
3.
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ANNEXURE TO AUDITORS REPORT (contd.)
(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. 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, 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. 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. 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. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 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. (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, 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, sales-tax, wealth tax, service-tax, customs duty, excise duty and cess as at March 31, 2011 which have not been deposited on account of a dispute, are as follow: Name of the statute APGST Act, 1957 Nature of dues Amount (`) Period to which the amount relates Financial year 1997-1998 Financial year 1998-1999 Forum where the dispute is pending Sales Tax Appellate Tribunal, Hyderabad Gurgaon, 28th April, 2011 10. The Company has no accumulated losses as at March 31, 2011, 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 raised any money by public issues during the year. 19. 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. 20. The other clauses, (iii) (b), (iii) (c), (iii) (d), (iii) (f), (iii) (g), (v) (b), (xi) and (xix) of paragraph 4 of the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors 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.
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5.
6. 7. 8. 9.
Sales Tax on 1,75,868 purchase from unregistered dealers 5,46,539 Exclusion of Service Tax in computation of VAT liability 10,90,519
Partha Mitra Partner Membership No. : 50553 For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants
APVAT Act, 2005
April 1, 2005 to Honble High January 31, Court of 2008 Andhra Pradesh, Hyderabad.
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule SOURCES OF FUNDS 1. Shareholders Funds a) Capital b) Reserves and Surplus 2. Deferred Tax Liability - Net Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less : Depreciation c) Net Block d) Capital Work-in-Progress 2. Investments 3. Current Assets, Loans and Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances Less : 4. Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Assets Total Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. Partha Mitra Membership Number : 50553 Partner For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011 I. As at 31st March, 2011 (` ) ( `) 24,00,00,000 70,09,02,800 As at 31st March, 2010 (` ) (` ) 24,00,00,000 66,42,74,561
1 2 3
94,09,02,800 8,06,79,058 1,02,15,81,858
90,42,74,561 8,23,21,156 98,65,95,717
87,23,50,271 33,55,26,226 53,68,24,045 11,80,396 67,52,586 1,81,45,548 14,78,05,377 67,81,685 2,82,99,931 20,77,85,127 8,49,21,970 5,88,01,654 14,37,23,624
5 6 7 8 9 10
53,80,04,441 41,95,15,914
86,79,90,775 31,07,14,418 55,72,76,357 84,57,834 1,01,47,562 2,42,74,108 12,45,77,394 78,76,786 2,89,72,895 19,58,48,745 8,20,90,710 5,86,85,199 14,07,75,909
56,57,34,191 36,57,88,690
11 12
6,40,61,503 1,02,15,81,858
5,50,72,836 98,65,95,717
On behalf of the Board G. Sivakumar Reddy Chairman George Verghese Managing Director
95

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Gross Income from Operations Less : Taxes Net Income from Operations Other Income II. EXPENDITURE Food, Beverage etc. consumed Operating and Administrative Expenses Depreciation III. PROFIT Profit before Taxation Provision for Taxation Profit after Taxation Profit brought forward Available for appropriation IV. APPROPRIATIONS General Reserve Proposed Dividend Income Tax on Proposed Dividend Profit Carried Forward For the year ended 31st March, 2011 (`) 57,04,81,110 4,34,70,627 52,70,10,483 3,33,65,127 56,03,75,611 6,19,50,321 33,43,07,577 3,56,59,372 43,19,17,270 12,84,58,341 3,58,57,902 9,26,00,439 60,20,36,841 69,46,37,280 75,00,000 4,80,00,000 79,72,200 63,11,65,080 69,46,37,280 3.86 For the year ended 31st March, 2010 (`) 54,95,21,034 4,04,43,017 50,90,78,017 3,66,03,436 54,56,81,453 5,94,94,337 31,11,99,208 3,38,66,514 40,45,60,059 14,11,21,394 4,49,37,186 9,61,84,208 56,95,10,233 66,56,94,441 75,00,000 4,80,00,000 81,57,600 60,20,36,841 66,56,94,441 4.01
13 14 15 16
17
18 Basic and Diluted Earnings Per Share (`) Notes to the Accounts 19 Significant Accounting Policies 20 The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. Partha Mitra Membership Number : 50553 Partner For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
On behalf of the Board G. Sivakumar Reddy Chairman George Verghese Managing Director For the year ended 31st March, 2011 ( `) (` ) For the year ended 31st March, 2010 ( `) (` )
A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX 12,84,58,341 14,11,21,394 ADJUSTMENT FOR Depreciation 3,56,59,372 3,38,66,514 Interest Income (81,49,906) (1,03,50,560) Fixed Assets Discarded - Net 60,47,258 5,17,237 Income from Current Investments (1,98,13,756) (1,16,59,377) Profit on Sale of Current Investments - Net (46,98,742) Liability no longer required written back (36,60,275) Provision for doubtful debts/Bad Debts Written Off 6,22,506 1,07,05,199 17,04,981 93,80,053 OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 13,91,63,540 15,05,01,447 ADJUSTMENT FOR Trade & Other Receivables 50,95,193 19,50,137 Inventories 33,94,976 33,84,763 Trade Payables 59,99,212 1,44,89,382 (1,14,68,923) (61,34,023) CASH GENERATED FROM OPERATIONS 15,36,52,922 14,43,67,424 Income Tax Paid (3,57,23,600) (3,16,94,066) NET CASH FROM OPERATING ACTIVITIES 11,79,29,322 11,26,73,358 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (1,28,23,747) (4,18,96,452) Sale of Fixed Assets 68,121 9,05,024 Purchase of Current Investments (2,58,33,43,606) (91,32,78,690) Sale/Redemption of Current Investments 2,52,96,16,381 87,41,27,828 Interest Received 81,25,353 1,00,85,937 Income from Current Investments 1,98,13,756 1,63,58,119 NET CASH USED IN INVESTING ACTIVITIES (3,85,43,742) (5,36,98,234) C. CASH FLOW FROM FINANCING ACTIVITIES Dividends etc., paid (4,80,00,000) (4,80,00,000) Income Tax on Dividend Paid (81,57,600) (81,57,600) NET CASH USED IN FINANCING ACTIVITIES (5,61,57,600) (5,61,57,600) NET INCREASE IN CASH AND CASH EQUIVALENTS 2,32,27,981 28,17,524 OPENING CASH AND CASH EQUIVALENTS 12,45,77,394 12,17,59,870 CLOSING CASH AND CASH EQUIVALENTS 14,78,05,375 12,45,77,394 CASH AND CASH EQUIVALENTS COMPRISE: Cash and Bank Balances 14,78,05,375 14,78,05,375 12,45,77,394 12,45,77,394 This is the Cash Flow Statement referred to in our Report of even date. Note: 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 Years Figures have been regrouped and/or rearranged wherever considered necessary to conform to those of current year. Partha Mitra Membership Number : 50553 Partner For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011
96

(Figures for the previous year have been rearranged to conform with the revised presentation)
As at 31st March, 2011 (` ) (` ) 1. CAPITAL Authorised 2,40,00,000 Equity Shares of ` 10/- each
As at 31st March, 2010 ( `) (` )
24,00,00,000 24,00,00,000
24,00,00,000 24,00,00,000
Issued and Subscribed*

2,40,00,000 Equity Shares of ` 10/- each fully paid up. Of the above, 10,00,000 Equity Shares of ` 10/- each were allotted as fully paid up to the shareholders of the amalgamating company pursuant to the scheme of amalgamation without payment being received in cash.
24,00,00,000
24,00,00,000
24,00,00,000
* Includes 1,63,20,477 Equity Shares of ` 10/- each fully paid up, held by the Holding Company, ITC Limited.
24,00,00,000
2.
RESERVES AND SURPLUS Capital Reserve General Reserve At the Commencement of the year Add : From Profit and Loss Account Profit & Loss Account
94,603 6,21,43,117 75,00,000 5,46,43,117 75,00,000
94,603
6,96,43,117 63,11,65,080 70,09,02,800
6,21,43,117 60,20,36,841 66,42,74,561
3.
DEFERRED TAX LIABILITY - NET Deferred Tax Liabilities Depreciation - Timing difference Less: Deferred Tax Assets Employee Benefits Other Timing Differences Deferred Tax Liability - Net
8,19,61,949
8,35,31,280
9,39,874 3,43,017 8,06,79,058
8,59,131 3,50,993 8,23,21,156
4. FIXED ASSETS
Original Cost as at March 31, 2010 (`) 1,00,00,000 30,25,76,934 33,11,00,505 1,75,61,941 19,11,22,980 1,56,28,415 86,79,90,775 84,57,834 87,64,48,609 84,60,07,951 Additions Withdrawals Original Cost as at March 31, 2011 (`) 1,00,00,000 30,55,09,578 33,51,81,715 1,65,13,349 19,04,45,547 1,47,00,082 87,23,50,271 11,80,396 87,35,30,667 87,64,48,609 Depreciation for the year (`) 49,32,582 1,63,14,884 22,67,907 1,07,47,491 13,96,508 3,56,59,372 3,56,59,372 3,38,66,514 Depreciation on Withdrawals (`) 2,71,338 40,41,259 18,11,142 37,95,492 9,28,333 1,08,47,564 1,08,47,564 12,22,140 Depreciation Net Block up to as at March 31, 2011 March 31, 2011 (`) (`) 6,52,66,585 12,80,47,237 1,40,68,121 12,23,01,269 58,43,014 33,55,26,226 33,55,26,226 31,07,14,418 1,00,00,000 24,02,42,993 20,71,34,478 24,45,228 6,81,44,278 88,57,068 53,68,24,045 11,80,396 53,80,04,441 56,57,34,191
Particulars Freehold Land Buildings Plant and Machinery Computers etc. Furniture and Fixtures Motor Vehicles Capital Work-in-Progress Total Previous Year
(`) 40,44,644 94,36,157 7,96,042 32,73,487 1,75,50,330 1,25,59,620 3,01,09,950 5,62,46,085
(`) 11,12,000 53,54,947 18,44,634 39,50,920 9,28,333 1,31,90,834 1,98,37,058 3,30,27,892 2,58,05,427
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(Figures for the previous year have been rearranged to conform with the revised presentation) As at 31st March, 2011 (`) 5. INVESTMENTS Unquoted, Other than Trade Long Term Government Securities - National Savings Certificates 10,000 (Deposits with or for deposit with authorities) Current - Other Investments LIC MF Income Plus Fund Daily Dividend Plan Nil (Previous Year - 1,43,47,276) Units of ` 10.00 each Kotak Floater Long Term - Daily Dividend Reinvest Nil (Previous Year - 1,20,25,893) Units of ` 10.0798 each Canara Robeco Treasury Advantage Fund - Daily Dividend Reinvest Nil (Previous Year - 81,47,538) Units of ` 12.4071 each Reliance Liquid Fund - Cash Plan - Daily Dividend Reinvestment 1,79,94,134.53 20,13,86,943 (Previous Year - Nil) Units of ` 11.1415 each Birla Sun Life Cash Plus - Inst Prem - Daily Div Reinverstment 1,09,78,591.75 11,03,14,608 (Previous Year - Nil) Units of ` 10.0195 each Religare Liquid Fund - Daily Dividend Reinvestment 1,07,415.69 (Previous Year - Nil) Units of ` 1000.7849 each 10,78,04,363 As at 31st March, 2010 (`) As at 31st March, 2011 (`) 47,78,609 19,73,977 67,52,586 As at 31st March, 2010 (`) 76,98,913 24,48,649 1,01,47,562
6.
INVENTORIES Food, Beverage, etc. Stores and Spare Parts SUNDRY DEBTORS Over Six months old Good and Unsecured Doubtful Other Debts Good and Secured Good and Unsecured
10,000
7.
1,40,101 1,10,230 1,86,913 1,80,05,447 1,84,42,691 1,10,230 1,86,913 1,81,45,548 51,32,077 1,34,33,865 10,21,200 12,82,18,235 14,78,05,377
48,60,654 1,10,230 3,42,778 1,94,13,454 2,47,27,116 1,10,230 3,42,778 2,42,74,108 27,93,980 1,06,50,022 10,21,200 11,01,12,192 12,45,77,394
14,34,72,768
Less : Provision for Doubtful Debts Less : Deposits from normal Trade Debtors - Contra 12,12,18,596 8. 10,10,87,326 CASH AND BANK BALANCES Cash and Cheques on Hand With Scheduled Banks On Current Accounts On Margin Money* On Deposit Accounts *Pledged with Bank for Bank Guarantee ` 10,21,200/(Previous Year ` 10,21,200/-) 9. OTHER CURRENT ASSETS Good and Unsecured Deposits with Government, Public Bodies and Others Interest Accrued on Deposits/Investments
44,30,008 23,51,677 67,81,685
47,05,486 31,71,300 78,76,786
41,95,15,914
36,57,88,690
During the year, the following current investments were purchased and sold; 01) Purchased 1,20,76,653.716 Units of JM Money Manager Fund Super Plus Plan - Daily Dividend at a cost of ` 12,08,30,543/02) Purchased 1,28,20,971.204 Units of LIC MF Income Plus Fund - Daliy Dividend Plan at a cost of ` 12,82,09,712/03) Purchased 1,00,08,102.2634 Units of JP Morgan India Liquid Fund - Super Inst. Daily Dividend Plan at a cost of ` 10,01,60,086/04) Purchased 1,50,32,086.4437 Units of JP Morgan India Liquid Fund - Super Inst. Daily Dividend Plan-reinvest at a cost of ` 15,04,39,617/05) Purchased 1,69,75,073.3157 Units of JP Morgan India Treasury Fund - Super Inst. Daily Dividend Plan-reinvest at a cost of ` 16,99,01,811/06) Purchased 81,95,202.2932 Units of Kotak Liquid Institutional Premium Dalily Dividend at a cost of ` 10,02,11,753/07) Purchased 1,40,53,545.365 Unit of Kotak Floater Long Term - Daily Dividend at a cost of ` 14,16,56,926/08) Purchased 72,89,023.6445 Units of Canara Robeco Treasury Advantage Super Inst. Daily Div Reinv Fund at a cost of ` 9,04,35,645/09) Purchased 1,17,99,832.3036 Units of Canara Robeco Treasury Advantage Super Inst. Daily Div Reinv Fund at a cost of ` 14,64,01,699.37p 10) Purchased 1,49,40,742.1891 Units of Canara Robeco Liquid Super Inst. Daily Div Reinv Fund at a cost of ` 15,02,29,162/11) Purchased 89,73,526.0975 Units of Canara Robeco Liquid Super Inst. Daily Div Reinv Fund at a cost of ` 9,02,28,804/12) Purchased 1,12,54,532.241 Units of TATA Floater Fund - Daily Dividend at a cost of ` 11,29,45,983/13) Purchased 1,10,139.405 Units of DSP Black Rock Liquidty Fund - Inst Plan-Daily DivReinvest Dividend at a cost of ` 11,01,74,220/14) Purchased 93,283.135 Units of DSP Black Rock Money Manager-Fund - Inst. PlanDaily Div-Reinvest Dividend at a cost of ` 9,33,57,761/15) Purchased 1,50,59,972.533 Units of Religare Liquid Fund - Super Inst. Daily Dividend at a cost of ` 15,07,17,193/16) Purchased 1,50,04,817.980 Units of Religare Ultra Short Term Fund - Inst. Daily Dividend at a cost of ` 15,03,04,762/17) Purchased 80,42,253.190 Units of Birla Sun Life Savings Fund-Inst. Daily DividendReinvestment at a cost of ` 8,04,77,219/18) Purchased 80,06,358.984 Units of Birla Sun Life Cash plus - Inst. Daily DividendReinvestment at a cost of ` 8,02,19,713/19) Purchased 99,53,939.050 Units of Sundaram Money Fund Super Inst. Daily Dividend Reinvest at a cost of ` 10,01,88,000/-
10. LOANS AND ADVANCES Good and Unsecured Advances recoverable in cash or in kind or for value to be received* 80,82,343 Advances with Government and Public Bodies 12,95,179 Advance Fringe Benefit Tax (Net of Provision of ` 67,46,417/-) (Previous Year - ` 67,46,417/-) 5,76,328 Advance Income Tax (Net of Provision of ` 39,84,40,872/-) (Previous Year - ` 36,06,40,872/-) 1,83,46,081 2,82,99,931 * Includes Capital Advances of ` 11,08,434/- (Previous Year ` 16,91,377/-). 11. LIABILITIES Sundry Creditors Dues to Micro and Small enterprises Dues to Others 6,50,55,632 Advances from Customers 82,07,612 Other Liabilities 73,69,962 Sundry Deposits 44,75,677 8,51,08,882 Less : Deposits from Normal Trade Debtors Contra 1,86,913 8,49,21,970 # # There is no outstanding amount to be credited to Investor Education & Protection Fund. 12. PROVISIONS Provision for Retirement Benefits Proposed Dividend Income Tax on Proposed Dividend 28,29,454 4,80,00,000 79,72,200 5,88,01,654
78,23,082 12,95,179
5,76,328
1,92,78,306 2,89,72,895
6,23,20,338 92,05,380 62,72,018 46,35,752 8,24,33,488 3,42,778 8,20,90,710 #
25,27,599 4,80,00,000 81,57,600 5,86,85,199 For the year ended 31st March, 2010 (`) 26,23,95,208 20,70,52,404 3,96,30,405 50,90,78,017
For the year ended 31st March, 2011 (`) 13. INCOME FROM OPERATIONS (NET)* Rooms 27,74,07,224 Food and Beverage 20,64,23,667 Recreation and Services 4,31,79,593 52,70,10,483
* Income from operations are stated at net of tax amounting to ` 4,34,70,627/(Previous year ` 4,04,43,017/-) Income from operations are stated at gross, the amount of tax deducted thereon is ` 44,13,024/- (Previous Year - ` 76,37,005/-)
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For the year ended 31st March, 2011 (`) 14. OTHER INCOME Miscellaneous Income* Gain on exchange - Net Income from Current Investments-Others Interest on Deposits** with Banks with Others Profit on Sale of Current Investments Liability no longer required written back * The Income includes ` Nil (Previous Year ` 62,32,541) relating to Previous Year ** The Income from Deposits are stated gross, the amount of income tax deducted theron is ` 8,44,176 (Previous Year - ` 10,14,695). 15. FOOD, BEVERAGE ETC. CONSUMED Opening Stock Add : Purchases Less : Closing Stock (`) 15,83,924 1,98,13,756 81,49,906 1,57,266 36,60,275 3,33,65,127 For the year ended 31st March, 2010 (`) 98,82,317 12,440 1,16,59,377 1,01,93,294 1,57,266 46,98,742 3,66,03,436 2011 (`) 19. NOTES TO THE ACCOUNTS i) The Estimated Amount of Contracts remaining to be executed on Capital Account and not provided for (net of advances ` 11,08,434/- Previous Year ` 16,91,378/-) 2010 (`)
29,53,873
15,50,541
76,98,913 5,90,30,017 6,67,28,930 47,78,609 6,19,50,321 ( `)
1,01,77,208 5,70,16,042 6,71,93,250 76,98,913 5,94,94,337
ii) Contingent Liability a) Claims against the Company not acknowledged as debts : i) The Commercial Tax Officer has raised a Value Added Tax (VAT) demand along with interest and penalty under the APVAT Act, 2005 for the period from April 01, 2005 to January 31, 2008 towards exclusion of service tax in the computation of VAT liability. The Company filed an appeal with the Honble High Court of Andhra Pradesh against the demand. 19,85,698 ii) Additional Tax assessed by department consequent to disallowance of certain expenses pertaining to Assessment Year 2006-07. 13,10,283 iii) Managing Directors Remuneration Salary Other Perquisites Contribution to Provident Fund & Other Funds 22,84,140 6,21,511 3,75,690 32,81,341
19,85,698
13,10,283 17,97,325 2,75,450 4,26,677 24,99,452
16. OPERATING AND ADMINISTRATIVE EXPENSES
Salaries, Wages and

Bonus 4,61,88,455 4,49,64,148 Contribution to Provident and Other Funds 27,07,193 30,53,535 Workmen and Staff Welfare Expenses 1,46,76,518 1,22,93,654 Reimbursement of Contractual Remuneration 3,35,72,192 9,71,44,359 2,68,69,301 8,71,80,638 Consumption of Stores and Supplies 1,50,93,513 1,54,41,195 Power and Fuel 4,17,45,279 3,80,22,590 Rent 55,87,704 47,29,190 Rates and Taxes 83,58,594 1,02,14,532 Insurance 33,40,467 29,77,406 Repairs Building 62,73,089 75,30,713 Machinery 85,57,237 78,92,491 Others 43,03,491 19,99,420 Advertising/Sales Promotion 56,25,640 44,69,189 Electronic Data Processing 34,97,217 24,00,378 Travelling and Conveyance 98,27,024 89,81,118 Guest Transport 23,34,960 27,09,572 Training 11,33,270 18,32,674 Legal Expenses 80,000 1,79,200 Postage, Telephone, Telex etc. 49,35,378 51,56,089 Commission paid to Travel Agents 8,49,053 10,83,401 Bank & Credit Card Charges 72,90,800 62,78,988 Technical & Consultancy Fees 4,89,64,699 4,60,68,745 Hotel RSVN/MKTG. Expenses 1,60,56,431 1,60,82,819 Contract Services 1,99,40,857 1,57,24,176 Provision for doubtful debts 1,10,230 Bad debts written off 6,22,506 15,94,751 Miscellaneous Expenses 1,50,80,800 1,95,43,022 Printing & Stationary 15,92,757 24,79,444 Loss on Exchange (Net) 25,196 Fixed Assets Discarded Net 60,47,258 5,17,237 33,43,07,577 31,11,99,208 Miscellaneous Expenses include : Auditors Remuneration and Expenses : Audit Fees 7,50,000 5,00,000 Fee for Other Services 75,000 75,000 Reimbursement of Expenses 17,500 12,500 17. PROVISION FOR TAXATION Income Tax : Current Year Deferred Tax 18. EARNINGS PER SHARE Profit after Taxation Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (face value ` 10/- per share)
iv) Earnings in Foreign Exchange *Includes ` 21,05,47,557/(Previous Year - ` 22,21,82,704/-) being Earnings during the year through International Credit Cards & Travel Agencies etc. as certified by Bankers. v) Expenditure in Foreign Currency during the year (On payment basis) Hotel Reservation / Marketing Expenses / Others Technical & Consultancy Fees vi) Value of Imports during the year (CIF Basis) Capital Goods Other Goods
21,66,72,748
23,01,67,803
13,75,585 1,55,46,519 1,69,22,104
31,37,890 2,17,06,581 2,48,44,471
11,23,590 9,04,829 20,28,419
11,29,265 3,89,149 15,18,414 (`) 2010 %
(`) vii) Value of Consumption of Raw Materials, Stores & Supplies a) Raw Materials Indigenous 6,19,50,321 Imported 6,19,50,321 b) Stores & Supplies Indigenous 1,41,88,684 Imported 9,04,829 1,50,93,513
2011 %
100.00 100.00 94.01 5.99 100.00
5,94,94,337 5,94,94,337 1,50,52,046 3,89,149 1,54,41,195
100.00 100.00 97.48 2.52 100.00
3,75,00,000 (16,42,098) 3,58,57,902 9,26,00,439 2,40,00,000 3.86
4,13,00,000 36,37,186 4,49,37,186 9,61,84,208 2,40,00,000 4.01
viii) The Company is exempted from disclosure of quantitative details as per Notification S.O. 301 (E) dated Feb.8 2011 exercised the powers conferred by sub-section (3) of section 211 of the Companies Act, 1956 (1 of 1956), the Central Government, Issued by Ministry of Corporate Affairs The same is subject to the consent of the Board of Directors at the board meeting. ix) x) The Company operates in one operating segment i.e., Hoteliering and within one Geographical segment i.e. India. The Companys significant lease arrangements are in respect of operating leases for residential premises. These leasing arrangements, which are not non-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 Schedule 16.
99

xi) Employee Benefits : As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes : 2011 2010 Leave Leave Gratuity Encashment Gratuity Encashment Funded Unfunded Funded Unfunded (`) (`) (`) (`) I. Components of Employer Expense 1 Current Service Cost 7,58,542 4,57,647 5,53,333 1,13,149 2 Interest Cost 3,46,239 58,319 2,90,123 62,627 3 Expected Return on Plan Assets (2,95,557) (1,85,331) 4 Curtailment Cost /(Credit) 5 Settlement Cost /(Credit) 6 Past Service Cost 7 Actuarial Losses/(Gains) (3,19,004) 27,776 1,34,890 (2,06,009) 8 Total expense recognised in the statement of Profit & Loss Account 4,88,220 5,43,742 7,93,015 (30,233) The Gratuity Expense has been recognised in Contribution to Provident and Other Funds and Leave Encashment in Salaries/Wages and Bonus under Schedule 16. II. Actual Returns 3,22,696 2,79,546 III. Net Asset / (Liability) recognised in Balance Sheet 1 Present Value of Obligation 52,36,642 13,02,107 48,07,308 7,96,811 2 Fair Value on Plan Assets 37,09,295 30,76,520 3 Status [Surplus /(Deficit)] (15,27,347) (13,02,107) (17,30,788) (7,96,811) 4 Unrecognised Past Service Cost 5 Net Asset / (Liability) recognised in Balance Sheet (15,27,347) (13,02,107) (17,30,788) (7,96,811) IV. Change in Defined Benefit Obligations (DBO) 1 Present Value of DBO at the Beginning of Period 48,07,308 7,96,811 40,01,868 8,43,011 2 Current Service Cost 7,56,542 4,57,647 5,53,333 1,13,149 3 Interest Cost 3,46,239 58,319 2,90,123 62,627 4 Curtailment Cost /(Credit) 5 Settlement Cost/(Credit) 6 Plan Amendments 7 Acquisitions 8 Actuarial (Gains)/Losses (2,91,865) 27,776 2,29,105 (2,06,009) 9 Benefits Paid (3,81,582) (38,446) (2,67,121) (15,967) 10 Present Value of DBO at the End of Period 52,36,642 13,02,107 48,07,308 7,96,811 V. Change in Fair Value of Assets 1 Plan Assets at the Beginning of Period 30,76,520 22,18,660 2 Acquisition Adjustment (2,865) 3 Expected Return on Plan Assets 2,95,557 1,85,331 4 Actuarial Gains/(Losses) 27,139 94,215 5 Actual Company Contribution 6,94,526 38,446 8,45,435 15,967 6 Benefits Paid (3,81,582) (38,446) (2,67,121) (15,967) 7 Plan assets at the End of Period 37,09,295 30,76,520 VI. Asset Assumptions 1 Discount Rate (%) 8.00 8.00 7.50 7.50 2 Expected Return on Plan Assets (%) 9.15 7.50 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 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.
xii) Related Party Disclosures Under Accounting Standard 18 i) Holding Company : ITC Limited ii) Other Related Parties with whom transactions have taken place during the year : Fellow Subsidiary Companies : Fortune Park Hotels Limited Surya Nepal Private Limited ITC Infotech India Limited Other entities under control of Holding company : ITC Sangeet Research Academy
iii) Key Management Personnel : Board of Directors G. Sivakumar Reddy - Chairman Nakul Anand - Vice Chairman & Director 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. No. Particulars Holding Company 2011 4,866 86,19,352 59,87,296 35,08,353 4,50,26,573 3,35,72,192 1,32,24,959 1,61,18,234 3,26,40,954 1,77,726 1,36,22,236 2010 66,308 44,40,097 48,41,055 26,88,126 4,35,98,900 2,68,69,301 97,67,087 1,41,39,834 3,26,40,954 17,88,443 1,95,50,634 Enterprises under control of Holding Company Subsidiaries 2011 2010 36,855 1,47,808 28,954 3,08,840 23,001 5,843 3,752 6,595 36,855 35,549 Others 2011 2010 1,58,720 1,58,720 Key Management Personnel 2011 26,08,460 2010 26,08,460
(`)
Relatives of Key Management Personnel (*) 2011 8,00,000 1,18,31,620 2010 6,30,000 1,18,31,620
1. 2. 3. 4.
5. 6. 7. 8. 9. 10.
Sale of Goods Sale of Services Purchase of Goods Purchase of Services - Hotel Services - Service Fee - Rent towards Godown Reimbursement of Contractual Remuneration Expenses recovered Expenses reimbursed Dividend Payments Sale of Fixed Assets Balance outstanding at the year end : i) Debtors/Receivables ii) Creditors/Payables
Note : Details of remuneration to the Managing Director is given in the note (iii) of the Notes to Accounts and for other members the remuneration for the year is ` Nil. (*) 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. xiii) Previous Years figures have been regrouped/rearranged wherever necessary.
100

SCHEDULES TO THE ACCOUNTS (Contd.) 20. SIGNIFICANT ACCOUNTING POLICIES i) 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. ii) 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. iii) DEPRECIATION To calculate depreciation on fixed assets in a manner that amortises the cost of 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 installments. iv) INVESTMENTS To state Current Investments at lower of cost and fair value; and long term investments at cost. Where applicable, provision is made where there is a permanent fall in valuation of Long Term investments. v) INVENTORIES To value all inventories at lower of cost or net realisable value. Cost includes freight and other related incidental expenses and is computed on weighted average method. vi) TURNOVER To state gross income from operations, which represents invoiced value of goods sold and services rendered, net of sales tax but inclusive of all applicable taxes. vii) INVESTMENT INCOME To account for Income from Investments on an accrual basis, inclusive of related tax deducted at source. viii) PROPOSED DIVIDEND To provide for Dividend as proposed by the Directors in the Books of Account, pending approval at the Annual General Meeting. ix) 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 the Accounting Standard 15 (revised 2005) on Employee benefits. The contributions in respect of gratuity fund are made to Life Insurance Corporation. x) 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 of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets. xi) FOREIGN CURRENCY TRANSLATIONS To record transactions in foreign currencies at the exchange rates 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. Liability/Receivables on account of foreign currency are converted at the exchange rates prevailing as at the end of the year. xii) BORROWING COSTS To capitalise the borrowing costs that are directly attributable to the acquisition or construction as cost of that capital asset. Other borrowing costs are recognised as an expense in the period in which they are incurred. xiii) FINANCIAL AND MANAGEMENT INFORMATION SYSTEMS The books of account and other records have been designed to ensure 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 (designed and based on Uniform System of Accounts for Hotels), on the other.
Partha Mitra Partner Membership No. : 50553 For Lovelock & Lewes Firms Registration Number : 301056E Chartered Accountants Gurgaon, 28th April, 2011
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 5 3 1 1 9 0 2 3 2 0 1 1 State Code 0 1 Application of Funds Net Fixed Assets 5 3 6 8 Net Current Assets 6 4 0 2 6 4 1 Investments 4 1 9 5 Misc. Expenditure N . A . Accumulated Losses N . A . IV. Performance of Company (Amount in Rs. Thousands) Turnover * 5 6 0 * Includes Other Income 4

Date
Month
Year
II. Capital raised during the year (Amount in ` Thousands) Public Issue N . A Bonus Issue N . A . . Rights Issue N . A . Private Placement N . A .
Total Expenditure 4 3 1 9 1
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 1 6 5 3 0 4 1 Sources of Funds Paid up Capital 2 4 0 0 Secured Loans N . A . 9 0 0 Reserves and Surplus 7 0 0 9 0 Unsecured Loans N . A . 2 Total Assets 1 6 5 3 0
Profit/Loss Before Tax Profit/Loss After Tax + 1 2 8 4 5 8 9 2 6 0 0 (Please tick appropriate box + for profit, for loss) Dividend Rate % 6 2 0
Earnings per Share in Rs. 3 . 8
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) Item Code No. Product Description H ** N O T E . L A S .
Deferred Tax Liability - Net 8 0 6 7
** No item code has been assigned to Hotels under the Indian Trade Classification.
Audit Committee : Chairman: Mr. S. C. Sekhar, Members: M/s. N. R. Pradeep Reddy & Dipak Haksar Permanent Invitees: Representative of Statutory Auditors.
101
FORTUNE PARK HOTELS LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2011 Your Directors submit their Report for the financial year ended 31st March, 2011. Financial Performance During the year under review, your Company recorded net revenue of ` 1801.45 lacs (previous year - ` 1491.89 lacs) and earned a net profit of ` 411.73 lacs (previous year - ` 213.06 lacs) after providing for income tax of ` 190.45 lacs (previous year- ` 120.41 lacs). Earnings Per Share for the year stands at ` 91.49 (previous year ` 47.35). Your Directors are pleased to recommend a dividend of ` 7/- (previous year ` 6/-) per Equity Share of ` 10/- each for the year ended 31st March, 2011. Your Board further recommends a transfer to General Reserve of ` 41.17 lacs (previous year - ` 21.31 lacs). The Company, which caters to the mid market to upscale segment, forged new alliances during the year taking the total number of properties under the Fortune brand to 63, with a total room count of 4915. Of these, 38 properties are operating hotels. Another 4 hotels are slated to be commissioned during the course of the financial year 2011-12. The remaining 21 hotel projects are under various stages of development. The Company seeks to be a lead player in the mid market to upscale segment, providing quality products and services that would position Fortune as the premier value brand in the Indian hospitality sector. Conservation of Energy, Foreign Exchange Earnings and outflow During the year your Company has introduced an Eco Friendlyrating 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 Companys brand. During the year under review, there was no foreign exchange income (previous year - nil) but there was a foreign exchange outflow of ` 13.71 lacs (previous year - ` 5.26 lacs). Directors Mr. Pawan K. Verma, Director of your Company resigned with effect from 6th September, 2010. Your Directors would like to place on record their sincere appreciation of the valuable services rendered by Mr. Verma. In accordance with the provisions of Article 143 of the Articles of Association of the Company, Mr. Gaj Singh will retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offers himself for re-appointment. COMPLIANCE CERTIFICATE 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, 2011(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: Ato 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 2010, 29th September 2010, 24th December 2010 & 25th March 2011 in respect of which meetings proper notices were given the proceedings 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 financial year. 6. The Annual General Meeting for the financial year ended on 31st March, 2010 was held on 28th June, 2010 after giving due notice to the Members of the Company and other concerned and the 7. 8. 9. resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. No extraordinary general meeting was held during the financial year. The Company has not advanced any loans to its Directors or persons or firms or companies referred to under Section 295 of the Act. The Company has not entered into any contract falling within the purview of Section 297 of the Act. 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. Compliance Certificate under the 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 Companys Auditors, Messrs. Price Waterhouse, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. 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 along 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. The required disclosures and significant accounting policies followed are appearing in Schedules 17 and 18 respectively, in the annual accounts.
On behalf of the Board S. C. Sekhar Director Arun Pathak 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 financial year. 13. The Company has: (i) not made any allotment/transfer/transmission of securities during the financial year. (ii) deposited the amount of final dividend declared in the separate Bank Account, on 29th June 2010 (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 14. The Board of Directors of the Company is duly constituted and the appointment of Additional Director has been duly made. However, there was no appointment of 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.
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16. The Company has not appointed any sole selling agents during the financial year. 17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and / or such 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 not issued any shares, debentures or other securities during the financial year. 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 financial year. 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 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. ANNEXURE A Registers maintained by the Company (As on March 31, 2011) Sl. Particulars No. 1. Minutes Book of the meetings of the Board of Directors of the Company 2. Minutes Book of General Body Meetings of the Members of the Company 3. Copies of Annual Returns 4. Register of Members 5. Register of Particulars of Directors, Managing Director, Manager and Secretary 6. Register of Directors Shareholding 7. Register(s) of contracts, companies and firms in which Directors are interested 8. Books of Accounts 9. Register of Investments 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, 2011) Sl. Particulars of Forms & Returns Filed Date of No. Filing Whether filed within prescribed time Yes Yes Yes Yes Yes Yes Yes Additional Fees paid 26. The Company has not altered the provisions of the Memorandum with respect to situation of the Companys Registered Office from one State to another during the year under scrutiny. 27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny. 28. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the year under scrutiny. 29. The Company has not altered the provisions of the Memorandum with 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 during the financial year. 32. The Company has not received any money as security from its employees during the financial year. 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 LLB, ACS CP : 6485
Relevant Section of the Act 193 193 159 150 303 307 301(3) 209 372A
1. 2. 3. 4. 5. 6. 7. B.
Form 32 u/s 303 of the Act for appointment of Mr. Arun Pathak as an Additional Director and resignation of Mr. M Riaz Ahmed from directorship on 26th March, 2010 12th April, 2010 Form 32 u/s 303 of the Act for the change in designation of Mr. Arun Pathak from Additional Director to Director in the Annual General Meeting held on 28th June 2010 6th July, 2010 Form 23AC and From 23ACA for Annual Accounts u/s 220 for the year ended 31st March 2010 12th July, 2010 Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March 2010 12th July, 2010 Form 20B for Annual Return u/s 159 of the Act, made upto 28th June 2010 i.e. the date of AGM for the financial year ended 31st March 2010 26th August, 2010 Form 32 u/s 303 of the Act for resignation of Mr. Pawan Verma from directorship on 6th September 2010 1st October, 2010 Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st October, 2010 Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil
No No No No No No No
REPORT OF THE AUDITORS 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, 2011, and the related Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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. 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
3.
2.
4.
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the best of our knowledge and belief, were necessary for the purpose of our audit; 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; The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet, Profit & Loss Account 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; On the basis of written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; 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, 2011; (ii) in the case of the Profit & Loss Account, 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. For Price Waterhouse Firm Registration Number: 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779
(b) (c) (d) (e)
(f)
ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of the Auditors Report of even date to the members of Fortune Park Hotels Limited on the financial statements for the year ended March 31, 2011. 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 maintained under Section 301 of the Act. 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) 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 and exceeding the value of Rupees Five Lakhs in respect of any party during the year, which have been made at prices which are not 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 its size and 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 as at March 31, 2011 which have not been deposited on account of a dispute, are as follows: Name of the statute Income Tax Act, 1961 Nature of dues Demand u/s 156 of Income Tax Act, 1961 Amount (`) Period to which the amount relates Assessment Year 2001-02 Forum where the dispute is pending CIT (Appeals) ruled in favour of the Company by its order dated December 13, 2004. The Income Tax department had then filed an appeal in Income Tax Appelate Tribunal in the financial Year 2005-06 Customs, Excise and Service Tax Appellate Tribunal CIT (Appeals) Amount withheld by department under Protest CIT (Appeals) Amount withheld by department under Protest
17,29,041
Finance Demand u/s Act,1994 73(1)(a)of The 45,70,992 Finance Act, 1994 Income Demand u/s Tax Act, 156 of Income 3,62,745 1961 Tax Act, 1961 Income Tax Act, 1961 Demand u/s 156 of Income 3,18,993 Tax Act, 1961
2003-04 to 18-04-2006 Assessment Year 2007-08 Assessment Year 2008-09
10. The Company has no accumulated losses as at March 31, 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year. 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 of security by way of pledge of shares, debentures and other securities. 13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company. 14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. 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. 16. The Company has not obtained any term loans. 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 the register maintained under Section 301 of the Act during the year. 19. The Company has not issued any debentures. 20. The Company has not raised any money by public issues during the year. 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 such case by the Management. For Price Waterhouse Firm Registration Number: 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779
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BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule I. SOURCES OF FUNDS 1. Shareholders Funds a) Capital b) Reserves and Surplus 1 2 As at 31st March, 2011 ( `) (` ) 45,00,080 11,75,52,727 As at 31st March, 2010 (` ) (`) 45,00,080 8,00,41,024
12,20,52,807 12,20,52,807
8,45,41,104 8,45,41,104
Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less : Depreciation c) Net Block 2. Investments 3. Deferred Tax Assets 4. Current Assets, Loans and Advances a) Sundry Debtors b) Cash and Bank Balances c) Other Current Assets d) Loans and Advances Less : 5. Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Assets Total Notes to the Accounts Significant Accounting Policies
3 1,02,96,472 50,62,285 4 5 6 7 8 9 6,06,56,537 4,49,07,304 16,74,567 2,19,29,801 12,91,68,209 52,34,187 4,40,82,435 92,52,375 4,57,48,441 3,44,90,402 13,79,605 1,86,04,707 10,02,23,155 1,01,58,188 43,32,767 58,25,421 1,71,82,834 88,87,171
10 11
4,08,74,940 2,48,09,459 6,56,84,399 6,34,83,810 12,20,52,807
2,83,66,332 1,92,11,145 4,75,77,477 5,26,45,678 8,45,41,104
17 18
The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Gross Income from Operations Less : Service Taxes Net Income from Operations Other Income For the year ended 31st March, 2011 (`) (`) 19,40,40,210 1,80,68,543 12 13 17,59,71,667 41,73,492 18,01,45,159 11,84,71,164 14,56,422 11,99,27,586 6,02,17,573 1,90,44,796 4,11,72,777 7,00,58,791 11,12,31,568 41,17,278 31,50,056 5,11,018 10,34,53,216 11,12,31,568 91.49 For the year ended 31st March, 2010 (` ) (`) 16,18,65,166 1,47,86,670 14,70,78,496 21,10,770 14,91,89,266 11,44,92,487 13,49,129 11,58,41,616 3,33,47,650 1,20,41,385 2,13,06,265 5,40,31,651 7,53,37,916 21,30,626 27,00,048 4,48,451 7,00,58,791 7,53,37,916 47.35 On behalf of the Board S. C. Sekhar Arun Pathak Director Director
II. EXPENDITURE Operating and Administrative Expenses Depreciation III. PROFIT Profit before Taxation Provision for Tax Profit after Taxation Profit brought Forward Available for Appropriation IV. APPROPRIATIONS General Reserve Proposed Dividend Income Tax on Proposed Dividend Profit Carried Forward
14 3
15
16 Basic and Diluted Earnings Per Share (`) Notes to the Accounts 17 Significant Accounting Policies 18 The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011
On behalf of the Board S. C. Sekhar Arun Pathak Director Director
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CASH FLOW STATEMENT For the year ended 31st March, 2011 (` ) A. NET PROFIT BEFORE TAX ADJUSTMENTS FOR Depreciation Interest Income Dividend from Current Investment Fixed Assets - Loss on Sale/Write off-Net Provision for Doubtful Debts (Profit)/Loss on Sale of Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR CHANGES IN WORKING CAPITAL : Increase in Trade and Other Receivables Increase in Trade and Other Payables CASH GENERATED FROM OPERATIONS Income Tax Paid including TDS (Net of Refunds) NET CASH GENERATED FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investment Interest Received Dividend from Current Investment Sale of Investments NET CASH USED IN INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES Dividend Paid Income Tax on Dividend Paid NET CASH USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS Notes : 1. Cash and cash equivalents comprise Cash and Cheques in hand Balance with Scheduled Banks in - Current Accounts etc. - Deposit Accounts Total 6,02,17,573 14,56,422 (25,86,009) (15,64,562) 54,684
For the year ended 31st March, 2010 (`) 3,33,47,650 13,49,129 (13,53,678) (4,24,318) 13,068 1,14,77,341 (3,32,774) 4,40,76,418 (22,94,159) 27,21,229 4,45,03,488 (2,15,90,813) 2,29,12,675 (9,99,729) 8,999 (1,04,24,318) 12,97,312 4,24,318 33,32,774 (63,60,644) (22,50,040) (3,82,395) (26,32,435) 1,39,19,596 2,05,70,806 3,44,90,402
2,27,892 5,78,06,000 (1,58,41,520) 1,75,94,347 5,95,58,827 (2,16,18,886) 3,79,39,941 (9,70,788) 50,916 (42,22,98,020) 21,08,263 15,64,562 39,51,70,527 (2,43,74,540) (27,00,048) (4,48,451) (31,48,499) 1,04,16,902 3,44,90,402 4,49,07,304
21,54,141 1,03,53,163 3,24,00,000 4,49,07,304
38,85,873 1,28,95,861 1,77,08,668 3,44,90,402
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. For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011
SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (`) 1. CAPITAL Authorised 20,00,000 Equity Shares of ` 10/- each Issued, Subscribed and Paid-up *4,50,008 Equity Shares of ` 10/- each * Includes 4,50,002 Equity Shares of ` 10/each fully paid-up held by the Holding Company, ITC Limited and 6 shares held by ITC Limited jointly with Management personnel As at 31st March, 2010 (`) 2. RESERVES AND SURPLUS Capital Reserve General Reserve At the commencement of the year Add : From Profit and Loss Account Profit and Loss Account At the commencement of the year Add : From Profit and Loss Account 69,82,233 41,17,278 1,10,99,511 30,00,000 48,51,607 21,30,626 69,82,233 30,00,000 As at 31st March, 2011 (`) (`) As at 31st March, 2010 ( `) (`)
On behalf of the Board S. C. Sekhar Arun Pathak Director Director
2,00,00,000
2,00,00,000
45,00,080 45,00,080
45,00,080 45,00,080
7,00,58,791 5,40,31,651 3,33,94,425 10,34,53,216 1,60,27,140 7,00,58,791 11,75,52,727 8,00,41,024
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3. FIXED ASSETS Gross Block Depreciation/Amortisation Net Block Original Cost Additions Deletions/ Original Cost Depreciation Depreciation Deletions/ Depreciation Net Block Net Block as at during the Adjustments as at upto for the Adjustments up to as at as at 01.04.2010 year 31.03.2011 01.04.2010 year 31.03.2011 31.03.2011 31.03.2010 (`) (`) (`) (`) (`) (`) (`) (`) (`) (`) 26,25,404 58,600 9,12,188 9,70,788 16,73,889 1,53,599 6,28,816 50,089 8,32,504 1,21,973 6,20,085 56,19,352 13,90,481 41,150 1,02,96,472 1,01,58,188 7,34,675 2,33,764 27,58,745 5,93,363 12,220 43,32,767 30,83,544 5,25,081 1,15,033 7,39,026 73,373 3,909 14,56,422 13,49,129 1,32,913 5,43,902 50,089 7,26,904 99,906 12,59,756 2,15,884 29,53,869 6,16,647 16,129 50,62,285 43,32,767 13,65,648 4,04,201 26,65,483 7,73,834 25,021 52,34,187 58,25,421 18,90,729 4,81,320 25,77,235 8,47,207 28,930 58,25,421
Particulars
Intangible Assets Capitalised software 26,25,404 Tangible Assets Plant and Machinery - Office Equipment 7,15,084 Computers 53,35,980 Furniture and Fixtures 14,40,570 Motor Vehicle 41,150 Total 1,01,58,188 Previous Year 86,06,272
As at As at 31st March, 2011 31st March, 2010 (`) (`) 4. INVESTMENTS Unquoted Current Fortis Money Plus Regular Plan Daily Dividend 0 Units (Previous Year - 3,85,798 Units) of ` 10/- each J P Morgan India Liquid Plus Fund Retail - Daily Dividend Plan - Reinvested 0 Units (Previous Year -3,17,180 Units) of ` 10/- each LIC Mutual Fund Income Plus - Daily Dividend Plan 0 Units ( Previous Year - 6,11,006 Units) of ` 10/- each Canara Robeco Treasure Advantage Retail Daily Dividend Fund 0 Units ( Previous Year - 3,25,447 Units) of ` 12.40/- each Religare Liquid Fund Inst. Daily Dividend 44073 Units (Previous Year - 0 Units) of ` 1000.23 each 9. LOANS AND ADVANCES Good and Unsecured Advances recoverable in cash or in kind or for value to be received 38,58,167 Current Tax [ Net of Provisions of ` 1,94,10,000/(Previous Year ` 1,76,00,000/-)]
As at As at 31st March, 2011 31st March, 2010 (`) (`)
36,92,240 1,82,37,561 2,19,29,801
27,59,004 1,58,45,703 1,86,04,707
31,76,748 10. LIABILITIES [Refer Note (iv) 0n Schedule 17]
61,10,066
Sundry Creditors Total outstanding dues of micro and small enterprises Total outstanding dues of creditors other than micro and small enterprises Advance from Customers Other Liabilities
1,97,34,427 1,65,04,106 46,36,407 4,08,74,940
1,58,84,615 84,49,883 40,31,834 2,83,66,332
40,37,853
4,40,82,435 4,40,82,435
1,71,82,834
5.
DEFERRED TAX ASSETS / (LIABILITY)-(NET) Deferred Tax Assets On Expenditure for the current year allowed under Income Tax Act, 1961 on payment/actual basis only On Provision for Doubtful Debts Less : Deferred Tax Liability Depreciation - Timing Difference Net Deferred Tax Assets (7,75,361) 92,52,375 (7,32,387) 88,87,171
11. PROVISIONS [Refer Note (vii) 0n Schedule 17] Provision for Employee Benefits Proposed Dividend 63,03,913 37,23,823 60,73,060 35,46,498 Income Tax on Proposed Dividend 2,11,48,385 31,50,056 5,11,018 2,48,09,459 1,60,62,646 27,00,048 4,48,451 1,92,11,145
For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 12. NET INCOME FROM OPERATIONS Management Consultancy and Other Services 17,59,71,667 17,59,71,667 13. OTHER INCOME 14,70,78,496 14,70,78,496
6.
SUNDRY DEBTORS Over 6 months old Good and Unsecured Doubtful and Unsecured Other Debts Good and Unsecured Less : Provision for Doubtful Debts 81,12,658 1,14,77,341 5,25,43,879 7,21,33,878 1,14,77,341 6,06,56,537 1,32,29,474 1,14,77,341 3,25,18,967 5,72,25,782 1,14,77,341 4,57,48,441 38,85,873 1,28,95,861 1,77,08,668 3,44,90,402
Interest on Deposits* Interest on Income Tax Refunds Dividend from Current Investment Profit on Sale of Investments Others * The income from Interest on Deposits is stated gross, the amount of Income Tax deducted thereon is ` 1,82,972/(Previous Year - ` 1,35,369/-) 14. OPERATING AND ADMINISTRATIVE EXPENSES Salaries, Wages and Bonus [includes ` 70,94,899/(Previous Year - ` 26,27,324/-) on account of compensated absences] Contribution to Provident and Other Funds
18,29,712 7,56,297 15,64,562 22,921 41,73,492
13,53,678 4,24,318 3,32,774 21,10,770
7.
CASH AND BANK BALANCES Cash and Cheques in hand With Scheduled Banks On Current Accounts On Deposit Accounts 21,54,141 1,03,53,163 3,24,00,000 4,49,07,304
8.
OTHER CURRENT ASSETS Good and Unsecured Deposits with Government, Public Bodies and Others Interest Accrued on Deposit with Bank 4,23,181 12,51,386 16,74,567 4,22,993 9,56,612 13,79,605
11,76,24,723
9,45,18,882
74,85,755
38,20,619
107

