ITC SUBSIDIARIES 2012 · Further, 55,00,000 5% Cumulative Redeemable Preference Shares of ` 100/- each, aggregating ` 55 crores, held by the Company in Wimco were redeemed during

S U B S I D I A R Y C O M P A N I E S

Russell Credit Limited 3Greenacre Holdings Limited 15

Wimco Limited 22Prag Agro Farm Limited 40Pavan Poplar Limited 47

Technico Pty Limited 54Technico Technologies Inc. 65Technico Agri Sciences Limited 69Technico Asia Holdings Pty Limited 82

Technico Horticultural (Kunming)Company Limited 87

Srinivasa Resorts Limited 95Fortune Park Hotels Limited 103Bay Islands Hotels Limited 113

ITC Infotech India Limited 119ITC Infotech Limited 130ITC Infotech (USA), Inc. 137

Pyxis Solutions, LLC. USA 143

Wills Corporation Limited 147

Gold Flake Corporation Limited 154

Landbase India Limited 161

BFIL Finance Limited 174MRR Trading & InvestmentCompany Limited 182

Surya Nepal Private Limited 186

King Maker Marketing, Inc. 199

3

RUSSELL CREDIT LIMITED

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

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

Andhra Pradesh at Hyderabad, had earlier been dismissed by the

respective High Courts.

During the year, your Company sold investments aggregating ` 83.41

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

Company, at book value.

6. NON-BANKING FINANCIAL (NON-DEPOSIT ACCEPTING ORHOLDING) COMPANIES PRUDENTIAL NORMS (RESERVE BANK)DIRECTIONS, 2007 (‘NBFC REGULATIONS’)

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

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

7. SUBSIDIARIES

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

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

is attached to the Accounts of the Company.

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

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

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

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

subsidiaries ceased to be subsidiaries of the Company with effect from

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

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

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

also agreed that the cumulative dividend on the said Preference Shares

aggregating ` 8.33 crores be waived.

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

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

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

Company.

8. PARTICULARS OF EMPLOYEES

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

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

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

9. AUDITORS

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

Accountants, retire at the ensuing Annual General Meeting of the

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

10. AUDIT COMMITTEE

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

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

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNINGS AND OUTGO

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

required on conservation of energy and technology absorption.

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

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

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

market research expenses).

10th May, 2012 On behalf of the Board

Registered Office:

Virginia House

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

Kolkata 700 071 S. Dutta Director

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON31ST MARCH, 2012

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

year ended on 31st March, 2012.

2. COMPANY PERFORMANCE

The overall performance of your Company has been satisfactory despite

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

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

being ` 40.58 crores.

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

For the year ended For the year ended

31st March, 2012 31st March, 2011

(`) (`)

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

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

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

c. Add : Profit brought

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

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

e. Less : Transferred to Special

Reserve under Section 45-IC of

the Reserve Bank of India

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

f. Balance carried forward to

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

3. DIRECTORS

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

Association of the Company, Mr. R. Tandon will retire by rotation at

the ensuing Annual General Meeting of the Company, and being

eligible, offers himself for re-election. Your Board of Directors has

recommended his re-election.

4. DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your

Directors confirm having : -

i) followed in the preparation of the Annual Accounts, the applicable

Accounting Standards with proper explanations relating to material

departures, if any;

ii) selected such accounting policies and applied them consistently

and made judgements and estimates that are reasonable and

prudent so as to give a true and fair view of the state of affairs of

the Company at the end of the financial year and of the profit of

the Company for that period;

iii) taken proper and sufficient care for the maintenance of adequate

accounting records in accordance with the provisions of the

Companies Act, 1956 for safeguarding the assets of the Company

and for preventing and detecting fraud and other irregularities; and

iv) prepared the Annual Accounts on a going concern basis.

5. TRADE INVESTMENTS

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

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

injunction against the Company’s Counter Offer to the shareholders

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

and Exchange Board of India (Substantial Acquisition of Shares &

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

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

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

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

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

Court, which is awaited.

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

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

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

Name Age Designation/ Gross Net Qualifications Experi- Date of Previous Employment/(Years) Nature of Duties Remuneration Remuneration ence Commence- Position Held

(Years) ment ofEmployment

(`) (`)

Sachidanand 53 Services on loan to 88,87,782/- 42,30,825/- B.Com (Hons.), 30 01.09.2007 COO, Technico Pty Ltd. -Madan fellow subsidiary company ACA and ACS Australia

Notes :

• Remuneration includes salary, performance bonus, allowances & other benefits / applicable perquisites except contribution to the approved GroupPension under the Defined Contribution Scheme and Gratuity Funds and provisions for leave encashment which are actuarially determined on anoverall Company basis. The term ‘remuneration’ has the meaning assigned to it in Section 198 of the Companies Act, 1956.

• Net remuneration comprises cash income less: a) income tax, surcharge & education cess deducted at source. b) employee’s own contribution to Provident Fund.

• The aforesaid appointment is contractual in accordance with terms and conditions as per Company rules.• The aforesaid employee is not a relative of any Director of the Company.


Registered Office:Virginia House37, J. L. Nehru Road R. Tandon DirectorKolkata 700 071 S. Dutta Director

4


AUDITORS’ REPORT TO THE MEMBERS OF RUSSELL CREDIT LIMITED

1. We have audited the attached Balance Sheet of RUSSELL CREDITLIMITED (’the Company’) as at 31st March, 2012, and also theStatement of Profit and Loss and the Cash Flow Statement of theCompany for the year ended on that date, both annexed thereto.These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatements. An audit includesexamining, on a test basis, evidence supporting the amounts and thedisclosures in the financial statements. An audit also includes assessingthe accounting principles used and the significant estimates made bythe Management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of Section 227(4A) of theCompanies Act, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3above, we report as follows:

(a) we have obtained all the information and explanations which tothe best of our knowledge and belief were necessary for thepurposes of our audit;

(b) in our opinion, proper books of account as required by law havebeen kept by the Company so far as appears from our examinationof those books;

(c) the Balance Sheet, the Statement of Profit and Loss and the CashFlow Statement dealt with by this report are in agreement withthe books of account;

(d) in our opinion, the Balance Sheet, the Statement of Profit and Lossand the Cash Flow Statement dealt with by this report are incompliance with the Accounting Standards referred to in Section211(3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and accordingto the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956, in the mannerso required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of theCompany as at 31st March, 2012;

ii) in the case of the Statement of Profit and Loss, of the profit ofthe Company for the year ended on that date ; and

iii) in the case of the Cash Flow Statement, of the cash flows ofthe Company for the year ended on that date.

5. On the basis of the written representations received from the Directorsas on 31st March, 2012 and taken on record by the Board of Directors,we report that none of the Directors is disqualified as on 31st March,2012 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

For A. F. Ferguson & Co.Chartered Accountants

(Registration No. 112066W)

Shyamak R. TataKolkata Partner10th May, 2012 (Membership No. 38320)

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

of any dispute are given below:

Out of the total disputed dues aggregating ` 55,80,921/- as above,` 45,27,648/- has been stayed for recovery by the relevant authorities.

(v) Based on our examination of the records and evaluation of the relatedinternal controls, the Company has maintained proper records oftransactions and contracts in respect of its dealing in shares and otherinvestments and timely entries have been made therein. The aforesaidsecurities have been held by the Company in its own name.

(vi) In our opinion and according to the information and explanationsgiven to us and on an overall examination of the Balance Sheet, wereport that funds raised on short-term basis have not been used duringthe year for long- term investment.

(vii) To the best of our knowledge and according to the information andexplanations given to us, no fraud by the Company and no significantfraud on the Company has been noticed or reported during the year.

For A. F. Ferguson & Co

Chartered Accountants(Registration No. 112066W)


ANNEXURE TO THE AUDITORS’ REPORT

[Referred to in paragraph 3 thereof]

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

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

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

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

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

(i) In respect of its fixed assets:

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

including quantitative details and situation of the fixed assets.

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

Management in accordance with a regular programme of

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

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

information and explanations given to us, no material discrepancies

were noticed on such verification.

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

has not been disposed off by the Company.

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

given to us, there are adequate internal control systems commensurate

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

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

basis of our examination and according to the information and

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

been informed of any instance of major weaknesses in the aforesaid

internal control systems.

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

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

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

according to the books and records as produced and examined

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

undisputed statutory dues including provident fund, income-tax,

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

applicable with the appropriate authorities.

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

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

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

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

Name of the Nature of Forum where Period to which Amountstatute the dues pending the amount (`)

relates

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

Act & Central CommissionerSales Tax Act

Tamil Nadu Sales Tax Commercial 2004-05 19,24,395General Sales Tax Tax OfficerAct & CentralSales Tax Act

Tamil Nadu Sales Tax Commercial 2005-06 24,24,648General Sales Tax Tax OfficerAct & CentralSales Tax Act

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

Taxes


5


6

BALANCE SHEET AS AT 31ST MARCH, 2012

Note As at As at31st March, 2012 31st March, 2011

(`) (`) (`) (`)I. Equity and Liability

1. Shareholders' Fundsa) Share capital 3 646,47,87,370 646,47,87,370b) Reserves and surplus 4 170,54,08,777 817,01,96,147 139,10,73,744 785,58,61,114

2. Non-current liabilities

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

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

3. Current liabilities

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

b) Short term provisions 8 1,05,86,314 1,70,86,733 86,61,565 2,49,47,561Total 819,06,67,125 788,62,43,137

II. Assets1. Non-current assets

(a) Fixed assetsi) Tangible assets 9 9,19,26,955 8,00,91,450ii) Capital work-in-progress 5,15,38,885 —

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

(b) Non-current investments 10 150,21,02,353 436,92,14,563(c) Long term loans and advances 11 2,91,00,583 167,46,68,776 13,91,61,977 458,84,67,990

2. Current assets

(a) Current portion of long term investment 12 — 55,00,00,000(b) Inventories 13 542,06,71,521 257,05,24,808(c) Trade receivables 14 1,05,78,077 2,89,29,010(d) Cash and cash equivalents 15 107,69,44,146 32,37,843(e) Short-term loans and advances 16 77,17,428 14,49,73,533(f) Other current assets 17 87,177 651,59,98,349 1,09,953 329,77,75,147

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

The accompanying notes 1 to 24 are an integral part of the financial statementsIn terms of our report of even date

On behalf of the BoardR. Tandon DirectorS. Dutta DirectorS. Jain Manager & Secretary

For A. F. Ferguson & Co.Chartered AccountantsShyamak R. TataPartnerKolkata, 10th May, 2012

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

Note For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)I Revenue from operations 18 40,24,70,536 27,09,14,216II Other income 19 33,79,025 62,82,188III Total revenue 40,58,49,561 27,71,96,404IV Expenses

Employee benefits expense 20 1,56,58,832 1,56,07,205Finance cost 21 806 40,41,236Depreciation expense 9 1,23,81,897 1,20,83,725Other expenses 22 43,56,166 1,94,83,245

Total expenditure 3,23,97,701 5,12,15,411V Profit before tax 37,34,51,860 22,59,80,993VI Tax expense:

Current tax 23 5,99,99,087 2,76,31,424Deferred tax 23 (8,82,260) (13,64,526)

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

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




7


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012For the year ended For the year ended

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

A. Cash flow from operating activitiesProfit before tax 37,34,51,860 22,59,80,993Adjustments for:Depreciation 1,23,81,897 1,20,83,725Interest expense on income tax 806 40,41,236Liabilities no longer required written back (14,018) —Provision on standard assets created/(released) during the year (5,39,420) 8,54,154Unrealised exchange gain — (24,72,500)Interest on Fixed Deposit (7,94,01,558) —Interest on Loans (2,02,11,743) (76,31,922)Dividend income from mutual funds held as stock-in-trade (16,67,85,437) (13,58,33,914)Dividend income from investment in equity instruments (4,34,70,632) (3,16,05,338)Proift on sale of fixed assets (469) (93,693)Operating profit before working capital changes 7,54,11,286 6,53,22,741Changes in working capital:(Increase)/Decrease in stock-in-trade (285,01,46,713) 115,24,82,403(Increase)/Decrease in short term loans and advances 11,91,81,360 (9,42,25,615)(Increase)/Decrease in long term loans and advances 10,69,00,295 2,32,58,877(Increase)/Decrease in trade receivables 1,83,50,933 (1,37,08,494)(Increase)/Decrease in other current assets 22,776 20,214Increase/(Decrease) in other current liabilities 16,94,470 (2,46,471)Increase/(Decrease) in long term provisions (9,30,768) 2,79,753Increase/(Decrease) in short term provisions 27,54,924 (1,69,45,395)

(260,21,72,723) 105,09,15,272Cash generated from operations before interest and dividend (252,67,61,437) 111,62,38,013Interest on Fixed Deposit 7,94,01,558 —Interest on Loans 2,02,11,743 76,31,922Dividend income from mutual funds held as stock-in-trade 16,67,85,437 13,58,33,914Dividend income from investment in equity instruments 4,34,70,632 3,16,05,338Cash generated from operations (221,68,92,067) 129,13,09,187Income tax (paid) / refunded during the year (3,92,91,188) 38,76,437Net cash (used in) / generated from operating activities (225,61,83,255) 129,51,85,624

B. Cash flow from investing activitiesPurchase of fixed assets (8,14,20,128) (26,300)Sale of fixed assets 56,64,310 33,09,995Fixed deposit not considered as cash and cash equivalents– placed (107,14,61,402) —Purchase of long term investments (11,59,58,219) (132,20,88,797)Sale of long term investments - subsidiaries 213,75,06,241 —Sale of long term investments - others 83,40,98,160 —Redemption of preference shares 55,00,00,000 —

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

Interest expense on income tax (806) (40,41,236)Net cash flow used in financing activities (806) (40,41,236)Net increase/(decrease) in cash and cash equivalents 22,44,901 (2,76,60,714)Opening cash and cash equivalents 32,37,843 3,08,98,557

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

Notes:1 The above cash flow statement has been prepared under the “indirect method” as set out in accounting standard - 3 cash flow statements2 Since the Company is an investment company, purchase and sale of investments and investment in fixed deposits have been considered as part

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

3 Reconciliation of cash and cash equivalents with the Balance Sheet As at As at31st March, 2012 31st March, 2011

(`) (`)Cash and cash equivalents as above 54,82,744 32,37,843Add: Bank balances not considered as cash and cash equivalents 107,14,61,402 —Cash and cash equivalents as per balance sheet (refer note 15) 107,69,44,146 32,37,843The accompanying notes 1 to 24 are an integral part of the financial statements

In terms of our report of even date


Shyamak R. TataPartnerKolkata, 10th May, 2012


8


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

1. Corporate InformationRussell Credit Limited, a wholly owned subsidiary of ITC Limited is aNon Deposit taking Systemically Important Non-Banking FinancialCompany under the Reserve Bank of India Act, 1934.

2. Significant Accounting PoliciesBasis of AccountingThe Financial Statements are prepared on accrual basis under thehistorical cost convention.All assets and liabilities have been classified as current or non-currentas per the Company’s normal operating cycle and other criteria set outin the Revised Schedule VI to the Companies Act, 1956 based on thenature of services.

Fixed AssetsFixed Assets are stated at cost including any incidental acquisitionexpenses.

DepreciationDepreciation is provided on ‘Straight Line’ basis at the rates prescribedin Schedule XIV to the Companies Act, 1956.

InvestmentsCurrent Investments are stated at lower of cost and fair value and LongTerm Investments, including in Joint Ventures and Associates, at cost.Where applicable, provision is made to recognise a decline, other thantemporary, in valuation of Long Term Investments. Investments areaccounted for based on trade date.

Investment IncomeIncome from Investments is accounted for on an accrual basis, inclusiveof related tax deducted at source.

InventoriesInventories, comprising of Stock-in-Trade, has been valued at cost orat available market quotation or their fair values, whichever is lower,category wise, in compliance with the Prudential Norms prescribed bythe Reserve Bank of India for Non-Banking Financial Companies. Stock-in-Trade is accounted for based on trade date.

Foreign Currency TranslationTransactions in foreign currency are accounted for at the exchangerate prevailing on the date of transactions.Gains/Losses arising out of

fluctuations in the exchange rates are recognised in the Statement ofProfit and Loss in the period in which they arise.Foreign Currency Monetary Assets and Monetary Liabilities are restatedat the rates ruling at the year end and all exchange gains/losses arisingtherefrom are adjusted in the Statement of Profit and Loss except forthose covered by forward contracts where the gains/losses arising fromsuch restatement are recognised over the period of such contracts.

Borrowing CostsBorrowing Costs that are directly attributable to the acquisition orconstruction of qualifying assets are capitalised as part of cost of suchassets. All other borrowing costs are charged to revenue.

Taxes on IncomeCurrent tax is accounted as the amount of tax payable in respect oftaxable income for the period, measured using the applicable tax ratesand tax laws.Deferred tax is accounted for on timing differences between taxableincome and accounting income subject to consideration of prudence,measured using the tax rates and tax laws that have been enacted orsubstantially enacted by the balance sheet date.Deferred tax assets on unabsorbed depreciation and carry forward oflosses are not recognised unless there is virtual certainty that there willbe sufficient future taxable income available to realise such assets.

Employee BenefitsMonthly contributions are made to Provident Funds/SuperannuationFunds which are in the nature of defined contribution scheme andsuch paid / payable amounts are charged against revenue.Liability for Gratuity and Leave Encashment schemes in the nature ofdefined benefit schemes are based on independent actuarial valuationas per the requirements of Accounting Standard -15 (revised 2005) on“Employee Benefits” .Actuarial gains and losses are recognised immediately in the Statementof Profit and Loss as income or expense.

Lease RentalsLease Rentals are accounted for on an accrual basis except in case oflessees in default where accrual is guided by Prudential Norms prescribedby the Reserve Bank of India for Non-Banking Financial Companies.

3. Share capital As at As at31st March, 2012 31st March, 2011

(`) (`)Authorised70,00,00,000 equity shares of ` 10/- each(2011 - 70,00,00,000 equity shares of ` 10/- each) 700,00,00,000 700,00,00,000

700,00,00,000 700,00,00,000Issued, Subscribed and Fully Paid-up59,74,54,177 (2011 - 59,74,54,177) equity shares of ̀ 10/- each, fully paid up 597,45,41,770 597,45,41,770

Issued, Subscribed but not Fully Paid-up7,54,22,400 (2011 - 7,54,22,400) equity shares of ` 10/- each, ` 6.50 per share paid up 49,02,45,600 49,02,45,600

646,47,87,370 646,47,87,370(i) Reconcilliation of number of shares and amounts outstanding

As at As at31st March, 2012 31st March, 2011

Particulars Equity Shares Equity Shares(Number) (`) (Number) (`)

Issued, Subscribed and Fully Paid-upEquity Shares of ` 10/- each outstanding at the beginning and at the endof the year 59,74,54,177 597,45,41,770 59,74,54,177 597,45,41,770

Issued, Subscribed but not Fully Paid-upEquity Shares of ` 10/- each, ` 6.50 per share paid up, outstanding at thebeginning and end of the year 7,54,22,400 49,02,45,600 7,54,22,400 49,02,45,600

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

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

As at As atName of the shareholders 31st March, 2012 31st March, 2011

No. of Shares held No. of Shares held(%) (Number) (%) (Number)

Issued, Subscribed and Fully Paid-upITC Limited – Holding Company 100% 59,74,54,177 100% 59,74,54,177

Issued, Subscribed but not Fully Paid-upITC Limited – Holding Company 100% 7,54,22,400 100% 7,54,22,400

(iii) Rights, preferences and restrictions attached to the equity sharesEquity Shares of the Company, having par value of ` 10/- per share , rank pari passu in all respects including voting rights and entitlement to dividend.

9


9. Tangible assets

GROSS BLOCK (AT COST) DEPRECIATION NET BLOCKParticulars As at Additions Disposal As at Upto For the Disposal Up to As at As at

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

(`) (`) (`) (`) (`) (`) (`) (`) (`) (`)Plant & equipment(*) 12,07,36,456 2,98,81,243 1,37,35,399 13,68,82,300 4,07,82,206 1,23,74,297 80,71,558 4,50,84,945 9,17,97,355 7,99,54,250Office equipment 1,60,000 — — 1,60,000 22,800 7,600 — 30,400 1,29,600 1,37,200TOTAL 12,08,96,456 2,98,81,243 1,37,35,399 13,70,42,300 4,08,05,006 1,23,81,897 80,71,558 4,51,15,345 9,19,26,955 8,00,91,450Previous Year 12,63,59,638 26,300 54,89,482 12,08,96,456 3,09,94,461 1,20,83,725 22,73,180 4,08,05,006 8,00,91,450 9,53,65,177

*Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms.The Gross Value of such assets is ` 13,68,56,001/- ( 2011 - ` 12,07,10,155/-) and Accumulated Depreciation is ` 4,50,82,871/- ( 2011 - ` 4,07,81,380/-).Depreciation for the year charged to Statement of Profit and Loss is ` 1,23,73,048/- (2011 - ` 1,20,80,356/-).The aggregate lease rental of ` 2,16,25,256/- (2011 - ` 2,09,09,256/-) is included in Lease and Other Rentals under Revenue from Operations (Note No. 18)

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

4. Reserves and surplusAs at As at

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

Capital reserve Balance at the beginning and at the end of the year 2,87,67,445 2,87,67,445

General reserveBalance at the beginning and at the end of the year 1,38,36,301 1,38,36,301

Special reserve u/s 45-IC of the Reserve Bank of India Act, 1934Balance at the beginning of the year 62,81,35,020 58,81,92,201Add: Transferred from Statement of Profit and Loss 6,28,67,007 3,99,42,819Balance at the end of the year 69,10,02,027 62,81,35,020

Surplus in Statement of Profit and LossBalance at the beginning of the year 72,03,34,978 56,05,63,702Add: Profit for the year 31,43,35,033 19,97,14,095

103,46,70,011 76,02,77,797Less: Transferred to Special reserve u/s 45-IC of the Reserve Bank ofIndia Act, 1934 6,28,67,007 3,99,42,819Balance at the end of the year 97,18,03,004 72,03,34,978

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

5. Deferred tax liabilities (net) As at As at31st March, 2012 31st March, 2011

(`) (`)Deferred tax liabilities

On fiscal allowances on fixed assets 51,05,252 56,16,36451,05,252 56,16,364

Deferred tax assetsOn employees' seperation and retirement etc. 20,53,028 12,15,322Other timing differences — 2,91,543On provision on standard assets 1,02,115 2,77,130

21,55,143 17,83,995

29,50,109 38,32,3696 Long term provisions

Provision for employee benefitsProvision for compensated absences 1,32,735 10,63,503

Provision - othersContingent provision against standard assets 3,01,401 5,38,590

4,34,136 16,02,093

7 Other current liabilities As at As at31st March, 2012 31st March, 2011

(`) (`)Other payables (*)

Dues to related parties Security deposit from the holding company 12,00,000 12,00,000Liability towards purchase of investments 5,43,336 1,20,09,363Liability towards expenses 39,26,799 29,58,297Statutory remittances 8,30,284 1,18,336

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

(*) There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and alsoas at 31st March, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has beendetermined to the extent such parties have been identified based on information available with the Company.

8 Short term provisions As at As at31st March, 2012 31st March, 2011

(`) (`)Current portion of long term employee benefits

Provision for compensated absences 27,54,924 —Provision - others

Current taxation (net of advance income tax) 78,18,057 83,46,001Contingent provision against standard assets 13,333 3,15,564

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

10



10. Non-current Investments(At cost)

As at 31st March, 2012 As at 31st March, 2011Long term Investment Number Value Number Value

(`) (`)A. Trade

Investments in equity instrumentsUnquoted(i) of subsidiariesEquity shares of ` 10/- each, of Greenacre Holdings Limited, fully paid 4,20,60,166 42,10,33,674 4,20,60,166 42,10,33,674Equity Shares of ` 1/- each, of Wimco Limited, fully paid — — 9,12,38,170 55,02,65,126Ordinary shares of Technico Pty Limited no par value — — 2,26,06,065 108,72,41,115(ii) of associatesEquity Shares of ` 10/- each, of Russell Investments Limited, fully paid 42,75,435 4,27,56,850 42,75,435 4,27,56,850Equity Shares of ` 10/- each, of Classic Infrastructure & DevelopmentLimited, fully paid 37,50,000 3,76,88,280 37,50,000 3,76,88,280Equity Shares of ` 10/- each, of Divya Management Limited, fully paid 41,82,915 6,93,07,630 41,82,915 6,93,07,630Equity Shares of ` 10/- each, of Antrang Finance Limited, fully paid 43,24,634 4,39,56,071 43,24,634 4,39,56,071

(iii) of joint venture companiesEquity Shares of ` 100/- each, of Maharaja Heritage Resorts Limited, fully paid 90,000 90,00,000 90,000 90,00,000Quoted(i) of associatesEquity Shares of ` 10/- each, of International Travel House Limited, fully paid 36,26,633 21,21,58,031 36,26,633 21,21,58,031(ii) of other entitiesEquity Shares of ` 10/- each, of VST Industries Limited, fully paid 6,00,000 9,96,59,626 6,00,000 9,96,59,626Equity Shares of ` 2/- each of Hotel Leelaventure Limited, fully paid 31,36,834 10,44,92,191 1,79,29,513 83,40,98,160Investment in preference sharesUnquotedof subsidiariesZero Coupon Redeemable Preference shares of ̀ 100/- each, of Wimco Limited,fully paid — — 50,00,000 50,00,00,000

B. Other InvestmentInvestments in equity instrumentsUnquotedof other entitiesClass ‘G’ Shares of ` 48,000/- each, of Lotus Court Limited, fully paid 2 2,34,00,000 2 2,34,00,000Equity Shares of ` 100/- each, ofAdyar Property Holding Company Private Limited, ` 65/- per share paid (*) 311 43,86,50,000 311 43,86,50,000

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

Aggregate amount of quoted investments 41,63,09,848 1,14,59,15,817Aggregate market value of quoted investments 1,62,81,70,012 1,75,29,90,487Aggregate amount of unquoted investments 1,08,57,92,505 3,22,32,98,746

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

11 Long term loans and advances As at As at31st March, 2012 31st March, 2011

(`) (`)Unsecured, considered goodSecurity deposits — 1,80,000Loans to related parties 2,00,00,000 12,30,53,750MAT credit entitlement — 31,61,098

Deposits with Government authorities 3,13,508 3,13,508

Secured, considered goodTerm loan to others 87,87,075 1,24,53,621(secured by mortgage of immovable property and hypothecation of moveables and receivables)

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

12 Current portion of long term investment(at cost) As at As at

31st March, 2012 31st March, 2011Number Value Number Value

(`) (`)Investment in preference shares in subsidiariesUnquoted5% Redeemable Cumulative Preference sharesof ` 100/- each, of Wimco Limited, fully paid — — 55,00,000 55,00,00,000

— 55,00,00,000

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


14. Trade receivables


(`) (`)Unsecured, considered good

Trade receivables outstanding for aperiod exceeding six months from thedate they were due for payment — —Trade receivables outstanding for a periodless than six months from the date they were due for payment 1,05,78,077 2,89,29,010

1,05,78,077 2,89,29,01015. Cash and cash equivalents

Cash on hand 1,002 4,345Cheques on hand — 3,03,800Balances with banks

in current accounts 54,81,742 29,29,698in deposit account 107,14,61,402 —

107,69,44,146 32,37,843

Of the above, the balances that meet thedefinition of cash and cash equivalentsas per AS 3 Cash Flow Statements is 54,82,744 32,37,843

11


16. Short term loans and advances

As at As at


(`) (`)

Unsecured, considered good

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

Security deposit 1,80,000 —

Advance to employees — 5,000

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

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

Advances towards gratuity fund 3,22,231 91,262

Secured, considered good

Term loan to others 36,66,547 32,53,876

(secured by mortgage of immovable

property and hypothecation of moveables

and receivables)

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

17. Other current assets


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

87,177 1,09,953

13. Inventories(at lower of cost and fair value)

As at 31st March, 2012 As at 31st March, 2011Particulars Number Value Number Value

(`) (`)Stock-in-tradeEquity shares of ` 10/- each, fully paid upSKH Metals Limited (*) 40,000 1 40,000 1Patheja Brothers Forgings and Stampings Limited (*) 50,000 1 50,000 1Jind Textiles Limited (*) 5,00,000 1 5,00,000 1Taib Capital Corporation Limited (*) 2,45,000 1 2,45,000 1Sub - total 4 4Units of ` 10/- each, fully paid upBirla Sun Life Short Term FMP - Series 7 Dividend Payout — — 4,80,00,000 48,00,00,000Birla Sun Life Short Term FMP-Series 25-Dividend - Payout 1,00,00,000 10,00,00,000 — —Birla FMP Fixed Term Plan - Series EW Dividend - Payout 1,50,00,000 15,00,00,000 — —Birla Sunlife Fixed Term Plan Series-DY Growth 1,00,00,000 10,00,00,000 — —BNP Paribas Fixed Term Fund Series 19F Cal.Qtrly.Div — — 1,00,00,000 10,00,00,000DSP BalckRock DMP-Series 39-12M-Dividend Payout 5,00,00,000 50,00,00,000 — —DSP FMP Series-38-12.5 M -Growth 4,50,00,000 45,00,00,000 — —DWS Fixed Term Fund - Series 72 - Dividend Plan Payout — — 1,00,00,000 10,00,00,000DWS Fixed Maturity Plan - Series 11- Dividend Plan-Payout 6,00,00,000 60,00,00,000 — —DWS Fixed Maturity Plan-Series 5-Growth Plan 1,00,00,000 10,00,00,000 — —HDFC FMP 370D January 2012(4) -Growth -Series XIX 4,00,00,000 40,00,00,000 — —ICICI Prudential FMP Series 63 - 1 Year Plan C- Dividend 4,00,00,000 40,00,00,000 — —IDFC Cash Fund - Super Inst Plan C Daily Dividend — — 99,91,870 9,99,43,679IDFC Fixed Maturity Plan Thirteen Month Series-7 Dividend 4,50,00,000 45,00,00,000 — —IDFC Fixed Maturity Plan Yearly Series 64-Dividend 2,50,00,000 25,00,00,000 — —IDFC Ultra Short Term Fund Daily Dividend 2,58,83,948 25,91,63,029 — —Kotak Floater Short Term - Daily Dividend — — 6,03,28,390 61,02,94,055Reliance Fixed Horizon Fund-XXI-Series 8-Growth Plan 1,50,00,000 15,00,00,000 — —Religare Fixed Maturity Plan - Series III - Plan A (12 Months) - Dividend — — 2,50,00,000 25,00,00,000Religare FMP Series XIII Plan F - Dividend Plan 1,00,00,000 10,00,00,000 — —UTI - Fixed Income Interval Fund - Series II - Quaterly Interval Plan- IV -Institutional Dividend Plan - Payout — — 2,00,00,000 20,00,00,000Units of ` 1,000/- each, fully paid upDSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend — — 7,30,056 73,02,87,070TATA Liquid Super High Investment Fund - Daily Dividend 8,97,974 100,08,10,435 — —Templeton India Treasury Management Account Super Institutional Plan-Daily Dividend Reinvestment 4,10,422 41,06,98,053 — —

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

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

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

For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)18. Revenue from operations

Profit/(loss) on sale of stock-in-trade (*) (3,001) 49,71,249Dividend income from mutual funds heldas stock-in-trade 16,67,85,437 13,58,33,914Dividend income from investment inequity instruments 4,34,70,632 3,16,05,338Interest Income

on loans 2,02,11,743 76,31,922from fixed deposit with bank 7,94,01,558 —

Brokerage income 5,60,98,911 6,15,62,537Lease and other rentals 3,65,05,256 2,93,09,256

40,24,70,536 27,09,14,216(*) Profit/(loss) on sale of stock-in-trade

Sales 3570,56,12,281 5859,05,47,086Less : Purchases 3855,57,61,995 5743,30,93,434

(285,01,49,714) 115,74,53,652Add / (less) : increase/(decrease) inclosing stock-in-trade 285,01,46,713 (115,24,82,403)Profit /(loss) on sale of stock-in-trade (3,001) 49,71,249

19 Other incomeInterest incomeInterest on income tax refund 3,448 693Net gain on foreign currency transactionand translation 15,16,976 24,70,485Profit on sale of fixed assets 469 93,693Provision for standard assets releasedduring the year 5,39,420 —Liability no longer required written back 14,018 —Miscellaneous Income 13,04,694 37,17,317

33,79,025 62,82,188

20. Employee benefits expense

Salaries and wages 1,27,89,306 1,02,39,097Contribution to provident and other funds 22,46,195 48,42,648Staff welfare expenses 6,23,331 5,25,460

1,56,58,832 1,56,07,20521 Finance cost

Interest on income tax 806 40,41,236806 40,41,236


24. Additional notes to the financial statements1. Claims against the Company not acknowledged as debts :

Sales tax claims disputed by the Company relating to issues of applicability-` 57,99,216/- (2011 – ` 56,20,611/-) .

2. Guarantees and Counter Guarantees outstanding Nil (2011– ` 1,78,605/-)3. Loans to related parties in note 11 and 16 include :

(a) Loan to a fellow subsidiary, balance as at the year end is as follows:Wimco Limited (*) – ` 2,00,00,000/- (2011- ` 10,00,00,000)

(b) Interest free loans to fellow subsidiaries, balances as at the year end areas follows:Technico Pty Limited, Australia (#) – ` Nil (2011 – ` 2,30,53,750/-).Technico Agri Sciences Limited (#) – ` Nil (2011 – ` 12,00,00,000/-).

(c) The maximum indebtedness during the year :Wimco Limited (*) – ` 55,00,00,000/- (2011- ` 30,00,00,000/-)Technico Pty Limited, Australia (#) – ` 2,30,53,750/- (2011– ` 2,30,53,750/-).Technico Agri Sciences Limited (#) – ` 12,00,00,000/- (2011 –` 12,00,00,000/-).(*) Subsidiary till 28.09.2011. Fellow subsidiary with effect from 29.09.2011(#) Subsidiary till 25.03.2012. Fellow subsidiary with effect from 26.03.2012

4. Expenditure in foreign currency during the year:Market research expenses : ` Nil (2011 - ` 1,11,487/- )

5. Value of imports during the year (C.I.F. basis) :Capital Goods : ` 6,87,39,801 /- (2011-Nil)

6. Earnings Per Share : For the year ended For the year ended31st March, 2012 31st March, 2011

Profit after tax (`) 31,43,35,033/- 19,97,14,095/-Weighted average number of equityshares outstanding 64,64,78,737 64,64,78,737Basic and diluted earnings per share inRupees (Face Value – `10/- per share) ` 0.49 ` 0.31

7. The status of the petition filed by an individual in the High Court at Calcutta,seeking an injunction against the Company’s Counter Offer to the shareholdersof VST Industries Limited, is outlined in the Report of the Directors.

8. Segment Reporting - The Company operates in a single business segment i.e.Financial Services and in a single geographical segment.

9. Capital to Risk Adequacy Ratio:Items 31st March, 2012 31st March, 2011(i) CRAR (%) 114.55 99.32(ii) CRAR - Tier I capital (%) 114.54 99.30(iii) CRAR - Tier II Capital (%) 0.01 0.02

10. Exposure to Real Estate Sector:Category 31st March, 2012 31st March, 2011

(a) Direct exposure(i) Residential Mortgages Nil Nil(ii) Commercial Real Estate Nil Nil(iii) Investments in Mortgage Backed

Securities (MBS) and othersecuritised exposures -a. Residential, Nil Nilb. Commercial Real Estate Nil Nil

(b) Indirect ExposureFund based and non-fund basedexposures on National Housing Bank(NHB) and Housing FinanceCompanies (HFCs). Nil Nil

11. Maturity pattern of certain assets and liablities :(` in Lakhs)

1 to 30/31 Over 1 Over 2 Over 3 Over 6 Over Over Over Totaldays month to months to months to months to 1 year to 3 years to 5 years

(one month) 2 months 3 months 6 months one year 3 years 5 yearsLiabilities

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

AssetsAdvances — — — — — — — — —Investments 54206.72*1 — — — — — — 15021.02*2 69227.74

*1 Investments classified as Inventories as per Note 13*2 Investments classified as Non Current Investments as per Note 10

12



(`) (`)

22 Other expenses

Rent 9,28,371 8,28,000Bank, custodial and depository charges 29,828 3,61,036Repairs and maintenanceBuildings 1,68,240 1,68,240Electricity charges 4,37,098 3,92,347Travelling and conveyance 84,585 62,088Rates and taxes 24,204 24,600Professional and legal fees 13,71,144 3,39,348Payment to auditor

As auditors- statutory audit 1,50,000 1,50,000For taxation matters (*) 75,000 1,00,000For other matters (*) 1,50,000 2,00,000Reimbursement of expenses (*) 4,812 30,499

Communication expenses 25,624 26,177Printing, stationery and periodicals 75,471 69,589Donation (**) — 1,50,00,000Provision for standard assets — 8,54,154Miscellaneous expenses 8,31,789 8,77,167

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

(*) Paid to the erstwhile auditors, ` Nil ( 2011- ` 3,30,499/-) a firm in which someof the partners of the statutory auditors firm are partners

(**) Donation of ` 1,50,00,000/-, was made to All India Congress Committee ofthe Indian National Congress in 2011

23 Tax expenseFor the year ended For the year ended

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

Current tax- for the year 6,00,00,000 3,00,00,000- for earlier years (913) (23,68,576)

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

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

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

12. Related Party Disclosures :(a) RelationshipsHolding Company ITC LimitedSubsidiary Companies Greenacre Holdings LimitedFellow Subsidiaries Wimco Limited (*)

Pavan Poplar Limited (*)Prag Agro Farm Limited (*)Technico Pty Limited (#)Technico Agri Sciences Limited (#)Technico Technologies Inc.(#)Technico Asia Holdings Pty Limited (#)Technico Horticultural (Kunming) Co. Limited (#)

(*) Subsidiary till 28.09.2011. Fellow subsidiary w.e.f. 29.09.2011(#) Subsidiary till 25.03.2012. Fellow subsidiary w.e.f. 26.03.2012Key Management PersonnelMr. R. Tandon Non - Executive ChairmanMr. B. B. Chatterjee Non - Executive DirectorMr. P. Banerjea Non - Executive DirectorMr. S. Dutta Non - Executive DirectorMr. S. Jain Manager and Company SecretaryOther Related Parties with whom the Company had transactions duringthe 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 endedHolding Company 31st March, 2012 31st March, 2011

(`) (`)Sale of quoted investments* 83,40,98,160 NilSale of unquoted investments (at cost) 2,13,75,06,241 NilLease rentals received 1,48,80,000 84,00,000Miscellaneous income 6,20,104 NilRent, repairs and maintenance 3,00,111 2,76,240Miscellaneous expenses 4,37,098 4,95,246Reimbursement of expenses 1,31,000 2,13,935* Investments have been sold to the Holding Company at cost, the market

value of such shares on the date of sale was ` 70,28,36,910/-.Balances as at 31st March, 2012 31st March, 2011Holding Company (`) (`)Security deposits received 12,00,000 12,00,000Payables Nil 9,000Fellow Subsidiary Companies For the year ended For the year ended

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

Wimco LimitedSubscription to Preference Share Capital Nil 50,00,00,000Intercorporate loan given 45,00,00,000 40,00,00,000Intercorporate loan repaid 53,00,00,000 30,00,00,000Interest on loan 1,85,24,727 55,49,918Sale of plant & machinery 26,53,676 NIlTechnico Pty LimitedIntercorporate loan repaid 2,30,53,750 NIlTechnico Agri Sciences LimitedIntercorporate loan repaid 12,00,00,000 NIl

Balances as at 31st March, 2012 31st March, 2011Fellow Subsidiary Companies (`) (`)Loans OutstandingTechnico Pty Limited Nil 2,30,53,750Technico Agri Sciences Limited Nil 12,00,00,000Wimco Limited 2,00,00,000 10,00,00,000

Particulars For the year ended For the year endedAssociates 31st March, 2012 31st March, 2011

(`) (`)Dividend IncomeInternational Travel House Limited 1,37,81,205 1,17,86,557Travelling ExpensesInternational Travel House Limited 43,542 8,706Reimbursement of expenseDivya Management Limited 4,36,246 4,18,331Remuneration of managers on deputation to subsidiaries, absorbed 1,24,77,141 (*) 1,12,05,286(*) Subsidiary till 25.03.2012. Fellow subsidiary w.e.f. 26.03.2012

13. Employee Benefits :Contribution to Defined Contribution Schemes – ` 19,95,058/- (2011 –` 34,92,126/-) Defined Benefit Plans / Long Term Compensated Absences- As per Actuarial Valuations as on March 31, 2012 and recognised in thefinancial statements in respect of Employee Benefit Schemes:


13


II. Actual Returns 8.25% — 8% —

III. Net Asset / (Liability) recognised in Leave LeaveBalance Sheet Gratuity Encashment Gratuity Encashment1. Present Value of Defined Benefit 21,77,769 28,87,659 19,08,738 10,63,503

Obligation2. Fair Value of Plan Assets 25,00,000 Nil 20,00,000 Nil3. Status [Surplus/(Deficit)] 3,22,231 (28,87,659) 91,262 (10,63,503)4. Unrecognised Past Service Cost Nil Nil Nil Nil5. Net Asset/(Liability) recognised in 3,22,231 (28,87,659) 91,262 (10,63,503)

Balance Sheet

For the year ended For the year ended31st March, 2012 (`) 31st March, 2011 (`)

Leave LeaveGratuity Encashment Gratuity Encashment

Funded Unfunded Funded Unfunded

I. Components of Employer Expenses1. Current Service Cost 3,30,026 2,01,636 3,00,629 1,41,6692. Interest Cost 1,57,471 87,739 41,370 62,7003. Expected Return on Plan Assets (1,85,625) Nil (1,39,680) Nil4. Curtailment Cost/(Credit) Nil Nil Nil Nil5. Settlement Cost/(Credit) Nil Nil Nil Nil6. Past Service Cost Nil Nil Nil Nil7. Actuarial Losses/(Gains) (50,735) 15,34,781 11,48,203 75,3848. Total expense recognised in the 2,51,137 18,24,156 13,50,522 2,79,753

Statement of Profit & Loss (*)

(*) Gratuity expense has been recognised in “Contribution to provident and other funds” and leaveencashment expense in “Salaries and wages” under Note 20.

Leave LeaveIV. Change in Defined Benefit Obligations (DBO) Gratuity Encashment Gratuity Encashment

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

2. Current Service Cost 3,30,026 2,01,636 3,00,629 1,41,6693. Interest Cost 1,57,471 87,739 41,370 62,7004. Curtailment Cost/(Credit) Nil Nil Nil Nil5. Settlement Cost/(Credit) Nil Nil Nil Nil6. Plan Amendments Nil Nil Nil Nil7. Acquisitions Nil Nil Nil Nil8. Actuarial (Gains)/Losses (2,18,466) 15,34,781 10,49,616 75,3849. Benefits Paid Nil Nil Nil Nil10. Present Value of DBO at the end 21,77,769 28,87,659 19,08,738 10,63,503

of year

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 Plan Assets1. Government Securities/Special

Deposit with RBI 44.00% 45.50%2. High Quality Corporate Bonds 41.00% 40.00%3. Insurance Companies 7.00% 7.00%4. Mutual Funds 2.00% 3.30%5. Cash and Cash Equivalents 4.00% 3.40%6. Equity 1.00% 0.80%7. Term Deposit 1.00% 0.00%

VIII. Basis used to determine the Expected Rate of Return on Plan AssetsThe 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 optimisereturns within acceptable risk parameters, the plan assets are well diversified.


Leave LeaveV. Change in Fair Value of Assets Gratuity Encashment Gratuity Encashment

1. Plan Assets at Beginning of year 20,00,000 N.A. 14,92,000 N.A.2. Acquisition Adjustment Nil N.A. Nil N.A.3. Expected Return on Plan Assets 1,85,625 N.A. 1,39,680 N.A.4. Actuarial Gains/(Losses) (1,67,731) N.A. (98,587) N.A.5. Actual Company Contributions 4,82,106 N.A. 4,66,907 N.A.6. Benefits Paid Nil N.A. Nil N.A.7. Plan Assets at the End of year 25,00,000 N.A. 20,00,000 N.A.