For the year ended 31st March, 2011 (`) (`) [includes ` 20,53,162/(Previous Year ` 2,11,010/-) on account of Gratuity] Workmen and Staff Welfare Expenses Reimbursement of contractual remuneration For the year ended 31st March, 2010 (`) (`) Miscellaneous Expenses Include : Auditors Remuneration and Expenses : (excluding Service Tax) Audit Fees Fees for Other Services - Tax Audit Reimbursement of Expenses For the year ended 31st March, 2011 (`) (`) For the year ended 31st March, 2010 (`) (`)
67,84,774
42,36,824
Less : Recoveries Consumption of Stores and Supplies Power and Fuel Rent [Refer Note (v) on Schedule 17] Insurance Repairs - Others Advertising/Sales Promotion Traveling and Conveyance Legal Expenses Postage, Telephones etc. Bank Charges Technical and Consultancy Fees Bad Debts Written Off Provision for Doubtful and Bad Debts Interest on delayed Payment of Service Tax Fixed Assets Discarded Loss on Sale of Current Investment Miscellaneous Expenses
2,78,85,505 2,66,28,527 15,97,80,757 12,92,04,852 8,60,64,144 7,37,16,613 6,58,88,511 6,33,16,341 6,40,675 17,53,372 30,81,488 60,068 31,89,925 1,20,41,693 1,13,23,773 14,55,680 25,84,481 44,141 29,17,302 37,66,756 14,236 54,684 2,27,892 15,98,385 11,84,71,164 6,65,197 13,73,777 29,10,837 57,823 25,88,651 1,53,44,166 77,37,850 12,14,605 25,04,456 27,874 24,69,879 16,71,441 1,14,77,341 13,068 11,19,181 11,44,92,487
1,50,000 50,000 25,000 2,25,000
1,50,000 50,000 20,000 2,20,000
15. PROVISION FOR TAXATION Income Tax for the year : Current Tax Deferred Tax
1,94,10,000 (3,65,204) 1,90,44,796
1,76,00,000 (55,58,615 ) 1,20,41,385
16. EARNINGS PER SHARE Profit after Taxation Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (Face value - ` 10/- per share) 17. NOTES TO THE ACCOUNTS
4,11,72,777 4,50,008 91.49
2,13,06,265 4,50,008 47.35
i)
Expenditure in Foreign Currency (On Payment Basis) : Travelling ` 4,01,411/(Previous year - ` 1,72,812/-), Others ` 9,69,897/- (Previous year - ` 3,53,100).
ii) Following are the details of investments purchased and sold/redeemed during the year.
S.No.
Particulars
For the Year ended For the Year ended 31st March, 2011 31st March, 2010 Units Purchased Purchase Unit Sold Units Purchased Purchase Unit Sold in numbers at cost (in `) in Numbers in numbers at cost (in `) In numbers 5,164 4,317 5,11,529 32,82,764 29,92,104 30,03,797 30,00,262 30,03,744 30,379 30,397 30,677 36,18,956 37,59,678 37,66,834 44,073 52,629 48,539 51,15,287 4,07,29,582 2,99,44,678 3,00,64,708 3,00,35,923 3,00,53,357 3,03,85,453 3,04,20,052 3,07,01,425 4,49,00,744 3,77,35,893 3,80,27,315 4,40,82,435 42,22,98,020 3,90,962 3,21,497 11,22,535 36,08,211 29,92,104 30,03,797 30,00,262 30,03,744 30,379 30,397 30,677 36,18,956 37,59,678 37,66,834 15,573 12,026 6,11,006 3,25,447 1,55,779 1,20,619 61,10,067 40,37,853 1,04,24,318 2,50,000 50,000
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.
Fortis Money Plus Regular Plan Daily Dividend Fidelity Fixed Maturity Plan Series 1 Plan B Retail Growth JP Morgan India Liquid Plus Fund - Retail - Daly Div Plan- Rein LIC Mutual Fund Income Plus - Daily Dividend Plan DSP Black Rock Fixed Maturity Plan 12M Series 3 - Regular Growth Maturity Canara Robeco Treasure Advantage Retail Daily Dividend Fund JP Morgan India Liquid Fund - Super Inst - Daily Div Plan - Reinvestment JP Morgan India Treasury Fund - Super Inst - Daily Div plan - Reinvestment Templeton India Ultra Short Bond Fund Inst Plan - Daily Div Reinvestment Fortis Money Plus Institutional Plan Daily Dividend UTI Treasury Advantage Fund Inst Plan Daily Div. Reinvestment UTI Floating Rate Fund Short Term Plan Ins. Daily-Dividend DSP Black Rock Money Manager Fund Inst Plan Daily Dividend Canara Robeco Treasure Advantage Inst Daily Div Fund Sundaram Ultra ST Fund Inst Div Rein Daily Sundaram Money Fund Inst.Daily Div Rein Religare Liquid Fund Inst.Daily Dividend Total
iii) Contingent Liabilities 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 ` 6,81,738 for Assessment year 2007-08 and 2008-09 (previous year ` Nil) for iv) 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. v) The Companys 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 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 Schedule 14.
vi) 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. vii) The Company has accounted for the long term defined benefits and contribution schemes as under: A) Defined Benefit Schemes: (a) Gratuity The employees are entitled to gratuity that is computed as half-months 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. (b) Other Benefit 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 in unfunded.
108

SCHEDULES TO THE ACCOUNTS (Contd.) The reconciliation of opening and closing balances of the present value of the defined benefit obligations are as below :
For the Year ended 31st March, 2011 Gratuity Leave encashment/ compensated absences Obligations at year beginning Service Cost Current Service Cost Past Interest Cost Actuarial (gain) / loss Benefit Paid Obligations at year end Change in plan assets Plan assets at year beginning, at fair value Expected return on plan assets Actuarial gain/(loss) Contributions Benefits paid Plan assets at year end, at fair value Reconciliation of present value of the obligation and the fair value of the plan assets : Present value of the defined benefit obligations at the end of the year Fair value of the plan assets at the end of the year Liability recognised in the Balance Sheet Defined benefit obligations cost for the year Service Cost Current Interest Cost Expected return on plan assets Past Service Cost Actuarial (gain)/loss Net defined benefit obligations cost* 14,44,078 19,68,440 5,059 1,06,719 (27,056) (2,20,173) 32,77,067 26,20,979 3,74,493 (3,74,493) 33,00,287 (2,20,173) 57,01,093 73,24,864 24,32,235 5,17,813 37,54,767 (17,04,414) 1,23,25,265 17,04,414 (17,04,414)
(Amount in `) For the Year ended 31st March, 2010 Gratuity Leave encashment/ compensated absences
11,84,312 9,85,528 84,943 (7,07,222) (1,03,483) 14,44,078 15,94,197 1,58,069 63,387 9,08,809 (1,03,483) 26,20,979 59,51,196 14,74,374 3,99,328 7,53,622 (12,53,656) 73,24,864 12,53,656 (12,53,656)
32,77,067 (57,01,093) (24,24,026) 19,68,440 1,06,719 (3,74,493) 5,059 3,47,437 20,53,162
1,23,25,265 1,23,25,265 24,32,235 5,17,813 37,54,767 67,94,815
14,44,078 (26,20,979) (11,76,901) 9,85,528 84,943 (1,58,069) (7,70,609) 1,41,793
73,24,864 73,24,864 14,74,374 3,99,328 7,53,622 26,27,324
* Included under operating and Administrative Expenses. Investment details of plan assets 100% of the plan assets are lying in the Gratuity fund administered through Life Insurance Corporation of India (LIC) under its Group Gratuity Scheme. The principal assumptions used in determining post-employment benefit obligations are shown below :
2011 (in %) Discount Rate Future salary increases Expected return on plan assets 8.00 p.a. 5.00 p.a. 9.00 p.a. 2010 (in %) 7.50 p.a. 5.00 p.a. 7.50 p.a.
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 factors in the employment market. Net Assets (Liabilities) recognised in Balance Sheet (Including experience adjustment Impact) 1. 2. 3. 4. 5. Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus(Deficit)] Experience Adjustment of Plan Assets [Gain/(Loss)] Experience Adjustment of Plan Obligation [Gain/(Loss)] For the year ended March 31,2011 Gratuity Leave Encashment 32,77,067 1,23,25,265 57,01,093 24,24,026 (1,23,25,265) (3,74,493) (27,056)
For the year ended March 31,2010 Gratuity Leave Encashment 1,44,4078 26,20,979 11,76,901 63,387 (7,07,222) 73,24,864
For the year ended For the year ended March 31,2009 March 31,2008 Gratuity Leave Gratuity Leave Encashment Encashment 11,84,312 15,94,197 4,09,885 2,55,902 (1,17,615) 59,51,196
(73,24,864)
(59,51,196)
5,40,083 5,11,554 (28,529) (84,277) 89,555
27,09,612
(27,09,612)
37,54,767
7,53,622
23,88,633
10,30,408
B) State Plans : 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 Companys contribution during the year that has been charged to revenue amounts to ` 47,68,338/- Previous year ` 35,54,620/viii) Related party disclosures under Accounting Standard 18 i) Holding Company : ITC Limited ii) Fellow Subsidiary Companies with Whom Transactions have taken place during the year: a. Srinivasa Resorts Limited b. Bay Islands Hotels Limited c. Landbase India Limited
iii) Other Related Parties with Whom Transactions have taken place during the year: a. International Travel House Limited ( Associate of Holding Company) b. Maharaja Heritage Resorts Limited (Joint venture of Holding Company) iv) Key Management Personnel : Board of Directors Nakul Anand S. C. Sekhar Arun Pathak Pawan Verma((Resigned on 6 September,2010) H. H. Maharaja Gaj Singh
109

SCHEDULES TO THE ACCOUNTS (Contd.) v) Summary of transactions (Rupees) : Transaction with 1. 2. 3. 4. 5. 6. 7. 8. 9. Receipt of Management & Consultancy fees* * Inclusive of Service Tax - ` 3,32,017/(Previous Year - ` 2,89,357/-) Purchase of Goods/Service Sale of Fixed Assets Rent Paid Recovered of Contractual Remuneration Reimbursement of Contractual Remuneration Dividend Payments Expense Recovered during the year (Amount recovered on account of payments made on behalf of related parties) Expense Reimbursed during the year (Amount paid to related parties on account of payments made by them on your behalf) Closing Balance (i) Debtors/Receivables (ii) Creditors/Payables
Holding Company 31-03-2011 36,62,128 9,17,671 4,95,840 1,74,666 2,78,85,505 27,00,048 1,22,17,266 31-03-2010 30,98,641 3,56,858 4,95,840 2,66,28,527 22,50,040 1,41,32,520
Fellow Subsidiaries 31-03-2011 50,917 4,48,024 97,675 31-03-2010 36,855 5,04,027 2,47,412
Other Related Parties 31-03-2011 36,73,382 31-03-2010 17,85,688
75,63,666 3,725 21,08,240
60,39,174 10,26,826 76,040
3,49,672 1,26,813
1,19,982
2,80,134 4,36,376
3,45,241 3,07,426
10.
Information regarding Significant Transactions/Balance Transaction with 1. 2. Receipt of Management & Consultancy fees ITC Limited Purchase of Goods/Service ITC Limited Srinivasa Resorts Limited International Travel House Limited Sale of Fixed Assets Landbase India Limited Rent Paid ITC Limited Recovered of Contractual Remuneration ITC Limited Bay Island Hotels Limited Reimbursement of Contractual Remuneration ITC Limited Dividend Payments ITC Limited Expense Recovered during the year (Amount recovered on account of payments made on behalf of related parties) ITC Limited Bay Island Hotels Limited Landbase India Limited Expense Reimbursed during the year (Amount paid to related parties on account of payments made by them on your behalf) ITC Limited Srinivasa Resorts Limited Bay Island Hotels Limited Maharaja Heritage Resorts Limited Landbase India Limited Closing Balance (i) Debtors/Receivables ITC Limited (ii) Creditors/Payables ITC Limited Bay Island Hotels Limited International Travel House Limited Holding Company 31-03-2011 36,62,128 31-03-2010 30,98,641 Fellow Subsidiaries 31-03-2011 31-03-2010 Other Related Parties 31-03-2011 31-03-2010
9,17,671 4,95,840 1,74,666 2,78,85,505 27,00,048
3,56,858 4,95,840 2,66,28,527 22,50,040
50,917 4,48,024
36,855 5,04,027
36,73,382
17,85,688
3. 4. 5.
6. 7. 8.
1,22,17,266
1,41,32,520
87,177 10,498
2,19,473 27,939
9.
75,63,666 3,725 21,08,240
60,39,174 10,26,826 76,040
3,49,672 1,26,813
3,752 1,16,230
2,80,134 4,35,376
3,45,241 3,07,426 (Amount in `)
10.
ix) Taxation Deferred Tax : Break-up of Deferred Tax Assets and Liabilities into major Components of the respective balances is as under : 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 income tax return ii) Tax impact of Expenses allowed as deduction under Income Tax Act on actual payment iii) Tax impact of expenses charged in the financial statements but allowable as deductionin future years under income tax Net Deferred Tax Asset III. Closing Deferred Tax Asset
Year ended Year ended March 31,2011 March 31,2010 88,87,171 (42,974) (11,77,889) 15,86,067 3,65,204 92,52,375 33,28,556 (8,903) 39,12,626 16,54,892 55,58,615 88,87,171
x) Previous Years figures have been regrouped/rearranged wherever necessary to conform with current years presentation.
110

SCHEDULES TO THE ACCOUNTS (Contd.) 18. SIGNIFICANT ACCOUNTING POLICIES
i) BASIS OF PREPARATION OF FINANCIAL STATEMENTS The Financial Statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified u/s 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. TURNOVER To state Net Income from Operations after deducting taxes and duties from invoiced value of services rendered. FIXED ASSETS To state Fixed Assets at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition. To capitalise 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. DEPRECIATION / AMORTISATION 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 the Companies Act, 1956, whichever is lower, by equal annual installments. Capitalised software costs are amortised over a period of five years. INVESTMENT To state Current Investments at lower of cost and fair value; and Long Term Investments at cost. Where applicable, provision is made where there is permanent fall in valuation of Long Term Investments. INVESTMENT INCOME To account for Income from Investments on an accrual basis, inclusive of related tax deducted at source. EMPLOYEE BENEFITS To make regular contributions to the State administered Provident Fund which are charged against revenue. To provide for long term defined benefit schemes 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 and losses in the Profit & Loss account as income and expense in the period in which they occur. viii) PROPOSED DIVIDEND To provide for Dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting. ix) FOREIGN CURRENCY TRANSLATIONS To record transactions in foreign currencies at the exchange rates prevailing on the date of the transaction. Gains / Losses arising out of fluctuations in the exchange rates are recognised in profit & loss in the period in which they arise. Liability / Receivables on account of foreign currency are converted at the exchange rates prevailing as at the end of the year. 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 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. Deferred tax is recognised at enacted or substantively enacted tax rates. Not to recognise Deferred tax assets or 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) FINANCIAL AND MANAGEMENT INFORMATION SYSTEMS To practice an integrated Accounting System which unifies both Financial Books and Costing Records. The books of accounts and other records have been designed to facilitate compliance of the relevant provisions of the Companies Act, 1956 on the 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.
ii)
iii)
iv)
v)
vi)
vii)
For PRICE WATERHOUSE Firms Registration No : 012754N Chartered Accountants Abhishek Rara Partner Membership Number 77779 Gurgaon, 28th April, 2011 On behalf of the Board S. C. Sekhar Arun Pathak Director Director
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 3 9 1 9 0 9 3 7 2 3 0 1 1 State Code 5 5 Application of Funds Net Fixed Assets 5 2 Net Current Assets 6 3 4 Accumulated Losses N . A . 3 8 4 3 Investments 4 4 0 Misc. Expenditure Deferred Tax Asset-Net 9 2 5 2 8 2
Date
Month
Year
II. Capital raised during the year (Amount in ` Thousands) Public Issue N . A Bonus Issue N . A . Rights Issue N . A . Private Placement N . A .
IV. Performance of Company (Amount in ` Thousands) Turnover * 1 8 0 * Includes Other Income +

III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 8 7 7 Sources of Funds Paid-up Capital 4 5 Secured Loan N . A . Reserves & Surplus 1 1 7 5 5 Unsecured Loan N . A . Total Assets 1 8 7 7
Profit/Loss before Tax Profit/Loss after Tax + 6 0 2 1 8 4 1 1 7 3 (Please tick appropriate box + for profit, for loss) Earnings per Share in ` 9 1 . 4 Dividend Rate % 9 7 0
V. Generic Names of Three Principal Products / Services of Company (as per monetary terms) Item Code No. Product Description H ** N O T E . L A S .
111
BAY ISLANDS HOTELS LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2011 Your Directors submit their Report and Accounts for the financial year ended 31st March, 2011. Financial Performance During the year under review, your Company earned an income of ` 112.42 lacs (previous year - ` 101.08 lacs) and post-tax profits of ` 75.94 lacs (previous year - ` 67.94 lacs) after providing for income tax of ` 30.27 lacs (previous year - ` 26.69 lacs). Earnings Per Share for the year stands at ` 639.53 (previous year - ` 572.11). Cash flows from Operations were ` 46.21 lacs during the year (previous year - ` 85.31 lacs). Your Directors are pleased to recommend a dividend of ` 50/- (previous year - ` 50/-) per Equity Share of ` 100/- each for the year ended 31st March, 2011. Your Board further recommends a transfer to General Reserve of ` 7.59 lacs (previous year - ` 6.79 lacs). Conservation of Energy Considering the fact that the hotel is under an operating licence with ITC Limited, no comment is made on conservation of energy. However, your Companys hotel viz., Fortune Resort Bay Island continues to focus on energy conservation, safety and environment. Foreign Exchange Earnings and Outflow There has been no foreign exchange income or outflow during the year (previous year - Nil). Directors In accordance with the provisions of Article 143 of the Articles of Association of the Company, Mr G.H.C. Jadwet and Mr. Mohan Bhatnagar will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. 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 Companies (Particulars of Employees) Rules, 1975. COMPLIANCE CERTIFICATE Company No. : U74899DL1976PLC105131 Nominal Capital : ` 1.2 Crores The Members of 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, 2011 (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 27th April 2010; 29th September 2010; 24th December 2010 and 25th March 2011 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, 2010 was held on 28th June 2010 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. 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 financial year. 13. The Company has: (i) not made any allotment/transfer/transmission of securities during the financial year. (ii) deposited the amount of final dividend declared in the separate Bank Account, on 26th June 2010. (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 and the appointment of Additional Directors has been duly made. However, there was no appointment of 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. 17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and / or such 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 not issued any shares, debentures or other securities during the financial year. 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 / accepted any deposits including any unsecured loans falling within the purview of Section 58A of the Act during the financial year. 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, 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 Companys Auditors, Messrs. S B Dandekar & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Directors 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 along with proper explanations relating to material departures, if any; 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 profit of the 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 the Company and for preventing and detecting fraud and other irregularities; and d) prepared the Annual Accounts on a going concern basis. The required disclosures and the significant accounting policies followed are appearing in Schedules 15 and 16 respectively, to the annual accounts. On behalf of the Board Mohan Bhatnagar Director S. C. Sekhar Director
112

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 finnacial year. The Company has not altered the provisions of the Memorandum with respect to situation of the Companys Registered Office from one State to another during the year under scrutiny. The Company has not altered the provisions of the Memorandum with respect to the Objects of the Company during the year under scrutiny. The Company has not altered the provisions of the Memorandum with respect to Name of the Company during the year under scrutiny. The Company has not altered the provisions of the Memorandum with respect to Share Capital of the Company during the year under scrutiny. 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 during the financial year. 32. The Company has not received any money as security from its employees during the financial year. 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 LLB, ACS CP : 6485
26.
27. 28. 29. 30.
New Delhi, 29th April, 2011
ANNEXURE 'A' Registers maintained by the Company (As on March 31, 2011) Sl. Particulars No. 1. Minutes Book of the meetings of the Board of Directors of the Company 2. Minutes Book of General Body Meetings of the Members of the Company 3. Copies of Annual Returns 4. Register of Members 5. Register of Particulars of Directors, Managing Director, Manager and Secretary 6. Register of Directors Share holding 7. Register(s) of contracts, companies and firms in which Directors are interested 8. Books of Accounts 9. Register of Share Transfer
Sl. Particulars of No. Forms & Returns Filed Relevant Section of the Act 193 193 159 150 303 307 301(3) 209
Date of Filing
Whether filed within prescribed time
Additional Fees paid
ANNEXURE 'B' A. Forms & Returns filed with the Registrar of Companies, New Delhi (During the Year ended on March 31, 2011) Sl. Particulars of Date of Whether Additional No. Forms & Returns Filed Filing filed within Fees paid prescribed time 1. Form 32 u/s 303 for the appointment of Mr. Arun Pathak as Additional Director and resignation of Mr. M. Riaz Ahmed from directorship on 26th March 2010 13th April 2010 Yes No
2. Form 32 u/s 303 for the change in designation of Mr. Arun Pathak from Additional Director to Director in the Annual General Meeting held on 28th June 2010 6th July 2010 Yes No 3. Form 23AC and Form 23ACA for Annual Accounts u/s 220 of the Act for the year ended 31st March, 2010 12th July 2010 Yes No 4. Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March 2010 12th July 2010 Yes No 5. Form 20B for Annual Return u/s 159 of the Act, made upto 28th June 2010 i.e. the date of AGM for the financial year ended 31st March 2010 26th August 2010 Yes No 6. Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st October 2010 Yes No The following form does not correspond to the financial year in review but are relevant for issuing the Compliance Certificate. 7. Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st April 2011 Yes No B. Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil
REPORT OF THE AUDITORS TO THE MEMBERS We have audited the attached Balance Sheet of BAY ISLANDS HOTELS LTD. as at 31st March, 2011 and the Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys 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 accepted in India. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examination, on a test basis, evidence supporting the amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used 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 (Auditors Report) Order 2003, as amended by the Companies (Auditors 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. 2. 3. We have obtained all the information and explanations, which to the best our knowledge and belief were necessary for the purpose of our audit. 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. In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E 4. In our opinion the Balance Sheet, Profit & Loss Account 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. On the basis of representations received from Directors as on 31st March 2011 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 in terms of clause (g) of subsection (1) of section 274 of the Companies Act 1956. 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 2011; and In case of the Profit & Loss Account of the Profit of the Company for the year ended on that date. In case of the Cash Flow Statement of the cash flows for the year ended on that date.
5.
6.
Port Blair, 29th April, 2011
113

ANNEXURE TO AUDITORS REPORT Statement on matters specified in paragraphs 4 & 5 of the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors 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, 2011. 1. The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets. 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 there under, 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 ` 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, 2011. It has not incurred any cash losses in the financial year as well as in the immediately preceding financial year. BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule I. SOURCES OF FUNDS 1. Shareholders Funds (a) Capital (b) Reserves and Surplus 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 Company has not given any guarantee for loans taken by others from banks or financial institutions. 16. In accordance with the information given to us, the Company has not taken any term loans. 17. In accordance with the information and explanation given to us the Company has not applied any short term borrowings for purpose of long term investments or vice versa. 18. In accordance with the information and explanation given to us the 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. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E As at 31st March, 2010 (`) (`) 11,87,500 9,53,51,405
Port Blair, 29th April, 2011 As at 31st March, 2011 (`) (`) 11,87,500 10,14,29,708
1 2
II. APPLICATION OF FUNDS 1. Fixed Assets (a) Gross Block (b) Less : Depreciation (c) Net Block 2. 3. Deferred Tax Asset (Net) Current Assets, Loans & Advances (a) Sundry Debtors (b) Cash and Bank Balances (c) Other Current Assets (d) Loans and Advances Less : Current Liabilities and Provisions (a) Liabilities (b) Provisions
10,26,17,208 10,26,17,208
9,65,38,905 9,65,38,905
3 10,34,42,743 3,06,69,158 7,27,73,585 4 5 6 7 8 30,63,436 2,38,48,123 5,10,180 7,23,000 2,81,44,739 24,08,258 19,60,348 1,88,86,741 5,17,645 2,31,575 2,15,96,309 10,34,42,743 2,95,70,687 7,38,72,056 20,77,053
9 10
19,303 6,90,071 7,09,374 2,74,35,365 10,26,17,208
11,030 9,95,483 10,06,513 2,05,89,796 9,65,38,905
Net Current Assets Total Notes to the Accounts 15 Significant Accounting Policies 16 The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011
On behalf of the Board Mohan Bhatnagar Director S. C. Sekhar Director Gurgaon, 28th April, 2011
114

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Operating Licence Fee Other Income For the year ended 31st March, 2011 (`) 99,60,456 12,81,560 1,12,42,016 3,48,503 2,72,411 6,20,914 1,06,21,102 30,26,668 75,94,434 2,38,00,718 3,13,95,152 7,59,443 5,93,750 96,321 2,99,45,638 3,13,95,152 639.53 For the year ended 31st March, 2010 (`) 84,27,855 16,80,198 1,01,08,053 3,71,137 2,74,471 6,45,608 94,62,445 26,68,643 67,93,802 1,83,78,660 2,51,72,462 6,79,380 5,93,750 98,614 2,38,00,718 2,51,72,462 572.11
11
II. EXPENDITURE Operating and Administrative Expenses Depreciation III. PROFIT/(LOSS) Profit before Taxation Taxation for the year Profit after Taxation Profit Brought Forward from Previous Year Available for Appropriation IV. APPROPRIATIONS General Reserve Proposed Dividend Tax on Proposed Dividend Profit Carried Forward
12
13
Basic and Diluted Earnings Per Share (`) 14 Notes to the Accounts 15 Significant Accounting Policies 16 The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit & Loss Account referred to in our Report of even date. KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 (Figures for the previous year have been rearranged to conform with the revised presentation)
For the year ended 31st March, 2011 (`) (`) A. NET PROFIT BEFORE TAX Adjustments for: Depreciation Interest OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES Adjustments for: Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Paid NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES: Interest Received NET CASH FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCIAL ACTIVITIES: Dividends Paid Income Tax on Dividend Paid NET CASH FLOW USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS COMPRISE : Cash and Bank Balances Per our Report attached to the Balance Sheet KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011 1,06,21,102 2,72,411 (12,81,560)
For the year ended 31st March, 2010 (`) (`) 94,62,445 2,74,471 (16,05,895)
(10,09,149) 96,11,953
(13,31,424) 81,31,021
(11,03,088) 8,273
(10,94,815) 85,17,138 (38,96,512) 46,20,626 10,33,120 10,33,120
29,81,340
29,81,340 1,11,12,361 (25,81,587) 85,30,774 9,73,411 9,73,441
10,33,120
9,73,411
(5,93,750) (98,614)
(6,92,364) (6,92,364) 49,61,382 1,88,86,741 2,38,48,123 2,38,48,123
(5,93,750) (1,00,908)
(6,94,658) (6,94,658) 88,09,527 1,00,77,214 1,88,86,741 1,88,86,741
115

SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (`) 1. CAPITAL Authorised 90,000 Equity Shares of ` 100/- each 30,000 13.5% Redeemable Cumulative Preference Shares of ` 100/- each Issued, Subscribed and Paid-up 11,875 Equity Shares of ` 100/- each, fully paid-up As at 31st March, 2010 (`) As at 31st March, 2011 (`) (`) 2. As at 31st March, 2010 (`) (`)
90,00,000 30,00,000 1,20,00,000
90,00,000 30,00,000 1,20,00,000
11,87,500 11,87,500
11,87,500 11,87,500
The above shares are held by the Holding Company, ITC Limited 3. FIXED ASSETS Particulars Original Cost/ Additions Professional Valuation during the as at 01.04.2010 year (`) 1. Land 2. Building 3. Plant & Machinery 4. Furniture & Fittings Total Previous Year 5,70,00,000 3,89,89,750 70,45,674 4,07,319 10,34,42,743 10,34,42,743 As at 31st March, 2011 (`) 4. DEFERRED TAX ASSET (NET) Deferred Tax Assets Unabsorbed Depreciation/Losses MAT Credits Less : Deferred Tax Liability Depreciation - Timing Difference Net Deferred Tax Assets 5. SUNDRY DEBTORS Over 6 months old Good and Unsecured Doubtful and Unsecured Other Debts Good and Secured Good and Unsecured Less : Provision for Doubtful Debts Less : Deposits from normal Trade Debtors - Contra 6. (24,08,258) (24,08,258) 24,08,258 (`) As at 31st March, 2010 (`) (20,77,053) (20,77,053) 20,77,053 Withdrawals during the year (`)
RESERVES & SURPLUS Revaluation Reserve At the commencement of the year 6,43,84,826 6,52,10,886 Less : Depreciation 8,26,060 6,35,58,766 8,26,060 6,43,84,826 Subsidy Reserve 43,38,099 43,38,099 General Reserve At the commencement of the year 28,27,762 21,48,382 Add : Transferred from Profit & Loss Account 7,59,443 35,87,205 6,79,380 28,27,762 Balance in Profit & Loss Account 2,99,45,638 2,38,00,718 10,14,29,708 9,53,51,405
Original Cost/ Depreciation Professional for the year Valuation as at 31.03.2011 (`) 5,70,00,000 3,89,89,750 70,45,674 4,07,319 10,34,42,743 10,34,42,743 (`) 10,81,283 17,188 10,98,471 11,00,531
Depreciation on withdrawals (`)
Depreciation upto 31.03.2011 (`) 2,32,35,310 70,26,529 4,07,319 3,06,69,158 2,95,70,687
Net Block as at 31.03.2011 (`) 5,70,00,000 1,57,54,440 19,145 7,27,73,585 7,38,72,056
As at As at 31st March, 2011 31st March, 2010 (`) (`) 10. PROVISIONS Income Tax (Provision for Taxation) Provision for Proposed Dividend Tax on Proposed Dividend Provision for Tax (net of advance tax) 5,93,750 96,321 6,90,071 5,93,750 98,614 3,03,119 9,95,483
For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 11. OTHER INCOME Interest on Fixed Deposit 12,81,560 Interest on Income Tax Refund A/Y 2006-07 Miscellaneous Income 12,81,560 16,05,895 25,285 49,018 16,80,198
30,63,436 30,63,436 30,63,436
19,60,348 19,60,348 19,60,348 10,916 1,88,75,825 1,88,86,741 5,17,645 5,17,645 1,82,557 49,018 2,31,575
7.
CASH AND BANK BALANCES With Scheduled Banks on Current Accounts 33,89,178 Deposit with Scheduled Banks 2,04,58,945 2,38,48,123 OTHER CURRENT ASSETS Interest accrued on investment 5,10,180 5,10,180 LOANS AND ADVANCES Income Tax-Refund Due for the year 2008-09 1,82,557 Income Tax-Refund Due for the year 2009-10 49,018 Income Tax-Refund Due for the year 2010-11 4,91,425 7,23,000 LIABILITIES Sundry Creditors Total outstanding dues to Micro and small enterprises Total outstanding dues to creditors other than Micro and small Enterprises There is no amount due and outstanding to be credited to Investor Education and Protection Fund.
12. OPERATING AND ADMINISTRATIVE EXPENSES Salaries, Wages and Bonus 75,29,647 65,90,803 Less : Recovered from ITC Ltd. (73,53,049) (64,37,146) Salaries, Wages and Bonus 1,76,598 153,657 Consumption of Stores and Spare Parts 30,000 30,000 Travelling and Conveyance 70,375 90,000 Miscellaneous Expenses 71,530 97,480 3,48,503 Miscellaneous Expenses include : Audit Fees Tax Audit Fees 13. PROVISION FOR TAXATION Income Tax on : Tax on Current Years Profits Add : Deferred Tax Expense/(Credit) 13,236 6,067 3,71,137 11,030 4,964
8.
9.
33,57,873 (3,31,205)
29,99,545 (3,30,902) 26,68,643 67,93,802 11,875 572.11
19,303 19,303
11,030 11,030
30,26,668 14. EARNINGS PER SHARE Profit/(Loss) after Taxation 75,94,434 Weighted average number of equity shares outstanding 11,875 Basic and diluted earnings per share in Rupees 639.53 (face value - ` 100/- per share)
116

SCHEDULES TO THE ACCOUNTS (Contd.) 15. NOTES TO THE ACCOUNTS 1. The Hotel operations are under an Operating License Agreement with ITC Limited. 2. The Land and Building were revalued as on 31st March, 1999 at ` 5,70,00,000/- and ` 3,89,89,750/- respectively, by an approved valuer and accordingly the gross block reflects the revised values in respect of these assets, in the books of accounts. 3. In view of the Companys current financial performance and the future profit projections, the Company expects to fully recover the deferred tax assets. 4. Related party disclosures under Accounting Standard 18 i) Holding Company : ITC Limited ii) Key Management Personnel : Board of Directors 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:1. 2. 3. 4. 5. Rent Received Expenses Reimbursed Reimbursement of Contractual Remuneration Dividend Payment Balance as on March 31, 2011 (i) Debtors/Receivables 2010-11 99,60,456 3,38,195 73,53,049 5,93,750 30,63,436 2009-10 84,27,855 3,66,897 64,37,146 5,93,750 19,60,348 3. 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 the Companies Act, 1956, whichever is lower, by equal annual installments. REVALUATION OF ASSETS To review the original book value of Fixed Assets, from time to time, and revalue such of those Fixed Assets as have appreciated in value significantly, in order to relate them more closely to current replacement values, 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. REVENUE RECOGNITION Income from operating license fees is booked on accrual basis in accordance with the provisions of operating license agreement / arrangements with the licencee viz., ITC Limited. PROPOSED DIVIDEND To provide for Dividend as proposed by the Directors in the books of account, pending approval at the Annual General Meeting. 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 of losses unless there is virtual certainty that there will be sufficient future taxable income available to realize such assets.
4.
5.
6.
7.
(b) Transaction with Key Management Personnel - Nil (Previous Year - Nil) 5. Previous Years figures have been regrouped/rearranged wherever necessary. 16. SIGNIFICANT ACCOUNTING POLICIES 1. 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. 2. FIXED ASSETS To state Fixed Assets at cost of acquisition inclusive of inward freight, duties and taxes and incidental expenses related to acquisition.
KEDARASHISH BAPAT Partner Membership No : 57903 For S.B. DANDEKAR & COMPANY Chartered Accountants Firms Registration No : 301009E Port Blair, 29th April, 2011
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 1 3 0 1 5 0 1 3 3 2 1 0 1 1 State Code 5 5 Application of Funds Net Fixed Assets 7 2 7 Net Current Assets 2 7 4 Accumulated losses N . A . 7 3 4 5 Investments N . A . Misc. Expenditure N . A . Deferred Tax Liability-Net - 2 4 0 8
Date
Month
Year
II. Capital raised during the year (Amount in ` Thousands) Public Issue N . A Bonus Issue N . A . Rights Issue N . A . Private Placement N . A .
IV. Performance of Company (Amount in ` Thousands) Turnover* 1 1 * Includes Other Income + 2 4 2 Total Expenditure 6 2 0
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 0 0 2 Sources of Funds Paid-up Capital 1 1 Secured Loan N . A . Reserves & Surplus 1 0 1 4 2 Unsecured Loan N . A . Total Assets 1 0 0 2
+ Profit/Loss Before Tax Profit/Loss After Tax 7 5 9 4 1 0 6 2 1 (Please tick appropriate box + for profit, for loss) Earnings per Share in ` 6 3 9 . 5 Dividend Rate % 3 5 0
V. Generic Names of Three Principal Products / Services of Company (as per monetary terms) Item Code No. Product Description H ** N O T E . L A S .
117
ITC INFOTECH INDIA LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2011 Your Directors take pleasure in submitting their Report for the financial year ended 31st March, 2011. FINANCIAL RESULTS Key aspects of your Companys consolidated financial performance and standalone financial results are tabulated below: (` Lakhs) Consolidated(*) Year Ended March 31, Total Income Total Expenditure Operating Profit Depreciation Profit before Tax Provision for Tax Profit after Tax 2011 63601 59972 3629 1285 2344 512 1832 2010 56772 50178 6594 1001 5593 1269 4324 2011 42642 40481 2161 1222 939 193 746 Standalone 2010 37771 32446 5325 935 4390 989 3401 growing funnel of prospects. During the year the Group has renewed its focus on India and the larger Asia-Pacific region and this has already resulted in significant traction in acquiring new customers, particularly in India. Market focus has also been extended to specific regions in Western Europe. Based on a survey commissioned through a reputed external agency, existing customers have given your Company the highest satisfaction scores ever recorded. These ratings are amongst the highest in the industry. Given its expanded customer base, supplemented by its rapidly increasing repertoire of value additive solutions and accredited partnerships with global software vendors, the Group is confident of an aggressive growth path. It will continue with its aforesaid strategies of sharp focus on a portfolio set of differentiated service lines and solutions, superior customer care and excellence in delivery. With strategies in place to expand to new markets, a portfolio of differentiated solutions, the ability to provide superior customer care and excellence in delivery through project management capabilities, knowledge management, solution accelerators and a robust quality system, the Group is poised to achieve rapid growth. WHOLLY OWNED SUBSIDIARIES - FINANCIAL PERFORMANCE Key aspects of financial performance of your Companys wholly owned subsidiaries are tabulated below : ITC Infotech (USA), Inc Consolidated(*) (millions) US$ Year Ended March 31, Total Revenue Net Profit 2011 0.01 ` 2011 0.32 US$ 2010 0.08 ` 2010 3.73 GBP 2011 1.03 ITC Infotech Limited, UK (millions) ` GBP ` 2010 46.76 2011 2010 74.31 0.69
(*) including ITC Infotech Limited, UK and ITC Infotech (USA), Inc.,(I2A), wholly owned subsidiaries of the Company, and Pyxis Solutions, LLC, a wholly owned subsidiary of I2A. BUSINESS REVIEW In the wake of the economic recovery, global IT spends improved in 2010. While this was largely driven by increased investments in software and hardware, software services are expected to grow over the next 24 months as companies will need to implement the application and enterprise systems post their investments in hardware and software. Understandably, growth in IT Services has been relatively moderate. Further, in the US, although the recessionary conditions eased towards the latter part of the financial year, client budgets continued to be tightly monitored. These trends reflect the continuing uncertainty during the economic recovery. In line with its peers in the mid tier of the IT services industry, the ITC Infotech Group (Group) has delivered a top line growth of approximately 13%. Your Companys aspiration to scale up rapidly required large investments in building differentiated capability and strengthening sales and technical delivery teams. While the investments, predominantly in manpower, have impacted the profits this year, the capabilities built are expected to strengthen the platform of growth over the next few years. Some of these capabilities include solutions in the areas of customer loyalty, end-to-end transformational services in IT outsourcing and Global Reporting Initiative based sustainability reporting. The Group continues to invest and focus on continuously improving program management and processes to ensure the highest levels of quality in technical delivery to its customers. Your Companys delivery processes have been accorded a maturity Level 3 in the Software Engineering Institutes (SEI) Capability Maturity Model Integration framework. The Groups investments, as mentioned above, in building differentiated capabilities are enabling it to provide end to end transformational services. Further, the Group has maintained its partnerships with some of the leading Independent Software Vendors (ISVs) in building niche solutions to address white spaces and strong joint go-to-market initiatives. Your Company has been ranked 26th in the Leaders Category for the 2011 Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP); this is the fifth consecutive year that your Company has featured in this prestigious list. In addition, your Company has featured in 8 sub-lists, placing it amongst the Top 20 companies globally in some categories such as Best 20 Leaders by Industry Focus - Financial Services (Banking, Markets), Best 20 Leaders by Industry Focus - Retail and Consumer Goods. The partner co-innovation strategy and the focused strategy in launching solutions which demonstrate value to clients in addressing some of their critical business challenges such as effective client relationship management and lowering the cost of operations, have yielded encouraging results in terms of the acquisition of several marquee, high potential clients and a
38.43 1713.97 30.99 1391.35 22.22 1595.63 19.44 1321.22
(*) including Pyxis Solutions, LLC, its wholly owned subsidiary During the year under review, Pyxis Solutions, LLC, declared and paid US$750,000 (` 334.50 lakhs) as dividend for the financial year 2010-11 (previous year - Nil) by way of distribution to its Sole Member i.e. ITC Infotech (USA), Inc. TALENT MANAGEMENT To support the quantum growth plans of your Company, talent management has been an area of focus and, as expected, there has been a build-up of pressure on availability of quality talent. The aim has been to recruit, retain, nurture and engage high quality people to enable optimum delivery of services. Your Company has put in place a process of growing and nurturing talent internally through continuous employee engagement and training programs. While internal communication channels spanned a broader and deeper spectrum to sense every pulse of the organisation, talent engagement as a whole has become a collaborative effort with concentrated participation from all spheres of the organisation. DIRECTORS RESPONSIBILITY STATEMENT As required under Section 217(2AA) of the Companies Act, 1956 your Directors confirm: (i) that in the preparation of the Annual Accounts for the financial year ended 31st March, 2011, 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 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; (iii) that 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 your Company and for preventing and detecting fraud and other irregularities; (iv) that the Annual Accounts for the financial year ended 31st March, 2011 have been prepared on a going concern basis.
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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 undertook Six Sigma Project on energy conservation and installed energy efficient servers as initiatives towards energy conservation and reduction of wastages. II. FOREIGN EXCHANGE EARNINGS AND OUTGO The foreign exchange earnings (FOB realisation basis) of your Company during the year were ` 28,158.65 lakhs (previous year ` 30,460.99 lakhs) while the outgoings (on payment basis) were ` 7,900.37 lakhs (previous year ` 12,491.22 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 Article 143 & 144 of the Articles of Association of the Company, Mr. B. B. Chatterjee and Mr. S. Sivakumar will retire by rotation at the ensuing Fifteenth Annual General Meeting (AGM) of the Company and, being eligible, offer themselves for re-election. Consequent to his retirement from the services of ITC Limited, the holding company, Mr. K. Vaidyanath ceased to be a Director of the Company with effect from close of business on 2nd January, 2011. Your Board of Directors places on record its appreciation of the contribution made by Mr. Vaidyanath during his tenure as Chairman and Director of the Company. Mr. Y. C. Deveshwar and Mr. R. Tandon were appointed by the Board of Directors as Additional Non-Executive Directors of the Company with effect from 3rd January, 2011 in terms of Section 260 of the Companies Act, 1956, read with Article 130 of the Articles of Association of the Company. Mr. Deveshwar and Mr. Tandon will vacate office at the AGM of the Company and have filed their respective requisite consent to act as a Director of the Company, if appointed. Notices under Section 257 of the Companies Act, 1956 have been received for appointment of Mr. Deveshwar and Mr. Tandon as a Director of the Company. Appropriate resolutions seeking your approval to the appointments of Mr. Deveshwar and Mr. Tandon are included in the Notice convening the AGM. In terms of Article 157 of the Articles of Association of the Company, Mr. Deveshwar and Mr. Sivakumar were respectively appointed as Chairman and Vice Chairman of the Board of Directors of the Company with effect from 3rd January, 2011. AUDIT COMMITTEE The Board of Directors at its meeting held on 21st December, 2010, reconstituted the Audit Committee of your Company which now 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 Companys consistent growth was made possible by their hard work, solidarity, co-operation and support. Bangalore, 9th May, 2011 Registered Office: Virginia House 37 J. L. Nehru Road Kolkata 700 071 India. On behalf of the Board
B. Sumant S. Sivakumar
Managing Director Vice Chairman
ANNEXURE A TO THE REPORT OF DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2011 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 ` 6,000,000 /- or more p.a. Name 1 BABU V.V.R. GUPTA S.K. JANARDHANAN S. TALWAR A. Age 2 56 55 53 52 Gross Designation / Nature of Duties Remuneration (`) 3 Sr Vice President - IT Services Sr Vice President - IT Services Sr Vice President - IT Services 4 8403527 6126275 6988173 Net Remuneration (`) Qualifications 5 4381262 4220265 4518224 3530941 6 M.Sc., M.Phil. M.Tech. M.Sc. M.B.A. Experience (Years) 7 34 33 31 27 Date of Joining 8 1-Oct-00 1-Oct-04 1-Oct-00 9-Apr-01 Previous Employment / Position held 9 ITC Ltd. Divisional Head India Operations (ISD) Vmokasha Technologies Exe. - Vice President ITC Ltd. Head - ITC IT Services Reliance Telecom Ltd. Vice President - HRD
Sr. Vice President - Talent Management 6580003
Employed for a part of the year and in receipt of remuneration aggregating ` 500,000/- or more per month AITHANI K.S. 52 On secondment to subsidiary company 2154386 1594829 M.Tech. 28 1-Oct-00 ITC Infotech Ltd. U.K. Chief Executive Officer
Notes : 1. Remuneration includes salary, performance effectiveness pay, allowances, one time deferred income, other benefits/applicable perquisites except contribution to the approved Group Pension under the Defined Benefit Scheme and Gratutity 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, surcharge & 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 Companys rules. 4. None of the above employees is a relative of any Director of the Company. On behalf of the Board B. Sumant S. Sivakumar Managing Director Vice Chairman
Bangalore, 9th May 2011
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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 2011, the related Profit and Loss Account 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 Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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. 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; Place : Bangalore Date : 9th May 2011 (c) The Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account 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; (e) On the basis of written representations received from the directors, as on 3Ist March 2011 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 2011 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 31st March 2011; (ii) in the case of the Profit and Loss Account, 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.
2.
3.
4.
For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000
ANNEXURE TO AUDITORS REPORT [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 March 31 2011] 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 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. (c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed of 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. 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. 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. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements referred to in section 301 of the Act, the particulars of which needs to be entered into the register maintained under that section. 5. 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. In our opinion, the company has an internal audit system commensurate with its size and nature of its business. (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, sales tax, service tax, customs duty, cess and other material statutory dues as applicable with the appropriate authorities in India. Employees' state insurance, wealth tax, and excise duty are not applicable to the company for the current year. (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, service tax, customs duty and cess which have not been deposited on account of any dispute. 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, 2011, and it has not incurred any cash losses during the financial year ended on that date or in the immediately preceding financial year. 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.
6. 7.
3.
9.
10. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 11. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the
4.
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Company, for letter of credit facility taken by a subsidiary from a bank are not prejudicial to the interest of the Company. 12. In our opinion, and according to the information and explanations 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 explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment. 14. 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. 15. The Company has not raised any money by public issues during the year. 16. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted Place : Bangalore Date : 9th May 2011 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. 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. For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule I. SOURCES OF FUNDS : 1. Shareholders Funds Capital 2. Reserves and Surplus 3. Loan Funds Unsecured Loans Total As at 31st March, 2011 (`) As at 31st March, 2010 (`)
1 2 3
852,000,000 563,809,242 1,492,500,000 2,908,309,242
852,000,000 489,234,837 1,108,900,000 2,450,134,837
II. APPLICATION OF FUNDS : 1. Fixed Assets (a) Gross Block (b) Less: Depreciation and Amortisation (c) Net Block (d) Capital Work-in-Progress 2. Investments 3. Deferred Tax - Net 4. Current Assets, Loans and Advances (a) Sundry Debtors (b) Cash and Bank Balances (c) Other Current Assets (d) Loans and Advances Less: 5. Current Liabilities and Provisions (a) Liabilities (b) Provisions Net Current Assets Total Notes to the Accounts Segment Reporting Related Party Disclosures Significant Accounting Policies The Schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011
4 1,023,770,478 677,657,026 346,113,452 4,820,840 350,934,292 870,434,087 61,296,983 1,276,510,676 633,388,608 41,159,651 338,824,693 2,289,883,628 844,852,044 568,832,307 276,019,737 18,615,777 294,635,514 870,434,087 69,284,916 887,537,207 684,271,818 7,074,969 317,932,349 1,896,816,343
5 6 7 8 9 10
11 12
509,672,460 154,567,288 664,239,748 1,625,643,880 2,908,309,242
533,652,343 147,383,680 681,036,023 1,215,780,320 2,450,134,837
18 19 20 21
On behalf of the Board B. Sumant S. Sivakumar S. V. Shah Managing Director Vice Chairman Company Secretary
R. Batra
Chief Financial Officer
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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Sales and Services Other Income For the year ended 31st March, 2011 (`) 4,211,559,483 52,606,275 4,264,165,758 2,935,635,165 1,112,416,789 122,230,455 4,170,282,409 93,883,349 19,308,944 74,574,405 0.88 For the year ended 31st March, 2010 (`) 3,675,744,065 101,326,482 3,777,070,547 2,547,955,194 696,586,221 93,459,231 3,338,000,646 439,069,901 98,921,812 340,148,089 3.99
13 14
II. EXPENDITURE Personnel Expenses Operating and Administrative Expenses Depreciation and Amortisation III. PROFIT BEFORE TAXATION Provision for Taxation IV. PROFIT AFTER TAXATION, CARRIED FORWARD Earnings Per Share (Face value ` 10 each) (Basic and Diluted) Notes to the Accounts Segment Reporting Related Party Disclosures Significant Accounting Policies The Schedules referred to above form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
15 16
17 18 (vii) 18 19 20 21
R. Batra
For the year ended 31st March, 2011 (`) (Figures for the previous year have been rearranged to conform with the revised presentation) A. NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Fixed Assets - Loss on Sale / Write off (Net) Unrealised (Gain) / Loss on Exchange (Net) Provision for Doubtful Deposits, Loans & Advances Interest on Loans, Deposits etc Provision for Doubtful Debts Liability no longer required written back (`) (`)
For the year ended 31st March, 2010 (`)
93,883,349 122,230,455 1,025,906 (3,346,501) 738,951 (36,360,697) (2,356,798) 81,931,316 175,814,665 (384,405,053) (208,590,388) 50,004,984 (258,595,372) (185,910,018) 228,524,437 93,459,231 1,199,193 (37,155,101) 9,721,179 (48,360,358) (352,817) (8,040,172)
439,069,901
B.
C.
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables (369,965,576) Trade Payables (14,439,477) CASH FROM OPERATIONS Income Tax Paid NET CASH (USED IN) / FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (179,555,139) Interest Received 3,667,301 NET CASH (USED IN) / FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from Long Term Borrowings 2,396,100,000 Repayments of Long Term Borrowings (2,012,500,000) NET CASH (USED IN) / FROM FINANCING ACTIVITIES NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS COMPRISE : Cash and Bank Balances 632,686,429 Unrealised (Loss)/Gain on Foreign Currency Cash and Cash Equivalents 702,179
10,471,155 449,541,056 42,614,419 492,155,475 126,196,703 365,958,772
(84,961,431) 48,654,611 (175,887,838) 1,482,500,000 (1,994,000,000) 383,600,000 (50,883,210) 684,271,818 633,388,608 686,148,858 (1,877,040) (511,500,000) (181,848,048) 866,119,866 684,271,818 (36,306,820)
633,388,608
684,271,818
This is the Cash Flow Statement referred to in our Report of even date.
For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011
R. Batra
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SCHEDULES TO THE ACCOUNTS As at 31st March, 2011 (`) 1. CAPITAL Authorised: 86,000,000 (2010 - 86,000,000) Equity Shares of ` 10 each Issued, subscribed and paid-up: 85,200,000 (2010 - 85,200,000) Equity Shares of ` 10 each (All Equity Shares are held by ITC Limited, the Holding Company) 2. RESERVES AND SURPLUS Profit and Loss Account As at the commencement of the year Add : Profit for the year As at 31st March, 2010 (`) 3. UNSECURED LOANS 860,000,000 860,000,000 Short Term From Others 830,000,000 (Interest-free Loan from ITC Limited, the Holding Company, due for repayment within one year from the date of the balance sheet) Other Loans From Others 662,500,000 (Interest-free Loan from ITC Limited, the Holding Company) 1,492,500,000 730,000,000 As at 31st March, 2011 (`) As at 31st March, 2010 (`)
852,000,000 852,000,000
852,000,000 852,000,000
378,900,000
489,234,837 74,574,405 563,809,242
149,086,748 340,148,089 489,234,837
1,108,900,000
4. FIXED ASSETS GROSS BLOCK Description As at 31st March, 2010 (`) Additions Withdrawals As at 31st March, 2011 (`) As at 31st March, 2010 (`) DEPRECIATION AND AMORTISATION For the On As at year Withdrawals 31st March, 2011 (`) (`) (`) 5,378,478 3,867,468 2,537,202 1,622,588 13,405,736 74,148,900 111,243,477 171,822,383 62,427,978 258,014,288 677,657,026 NET BLOCK As at 31st March, 2011 (`) As at 31st March, 2010 (`)
(`)
(`)
Leasehold Improvements Plant and Machinery Computers etc. Furniture and Fixtures Capitalised Software Capital Work-in-Progress Total Previous Year
111,504,365 19,145,423 150,994,108 55,979,696 218,799,604 73,538,919 62,702,716 32,577,761 300,851,251 12,108,277 844,852,044 193,350,076 844,852,044 193,350,076 779,001,536 75,449,083
130,649,788 57,091,425 17,057,475 5,868,751 201,105,053 90,928,907 25,693,048 4,270,785 288,067,738 138,749,422 36,940,429 2,669,518 92,610,959 49,195,892 15,769,288 1,622,588 311,336,940 232,866,661 26,770,215 14,431,642 1,023,770,478 568,832,307 122,230,455 14,431,642 1,023,770,478 568,832,307 122,230,455 9,598,575 844,852,044 483,772,458 93,459,231
13,405,736 677,657,026 8,399,382 568,832,307
56,500,888 54,412,940 89,861,576 60,065,201 116,245,355 80,050,182 30,182,981 13,506,824 53,322,652 67,984,590 346,113,452 276,019,737 4,820,840 18,615,777 350,934,292 294,635,514 276,019,737 As at 31st March, 2010 (`) 255,870 1,229,742 138,926,794 520,400,000
As at 31st March, 2011 (`) 5. INVESTMENTS Long Term, Unquoted (at Cost) Other than trade Subsidiary Companies ITC Infotech Limited, U.K. 685,815 (2010 - 685,815) Equity Shares of GBP 1 each, fully paid-up ITC Infotech (USA), Inc. 182,000 (2010 - 182,000) Common Shares without par value, fully paid-up
As at 31st March, 2010 (`) 8. CASH AND BANK BALANCES Cash in Hand Cheques in Hand Balances with Scheduled Banks On Current Accounts On Deposit Accounts *
As at 31st March, 2011 (`) 108,067 8,120,108 90,698,474 520,400,000
68,685,837
68,685,837
801,748,250 870,434,087
801,748,250 870,434,087
6. DEFERRED TAX - NET Deferred Tax Assets On employees separation and retirement On provision for doubtful debts and advances On unabsorbed depreciation Deferred Tax Liabilities On fiscal allowances on fixed assets 696,016 61,296,983 7. SUNDRY DEBTORS Over six months old Good and Unsecured - From Others Doubtful and Unsecured - From Others Other Debts Good and Unsecured - From Holding Company - From Subsidiaries * - From Others * Less: Provision for Doubtful Debts 76,504,636 17,358,575 14,702,066 17,358,575 8,624,060 69,284,916 52,537,421 9,455,578 61,992,999 50,095,713 9,204,408 18,608,855 77,908,976
9,957,888 288,080,791 901,967,361 1,293,869,251 17,358,575 1,276,510,676
212,045,234 660,789,907 904,895,782 17,358,575 887,537,207
* including marked as Lien ` Nil (2010 - ` 514,700,000) for corporate guarantee extended on behalf of wholly owned subsidiary (refer Note (ii)(c) of Schedule 18 and ` 400,000 (2010 ` 400,000) held as margin money Balances with other Banks On Current Account - Fokus Bank, Norway Maximum balance outstanding at any time during the year : ` 9,491,410 (2010 - ` 17,761,390) - Danske Bank AS, Denmark Maximum balance outstanding at any time during the year ` 68,605,449 (2010 - ` 68,075,470) - Nordea Bank, Finland Maximum balance outstanding at any time during the year ` 2,244,525 (2010 - ` 5,224,731) - Nordea Bank, Sweden Maximum balance outstanding at any time during the year ` 2,187,957 (2010 - ` 1,721,176) - Deutsche Bank, Netherland Maximum balance outstanding at any time during the year ` 1,557,343 (2010 - ` Nil) - Standard Bank, South Africa Maximum balance outstanding at any time during the year ` 909,593 (2010 - ` Nil) - Westpac Bank, Australia Maximum balance outstanding at any time during the year ` 4,315,000 (2010 - ` Nil)
1,440,280
1,172,265
9,983,736
20,225,641
727,431
1,936,648
901,938
124,858
10,182
736,189
262,203
Includes Unbilled Revenue ` 47,203,828 (2010 - ` 17,708,202)
633,388,608
684,271,818
123

As at 31st March, 2011 (`) 9. OTHER CURRENT ASSETS Good and Unsecured Deposits with Government, Public Bodies and Others Interest accrued on Loans, Advances, etc. 10. LOANS AND ADVANCES Good and Unsecured Loans to Employees Advances recoverable in cash or in kind or for value to be received Advance Tax (Net of Provision for Indian Income Tax ` 108,628,179 (2010 - ` 129,063,709) and Provision for Tax for Overseas Branches ` 8,213,694 (2010 - ` 9,036,786)) Doubtful and Unsecured Loans to Employees Advances recoverable in cash or in kind or for value to be received Less: Provision for Doubtful Loans and Advances 11. LIABILITIES Sundry Creditors - Dues to micro and small enterprises - Dues to creditors other than micro and small enterprises * Other Liabilities *Includes Dues to Holding Company ` Nil (2010 - ` 3,957,956) and to Subsidiary Companies ` 95,390,234 (2010 - ` Nil) 12. PROVISIONS Provision for Retirement Benefits 13. SALES AND SERVICES Exports Domestic 14. OTHER INCOME Interest on Deposits - Gross (Tax Deducted at Source ` 3,632,584) (2010 - ` 4,761,169) Interest Others (Tax Deducted at Source ` Nil) (2010 - ` Nil) Liabilities no longer required written back Miscellaneous Income Gain on Exchange - Net 36,360,697 48,360,358 (iii) 3,136,102,526 1,075,456,957 4,211,559,483 2,869,632,233 806,111,832 3,675,744,065 154,567,288 154,567,288 147,383,680 147,383,680 414,934,528 94,737,932 412,025,125 121,627,218 28,519,577 41,720,042 As at 31st March, 2010 (`) Power and Fuel Outsourcing Charges 8,171,137 32,988,514 41,159,651 6,779,851 295,118 7,074,969 (including Payment to Subsidiary Companies ` 249,419,316) (2010 - ` 142,209,880) Software and Related Expenses Business Development Expenses Repairs and Maintenance - Buildings - Machinery 48,553,808 261,751,308 53,144,972 223,067,335 - Others Legal, Professional and Consultancy Expenses Doubtful and Bad Deposits, Loans and Advances Doubtful and Bad Debts Fixed Assets Discarded (Net) Auditors Remuneration and Expenses 2,420,047 8,040,083 349,284,823 10,460,130 338,824,693 1,681,096 8,040,083 327,653,528 9,721,179 317,932,349 Training and Development Recruitment Expenses Loss on Exchange - Net Miscellaneous Expenses 17. PROVISION FOR TAXATION Current Tax (including tax on foreign branches (` 8,322,746) (2010 - ` 9,369,606) Deferred Tax MAT Credit Entitlement utilized 18. NOTES TO THE ACCOUNTS (i) Nature of Operations lTC Infotech India Limited (the Company) is a wholly owned subsidiary of lTC Limited (the Holding Company) providing information technology solutions and software development services. (ii) Commitments and Contingencies (a) Estimated amount of contracts remaining to be executed on capital account, (net of advances ` Nil, 2010 - ` Nil) - ` 22,323,643 (2010 - ` 9,585,703) (b) Guarantees and Counter Guarantees outstanding - ` 43,073,548 (2010 - ` 11,200,000). (c) Outstanding corporate guarantee extended on behalf of wholly owned subsidiary - USD Nil (2010 - USD 8,233,532 approximately ` 369,685,586). (d) Claims against the Company not acknowledged as debts ` 62,959,452 (2010 - ` 46,032,665) comprising of certain claims relating to income tax disputed by the Company. The Companys significant leasing arrangements are in respect of operating leases for premises (residential, office etc). These leasing arrangements, which are not non-cancelable, range between 11 months and 9 years generally, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable ` 40,123,527 (2010 - ` 52,422,742) are charged as Rent under Schedule 16 to the Accounts. The Company uses forward exchange contracts to hedge against its foreign currency exposure relating to the underlying transactions 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 31st March 2011 Buy GBP - USD EUR - USD USD - INR 40,123,527 1,571,771 23,022,871 294,021,493 28,138,724 52,422,742 1,435,923 14,906,366 191,471,993 23,702,191 AUD - USD USD - DKK USD - SEK USD - NOK GBP EUR USD AUD DKK SEK NOK 47,978,225 1,060,000 2,400,000 Sell 1,470,000 23,200,000 38,995,429 3,190,000 31st March 2010 Buy Sell 1,350,000 36,413,124 85,538,399 13,383,413 98,921,812 13,036,883 12,777,866 6,410,177 40,254,953 738,951 1,025,906 1,762,409 20,468,167 53,438,423 118,643,132 18,630,720 1,112,416,789 21,560,348 20,615,287 9,687,509 28,703,808 9,721,179 (352,817) 1,199,193 1,727,972 22,638,256 10,657,047 13,286,091 696,586,221 55,130,256 32,889,928 49,797,541 21,665,503 For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 41,104,659 309,225,973 28,305,519 173,434,570
Income Tax Provision Adjusted for Previous Years (16,298,956) 7,987,933 (8,793,157) 19,308,944
509,672,460
533,652,343
11,048,423 2,356,798 2,840,357 52,606,275
8,040,172 3,898,633 41,027,319 101,326,482 (iv)
15. PERSONNEL EXPENSES Salaries and Bonus 2,792,729,043 Contribution to Provident and Other Funds 97,406,337 Staff Welfare Expenses 22,612,828 Reimbursement of Contractual Remuneration 22,886,957 2,935,635,165 16. OPERATING AND ADMINISTRATIVE EXPENSES Rent Rates and Taxes Insurance Travelling and Conveyance Communication 2,370,795,731 139,424,819 20,296,446 17,438,198 2,547,955,194
17,750,000 27,100,000
5,902,650
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(v) Employee Benefits (a) The following tables sets out the Defined Benefit Plans / Long Term Compensated Absences - as per Actuarial Valuation as on 31st March, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes : For the year ended 31st March, 2011 (`) Leave Pension Gratuity Encashment Funded Unfunded 17,166,880 13,933,619 (9,336,000) (27,339,272) (5,574,773) 12,915,384 7,254,149 (7,080,000) 1,556,917 14,646,450 13,179,845 5,593,649 (1,429,551) 17,343,943 Leave Encashment For the year ended 31st March, 2010 (`) Leave Pension Gratuity Encashment Funded Unfunded 20,059,515 9,708,283 (7,871,500) 16,887,783 38,784,081 12,805,221 4,690,763 (6,270,250) 18,774,189 29,999,923 12,192,983 3,884,500 9,068,329 25,145,812 Leave Encashment
I.
Components of Employer Expense 1 2 3 4 5 6 7 8 Current Service Cost Interest cost Expected Return on Plan Assets Curtailment Cost / (Credit) Settlement Cost / (Credit) Past Service Cost Actuarial Losses / (Gains) Total expense recognised in the Statement of Profit & Loss Account
The Pension and Gratuity Expenses have been recognised in Contribution to Provident and Other Funds and Leave Encashment in Salaries & Bonus under Schedule15. Pension II. Actual Returns 10,000,000 Gratuity 6,400,000 Pension 9,500,000 Gratuity (4,200,000)
III. Net Asset / (Liability) recognised in Balance Sheet 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10 V. 1 2 3 4 5 6 7 1 2 3 Present Value of Defined Benefit Obligation Fair Value on Plan Assets Status [(Surplus) / Deficit] Unrecognised Past Service Cost Net Asset /(Liability) recognised in Balance Sheet Present Value of DBO at Beginning of Period Current Service Cost Interest Cost Curtailment Cost / (Credit) Settlement Cost / (Credit) Plan Amendments Acquisitions Actuarial (Gains) / Loss Benefits Paid Present Value of DBO at the End of Period Plan Assets at Beginning of Period Acquisition Adjustment Expected Return on Plan Assets Actuarial Gains / (Loss) Actual Company Contributions Benefits Paid Plan Assets at the End of Period Discount Rate (%) Expected Return on Plan Assets (%) Long term rate of compensation increase (%) Management Staff Others 174,841,782 122,000,000 (52,841,782) (52,841,782) 177,923,852 17,166,880 13,933,619 (26,675,381) (7,507,188) 174,841,782 111,400,000 9,336,000 664,000 8,107,188 (7,507,188) 122,000,000 109,823,310 89,800,000 (20,023,310) (20,023,310) 92,576,860 12,915,384 7,254,149 876,917 (3,800,000) 109,823,310 87,200,000 7,080,000 (680,000) (3,800,000) 89,800,000 8.0% 8.0% 10.0% 10.0% 81,702,196 (81,702,196) (81,702,196) 75,482,968 13,179,845 5,593,649 (1,429,551) (11,124,715) 81,702,196 11,124,715 (11,124,715) 177,923,852 111,400,000 (66,523,852) (66,523,852) 147,739,756 20,059,515 9,708,283 18,516,298 (18,100,000) 177,923,852 113,500,000 7,871,500 1,628,500 6,500,000 (18,100,000) 111,400,000 92,576,860 87,200,000 (5,376,860) (5,376,860) 67,176,937 12,805,221 4,690,763 8,303,939 (400,000) 92,576,860 91,800,000 6,270,250 (10,470,250) (400,000) 87,200,000 7.0% 7.0% 10.0% 10.0% 75,482,968 (75,482,968) (75,482,968) 60,648,572 12,192,983 3,884,500 9,068,329 (10,311,416) 75,482,968 10,311,416 (10,311,416)
IV. Change in Defined Benefit Obligations (DBO)
Change in Fair Value of Assets
VI. Actuarial Assumptions
For the year ended 31st March, 2011
For the year ended 31st March, 2010
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 1 2 3 4 5 Government Securities / Special Deposit with RBI High Quality Corporate Bonds Insurance Companies Mutual Funds Cash and Cash Equivalents For the year ended 31st March, 2011 33.0% 34.0% 27.0% 4.0% 3.0% For the year ended 31st March, 2010 30.0% 32.0% 32.0% 4.0% 3.0%
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 return within acceptable risk parameters, the plan assets are well diversified. IX. For the year ended 31st March, 2011 ` Leave Pension Gratuity Encashment 109,823,310 89,800,000 (20,023,310) (2,279,000) 6,246,134 81,702,196 (81,702,196) 2,844,651 For the year ended 31st March, 2010 ` Leave Pension Gratuity Encashment 177,923,852 111,400,000 (66,523,852) 1,628,500 (11,877,125) 92,576,860 87,200,000 (5,376,860) (10,470,250) (5,518,904) For the year ended 31st March, 2009 ` Leave Pension Gratuity Encashment 67,176,921 91,800,000 24,623,079 4,002,500 7,560,838 For the year ended 31st March, 2008 ` Leave Pension Gratuity Encashment 46,191,902 79,600,000 33,408,098 (2,170,113) (1,894,354) 49,181,562 (49,181,562) 4,209,505
Net Asset / (Liability) recognised in Balance Sheet (Including experience adjustment impact) 1 2 3 4 5
Present Value of Defined Benefit Obligation 174,841,782 Fair Value of Plan Assets 122,000,000 Status [Surplus / (Deficit)] (52,841,782) Experience Adjustment of Plan Assets [Gain / (Loss)] (9,140,000) Experience Adjustment of Obligation [(Gain) / Loss] (1,621,251)
75,482,968 147,739,740 113,500,000 (75,482,968) (34,239,740) 1,005,000 (672,376) 21,494,741
60,648,572 106,691,172 99,700,000 (60,648,572) (6,991,172) (90,000) 4,352,583 (843,812)
(b) Amounts towards Defined Contribution Plans have been recognised under Contribution to Provident and Other Funds in Schedule 15: ` 78,905,203 (2010 ` 59,724,521)
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(vi) Quantitative details The Company is engaged in providing informaton technology solutions and software development services. The purchase, production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI of the Companies Act, 1956. For the year ended For the year ended 31st March, 2011 31st March, 2010 ` ` 74,574,405 340,148,089 85,200,000 0.88 85,200,000 3.99 31st March, 2011 ` SECONDARY SEGMENT INFORMATION (GEOGRAPHICAL SEGMENTS) : Segment Revenue India Rest of the World Total Revenue Segment Assets * India Rest of the World Total Assets Capital Expenditure * India Rest of the World Total Capital Expenditure 1,000,000 200,000 386,630 141,342 1,727,972 1,075,456,957 3,136,102,526 4,211,559,483 1,258,800,933 1,990,699,766 3,249,500,699 179,555,139 179,555,139 806, 111,832 2,869,632,233 3,675,744,065 1,133,629,722 1,705,188,887 2,838,818,609 84,961,431 84,961,431 31st March, 2010 `
(vii) Earnings per share
(a) Profit after Taxation (b)Weighted average number of Equity Shares (c) Earnings Per Share (Face value of ` 10 per share) (Basic and Diluted)
(viii) Auditors Remuneration and Expenses (Including service tax considered under other services) Audit Fees 1,100,000 Tax Audit Fees 200,000 Fees for Other services 284,173 Reimbursement of Expenses 178,236 1,762,409 (ix) Value of Imports during the year (C.I.F. Basis) Capital Goods (x) 65,847,076 65,847,076 Expenditure In Foreign Currency during the year (On Payment Basis) 166,871,935
* Fixed Assets and Capital Expenditure have been considered on the basis of physical location. 20. RELATED PARTY DISCLOSURES 1. HOLDING COMPANY: ITC Limited 2. ENTERPRISES WHERE CONTROL EXISTS: Wholly Owned Subsidiaries:
49,991,159 49,991,159
lTC Infotech Limited ITC Infotech (USA), Inc. Pyxis Solutions LLC. 3. OTHER RELATED PARTIES WITH WHOM THE COMPANY HAD TRANSACTIONS, etc.
(xi)
152,444,701 4,546,412 460,078,492 6,095,419 790,036,959 Earnings in foreign exchange during the year (F.O.B. Realisation Basis) Sale of services including reimbursement of expenses 2,815,864,769 2,815,864,769
Travel Professional, Consultancy and Account Management Fees Software and Related Expenses Expenditure of overseas branches Others
133,244,083 425,247,244 14,700,686 655,300,058 20,630,425 1,249,122,496
Fellow Subsidiary Companies: Surya Nepal Private Limited Wimco Limited Technico Agri Sciences Limited Technico Technologies Inc. Srinivasa Resorts Limited 4. KEY MANAGEMENT PERSONNEL Non-Executive Directors Mr. Y. C. Deveshwar - Chairman (w.e.f. 3rd January, 2011) Mr. K. Vaidyanath (till 2nd January, 2011) Mr. S. Sivakumar - Vice Chairman Mr. A. Nayak Mr. B. B. Chatterjee Mr. S. Puri Mr. R. Tandon (w.e.f. 3rd January, 2011) Mr. R. Srinivasan (till 30th April, 2010) Management Committee Members Mr. B. Sumant - Managing Director Mr. R. Batra Mr. A. Talwar Mr. K. S. Aithani (till 31st May, 2010) Mr. S. Janardhanan Mr. V. V. R. Babu Mr. S. K. Gupta Mr. V. V. Rajasekhar Mr. A. Maheshwari (w.e.f. 6th August, 2010) Mr. A. Jagannath (w.e.f. 6th August, 2010) Mr. S. V. Shah (w.e.f. 6th August, 2010)
3,046,099,079 3,046,099,079
(xii) Previous years figures have been regrouped / rearranged wherever necessary. 19. 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.
5. DISCLOSURE OF TRANSACTIONS BETWEEN THE COMPANY AND RELATED PARTIES AND THE STATUS OF OUTSTANDING BALANCES AS ON 31ST MARCH Holding Company 2011 2010 ` Sale of Goods / Services Purchase of Goods / Services Rent paid Remuneration to Key Managerial Personnel Reimbursement of Contractual Remuneration Remuneration of managers on deputation recovered Expenses recovered Expenses reimbursed Receipt towards Loan Repayment Interest recovered on Loans Loans received Loan repaid Balances as on 31st March, i) Debtors / Receivables ii) Loans Taken iii) Loans Given iv) Creditors / Payables v) Corporate Guarantee Outstanding 831,067,971 4,573,881 10,565,530 22,886,957 ` 719,355,031 3,849,095 8,167,183 17,438,198 ITC Infotech Limited ` 376,147,120 246,715,727 3,287,992 3,476,269 69,310,266 164,700,500 Wholly Owned Subsidiaries 2011 ITC Infotech Pyxis Solution ITC Infotech (USA), INC. LLC Limited ` ` ` 567,065,514 2,703,589 25,591,005 18,578,281 314,762,165 28,157,825 16,898,332 1,476,451 413,122,924 135,587,021 1,611,842 816,954 80,737,925 43,259,492 2010 ITC Infotech Pyxis Solutions (USA), INC. LLC ` ` 428,931,322 6,622,859 13,785,799 8,129,896 187,314,899 14,425,645 369,685,586 15,714,052 1,677,547 Fellow Subsidiaries 2011 2010 ` 12,586,479 3,202,321 10,489 3,987,635 ` 8,782,377 3,051,562 772,100 Key Management Personnel 2011 2010 ` 41,516,313 243,500 12,718 1,412,466 ` 33,209,276 463,529 28,543 2,419,878 1,116,472
1,109,309 4,139,281 3,514,001 47,988,196 38,291,933 2,396,100,000 1,482,500,000 2,012,500,000 1,994,000,000 18,090,356 1,492,500,000 1,108,900,000 8,132,468 3,957,956
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21. SIGNIFICANT ACCOUNTING POLICIES IT IS CORPORATE POLICY 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. Basis of Accounting To prepare financial statements in accordance with the historical cost convention. 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 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. Fixed Assets To state fixed assets at actual cost less accumulated depreciation. The actual cost capitalized includes material cost, freight, installation cost, duties and taxes, finance charges and other incidental expenses incurred during the construction / installation stage. To capitalize software where it is expected to provide future enduring economic benefits. Capitalization costs include license fees and costs of implementation / system integration services. The costs are capitalized in the year in which the relevant software is implemented for use. Capital Work in Progress To treat cost of assets not put to use before the year-end as capital work in progress. 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 profit and loss account. The estimated useful lives of fixed assets are as follows : Buildings Plant and Machinery Computers / Computer Accessories Other Equipment Furniture and Fixtures Motor Vehicles Leasehold Improvements 25 years 3 to 5 years 5 years 5 years 5 years Shorter of lease period or estimated useful lives Proposed Dividend To provide for Dividends as proposed by the Directors in the books of accounts, pending approval at the Annual General Meeting. 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. 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. 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 Profit and Loss Account 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. 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 Profit and Loss Account as income or expense. 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. Segment Reporting To identify segments having regard to the dominant source and nature of risks and returns and the internal organisation and management structure.
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. 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 assets 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 an asset and from its disposal at the end of its useful life. 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.
For Lovelock & Lewes Firm Registration Number: 301056E Chartered Accountants Sunit Kumar Basu Partner Membership Number: 55000 Place : Bangalore Date : 9th May, 2011 On behalf of the Board
B. Sumant Managing Director S. Sivakumar Vice Chairman R. Batra Chief Financial Officer S. V. Shah Company Secretary
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STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
Sl. No. Name of the Subsidiary Company Number of Shares held by the Company Extent of Holding Profits / (Losses) so far it concerns the members of the Holding Company and not dealt with in the Books of Account of the Holding Company For the Financial Year of the Subsidiary 1 2 3 ITC INFOTECH LIMITED, UK (*) ITC INFOTECH (USA), INC. (**) PYXIS SOLUTIONS LLC. (**) 685,815 182,000 Note 100% 100% 100% GBP 1,034,989 INR 74,312,210 USD 732,567 INR 32,672,488 USD 24,672 INR 1,100,371 For the Previous Financial Year(s) since it became a Subsidiary GBP 3,145,410 INR 224,893,944 (USD 1,805,262) (INR 88,438,236) USD 1,395,344 INR 67,163,237 Profits / (Losses) so far it concerns the members of the Holding Company and dealt with in the Books of Account of the Holding Company For the Financial Year of the Subsidiary NIL NIL NIL For the Previous Financial Year(s) since it became a Subsidiary NIL NIL NIL
The financial year of all the subsidiaries ended on 31 March, 2011.
(*) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of GBP 1 = INR 71.80 (**) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of USD 1 = INR 44.60 NotePyxis 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. On behalf of the Board Place : Bangalore Date : 9th May, 2011 B. Sumant S. Sivakumar S. V. Shah Managing Director Vice Chairman Company Secretary
R. Batra
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956)
I. Registration Details Registration No. Balance Sheet Date II. 7 7 3 4 1 3 1 Date 0 3 Month 1 1 Year Rights Issue N I Bonus Issue N I L L N I Private Placement N I L L State Code 2 1 IV. Performance of Company (Amount in ` Thousands) Turnover (Including other Income) 4 2 6 4 1 6 6 Total Expenditure 4 1 7 0 2 8 2
Profit / Loss Before Tax 9 3 8 8 3
Profit / Loss After Tax 7 4 5 7 4
(Please tick appropriate box + for Profit, for Loss)
Earnings per Share in `
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 3 5 7 2 5 4 9 Sources of Funds Paid-up Capital 8 5 2 0 0 0 Unsecured Loans 1 4 9 2 5 0 0 Application of Funds Net Fixed Assets 3 5 0 9 3 4 Current Assets 2 2 8 9 8 8 4 Accumulated Losses N I L Total Assets 3 5 7 2 5 4 9 Reserves & Surplus 5 6 3 8 0 9 Current Liabilities and Provisions 6 6 4 2 4 0 Investments 8 7 0 4 3 4 Misc. Expenditure N I L Deferred Tax - Net 6 1 2 9 7
8 8
Dividend Rate (%) N I
V.
Generic Names of Principal Products / Services of Company (as per monetary terms) Item Code No. (ITC Code) 8 5 2 4 9 0 0 9
Product Description
C O M P U T E R
S O F
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ITC INFOTECH LIMITED

REPORT OF THE DIRECTORS Your Directors present their Report together with the Audited Financial Statements for the year ended 31 March, 2011. The Company is a wholly owned subsidiary of ITC Infotech India Limited (I3L), which is incorporated in India. Principal activities The Company is engaged in providing IT services, software development and support services. Key performance indicators GBP (million) Year Ended March 31, Total Income Cost of Sales Gross Profit Operating Profit Profit before Tax Profit after Tax Business review Your Company has delivered a robust financial performance with Total Income, Operating Profit and Profit After Tax growing by 14%, 39% and 49% respectively through effective operations and cost management. Your Company has been successful in acquiring marquee Banking and Financial Services customers with a potential for large offshore delivery centres in India. Your Company has also expanded its market development activities across Europe, South Africa, Middle East and Asia Pacific. During the year under review your Company established a branch office in Singapore to provide a base for the Asia Pacific market. Your Companys strategy of focussed account management has resulted in growth in revenue from existing accounts and has also supplemented the efforts of business development in winning new references/clients. With a healthy sales funnel your Company looks forward to 2011-12 with confidence. Financial risk management objectives and policies The objective of financial risk management is to protect the value of the Companys 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 16% 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 Companys 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. 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 Consequent to his retirement from the services of ITC Limited, the holding company, Mr. K. Vaidyanath ceased to be a Director of the Company with effect from close of business on 2nd January, 2011. Your Board of Directors REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF ITC INFOTECH LIMITED We have audited the financial statements of ITC Infotech Limited for the year ended 31 March 2011 which comprise the principal accounting policies, profit and loss account, balance sheet, cashflow statement, statement of total recognised gains and losses and the related notes, excluding the supplementary information disclosed in Indian Rupees. 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). We have not audited the supplementary information stated in Indian Rupees included in these financial statements. The information has been included at the request of the parent company and is for information only. This report is made solely to the companys members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the companys members those matters we are required to state to them in an auditors 2011 22.22 16.00 6.22 1.45 1.45 1.03 2010 19.44 13.67 5.77 1.04 1.04 0.69 places on record its appreciation of the contribution made by Mr. K. Vaidyanath during his tenure as Chairman and Director of the Company. In terms of Article 17 of the Articles of Association of the Company and as nominated by 13L, the Board of Directors of the Company at its meeting held on 21st December, 2010 appointed Mr. Y. C. Deveshwar, Mr. S. Sivakumar and Mr. R. Tandon as Directors of the Company. In terms of Article 19 of the Articles of Association of the Company, Mr. Y. C. Deveshwar and Mr. S. Sivakumar were appointed Chairman and Vice Chairman respectively of the Board of Directors of the Company with effect from 3rd January, 2011. 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, 2011 and 1st April, 2010 were as follows: 2011 and 2010 Ordinary Shares Y. C. Deveshwar (from 3rd January, 2011) S. Sivakumar (from 3rd January, 2011) R. Tandon (from 3rd January, 2011) K. Vaidyanath (till 2nd January, 2011) B. B. Chatterjee S. Puri B. Sumant Mr. S. Puri and Mr. B. Sumant, Directors, will retire by rotation at the Annual General Meeting (AGM) 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 M/s. Grant Thornton UK LLP, Auditors, vacate office at the ensuing Annual General Meeting. In terms of the Companys policy on Rotation of Statutory Auditors, your Board has recommended to the Members the appointment of M/s. PricewaterhouseCoopers LLP, Exchange House, Central Business Exchange, Midsummer Boulevard, Central Milton Keynes MK9 2DF, as the Auditors of the Company for the financial year 2011-12 at a remuneration to be agreed between the Board and the said Auditors. M/s. PricewaterhouseCoopers LLP have given their consent to act as Auditors of the Company, if appointed. Approved by the Board on 9th May, 2011 and signed on behalf of the Board by ITC Infotech Limited Norfolk House 118, Saxon Gate West Milton Keynes MK9 2DN
B. Sumant Director
S. Sivakumar Vice Chairman
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report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the companys members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor 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 the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Boards (APBs) Ethical Standards for Auditors. 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 companys 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. Opinion on financial statements In our opinion the financial statements, excluding the supplementary information: give a true and fair view of the state of the company's affairs as at 31 March 2011 and of the companys profit for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and Simon Jones Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP, Statutory Auditor, Chartered Accountants Central Milton Keynes 9 May, 2011 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 Report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements. 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.
PRINCIPAL ACCOUNTING POLICIES Basis of accounting The financial statements have been prepared under the historical cost convention. The principal accounting policies of the company are set out below and remain unchanged from the previous year. 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 Fixtures and fittings Computer equipment Leased assets 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. 25% 25% 25%
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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2011 Note Turnover Cost of sales Gross Profit Other operating charges Operating profit Operating profit before foreign exchange loss/(gain) Foreign exchange loss/(gain) Interest receivable Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit for the financial year All of the activities of the company are classed as continuing. The accompanying accounting policies and notes form part of these financial statements. 6 5 2 3 1 2011 22,224,843 16,002,587 6,222,256 4,775,531 1,446,725 1,546,776 100,051 4,285 1,451,010 416,021 1,034,989 Unaudited 2011 ` 1,595,632,603 1,148,905,734 446,726,869 342,859,248 103,867,621 111,050,782 7,183,161 307,642 104,175,263 29,868,228 74,307,035 2010 19,441,141 13,667,905 5,773,236 4,736,471 1,036,765 1,171,045 134,280 3,087 1,039,852 351,811 688,041 Unaudited 2010 ` 1,321,219,921 928,870,835 392,349,086 321,890,541 70,458,545 79,584,212 9,125,667 209,765 70,668,310 23,909,073 46,759,237
BALANCE SHEET AS AT 31 MARCH 2011 Unaudited Note Fixed assets Tangible assets Current assets Debtors Loans and advances Deferred tax recoverable Cash at bank Creditors: amounts falling due within one year Net Current Assets Total assets less current liabilities Capital and reserves Called-up equity share capital Profit and loss account Shareholders funds 14 15 16 10 9 8 6,730,710 108,752 3,694 2,612,614 9,455,770 4,082,681 5,373,089 5,404,148 685,815 4,718,333 5,404,148 483,231,324 7,807,850 265,211 187,572,622 678,877,007 293,116,082 385,760,925 387,990,807 49,238,075 338,752,732 387,990,807 5,837,704 53,688 8,360 1,986,027 7,885,779 3,557,827 4,327,952 4,368,327 685,815 3,682,512 4,368,327 396,730,352 3,648,648 568,146 134,970,416 535,917,562 241,790,038 294,127,524 296,871,446 46,609,960 250,261,486 296,871,446 7 31,059 2,229,882 40,375 2,743,922 2011 2011 ` 2010 Unaudited 2010 `
These financial statements were approved by the directors on 9th May 2011 and are signed on their behalf by: V. Sreenivasan Resident Officer A. Sreenivasan Financial Controller B. Sumant Director S. Sivakumar Vice Chairman
The accompanying accounting policies and notes form part of these financial statements.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2011 Note Net cash inflow/(outflow) from operating activities Returns on investments and servicing of finance Interest received Net cash inflow from returns on investments and servicing of finance Taxation Capital expenditure Payments to acquire tangible fixed assets Net cash outflow from capital expenditure Increase/(Decrease) in cash 17 (7,822) (7,822) 626,587 (561,580) (561,580) 44,985,814 (29,974) (29,974) 1,051,837 (2,037,027) (2,037,027) 71,482,865 4,285 4,285 (222,070) 307,642 307,642 (15,943,516) 3,087 3,087 (749,899) 209,765 209,765 (50,963,064) 17 2011 852,194 Unaudited 2011 ` 61,183,268 2010 1,828,623 Unaudited 2010 ` 124,273,191
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STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2011 2011 Profit for the financial year Currency translation of (loss) / gain of retained earnings of overseas branches Total recognised gains and losses relating to the financial year 1,034,989 832 1,035,821 Unaudited 2011 ` 74,307,035 59,733 74,366,768 2010 688,041 (19,176) 668,865 Unaudited 2010 ` 46,759,237 (1,303,201) 45,456,036
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011 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 requested by the parent company has been arrived at by applying the year end interbank exchange rate of GBP 1 = ` 71.80 (2010: GBP 1 = ` 67.96) as provided by the parent company. The supplementary information has not been audited. 1. Turnover The turnover and profit before tax are attributable to the one principal activity of the company. An analysis of turnover is given below: 2011 United Kingdom India US Malaysia Europe Other 16,133,769 3,606,992 236,794 9,676 2,203,074 34,538 22,224,843 2. Other operating charges Administrative expenses 3. Operating profit Operating profit is stated after charging: Depreciation of owned fixed assets Auditors remuneration: - audit fees - non audit fees taxation and other services Loss / (Gain) on foreign exchange Operating lease costs: Land and buildings Plant and equipment 4. 17,138 20,775 14,505 100,051 53,191 1,809 1,230,422 1,491,541 1,041,386 7,183,161 3,818,848 129,877 21,823 19,976 9,202 134,280 53,720 1,714 1,483,075 1,357,569 625,368 9,125,667 3,650,815 116,502 4,775,531 342,859,248 4,736,471 321,890,541 Unaudited 2011 ` 1,158,323,945 258,963,991 17,000,625 694,688 158,169,698 2,479,656 1,595,632,603 2010 14,928,120 1,813,678 127,222 38,628 2,528,083 5,410 19,441,141 Unaudited 2010 ` 1,014,515,028 123,257,536 8,645,975 2,625,150 171,808,549 367,683 1,321,219,921
Directors and employees The average number of staff employed by the company during the financial year amounted to: 2011 No. Staff The aggregate payroll costs of the above were: 2011 Wages and salaries Social security costs 8,719,581 787,840 9,507,421 Remuneration in respect of directors was nil (2010: nil). Unaudited 2011 ` 626,022,318 56,562,973 682,585,291 2010 7,219,807 712,939 7,932,746 Unaudited 2010 ` 490,658,097 48,451,336 539,109,433 210 2010 No. 176
5.
Interest receivable Bank interest receivable 4,285 307,642 3,087 209,765
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2011 6. Taxation on ordinary activities (a) Analysis of charge in the year Current tax: In respect of the year: UK Corporation tax based on the results for the year at 28% (2010 - 28%) Under / (over) provision in prior year Foreign Tax Current Year Prior Year Total current tax Deferred tax: Origination and reversal of timing differences Tax on profit 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 28% (2010 - 28%). Profit on ordinary activities before taxation Profit on ordinary activities multiplied by rate of tax Expenses not deductible for tax purposes Movement in capital allowances Adjustments to tax charge in respect of previous periods Total current tax (note 6(a)) 7. Tangible fixed assets Unaudited Leasehold Leasehold improvements improvements ` Cost At 1 April 2010 Additions At 31 March 2011 Depreciation At 1 April 2010 Charge for the year At 31 March 2011 Net book value At 31 March 2011 At 31 March 2010 10,758 15,723 772,371 1,128,833 6,241 7,782 448,073 558,709 14,060 16,870 1,009,438 1,211,182 31,059 40,375 2,229,882 2,898,723 35,242 4,965 40,207 2,530,199 356,462 2,886,661 51,039 2,935 53,974 3,664,345 210,718 3,875,063 152,140 9,238 161,378 10,922,891 663,242 11,586,133 238,421 17,138 255,559 17,117,435 1,230,422 18,347,857 50,965 50,965 3,659,032 3,659,032 58,821 1,394 60,215 4,223,054 100,082 4,323,136 169,010 6,428 175,438 12,134,073 461,498 12,595,571 278,796 7,822 286,618 20,016,159 561,580 20,577,739 Fixtures and fittings Unaudited Fixtures and fittings ` Computer equipment Unaudited Computer equipment ` Unaudited Total ` 1,451,010 406,283 30,851 (1,785) (23,994) 411,355 104,175,263 29,169,074 2,214,962 (128,154) (1,722,649) 29,533,233 1,039,852 291,158 11,511 (344) 48,187 350,512 70,668,310 19,787,127 782,258 (23,378) 3,274,789 23,820,796 4,666 416,021 334,995 29,868,228 1,299 351,811 88,277 23,909,073 Unaudited 2011 ` 2010 Unaudited 2010 `
350,140 81,345 3,864 (23,994) 411,355
25,138,302 5,840,164 277,416 (1,722,649) 29,533,233
262,140 48,187 40,185 40,185 350,512
17,815,034 3,274,789 2,730,973 2,730,973 23,820,796
Total
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March 2011 exchange rate. 8. Debtors Unaudited 2011 5,295,551 1,367,764 67,395 6,730,710 9. Deferred taxation The deferred tax included in the Balance sheet is as follows: Deferred tax assets The movement in the deferred taxation account during the year was: Balance brought forward Profit and loss account movement arising during the year Balance carried forward The balance of the deferred taxation account consists of the tax effect of timing differences in respect of: Excess of depreciation over taxation allowances on fixed assets 3,694 265,211 8,360 568,146 8,360 (4,666) 3,694 600,206 (334,995) 265,211 9,659 (1,299) 8,360 656,423 (88,277) 568,146 3,694 265,211 8,360 568,146 2011 ` 380,194,084 98,198,616 4,838,624 483,231,324 2010 5,746,154 23,972 67,578 5,837,704 Unaudited 2010 ` 390,508,615 1,629,158 4,592,579 396,730,352
Trade debtors Amounts owed by group undertakings Prepayments and accrued income Corporation Tax
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10. Creditors: amounts falling due within one year 2011 Trade creditors Amounts owed to group undertakings Corporation tax Other taxation and social security Other creditors 839,628 121,707 937,259 2,184,087 4,082,681 11. Leasing commitments At 31 March 2011 the company had annual commitments under non-cancellable operating leases as set out below. 2011 Land & Buildings Operating leases which expire: Within 1 year Within 1 to 2 years Within 2 to 5 years 12. Capital commitments There were no capital commitments at 31 March 2011 or 31 March 2010. 13. Contingent liabilities There were no contingent liabilities at 31 March 2011 or 31 March 2010. 14. Share capital Authorised share capital: Unaudited 2011 1,629,700 Ordinary shares of 1 each Allotted, called up and fully paid: Unaudited 2011 No. Ordinary shares of 1 each Equity shares Ordinary shares of 1 each 15. Profit and loss account At 1 April 2010 Profit for the financial year Other recognised losses and gains At 31 March 2011 3,682,512 1,034,989 832 4,718,333 685,815 685,815 685,815 685,815 2011 ` 49,238,075 49,238,075 No. 685,815 685,815 2010 685,815 685,815 Unaudited 2010 ` 46,609,960 46,609,960 Unaudited ` 264,385,964 74,307,035 59,733 338,752,732 1,629,700 2011 ` 117,004,312 2010 1,629,700 Unaudited 2010 ` 110,754,412 60,941 60,941 4,375,259 4,375,259 1,809 1,809 129,877 129,877 68,944 68,944 4,685,464 4,685,464 224 2,591 2,815 15,223 176,099 191,322 Unaudited Land & Buildings ` Other Items Unaudited Other Items ` Land & Buildings Unaudited Land & Bulidings ` 2010 Other Items Unaudited Other Items ` Unaudited 2011 ` 60,281,092 8,737,954 67,290,510 156,806,526 293,116,082 2010 452,334 523,338 828,689 1,753,466 3,557,827 Unaudited 2010 ` 30,740,629 35,566,058 56,317,729 119,165,622 241,790,038
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March, 2011 exchange rate. 16. Reconciliation of movements in shareholders funds Unaudited 2011 Profit for the financial year Other recognised losses and gains Net addition to shareholders funds Opening shareholders funds Closing shareholders funds 1,034,989 832 1,035,821 4,368,327 5,404,148 2011 ` 74,307,035 59,733 74,366,768 313,624,039 387,990,807 2010 688,041 (19,176) 668,865 3,699,462 4,368,327 Unaudited 2010 ` 46,759,237 (1,303,201) 45,456,036 251,415,410 296,871,446
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March, 2011 exchange rate.
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17. Notes to the statement of cash flows Unaudited 2011 Reconciliation of operating profit to net cash inflow/ (outflow) from operating activities Operating profit Foreign exchange movement Depreciation (Increase)/decrease in debtors Increase/(decrease) in creditors Net cash inflow/(outflow) from operating activities Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the period Movement in net funds in the period Net funds at 1 April 2010 Net funds at 31 March 2011 Analysis of changes in net funds 626,587 626,587 1,986,027 2,612,614 44,985,814 44,985,814 142,586,808 187,572,622 1,051,837 1,051,837 934,190 1,986,027 71,482,865 71,482,865 63,487,551 134,970,416 1,446,725 832 17,138 (1,015,648) 403,147 852,194 103,867,621 59,733 1,230,423 (72,918,448) 28,943,939 61,183,268 1,036,765 (19,176) 21,823 785,640 3,571 1,828,623 70,458,545 (1,303,201) 1,483,074 53,392,082 242,691 124,273,191 2011 ` 2010 Unaudited 2010 `
At 1 April 2010 Net cash: Cash in hand and at bank Net funds 1,986,027 1,986,027
At 1 April 2010 `
Cash flows
Cash flows `
At 31 March 2011
At 31 March 2011 `
142,586,808 142,586,808
626,587 626,587
44,985,814 44,985,814
2,612,614 2,612,614
187,572,622 187,572,622
For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March 2011 exchange rate. 18. 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.
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ITC INFOTECH (USA), INC.