VI. Actuarial Assumptions

1. Discount Rate (%) 8.25 8.25 8.00 8.002. Expected Return on Plan Assets (%) 8.25 N.A. 8.00 N.A.

Sl Name of the Subsidiary Number of Equity Shares Extent of Holding Net aggregate amount of the Subsidiary’s Net aggregate amount of the Subsidiary’sNo. Company held by the Company profits /(losses) not dealt with in the profits /(losses) dealt with in the

Company’s Accounts (`) Company’s Accounts (`)For the Subsidiary’s For the previous For the Subsidiary’s For the previousfinancial year ended financial years of the financial year ended financial years of the31st March, 2012 Subsidiary since it 31st March, 2011 Subsidiary since it

became the became theCompany’s Subsidiary Company’s Subsidiary

1. Greenacre Holdings Limited 4,20,60,166 Equity Shares 100% 96,95,485/- 8,17,84,188/- Nil Nilof ` 10/- each

STATEMENT REGARDING SUBSIDIARY COMPANIESPursuant to Section 212 of the Companies Act, 1956

Notes1. Technico Pty Limited and its subsidiaries - Technico Agri Sciences Limited, Technico Asia Holdings Pty Limited, Technico Technologies Inc. and Technico

Horticultural (Kunming) Co. Limited ceased to be subsidiaries of the Company with effect from 26th March, 2012.2. Wimco Limited and its subsidiaries – Pavan Poplar Limited and Prag Agro Farm Limited ceased to be subsidiaries of the Company with effect from

29th September, 2011.

Kolkata, 10th May, 2012



14



14. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financialstatements. Previous year’s figures have been regrouped / re-classified wherever necessary to correspond with the current year’s classification /disclosure.


For the year ended For the year ended For the year ended For the year ended For the year ended31st March, 2012 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008

(`) (`) (`) (`) (`)Gratuity Leave Gratuity Leave Gratuity Leave Gratuity Leave Gratuity Leave

Encashment Encashment Encashment Encashment Encashment IX. Net Asset / (Liability) recognised

in Balance Sheet (including Funded Unfunded Funded Unfunded Funded Unfunded Funded Unfunded Funded Unfundedexperience adjustment impact)1. Present Value of Defined

Benefit Obligation 21,77,769 28,87,659 19,08,738 10,63,503 5,17,123 7,83,750 11,51,189 4,98,931 13,22,680 5,31,6992. Fair Value on Plan Assets 25,00,000 Nil 20,00,000 Nil 14,92,000 Nil 8,15,033 Nil — Nil3. Status [Surplus / (Deficit)] 3,22,231 (28,87,659 ) 91,262 (10,63,503 ) 9,74,877 (7,83,750 ) (3,36,156 ) (4,98,931 ) (13,22,680 ) (5,31,699)4. Experience Adjustment of

Plan Assets [Gain / (Loss)] (1,62,106 ) N.A. (81,127 ) N.A. 2,44,436 N.A. Nil N.A. Nil N.A.5. Experience Adjustment of

Obligation [(Gain) / Loss] (1,87,206 ) 15,78,168 11,66,407 1,58,640 (6,39,036 ) 1,25,154 Nil Nil Nil Nil

(` in Lakhs)Long Term investment: Amount

Outstanding

(` in Lakhs)31st March, 2012

Particulars Amount AmountLiabilities Side: Outstanding Overdue

(1) Loans and advances availed by theNBFCs inclusive of interest accruedthereon but not paid — —a) Debentures — —

Secured — —Unsecured — —(other than falling within the meaningof public deposits)

b) Deferred Credits — —c) Term Loans — —d) Inter-Corporate loans and borrowings — —e) Commercial Papers — —f) Other Loans — —Assets Side: Amount Outstanding

(2) Break-up of Loans and Advancesincluding bills receivables [otherthan those included in (4) below](a) Secured 124.54(b) Unsecured 200.00

(3) Break-up of Leased Assets and stockon hire and other assets countingtowards AFC activities(i) Lease assets including lease

rentals under sundry debtors 934.40(a) Financial lease —(b) Operating lease 934.40

(ii) Stock on hire including hirecharges 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 Investments1. Quoted: —

(i) Shares: (a) Equity —(b) Preference —

(ii) Debentures and Bonds —(iii) Units of Mutual Funds —(iv) Government Securities —(v) Others (please specify) —

2. Unquoted: 54,206.72(i) Shares: (a) Equity —

(b) Preference —(ii) Debentures and Bonds —(iii) Units of Mutual Funds 54,206.72(iv) Government Securities —(v) Others (please specify) —

SCHEDULE TO THE BALANCE SHEET AS AT 31ST MARCH, 2012[as required in terms of Paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007]

1. Quoted: 4,163.10(i) Shares: (a) Equity 4,163.10

(b) Preference —(ii) Debentures and Bonds —(iii) Units of Mutual Funds —(iv) Government Securities —(v) Others (please specify) —

2. Unquoted: 10,857.93(i) Shares: (a) Equity 10,857.93

(b) Preference —(ii) Debentures and Bonds —(iii) Units of Mutual Funds —(iv) Government Securities —(v) Others (please specify) —

(5) Borrower group-wise classification ofassets financed as in (2) and (3) above

Amount Net of ProvisionsSecured Unsecured Total

Category1. Related Parties

(a) Subsidiaries — 200.00 200.00(b) Companies in the same group — — —(c) Other related parties — — —

2. Other than related parties 124.54 934.40 1,058.94Total 124.54 1,134.40 1,258.94

(6) Investor group-wise classification of allinvestments (current and long term)in shares and securities (both quotedand unquoted):

Market Value/ Book ValueBreak-up or (Net of

fair value or NAV Provisions)Category1. Related Parties

(a) Subsidiaries 5,372.41 4,210.34(b) Companies in the same group 8,742.90 4,148.67(c) Other related parties — —

2. Other than related parties 68,884.96 60,868.73Total 83,000.27 69,227.74

(7) Other InformationParticulars Amount (`)

(i) Gross Non-Performing Assets —(a) Related Parties —(b) Other related parties —

(ii) Net Non-Performing Assets —(a) Related Parties —(b) Other related parties —

(iii) Assets acquired in satisfaction of debt —

ii) selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit ofthe Company for that period;

iii) taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities; and



None of the employees of your Company is covered under the provisionsof Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975.

6. AUDITORS

The Company’s Auditors, Messrs. A. F. Ferguson & Co., CharteredAccountants, retire at the ensuing Annual General Meeting of theCompany, and being eligible, offer themselves for re-appointment.

7. AUDIT COMMITTEE

The Audit Committee of the Company comprises Mr. R. Tandon asChairman and M/s. A. Nayak and Saradindu Dutta as Members.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNINGS AND OUTGO

Considering the nature of business of your Company, no comment isrequired on conservation of energy and technology absorption. Therehas been no foreign exchange earnings or outflow during the yearunder review.


Registered Office:

ITC Centre

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

Kolkata 700 071 S. Dutta Director

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED31ST MARCH, 2012

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

year ended 31st March, 2012.

2. PERFORMANCE OF THE COMPANY

During the year, your Company has earned revenue of ` 2.20 croresfrom its operations, with total revenue being ̀ 2.97 crores. The Companyprovides maintenance services for real estate assets such as officebuilding. The Board of Directors of your Company continues to explorebetter growth opportunities.


For the year ended For the year ended


(`) (`)


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

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

c. Add : Profit brought

forward from previous years 9,37,79,046 8,53,47,057

d. Balance carried forward to


3. DIRECTORSIn accordance with the provisions of Article 143 of the Articles ofAssociation of the Company, Mr. Saradindu Dutta will retire by rotationat the ensuing Annual General Meeting of the Company, and beingeligible, offers himself for re-election. Your Board of Directors hasrecommended his re-election.


As required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm having : -i) followed in the preparation of the Annual Accounts, the applicable

Accounting Standards with proper explanations relating to materialdepartures, if any;

15

GREENACRE HOLDINGS LIMITED

AUDITORS’ REPORT TO THE MEMBERS OF GREENACRE HOLDINGS LIMITED

1. We have audited the attached Balance Sheet of GREENACRE HOLDINGSLIMITED (”the Company”) as at 31st March, 2012, and also the Statementof Profit and Loss and the Cash Flow Statement of the Company for theyear ended on that date, both annexed thereto. These financial statementsare the responsibility of the Company’s Management. Our responsibilityis to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generallyaccepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatements. An audit includes examining, on a testbasis, evidence supporting the amounts and the disclosures in the financialstatements. An audit also includes assessing the accounting principlesused and the significant estimates made by the Management, as well asevaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issuedby the Central Government of India in terms of Section 227(4A) of theCompanies Act, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3above, we report as follows:

(a) we have obtained all the information and explanations which tothe best of our knowledge and belief were necessary for thepurposes of our audit;


(c) the Balance Sheet, the Statement of Profit and Loss and the CashFlow Statement dealt with by this report are in agreement with thebooks of account;

(d) in our opinion, the Balance Sheet, the Statement of Profit and Lossand the Cash Flow Statement dealt with by this report are incompliance with the Accounting Standards referred to in Section211(3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and accordingto the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956, in the mannerso required and give a true and fair view in conformity with theaccounting principles general ly accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of theCompany as at 31st March, 2012;

ii) in the case of the Statement of Profit and Loss, of the profitof the Company for the year ended on that date and

iii) in the case of the Cash Flow Statement, of the cash flows ofthe Company for the year ended on that date.

5. On the basis of the written representations received from theDirectors as on 31st March, 2012 and taken on record by theBoard of Directors, we report that none of the Directors is disqualifiedas on 31st March, 2012 from being appointed as a director in termsof Section 274(1) (g) of the Companies Act, 1956.


(Registration No. 112066W)


16



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

I. Equity and Liability 1. Shareholders’ Funds

a) Share capital 3 42,06,01,660 42,06,01,660b) Reserves and surplus 4 11,72,45,509 53,78,47,169 10,75,50,024 52,81,51,684

2. Non-current liabilities

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

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

3. Current liabilities

a) Trade payables 7 — 6,31,257

b) Other current liabilities 8 1,14,49,652 3,82,83,482c) Short-term provisions 9 4,43,432 1,18,93,084 72,972 3,89,87,711Total 57,89,57,640 57,11,84,774

II. Assets1. Non-current assets

(a) Fixed assetsTangible assets 10 43,10,83,088 43,09,81,332

(b) Non-current investments 11 6,63,26,700 6,63,26,700(c) Deferred tax assets 12 6,06,561 7,65,830(d) Long-term loans and advances 13 34,72,278 50,14,88,627 34,68,278 50,15,42,140

2. Current assets

(a) Current investment 14 5,93,41,015 5,31,08,872(b) Inventories 15 1,23,71,911 1,23,71,911(c) Cash and cash equivalents 16 36,84,691 10,05,915(d) Short-term loans and advances 17 7,69,856 26,28,869(e) Other current assets 18 13,01,540 7,74,69,013 5,27,067 6,96,42,634

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



On behalf of the BoardR. Tandon DirectorS. Dutta DirectorA. Prasad Manager & Secretary

ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 thereof)

In our opinion and according to the information and explanations givento us, the nature of the Company’s business/activities during the year aresuch that clauses 4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv),(xvi), (xviii), (xix) and (xx) of Companies (Auditor’s Report) Order 2003,are not applicable to the Company. In respect of the other clauses, wereport as under:

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars,including quantitative details and situation of the fixed assets.

(b) The fixed assets were physically verified during the year by theManagement in accordance with a regular programme ofverification, which, in our opinion, provides for physical verificationof all the fixed assets at reasonable intervals. According to theinformation and explanations given to us, no material discrepancieswere 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 explanationsgiven to us, there are adequate internal control systems commensuratewith the size of the Company and the nature of its business for thepurchase of fixed assets and for the sale of services. Further, on thebasis of our examination and according to the information andexplanations given to us, we have neither come across nor have webeen informed of any instance of major weaknesses in the aforesaidinternal control systems.

(iii) In our opinion, the Company has an internal audit system commensuratewith the size of the Company and the nature of its business.

(iv) (a) According to the information and explanations given to us andaccording to the books and records as produced and examinedby us, in our opinion, the Company is regular in depositingundisputed statutory dues including provident fund, employees’state insurance, income-tax, service tax, cess and other materialstatutory dues as applicable with the appropriate authorities.

(b) As at 31st March, 2012, according to the records of the Companyand the information and explanations given to us, there were nodues on account of income-tax, service tax and cess which havenot been deposited on account of any dispute.

(v) In our opinion and according to the information and explanationsgiven to us and on an overall examination of the Balance Sheet, wereport that funds raised on short-term basis have not been used duringthe year for long-term investment.

(vi) To the best of our knowledge and according to the information andexplanations given to us, no fraud by the Company and no significantfraud on the Company has been noticed or reported during the year.


(Registration No.112066W)


17





Shyamak R. TataPartnerKolkata, 10th May, 2012



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

A. Cash flow from operating activitiesProfit before tax 1,20,42,723 1,09,68,030Adjustments for:Depreciation 1,81,744 1,81,744Loss on sale of current investments 989 1,02,400Liabilities no longer required written back (11,11,409) (6,35,326)Income from current investments (41,10,760) (26,17,910)Operating profit before working capital changes 70,03,287 79,98,938Changes in working capital:(Increase)/Decrease in short-term loans and advances (1,56,479) 3,75,622(Increase)/Decrease in long-term loans and advances (4,000) (1,78,000)(Increase)/Decrease in other current assets (7,74,473) (3,57,067)Increase/(Decrease) in trade payables (6,31,257) —Increase/(Decrease) in other current liabilities (2,57,22,421) 1,44,82,222Increase/(Decrease) in other long-term liabilities 2,54,34,643 (1,36,88,643)Increase/(Decrease) in short-term provisions 3,70,460 72,972Increase/(Decrease) in long-term provisions (2,62,635) 1,51,455

(17,46,162) 8,58,561Cash generated from operations 52,57,125 88,57,499Income tax paid (1,72,476) (31,37,247)Net cash generated from operating activities 50,84,649 57,20,252

B. Cash flow from investing activitiesPurchase of current investments (59,61,08,000) (71,40,72,784)Sale of current investments 59,17,92,037 71,37,99,111Dividend from investments 21,93,590 11,22,921Purchase of fixed assets (2,83,500) (90,00,000)Net cash used in investing activities (24,05,873) (81,50,752)

C. Cash flow from financial activities — —Net cash flow used in financing activities — —Net increase/(decrease) in cash and cash equivalents 26,78,776 (24,30,500)Opening cash and cash equivalents 10,05,915 34,36,415Closing cash and cash equivalents (note 16) 36,84,691 10,05,915

Notes:1 The above cash flow statement has been prepared under the “indirect method” as set out in accounting standard - 3 cash flow statements2. Cash and cash equivalents:

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

Cash on hand 19,409 15,251Balances with banks 36,65,282 9,90,664Cash and cash equivalents as per balance sheet (refer note 16) 36,84,691 10,05,915




(`) (`)I Revenue from operations 19 2,20,40,402 2,19,19,628II Other income 20 76,59,546 52,49,603III Total revenue 2,96,99,948 2,71,69,231IV Expenses

Changes in inventories of work-in-progress 21 — —Maintenance and service expenses 43,20,233 39,02,299Employee benefits expense 22 1,12,43,158 1,16,16,399Depreciation expense 10 1,81,744 1,81,744Other expenses 23 19,12,090 5,00,759Total expenses 1,76,57,225 1,62,01,201

V Profit before tax 1,20,42,723 1,09,68,030VI Tax expense:

Current tax 24 21,87,969 27,86,163Deferred tax 24 1,59,269 (2,50,122)

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

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


3. Share capital As at As at31st March, 2012 31st March, 2011

(`) (`)Authorised5,00,00,000 (2011 - 5,00,00,000) equity shares of ` 10/- each 50,00,00,000 50,00,00,000

50,00,00,000 50,00,00,000Issued, Subscribed and Fully Paid-up4,20,60,166 (2011 - 4,20,60,166) equity shares of ` 10/- each, fully paid 42,06,01,660 42,06,01,660

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

(i) Reconciliation of number of shares and amounts outstandingParticulars As at As at

31st March, 2012 31st March, 2011Equity Shares Equity Shares

(Number) (`) (Number) (`)Issued, Subscribed and Fully Paid-upEquity Shares of ` 10/- each outstanding at the beginning and at the end of the year 4,20,60,166 42,06,01,660 4,20,60,166 42,06,01,660

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

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

As at As atName of the shareholders 31st March, 2012 31st March, 2011

No. of Shares held No. of Shares held(%) (Number) (%) (Number)

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

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

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

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

18


1. Corporate InformationGreenacre Holdings Limited, a subsidiary of Russell Credit Limited,which in turn a wholly-owned subsidiary of ITC Limited, is engaged inthe business of project management, property development andproperty maintenance.

2. Significant Accounting PoliciesBasis of AccountingThe financial statements are prepared on accrual basis under thehistorical cost convention.All assets and liabilities have been classified as current or non-currentas per the Company’s normal operating cycle and other criteria set outin the Revised Schedule VI to the Companies Act, 1956 based on thenature of services.Fixed AssetsFixed Assets are stated at cost including any incidental acquisitionexpenses.DepreciationDepreciation is provided on ‘Straight Line’ basis at the rates prescribedin Schedule XIV to the Companies Act, 1956.InvestmentsCurrent Investments are stated at lower of cost and fair value andLong-Term Investments, including in Joint Ventures and Associates, atcost. Where applicable, provision is made to recognise a decline, otherthan temporary, in valuation of Long-Term Investments.

Investment IncomeIncome from Investments is accounted for on an accrual basis, inclusiveof related tax deducted at source.

Method of Accounting - ProjectsThe Company recognises revenue on projects using percentageof completion method of accounting, if work completed can bereasonably estimated.

Revenue RecognitionService Income is recognised on rendering of service, net of taxes.

Borrowing CostsBorrowing Costs that are directly attributable to the acquisition orconstruction of qualifying assets are capitalised as part of cost of suchassets. All other borrowing costs are charged to revenue.

Employee BenefitsContributions is made to the Provident Fund administered throughduly constituted and approved independent trust, which is in the natureof defined contribution scheme and such paid/payable amounts arecharged against revenue.Liability for Gratuity and Leave Encashment schemes in the nature ofdefined benefit schemes are based on independent actuarial valuationas per the requirements of Accounting Standard -15 (revised 2005) on‘Employee Benefits’.Actuarial gains and losses are recognised immediately in the Statementof Profit and Loss as income or expense.

Lease RentalsLease Rentals are accounted for on an accrual basis.

Taxes on IncomeCurrent tax is accounted as the amount of tax payable in respect oftaxable income for the period, measured using the applicable tax ratesand tax laws.Deferred tax is accounted for on timing differences between taxableincome and accounting income subject to consideration of prudence,measured using the tax rates and tax laws that have been enacted orsubstantially enacted by the balance sheet date.Deferred tax assets on unabsorbed depreciation and carry forward oflosses are not recognised unless there is virtual certainty that there willbe sufficient future taxable income available to realise such assets.

4. Reserves and surplusAs at As at

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

General reserveBalance at the beginning and at the end of the year 1,37,70,978 1,37,70,978

Surplus in the statement of profit and lossBalance at the beginning of the year 9,37,79,046 8,53,47,057Add: Profit for the year 96,95,485 84,31,989

Balance at the end of the year 10,34,74,531 9,37,79,04611,72,45,509 10,75,50,024

5. Other long-term liabilities As at As at31st March, 2012 31st March, 2011

(`) (`)OthersSecurity deposits 2,76,11,000 20,00,000[includes deposits from ultimate holding company` 2,20,00,000/- (2011- ` 20,00,000/-)]Liability towards gratuity fund — 1,76,357

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

6. Long-term provisions As at As at31st March, 2012 31st March, 2011

(`) (`)Provision for employee benefits

Provision for compensated absences 16,06,387 18,69,02216,06,387 18,69,022

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

— 6,31,257

(*) There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and alsoas at 31st March, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has beendetermined to the extent such parties have been identified based on information available with the Company.

8. Other current liabilities As at As at31st March, 2012 31st March, 2011

(`) (`)Other payables (#)

Statutory remittances 13,69,838 8,08,162Progress payments and advance received against projects 1,00,00,000 1,00,00,000Liabilties for expenses 79,814 11,92,155Security deposits — 2,60,90,000[includes deposits from ultimate holding company ` Nil (2011 – ` 2,00,00,000/-)]Liability towards gratuity fund — 1,93,165

1,14,49,652 3,82,83,482(#) There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and alsoas at 31st March, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has beendetermined to the extent such parties have been identified based on information available with the Company.

9. Short-term provisions As at As at31st March, 2012 31st March, 2011

(`) (`)Current portion of long-term employee benefitsProvision for compensated absences 4,43,432 72,972

4,43,432 72,972

10. Tangible assets

GROSS BLOCK (AT COST) DEPRECIATION NET BLOCKParticulars As at Additions As at Upto For the year Up to As at As at

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

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

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

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

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

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

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

(*) Includes land given on lease, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms.The Gross value of such assets is ` 28,21,78,478/- ( 2011 - ` 28,21,78,478/-)The aggregate lease rental of ` 10,00,000/- (2011 - ` 10,00,000 /-) is included in Lease rental income under Other income (Note No.20)

(#) Represents assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms.The Gross value of such assets is ` 1,10,04,119/- ( 2011 - ` 1,10,04,119/-) and Accumulated depreciation is ` 27,49,798/- ( 2011 - ` 25,70,431 /-).Depreciation for the year charged to Statement of Profit and Loss is ` 1,79,367/- ( 2011 - ` 1,79,367/-).The aggregate lease rental of ` 11,89,500/- (2011 – ` 8,87,500 /-) is included in Lease rental income under Other income (Note No.20)

19



11 Non-current investments(at cost) As at As at

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

Long term - tradeUnquotedInvestments in equity instrumentsClassic Infrastructure &Development Limited 6,63,26,700 6,63,26,700

16,50,000 (2011-16,50,000)equity shares of ` 10/- each fully paid up 6,63,26,700 6,63,26,700Aggregate amount of unquoted investments 6,63,26,700 6,63,26,700

12. Deferred tax assetOn fiscal allowances on fixed assets 13,428 15,859On employee benefits 5,93,133 7,49,971

6,06,561 7,65,83013. Long term loans and advances

Unsecured, considered goodSecurity deposit 1,55,000 1,55,000Project advances 32,90,278 32,90,278Advances to employees 27,000 23,000

34,72,278 34,68,278

14. Current investments As at As at31st March, 2012 31st March, 2011

(`) (`)

(at lower of carrying cost and fair value)Other investmentsUnquotedInvestments in mutual fundsDSP BlackRock Liquidity Fund -Institutional Plan - Daily Dividend — 2,31,08,872Nil (2011-23,102) Units of ` 1,000/- eachKotak Quarterly Interval Plan Series 2 - Dividend — 3,00,00,000Nil (2011- 29,99,641) Units of ` 10/- eachHDFC Cash Management Fund - SavingPlan-Daily Dividend Reinvestment 3,20,23,071 —30,10,706 (2011- Nil) Units of ` 10/- eachBirla Sun Life Floating Rate - LongTerm Institutional Plan Daily Dividend -Reinvestment 2,73,17,944 —2,73,128 (2011- Nil) Units of ` 100/- each 5,93,41,015 5,31,08,872Aggregate amount of unquoted investments 5,93,41,015 5,31,08,872

15. Inventories(At lower of cost and net realisable value)Work-in-progress 1,23,71,911 1,23,71,911(project for property development)

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

25. Additional notes to the financial statements1. Earnings Per Share : For the year ended For the year ended

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

Profit after tax (`) 96,95,485 84,31,989Weighted average number of equityshares outstanding 4,20,60,166 4,20,60,166Basic and diluted earnings per share(Face Value – ` 10/- per share) ` 0.23 ` 0.20

2. Segment reporting - The Company operates in a single business segmentnamely property maintenance and in a single geographical segment.

3. Related party disclosures:a) Relationship:

Holding Company Russell Credit LimitedUltimate Holding Company ITC LimitedFellow Subsidiary Company Landbase India LimitedEmployees’ Benefit Plans where there is significant influence:a) Greenacre Holdings Limited Provident Fundb) Greenacre Holdings Limited Gratuity FundKey Management PersonnelMr. R. Tandon Non-Executive ChairmanMr. A. Nayak Non - Executive DirectorMr. S. Dutta Non - Executive DirectorMs. A. Prasad Manager and Company

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

status of outstanding balances:

Particulars For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)Ultimate HoldingCompany ITC LtdLease rental income 19,60,000 18,20,000Sale of service 2,20,40,402 2,19,19,628Other reimbursements received 1,94,164 2,61,830Other reimbursements made 16,758 26,332Balances as atUltimate HoldingCompany ITC LtdSecurity deposit received 2,20,00,000 2,20,00,000Other receivables 11,03,000 4,00,000Fellow Subsidiary CompanyLandbase India LtdReimbursement of expenses 4,33,592 21,79,702Fellow Subsidiary CompanyLandbase India LtdOther payables Nil 11,17,702Key Management PersonnelRemuneration of manager 24,20,296 18,29,776Contribution to GreenacreHoldings Limited Provident Fund 7,00,169 5,27,754Contribution to GreenacreHoldings Limited Gratuity Fund 6,02,820 2,35,195

4. Employee Benefits:(a) Contribution to Defined Contribution Schemes – ` 8,05,595/-

(2011 – ` 8,25,782/-)Defined Benefit Plans / Long Term Compensated Absences - As per ActuarialValuations as on March 31, 2012 and recognised in the financial statementsin respect of Employee Benefit Schemes:


20


16. Cash and cash equivalentsAs at As at

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

Cash on hand 19,409 15,251Balances with banksin current accounts 36,65,282 9,90,664

36,84,691 10,05,91517. Short term loans and advances

Unsecured, considered goodAdvances to employees 1,01,000 99,000Prepaid expenses 1,58,091 94,794Current taxation (net of provisions) 3,70,786 23,77,518Fringe benefit tax (net of provisions) — 8,760Advance towards gratuity fund 1,30,296 —Balances with government authoritiesService tax credit receivable 9,683 48,797

7,69,856 26,28,86918. Other current assets

Lease rent receivable 13,01,540 4,18,200[includes ` 11,03,000/- (2011- ` 4,00,000/-)due from ultimate holding company, ITC Limited]Accrued interest on income tax — 1,08,867

13,01,540 5,27,067

19. Revenue from operations For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)Sale of services 2,20,40,402 2,19,19,628

2,20,40,402 2,19,19,62820. Other income

Dividend income from current investments 41,10,760 26,17,910Lease rental income 21,89,500 18,87,500Interest on income tax refund 2,47,877 1,08,867Liability no longer required written back 11,11,409 6,35,326

76,59,546 52,49,60321. Changes in inventories of work-in-progress

Opening work-in-progress 1,23,71,911 1,23,71,911Add: Expenditure incurred on projectsduring the year — —Less: Closing work-in-progress 1,23,71,911 1,23,71,911

— —22. Employee benefits expense

Salaries and wages 97,38,609 88,15,749Contribution to provident and other funds 9,08,597 16,94,742Staff welfare expense 5,95,952 11,05,908

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

23. Other expensesRates and taxes 47,498 41,288Insurance 2,395 4,354Travelling and conveyance 13,540 7,097Legal and professional 16,59,461 1,62,977Payment to auditor

As auditors - statutory audit 75,000 75,000For taxation matters (*) 37,500 50,000For other matters 4,000 —

Communication expenses 9,795 11,322Loss on sale of current investments 989 1,02,400Miscellaneous expenses 61,912 46,321

19,12,090 5,00,759

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

24. Tax expense For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)Current tax

– for the year 23,00,000 32,00,000– for earlier years (1,12,031) (4,13,837)

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

– for the year 1,59,269 (2,50,122)(B) 1,59,269 (2,50,122)

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




I. Components of Employer Expenses

1. Current Service Cost 2,46,575 1,33,423 2,11,698 1,28,601

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

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

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

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

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

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

8. Total expense recognised in the 1,03,002 1,80,797 8,68,960 5,24,427Statement of Profit & Loss (*)


21


For the year ended For the year ended For the year ended For the year ended For the year ended31st March, 2012 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008

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

Gratuity Leave Gratuity Leave Gratuity Leave Gratuity Leave Gratuity LeaveEncashment Encashment Encashment Encashment Encashment

VIII. Net Asset / (Liability) recognisedin Balance Sheet (including Funded Unfunded Funded Unfunded Funded Unfunded Funded Unfunded Funded Unfundedexperience adjustment impact)1. Present Value of Defined

Benefit Obligation 28,42,884 20,49,819 27,27,984 19,41,994 20,89,233 17,17,567 19,76,274 15,44,591 16,38,837 12,91,0532. Fair Value on Plan Assets 29,73,180 Nil 23,58,462 Nil 23,43,602 Nil 22,31,093 Nil 19,19,289 Nil3. Status [Surplus / (Deficit)] 1,30,296 (20,49,819) (3,69,522) (19,41,994) 2,54,369 (17,17,567) 2,54,819 (15,44,591) 2,80,452 (12,91,053)4. Experience Adjustment of

Plan Assets [Gain / (Loss)] (8,203) N. A . (61,732) N.A . 79,276 N.A. Nil N.A. Nil N.A.5. Experience Adjustment of

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


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

III. Net Asset / (Liability) recognised in Leave LeaveBalance Sheet Gratuity Encashment Gratuity Encashment

1. Present Value of Defined Benefit 28,42,884 20,49,819 27,27,984 19,41,994Obligation

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

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

4. Unrecognised Past Service Cost Nil Nil Nil Nil

5. Net Asset/(Liability) recognised in 1,30,296 (20,49,819) (3,69,522) (19,41,994)Balance Sheet

Leave LeaveIV. Change in Defined Benefit Obligations (DBO) Gratuity Encashment Gratuity Encashment

1. Present Value of DBO at 27,27,984 19,41,994 20,89,233 17,17,567

beginning of year2. Current Service Cost 2,46,575 1,33,423 2,11,698 1,28,601

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

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

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

6. Plan Amendments Nil Nil Nil Nil

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

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

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

10. Present Value of DBO at the end 28,42,884 20,49,819 27,27,984 19,41,994of year

(*) Gratuity expense has been recognised in “Contribution to provident and otherfunds” and leave encashment expense in “Salaries and wages” under Note 22.




V. Change in Fair Value of Assets

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

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

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

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

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

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

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

VI. Actuarial Assumptions For the year ended For the year ended31st March, 2012 (`) 31st March, 2011 (`)


1. Discount Rate (%) 8.25 8.25 8.00 8.002. Expected Return on Plan Assets (%) 8.25 N.A. 8.00 N.A.

VII. Major Category of Plan Assets As at As atas a % of the Total Plan Assets 31st March, 2012 31st March, 2011

1. Government Securities/SpecialDeposit with RBI N.A. N.A.

2. High Quality Corporate Bonds N.A. N.A.3. Insurance Companies 100% 100%4. Mutual Funds N.A. N.A.5. Cash and Cash Equivalents N.A. N.A.

(b) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors,such as supply and demand in the employment market.

(c) In the absence of detailed information regarding plan assets (of gratuity fund) which is funded with insurance company, the composition of eachmajor category of plan assets, the percentage or amount for each category to the fair value of plan assets have not been disclosed.

(d) The expected rate of returns on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protectthe capital and optimize returns within acceptable risk parameters, the plan assets are well diversified.

5. The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted thedisclosure and presentation made in the financial statements. Previous year’s figures have been regrouped / re-classified wherever necessary to correspondwith the current year’s classification /disclosure.



DIRECTORS’ REPORTTO THE MEMBERS OF WIMCO LIMITEDYour Directors present their report for the financial year ended31st March, 2012.Company PerformanceYour Company’s turnover, which stood at ` 169.70 crores has seen a declineof 12% as compared to last year primarily on account of lower volumes inthe Safety Matches Business. During the year under review, your Companyincurred a net loss of ` 45.99 crores after taking into account a one-timecost of ` 36.87 crores, inter alia, for rationalising its operations.The income from Safety Matches Business for the year declined by 17% to` 152.89 crores from `184.78 crores earned in the previous year. YourCompany continues to face challenges in its main business of Safety Matchesdue to steep increase in the prices of key raw materials on the one handand growing competition from the small scale and cottage sector on theother. The recent budget announcement increasing the excise duty on themechanised industry while reducing the duty on semi-mechanised industryhas put your Company’s Safety Matches Business at a further disadvantage.Besides, the levy of discriminatory state level taxes on mechanised SafetyMatches industry has compounded the challenge faced by the Companyin the market place.In its pursuit to restructure the Safety Matches Business to make it viable,your Company, during the year, has implemented a Voluntary RetirementScheme at the Kolkata unit, post suspension of operations at the said unit.With the above, your Company has discontinued operations at its Chennai,Ambarnath and Kolkata units. Insofar as the Bareilly unit is concerned,your Company has initiated steps to modernise the said unit. Meanwhile,the Company has made alternate arrangements for sourcing its volumerequirements from external vendors. The outsourced volume has increasedby 72% to 608 million boxes from 354 million boxes sold in theprevious year.Pursuant to your approval at the last Annual General Meeting held on23rd September, 2011, for deployment of the assets of the Safety MatchesBusiness that may be rendered surplus for alternate usage, your Companyleased out its land located at Chennai to ITC Limited (ITC), the HoldingCompany, for a period of ten years at an initial lease rental of ` 2.40 croresper year and a non-interest bearing refundable security deposit of` 50 crores. The Company has also agreed in-principle to lease out its landand buildings located at Ambarnath to ITC for a period of ten years at aninitial lease rental of ` 1.50 crores per year and a non-interest bearingrefundable security deposit of ` 30 crores.The surplus movable assets of the Chennai, Ambarnath and Kolkata units,including plant & machinery, factory equipments, furniture & fixtures, arebeing suitably deployed, inter alia, at the Company’s Bareilly unit. Suchdeployment would assist the Company in optimising its supply-chainmanagement.The Engineering Business recorded a turnover of ` 16.77 crores as comparedto ` 14.04 crores in the previous year, registering a growth of 19%. It isyour Company’s endeavour to increase value capture through continuousproduct development in the packaging machinery category. This Businessis poised for further growth through new customer acquisitions.The income from the Agri (Forestry) Business during the year was ` 11.92crores as against ` 9.76 crores in the previous year, registering a growthof 22%. This Business is supplying high quality poplar and eucalyptus ETPs(Entire Transplants) to farmers in Northern India thereby providingemployment and livelihood opportunities. Apart from creating a long-termsustainable supply of a critical raw material, our strategy of creatingsustainable and meaningful linkages across the farmer community is helpingus to contribute towards improving the green cover in the region.DividendIn view of the losses incurred during the year, your Directors are unable torecommend any dividend.Holding CompanyConsequent to transfer of 9,12,38,170 equity shares of the Company byRussell Credit Limited (Russell) to ITC, your Company became a directsubsidiary of ITC with effect from 29th September, 2011.DirectorsIn accordance with the provisions of Articles 131, 132 and 133 of theArticles of Association of the Company, Mr. C. R. Dua and Mr. R. Tandonwill retire by rotation at the ensuing Annual General Meeting of the Companyand, being eligible, offer themselves for re-election. The Board hasrecommended their re-election.Share Capital(i) Rights Issue

During the year, the Company made a rights issue of 9,42,30,000equity shares of ` 1/- each at a price of ` 6.50 per equity share, includinga premium of ` 5.50 per share, to the existing shareholders of thecompany in the ratio of one rights equity share for every one fully paidup equity share held. Out of these, the Company received 1,739 valid

22

WIMCO LIMITED

applications for 9,16,25,147 rights equity shares representing 97.3%of the issue size. These shares were allotted on 27th March, 2012,consequent to which the paid-up equity capital of the Companyincreased from ` 9.42 crores to ` 18.59 crores.The remaining (unsubscribed) 26,04,853 shares were offered to andsubscribed by Russell, a fellow subsidiary; the said shares were allottedon 25th April, 2012. With this, the paid-up capital of the Companystands increased to ` 18.84 crores as on that date.The proceeds of the aforesaid rights issue has been utilised for redemptionof Preference Shares held by Russell, upgradation of existing infrastructure,meeting the working capital requirements and restructuring theoperations of the Company.

(ii) Preference SharesDuring the year, your Company redeemed 55,00,000, 5% RedeemableCumulative Preference Shares of `100/- each, aggregating ` 55 crores,held by Russell. Further, the cumulative dividend payable on theaforesaid Preference Shares aggregating ` 8.33 crores, was waived byRussell.

Directors’ Responsibility StatementAs required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm that:(i) in the preparation of the Annual Accounts, the applicable Accounting

Standards have been followed and no significant departures have beenmade from the same;

ii) appropriate accounting policies have been selected and appliedconsistently and judgments and estimates that have been made arereasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31st March, 2012 and of the loss of theCompany for that period;

iii) proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; and

iv) the Annual Accounts have been prepared on a going concern basis.AuditorsThe Company’s Auditors M/s. BSR & Co., retire at the ensuing AnnualGeneral Meeting, and being eligible, offer themselves for re-appointment.The Board has recommended their re-appointment.SubsidiariesParticulars as required under Section 212 of the Companies Act, 1956 inrespect of the Subsidiaries of the Company viz. Pavan Poplar Limited andPrag Agro Farm Limited, have been attached to the Accounts of theCompany.Conservation of Energy, Technology Absorption, Foreign ExchangeEarnings and OutgoA) Conservation of Energy

The particulars in Form A regarding conservation of energy has notbeen provided as the activity of the Company does not fall under thelist of industries specified in the Schedule annexed to the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules,1988.

B) Technology AbsorptionDuring the year, the Company’s expenditure on Research andDevelopment on poplar, eucalyptus and other wood species was` 34.94 Lacs.

C) Foreign Exchange Earnings and OutgoDuring the year, the Company earned foreign exchange of` 278.01 Lacs. The total outflow of foreign exchange was ` 629.98 lacs.

EmployeesThe relations between your Company and its employees have generallybeen cordial and harmonious during the year under review. None of theemployees of the Company is covered under the provisions of Section217(2A) of the Companies Act, 1956, read with the Companies (Particularsof Employees) Rules, 1975.AcknowledgementThe Board acknowledges the understanding and support of the government,investors, banks, distributors, customers, suppliers and business associatesand the dedication and hard work of its employees.

For and on behalf of the BoardKolkata K.N. Grant15th June, 2012 Chairman

AUDITORS’ REPORTTO THE MEMBERS OF WIMCO LIMITED

We have audited the attached balance sheet of Wimco Limited(”the Company”) as at 31 March, 2012 and the related statement of profitand loss and cash flow statement for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform the

audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

(ix) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company,amounts deducted /accrued in the books of account in respectof 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 dueshave been regularly deposited during the year by the Companywith the appropriate authorities. As explained to us, the Companydid not have any dues on account of Investor Education andProtection Fund.

According to the information and explanations given to us, noundisputed 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 materialstatutory dues were in arrears as at 31 March, 2012 for a periodof more than six months from the date they became payable.

(b) According to the information and explanations given to us, thereare no dues of Wealth tax, Service tax, Customs Duty and Cesswhich have not been deposited with the appropriate authoritieson account of any disputes. According to the information andexplanations given to us, the following statutory dues have notbeen deposited by the Company on account of disputes:

Name of the Nature of the Amount Period to Forum whereStatute Dues (` in which the dispute is

Lakhs) amount pendingrelates

The Central Excise Duty 29.75 2006-2008 CESTAT, KolkataExcise Act, 1944Uttar Pradesh Sales tax 0.75 2000-2004 High Court, AllahabadSales Tax Act,1948

Central Sales tax 272.68 2005-2006 Appellate Authority,Sales Tax KolkataAct, 1956

Uttar Pradesh Sales tax 13.40 2007-2008 Joint CommissionerSales Tax Act, Sales Tax, Bareilly1948

Uttar Pradesh Sales tax 1.64 2009-2010 Additional Commissionervalue added, Grade II (Appeal),Tax Act, 2008 Comercial Tax Bareilly

Excludes ` 63.31 Lacs paid under protest.

(x) The accumulated losses of the Company at the end of the financialyear are less than fifty percent of its net worth. However, it has incurredcash losses in the financial year as well as in the immediately precedingfinancial year.

(xi) In our opinion and according to the information and explanationsgiven to us, the Company has not defaulted in repayment of dues

23

WIMCO LIMITED

1. As required by the Companies (Auditor’s Report) Order. 2003 (’theOrder’), issued by the Central Government of India in terms of subsection (4A) of Section 227 of the Companies Act, 1956, (’the Act’)we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to above, we reportthat:a) We have obtained all the information and explanations which to

the best of our knowledge and belief were necessary for the purposeof our audit;

b) In our opinion, proper books of account as required by law havebeen kept by the Company so far as appears from our examinationof those books;

c) The balance sheet, statement of profit and loss and cash flowstatement dealt with by this report are in agreement with thebooks of account;

d) In our opinion, the balance sheet, statement of profit and loss andcash flow statement dealt with by this report comply with theAccounting Standards referred to in sub-section (3C) of Section211 of the Act;

e) On the basis of written representations received from directors ofthe Company as at 31 March, 2012 and taken on record by the

Board of Directors, we report that none of the directors is disqualifiedas on 31 March, 2012 from being appointed as a director in termsof 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 accordingto the explanations given to us, the said accounts give theinformation required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principlesgenerally accepted in India:i) in the case of the balance sheet, of the state of affairs of the

Company as at 31 March, 2012;ii) in the case of the statement of profit and loss, of the loss of

the Company for the year ended on that date; andiii) 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

Firm’s Registration No. : 101248W

Bhavesh DhupeliaMumbai Partner26th April, 2012 Membership No. : 042070

ANNEXURE TO THE AUDITORS’ REPORT - 31 MARCH, 2012

(Referred to in our report of even date)

(i) (a) The Company has maintained proper records showing fullparticulars, including quantitative details and situation of fixedassets.

(b) The Company has a regular programme of physical verification ofits fixed assets by which all fixed assets are verified in a phasedmanner over a period of three years. In our opinion, this periodicityof physical verification is reasonable having regard to the size ofthe Company and the nature of its assets. Pursuant to theprogramme, certain fixed assets were physically verified duringthe year and no material discrepancies were noted on suchverification.

(c) Fixed assets disposed off during the year were not substantial and,therefore, do not affect the going concern assumption.

(ii) (a) The inventory, except goods-in-transit and stocks lying with thirdparties, has been physically verified by the management duringthe year. In our opinion, the frequency of such verification isreasonable. For stocks lying with third parties at year-end, writtenconfirmations have been obtained.

(b) The procedures for the physical verification of inventories followedby the management are reasonable and adequate in relation tothe size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. Thediscrepancies noticed on verification between the physical stocksand the book records were not material.

(iii) According to the information and explanations given to us, we are ofthe opinion that there are no companies, firms or other parties coveredin 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 explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business withregard to purchase of inventory and fixed assets and with regard tothe sale of goods and services. We have not observed any majorweakness in the internal control system during the course of the audit.

(v) In our opinion, and according to the information and explanationsgiven to us, there are no contracts and arrangements the particularsof which need to be entered into the register maintained underSection 301 of the Act.

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

(vii) In our opinion, the Company has an internal audit systemcommensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained bythe Company pursuant to the rules prescribed by the CentralGovernment for maintenance of cost records under Section 209(1)(d) ofthe Act in respect of generation of electricity from wind power andmanufacture of matches and are of the opinion that prima facie, theprescribed accounts and records have been made and maintained.However, we have not made a detailed examination of the records.

to its bankers. The Company did not have any outstanding debenturesor outstanding dues to any financial institutions during the year.

(xii) The Company has not granted any loans and advances on the basisof security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanationsgiven to us, the Company is not a chit fund or a nidhi/ mutual benefitfund/ society.

(xiv) According to the information and explanations given to us, theCompany is not dealing or trading in shares, securities, debenturesand other investments.

(xv) According to the information and explanations given to us, theCompany has not given any guarantee for loans taken by othersfrom banks or financial institution.

(xvi) The Company did not have any term loans outstanding duringthe year.

(xvii) According to the information and explanations given to us and onoverall examination of the balance sheet of the Company, we are ofopinion that the funds raised on short-term basis have not beenused for long-term investment.