REPORT OF THE DIRECTORS Your Directors present their Report together with the Audited Financial Statements for the year ended 31st March, 2011. The Corporation is a wholly owned subsidiary of ITC Infotech India Limited (I3L), which is incorporated in India. Principal Activities The Corporation is engaged in providing IT services, software development and support services. Financial Results (US$ million) ITC Infotech (USA), Inc. Consolidated(*) Year Ended March 31, Total Revenue Operating Income before Amortization Net Cash Flow provided by Operating activities 2011 38.43 0.82 1.25 2010 30.99 0.73 0.66 The expanded customer base, the strong sales funnel and the bank of market-relevant capabilities, augur well for the year 2011-12. Wholly Owned Subsidiary Pyxis Solutions, LLC As stated in the Report of the Directors last year, the Corporation acquired 100% Membership Interest in Pyxis Solutions, LLC (Pyxis) with effect from 11th August, 2008. Pyxis provides high end, domain-based quality consulting to marquee clients in the financial services industry. In line with the Corporations approach towards capability building, new niche capabilities were added to Pyxis range. Delayed recovery in IT spending in the capital markets sector adversely impacted Pyxis revenues and margins for 2010-11. It is a testimony to Pyxis capabilities that all major clients were retained during the financial year, besides acquiring new clients and projects. Towards the end of the financial year, Pyxis was chosen to provide quality assurance services in a new business-critical area by their largest client. A healthy funnel of projects based on the combined capabilities of Pyxis and the Corporation provides a sound foundation for growth in the next financial year. During the year under review, Pyxis declared and paid US$ 750,000 (previous year-Nil) as dividend for the financial year 2010-11 by way of distribution to the Corporation, the Sole Member of Pyxis. Directors Consequent to his retirement from the services of ITC Limited, the ultimate holding company, Mr. K. Vaidyanath ceased to be a Director of the Corporation with effect from close of business on 2nd January, 2011. Your Board of Directors places on record its appreciation of the contribution made by Mr. Vaidyanath during his tenure as Chairman and Director of the Corporation. In terms of Article III Clause 4(a) of the By Laws of the Corporation and as nominated by I3L, the Board of Directors of your Corporation at its meeting held on 21st December, 2010 appointed Mr. Y. C. Deveshwar and Mr. S. Sivakumar as Directors of the Corporation to hold office until the next succeeding Annual Meeting of the Shareholders of the Corporation. Your approval for appointment of Mr. Y. C. Deveshwar and Mr. S. Sivakumar as Directors of the Corporation is being sought at the Annual Meeting of the Corporation for the financial year ended 31st March, 2011. In terms of Article III Clause 6A of the By Laws of the Corporation, Mr. Y. C. Deveshwar and Mr. S. Sivakumar were appointed Chairman and Vice Chairman respectively of the Board of Directors of the Corporation with effect from 3rd January, 2011. In terms of Article III Clause 4(c) of the By Laws of the Corporation and as nominated by I3L, Mr. R. Tandon was appointed as a Director of the Corporation at a Special Meeting of the Shareholders of the Corporation held on 21st December, 2010. M/s. 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 reappointment as Auditors of the Corporation to audit the Financial Statements of the Corporation for the financial year ending 31st March, 2012. On behalf of the Board May 9, 2011 B. Sumant S. Sivakumar Director Vice Chairman
(*)including Pyxis Solutions, LLC, a wholly owned subsidiary of the Corporation. Business Review The Corporation is pleased to report another year of strong growth even as the US economy gradually began emerging from the historic recessionary crisis. Recent analyst estimates for 2010 based on data from the US Department of Commerce indicates growth in IT consulting services and IT outsourcing at 2.8% and 5.7% respectively, reversing the de-growth in IT purchases during 2009. Driven by aggressive growth in new client acquisition and focused account management, the Corporations Total Revenue increased by 24% over that of the previous year. The smart upturn in the Corporations financial performance validates the robustness of its strategy of investing proactively to create unique domain-led solutions towards enhancing the competitiveness of clients across identified industry verticals. In particular, these solutions enabled demonstrable value to clients in addressing some of their critical business challenges such as effective client relationship management, collaborative product development to shrink time to market, and lowering cost of operations. Although the recessionary conditions eased towards the latter part of the financial year, client budgets continue to be tightly monitored. Several CIO surveys by leading analysts indicate that (a) new project funding was largely sourced from savings in cost of operations and (b) the focus was on quickening ROI on projects. These trends reflect the continuing uncertainty during the economic recovery. Consequently, the Corporations margins remained under pressure, despite the gradual renegotiation of prices upwards for some customers. The margins during the financial year 2010-11 reflect the impact of (a) cost management initiatives (b) partnered approach to co-innovation where feasible and (c) growing share of higher order consulting services. The partnered co-innovation strategy has yielded encouraging results in terms of acquisitions of several marquee, high potential clients and a growing funnel of prospects. The Corporation has begun implementing some business transformation projects for clients, with salutary impact on margins, and more importantly in building market standing for the future. The high scores in the customer satisfaction survey, independently conducted by a reputed firm, serves to validate the Corporations worth as a value-adding business partner. AMPER, POLITZINER & MATTIA, LLP Report of the Independent Auditors' to the members of ITC Infotech (USA), Inc. and its group Companies Board of Directors ITC Infotech (USA), Inc. We have audited the accompanying special-purpose balance sheet of ITC Infotech (USA), Inc. as of March 31, 2011, and the related special-purpose statements of operations and accumulated deficit, and cash flows for the year then ended. 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. The special-purpose financial statements as of and for the year ended March 31, 2010 were audited by Amper, Politziner & Mattia, LLP, whose practice was combined with the practice of Eisner LLP to form EisnerAmper LLP as of August 16, 2010 and whose report dated May 10, 2010, expressed an unqualified opinion on those statements. We conducted our audit 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 Companys 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. 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.
The accompanying special-purpose financial statements were prepared for the purpose of reporting to the members of ITC Infotech (USA), Inc., and its Companies and is not intended to be a presentation in conformity with generally accepted accounting principles. The Company does not include the financial position of Pyxis Solutions, LLC, a 100% owned subsidiary, as required under accounting principles generally accepted in the United States (US GAAP). Accordingly, this does not purport to be presented under US GAAP. The Indian Rupee equivalent figures have been included in the financial statements as required by the parent company, and is not intended to be a representation in conformity with accounting principles generally accepted in the United States of America. 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, 2011 and the results of its operations and its cash flows for the year then ended, in accordance with the Basis of Presentation as described in Note B. This report 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.
Edison, New Jersey May 9, 2011
EisnerAmper LLP
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BALANCE SHEETS March 31, 2011 $ ASSETS CURRENT ASSETS Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $396,427 (` 17,680,644) and $396,427 (` 17,799,573) for 2011 and 2010, respectively Advances to employees Deferred income taxes Total current assets EQUIPMENT, SOFTWARE, FURNITURE AND FIXTURES AND LEASEHOLD IMPROVEMENTS Less: Accumulated depreciation and amortization 660,722 533,432 127,290 INTANGIBLE ASSETS Less: Accumulated amortization 14,184,523 2,024,938 12,159,585 Other assets, principally unsecured advances LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable Accrued expenses and other current liabilities Accrued payroll and payroll taxes Due to ITC Infotech Ltd. (UK), net Due to Pyxis Solutions, LLC., net Due to ITC Infotech India Ltd., net Total current liabilities Non current liabilities Deferred income taxes COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY Capital stock, no par value; 185,000 shares authorized; 182,000 shares issued and outstanding at March 31, 2011 and 2010 Additional paid-in capital Accumulated deficit Total stockholder's equity 200,000 18,000,000 (2,251,532) 15,948,468 25,479,330 The accompanying notes are an integral part of these financial statements 8,920,000 802,800,000 (100,418,327) 711,301,673 1,136,378,118 200,000 18,000,000 (2,984,099) 15,215,901 22,168,839 8,980,000 808,200,000 (133,986,045) 683,193,955 995,380,871 158,227 7,056,924 106,215 4,769,054 1,171,826 1,274,087 491,350 165 75,797 6,359,410 9,372,635 52,263,440 56,824,280 21,914,210 7,359 3,380,546 283,629,686 418,019,521 1,294,666 1,116,162 311,799 78,969 4,045,127 6,846,723 58,130,503 50,115,674 13,999,775 3,545,708 181,626,202 307,417,862 463,291 25,479,330 29,468,201 23,791,067 5,677,134 632,629,726 90,312,235 542,317,491 20,662,778 1,136,378,118 608,086 421,660 186,426 13,585,782 1,257,438 12,328,344 341,678 22,168,839 27,303,061 18,932,534 8,370,527 610,001,612 56,458,966 553,542,646 15,341,342 995,380,871 9,390,245 103,964 948,901 12,729,164 418,804,927 4,636,795 42,320,985 567,720,715 6,787,545 56,936 911,097 9,312,391 304,760,771 2,556,426 40,908,255 418,126,356 2,286,054 101,958,008 1,556,813 69,900,904 March 31,2011 ` March 31, 2010 $ March 31, 2010 `
On behalf of the Board Date : May 9, 2011 G Satish Financial Controller L. N. Balaji President B. Sumant Director S. Sivakumar Vice Chairman
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STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT For the year ended For the year ended March 31, 2011 March 31, 2011 $ ` Revenues Service fees Account management fees - affiliates Project fees Total revenues Cost of revenues, principally employment costs and fees charged by affiliates Gross profit General and administrative expenses Operating income before amortization Amortization of intangible assets Operating income (loss) Other income Income (loss) before income tax expense Income tax expense (benefit) Current Deferred Total income tax expense (benefit) Net income (loss) Accumulated deficit at beginning of year Accumulated deficit at end of year The accompanying notes are an integral part of these statements G Satish Financial Controller L. N. Balaji President 24,966,387 114,337 7,252,758 32,333,482 1,113,500,860 5,099,430 323,473,007 1,442,073,297 For the year ended March 31, 2010 $ 18,245,280 129,357 4,419,365 22,794,002 For the year ended March 31, 2010 ` 819,213,072 5,808,129 198,429,489 1,023,450,690
25,264,653 7,068,829 6,273,750 795,079 767,500 27,579 757,663 785,242 38,467 14,208 52,675 732,567 (2,984,099) (2,251,532)
1,126,803,524 315,269,773 279,809,250 35,460,523 34,230,500 1,230,023 33,791,770 35,021,793 1,715,628 633,677 2,349,305 32,672,488 (133,090,815) (100,418,327)
16,930,121 5,863,881 5,749,625 114,256 767,500 (653,244) 145,505 (507,739) (19,014) 48,157 29,143 (536,882) (2,447,217) (2,984,099)
760,162,433 263,288,257 258,158,163 5,130,094 34,460,750 (29,330,656) 6,533,175 (22,797,481) (853,729) 2,162,250 1,308,521 (24,106,002) (109,880,043) (133,986,045)
On behalf of the Board B. Sumant Director S. Sivakumar Vice Chairman
Date : May 9, 2011
STATEMENT OF CASH FLOWS March 31, 2011 $ Cash flows from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization Deferred income taxes Bad debt expense (Increase) decrease in assets Accounts Receivable Due from ITC lnfotech Ltd. (UK), net Advances to employees Security deposits and other advances Increase (decrease) in liabilities Accounts payable Accrued expenses and other liabilities Accrued payroll and payroll taxes Due to ITC Infotech Ltd. (UK), net Due to Pyxis Solutions, LLC. Due to ITC Infotech India Ltd., net Net cash provided by operating activities 732,567 March 31, 2011 ` 32,672,488 March 31, 2010 $ (536,882) March 31, 2010 ` (24,106,002)
879,272 14,208 (2,602,700) (47,028) (121,613) (122,840) 157,925 179,551 (78,804) 75,797 2,314,283 1,380,618
39,215,531 633,677 (116,080,420) (2,097,449) (5,423,940) (5,478,664) 7,043,455 8,007,975 (3,514,658) 3,380,546 103,217,022 61,575,563
872,716 48,157 180,800 (3,375,236) 245,109 (388) (287,021) 443,372 51,929 46,112 78,969 2,268,706 36,343 (25,811) (1,083,668) 290,758 (818,721) (782,378) 2,339,191 1,556,813
39,184,954 2,162,249 8,117,920 (151,548,096) 11,005,394 (17,421) (12,887,243) 19,907,403 2,331,612 2,070,429 3,545,708 101,864,899 1,631,806 (1,158,914) (48,656,693) 13,055,029 (36,760,578) (35,128,772) 105,029,676 69,900,904
Cash flows from investing activities Capital expenditures (52,636) (2,347,566) Increase in goodwill acquired (see Note C) (598,741) (26,703,849) Notes receivable Net cash used in investing activities (651,377) (29,051,415) Cash flows from financing activities Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents 729,241 32,524,148 Cash and cash equivalents at beginning of year 1,556,813 69,433,860 Cash and cash equivalents at end of year 2,286,054 101,958,008 Supplemental disclosures of cash flow information: Income taxes paid were $44,865 (` 2,000,979) and $260,384 (` 11,691,242) during 2011 and 2010, respectively. The accompanying notes are an integral part of these statements
On behalf of the Board Date : May 9, 2011 G Satish Financial Controller L. N. Balaji President B. Sumant Director S. Sivakumar Vice Chairman
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NOTES TO THE FINANCIAL STATEMENTS 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 customers 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 Companys 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 authorized 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 owns 100% of the membership interests of Pyxis Solutions, LLC (Pyxis). 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 The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States, the country of incorporation and are represented in U.S. dollars. As required by the parent company, the Indian Rupee equivalent figures, arrived at by applying the year end interbank exchange rate of US$1 = ` 44.60 (2010: US$1 = ` 44.90) as provided by the parent company, have been included. As required by the parent company, this presentation does not consolidate the results of its wholly-owned subsidiary Pyxis. Accounting principles generally accepted in the United States would require consolidation of a whollyowned subsidiary. So accordingly, these financial statements do not purport to follow US GAAP. Futhermore, 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. 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-cancelable 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 recognized upon such acceptance. Losses on contracts are recognized 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. 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 customers 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 managements 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 recognized to the extent that realization of these benefits is considered to be more likely than not. If the future realization of such benefits is uncertain, then a valuation allowance is provided. On July 1, 2007, 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 74010 requires that a position taken or expected to be taken in a tax return be recognized 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 recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company adopted the provisions of FASB ASC 740-10 on April 1, 2009 and its adoption did not have a material impact on the financial statements. 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 2011 or 2010. 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.
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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, 2011 and 2010. 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 Companys 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 assets and liabilities. ASC 820 does not require additional assets or liabilities to be accounted for at fair value beyond that is already required under other U.S. GAAP accounting standards. The effective date of ASC 820 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, is Companys 2011 fiscal year end. 15) Capitalized Software Costs Costs incurred for development of computer software for internal use of the Company are capitalized. Any costs incurred in the preliminary stages of development and in the operating stages of the software are expensed immediately. Capitalized software costs are amortized over a period of five years or over the estimated useful lives, whichever is lower. There were no such costs capitalized in 2011 or 2010. 16) Subsequent Events The Company evaluated all events or transactions that occurred after March 31, 2011 up through May 9, 2011, when the financial statements were available to be issued. NOTE C - ACQUISITION OF MEMBERSHIP INTERESTS On August 11, 2008, the Company acquired the membership interests of Pyxis for $12,434,878 (` 554,595,559). 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 Pyxiss earning 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. The fair value of the intangible assets, as described in Note F, was determined by an independent outside appraiser. 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 recognized intangible assets on a stepped-up basis and such intangible assets are being amortized over 15 years. In accordance with MIPA, based on Pyxiss EBITDA for the year ended August 31, 2009, the Company paid the founder members of Pyxis $1,083,668 (` 48,331,593) 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 Pyxiss EBITDA for the year ended August 31, 2010, the Company paid the founder members of Pyxis $598,741 (` 26,703,849). This payment is reflected as an increase in goodwill in accordance with ASC 805. The Second Anniversary Payment was made from the Companys internal cash accruals. In accordance with MIPA, the Company had provided an irrevocable standby letter of credit, expiring on April 30, 2011 for $ 4,650,000 (`207,390,000), 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 (` 602,100,000). After paying the Second Anniversary Payment, as above, the irrevocable standby letterof 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 ` 554,595,559 Transaction costs 493,755 22,021,473 Total purchase price at the time of acquisition 12,928,633 576,617,032 Contingent anniversary payment 1,083,668 48,331,593 Second anniversary payment 598,741 26,703,849 Total purchase price 14,611,042 651,652,474 Allocation of purchase price Current assets acquired 2,567,021 114,489,137 Less: Current liabilities assumed 957,064 42,685,055 Net assets acquired (working capital) 1,609,957 71,804,082 Identifiable intangible assets (see Note F) 5,390,000 240,394,000 Goodwill (see Note F) 5,502,156 245,396,158 Add: Deferred tax benefit adjusted 426,520 19,022,792 Goodwill (on acquisition before deferred tax adjustment) 5,928,676 264,418,950 Total purchase price at the time of acquisition 12,928,633 576,617,032 Add: Contingent anniversary payment added to 1,083,668 48,331,593 goodwill (see Note C and Note F) Add: Second anniversary payment added to goodwill (see Note C and Note F) 598,741 26,703,849 Total purchase price NOTE D - RELATED PARTY TRANSACTIONS The Company had transactions with the following parties: Year ended March 31, 2011 2011 2010 2010 $ (`) $ (`) Transactions with Infotech India Costs for project consultations / other expenses, included in cost of revenues / general and administrative expenses $12,424,265 554,122,219 $9,725,682 436,683,122 Project / other expenses reimbursements from Infotech India 562,030 25,066,538 176,037 7,904,061 Service / account management fees recognized as revenue 53,262 2,375,485 143,744 6,454,106 Transactions with Infotech UK Service / account management fees / others, recognized as revenue 61,075 2,723,945 110,671 4,969,128 Costs for project consultations / other expenses, included in cost of revenues / general and administrative expenses 366,423 16,342,466 185,210 8,315,929 Project / other expense reimbursements from Infotech UK 556 24,798 63,335 2,843,742 Transactions with Pyxis Costs for project consultations / other expense reimbursements, included in cost of revenues / general and administrative expenses 241,176 10,756,450 58,192 2,612,821 Other expense reimbursements from Pyxis 233,665 10,421,459 83,224 3,736,758 Other expense reimbursements to Pyxis 29,149 1,300,045 Other assets include $0 (` 0) and $25,000 (` 1,122,500) advance to Pyxis Singapore as at March 31, 2011 and 2010 respectively. Other assets include $0 (` 0) and $18,052 (` 810,535) notes receivable from officers of Pyxis as at March 31, 2011 and 2010 respectively. Rent paid includes $95,048 (` 4,239,141) and $96,476 (` 4,331,772) towards rent paid to King Maker Marketing Inc. (see Note G) for the year ended March 31, 2011 and 2010 respectively. Accounts receivable includes $38,277 (` 1,707,154) and $27,859 (` 1,250,869) receivable from Pyxis Solutions Pte. Ltd. for the year ended March 31, 2011 and 2010, respectively. NOTE E - ACCOUNTS RECEIVABLE Accounts receivable includes both billed and unbilled receivable. Changes in the allowance for doubtful accounts in 2011 and 2010 are as follows: 2011 $ 396,427 396,427 2011 (`) 17,680,644 17,680,644 2010 $ 433,390 180,800 (105,147) (112,616) 396,427 2010 (`) 19,459,211 8,117,920 (4,721,100) (5,056,458) 17,799,573 $ 14,611,042 ` 651,652,474
Beginning balance Increase to allowance Accounts written off Provision written back Ending balance
Unbilled receivables were approximately $ 818,623 (` 36,510,586) and $ 492,777 (` 22,125,687) as at March 31, 2011 and 2010 respectively.
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NOTE F - INTANGIBLE ASSETS The Company has fair valued assets arising on acquisition of membership interest in accordance with ASC 805, Business Combinations (ASC 805), through an independent outside appraiser. Accordingly, the components of intangible assets (including goodwill) as at March 31, 2011 and 2010, are as follows: 2011 Identifiable intangible assets Trade name Non-compete agreement Customer relationship Know how Total Goodwill (after deferred tax benefit adjustment) (see Note C) Total intangible assets Estimated useful life 8 4 8 5 Currency Gross carrying amount 300,000 13,380,000 90,000 4,014,000 3,900,000 173,940,000 1,100,000 49,060,000 5,390,000 240,394,000 7,184,566 320,431,644 12,574,566 560,825,644 Accumulated amortization 98,938 4,412,635 59,363 2,647,590 1,286,199 57,364,475 580,438 25,887,535 2,024,938 90,312,235 2,024,938 90,312,235 Net carrying amount 201,062 8,967,365 30,637 1,366,410 2,613,801 116,575,525 519,562 23,172,465 3,365,062 150,081,765 7,184,566 320,431,644 10,549,628 470,513,409 Gross carrying amount 300,000 13,470,000 90,000 4,041,000 3,900,000 175,110,000 1,100,000 49,390,000 5,390,000 242,011,000 6,585,824 295,703,498 11,975,824 537,714,498 2010 Accumulated amortization 61,438 2,758,566 36,863 1,655,149 798,699 35,861,585 360,438 16,183,666 1,257,438 56,458,966 1,257,438 56,458,966 Net carrying amount 238,562 10,711,434 53,137 2,385,851 3,101,301 139,248,415 739,562 33,206,334 4,132,562 185,552,034 6,585,824 295,703,498 10,718,386 481,255,532
$ ` $ ` $ ` $ ` $ ` $ ` $ `
Amortization of identifiable intangible assets for the year ended March 31, 2011 and 2010 was $767,500 (`34,230,500) and $767,500 (`34,460,750), respectively. At March 31, 2011 the expected amount of amortization of identifiable intangible assets, over the next five years are as follows: 2011-2012 $767,500 `34,230,500 2012-2013 753,137 33,589,910 2013-2014 604,562 26,963,465 2014-2015 525,000 23,415,000 2015-2016 525,000 23,415,000 Total amortization expense $3,175,199 `141,613,875 NOTE G - COMMITMENTS AND CONTINGENCIES LEASES The Company has leased offices, storage spaces under non cancelable operating leases, some of these expiring through fiscal 2015. One such office has been leased from King Maker Marketing Inc. whose parent Company (ITC Limited) is same as the Companys ultimate parent Company. Total rent and other reimbursements to King Maker Marketing Inc. was approximately $ 95,048 (` 4,239,141) and $ 96,476 (` 4,331,772) for the years ended March 31, 2011 and 2010, respectively. Total rent expense under all facilities leases was approximately $ 152,898 (` 6,819,251) and $ 142,313 (` 6,389,854) for the years ended March 31, 2011 and 2010, respectively. In addition, the Company has entered into various non-cancelable operating leases for the rental of equipment. The future minimum annual lease payments as at March 31, 2011 are as follows: Offices Equipment Total $ ` $ ` $ ` 2011-2012 128,179 5,716,783 4,175 186,205 132,354 5,902,988 2012-2013 22,467 1,002,028 4,175 186,205 26,642 1,188,233 2013-2014 3,845 171,487 3,845 171,487 2014-2015 2,142 95,533 2,142 95,533 2015-2016 Total Minimum Lease Payments 150,646 6,718,811 14,337 639,430 164,983 7,358,241 NOTE H - INCOME TAXES The provision for income taxes consists of the following: Year ended March 31, $ 2011 2011(`) $ 2010 2010(`) Federal Taxes Current (130,898) (5,877,320) Deferred (155,075) (6,916,345) 45,686 2,051,301 State and local taxes Current 38,467 1,715,628 111,884 5,023,592 Deferred (1,178) (52,539) 2,471 110,948 Foreign Taxes 170,461 7,602,561 Total current expense $ 52,675 ` 2,349,305 $ 29,143 ` 1,308,521
As a result of the Pyxis acquisition, the Companys amortizable tax basis goodwill exceeds it financial reporting goodwill. Under ASC 740, this is known as Component II goodwill. No tax benefit is recorded for amortization of Component II goodwill until such deduction reduces taxes payable. As of March 31, 2011, no tax benefit related to the amortization of Component II goodwill has been recorded. The Companys 2011 and 2010 expected Federal income tax provision was offset by the utilization of net operating loss carry forwards. Deferred tax assets and liabilities consist of the following: $ 2011 Net Operating Loss carry forwards Other temporary differences (net) Federal Alternate Minimum Tax carry over Net deferred tax asset $ 790,674 ` 35,264,060 $ 804,882 ` 36,139,202 281,844 483,892 24,938 2011(`) 12,570,242 21,581,583 1,112,235 $ 2010 288,059 491,885 24,938 2010 (`) 12,933,849 22,085,637 1,119,716
As at March 31, 2011, the Company has NOL of approximately $ 800,517 (` 35,703,058) available to offset future taxable income, as summarized below. Operating loss carry forwards for Federal income tax purposes will expire as follows: Year March, 2024 March, 2025 March, 2026 March, 2027 March, 2028 Expiring Amount ($) 314,278 435,527 10,805 17,343 22,564 $ 800,517 NOTE I - CONCENTRATION OF CUSTOMER SALES A significant portion of the Companys 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 37% (18%, 11% and 8%) and approximately 36% (16%, 14% and 6%) of the Companys net revenues for the years ended March 31, 2011 and 2010, respectively. Accounts receivable from these customers approximated 32% (14%, 14% and 4%) and 35% (22%, 5% and 8%) of total accounts receivable as at March 31, 2011 and 2010, respectively. Expiring Amount (`) 14,016,799 19,424,504 481,903 773,498 1,006,354 ` 35,703,058
141
PYXIS SOLUTIONS, LLC. USA

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, 2011. Principal Activities Your Company is engaged in providing Software Testing and Quality Assurance services primarily for the Banking, Financial Services & Insurance business segments. Business Review Pyxis provides high end, domain-based quality consulting to marquee clients in the financial services industry. In line with the holding companys approach towards capability building, new niche capabilities were added to your Companys range. Delayed recovery in IT spending in the capital markets sector adversely impacted the revenues and margins for 2010-11. It is a testimony to your Companys capabilities that all major clients were retained during the financial year, beside acquiring new clients and projects. Towards the end of the financial year, your Company was chosen to provide quality assurance services in a new business-critical area by their largest client. A healthy funnel of projects based on the combined capabilities of your REPORT OF INDEPENDENT AUDITORS 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, 2011 and the related statements of operations and members equity and cash flows for the year ended March 31, 2011. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of and for the year ended March 31, 2010 were audited by Amper, Politziner & Mattia, LLP, whose practice was combined with the practice of Eisner LLP to form EisnerAmper LLP as of August 16, 2010 and whose report dated May 10, 2010, expressed an unqualified opinion on those statements. We conducted our audit 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 Companys 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. 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. The Indian Rupee equivalent figures have been included in the financial statements as required by ITC Infotech India Limited, the parents parent company, and is not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America. 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, 2011, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Edison, New Jersey May 9, 2011 EisnerAmper LLP Company and the holding company provides a sound foundation for growth in the next financial year. During the year under review your Company registered a Turnover of US$ 6.34 million (previous year - US$ 8.25 million) and a Net Income of US$ 0.02 million (previous year - US$ 0.62 million). During the year under review, your Company declared and paid US$ 750,000 (previous year - Nil) as dividend for the financial year 2010-11 by way of distribution to the Sole Member. Auditors M/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Company, offer themselves for reappointment as Auditors of the Company to audit the Financial Statements of the Company for the financial year ending 31st March, 2012. Amar Singh Duggal Chief Executive Officer
May 9, 2011
BALANCE SHEET AS AT 31ST MARCH, 2011 March 31, 2011 $ Assets Current Assets Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $ 8,391 (` 374,239) for 2011 and $ 8,391 (` 376,756) for 2010, respectively Due from ITC Infotech (USA), Inc. Advances to employees Trade advance Prepaid expenses Total Current Assets Computer Equipment, net of accumulated depreciation of $814 (` 36,304) and $509 (`22,854) for 2011 and 2010 respectively Liabilities and Members Equity Current liabilities Accounts payable Accrued expenses and other current liabilities Accrued payroll and payroll taxes Due to ITC Infotech India Ltd., net Total Current Liabilities Commitments and contingencies Members equity March 31,2011 ` March 31, 2010 $ March 31, 2010 `
1,800,796
80,315,502
1,927,674
86,552,563
985,224 75,797 4,713 11,211 2,877,741
43,940,990 3,380,546 210,200 500,011 128,347,249
1,606,190 48,500 17,112 3,599,476
72,117,931 2,177,650 768,329 161,616,473
407 2,878,148
18,152 128,365,401
712 3,600,188
31,969 161,648,442
86,000 290,493 188,574 33,108 598,175 2,279,973 2,878,148
3,835,600 12,955,988 8,410,400 1,476,617 26,678,605 101,686,796 128,365,401
86,000 235,053 236,472 37,362 594,887 3,005,301 3,600,188
3,861,400 10,553,880 10,617,593 1,677,554 26,710,427 134,938,015 161,648,442 A. Duggal Chief Executive Officer
Date : May 9, 2011
V. Sawhney Financial Controller
Greg Zvi Brener Chief Operating Officer
The accompanying notes are an integral part of these financial statements
142

STATEMENTS OF OPERATIONS AND MEMBERS EQUITY FOR THE YEAR ENDED 31ST MARCH, 2011 Year Ended March 31, 2011 $ Revenue Service Fees Project Fees Total revenue Cost of revenue, principally employment cost and subcontractor fees Gross profit General and administrative expenses Operating income Other income Net income Members equity at the beginning of year Members distribution Members equity at the end of year 6,337,487 6,337,487 5,122,152 1,215,335 1,194,272 21,063 3,609 24,672 3,005,301 (750,000) 2,279,973 282,651,920 282,651,920 228,447,979 54,203,941 53,264,531 939,410 160,961 1,100,371 134,036,425 (33,450,000) 101,686,796 8,209,496 42,400 8,251,896 6,162,774 2,089,122 1,471,538 617,584 2,452 620,036 2,385,265 3,005,301 368,606,370 1,903,760 370,510,130 276,708,553 93,801,577 66,072,056 27,729,521 110,095 27,839,616 107,098,399 134,938,015 Year Ended March 31, 2011 ` Year Ended March 31, 2010 $ Year Ended March 31, 2010 `
Date : May 9, 2011
A. Duggal Chief Executive Officer
STATEMENTS OF CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2011 Year Ended March 31, 2011 $ Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Changes in assets and liabilities Accounts receivable Due from ITC Infotech (USA), Inc. Advances to employees Trade advance Prepaid expenses Accounts payable Accrued expenses and other current liabilities Accrued payroll and payroll taxes Due to ITC Infotech India Ltd., net Net cash provided by operating activities Cash flows from financing activities Members distribution Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (750,000) (750,000) (126,878) 1,927,674 1,800,796 (33,450,000) (33,450,000) (5,658,758) 85,974,260 80,315,502 627,466 1,300,208 1,927,674 28,173,224 58,379,339 86,552,563 620,966 (75,797) (4,713) 48,500 5,901 55,440 (47,898) (4,254) 623,122 27,695,084 (3,380,546) (210,200) 2,163,100 263,185 2,472,624 (2,136,251) (189,728) 27,791,242 70,374 (11,101) 50,524 (63,771) (76,263) 37,362 627,466 3,159,793 (498,435) 2,268,528 (2,863,318) (3,424,209) 1,677,554 28,173,224 305 13,603 305 13,695 24,672 1,100,371 620,036 27,839,616 Year Ended March 31, 2011 ` Year Ended March 31, 2010 $ Year Ended March 31, 2010 `
Date : May 9, 2011
A. Duggal Chief Executive Officer
143

NOTES TO THE FINANCIAL STATEMENTS 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 customers 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 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 the parent company, the Indian Rupee equivalent figures, arrived at by applying the period end interbank exchange rate of US$1 = ` 44.60 as at March 31, 2011 (March 31, 2010: US$ 1= ` 44.90) as provided by the parent company, have been included. Recognition of Revenue Service Revenue Service revenue is based upon hours worked by the Company employees on customer assignments and is recognized when the work is performed. Revenue is determined by multiplying the hours worked by the contractual billing rates. Substantially all customers are invoiced biweekly or monthly. Project Revenue Revenue on the project business is recognized as earned, typically in the month the service is performed. Costs associated with the use of consultants 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-cancelable 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 recognized upon such acceptance. Losses on contracts are recognized when determinable. 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. Accounts Receivable and Allowance for Doubtful Accounts Credit is extended based on evaluation of a customers 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 managements evaluation of outstanding accounts receivable. Accounts are written off when they are deemed uncollectible. 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. Transactions with ITC Infotech (USA ), Inc. Service / Account Management fees / others recognized as revenue Project / other expenses reimbursements incurred by ITC Infotech (USA), Inc. Project / other expenses reimbursements incurred by Pyxis 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. ITC does not allocate any of its tax liabilities or benefits to the Company. 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 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 financial statements. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. 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 $ 1,619 (` 72,207) as of March 31, 2011, and are included in Other Income in the accompanying statements of operations. Subsequent Events The Company evaluated subsequent events from March 31, 2011 through May 9, 2011, 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 ITC Infotech (USA), Inc. In connection with the Membership Interest Purchase Agreement (Purchase Agreement) a sum of $2,500,000 (` 111,500,000) was paid by ITC Infotech (USA), Inc. on behalf of the Company. Thereafter, the Company became a wholly-owned subsidiary of ITC Infotech (USA), Inc. As permitted by accounting principles generally accepted in the United States, the impact of the purchase was not pusheddown 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. In connection with the Purchase Agreement, each seller receives a certain allocable portion of the Companys earning as contingent anniversary payments. Such contingent anniversary payments are contingent on the Companys earnings before interest, taxes, depreciation and amortization (EBITDA) as determined from the first anniversary income statement and the second anniversary income statement in accordance with the terms of meeting or exceeding the Target EBITDA. In connection with this transaction, the Company entered into employment agreements with two of the founding members (see Note H). NOTE D - RELATED PARTY TRANSACTIONS The Company has entered into various transactions with its related parties as follows: Year Ended March 31, 2011 $ Year Ended March 31, 2011 ` Year Ended March 31, 2010 $ Year Ended March 31, 2010 `
241,176
10,756,450
58,192
2,612 ,821
233,665
10,421,459
83,224
3,736,758
29,149
1,300,045
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Year Ended March 31, 2011 $ Transactions with ITC Infotech India Ltd. Costs for project consultations / other expenses, included in cost of revenue 371,314 Transaction with Pyxis India Costs for project consultations / other expenses, included in cost of revenue Transaction with Pyxis UK Costs for project consultations / other expenses, included in cost of revenue Year Ended March 31, 2011 ` Year Ended March 31, 2010 $ Year Ended March 31, 2010 ` The future minimum annual lease payments at March 31, 2011 are as follows : Office Rent Year 2011-12 2012-13 2013-14 16,560,604 333,305 14,965,395 2014-15 $ 63,261 63,261 63,261 42,174 ` Equipment $ ` Total $ 65,652 65,652 64,457 42,174 ` 2,928,080 2,928,080 2,874,783 1,880,960
2,821,441 2,391 106,639 2,821,441 2,391 106,639 2,821,441 1,196 1,880,960 53,342
Total minimum lease payments 231,957 10,345,283 5,978 266,620 237,935 10,611,903 NOTE G - CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS 41,820 1,877,718 A significant portion of the Companys sales are to several key customers. Two such customers accounted for approximately 60% and approximately 40% of the Companys net revenues for the year ended March 31, 2011 and for the year ended March 31, 2010 respectively. These two customers accounted for approximately 49% and 55% of total accounts receivable at March 31, 2011 and 2010 respectively. NOTE H - EMPLOYMENT AGREEMENT In connection with employment agreements (Agreements), the Companys Chief Executive Officer and the Chief Operating Officer agree that the term of these Agreements are for a period of two years (expiring August 2010). These Agreements provide for certain minimum level of base salary and other amounts of contingent compensation to be earned, all of which are defined in the Agreements. In November 2010, the employment agreements terminated and ITC Infotech (USA), Inc. entered into consultation agreements with Mr. Amar Duggal and Mr. Zvi Brener as the Companys Chief Executive Officer and Chief Operating Officer, respectively. NOTE I - MEMBERS DISTRIBUTION On March 28, 2011 the Company proposed a distribution of $ 750,000 (` 33,450,000) to ITC Infotech (USA), Inc. (sole member), which was approved and paid on March 31, 2011.
95,483
4,287,187
Trade advance of $48,500 (` 2,163,100) receivable from Pyxis Singapore as of March 31, 2010 was received during the current year. NOTE E - ACCOUNTS RECEIVABLE Accounts receivable consist of trade accounts receivable and unbilled accounts receivable (representing services performed prior to the balance sheet dates, but not invoiced to the customer until thereafter). Unbilled receivables were approximately $ 456,983 (` 20,381,442) and $ 407,430 (` 18,293,607) as of March 31, 2011 and 2010 respectively. NOTE F - COMMITMENTS AND CONTINGENCIES Leases The Company has leased office space under a non-cancelable operating lease expiring March 31, 2015. Total rent expense under this lease for year ending March 31, 2011 was $ 48,955 (` 2,183,393) and $ 63,261 (` 2,840,419) for year ending March 31, 2010. In addition, the Company has entered into a non-cancelable operating lease for rental of equipment during the current year. Total expense under this lease for year ending March 31, 2011 was $ 2,171 (` 96,827).
145
WILLS CORPORATION LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2011 1. 2. Your Directors hereby submit their Report and Accounts for the financial year ended on 31st March, 2011. COMPANY PERFORMANCE During the year under review, your Company has not contracted any fresh business and the temporary surplus funds of the Company have been invested in debt mutual funds. The financial results of your Company, summarised, are as under : For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) a. Profit Before Taxation Less : Provision for Taxation b. Profit After Taxation c. Add : Profit brought forward from previous years d. Balance carried forward to the following year 3. DIRECTORS Mr. K. Vaidyanath, consequent to his retirement from the services of ITC Limited, the Holding Company, stepped down as the Chairman and Director of your Company with effect from close of work on 2nd January, 2011. Your Directors would like to place on record their sincere appreciation for the contribution made by Mr. Vaidyanath during his tenure with the Company. Mr. R. Tandon was appointed as the Chairman of the Board of Directors of your Company with effect from 3rd January, 2011. In accordance with the provisions of Article 92 of the Articles of Association of the Company, Mr. Saradindu Dutta 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; 7. 44,20,739 1,33,419 42,87,320 2,35,13,868 2,78,01,188 49,52,085 2,89,042 46,63,043 6. 1,88,50,825 2,35,13,868 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. PARTICULARS OF EMPLOYEES 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. AUDITORS The Companys Auditors, Messrs. Basu, Chatterjea & Co., Chartered Accountants, who retire at the ensuing Annual General Meeting, have expressed that they would not like to offer themselves for re-appointment as Auditors of the Company. Your Company has received a Special Notice in terms of the provisions of Section 225 of the Companies Act, 1956 (the Act) proposing the appointment of Messrs. L. B. Jha & Co., Chartered Accountants, as Statutory Auditors of the Company at the ensuing Annual General Meeting. Your Board of Directors has recommended the appointment of Messrs. L. B. Jha & Co. as Auditors of the Company from the conclusion of the ensuing Annual General Meeting. Messrs. L. B. Jha & Co. have confirmed their eligibility under Section 224(1B) of the Act for appointment as Auditors of the Company. 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. There has been no foreign exchange earnings or outflow during the year under review.
5th May, 2011 Registered Office: Virginia House 37 J. L. Nehru Road Kolkata 700 071 On behalf of the Board R. Tandon Director S. Dutta Director
AUDITORS REPORT TO THE MEMBERS OF WILLS CORPORATION LIMITED We have audited the attached Balance Sheet of WILLS CORPORATION LIMITED, as at 31st March 2011, the Profit and Loss Account and Cash Flow Statement for the year ended on that date and 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. 1. 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used 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 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: i. 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; 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; iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account ; iv. In our opinion, the Balance Sheet, Profit and Loss Account 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 Companies Act, 1956. v. On the basis of written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a Director in terms of clause (g) sub-section (1) of section 274 of the Companies Act,1956 ;
2.
vi. 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 : (a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011. (b) In the case of the Profit and Loss Account, of the profit for the year ended on that date. (c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) Kolkata 5th May, 2011 S. K. Chatterjea Partner Membership No. 005629
3.
ii.
146

ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF WILLS CORPORATION LIMITED (Referred to in paragraph 3 thereof) 1. (a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets. (b) In our opinion, the fixed assets have been physically verified by the management at reasonable intervals, having regard to the size of the Company and nature of its assets. No material discrepancies between the book records and the physical inventory were noticed. (c) During the year, in our opinion, and according to information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company. 2. According to information and explanations given to us and as per the books and records of the Company examined by us, there was no stock held by the Company at any time during the year. 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 Companies Act, 1956. As the Company has not granted any loans, secured or unsecured to parties covered in the Registrar mentioned under section 301 of the Companies Act, 1956, paragraphs (iii) (b), (c) and (d) of the Order are not applicable. (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 Companies Act, 1956. As the Company has not taken any loans, secured or unsecured from parties covered in the Register maintained under section 301 of the Companies Act, 1956, paragraphs (iii) (f) and (g) of the Order are not applicable. 4. 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 nature of its business for purchase of fixed assets. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weakness in the aforesaid internal control systems. 5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the Register maintained under section 301 of the Companies Act, 1956. 6. 7. The Company has not accepted any deposit from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. 8. (a) According to the information and explanations given to us, and according to the books and records examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including Income Tax, Cess and other material statutory dues as applicable to it with the appropriate authorities during the year. (b) According to the information and explanations given to us, there are no undisputed dues, including Income Tax, Cess which were outstanding for more than 6 months as at 31st March, 2011. (c) According to the information and explanations given to us, there are no undisputed dues, including Income Tax, Cess which were outstanding as at 31st March, 2011. 9. The Company does not have accumulated losses as at 31st March, 2011, and has not incurred cash losses during the year ended on that date and in the immediately preceding financial year. 10. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 11. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. 12. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks and financial institutions. 13. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956, during the year. 14. The Company has not raised money by public issue during the year. 15. According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported. 16. The nature of the Company's activities during the year ended 31st March, 2011 indicate that the provisions of clauses 4(viii), (xi), (xiii), (xvi), (xvii), (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) S. K. Chatterjea Partner Kolkata Membership No. 005629 5th May, 2011
BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule (`) I. SOURCES OF FUNDS 1. Shareholders' Funds a) Capital b) Reserves and Surplus 31st March, 2011 (`) (`) 31st March, 2010 (`)
1 2
4,88,56,260 2,89,16,389 7,77,72,649 7,77,72,649
4,88,56,260 2,46,29,069 7,34,85,329 7,34,85,329 60,57,401 14,90,534 44,73,712 7,43,79,207 45,66,867 7,05,68,289 4,14,315 57,891 39,393 5,11,599
TOTAL II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less: Depreciation c) Net Block 2. Investments 3. Current Assets, Loans and Advances a) Cash and Bank Balances b) Other Current Assets c) Loans and Advances 4. Less : Current Liabilities and Provisions a) Liabilities b) Provisions
60,57,401 15,83,689
4 5 6 7 6,31,864 4,59,200 1,07,937 11,99,001
8 9
20,82,019 1,97,252 22,79,271 (10,80,270) 7,77,72,649
20,54,028 1,07,398 21,61,426 (16,49,827) 7,34,85,329
Net Current Liabilities TOTAL Notes to the Accounts 13 Significant Accounting Policies 14 The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011
On behalf of the Board R. Tandon Director S. Dutta Director T. Ghosal Secretary
147

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Dividend Income Rental Income Interest Income on Income Tax Refunds Profit on sale of Current Investments (net) Other Income For the year ended 31st March, 2011 (`) 40,87,622 8,20,000 624 7,27,449 56,35,695 10,07,316 1,14,485 93,155 12,14,956 44,20,739 1,33,419 42,87,320 2,35,13,868 2,78,01,188 2,78,01,188 13(2) 13 14 0.88 For the year ended 31st March, 2010 (`) 40,59,174 7,20,000 8,01,401 5,75,911 61,56,486 6,89,575 3,14,620 1,07,051 93,155 12,04,401 49,52,085 2,89,042 46,63,043 1,88,50,825 2,35,13,868 2,35,13,868 0.95
10
II. EXPENDITURE Employee Cost Loss on Sale of Current Investments (net) Operating and Establishment Expenses Depreciation III. PROFIT Profit before Taxation Provision for Taxation Profit after Taxation Profit brought forward Available for appropriations IV. APPROPRIATIONS Profit carried forward Earnings Per Share (Face Value ` 10/- each) (Basic & Diluted) Notes to the Accounts Significant Accounting Policies
11 3
12
The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Dividend Income Interest on Income Tax (Net) Profit on Sale of Current Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Refund/(Payment) NET CASH USED IN OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Income from Current Investments Purchase of Current Investments Sale of Current Investments NET CASH FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES NET CASH FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS Notes : 1 The above Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 Cash Flow Statement. 2 CASH AND CASH EQUIVALENTS : Balance with Scheduled Banks - On Current Account Cash on Hand Cheques on Hand Cash and Bank Balance (Schedule 5) In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 2,17,549 4,14,315 6,31,864 44,20,739 93,155 (40,87,622) 332 (624) 4,25,980 (4,01,309) 1,17,845 1,42,516 (2,02,294) (59,778) 9,32,535 (108,26,49,132) 108,19,93,924 2,77,327
For the year ended 31st March, 2010 (`) 49,52,085 93,155 (40,59,174) 3,14,620 13,00,686 1,39,098 (20,161) 14,19,623 15,98,562 30,18,185 18,13,433 (111,17,41,285) 110,67,69,713 (31,58,139) (1,39,954) 5,54,269 4,14,315
3,19,632 3,12,232 6,31,864
4,14,185 130 4,14,315
148

SCHEDULES TO THE ACCOUNTS 1. CAPITAL Authorised 50,00,000 Equity Shares of ` 10/- each Issued, Subscribed and Paid up 48,85,626 Equity Shares of ` 10/- each, fully paid up (All the above shares are held by the Holding Company, ITC Limited) 2. RESERVES AND SURPLUS As at 31st March, 2011 (`) General Reserve Profit and Loss Account 3. FIXED ASSETS GROSS BLOCK (AT COST) Particulars As at commencement of the year (`) 3,42,348 57,15,053 60,57,401 60,57,401 As at the end of the year (`) 3,42,348 57,15,053 60,57,401 60,57,401 Upto 31st March, 2010 (`) 3,42,348 11,48,186 14,90,534 13,97,379 DEPRECIATION For the year (`) 93,155 93,155 93,155 Upto 31st March, 2011 (`) 3,42,348 12,41,341 15,83,689 14,90,534 NET BOOK VALUE As at 31st March, 2011 (`) 44,73,712 44,73,712 45,66,867 11,15,201 2,78,01,188 2,89,16,389 As at 31st March, 2010 (`) 11,15,201 2,35,13,868 2,46,29,069 As at 31st March, 2011 (`) 5,00,00,000 5,00,00,000 4,88,56,260 4,88,56,260 As at 31 st March, 2010 (`) 5,00,00,000 5,00,00,000 4,88,56,260 4,88,56,260
Plant and Machinery Building (*) Total Previous Year
* Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms 4. INVESTMENTS As at As at 31st March, 2011 31st March, 2010 (`) (`) UNQUOTED Current Other Investments Canara Robeco Interval Series 2 - Quarterly Plan 2 - Inst Dividend Fund NIL (2010 - 30,00,000) Units of ` 10/- each 3,00,00,000 8. Good and Unsecured Current Taxation (net of provisions) Fringe Benefit Tax (net of provisions) 7. LOANS AND ADVANCES As at As at 31st March, 2011 31st March, 2010 (`) (`) 1,07,339 598 1,07,937 36,455 2,938 39,393
LIABILITIES As at As at 31st March, 2011 31st March, 2010 (`) (`) Sundry Creditors Total outstanding dues of micro enterprises and small enterprises Total outstanding dues of creditors other than micro enterprises and small enterprises Others Liabilities Security Deposits*
DSP BlackRock Liqudity Fund - Institutional Plan Daily Dividend 7,43,79,207 74,356 (2010 - NIL) Units of ` 1,000/- each LIC MF Liquid Fund - Dividend Plan NIL (2010 - 36,94,710) Units of ` 10/- each 7,43,79,207 5. CASH AND BANK BALANCES
4,05,68,289 7,05,68,289
As at As at 31st March, 2011 31st March, 2010 (`) (`) With Scheduled Banks On Current Accounts Cheques on Hand Cash on Hand 3,19,632 3,12,232 6,31,864 4,14,185 130 4,14,315
45,304 36,715 20,00,000 20,82,019
49,228 4,800 20,00,000 20,54,028
* Includes deposits from Holding Company ` 20,00,000/- (2010 - ` 20,00,000/-) 9. PROVISIONS As at As at 31st March, 2011 31st March, 2010 (`) (`) Provision for Retirement Benefits As at As at 31st March, 2011 31st March, 2010 (`) (`) 1,97,252 1,97,252 1,07,398 1,07,398
6.
OTHER CURRENT ASSETS
10. OTHER INCOME For the year ended 31st March, 2011 (`) Miscellaneous Income Provision no longer required written back 7,27,449 7,27,449 For the year ended 31st March, 2010 (`) 5,51,659 24,252 5,75,911
Good and Unsecured Deposits Others*
56,563 4,02,637 4,59,200
56,563 1,328 57,891
* Includes due from Holding Company ` 4,00,000/- (2010 - ` NIL)
149