BALANCE SHEET AS AT MARCH 31, 2012

As at As atNote March 31, 2012 March 31, 2011

(` in Lacs) (` in Lacs)

EQUITY AND LIABILITIESShareholders’ Funds

Share capital 1 6,858.55 11,442.30Reserves and surplus 2 4,298.54 4,299.92

Non-current liabilitiesLong-term borrowings 3 450.00 1,280.00Deferred tax liabilities (net) 4 — —Other long-term liabilities 5 5,652.68 172.35Long-term provisions 6 87.97 84.53

Current liabilitiesShort-term borrowings 7 25.84 23.30Trade payables 8 4,093.59 4,628.04Other current liabilities 9 427.64 657.67Short-term provisions 10 89.71 250.51

TOTAL 21,984.52 22,838.62

ASSETS

Non-current assetsFixed assets 11Tangible assets 15,373.65 15,630.51Intangible assets 34.73 80.95Capital work-in-progress 23.38 104.99

Non-current investments 12 599.15 599.10Long-term loans and advances 13 802.19 776.96Other non-current assets 14 0.25 0.25

Current assetsInventories 15 2,299.72 3,136.42Trade receivables 16 320.68 334.96Cash and cash equivalents 17 129.42 60.46Short-term loans and advances 18 2,399.87 2,113.16Other current assets 19 1.48 0.86

TOTAL 21,984.52 22,838.62

Segment information 29Related party disclosure 30Significant accounting policies 43

The accompanying notes from 1 to 43 form an integral part of these financial statements.As per our report of even date.

(xviii) As stated in paragraph (iii) above, there are no companies/firms/partiescovered in the register required to be maintained under Section 301of the Act.

(xix) The Company did not have any outstanding debentures during theyear.

(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 thecourse of our audit.

For BSR & Co.Chartered AccountantsFirm’s Registration No.: 101248W

Bhavesh DhupeliaPartnerMembership No. 042070Place : MumbaiDate : 26th April, 2012

24

WIMCO LIMITED


Firm’s Registration No. : 101248W

Bhavesh DhupeliaMumbai Partner26th April, 2012 Membership No. : 042070

For and on behalf of the Board

K. N. Grant ChairmanV. M. Rajasekharan Managing DirectorS. K. Sipani Head - Finance & Company Secretary

Place : Kolkata26th April, 2012

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

Note For the year ended For the year endedMarch 31, 2012 March 31, 2011


INCOME

Revenue from sale of goods and services (gross) 20 18,154.35 20,857.78Less : Excise duty and taxes on sale of services 1,184.81 1,638.60Revenue from sale of goods and services (net) 16,969.54 19,219.18Other operating revenue 21 138.89 124.31Other income 22 204.96 117.65

Total income 17,313.39 19,461.14EXPENDITURE

Cost of material consumed 23 7,603.68 11,605.88Cost of seeds 23 7.11 7.34Purchase of stock-in-trade 3,611.74 1,888.20Changes in Inventory of finished goods,work-in-progress and stock-in-trade 24 634.31 69.33Employee benefits expense 25 2,500.48 3,429.98Finance cost 26 189.66 57.84Depreciation and amortisation expense 11 456.46 514.00Other expenses 27 3,222.05 4,107.15

Total expenses 18,225.49 21,679.72

(Loss) before exceptional items and taxation (912.10) (2,218.58)Exceptional items (see note 34) 3,687.26 3,746.46

(Loss) before taxation (4,599.36) (5,965.04)

Tax expenses — —

(Loss) after taxation (4,599.36) (5,965.04)

Earnings per equity share (`) - basic and diluted 28 (4.82) (6.67)

Face value (`) 1.00 1.00

Segment information 29

Related party disclosure 30

Significant accounting policies 43


25

WIMCO LIMITED


Bhavesh DhupeliaPartnerMembership No. 042070

Place : MumbaiDate : 26th April, 2012




CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012For the year ended For the year ended

March 31, 2012 March 31, 2011(` in Lacs) (` in Lacs)

A. Cash flow from operating activities(Loss) before exceptional items and taxation (912.10) (2,218.58)Adjustments for:

Depreciation / amortisation 456.46 514.00Loss on sale of tangible assets (net) 0.38 0.81Provision no longer required written back (42.29) (60.10)Interest income (3.05) (2.56)Interest expenditure 189.66 57.84

Operating (loss)/profit before working capital changes (310.94) (1,708.59)Adjustments for:

Trade and other receivables 14.28 (127.38)Loans and advances (5.82) 35.53Inventories 836.70 365.02Trade and other payables 4,162.20 (245.24)

Cash generated from operations 4,696.42 (1,680.66)Income tax paid (net of refunds) (306.11) (365.15)

Net cash generated from/(used in) operations before exceptional items 4,390.31 (2,045.81)Exceptional items (3,687.26) (3,746.46)

Net cash generated from/(used in) operating activities 703.05 (5,792.27)

B. Cash flow from investing activitiesPurchase of tangible/intangible assets (109.52) (132.68)Proceeds from sale of tangible/intangible assets 37.37 1.20Purchase of long-term investments (0.05) —

Interest received 2.43 3.09

Net cash generated from/(used in) investing activities (69.77) (128.39)

C. Cash flow from financing activitiesProceeds from rights issue of equity shares 5,955.63 —Proceeds from issue of zero coupon preference shares —— 5,000.00Redemption of 5% redeemable cumulative preference shares (5,500.00) —Interest paid (189.95) (58.50)Borrowing from holding/subsidiary company —— 988.02Repayment of borrowings to holding/subsidiary company (830.00) —

Net cash generated from/(used in) financing activities (564.32) 5,929.52

D. Net increase in cash and cash equivalents (A+B+C) 68.96 8.86

E. ReconciliationCash and cash equivalents at the beginning of the year 60.46 51.60Cash and cash equivalents at the end of the year 129.42 60.46

68.96 8.86Cash and cash equivalents comprise of

Cash on hand 7.57 10.47Balances with banks 121.85 49.99

129.42 60.46

Notes :1. The cash flow statement has been prepared under the "Indirect Method" as set out in Accounting Standard - 3

on cash flow statement prescribed in Companies (Accounting Standard) Rules, 2006.2. The following have been considered under financing activities : - Cash credit/working capital demand loan and other borrowings being source of finance.3. Proceeds from borrowings are shown net of repayments.4. Purchase of fixed assets are shown inclusive of movements in capital work-in-progress.5. Cash and cash equivalents represent cash and bank balances only.

26

WIMCO LIMITED


Bhavesh DhupeliaPartnerMembership No. 042070

Place : MumbaiDate : 26th April, 2012




NOTES TO THE ACCOUNTSAs at As at

March 31, 2012 March 31, 2011(` in Lacs) (` in Lacs)

1. Share capitalAuthorised35,00,00,000 ( 2010-11: 35,00,00,000) Equity shares of ` 1 (2010-11: ` 1) each(see note (B)(I) (a),(c) and (d) below) 3,500.00 3,500.00

113,00,000 (2010-11: 113,00,000) Redeemable preference shares of ` 100 each(see note (B)(I) (d) below) 11,300.00 11,300.00

14,800.00 14,800.00Issued18,84,60,000 (2010-11: 9,42,30,000) Equity shares of ` 1 each (see notes (B)(I)(a),(b), (c) and note (C) below) 1,884.60 942.30

Nil (2010-11: 55,00,000 ) 5% Redeemable cumulative preference shares of` 100 each (see note (B)(II) below) — 5,500.00

50,00,000 (2010-11: 50,00,000) Zero coupon preference shares of` 100 each (see note (B)(III) below) 5,000.00 5,000.00

Subscribed and paid up18,58,55,147 (2010-11: 9,42,30,000) Equity shares of ` 1 each fully paid up(see notes B(I) (a), (b), (c), (d) and note (C) below) 1,858.55 942.30

Nil (2010-11: 55,00,000 ) 5% Redeemable cumulative preference shares of` 100 each fully paid up (see note (B)(II) below) — 5,500.00

50,00,000 (2010-11: 50,00,000) Zero coupon preference shares of` 100 each fully paid up (see note (B)(III) below) 5,000.00 5,000.00

Total 6,858.55 11,442.30

As at As atA) Reconciliation of number of shares March 31, 2012 March 31, 2011

Equity shares No. of Shares ` in Lacs No. of Shares ` in Lacs

Balance as at the beginning of the year 9,42,30,000 942.30 9,42,30,000 942.30Shares issued during the year - rights issue 9,16,25,147 916.25 — —Balance as at the end of the year 18,58,55,147 1,858.55 9,42,30,000 942.305% Redeemable cumulative preference sharesBalance as at the beginning of the year 55,00,000 5,500 55,00,000 5,500Shares redeemed during the year 55,00,000 5,500 — —Balance as at the end of the year — — 55,00,000 5,500Zero coupon preference sharesBalance as at the beginning of the year 50,00,000 5,000 — —Shares issued during the year — — 50,00,000 5,000Balance as at the end of the year 50,00,000 5,000 50,00,000 5,000

B) Rights, preferences and restrictions attached to shares(I) Equity shares:

(a) The Ordinary Shares of the Company, having par value of ` 1/- per share, rank pari passu in all respects including entitlement to dividend.Repayment of capital in the event of winding up of the Company will inter alia be subject to the provisions of the Articles of Associationof the Company and as may be determined by the Company in General Meeting prior to such winding up.

(b) During the year the Company had offered 9,42,30,000 equity shares of ` 1/- each for ` 6.50 per equity share, including premium of ` 5.50per share, to the existing equity shareholders of the Company on rights basis in the ratio of one rights equity share for every one fully paidup equity share held. Of these the Company has allotted 9,16,25,147 shares to the existing shareholders and has offered 26,04,853 unsubscribedshares to Russell Credit Limited at the same price as at the balance sheet date. Unsubscribed shares offered to Russell Credit Limited wereallotted post balance sheet date (i.e. on April 25, 2012). These equity shares shall rank pari pasu in all respects with the existing equity sharecapital of the Company.

(c) Pursuant to the provisions of Section 100 of the Companies Act, 1956, Article 8 of the Articles of Association of the Company and High Courtorder dated February 11, 2005, the issued, subscribed and paid up capital of the Company was reduced from ` 10,400 lakhs to ` 5,720 Lakhsby reducing the paid up value of equity shares by ` 9 per equity share and the amount so cancelled was utilised for reducing the accumulatedlosses as at March 31, 2004 to the extent of ` 4,680 lakhs. To give effect to the above, the composition of the authorised capital was modifiedfrom 5,50,00,000 equity shares of ` 10 each to 55,00,00,000 equity shares of ` 1 each.

(d) Pursuant to the provisions of Section 94 of the Companies Act, 1956, Article 3 of the Articles of Association of the Company, the authorisedshare capital of ` 1,48,00,00,000 comprising 55,00,00,000 equity shares of ` 1/- each and 93,00,000 redeemable preference shares of ` 100/-each, is re-classified into 35,00,00,000 (three thousand five hundred lakhs) equity shares of ` 1 (rupee one) each and 1,13,00,000 (one hundredthirteen lakhs) redeemable preference shares of ` 100 (Rupees One Hundred) each.

(II) 5% Redeemable cumulative preference shares:55,00,000, 5% Redeemable preference shares of ` 100 each were issued during the year 2007 to Russell Credit Limited, the erstwhile holdingcompany. These preference shares were due for redemption on March 15, 2012 but the same was extended upto March 31, 2012 with the consentof Russell Credit Limited. On March 28, 2012 these preference shares were redeemed. Arrears of dividend on these shares were waived by RussellCredit Limited.

(III) Zero coupon preference shares50,00,000, Zero coupon preference shares of ` 100 each, redeemable at 6% premium per annum, were issued during the year 2010 to RussellCredit Limited, the erstwhile holding company. These shares shall be redeemable on or before September 15, 2015. During the year Russell CreditLimited has transferred these shares to ITC Limited.

C) Shares allotted as fully paid up pursuant to contracts for consideration other than cash4,39,08,340 equity shares have been allotted as fully paid up pursuant to contracts for consideration other than cash. Of the equity shares:(i) 12,50,000 equity shares have been allotted pursuant to the scheme of amalgamation of the Assam Match Company Limited with the Company.(ii) 4,22,30,000 equity shares have been allotted pursuant to the scheme of amalgamation of Wimco Boards Limited with the Company.(iii) 1,20,000 and 80,000 equity shares have been allotted pursuant to the agreement with ICICI Bank Limited and trustee of debenture holders

respectively.

27

WIMCO LIMITED

NOTES TO THE ACCOUNTS

As at As atMarch 31, 2012 March 31, 2011

(` in Lacs) (` in Lacs)D) Shares held by holding company and subsidiary of holding company

Equity shares18,24,76,340 (2010-11: Nil) Equity shares of ` 1 each, fully paid upare held by ITC Limited (holding company effective September 29, 2011,was the ultimate holding company in 2010-11) 1,824.76 —Nil (2010-11: 9,12,38,170) Equity shares of ` 1 each, fully paid up were heldby Russell Credit Limited (fellow subsidiary, was the holding company ofWimco Limited till September 28, 2011) — 912.38Preference sharesNil (2010-11: 55,00,000 ) 5% Redeemable cumulative preference shares of` 100 each fully paid up held by Russell Credit Limited (fellow subsidiary, wasthe holding company of Wimco Limited till September 28, 2011) — 5,500.00Nil (2010-11: 50,00,000) Zero coupon preference shares of ` 100 each fullypaid held by Russell Credit Limited (fellow subsidiary, was the holding companyof Wimco Limited till September 28, 2011) — 5,000.0050,00,000 (2010-11: Nil) Zero coupon preference shares of ` 100 each fullypaid held by ITC Limited (holding company effective September 29, 2011, wasthe ultimate holding company in 2010-11) 5,000.00 —


E) Name of shareholders holding more than 5% of the shares of the Company Equity SharesITC Limited (holding company effective September 29, 2011,was the ultimate holding company in 2010-11) 18,24,76,340 —

98.18% —Russell Credit Limited (fellow subsidiary, was the holding companyof Wimco Limited till September 28, 2011) — 9,12,38,170

— 96.82%5% Redeemable cumulative preference sharesRussell Credit Limited (fellow subsidiary, was the holding companyof Wimco Limited till September 28, 2011) — 55,00,000

— 100.00%Zero coupon preference sharesRussell Credit Limited (fellow subsidiary, was the holding company ofWimco Limited till September 28, 2011) — 50,00,000

— 100.00%ITC Limited (holding company effective September 29, 2011, was theultimate holding company in 2010-11) 50,00,000 —

100.00% —

As at As atMarch 31, 2012 (` in Lacs) March 31, 2011 (` in Lacs)

2. Reserves and surplus

Capital reserve 29.96 29.96Capital redemption reserve 500.00 500.00Securities premium

Balance at the beginning of the year 0.27 0.27Add : On issue of equity shares (see note 1(B)(I)(b)) 5,039.38 —Less : Premium on zero coupon preference shares 441.68 0.27

4,597.97 —Revaluation reserve

Balance at the beginning of the year 4,587.14 —Add: On revaluation during the year (see note 11B) — 4,587.14

4,587.14 4,587.14Capital subsidy 14.93 14.93General reserve as per the last balance sheet 6,534.97 6,534.97(Deficit) in the statement of profit and loss

Balance at the beginning of the year (7,367.07) (1,402.03)Add: (Loss) for the year (4,599.36) (5,965.04)

(11,966.43) (7,367.08)Total 4,298.54 4,299.92

3. Long-term borrowings

Unsecured :Loans and advances from related parties

Pavan Poplar Limited (wholly-owned subsidiary) 250.00 280.00Russell Credit Limited (fellow subsidiary, was the holding company ofWimco Limited till September 28, 2011) 200.00 1,000.00

Total 450.00 1,280.00

Terms of repayment of loans and advances

Borrowings Terms of RepaymentPavan Poplar Limited Interest free, repayable by March 31, 2014.Russell Credit Limited Repayable within two years with an interest rate of 9.5% per annum.

(6% per annum from date of loan till February 13, 2012)

28

WIMCO LIMITED




4. Deferred taxDeferred tax liabilities

Difference between book depreciation and depreciation underthe Income Tax Act, 1961 420.58 459.95

Deferred tax assetsOn Unabsorbed depreciation as per Income Tax Act, 1961 682.58 577.45On Disallowance u/s 43B of the Income Tax Act, 1961 159.24 216.35On VRS cost u/s 35 DDA of the Income Tax Act, 1961 1,456.72 764.44On Provision for doubtful debts 152.94 156.59On Long-term capital loss as per Income Tax Act, 1961 223.10 261.63On Business loss as per Income Tax Act, 1961 2,765.04 1,874.18

5,439.62 3,850.64

Net deferred tax asset 420.58 459.95Deferred tax asset (net) recognised * — —

*Deferred tax asset has been recognised only to the extent of the deferredtax liabilities as this amount is considered to be virtually certain of realisation.

5. Other long-term liabilities

Security deposit received from holding company 5,000.00 —Premium on zero coupon preference shares* 441.68 0.27Rent payable 211.00 172.08

5,652.68 172.35

* Premium is payable to ITC Limited (holding company effectiveSeptember 29, 2011, was the ultimate holding company in 2010-11).

6. Long-term provisions

Provisions for employee benefits (see note 25)Provision for leave encashment 87.97 84.53

87.97 84.53

7. Short-term borrowings

Unsecured :Short-term loans and advances from related parties

Pavan Poplar Limited (wholly-owned subsidiary) 25.84 23.30

25.84 23.30

8. Trade payables

Total outstanding dues of micro enterprises and small enterprises (see note 36) — —Total outstanding dues of creditors other than micro enterprises and small enterprises 4,093.59 4,628.04

4,093.59 4,628.04

9. Other current liabilities

Interest accrued but not due on deposits 8.41 8.70Advances from customers 83.96 131.94Deposit from customers 45.06 59.57Employee benefits payable 206.68 295.43Statutory dues payable* 74.07 155.86Rent payable 9.46 6.17

427.64 657.67

*Statutory dues payable includeWealth tax and withholding taxes 49.69 61.55Excise duty, custom duty and service tax 12.31 44.60VAT and Others 12.07 49.71

74.07 155.86

10. Short-term provisions

Provisions for employee benefits (See Note 25)Provision for gratuity 87.77 249.22Provision for leave encashment 1.94 1.29

89.71 250.51

29

WIMCO LIMITED

11B. Based on the valuation report submitted by the approved valuers, during the year 2010-11, the Company revalued the freehold land at Chennai by ` 4,587.14 Lacs and the same has been transferred to revaluation reserve account.11C. The Company has received notice from the Special Tahsildar (Land Acquisition) Thiruvottiyur for compulsory acquisition of certain portion of land at Chennai.


GROSS BLOCK ACCUMULATED DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCKBalance Additions Revaluation Disposal/ Balance As at Charge on account of Disposal/ As at As at As at

as at April 1, during the during the Adjustments as at March 31, April 1, 2011 Depreciation Impairment Held for Sale Adjustments March 31,2012 March 31, March 31,Tangible assets and 2011 year year during the year 2012 for the during the 2012 2011Intangible assets Depreciation Impairment year year Depreciation impairment

Intangible assetsComputer software 289.84 — — — 289.84 208.89 — 46.22 — — — 255.11 — 34.73 80.95Tangible assetsFreehold land(see note 11A below) 12,187.45 — — — 12,187.45 — 167.73 — — — — — 167.73 12,019.72 12,019.72Leasehold land 247.28 — — — 247.28 0.66 246.62 — — — — 0.66 246.62 — —Buildings(see note - 11A below) 6,288.87 12.10 — 2.22 6,298.75 5,738.10 — 22.42 — — 2.04 5,758.48 — 540.27 550.77Plant and machinery 7,014.00 150.60 — 58.93 7,105.67 4,324.12 — 347.85 — — 26.69 4,645.28 — 2,460.39 2,689.88Computers 312.45 1.86 — — 314.31 275.40 — 5.16 — — — 280.56 — 33.75 37.05Office Equipments 207.86 2.95 — — 210.81 143.69 — 8.37 — — — 152.06 — 58.75 64.17Furniture and fittings 620.07 0.52 — 0.07 620.52 377.19 — 22.76 — — 0.06 399.89 — 220.63 242.88Motor cars, lorries,tractors and launches 148.56 23.09 — 25.37 146.28 122.52 — 3.68 — — 20.06 106.14 — 40.14 26.04

2011-12 27,316.38 191.12 — 86.59 27,420.91 11,190.57 414.35 456.46 — — 48.85 11,598.18 414.35 15,408.38 15,711.462010-11 22,496.54 238.40 4,587.14 5.70 27,316.38 10,680.26 414.35 514.00 — — 3.69 11,190.57 414.35Capital work-in-progress 23.38 104.99

15,431.76 15,816.45


(`in Lacs) (` in Lacs)12. Non-current investmentsUnquotedTrade investmentA. Investment in government securities

National savings certificates (pledged with various Mandi Samitis) 0.06 0.010.06 0.01

Non-trade investmentB. Investment in equity instruments

(I) Investments in wholly-owned subsidiary companiesPavan Poplar Limited 599.06 599.0655,10,004 ( 2010-11: 55,10,004 ) equity shares of ` 10 each, fully paid(including 6 Equity Shares held by nominees)Prag Agro Farm Limited 381.90 381.9038,00,020 (2010-11: 38,00,020 ) equity shares of ` 10 each, fully paid(including 6 equity shares held by nominees)Less : Provision for diminution (381.90) (381.90)

599.06 599.06(II) Investments in other companies

Woodlands Multispeciality Hospital Limited (Formerly known asWoodlands Hospital & Medical Research Centre Limited) 22, (2010-11 : 22 )1/2% debentures of ` 100 each fully paid 0.02 0.02Mirage Advertising and Marketing Limited 12,488 (2010-11 : 12,488 )equity shares of ` 10 each fully paid 1.25 1.25Bilaspur Cane Development Corporation Limited100 (2010-11: 100 ) equity shares of ` 10 each fully paid 0.01 0.01Less : Provision for diminution (1.25) (1.25)

0.03 0.03Total non-current investments (at cost) - unquoted 982.30 982.25Less : aggregate provision for diminution in value (383.15) (383.15)

599.15 599.10

13. Long-term loans and advancesUnsecured, considered goodLoan to subsidiary company (Prag Agro Farm Limited) 788.85 762.46Advances recoverable in cash (employee advances, contingent rent etc.) 13.34 14.50

802.19 776.96

30

WIMCO LIMITED

11. Fixed assets(` in Lacs)

11A. Assets given on operating lease

Tangible asset Year Ended March 31, 2012 Year Ended March 31, 2011Gross Block Accumulated Net Block Charge for Gross Block Accumulated Net Block Charge for

Depreciation the year Depreciation the yearFreehold Land 8,027.68 — 8,027.68 — — — — —Buildings 1,080.57 1,012.41 68.16 2.57 — — — —TOTAL 9,108.25 1,012.41 8,095.84 2.57 — — — —

(` in Lacs)




14. Other non-current assets

Other bank balances (see note 17) 0.25 0.25

0.25 0.25

15. Inventories

Raw materials (Includes in transit, ` 14.32 Lacs (2010-11: ` 58.30 Lacs))* 912.22 969.58Work-in-progress - (including plantations)* 445.72 441.62Finished goods - manufactured* 344.88 986.08Finished goods - traded 12.35 9.56Stores and spares* 584.55 729.58

2,299.72 3,136.42* Net of obsolescence


Trade receivables outstanding for a period exceeding six months from thedate they are due for payment:

Unsecured, considered good 61.20 52.71Unsecured, considered doubtful 471.43 471.43

Less: Provision for doubtful debts (471.43) (471.43)61.20 52.71

Others 259.48 282.25

Total 320.68 334.96

17. Cash and cash equivalents

Balances with banks:

- In Current accounts 38.77 39.88- Cash credit (including working capital demand loan) with banks* 82.30 9.33

Cash on hand 7.57 10.47Other bank balances

In restricted bank accounts (non-current) 0.25 0.25Deposit of original maturity of more than 12 months (current) 0.78 0.78Less: Amounts disclosed under non-current assets (see note 14) (0.25) (0.25)

129.42 60.46

*Secured by hypothecation of all stock-in-trade present and future of the Company including raw materials, finished goods, trading products and stock-in-process and present and future book debts, outstanding receivables, claims and bills.

18. Short-term loans and advances

Other loans and advances - unsecured, considered good unless otherwise statedSundry advances to suppliers, employees, etc.

Considered good 346.29 277.01Considered doubtful 26.83 26.83

373.12 303.84Less: Allowance for bad and doubtful loans and advances (26.83) (26.83)

346.29 277.01Prepaid expenses 16.05 96.72Advances with government and public bodies# 225.94 323.56Deposits

Considered good 346.29 256.68Considered doubtful 11.10 11.10

357.39 267.78Less: Provision for doubtful deposits (11.10) (11.10)

346.29 256.68Current taxation (net of provisions ` 344.06 Lacs 2010-11: ` 344.06 lacs) 1,454.45 1,148.34Fringe benefits tax (net of provisions ` 49.80 Lacs 2010-11 : ` 49.80 Lacs) 10.85 10.85

2,399.87 2,113.16#Advances with government and public bodiesExcise duty, custom duty and service tax 151.59 271.36VAT 74.35 52.20

225.94 323.56

19. Other current assets

Interest accrued but not due on electricity deposits 1.48 0.86

1.48 0.86

31

WIMCO LIMITED


Year Ended Year EndedMarch 31, 2012 March 31, 2011


20. Sale of goods and services

Sale of goodsFinished goods (including plantations) 14,146.52 18,677.55Traded goods 3,957.50 2,104.49

Sale of services 50.33 75.74

18,154.35 20,857.78

21. Other operating revenue

Income from sale of

-Scrap 69.68 81.71-Stores and spares 20.79 6.26-Raw materials 10.09 7.18

Income from sale of energy 35.74 17.88Insurance claims 2.59 11.28

138.89 124.31

22. Other income

Interest income on deposits and others 3.05 2.56Foreign exchange gain (net) 6.08 3.51Rent and other charges realised* 153.54 51.48Provisions / liabilities written back as no longer required 42.29 60.10

204.96 117.65

* Includes income from operating lease of land and officebuilding premises at various locations

23. Cost of material consumed

(a) Raw materials including packing materials consumedOpening stock 969.58 1,183.09Purchases 7,546.32 11,392.37Less: Closing stock (912.22) (969.58)Cost of Raw materials including packing materialsconsumed (see note 39) 7,603.68 11,605.88

(b) Cost of seeds 7.11 7.34

Total 7,610.79 11,613.22

24. Changes in Inventory of finished goods,work-in-progress and stock-in-trade

(Increase)/decrease in stocksStock at the end of the year

Finished goods 344.88 986.08Work-in-progress (including plantations) 445.72 441.62Stock-in-trade 12.35 9.56

Total (A) 802.95 1,437.26

Less: Stock at the beginning of the yearFinished goods 986.08 785.31Work-in-progress (including plantations) 441.62 711.30Stock-in-trade 9.56 9.98

Total (B) 1,437.26 1,506.59

(Increase)/decrease in stocks (B-A) 634.31 69.33

25. Employee benefits expense

Salaries, wages and bonus 1,852.87 2,653.61Contribution to provident and other funds 479.89 502.14Workmen and staff welfare expenses 168.35 274.95

2,501.11 3,430.70Less: Recoveries (0.63) (0.72)

2,500.48 3,429.98

In accordance with Accounting Standard 15, the undiscounted amount of short-term compensated absences in the nature of unavailed leave expectedto be paid in exchange for services rendered amounting to ` 14.80 lacs (2010-11: ` 27.58 lacs) has been recognised in the statement of profit andloss for the year.

32

WIMCO LIMITED

33

WIMCO LIMITED


For the year ended31st March, 2009Net Asset/(Liability)

recognized in Balance Sheet(including experienceadjustment impact)

For the year ended31st March, 2012



Gratuity LeaveEncashment Gratuity Leave

Encashment Gratuity LeaveEncashment Gratuity

LeaveEncashment

1

2

3

Present Value of Defined

Benefit Obligation

Fair Value on Plan assets

Status [Surplus/(deficit)]

(` in Lacs)

(` in Lacs)

367.47 89.93 763.22 85.83 1,066.53 110.90 951.89 94.21

279.70 — 514.01 — 969.37 — 956.07 —

(87.77) (89.93) (249.21) (85.83) (97.16) (110.90) 4.18 (94.21)

There are no experience adjustments of plan assets / obligations as at March 31, 2012

A. Amounts recognised as an expense ` 82.83 lacs (2010-11: ` 78.76 lacs) for leave encashment in "contribution to provident and other funds".B. Basis used to determine expected rate of return on assets:

The Gratuity scheme is invested in a Group-cum-life assurance cash accumulation policy offered by Life Insurance Corporation of India (LIC). Theinvested return earned on the policy comprises bonuses declared by LIC having regard to LIC's investment earnings. The information on the allocationof the fund into major asset classes and major class are not readily available. We understand that expected return on each LIC's overall portfolio ofassets 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 suchas supply and demand in the employment market.Provident fund liability:Eligible employees receive benefits from a provident fund, wherein, both the employee and the Company make monthly contributions equal to aspecified percentage of the employee's salary. The company contributed ` 114.46 Lacs (including shortfall of ` 26.53 Lacs) and ` 164.48 Lacs (includingshortfall of ` 10.51 Lacs) towards provident fund during the year ended March 31,2012 and March 31, 2011, respectively. The contributions otherthan for the employees of erstwhile Wimco Seedlings Limited, are made to a Trust administered by the Company. Pursuant to the Guidance Note onValuation of Interest rate Guarantees on Exempt Provident Fund issued by the Institute of Actuaries of India during the year, based on an actuarialvaluation at March 31, 2012 in this regard, plan assets at year end, at fair value stands at ` 2309.25 Lacs and present value of defined obligation atyear end is ` 2303.74 Lacs. The key assumptions include: (a) Government of India bond yield at 8.57%; (b) Expected guaranteed interest rate at 8.25%;and (c) Remaining term of maturity at 9 years.

Defined Benefit Plans

Gratuity Leave Encashment(Funded) (Unfunded)

2011-12 2010-11 2011-12 2010-11

Change in obligation during the year

1. Obligation at the beginning of the year 763.22 1,066.52 85.83 110.902. Service cost 18.79 41.93 14.13 32.093. Interest cost 52.47 85.49 5.72 8.994. Actuarial (gains) / losses 241.87 143.14 31.87 37.685. Benefits’ payments (708.88) (573.86) (47.62) (103.83)

6. Obligations at the end of the year 367.47 763.22 89.93 85.83

Change in plan assets

1. Plan assets at the beginning of the year 514.01 969.37 — —2. Expected return on plan assets 30.57 88.58 — —3. Contribution by employers 444.00 32.00 — —4. Actual benefits paid (708.88) (573.86) — —5. Actuarial gains / (losses) — (2.09) — —

6. Plan assets at the end of the year 279.70 514.00 — —

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 279.70 514.01 — —2. Present value of the defined benefit obligation at the end of the year 367.47 763.22 89.93 85.83

3. Asset /(liability) recognised in the balance sheet (87.77) (249.21) (89.93) (85.83)

Cost for the period

1. Service cost 18.79 41.93 14.13 32.092. Interest cost 52.47 85.49 5.72 8.993. Return on plan assets (30.57) (88.58) — —4. Actuarial (gains) / losses 241.87 143.14 31.87 37.68

Net cost 282.56 181.98 51.72 78.76Investment details of plan assetsThe Gratuity Scheme is invested in a Group-cum-Life Assurance cashaccumulation policy offered by Life Insurance Corporation (LIC) of India

Actual return on plan assets (30.57) (88.58) — —Actuarial Assumptions:

1. Discount Rate 8.25% 8.00% 8.25% 8.00%2. Salary escalation 4.00% 4.00% 4.00% 4.00%3. Expected return on plan assets 9.00% 9.00% — —



26. Finance cost

Interest expense :

Interest 185.25 55.50

Other borrowing costs 4.41 2.34

189.66 57.84

27. Other expenses

Consumption of stores and spare parts(including provision made for obsolete spares) 412.36 671.24

Power and fuel 439.04 765.27

Rent* 277.33 226.97

Repairs

- Buildings 46.37 37.44

- Machinery 85.65 124.38

- Others 56.46 80.00

Rates and taxes 120.70 118.80

Insurance 42.70 72.23

Maintenance and upkeep 144.31 101.73

Outward freight and handling charges 394.36 685.60

Warehousing charges 23.56 27.80

Advertising and sales promotion charges 25.15 41.02

Commission to selling agents 0.77 0.12

Bank charges 5.46 10.40

Information technology services 82.07 138.36

Travelling and conveyance 168.59 188.77

Training and development 1.95 5.52

Professional fees 173.49 114.36

Postage and telephone charges 29.91 37.35

Printing and stationery 15.91 16.49

Loss on sale of fixed assets (net) 0.38 0.81

Auditors' remuneration (see note -31) 16.99 16.30

Directors' sitting fees 0.55 0.50

Plantation, Cultivation and Harvesting Charges 193.06 151.75

Miscellaneous expenses 464.93 473.94

Total 3,222.05 4,107.15

*Leases: Where the Company is a lessee/ licensee

The Company has taken various office and godown premises under operating lease on leave and license agreements. These are not non-cancellable andrange between 11 months and 3 years under leave and license or longer for other leases

28. Earnings per share

(Loss) after taxation (4,599.36) (5,965.04)

Arrears of preference dividend and including preferencedividend tax (see note 1(B)(iii)) — 320.67

(Loss) attributable to equity shareholders (4,599.36) (6,285.71)

Weighted average number of equity shares 95,481,710 94,230,000

Earning per share - basic and diluted (`) (4.82) (6.67)

Nominal value of an equity share (`) 1.00 1.00


34

WIMCO LIMITED

4. Directors of the Company

Managing director VM Rajasekharan

No remuneration is paid by the Company to the Managing Directorin accordance with the terms of his appointment.

3. Other related Parties with whom the Company had transactions

Related Party Relationship

ITC Infotech India Limited Fellow subsidiaryRussell Credit Limited Fellow subsidiary, was the holding

company of Wimco Limited tillSeptember 28, 2011

30. Related party disclosures

1. Parties exercising control over the Company:


ITC Limited Holding company effective September29, 2011, was the ultimate holdingcompany in 2010-11

Russell Credit Limited Fellow subsidiary, was the holdingcompany of Wimco Limited tillSeptember 28, 2011

35

WIMCO LIMITED

29. Segment information for the year ended March 31, 2012 (` in lacs)

Information about primary March 31, 2012 March 31, 2011business segments Match Engineering Forestry Unallocated Total Match Engineering Forestry Unallocated TotalRevenueExternal 15,285.86 1,676.85 1,191.64 18,154.35 18,478.00 1,404.25 975.53 20,857.78Inter-segment 296.57 296.57 — — 329.32 329.32Total 15,285.86 1,676.85 1,488.21 — 18,450.92 18,478.00 1,404.25 1,304.85 — 21,187.10Less: Eliminations on accountof inter segment revenue (296.57) (296.57) (329.32) (329.32)Total revenue 15,285.86 1,676.85 1,191.64 — 18,154.35 18,478.00 1,404.25 975.53 — 20,857.78ResultSegment result (538.63) 236.68 821.09 519.14 (2,201.19) 173.84 736.45 (1,290.90)Unallocated expenditure netof unallocated income (1,244.63) (1,244.63) (872.40) (872.40)Operating Profit / (Loss)before exceptional items (538.63) 236.68 821.09 (1,244.63) (725.49) (2,201.19) 173.84 736.45 (872.40) (2,163.30)

Exceptional Item(see note 34) (3,687.26) (3,687.26) (3,746.46) (3,746.46)

Operating Profit / (Loss) afterexceptional items (538.63) 236.68 821.09 (4,931.89) (4,412.75) (2,201.19) 173.84 736.45 (4,618.86) (5,909.76)

Interest expenses — — — (189.66) (189.66) (57.84) (57.84)Interest income 0.40 — 0.10 2.55 3.05 2.56 2.56Provision for taxation — —Net Profit / (Loss) (538.23) 236.68 821.19 (5,119.00) (4,599.36) (2,201.19) 173.84 736.45 (4,674.14) (5,965.04)Other InformationSegment assets 6,635.39 567.45 1,996.54 12,785.14 21,984.53 8,944.15 681.16 1,935.02 11,278.30 22,838.63Segment liabilities 1,043.05 302.26 414.30 9,067.82 10,827.44 2,102.31 304.93 472.21 4,216.96 7,096.41Capital expenditure 39.68 6.82 22.19 40.83 109.51 109.77 5.73 1.79 15.40 132.68Depreciation 337.17 4.75 3.66 110.88 456.46 406.07 8.65 3.33 95.95 513.99

March 31, 2012 March 31, 2011India Outside India Total India Outside India Total

Sales 17,898.21 256.15 18,154.35 20,573.15 284.64 20,857.79Carrying Amount of Segment Assets 21,984.53 — 21,984.53 22,778.81 — 22,778.81Capital Expenditure 109.51 — 109.51 132.68 — 132.68

Unallocated income and expenditure relate mainly to the Corporate Office as also the Unallocated assets and Liabilities which include investments made centrally at the Corporate Office.

Information about Secondary Business SegmentsRevenue by Geographical Segments

(i) The business segment has been considered as the primary segment. The Company is organised into three main business segments: Match, Engineering andForestry. The segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the organisationstructure 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 notbeen identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments for some units. The Companytherefore believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities (including capital expenditure incurredduring 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 reasonablebasis.

2. Parties over whom Company exercises control:


Pavan Poplar Limited Subsidiary Company (Wholly owned)Prag Agro Farm Limited Subsidiary Company (Wholly owned)


36

WIMCO LIMITED

` in Lacs

ULTIMATE HOLDING HOLDING COMPANY SUBSIDIARY COMPANIES Fellow Subsidiaries TotalCOMPANY

ITC Ltd.* RUSSELL CREDIT Ltd.* ITC Limited * PPL PAFL RCL* ITC Infotech India Ltd.

2011-12 2010-11 2011-12 2010-11 2011-12 2011-12 2010-11 2011-12 2010-11 2011-12 2011-12 2010-11 2011-12 2010-11

Sale of goodsand services 7,070.07 18,536.43 8,405.84 2.05 5.35 4.14 4.88 15,482.10 18,546.66

Purchase of rawmaterials andcomponents 362.89 1,247.04 367.02 65.87 306.78 795.78 1,553.81

Purchase of services 0.40 1.40 — 51.97 98.22 52.37 99.62

Purchase of fixed assets 26.54 26.54 —

Expenses reimbursed 102.02 603.23 137.26 2.61 3.96 0.19 15.31 242.09 622.51

Interest Paid 56.85 55.50 128.39 185.25 55.50

Expenses recovered — 0.14 5.59 0.53 0.85 12.61 38.60 18.73 39.59

Rent received 47.93 51.48 126.97 174.89 51.48

Loans and advances given during the year 32.14 55.02 32.14 55.02

Receipt towardsrepayment of loansand advances given 5.75 28.51 5.75 28.51

Outstanding loans and advances (Dr) 788.85 762.46 788.85 762.46

Loans and advancestaken during the year 37.57 127.10 4,300.00 4,000.00 210.49 2.45 1.33 200.00 4,750.50 4,128.43

Repayment of loans and advances bythe Company 15.88 330.61 3,000.00 325.11 29.91 13.30 5,300.00 5,670.90 3,343.91

Unsecured loans (Cr) 1,000.00 275.84 303.30 200.00 475.84 1,303.30

Deposits receivedduring the year 5,000.00 5,000.00 —

Outstanding receivables 87.06 59.53 59.53 87.06

Outstanding payables 126.95 5,483.62 82.87 82.87 5,566.49 209.82

Advance payable 2,567.08 2,474.14 2,474.14 2,567.08

Issue of preference shares 5,000.00 — 5,000.00

Redemption of 5%redeemable cumulativepreference shares 5,500.00 5,500.00 —

Proceeds from rightsissue of equity shares 5,930.48 5,930.48 —

* Refer 1 above



31. Auditors' remuneration Payments to the auditor as (` in Lacs) (` in Lacs)a. Audit fees 15.50 15.50b. Out-of-pocket expenses 1.49 0.75Total 16.99 16.25

32. Contingent liabilities and commitments (to the extent not provided for)Contingent liabilities

1. Claims against the company not acknowledged as debts:A. Income tax matters relating to allowability of expenses,

unabsorbed depreciation and brought forward losses, etc. 13.56 1,048.71B. Excise duty, sales tax and indirect taxes claims disputed

relating to issues of applicability and classification 421.44 360.85C. Local authority taxes / Cess/ Royalty on property, utilities etc.

disputed relating to issues of applicability and determination 380.53 342.09D. Third party claims arising from disputes relating to contracts 474.75 400.51E. Other matters 45.91 66.41

1,336.19 2,218.572. Other matters for which the Company is contingently liable

A. Test bonds / special valuation bonds equivalent to CIF Valueof exports of certain raw materials in respect of which additionalliability of custom duty is not likely to exceed the amount. 241.00 241.00

B. Claims have been filed by farmers in respect of disputes under the WIMCO NABARD Poplar Scheme. 19.65 19.65

5. Transaction with Related Parties

C. The Company had issued ‘Legal Agreement-Undertaking’ in favourof the President of India acting through the Director General of ForeignTrade, Ministry of Commerce, and given declarations under the amendedprocedures of the Export Import Policy 1992-1997 and issued bondsto the President of India acting through the Assistant Commissionerof Customs, Mumbai, aggregating ` 235.35 lacs (2010-11: ` 235.35 lacs)where necessary formalities and entries have not been completed. 1,362.62 1,362.62

2,959.46 3,841.84Commitments

Arrears of dividend on redeemable cumulative preference shares(excluding dividend tax). The entire amount of dividend has beenwaived during the year 2011-12. — 570.34The Company has issued letter of financial support to one of itssubsidiary company, viz. Prag Agro Farm Limited.

— 570.34Total of contingent liability and commitments 2,959.46 4,412.18


33. The Company suspended operations in its unit at Dhubri, Assam in anearlier year. The Company has provided accelerated depreciation onfixed assets (excluding land) aggregating to ` Nil (2010-11: ` 43.67lacs) and made provision for inventories of stores and spares aggregating` Nil (2010-11: ` 34.91 lacs).

34. The Company has completed a voluntary separation scheme that hasbeen accepted by all its workmen during the year at its Kolkata factoryand during the financial year 2010-11 at its Chennai and Ambarnathfactories. Consequently, the Safety Matches operations at these unitsstand suspended.The Company is evaluating various options for the utilization of itsplant & machinery and inventory lying at these factories as also thealternate use for its land and building at these locations in order tooptimise value. The value of land and buildings at these locations,amounting to ` 11,503.48 Lacs (2010-11: ` 11,677.90 lacs) are nowincluded under Unallocated Assets, while the restructuring costs incurred

to get these assets released for alternate use have been included underUnallocated Expenditure in Note 29–Segment Information.

35. The order passed by the District Magistrate authorising the Stateauthorities to take possession of the land leased to Pavan Poplar Limitedand Prag Agro Farm Limited, subsidiaries of the Company, has beenstayed by the order of the High Court. In the circumstances, no provisionhas been made for advances to subsidiaries.

36. Micro, small and medium scale business entities:There are no Micro, Small and Medium Enterprises, to whom theCompany owes dues, which are outstanding for more than 45 daysduring the year and as at March 31, 2012 and March 31, 2011. Thisinformation as required to be disclosed under the Micro, Small andMedium Enterprise Development Act, 2006, has been determined tothe extent such parties have been identified on the basis of informationavailable with the Company.



37. CIF value of imports

Raw materials 627.26 819.20

38. Expenditure in foreign currency

Foreign travel 2.71 1.76

39. Details of consumption and purchases

(a) Details of raw materials/packing materials consumedWood 1,798.57 2,408.81Splints and veneers 1,257.13 2,411.02Card board and paper 1,888.69 3,552.15Chemicals 1,259.51 2,494.81Others 1,399.78 739.09Total 7,603.68 11,605.88

(b) Value of imported and indigenous materials consumedRaw materialsImported 654.25 1,077.82Indigenous 6,949.43 10,528.06

7,603.68 11,605.88Stores and spare partsImported 34.47 0.12Indigenous 404.57 765.15

439.04 765.27(c) Purchase of traded goods

Matches 3,560.44 1,888.20Machines 51.30 —Total 3,611.74 1,888.20

40. Earnings in foreign exchange

Exports of goods calculated on FOB basis 278.01 277.50

41. Unhedged foreign currency exposure not covered by forward contractAmount Amount

(` in Lacs) (USD in Lacs) (` in Lacs) (USD in Lacs)Trade receivables 5.62 0.11 42.92 0.98

42. Prior period comparatives

The previous year’s figures have been re-grouped / re-arranged as necessary to conform to the present year’s classification consequent to notificationof Revised Schedule VI under Companies Act, 1956 [see note 43 (1)].