SCHEDULES TO THE ACCOUNTS (Contd.) 11. OPERATING AND ESTABLISHMENT EXPENSES For the year ended 31st March, 2011 (`) Rates and Taxes Insurance Auditors Remuneration (excluding Service Tax) Audit Fees Other Services Travelling and Conveyance Postage, Telephone, Telex, etc. Professional Fees Filing Fees Printing and Stationery Miscellaneous Expenses 43,278 1,971 18,000 17,437 1,866 2,839 12,500 2,040 14,554 1,14,485 12. PROVISION FOR TAXATION For the year ended 31st March, 2011 (`) Income Tax for the year Current Tax Less : Adjustments relating to previous year Current Tax Fringe Benefit Tax 13. NOTES TO THE ACCOUNTS 1. During the year, the following Current Investments were purchased and sold: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) 11,13,355 Units of Birla Sun Life Cash Plus- Instl.- Daily Dividend Reinvestment at a cost of ` 1,20,26,795/51,20,296 Units of BNP Paribas Money Plus Institutional Plan Daily Dividend at a cost of ` 5,12,23,479/51,09,066 Units of BNP Paribas Overnight Fund- Institutional Daily Dividend at a cost of ` 5,11,05,987/1,79,345 Units of Canara Robeco Interval Series 2- Quaterly Plan 2- Inst Dividend Fund at a cost of ` 17,93,459/ 12,43,629 Units of Canara Robeco Liquid Super Instt Daily Div Reinvest Fund at a cost of ` 1,25,04,691/8,90,684 Units of Canara Robeco Treasury Advantage Super Instt Daily Div Reinv Fund at a cost of ` 1,10,50,804/ 10,00,000 Units of DSP BlackRock FMP- 3M Series 22- Dividend Payout at a cost of ` 1,00,00,000/10,998 Units of DSP BlackRock Liquidity Fund- Institutional Plan- Daily Dividend at a cost of ` 1,10,01,612/ 10,012 Units of DSP BlackRock Liquidity Fund- Regular PlanDaily Dividend at a cost of ` 1,00,216/11,013 Units of DSP BlackRock Money Manager FundInstitutional Plan- Daily Dividend at a cost of ` 1,10,22,146/97,322 Units of DWS Insta Cash Plus Fund Regular Plan Daily Dividend- Reinvest at a cost of ` 10,02,517/10,00,000 Units of Fidelity FMP Series 2- Plan B- Dividend at a cost of ` 1,00,00,000/20,00,000 Units of HDFC FMP 100D September 2010 (2)Dividend- Series XIV, Option: Payout at a cost of ` 2,00,00,000 / 1,690 Units of ICICI Prudential Liquid Institutional Plus PlanDiv- Daily at a cost of ` 2,00,306/9,273 Units of ING Liquid Fund- Daily Dividend Option at a cost of ` 1,00,026/41,36,464 Units of JM High Liquidity Fund Institutional PlanDaily Dividend at a cost of ` 4,14,30,411/ 40,83,967 Units of JM Money Manager Fund Super Plus PlanDaily Dividend at a cost of ` 4,08,61,315/50,086 Units of JP Morgan India Liquid Fund- Retail- Daily Dividend Plan- Reinvest at a cost of ` 5,01,613/ 50,91,184 Units of JP Morgan India Liquid Fund- Super Inst. Daily Dividend Plan- Reinvest at a cost of ` 5,09,52,065 / 31,03,372 Units of JP Morgan India Treasury Fund- Super Inst. Daily Div Plan- Reinvest at a cost of ` 3,10,61,342/ 2. Earnings per Share For the year ended For the year ended 31st March, 2011 31st March, 2010 Profit after Taxation (`) Weighted average number of Equity Shares outstanding Basic and Diluted Earnings Per Share (Face Value - ` 10/- per share) 3. 42,87,320 /48,85,626 ` 0.88 46,63,043/48,85,626 ` 0.95 1,00,000 (33,472) 53 1,33,419 For the year ended 31st March, 2010 (`) 4,00,000 1,10,958 2,89,042 For the year ended 31st March, 2010 (`) 46,288 662 18,000 7,500 240 3,622 12,510 1,500 1,664 15,065 1,07,051 20,00,000 Units of Kotak FMP Series 31- Dividend at a cost of ` 2,00,00,000/(xxii) 39,74,392 Units of Kotak Floater Long Term- Daily Dividend at a cost of ` 4,00,61,075/(xxiii) 32,71,415 Units of Kotak Liquid (Institutional)- Daily Dividend at a cost of ` 4,00,03,193/(xxiv) 41,06,635 Units of LIC Nomura MF Income Plus Fund- Daily Dividend Plan at a cost of ` 4,10,66,351/(xxv) 38,63,702 Units of LIC Nomura MF Liquid Fund- Dividend Plan at a cost of ` 4,24,23,835/(xxvi) 40,96,955 Units of Principal Cash Management Fund- Liquid Option- Instl. Plan- Dividend Reinvestment- Daily at a cost of ` 4,09,78,567/(xxvii) 20,01,830 Units of Reliance Liquid Fund- Cash Plan- Daily Dividend Option at a cost of ` 2,23,03,392/(xxviii) 74,254 Units of Religare Liquid Fund- Institutional Daily Dividend at a cost of ` 7,42,70,394/(xxix) 53,79,421 Units of Sundaram Money Fund Inst.- Daily Div Rein at a cost of ` 5,43,06,872/(xxx) 1,12,470 Units of Templeton India Treasury Management Account Institutional Plan- Daily Dividend Reinvestment at a cost of ` 11,25,45,993/(xxxi) 1,12,55,196 Units of Templeton India Ultra Short Bond Fund Institutional Plan- Daily Dividend Reinvestment at a cost of ` 11,26,76,891/(xxxii) 20,995 Units of UTI Liquid Cash Plan Institutional- Daily Income Option- Re-investment at a cost of ` 2,14,03,074/(xxxiii) 21,439 Units of UTI Treasury Advantage Fund- Institutional Plan (Daily Dividend Option)- Re-investment at a cost of ` 2,14,43,424/(xxi)
Provision for Taxation included in the Profit and Loss Account represents Current Tax. The incidence of Deferred Tax being insignificant, is not considered. Related Party Disclosures : (a) Relationships : Holding Company Key Management Personnel Mr. K. Vaidyanath Mr. R. Tandon Mr. B. B. Chatterjee Mr. S. Dutta Non Executive Chairman (Upto 2nd January, 2011) Non-Executive Chairman (w.e.f. 3rd January, 2011) Non-Executive Director (Upto 2nd January, 2011) Non-Executive Director Non-Executive Director ITC Limited
4.
(b) Disclosure of transaction between the Company and Related Parties and the status of outstanding balances : Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 2,839/11,030/8,20,000/7,27,674/31st March, 2011 (`) 4,00,000/Nil 20,00,000/3,622/11,030/7,20,000/5,51,659/31st March, 2010 (`) Nil Nil 20,00,000/-
(xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx)
Holding Company Postage, Telephone, Telex etc. Miscellaneous Expenses Rental Income Miscellaneous Income Balance as at Holding Company Receivables Payables Security Deposit Received 5.
Segment Reporting - The Company operates in a single business and geographical segment.
150

SCHEDULES TO THE ACCOUNTS (Contd.) 6. Employee Benefits : Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes: For the year ended 31st March, 2011 (`) Pension Gratuity Leave Encashment N.A. I. Components of Employer Expense 1. 2. 3. 4. 5. 6. 7. 8. Current Service Cost Interest Cost Expected Return on Plan Assets Curtailment Cost/(Credit) Settlement Cost/(Credit) Past Service Cost Actuarial Losses/(Gains) Total expense recognised in the Statement of Profit & Loss Account N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 16,232 3,645 Nil Nil Nil 12,411 11,892 44,180 9,166 4,426 Nil Nil Nil Nil 32,082 45,674 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. (9,202) (2,873) Nil Nil Nil Nil 1,635 (10,440) (7,864) (3,105) Nil Nil Nil Nil (2,843) (13,812) Unfunded Unfunded N.A. Unfunded Pension For the year ended 31st March, 2010 (`) Gratuity Leave Encashment Unfunded
The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost. II. Actual Returns III. Net Asset/(Liability) recognised in Balance Sheet 1. 2. 3. 4. 5. Present Value of Defined Benefit Obligation Fair value on Plan Assets Status [Surplus / (Deficit)] Unrecognised Past Service Cost Net Asset/(Liability) recognised in Balance Sheet N.A. N.A. N.A. N.A. N.A. 96,256 N.A. (96,256) Nil (96,256) 1,00,996 N.A. (1,00,996) Nil (1,00,996) N.A. N.A. N.A. N.A. N.A. 52,076 N.A. (52,076) Nil (52,076) 55,322 N.A. (55,322) Nil (55,322) N.A. Nil Nil N.A. Nil Nil
IV. Change in Defined Benefit Obligations (DBO) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Present Value of DBO at Beginning of Period Current Service Cost Interest Cost Past Service Cost Curtailment Cost/(Credit) Settlement Cost/(Credit) Plan Amendments Acquisitions Actuarial (Gains)/Losses Benefits Paid Present Value of DBO at the End of Period N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 52,076 16,232 3,645 12,411 Nil Nil Nil Nil 11,892 Nil 96,256 55,322 9,166 4,426 Nil Nil Nil Nil Nil 32,082 Nil 1,00,996 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 62,516 (9,202) (2,873) Nil Nil Nil Nil Nil 1,635 Nil 52,076 69,134 (7,864) (3,105) Nil Nil Nil Nil Nil (2,843) Nil 55,322
V. Change in Fair value of Assets 1. 2. 3. 4. 5. 6. 7. Plan Assets at Beginning of Period Acquisition Adjustment Expected Return on Plan Assets Actuarial Gains/(Losses) Actual Company Contributions Benefits Paid Plan Assets at the End of Period N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
VI.Actuarial Assumptions 1. 2. Discount Rate (%) Expected Return on Plan Assets (%) N.A. N.A. 8.00 Nil 8.00 Nil N.A. N.A. 7.00 Nil 7.00 Nil
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 factors in the employment market.
151

SCHEDULES TO THE ACCOUNTS (Contd.) As at 31st March, 2011 VII. Major Category of Plan Assets as a % of the Total Plan Assets 1. Government Securities/Special Deposit with RBI 2. High Quality Corporate Bonds 3. Insurance Companies 4. Mutual Funds 5. Cash and Cash Equivalents VIII. Basis used to determine the Expected Rate of Return on Plan Assets The expected rate 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. For the year ended 31st March, 2011 (`) Pension Gratuity For the year ended 31st March, 2010 (`) Leave Pension
Encashment
As at 31st March, 2010
N.A. N.A. N.A. N.A. N.A.
For the year ended 31st March, 2009 (`) Leave Pension Gratuity
For the year ended 31st March, 2008 (`) Leave Pension Gratuity Leave
Encashment
Gratuity
Encashment
Encashment
N.A. Unfunded Unfunded IX. Net Asset/(Liability) recognised in Balance Sheet (including experience adjustment impact) 1. 2. 3. 4. 5. 7. Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus/(Deficit)] Experience Adjustment of Plan Assets [Gain/(Loss)] Experience Adjustment of Obligation [(Gain) /Loss] N.A. N.A. N.A. N.A. N.A. 96,256 1,00,996 N.A. Nil Nil N.A. Nil Nil (96,256) (1,00,996)
N.A. Unfunded Unfunded
52,076 N.A. Nil Nil
55,322 N.A. Nil Nil
62,516 N.A. Nil Nil
69,134 N.A. Nil Nil
47,897 N.A. Nil Nil
54,062 N.A. Nil Nil
(52,076) (55,322)
(62,516) (69,134)
(47,897) (54,062)
There are no Micro, Small and Medium Enterprises, to whom the Company owes any dues, as at 31st March, 2011. 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. Figures for the previous year have been regrouped / re-arranged wherever necessary.
14. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Financial Statements are prepared on accrual basis under the historical cost convention. 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 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. 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 there from are adjusted in the Profit and Loss Account except for those covered by forward contract rates where the gains / losses arising from such restatement are recognized over the period of such contracts. Kolkata, 5th May, 2011 On behalf of the Board R. Tandon Director S. Dutta Director T. Ghosal Secretary Borrowing Costs Borrowing cost that are directly attributable to the acquisition or construction of qualifying assets, are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue. Lease Rentals Lease Rentals are being accounted for on an accrual basis. Retirement Benefits Liability for Leave Encashment and Gratuity payable to employees is provided for at the year-end on actuarial basis. Taxes on Income To provide Current Tax as the amount of tax payable in respect of taxable income for the period. To provide 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 of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.
152
BALANCE SHEET ABSTRACT AND COMPANYS GEtNERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date
0 0 0 8 7 1 4 9 3 1 0 3 2 0 1 1
IV. State Code

2 1
Performance of Company (Amount in ` Thousands) Turnover (including other income)

5 6 3 6
Total Expenditure
1 2 1 5
Date II.
Month
Year
+

Profit /Loss Before Tax

4 4 2 1
+


4 2 8 7

N I L
(Please tick appropriate box + for profit, - for loss)

L
Rights Issue
N I
Earnings Per Share in `

0 . 8 8
Dividend Rate (%)

N I L
Bonus Issue
N I L
Private Placement
N I L
V. III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities
7 7 7 7 3
Generic Names of Principal Products/Services of Company (As per monetary terms) Item Code No. (ITC Code)
N . A .
Total Assets
7 7 7 7 3
Sources of Funds Paid up Capital

4 8 8 5 6
Product Description Reserves & Surplus

2 8 9 1 7
N . A .
Secured Loans
N I L
Unsecured Loans
N I L

4 4 7 4
Investments
7 4 3 7 9
Net Current Assets

- 1 0 8 0
Misc. Expenditure
N I L
Accumulated Losses
N I L
153
GOLD FLAKE CORPORATION LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2011 1. 2. Your Directors hereby submit their Report and Accounts for the financial year ended on 31st March, 2011. COMPANY PERFORMANCE During the year under review, your Company has not contracted any fresh business and the temporary surplus funds of the Company have been invested in debt mutual funds. The financial results of your Company, summarised, are as under : For the year ended 31st March, 2011 (`) a. b. c. d. 3. Profit Before Taxation Less : Provision for Taxation Profit After Taxation Add : Profit brought forward from previous years Balance carried forward to the following year DIRECTORS Mr. K. Vaidyanath, consequent to his retirement from the services of ITC Limited, the Holding Company, stepped down as the Chairman and Director of your Company with effect from close of work on 2nd January, 2011. Your Directors would like to place on record their sincere appreciation for the contribution made by Mr. Vaidyanath during his tenure with the Company. Mr. R. Tandon was appointed as the Chairman of the Board of Directors of your Company with effect from 3rd January, 2011. In accordance with the provisions of Article 92 of the Articles of Association of the Company, Mr. Saradindu Dutta 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; selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and 4,09,09,930 7,06,05,884 1,03,46,209 4,09,09,930 2,96,07,468 (88,486) 2,96,95,954 For the year ended 31st March, 2010 (`) 3,05,63,721 3,05,63,721 6. 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. PARTICULARS OF EMPLOYEES 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. AUDITORS The Companys Auditors, Messrs. Basu, Chatterjea & Co., Chartered Accountants, who retire at the ensuing Annual General Meeting, have expressed that they would not like to offer themselves for re-appointment as Auditors of the Company. Your Company has received a Special Notice in terms of the provisions of Section 225 of the Companies Act, 1956 (the Act) proposing the appointment of Messrs. L. B. Jha & Co., Chartered Accountants, as Statutory Auditors of the Company at the ensuing Annual General Meeting. Your Board of Directors, on the recommendation of the Audit Committee, has recommended the appointment of Messrs. L. B. Jha & Co. as Auditors of the Company from the conclusion of the ensuing Annual General Meeting. Messrs. L. B. Jha & Co. have confirmed their eligibility under Section 224(1B) of the Act for appointment as Auditors of the Company. 7. 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. There has been no foreign exchange earnings or outflow during the year under review. 5th May, 2011 Registered Office : Virginia House 37 J. L. Nehru Road Kolkata 700 071
On behalf of the Board R. Tandon Director S. Dutta Director
ii)
AUDITORS' REPORT TO THE MEMBERS OF GOLD FLAKE CORPORATION LIMITED We have audited the attached Balance Sheet of GOLD FLAKE CORPORATION LIMITED, as at 31st March, 2011, the Profit and Loss Account and Cash Flow Statement for the year ended on that date and annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. 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 also 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 2. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (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. 3. Further to our comments in the Annexure referred to above, we report that: i. 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; ii. 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; iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the Balance Sheet, Profit and Loss Account 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 Companies Act, 1956; v. On the basis of written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a Director in terms of clause (g) sub-section (1) of Section 274 of the Companies Act,1956; vi. 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 : (a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; (b) In the case of the Profit and Loss Account, of the profit for the year ended on that date; (c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) Kolkata 5th May, 2011 S. K. Chatterjea Partner (Membership No. 005629)
154

ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF GOLD FLAKE CORPORATION LIMITED
(Referred to in paragraph 3 thereof) 1. a. The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets. b. In our opinion, the fixed assets have been physically verified by the management at reasonable intervals, having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory were noticed. c. During the year, in our opinion, and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company. 2. According to the information and explanations given to us and as per the books and records of the Company examined by us, there was no stock held by the Company at any time during the year. 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 Companies Act, 1956. As the Company has not granted any loans, secured or unsecured to parties covered in the Register maintained under Section 301 of the Companies Act, 1956, paragraphs (iii) (b), (c) and (d) of the Order are not applicable. 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 Companies Act, 1956. As the Company has not taken any loans, secured or unsecured from parties covered in the Register maintained under Section 301 of the Companies Act, 1956, paragraphs (iii ) (f) and (g) of the Order are not applicable. 4. 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 purchase of fixed assets. Further, on the basis of our examination, and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weakness in the aforesaid internal control systems. 5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956. 6. The Company has not accepted any deposit from the public. 7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule
8.
9. 10. 11. 12. 13. 14. 15. 16.
a. According to the information and explanations given to us, and according to the books and records examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including Income Tax, Cess and other material statutory dues as applicable to it with the appropriate authorities during the year. b. According to the information and explanations given to us, there are no undisputed dues, including Income Tax, Cess which were outstanding for more than 6 months as at 31st March, 2011. c. According to the information and explanations given to us, there are no undisputed dues, including Income tax, Cess which were outstanding as at 31st March, 2011. The Company does not have accumulated losses as at 31st March, 2011, and has not incurred cash losses during the year ended on that date and in the immediately preceding financial year. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks and financial institutions. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956, during the year. The Company has not raised money by public issue during the year. According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported. The nature of the Companys activities during the year ended 31st March, 2011 indicate that the provisions of clauses 4(viii), (xi), (xiii), (xvi), (xvii), (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable. For Basu, Chatterjea & Co. Chartered Accountants (Registration No. 301066E) S. K. Chatterjea Partner (Membership No. 005629)
Kolkata 5th May, 2011
(`) I. SOURCES OF FUNDS 1. Shareholders Funds a) Capital b) Reserves and Surplus
31st March, 2011 (`)
(`)
31st March, 2010 (`)
1 2
15,99,83,850 7,93,32,107 23,93,15,957 23,93,15,957
15,99,83,850 4,96,36,153 20,96,20,003 20,96,20,003
Total II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Less : Depreciation c) Net Block 2. Investments 3. Current Assets, Loans and Advances a) Cash and Bank Balances b) Other Current Assets c) Loans and Advances Less : 4. Current Liabilities and Provisions a) Liabilities b) Provisions Net Current Liabilities
3 90,943 90,666 4 5 6 7 4,04,876 5,000 99,941 5,09,817 277 23,93,34,181 3,13,399 5,500 3,850 3,22,749 90,943 90,583 360 20,98,16,120
8 9
4,97,549 30,769 5,28,318 (18,501) 23,93,15,957
4,94,058 25,168 5,19,226 (1,96,477) 20,96,20,003
Total Notes to the Accounts 12 Significant Accounting Policies 13 The Schedules referred to above form an integral part of the Balance Sheet. In terms of our report of even date. For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011
On behalf of the Board R. Tandon Director S. Dutta Director N. Bajaj Secretary
155

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule For the year ended 31st March, 2011 (`) I. INCOME Dividend Income Interest on Income Tax Other Income Profit on Sale Current Investments 2,98,21,661 9,032 5,03,364 1,044 3,03,35,101 II. EXPENDITURE Employee Cost Operating and Establishment Expenses Loss on Sale of Current Investments (net) Depreciation 3 10 6,49,276 78,274 83 7,27,633 III. PROFIT Profit before Taxation Provision for Taxation Profit after Taxation Profit brought forward Available for appropriation IV. APPROPRIATIONS Profit carried forward 7,06,05,884 7,06,05,884 Earnings Per Share (Face Value ` 10/- each) (Basic & Diluted) Notes to the Accounts Significant Accounting Policies 12(4) 1.86 4,09,09,930 4,09,09,930 1.91 11 2,96,07,468 (88,486) 2,96,95,954 4,09,09,930 7,06,05,884 3,05,63,721 3,05,63,721 1,03,46,209 4,09,09,930 3,94,636 72,517 4,25,937 151 8,93,241 3,11,34,582 3,450 3,18,930 3,14,56,962 For the year ended 31st March, 2010 (`)
12 13
The Schedules referred to above form an integral part of the Profit and Loss Account. In terms of our report of even date. For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 On behalf of the Board R. Tandon Director S. Dutta Director N. Bajaj Secretary
156

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT BEFORE TAX ADJUSTMENTS FOR : Depreciation Income from Long Term Investments Income from Current Investments Interest on Income Tax (Net) Loss/(Gain) on Sale of Current Investments OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Trade and Other Receivables Trade Payables CASH GENERATED FROM OPERATIONS Income Tax Refund /(Payment) NET CASH USED IN OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES Income from Long Term Investments Income from Current Investments Purchase of Long Term Investments Purchase of Current Investments Sale of Current Investments NET CASH FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES NET CASH FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS Notes : 1 The above Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 Cash Flow Statement. 2 CASH AND CASH EQUIVALENTS : Balance with Scheduled Banks - On Current Account Cheques on Hand Cash on Hand Cash and Bank Balance (Schedule 5) In terms of our report of even date For Basu, Chatterjea & Co. Chartered Accountants S. K. Chatterjea Partner Membership No. 005629 Kolkata, 5th May, 2011 SCHEDULES TO THE ACCOUNTS 1. CAPITAL Authorised 2,00,00,000 Equity Shares of ` 10/- each Issued, Subscribed and Paid-up 1,59,98,385 Equity Shares of ` 10/- each, fully paid (All the above shares are held by the Holding Company, ITC Limited) 2. RESERVES AND SURPLUS As at 31st March, 2011 (`) General Reserve Profit and Loss Account 3. FIXED ASSETS GROSS BLOCK (AT COST) Particulars As at commencement of the year (`) 85,853 5,090 90,943 90,943 As at the end of the year (`) 85,853 5,090 90,943 90,943 Upto 31st March, 2010 (`) 85,692 4,891 90,583 90,433 DEPRECIATION For the year (`) 47 36 83 151 Upto 31st March, 2011 (`) 85,739 4,927 90,666 90,583 NET BOOK VALUE As at 31st March, 2011 (`) 114 163 277 360 87,26,223 7,06,05,884 7,93,32,107 As at 31st March, 2010 (`) 87,26,223 4,09,09,930 4,96,36,153 As at 31st March, 2011 (`) 20,00,00,000 20,00,00,000 15,99,83,850 15,99,83,850 As at 31st March, 2010 (`) 20,00,00,000 20,00,00,000 15,99,83,850 15,99,83,850 91,477 3,13,399 4,04,876 1,50,408 1,62,991 3,13,399 2,96,07,468 83 (2,02,50,000) (95,71,661) (9,032) (1,044) (2,24,186) 500 20,586 (2,03,100) (10,067) (2,13,167) 2,02,50,000 29,60,033 (1,04,34,376) (294,78,61,223) 293,53,90,210 3,04,644 For the year ended 31st March, 2010 (`) 3,05,63,721 151 (2,02,50,000) (1,08,84,582) (3,450) 4,25,937 (1,48,223) 78,188 3,252 (66,783) 1,10,738 43,955 2,02,50,000 60,44,777 (83,47,500) (238,55,46,321) 236,77,05,497 1,06,453
1,67,988 2,36,888 4,04,876
3,13,121 278 3,13,399
On behalf of the Board R. Tandon Director S. Dutta Director N. Bajaj Secretary
Plant and Machinery Furniture and Fixtures Total Previous Year
157

4. INVESTMENTS As at As at 31st March, 2011 31st March, 2010 (`) (`) UNQUOTED A. Long Term TRADE INVESTMENTS ITC Filtrona Limited 22,50,000 (2010 - 22,50,000) Equity Shares of ` 10/- each, fully paid ATC Limited 55,650 (2010 - 55,650) Equity Shares of ` 100/- each, fully paid 1,39,125 (2010 - 1,39,125) Equity Shares of ` 100/- each, ` 70/- paid (2010 - ` 45/- paid ) (a) B. Current OTHER INVESTMENTS Canara Robeco Interval Series 2 Quarterly Plan 2 - Inst Dividend Fund Nil (2010 - 50,00,000) Units of ` 10/- each DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend 1,79,214 (2010 - Nil) Units of ` 1,000/- each LIC MF Liquid Fund - Dividend Plan Nil (2010 - 1,00,35,131) Units of ` 10/- each (b) Total (a) + (b) 5. CASH AND BANK BALANCES As at As at 31st March, 2011 31st March, 2010 (`) (`) With Scheduled Banks On Current Accounts Cheques on Hand Cash on Hand 1,67,988 2,36,888 4,04,876 3,13,121 278 3,13,399 10.OPERATING AND ESTABLISHMENT EXPENSES For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Rates and taxes Filing Fees Auditors Remuneration (excluding Service Tax) Audit Fees Other Services Travelling and Conveyance Professional Fees Insurance Miscellaneous Expenses 11.PROVISION FOR TAXATION For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) 5,00,00,000 Income Tax for the year Current Tax Less: Adjustments relating to previous years Current Tax 8,750 3,800 18,000 17,437 128 14,500 662 14,997 78,274 8,692 1,168 18,000 7,500 2,975 14,030 662 19,490 72,517
2,25,00,000
2,25,00,000
83,47,500 2,92,16,250 6,00,63,750
83,47,500 1,87,81,875 4,96,29,375
17,92,70,431 17,92,70,431 23,93,34,181
11,01,86,745 16,01,86,745 20,98,16,120
88,486 (88,486)
6. OTHER CURRENT ASSETS As at As at 31st March, 2011 31st March, 2010 (`) (`) Good and Unsecured Deposits Others 5,000 5,000 5,000 500 5,500
7. LOANS AND ADVANCES As at As at 31st March, 2011 31st March, 2010 (`) (`) Good and Unsecured Income Tax (net of provisions) Fringe Benefit Tax (net of provisions) 97,091 2,850 99,941 3,850 3,850
8. LIABILITIES As at As at 31st March, 2011 31st March, 2010 (`) (`) Sundry Creditors Total outstanding dues of micro enterprises and small enterprises Total outstanding dues of creditors other than micro enterprises and small enterprises Security Deposits
33,345 4,64,204 4,97,549
29,854 4,64,204 4,94,058
9. PROVISIONS As at As at 31st March, 2011 31st March, 2010 (`) (`) Provision for Retirement Benefits Provision for Income Tax (net of advance payment) 30,769 30,769 13,674 11,494 25,168
12.NOTES TO THE ACCOUNTS 1. Uncalled liability in respect of partly paid up 1,39,125 shares is ` 1,25,21,250/(2010 - ` 2,29,55,625/-). 2. Dividend Income represents ` 2,02,50,000/- (2010 - ` 2,02,50,000/-) from Long Term Investments. 3. During the year, the following Current Investments were purchased and sold: (i) 30,24,614 Units of Birla Sun Life Cash Plus - Instl. - Daily Dividend Reinvestment at cost of ` 3,26,72,792/(ii) 18,369 Units of Birla Sun Life Cash Plus - Retail - Daily Dividend Reinvestment at cost of ` 3,00,689/(iii) 1,42,39,190 Units of BNP Paribas Money Plus Institutional Plan Daily Dividend at cost of ` 14,24,47,520/(iv) 1,42,07,394 Units of BNP Paribas Overnight Fund Institutional Daily Dividend at cost of ` 14,21,16,562/(v) 2,98,908 Units of Canara Robeco Interval Series 2 - Quaterly Plan 2 - Inst Dividend Fund at cost of ` 29,89,098/(vi) 33,02,579 Units of Canara Robeco Liquid Super Instt Daily Div Reinvest Fund at cost of ` 3,32,07,433/(vii) 25,91,080 Units of Canara Robeco Treasury Advantage Super Instt Daily Div Reinv Fund at cost of ` 3,21,47,792/(viii) 20,00,000 Units of DSP BlackRock FMP - 3M Series 22 - Dividend Payout at cost of ` 2,00,00,000/(ix) 31,995 Units of DSP BlackRock Liquidity Fund - Institutional Plan Daily Dividend at cost of ` 3,20,04,688 /(x) 22,517 Units of DSP BlackRock Liquidity Fund - Regular Plan - Daily Dividend at cost of ` 2,25,392 /(xi) 32,039 Units of DSP BlackRock Money Manager Fund - Institutional Plan - Daily Dividend at cost of ` 3,20,64,427/(xii) 1,07,045 Units of DWS Insta Cash Plus Fund - Regular Plan Daily Dividend - Reinvest at cost of ` 11,02,675/(xiii) 30,00,000 Units of Fidelity FMP Series 2 - Plan B - Dividend at cost of ` 3,00,00,000/(xiv) 70,00,000 Units of HDFC FMP 100 D September 2010 (2) - Dividend Series XIV, Option: Payout at cost of ` 7,00,00,000/(xv) 1,001 Units of ICICI Prudential Liquid Super Institutional Plan - Div Daily at cost of ` 1,00,167/(xvi) 9,273 Units of ING Liquid Fund - Daily Dividend Option at cost of ` 1,00,026/(xvii) 1,10,72,903 Units of JM High Liquidity Fund - Super Institutional Plan - Daily Dividend at cost of ` 11,09,11,736/(xviii) 1,10,50,735 Units of JM Money Manager Fund Super Plus Plan Daily Dividend at cost of ` 11,05,65,918/(xix) 20,036 Units of JP Morgan India Liquid Fund - Retail - Daily Dividend Plan - Reinvest at cost of ` 2,00,658/(xx) 1,61,22,772 Units of JP Morgan India Liquid Fund - Super Inst. Daily Dividend Plan - Reinvest at cost of ` 16,13,55,093/(xxi) 91,59,467 Units of JP Morgan India Treasury Fund - Super Inst. Daily Div Plan - Reinvest at cost of ` 9,16,76,194/(xxii) 70,00,000 Units of Kotak FMP Series 31- Dividend at cost of ` 7,00,00,000/(xxiii) 1,09,29,775 Units of Kotak Floater Long Term - Daily Dividend at cost of ` 11,01,69,948/-
158

(xxiv) 89,96,554 Units of Kotak Liquid (Institutional Premium) - Daily Dividend at cost of ` 11,00,10,768/(xxv) 1,11,20,167 Units of LIC Nomura MF Income Plus Fund - Daily Dividend Plan at cost of ` 11,12,01,671/(xxvi) 1,20,83,587 Units of LIC Nomura MF Liquid Fund - Dividend Plan at cost of ` 13,26,78,999/(xxvii) 1,10,57,320 Units of Principal Cash Management Fund - Dividend Reinvestment Daily at cost of ` 11,05,80,940/ (xxviii) 49,14,539 Units of Reliance Liquid Fund - Cash Plan - Daily Dividend Option at cost of ` 5,47,55,336/(xxix) 1,79,144 Units of Religare Liquid Fund - Institutional Daily Dividend at cost of ` 17,91,83,902 / (xxx) 32,36,449 Units of Sundaram Money Fund Inst. - Daily Div Rein at cost of ` 3,26,72,927/(xxxi) 1,23,41,264 Units of S230 Sundaram Money Fund Super Inst. Daily Div. Rein at cost of ` 12,45,88,767/(xxxii) 2,93,936 Units of Templeton India Treasury Management Account Super Institutional Plan - Daily Dividend Reinvestment at cost of ` 29,41,33,820 /(xxxiii) 2,94,17,322 Units of Templeton India Ultra Short Bond Fund Super Institutional Plan - Daily Dividend Reinvestment at cost of ` 29,45,14,459 /(xxxiv) 51,212 Units of UTI Liquid Cash Plan Institutional - Daily Income Option - Re-investment at cost of ` 5,22,07,497/ (xxxv) 52,295 Units of UTI Treasury Advantage Fund - Institutional Plan (Daily Dividend Option) - Re-investment at cost of ` 5,23,05,925/4. Earnings per Share Profit after Taxation (`) Weighted average number of Equity Shares outstanding Basic and Diluted Earnings Per Share (Face Value - ` 10 / - per share) For the year ended 31st March, 2011 2,96,95,954 / 1,59,98,385 ` 1.86 For the year ended 31st March, 2010 3,05,63,721 /1,59,98,385 ` 1.91 7. Provision for Taxation included in the Profit and Loss Account represents Current Tax. The incidence of Deferred Tax being insignificant, is not considered. 8. Interest in Joint Venture : The Companys interests, as a venturer, in jointly controlled entity (incorporated Joint Ventures) is : Name Country of Incorporation India Percentage of Voting Power as at 31st March, 2011 50
ITC Filtrona Limited
Financial Statements of ITC Filtrona Limited are drawn up according to the Financial Year Ended as at 31st December. The Companys interests in this Joint Venture is reported as Long Term Investment (Schedule 4) and stated at cost. However, the Companys 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 December, 2010 (`) ASSETS 1. Fixed Assets (net) 2. Current Assets, Loans and Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances II LIABILITIES 1. Current Liabilities and Provisions a) Liabilities b) Provisions 2. Deferred Tax (net) III INCOME 1. Sales 2. Other Income IV EXPENSES 1. Raw Materials, etc. 2. Manufacturing, Selling, etc. Expenses 3. Depreciation 4. Provision for Taxation V OTHER MATTERS 1. Capital Expenditure Commitments I 9,48,62,622 13,11,96,676 2,58,10,436 1,61,92,143 11,17,319 2,62,36,800 As at 31st December, 2009 (`) 9,27,63,260 12,04,43,314 3,33,30,218 1,06,45,004 8,66,371 2,30,04,589
5. Remuneration of Manager : Salaries : ` 5,84,200/- (2010 - ` 3,59,000/-) Other Benefits : ` 47,981/- (2010 - ` 30,004/-) 6. Related Party Disclosures : (a) Relationships Holding Company ITC Limited Joint Venture ITC Filtrona Limited Key Management Personnel Mr. K. Vaidyanath Non-Executive Chairman (upto 2nd January, 2011) Mr. R. Tandon Non-Executive Chairman (w.e.f. 3rd January, 2011) Non-Executive Director (upto 2nd January, 2011) Mr. B. B. Chatterjee Non-Executive Director Mr. S. Dutta Non-Executive Director (b) Disclosure of transaction between the Company and Related Party : Particulars For the year ended For the year ended 31st March, 2011 31st March, 2010 (`) (`) Joint Venture Company Dividend Received 2,02,50,000 / 2,02,50,000 / Holding Company Miscellaneous Income 5,03,364 / 3,18,930 / Miscellaneous Expenses 11,030 / 11,030 / -
9,64,04,964 2,58,55,745 75,14,132 63,27,37,162 1,20,70,435 53,07,15,980 4,15,59,788 1,21,44,300 1,94,88,031 2,41,88,020
9,41,02,406 2,62,09,589 69,26,101 62,20,83,565 1,01,73,869 49,94,12,190 4,51,78,429 1,19,71,602 2,50,21,076 Nil
9. Segment Reporting : The Company operates in a single business and geographical segment.
10. Employee Benefits : Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes: For the year ended 31st March, 2011 (`) Pension Gratuity For the year ended 31st March, 2010 (`) Gratuity
Leave Encashment Unfunded
Pension
Leave Encashment Unfunded
N.A. I. Components of Employer Expense 1. 2. 3. 4. 5. 6. 7. 8. Current Service Cost Interest Cost Expected Return on Plan Assets Curtailment Cost/(Credit) Settlement Cost/(Credit) Past Service Cost Actuarial Losses/(Gains) Total expense recognised in the Statement of Profit & Loss Account N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
Unfunded
N.A.
Unfunded
4,956 445 Nil Nil Nil Nil 2,443 7,844
2,552 648 Nil Nil Nil Nil 6,051 9,251
N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
2936 191 Nil Nil Nil Nil (293) 2,834
1,432 372 Nil Nil Nil Nil 994 2,798
The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost.
159

For the year ended 31st March, 2011 (`) Pension Gratuity For the year ended 31st March, 2010 (`) Gratuity Unfunded Unfunded 7%
Leave Encashment Unfunded 8%
Pension
Leave Encashment Unfunded 7%
N.A. II. Actual Returns III. Net Asset/(Liability) recognised in Balance Sheet 1. Present Value of Defined Benefit Obligation 2. Fair value on Plan Assets 3. Status [Surplus/(Deficit)] 4. Unrecognised Past Service Cost 5. Net Asset/ (Liability) recognised in Balance Sheet IV. Change in Defined Benefit Obligations (DBO) 1. Present Value of DBO at Beginning of Period 2. Current Service Cost 3. Interest Cost 4. Curtailment Cost/(Credit) 5. Settlement Cost/(Credit) 6. Plan Amendments 7. Acquisitions 8. Actuarial (Gains)/Losses 9. Bentfits Paid 10. Present Value of DBO at the End of Period V. Change in Fair value of Asset 1. Plan Assets at Beginning of Period 2. Acquisition Adjustment 3. Expected Return on Plan Assets 4. Actuarial Gains/(Losses) 5. Actual Company Contributions 6. Benefits Paid 7. Plan Assets at End of Period VI. Actuarial Assumptions 1. Discount Rate (%) 2. Expected Return on Plan Assets (%) N.A.
Unfunded 8%
N.A. N.A.
13,412 N.A. (13,412) Nil (13,412)
17,357 N.A. (17,357) Nil (17,357)
5,568 N.A. (5,568) Nil (5,568)
8,106 N.A. (8,106) Nil (8,106)
N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
5,568 4,956 445 Nil Nil Nil Nil 2,443 Nil 13,412
8,106 2,552 648 Nil Nil Nil Nil 6,051 Nil 17,357
N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
2,734 2,936 191 Nil Nil Nil Nil (293) Nil 5,568
5,308 1,432 372 Nil Nil Nil Nil 994 Nil 8,106
N.A. N.A. N.A. N.A. N.A. N.A. N.A.
N.A. N.A.
8.00 Nil
8.00 Nil
N.A. N.A.
7.00 Nil
7.00 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. As at 31st March, 2011 VII.Major Category of Plan Assets as a % of the Total Plan Assets 1. Government Securities/Special Deposit with RBI 2. High Quality Corporate Bonds 3. Insurance Companies 4. Mutual Funds 5. Cash and Cash Equivalents N.A. N.A. N.A. N.A. N.A. As at 31st March, 2010 N.A. N.A. N.A. N.A. N.A.
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. For the year ended 31st March, 2011 (`) Pension Gratuity For the year ended 31st March, 2010 (`) Leave Pension
Encashment
For the year ended 31st March, 2009 (`) Leave Pension Gratuity
For the year ended 31st March, 2008 (`) Leave Pension Gratuity Leave
Encashment
Gratuity
Encashment
Encashment
N.A. Unfunded Unfunded IX. Net Asset /(Liability) recognised in Balance Sheet (including experience adjustment impact) 1. 2. 3. 4. 5. Present Value of Defined Benefit Obligation Fair Value of Plan Assets Status [Surplus/(Deficit)] Experience Adjustment of Plan Assets [Gain/(Loss)] Experience Adjustment of Obligation [(Gain)/Loss] N.A. 13,412 17,357 N.A. N.A. N.A. N.A. (13,412) (17,357) N.A. Nil Nil N.A. Nil Nil
5,568 8,106 N.A. N.A. (5,568) (8,106) Nil Nil Nil Nil
2,734 5,308 N.A. N.A. (2,734) (5,308) Nil Nil Nil Nil
N.A. 2,371 2,250 N.A. N.A. N.A. N.A. (2,371) (2,250) N.A. Nil Nil N.A. Nil Nil
160

11. There are no Micro, Small and Medium Enterprises, to whom the Company owes any dues, as at 31st March 2011. 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 13. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Financial Statements are prepared on accrual basis under the historical cost convention. Fixed Assets Fixed Assets are stated at cost including any incidental acquisition expenses. Depreciation Depreciation is provided on Written Down Value basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. 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. 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 Profit and Loss Account except for those covered by forward contract rates where the gains / losses arising from such restatement are recognised over the period of such contracts. On behalf of the Board R. Tandon Director S. Dutta Director N. Bajaj Secretary Borrowing Costs 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 being accounted for on an accrual basis. Retirement Benefits Liability for Leave Encashment and gratuity payable to employees is provided for at the year-end on actuarial basis. Taxes on Income To provide Current Tax as the amount of tax payable in respect of taxable income for the period. To provide 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 of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets. have been identified based on information available with the Company. 12. Figures for the previous year have been re-grouped / re-arranged wherever necessary.
0 0 0 0 8 3 1 4 3 1 0 3 2 0 1 1
IV. State Code

2 1
Performance of Company (Amount in ` Thousands) Turnover (including other income)

3 0 3 3 5
Total Expenditure
7 2 8
Date II.
Month
Year
+

Profit / Loss Before Tax

2 9 6 0 7
+

Profit / Loss After Tax

2 9 6 9 6

N I L
(Please tick appropriate box + for profit, - for loss)

L
Rights Issue
N I
Earnings Per Share in `

1 . 8 6
Dividend Rate %
N I L
Bonus Issue
N I L
Private Placement
N I L
V. III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities
2 3 9 3 1 6
Generic Names of Principal Products/Services of Company (As per monetary terms) Item Code No. (ITC Code)
N . A .
Total Assets
2 3 9 3 1 6
Sources of Funds Paid up Capital

1 5 9 9 8 4
Product Description Reserves & Surplus

7 9 3 3 2
N . A .
Secured Loans
N I L
Unsecured Loans
N I L

0
Investments
2 3 9 3 3 4
Net Current Assets

1 8
Misc. Expenditure
N I L
Accumulated Losses
N I L
Audit Committee : B. B. Chatterjee, Chairman, M/s. R. Tandon and S. Dutta, Members
161
LANDBASE INDIA LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2011 Your Directors submit their Report and Accounts for the financial year ended 31st March, 2011. FINANCIAL PERFORMANCE During the year under review, your Company earned a gross income of ` 1022.94 lakhs (previous year ` 895.41 lakhs) and incurred a net loss of ` 325.79 lakhs (previous year ` 490.22 lakhs). OPERATIONS The Company owns and operates The Classic Golf Resort, a Jack Nicklaus Signature Course, 45 Kms from Delhi. During the year, The Classic Golf Resort was the venue for some very prestigious events such as Albatross Haryana Golf, The Economic Times, BT Pro Am, Vodafone, Audi Cup, BBC Sprit of Golf and Indian Golf League. Most of the tournaments received extensive print and electronic media coverage. The course was rated as one of the best in the country by the officials and leading professional players of the country. 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 last quarter of 2012. During the year, the Company issued and allotted 25,00,000 Redeemable Preference Shares of ` 100 / - each for cash at par, aggregating ` 25 Crores, to ITC Limited, the Holding Company. The total preference capital of the Company subsequent to the above issue stands at ` 126 Crores. The proceeds from the said issue are being utilized towards the construction of the destination resort. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO 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 ` 35.58 lakhs (previous year ` 38.58 lakhs). ii) Outgo : Foreign exchange outgo during the year under review was ` 68.59 lakhs (previous year ` 76.50 lakhs). Place : Gurgaon Date : 28th April, 2011 DIRECTORS In accordance with Articles 106 and 107 of the Articles of Association of the Company, Mr. Rajiv Tandon 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. The Board of Directors of your Company at its meeting held on 25th March 2011 re-appointed Mr. S. C. Sekhar as Managing Director of the Company for a period of two years with effect from 1st April, 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 General Meeting. Appropriate resolution seeking your approval for re-appointment of Mr. Sekhar as Managing Director is appearing in the Notice convening the ensuing Annual General Meeting of the Company. 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. DIRECTORS 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 along with proper explanations relating to material departures, if any; 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 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; d) prepared the Annual Accounts on a going concern basis. The significant accounting policies and required disclosures followed are appearing in Schedules 16 and 17, respectively, in the Annual Accounts.
On behalf of the Board of Directors S. C. Sekhar Managing Director B. Hariharan Director
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, 2011 and the related Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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; 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; The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; In our opinion, the Balance Sheet, Profit and Loss Account 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; On the basis of written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; In our opinion and to the best of our information and according to the explanations given to us, the said financial statements
(b)
2.
(c)
(d)
3.
(e)
(f)
162

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) (ii) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011; In the case of the Profit and Loss Account, of the loss for the year ended on the date; and Gurgaon, 28th April, 2011 (iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants
ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF LANDBASE INDIA LIMITED Referred to in paragraph 3 of the Auditors Report of even date to the members of Landbase India Limited on the financial statements for the year ended March 31, 2011. 1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets. 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. 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. The inventory has been physically verified by the Management during the year. In our opinion, the frequency of verification is reasonable. There is no inventory lying with third parties. 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. 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. 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. 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. (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, excise duty and cess as at March 31, 2011 which have not been deposited on account of a dispute, are as follows : Amount (`) Period to which the amount relates A.Y. 2001-02 A.Y. 2003-04 A.Y. 2005-06 A.Y. 2005-06 Forum where the dispute is pending Income Tax Appellate Tribunal Income Tax Appellate Tribunal Income Tax Appellate Tribunal Commissioner of Income Tax (Appeals)
(b)
Name of the Nature of the Statute dues Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961
Income Tax 11,59,41,813 Income Tax 32,98,817
(c)
Income Tax 13,82,55,172 Income Tax 12,80,10,000
2.
(a)
(b)
(c)
10. The accumulated losses of the Company as at March 31, 2011 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 preceding financial year. 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 of security by way of pledge of shares, debentures and other securities. 13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company. 14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. 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. 16. The Company has not obtained any term loans. 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 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. 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 such case by the Management. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants
3.
(a)
(b)
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, 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. 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. 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. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 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. (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 undisputed statutory dues including investor education and protection fund, employees state insurance, entertainment duty, income-tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues as applicable, with the appropriate authorities.
5.
6.
7. 8.
9.
163

BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule I. SOURCES OF FUNDS 1. Shareholders Funds a) Share Capital b) Reserves and Surplus As at 31st March, 2011 (`) (`) 1,76,00,00,000 6,11,62,181 1,82,11,62,181 3 1,30,07,84,203 35,22,26,636 94,85,57,567 20,43,88,532 1,15,29,46,099 4 5 6 7 8 9 1,66,43,020 46,42,530 7,40,09,721 21,12,291 8,09,32,584 17,83,40,146 37,32,27,018 18,28,935 (19,67,15,807) 86,49,31,639 1,82,11,62,181 250 1,23,37,806 56,36,932 3,13,76,762 13,67,568 2,10,80,365 7,17,99,433 34,66,79,940 14,61,778 (27,63,42,285) 83,23,52,610 1,57,11,62,181 1,26,66,05,173 33,35,05,542 93,30,99,631 8,20,51,975 1,01,51,51,606 250 As at 31st March, 2010 (`) (`) 1,51,00,00,000 6,11,62,181 1,57,11,62,181
1 2
Total II. APPLICATION OF FUNDS 1. Fixed Assets Gross Block Less : Depreciation Net Block Capital Work-in-Progress 2. Investments 3. Current Assets, Loans and Advances a) Inventories b) Sundry Debtors c) Cash and Bank Balances d) Other Current Assets e) Loans and Advances Less : Current Liabilities and Provisions a) Current Liabilities b) Provisions Net Current Liabilities
10 11
4. Profit and Loss Account Total Significant Accounting Policies 16 Notes to the Accounts 17 The Schedules referred to above form an integral part of the Accounts. This is the Balance Sheet referred to in our Report of even date. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants Gurgaon, 28th April, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule I. INCOME Income from Operations Other Income
For and on behalf of the Board of Directors S. C. Sekhar B. Hariharan Managing Director Director
For the year ended 31st March, 2011 (`) 9,22,66,606 1,00,27,302 10,22,93,908
For the year ended 31st March, 2010 (`) 8,76,19,576 19,21,857 8,95,41,433
12 13
II. EXPENDITURE Raw Material, Merchandising etc. Consumed and Expenditure incurred on Construction Operating and Administrative Expenses Depreciation on Fixed Assets(net) III. PROFIT Profit /(Loss) before Taxation Current and Deferred Tax Profit /(Loss) after Taxation Profit /(Loss) Brought Forward Profit /(Loss) Carried Forward Earnings Per Share (Face Value ` 10/- each)
14 15 5
70,34,417 9,52,99,651 3,25,38,869 13,48,72,937 (3,25,79,029)
64,85,177 10,00,00,744 3,20,78,246 13,85,64,167 (4,90,22,734) (4,90,22,734) (78,33,29,876) (83,23,52,610) (4.02)
17 (6)
17 (5)
(3,25,79,029) (83,23,52,610) (86,49,31,639) (0.65)
Significant Accounting Policies 16 Notes to the Accounts 17 The Schedules referred to above form an integral part of the Accounts. This is the Profit and Loss Account referred to in our Report of even date. Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants Gurgaon, 28th April, 2011
164

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011 For the year ended 31st March, 2011 (`) A. CASH FLOW FROM OPERATING ACTIVITIES : NET (LOSS) /PROFIT BEFORE TAX Adjustments for: Depreciation Interest Income (Profit)/Loss on Fixed Assets/Debtors sold/Write offs Miscellaneous Advances written off Write offs of Subscription Fees Provision for Doubtful Debts Provision for Doubtful advances Liability no longer required written back Provision for Gratuity & Leave Encashment OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR CHANGES IN WORKING CAPITAL : (Increase)/Decrease in Sundry Debtors (Increase)/Decrease in Other Receivables (Increase)/Decrease in Inventories Increase/(Decrease) in Trade and Other Payables Cash generated from Operations Taxes (Paid)/Received (Net of TDS) Net cash from Operating Activities B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets Increase in Capital Work in Progress Interest Received Net cash used in Investing Activities C. CASH FLOW FROM FINANCING ACTIVITIES : Proceeds from fresh issue of Equity Share Capital Proceeds from fresh issue of Preference Share Capital Repayment of Long-Term Borrowings (Term Loans) Net Cash from Financing Activities Net Increase /(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents as at 31.03.2010 Cash and Cash Equivalents as at 31.03.2011 Cash and Cash Equivalents comprise : Cash in hand Balance with Scheduled Banks Deposit under Margin Money Dividend Account Total Cash and Cash equivalents NOTES:1. 2. 3. The above Cash Flow Statement has been prepared under the indirect method set out in the Accounting Standard-3 Cash Flow Statement. Figures in brackets indicate cash outgo. Following other non cash transactions have not been considered in the Cash Flow Statement. - Tax deducted at source (on income) This is the Cash Flow Statement Account referred to in our report of even date. 1,89,161 5,90,32,811 1,47,87,557 192 7,40,09,721 2,36,664 1,30,61,936 1,80,77,970 192 3,13,76,762 25,00,00,000 25,00,00,000 4,26,32,959 3,13,76,762 7,40,09,721 46,00,00,000 1,01,00,00,000 (40,00,00,000) 1,07,00,00,000 2,16,19,882 97,56,880 3,13,76,762 (11,56,60,406) (12,16,95,501) 24,71,172 (23,48,84,735) (4,79,00,522) (1,18,25,822) 7,37,916 (5,89,88,428) (3,25,79,029) 3,25,38,869 (32,15,895) 34,15,657 10,53,347 6,53,024 6,49,767 (61,20,555) 7,74,051 (28,30,764) 9,94,402 (19,38,270) (43,05,214) 3,16,07,715 2,35,27,869 39,89,825 2,75,17,694 (4,90,22,734) 3,20,78,246 (14,27,123) 10,53,347 8,85,043 (1,43,157) 2,75,260 (1,63,01,118) (22,94,377) 60,82,470 5,96,397 (98,09,52,187) (99,28,68,815) 34,77,125 (98,93,91,690) For the year ended 31st March, 2010 (`)
Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firm Registration Number : 012574N Chartered Accountants Gurgaon, 28th April, 2011
165

As at 31st March, 2011 (`) (`) 1. SHARE CAPITAL

Authorised 5,00,00,000 Equity Shares (Previous Year 5,00,00,000 Equity Share) of ` 10/- each 1,50,00,000 Redeemable Preference Shares (Previous Year 1,50,00,000) of ` 100 /- each Issued and Subscribed 5,00,00,000 * (Previous Year 5,00,00,000) Equity Shares of ` 10/- each fully paid up. [Out of the above 5,00,00,000 Equity Shares (Previous Year 5,00,00,000 Equity Shares) are held by the Holding Company, ITC Limited, and its nominees] 1,26,00,000 (Previous Year 1,01,00,000) Redeemable Preference Shares (redeemable on or after 5 years and not entitled to dividend) of ` 100 /- each fully paid up. [Out of the above 1,26,00,000 Preference Shares (Previous Year 1,01,00,000) are held by the Holding Company, ITC Limited] 50,00,00,000 1,50,00,00,000 2,00,00,00,000
As at 31st March, 2010 (`) (`)
50,00,00,000 1,50,00,00,000 2,00,00,00,000
50,00,00,000
50,00,00,000
1,26,00,00,000
1,01,00,00,000
1,76,00,00,000 * Out of the above Nil (Previous Year 4,60,00,000) shares have been allotted by the way of rights issue to the exisiting shareholders. 2. RESERVES AND SURPLUS General Reserve 6,11,62,181 6,11,62,181 3. FIXED ASSETS (At Cost) [Refer Note (B) & (C) of Schedule 16 & Note 14 of Schedule 17]
GROSS BLOCK As at 1st April, 2010 (`) Additions (`) Deduction/ Adjustments (`) As at 31st March, 2011 (`) As at 1st April, 2010 (`) DEPRECIATION For the year** (`) Deduction/ Adjustments (`) As at 31st March, 2011 (`)
1,51,00,00,000
6,11,62,181 6,11,62,181 (in `)

NET BLOCK As at 31st March, 2011 (`) As at 31st March, 2010 (`)
Particulars
Tangible Assets Land (Freehold) Building* Plant & Machinery-Others Plant & Machinery-Golf Course Office & Other Equipment Furniture & Fixtures Computers Vehicles Golf Carts Tents TOTAL Capital Work-in-Progress Previous Year
52,20,40,459 23,10,99,859 24,36,83,433 22,57,78,037 26,78,969 64,41,877 61,88,803 79,33,474 1,50,92,071 56,68,191 1,26,66,05,173 1,19,16,29,929
3,11,30,282 4,50,059 74,03,170 6,04,303 20,85,654 10,43,047 10,18,197 55,90,759 27,39,620 5,20,65,091 7,49,75,244
55,31,70,741 11,31,739 23,04,18,179 51,55,706 24,59,30,897 22,57,78,037 10,22,515 22,60,757 6,37,785 78,89,746 5,92,633 66,39,217 1,95,774 87,55,897 34,81,718 1,72,01,112 56,68,191 27,39,620 1,78,86,061 1,30,07,84,203 1,26,66,05,173
5,02,05,491 12,52,07,635 13,35,20,838 12,26,874 43,94,433 28,59,844 28,35,016 90,15,914 42,39,497 33,35,05,542 30,14,05,853
36,96,339 1,24,09,477 1,07,24,458 1,33,329 6,78,550 9,94,620 8,32,197 19,53,467 17,57,488 3,31,79,925 3,20,99,689
4,61,343 30,53,381 5,83,025 5,51,631 5,70,217 89,340 34,81,704 56,68,190 1,44,58,831
5,34,40,487 13,45,63,731 14,42,45,296 7,77,178 45,21,352 32,84,247 35,77,873 74,87,677 3,28,795 35,22,26,636 33,35,05,542
55,31,70,741 17,69,77,692 11,13,67,166 8,15,32,741 14,83,579 33,68,394 33,54,970 51,78,024 97,13,435 24,10,825 94,85,57,567 20,43,88,532 93,30,99,631
52,20,40,459 18,08,94,368 11,84,75,798 9,22,57,199 14,52,095 20,47,444 33,28,959 50,98,458 60,76,157 14,28,694 93,30,99,631 8,20,51,975
* Building includes Vehicular Roads of ` 45,95,709/- (Previous Year ` 45,95,709/- ) which have been fully depreciated over a period of five years as per Note C of Schedule 16. ** Depreciation includes ` 5,24,998 / - (Previous Year ` 21,443 / -) on Assets used for the Resort Project transferred to Capital Work-in-Progress and ` 1,16,058 / - (Previous Year ` Nil) transferred on Inventory on Golf Huts work in progress used for the same.
As at 31st March, 2011 (`) (`) 4. INVESTMENTS (Refer Note (E) of Schedule 16) (Unquoted - Long-Term, Non-Trade) Gilt Facilities India Private Ltd. 545 Redeemable Preference Shares (0.5%) of ` 1,00,000/each fully paid 5,45,00,000 Less : Provision for Diminution in Investments 5,44,99,900 Prime Golf Ranking Private Limited 150 Equity Shares of ` 1/- each fully paid
As at 31st March, 2010 (`) (`) 6. SUNDRY DEBTORS (Unsecured) Debts Outstanding for a period exceeding six months Considered Good Considered Doubtful Other Debts Considered Good Total Debts Less : Provision for doubtful debts
As at 31st March, 2011 (`) (`)
As at 31st March, 2010 (`) (`)
5,64,132 5,02,688 40,78,398 51,45,218 5,02,688
4,47,762 5,02,688 51,89,170 61,39,620 5,02,688
5,45,00,000 100 5,44,99,900 150 250 100 150 250
46,42,530 46,42,530 1,89,161
56,36,932 56,36,932 1,48,373 88,291 1,30,61,936 192 1,80,77,970 3,13,76,762
5. INVENTORIES [Refer Note (F) of Schedule 16] Merchandising Stock Food & Beverage Stock Stores and Spares Stock of Parking Slot/Servant Qtrs Work in Progress-Golf Huts
14,80,690 5,23,182 77,91,231 13,19,908 68,97,563 1,80,12,574
9,09,456 5,56,797 69,84,013 13,19,908 39,37,186 1,37,07,360 13,19,908 1,66,43,020 1,66,43,020 49,646 1,23,37,806 1,23,37,806
7. CASH AND BANK BALANCES Cash in hand Cheques in hand Balance With Scheduled Banks on Current Accounts Dividend Accounts (including interest) Fixed Deposit - Margin Money*
5,90,32,811 192 1,47,87,557 7,40,09,721 * Pledged against Guarantees and Letter of Credit issued by Bank
Less: Provision for Slow Moving stock of parking slot/servant quarters 13,19,908 Less: Provision for Slow Moving stock of stores and spares 49,646
8. OTHER CURRENT ASSETS (Unsecured - considered good) Interest Accrued on Fixed Deposits
21,12,291 21,12,291
13,67,568 13,67,568
166

As at 31st March, 2011 (`) (`) 9. LOANS AND ADVANCES (Unsecured) Advances recoverable in cash or in kind or for value to be received Considered good* Considered doubtful
As at 31st March, 2010 (`) (`)
14. RAW MATERIAL, MERCHANDISING, ETC. CONSUMED AND EXPENDITURE INCURRED ON CONSTRUCTION 1) Raw Material (Food & Beverage) Opening Stock Add : Purchases Less : Closing Stock 2) Merchandising Opening Stock Add : Purchases Less : Closing Stock 3) Laburnum Project Expenses Opening Balance Stock of Parking Slots & Servant Quarters and Material at Site Less : Provision for Parking Slots & Servant Quarter 4) Golf Hut Project Expenses Opening Balance Add : Expenses during the year Salaries, Wages and Bonus Travelling & Conveyance Vehicle Maintenance Legal & Professional Charges Printing & stationery Miscellaneous exp Depreciation Less : Closing Stock
For the year ended 31st March, 2011 (`) (`) 5,56,797 51,95,014 57,51,811 5,23,182 9,09,456 23,77,022 32,86,478 14,80,690
For the year ended 31st March, 2010 (`) (`) 6,34,478 55,52,575 61,87,053 5,56,797 11,61,900 6,02,477 17,64,377 9,09,456
7,79,91,854 1,33,64,810 6,49,767 7,86,41,621 1,33,64,810 Less Provision for doubtful advances 6,49,767 7,79,91,854 1,33,64,810 Security Deposits Considered good 5,30,128 13,15,128 Advance Tax (Net of Provision for tax amounting to ` 18,86,593 2,41,06,02 64,00,427 (Previous Year ` 18,86,593) 8,09,32,584 2,10,80,365
52,28,629
56,30,256
18,05,788
8,54,921
* Includes capital advances amounting to ` 6,49,54,041/- (Previous Year ` 13,47,153/-) 10. CURRENT LIABILITIES Sundry Creditors Total outstanding dues of creditors other than micro & small enterprises (Refer Note 4 on Schedule 17) 4,51,14,907 1,86,45,221 Other Liabilities 40,56,181 36,38,910 Investor Education and Protection Fund shall be credited by the following amount : Unpaid Dividend 157 157 Advances received against Golf Membership 3,40,36,642 3,04,63,786 Payments received against Golf Membership pending approval 20,000 32,18,133 Security Deposit against Golf Membership (Refer Note 3 on Schedule 17) 31,10,08,793 31,08,75,115 34,50,65,435 34,45,57,034 Less : Membership Subscription Receivable 2,10,09,662 32,40,55,773 2,01,61,382 32,43,95,652 37,32,27,018 11. PROVISIONS (Refer Note (G) of Schedule 16 and Note 15 of Schedule 17) Provision for Employee Benefits 18,28,935 18,28,935 For the year ended 31st March, 2011 12. INCOME FROM OPERATIONS Membership Fee Food and Beverage Sales Proshop Income Caddie Rental Cart Rental Green Fee Health Club and Other Facilities Tented Accomodation Rental Income Sponsorship Income 3,48,75,001 1,14,11,552 29,33,959 72,56,493 54,52,356 2,43,36,452 21,99,514 8,86,993 29,14,286 9,22,66,606 3,44,17,396 1,34,38,499 19,29,367 74,08,340 37,65,112 2,24,57,321 10,06,580 24,70,685 7,26,276 8,76,19,576 14,61,778 14,61,778 For the year ended 31st March, 2010 34,66,79,940
13,19,908 13,19,908 13,19,908
13,19,908 13,19,908 13,19,908
39,37,186 11,582 55,037 3,336 27,54,165 16,249 3,949 1,16,059 68,97,563 68,97,563 70,34,417
31,92,661

7,44,525

39,37,186 39,37,186 64,85,177
13. OTHER INCOME Interest received On Fixed Deposits Gross* Income Tax Refund Others Miscellaneous Receipts Sale of Scrap Liabilities Written Back *[Tax deducted at source ` 2,11,549/(Previous year - ` 88,717/-)]
21,14,818 8,80,000 2,21,077 4,67,516 2,23,336 61,20,555 1,00,27,302
8,89,119 1,67,300 3,70,704 2,84,329 67,248 1,43,157 19,21,857
15. OPERATING AND ADMINISTRATIVE EXPENSES (Refer Note 14 & 15 of Schedule 17) Salaries, Wages and Bonus 4,18,62,621 4,02,42,303 Contribution to Provident and Other Funds [Includes ` 4,20,660/(Previous Year ` 72,724/-) towards provision for Gratuity] 17,77,934 11,15,228 Welfare Expenses 10,17,351 4,46,57,906 10,35,246 4,23,92,777 Rent 5,93,745 7,64,728 Rates & Taxes 11,90,061 6,10,304 Travelling & Conveyance 29,08,655 30,99,703 Vehicle Maintenance 17,37,246 17,20,715 Communication Expenses 12,98,567 14,35,851 Power & Fuel 1,19,76,468 1,01,80,779 Consumption of Other Consumables 37,52,692 34,99,547 Insurance 11,92,824 7,86,486 Repair and Maintenance Building 7,69,749 6,83,145 Plant and Machinery 8,46,650 5,50,430 Others 32,16,482 48,32,881 18,83,966 31,17,541 Golf Course Maintenance [excluding debited to other heads ` 74,99,247/(Previous Year ` 53,21,852/-)] 51,56,170 50,40,585 Business Promotion 2,48,336 1,61,655 Printing & Stationery 53,083 51,407 Auditors Remuneration Audit Fee 6,61,800 6,61,800 Out of Pocket Expenses 55,600 7,17,400 57,900 7,19,700 Legal & Professional Charges 54,44,139 98,62,640 Advertisement & Sales Promotion 10,000 21,000 Hire Charges 12,16,052 12,25,029 Club Promotion Expenses 15,826 55,606 Sundry Balances written off 8,85,043 Loss on Assets sold & written off 34,15,657 Subscription fees written off 6,53,024 Filing Fees for increase in Authorised Capital 1,18,50,000 Miscellaneous Expenses 42,28,919 25,19,648 9,52,99,651 10,00,00,744
167

SCHEDULES TO THE ACCOUNTS (Contd.) 16. SIGNIFICANT ACCOUNTING POLICIES A) BASIS OF PREPARATION OF ACCOUNTS The Financial Statements have been prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. B) FIXED ASSETS Fixed assets are stated at cost of acquisition less accumulated depreciation. Costs are inclusive of inward freight, duties and taxes and any other incidental expenditure relating to acquisition. In respect of major projects involving construction, related project and pre-operational expenses form part of the value of assets capitalized. C) DEPRECIATION Depreciation on Fixed Assets, is provided on straight line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956 except for the following assets on which based on managements assessment of useful life, depreciation has been provided at higher rates : Rate (%) Golf Carts 20 Tents 50 Vehicular Roads 20 Depreciation is provided on prorata basis on the assets capitalized during the year. Assets costing less than ` 5,000/- are fully depreciated in the year of purchase. D) FOREIGN CURRENCY TRANSACTIONS i) Transactions in foreign currency are recorded at the rate prevalent on the date of the transaction. ii) All foreign currency liabilities and monetary assets are restated at the exchange rate prevailing as at the date of the Balance Sheet. The difference is taken to the Profit and Loss account as Exchange Fluctuation loss or gain. E) INVESTMENTS Investments made by the Company are long-term in nature and are recorded at cost. Provision for diminution is made to recognize a decline, other than temporary, in the value of the investments. F) INVENTORIES Inventories are valued at the lower of cost, determined on the weighted average basis and net realizable value. Work in progress - golf huts includes cost of work for in progress properties. Cost included in inventory includes development expenses, cost of services and other overheads relating to project and is valued at lower of cost / estimated cost and estimated net realizable value. G) EMPLOYEE BENEFITS i) The Companys contributions to State plans namely Employee Provident Fund and Employees State Insurance Fund are charged to revenue every year. ii) The Company has defined Benefit plans namely Gratuity (unfunded plan) for all employees, 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. iii) Other long term benefits 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. iv) Termination benefits are recognised as an expense immediately. v) Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account as income or expense. H) REVENUE RECOGNITION 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. iv) Sale of merchandising stock (Proshop Income) is recognised at the time of delivery of goods to the customer. I) TAXES ON INCOME i) Provision for Current Tax is made on the basis of estimated taxable income for the current accounting year in accordance with the applicable provisions of the Income Tax Act, 1961. ii) In accordance with Accounting Standard AS-22 Accounting for taxes on Income, the deferred tax liability on account of timing differences between the book and the tax profits for the year is accounted for using the tax rates and laws that have been substantially enacted as on the Balance Sheet date. iii) Deferred Tax Assets arising from timing differences are recognized subject to consideration of prudence. However, where there are unabsorbed tax losses and depreciation deferred tax assets are recognized to the extent there is virtual certainty that these would be realised in future. J) 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. 17. NOTES TO THE ACCOUNTS 1. Contingent Liabilities : Claims against the Company not acknowledged as debts : a) Pertaining to legal suits against the Company for recovery of dues / compensation aggregating to ` 6,32,716/- (Previous Year ` 3,32,338/-) plus future interest, the amount of which is unascertainable, under litigation. As opined by Companys lawyers, the chances of suit succeeding are remote and accordingly Company does not foresee any liability in this regard. b) The Company has Income Tax demands outstanding of ` 11,59,41,813/(Previous Year ` 11,59,41,813/-) for Assessment Year 2001-02, ` 1,56,29,691/(Previous Year ` 1,56,29,691/-) for the Assessment Year 2003-04 and ` 26,62,65,172/- (Previous Year ` 13,82,55,712/-) for Assessment Year 2005-06. All the assessments are currently under appeal with the Income Tax Authorities. 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. c) Bank Guarantees** given to Government Authorities, ` 1,14,77,970/(Previous Year ` 1,14,77,970/-). d) Letter of Credits** given to vendors, ` 33,00,000/- (Previous Year ` 61,44,859/-) * The amounts shown in the item (a) and (b) above represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. ** The amounts shown in items (c) and (d) represent guarantees and letter of credits given in the normal course of the Companys operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations. 2. Outstanding Capital Commitments : Unexpired amount (net of advances) of the contracts on Capital Account not provided for in the accounts is ` 41,81,13,474/- (Previous Year ` 6,68,54,619/-). 3. Current Liabilities include ` 31,10,08,793/- (Previous Year ` 31,08,75,115/-) as deposits received from individuals towards golf memberships. These represent long term tradable memberships which, are to be refunded at the time of termination of the membership. 4. As per the information available with the Company, none of the vendors are covered under the Micro, Small & Medium Enterprises Development Act, 2006. 5. Earnings Per Share : Basic/Diluted Earnings Per Share As at March 31, 2011 Net Profit/(Loss) after tax available for Equity Shareholders (`) Weighted Average Number of Shares outstanding during the year Nominal Value of Equity Shares (`) Basic/Diluted (Loss)/Earnings per Share of ` 10/- each (3,25,79,029) 5,00,00,000 10.00 (0.65) As at March 31, 2010 (4,90,22,734) 1,21,91,781 10.00 (4.02)
6. 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, 2011 has not been recognised in the books of accounts. 7. Value of Imports calculated on CIF basis during the year in respect of : For the year ended March 31, 2011 (`) Capital Goods Total 75,60,411 75,60,411 For the year ended March 31, 2010 (`) 18,51,547 18,51,547 March 31, 2010 (`) 76,49,661 March 31, 2010 (`) 38,57,845
8. Expenditure in Foreign Currency (Cash Basis) : March 31, 2011 (`) Professional & Consultancy 68,59,370 9. Earnings in Foreign Exchange (Accrual) : March 31, 2011 (`) Service Income 35,58,156
168

SCHEDULES TO THE ACCOUNTS (Contd.) 10. Value of indigenous and imported Raw Material, Stores & Spares consumed during the period & percentage of each to the total consumption : March 31, 2011 March 31, 2010 Value (`) % Value (`) % Raw Material Imported Indigenous 52,28,629 100 56,30,256 100 52,28,629 56,30,256 Stores & Spares Imported 18,99,400 15 14,29,562 14 Indigenous 1,07,56,017 85 89,32,875 86 1,26,55,417 1,03,62,437 11. Quantitative Details of Merchandising Stock Particulars Current Year Qty Value (Nos.) (`) 13 8,522 8,535 6,72,888 2,36,568 9,09,456 Previous Year Qty Value (Nos.) (`) 13 6,72,887 13,648 4,89,013 13,661 11,61,900 3,795 3,795 6,02,477 6,02,477 12. Segment Revenue, Result & Other Information The Company carries on activities primarily under the Leisure & Hospitality segment and operates within one geographical segment, India. Hence the segment disclosure has not been provided. 13. Related Party Disclosure i) Holding Company : ITC Limited ii) Key Management Personnel : Mr. Nakul Anand Mr. S. C. Sekhar Mr. Rajiv Tandon Mr. B. Hariharan Mr. Ravi Puri Mr. Atul Kumar Chairman Managing Director Director Director Chief Executive Officer Head of Finance & Commercial
a) Opening Stock Golf Equipment * Golf Apparel etc Total b) Purchases Golf Equipment * Golf Apparel etc Total c) Turnover (at selling price) Golf Equipment * Golf Apparel etc Total d) Closing Stock Golf Equipment * Golf Apparel etc Total
iii) Fellow Subsidiaries with whom transactions have taken place : M/s Fortune Park Hotels Limited M/s Green Acre Holdings Limited iv) Associate Companies with whom transactions have taken place : M/s International Travel House Limited M/s Classic Infrastructure Development Limited
9,981 23,77,022 9,981 23,77,022 12,217 22,60,435 12,217 22,60,435 13 6,72,888 6,286 8,07,802 6,299 14,80,690
8,921 10,54,711 8,921 10,54,711 13 8,522 8,535 6,72,888 2,36,568 9,09,456
*Quantitative details reflects only high value golf equipment v)Details of Transaction carried out during the financial year ended March 31, 2011 with related party in the ordinary course of business :
S. No Particular Holding Company Current Year 1 Sale of Services Previous Year Fellow Subsidiaries Current Year Previous Year Associates Current Year Previous Year
(in `)
2 3 4
8 9 10 11 i)
ii)
ITC Limited Purchase of Fixed Assets Fortune Park Hotels Limited Commission Income on Consignment Sales ITC Limited Purchase of services ITC Limited International Travel House Limited Fortune Park Hotels Limited Expenses Recovered ITC Limited Green Acre Holdings Limited Classic Infrastructure & Development Limited Fortune Park Hotels Limited International Travel House Limited Expenses Reimbursed ITC Limited Fortune Park Hotels Limited International Travel House Limited Project Expenses Reimbursed ITC Limited Fortune Park Hotels Limited International Travel House Limited Repayment of Advances received ITC Limited Repayment Loans ITC Limited Advances Received ITC Limited Balances Outstanding at the year end Debtors/Receivables Green Acre Holdings Limited Classic Infrastructure Development Limited International Travel House Limited Creditors/Payables ITC Limited Fortune Park Hotels Limited Green Acre Holdings Limited
4,05,434 5,38,802 5,99,840 94,56,522 25,17,869
1,54,855 15,517 1,85,920 1,86,161 70,73,863 11,99,681 1,05,14,00,000 40,00,00,000 6,68,00,000
50,917 21,79,702 10,498
8,400 94,71,047 1,16,230 27,939 1,60,162
3,25,434 23,915 16,690
92,460 1,16,230 30,508 22,053
39,47,268
10,87,529
11,17,702
17,549 5,364
9,301 4,111
169

vi) Summary of Transactions with the Key Management Personnel during the year : S. No 1 2 Particulars Current Year Sale of Services 79,002 Balances Outstanding at the year end i) Debtors /Receivables Previous Year 2,700 2,700 During the current year, management subsequent to change in its plans for selling of golf huts has reclassified ` 39,37,186/- from Capital Work in progress outstanding as at April 1, 2010 towards Work in Progress-Golf Huts. 15. 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 Employees State Insurance Corporation (ESIC) II. Defined Benefit Plans - Gratuity for employees During the current year the Company has recognized the following 54,77,110 5,06,288 21,22,497 56,482 1,75,749 16,904 1,97,56,882 5,447 4,87,470 4,26,970 6,17,184 12,788 5,24,997 3,01,86,768 11,16,49,051 84,026 61,498 30,000 10,40,377 3,621 95,98,797 1,84,954 78,022 21,443 1,11,02,738 8,14,62,283 amounts in the Profit & Loss Account : Employers Contribution As at March 31, 2011 Provident Fund Employees State Insurance Corporation 9,62,615 3,94,659 As at March 31, 2010 7,61,235 2,81,269
14. The Board of Directors had approved a detailed plan in Financial Year 2009-10 of the Green Bharat Project (resort project) of the Company which is proposed to be completed by 2012-13. The Capital work-in-progress amounting to ` 20,43,88,532/- (Previous Year ` 8,20,51,975/-) includes ` 20,37,98,840/- (Previous Year ` 8,14,62,283/-) relating 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 Opening Balance as at April 1, 2010 Add : Expenses incurred Salaries, Wages and Bonus Welfare Expenses Rates & Taxes Travelling & Conveyance Vehicle Maintenance Power & Fuel Insurance Technical & Professional Charges Repairs & Maintenance - P & M Repairs & Maintenance - Others Printing & Stationary Miscellaneous Expenses Hire Charges Depreciation Sum Total Closing Balance as at March 31 2011 2010-11 8,14,62,283 2009-10 7,03,59,545
In accordance with Accounting Standard 15, actuarial valuation was done in respect of the aforesaid plans based on the following assumptions
Employees Gratuity Fund (Unfunded) Assumptions As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Discount Rate Salary Escalation Rate Normal Retirement age Attrition Rate
8.00% 5.00% 58 years 10% p.a.
7.50% 5.00% 58 years 10% p.a.
7.00% 5.00% 58 years 10% p.a.
7.50% 5.00% 58 years 10% p.a.
7.50% 5.00% 58 years 10% p.a.
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.
Employees Gratuity Fund (A) Changes in the Present Value of Obligation As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Present value of Obligation as at April 1, 2010 Interest Cost Current Service Cost Benefits Paid Actuarial (gain)/ loss due to change in assumption/ interest guarantee Present value of Obligation as at March 31, 2011
7,02,851 47,288 4,18,916 (2,23,508) (45,544) 9,00,003
6,30,127 47,260 2,78,817 NIL (2,53,353) 7,02,851
4,70,063 21,014 2,43,208 (3,39,719) 2,35,561 6,30,127
4,49,746 32,975 36,721 (20,169) (29,210) 4,70,063
4,32,506 22,066 1,24,659 (2,76,576) 1,47,091 4,49,746
Employees Gratuity Fund (B) Amount recognised in the Balance Sheet As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Liability at the end of the year Ending Assets Funded Status Asset/(Liability) Unrecognised Past Service Cost Asset / (Liability) recognised in the Balance Sheet
(9,00,003) (9,00,003)
(7,02,851) (7,02,851)
(6,30,127) (6,30,127)
(4,70,063) (4,70,063)
(4,49,746) (4,49,746)
170

Employees Gratuity Fund (C) Expense recognised in the Income Statement As at March 31, 2011 As at March 31, 2010 As at March 31, 2009 As at March 31, 2008 As at March 31, 2007
Current Service Cost Interest Cost Net Actuarial (Gain)/Loss to be recognised Expense Recognised in P & L**
4,18,916 47,288 (45,544) 4,20,660
2,78,817 47,260 (2,53,353) 72,724
2,43,208 21,014 2,35,561 4,99,783
36,721 32,975 (29,210) 40,486
1,24,659 22,066 1,47,091 2,93,816
III. Other Long Term Benefits Leave Encashment Year ended March 31, 2011 Asset / (Liability) recognised in the Balance Sheet * Amount recognised in the Income Statement** (8,88,261) 3,12,720 Year ended March 31, 2010 (7,10,926) 2,49,355
Provision for employee benefits as disclosed under Schedule 11 includes ` 40,671/- (Previous Year ` 48,001/-) provided for short term leave of the employees. Leave encashment is included in Salary, Wages and Bonus and Contribution to Provident Fund, ESIC and Provision for Gratuity is included in Contribution to Provident and Other Funds (Refer Schedule 15)
**
18. Previous year figures have been regrouped and reclassified wherever necessary to conform to current years classification.
Abhishek Rara Partner Membership No : 077779 For Price Waterhouse Firms Registration Number : 012754N Chartered Accountants Gurgaon, 28th April, 2011
For and on behalf of the Board S. C. Sekhar B. Hariharan Managing Director Director
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, Part IV of the Companies Act, 1956) I. Registration Details Registration No. Balance Sheet Date 3 4 1 7 0 3 3 3 2 1 0 1 1 State Code 5 5 Application of Funds Net Fixed Assets 1 1 5 2 9 Net Current Assets (1 9 6 7 Accumulated Losses 8 6 4 9 Turnover 1 0 2 0 0 +

Investments N I L Misc. Expenditure N I L
Date
Month
Year
1 6) 3 2
II. Capital raised during the year (Amount in ` Thousands) Public Issue N I L Bonus Issue N I L Rights Issue N I L Private Placement 2 5 0 0
IV. Performance of the Company (Amount in ` Thousands) 2 9 4 +

Profit/Loss before Tax (3 2 5 7 9) Earning per Share in ` (0 . 6 5)
Profit/Loss after Tax (3 2 5 7 9)
III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands) Total Liabilities 1 8 2 1 1 Sources of Funds Paid up Capital 1 7 6 0 0 Reserves & Surplus 6 1 1 Unsecured Loans N I L Share Application Pending Allotment N I L Secured Loans N I L Total Assets 8 2 1 1
(Please tick appropriate box, + for Profit, for Loss) Dividend Rate % N I L
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) N . A . Item Code No. (ITC Code) Product Description N . A .
0 6
0 2
Audit Committee : Chairman: Mr. Rajiv Tandon, Members: Mr. B. Hariharan and Mr. Nakul Anand Permanent Invitees: Representative of Statutory Auditors
171
BFIL FINANCE LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2011 Your Directors hereby present the Annual Report and Audited Accounts of the Company for the financial year ended 31st March, 2011.
Year ended 31.03.2011 (` Lakhs) (43.57) 0.00 (43.57) 2.51 (46.08) (46.08) (6,033.33) (6,033.33) Year ended 31.03.2010 (` Lakhs) 52.86 0.00 52.86 2.71 50.15 50.15 (6,037.40) (5,987.25)
accounting standards with proper explanation relating to material 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 and of the profit of the Company for that period;
Gross operating Profit/ (Loss) Less: Interest and finance charges Profit / (Loss) before depreciation and taxation Less: Depreciation & Impairment loss Profit / (Loss) before Taxation Less: Provision for Taxation Profit / (Loss) after Taxation Brought forward from previous year Transfer from General Reserve Balance carried to Balance Sheet
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; 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. Particulars of Employees The Company has no employee in the category specified under Section 217 (2A) of the Companies Act, 1956. Subsidiary Companies BFIL Securities Limited Your Companys subsidiary is in the process of Members voluntary winding up. 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 of your Company. Directors Sri Jagdish Singh 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 2011, 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. On behalf of the Board Kolkata, 30th April, 2011 P. K. Sen Director Jagdish Singh Director
The gross operating loss for the year ended March 31, 2011 was ` 43.57 lakhs, compared to a profit of ` 52.86 lakhs in the previous year and after providing depreciation, the net loss for the year was ` 46.08 lakhs as against a net profit of ` 50.15 lakhs in the previous year. Economic Scenario Recoveries of non-performing assets continued to be muted at ` 9.11 lakhs for the year. Your Company continues to vigorously pursue various legal cases initiated against defaulting clients. Operations During the last fourteen years your Company has concentrated on recoveries and has collected a total of ` 9,665.83 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. For AY 2002-2003, an appeal filed with the Commissioner Income Tax on imposition of penalty of ` 76.56 lakhs was disallowed with regard to negotiated out of court settlement with one of the defaulting parties. This matter is now in appeal before the Income Tax Appellate Tribunal Mumbai (ITAT) which is pending. Though your Company prima facie believes that it has a strong case, as a matter of abundant caution, a provision has been made in the books of the Company for the demanded amount. 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 Indias Directions. Directors Responsibility Statement Your Directors have: i) followed, in the preparation of the annual accounts, the applicable
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, 2011, and the related Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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. Further to our comments in paragraph 3 above, we report that:
2.
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;
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(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account 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, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 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, 2011; (ii) in the case of the Profit and Loss Account, of the loss 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. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Kolkata, April 30, 2011 Membership No: 50553
ANNEXURE TO AUDITORS REPORT [Referred to in paragraph 3 of the Auditors Report of even date to the members of BFIL Finance Limited (the Company) on the financial statements as at and for the year ended March 31, 2011] 1. (a) The Company is generally maintaining adequate records to show the particulars of fixed assets, commensurate with the size of the company and the nature of its business. (b) All the fixed assets of the company are physically verified by the management according to a phased program designed to cover all the items over a period of two years, except for the leased assets where parties have defaulted in payment of lease rentals and the Company has initiated legal proceedings for recovering the dues, accordingly no physical verification of such leased assets have been carried out during the year. (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 during the year. 2. (a) The inventory has been physically verified by the management at the year end. 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. The discrepancies noticed on physical verification of inventory as compared to book records were not material. 3. 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. 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. 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. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. (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 undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, service tax, customs duty, excise duty, 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, sales tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2011, which have not been deposited on account of a dispute, are as follows:
Name of the statute Nature of dues Amount (Rupees) Period to which Forum where the the amount relates dispute is pending 1996-97 to 1999-2000 1996-97 Joint Commissioner (A), Trade Tax, Kanpur Deputy Commissioner (A), Commercial taxes, Jaipur CIT(A), Mumbai
UP Trade tax Lease tax 37,21,426 Act, 1948 Rajasthan Sales tax Act, 1994 Income tax Act, 1961 Lease tax 4,88,211
Penalty u/s. 156
76,56,074
A.Y 2002-03
8.
The companys accumulated losses as at March 31, 2011 are more than fifty percent of its net worth and has incurred cash losses during the financial year ended on date and in the immediately preceding financial year. 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.
9.
10. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year. 11. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicable to the Company. 12. 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, 2011 holds certain securities as stock-in-trade and such securities have been held by the company in its own name. 13. 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. 14. 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. 15. The Clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), (iv), (viii), (xv), (xvi), (xviii), (xix) and (xx) of paragraph 4, of the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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.
4.
5.
6. 7.
For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Kolkata, April 30, 2011 Membership No: 50553
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BALANCE SHEET AS AT 31ST MARCH, 2011 (Amount in Rupees) Schedule I. SOURCES OF FUNDS 1. Shareholders' Funds Capital 2. Loan Funds Unsecured Loans II. APPLICATION OF FUNDS 1. Fixed Assets a) Gross Block b) Depreciation and Impairment c) Lease Terminal Adjustment d) Net Block e) Capital Work-in-Progress f) Provision for Doubtful leased Assets 2. Investments 3. Current Assets, Loans and Advances a) Stock-on-hire Less: Provision for Doubtful Assets Less: Unmatured finance charges b) c) d) e) f) Less: Stock-in-trade Sundry Debtors Cash and Bank Balances Loans and Advances Other Current Assets 5 6 7 8 As at 31st March, 2011 As at 31st March, 2010
1 2
20,00,00,000 47,54,11,077 67,54,11,077
20,00,00,000 47,54,11,077 67,54,11,077
3 22,02,12,551 (12,36,54,186) (3,53,45,463) 6,12,12,902 2,81,72,250 (5,66,83,562) 4 3,06,66,715 2,39,03,734 67,62,981 67,62,981 1,000 8,29,760 5,66,654 33,77,752 47,75,166 7,66,146 76,56,074 (36,47,054) 60,33,32,791 67,54,11,077 3,27,01,590 4,30,23,750 3,06,66,715 2,39,03,734 67,62,981 67,62,981 1,000 11,57,788 1,45,281 13,04,069 5,94,001 7,10,068 59,87,24,863 67,54,11,077 23,15,68,059 (12,99,44,168) (3,75,32,804) 6,40,91,087 2,81,72,250 (5,93,10,941) 3,29,52,396 4,30,23,750
4.
Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets/(Liabilities) Profit and Loss Account - Debit Balance
9 10
Notes to the Accounts 13 Schedues 1 to 10, 13 and Statement on Significant Accounting Policies form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For Lovelock & Lewes Firm registration No. 301056E Chartered Accountants Partha Mitra, Partner Membership No. 50553 Kolkata, 30th April, 2011 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule INCOME Other Income EXPENDITURE Personnel, Operating and Administration Expenses Depreciation and Impairment loss For the year ended 31st March, 2011 52,24,974 52,24,974 (Amount in Rupees) For the year ended 31st March, 2010 69,92,944 69,92,944 On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary
11
12
PROFIT BEFORE TAXATION Provision for Taxation PROFIT AFTER TAXATION Surplus / (Deficit) Brought forward from previous year Balance carried to Balance Sheet Notes to the Accounts 13 Basic and Diluted Earnings per Share (`) Schedules 11 to 13 and Statement on Significant Accounting Policies form an integral part of the Profit and Loss Account. This is the Profit and Loss Account referred to in our Report of even date. For Lovelock & Lewes Firm registration No. 301056E Chartered Accountants Partha Mitra, Partner Membership No. 50553 Kolkata, 30th April, 2011
95,82,096 2,50,806 98,32,902 (46,07,928) (46,07,928) (59,87,24,863) (60,33,32,791) (0.23)
17,06,880 2,71,222 19,78,102 50,14,842 50,14,842 (60,37,39,705) (59,87,24,863) 0.25
On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary
174

SCHEDULES TO THE FINANCIAL STATEMENTS (Amount in Rupees) As at 31st March, 2011 1. CAPITAL AUTHORISED 3,00,00,000 Equity Shares of ` 10/- each 10,00,000 Cumulative Redeemable/Convertible Preference Shares of ` 100/- each ISSUED AND SUBSCRIBED 2,00,00,000 Equity Shares of ` 10/- each fully paid-up in cash (all the above Shares are held by the Holding Company, ITC Limited) 2. UNSECURED LOANS Other than Short Term 15,00,000 - 0% Non-Convertible Debentures of ` 100/- each issued to the Holding Company and repayable at par on 31st March, 2012 Loans from Holding Company As at 31st March, 2010
30,00,00,000 10,00,00,000 40,00,00,000 20,00,00,000 20,00,00,000
30,00,00,000 10,00,00,000 40,00,00,000 20,00,00,000 20,00,00,000
15,00,00,000 32,54,11,077 47,54,11,077
15,00,00,000 32,54,11,077 47,54,11,077 (Amount in Rupees)
3.
FIXED ASSETS
Gross Block (at cost) As at Additions Deductions As at 1st April, during during 31st March, 2010 the period the period 2011 Buildings Office Equipment Furniture and Fixtures Leasehold Improvement LEASED ASSETS Plant and Machinery Total Previous Year 19,63,24,915 23,15,68,059 23,70,72,144 1,13,55,508 18,49,69,407 9,94,81,170 1,08,59,437 29,68,955 1,48,05,658 66,09,094 1,08,59,437 29,68,955 66,09,094 As at 1st April, 2010 28,36,555 54,82,051 Depreciation Lease Terminal Adjustment
Net Block
On withdrawals As at As at As at As at As at For the and 31st March, 31st March, 31st March, 31st March, 31st March, year adjustments 2011 2011 2010 2011 2010 75,14,770 28,54,972 55,38,404 33,44,667 1,13,983 10,70,690 35,20,703 1,32,400 11,27,043 18,417 56,353
73,38,734 1,76,036
1,48,05,658 1,48,05,658
1,48,05,658
65,40,788 9,29,40,382 3,53,45,463 3,75,32,804 5,66,83,562 5,93,10,941 65,40,788 12,36,54,186 3,53,45,463 3,75,32,804 6,12,12,902 6,40,91,087 19,97,530 12,99,44,168 3,75,32,804 3,91,43,894 6,40,91,087 6,62,57,774 2,81,72,250 2,81,72,250
1,13,55,508 22,02,12,551 12,99,44,168 2,50,806 55,04,085 23,15,68,059 13,16,70,476 2,71,222
Capital Work-in-Progress
Leasehold Improvement represents the amount incurred on renovation of the premises of the wholly owned subsidiary, MRR Trading & Investment Co. Ltd. which holds the tenancy rights. Capital Work-in-Progress represents ` 2,81,72,250 (2010 : ` 2,81,72,250) being value of property received towards settlement of dues pending registration. Depreciation as at the year end include impairment loss as under : (Amount in Rupees) As at 31st March, 2011 Buildings Furniture and Fixtures Total 32,00,858 48,86,754 80,87,612 31st March, 2010 32,00,858 48,86,754 80,87,612
(Amount in Rupees) As at 31st March, 2011 4. INVESTMENTS Unquoted (At Cost) Long Term:
Government / Trust Securities (other than trade) National Savings Certificate fully paid (deposited with Government Authorities) Kisan Vikas Patra fully paid (deposited with Government Authorities) Less : Provision for doubtful investments Trade Investments: Subsidiary Company MRR Trading & Investment Company Limited (includes 50,000 Equity Shares of ` 10/- each fully paid) Less: Diminution in value of investments 5,06,44,520 5,06,44,520
(Amount in Rupees) As at 31st March, 2011 5. STOCK-IN-TRADE (Valued at Cost or Market Value whichever is lower) Stock of Shares & Securities Quoted - Fully paid 3 Equity Shares of ` 10/- each of Ultra Tech CemCo Limited Unquoted- Fully paid 5,40,000 Optionally Fully Convertible Debentures of G-Tech Stone Limited 5,94,00,000 Less: Provision for erosion in value 5,94,00,000 As at 31st March, 2010
As at 31st March, 2010
5,000
5,000
1,000
1,000
5,000
5,000
10,000 10,000
10,000 10,000
5,94,00,000 5,94,00,000 1,000
1,000
6. SUNDRY DEBTORS (Unsecured, considered doubtful) Over 6 months : Lease and hire purchase debtors Trade debtors
4,55,34,170 9,39,55,367 13,94,89,537 13,94,89,537
4,72,84,272 10,45,60,247 15,18,44,519 15,18,44,519
(76,20,770) 4,30,23,750 (76,20,770) 4,30,23,750 4,30,23,750 4,30,23,750
Less: Provision for doubtful debts
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SCHEDULES TO THE ACCOUNTS (Contd.) (Amount in Rupees) As at 31st March, 2011 7. CASH AND BANK BALANCES Cash on hand With Scheduled Banks - on current accounts - Fixed Deposits (Bank Guarantee for the like amount was given to Rajasthan Commercial Taxes Department against this fixed deposit) 8. LOANS AND ADVANCES (Unsecured, considered good) Deposit with Govt., Public Bodies etc. Other Advances Advance payment of tax (TDS) 9. CURRENT LIABILITIES Sundry Creditors Dues to Micro, Small and Medium enterprises Other Liabilities (includes Nil (2010 - Nil) due to Subsidiary Company) 10. PROVISIONS Provisions for disputed penalty 11. OTHER INCOME Provision no longer required written back Interest on Fixed Deposit Interest - from customer Profit on sale of fixed assets Amount refunded by the Subsidiary Company Rent [ TDS ` 4,20,000 (2010 - ` 90,000)] Dividend Others 12. PERSONNEL, OPERATING AND ADMINISTRATION EXPENSES Salaries Conveyance Professional Charges Professional Tax Legal Expenses Rates & Taxes Remuneration to Auditors : Audit Fee Other services 86,034 29,066 1,15,100 Reimbursement of Expenses incurred by Subsidary Company Miscellaneous* 1,70,463 76,75,676 95,82,096 5,66,654 5,66,654 1,45,281 1,45,281 2,84,078 5,45,682 As at 31st March, 2010 11,57,788 5. 3. 4. 2. Contingent Liabilities: Bank Guarantee issued to Rajasthan Tax Board - ` 5,45,682. Lease tax on account of non-accrual of lease rental ` 37,21,426. Claims against the Company not acknowledged as debts: The Company has initiated legal proceedings against various parties for recovery of dues and such legal proceedings are at different stages as at the date of the Balance Sheet and upon culmination, are expected to result in recovery of part of the dues in the future. Deferred tax asset As at 31st March, 2011 (a) Deferred Tax Assets Unabsorbed Depreciation Accumulated Business Loss Deferred Tax Liabilities On Account of Depreciation 7,93,70,975 10,70,58,857 18,64,29,832 (b) 1,21,99,728 1,21,99,728 Deferred Tax Assets (Net) 7,66,146 7,66,146 76,56,074 76,56,074 5,94,001 6. 5,94,001 17,42,30,104 (Amount in Rupees) As at 31st March, 2010 7,93,70,358 10,56,35,625 18,50,05,983 1,25,41,874 1,25,41,874 17,24,64,109
8,29,760
11,57,788
The Company has not recognized the net deferred tax assets, in respect of accumulated losses and unabsorbed depreciation in view of the uncertainty of availing the benefit in future. The earnings considered in ascertaining the Companys Earnings Per Share (EPS) comprise net profit / (loss) after taxation. The number of shares used in computing basic and diluted EPS is the weighted average number of shares outstanding during the year. Profit / (Loss) after Taxation (Amount in `) Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (Face value - ` 10/- per share) 7. 2010-11 (46,07,928) 2009-10 50,14,842
9,11,182 13,724 50,000 42,00,000 68 50,000 52,24,974
26,73,116 2,68,356 23,26,884 3,67,612 13,50,000 6,976 69,92,944
2,00,00,000 2,00,00,000 (0.23) 0.25
Information with regard to matters in clauses 3, 4(A), 4(C) and 4(D) of part II of Schedule VI of the Companies Act, 1956 to the extent that they are either Nil or not applicable to the Company, have not been given. Segment Reporting The Company operates in a single business segment and hence no further disclosure is being made. Related Parties Disclosures: a) Relationships: Holding Company - ITC Limited Subsidiary Company MRR Trading & Investment Company Limited b) Key Management Personnel Mr. Anil Seth - Non-Executive Director Mr. P. K. Sen - Non-Executive Director Mr. Jagdish Singh - Non-Executive Director Mr. V. Radhakrishnan - Manager & Company Secretary c) Disclosure of transactions between the Company and related parties and the status of outstanding balances as at the year end :(Amount in Rupees)
Particulars Holding Company Repayment of unsecured loan Rent Balance as at the year end Receivables 0% Non-Convertible Debentures Loans from Holding Company Subsidiary Company Re-imbursement of expenses 2010-11 NIL 42,00,000 33,65,400 15,00,00,000 32,54,11,077 1,70,463 2009-10 45,00,000 13,50,000 NIL 15,00,00,000 32,54,11,077 1,70,179
8. 9.
96,000 29,806 7,47,962 2,100 7,44,989 86,034 28,678
96,000 14,636 10,84,690 2,100 2,15,000 5,805
1,14,712 1,70,179 3,758 17,06,880
* Includes ` 76,56,074 towards provision for disputed penalty for the A. Y. 2002 - 03 under Income Tax Act, 1961 13. NOTES TO THE ACCOUNTS 1. The financial statements have been prepared on a going concern basis. There are no operational activities. The Company continued recovery of its dues in the normal course of business. The Company will examine options for further business opportunities, on improvement of collections from debtors. No provision has been made for Income Tax during the current financial year because of carry forward loss under Income Tax Act.
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10. QUANTITATIVE ANALYSIS FOR STOCK-IN-TRADE
Particulars Opening Stock As at April 1, 2010 Quantity (Nos.) Quantitative Information Equity Shares of ` 10/- each of Ultra Tech CemCo. Ltd. Unquoted Convertible / Non-Convertible Debentures of G-Tech Stone Ltd. Less: Provision for Diminution in the value Total 3 1,000 3 5,40,000 1,000 5,94,00,000 1,000 3 1,000 Value (Amount in `) Purchases During the year Quantity Value (Nos.) (Amount in `) Sales During the year Quantity (Nos.) Value (Amount in `) Closing Stock As at March 31, 2011 Quantity Value (Nos.) (Amount in `) Closing Stock As at March 31, 2010 Quantity Value (Nos.) (Amount in `)
5,40,000 5,94,00,000 (5,94,00,000) 1,000
5,40,000 5,94,00,000 (5,94,00,000) 1,000
(5,94,00,000)
11. Previous years figures have been regrouped wherever necessary to conform to the current years classification. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES GENERAL These accounts have been prepared under the historical cost convention and on accrual system based on the principle of going concern. Income recognition and provisioning for Non-performing Assets, consisting of Lease and Hire Purchase Assets, Bills Discounted and Other Loans and Advances, is done as per Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 and as amended from time to time. REVENUE RECOGNITION As per the directives of the Reserve Bank of India, revenue is recognized upon realization, on Non-Performing Assets. Revenue is not recognized on the grounds of prudence until realized in respect of liquidated damages, penalties and delayed payment charges, as recovery of the amounts is uncertain. INVESTMENTS All investments are stated at cost i.e. cost of acquisition, inclusive of expenses incidental to acquisition where applicable. Provision for any permanent diminutions in 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. STATEMENT REGARDING SUBSIDIARY COMPANIES: Pursuant to Section 212(1) and (3) of the Companies Act, 1956 MRR TRADING & INVESTMENT COMPANY LIMITED (a) Holding Companys interest: 50,000 Equity Shares of ` 10/- each, fully paid-up (b) Net aggregate amount of Subsidiarys profit/(loss) not dealt with in the Holding Companys accounts: (Amount in `) (i) for the Subsidiarys financial year ended March 31, 2011 Nil STOCK-IN-TRADE Stock of securities are stated at cost or market price whichever is lower. Stock-on-hire is valued at agreement value less amounts receivable. FIXED ASSETS All fixed assets including assets given on lease are valued at cost inclusive of direct and incidental expenses related to acquisition. Depreciation of fixed assets is provided on written down value method on pro-rata 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 Leasehold improvements are being depreciated @ 15%. All the fixed 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 profit and loss account in the respective financial years. The impairment loss recognized in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon re-assessment in the subsequent years.
(Amount in `) (ii) for the previous financial years (4,16,160) (c) Net aggregate amount of Subsidiarys profit/(loss) dealt with in the Holding Companys accounts: (i) for the Subsidiarys financial year ended March 31, 2011 Nil (ii) for the previous financial years Nil
0 1 3 1 6 4 6 6 2 0 3 1 1
State Code
1 1

3 2 7 0 2
Investments
4 3 0 2 4
Net Current Assets

( 3 6 4 7 )
Misc. Expenditure
Date II.
Month
Year
Accumulated Losses
6 0 3 3 3 3
Rights Issue
IV.
Performance of Company (Amount in ` Thousands) Turnover Total Expenditure

5 2 2 5 9 8 3 3
Bonus Issue
Private Placement

( 4 6 0 8 )

( 4 6 0 8 )
III.