37

WIMCO LIMITED

38

WIMCO LIMITED

43 - Significant Accounting Policies

1. Basis of Preparation of Financial StatementsThe financial statements have been prepared and presented under thehistorical cost convention (except for fixed assets revalued in earlieryears), on the accrual basis of accounting and in accordance with theprovisions of the Companies Act, 1956 (’the Act’) and the accountingprinciples generally accepted in India and comply with the accountingstandards (’AS’) prescribed in the Companies (Accounting Standards)Rules, 2006 issued by the Central Government, in consultation withthe National Advisory Committee on Accounting Standards, to theextent applicable.During the year ended March 31, 2012 (effective April 1, 2011), therevised Schedule VI notified under the Act has become applicable toWimco Limited (’the Company’) for preparation and presentation ofits financial statements. Except for accounting for dividend oninvestments in subsidiary companies (See Note 8 below), the adoptionof revised Schedule-VI does not impact recognition and measurementprinciples followed for preparation of financial statements. All assetsand liabilities have been classified as current or non-current as per theCompany’s normal operating cycle and other criteria set out in therevised Schedule VI.

2. Use of EstimatesThe preparation of financial statements in conformity with generallyaccepted accounting principles in India requires management to makeestimates and assumptions that affect the reported amounts of assetsand liabilities and disclosure of contingent liabilities on the date of thefinancial statements and the reported amounts of revenue and expensesfor the period. Actual results could differ from those estimates. Anyrevision to accounting estimates is recognised prospectively in currentand future periods.

3. Fixed Assets / Depreciation/ ImpairmentTangible AssetsI. Fixed assets are stated at cost of acquisition less accumulated

depreciation and impairment loss except in case of certain FreeholdLand 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 followingannual rates:

Nature of Assets Rates %Building 1.63 to 3.34Plant, machinery and factory equipment 4.75 to 10.34Furniture and fittings/office equipment 6.33Computers 31.67Motor cars, lorries, tractors and launches 7.07 to 11.31

Assets individually costing ` 5,000.00 or less are fully depreciatedin the year of purchase.

II. Leasehold Land is carried at cost less accumulated amortisationand impairment loss, if any. Accordingly, expenditure incurred onleasehold land is amortised on a straight-line basis over the remainingperiod of the lease.

III. Assets identified as held for disposal are stated at lower of theirbook value and estimated net realisable value.

Intangible AssetsIV. Application software, which is not an integral part of the related

hardware, is shown as intangible asset and amortised on a straightline basis over its useful life, not exceeding 5 years, as determinedby the management.

ImpairmentV. In accordance with AS 28, where there is an indication of impairment

of the Company’s assets, the carrying amounts of the Company’sassets are reviewed at each balance sheet date to determine whetherthere is any impairment. The recoverable amount of the assets (orwhere applicable, that of the cash generating unit to which theasset belongs) is estimated at the higher of its net selling price andits value in use. Value in use is the present value of estimated futurecash flows expected to arise from the continuing use of the assetand from its disposal at the end of its useful life. An impairmentloss is recognised whenever the carrying amount of an asset or acash-generating unit exceeds its recoverable amount. Impairmentloss is recognised in the Profit and Loss Account.

4. Valuation of InvestmentsInvestments, which are readily realisable and intended to be held fornot more than one year from the date on which such investments aremade, are classified as current investments. All other investments areclassified as long-term investments.Long-term investments are stated at cost. A provision for diminutionis made to recognise a decline, other than temporary, in the value oflong-term investments. Current investments are carried at lower ofcost and market value.

5. Valuation of Inventories and Plantation Work-in-ProgressInventories are valued at the lower of cost and net realisable value.Inventories of Raw Materials, Stores and Spares are valued on a weightedaverage cost basis.Finished and semi finished goods include cost of conversion and othercosts incurred in bringing the inventories to their present location and


condition. Semi finished goods are valued based on stage of completionas certified by management.Entire Transplants included in semi-finished goods are valued at cost.Cost represents direct expenses including cost of Entire Transplantspurchased specifically for multiplication and other direct costs.

Plantation Work-in-Progress:(i) In valuing poplar trees included under semi finished products, no

adjustment is made to the total cost of trees on account of undeveloped /diseased trees, being normal loss during the period of maturity ofplantation (based on a technical estimate) except that realisation /insurance claim for such trees is reduced from the total cost. Every year,plantation cost already incurred is compared with net realisable valuewhich is determined on the basis of estimated selling price less estimatedcost likely to be incurred in future for bringing the plantation to maturityand the cost necessarily to be incurred in order to make sale. NetRealisable Value is arrived at based on standard average yield ofmatchwood per tree and the prevailing market price for matchwoodof similar quality/contracted price. The yield is computed based on anevaluation carried out by the Company’s technical expert.Cost includes all direct and indirect expenses in respect of the poplarplantation.Further, 75% of net realisable value of intercropping, waste, etc isreduced from the above cost because entire farm cost is first added tocost of plantation.

(ii) Agricultural produce/standing crops and plants are valued at 75% oftheir net realisable value.

(iii) Fuel wood arising from poplar trees and lying in stock is valued at 75%of their net realisable value.

(iv) The Company has considered an average yield of 0.22 cmh per treebased on the evaluation carried out by the Company’s technical expert.

6. Foreign Currency TransactionsTransactions denominated in foreign currency are recorded at theexchange rate prevailing on the date of the transactions. Exchangedifferences arising on foreign exchange transactions settled during theyear are recognized in the statement of profit and loss for the year.Monetary assets and liabilities denominated in foreign currencies as atthe balance sheet date are translated at the closing exchange rates onthat date; the resultant exchange differences are recognised in thestatement of profit and loss.

7. Revenue RecognitionRevenue from sale of goods is recognised on transfer of all significantrisks and rewards of ownership to the buyer. Sales are accounted forinclusive of excise duty but net of sales tax and discounts.Service income is accrued as services are rendered, based on respectivecontractual terms. Consultancy income is recognized on renderingservice in accordance with related contracts with the customers.Revenue from interest is accrued taking into account the amountoutstanding, period and the rate applicable.Lease/Rental Income is recognised on a straight-line basis over theperiod of the related agreement.Dividend income is recognised when the right to receive dividend isestablished. Accordingly, dividend declared by subsidiary companyafter the reporting date but pertaining to the current year is no longerrecognised during the year as was mandated by the pre-revised Schedule VI.As no dividend has been declared by the Company’s subsidiaries,there is no impact of this change.

8. Taxes on IncomeIncome tax expense comprises current tax (i.e. amount of tax for theperiod determined in accordance with the Income Tax law) and deferredtax charge or credit (reflecting the tax effects of timing differencesbetween accounting income and taxable income for the period). Thedeferred tax charge or credit and the corresponding deferred taxliabilities or assets are recognised using the tax rates and tax laws thathave been enacted or substantively enacted by the balance sheet date.Deferred tax assets are recognised only to the extent there is reasonablecertainty that the assets can be realised in future; however, where thereis unabsorbed depreciation or carried forward loss under taxation laws,deferred tax assets are recognised only if there is virtual certainty ofrealisation of such assets. Deferred tax assets are reviewed as at eachbalance sheet date and written down or written up to reflect theamount that is reasonably/virtually certain (as the case may be) to berealized.

9. Employee benefitsShort-term employee benefitsAll employee benefits payable wholly within twelve months of renderingthe service are classified as short-term employee benefits. These benefitsinclude compensated absences such as paid annual leave. Theundiscounted amount of short-term employee benefits expected to bepaid in exchange for the services rendered by employees is recognizedduring the period.Post-employment benefitsIn respect of the employees of the erstwhile WIMCO Seedlings Limited,the contribution towards provident fund is deposited in a governmentadministered fund which is a defined contribution scheme. Thecontribution paid/payable under the scheme is recognised as expenseduring the period in which the employee renders the related service.


10. Borrowing CostsBorrowing costs specifically relatable to the acquisition of qualifyingfixed assets are capitalised as part of the cost of fixed assets. Otherborrowing costs are charged to revenue.

11. Provisions and ContingenciesA provision is created where there is a present obligation as a result ofa past event that probably an outflow of resources and a reliableestimate can be made of the amount of the obligation.A contingent liability is disclosed when there is a possible or a presentobligation that may, but probably will not, require an outflow ofresources. Where there is a possible obligation or a present obligationand the likelihood of outflow of resources is remote, no provision ordisclosure is made.

12. LeasesThe Company has various operating leases, principally for propertiesand office space, with various renewal options. Rental expense inagreements 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 theperiod attributable to the equity shareholders by the weighted averagenumber of equity shares outstanding during the reporting period.Diluted EPS is computed by dividing the net profit for the periodattributable to the equity shareholders by the weighted average numberof equity and equivalent dilutive equity shares outstanding during theperiod, except where the results would be anti-dilutive.

14. Research and development costsRevenue expenditure incurred on different projects is charged toappropriate expense heads in the period incurred and amounts recoveredfrom the customer form part of the consultancy income.

Signatures to the Notes forming part of the Balance Sheet and Statementof Profit and Loss.

1. Name of the Subsidiary Company PAVAN POPLAR LIMITED PRAG AGRO FARM LIMITED

2. Financial Year of the SubsidiaryCompany ended March 31, 2012 March 31, 2012

3. Number of Shares held in Subsidiary 55,10,004 Equity Shares 38,00,020 Equity Shares ofof ` 10 each. (Including ` 10 each (Including 6 Equity6 Equity Shares held by nominees Shares held by nominees of Wimco of Wimco Limited) Limited)

4. Total issued Share Capital of the Equity Shares - 55,10,004 Equity Shares - 38,00,020Subsidiary Company Shares of ` 10 each. Shares of ` 10 each.

5. Percentage of Shares held in thesubscribed capital of the Subsidiary Equity Shares - 100% Equity Shares - 100%(including shares held by nominees)

6. The net aggregate amount so far asit concerns members of the Companyand is not dealt with in theCompany’s accounts of Subsidiary(i) Profit/(Loss) for the financial year March 31, 2012 March 31, 2012

ended (` in lacs) ` 3.32 ` 6.18(ii) Profits/(Losses) for the previous

financial years of the Subsidiarysince it became the Company’sSubsidiary (` in lacs) ` 139.60 ` (748.92)

7. The net aggregate amount so far asit concerns members of the Companyand is dealt with in the Company’saccount of Subsidiary(i) Profit for the financial year ended March 31, 2012 March 31, 2012

(` in lacs) Nil Nil(ii) Profits for the

previous financial years ofthe Subsidiary since it became theCompany’s Subsidiary(` in lacs) Nil Nil

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES

In respect of other employees, the contributions are made to Companymanaged provident fund. The interest rate payable by the Trust to thebeneficiaries every year is being notified by the Government. TheCompany has an obligation to make good the shortfall, if any, betweenthe return from the investments of the Trust and the notified interestrate.The Company’s approved Superannuation Pension Scheme applicableto certain employees is a defined contribution plan funded with theLife Insurance Corporation of India (LIC). The annual contributionsmade under the policy are recognised as an expense in the statementof profit and loss during the period in which the employee renders therelated service.The Company’s gratuity benefit scheme is a defined benefit plan fundedthrough a policy taken with the LIC. The Company’s net obligation inrespect of the gratuity benefit scheme is calculated by estimating theamount of future benefit that employees have earned in return for theirservice in the current and prior periods; that benefit is discounted todetermine its present value, and the fair value of any plan assets isdeducted.The present value of the obligation under such defined benefit planis determined based on actuarial valuation using the Projected UnitCredit Method, which recognizes each period of service as giving riseto additional unit of employee benefit entitlement and measures eachunit separately to build up the final obligation.The obligation is measured at the present value of the estimated futurecash flows. The discount rates used for determining the present valueof the obligation under defined benefit plan are based on the marketyields on Government securities as at the balance sheet date.The obligation is compared with the fund balance with LIC and wherethe calculation results in a benefit to the Company, the recognizedasset is limited to the net total of any unrecognised actuarial losses andpast service costs and the present value of any future refunds from thefund or reductions in future contributions to the fund. Actuarial gainsand losses are recognised immediately in the Statement of Profitand Loss.Other Long-term employment benefitsCompensated absences which are not expected to occur within twelvemonths after the end of the period in which the employee renders therelated services are recognised as a liability at the present value of thedefined benefit obligation at the balance sheet date. The discount ratesused for determining the present value of the obligation under definedbenefit plan are based on the market yields on Government securitiesas at the balance sheet date.

WIMCO LIMITED

For BSR & Co.Chartered AccountantsFirm’s Registration No.: 101248WBhavesh DhupeliaPartnerMembership No. 042070Place : MumbaiDate : 26th April, 2012




Place : KolkataDate : 26th April, 2012



39

The Board has recommended their re-appointment.Auditors’ ReportThe Auditors’ Report given by the Auditors is self-explanatory.Secretarial Compliance CertificateThe certificate from a Secretary in Whole-time Practice as requiredunder proviso to Section 383(1) of the Companies Act, 1956 is attachedwith this Report.Conservation of Energy, Technology Absorption, Foreign ExchangeEarnings and Outgo

A) Conservation of EnergyThe particulars in Form A regarding consumption of energy are notprovided as the activity of the Company does not fall under the list ofindustries specified in the Schedule annexed to the Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988.

B) Technology AbsorptionDuring the year, there is no technology absorption and the Companyhas not incurred any expenses on research and development.

C) Foreign Exchange Earnings and OutgoThere is no foreign exchange earning and outgo during the year.

EmployeesNone of the employees of the Company is covered under the provisionsof Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975.

AcknowledgementThe Board acknowledges the understanding and support of the government,investors, banks, distributors, customers, suppliers and business associatesand the dedication and hard work of its employees.


S. K. Sipani DirectorKolkata, 15th June, 2012 S. Limaye Director

DIRECTORS’ REPORTTO THE MEMBERS OF PRAG AGRO FARM LIMITEDYour Directors present their report for the financial year ended on31st March, 2012.Company PerformanceDuring the year, the Company’s turnover has declined to ` 131.73 Lakhsfrom ` 377.01 Lakhs as compared to previous year. The company hasposted a profit after tax of ` 6.17 Lakhs as against a profit of ` 5.36 lakhsin the previous year.DividendIn view of accumulated losses, your Directors are unable to recommendany dividend for the year under review.DirectorsMr. Dipes Chakraborti will retire by rotation at the ensuing Annual GeneralMeeting of the Company and, being eligible, offer himself for re-election.Your Board has recommended his re-election.Directors’ Responsibility StatementPursuant to Section 217(2AA) of the Companies Act, 1956, your Directorsconfirm that -(i) in the preparation of the Annual Accounts, the applicable Accounting

Standards have been followed and no significant departures have beenmade from the same;

(ii) appropriate accounting policies have been applied consistently andjudgements and estimates made are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at31st March, 2012 and of the profit for that period;

(iii) proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; and

(iv) the Annual Accounts have been prepared on a going concern basis.AuditorsThe Company’s Auditors M/s. BSR & Co., retire at the ensuing AnnualGeneral Meeting, and being eligible, offer themselves for re-appointment.

40

PRAG AGRO FARM LIMITED

COMPLIANCE CERTIFICATECIN No. of the Company : U01100MH1997PLC128846Authorised Capital : ` 4,00,00,000/-ToThe Members,Prag Agro Farm LimitedWe have examined the registers, records, books and papers of PRAG AGROFARM LIMITED (“the Company”) as required to be maintained under theCompanies Act, 1956, (“the Act”) and the rules made thereunder and alsothe provisions contained in the Memorandum and Articles of Associationof the Company for the financial year ended on 31st March, 2012. In ouropinion and to the best of our information and according to the examinationscarried out by us and explanations furnished to us by the Company, itsofficers and agents, we report that in respect of the aforesaid financial yearunder 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 rulesmade 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 withinthe time prescribed under the Act and the rules made thereunder.

3. The Company, being a public limited company, this comment is notrequired.

4. The Board of Directors duly met FOUR times respectively on 3rdMay, 2011, 1st August, 2011, 2nd November, 2011 and 31st March,2012 in respect of which meetings proper notices were given and theproceedings were properly recorded and signed including the circularresolutions passed in the Minutes Book maintained for the purpose.

5. There were no instances requiring the Company to close its Registerof Members during the financial year under review.

6. The Annual General Meeting for the financial year ended on 31stMarch, 2011 was held on 23rd September, 2011 after giving duenotice to the members of the Company and the resolutions passedthereat were duly recorded in Minutes Book maintained for the purpose.

7. No extraordinary general meeting was held during the financial yearunder review.

8. The Company has not advanced any loans to its directors or personsor firms or companies referred to under Section 295 of the Act duringthe financial year under review.

9. The Company has not entered into any contracts falling within thepurview of Section 297 of the Act during the financial year under review.

10. The Company has complied with the provisions of Section 301 of theAct during the financial year under review.

11. As there were no instances falling within the purview of Section 314of the Act, the Company has not obtained any approvals from theBoard of directors, members or Central Government.

12. The Company has not issued any duplicate share certificates duringthe financial year under review.

13. (i) There was no allotment/ transfer/ transmission of securities duringthe financial year.

(ii) The Company has not declared any dividend including interimdividend during the financial year under review.

(iii) The Company was not required to post warrants to any memberof the company as no dividend was declared during thefinancial year.

(iv) The Company has not transferred the amounts in unpaid dividendaccount, application money due for refund, matured deposits,matured debentures and the interest accrued thereon which haveremained unclaimed or unpaid for a period of seven years toInvestor Education and Protection Fund as there were no suchamounts outstanding during the financial year under review.

(v) The Company has complied with the requirements of Section 217of the Act.

14. The Board of Directors of the Company is duly constituted. There wasno appointment of directors, additional director, alternate directorsand directors to fill casual vacancy during the financial year.

15. The Company has not appointed any Managing Director/ Whole timeDirector/Manager during the financial year under review.

16. The Company has not appointed any sole selling agents during thefinancial year under review.

17. The Company was not required to obtain any approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar and/orsuch other authorities prescribed under the various provisions of theAct during the financial year.

18. The directors have disclosed their interest in other firms/companies tothe Board of Directors pursuant to the provisions of the Act and therules made thereunder.

19. The Company has issued Nil Equity Shares during the financial yearunder review.

20. The Company has not bought back any shares during the financialyear under review.

21. The Company has not issued any preference shares/debentures; thereforethe comment is not required.

22. There were no transactions necessitating the Company to keep inabeyance the rights to dividend, right shares and bonus shares pendingregistration of transfer of shares.

23. As per explanation provided, the Company has not invited/acceptedany deposits including any unsecured loans falling within the purviewof section 58A during the financial year under review.

24. As per the information given by the management, the amounts borrowedby the Company during the financial year ending 31st March, 2012

ANNEXURE TO THE AUDITORS’ REPORT – 31 MARCH, 2012(Referred to in our report of even date)(i) (a) The Company has maintained proper records showing full particulars,

including quantitative details and situation of fixed assets.(b) The Company has a regular programme of physical verification of

its fixed assets by which all fixed assets are verified annually. In ouropinion, this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. Nodiscrepancies were noticed upon such verification during the year.

(c) The Company has not disposed off any fixed assets during the year.(ii) (a) The inventory has been physically verified by the management

during the year. In our opinion, the frequency of such verificationis reasonable.

(b) The procedures for the physical verification of inventories followedby the management are reasonable and adequate in relation tothe size of the Company and the nature of its business.


(iii) The Company has neither granted nor taken any loans, secured orunsecured, to or from companies, firms or other parties covered inthe register maintained under Section 301 of the Companies Act,1956 (’the Act’). Accordingly, the provisions of paragraph 4(iii) ofthe Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business withregard to purchase of inventory and fixed assets and with regard tothe sale of goods. The activities of the Company do not involve saleof services. We have not observed any major weakness in the internalcontrol system during the course of the audit.

(v) In our opinion and according to the information and explanationsgiven to us, there are no contracts and arrangements, the particularsof which need to be entered into the register maintained underSection 301 of the Act.


30. The Company has not altered its Articles of Association during thefinancial year under review.

31. As per the information given by the management, there was noprosecution initiated against or show cause notices received by theCompany and no fines or penalties or any other punishment wasimposed on the company during the financial year, for offences underthe Act.

32. As per the information given by the management, the Company hasnot received any money as security from its employees during thefinancial year.

33. As per the information given by the management, the Company hasnot constituted a provident fund for its employees and thereforeprovisions of Section 418 of the Companies Act, 1956 with regard todeposit of contribution to provident fund are not applicable to thecompany.

Name of CP Holder: Anchal R. JainChennai, 15th June 2012 CP Number: 5168

AUDITORS’ REPORTTO THE MEMBERS OF PRAG AGRO FARM LIMITED

We have audited the attached balance sheet of Prag Agro Farm Limited(’the Company’) as at 31 March, 2012 and the related statement of profitand loss and cash flow statement for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.As required by the Companies (Auditor’s Report) Order, 2003 (’the Order’),issued by the Central Government of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956 (’the Act’), we enclose in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 ofthe said Order.Further to our comments in the Annexure referred to above, we report that:(a) we have obtained all the information and explanations, which to the

best of our knowledge and belief, were necessary for the purpose ofour audit;

(b) in our opinion, proper books of account as required by law have beenkept by the Company so far as appears from our examination ofthose books;

(c) the balance sheet, statement of profit and loss and cash flow statementdealt with by this report are in agreement with the books of account;

(d) in our opinion, the balance sheet, statement of profit and loss and cashflow statement dealt with by this report comply with the AccountingStandards referred to in sub-section (3C) of Section 211 of the Act;

(e) on the basis of written representations received from the directors ofthe Company as at 31 March, 2012 and taken on record by the Boardof Directors, we report that none of the directors is disqualified as on31 March, 2012 from being appointed as a director in terms ofclause (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 tothe explanations given to us, the said accounts give the informationrequired by the Act in the manner so required and give a true and fairview in conformity with the accounting principles generally acceptedin India:(i) in the case of the balance sheet, of the state of affairs of the

Company as at 31 March, 2012;(ii) in the case of the statement of profit and loss, of the 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 AccountantsFirm’s Registration No: 101248W

Bhavesh DhupeliaPartner

Mumbai, 26th April, 2012 Membership No: 042070

41


are within the borrowing limits of the Company and that necessaryresolutions as per Section 293(1)(d) of the Act have been passed.

25. The Company has not made any loans and investments or givenguarantees or provided securities to other bodies corporate andconsequently no entries have been made in the register kept for thepurpose.

26. The Company has not altered the provisions of the Memorandum withrespect to situation of the Company’s registered office from one Stateto another during the financial year under review.

27. The Company has not altered the provisions of the Memorandum withrespect to the objects of the Company during the financial year underreview.

28. The Company has not altered the provisions of the Memorandum withrespect to name of the Company during the financial year under review.

29. The Company has not altered the provisions of the Memorandum withrespect to share capital of the Company during the financial year underreview.

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

Annexure B

Forms and Returns as filed by the Company with Registrar of Companies,Regional Director, Central Government or other authorities during thefinancial year ending 31st March, 2012.1. Form 23AC-XBRL/Form 23ACA-XBRL alongwith required documents

u/s 220 of the Companies Act, 1956 for the year 2011 filed on25.11.2011 with normal filing fees.

2. Form 20B alongwith Schedule V u/s 159 of the Companies Act, 1956for the year 2011 filed on 16.11.2011 with normal filing fees.

3. Form 66 alongwith Compliance Certificate u/s 383A of the CompaniesAct, 1956 for the year 2011 filed on 18.10.2011 with normalfiling fees.

Name of CP Holder: Anchal R. JainChennai, 15th June, 2012 CP Number: 5168

42



(viii) The Central Government has not prescribed the maintenance of costrecords under Section 209(1)(d) of the Act for any of the productsmanufactured by the Company.

(ix) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company,amounts deducted/accrued in the books of account in respect ofundisputed statutory dues including Income tax and other materialstatutory dues have been regularly deposited during the year bythe Company with the appropriate authorities. As explained tous, the Company did not have any dues on account of Wealthtax, Sales tax, Provident fund, Excise duty, Cess, Employees’ StateInsurance and Investor Education and Protection Fund.According to the information and explanations given to us, noundisputed amounts payable in respect of Income tax and othermaterial statutory dues were in arrears as at 31 March, 2012 for aperiod of more than six months from the date they became payable.

(b) According to the information and explanations given to us, thereare no dues of Income tax which have not been deposited withthe appropriate authorities on account of any dispute.

(x) The Company has accumulated losses at the end of the financial yearin excess of fifty percent of its net worth. The Company has not incurredcash losses in the current financial year and in the immediatelypreceding financial year.

(xi) The Company did not have any outstanding dues to any financialinstitution, banks or debentureholders during the year.


(xiii) In our opinion and according to the information and explanationsgiven to us, the Company is not a chit fund or a nidhi/mutual benefitfund/society.

(xiv) According to the information and explanations given to us, theCompany is not dealing or trading in shares, securities, debenturesand other investments.

(xv) According to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others frombanks or financial institutions.

(xvi) The Company did not have any term loans outstanding duringthe year.

(xvii) According to the information and explanations given to us, and onan overall examination of the balance sheet of the Company, we areof the opinion that the funds raised on short term basis have notbeen used for long term investment.


(xix) The Company did not have any outstanding debentures duringthe year.

(xx) The Company has not raised any money by public issues duringthe year.

(xxi) According to the information and explanations given to us, no fraudon or by the Company has been noticed or reported during thecourse of our audit.


Firm’s Registration No: 101248WBhavesh Dhupelia

PartnerMumbai, 26th April, 2012 Membership No: 042070

BALANCE SHEET AS AT 31ST MARCH, 2012Note As at As at

March 31, 2012 March 31, 2011

(`) (`)EQUITY AND LIABILITIES

Shareholders’ FundsShare Capital 1 3,80,00,200 3,80,00,200Reserves and surplus 2 (7,42,74,768) (7,48,92,319)

Non-current liabilitiesLong-term borrowings 3 7,88,84,854 7,62,46,057

Current liabilitiesTrade payables 4 5,12,364 2,01,888Other current liabilities 5 1,29,640 67,866

TOTAL 4,32,52,290 3,96,23,692

ASSETSNon-current assets

Fixed assets 6Tangible assets 2,24,23,585 2,35,75,687Non-current investments 7 34,000 32,000

Current assetsInventories 8 1,42,26,213 99,06,202Trade receivables 9 7,78,273 7,10,108Cash and cash equivalent 10 76,625 18,499Short-term loans and advances 11 57,13,594 53,81,196TOTAL 4,32,52,290 3,96,23,692


The accompanying notes from 1 to 23 form an integral part of these financial statements.

As per our report of even date.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248W For and on behalf of the Board

Bhavesh DhupeliaPartner S K Sipani DirectorMembership Number: 042070 S Limaye Director

Mumbai, 26th April, 2012 Kolkata, 26th April, 2012


Note For the year ended For the year endedMarch 31, 2012 March 31, 2011

(`) (`)INCOMERevenue from operations

-Revenue from sale of goods 12 1,31,72,842 3,77,00,687Other operating revenue 13 500 1,45,467Other income 14 17,510 2,435Total income 1,31,90,852 3,78,48,589ExpensesCost of seeds 15 8,25,655 11,74,466Purchases of stock-in-trade 62,58,146 2,82,48,793Changes in inventories of finished goods, work-in-progressand stock-in-trade 16 (43,20,011) (5,55,102)Depreciation and amortisation expense 6 11,52,102 11,54,300Other expenses 17 86,29,131 71,66,285Total expense 1,25,45,023 3,71,88,742Profit before tax 6,45,829 6,59,847Tax expense

Current tax 28,278 1,23,258Profit for the year 6,17,551 5,36,589

Earnings per equity share 18Basic and diluted 0.16 0.14Face value (`) 10.00 10.00



For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248W For and on behalf of the BoardBhavesh DhupeliaPartner S K Sipani DirectorMembership Number: 042070 S Limaye Director


43



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

A. CASH FLOW FROM OPERATING ACTIVITIES :Profit before Taxation 6,45,829 6,59,847Adjustments for :

Depreciation 11,52,102 11,54,300Interest Income (17,510) (2,435)

Operating profit before working capital changes 17,80,421 18,11,712Adjustments for :

Trade, other payables & liabilities 3,72,250 (4,17,597)Inventories (43,20,011) (5,55,102)Loans and Advances (5,14,363) (23,07,356)Trade and other receivable (68,165) (4,50,748)

Cash used in operations (27,49,868) (19,19,091)Taxes paid (net of refunds) 1,53,687 (7,14,384)Net cash used in operating activities (25,96,181) (26,33,475)

B. Cash flow from investing activitiesPurchase of long-term investments (2,000) (5,000)Interest received 17,510 —

Net cash generated from/(used in) investing activities 15,510 (5,000)

C. Cash flow from financing activitiesBorrowing from holding Company 26,38,797 26,51,037Net cash generated from financing activities 26,38,797 26,51,037

D. Net increase in cash and cash equivalents 58,126 12,562E. Reconciliation

Cash and cash equivalents at beginning of the year 18,499 5,937 Cash and cash equivalents at the end of the year 76,625 18,499

58,126 12,562Notes :1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard - 3 on Cash Flow Statement prescribed

in Companies (Accounting Standard) Rules,2006.2. Proceed from borrowing are shown net of repayments.3. Cash and cash equivalents represent cash and bank balances only.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248W For and on behalf of the BoardBhavesh DhupeliaPartner S K Sipani DirectorMembership Number: 042070 S Limaye Director



1. Share capital

Authorised :4,000,000 (2010-11: 4,000,000)Equity Shares of ` 10 each 4,00,00,000 4,00,00,000(see notes (a), (b) and (c) below) 4,00,00,000 4,00,00,000

Issued3,800,020 (2010-11: 3,800,020)Equity Shares of ` 10 each 3,80,00,200 3,80,00,200(see notes (a), (b) and (c) below)

3,80,00,200 3,80,00,200Subscribed and Paid-up3,800,020 (2010-11: 3,800,020)Equity Shares of ` 10 each fully paid-up 3,80,00,200 3,80,00,200(see notes (a), (b) and (c) below)Total 3,80,00,200 3,80,00,200a) Shares held by holding Company

Equity shares3,800,020 (2010-11: 3,800,020) 3,80,00,200 3,80,00,200Equity shares of ` 10 each, fully paid upare held by the holding company Wimco Limited and its nominees.

b) Name of shareholders holding more than 5% ofthe shares of the CompanyEquity SharesWimco Limited, the holding Company 38,00,020 38,00,020

100% 100%

c) Rights, preferences and restrictions attached to sharesThe Ordinary Shares of the Company, having par value of ` 10/- per share, rankpari passu in all respects including entitlement to dividend. Repayment of capitalin the event of winding up of the Company will inter alia be subject to theprovisions of the Articles of Association of the Company and as may be determinedby the Company in General Meeting prior to such winding up.

44


6. Fixed assets

Gross Block Accumulated Depreciation/Impairment NET BLOCK

As at April 1, 2011 As at March 31, 2012As at Additions Disposed/ As at Depreciation As at As at

Description April 1, 2011 during the Adjusted March 31, 2012 Depreciation Impairment Charged for Depreciation Impairment March 31, 2012 March 31,2011year during the year the Year

Tangible assetsLeasehold land 10,16,90,195 — — 10,16,90,195 2,72,52,052 5,10,01,947 11,41,995 2,83,94,047 5,10,01,947 2,22,94,201 2,34,36,196

Building 1,79,500 — — 1,79,500 59,015 — 5,880 64,895 — 1,14,605 1,20,485Plant and machinery 45,500 — — 45,500 29,485 — 1,236 30,721 — 14,779 16,015Furniture and fixture 1,500 — — 1,500 1,500 — — 1,500 — — —Vehicle 36,500 — — 36,500 33,509 — 2,991 36,500 — — 2,991

10,19,53,195 — — 10,19,53,195 2,73,75,561 5,10,01,947 11,52,102 2,85,27,663 5,10,01,947 2,24,23,585 2,35,75,6872010-11 10,19,68,195 — — 10,19,53,195 2,62,21,261 5,10,01,947 11,54,300 2,73,75,561 5,10,01,947 2,35,75,687

Amount in (`)

7. Non-current investmentsUnquoted :Trade investmentsInvestment in government securities

National savings certificates(pledged with various Mandi Samitis) 33,000 31,000

Kissan vikas patra 1,000 1,000Total 34,000 32,000Total non-current investments (at cost) unquoted 34,000 32,000

8. InventoriesWork-in-progress - agri produces 30,85,370 17,45,735Work-in-progress - poplar trees 1,10,99,108 81,60,467Finished goods 41,735 —Total 1,42,26,213 99,06,202


Trade receivables outstanding for aperiod less than six months from thedate they are due for payment

Unsecured, considered good 7,78,273 7,10,108

Total 7,78,273 7,10,108


Cash and cash equivalents

Balances with bank :

- In current accounts 64,491 6,408

Cash on hand 12,134 12,091

Total 76,625 18,499

2. Reserves and surplus

(Deficit) in the statement of profit and lossBalance at the beginning of the year (7,48,92,319) (7,54,28,908)

Less : Profit for the year 6,17,551 5,36,589(7,42,74,768) (7,48,92,319)

3. Long-term borrowings

Unsecured :Loans and advances from related parties 7,88,84,854 7,62,46,057

7,88,84,854 7,62,46,057

Borrowings Terms of repayment

Loans and advances from related party– Wimco Limited (holding company) Interest free, repayable by March 31, 2014.

4. Trade payables

Total outstanding dues of micro enterprisesand small enterprises (see note 20) — —Total outstanding dues of creditors otherthan micro enterprises and small enterprises 5,12,364 2,01,888

Total 5,12,364 2,01,888

5. Other current liabilities

Advances from customers 1,00,000 50,000

Statutory dues payable- (tax deducted at source -’TDS’) 29,640 17,866

Total 1,29,640 67,866


(`) (`)

As at As at

March 31, 2012 March 31, 2011

(`) (`)


(`) (`)

As at As at

March 31, 2012 March 31, 2011

(`) (`)

45



(`) (`)

11. Short-term loans and advances

Other loans and advances - unsecured,

considered good

Sundry advances to supplier, employees etc. 10,686 2,37,260Commercial tax receivable 49,06,077 41,87,821

Prepaid expenses 31,206 8,525

Advance tax and tax deducted at source 7,65,625 9,47,590[net of provision ` 439,377(2010-11 : ` 411,099)]

Total 57,13,594 53,81,196

12. Revenue from sale of goods

Sale of products

Finished goods 68,22,858 76,24,616

Traded goods 63,49,984 3,00,76,071

Total 1,31,72,842 3,77,00,687

13. Other operating revenue

Sale of scrap — 85,142

Insurance claims 500 60,325

Others — —

Total 500 1,45,467

14. Other Income

Interest Income 17,510 2,435

Total 17,510 2,435

15. Cost of seeds

Poplar ETP's 4,11,487 6,86,107

Seeds 4,14,168 4,88,359

Total 8,25,655 11,74,466

16. Changes in inventory of finished goods, work-in-progressand stock in trade

(Increase)/decrease in stocks

Stock at the end of the yearFinished goods 41,735 —

Work-in-progress - agri produces 30,85,370 17,45,735

Work-in-progress - poplar trees 1,10,99,108 81,60,467

Total A 1,42,26,213 99,06,202

Less: Stock at the beginning of the yearFinished goods — 48,330

Work-in-progress - agri produces 17,45,735 20,87,968

Work-in-progress - poplar trees 81,60,467 58,53,308

Stock-in-trade — 13,61,494

Total B 99,06,202 93,51,100

(Increase) / decrease in stocks (B-A) (43,20,011) (5,55,102)


(`) (`)17. Other expenses

Power and fuel 11,31,900 9,84,162Deputation charges 13,20,458 12,18,507Consumption of stores and spare parts 4,877 3,265Rent 8,197 8,197Rates and taxes 24,533 50,332Insurance 84,170 34,865Repairs

- Buildings 53,374 35,149- Others 3,06,685 2,49,021

Outward freight and handling charges 82,059 99,521Plantation and cultivation 48,39,779 37,67,919Bank and credit card charges 22,702 81,938Travelling and conveyance 2,02,818 1,15,813Legal and professional fees 3,60,833 3,30,348Postage and telephone charges 23,222 29,372Printing and stationery 14,145 16,572Auditors' remuneration 1,03,640 1,04,940Miscellaneous expenses 45,739 36,364Total 86,29,131 71,66,285

18. Earnings per shareThe computation of earningsper share is set out below:Net Profit attributable to equity shareholders (A) (`) 6,17,551 5,36,589Weighted average number of equity sharesoutstanding during the year 38,00,020 38,00,020Earnings per share of face value(`) 10 each basic and diluted ((A)/(B)) 0.16 0.14

19. Segment informationThe Company’s activities involve, predominantly, business of growing and sellingagricultural produce and trading of poplar wood in India, which is considered to bea 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 arereflective of the information required by Accounting Standard 17- Segment Reporting.

20. There are no Micro and Small Enterprises to whom the Company owes any amounts,which are outstanding for more than 45 days as at March 31, 2012 (March 31,2011` nil). This information as required to be disclosed under the Micro, Small andMedium Enterprises Development Act, 2006 has been determined to the extent suchparties have been identified on the basis of information available with the Company.

21. Related party disclosures

1. Parties exercising control over the Company

ITC Limited – Ultimate holding company #Russell Credit Limited – Fellow subsidiary of holding company #

(was holding company of Wimco Limited tillSeptember 28, 2011)

Wimco Limited – Holding company# No transaction during the years 2011-12 and 2010-11.

2. Other related parties with whom the Company had transactionsPavan Poplar Limited (PPL) – Fellow subsidiary

3. Transaction with related parties

HOLDING COMPANY FELLOW SUBSIDIARY COMPANY TOTAL

Wimco Limited PPL

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

Purchases 4,14,168 4,88,359 66,495 4,01,403 4,80,663 8,89,762

Sales 65,86,845 3,06,77,595 1,83,750 82,250 67,70,595 3,07,59,845

Expenses reimbursed 12,60,668 38,60,101 30,69,441 26,78,922 43,30,109 65,39,023

Expenses recovered 19,466 15,31,412 23,606 20,266 43,072 15,51,678

Loans taken 32,13,917 55,01,714 — — 32,13,917 55,01,714

Loan repayment 5,75,164 28,50,677 — — 5,75,164 28,50,677

Outstanding unsecuredloans 7,88,84,810 7,62,46,057 — — 7,88,84,810 7,62,46,057

Amounts in (`)

PARTICULARS

22. Prior period comparativesThe previous year’s figures have been re-grouped/ re-arranged as necessary to conform to the present year’s classification consequent to notification of Revised Schedule VI underthe Companies Act, 1956.

23. Significant accounting policies

1. Basis of AccountingThe financial statements have been prepared and presented under thehistorical cost convention, on the accrual basis of accounting and inaccordance with the provisions of the Companies Act, 1956, (’the Act’)and the accounting principles generally accepted in India and complywith 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 AccountingStandards, to the extent applicable.

During the year ended March 31, 2012 (effective April 1, 2011), therevised Schedule VI notified under the Act has become applicable toPrag Agro Farm Limited (’the Company’) for preparation and presentationof its financial statements. The adoption of revised Schedule-VI doesnot impact recognition and measurement principles followed forpreparation of financial statements. All assets and liabilities have beenclassified as current or non-current as per the Company’s normaloperating cycle and other criteria set out in the revised Schedule VI.The accumulated losses of the Company as at March 31, 2012 haveresulted in erosion of Company’s net worth. However, based on theCompany’s future plans and letter of support received from WimcoLimited (Holding Company), these accounts have been prepared ona going concern basis.

2. Use of estimatesThe preparation of financial statements in conformity with generallyaccepted accounting principles (GAAP) in India requires managementto make estimates and assumptions that affect the reported amountof assets and liabilities and the disclosure of contingent liabilities onthe date of the financial statements and actual results could differ fromthose estimates. Any revision to accounting estimates is recognisedprospectively in current and future periods.

3. Fixed Assets / Amortisation / Impairment / DepreciationTangible AssetsFixed Assets are stated at cost of acquisition less accumulated depreciationand impairment loss. Cost includes all expenses attributable to theacquisition and development of the assets.

Depreciation is computed on a straight-line basis at the followingannual rates:

Nature of Assets Rates %Plant, machinery 4.75 to 10.34Furniture and fittings 6.33Vehicles 7.07 to 11.31

Building and civil works on leasehold land are charged on straight-linebasis over the lesser of period of lease and useful life.Assets individually costing ` 5,000 or less are fully depreciated in theyear of acquisition.Leasehold Land is carried at cost less accumulated amortisation andimpairment loss, if any. The lease agreement is effective upto 2031.Accordingly, expenditure incurred on leasehold land is amortised ona straight-line basis over the remaining period of the lease.

ImpairmentIn accordance with AS 28, where there is an indication of impairmentof the Company’s assets, the carrying amounts of the Company’s assetsare reviewed at each balance sheet date to determine whether thereis any impairment. The recoverable amount of the asset (or whereapplicable, that of the cash generating unit to which the asset belongs)is estimated as the higher of its net selling price and its value in use.An impairment loss is recognised whenever the carrying amount of anasset or a cash-generating unit exceeds its recoverable amount.Impairment loss is recognised in the profit and loss account or againstrevaluation 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 ofundeveloped / diseased trees, being normal loss during the periodof maturity of plantation (based on a technical estimate) exceptthat realisation / insurance claim for such trees is reduced from the

46


total cost. Every year, plantation cost already incurred is comparedwith net realisable value which is determined on the basis ofestimated selling price less estimated cost likely to be incurred infuture for bringing the plantation to maturity and the cost necessarilyto be incurred in order to make sale.

Cost includes all direct and indirect expenses in respect of the poplarplantation.

Further, 75% of net standard realisable value of intercropping,waste, etc is reduced from the above cost because entire farm costis first added to the cost of plantation.

(ii) Agriculture produce/standing crops and plants are valued at 75%of their net realisable value.

5. Revenue recognitionRevenue from sale of goods is recognised on transfer of all significantrisks and rewards of ownership to the buyer.

6. Contingencies and Provisions

A provision is created where there is a present obligation as a result ofa past event that probably requires an outflow of resources and areliable estimate can be made of the amount of the obligation.

A contingent liability is disclosed when there is a possible or a presentobligation that may, but probably will not, require an outflow ofresources. Where there is a possible or a present obligation and thelikelihood of outflow of resources is remote, no provision or disclosureis made.

7. Taxation

Income-tax expense comprises current tax and deferred tax charge orcredit. Current tax is determined in accordance with the Income TaxAct 1961. The deferred tax charge or credit and the correspondingdeferred tax liabilities or assets are recognised using the tax rates andtax laws that have been enacted or substantively enacted by the balancesheet date. Deferred tax assets are recognised only to the extent thereis reasonable certainty that the assets can be realised in future; however,where there is unabsorbed depreciation or carried forward loss undertaxation laws, deferred tax assets are recognised only if there is a virtualcertainty of realisation of such assets. Deferred tax assets are reviewedas at each balance sheet date and written down or written-up to reflectthe amount that is reasonably/virtually certain (as the case may be) tobe realised. As the Company is engaged in growing and sellingagricultural produce, such income is exempt from income tax.Accordingly, there are no deferred tax assets/liabilities arising therefrom.

8. Earnings per share (’EPS’)The basic earnings per share (’EPS’) is computed by dividing the netprofit attributable to the equity shareholders for the period by theweighted average number of equity shares outstanding during thereporting period. Diluted EPS is computed by dividing the net profitattributable to the equity shareholders for the period by the weightedaverage number of equity and equivalent dilutive equity sharesoutstanding during the period, except where the results would be anti-dilutive.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248W

Bhavesh DhupeliaPartnerMembership Number: 042070

Mumbai, 26th April, 2012


S K Sipani DirectorS Limaye Director

Kolkata, 26th April, 2012

Auditors

The Company’s Auditors, M/s BSR & Co., retire at the ensuing Annual GeneralMeeting, and being eligible, offer themselves for re-appointment.The Board has recommended their re-appointment.Conservation of Energy, Technology Absorption, Foreign Exchange Earningsand OutgoA) Conservation of Energy

The particulars in Form A regarding consumption of energy are not providedas the activity of the Company does not fall under the list of industriesspecified in the Schedule annexed to the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988.

B) Technology AbsorptionThere is no technology absorption during the year and the Company hasnot incurred any expenses on research and development.

C) Foreign Exchange Earnings and OutgoThere is no foreign exchange earning and outgo during the year.

EmployeesNone of the employees of the Company is covered under the provisions of Section217(2A) of the Companies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975.AcknowledgementThe Board acknowledges the understanding and support of the government,investors, banks, distributors, customers, suppliers and business associates andthe dedication and hard work of its employees.