6 7 5 4 1 1
(Please tick appropriate box + for profit, for loss) Earnings per Share (`)
( 0 . 2 3 )
Dividend rate (%)

--
Total Assets
6 7 5 4 1 1
V.
Generic Names of Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC Code)
N O T N O T A P P L I C A B L E A P P L I C A B L E

2 0 0 0 0 0
Reserves & Surplus
Product Description
Secured Loans
0
Unsecured Loans
4 7 5 4 1 1
Kolkata, 30th April, 2011 Audit Committee : Mr. Anil Seth, Chairman, M/s. P. K. Sen, J. Singh Members.
On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary
177

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 A. CASH FLOW FROM OPERATING ACTIVITIES: Net Profit/(Loss) Before Tax Adjustments For : Depreciation Provision no longer required written back OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES ADJUSTMENTS FOR : Sundry Debtors - (increase)/decrease Trade and Other Receivables - (increase)/decrease Trade Payables & Provisions - increase/(decrease) Cash Generated From Operations Income Tax Paid NET CASH FROM OPERATING ACTIVITIES B. CASH FLOW FROM INVESTING ACTIVITIES C. CASH FLOW FROM FINANCING ACTIVITIES : Repayments of Long Term Borrowings-Holding Company NET CASH USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS OPENING CASH AND CASH EQUIVALENTS CLOSING CASH AND CASH EQUIVALENTS 1. 2. (46,07,928) 2,50,806 (9,11,182) 2,71,222 (26,73,116) (Amount in Rupees) For the year ended 31st March, 2010 50,14,842
(6,60,376) (52,68,304)
(24,01,894) 26,12,948
9,11,182 (37,99,125) 78,28,219
49,40,276 (3,28,028) (3,28,028) (3,28,028) 11,57,788 8,29,760
26,73,116 (86,936) (23,247)
25,62,933 51,75,881 51,75,881 (45,00,000) (45,00,000) 6,75,881 4,81,907 11,57,788
The above cash flow statement has been prepared under the Indirect Method as set out in AS-3 on Cash Flow Statements. 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.
For Lovelock & Lewes Firm registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No. 50553 Kolkata, April 30, 2011
On behalf of the Board P. K. Sen Director Jagdish Singh Director V. Radhakrishnan Manager & Company Secretary Kolkata, April 30, 2011
SCHEDULE TO THE BALANCE SHEET OF A NON-DEPOSIT TAKING NON-BANKING FINANCIAL COMPANY AS AT 31ST MARCH, 2011 [as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Prudential Norms (Reserve Bank) Directions, 2007] Particulars Liabilities side: 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) (b) Deferred Credits (c) Term Loans (d) Inter-corporate loans and borrowing (from Holding Company) (e) Commercial Paper (f) Other Loans (` In lakhs) Amount outstanding (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. Nil Nil 3,254.11 Nil Nil Nil Nil Nil Nil Nil 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 (2) Unquoted: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual funds (iv) Government Securities (v) Others Long Term investments: Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
(` In lakhs)
Amount outstanding Nil 1,500.00 Amount overdue Nil Nil
1.
367.76 Nil Nil Nil
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 Nil 978.87
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 (b) Operating lease
1.
961.09 Nil
Quoted:
(i) Shares: (a) Equity (b) Preference Nil Nil
178

(` In lakhs)
(ii) Debentures and Bonds (iii) Units of Mutual funds (iv) Government Securities (v) Others Unquoted: (i) Shares: (a) Equity (b) Preference (ii) Debentures and Bonds (iii) Units of Mutual funds (iv) Government Securities (v) Others - Investment in subsidiary Company Nil Nil Nil Nil Nil Nil Nil Nil Nil 430.24
(` In lakhs) 6. Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):
Category Market value/Break up or fair value or NAV Book value (Net of provisions)
2.
1.
5.
Borrower group-wise classification of all assets financed as in (2) and (3) above : Category 1. Related Parties** (a) Subsidiaries (b) Companies in the same group (c) Other related parties Other than related parties TOTAL Amount net of provisions Secured Unsecured Total Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 7.
Related Parties** (a) Subsidiaries (b) Companies in the same group (c) Other related parties 2. Other than related parties TOTAL ** As per Accounting Standard of ICAI
430.24 Nil Nil Nil 430.24
430.24 Nil Nil Nil 430.24
Other information Particulars

(i) Gross Non-Performing Assets (a) Related parties (b) Other than related parties (ii) Net Non-Performing Assets (a) Related parties (b) Other than related parties (iii) Assets acquired in satisfaction of debt Nil 3,664.82 Nil Nil 390.32
2.
179
MRR TRADING & INVESTMENT COMPANY LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2011 The Directors hereby submit their report for the financial year ended 31st March, 2011. 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. Particulars of Employees 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 Jagdish Singh, 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, 2011, and the related Profit and Loss Account 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 Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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. 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; (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account 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, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 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, 2011; (ii) in the case of the Profit and Loss Account, of the profit (` Nil) 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. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Directors Responsibility Statement Your Directors have: i) Followed, in the preparation of the annual accounts, the applicable accounting standards with proper explanation relating to material 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 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; iv) Prepared the annual accounts on a going concern basis. On behalf of the Board Kolkata 30th April, 2011 P. K. Sen M. Yelamanda Director Director
2.
3.
4.
Kolkata, April 30, 2011
ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of the Auditors Report of even date to the members of MRR Trading & Investment Company Limited on the financial statements for the year ended March 31, 2011 1. 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. 2. 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, commenting on transactions made in pursuance of such contracts or arrangements does not arise. 3. The companys accumulated losses as at March 31, 2011 is more than fifty percent of its net worth and has not incurred cash losses during the financial year ended on date and in the immediately preceding financial year. 4. 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. 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), (vi), (vii), (viii), (ix)(a), (ix)(b), (xi), (xii), (xiii)(a), (xiii)(b), (xiii)(c), (xiii)(d), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) of paragraph 4, of the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553
5.
180

BALANCE SHEET AS AT 31ST MARCH, 2011 Schedule As at 31st March, 2011 (`) As at 31st March, 2010 (`)
SOURCES OF FUNDS 1. Shareholders Funds a) Capital TOTAL APPLICATION OF FUNDS 1. Current Assets, Loans and Advances a) Cash and Bank Balances b) Loans and Advances Less: Current Liabilities and Provisions a) Current Liabilities - Sundry Creditors 2. Net Current Assets Debit Balance in Profit & Loss Account TOTAL Notes to the Accounts Schedules 1 to 5 form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Kolkata, April 30, 2011 On behalf of the Board 5 2 3 89,956 7,120 97,076 13,236 83,840 4,16,160 5,00,000 89,956 7,120 97,076 13,236 83,840 4,16,160 5,00,000 1 5,00,000 5,00,000 5,00,000 5,00,000
P. K. Sen M. Yelamanda
Director Director
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011 Schedule For the year ended 31st March, 2011 (`) (`) 83,592 61,872 11,625 138 13,236 1,70,463 1,70,463 (4,16,160) (4,16,160) 5 0.00 0.00 81,696 61,872 13,309 66 13,236 1,70,179 1,70,179 (4,16,160) (4,16,160) For the year ended 31st March, 2010 (`) (`) 3,67,612 (3,67,612)
INCOME Income Less: Refunded to the Holding Company TOTAL EXPENDITURE Rent Rates and Taxes Water Charges Bank Charges Audit Fees Less: Expenses reimbursed by the Holding Company TOTAL Profit/(Loss) Before Taxation Provision for Taxation Profit/(Loss) After Taxation Balance Carried Forward from previous year Balance Carried to Balance Sheet Notes to the Accounts Earnings Per Share Schedule 5 forms an integral part of the Profit and Loss Account. This is the Profit & Loss Account referred to in our report of even date. For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Kolkata, April 30, 2011
P. K. Sen M. Yelamanda
Director Director
181

SCHEDULES TO THE BALANCE SHEET As at March 31, 2011 (`) 1. CAPITAL AUTHORISED 50,000 Equity Shares of ` 10/- each ISSUED AND SUBSCRIBED AND PAID-UP 50,000 Equity Shares of ` 10/- each fully paid-up (All the shares are held by the Holding Company, BFIL Finance Limited, a subsidiary of ITC Limited, ultimate
Holding Company) 5,00,000 5,00,000 5,00,000 5,00,000
SCHEDULES TO THE FINANCIAL STATEMENTS As at March 31, 2010 (`)

5. NOTES TO THE ACCOUNTS
1. The financial statements have been prepared on a going concern basis. 2. Significant Accounting Policies (a) The accounts have been prepared on historical cost basis. (b) All revenue and expenses are accounted on accrual basis. 3. 4. Segment Reporting - The Company operates in a single business segment and hence no further disclosure is being made. Related Parties Disclosures : a) Relationships : Holding Company - BFIL Finance Limited b) Key Management Personnel Mr. P. K. Sen Mr. J. Singh c) Director Director Director
5,00,000
5,00,000
Mr. M. Yelamanda -
2.
CASH AND BANK BALANCES Balances with Scheduled Bank - on Current Account 89,956 89,956 89,956 89,956
Disclosure of transactions between the Company and related parties and the status of outstanding balances as at the year end. Particulars Holding Company BFIL Finance Limited Expenses Re-imbursed Receivables as at the year end 2010-11 (`) 2009-10 (`)
3.
LOANS AND ADVANCES Deposits with Government, Public Bodies, etc. 7,120 7,120 7,120 7,120 5.
1,70,463
1,70,179
4.
CURRENT LIABILITIES - SUNDRY CREDITORS Dues to Micro, Small and Medium enterprises Others 13,236 13,236 13,236 13,236
The earnings considered in ascertaining the Companys Earnings Per Share (EPS) comprise net Profit /Loss after Taxation. The number of shares used in computing basic and diluted EPS is the weighted average number of shares outstanding during the year.
Description
2010-11 50,000 0.00
2009-10 50,000 0.00
Profit/(loss) after taxation (Amount in `) Weighted average number of equity shares outstanding Basic and diluted earnings per share in rupees (face value - ` 10/- per share) 6.
Previous year figures have been regrouped wherever necessary.
1 1 3 1 2 3 2 5 9 0 3 1 1
State Code
1 1
Investments
Net Current Assets

8 4
Misc. Expenditure
Date II.
Month
Year
Accumulated Losses
4 1 6
Rights Issue
IV.
Performance of Company (Amount in ` Thousands) Turnover Total Expenditure

0 . 0 0 0 . 0 0 0 . 0 0
Bonus Issue
Private Placement

0 . 0 0
III.

5 0 0
(Please tick appropriate box + for profit, for loss) Earnings per Share (`)
0 . 0 0
Dividend rate (%)
Total Assets
5 0 0
V.
Generic Names of Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC CODE) Product Description
N O T N O T A P P L I C A B L E A P P L I C A B L E

5 0 0
Reserves & Surplus
Secured Loans
Unsecured Loans
On behalf of the Board P. K. Sen Director M. Yelamanda Director
182

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended 31st March, 2011 (`) Cash flow from Operating Activities: Net Profit before Tax Adjustments for: Depreciation etc. Operating profit before working capital changes Adjustment for: Trade and other receivables - (increase)/decrease Trade payables - Increase/(decrease) Cash generated from Operations Income Tax paid Net Cash from Operating Activities Cash flow from Investing Activities: Cash flow from Financing Activities: Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 1. 2. 89,956 89,956 For the year ended 31st March, 2010 (`) 2,451 2,451 2,451 2,451 87,505 89,956
The above cash flow statement has been prepared under the Indirect Method as set out in AS-3 on Cash Flow Statements. 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 For Lovelock & Lewes Firm Registration No. 301056E Chartered Accountants Partha Mitra Partner Membership No: 50553 Kolkata, April 30, 2011
On behalf of the Board P. K. Sen M. Yelamanda Director Director
183
SURYA NEPAL PRIVATE LIMITED

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010) Your Directors are pleased to submit their Report and Audited Accounts of your Company for the year ended 32nd Asadh 2067 (16th July 2010). SOCIO-ECONOMIC ENVIRONMENT The political environment in Nepal remained disturbed during the year culminating in the resignation of the Prime Minister and installation of a caretaker government. Subsequent attempts at re-election of a new prime minister remained inconclusive. The proposed new constitution stayed unwritten and social, economic and political disruptions continued to take place from time to time. However, Nepal remained relatively sheltered from the global recession. In its Economic Survey, the Government of Nepal has estimated the GDP growth at 3.5% for the financial year ending 32nd Ashad 2067, a marginal decline from the level of 3.8% achieved in the previous year. This decline was an outcome of the slowdown in the agricultural sector from 3 % to 1.2 % due to adverse climatic conditions. Despite disruptions and frequent power outages, the Manufacturing sector grew by 2.6% compared to a negative growth of 1% in the previous year. The hospitality sector recorded a growth of 8.5% against 3% last year driven by higher tourist inflows. As in the previous year remittances grew at 7% and fueled consumption. COMPANY PERFORMANCE Despite the challenging political environment your Companys performance was robust in the year under review. In the year ended 32nd Asadh 2067, the company recorded a 36% growth in sales with Gross Turnover (net of VAT) increasing to NRs. 1116 (` 697) Crores from NRs. 821 (` 513) Crores in the previous year. Despite exponential increase of input costs in the Cigarette Business, your Companys Profits after Tax at NRs. 197 (` 123) Crores increased by 37% over the previous year. Return on net worth increased to 90% from 65% in the previous year. Cash Generated from Operations during the year stood at NRs. 241.2 (` 150.8) Crores, lower by NRs. 10.4 (` 6.5) Crores from the levels achieved in the previous year, primarily due to higher cost of procurement of tobacco leaf. 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, with a payment of NRs. 622 (` 389) Crores during the year {(Previous Year: NRs. 454 (` 284) Crores} by way of Excise Duty, VAT, Income Tax and other taxes. BUSINESS SEGMENTS CIGARETTE BUSINESS Brand Portfolio Relentless focus on value creation for the consumer at the premium end of the market underlined the companys strong performance and leadership position in the Cigarette market. The Surya trademark emerged as the undisputed leader in the premium segment capturing consumer franchise in the face of competing International Brands. Khukuri, the largest selling brand of the company showed healthy growth and Pilot Filter, launched in recent years in the regular size filter segment, garnered significant volume share. Passport Filter Kings which was successfully test marketed during the year will further reinforce the brand portfolio. Distribution and Supply Chain Management Amidst challenging circumstances, the companys proactive supply chain and superior management practices ensured uninterrupted supplies to the trade and consumers to sustain the volume and value growth in the cigarette business. Quality On the Manufacturing front, the company continued to invest in new technology cigarette making and packing lines to reinforce the superiority and consistency of product quality. Investments were made in upgrading infrastructure to cater to the enhanced production capacity and the requirements of new technology machines. Energy Energy conservation and efficiency continue to engage your Companys attention as areas of critical priority. Energy saving initiatives implemented by the Company over the years has enabled substantial energy savings through reduced energy consumption per unit. Environment Health and Safety The Companys commitment to inclusive growth manifested in the accreditation of its cigarette factory under the upgraded version of Social Accountability 8000:2008 certification. A system led approach, implemented with detailed attention and effective monitoring, continued to provide a safe work environment for all employees. Leaf Tobacco Despite the agro-climatic challenges in growing tobacco in Nepal, the Company continued to engage with the farmers from the stage of seed development to crop harvesting and provided customized services to farmers during the year. These interventions have helped in enhancing productivity and quality at the farm level thereby enhancing returns to the farmers. Encouraged by the interventions of the Company, farmers have increased the acreage under leaf cultivation. Efforts are underway to further improve the quality of the domestic grades. GARMENT BUSINESS EXPORT The Garments export business was constrained for the better part of the year by the import tax increases in India from July 2009. In this context, the business reinforced its efforts at market expansion through forays into new export markets while continuing to cater to orders for the John Players and Wills range of apparels. Such business development efforts have resulted in third country export volumes increasing by 36% over the previous year. The Company is hopeful that these efforts will result in the delivery of improved export revenues and profitability in future. GARMENT BUSINESS DOMESTIC In the domestic market John Players retained its leadership status in the branded apparel segment with a strong presence in the minds of the consumer. Springwood, the home grown western wear brand positioned as an alternative to low price imports from China and South East Asia, has further consolidated and strengthened its position in the value for money segment. MATCHES BUSINESS In the Safety Matches business, the Companys brand Tir, has established a strong consumer franchise and significant market share within a few years of its launch. The brand achieved a top line growth of 25% during the year. DIVIDEND Your Directors have declared an Interim Dividend of NRs. 12.50 (` 7.81) per Ordinary Share for the year ended 32nd Asadh 2067. The consequent outflow on this account, including Dividend Tax, amounts to NRs. 25.2 (` 15.75) Crores. Your Board has also recommended a Final Dividend of NRs. 77.5 (` 48.44) 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. TAX MATTERS The Honble Supreme Court of Nepal, during the year, passed judgements in favour of your Company, with regard to certain Excise and Income Tax demands on the issue of theoretical production. These are summarised below: 1. For the financial years 2050-51 & 2051-52 (1993-94 & 1994-95), Revenue authorities had raised a Excise demand for NRs. 13,59,81,616 (` 8,49,88,510) which was quashed by a Division Bench of the Supreme Court on 8th April 1998. The Government filed a review petition on 8th October 1998. The Full Bench of the Supreme Court on 29th October 2009 decided the matter in favour of the Company. 2. For the financial years 2055-56 to 2059-60 (1998-99 to 2002-03) an Excise demand for NRs. 37,17,24,680 (` 23,23,27,925) was issued to the Company by the Inland Revenue Office. The Company challenged the demand in the Supreme Court, which has pronounced its verdict on 1st April 2010 in favour of the Company. 3. An Income Tax demand for the financial year 2058-59 (2001-02) was issued to the Company for an amount of NRs. 16,07,61,328 (` 10,04,75,830) related to the matter of theoretical production. The Company filed a writ petition before the Supreme Court seeking that the said demand order be quashed. The Supreme Court pronounced its verdict on 1st April 2010 in favour of the Company. 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 Companys 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 remain pending stand at NRs.92.90 (` 58.06) Crores and comprise: (a) Excise Demands NRs. 27.80 (` 17.38) Crores. No fresh demand has been received during the year. (b) VAT Demands NRs. 36.51 (` 22.82) Crores. This includes a fresh demand received during the year for an amount of NRs. 11.47 (` 7.17) Crores pertaining to year 2064-65 (2007-08). (c) Income Tax Demands NRs. 28.59 (` 17.87) Crores. This includes fresh demands received during the year for an amount of NRs. 7.06 (` 4.41) Crores pertaining to the years 2061-62 and 2062-63 (2004-05 and 2005-06). Out of the above NRs. 92.90 (` 58.06) Crores, demands aggregating NRs. 66.81 (` 41.76) Crores are under appeal before Supreme Court and demands aggregating NRs. 21.18 (` 13.24) Crores are under appeal before Revenue Tribunal / DG-Inland Revenue Department. Your Company is in the process of challenging the balance demand, received on 20.09.2010, of NRs. 4.91 (` 3.07) Crores through appropriate legal remedies. 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 in favour of the Company by the Full Bench of the Honble Supreme Court on similar matters. RISK MANAGEMENT Your Companys 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. 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 countrys most premier professional Golf tournament the Surya Nepal Masters. EMPLOYEES Human Resource Development continued to be a critical focus area. Industrial
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relations with employees remain harmonious. The Directors of your Company place on record their sincere appreciation for the dedication and performance of the employees during the year. DIRECTORS Mr. A Singh, Director nominated by ITC Limited, ceased to be a Director of your Company with effect from 21st March 2010, in view of his retirement from the services of ITC Limited. Mr. K N Grant has been nominated by ITC Limited and was appointed a Director of your Company from 22nd March 2010. Your Directors would like to place on record their appreciation for the significant services rendered by Mr. A Singh during his tenure as Director of the Company. There were no other changes in the composition of the Board of Directors during the year. The number of shares held by your Directors in the Company as on 32nd Asadh 2067 are annexed to this Report (Annexure I). The Directors have confirmed that none of them or their close relatives have 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 2066 / 67 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, and being eligible, have offered themselves for reappointment. FUTURE OUTLOOK A second cigarette factory near Pokhara has been proposed to meet the growing market demand. Investment is also planned in Employee housing, Corporate Office and Warehouse at Kathmandu. Your Company will continue to explore and pursue opportunities for profitable growth and looks forward to the future with optimism and confidence. On behalf of the Board K. N. Grant Sanjiv Keshava Director Managing Director
18th Aswin 2067 (4th October 2010)
Y. C. Deveshwar Chairman
Annexure I Sl. No. Name of Director Number of Ordinary shares of NRs. 100/- each held singly and/or jointly as on 32nd Asadh 2067 (16th July 2010) Nil Nil Nil Nil 67,212 600 Nil
1. 2. 3. 4. 5. 6. 7.
Y. C. Deveshwar A. K. Mukerji B. B. Chatterjee K. N. Grant S. R. Pandey S. SJB Rana Sanjiv Keshava
Annexure II THE AMOUNT OF REMUNERATION, ALLOWANCE AND FACILITIES PAID TO DIRECTOR, MANAGING DIRECTOR, CHIEF EXECUTIVE AND OFFICIALS During the financial year 2066/67, the following amounts were paid to the Directors. Board Meeting Fee paid NRs. 58,824 (` 36,765) Incidental expenses paid NRs. 40,000 (` 25,000) Payment to/on behalf of Managing Director for the financial year 2066/67: Salary Allowances NRs. 49,20,000 (` 30,75,000) NRs. 60,34,809 (` 37,71,756)
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 2066/67: Salary NRs. 1,00,69,580 (` 62,93,488) Allowances NRs. 1,14,44,917 (` 71,53,073) 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 2066/67 comprising telephone, telex, fax, legal and service fees, bank charges, rates & taxes, printing & stationery, entertainment, rent, electricity, fuel & water, repair & improvement, travel & conveyance, insurance premium, postage, board meeting fees, donations and charity, books & periodicals, miscellaneous expenses etc. amounted to NRs. 44,07,35,185 (` 27,54,59,491).
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, 2067 (July 16, 2010), 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 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 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 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, 2067 (July 16, 2010). ii) in the case of Profit & Loss Account, the profit of the Company for the year ended on Asadh 32, 2067 (July 16, 2010). iii) in the case of the Statement of Cash Flow, the cash flows of the Company for the year ended on Asadh 32, 2067 (July 16, 2010). 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.
e)
Nem Lal Amatya Partner N Amatya & Co. Chartered Accountants Date : 18th Aswin 2067 (4th October 2010) Place : Kolkata
Partha Mitra Partner Lovelock & Lewes Chartered Accountants
185

BALANCE SHEET AS AT 32ND ASADH 2067 (16TH JULY 2010) Figures in NRs. As at 32nd Asadh 2067 (16th July 2010) Figures in ` As at 32nd Asadh 2067 (16th July 2010) Figures in NRs. As at 31st Asadh 2066 (15th July 2009) Figures in ` As at 31st Asadh 2066 (15th July 2009)
Schedule CAPITAL & LIABILITIES SHARE CAPITAL AND RESERVES (a) Share Capital (b) Reserves & Surplus Total ASSETS (1) Fixed Assets (a) Gross Block (b) Less : Accumulated Depreciation (c) Net Block (d) Capital Work-in-Progress and In-transit (2) Investments (3) Deferred Tax Asset (Net) (Refer 2G of Schedule 17) (4) Current Assets (a) Inventories (b) Sundry Debtors (c) Cash and Bank Balances (d) Loans and Advances Total Less: Current Liabilities and Provisions (a) Liabilities (b) Provisions Total Net Current Assets Total Notes to the Accounts and Contingent Liabilities 17 9 10 5 6 7 8 4 3 1 2
2,01,60,00,000 39,68,03,659 2,41,28,03,659
1,26,00,00,000 24,80,02,287 1,50,80,02,287
2,01,60,00,000 23,68,57,479 2,25,28,57,479
1,26,00,00,000 14,80,35,924 1,40,80,35,924
2,99,08,67,216 1,38,36,10,520 1,60,72,56,696 36,06,01,827 10,98,82,338 2,89,86,715
1,86,92,92,010 86,47,56,575 1,00,45,35,435 22,53,76,142 6,86,76,461 1,81,16,697
2,90,29,16,483 1,23,51,49,076 1,66,77,67,407 3,24,46,920 10,98,82,338 1,64,49,586
1,81,43,22,802 77,19,68,172 1,04,23,54,630 2,02,79,325 6,86,76,461 1,02,80,991
1,36,57,74,940 10,15,85,334 91,66,48,884 60,98,42,066 2,99,38,51,224
85,36,09,337 6,34,90,834 57,29,05,553 38,11,51,291 1,87,11,57,015
1,10,45,85,269 12,16,38,498 1,82,00,46,229 19,07,26,544 3,23,69,96,540
69,03,65,793 7,60,24,061 1,13,75,28,893 11,92,04,090 2,02,31,22,837
78,13,71,014 1,90,64,04,127 2,68,77,75,141 30,60,76,083 2,41,28,03,659
48,83,56,884 1,19,15,02,579 1,67,98,59,463 19,12,97,552 1,50,80,02,287
73,08,18,721 2,07,98,66,591 2,81,06,85,312 42,63,11,228 2,25,28,57,479
45,67,61,701 1,29,99,16,619 1,75,66,78,320 26,64,44,517 1,40,80,35,924
The schedules referred to above form an integral part of the Balance Sheet. This is the Balance Sheet referred to in our Report of even date.
Subhraketan Mitra Financial Controller S R Pandey Director
Sanjiv Keshava Managing Director A K Mukerji Director
Saurya SJB Rana Alternate Director B B Chatterjee Director
K N Grant Director Nem Lal Amatya Partner N. Amatya & Co. Chartered Accountants
Y C Deveshwar Chairman Partha Mitra Partner Lovelock & Lewes Chartered Accountants
Date: 18th Aswin 2067 (4th October 2010)
186

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010) Figures in NRs. For the year ended 32nd Asadh 2067 (16th July 2010) 11,15,51,95,592 3,87,87,93,937 7,27,64,01,655 13 2,92,35,79,313 2,92,35,79,313 4,35,28,22,342 14 10,12,62,733 4,45,40,85,075 15 1,06,37,93,136 27,24,88,766 3,11,78,03,173 22,44,55,190 1,07,03,671 2,88,26,44,312 16 90,82,98,132 1,97,43,46,180 1,97,43,46,180 Figures in ` For the year ended 32nd Asadh 2067 (16th July 2010) 6,97,19,97,245 2,42,42,46,211 4,54,77,51,034 1,82,72,37,071 1,82,72,37,071 2,72,05,13,963 6,32,89,208 2,78,38,03,171 66,48,70,709 17,03,05,479 1,94,86,26,983 14,02,84,494 66,89,794 1,80,16,52,695 56,76,86,332 1,23,39,66,363 1,23,39,66,363 Figures in NRs. For the year ended 31st Asadh 2066 (15th July 2009) 8,21,33,92,623 2,83,91,04,742 5,37,42,87,881 2,04,89,11,992 2,04,89,11,992 3,32,53,75,889 11,73,63,861 3,44,27,39,750 98,31,17,616 20,04,53,876 2,25,91,68,258 13,79,83,391 5,93,867 2,12,05,91,000 67,97,38,016 1,44,08,52,984 65,08,79,260 2,09,17,32,244 Figures in ` For the year ended 31st Asadh 2066 (15th July 2009) 5,13,33,70,389 1,77,44,40,464 3,35,89,29,925 1,28,05,69,995 1,28,05,69,995 2,07,83,59,930 7,33,52,413 2,15,17,12,343 61,44,48,509 12,52,83,673 1,41,19,80,161 8,62,39,619 3,71,167 1,32,53,69,375 42,48,36,260 90,05,33,115 40,67,99,538 1,30,73,32,653
Schedule Gross Revenue Less: Duties Net Sales Raw Materials Consumed, etc. Cost of Sales Gross Profit Other Income Total Manufacturing, Admin, Selling Expenses etc. Provision For Employees Bonus Operating Profit Depreciation Loss on Fixed Assets sold / discarded (Net) Profit before Taxation Provision for Taxation Profit after Taxation Transferred from General Reserve Available for Appropriation Appropriation Provision For Employees Housing Interim Dividend Second Interim Dividend Proposed Final Dividend Balance Carried Over to Balance Sheet 11 12
15,77,56,654 25,20,00,000 1,56,24,00,000 21,89,526 1,97,43,46,180
9,85,97,909 15,75,00,000 97,65,00,000 13,68,454 1,23,39,66,363
11,60,52,244 10,08,00,000 1,14,91,20,000 72,57,60,000 2,09,17,32,244
7,25,32,653 6,30,00,000 71,82,00,000 45,36,00,000 1,30,73,32,653
Notes to the Accounts and Contingent Liabilities
17
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.
187

CASH FLOW STATEMENT FOR THE YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010) Figures in NRs. For the year ended 32nd Asadh 2067 (16th July 2010) A. Cash Flow From Operating Activities Net Profit Before Tax Adjustments for : Depreciation Interest from Investments Interest on Short Term/Call Deposits Unrealised Loss/(Gain) on Foreign Exchange (Net) Loss on Fixed Assets sold/discarded (Net) Claims and advance written off Provision for Doubtful Debts and Advance Liability no longer required written back Provision for Doubtful Advance/Debts written back Operating Profit Before Working Capital Changes Adjustments for : Trade and Other Receivables Inventories Trade Payables Cash Generated From Operation Income Tax Paid Net Cash From Operating Activities B. Cash Flow From Investing Activities Purchase of Fixed Assets Proceeds from Disposal of Fixed Assets Interest Received Net Cash Used in Investing Activities C. Cash Flow From Financing Activities Dividends Paid Net Cash Used in Financing Activities (C) (1,97,56,80,000) (1,97,56,80,000) (90,25,04,030) 1,82,00,46,229 91,75,42,199 (1,23,48,00,000) (1,23,48,00,000) (56,40,65,018) 1,13,75,28,893 57,34,63,875 (87,36,00,000) (87,36,00,000) 41,81,57,009 1,39,99,13,123 1,81,80,70,132 (54,60,00,000) (54,60,00,000) 26,13,48,130 87,49,45,702 1,13,62,93,832 (B) (50,28,30,267) 27,210 8,89,22,631 (41,38,80,426) (31,42,68,917) 17,006 5,55,76,644 (25,86,75,267) (66,10,26,919) 52,53,296 9,73,26,620 (55,84,47,003) (41,31,41,824) 32,83,310 6,08,29,136 (34,90,29,378) (A) (40,25,09,616) (26,11,89,671) 4,26,84,479 2,41,22,06,307 (92,51,49,911) 1,48,70,56,396 (25,15,68,509) (16,32,43,544) 2,66,77,799 1,50,76,28,943 (57,82,18,694) 92,94,10,249 23,19,96,438 (24,96,77,060) 36,94,06,556 2,51,57,37,003 (66,55,32,991) 1,85,02,04,012 14,49,97,774 (15,60,48,163) 23,08,79,098 1,57,23,35,627 (41,59,58,119) 1,15,63,77,508 22,44,55,190 (56,83,125) (8,14,64,792) 8,93,315 1,07,03,671 17,41,531 (68,987) 3,03,32,21,115 14,02,84,494 (35,51,953) (5,09,15,495) 5,58,322 66,89,794 10,88,457 (43,117) 1,89,57,63,197 13,79,83,391 (56,83,125) (9,35,10,614) (19,76,097) 5,93,867 3,58,160 62,40,537 (3,13,355) (2,72,695) 2,16,40,11,069 8,62,39,619 (35,51,953) (5,84,44,134) (12,35,061) 3,71,167 2,23,850 39,00,336 (1,95,847) (1,70,434) 1,35,25,06,918 2,88,26,44,312 1,80,16,52,695 2,12,05,91,000 1,32,53,69,375 Figures in ` For the year ended 32nd Asadh 2067 (16th July 2010) Figures in NRs. For the year ended 31st Asadh 2066 (15th July 2009) Figures in ` For the year ended 31st Asadh 2066 (15th July 2009)
Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) Cash and Cash Equivalents (Opening Balance) Cash and Cash Equivalents (Closing Balance) Cash and Cash Equivalents Comprises: Cash and Bank Balances Unrealised Loss/(Gain) on Foreign Currency Cash and Cash Equivalents
91,66,48,884 8,93,315
57,29,05,553 5,58,322
1,82,00,46,229 (19,76,097)
1,13,75,28,893 (12,35,061)
Total
91,75,42,199
57,34,63,875
1,81,80,70,132
1,13,62,93,832
188

STATEMENT OF CHANGE IN EQUITY FOR THE YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010)
Figures in NRs. Figures in ` Figures in NRs. Revaluation Reserve 1,21,81,280 1,21,81,280 1,21,81,280 Figures in ` Figures in NRs. Revaluation Reserve General Reserve Figures in ` Figures in NRs. General Reserve Employees' Housing Reserve 9,73,27,496 11,60,52,244 21,33,79,740 15,77,56,654 15,77,56,654 37,11,36,394 Figures in ` Figures in NRs. Employees' Housing Reserve Surplus Figures in ` Figures in NRs. Surplus Total Figures in ` Total
Share Capital Share Capital
Balance as at 31st Asadh 2065 (15th July 2008) Net Profit for the year Transfer to Employees Housing Reserve Issue of Bonus Shares Transfer to Profit and Loss Appropriation Account Dividend Transfer to Reserve Total Balance as at 31st Asadh 2066 (15th July 2009) Net Profit for the year Transfer to Employees Housing Reserve Dividend Transfer to Reserve Total Balance as at 32nd Asadh 2067 (16th July 2010)
33,60,00,000
21,00,00,000
76,13,300 2,34,21,75,719 1,46,38,59,824 (1,68,00,00,000)(1,05,00,00,000) (65,08,79,260) (40,67,99,538) 76,13,300 76,13,300 1,12,96,459 21,89,526 21,89,526 1,34,85,985 70,60,286 13,68,454 13,68,454 84,28,740
6,08,29,685 1,44,08,52,984 7,25,32,653 13,33,62,338 65,08,79,260
2,78,76,84,495 1,74,23,02,809 90,05,33,115 1,44,08,52,984 90,05,33,115 40,67,99,538
7,25,32,653 (11,60,52,244) (7,25,32,653)
1,68,00,00,000 1,05,00,00,000
(1,97,56,80,000)(1,23,48,00,000)(1,97,56,80,000)(1,23,48,00,000) (53,48,27,016) (33,42,66,885) 2,25,28,57,479 1,40,80,35,924 15,99,46,180 9,99,66,363
1,68,00,00,000 1,05,00,00,000 2,01,60,00,000 1,26,00,00,000
(2,33,08,79,260)(1,45,67,99,538) 11,60,52,244
1,97,43,46,180 1,23,39,66,363 1,97,43,46,180 1,23,39,66,363 9,85,97,909 (15,77,56,654) (9,85,97,909) 9,85,97,909 23,19,60,247 (21,89,526) (13,68,454) (1,81,44,00,000)(1,13,40,00,000)(1,81,44,00,000)(1,13,40,00,000)
2,01,60,00,000 1,26,00,00,000
2,41,28,03,659 1,50,80,02,287
SCHEDULES TO THE ACCOUNTS Figures in NRs. As at 32nd Asadh 2067 (16th July 2010) SCHEDULE 1 : SHARE CAPITAL Authorised 6,50,00,000 Ordinary Shares of NRs. 100.00 each Issued, Subscribed & Paid up 2,01,60,000 Ordinary Shares of NRs. 100.00 each, fully paid Out of the above; 1. 2. 3. 4. 1,68,00,000 Ordinary Shares were issued as fully paid up bonus shares in 2065/66(2008/09). 28,00,000 Ordinary Shares were issued as fully paid up bonus shares in 2060/61(2003-04). 2,80,000 Ordinary Shares were issued as fully paid up bonus shares in 2052/53 (1995-96). 1,18,94,400 Ordinary Shares are held by the Holding Company, ITC Limited. 2,01,60,00,000 2,01,60,00,000 1,26,00,00,000 1,26,00,00,000 2,01,60,00,000 2,01,60,00,000 1,26,00,00,000 1,26,00,00,000 6,50,00,00,000 4,06,25,00,000 6,50,00,00,000 4,06,25,00,000 Figures in ` As at 32nd Asadh 2067 (16th July 2010) Figures in NRs. As at 31st Asadh 2066 (15th July 2009) Figures in ` As at 31st Asadh 2066 (15th July 2009)
Reconciliation of number of Shares outstanding: Number of Shares At the beginning of the year Add: Issue of Bonus Share At the end of the year 2,01,60,000 2,01,60,000 33,60,000 1,68,00,000 2,01,60,000
Figures in NRs. As at 31st Asadh 2066 (15th July 2009) SCHEDULE 2 : RESERVES & SURPLUS Capital Reserve Revaluation of Land Revenue Reserve General Reserve Housing Fund Provision for Employee Housing Surplus Profit & Loss Account 23,68,57,479 21,33,79,740 1,12,96,459 1,21,81,280
Figures in ` Figures in NRs. As at 31st Asadh 2066 (15th July 2009)
Figures in `
Figures in NRs.
Figures in `
Figures in NRs.
Figures in `
Addition
Addition
Withdrawal
As at As at 32nd Asadh 2067 32nd Asadh 2067 Withdrawal (16th July 2010) (16th July 2010)
76,13,300 70,60,286 13,33,62,338 14,80,35,924
21,89,526 15,77,56,654 21,89,526 16,21,35,706
13,68,454 9,85,97,909 13,68,454 10,13,34,817
21,89,526 21,89,526
13,68,454 13,68,454
1,21,81,280 1,34,85,985 37,11,36,394 39,68,03,659
76,13,300 84,28,740 23,19,60,247 24,80,02,287
189
190
GROSS BLOCK ` NRs. Withdrawals/ Adjustments 7,60,42,520 8,47,762 23,63,951 46,70,808 27,99,586 8,67,24,627 14,32,47,505 22,99,72,132 88,23,56,160 55,14,72,600 2,93,53,63,403 1,83,46,02,127 1,10,13,80,892 14,37,32,582 3,35,14,69,043 2,09,46,68,152 1,23,51,49,076 8,95,29,691 36,06,01,827 22,53,76,142 77,19,68,172 68,83,63,057 5,42,02,891 2,99,08,67,216 1,86,92,92,010 1,23,51,49,076 77,19,68,172 22,44,55,190 22,44,55,190 13,79,83,391 17,49,741 5,25,78,018 3,28,61,260 1,48,00,993 92,50,620 30,63,441 29,19,255 4,90,97,420 3,06,85,888 2,70,00,537 1,68,75,336 43,22,405 14,77,469 6,60,12,749 4,12,57,969 91,69,867 57,31,167 43,58,240 27,23,900 27,01,503 19,14,651 14,02,84,494 14,02,84,494 8,62,39,619 5,29,851 2,64,73,908 1,65,46,192 1,14,53,354 71,58,345 19,85,299 12,40,812 4,75,26,575 2,09,53,76,681 1,30,96,10,426 1,08,43,24,353 67,77,02,721 19,72,61,429 12,32,88,393* 6,77,54,154 7,49,733 10,09,168 43,60,954 21,19,737 7,59,93,746 7,59,93,746 42,15,207 48,01,40,449 30,00,87,780 8,83,99,972 5,52,49,983 1,34,64,376 84,15,235 22,11,87,991 13,82,42,495 Withdrawals/ Adjustments For the year For the year Withdrawals/ Adjustments Withdrawals/ Adjustments NRs. NRs. Additions 4,74,85,738 1,53,87,884 2,80,25,152 10,80,319 73,34,432 24,40,169 74,18,405 10,91,72,099 29,46,26,508 40,37,98,607 95,83,25,445 NRs. As at 32.03.2067 (16.07.2010) NRs. As at 31.03.2066 (15.07.2009) ` ` ` DEPRECIATION NET BLOCK ` As at 32.03.2067 (16.07.2010) ` As at 31.03.2066 (15.07.2009) NRs . As at 32.03.2067 (16.07.2010) 10,18,64,348 4,23,46,346 1,21,38,31,628 4,68,583 6,30,730 27,25,596 13,24,836 1,26,88,920 1,25,18,939 2,69,61,988 1,57,44,697 4,74,96,091 1,38,36,10,520 4,74,96,091 1,38,36,10,520 26,34,504 1,23,51,49,076 ` As at 32.03.2067 (16.07.2010) 6,36,65,218 75,86,44,768 79,30,574 78,24,337 1,68,51,243 98,40,435 NRs. As at 32.03.2067 (16.07.2010) 22,11,87,991 37,82,76,101 88,15,45,053 1,37,84,988 5,34,93,810 2,21,35,432 3,68,33,321 ` As at 32.03.2067 (16.07.2010) 13,82,42,495 23,64,22,562 NRs. As at 31.03.2066 (15.07.2009) 14,52,10,811 36,71,19,862 55,09,65,658 1,04,22,54,605 86,15,618 3,34,33,632 1,38,34,645 2,30,20,825 1,41,39,803 4,74,71,745 2,28,63,421 2,87,07,160 ` As at 31.03.2066 (15.07.2009) 9,07,56,757 22,94,49,913 65,14,09,128 88,37,379 2,96,69,839 1,42,89,638 1,79,41,976 86,47,56,575 1,60,72,56,696 1,00,45,35,435 1,66,77,67,407 1,04,23,54,630 36,06,01,827 22,53,76,142 3,24,46,920 2,02,79,325 86,47,56,575 1,96,78,58,523 1,22,99,11,577 1,70,02,14,327 1,06,26,33,955 77,19,68,172 1,70,02,14,327 1,06,26,33,955
Schedule 3 - FIXED ASSETS
NRs.
Description
Basic Depreciation Rates (%)
NRs. As at 31.03.2066 (15.07.2009)
` As at 31.03.2066 (15.07.2009)
Additions
Land & Land Development
14,52,10,811
9,07,56,757
7,59,77,180
Buildings
1.65
45,55,19,834
28,46,99,896
2,46,20,615
Plant & Machinery
5.30 2,12,65,78,958 1,32,91,11,849
4,48,40,243
Furniture & Fixtures
3.40 & 5.30
2,55,93,157
1,59,95,724
17,28,513
Vehicles
5.30
5,66,41,612
3,54,01,006
1,17,35,088
Computers
7.30
4,98,63,958
3,11,64,974
39,04,270
Office Equipments
5.30
4,35,08,153
2,71,92,596
1,18,69,451
Total
2,90,29,16,483 1,81,43,22,802
17,46,75,360
Capital Work-in-Progress and in Transit
3,24,46,920
2,02,79,325
47,14,02,412
Grand Total
2,93,53,63,403 1,83,46,02,127
64,60,77,772
Previous Year
2,28,43,98,854 1,42,77,49,282 1,53,33,20,709
* Includes additional depreciation amounting NRs. 4,04,53,995 (` 2,52,83,747) arising from change in estimated useful life of certain plant and machinery.