S. K. Sipani DirectorKolkata, 15th June, 2012 S. Limaye Director

DIRECTORS’ REPORTTO THE MEMBERS OF PAVAN POPLAR LIMITEDYour Directors present their Report and Accounts for the financial year ended on31st March, 2012.Company PerformanceThe Company’s turnover decreased to ` 71.47 lakhs as against previous year’sturnover of ` 82.19 Lakhs.The Company has posted a net profit of ` 3.32 lakhsas against a net profit of ` 4.43 lakhs during the previous year.DividendYour Directors are unable to recommend dividend.DirectorsMr. Dipes Chakraborti will retire by rotation at the ensuing Annual General Meetingof the Company and, being eligible, offer himself for re-election. Your Board hasrecommended his re-election.Directors’ Responsibility StatementPursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirmthat -(i) in the preparation of the Annual Accounts, the applicable Accounting

Standards have been followed and no significant departures have been madefrom the same;

(ii) appropriate accounting policies have been applied consistently and judgementsand estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March, 2012 and ofthe profits for that period;

(iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act,1956, for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; and

(iv) the Annual Accounts have been prepared on a going concern basis.

Audit CommitteeThe Audit Committee comprises of M/s. S. Sipani, S. Limaye and D. Chakraborti.

(d) in our opinion, the balance sheet, statement of profit and loss andcash flow statement dealt with by this report comply with theAccounting Standards referred to in sub-section (3C) of Section211 of the Act;

(e) on the basis of written representations received from the directorsof the Company as at 31 March, 2012 and taken on record by theBoard of Directors, we report that none of the directors is disqualifiedas on 31 March, 2012 from being appointed as a director in termsof 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 accordingto the explanations given to us, the said accounts give the informationrequired by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generallyaccepted in India:(i) in the case of the balance sheet, of the state of affairs of the

Company as at 31 March, 2012;(ii) in the case of the statement of profit and loss, of the 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


Firm’s Registration No: 101248W



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, 2012 and the related statement of profitand loss and cash flow statement for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.As required by the Companies (Auditor’s Report) Order, 2003 (’the Order’),issued by the Central Government of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956 (’the Act’), we enclose in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 ofthe 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 tothe best of our knowledge and belief, were necessary for the purposeof our audit;


(c) the balance sheet, statement of profit and loss and cash flowstatement dealt with by this report are in agreement with the booksof account;

ANNEXURE TO THE AUDITORS’ REPORT – 31 MARCH, 2012(Referred to in our report of even date)

(i) (a) The Company has maintained proper records showing full particulars,including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verificationof its fixed assets by which all fixed assets are verified annually.In our opinion, this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of itsassets. No discrepancies were noticed upon such verificationduring the year.

(c) The Company has not disposed off any fixed assets during the year.

(ii) (a) The inventory has been physically verified by the managementduring the year. In our opinion, the frequency of such verificationis reasonable.

(b) The procedures for the physical verification of inventories followed

by the management are reasonable and adequate in relation tothe size of the Company and the nature of its business.


(iii) According to the information and explanations given to us, we areof the opinion that there are no companies, firms or other partiescovered 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 explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business withregard to purchase of inventory and fixed assets and with regard tothe sale of goods. The activities of the Company do not involve sale

47

PAVAN POPLAR LIMITED

BALANCE SHEET AS AT 31ST MARCH, 2012As at As at

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

EQUITY AND LIABILITIESShareholders’ funds

Share capital 1 5,51,00,040 5,51,00,040Reserves and surplus 2 1,47,92,041 1,44,59,813

Non-current liabilitiesLong-term provisions 3 1,05,737 96,238

Current liabilitiesTrade payables 4 4,53,050 3,30,276

Other current liabilities 5 22,55,679 22,50,592Short-term provisions 6 7,97,064 6,12,827TOTAL 7,35,03,611 7,28,49,786

ASSETSNon-current assets

Fixed assetsTangible assets 7 2,24,54,437 2,36,05,946

Long-term loans and advances 8 2,50,00,000 2,80,00,000Current assets

Inventories 9 1,49,56,326 1,02,20,619Trade receivables 10 83,64,301 83,60,629Cash and cash equivalent 11 1,11,693 2,53,279Short-term loans and advances 12 26,16,854 23,40,511Other current assets 13 — 68,802

TOTAL 7,35,03,611 7,28,49,786

Segment information 21Related party disclosure 25Significant accounting policies 27The accompanying notes from 1 to 27 form an integral part of these financial statements.As per our report of even date.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248WBhavesh DhupeliaPartner Membership No: 042070Mumbai, 26th April, 2012

of services. We have not observed any major weakness inthe internalcontrol system during the course of the audit.

(v) In our opinion and according to the information and explanationsgiven to us, there are no contracts and arrangements, the particularsof which need to be entered into the register maintained underSection 301 of the Act.



(viii) The Central Government has not prescribed the maintenance of costrecords under Section 209(1)(d) of the Act for any of the productsmanufactured by the Company.

(ix) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company,amounts deducted/accrued in the books of account in respectof undisputed statutory dues including Provident Fund, Incometax and other material statutory dues have been regularly depositedduring the year by the Company with the appropriate authorities.As explained to us, the Company did not have any dues onaccount of Wealth tax, Sales tax, Excise duty, Cess, Employees’State Insurance and Investor Education and Protection Fund.

According to the information and explanations given to us, noundisputed amounts payable in respect of Provident Fund, Incometax and other material statutory dues were in arrears as at 31March, 2012 for a period of more than six months from the datethey became payable.

(b) According to the information and explanations given to us, thereare no dues of Income tax which have not been deposited withthe appropriate authorities on account of any dispute.

(x) The Company does not have any accumulated losses at the end ofthe financial year and has not incurred cash losses in the currentfinancial year and in the immediately preceding financial year.

(xi) The Company did not have any outstanding dues to any financialinstitution, banks or debentureholders during the year.


(xiii) In our opinion and according to the information and explanationsgiven to us, the Company is not a chit fund or a nidhi/ mutual benefitfund/ society.

(xiv) According to the information and explanations given to us, theCompany is not dealing or trading in shares, securities, debenturesand other investment.

(xv) According to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others frombanks or financial institution.

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

(xvii) According to the information and explanations given to us and overallexamination of the balance sheet of the Company, we are of opinionthat funds raised on short-term basis have not been used forlong-term investment.



(xx) The Company has not raised any money by public issues during theyear.

(xxi) According to the information and explanations given to us, no fraudon or by the Company has been noticed or reported during thecourse of our audit.


Firm’s Registration No: 101248W



48


For and on behalf of the BoardS. K. Sipani Director

S. Limaye DirectorDr. R. C. Dhiman Manager


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012Year Ended Year Ended

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

A. Cash flow from operating activitiesProfit before taxation 3,51,934 4,49,100Adjustments for:

Depreciation 11,51,509 11,51,509Interest income (11,047) (12,356)

Operating profit before working capital changes 14,92,396 15,88,253

Adjustment forTrade, other payables & liabilities 3,13,768 4,37,920Inventories (47,35,707) (29,55,638)Trade and other receivable 11,474 (1,16,806)Loans and advances 26,828 (8,246)

Cash used in operations (28,91,241) (10,54,517)Taxes paid (net of refunds) (6,905) (2,471)Net cash used in operating activities (28,98,146) (10,56,988)

B. Cash flow from investing activitiesInterest received 11,047 12,356Net cash generated from investing activities 11,047 12,356

C. Cash flow from financing activitiesLoan repayment from holding Company 27,45,513 12,03,010Net cash generated from financing activities 27,45,513 12,03,010

D. Net increase/(decrease) in cash and cash equivalents (1,41,586) 1,58,378

E. ReconciliationCash and cash equivalents at the beginning of the year 2,53,279 94,901Cash and cash equivalents at the end of the year 1,11,693 2,53,279

(1,41,586) 1,58,378

Notes:1. The Cash Flow Statement has been prepared under the "Indirect Method" as set out in Accounting

Standard - 3 on Cash Flow Statement prescribed in Companies (Accounting Standard) Rules, 2006.2. Cash and cash equivalents represent cash and bank balances only.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248WBhavesh DhupeliaPartner Membership No: 042070Mumbai, 26th April, 2012







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

For the Year ended For the Year endedNote March 31, 2012 March 31, 2011

(`) (`)INCOMERevenue from operations

-Revenue from sale of goods 71,47,389 82,18,773Other operating revenue 14 1,15,609 —Other income - interest on fixed deposits 11,047 12,356Total income 72,74,045 82,31,129ExpensesCost of seeds 15 7,69,916 9,08,272Changes in inventories of finished goods,work-in-progress and stock-in-trade 16 (47,35,707) (29,55,638)Employee benefits expense 17 26,10,147 22,41,543Depreciation and amortisation expense 7 11,51,509 11,51,509Other expenses 18 71,26,246 64,36,343Total expense 69,22,111 77,82,029Profit before tax 3,51,934 4,49,100Tax expenseCurrent tax 19,706 5,924

Profit for the Year 3,32,228 4,43,176Earnings per equity share 20Basic and diluted 0.06 0.08Face value (`) 10.00 10.00Segment information 21Related party disclosure 25Significant accounting policies 27



Firm’s Registration No: 101248WBhavesh DhupeliaPartner Membership No: 042070Mumbai, 26th April, 2012

49




(`) (`)1. Share capital

Authorised

10,000,000 (2010-11: 10,000,000)equity shares of ` 10 each(See notes (a), (b) and (c) below) 10,00,00,000 10,00,00,000

10,00,00,000 10,00,00,000Issued

5,510,004 (2010-11: 5,510,004)equity shares of ` 10 each(See notes (a), (b) and (c) below) 5,51,00,040 5,51,00,040

5,51,00,040 5,51,00,040Subscribed and paid up

5,510,004 (2010-11: 5,510,004)equity shares of ` 10 each fully paid-up(See notes (a), (b) and (c) below) 5,51,00,040 5,51,00,040Total 5,51,00,040 5,51,00,040

a) Shares held by holding Company

Equity Shares

5,510,004 (2010-11: 5,510,004) Equity

shares of ̀ 10 each, fully paid up are held

by the holding company Wimco Limited

and its nominees. 5,51,00,040 5,51,00,040

b) Name of share holders holding more

than 5% of the shares of the Company

Equity Shares

Wimco Limited , the holding Company 55,10,004 55,10,004

100% 100%

c) Rights, preferences and restrictions attached to shares

The Ordinary Shares of the Company, having par value of ̀10/- per share, rank

pari passu in all respects including entitlement to dividend. Repayment of

capital in the event of winding up of the Company will inter alia be subject

to the provisions of the Articles of Association of the Company and as may be

determined by the Company in General Meeting prior to such winding up.

50


50


7. Fixed Assets

GROSS BLOCK ACCUMULATED DEPRECIATION/IMPAIRMENT NET BLOCK

As at April 1, 2011 As at March 31, 2012

As at Additions Deduction As at Charge As at As atDescription April 1, during the during the, March 31, Depreciation Impairment for the Depreciation Impairment March 31, March 31,

2011 year year 2012 year 2012 2011Tangible assetLeasehold land 4,49,33,855 — — 4,49,33,855 1,80,68,422 32,59,487 11,51,509 1,92,19,931 32,59,487 2,24,54,437 2,36,05,946Total 4,49,33,855 — — 4,49,33,855 1,80,68,422 32,59,487 11,51,509 1,92,19,931 32,59,487 2,24,54,437 2,36,05,9462010-11 4,49,33,855 — — 4,49,33,855 1,69,16,913 32,59,487 11,51,509 1,80,68,422 32,59,487 2,36,05,946

Amount In (`)

6. Short-term provisionsProvisions for employee benefits :

Provision for gratuity 7,77,486 6,11,359Provision for leave encashment 11,749 1,468

Provision for income tax(net of advance taxes ` 72,772) 7,829 —Total 7,97,064 6,12,827


(`) (`)

2. Reserves and surplusGeneral reserve 5,00,000 5,00,000Surplus in the statement of profit and lossBalance at the beginning of the year 1,39,59,813 1,35,16,637Add : Profit for the year 3,32,228 4,43,176

1,42,92,041 1,39,59,813

Total 1,47,92,041 1,44,59,813

3. Long-term provisionsProvisions for employee benefitsProvision for leave encashment 1,05,737 96,238Total 1,05,737 96,238

4. Trade payablesTotal outstanding dues of microenterprises and small enterprises(see note 24) — —Total outstanding dues of creditorsother than micro enterprises andsmall enterprises 4,53,050 3,30,276Total 4,53,050 3,30,276

5. Other current liabilitiesAdvances from customers 3,12,279 3,56,753Employee benefits payable 2,32,180 1,97,121Statutory dues payable* 17,11,220 16,96,718Total 22,55,679 22,50,592*Statutory dues payable include

Tax deducted at source -'TDS' 33,853 22,885Provident fund 28,367 24,833Stamp duty 16,49,000 16,49,000

17,11,220 16,96,718

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

(`) (`)

8. Long Term Loans and Advances


With holding company* 2,50,00,000 2,80,00,000Total 2,50,00,000 2,80,00,000

*The loan is interest free, receivable by March 31, 2014

9. Inventories

Work-in-progress - Agri produces 30,07,884 26,36,806

Work-in-progress - Poplar trees 1,18,90,551 75,66,664

Finished goods 57,891 17,149

Total 1,49,56,326 1,02,20,619


(`) (`)10. Trade receivables

Trade receivables outstanding for aperiod exceeding six months fromthe date they are due for paymentUnsecured, considered good * 82,87,088 83,60,629

OthersUnsecured, considered good 77,213 —Total 83,64,301 83,60,629

*Includes amount due from Wimco Limited, holding company ` 82,87,088(2010 - 11 : ` 82,87,088)

11. Cash and cash equivalentsCash and cash equivalentsBalances with bank :

- In current accounts 1,05,365 2,40,697Cash on hand 6,328 12,582Total 1,11,693 2,53,279


(`) (`)17. Employee benefits expense

Salaries, wages and bonus 21,42,793 17,95,746Contribution to provident and other funds 3,55,634 3,42,855Workmen and staff welfare expenses 1,11,720 1,02,942

26,10,147 22,41,543


(`) (`)

15. Cost of seedsPoplar ETP's 2,05,344 5,34,934Seeds 5,64,572 3,73,338Total 7,69,916 9,08,272

16. Changes in inventory, work-in-progress and stock in trade(Increase)/decrease in stocksStock at the end of the yearFinished goods 57,891 17,149Work-in-progress - Agri produces 30,07,884 26,36,806Work-in-progress - Poplar trees 1,18,90,551 75,66,664Total A 1,49,56,326 1,02,20,619Less: Stock at the beginning of the yearFinished goods 17,149 79,575Work-in-progress - Agri produces 26,36,806 29,59,441Work-in-progress - Poplar trees 75,66,664 42,25,965Total B 1,02,20,619 72,64,981(Increase) / decrease in stocks (B-A) (47,35,707) (29,55,638)

51



Net asset/(liability) For the year ended For the year ended For the year ended For the year endedrecognised in Balance Sheet March 31, 2012(`) March 31, 2011(`) March 31, 2010(`) March 31, 2009(`)

(including experience Leave Leave Leave Leaveadjustment impact) Gratuity Encashment Gratuity Encashment Gratuity Encashment Gratuity Encashment

1. Present value of definedbenefit obligation 7,77,486 1,17,486 6,11,359 97,706 4,42,430 80,073 4,17,806 99,795

2. Status [surplus/(deficit)] (7,77,486) (1,17,486) (6,11,359) (97,706) (4,42,430) (80,073) (4,17,806) (99,795)

There are no experience adjustments of plan assets / obligations as at March 31, 2012 (March 31, 2011: nil)

A. Amounts recognised as an expense and included in note 17 - "employee benefits expense" ` 19,780 [2010-11: ` (23,373)] for leave encashment.

B. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply anddemand in the employment market.

As at As at

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

12. Short-term loans and advancesUnsecured, considered goodReceivable from holding company 25,84,034 23,29,547Sundry advances to supplier,employees etc. 6,367 1,548Prepaid expenses 26,453 4,444Advance tax and tax deducted at source(net of provision ̀ nil (2010-11 : ̀ 65,591) — 4,972Total 26,16,854 23,40,511

13. Other current assetsSecurity deposits — 68,802Total — 68,802

14. Other operating revenueInsurance Claims 1,15,609 —

Total 1,15,609 —

2011-12 2010-11 2011-12 2010-11

Change in obligation during the year1. Obligation at the beginning of the year 6,11,359 4,42,430 97,706 80,0732. Service cost 36,013 36,910 25,809 25,4933. Interest cost 40,757 35,394 6,514 6,4064. Actuarial (Gains) /Losses 1,05,972 1,19,443 (12,543) (8,526)5. Benefits’ payments (16,615) (22,818) — (5,740)6. Obligations at the end of the year 7,77,486 6,11,359 1,17,486 97,706Change in plan assets1. Plan assets at the beginning of the year — — — —2. Expected return on plan assets — — — —3. Contribution by employers 16,615 22,818 — 5,7404. Actual benefits paid (16,615) (22,818) — (5,740)5. Actuarial Gains/(Losses) — — — —6. Plan assets at the end of the year — — — —

Reconciliation of present value of the obligation and the fair value ofthe plan assets1. Fair value of plan assets at the end of the year — — — —2. Present value of the defined benifit obligation at the end of the period 7,77,486 6,11,359 1,17,486 97,7063. Asset/(Liability) recognised in the balance sheet (7,77,486) (6,11,359) (1,17,486) (97,706)Cost for the period1. Service cost 36,013 36,910 25,809 25,4932. Interest cost 40,757 35,394 6,514 6,4063. Return on plan asset — — — —4. Actuarial (gains)/ losses 1,05,972 1,19,443 (12,543) (8,526)5. Past service cost — — — —Net cost 1,82,742 1,91,747 19,780 23,373Actuarial assumptions :1. Discount rate 8.25% 8.00% 8.25% 8.00%2. Salary escalation 4.00% 4.00% 4.00% 4.00%3. Expected return on plan assets N/A N/A N/A N/A

Defined Benefit Plans

Gratuity ( Unfunded) Leave Encashment

(`)


52


25. Related Party Disclosures

1. Parties exercising control over the CompanyITC Limited - Ultimate holding Company#Russell Credit Limited - Fellow Subsidiary of Holding Company#

(was holding company of WIMCO Limited tillSeptember 28, 2011)

WIMCO Limited - Holding Company

# No transaction during the years 2011-12 and 2010-11

2. Other related parties with whom the Company had transactionsPrag Agro Farm Limited (PAFL) - Fellow Subsidiary Company

21. Segment information

The Company’s activities involve predominantly business of growing and

selling agricultural produce in India, which is considered to be a single

business segment since these are subject to similar risks and returns. Further,

the business is carried out in India and product sold primarily in India and

hence there are no reportable geographical segments. Hence, the financial

statements are reflective of the information required by Accounting Standard

17 on Segment Reporting.

22. No remuneration is payable to the Manager during the year.

(2010-11: ` Nil)

23. The Company has not appointed a whole-time Company Secretary as required

by Section 383 A of the Companies Act, 1956 and accordingly, the financial

statements have not been authenticated by a whole-time Company Secretary.

24. There are no Micro and Small Enterprises, to whom the Company owes anyamounts, which are outstanding for more than 45 days as at March 31, 2012(March 31, 2011 ` nil). This information as required to be disclosed underthe Micro, Small and Medium Enterprises Development Act, 2006 has beendetermined to the extent such parties have been identified on the basis ofinformation available with the Company.

3) Transaction with related parties

Particulars Holding Company Fellow Subsidiary Company Total

Wimco Limited PAFL

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

Purchases 2,05,344 5,34,934 1,83,750 82,250 3,89,094 6,17,184Sales — — 66,495 4,01,403 66,495 4,01,403Expenses reimbursed 53,119 84,974 23,606 20,266 76,725 1,05,240Expenses recovered 2,61,250 3,96,196 30,69,441 26,78,922 33,30,691 30,75,118Loans given 2,45,232 1,32,653 — — 2,45,232 1,32,653Receipt towardsloan repayment 29,90,745 13,29,671 — — 29,90,745 13,29,671Outstanding loansand advances 2,75,84,034 3,03,29,547 — — 2,75,84,034 3,03,29,547Outstanding debtors 82,87,088 82,87,088 — — 82,87,088 82,87,088

Amount In (`)

26. Prior period comparativesThe previous year’s figures have been re-grouped / re-arranged as necessary to conform to the present year’s classification consequent to notification of Revised ScheduleVI under the Companies Act, 1956.


(`) (`)18. Other expenses

Power and fuel 10,50,177 12,09,066Consumption of stores and spare parts 4,877 3,305Rent 7,760 7,760Rates and taxes 40,621 33,963Insurance 50,242 25,644Repairs

- Buildings 40,573 35,142- Others 3,11,975 2,38,141

Outward freight and handling charges 89,951 97,778Plantation and cultivation 47,58,077 41,24,413Bank and credit card charges 2,001 2,278Travelling and conveyance 1,85,440 79,997Legal and professional fees 3,93,194 3,96,459Postage and telephone charges 5,343 5,680Printing and stationery 8,957 8,188Auditors' remuneration 1,03,650 1,05,185Miscellaneous expenses 73,408 63,344Total 71,26,246 64,36,343

As At As AtMarch 31, 2012 March 31, 2011

(`) (`)19. Contingent liabilities and commitments

(to the extent not provided for)Contingent liabilitiesClaims against the Companynot acknowledged as debts

Local authority taxes -dispute relatingto applicability and determination 6,64,524 6,64,524

Other matters for which the Company iscontingently liable 68,802 68,802Total 7,33,326 7,33,326

As At As AtMarch 31, 2012 March 31, 2011

20. Earnings per shareThe computation of earningsper share is set out below:Net Profit attributable to equityshareholders (A) (`) 3,32,228 4,43,176Weighted average number ofequity shares outstandingduring the year (B) (`) 55,10,004 55,10,004Earnings per share of facevalue `10 each basic anddiluted (A/B) 0.06 0.08

27. Significant Accounting Policies

1. Basis of PreparationThe financial statements have been prepared and presented under thehistorical cost convention on the accrual basis of accounting and inaccordance with the provisions of the Companies Act, 1956 (’the Act’)and the accounting principles generally accepted in India and complywith 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 AccountingStandards, to the extent applicable.

During the year ended March 31, 2012 (effective April 1, 2011), therevised Schedule VI notified under the Act has become applicable toPavan Poplar Limited (’the Company’) for preparation and presentationof its financial statements. The adoption of revised Schedule-VI doesnot impact recognition and measurement principles followed forpreparation of financial statements. All assets and liabilities have beenclassified as current or non-current as per the Company’s normaloperating cycle and other criteria set out in the revised Schedule VI.

2. Use of estimatesThe preparation of financial statements in conformity with generallyaccepted accounting principles (GAAP) in India requires managementto make estimates and assumptions that affect the reported amountsof assets and liabilities and the disclosure of contingent liabilities onthe date of the financial statements and actual results could differ fromthose estimates. Any revision to accounting estimates is recognizedprospectively in current and future periods.

3. Fixed Assets/Amortisation/Impairment/DepreciationFixed Assets are stated at cost of acquisition less accumulated depreciationand impairment loss. Cost includes all expenses attributable to theacquisition and development of the assets.

Leasehold Land is carried at cost less accumulated amortisation andimpairment loss, if any. The lease agreement is effective up to 2031.Accordingly, expenditure incurred on leasehold land is amortised ona straight-line basis over the remaining period of the lease.

In accordance with AS-28 Impairment of Assets, where there is anindication of impairment of the Company’s assets, the carrying amountsof the Company’s assets are reviewed at each balance sheet date todetermine whether there is any impairment. The recoverable amountof the asset (or where applicable, that of the cash generating unit towhich the asset belongs) is estimated as the higher of its net sellingprice and its value in use. An impairment loss is recognized wheneverthe carrying amount of an asset or a cash-generating unit exceeds itsrecoverable amount. Impairment loss is recognized in the profit andloss account or against revaluation surplus, where applicable.

4. Inventories� In valuing poplar trees included under semi finished products, no

adjustment is made to the total cost of the trees on account ofundeveloped/diseased trees, being normal loss during the periodof maturity of plantation (based on a technical estimate) exceptthat realisation/insurance claim for such trees is reduced from thetotal cost. Every year, plantation cost already incurred is comparedwith the net realisable value which is determined on the basis ofestimated selling price less estimated cost likely to be incurred infuture for bringing the plantation to maturity and the cost necessarilyto be incurred in order to make the sale.

� Cost includes all direct and indirect expenses in respect of thepoplar plantation.

� Further, 75% of net standard realisable value of intercropping,waste, etc. is reduced from the above cost because the entire farmcost is first added to the cost of plantation.

� Agricultural produce/standing crops and plants are valued at 75%of their net realisable value.

5. Retirement benefitsShort-term employee benefitsAll employee benefits payable wholly within twelve months of renderingthe service are classified as short-term employee benefits. Thesebenefits include compensated absences such as paid annual leave. Theundiscounted amount of short-term employee benefits expected to bepaid in exchange for the services rendered by employees is recognisedduring the period.

Contributions to the provident fund, which is a defined contributionscheme, are charged to the Profit and Loss Account in the period inwhich the liability is incurred.


Post-employment benefitsThe Company’s gratuity benefit scheme is a defined benefit plan whichis not funded. The Company’s obligation in respect of the gratuitybenefit scheme is calculated by estimating the amount of future benefitthat employees have earned in return for their service in the currentand prior periods; that benefit is discounted to determine its presentvalue.The present value of the obligation under such defined benefit planis determined based on actuarial valuation using the Projected UnitCredit Method, which recognises each period of service as giving riseto additional unit of employee benefit entitlement and measureseach unit separately to build up the final obligation. The obligation ismeasured at the present value of the estimated future cash flows. Thediscount rates used for determining the present value of obligationunder defined benefit plan are based on the market yields on Governmentsecurities as at the balance sheet date.Actuarial gains and losses are recognized immediately in the statementof profit and loss.

Other long-term employment benefitsCompensated absences which are not expected to occur within twelvemonths after the end of the period in which the employee renders therelated services are recognized as a liability at the present value of thedefined benefit obligation at the balance sheet date. The discountrates used for determining the present value of the obligation underdefined benefit plan are based on the market yields on Governmentsecurities 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 ProvisionsA provision is created where there is a present obligation as a result ofa past event that probably requires an outflow of resources and areliable estimate can be made of the amount of the obligation.

A contingent liability is disclosed when there is a possible or a presentobligation that may, but probably will not, require an outflow ofresources and a reliable estimate can be made of the amount involved.Where there is a possible or a present obligation and the likelihood ofoutflow of resources is remote, no provision or disclosure is made.

8. TaxationIncome-tax expense comprises current tax and deferred tax charge orcredit. Current tax is determined in accordance with the Income TaxAct, 1961. The deferred tax charge or credit and the correspondingdeferred tax liabilities or assets are recognised using the tax rates andtax laws that have been enacted or substantively enacted by the balancesheet date. Deferred tax assets are recognised only to the extent thereis reasonable certainty that the assets can be realised in future; however,where there is unabsorbed depreciation or carried forward loss undertaxation laws, deferred tax assets are recognised only if there is a virtualcertainty of realisation of such assets. Deferred tax assets are reviewedas at each balance sheet date and written-down or written-up to reflectthe amount that is reasonably/virtually certain (as the case may be) tobe realised. As the Company is engaged in growing and sellingagricultural produce, such income is exempt from income tax.Accordingly, there are no deferred tax assets/liabilities arising therefrom.

9. Earnings per share (‘EPS’)The basic earnings per share (’EPS’) is computed by dividing the netprofit attributable to the equity shareholders for the period by theweighted average number of equity shares outstanding during thereporting period. Diluted EPS is computed by dividing the netprofit attributable to the equity shareholders for the period by theweighted average number of equity and equivalent dilutive equityshares outstanding during the period, except where the results wouldbe anti-dilutive.

53



S. K. Sipani DirectorS. Limaye Director

Dr. R. C. Dhiman ManagerKolkata, 26th April, 2012

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248WBhavesh DhupeliaPartnerMembership Number: 042070Mumbai, 26th April, 2012

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2012

Your directors present their report on the company for the financial yearended 31 March 2012.

Directors

The names of the directors in office at any time during or since the end ofthe year are:

Mr Surampudi Sivakumar Mr David Charles McDonald

Mr Arup Kumar Mukerji Mr Allan Hendry

Mr Sachidanand Madan

All the directors have been in office since the start of the financial year untilthe date of this report.

Corporate information

On 26th March, 2012, ITC Limited acquired the entire shareholding ofyour Company, from its wholly owned subsidiary, Russell Credit Limited.Consequently with effect from the said date, your company became adirect subsidiary of ITC Limited, a public company registered in India andlisted in National Stock Exchange and Bombay Stock Exchange in India.

The registered office of Technico Pty Limited is located at:

Suite 5, 20 Bundaroo Street, BOWRAL NSW 2576, Australia

There were two employees on the rolls of the company as at 31 March2012. The company also utilises the services of consultants to support itsoperations.

Principal activities

The principal activities of your company during the financial year underreview were anchored on horticulture technology, its downstreamimplementation and commercialisation and activities associated therewith.The company owns the proprietary TECHNITUBER® Technology in thisfield and has undertaken commercialisation of such technology throughits wholly owned subsidiaries in different geographies viz:

• Technico Agri Sciences Limited, India• Technico Asia Holdings Pty Limited, Australia (‘TAHL’)• Technico Hort icultural (Kunming) Co. L imited, China

(100% subsidiary of TAHL)• Technico Technologies Inc., Canada

Review and results of operations

Your company is focused on ensuring the continuous upgrading of theTECHNITUBER® Technology and customising its application across variousgeographies. Your company is also engaged in the marketing ofTECHNITUBER® seeds to global customers by leveraging the productionfacilities of its subsidiaries in India, China and Canada.

For the year under review, your company registered a turnover ofA$1,126,878 (2011: A$1,584,348) and a net profit of A$111,374 (2011: A$100,232). The lower turnover was due to reduced orders from a largecustomer as well the strengthening of the Australian Dollar against the USDollar and Euro which are the Company’s invoicing currencies.

The property at Paddy’s River, Australia, held for sale for some years, wassold during the year and the sale proceeds along with the available cashbalance was used to repay all outstanding loans of the Company.

No dividends have been paid or declared during the financial year.

Significant changes in the state of affairs

No significant changes in the state of affairs occurred during the financialyear.

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 environmentalregulation.

Indemnification and insurance of directors

During the financial year, the company paid premiums in respect of acontract insuring all directors and officers of Technico Pty Limited for generaldirectors’ and officers’ liability. The amount of the premium paid was$5,941 (2011: $6,304).

The indemnification covers, on behalf of all directors and officers, all losseswhich they become legally obligated to pay on account of any claim firstmade against them during the policy period for a wrongful act committedbefore or during the policy period.

Auditor independence

The auditor’s independence declaration from Gillespies is on page 26 ofthis report.

Signed in accordance with a resolution of the Board of Directors:

Place: Sydney, Australia Allan Hendry

Date: 26th April 2012 Director

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 MARCH 2012

In accordance with a resolution of the directors of Technico Pty Limited,we state that in the opinion of the directors :(a) the company is not a reporting entity as defined in the Australian

Accounting Standards;(b) the financial statements and notes of the company are in accordance

with the Corporations Act 2001, including:(i) giving a true and fair view of the company’s financial position as

at 31 March 2012 and of their performance for the year ended onthat date; and

(ii) complying with Accounting Standards and Corporations Regulations;and

(c) there are reasonable grounds to believe that the company will be ableto pay its debts as and when they become due and payable.

On behalf of the Board

Place : Sydney, Australia Allan HendryDate: 26th April 2012 Director

54

TECHNICO PTY LIMITED

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OFTECHNICO PTY LIMITED FOR THE YEAR ENDED 31 MARCH, 2012

In relation to our audit of the financial report of Technico Pty Limited forthe financial year ended 31 March 2012, to the best of my knowledge andbelief, there have been no contraventions of the auditor independence

requirements of the Corporations Act 2001 or any applicable code ofprofessional conduct.

GILLESPIESChartered Accountants

Suite 5, 20 Bundaroo StreetBOWRAL NSW 2576 David DuffDated: 26th April 2012 Partner

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO PTYLIMITED FOR THE YEAR ENDED 31 MARCH 2012

We have audited the accompanying financial report, being a special purposefinancial report of Technico Pty Limited, which comprises the statement offinancial position as at 31 March 2012, the statement of comprehensiveincome, statement of changes in equity and statement of cash flows forthe year then ended, notes comprising a summary of significant accountingpolicies 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 thefinancial report and have determined that the basis of preparation describedin note 1 to the financial report is appropriate to meet the requirementsof the Corporations Act 2001 and is appropriate to meet the needs of themembers.

The directors’ responsibility also includes such internal control as the directorsdetermine is necessary to enable the preparation of a financial report thatis free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based onour audit. We have conducted our audit in accordance with AustralianAuditing Standards. Those standards require that we comply with relevantethical requirements relating to audit engagements and plan and performthe audit to obtain reasonable assurance whether the financial report isfree from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the financial report. The procedures selecteddepend on the auditor’s judgement, including the assessment of the risksof material misstatement of the financial report, whether due to fraud orerror. In making those risk assessments, the auditor considers internalcontrol relevant to the entity’s preparation of the financial report that givesa true and fair view in order to design audit procedures that are appropriatein the circumstance, but not for the purpose of expressing an opinion onthe effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by the directors, as well asevaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independencerequirements of the Corporations Act 2001. We confirm that the independencedeclaration required by the Corporations Act 2001, which has been givento the directors of Technico Pty Limited, would be in the same terms ifgiven to the directors as at the time of the auditor’s report.

Audit opinion

In our opinion, the financial report of Technico Pty Limited is in accordancewith the Corporations Act 2001, including:

(a) giving a true and fair view of the company’s financial position as at31 March 2012 and of its performance for the year ended on that date;and

(b) complying with Australian Accounting Standards to the extent describedin note 1, and the Corporations Regulations 2001.

Basis of accounting

Without modifying our opinion, we draw attention to Note 1(a) to thefinancial report, which describes the basis of accounting. The financialreport has been prepared for the purpose of fulfilling the directors’ financialreporting responsibilities under the Corporations Act 2001. As a result, thefinancial report may not be suitable for another purpose.

GILLESPIES

Chartered Accountants

Dated: 26th April 2012

Suite 5, 20 Bundaroo Street David Duff

BOWRAL NSW 2576 Partner

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 20122012 2011

Notes $ ` $ `

Continuing Operations

Sale of goods 2(a) 1,126,878 55,790,378 1,584,348 69,133,025

Cost of sales:

Other cost of sales (682,737) (33,801,490) (861,993) (37,613,065)

Inventory write off and write down — — — —

GROSS PROFIT 444,141 21,988,888 722,355 31,519,960

Other income 2(a) 242,426 12,002,220 206,773 9,022,540Marketing expenses (1,610) (79,709) — —Middle East & North Africa expenses (130,285) (6,450,254) (203,741) (8,890,239)Research and development expenses (149,970) (7,424,835) (157,343) (6,865,662)Occupancy expenses (3,727) (184,519) (3,705) (161,668)Administration Expenses:

Other administration expenses (284,039) (14,062,430) (443,218) (19,339,817)Recovery/(write-down) investments and loans — — — —

Finance costs 2(b) (5,562) (275,368) (20,889) (911,491)Reversal of provision for employee share scheme — — — —

PROFIT FROM CONTINUING OPERATIONS BEFORE

INCOME TAX EXPENSE 111,374 5,513,993 100,232 4,373,623

Income tax expense 3 — — — —

Total comprehensive income attributable to members of

Technico Pty Ltd 111,374 5,513,993 100,232 4,373,623

Other comprehensive income — — — —

Total comprehensive income for the period 111,374 5,513,993 100,232 4,373,623

Profit from continuing operations after income tax expense 111,374 5,513,993 100,232 4,373,623

Net profit for the period 111,374 5,513,993 100,232 4,373,623

Net profit attributable to members of Technico Pty Limited 111,374 5,513,993 100,232 4,373,623

55


56


STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2012Share based

Contributed Retained payment equity earnings reserve Total

$ $ $ $

At 1 April 2010 43,989,182 (29,659,170) — 14,330,012

Profit for the Period — 100,232 — 100,232

At 31 March 2011 43,989,182 (29,558,938) — 14,430,244

Profit for the Period — 111,374 — 111,374

At 31 March 2012 43,989,182 (29,447,564) — 14,541,618

Share basedContributed Retained payment

equity earnings reserve Total` ` ` `

At 1 April 2010

Profit for the Period 2,327,467,620 (1,569,266,683) — 758,200,937

Share Issue — 5,303,275 — 5,303,275

At 31 March 2011 2,327,467,620 (1,563,963,408) — 763,504,212

Profit for the Period — 5,892,798 — 5,892,798

At 31 March 2012 2,327,467,620 (1,558,070,610) — 769,397,010

BALANCE SHEET AS AT 31 MARCH 20122012 2011

Notes $ ` $ `

Current AssetsCash and cash equivalents 4 271,411 14,360,356 446,554 20,589,489Trade and other receivables 5(a) 707,325 37,424,566 808,879 37,295,388Other 6 11,223 593,809 26,910 1,240,753

989,959 52,378,731 1,282,343 59,125,630Non-current assets classified as held for sale 8 — — 376,381 17,353,987Total current assets 989,959 52,378,731 1,658,724 76,479,617

Non-current assets

Receivables 5(b) — — 7,826 360,837Other financial assets 7 14,269,282 754,987,711 14,269,282 657,920,920Property, plant and equipment 8 909 48,095 2,068 95,350Intangible assets 9 21,471 1,136,031 24,955 1,150,613

Total non-current assets 14,291,662 756,171,837 14,304,131 659,527,720

Total assets 15,281,621 808,550,568 15,962,855 736,007,337

Current liabilities

Trade and other payables 10 712,129 37,678,745 779,619 35,946,283Loans and borrowings 11 — — 230,000 10,604,725Provisions 12 27,874 1,474,813 22,992 1,060,104

Total current liabilities 740,003 39,153,558 1,032,611 47,611,112Non-current liabilitiesLoans and Borrowings 11 — — 500,000 23,053,750Provisions 12 — — — —Total non-current liabilities — — 500,000 23,053,750

Total liabilities 740,003 39,153,558 1,532,611 70,664,862

Net assets 14,541,618 769,397,010 14,430,244 665,342,475

Equity

Contributed equity 13 43,989,182 2,327,467,620 43,989,182 2,028,231,209

Accumulated Losses 14 (29,447,564) (1,558,070,610) (29,558,938) (1,362,888,734)

Total equity 14,541,618 769,397,010 14,430,244 665,342,475

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS ASAT 31 MARCH 2012


Technico Pty Limited is a company limited by shares that is incorporatedand domiciled in Australia. Its parent entity is ITC Limited, a public companylisted in National Stock Exchange and Bombay Stock Exchange in India.

The registered office of Technico Pty Limited is located at:

Suite 5,20 Bundaroo StreetBOWRAL NSW 2576Australia

The company employed two employees at 31 March 2012. The companyalso 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 thatthe company is a non-reporting entity because there are no usersdependent on general purpose financial statements. The financialstatements are therefore special purpose financial statements that havebeen prepared in order to meet the requirements of the CorporationsAct 2001.

The financial report is prepared for distribution to members of thecompany to fulfil the directors’ financial reporting requirements underChapter 2M of the Corporations Act 2001, wherein the company isconsidered to be a large proprietary company. The accounting policiesused in the preparation of this report, as described below, are in theopinion of the directors, appropriate to meet the needs of members

The financial report has been prepared on a historical cost basis andis presented in Australian dollars. The supplementary information inINR (Indian Rupees), which are unaudited, have been arrived at byapplying the year end inter-bank exchange rate of 1 AUD = INR 52.9100for the current year balance sheet (2011: INR 46.1075) and the averagerate of 1 AUD = INR 49.5088 for the current year income statement(2011: INR 43.6350), and have been included in the financial reportas required by the parent entity.

The directors have determined that the company is not a ‘reportingentity’. Consequently the requirements of Accounting Standards issuedby the AASB and other professional reporting requirements do nothave mandatory applicability to Technico Pty Limited in relation to the

year ended 31 March 2012. However, the directors have determinedthat in order for the financial report to give a true and fair view of thecompany’s results of operations and state of affairs, the requirementsof Accounting Standards and other professional reporting requirementsin 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 accordancewith the following Accounting Standards:

AASB 101: Presentation of Financial StatementsAASB 107: Cash Flow StatementsAASB 108: Accounting Policies, Changes in Accounting Estimates and ErrorsAASB 1048: Interpretation and Application of StandardsThe material accounting policies that have been adopted in thepreparation of these statements are as follows:

Going concern

Though the company has accumulated losses of $29,447,564 as at 31March 2012 (2011: $29,558,938), the management believe that theapplication of the going concern basis of accounting is appropriatedue to the expected cash flows of the company over the next twelvemonths and the belief that the company is an important part of thebusiness plans of ITC limited, the parent entity. Any exposure of theparent entity in the Company is limited to equity or fund basedcommitments.

(b) Significant accounting judgements, estimates and assumptions

The carrying amounts of certain assets and liabilities are often determinedbased on estimates and assumptions of future events. The key estimatesand assumptions that have a significant risk of causing a materialadjustment to the carrying amounts of certain assets and liabilitieswithin the next annual reporting period are:

Investment in subsidiaries

The carrying value of the investment in subsidiaries is assessed at eachreporting date as to whether there is an indication that the asset maybe impaired. The assessment includes estimates and assumptions offuture events including anticipated rates of growth, gross margins,together with the application of a discount rate. These assumptionscorrespond with the best estimates of management at reporting date.

57


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 20122012 2011

$ ` $ `

Cash flow from operating activitiesReceipts from customers 1,228,432 60,818,194 1,572,611 68,620,881Receipts of sundry income 126,840 6,279,696 188,577 8,228,557Payments to suppliers and employees (1,249,568) (61,864,612) (1,720,209) (75,061,320)Goods and services tax (paid)/received (36,739) (1,818,904) 19,817 864,715Interest received 17,136 848,383 18,196 793,982Borrowing costs (5,562) (275,368) (20,889) (911,491)

Net cash flows from operating activities 80,539 3,987,389 58,103 2,535,324

Cash flow from investing activitiesProceeds from sale of property, plant and equipment 474,832 23,508,363 — —Payments for protection of technology (514) (25,448) (1,771) (77,278)

Net cash flows (used in)/from investing activities 447,318 23,482,915 (1,771) (77,278)

Cash flows from financing activitiesRepayment of borrowings (730,000) (36,141,424) — —

Net cash flows (used in)/from financing activities (730,000) (36,141,424) — —

Net increase/(decrease) in cash held (175,143) (8,671,120) 56,332 2,458,046ADD OPENING CASH BROUGHT FORWARD 446,554 — 390,222 —

Cash and cash equivalents at end of period 271,411 14,360,356 446,554 20,589,489

(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 functionalcurrency by applying the exchange rates ruling at the date of transaction.Monetary assets and liabilities denominated in foreign currencies areretranslated 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 bankand in hand and short-term deposits with an original maturity of threemonths or less.For the purposes of the cash flow statement, cash and cash equivalentsconsist of cash and cash equivalents as defined above, net of outstandingbank overdrafts.

(e) Receivables

Trade receivables are recognised and carried at the original amountless any provision for doubtful debts. A provision is recognised whencollection of the full amount is no longer probable. Bad debts arewritten off as incurred.

(f) Other financial assets

Investments in controlled entities are recorded at cost less impairmentof the investment value.

(g) Impairment of assets

The company assesses at each reporting date whether there is anindication that an asset may be impaired. If any such indication exists,or when annual impairment testing for an asset is required, the companymakes an estimate of the asset’s recoverable amount. An asset’srecoverable amount is the higher of its fair value less costs to sell andits value in use and is determined for an individual asset, unless theasset does not generate cash inflows that are largely independent ofthose from other assets or groups of assets and the asset’s value in usecannot be estimated to be close to its fair value. In such cases theasset is tested for impairment as part of the cash-generating unit towhich 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 itsrecoverable amount.

In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specificto the asset. Impairment losses relating to continuing operations arerecognised in those expense categories consistent with the functionof the impaired asset.

(h) Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Class of fixed asset 2012 2011Buildings 6.70 % 6.70 %Plant and equipment 13-27 % 13-27 %

The assets residual values, useful lives and amortisation methods arereviewed and adjusted, if appropriate, at each financial year end.

Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposalor when no further future economic benefits are expected from its useor disposal.

Any gain or loss arising on derecognition of the asset (calculated asthe difference between the net disposal proceeds and the carryingamount of the asset) is included in profit or loss in the year the assetis derecognised.

(i) Non-current assets held for sale

Non-current assets are classified as held for sale and measured at thelower of their carrying amount and fair value less costs to sell if theircarrying 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 leaseis based on the substance of the arrangement and requires an assessmentof whether the fulfilment of the arrangement is dependent on the useof a specific asset or assets and the arrangement conveys a right to usethe asset.

Operating lease payments are recognised as an expense in the incomestatement on a straight-line basis over the lease term. Lease incentivesare recognised in the income statement as an integral part of the totallease expense.

Finance leases, which transfer to the company substantially all the risksand benefits incidental to ownership of the leased item, are capitalisedat the inception of the lease at the fair value of the leased property or,if lower, the present value of the minimum lease payments. Leasepayments are apportioned between the finance charges and reductionof the lease liability so as to achieve a constant rate of interest on theremaining balance of the liability. Finance charges are recognised asan expense in profit and loss.

(k) Payables

Trade payables and other payables are carried at amortised costs andrepresent liabilities for goods and services provided to the companyprior to the end of the financial year that are unpaid and arise whenthe company becomes obliged to make future payments in respect ofthe 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 anoutflow of resources embodying economic benefits will be required tosettle the obligation and a reliable estimate can be made of the amountof the obligation.When the company expects some or all of a provision to be reimbursed,for example under an insurance contract, the reimbursement isrecognised as a separate asset but only when the reimbursement isvirtually certain. The expense relating to any provision is presented inthe income statement net of any reimbursement. Provisions aremeasured at the present value of management best estimate of theexpenditure required to settle the present obligation at the balancesheet date.If the effect of the time value of money is material, provisions arediscounted using a current pre-tax rate that reflects the risks specificto the liability. When discounting is used, the increase in the provisiondue to the passage of time is recognised as a borrowing cost..

(m) Contributed equity

Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares or options are shown in equityas a deduction, net of tax, from the proceeds.

(n) Revenue recognition

Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the company and the revenue can be reliablymeasured. The following recognition criteria must also be met beforerevenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised upon the delivery ofgoods to customers.

Interest

Interest revenue is recognised on a proportional basis taking into accountthe interest rates applicable to the financial assets.

Rendering of services

Revenue from the provision of services is recognised when control ofthe right to be compensated for the services and the stage of completioncan be reliably measured.

(o) Taxation

Current tax assets and liabilities are measured at the amount expectedto be recovered from or paid to the taxation authorities. The tax ratesand tax laws used to compute the amount are those that are enactedor substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at thebalance sheet date between the tax basis of assets and liabilities and theircarrying amounts for financial reporting purposes.

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Deferred income tax liabilities are recognised for all taxabletemporary differences except:

• when the deferred income tax liability arises from the initialrecognition of goodwill or of an asset or liability in a transactionthat is not a business combination and that, at the time of thetransaction, affects neither the accounting profit nor taxable profitor loss; or

• when the taxable temporary difference is associated with investmentsin subsidiaries, associates or interests in joint ventures, and thetiming of the reversal of the temporary difference can be controlledand it is probable that the temporary difference will not reversein the foreseeable future.

Deferred income tax assets are recognised for all deductibletemporary differences, carry-forward of unused tax assets andunused tax losses, to the extent that it is probable that taxableprofit will be available against which the deductible temporarydifferences and the carry-forward of unused tax credits and unusedtax losses can be utilised, except:

• when the deferred income tax asset relating to the deductibletemporary difference arises from the initial recognition of an assetor liability in a transaction that is not a business combination and,at the time of the transaction, affects neither the accounting profitnor taxable profit or loss; or

• when the deductible temporary difference is associated withinvestments in subsidiaries, associates or interests in joint ventures,in which case a deferred tax asset is only recognised to the extentthat it is probable that the temporary difference will reverse in theforeseeable future and taxable profit will be available against whichthe temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed ateach balance sheet date and reduced to the extent that it is nolonger probable that sufficient taxable profit will be available toallow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at eachbalance sheet date and are recognised to the extent that it hasbecome probable that future taxable profit will allow the deferredtax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax ratesthat are expected to apply to the year when the asset is realised or theliability is settled, based on tax rates (and tax laws) that have beenenacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognisedin equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legallyenforceable right exists to set off current tax assets against current taxliabilities 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 ofGST except:

• when the GST incurred on a purchase of goods and services is notrecoverable from the taxation authority, in which case the GST isrecognised as part of the cost of acquisition of the asset or as partof the expense item as applicable; and

• receivables and payables, which are stated with the amount ofGST included.

The net amount of GST recoverable from, or payable to, the taxationauthority is included as part of receivables or payables in the balancesheet.

Cash flows are included in the cash flow statement on a gross basisand the GST component of cash flows arising from investing andfinancing activities, which are recoverable from, or payable to, thetaxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount ofGST 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 benefitsand annual leave expected to be settled within twelve months ofthe reporting date are recognised in other payables in respect ofemployees’ services up to the reporting date. They are measuredat 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 provisionfor employee benefits and measured as the present value ofexpected future payments to be made in respect of services providedby employees up to the reporting date using the projected unitcredit method. Consideration is given to expected future wageand salary levels, experience of employee departures, and periodsof service. Expected future payments are discounted using marketyields at the reporting date on national government bonds withterms 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 andtrademarks and are considered to have finite lives, and are amortisedover the useful lives and assessed for impairment whenever there is anindication that the intangible asset may be impaired. If benefit is nolonger expected to be received, the asset will be written down to itsnet realisable value.

(s) Comparatives

When required by Accounting Standards, comparative figures havebeen adjusted to conform to changes in presentation for the currentfinancial year.

59


60


NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 20122012 2011

$ ` $ `

Note 2: Revenues and ExpensesRevenue and Expenses from Continuing Activities

(a) RevenueSale of goods 1,126,878 55,790,378 1,584,348 69,133,025Finance revenue 17,136 848,383 18,196 793,982Agronomy support income 48,208 2,386,720 69,670 3,040,050Sundry income 78,632 3,892,976 118,907 5,188,508Profit on sale of assets 98,450 4,874,141 — —

1,369,304 67,792,598 1,791,121 78,155,565Breakdown of finance revenue:Bank interest 17,136 848,383 18,196 793,982

(b) Finance costsBank loans and overdrafts 5,562 275,368 20,889 911,491

(c) Depreciation, amortisation and costs of inventories included in the income statementDepreciation of non-current assets:Buildings — — — —Plant and equipment 880 43,568 937 40,886Total depreciation of non-current assets 880 43,568 937 40,886Amortisation of non-current assets:Leased plant and equipment — — — —Technology and trademarks 3,998 197,936 4,520 197,230Total amortisation of non-current assets 3,998 197,936 4,520 197,230Total depreciation and amortisation expenses 4,878 241,504 5,457 238,116Cost of inventories recognised as an expense includeswrite down of inventory to net realisable value — — — —

(d) Employee benefit expenseWages and salaries 208,444 10,319,812 290,259 12,665,451Workers’ compensation costs 190 9,407 830 36,217Annual leave provision 1,479 73,224 7,740 337,735Share options — — — —

Note 3: Income tax

The major components of income tax expenses are:Income statementCurrent income taxCurrent income tax charge — — — —Adjustments in respect of current income tax of previous years — — — —

Deferred income taxRelating to origination and reversal of temporary differences — — — —Income tax expense reported in the income statement — — — —

A reconciliation between income tax expense and the product of accounting profit before income tax multiplied by the company’sapplicable income tax rate is as follows :Accounting profit before income from continuing operations at thestatutory income tax rate of 30% 33,412 1,654,188 30,070 1,312,104Amortisation of technology (101) (5,000) (101) (4,407)Movement in employee entitlements 1,465 72,530 1,556 67,896Write back or write down of investments in wholly owned subsidiaries — — — —Non-deductible expenses/timing differences (38,828) (1,922,328) 13,428 585,931(Recoupment of prior year tax losses)/Futureincome tax benefits not brought to account 4,052 200,610 (44,953) (1,961,524)Income tax attributable to ordinary activities — — — —

Income Tax LossesFuture income tax benefits arising from revenue timing differences and tax losses of the parent entity amounted to $4,052 (2011: $(44,953)). This hasnot 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 2012 (Contd.)2012 2011

Notes $ ` $ `Note 4: Cash and cash equivalentsCurrentCash at Bank 8,5558 452,804 11,583 534,063Deposits at Call 262,853 13,907,552 434,971 20,055,426

271,411 14,360,356 446,554 20,589,489

(a) Terms and conditions relating to the above financial instruments:(i) cash at bank has a weighted average interest rate of 0% (2011: 0%); and(ii) deposits at call has a weighted average effective interest rate of5.21% (2011: 4.5%).

(b) Reconciliation of net profit/(loss)after tax to the net cash flows from operations:Net profit/(loss) 111,374 5,513,993 100,232 4,373,623Non-cash items:

Amortisation of non-current assets 3,998 197,936 4,520 197,230Depreciation of non-current assets 880 43,568 937 40,886Decrease in value of inventories — — — —Provision for doubtful debts — — — —Decrease/(increase) in value of receivables in subsidiaries 7,826 387,456 (5,525) (241,083)(Increase)/decrease in value of investments in subsidiaries — — — —Unrealised foreign currency revaluation — — — —(Profit) on sale of property, plant and equipment — — — —Employee benefits equity reserve — — — —(Profit)/loss on sale of assets (98,450) (4,874,141) — —(Profit)/loss on disposal of assets 278 13,763 — —Changes in assets and liabilities:(Increase)/decrease in trade and other receivables 101,554 5,027,817 (11,737 ) (512,144)Decrease in inventories — — — —Decrease/(increase) in other current assets 15,687 776,644 (10,612 ) (463,055)(Decrease) in trade creditors and accruals (67,490) (3,341,349) (24,900 ) (1,086,511)Increase in employee provisions 4,882 241,702 5,188 226,378

Cash flows from operations 80,539 3,987,389 58,103 2,535,324

(c) Financing facilities availableAt reporting date, the following financing facilities had beennegotiated and were available:Total facilitiesBank loans — — 230,000 10,604,725Loan from Russell Credit Ltd (parent company until 26 March 2012) — — 500,000 23,053,750Facilities used at reporting dateBank loans — — 230,000 10,604,725Loan from Russell Credit Ltd — — 500,000 23,053,750

Note 5: Trade and other receivablesCurrentTrade debtors (a) 704,310 37,265,042 809,015 37,301,659Provision for doubtful debts — — — —

704,310 37,265,042 809,015 37,301,659

Other debtors (a) 3,015 159,524 (136) (6,271)707,325 37,424,566 808,879 37,295,388

Non-currentAmounts receivable from wholly owned subsidiaries — — 7,826 360,837Provision for doubtful debts — — — —

— — 7,826 360,837(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.

$ ` $ `Note 6: Other assets

CurrentPrepayments 9,148 484,021 26,910 1,240,753Interest accrual 2,075 109,788 — —

11,223 593,809 26,910 1,240,753

Note 7: Other financial assetsNon-currentShares in subsidiaries:At cost 18,180,409 961,925,440 18,180,409 838,253,208Provision for write-down (a) (3,911,127) (206,937,729) (3,911,127 ) (180,332,288)

Total other financial assets 14,269,282 754,987,711 14,269,282 657,920,920(a) Provision for write-down of subsidiariesThe losses generated within the subsidiaries have resulted in a provision for write-down to net assets being recorded against the cost amount of theinvestment.


62


2012 2011Notes $ ` $ `

Note 8: Property, plant and equipmentNon-currentLand and buildingsLand at cost — — 327,725 15,110,580Accumulated amortisation and impairment — — — —

Net carrying amount transferred to assets held for sale — — 327,725 15,110,580

Buildings at cost 191,765 8,841,805Accumulated depreciation and impairment — — (143,109) (6,598,398)

Net carrying amount transferred to assets held for sale — — 48,656 2,243,407

Plant and equipment at cost 439,281 20,254,149Accumulated depreciation and impairment — — (439,281) (20,254,149)

Net carrying amount transferred to assets held for sale — — — —

Total net carrying amount of land and buildings transferredto assets held for sale — — 376,381 17,353,987

Plant and equipment at cost 2,838 150,158 158,237 7,295,912Accumulated depreciation and impairment (1,929) (102,063) (156,169) (7,200,562)

Net carrying amount 909 48,095 2,068 95,350

Total net carrying amount of plant and equipment 909 48,095 2,068 95,350

Total property, plant and equipment at cost 2,838 150,158 158,237 7,295,912

Accumulated depreciation, amortisation and impairment (1,929) (102,063) (156,169) (7,200,562)

Total property, plant and equipment transferred to assets held for sale — — 376,381 17,353,987

Total property, plant and equipment 909 48,095 2,068 95,350

LandBalance at beginning of the year - net of accumulateddepreciation and impairment 327,725 17,339,930 327,725 15,110,580

Disposals (327,725) (17,339,930) — —Balance at end of the year - net of accumulateddepreciation and impairment — — 327,725 15,110,580Buildings at costBalance at beginning of the year - net of accumulateddepreciation and impairment 48,656 2,574,389 48,656 2,243,407

Disposals (48,656) (2,574,389) — —

Depreciation expense — — — —Balance at end of the year - net of accumulateddepreciation and impairment — — 48,656 2,243,407Plant and equipment at costBalance at beginning of the year - net of accumulateddepreciation and impairment 2,068 109,418 3,005 138,553

Additions — — — —

Disposals (278) (14,709) — —Depreciation expense (881) (46,614) (937) (43,203)Balance at end of the year - net of accumulateddepreciation and impairment 909 48,095 2,068 95,350

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2012

Interest in subsidiariesPercentage of equity Investmentinterest held by the (Provision for diminution)consolidated entity 2012 2011

country ofincorporation % $ ` $ `

Technico Asia Holdings Pty Ltd(formerly known as Technico China Pty Ltd) Australia 100 3,684,522 194,948,059 3,684,522 169,884,098

(2,714,786) (143,639,327) (2,714,786) (125,171,995)

969,736 51,308,732 969,736 44,712,103

Technico Technologies Inc Canada 100 1,196,341 63,298,402 1,196,341 55,160,293(1,196,341) (63,298,402) (1,196,341) (55,160,293)

— — — —Technico Agri Sciences Ltd India 100 13,299,546 703,678,979 13,299,546 613,208,817

— — — —

13,299,546 703,678,979 13,299,546 613,208,817

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2012

2012 2011Notes $ ` $ `

Note 9: Intangible assets

Non-current

TECHNITUBER® technology, patents and trademarks at cost 3,407,514 180,291,566 3,407,000 157,088,253

Less: Accumulated amortisation (3,386,043) (179,155,535) (3,382,045) (155,937,640)

21,471 1,136,031 24,955 1,150,613Movement in intangibles

Balance at beginning of the year 24,955 1,320,369 27,704 1,277,362

Additions 514 27,196 1,771 81,657

Amortisation expense (3,998) (211,534) (4,520) (208,406)

Balance at the end of the year 21,471 1,136,031 24,955 1,150,613

Note 10: Trade and other payables

Current

Trade creditors 537,480 28,438,067 577,402 26,622,563

Sundry creditors and accruals 174,649 9,240,678 202,217 9,323,720

712,129 37,678,745 779,619 35,946,283Terms 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.

63


2012 2011

Notes $ ` $ `

Note 11: Loans and borrowings

Current

Russell Credit Limited - unsecured (non-interest bearing) — — — —

Bank loan - secured (interest bearing) — — 230,000 10,604,725

— — 230,000 10,604,725

Non-current

Bank loan - secured (interest bearing) — — — —

Russell Credit Limited - unsecured (non-interest bearing) — — 500,000 23,053,750

— — 500,000 23,053,750

2012 2011

Notes $ ` $ `

Note 12: Provisions

Current

Employee entitlements 27,874 1,474,813 22,992 1,060,104

Non-Current

Employee entitlements — — — —

Note 13: Contributed equity

(a) Issued and paid up capital

Ordinary shares fully paid 22,606,065 shares (2011: 22,606,065) 44,098,046 2,333,227,614 44,098,046 2,033,250,656

Discount on issue (108,864) (5,759,994) (108,864 ) (5,019,447)

43,989,182 2,327,467,620 43,989,182 2,028,231,209

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2012 (Contd.)

(b) Terms and conditions of contributed equity

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

2012 2011

$ ` $ `

Note 14: Reserve and accumulated losses

Accumulated losses 29,447,564 1,558,070,610 29,558,938 1,362,888,734

Balance at beginning of year 29,558,938 1,563,963,408 29,659,170 1,367,510,181

Net (profit)/loss attributable to the members of Technico Pty Ltd (111,374) (5,892,798) (100,232) (4,621,447)

Total unavailable for appropriation 29,447,564 1,558,070,610 29,558,938 1,362,888,734

Dividends paid or provided for — — — —

Aggregate amount transferred (to)/from reserves — — — —

Balance at end of period 29,447,564 1,558,070,610 29,558,938 1,362,888,734

Note 15: Contigent liabilities

Estimates of material amounts of contingent liabilities,

not provided for in the financial report — — — —

Note 16: Events subsequent to reporting date

There are no subsequent events to be reported. 2012 2012 2011 2011$ ` $ `

Note 17: Remuneration of auditors

Amounts received or due and receivable by auditor:

Audit of the entity by auditor/group auditor 53,000 2,623,966 70,000 3,054,450

Other services in relation to the entity 7,000 346,562 15,000 654,525

60,000 2,970,528 85,000 3,708,975

64


selected depend on the auditor's judgement, including the assessment ofthe risks of material misstatement of the financial statements, whether dueto fraud or error. In making those risk assessments, the auditor considersinternal control relevant to the entity's preparation and fair presentationof the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity's internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates made by management, as wellas evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these financial statements present fairly, in all materialrespects, the financial position of Technico Technologies Inc. as at March31, 2012 and the results of its operations and its cash flows for the yearthen ended in accordance with Canadian accounting standards for privateenterprises.

Place : Fredericton, New Brunswick Teed Saunders Doyle & Co.

Date : April 11, 2012 Chartered Accountants


2012 2012 2011 2011$ ` $ `

ASSETS

Current AssetsCash 85,409 4,359,275 33,217 1,527,650Accounts receivable 3,060 156,182 2,921 134,337Inventory 206,154 10,522,100 224,193 10,310,636Prepaid expenses 2,753 140,513 2,780 127,852

297,376 15,178,070 263,111 12,100,475

Property and Equipment (note 6) 127,541 6,509,693 165,192 7,597,180

424,917 21,687,763 428,303 19,697,655

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2012

Your directors submit their Report for the financial year ended 31 March2012.

Directors

The following directors held office since the start of the financial year untilthe date of this report:

Ms Bhavani Parameswar

Mr David Charles McDonald



Technico Technologies Inc. is a company limited by shares that is incorporatedand domiciled in Canada. It is a wholly owned subsidiary of Technico PtyLtd, a company incorporated in Australia. On 26th March, 2012, ITC Limited,India acquired from its wholly owned subsidiary, Russell Credit Limited theentire shareholding of your Companyís parent company, Technico Pty Limited(Technico), Australia.

The registered office of Technico Technologies Inc is located at:

Stewart McKelvey Stirling Scales

Suite 600, Frederick Square,

77 Westmoreland

Fredericton, New Brunswick

E3B 5B4 Canada

Employees

The company operates through employees engaged on seasonal & casualbasis with technical and management support from its parent entity.


The principal activities of your company during the financial year underreview were production of TECHNITUBER® seed potatoes for sale in theCanadian and export markets and production of early generation field seedpotatoes under a joint farming arrangement with local potato farmers.


The TECHNITUBER® brand continues to gain recognition in Canada, thoughoverall volumes are still small.

Technico Technologies Inc., Canada registered sales of Canadian Dollar (C$)0.26 million (previous year C$ 0.20 million) and posted a net profit of C$0.02 million (previous year C$ 0.01 million). The increase in sales revenueis due to increase in volumes and prices of Field Seed potatoes.

No dividends have been paid or declared during the financial year.

Auditors

The Company has engaged M/s Teed Saunders Doyle & Co as auditors forthe year under review whose report is annexed to the financial report.

Future developments and results

Your company’s early generation seed potato continues to show its superiorquality and although volumes to date are small, interest has been strongerfor the product. The future focus of this business will be to build on thereputation of its technology and its isolated seed production environmentto obtain a price premium commensurate with the quality and performance.The company will continue to build on exports to new markets.


Your company is not subject to any particular or significant environmentalregulation.

Place: New Jersey, USA Bhavani ParameswarDate: 2nd May 2012 Director

INDEPENDENT AUDITOR'S REPORT

To the Shareholder of Technico Technologies Inc.

We have audited the accompanying financial statements of TechnicoTechnologies Inc., which comprise the balance sheet as at March 31, 2012and the statements of income, retained earnings (deficit) and cash flowsfor the year then ended, and a summary of significant accounting policiesand other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation ofthese financial statements in accordance with Canadian accounting standardsfor private enterprises, and for such internal control as managementdetermines is necessary to enable the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statementsbased on our audit. We conducted our audit in accordance with Canadiangenerally accepted auditing standards. Those standards require that wecomply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free frommaterial misstatement.An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the financial statements. The procedures

65

TECHNICO TECHNOLOGIES INC.

STATEMENT OF RETAINED EARNINGS (DEFICIT) FOR THE YEAR ENDED MARCH 31, 2012

(Unaudited) (Unaudited) 2012 2012 2011 2011 $ ` $ `

Deficit At Beginning Of Year (1,134,337) (52,168,158) (1,141,418) (50,427,846)

Net Income For The Year 15,724 762,928 7,081 319,246

Change In Unrealized Foreign Exchange

During The Year — (5,688,778) — (2,059,558)

Deficit At End Of Year (1,118,613) (57,094,008) (1,134,337) (52,168,158)

66



2012 2012 2011 2011$ ` $ `

Current LiabilitiesAccounts payable and accrued liabilities 18,306 934,338 13,876 638,157Current portion of longterm debt 39,166 1,999,033 8,265 380,107

57,472 2,933,371 22,141 1,018,264

Unamortized Government Assistance (note 5) 31,672 1,616,539 43,407 1,996,288

LongTerm Debt (note 8) 169,928 8,673,125 209,094 9,616,233

259,072 13,223,035 274,642 12,630,785

STATEMENT OF INCOME FOR THE YEAR ENDED MARCH 31, 2012

2012 2012 2011 2011 $ ` $ `

Sales 257,922 12,514,375 199,191 8,980,526

Cost Of Sales 165,231 8,017,008 139,314 6,280,972

Gross Profit (Loss) 92,691 4,497,367 59,877 2,699,554

Expenses

Advertising and trade shows 7,816 379,232 594 26,780

Agronomy and marketing 12,039 584,132 — —Amortization of property and equipment 12,619 612,274 15,007 676,591

Bank charges 625 30,325 396 17,854

Insurance 5,711 277,098 5,586 251,845

Interest on longterm debt 11,735 569,382 12,184 549,316

Occupancy costs 6,166 299,174 5,638 254,189

Office and supplies (recoveries) (329) (15,963) 1,534 69,160

Professional services 9,000 436,680 10,501 473,438

Staff training 35 1,698 322 14,517

Telephone 3,523 170,936 4,271 192,558

Vehicle and travel 3,307 160,456 6,190 279,076

Wages and benefits 16,455 798,397 16,407 739,710

88,702 4,303,821 78,630 3,545,034

3,989 193,546 (18,753) (845,480)

Other Income

Government assistance Interest subsidy 11,735 569,382 12,184 549,316

Net revenue Support services (note 12) — — 13,650 615,410

11,735 569,382 25,834 1,164,726

Net Income For The Year 15,724 762,928 7,081 319,246

SHAREHOLDERS' EQUITY

Capital Stock (note 11) 1,284,458 65,558,736 1,287,998 59,235,028Deficit (1,118,613) (57,094,008) (1,134,337) (52,168,158)

165,845 8,464,728 153,661 7,066,870

424,917 21,687,763 428,303 19,697,655

Approved By The Board:

Bhavani Parameswar Director

67


NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED MARCH 31, 2012

1. Nature of Business Activities

The company is a wholly-owned subsidiary of Technico Pty Limited(Australia) and produces early generation seed potatoes for the NorthAmerican Market.

2. First Time Adoption of Accounting Standards For Private Enterprises

During the year, the company adopted accounting standards for privateenterprises. These financial statements are the first prepared inaccordance with these standards. The standards have been preparedretrospectively, but resulted in no changes to beginning equity, assetsor liabilities.

3. Significant Accounting Policies

Basis of Presentation

The financial statements include Indian Rupee equivalent figures, arrivedat by applying the year-end exchange rate of CAD $1 = Rs. 51.04(2011 CAD $1 = Rs. 45.99) to the balance sheet and the average annualexchange rate of CAD $1 = Rs. 48.52 (2011 CAD $1 = Rs. 45.085) tothe income statement as provided by the parent company.

Financial Instruments

Financial instruments are recorded at fair value when acquired or issued. In subsequent periods, financial assets with actively traded marketsare reported at fair value, with any unrealized gains and losses reportedin income. All other financial instruments are reported at amortizedcost, and tested for impairment at each reporting date. Transactioncosts on the acquisition, sale or issue of the financial instruments areexpensed when incurred.

Measurement Uncertainty

The preparation of financial statements in conformity with Canadianaccounting standards for private enterprises requires management tomake estimates and assumptions that affect the reported amount ofnet assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the period. Suchestimates are periodically reviewed and any adjustments necessary arereported in earnings in the period in which they become known. Actualresults could differ from these estimates.

Inventory

Inventory is valued at the lower of production cost and net realizablevalue. Inventory includes capitalized amortization of $32,208 (2011$40,026).

Revenue

Revenue is recognized when products and services are delivered to thecustomer and ultimate collection is reasonably assured.

3. Significant Accounting Policies (continued)

Amortization

Amortization of property and equipment is recorded on a straight-linebasis at the following annual rates:

Buildings 10%

Equipment 13.34%, 20%

Change in Accounting Policy Income Taxes

In the current year, upon adoption of Canadian accounting standardsfor private enterprises, the company has adopted the taxes payablemethod of accounting for income taxes. Under this method, onlycurrent income tax assets and liabilities are recognized. Previously, thecompany accounted for future income taxes which were reduced bya valuation allowance to reduce future tax assets to the amount morelikely than not to be realized. The adoption of this new accountingpolicy has been applied retroactively but has resulted in no changesto recorded amounts in the financial statements.

4. Financial Instruments

Credit Risk

Credit risk arises from the potential that a counter party will fail toperform its obligations. The company is exposed to credit risk fromcustomers. In order to reduce its credit risk, the company reviews anew customer's credit history before extending credit and conductsregular reviews of its existing customers' credit performance. Anallowance for doubtful accounts is established based upon factorssurrounding the credit risk of specific accounts, historical trends andother information.

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2012

2012 2012 2011 2011$ ` $ `

Cash Provided By (Required For):

Operating Activities

Net income for the year 15,724 762,928 7,081 319,246

Items not affecting cash

Amortization of property and equipment 12,619 612,274 15,007 676,591

Amortization capitalized to inventory 32,208 1,562,732 40,026 1,804,573

Foreign currency fluctuations — 320,335 — 88,916

60,551 3,258,269 62,114 2,889,326

Changes in non-cash operating working capital (note 10) 22,359 1,141,203 (31,977) (1,470,624)

82,910 4,399,472 30,137 1,418,702

Investing Activities

Purchase of property and equipment (7,178) (366,365) (4,987) (229,352)

Financing Activities

Capital stock issuance (redemption) (3,540) (180,682) — —

Repayment of long-term debt (8,265) (421,846) 2,184 100,442

Unamortized government assistance (11,735) (598,954) (12,184) (560,342)

(23,540) (1,201,482) (10,000) (459,900)

Increase In Cash During The Year 52,192 2,831,625 15,150 729,450

Cash Position At Beginning Of Year 33,217 1,527,650 18,067 798,200

Cash Position At End Of Year 85,409 4,359,275 33,217 1,527,650

68


9. Income Taxes

The company has non-capital losses for income tax purposes of$1,205,506 which may be carried forward to reduce taxable incomein future years. If not applied against taxable income, the noncapitallosses will expire as follows:

$ `

2014 205,382 10,482,6972026 366,483 18,705,2922027 283,750 14,482,6002028 214,636 10,955,0212030 115,010 5,870,1102031 12,550 640,5522032 7,695 392,753

1,205,506 61,529,025

The company has investment tax credits of $34,039 available to reducetaxes payable of future years. The benefit of investment tax credits andnon-capital losses carried forward have not been recorded in thefinancial statements.

10. Changes In Non-Cash Operating Working Capital

2012 2012 2011 2011$ ` $ `

Accounts receivable (139) (7,095) (42) (1,932)

Inventory 18,039 920,711 (17,745) (816,093)

Prepaid expenses 27 1,378 (21) (966)

Accounts payableand accrued liabilities 4,432 226,209 (11,529) (530,219)

Deferred revenue — — (2,640) (121,414)22,359 1,141,203 (31,977) (1,470,624)

11. Capital Stock

2012 2012 2011 2011$ ` $ `

Authorized

An unlimited number ofcommon shares

200,000 non-voting,non-cumulative,non-participating,redeemable andretractable ClassA preferred shares

Issued

1,087,999 Commonshares 1,087,998 55,531,418 1,087,998 50,037,028

196,460 Class A preferred shares(2011 200,000 shares) 196,460 10,027,318 200,000 9,198,000

1,284,458 65,558,736 1,287,998 59,235,028

The company's Class A preferred shares are redeemable on the basisof 50% of aftertax profits of the preceding fiscal year and are fullyretractable by the holder should specified corporate obligations notbe met. During the year, the company redeemed 3,540 Class A preferredshares (2011 nil Class A preferred shares)

12. Net Revenue Support Services

2012 2012 2011 2011$ ` $ `

Revenue — — 83,252 3,753,416Expense wages and salaries — — 69,602 3,138,006

Net revenue Support services — — 13,650 615,410

Support services revenue is generated entirely from ITC Infotech India Limited,a subsidiary company of ITC Limited (India), which is the ultimate parentcompany of Technico Pty Limited (Australia) and Technico Technologies Inc.(Canada). These related party transactions are recorded at the exchangeamount as established and agreed to by the related parties and are subject tonormal trade terms.

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meetingobligations associated with financial liabilities. The company is exposedto this risk mainly in respect of its receipt of funds from its customersand other related sources and the payment of funds for accountspayables and longterm debt.

5. Government Assistance

During the year, the company received government grants totalling$13,098 which have been applied to reduce expenses as follows:

2012 2012 2011 2011$ ` $ `

Advertisingand trade shows 3,281 159,194 — —Agronomyand marketing 9,817 476,321 — —

13,098 635,515 — —

6. Property and Equipment

Accumulated 2012 2011Cost Amortization Net Net

$ $ $ $

Land 46,564 — 46,564 46,564

Buildings 289,698 245,045 44,653 69,128

Equipment 280,566 244,242 36,324 49,500

616,828 489,287 127,541 165,192

` ` ` `

Land 2,376,627 — 2,376,627 2,141,478

Buildings 14,786,186 12,507,097 2,279,089 3,179,197

Equipment 14,320,089 12,466,112 1,853,977 2,276,505

31,482,902 24,973,209 6,509,693 7,597,180

7. Unamortized Government Assistance

Unamortized government assistance represents the unamortized amountof interest subsidy relative to a non-market rate loan received from theAtlantic Canada Opportunities Agency. The amortization of the loaninterest subsidy is recorded as other income in the statement of income.

8. LongTerm Debt

2012 2012 2011 2011

$ ` $ `

Non-interest bearing loanpayable to the AtlanticCanada OpportunitiesAgency, net of anunamortized fair valuediscount of $31,672(2011 $43,407) at 4.5%,in four annual installmentsof $50,000 and onepayment of $40,766,unsecured, due August 2016. 209,094 10,672,158 217,359 9,996,340

Less current portion 39,166 1,999,033 8,265 380,107

169,928 8,673,125 209,094 9,616,233

Principal repayment of long-term debt over the next five years is as follows:$ `

2013 39,166 1,999,0332014 41,416 2,113,8732015 43,666 2,228,7132016 45,916 2,343,5532017 38,930 1,986,987

209,094 10,672,159

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 31ST MARCH,2012

Your Directors submit their Report for the financial year ended 31st March,2012.

During the year under review, production of potato in India estimated at37.5 million MT recorded an all time high leading to surplus stocks andlow prices. As a result, the demand for seed potato and its prices were alsodepressed. Consequently, your Company experienced a muted growth inturnover. However, your Company leveraged its market standing, productquality, on-field performance and strong trade & customer relationship, todrive a price premium for its seed potatoes and deliver 11.5% growth inprofits over the previous year. During the year, the company also repaidits outstanding loan from Russell Credit Limited in accordance with agreedterms.

On 26th March, 2012, ITC Limited acquired from its wholly owned subsidiary,Russell Credit Limited, the entire shareholding of your Company’s holdingcompany, Technico Pty Limited, Australia. The ultimate holding companycontinues to leverage your Company’s leadership in the production of earlygeneration seed potatoes and strength in agronomy not only for sourcingthe chip stock for the ‘Bingo!’ brand of its Branded Packaged Foods businessbut also in servicing the seed potato requirements of its farmer base anchoredto its e-Choupal system.

FINANCIAL RESULTS(` Crore)

Particulars 2011-12 2010-11

Turnover 48.20 47.65

Profit before interest, depreciation & tax 8.68 7.83

Financial expenses 0.03 0.03

Depreciation 0.82 0.78

Profit before tax 7.83 7.02

Profit after tax 7.83 7.02

Balance carried forward to Balance Sheet 8.25 0.42

COMPANY’S PERFORMANCE

(A) PRODUCTION OF TECHNITUBER® SEED POTATOES

During the year under review, your Company produced 94.71 lakhTECHNITUBER® seed potatoes (Previous Year 101.28 lakhs) at its facilityat Manpura, Himachal Pradesh. The lower production was mainly attributableto change in size specifications by our customers.

(B) FIELD OPERATIONS

Higher than normal temperature during the time of sowing, heavy unseasonalrain and late blight disease affected the Rabi 2012 crop for potato in Indiaand led to a decline of about 10% for the country as a whole and about 4%for your Company. As a result, your Company’s field generated seed potatoproduction stood at 48,395 MT against 50,403 MT in the previous year.Your Company has continued to reinforce the competency of its Agronomyteam and upgrade the capacity of relevant potato farmers through theadoption of modern farm practices, superior inputs and more effectiveirrigation techniques. This, coupled with its strong focus on quality hasenabled it to continuously improve the quality of its seed and maintain thelargest early generation seed potato pipeline for Processing and Table Potatovarieties in India.

(C) MARKETING

Your Company sold 40,178 MT of seed potato / potato during the year(previous financial 39,859 MT).Your Company continues to be the only exporter of seed potatoes fromIndia. During the year, your Company exported 42.90 lakh TECHNITUBER®seed potatoes (previous year: 46.78 lakh) and 200.40 MT of early generationseed potatoes (previous year: 546.09 MT). Your company continued toprovide quality farm inputs to its farmers at competitive prices.

Your Company recognises that its business is subject to climatic, agriculturaland cyclical risks but looks forward to continued delivery of superiorperformance premised on the strong demand for its seed potatoes fromloyal customer and farmer bases fuelled by the technology of its parentand the expertise of its employees.

EMPLOYEES

Your Directors recognise the key role of employees in creating and deliveringvalue to farmers, customers and shareholders and wish to place on recordtheir appreciation of the dedication and commitment of every employeeof the Company, which has led to sustaining its performance even in thedifficult business circumstances that prevailed during the year under review.

None of the employees of your Company is covered under the provisionsof Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules 1975.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGNEXCHANGE EARNINGS AND OUTGO

The information with regard to technology absorption and foreign exchangeearnings and outgo in terms of Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988 is annexed.

DIRECTORS

In accordance with the provisions of Articles 122 and 123 of the Articlesof Association of the Company, Mr. Arup Kumar Mukerji and Mr. DavidMcDonald will retire by rotation at the ensuing Annual General Meetingof the Company, and being eligible, offer themselves for re-election. TheBoard has recommended their re-election.

AUDIT COMMITTEE

The Audit Committee of the Company comprises of Mr. Surampudi Sivakumaras Chairman, and Mr. David Charles McDonald and Mr. Arup Kumar Mukerjias Members.

DIRECTOR’S RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, yourDirectors confirm having:

a) followed in the preparation of the Annual Accounts, the applicableaccounting standards with proper explanation relating to materialdepartures if any;

b) selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of your Company atthe end of the financial year and of the profit of your Company forthat period;

c) taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of your Company and forpreventing and detecting fraud and other irregularities; and

d) prepared the Annual Accounts on a going concern basis.

AUDITORS

The Company’s Auditors, M/s. S. R. Batliboi and Co., Chartered Accountants,retire at the ensuing Annual General Meeting of the Company and, beingeligible, offer themselves for re-appointment.

On behalf of the Board of DirectorsFor Technico Agri Sciences Limited

Place : Gurgaon S. Sivakumar

Dated : 26th April,2012 Chairman

69

TECHNICO AGRI SCIENCES LIMITED

ANNEXURE TO THE REPORT OF DIRECTORS

Information under Section 217(1)(e) of the Companies Act, 1956, readwith Companies (Disclosure of Particulars in the Report of Board of Directors)Rules 1988 and forming part of the Directors Report:-Research and Development (R&D)Your Company continues to be engaged in Research and Developmentactivities in both TECHNITUBER® seed potato production as well as fieldgenerated seed potato production with the objectives of reducingconsumption of water and fertilisers, using new chemicals to minimisedisease pressure, enhancing yield etc. In order to further leverage its tissueculture capabilities, the Company has undertaken trial production of bananatissue culture plantlets and its test marketing in select states.

Technology Absorption, Adaptation and InnovationBased on the efforts made towards technology absorption, your Companyachieved smooth plant operation since the declaration of commercialproduction. Field progeny of the seed potatoes produced with the use ofTECHNITUBER® Seed Potato Technology has exhibited qualitative andquantitative improvement over traditional product at affordable cost.a) Technology Imported : Production Facility at Manpura, Himachal

Pradesh, is based on TECHNITUBER® SeedPotato Technology from Technico Pty Limited,Australia.

b) Year of import : 2000c) Whether technology The absorption of the technology has taken

fully absorbed : place through two-phase production. YourCompany has been successfully producing

d) If not fully absorbed, TECHNITUBER® seed potatoes (G0) in itsareas where this has production facility at Manpura. Subsequentnot taken place, reasons stage multiplications have been successfullytherefore and future undertaken in leased and contract farms.plans of action : However, the company continues to refine

and improve upon the technology bydrawing on the technical expertise of theparent company.

Foreign Exchange Earnings and Outgo (` crore)Foreign Exchange Earnings : 1.97Foreign Exchange Outgo : 0.08

On behalf of the Board of DirectorsFor Technico Agri Sciences Limited

Place: Gurgaon S SivakumarDated: 26th April, 2012 Chairman

AUDITORS’ REPORTTO THE MEMBERS OF TECHNICO AGRI SCIENCES LIMITED1. We have audited the attached Balance Sheet of Technico Agri Sciences

Limited as at March 31, 2012 and also the Statement of profit and lossand the cash flow statement for the year ended on that date annexedthereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and performthe audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (asamended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclosein the Annexure a statement on the matters specified in paragraphs 4and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we reportthat:i. We have obtained all the information and explanations, which to

the best of our knowledge and belief were necessary for thepurposes of our audit;

ii. In our opinion, proper books of account as required by law havebeen kept by the Company so far as appears from our examinationof those books;

iii. The balance sheet, statement of profit and loss and cash flow

statement dealt with by this report are in agreement with thebooks of account;

iv. In our opinion, the balance sheet, statement of profit and loss andcash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section211 of the Companies Act, 1956.

v. On the basis of the written representations received from thedirectors, as on March 31, 2012, and taken on record by the Boardof Directors, we report that none of the directors is disqualified ason March 31, 2012 from being appointed as a director in termsof clause (g) of sub-section (1) of section 274 of the CompaniesAct, 1956.

vi. In our opinion and to the best of our information and accordingto the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956, in the mannerso required and give a true and fair view in conformity with theaccounting principles generally accepted in India;(a) in the case of the balance sheet, of the state of affairs of the

Company as at March 31, 2012;(b) in the case of the statement of profit and loss, of the profit for

the year ended on that date; and(c) in the case of cash flow statement, of the cash flows for the

year ended on that date.For S.R. Batliboi & Co.

Firm registration number: 301003EChartered Accountants

per Manoj GuptaPlace : Gurgaon PartnerDate : April 26, 2012 Membership No.: 83906

Annexure referred to in paragraph 3 of our report of even dateRE: TECHNICO AGRI SCIENCES LIMITED (‘THE COMPANY’)

(i) (a) The Company has maintained proper records showing fullparticulars, including quantitative details and situation of fixedassets.

(b) The fixed assets were physically verified during the year by theManagement in accordance with a regular programme of verificationwhich, in our opinion, is reasonable having regard to the size ofthe Company and the nature of its assets. According to informationand explanation given to us, no material discrepancies were noticedon 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 thesize of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and nomaterial discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, theCompany has not granted any loans, secured or unsecured tocompanies, firms or other parties covered in the register maintainedunder section 301 of the Companies Act, 1956. Accordingly, theprovisions of clause 4(iii)(a) to (d) of the Order are not applicableto the Company and hence not commented upon.

(e) According to information and explanations given to us, the Companyhas not taken any loans, secured or unsecured, from companies,

firms or other parties covered in the register maintained undersection 301 of the Companies Act, 1956. Accordingly, the provisionsof clause 4(iii)(e) to (g) of the Order are not applicable to theCompany and hence not commented upon.

(iv) In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business, for thepurchase of inventory and fixed assets and for the sale of goods andservices. During the course of our audit, we have not observed anymajor weakness or continuing failure to correct any major weaknessin the internal control system of the company in respect of these areas.

(v) (a) In our opinion, there are no contracts or arrangements that needto be entered in the register maintained under Section 301 of theCompanies Act, 1956. Therefore, provision of clause 4(v) (b) ofthe Companies (Auditor’s Report) Order, 2003 (as amended) isnot applicable to the Company.

(vi) The Company has not accepted any deposits from the public.(vii) The Company is covered as part of the internal audit function operated

by its parent company, which is commensurate with the size of theCompany and the nature of its business.

(viii)To the best of our knowledge and as explained, the Central Governmenthas not prescribed maintenance of cost records under clause (d) ofsub-section (1) of section 209 of the Companies Act, 1956 for theproducts of the Company.

(ix) (a) The Company is regular in depositing with appropriate authorities

70


]

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 duesapplicable to it. The provisions relating to investor education andprotection fund are not applicable to the Company.

(b) According to the information and explanations given to us, noundisputed amounts payable in respect of provident fund,employees’ state insurance, income-tax, wealth-tax, service tax,sales-tax, customs duty, excise duty, cess and other undisputedstatutory dues were outstanding, at the year end, for a period ofmore than six months from the date they became payable.

(c) According to the information and explanation given to us, thereare no dues of income-tax, sales-tax, wealth-tax, service tax, customsduty, excise duty and cess which have not been deposited onaccount of any dispute.

(x) The Company has no accumulated losses at the end of the financialyear and it has not incurred cash losses in the current and immediatelypreceding financial year.

(xi) Based on our audit procedures and as per the information andexplanations given by the management, we are of the opinion thatthe Company has not defaulted in repayment of dues to a financialinstitution, bank or debenture holders.

(xii) According to the information and explanations given to us and basedon the documents and records produced before us, the Company hasnot granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutualbenefit fund / society. Therefore, the provisions of clause 4(xiii) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are notapplicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares,securities, debentures and other investments. Accordingly, the provisions

of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (asamended) are not applicable to the Company.

(xv) According to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others frombank or financial institutions.

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

(xvii) According to the information and explanations given to us and onan overall examination of the balance sheet of the Company, we reportthat no funds raised on short-term basis have been used for long-terminvestment.

(xviii)The Company has not made any preferential allotment of shares toparties or companies covered in the register maintained under section301 of the Companies Act, 1956.


(xx) The Company has not raised any money through a public issue duringthe year.

(xxi) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and as perthe information and explanations given by the management, wereport that no fraud on or by the Company has been noticed orreported during the year.