SCHEDULES TO THE ACCOUNTS (Contd.) Figures in NRs. As at 32nd Asadh 2067 (16th July 2010) SCHEDULE 4 : INVESTMENTS LONG TERM Investment in Stocks issued by Nepal Government 5% Bikash Rinpatra, 2071* Investment in Promissory Note issued by Nepal Government 6.50% Bikash Rinpatra, 2075* * Pledged with a bank for obtaining letter of credit, guarantee facilities. SCHEDULE 5 : INVENTORIES Stores & Supplies (including in-transit) Raw Materials (including in-transit) Stock-In-Process Finished Goods At Cost At Net Realisable Value SCHEDULE 6 : SUNDRY DEBTORS (Receivable within twelve months, unless otherwise stated) Due for more than six months Good and Secured Good and Unsecured From Holding Company From Others Doubtful and Unsecured - From Others Due for less than six months - Considered good Secured Unsecured From Holding Company From Others Less : Provision for Doubtful Debts SCHEDULE 7 : CASH AND BANK BALANCES Cash on Hand Cheques on Hand Cash At Bank Current Account Savings Account (Provident Fund) Short Term - Call Deposits SCHEDULE 8 : LOANS & ADVANCES (Recoverable within twelve months, unless otherwise stated) Receivables from Holding Company (Net) Loan/Advance to Employees [Includes NRs. 9,59,90,118 (` 5,99,93,824) {(2065-66 - NRs. 10,36,19,531) (` 6,47,62,207)} recoverable after twelve months] Margin Money Deposit Advance to Others Prepaid Expenses Accrued Interest Receivable Deposits : With Government Authorities With Others Less : Provision for Doubtful Advance SCHEDULE 9 : CURRENT LIABILITIES (Payble within twelve months, unless otherwise stated) Payable to Holding Company (Net) Retention Money Sundry Creditors Advances from Wholesale Dealers Deposits from Wholesale Dealers Other Liabilities SCHEDULE 10 : PROVISIONS Provision for Income Tax [Net of payment of Income Tax Advance/Deposits amounting to NRs. 95,17,97,108 (` 59,48,73,193) {(2065-66 NRs. 69,44,30,542) (` 43,40,19,089)}] Provision for Gratuity and Leave Encashment Provision for Interim /First Interim Dividend Provision for Second Interim Dividend Provision for Proposed Final Dividend 78,11,885 50,55,30,502 24,85,24,613 59,50,000 1,35,54,014 78,13,71,014 5,34,46,736 48,82,428 31,59,56,564 15,53,27,883 37,18,750 84,71,259 48,83,56,884 3,34,04,210 5,28,31,698 74,16,410 41,06,68,595 24,25,49,934 69,50,000 1,04,02,084 73,08,18,721 5,77,61,386 3,30,19,811 46,35,256 25,66,67,872 15,15,93,709 43,43,750 65,01,303 45,67,61,701 3,61,00,866 36,84,74,089 11,05,75,415 23,02,96,306 6,91,09,634 11,64,72,957 7,27,95,598 Figures in ` As at 32nd Asadh 2067 (16th July 2010) Figures in NRs. As at 31st Asadh 2066 (15th July 2009) Figures in ` As at 31st Asadh 2066 (15th July 2009)
8,42,50,000 2,56,32,338 10,98,82,338
5,26,56,250 1,60,20,211 6,86,76,461
8,42,50,000 2,56,32,338 10,98,82,338
5,26,56,250 1,60,20,211 6,86,76,461
6,94,63,908 78,11,22,138 2,48,30,840 47,09,44,945 1,94,13,109 1,36,57,74,940
4,34,14,943 48,82,01,335 1,55,19,275 29,43,40,591 1,21,33,193 85,36,09,337
5,95,35,918 46,02,80,092 2,86,12,049 54,16,55,964 1,45,01,246 1,10,45,85,269
3,72,09,948 28,76,75,057 1,78,82,531 33,85,34,978 90,63,279 69,03,65,793
2,66,137 21,60,000 24,23,264 10,26,983 15,63,247 3,60,69,509 5,91,03,177 10,26,12,317 10,26,983 10,15,85,334 1,20,394 1,99,00,000 1,82,92,668 54,026 87,82,81,796 91,66,48,884
1,66,336 13,50,000 15,14,540 6,41,864 9,77,029 2,25,43,443 3,69,39,486 6,41,32,698 6,41,864 6,34,90,834 75,246 1,24,37,500 1,14,32,918 33,766 54,89,26,123 57,29,05,553
6,29,249 12,45,925 10,95,970 24,70,751 6,21,25,275 5,51,67,298 12,27,34,468 10,95,970 12,16,38,498 1,04,257 4,45,639 2,02,57,739 53,114 1,79,91,85,480 1,82,00,46,229
3,93,281 7,78,703 6,84,981 15,44,219 3,88,28,297 3,44,79,561 7,67,09,042 6,84,981 7,60,24,061 65,161 2,78,524 1,26,61,087 33,196 1,12,44,90,925 1,13,75,28,893
1,10,355 4,83,94,692 43,52,841 10,01,371 6,80,01,045 1,67,05,865 61,76,15,673 77,73,607 60,98,42,066
68,972 3,02,46,682 27,20,526 6,25,857 4,25,00,653 1,04,41,165 38,60,09,795 48,58,504 38,11,51,291
24,66,412 2,77,73,316 44,28,515 27,76,085 2,93,64,008 1,34,77,327 19,67,58,620 60,32,076 19,07,26,544
15,41,508 1,73,58,323 27,67,822 17,35,053 1,83,52,505 84,23,329 12,29,74,138 37,70,048 11,92,04,090
3,85,57,391 25,20,00,000 1,56,24,00,000 1,90,64,04,127
2,40,98,369 15,75,00,000 97,65,00,000 1,19,15,02,579
4,64,25,205 10,08,00,000 1,14,91,20,000 72,57,60,000 2,07,98,66,591
2,90,15,753 6,30,00,000 71,82,00,000 45,36,00,000 1,29,99,16,619
191

SCHEDULES TO THE ACCOUNTS (Contd.) Figures in NRs. For the year ended 32nd Asadh 2067 (16th July 2010) 10,78,63,71,147 7,47,59,603 7,97,26,289 21,43,38,553 11,15,51,95,592 3,81,42,13,414 6,45,80,523 3,87,87,93,937 1,63,54,05,858 1,90,27,953 94,39,19,217 20,38,49,632 10,19,73,039 2,90,41,75,699 6,40,28,932 (4,46,25,318) 2,92,35,79,313 Figures in ` For the year ended 32nd Asadh 2067 (16th July 2010) 6,74,14,81,967 4,67,24,752 4,98,28,931 13,39,61,595 6,97,19,97,245 2,38,38,83,384 4,03,62,827 2,42,42,46,211 1,02,21,28,661 1,18,92,471 58,99,49,511 12,74,06,020 6,37,33,149 1,81,51,09,812 4,00,18,083 (2,78,90,824) 1,82,72,37,071 Figures in NRs. For the year ended 31st Asadh 2066 (15th July 2009) 7,74,34,19,542 10,23,43,054 6,39,39,580 30,36,90,447 8,21,33,92,623 2,79,71,54,281 4,19,50,461 2,83,91,04,742 94,99,37,527 1,54,20,198 72,41,13,512 28,31,47,836 10,35,53,431 2,07,61,72,504 3,67,68,420 (6,40,28,932) 2,04,89,11,992 Figures in ` For the year ended 31st Asadh 2066 (15th July 2009) 4,83,96,37,214 6,39,64,409 3,99,62,238 18,98,06,528 5,13,33,70,389 1,74,82,21,426 2,62,19,038 1,77,44,40,464 59,37,10,954 96,37,624 45,25,70,945 17,69,67,398 6,47,20,894 1,29,76,07,815 2,29,80,263 (4,00,18,083) 1,28,05,69,995
SCHEDULE 11 : GROSS REVENUE Domestic : Cigarette Garments Matches Exports : Garments SCHEDULE 12 : DUTIES Excise Duty Sticker Charges SCHEDULE 13 : RAW MATERIALS CONSUMED ETC. Leaf Casing Materials Wrapping Materials Fabrics, Trims etc Purchase and Contract Manufacturing Charges Adjustment of overheads loaded, etc. on Finished Goods Opening Closing
Note : Includes write down of inventories amounting to NRs. 1,31,63,896 (` 82,27,435) {(2065-66 NRs. 36,43,460 (` 22,77,163)} SCHEDULE 14 : OTHER INCOME Interest Received Less : Interest paid on Trading Debts Interest on Short Term /Call Deposit with Bank Gain on Foreign Exchange (Net) Interest from Investments Liability no longer required written back Provision for doubtful advance/debts written back Miscellaneous Income SCHEDULE 15 : MANUFACTURING, ADMIN, SELLING EXPENSES ETC. Salaries, Wages & Allowances Contribution to Provident Fund Labour & Staff Welfare Uniform Rent Electricity, Fuel & Water Rates & Taxes Insurance Premium Repairs & Improvement - Depreciable Assets Safety & Pollution Control Cost Maintenance to Other Properties Consumable Stores & Spares Freight Product Development Advertising Travel & Conveyance Training & Recruitment Expenses Postage, Telephone, Telex, Fax etc. Bank Charges and Commission Audit Fees Legal Fees Printing & Stationery Consultancy, Service Charges & Other Fees Licence Fee Entertainment Sales Promotion Board Meeting Fees Donations & Charity Books & Periodicals Membership Fee Claims and Advances Written off Provision for Doubtful Debts and Advances Provision for Retirement Benefits Loss on Foreign Exchange (Net) Miscellaneous Expenses {Refer 2F of Schedule 17} SCHEDULE 16 : PROVISION FOR TAXATION Current Tax Deferred Tax 67,68,502 20,00,883 47,67,619 8,14,64,792 56,83,125 68,987 92,78,210 10,12,62,733 42,30,314 12,50,552 29,79,762 5,09,15,495 35,51,953 43,117 57,98,881 6,32,89,208 54,28,543 23,83,212 30,45,331 9,35,10,614 23,86,834 56,83,125 3,13,355 2,72,695 1,21,51,907 11,73,63,861 33,92,840 14,89,508 19,03,332 5,84,44,134 14,91,771 35,51,953 1,95,847 1,70,434 75,94,942 7,33,52,413
25,92,90,147 84,74,071 1,89,85,556 26,25,683 4,43,93,855 8,10,81,841 11,03,162 3,97,57,392 9,80,67,962 50,62,937 1,76,83,275 1,43,45,842 3,99,72,863 1,13,12,113 15,50,29,004 7,19,48,263 1,14,50,044 92,68,988 33,01,067 8,00,000 7,95,800 24,25,855 4,71,76,273 14,07,498 45,50,713 9,18,76,468 58,824 6,76,250 3,78,212 4,27,457 17,41,531 49,98,812 3,20,862 1,30,04,516 1,06,37,93,136 92,08,35,261 (1,25,37,129) 90,82,98,132
16,20,56,341 52,96,294 1,18,65,973 16,41,052 2,77,46,159 5,06,76,151 6,89,476 2,48,48,370 6,12,92,476 31,64,336 1,10,52,046 89,66,151 2,49,83,039 70,70,071 9,68,93,128 4,49,67,664 71,56,278 57,93,118 20,63,167 5,00,000 4,97,375 15,16,159 2,94,85,170 8,79,686 28,44,196 5,74,22,792 36,765 4,22,656 2,36,383 2,67,160 10,88,457 31,24,258 2,00,539 81,27,823 66,48,70,709 57,55,22,038 (78,35,706) 56,76,86,332
23,10,86,780 75,82,495 1,69,10,622 14,65,479 4,47,82,685 8,36,77,379 69,27,710 3,25,99,423 10,67,97,769 47,43,343 1,63,12,708 1,33,00,274 3,61,81,760 96,64,849 13,00,90,726 4,29,30,856 72,10,959 78,69,019 21,63,289 4,50,000 8,70,300 20,16,446 3,31,72,252 13,74,006 35,87,127 10,23,71,917 23,529 13,16,977 2,69,878 9,34,532 3,58,160 62,40,537 1,49,13,303 1,29,20,527 98,31,17,616 66,99,12,880 98,25,136 67,97,38,016
14,44,29,237 47,39,059 1,05,69,139 9,15,924 2,79,89,178 5,22,98,362 43,29,819 2,03,74,639 6,67,48,606 29,64,589 1,01,95,442 83,12,671 2,26,13,600 60,40,531 8,13,06,704 2,68,31,785 45,06,849 49,18,137 13,52,056 2,81,250 5,43,938 12,60,279 2,07,32,657 8,58,754 22,41,954 6,39,82,448 14,706 8,23,111 1,68,674 5,84,082 2,23,850 39,00,336 93,20,814 80,75,329 61,44,48,509 41,86,95,550 61,40,710 42,48,36,260
192

SCHEDULE 17 - NOTES TO THE ACCOUNTS 1. Significant Accounting Policies i) Convention These financial statements have been prepared in accordance with applicable Accounting Standards in Nepal and generally accepted accounting principles. 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 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 in the Profit and Loss Account on foreign exchange rate fluctuations relating to monetary items are accounted for 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 on profit for the period covered by the financial statements with reference to 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 not recognised unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax is determined using the tax rates that have been enacted or substantively enacted by 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 2067, the Board of Directors of the Company at its meeting held on 18th Aswin 2067 (4th October 2010) have: a) declared interim dividend of NRs. 12.50 (` 7.81) per share and b) recommended final dividend of NRs. 77.50 (` 48.44) per share. B. Claims against the Company not acknowledged as debts: a) Demands raised by Revenue Authorities on theoretical production of cigarettes: The Company has been receiving Show Cause Notices (SCNs) and demands from Excise, Income Tax and VAT authorities. The basis of 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 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 Companys 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. It may be pointed out that such levy of taxes on such theoretical production of cigarettes has absolutely no basis in law. The Honble Supreme Court of Nepal has, during the year, passed judgements in favour of your Company, with regard to certain Excise and Income Tax demands on the issue of theoretical production. These are summarised below: (i) Excise Related: 1. For the financial years 2050-51 & 2051-52 (1993-94 & 1994-95), Revenue authorities had raised a Excise demand for NRs. 13,59,81,616 (` 8,49,88,510), which was quashed by a Division Bench of the Supreme Court on 8th April 1998. Government filed a review petition on 8th October 1998. The Full Bench of the Supreme Court on 29th October 2009 decided the matter in favour of the Company. Our counsel appearing in the matter has opined that this verdict will add substantial strength to the Companys case in all other matters relating to the issue of theoretical production. 2. An Excise demand dated 12th July 2005 for NRs. 37,17,24,680 (` 23,23,27,925) for the financial years 2055-56 to 2059-60 (1998-99 to 2002-03) was issued to the Company by the Inland Revenue Office. On 21st September 2006 the Company challenged the demand in the Supreme Court, which on 1st April 2010, has decided the matter in favour of the Company. (ii) Income Tax Related: An Income Tax demand dated 13th October 2006 for the financial year 2058-59 (2001-02) was issued to the Company for an amount of NRs. 16,07,61,328 (` 10,04,75,830) related to the matter of theoretical production. On 7th November 2006, the Company filed a writ petition before the Supreme Court seeking that the said demand order be quashed. The Supreme Court, on 1st April 2010, has decided the matter in favour of the Company. Following is the status on other demands issued to the Company on the same matter which are based on similar untenable contention by the Revenue authorities: (i) Excise Demand for NRs. 27,80,26,266 (` 17,37,66,416) 1. A demand letter dated 22nd February 2008 was issued to the Company by the Inland Revenue Office, Simra, Bara. The demand of NRs. 14,95,15,509 (` 9,34,47,193) by way of Excise duty, relate to the financial years 2060-61 to 2062-63 (2003-04 to 2005-06). The Company filed a writ petition in the Supreme Court on 1st April 2008 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 2nd April 2008 and directed issue of Show Cause Notices to the respondents, and the hearing on the matter is pending. 2. A demand letter dated 30th November 2008 was issued to the Company by the Inland Revenue Office, Simra, Bara. The demand of NRs. 12,85,10,757 (` 8,03,19,223) by way of Excise duty, relate to the financial year 2063-64 (2006-07). The Company had filed a writ petition in the Supreme Court on 31st December 2008 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 6th January 2009 and directed issue of Show Cause Notices to the respondents, and the hearing on the matter is pending. (ii) VAT Demand for NRs. 36,50,65,785 (` 22,81,66,116) 1. A demand letter dated 7th August 2006 for the financial year 2058-59 (2001-02) was issued to the Company by the Large Taxpayers Office, Kathmandu. Of a total demand of NRs. 7,54,63,766 (` 4,71,64,854), the basis of a demand for NRs. 7,54,51,113 (` 4,71,56,946) is theoretical production. An administrative review petition on the Value Added Tax matter was filed before the Director General on 1st September 2006, and the matter is pending. 2. A demand letter dated 8th August 2007 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial year 2059-60 (2002-03). The total demand is for NRs. 5,72,38,860 (` 3,57,74,288) and the basis of demand is theoretical production. The Company has filed a writ petition in the Supreme Court on 11th September 2007 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 12th September 2007 and directed issue of Show Cause Notices to the respondents, and the hearing on the matter is pending. 3. A demand letter dated 5th August 2008 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial year 2060-61 (2003-04). Of a total demand of NRs. 1,13,28,199 (` 70,80,124), the basis of a demand for NRs. 1,07,18,107 (` 66,98,817) is theoretical production. The Company has filed a writ petition in the Supreme Court on 1st September 2008 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 5th September 2008 and directed issue of Show Cause Notices to the respondents and the hearing on the matter is pending. 4. A demand letter dated 10th July 2009 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial years 2061-62 to 2063-64 (2004-05 to 2006-07). The total demand is for
193

SCHEDULE 17 - NOTES TO THE ACCOUNTS (Contd.) NRs. 10,69,66,056 (` 6,68,53,785) and the basis of demand is theoretical production. The Company has filed a writ petition in the Supreme Court on 7th August 2009 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 9th August 2009 and directed issue of Show Cause Notices to the respondents and the hearing on the matter is pending. 5. A demand letter dated 14th May 2010 was issued to the Company by the Large Taxpayers Office, Lalitpur, for the financial year 2064-65 (2007-08) for NRs. 11,46,91,649 (` 7,16,82,280) the basis of which is theoretical production. An administrative review petition on the Value Added Tax matter was filed before the Director General on 11th July 2010, and the matter is pending. (iii) Income Tax Demand for NRs. 28,58,68,507 (` 17,86,67,817) 1. A demand letter dated 12th August 2007, for the financial year 205960 (2002-03) was issued to the Company by the Large Taxpayers Office, Lalitpur, on 14th August 2007 for a sum of NRs. 19,60,92,971 (` 12,25,58,107) on theoretical production. The Company has filed a writ petition in the Supreme Court on 11th September 2007 requesting that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 12th September 2007, and the hearing on the matter is pending. 2. A demand letter dated 15th September 2008 for the financial year 2060-61 (2003-04) was issued to the Company by the Large Taxpayers Office, Lalitpur. Of a 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 has filed a writ petition in the Supreme Court on 7th December 2008 seeking that the said demand order be quashed and orders issued such that the tax demanded not be collected. The Supreme Court admitted the petition on 8th December 2008 and hearing on the matter is pending. 3. A demand letter dated 16th October 2009 for the financial year 206162 (2004-05) was issued to the Company by the Large Taxpayers Office, Lalitpur. 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 E. Payment to Managing Directors: Particulars Year ended 32nd Asadh 2067 (16th July 2010) In NRs. 1,31,55,061 1,31,55,061 In ` 82,21,913 82,21,913 Year ended 31st Asadh 2066 (15th July 2009) In NRs. 1,11,98,602* 1,11,98,602 In ` 69,99,126* 69,99,126 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. 4. A demand letter dated 16th September 2010 for the financial year 2062-63 (2005-06) was issued to the Company by the Large Taxpayers Office, Lalitpur. Out of a total demand of NRs. 4,92,55,186 (` 3,07,84,491), the basis of the demand for NRs. 4,90,70,474 (` 3,06,69,046) is on theoretical production. The Company, in consultation with its counsel, is in the process of challenging it through appropriate legal remedies. The Management considers that all the demands 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 decision in favour of the Company by the Full Bench of the Honble Supreme Court. Other demands raised on account of, 1. Income Taxes for various assessment years amounting to NRs. 10,32,83,725 (` 6,45,52,328) {(2065-66 - 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. 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) {(2065-66 - NRs. 31,00,750 (` 19,37,969))}, which are under appeal. In the matter related to theoretical production, a Show Cause Notice dated 19th January 2010 was issued by the Inland Revenue Office seeking reasons as to why a demand of NRs. 19,65,37,807 (` 12,28,36,129) by way of Excise Duty should not be raised on the Company for the financial year 2064-65 (2007-08). The Company has filed a writ petition in the Supreme Court on 4th February 2010 seeking a stay order on the Department from raising a demand on this matter in view of the favourable decision of the Honble Supreme Court in the matter narrated in paragraph B(a)(i)(1) above. On 7th March 2010, Supreme Court stayed the demand, pending final disposal. In respect of the above Show Cause Notice, the management is of the view that the Company has a strong case on merits and has been advised by eminent counsel that the Show Cause Notice is not sustainable, particularly in the light of the decision by the Full Bench of the Supreme Court on a similar manner Estimated amount of contracts remaining to be executed on capital account NRs. 38,94,00,452 (` 24,33,75,283) {(2065-66 NRs. 1,36,12,442 (` 85,07,776))}.
b)
C.
D.
Salary, Bonus etc. (Short Term) Post Employment Benefits** Total
F. G.
* Includes NRs. 39,44,756 (` 24,65,473) paid to former Managing Director as per terms and conditions approved by the Shareholders. **Post employment benefits are actuarially determined on overall basis for all employees. Miscellaneous Expenses include reimbursement of expenses to statutory auditors amounting to NRs. 68,410 (` 42,756) {(2065-66 NRs. 2,48,754 (` 1,55,471))}. The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing difference are as under: Particulars As at 31st Asadh 2067 (16th July 2010) In NRs. Deferred Tax Asset On employees separation and retirement On fiscal allowance on fixed assets On doubtful advance Deferred Tax Liability On finished goods Deferred Tax Net 1,08,20,523 2,22,01,471 12,66,614 3,42,88,608 53,01,893 2,89,86,715 In ` 67,62,827 1,38,75,919 7,91,634 2,14,30,380 33,13,683 1,81,16,697 As at 31st Asadh 2066 (15th July 2009) In NRs. 1,36,75,628 77,30,612 9,60,155 2,23,66,395 59,16,809 1,64,49,586 In ` 85,47,268 48,31,632 6,00,097 1,39,78,997 36,98,006 1,02,80,991
H.
Explanation of the relationship between tax expenses and accounting profit: Particulars For the Year ended 32nd Asadh 2067 (16th July 2010) In NRs. 2,88,26,44,312 88,00,80,163 In ` 1,80,16,52,695 55,00,50,102 For the Year ended 31st Asadh 2066 (15th July 2009) In NRs. 2,12,05,91,000 64,81,82,492 In ` 1,32,53,69,375 40,51,14,057
Accounting Profit Tax at the applicable tax rate (Cigarette manufacturing @ 30%, Garments Manufacturing @ 20% and Trading @ 25%) Factors affecting tax charge for the year Effect of : Unused Tax Losses not recognised Expenses not deductible for tax purposes Movement in other timing differences Reduction in opening deferred taxes resulting from reduction in tax rate Total Tax Expense
2,72,77,870 9,40,099 90,82,98,132
1,70,48,668 5,87,562 56,76,86,332
2,56,08,895 10,42,934 36,96,313 12,07,382 67,97,38,016
1,60,05,559 6,51,834 23,10,196 7,54,614 42,48,36,260
194

SCHEDULE 17 - NOTES TO THE ACCOUNTS (Contd.) I. 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 Companys policy to maintain a sound capital base that is supportive of the Companys business plans . Return on Capital employed is monitored based on Asset Turnover & Profitability ratio. J. 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 Hotel Limited, India d) Russell Credit Limited, India and its subsidiary 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 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 (became subsidiary with effect from 11.08.2008) f) g) h) i) Wills Corporation Limited, India Gold Flake Corporation Limited, India Landbase India Limited, India 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) i. Hup Hoon Traders Pte. Limited, Singapore 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. Key Management Personnel: Y. C. Deveshwar Chairman & Non-Executive Director S. Puri Alternate Director to Y. C. Deveshwar (w.e.f. 22nd March,2010) A. Singh Non-Executive Director (till 21st March, 2010) A. K. Mukerji Non-Executive Director (w.e.f. 17th August, 2009) B. B. Chatterjee Non-Executive Director K. N. Grant Non-Executive Director (w.e.f. 22nd March, 2010) P. Chatterjee Non-Executive Director (till 16th August, 2009) 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
3.
Disclosure of transactions between the Company and related parties and the status of outstanding balances as on 16th July, 2010:
For the year ended 32nd Asadh, 2067 (16th July, 2010) Holding Company Fellow Subsidiaries In ` 6,02,16,584 In NRs. 59,820 23,03,064 In ` 37,388 14,39,415 1,31,55,061 98,824 69,19,105 12,24,946 43,24,441 7,65,591 82,21,913 61,765 34,79,199 51,20,000 Key Management Personnel In NRs. In ` Holding Company
For the year ended 31Asadh, 2066 (15th July, 2009) Fellow Subsidiaries In ` In NRs. In ` Key Management Personnel In NRs. In `
In NRs. Sale of Goods /Services Purchase of Goods /Services Payment to Managing Director Sitting Fees / Incidental Expenses to Other Directors Machine Hire Charges Rent Received Dividend Payments Expenses recovered Expenses reimbursed Advances Given (after adjustment of purchase) Issue of Bonus Share Balances as on 16th July Debtors Advances/Other Receivables Creditors / Payables
K. L.
In NRs.
9,63,46,535
22,10,73,693 13,81,71,058 1,18,74,63,779 74,21,64,862 31,29,830 19,56,144 72,53,846 48,529 21,74,499 32,00,000 45,33,654 30,331
1,98,87,64,823 1,24,29,78,014
1,16,56,51,200 72,85,32,000 91,83,785 58,02,919 57,39,866 36,26,824 12,073 7,546
51,54,24,000 32,21,40,000 97,54,500 84,70,386 4,56,037 60,96,563 52,93,991 2,85,023 2,36,848 1,48,030
50,22,62,979 31,39,14,362
99,12,00,000 61,95,00,000
3,82,29,509
2,38,93,443
6,33,71,200 11,30,246 5,39,61,944
3,96,07,000 7,06,404 3,37,26,215 8,41,281 5,25,801
50,46,56,336 31,54,10,210 13,61,82,247 8,51,13,904
Figures have been rounded off to the nearest rupee. Previous Years figures have been regrouped and/or rearranged wherever necessary.
195
KING MAKER MARKETING, INC.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors King Maker Marketing, Inc. Paramus, New Jersey We have audited the accompanying balance sheets of King Maker Marketing, Inc. as of March 31, 2011 and 2010, and the related statements of income and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Companys 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 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 BALANCE SHEETS March 31, 2011 $ ASSETS CURRENT ASSETS Cash and cash equivalents Accounts receivable Accounts receivable, other Inventory, net of reserve for write-off Due from related parties, net Prepaid expenses Income tax receivable Deferred income taxes PROPERTY AND EQUIPMENT, net OTHER ASSETS LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts payable Due to related parties, net Accrued settlement charges Accrued expenses and other LONG-TERM LIABILITIES Deferred income taxes COMMITMENTS AND CONTINGENCIES STOCKHOLDERS EQUITY Common stock, voting, no par value, 1,000 shares authorized; 204 shares issued and outstanding Retained earnings 8,962,492 457,226 282,809 939,039 306,417 77,852 51,938 11,077,773 27,729 26,110 11,131,612 March 31, 2011 ` 399,682,331 20,389,994 12,611,867 41,876,444 13,664,666 3,471,810 2,316,175 494,013,288 1,236,575 1,164,375 496,414,238 March 31, 2010 $ 12,383,287 477,464 226,240 2,765,161 27,946 441,867 436,724 191,903 16,950,592 40,322 26,610 17,017,524 March 31, 2010 ` 556,009,586 21,438,134 10,158,176 124,155,684 1,254,775 19,839,828 19,608,954 8,616,445 761,081,582 1,810,502 1,194,789 764,086,873 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. as of March 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information presented on page 199 is for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Albany, New York April 15, 2011 Bollam, Sheedy, Torani & Co. LLP
1,040,653 69,829 4,188,026 192,500 5,491,008 91,993
46,407,921 3,114,024 186,765,019 8,584,538 244,871,502 4,102,428
1,585,786 10,121,083 230,409 11,937,278 53,238
71,201,791 454,436,627 10,345,364 535,983,782 2,390,386
4,080 5,544,531 5,548,611 11,131,612
181,948 247,258,360 247,440,308 496,414,238
4,080 5,022,928 5,027,008 17,017,524
183,192 225,529,513 225,712,705 764,086,873
The accompanying Notes to Financial Statements are an integral part of these statements.
STATEMENTS OF INCOME AND RETAINED EARNINGS For the year ended 31st March, 2011 $ SALES Revenues, net of customer returns Less quick pay discounts Net sales COST OF SALES MSA SETTLEMENT CHARGES, NET Gross profit OPERATING EXPENSES Income (loss) from operations OTHER Business service income Reserve for inventory write-off Loss on diposal of property and equipment Interest income Other income Income before provision for income taxes PROVISION FOR INCOME TAXES Net Income RETAINED EARNINGS, beginning of year RETAINED EARNINGS, end of year 37,105,170 (1,552,876) 35,552,294 27,138,915 8,413,379 3,068,464 5,344,915 4,828,352 516,563 360,000 (74,400) (1,499) 80,825 1,960 366,886 883,449 (361,846) 521,603 5,022,928 5,544,531 For the year ended 31st March, 2011 ` 1,659,320,351 (69,487,319) 1,589,833,032 1,214,978,284 374,854,748 137,306,093 237,548,655 216,056,681 21,491,974 16,109,100 (3,317,868) (67,077) 3,616,717 87,705 16,428,577 37,920,551 (16,191,704) 21,728,847 225,529,513 247,258,360 For the year ended 31st March, 2010 $ 54,201,154 (1,687,326) 52,513,828 38,299,134 14,214,694 8,939,313 5,275,381 5,310,056 (34,675) 360,000 (355,000) 102,550 12,253 119,803 85,128 (27,668) 57,460 4,965,468 5,022,928 For the year ended 31st March, 2010 ` 2,581,247,900 (80,671,056) 2,500,576,844 1,852,522,704 648,054,140 427,388,555 220,665,585 253,873,778 (33,208,193) 17,211,600 (15,939,500) 4,902,916 585,815 6,760,831 (26,447,362) (1,322,807) (27,770,169) 253,299,682 225,529,513
196

STATEMENTS OF CASH FLOWS YEAR ENDED MARCH 31, 2011 For the year ended 31st March, 2011 $ CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided (used) by operating activities Depreciation Loss on disposal of property and equipment Deferred income taxes (Increase) decrease in Accounts receivable Accounts receivable, other Inventory Due from related parties Prepaid expenses Income taxes receivable Other assets Increase (decrease) in Accounts payable Reserve for inventory write-off Accrued settlement charges Accrued expenses and other 521,603 11,094 1,499 178,720 20,238 (56,569) 1,751,722 97,775 135,450 358,872 500 (545,133) 74,400 (5,933,057) (37,909) (3,420,795) CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES Payments for the purchase of property and equipment Net decrease in cash and cash equivalents CASH AND CASH EQUIVALENTS, beginning of year CASH AND CASH EQUIVALENTS, end of year SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for Income taxes (3,420,795) 12,383,287 8,962,492 183,127 (156,327,256) 556,009,586 399,682,331 8,166,549 (2,208 ) (3,282,802 ) 15,666,089 12,383,287 105,647 (99,139 ) (238,574,448 ) 794,584,034 556,009,586 5,050,981 For the year ended 31st March, 2011 ` 21,728,847 496,429 67,077 7,997,273 902,514 (2,522,695) 78,385,180 4,360,276 6,040,393 16,003,897 22,298 (24,310,206) 3,317,868 (267,125,854) (1,690,552) (156,327,256) For the year ended 31st March, 2010 $ 57,460 17,054 (77,981 ) 176,512 (21,611 ) 1,127,757 28,478 (131,610 ) (314,843 ) (1,545 ) 876,855 355,000 (5,362,750 ) (9,370 ) (3,280,594 ) For the year ended 31st March, 2010 ` (27,770,169 ) 815,352 (3,728,272 ) 11,731,529 (494,495 ) 75,359,217 1,607,050 (4,377,482 ) (13,427,104 ) (76,508 ) 35,244,811 15,939,500 (327,482,511 ) (1,816,227 ) (238,475,309 )
NOTES TO FINANCIAL STATEMENTS March 31, 2011 and 2010 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. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company uses the accrual basis of accounting. b. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires that management make estimates and assumptions relevant to the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and 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 Companys cash and cash equivalents are defined as cash and short-term highly liquid investments with an original maturity of three or fewer months. The Company has a restricted cash deposit balance of $1.6 million 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. The lower of cost (first-in, first out) or market method has been used in determining the inventory value and includes applicable duty, federal excise taxes, tobacco buyout costs, FDA User Fee, MSA, freight-in, storage, and other direct costs. 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 assets carrying amount over the fair value of the assets. There were no impairment losses deemed necessary for the years ended March 31, 2011 and 2010. g. Revenue Recognition/Accounts Receivable The Company recognizes 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 managements periodic review of the accounts. Management considers accounts receivable to be fully collectible, and, therefore, no allowance is considered necessary as of March 31, 2011 and 2010. Revenues are reflected net of customer returns. Total customer returns were $539,626 and $371,869 for the years ended March 31, 2011 and 2010, 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 Companys policy is to expense marketing and promotion costs as incurred. Total marketing and promotion costs, which are included in operating expenses, were $1,274,442 and $1,511,664 for the years ended March 31, 2011 and 2010, respectively. j. Income Tax The Company follows the asset and liability approach to account for income taxes. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company presently discloses or recognizes income tax positions based on managements 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 uncertain tax positions that require adjustment in its financial statements.The Companys federal and state tax returns are subject to examination by taxing authorities. The Company is no longer subject to tax examination for the year ended March 31, 2006, and prior.
197

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued k. Subsequent Events In preparing the financial statements and notes thereto, the Company has considered subsequent events through April 15, 2011, the date the financial statements were available to be issued. NOTE 3 - STOCKHOLDERS EQUITY ITC Limited is the sole owner of the Company. The Companys 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, 2011 2010
$ $ 4,080
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 8 - 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, 2011 and 2010, from ITC were $4,791,774 and $5,746,131, respectively. At March 31, 2011 and 2010, respectively, the Company owed ITC $71,390 and $-0-. At March 31, 2011 and 2010, respectively, $1,561 and $27,946 is due from ITC. Furthermore, the Company billed approximately $360,000 to ITC for expenses related to business services for the years ended March 31, 2011 and 2010. NOTE 9 - 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. The Company estimates its relative market share gain as defined in the MSA and the resultant settlement contribution required. The MSA contributions are subject to several revisions and recalculations by the independent auditor. MSA settlement charges are as follows:
Estimated cost based on current activity, net of credits Change in estimate of MSA settlement costs based on actual results for calendar year end March 31, 2011 $ ` 4,257,259 190,501,697 March 31, 2010 $ ` 9,455,918 452,087,440
Capital structure
Common stock, no par value, 1,000 shares authorized, 204 shares issued and outstanding 4,080
NOTE 4 - APPAREL BUSINESS During fiscal year ended 2009, the Company made a foray into the apparel business. The Company has leased office space in New York City and hired personnel to develop business opportunities. The revenues and inventory on account of this business included in the financial statements are $238,539 and $74,400, respectively, for 2011. The inventory as of March 31, 2011, is fully reserved for write-off. The revenues and inventory for 2010 were $26,556 and $165,833, respectively. On August 24, 2010, the Board of Directors approved the winding down of the apparel business. NOTE 5 - ROLL - YOUR - OWN AND CIGARETTE INVENTORY WRITE-OFF On April 1, 2009, the federal excise tax increased by approximately 160% on cigarettes and 2,170% on roll-your-own (RYO) tobacco, which significantly impacted the Company in the year ended March 31, 2010, with substantive loss of the RYO business and increased costs. Effective June 22, 2010, the FDA mandated packaging changes, which required that all current design packaging manufactured before the due date be sold into commerce by July 22, 2010. For the year ended March 31, 2010, management reserved for write-off, an amount of $355,000 for the projected unsaleable inventory based on items most at risk of being liquidated by that date. As of March 31, 2011, the Company wrote-off the $355,000 plus an additional $253,000 of the remaining unsaleable inventory, totaling $608,000. NOTE 6 - PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following:
March 31, 2011 $ ` 100,248 4,470,560 19,847 885,077 74,082 3,303,687 194,177 8,659,323 166,448 7,422,749 27,729 1,236,575 March 31, 2010 $ ` 111,257 4,995,439 19,847 891,130 74,082 3,326,782 205,186 9,212,851 164,864 7,402,349 40,322 1,810,502
(1,188,795) (53,195,604) (516,605) (24,698,885) 3,068,464 137,306,093 8,939,313 427,388,555
Equipment and fixtures Leasehold improvements Computer software Less accumulated depreciation
Depreciation expense for property and equipment was $ 11,094 and $ 17,054 for the years ended March 31, 2011 and 2010, respectively.
The Company disputes a portion of the calculated settlement amount as allowed by the MSA. Under the agreement, the Company has four years to formally protest. The total amount disputed is approximately $7.7 million as of March 31, 2011. There has been no resolution to these disputes to date. An arbitration panel as provided under the MSA has commenced hearings on some of those disputes as of September 2010. Further, the Company also disagrees with the independent auditors treatment of unapplied recalculation credits due to the Company of $533,110. The Company is unable to avail itself to these credits at this time as well. NOTE 10 - 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 Companys 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, 2011 and 2010, were $1,209,161 and $1,755,349, respectively. NOTE 11 - PROFIT-SHARING PENSION PLAN The Company offers a profit-sharing pension plan for all eligible employees. Employees become eligible as long as they are twenty-one years of age and have credited twelve months of 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 employees Social Security base income. Expenses for the years ended March 31, 2011 and 2010, were $133,306 and $128,246, respectively. NOTE 12 - CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations 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 Companys 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 no customers that exceeded 10% of total sales for the year ended March 31, 2011. The Company had one customer that exceeded 10% of total sales for the year ended March 31, 2010. As of March 31, 2010, accounts receivable for this customer was $38,597.
NOTE 7 - COMMITMENTS AND CONTINGENCIES a. Leases The Companys main office is located in Paramus, New Jersey. It has 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, 2011 and 2010, was approximately $134,000 and $133,000, 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 $95,000 and $96,000 for the years ended March 31, 2011 and 2010, 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, 2011 and 2010. The Company leases accommodations for its managers seconded from ITC Ltd. India to ease their transition to the United States. The Company pays monthly rent, which is included in the employees payroll for tax purposes. These amounts were approximately $24,600 and $26,400 for the years ended March 31, 2011 and 2010, respectively. The Company leases automobiles under noncancelable operating leases with 36-month terms. Vehicle lease expense was $16,807 and $14,328 for the years ended March 31, 2011 and 2010, 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, 2011, are: 2012 $ 202,149 2013 57,792 2014 9,842 Total minimum payments required $ 269,783 Total rental expense for all operating leases, less sublease rentals recovered, is as follows:
March 31, 2011 $ ` 228,652 10,231,605 95,048 4,253,160 133,604 5,978,445 March 31, 2010 $ `
Minimum rentals Less sublease rentals
229,620 10,978,132 96,476 4,612,518 133,144 6,365,615
198

NOTE 13 - INCOME TAXES The income tax provision reflected in the statements of income and retained earnings consists of the following components: Year ended 31st March, 2011 $ Current income tax expense Federal States Total current Deferred income tax expense Federal States Total deferred Net income tax expense Federal States Total income tax expense charged to operations 124,572 58,554 183,126 Year ended 31st March, 2011 ` 5,574,286 2,620,145 8,194,431 Year ended 31st March, 2010 $ 108,946 (3,297 ) 105,649 Year ended 31st March, 2010 ` 5,208,708 (157,630) 5,051,079
(148,157) (30,563) (178,720)
(6,629,655) (1,367,618) (7,997,273)
(67,464 ) (10,517 ) (77,981 )
(3,225,454) (502,818) (3,728,272)
272,729 89,117 361,846
12,203,941 3,987,763 16,191,704
41,482 (13,814 ) 27,668
1,983,254 (660,447) 1,322,807
The difference between the statutory rate and the rate reflected in the financial statements is due to state taxes. The Companys total deferred tax assets (liabilities) arise from basis differences summarized as follows: Year ended 31st March, 2011 $ Deferred tax assets Inventory Deferred tax liabilities Depreciation SUPPLEMENTAL INFORMATION COST OF SALES Year ended Year ended 31st March, 2011 31st March, 2011 $ ` 2,765,160 124,155,684 18,489,982 827,380,470 4,644,548 207,834,234 1,209,161 54,107,536 439,161 19,651,576 241,386 10,801,541 205,777 9,208,109 114,842 5,138,950 27,782 1,243,189 14,555 651,307 28,152,354 1,260,172,596 (1,013,439) (45,194,312) 74,400 3,317,868 27,138,915 1,214,978,284 Net Year ended Year ended Sales 31st March, 2010 31st March, 2010 % $ ` 7.8 4,247,918 215,454,401 52.0 28,893,010 1,381,374,808 13.1 5,587,497 267,138,232 3.4 1,755,349 83,923,236 1.2 230,508 11,020,587 0.7 158,634 7,584,292 0.6 463,273 22,149,082 0.3 37,280 1,782,357 0.1 37,462 1,791,058 0.0 8,363 399,835 79.1 41,419,294 1,992,617,888 (2.9) (3,120,160 ) (140,095,184) 0.2 355,000 15,939,500 76.3 38,299,134 1,852,522,704 Net Sales % 8.1 55.0 10.6 3.3 0.4 0.3 0.9 0.1 0.1 0.0 78.9 (5.9) 0.7 72.9 51,938 (91,993) Year ended 31st March, 2011 ` 2,316,175 (4,102,428 ) Year ended 31st March, 2010 $ 191,903 (53,238 ) Year ended 31st March, 2010 ` 8,616,445 (2,390,386)
Beginning inventory Cigarette tax, duty, and harbor processing fees Cigarette purchases Tobacco buyout expense FDA Other expenses / purchases Storage Freight-in Customs brokerage Destruction charges Ending inventory prior to reserve Provision for inventory write-off
SUPPLEMENTAL INFORMATION OPERATING EXPENSES Year ended 31st March, 2011 $ 1,274,442 1,084,734 611,980 340,795 292,262 246,736 137,026 133,604 133,306 128,033 103,593 90,831 90,316 55,060 34,751 32,539 27,250 11,094 4,828,352 Year ended 31st March, 2011 ` 57,028,093 48,539,135 27,384,575 15,249,724 13,077,994 11,040,819 6,131,571 5,978,445 5,965,110 5,729,157 4,635,528 4,064,460 4,041,415 2,463,797 1,555,020 1,456,039 1,219,369 496,429 216,056,681 Net Sales % 3.6 3.1 1.7 1.0 0.8 0.7 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.1 0.1 0.1 0.0 13.6 Year ended 31st March, 2010 $ 1,511,664 1,224,358 841,729 305,679 204,447 329,763 89,865 133,144 128,246 93,873 96,451 84,797 78,865 63,928 39,921 38,347 27,925 17,054 5,310,056 Year ended 31st March, 2010 ` 72,272,655 58,536,556 40,243,063 14,614,513 9,774,611 15,765,969 4,296,446 6,365,615 6,131,441 4,488,068 4,611,322 4,054,145 3,770,536 3,056,398 1,908,624 1,833,370 1,335,094 815,352 253,873,778 Net Sales % 2.9 2.3 1.6 0.6 0.4 0.6 0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.0 10.1
Marketing and promotion Salaries Shipping and handling Professional fees Fees and Licenses Travel Office supplies and expense Rent Pension General insurance Group insurance Payroll tax Miscellaneous/other expenses Dues and subscriptions Auto Telephone/communication Training and placement fees Depreciation
199

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SUBSIDIARY COMPANIES

RUSSELL CREDIT LIMITED

On behalf of the Board

RUSSELL CREDIT LIMITED

Age Designation/ (Years) Nature of Duties

Net Qualifications Remuneration

Date of Commencement of Employment

Previous Employment/ Position Held

(`) 1 Sachidanand Madan

3 Services on loan to subsidiary company

On behalf of the Board

RUSSELL CREDIT LIMITED

Commercial Tax Officer

Sales Tax Directorate of Commercial Taxes

RUSSELL CREDIT LIMITED

785,58,61,114 38,32,369 785,96,93,483

765,61,47,019 51,96,895 766,13,43,914

On behalf of the Board R. Tandon S. Dutta S. Jain Director Director Secretary

RUSSELL CREDIT LIMITED

29,29,698 4,345 3,03,800 32,37,843

3,08,98,013 544 3,08,98,557

597,45,41,770 49,02,45,600 646,47,87,370

597,45,41,770 49,02,45,600 646,47,87,370

As at 31st March, 2011 (`)

(`) 50,43,37,365 8,38,54,836

As at 31st March, 2010 (`)

62,81,35,020 2,87,67,445 1,38,36,301 72,03,34,978 139,10,73,744

58,81,92,201 2,87,67,445 1,38,36,301 56,05,63,702 119,13,59,649

RUSSELL CREDIT LIMITED

Plant & Machinery* TOTAL Previous Year

Up to 31st March, 2011 (`) 4,08,05,006 4,08,05,006 3,09,94,461

4,20,60,166 9,12,38,170 2,26,06,065 55,00,000 50,00,000

42,10,33,674 55,02,65,126 108,72,41,115 55,00,00,000 50,00,00,000

4,20,60,166 9,12,38,170 2,26,06,065 55,00,000

42,10,33,674 55,02,65,126 108,72,41,115 55,00,00,000

90,000 42,75,435 37,50,000 41,82,915 43,24,634

90,00,000 4,27,56,850 3,76,88,280 6,93,07,630 4,39,56,071

90,000 42,75,435 37,50,000 41,82,915 43,24,634

90,00,000 4,27,56,850 3,76,88,280 6,93,07,630 4,39,56,071

83,40,98,160 114,59,15,817 491,92,14,563

Total (A + B) Market Value of Quoted Investments: ` 175,29,90,487/- (2010 ` 81,15,00,078/-)

RUSSELL CREDIT LIMITED

29,29,698 4,345 3,03,800 32,37,843

3,08,98,013 544 3,08,98,557

14,05,81,250 11,71,877 4,79,14,186 32,164 20,82,94,622

3,13,508 1,09,953 4,23,461

2,55,63,508 1,30,166 2,56,93,674

RUSSELL CREDIT LIMITED

1,50,85,996 12,00,000 1,62,85,996

33,23,102 12,00,000 45,23,102

1,50,000 25,860 91,791 19,12,341 41,74,346

12,60,214 11,14,020 (5,658) 23,68,576

23,53,762 23,53,762 7,07,64,762

RUSSELL CREDIT LIMITED

Balances as at Holding Company Security Deposits Received Payables

2,30,53,750 12,00,00,000 10,00,00,000

2,05,81,250 12,00,00,000 Nil

RUSSELL CREDIT LIMITED

RUSSELL CREDIT LIMITED

Greenacre Holdings Limited

Technico Pty Limited

Technico Agri Sciences Limited (a 100% Subsidiary of Technico Pty Limited)

RUSSELL CREDIT LIMITED

On behalf of the Board R. Tandon S. Dutta S. Jain Director Director Secretary