For S.R. Batliboi & Co.Firm registration number: 301003E

Chartered Accountantsper Manoj Gupta

Place : Gurgaon PartnerDate : April 26, 2012 Membership No.: 83906

71


(Amount in ` '000)

As per our report of even dateFor S.R. Batliboi & Co. For and on behalf of the Board of Directors of Technico Agri Sciences Limited

Firm registration number: 301003EChartered Accountants

per Manoj Gupta Arup Kumar Mukerji Sachidanand Madan Sanjeev MadanPartner Director Director and Company Vice PresidentMembership no.: 83906 Secretary (Finance)

Place: GurgaonDate: 26 April 2012


Particulars Notes 31st March, 2012 31st March, 2011Equity and LiabilitiesShareholders’ Funds

Share Capital 1 3,79,628 3,79,628Reserves and Surplus 2 82,520 4,229

4,62,148 3,83,857Non-current liabilities

Long-term provisions 3 2,060 1,6972,060 1,697

Current liabilitiesShort-term Borrowings 4 — 1,20,000Trade Payables 5 1,15,325 1,74,126Other Current Liabilities 5 61,771 49,963Short-term provisions 3 207 285

1,77,303 3,44,374TOTAL 6,41,511 7,29,928AssetsNon-current Assets

Fixed AssetsTangible Assets 6.1 1,08,378 1,10,518Intangible Assets 6.2 — — Intangible Assets under development 1,050 — Long-term Loans and Advances 7 1,564 1,497Other Non-current Assets 8.2 23 21

1,11,015 1,12,036Current assets

Current investments 9 84,292 2,22,762Inventories 10 4,22,264 3,70,494Trade Receivables 8.1 16,047 17,750Cash and Cash equivalents 11 1,241 1,130Short-term Loans and Advances 7 5,741 5,127 Other Current Assets 8.2 911 629

5,30,496 6,17,892Total 6,41,511 7,29,928

Nature of Operations 21Summary of significant accounting policies 22

The accompanying notes are an integral part of the financial statements.

72


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012 For the year ended For the year ended

31st March, 2012 31st March, 2011Particulars

Cash flow from operating activitiesProfit before tax 78,291 70,205Non-cash adjustment to reconcile profit before tax to net cash flowsDepreciation/amortization 8,260 7,801Impairment/other write off on Tangible/Intangible assets — 333Loss/(profit) on sale of fixed assets (1) 5Unrealized Foreign Exchange (gain)/loss (739) (529)Interest expense 276 290Dividend income (12,316) (8,646)Provision written back (6,476) (1,917)Operating profit before Working Capital changes 67,295 67,542Movements in Working Capital :Increase/(decrease) in Trade Payables (58,801) (11,593)Increase/(decrease) in Long-term provisions 363 —Increase/(decrease) in Short-term provisions (78) —Increase/(decrease) in Other Current Liabilities 18,284 1,189Decrease/(increase) in Trade Receivables 2,442 (7,049)Decrease/(increase) in Inventories (51,770) (23,623)Decrease/(increase) in Long-term Loans and Advances (67) —Decrease/(increase) in Short-term Loans and Advances (614) (503)Decrease/(increase) in Other Current Assets (282) —Decrease/(increase) in other Non-current Assets (2) (10)Cash generated from/(used in) Operations (23,230) 25,953Net cash flow from/(used in) operating activities (A) (23,230) 25,953Cash flows from investing activitiesPurchase of Fixed Assets, including Intangible Assets, CWIP and Capital Advances (7,178) (5,636)Proceeds from sale of Fixed Assets 9 8Purchase of Current Investments (21,08,364) (17,77,291)Proceeds from sale/maturity of Current Investments 22,47,126 17,10,888Dividends received 12,024 8,609Net cash flow from/(used in) investing activities (B) 1,43,617 (63,422)


Particulars Notes For the year ended For the year ended31st March, 2012 31st March, 2011

INCOME Revenue from operations (net) 12 4,96,999 4,78,981Other Income 13 22,679 18,932Total Revenue (I) 5,19,678 4,97,913EXPENSESCost of Raw material and Components consumed 14 43,523 37,272Purchase of Traded Goods 15 18,617 17,879(Increase)/decrease in Inventories of Finished Goods, 15 (48,787) (23,403)Work-in-progress and Traded GoodsEmployee Benefits expense 16 27,776 24,836Other expenses 17 3,91,722 3,63,033TOTAL (II) 4,32,851 4,19,617Earnings before interest,tax,depreciation and 86,827 78,296amortization (EBITDA) (I) - (II)Depreciation and Amortization expense 18 8,260 7,801Finance costs 19 276 290Profit/(loss) before tax 78,291 70,205Tax expenses — —Profit/(loss)after tax 78,291 70,205Earnings per equity share [nominal value of share ` 10(31 March 2011:` 10)] 20BasicComputed on the basis of total profit for the year `2.06 `1.85DilutedComputed on the basis of total profit for the year `2.06 `1.85Nature of Operations 21Summary of significant accounting policies 22

The accompanying notes are an integral part of the financial statements.

As per our report of even dateFor S.R. Batliboi & Co.Firm registration Number : 301003EChartered Accountantsper Manoj GuptaPartnerMembership No. 83906Place: GurgaonDate: 26 April 2012

For and on behalf of the Board of Directors of Technico Agri Sciences LimitedArup Kumar Mukerji DirectorSachidanand Madan Director and Company SecretarySanjeev Madan Vice President (Finance)

(Amount in ` '000)

(Amount in ` '000)

73


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012 (Contd)For the year ended For the year ended

Particulars 31st March, 2012 31st March, 2011Cash flows from financing activitiesRepayment of Short-term Borrowings (1,20,000) —Interest paid (276) (290)

Net Cash flow from/(used in) in financing activities (C) (1,20,276) (290)

Net increase/(decrease) in Cash and Cash equivalents (A + B + C) 111 (37,759)Cash and Cash equivalents at the beginning of the year 1,130 38,889

Cash and Cash equivalents at the end of the year 1,241 1,130Components of Cash and Cash equivalentsCash on Hand 21 50With banks- on Current Account 1,220 1,080

Total Cash and Cash equivalents (note 11) 1,241 1,130

As per our report of even dateFor S.R. Batliboi & Co.Firm registration Number : 301003EChartered Accountantsper Manoj GuptaPartnerMembership No. 83906Place: GurgaonDate: 26 April 2012

For and on behalf of the Board of Directors of Technico Agri Sciences Limited

Arup Kumar Mukerji Director

Sachidanand Madan Director and Company Secretary

Sanjeev Madan Vice President (Finance)

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 20121. Share Capital (Amount in ` '000)Particulars As at As at

31 March 2012 31 March 2011Authorized40,000,000 (31 March 2011: 40,000,000) equity shares of `10/- each 4,00,000 4,00,000Issued, Subscribed and Fully Paid-up37,962,800 (31 March 2011 : 37,962,800) equity shares of `10/- each 3,79,628 3,79,628Total issued, Subscribed and Fully Paid-up Share capital 3,79,628 3,79,628a. Reconciliation of the shares outstanding at the beginning and at the end of the reporting periodParticulars As at As at

31 March 2012 31 March 2011Numbers (Amount in ` '000) Numbers (Amount in ` '000)

At the beginning of the period 3,79,62,800 3,79,628 3,79,62,800 3,79,628Issued during the period — — — —Outstanding at the end of the period 3,79,62,800 3,79,628 3,79,62,800 3,79,628

b. Terms/rights attached to Equity Shares I. The company has only one class of equity shares having par value of `10 per share. II. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company. The distribution will be in proportion to the number of equity shares held by the shareholders.c. Shares held by Holding Company Out of equity shares issued by the company, shares held by its holding company are as below:

Name of the Company As at As at31 March 2012 31 March 2011

Numbers (Amount in ` '000) Numbers (Amount in ` '000)Technico Pty Ltd., the Holding CompanyEquity shares of `10 each fully paid 3,79,62,794 3,79,628 3,79,62,794 3,79,628Technico Pty Ltd., the Holding Company , jointly with other share holdersEquity shares of `10 each fully paid 6 0 6 0

d. Details of Shareholders holding more than 5% shares in the company

Name of the Shareholders As at As at31 March 2012 31 March 2011

Numbers % holding Numbers % holdingEquity shares of `10 each fully paidTechnico Pty Ltd., the holding company 3,79,62,794 99.99% 3,79,62,794 99.99%

(Amount in ` '000)

74

TECHNICO AGRI SCIENCES LIMITEDNOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2012 (contd)2. Reserves and Surplus (Amount in ` '000)

Particulars As at As at31 March 2012 31 March 2011

Surplus/(deficit) in the statement of Profit and LossBalance as per last financial statements 4,229 (65,976)Profit for the year 78,291 70,205Net surplus in the statement of Profit and Loss 82,520 4,229Total Reserves and Surplus 82,520 4,229

3. Provisions (Amount in ` '000)Long-term Short-term

Particulars As at As at31 March 2012 31 March 2011 31 March 2012 31 March 2011

Provision for Employee BenefitsProvision for Leave benefits 2,060 1,697 207 285

2,060 1,697 207 285

4. Short-term Borrowings (Amount in ` '000)Particulars As at As at

31 March 2012 31 March 2011Interest Free Loan from body corporate — 1,20,000(from Russell Credit Limited, the then 100% holding Company ofTechnico Pty Limited, Australia, the holding Company) — 1,20,000The above amount includesSecured Borrowings — —Unsecured Borrowings — 1,20,000

Note : As per agreed terms, the unsecured loan which was due for repaymentby 30 September 2011, was repaid on 29 September 2011.

5. Other Current Liabilities (Amount in ` '000)Particulars As at As at

31 March 2012 31 March 2011Trade payables (refer note 29 for details of dues tomicro and small enterprises) — —Trade Payables other than Micro and Small Enterprises 1,15,325 1,74,126Other Liabilities

- Advances from Customers 60,228 48,644- Deposit from Dealers 240 240- Other Payables 1,303 1,079

61,771 49,9631,77,096 2,24,089

6.1. Tangible Assets (Amount in ` '000)

Particulars Land Buildings Plant Furniture Licenced Office Computers, Vehicles Totaland and Properties - Equipment Servers &

Equipment Fixtures Building Other ITImprovements equipments

At Cost

At 1 April 2010 15,193 46,548 1,10,120 2,377 4,951 1,051 3,371 3,631 1,87,242

Additions — — 5,713 17 78 51 203 — 6,062

Disposals — — (74) (72) — (385) (433) — (964)At 31 March 2011 15,193 46,548 1,15,759 2,322 5,029 717 3,141 3,631 1,92,340

Additions — — 5,175 — — 20 933 — 6,128

Disposals — — — — — (9) — (9)

At 31 March 2012 15,193 46,548 1,20,934 2,322 5,029 728 4,074 3,631 1,98,459

Depreciation

At 1 April 2010 — 12,525 56,652 1,436 44 286 2,262 1,434 74,639

Charge for the year — 1,313 5,200 90 526 44 283 345 7,801

Disposals — — (33) (42) — (129) (414) — (618)

At 31 March 2011 — 13,838 61,819 1,484 570 201 2,131 1,779 81,822

Charge for the year — 1,313 5,682 91 531 32 266 345 8,260

Disposals — — — — — (1) — — (1)

At 31 March 2012 — 15,151 67,501 1,575 1,101 232 2,397 2,124 90,081Net BlockAt 31 March 2011 15,193 32,710 53,940 838 4,459 516 1,010 1,852 1,10,518At 31 March 2012 15,193 31,397 53,433 747 3,928 496 1,677 1,507 1,08,378

Note :1. Land is free hold and Land amounting to `328 thousand (Previous Year `328 thousand) is pending registration in the name of the Company.2. Land amounting `10,199 thousand (Previous Year `10,199 thousand) has been given to Ultimate Parent Company on operating lease.

75

TECHNICO AGRI SCIENCES LIMITEDNOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2012 (contd)

6.2 Intangible Assets (Amount in ` '000)

Particulars Technical Totalknow now

Gross block

At 1 April 2010 93,837 93,837

Purchase — —

Internal development — —

At 31 March 2011 93,837 93,837

Purchase/Acquisitions through amalgamation — —

At 31 March 2012 93,837 93,837

Amortization

At 1 April 2010 93,837 93,837

Charge for the year — —

At 31 March 2011 93,837 93,837

Charge for the year — —

At 31 March 2012 93,837 93,837

Net block

At 31 March 2011 — —

At 31 March 2012 — —

7. Loans and Advances (Amount in ` '000)Non-current Current

Particulars As at As at31 March 31 March 31 March 31 March

2012 2011 2012 2011Security depositSecured, considered good — — — —Unsecured, considered good 1,319 1,497 183 —Doubtful — — — —

(A) 1,319 1,497 183 —Advances recoverable inCash or kindSecured considered good — — — —Unsecured considered good — — 824 959Doubtful — — 393 393

— — 1,217 1,352Provision for doubtfuladvances — — 393 393

(B) — — 824 959Other loans and advancesPrepaid expenses 245 — 1,020 1,487Balances with Statutory/Government authorities — — 3,714 2,681

(C) 245 — 4,734 4,168Total (A+ B + C ) 1,564 1,497 5,741 5,127

8. Trade Receivables and Other Assets8.1 Trade Receivables (Amount in ` '000)

Non-current CurrentParticulars As at As at

31 March 31 March 31 March 31 March2012 2011 2012 2011

Unsecured, consideredgood unless stated otherwiseOutstanding for a periodexceeding six months fromthe date they are due for paymentSecured, considered good — — — —Unsecured, considered good — — — —Doubtful — — 589 619

— — 589 619Provision for doubtful receivables — — (589) (619)

(A) — — — —Other receivablesSecured, considered good — — — —Unsecured, considered good — — 16,047 17,750Doubtful — — — —

— — 16,047 17,750Provision for doubtful receivables — — — —

(B) — — 16,047 17,750Total (A + B) — — 16,047 17,750

8.2 Other Assets(Amount in ` '000)



Unsecured, considered goodunless stated otherwiseNon-current Bank Balances 10 10 — —(note11)

(A) 10 10 — —OthersInterest accrued onFixed Deposits 13 11 — —Other receivables fromrelated parties (note 24(ii)) — — 911 629

(B) 13 11 911 629Total (A + B) 23 21 911 629

9. Current Investments (Amount in ` '000)Particulars As at As at

31 March 2012 31 March 2011

(At lower of carrying cost and fair value) Unquoted mutual funds

1,498,322 units (Previous Year 3,500,865 units) - Tata Fixed Income Portfolio Fund SchemeA2 Institutional Monthly Dividend Reinvestment 15,000 35,012

192,295 units (Previous Year Nil) - Birla Sun Life Floating Rate Fund-STP-IP-Daily Dividend Reinvestment 19,233 —

4,706,409 units (Previous Year Nil) - HDFC Cash Management Fund - Savings Plan-Daily Dividend Reinvestment 50,059 —

Nil (Previous Year 72,496 units) - DSP Black Rock Liquidity Fund-Inst Plan -Daily Dividend Reinvestment — 72,519

Nil (Previous Year 6,921,384 units) - Kotak Floater Fund Short Term-Daily Dividend Reinvestment — 70,018

Nil (Previous Year 2,498,376 units) - Reliance Interval Fund MIP- Series 1- Inst. Dividend Plan Reinvestment — 25,000

Nil (Previous Year 2,019,065 units) - Reliance Interval Fund QIP- Series 1 Inst. Dividend Plan Reinvestment — 20,213

84,292 2,22,762

Aggregate amount of unquoted investments - Fair value ` 84,386 thousands (previous year ` 2,23,552 thousands) 84,292 2,22,762

76

TECHNICO AGRI SCIENCES LIMITEDNotes to financial statements for the year ended 31 March 2012

10. Inventories (valued at lower of cost and net realizable value)

(Amount in ` '000)


Raw Materials and Components(including stock-in-transit ` Nil(31 March 2011: ` Nil)) (refer note 14) 8,006 4,770

Work-in-progress (refer note 15) 1,139 —

Finished Goods (refer note 15) 4,00,440 3,52,869

Traded Goods (including stock-in-transit` Nil(31 March 2011: ` Nil)) (refer note 15) 11,099 11,022

Stores and Spares 1,580 1,833

4,22,264 3,70,494

11. Cash and Cash equivalents



Balances with Banks:

On current accounts — — 1,220 1,080

Cash on hand — — 21 50

— — 1,241 1,130

Other Bank balances

Deposits with maturity formore than 12 months 10 10 — —

10 10 — —

Amount disclosed under non-current assets (note 8.2) (10) (10) — —

— — 1,241 1,130

12. Revenue from Operations (Amount in ` '000)

Particulars for the year ended for the year ended31 March 2012 31 March 2011

Revenue from OperationsSale of products

Finished Goods 4,55,933 4,64,849Traded Goods 26,026 11,634

Other operating revenueSale of old empty bags 5,733 366Excess Provision written back 6,476 1,917Other 2,831 215

Revenue from operations 4,96,999 4,78,981

Details of products sold

(Amount in ` '000)


Finished Goods sold

TECHNITUBER® Seed Potatoes 19,631 21,755

Field Generated Seed Potatoes 4,35,886 4,43,094

Banana Tissue Culture Plantlets 416 —

4,55,933 4,64,849

Traded Goods sold

Field Generated Seed Potatoes 16,864 3,495

Insecticides,Fungicides and Micronutrients 9,162 8,139

26,026 11,634

4,81,959 4,76,483

13. Other Income

(Amount in ` '000)for the year ended for the year ended

31 March 2012 31 March 2011ParticularsInterest income on

Bank deposits 2 1

Dividend income on

Current investments 12,316 8,646

Commission on Sales — 269

Rental income 8,523 8,424

Exchange difference (net) 1,760 976

Profit on sale of assets 1 2

Miscellaneous income 77 614

10,361 10,285

22,679 18,932

14. Cost of Raw Material andComponents Consumed

(Amount in ` '000)Particulars for the year ended for the year ended

31 March 2012 31 March 2011Inventory at the beginning of the year 4,770 4,526

Add: Purchases 46,759 37,516

51,529 42,042

Less: inventory at the end of the year 8,006 4,770

Cost of Raw Material andComponents Consumed 43,523 37,272

Details of Raw Material andComponents Consumed


31 March 2012 31 March 2011Plantlets 545 248

Chemicals and Fertilisers 3,054 1,937

Packing stores 39,924 35,087

43,523 37,272

Details of Inventory(Amount in ` '000)


Raw Materials and Components

Plantlets — —

Chemicals and Fertilisers 398 955

Packing stores 7,608 3,815

8,006 4,770

15. (Increase)/decreasein Inventories


31 March 2012 31 March 2011Inventories at the end of the year

Traded goods 11,099 11,022

Work-in-progress 1,139 —

Finished goods 4,00,440 3,52,869

4,12,678 3,63,891Inventories at the beginning of the yearTraded goods 11,022 1,893Work-in-progress — —Finished goods 3,52,869 3,38,595

3,63,891 3,40,488

(Increase)/decrease in Inventories (48,787) (23,403)

(Amount in ` '000)

77


Details of purchase of Traded Goods (Amount in ` '000)



Insecticides, Fungicides andMicronutrients 8,456 7,130

18,617 17,879

Details of Inventory(Amount in ` '000)


Traded Goods


Insecticides, Fungicides and Micronutrients 78 2

11,099 11,022

Work-in-progress

Banana Tissue Culture Plantlets 1,139 —

1,139 —

Finished Goods

TECHNITUBER® Seed Potatoes 18,890 20,528

Field Generated Seed Potatoes 3,81,438 3,31,891

Banana Tissue Culture Plantlets 112 450

4,00,440 3,52,869

16. Employee Benefits Expense(Amount in ` '000)


Salaries, Wages and Bonus 24,704 21,853

Contribution to Provident and Other fund 1,000 829

Gratuity expense (note 28) 325 379

Staff Welfare expenses 1,747 1,775

27,776 24,836

17. Other Expenses(Amount in ` '000)


SPC

Consumption of Stores and Spares 1,172 1,067

Seed Farming Charges 2,00,426 1,94,161

Power and Fuel 9,712 9,914

Freight and forwarding charges 59,656 49,458

Rent 4,661 3,989

Storage and Handling cost 79,441 66,408

Contract Labour 9,440 10,349

Rates and Taxes 295 394

Insurance 1,439 1,503

Repairs and Maintenance

- Plant and Machinery 2,541 2,501- Buildings 35 265- Others 1,396 1,389

Advertising and Sales Promotion 315 426

Sales Commission 551 625

Travelling and Conveyance 8,245 7,759

Telephone, Postage and Telegram expenses 1,941 1,863

Printing and Stationery 485 410

(Amount in ` '000)


Legal and Professional fees 1,359 989

Payment to Auditor (Refer details below) 668 655

Provision for Doubtful Debts and Advances — 393

Loss on sale of Fixed Assets (net) — 7

Impairment/other write off onTangible/Intangible assets — 333

Miscellaneous expenses 7,944 8,175

3,91,722 3,63,033

Above expenses include Research andDevelopment expenses 699 636

Payment to Auditor(Amount in ` '000)


As Auditor:

Audit Fee 441 441

Tax Audit Fee 165 165

Reimbursements 62 49

668 655

18. Depreciation andAmortization expense

(Amount in ` '000)


Depreciation of Tangible assets 8,260 7,801

8,260 7,801

19. Finance Costs(Amount in ` '000)


Interest 276 290

276 290

20. Earnings per share (EPS)(Amount in ` '000)


Profit/(loss) after tax 78,291 70,205

Net profit/(loss) forcalculation of basic EPS 78,291 70,205

Net profit as above 78,291 70,205

Net profit/(loss) forcalculation of diluted EPS 78,291 70,205

Numbers Numbers

Weighted average number of equityshares in calculating basic EPS 3,79,62,800 3,79,62,800

Weighted average number of equityshares in calculating diluted EPS 3,79,62,800 3,79,62,800

Earnings per share

Basic [Nominal value of shares`10 (Previous Year: `10)] `2.06 `1.85

Diluted [Nominal value of shares`10 (Previous Year: `10)] `2.06 `1.85

Notes to financial statements for the year ended 31 March 2012

21. Nature of OperationsThe Company is in the business of producing and selling TECHNITUBER®Seed Potatoes and Field Generated Seed Potatoes. The Company’sproduction process comprises TECHNITUBER® Seed Potatoes (i.e. G-0)and Field Generated Seed Potatoes which can itself have several stageslike G-1, G-2 and so on. During the G-0 stage, the TECHNITUBER®Seed Potatoes are produced under a controlled environment in thenurseries maintained at the facility situated at Vill. Manpura, Distt.Solan, Himachal Pradesh. The TECHNITUBER® Seed Potatoes producedin the G-0 stage are taken for field plantation for further productionof next stage i.e. G-1, which is again taken for subsequent productionfor another generation and so on depending on the production andsales strategy. The Company also supplies Agri Inputs comprisingInsecticides, Fungicides and Micronutrients to the farmers associated withthe Company for growing Field Generated Seed Potatoes. The Companyhas also started trial production of Tissue Culture Plantlets of Banana inthe facility situated at Vill. Manpura, Distt. Solan, Himachal Pradesh.

On 26th March, 2012, ITC Limited acquired the entire shareholdingof your Company’s parent company, Technico Pty Limited (Technico),Australia, from Russell Credit Limited. Consequently with effect fromthe said date, Technico became a direct subsidiary of ITC Limited.

22. Statement of Significant Accounting Policiesa) Basis of Preparation

The financial statements have been prepared to comply in all materialrespects with the notified accounting standards by the CompaniesAccounting Standards Rules, 2006 (as amended) and the relevantprovisions of the Companies Act, 1956. The financial statements havebeen prepared under the historical cost convention on an accrual basis.The accounting policies have been consistently applied by the Companyand are consistent with those used in the previous year.

b) Use of EstimatesThe preparation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent liabilities at the date of the financialstatements and the results of operations during the reporting periodend. Although these estimates are based upon management’s bestknowledge of current events and actions, actual results could differfrom these estimates.

c) Fixed AssetsFixed Assets are stated at historical cost less accumulated depreciationand impairment losses, if any. Cost comprises the purchase price andany attributable cost of bringing the asset to its working condition forits intended use.

d) DepreciationDepreciation on Fixed Assets, except for Leasehold Improvements andpart of Plant and Machinery used in field operations, is provided onstraight-line method at the rates prescribed in Schedule XIV to theCompanies Act, 1956 which are not lower than rates based on estimateduseful lives of the respective assets. Leasehold Improvements aredepreciated over the period of Primary lease and part of Plant andMachinery used in field operations is depreciated over five to eightyears which is determined based on technical evaluation.

Assets Rates (SLM) Rates Schedule XIV

Buildings 1.63% - 3.34% 1.63% - 3.34%Plant and Equipment 4.75% - 20% 4.75%Office Equipment 4.75% 4.75%Furniture and Fixtures 6.33% 6.33%Vehicles 9.5% 9.5%Computers,Servers andother IT equipments 16.21% 16.21%Licenced Properties- Over the PrimaryBuilding Improvements Lease Period —

All assets costing `.5,000 or below are fully depreciated in the year ofaddition.

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 oninternal/external factors. An impairment loss is recognized whereverthe carrying amount of an asset exceeds its recoverable amount.The recoverable amount is the greater of the assets net sellingprice and value in use. In assessing value in use, the estimatedfuture cash flows are discounted to their present value at theweighted average cost of capital.

(ii) After impairment, depreciation is provided on the revised carryingamount of the asset over its remaining useful life.

f) InventoriesInventories are valued as follows:

i) Stores & SparesAt cost or net realizable value, whichever is lower, arrived at onFIFO basis

(ii) TECHNITUBER® Seed Potatoes, Field Generated Seed Potatoesand Banana Tissue Culture PlantletsAt cost or net realizable value whichever is lower. Cost for thispurpose includes all direct costs incurred up to the stage of productionof the respective inventories. Borrowing costs relating to generationof TECHNITUBER® Seed Potatoes, Field Generated Seed Potatoesand Banana Tissue Culture Plantlets which takes substantial periodof time to get ready for sale are also included to the extent theyrelate to the period till such stocks are ready for sale. Cost isdetermined on FIFO basis for TECHNITUBER® Seed Potatoes andBanana Tissue Culture Plantlets and weighted average basis for FieldGenerated Seed Potatoes.Net realizable value is the estimated selling price in the ordinarycourse of business, less estimated costs of completion and estimatedcosts necessary to make the sale.

(iii) Insecticides, Fungicides and MicronutrientsAt cost or net realizable value, whichever is lower, arrived at onFIFO basis

g) Foreign Currency Transactions(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency,by applying to the foreign currency amount, the exchange ratebetween the reporting currency and the foreign currency at thedate of the transaction.

(ii) ConversionForeign currency monetary items are reported using the closingrate. Non-monetary items which are carried in terms of historicalcost denominated in a foreign currency, are reported using theexchange rate at the date of the transaction and non-monetaryitems which are carried at fair value or other similar valuationdenominated in a foreign currency, are reported using the exchangerates that existed when the values were determined.

(iii) Exchange DifferencesExchange differences arising on the settlement of monetary itemsor on reporting monetary items of the Company, at rates differentfrom those at which they were initially recorded during the year,or reported in previous financial statements are recognised asincome or as expenses in the year in which they arise except thosearising from investments in non-integral operations.

h) InvestmentInvestments that are readily realisable and intended to be held for notmore than a year are classified as current investments. All other investmentsare classified as long-term investments. Current investments are carriedat lower of cost and fair value, determined on an individual investmentbasis. Long-term investments are carried at cost. However, provision fordiminution in value is made to recognise a decline other than temporaryin the value of the investments.

i) Borrowing CostBorrowing costs consist of interest and other costs that an entity incursin connection with the borrowing of funds. Borrowing costs directlyattributable to the acquisition, construction or production of an assetthat necessarily takes a substantial period of time to get ready for itsintended use or sale are capitalized as part of the cost of the respectiveasset. All other borrowing costs are expensed in the period they occur.

j) Revenue RecognitionRevenue is recognized to the extent that it is probable that the economicbenefits will flow to the Company and the revenue can be reliablymeasured.(i) Sale of Goods

Revenue from sale of goods is recognized on transfer of risks andrewards, which coincides with the dispatch of goods to the customers.

(ii) InterestRevenue from interest (incl. of tax deducted at source) is recognizedon a time proportion basis taking into account the amountoutstanding and the rate applicable.

78


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

79


(ii) The following transactions were carried out with the related partiesand the balances of these related parties as at March 31, 2012 forthe period then ended are presented here in below:

Ultimate Holding CommonParticulars Holding Company Control

Company (TPL)(ITC)

Sale of Seed Potatoes 7,687 14,674 —(3,516) (15,385) (—)

Rental income 8,523 — —(8,424) (—) (—)

Services Received 3,145 — 109(2,957) (—) (—)

Expenses Reimbursed 613 — —(627) (—) (—)

Expenses Recovered 95 1,528 —(45) (677) (—)

Loan Outstanding —(120,000)

Loan repaid — — 120,000(—) (—) (—)

Accounts receivable 911 13,492 —(1,059) (11,601) (—)

Other Payable 594 — —(164) (—) (—)

p) Cash and Cash equivalentsCash and cash equivalents in the cash flow statement comprise cashon hand and at bank and short-term deposits with maturity of threemonths or less.

q) Identification of Segments(i) Primary segment- Business Segment

The Company’s Operations predominantly comprise of only onesegment i.e. Seed Potatoes. In view of the same, separate segmentalinformation is not required to be given as per the requirements ofAccounting Standard 17.

(ii) Secondary Segment- Geographical SegmentThe analysis of geographical segment is based on the geographicallocation of the customers. The geographical segments consideredfor disclosure are as follows:Revenue from domestic market includes sales to customers locatedwithin India.Revenue from overseas market includes sales to customers locatedoutside India.

23. Segment ReportingGeographical segment wise revenue (`. in ‘000)

S. No. Particulars 2011-12 2010-11(a) Revenue from Domestic Market 462,290 451,601(b) Revenue from Overseas Market 19,669 24,882

Total 481,959 476,483

Geographical segment wise receivables (Gross): (`. in ‘000)S. No. Particulars 2011-12 2010-11

(a) Receivable from Domestic Market 3,144 6,768(b) Receivable from Overseas Market 13,492 11,601

Total 16,636 18,369The Company has common assets for producing goods for domestic markets and overseas markets. Hence, separate figures for assets/additionto fixed assets cannot be furnished.

24. Related Party Disclosures(i) The list of related parties as identified by the management is as under:

Name of the Party Relationship

ITC Limited (ITC) Ultimate Holding Company

Russell Credit Limited (RCL) Enterprise under Common Control(Holding Company of Technico Pty Ltd.till 26th March 2012)

Technico Pty Limited, Australia (TPL) Holding Company

ITC Infotech India Limited Enterprise under Common Control

Mr. David Charles McDonald Director

Mr. Sachidanand Madan Whole Time Director

Mr. Surampudi Sivakumar Director

Mr.Arup Kumar Mukerji Director

Mr. Ganesh Kumar Sundararaman Director

(iii) DividendRevenue from dividend is recognised when the right to receivepayment is established at the balance sheet date.

(iv) Rental IncomeRental income is recognised in the Profit and Loss Account as perlease terms.

k) Retirement Benefits(i) Retirement benefits in the form of Provident Fund are a defined

contribution scheme and the contributions are charged to theProfit and Loss Account of the year, when the contributions to therespective funds are due. There are no other obligations other thanthe contribution payable to the respective trusts.

(ii) Gratuity liability is a defined benefit obligation and is provided foron the basis of an actuarial valuation on projected unit creditmethod made at the end of each financial year.The Company has taken a Policy with Life Insurance Corporationof India (LIC) to cover the gratuity liability with respect to theemployees and the premium paid to LIC is charged to Profit &Loss Account. The difference between the actuarial valuation ofthe gratuity with respect to employees at the year-end and thecontribution paid to LIC is further adjusted in the books of accounts.

(iii) Short term compensated absences and Long term compensatedabsences are provided for based on actuarial valuation at the yearend. The actuarial valuation is done as per projected unit creditmethod.

(iv) Actuarial gains/losses are immediately charged off to profit andloss account and are not deferred.

l) Income TaxTax expense comprises of current and deferred tax. Current incometax is measured at the amount expected to be paid to the tax authoritiesin accordance with the Indian Income Tax Act. Deferred income taxreflects the impact of current year timing differences between taxableincome and accounting income for the year and reversal of timingdifferences of earlier years.Deferred tax is measured based on the tax rates and the tax lawsenacted or substantively enacted at the balance sheet date. Deferredtax assets are recognised only to the extent that there is reasonablecertainty that sufficient future taxable income will be available againstwhich such deferred tax assets can be realised. If the Company hasunabsorbed depreciation or carry forward tax losses, deferred tax assetsare recognised only if there is virtual certainty supported by convincingevidence that such deferred tax assets can be realized against futuretaxable profits.At each balance sheet date the Company re-assesses unrecogniseddeferred tax assets. It recognises unrecognised deferred tax assets tothe extent that it has become reasonably certain or virtually certain,as the case may be, that sufficient future taxable income will be availableagainst which such deferred tax assets can be realised.

m) LeasesLeases where the lessor effectively retains substantially all the risks andbenefits of ownership over the leased term are classified as operatingleases.Where the Company is the lessee, the operating lease payments arerecognized as an expense in the Profit and Loss Account over the leaseterm.Where the Company is the lessor, the assets subject to operating leasesare included in the fixed assets and lease income is recognised in theProfit and Loss Account over the lease term.

n) Earnings Per ShareBasic earnings per share are calculated by dividing the net profit orloss for the period attributable to equity shareholders (after deductingattributable taxes) by the weighted average number of equity sharesoutstanding during the period. Partly paid equity shares are treatedas a fraction of an equity share to the extent that they were entitledto participate in dividends relative to a fully paid equity share duringthe reporting period.For the purpose of calculating diluted earnings per share, the net profitor loss for the period attributable to equity shareholders and theweighted average number of shares outstanding during the period areadjusted for the effects of all dilutive potential equity shares.

o) ProvisionsA provision is recognised when an enterprise has a present obligationas a result of past event and it is probable that an outflow of resourceswill be required to settle the obligation, in respect of which a reliableestimate can be made. Provisions are not discounted to its presentvalue and are determined based on best estimate required to settle theobligation at the balance sheet date. These are reviewed at each balancesheet date and adjusted to reflect the current best estimates.

(` in ‘000)

Previous year figures are given in the brackets.


Balance Sheet

Details of Provision for Gratuity and Leave Encashment(` in ‘000)


Gratuity Leave Gratuity LeaveEncashment Encashment

Defined benefit obligation (1,840) (2,266) (1,519) (1,982)Fair value of plan assets 1,874 — 1,600 —Less: Un-recognized

past service cost — — — —Plan asset/(liability) 34 (2,266) 81 (1,982)

Changes in the present value of the defined benefit obligation are as follows:(` in ‘000)



Opening defined benefitobligation 1,519 1,982 975 1,416Interest cost 119 152 77 107Current service cost 347 144 313 130Past service cost — — 97 —Benefits paid (155) (285) (25) (141)Actuarial (gains)/ losseson obligation 10 273 81 470Closing defined benefitobligation 1,840 2.266 1,519 1,982

Changes in the fair value of plan assets are as follows:(` in ‘000)

Particulars 2011-12 2010-11Gratuity Leave Gratuity Leave

Encashment Encashment

Opening fair value ofplan assets 1,600 — 993 —Expected return 143 — 97 —Contributions by employer 278 285 442 141Benefits paid (155) (285) (25) (141)Actuarial gains / (losses) 8 — 93 —Closing fair value ofplan assets 1,874 — 1,600 —

The Company expects to contribute ` 450 (Previous year ` 400)thousands to gratuity fund in 2012-13.The major categories of plan assets as a percentage of the fair value oftotal plan assets are as follows:


Investments with insurer 100% 100%

The principal assumptions are the discount rate & salary increase. Thediscount rate is based upon the market yields available on Governmentbonds at the accounting date with a term that matches that of liabilitiesand the salary increase takes in to account inflation, seniority, promotionand other relevant factors on long term basis.The principal assumptions used in determining gratuity obligations forthe Company’s plans are shown below:

Particulars 2011-12 2010-11(In %) (In %)

Discount rate 8.25 8.00Expected rate of return on plan assets 8.25 7.50

25. In accordance with Accounting Standard 22 on "Accounting for Taxeson 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 certaintyagainst which such Deferred Tax Assets would be realised.

26. Estimated amount of contracts remaining to be executed on capitalaccount and not provided for ` Nil (Previous Year ` Nil).

27. Operating LeaseGeneral description of the Company's operating lease arrangements:The Company has entered into operating lease arrangements primarilyfor Office premises, Godowns etc. Some of the significant terms andconditions 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 periodrent in lieu thereof;

• the lease is generally renewable on the expiry of lease period subjectto mutual agreement;

• the Company has no obligation towards the owner in case ofdamage to the property on account of risk factors like fire, flood, riots,natural calamities, etc.

(` in ‘000)

Particulars Year ended Year endedMarch 31, 2012 March 31, 2011

Lease rentals charged to theprofit and loss account. 4,661 3,989

28. Employee benefit plans:The Company has a defined benefit gratuity plan. Every employee whohas completed five years or more of service gets a gratuity on departureat 15 days salary (last drawn salary) for each completed year of service.The scheme is funded with an insurance company in the form of aqualifying insurance policy.The Provident Fund being administered by a Trust (managed by theultimate holding company of the Company) is a defined contributionscheme. Shortfall in the interest, if any, is adequately provided by theCompany.The following table summarises the components of net benefit expenserecognised in the profit and loss account, the funded/unfunded statusand amounts recognised in the balance sheet for the Gratuity and Leaveencashment.

Profit and Loss account

Net employee benefit expense (recognised in Employee Cost)(` in ‘000)



(Funded) (Unfunded) (Funded) (Unfunded)

Current service cost 347 144 313 130Interest cost on benefitobligation 119 152 77 107Expected return on planassets (143) — (97) —Net actuarial (gain)/lossrecognised in the year 2 273 (11) 470Past service cost — — 97 —Net benefit expense 325 569 379 707Actual return on plan assets 151 — 190 —

80



S.No. Particulars 2011-12 2010-11

a) the principal amount and the interest duethereon (to be shown separately) remainingunpaid to any supplier as at the end of eachaccounting year

b) the amount of interest paid by the buyer interms of section 16, of the Micro Small andMedium Enterprise Development Act, 2006along with the amounts of the paymentmade to the supplier beyond the appointedday during each accounting year

c) the amount of interest due and payable forthe period of delay in making payment(which have been paid but beyond theappointed day during the year) but withoutadding the interest specified under MicroSmall and Medium EnterpriseDevelopment Act, 2006

d) the amount of interest accrued andremaining unpaid at the end of eachaccounting year; and

e) the amount of further interest remainingdue and payable even in the succeedingyears, until such date when the interestdues as above are actually paid to thesmall enterprise for the purpose ofdisallowance as a deductible expenditureunder section 23 of the Micro Small andMedium Enterprise Development Act, 2006

81


36. Previous years’ figures have 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. : 301003EChartered Accountantsper Manoj GuptaPartnerMembership No. 83906Gurgaon, April 26, 2012

For and on behalf of the Board of Directors of Technico Agri Sciences Limited

Arup Kumar Mukerji Director

Sachidanand Madan Director and Company Secretary

Sanjeev Madan Vice President (Finance)

30. Particulars of Un-hedged Foreign Currency Exposure(` in ‘000)

Particulars Currency 2011-12 2010-11

Debtors AUD$ 254.99 251.60` 13,492 11,601

31. Earnings in foreign currency(` in ‘000)


FOB value of Exports 19,669 24,882

—

—

—

—

—

—

—

—

—

—

29.Details of dues to Micro and Small Enterprises as per MSMED Act,2006

33. Particulars regarding Purchase, Sales and Stock(` in ‘000)

2011-12 2010-11Particulars Value Value

PurchaseField Generated Seed Potatoes 10,161 10,749Insecticides, Fungicides and Micronutrients 8,456 7,130SalesTECHNITUBER® Seed Potatoes 19,631 21,755Field Generated Seed Potatoes 452,750 446,589Banana Tissue Culture Plantlets 416 —Insecticides, Fungicides and Micronutrients 9,162 8,139Opening StockTECHNITUBER® Seed Potatoes 20,528 19,873Field Generated Seed Potatoes 342,911 320,615Banana Tissue Culture Plantlets 450 —Insecticides, Fungicides and Micronutrients 2 —Closing StockTECHNITUBER® Seed Potatoes 18,890 20,528Field Generated Seed Potatoes 392,459 342,911Banana Tissue Culture Plantlets 112 450Insecticides, Fungicides and Micronutrients 78 2

34. Consumption of Plantlets, Chemicals and fertilisers and Packing Stores

(` in ‘000)Particulars 2011-12 % 2010-11 %Imported — — — —Indigenous 43,523 100.00 37,272 100.00Total 43,523 37,272

35. Consumption of Consumables(` in ‘000)

Particulars 2011-12 % 2010-11 %Imported — — — —Indigenous 1,172 100.00 1,067 100.00Total 1,172 100.00 1,067

Amount for the current and previous year are as follows: (` in ‘000)

Particulars Gratuity

2011-12 2010-11 2009-10 2008-09 2007-08

Defined benefit obligation (1,840) (1,519) (975) (790) (746)

Fair value of Plan assets 1,874 1,600 993 779 813Plan asset / (liability) 34 81 18 (11) 67Experience loss/(gain) on 11 81 (61) (253) 127plan liabilitiesExperience loss/(gain) on (8) (93) 57 94 2plan assets

32. Expenditure in foreign currency(` in ‘000)


Travelling 109 151

Testing Charges,Temperature Data Loggers 652 537


82

TECHNICO ASIA HOLDINGS PTY LIMITED

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH, 2012

Your directors present their report on the company for the financial year ended31 March, 2012.

Directors

The names of the directors in office at any time during or since the end of theyear are:

Mr David Charles McDonald


Mr Arup Kumar Mukerji

Mr Allan Hendry


Technico Asia Holdings Pty Limited is a company limited by shares that isincorporated and domiciled in Australia. It is a wholly owned subsidiary ofTechnico Pty Ltd, a company incorporated in Australia. During the year underreview, ITC Limited, India acquired from its wholly owned subsidiary, RussellCredit Limited the entire shareholding of your Company’s parent company,Technico Pty Limited (Technico), Australia.

The registered office of Technico Asia Holdings Pty Limited is located at:

Suite 5,20 Bundaroo Street,BOWRAL NSW 2576,Australia

The company had no employees during the year.


During the year, the entity did not have any activity other than holding 100%of the shares of Technico Horticultural (Kunming) Co. Limited, China.


During the year, the company earned a profit of A$ nil [2011: nil].

Significant events after balance date

There are no significant events after the balance date to be reported.


The company is not subject to any particular or significant environmentalregulation.

Indemnification and insurance of directors

Indemnification

The company has not, during or since the financial year, indemnified or agreedto indemnify a current or former director or officer or auditor of the companyor of any related body corporate against a liability incurred whilst engaged asa director or officer or auditor.

Insurance

The company has not, during or since the financial year, paid any insurancepremium or agreed to pay a premium insuring directors, officers and auditorsof the company against liabilities for costs and expenses incurred in defendingcivil or criminal proceedings.

Auditor independence

The auditor’s independence declaration from Gillespies is on page 12 of thisreport.

Signed in accordance with a resolution of the Board of Directors:

Place: Sydney, Australia Allan Hendry

Dated: 26th April, 2012 Director

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 MARCH, 2012

In accordance with a resolution of the directors of Technico Asia HoldingsPty Limited, we state that in the opinion of the directors:

(a) the company is not a reporting entity as defined in the AustralianAccounting Standards;

(b) the financial statements and notes of the company are in accordancewith the Corporations Act 2001, including:

(i) giving a true and fair view of the company’s financial position asat 31 March, 2012 and of their performance for the year endedon that date; and

(ii) complying with Accounting Standards and Corporations Regulations;and

(c) there are reasonable grounds to believe that the company will be ableto pay its debts as and when they become due and payable.

Place: Sydney, Australia On behalf of the Board:

26 April, 2012 Allan Hendry Director

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OFTECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED31 MARCH, 2012

In relation to our audit of the financial report of Technico Asia Holdings PtyLimited for the financial year ended 31 March, 2012, to the best of myknowledge and belief, there have been no contraventions of the auditor

independence requirements of the Corporations Act 2001 or any applicablecode of professional conduct.


Suite 5, 20 Bundaroo StreetBOWRAL NSW 2576 David DuffDated: 26 April, 2012 Partner

INDEPENDENT AUDIT REPORT TO THE DIRECTORS OF TECHNICO ASIAHOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH, 2012

We have audited the accompanying financial report, being a special purposefinancial report of Technico Asia Holdings Pty Limited, which comprises thestatement of financial position as at 31 March, 2012, the statement ofcomprehensive income, statement of changes in equity and statement ofcash flows for the year then ended, notes comprising a summary orsignificant accounting policies and other explanatory information, and thedirectors’ 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.

83


INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH, 2012

2012 2011

Notes $ ` $ `

Continuing operations

Sale of goods — — — —

Cost of sales:

Other cost of sales — — — —

Inventory write off and write down — — — —

Gross profit

Other income — — — —

Marketing expenses — — — —

Research and development expenses — — — —

Occupancy expenses — — — —

Administration expenses: — — — —

Other administration expenses — — — —

Recovery investments and loans — — — —

Finance costs — — — —

Other revenues/(expenses) from ordinary activities — — — —

Profit from continuing operations before income tax expense — — — —

Income tax expense — — — —

Net profit attributable to members of Technico Asia Holdings Pty Ltd — — — —

The directors’ responsibility also includes such internal control as the directors

determine is necessary to enable the preparation of a financial report that

is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on

our audit. We have conducted our audit in accordance with Australian

Auditing Standards. Those standards require that we comply with relevant

ethical requirements relating to audit engagements and plan and perform

the audit to obtain reasonable assurance whether the financial report is

free from material misstatement.

An audit involves performing procedures to obtain audit evidence about

the amounts and disclosures in the financial report. The procedures selected

depend on the auditor’s judgement, including the assessment of the risks

of material misstatement of the financial report, whether due to fraud or

error. In making those risk assessments, the auditor considers internal

control relevant to the entity’s preparation of the financial report that gives

a true and fair view in order to design audit procedures that are appropriate

in the circumstance, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by the directors, as well as

evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independencerequirements of the Corporations Act 2001. We confirm that the independencedeclaration required by the Corporations Act 2001, which has been givento the directors of Technico Asia Holdings Pty Limited, would be in thesame terms if given to the directors as at the time of the auditor’s report.

Audit opinion

In our opinion, the financial report of Technico Asia Holdings Pty Limitedis in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the company’s financial position as at

31 March, 2012 and of its performance for the year ended on thatdate; and

(b) complying with Australian Accounting Standards to the extent describedin note 1, and the Corporations Regulations 2001.

Basis of accounting

Without modifying our opinion, we draw attention to Note 1(a) to thefinancial report, which describes the basis of accounting. The financialreport has been prepared for the purpose of fulfilling the directors’ financialreporting responsibilities under the Corporations Act 2001. As a result, thefinancial report may not be suitable for another purpose.


Suite 5, 20 Bundaroo StreetBOWRAL NSW 2576 David Duff26 April 2012 Partner

84


BALANCE SHEET AS AT 31 MARCH, 20122012 2011

Notes $ ` $ `

Current assets

Cash and cash equivalents — — — —

Trade and other receivables 2 — — — —

Inventories — — — —

Other — — — —

Total current assets — — — —

Non-current assets

Receivables — — — —

Other financial assets 3 969,736 51,308,732 969,736 44,712,103

Property, plant and equipment — — — —

Intangible assets — — — —

Total non-current assets 969,736 51,308,732 969,736 44,712,103

Total assets 969,736 51,308,732 969,736 44,712,103

Current liabilities

Trade and other payables 4 — — — —

Loans and borrowings 5 — — — —

Provisions — — — —

Total current liabilities — — — —

Non-current liabilities

Interest free loans and borrowings — — — —

Provisions — — — —

Total non-current liabilities — — — —

Total liabilities — — — —

Net assets 969,736 51,308,732 969,736 44,712,103

Equity

Contributed equity 6 3,684,522 194,948,059 3,684,522 169,884,098

Accumulated losses 7 (2,714,786) (143,639,327) (2,714,786) (125,171,995)

Total equity 969,736 51,308,732 969,736 44,712,103

STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH, 2012Contributed Retained

Equity Earnings Total$ $ $

At 1 April 2010 3,684,522 (2,714,786) 969,736

Profit for the period — — 516,236

At 31 March 2011 3,684,522 (2,714,786) 969,736

Profit for the period — — —

At 31 March 2012 3,684,522 (2,714,786) 969,736

Contributed Retained Equity Earnings Total

` ` `

At 1 April 2010 194,948,059 (143,639,327) 51,308,732


At 31 March 2011 194,948,059 (143,639,327) 51,308,732


At 31 March 2012 194,948,059 (143,639,327) 51,308,732

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 20122012 2011

Notes $ ` $ `

Cash flow from operating activitiesNet cash flows (used in)/from operating activities — — — —

Cash flow from financing activitiesNet 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 — — — —

85


be impaired. The assessment includes estimates and assumptions offuture events including anticipated rates of growth, gross margins,together with the application of a discount rate. These assumptionscorrespond with the best estimates of management at reporting date.

(c) Receivables

Trade/other receivables are recognised and carried at the originalamount less any provision for doubtful debts. A provision is recognisedwhen collection of the full amount is no longer probable. Bad debtsare written off as incurred.

(d) Other financial assets

Investments in controlled entities are recorded at cost less impairmentof the investment value.

(e) Impairment of assets

The company assesses at each reporting date whether there is anindication that an asset may be impaired. If any such indication exists,or when annual impairment testing for an asset is required, the companymakes an estimate of the asset’s recoverable amount. An asset’srecoverable amount is the higher of its fair value less costs to sell andits value in use and is determined for an individual asset, unless theasset does not generate cash inflows that are largely independent ofthose from other assets or groups of assets and the asset’s value in usecannot be estimated to be close to its fair value. In such cases the assetis tested for impairment as part of the cash-generating unit to whichit belongs. When the carrying amount of an asset or cash-generatingunit exceeds its recoverable amount, the asset or cash-generating unitis considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specificto the asset. Impairment losses relating to continuing operations arerecognised in those expense categories consistent with the functionof the impaired asset.

(f) Payables

Trade payables and other payables are carried at amortised costs andrepresent liabilities for goods and services provided to the companyprior to the end of the financial year that are unpaid and arise whenthe company becomes obliged to make future payments in respect ofthe purchase of these goods and services.

(g) Contributed equity

Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares or options are shown in equityas a deduction, net of tax, from the proceeds.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSAS AT 31 MARCH, 2012

Note 1: Statement of significant accounting policies

(a) Basis of preparation and going concern

The financial report is a special purpose financial report prepared fordistribution to members of the company to fulfil the directors’ financialreporting requirements under Chapter 2M of the Corporations Act 2001.The accounting policies used in the preparation of this report, asdescribed below, are in the opinion of the directors, appropriate tomeet the needs of members.

The financial report has been prepared on a historical cost basis andis presented in Australian dollars. The supplementary information inINR (Indian Rupees), which is unaudited, have been arrived at byapplying the year end inter-bank exchange rate of 1 AUD = INR 52.9100for the current year balance sheet (2011: INR 46.1075) and the averagerate of 1 AUD = INR 49.5088 for the current year income statement(2011: INR 43.6350) and have been included in the financial reportas required by the Indian holding company of the parent entity.

The directors have determined that the company is not a “reportingentity”. Consequently the requirements of Accounting Standards issuedby the AASB and other professional reporting requirements do nothave mandatory applicability to Technico Asia Holdings Pty Limited inrelation to the year ended 31 March, 2012. However, the directorshave determined that in order for the financial report to give a trueand fair view of the company’s results of operations and state of affairs,the requirements of Accounting Standards and other professionalreporting requirements in Australia relating to the measurement andrecognition of assets, liabilities, revenues, expenses and equity shouldbe complied with.

Accordingly, the directors have prepared the financial report inaccordance with the following Accounting Standards:

AASB 101: Presentation of Financial Statements

AASB 107: Cash Flow Statements

AASB 108: Accounting Policies, Changes in Accounting Estimatesand Errors

AASB 1048: Interpretation and Application of Standards

(b) Significant accounting judgements, estimates and assumptions

The carrying amounts of certain assets and liabilities are often determinedbased on estimates and assumptions of future events. The key estimatesand assumptions that have a significant risk of causing a materialadjustment to the carrying amounts of certain assets and liabilitieswithin the next annual reporting period are:

Investment in subsidiaries

The carrying value of the investment in subsidiaries is assessed at eachreporting date as to whether there is an indication that the asset may

Note 4: Trade and other payables2012 2011

$ ` $ `

Current

Trade creditors (i) — — — —

Terms and conditions relating to the above financial instruments:

(i) trade creditors are non-interest bearing and are normallysettled on 30 day terms.

Note 5: Loans and borrowings

Current

Loans and borrowings — — — —

Note 6: Contributed equity

Issued and paid up capital

3,684,522 Ordinary shares fully paid 3,684,522 194,948,059 3,684,522 169,884,098

Terms and conditions of contributed equity

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the saleof 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 personor by proxy, at a meeting of the company.

Note 7: Reserves and accumulated losses2012 2011

$ ` $ `

Accumulated losses

Balance at beginning of year (2,714,786) (143,639,327) (2,714,786) (125,171,995)

Net profit attributable to the membersof Technico Asia Holdings Pty Ltd. — — — —

Total available for appropriation (2,714,786) (143,639,327) (2,714,786) (125,171,995)

Dividends paid or provided for — —

Aggregate amount transferred (to)/ from reserves — — — —

Balance at end of period (2,714,786) (143,639,327) (2,714,786) (125,171,995)

Note 8: Events subsequent to reporting date

There are no subsequent events to be reported.

86


Percentage of equity Investmentinterest held by the (Provision for diminution)consolidated entity 2012 2011

country of incorporation (%) $ ` $ `

Technico Horticultural (Kunming) Co. Ltd. China 100 3,684,522 194,948,059 3,684,522 169,884,098

(2,714,786) (143,639,327) (2,714,786) (125,171,995)

969,736 51,308,732 969,736 44,712,103

Note 2: Trade and Other Receivables2012 2011

$ ` $ `

CurrentTrade and other receivables — — — —

Note 3: Other Financial AssetsNon-currentShares in subsidiaries:

At cost 3,684,522 194,948,059 3,684,522 169,884,098

Provision for write-down (2,714,786) (143,639,327) (2,714,786) (125,171,995)

Total other financial assets 969,736 51,308,732 969,736 44,712,103

Provision for write-down of subsidiariesThe losses generated within the subsidiaries have resulted in a provision for write-down to net assets being recorded against the cost amount of theinvestment.

87

TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED

MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2011

Your management submits its report for the financial year ended31 December 2011.

Corporate Information

Technico Horticultural (Kunming) Co Ltd (”Company”) is domiciled inYunnan Province, People’s Republic of China. Its parent entity is TechnicoAsia Holdings Pty Ltd (formerly Technico China Pty Ltd), a companyincorporated in Australia.

The registered office of the Company is located at,

A-38 Yanglin Industrial Development Zone,

Songming,

Yunnan Province,

People’s Republic of China.

Employees

There were 39 employees on the rolls of the Company as at 31 December,2011.


The Company is primarily engaged in production and supply ofTECHNITUBER® Seed potatoes to export markets.

Business Review

For the year under review, the Company achieved a turnover of CNY2,436,679 (2010: CNY 6,283,417) and incurred a loss of CNY 864,982(2010: Profit of CNY 460,074). The current year loss is on account of aone off lower sales order from its largest customer during the year. Thecompany expects higher orders in the coming year.

In view of the accumulated losses, no dividends have been paid or declaredduring the financial year.

Auditors

The Company has engaged M/s Yunnan Tianying Certified PublicAccountants as auditors for the year under review whose report is annexedto the financial report.


Your Company complies with the applicable environmental regulationsset by the Songming Environmental Bureau.

Place : Songming Min ZhangDate : 2 May 2012 Legal Representative

the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those riskassessments, Certified Public Accountants consider the internal controlrelevant to the preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinionon the effectiveness of the internal control. An audit also includesevaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as wellas evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

3. Opinion

In our opinion, the financial statements of Technico Horticultural(Kunming) Company present fairly, in all material respects, the company'sfinancial position as of 31 December 2011, and the company's resultsof operations and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises and “The AccountingSystems of PRC Enterprises”.

Yunnan Tianying Certified Public Accountants

Kunming, The People’s Republic of Chinese

1 April 2012

AUDITOR’S REPORTTECHNICO HORTICULTURAL (KUNMING) CO., LTD.

We have audited the accompanying financial statements of TechnicoHorticultural (Kunming) Company, which comprise the balance sheet asat 31 December 2011, and the income statement, the statement of changesin owners' equity and the cash flow statement for the year then ended,and the notes to the financial statements.

1. Management's responsibility for the financial statements

Management of Technico Horticultural (Kunming) Company isresponsible for the preparation and fair presentation of these financialstatements. This responsibility includes: (1) preparing the financialstatements in accordance with Accounting Standards for BusinessEnterprises and “The Accounting Systems of PRC Enterprises” to achievefair presentation of the financial statements; (2) designing, implementingand maintaining internal control which is necessary to enable that thefinancial statements are free from material misstatement, whether dueto fraud or error.

2. Auditor’s responsibility

Our responsibility is to express an audit opinion on these financialstatements based on our audit. We conducted our audit in accordancewith China Standards on Auditing. China Standards on Auditing requirethat we comply with the Code of Ethics for Chinese Certified PublicAccountants and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from materialmisstatement.

An audit involves performing audit procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.The procedures selected depend on the auditor’s judgment, including

ITEMS LINENO 31/Dec/10 31/Dec/10 31/Dec/11 31/Dec/11CNY ` CNY `

CURRENT ASSETS 1

Cash and cash equivalents 2 2,639,163 18,090,140 4,166,979 35,541,001

Transaction monetary assets 3 0 0 0 0Short-term investments 4 0 0 0 0

Notes receivable 5 0 0 0 0

Accounts receivable 6 2,899,782 19,876,554 0 0

Advance to suppliersd debts 7 0 0 0 0

Dividend receivable 8 0 0 0 0

Interest receivable 9 0 0 0 0

Other notes receivable 10 21,077 1,44,469 1,119 9,548

Inventoriesns 11 1,746,182 11,969,208 2,323,817 19,820,304

Including Raw materials 12 0 0 0 0

Finished goods 13 1,746,182 11,969,208 1,997,526 17,037,296

In one year expired noncurrent assets 14 0 0 0 0

Other current assets 15 20,381 139,700 16,063 137,005Total current assets 16 7,326,584 5,02,20,072 65,07,979 55,507,858

NONCURRENT ASSETS 17 0 0 0 0

Financial assets available for sale 18 0 0 0 0

Hold investment due 19 0 0 0 0

Long-term investment on bonds 20 0 0 0 0

Long-term account receivable 21 0 0 0 0

Long-term investment on stocks 22 0 0 0 0

Right to trade in previously non-tradable shares 23 0 0 0 0

Investment real eastate 24 0 0 0 0

Fixed assets-cost 25 26,071,597 178,707,760 26,069,704 222,353,718

Less Accumulated depreciationes 26 20,414,802 139,933,261 20,856,048 177,885,403

Fixed assets-net value 27 5,656,795 38,774,499 5,213,656 44,468,315

Less Fixed assets depreciation reserves 28 0 0 0 0

Fixed assets-net equity 29 5,656,795 38,774,499 5,213,656 44,468,315

Construction in progress liab 30 0 0 0 0

Project goods and material 31 0 0 0 0

Liquidation of fixed assets 32 0 0 0 0

Productive living assets 33 0 0 0 0

Oil and gas assets 34 0 0 0 0

Intangible assets 35 1,537,031 10,535,581 1,496,044 12,760,056

Including right to use land 36 1,537,031 10,535,581 1,496,044 12,760,056

Development expenditures 37 0 0 0 0

Business reputation 38 0 0 0 0

Cost-book value differentials 39 0 0 0 0

Long-term deferred and prepaid expenses 40 0 0 0 0

Deferred income tax assets 41 0 0 0 0

Deferred taxes debit 42 0 0 0 0

Other noncurrent assets 43 0 0 0 0

Including specially approved reserving materials 44 0 0 0 0

Total noncurrent assets 45 7,193,826 49,310,080 6,709,700 57,228,371

TOTAL ASSETS 46 14,520,410 99,530,151 13,217,679 112,736,229

CURRENT LIABILITIES 47 0 0

Short term loans 48 0 0 0 0

Transaction financial liabilities 49 0 0 0 0

Warrants payable 50 0 0 0 0

Notes payable 51 0 0 0 0

Accounts payable 52 0 0 0 0

Advances from customers 53 227,500 1,559,399 0 0

BALANCE SHEET AS ON 31st DECEMBER 2011Technico Horticultural ( Kunming ) Co. Ltd.

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89


Employee pay payable 54 284,836 1,952,412 160,855 1,371,965

Including: accrued wages 55 282,682 1,937,645 157,842 1,346,269

accrued welfarism 56 2,154 14,767 3,013 25,695

Including: staff and workersbonus and welfare fund 57 0 0 0 0

Taxes and dues payable 58 0 0 0 0

Including: Taxes payable 59 0 0 0 0

Interest payable 60 0 0 0 0

Dividends payable 61 0 0 0 0

Other payables 62 104,468 716,076 35,000 298,522

Due within one year of noncurrent liabilities 63 0 0 0 0

Other current liabilities 64 0 0 0 0

Total current liabilities 65 616,804 4,227,886 195,855 1,670,487

NONCURRENT LIABILITIES : 66 0 0 0 0

Long-term loans 67 0 0 0 0

Bonds payable 68 0 0 0 0

Long-term account payable 69 52,515 359,961 35,715 304,620

Special payable 70 0 0 0 0

Projected liabilities 71 0 0 0 0

Deferred income tax liabilities 72 0 0 0 0

Deferred taxes credit 73 0 0 0 0

Other noncurrent liabilities 74 0 0 0 0

Including: special reserve fund 75 0 0 0 0

Total non-current liabilities 76 52,515 359,961 35,715 304,620

Total liabilities 77 669,319 4,587,847 231,570 1,975,107

OWNERS' EQUITY : 78 0 0 0 0

Practical capital collected (or share capital) 79 19,013,598 130,328,708 19,013,598 162,170,780

National capital 80 0 0 0 0

Collective capital 81 0 0 0 0

Legal person’s capital 82 0 0 0 0

Including: State-owned legal person’s capital 83 0 0 0 0

Collective legal person’s capital 84 0 0 0 0

Personal capital 85 0 0 0 0

Foreign businessmen’s capital 86 19,013,598 130,328,708 19,013,598 130,033,997

Less: Investment returned 87 0 0 0 0

Net paid in capital 88 19,013,598 130,033,997 19,013,598 130,033,997

Capital reserves 89 42,667 292,458 42,667 363,912

Less: treasury stock 90 0 0 0 0

Surplus reserves 91 0 0 0 0

Including: Legal surplus 92 0 0 0 0

Free surplus reserves 93 0 0 0 0

Reserve fund 94 0 0 0 0

Enterprise expension fund 95 0 0 0 0

Profits capitalizad on return of investment 96 0 0 0 0

Unaffirmed investment loss 97 0 0 0 0

Undistributed profit 98 (5,205,173) (32,730,721) (6,070,155) (39,384,075)

Including: cash dividends 99 0 0 0 0

*Margin of Translation of ForeignCurrency Financial Statements 100 0 (2,653,430) 0 019,747,289

Total equity attributable to equity holders of the Parent 101 13,851,091 94,942,304 12,986,109 110,761,122

*minority stockholders’ interest 102 0 0 0 0

Total owners’ equity 103 13,851,091 94,942,304 12,986,109 110,761,122

Less: assets loss 104 0 0 0

Total owners’ equity : net value less loss on assets) 105 13,851,091 94,942,304 12,986,109 110,761,122

TOTAL LIABILITIES AND OWNERS’ EQUITY 106 14,520,410 99,530,151 13,217,679 112,736,229

BALANCE SHEET AS AT 31 DECEMBER 2011 (Contd.)Technico Horticultural (Kunming) Co. Ltd.

ITEMS LINE NO 31 Dec 2010 31 Dec 2010 31 Dec 2011 31 Dec 2011

CNY ` CNY `

Gross operating income 1 6,283,417 43,021,298 2,436,679 18,742,689

Including: operating income 2 6,283,417 43,021,298 2,436,679 18,742,689

Including: main business income 3 6,276,667 42,975,082 2,436,679 18,742,689

Other business income 4 6,750 46,216 0 0

Gross operating cost 5 5,831,987 39,930,448 3,334,161 25,646,030

Including: operating cost 6 4,204,581 28,787,928 1,727,325 13,286,408

Including: main business cost 7 4,204,581 28,787,928 1,727,325 13,286,408

Other business expense 8 0 0 0 0

Business tax and surcharges 9 0 0 0 0

Selling expenses 10 419,288 2,870,782 251,197 1,932,183

Adminisstrative expenses 11 1,179,578 8,076,333 1,296,270 9,970,777

Including: Business entertainment 12 0 0 0 0

Research and development expense 13 0 0 0 0

Financial Expenses 14 28,539 195,404 59,369 456,661

Including: Interest exchange 15 0 0 0 0

Interest income 16 18,767 128,496 53,669 412,817

Foreign exchange profit and loss 17 43,096 295,067 109,051 838,813

Asset impairment losses 18 0 0 0 0

Other 19 0 0 0 0

Add: Changes in fair value of the profit and loss 20 0 0 0 0

Investment income 21 0 0 0 0

Including for the investment benefitsfrom the invested businessand the united business and joint venture 22 0 0 0 0

Operating profit 23 451,430 3,090,850 (897,482) (6,903,341)

Add Non-operating income 24 10,453 71,571 32,500 249,987

Including income from disposal of long term assets 25 0 0 0

Income from non-monetary assets exchange 26 0 0 0

Government grants (subsidy income) 27 0 0 0

Income from debt restructuring 28 0 0 0

Less Non-operating expenses 29 1,809 12,388 0 0

Including loss on disposal of long-term assts 30 0 0 0

Loss on non-monetary assets exchange 31 0 0

Loss on debt restructuring 32 0 0

TOTAL PROFIT 33 460,074 3,150,034 (864,982) (6,653,355)

Less Income tax expense 34

Add unaffirmed investment loss 35

NET INCOME 36 460,074 3,150,034 (864,982) (6,653,355)

Less minority interest income 37Net income attributable to equity holders of the 38 460,074 3,150,034 (864,982) (6,653,355)

ITEMS LINE NO 2010 2010 2011 2011

CNY ` CNY `

INCOME AND PROFIT DISTRIBUTION STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011Technico Horticultural (Kunming) Co. Ltd.

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1. Cash Flow from Operating Activities 1

Cash from selling commodities or offering labor 2 51,86,232 3,98,91,977

Refund of tax and fee received 3 28,900 2,22,296

Other cash received related to operating activities 4 53,669 4,12,817

Cash InflowSubtotal 5 52,68,801 4,05,27,090

Cash paid for commodities or labor 6 17,47,641 1,34,42,680

Cash paid to and for employees 7 14,26,208 1,09,70,246

Taxes and fees paid 8 2,25,989 17,38,288

Other cash paid related to operating activities 9 3,39,676 26,12,754

Cash Outflow Subtotal 10 37,39,514 2,87,63,969

Cash flow generated from operating activitiesNet Amount 11 15,29,287 1,17,63,122

2. Cash Flow from Investing Activities 12 0 0

Cash from investment withdrawal 13 0 0

Cash from investment income 14 0 0

Net cash from disposing fixed assets,

intangible assets and other long-term assets 15 3,600 27,691

Net cash inflows of disposal of subsidiaries

and other business entities 16 0 0

Other cash received related to investing activities 17 0 0

Cash Inflow Subtotal 18 3,600 27,691

Cash paid for buying fixed assets,

intangible assets and other long-term investment 19 5,070 38,998

Cash paid for investment 20 0 0

Net cash outflows of procurement of

subsidiaries and other business units 21 0 0

Other cash paid related to investing activities 22 0 0

Cash Outflow Subtotal 23 5,070 38,998

Cash flow generated from investing activities Net Amount 24 -1,470 -11,307

3. Cash Flow from Financing Activities 25 0

Cash received from accepting investment 26 0

Including cash inflows from minority investment in subsidiaries 27 0

Borrowings 28 0 0

Other cash received related to financing activities 29 0

Cash Inflow Subtotal 30 0 0

Cash paid for debt 31 0

Cash paid for dividend ,profit or interest 32 0 0

Including: dividends and earnings paid to minorities by subsidiaries 33 0

Other cash paid related to financing activities 34 0

Cash Outflow Subtotal 35 0 0

Cash flow from financing activities Net Amount 36 0 0

4. Foreign Currency Translation Gains (Losses) 37 0 34,89,012

5. Net Increase Of Cash and Cash Equivalents 38 15,27,817 1,52,40,827

Add: cash and cash equivalents beginning bal. 39 26,39,163 2,03,00,175

6. cash and cash equivalents ending bal. 40 41,66,979 3,55,41,001

ITEMS LINE NO CNY `

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011Technico Horticultural (Kunming) Co. Ltd.


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The standard about fixed asset: House and building, machineryand equipment, Motor vehicle and so on of the useful life morethan one year, and non-principle operating equipment of the unitvalue over 2000 yuan and the useful life more than two years

Depreciation is calculated on the straight-line basis to write off thecost of each asset over its estimated useful life after deducting theestimated residual value. The categories, useful life and residualvalue, annual depreciation rate are as follows:

Category Estimated Annual Residualuseful life depreciation value

rate

House and building 20 years 4.50% 10.00%

Production equipment 10 years 9.00% 10.00%

Motor vehicle 5 years 18.00% 10.00%

Office equipment and other 5 years 18.00% 10.00%

Provision for impairment: At the end of each period, The Companyexamines its fixed assets and if market value of the fixed asset hasdeclined continually, become obsolete in technology, been notin use in the long term, or been damage, and the recoverableamount of the fixed asset is less than its carrying amount, theprovision for impairment is determined according to the differenceof the recoverable amount of the fixed asset lower than its carryingamount on an item-by-item basis.

(10) Intangible assets

An intangible asset, which is acquired separately, is recorded basedon the actual purchase price paid.

The cost of an intangible asset is amortized evenly over its expecteduseful life starting in the month in which it is obtained.

If the expected useful life exceeds the beneficial period stipulatedin the relevant contract or the effective period stipulated by law,the amortization period of an intangible asset is determined inaccordance with the following rules:

a. If the relevant contract stipulates the beneficial period but thelaw does not stipulate the effective period, the amortizationperiod is not longer than the beneficial stipulated by therelevant contract;

b. If the relevant contract does not stipulate the beneficial periodbut the law stipulates the effective period, the amortizationperiod is not longer than the effective period stipulated bylaw;

c. If the relevant contract stipulates the beneficial period but thelaw also stipulate the effective period, the amortization periodis not longer than the shorter of the beneficial period and theeffective period.

If the relevant contract does not stipulate the beneficial period andthe law does not stipulate the effective period, the amortizationperiod does not exceed 10 years.

If an intangible asset is no longer expected to be able to generateany economic benefits that flow to the enterprise, the carryingamount of the intangible asset is written off and is recognized asgain or loss the current period.

The Company reviews the carrying amount of the intangible assetat the end of each period. The difference of the expected receivableamount lower than the carrying amount of the intangible asset isrecognized as provision for impairment on an item-by-item basis.

(11) Long-term prepaid expense

Long-term prepaid expenses are recorded based on the actualpayments and amortized on the straight-line basis in the beneficialperiod.

The expenses (except for acquiring fixed assets), which occur inthe preparative duration, are recorded as long-term expense, andare 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 conditionshave been satisfied: the Company has transferred to the buyerthe significant risks and rewards of ownership of the goods;the enterprise retains neither continuing managerial involvementto the degree usually associated with ownership nor effectivecontrol over the goods sold; it is probable that the economicbenefits will flow to the Company; the relevant amount ofrevenue and costs can be measured reliably.

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NOTES TO FINANCIAL STATEMENTS

1. Brief information on the Company

Technico Horticultural (Kunming) Co., Ltd. (the “company”) wasestablished as a wholly foreign-owned enterprise invested by TechnicoAsia Holdings Pty Limited., under the “laws of the People’s Republicof China (the “PRC”) on Enterprises Operated Exclusively with ForeignCapital” and through the approval by the Foreign Economic and TradeDepartment of Yunnan province in the certification Dian zi (1997)No.0049. The Company of the registered capital USD2,300,000.00was registered, with the business license number of Qi Du Zong ziNo.000716, on 8 December 1997. The tenure of the Company is 50years and may be extended upon application by the board of directorsand approval of the relevant government authorities. The principalactivities of the Company are the development, production and supplyof microtuber potato.

2. Significant accounting policies and accounting estimates

(1) Accounting regulations

The Company implements “The Accounting Standards forEnterprises” and “The Accounting Regulations of Enterprises” andthe supplementary stipulate.

(2) Fiscal year

The fiscal year for the Company is from 1 January to 31 Decemberof each calendar year.

(3) Accounting currency

The Company’s financial records are maintained and the financialstatements are stated in Renminbi (”RMB”).

(4) Accounting basis and principle

The accounting basis of The Company is accrual principle, and theaccounting principle is historical cost principle.

(5) Foreign currency transactions

All foreign currency transactions have been translated into RMBat the market rates of exchange prevailing on the dates oftransactions. Monetary assets and liabilities denominated in foreigncurrencies at the balance sheet date are translated into RMB at themarket rates of exchange ruling at that date. The resulting exchangegains or losses are capitalized if they have relation to acquiringfixed assets before the fixed assets intended-use have beencommenced; or are accounted as long-term prepaid expense AIinthe preparative duration, or are dealt with in the profit and lossaccount in the operating duration, if they have not relation toacquiring fixed assets.

(6) Cash equivalents

Cash equivalents are the short-term investments, which are heldby the Company at the short-term (generally within 3 monthsfrom the purchasing date to the date due), are easy in currencyand conversion to known-account cashes, are of little valuefluctuations.

(7) Allowances for uncollectible accounts

The Company uses the allowance method in which the allowancesfor uncollectible accounts for the receivable items (including theaccounts receivable and other receivable) are recognized in theaging receivable account method and are dealt with in the profitand loss account at the balance sheet. The aging receivable accountmethod is made as follows:

a. Within 1 year, at 0.5 percent on the amount of the part;

b. 1-2 year, at 10 percent on the amount of the part;

c. 2-3 year, at 30 percent on the amount of the part.

If any receivable is evidently different from the others, the specificidentification method is made for the receivable item.

(8) Inventories

Inventories, which are recorded at actual cost, include finishedgoods, work-in-progress and raw material.

For the unrecoverable inventory cost due to the damage, partlyor wholly obsolescence, or market price lower than the cost, theprovision for decline in value of inventories is determined accordingto the difference of the actual cost lower than net realizable valueon 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 inceptionof a lease, the fixed assets by a lessee under a finance lease arerecorded at an amount equal to the lower of the carrying amountof the leased asset originally recorded in the books of the lessorand the present value of the minimum lease payments. (If theproportion of the recorded amount of the leased assets to the totalamount of assets is lower than 30 percent, the leased assets arerecorded at an amount equal to the total minimum lease payments.)

NOTES TO FINANCIAL STATEMENTS (Contd.)

b. Revenue from rendering of services

When the provision of services is started and completed withinthe same accounting year, revenue is recognized at the timeof completion of the services, and receipt of money or holdingthe qualification of acquiring money;

When the provision of services is started and completed indifferent accounting year, the total income and the completiondegree involving the service contract can be estimated reliably,it is probable that the economic benefits will flow to theCompany, the outcome of a transaction involving the renderingof services can be estimated reliably, the service revenue is

recognized at the balance sheet date by the use of thepercentage of completion method.

The revenue referred to above is recognized when all thefollowing conditions have been satisfied:

a. It is probable that the economic benefits will flow to theCompany;

b. The amount of the revenue can be measured reliably.

(13) Corporation income tax

Corporation income tax is accounted on the tax payable basis.

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(2) Account receivable

2010-12-31 2011-12-31

Provision for Provision forThe age of accounts receivable RMB Percentage bad debts RMB Percentage bad debts

Within 1 year 2,914,353.58 100.00% 14,571.77

Total 2,914,353.58 100.00% 14,571.77

(3) Other receivables

2010-12-31 2011-12-31

Provision for Provision forLength after occurrence RMB Percentage bad debts RMB Percentage bad debts

Within 1 year 21,076.58 100.00% 619.44 55.34%1-2 year 500.00 44.66%Total 21,076.58 100.00% 1,119.44 100.00%

(4) Inventories and provision for loss on realization of inventory

2010-12-31 2011-12-31

Provision ProvisionItems RMB for loss on RMB for loss on

realization realizationof inventory of inventory

Finished goods 1,419,890.62 1,997,525.67

Work-in-progress 326,291.82 326,291.82

Total 1,746,182.44 2,323,817.49

(5) Fixed assets

Items Cost 2010-12-31 Add Less 2011-12-31

Total Capex 26,071,596.82 5,070.00 6,963.00 26,069,703.82

Accumulated depreciation

Total Depreciation 20,414,802.17 448,208.62 6,963.00 20,856,047.79

Fixed assets depreciation reserves

Net book value 5,656,794.65 5,213,656.03

4. Notes to significant items in the financial statements

(1) Cash

Items 2010-12-31 2011-12-31 RMB RMB

Cash on hand 17,182.14 39,164.12Cash in bank 2,621,980.47 4,127,815.37

Total 2,639,162.61 4,166,979.49

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 theCompany.

Corporation income tax is accounted on the tax payable basis at a rate of 25% on its taxable income. However, according to the new incometax-laws in the PRC, the Company is an agricultural production company which is exempted from corporate income tax.

94


(7) Advances from customers

Length after occurrence 2010-12-31 2011-12-31RMB RMB

Within 1 Year 227,500.00

Total 227,500.00

(8) Other payable

2010-12-31 2011-12-31Length after occurrence RMB RMB

Within 1 Year 1,04,468.00 35,000.00

Total 1,04,468.00 35,000.00

(9) Long-term account payable

2010-12-31 2011-12-31RMB RMB

52,514.58 35,715.01

The amount due to investor is unsecured, interest free and has no fixed term of repayment.

(10) Paid-in capital

Investors 2010-12-31 Add Less 2011-12-31

RMB Proportion RMB RMB RMB Proportion

Technico Asia HoldingPty Ltd. 19,013,598.02 100.00% 19,013,598.02 100.00%

Total 19,013,598.02 100.00% 19,013,598.02 100.00%

(11) Primary operating profit

Operating Operatingrevenue cost

2,436,678.74 1,727,324.65

(12) Finance expense

Items From 2011-1-1to 2011-12-31

Interest expense

Less: Interest income 53,669.09

Foreign exchange loss 109,051.44

Other 3,986.78

Total 59,369.13

5. Contingencies

Up to 31 December 2011, there are no material contingencies for the Company.

6. Promised events

Up to 31 December 2011, there are no material promised events for the Company.

7. Non-adjusting events subsequent to the balance sheet date

Not material non-adjusting events subsequent to the balance sheet date for the Company.

8. Other material events stated

Up to 31 December 2011, there are no other material matters specially stated for the Company.

(6) Intangible assets

2010-12-31 Add Less 2011-12-31Items RMB RMB RMB RMB

Land-use-right 2,049,375.00 2,049,375.00

Amortization 512,343.75 40,987.50 553,331.25

Total 1,537,031.25 40,987.50 1,496,043.75

The amortization term is 50 years, and there have been 36 years and 6 months left by 31 December 2011.

NOTES TO FINANCIAL STATEMENTS (Contd.)

In accordance with the provisions of Article 151 of the Articles of Association of theCompany, Mr. S.C.Sekhar and Mr. Dipak Haksar will retire by rotation at the ensuingAnnual General Meeting and being eligible, offer themselves for re-appointment.Human ResourceYour Company continues to attract and retain talent of the highest quality. YourCompany has initiated various training and development programmes to sustaincompetitive edge.Your Directors place on record their sincere appreciation of the efforts made and thesupport rendered by 391 employees deployed in the Company’s hotel.Particulars of EmployeesNone of the employees fall under the purview of the provisions of Section 217(2A) ofthe Companies Act, 1956, read with the Companies (Particulars of Employees) Rules,1975.AuditorsYour Company’s Auditors, Messrs. Lovelock & Lewes, Chartered Accountants, retireat the ensuing Annual General Meeting and being eligible, offer themselves forre-appointment.Audit CommitteeThe Audit Committee of the Company comprises of Mr. S.C. Sekhar as Chairman andMessrs. N. R. Pradeep Reddy and Dipak Haksar as Members.Directors’ Responsibility StatementAs required under Section 217 (2AA) of the Companies Act, 1956, your Directorsconfirm 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 trueand fair view of the state of affairs of your Company at the end of the financialyear and of the profit of your Company for that period;

(iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of your Company and for preventing and detecting fraudand other irregularities; and

(iv) prepared the Annual Accounts on a going concern basis.

On behalf of the BoardPlace: Gurgaon Gunupati Sivakumar ReddyDate : 27th April, 2012 Chairman


Your Directors submit their Report for the financial year ended 31st March, 2012.

Performance and Hotel OperationsDuring the year under review, your Company recorded an income of ` 57.66 crores(previous year - ` 56.04 crores), Pre-tax profit of ` 11.89 crores (previous year -` 12.85 crores) and Post-tax profit of ` 9.40 crores (previous year - ` 9.26 crores) afterproviding for income tax of ` 2.49 crores (previous year ` 3.59 crores). Earnings PerShare for the year stands at ` 3.92 (previous year - ` 3.86). Cash flows from Operationswere ` 10.41 crores during the year (previous year - ` 11.69 crores).Your Directors are pleased to recommend a Dividend of ` 2/- (previous year - ` 2/-)per Equity Share of ` 10/- each for the year ended 31st March, 2012. Your Board furtherrecommends a transfer to General Reserve of ` 0.75 crores (previous year -` 0.75 crores).Political instability and influx of new inventory, with internationally benchmarkedofferings, catering to various segments of the market mix, has adversely affected thefinancial performance of the company. The impetus towards continued focus on qualityand superior guest experience is reflected in your hotel ranking 1st in the GlobalDistribution System (GDS) and Value Index Growth.Proactive steps taken to contain costs have resulted in improving the bottom line ofthe Company appreciably in a year of intense market competition and high inflation.AwardsThe hotel’s culinary excellence has been recognised with Times Food Guide accoladesfor ‘Kebabs & Kurries’ and ‘Dakshin’ as the best in their category. In addition the‘Marco Polo’ bar received the award for best outlet in its category during the year.Conservation of Energy, Foreign Exchange Earnings and OutgoYour Company has obtained LEED (Leadership in Energy and Environment Design)Platinum certification from US Green Building Council (USGBC) in the Existing Building(EB) category, as part of a holistic approach towards sustainability. This has helpedachieve significant energy savings.Your Company continued its efforts to improve energy usage efficiency and increasecontributions from renewable sources of energy.During the year, your Company earned ` 21.52 crores in foreign exchange (previousyear - ` 21.67 crores) and its foreign exchange outgo was ` 1.64 crores (previousyear - ` 1.69 crores).DirectorsThe Board of Directors at its meeting held on 27th April, 2012, reappointed, subjectto the approval of the Members, Mr George Verghese as the Managing Director of theCompany for a period of three years effective 1st June, 2012. The resolution seekingyour approval to such appointment appears in the Notice convening the 27th AnnualGeneral Meeting of the Company.

AUDITORS’ REPORT TO THE MEMBERS OF SRINIVASA RESORTS LIMITED

1. We have audited the attached Balance Sheet of Srinivasa Resorts Limited (the“Company”) as at March 31, 2012, and the related Statement of Profit and Lossand Cash Flow Statement for the year ended on that date annexed thereto, whichwe have signed under reference to this report. These financial statements are theresponsibility of the Company’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generallyaccepted in India. Those Standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates madeby Management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended bythe Companies (Auditor’s Report) (Amendment) Order, 2004 (together the“Order”), issued by the Central Government of India in terms of sub-section (4A)of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and on the basisof such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us, wegive in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, wereport 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, Statement of Profit and Loss and Cash Flow Statementdealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and CashFlow Statement dealt with by this report comply with the accounting standardsreferred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as onMarch 31, 2012 and taken on record by the Board of Directors, none of thedirectors is disqualified as on March 31, 2012 from being appointed as adirector 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 theexplanations given to us, the said financial statements together with thenotes thereon and attached thereto give, in the prescribed manner, theinformation required by the Act, and give a true and fair view in conformitywith the accounting principles generally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the company

as at March 31, 2012;(ii) in the case of the Statement of Profit and Loss, of the profit for the year

ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for the year

ended on that date.

For Lovelock & LewesChartered Accountants

Firm’s Registration Number : 301056E

Sunit Kumar BasuPartner

Membership No. : 55000

ANNEXURE TO AUDITORS’ REPORT

Referred to in paragraph 3 of the Auditors’ Report of even date to the members ofSrinivasa Resorts Limited on the financial statements as of and for the year endedMarch 31, 2012.1. (a) The Company is maintaining proper records showing full particulars, including

quantitative details and situation, of fixed assets.(b) The fixed assets of the Company have been physically verified by the

Management during the year and no material discrepancies between thebook 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 tous, a substantial part of fixed assets has not been disposed of by the Companyduring the year.

2. (a) The inventory has been physically verified by the Management during theyear. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followedby the Management are reasonable and adequate in relation to the size ofthe Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, theCompany is maintaining proper records of inventory. The discrepanciesnoticed on physical verification of inventory as compared to book recordswere not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies,firms or other parties covered in the register maintained under Section 301of the Act.

(b) The Company has not taken any loans, secured or unsecured, from companies,firms or other parties covered in the register maintained under Section 301 ofthe Act.

95

SRINIVASA RESORTS LIMITED

Place: GurgaonDate : 27th April, 2012

BALANCE SHEET AS AT 31ST MARCH, 2012Note No. 31st March, 2012 31st March, 2011

(`) (`)I. EQUITY AND LIABILITIES

1. Shareholders’ Fundsa) Share Capital 3 24,00,00,000 24,00,00,000b) Reserves and Surplus 4 73,90,78,791 70,09,02,800

2. Non-Current Liabilities(a) Deferred Tax Liability (Net) 5 7,93,17,125 8,06,79,058(b) Long-Term Provisions 6 9,29,455 12,35,850

3. Current Liabilities(a) Trade Payables 7 6,66,19,723 6,50,55,632(b) Other Current Liabilities 8 2,24,55,058 2,32,05,563(c) Short-Term Provisions 9 5,84,20,254 5,75,65,804Total 1,20,68,20,406 1,16,86,44,707

II. ASSETS1. Non-Current Assets

(a) Fixed Assets 10(i) Tangible Assets 52,34,38,718 53,68,24,045(ii) Capital Work-in-progress 1,14,48,224 11,80,396

(b) Non-current Investments 11 10,000 10,000(c) Long-Term Loans and Advances 12 1,00,84,427 45,09,942(d) Other Non-current Assets 13 10,21,200 10,21,200

2. Current Assets(a) Current Investments 14 46,37,96,619 41,95,05,914(b) Inventories 15 80,62,138 67,52,586(c) Trade Receivables 16 1,77,56,038 2,14,84,773(d) Cash and Bank balances 17 14,82,65,757 14,67,84,177(e) Short-term Loans and Advances 18 1,90,70,116 2,82,19,997(f) Other Current Assets 19 38,67,169 23,51,677Total 1,20,68,20,406 1,16,86,44,707

Summary of Significant Accounting Policies 2Notes are an integral part of these financial statementsThis is the Balance Sheet referred to in our Report of even date.

10. The Company has no accumulated losses as at March 31, 2012 and it has notincurred any cash losses in the financial year ended on that date or in theimmediately preceding financial year.

11. The Company has not granted any loans and advances on the basis of securityby way of pledge of shares, debentures and other securities.

12. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefitfund/ 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 banksor 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, thereare no funds raised on a short-term basis which have been used for long-terminvestment.

17. The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under Section 301 of the Act duringthe year.

18. The Company has not issued any debentures during the year and does not haveany debentures outstanding as at the year end.

19. The Company has not raised any money by public issues during the year.20. During the course of our examination of the books and records of the Company,

carried out in accordance with the generally accepted auditing practices in India,and according to the information and explanations given to us, we have neithercome across any instance of fraud on or by the Company, noticed or reportedduring the year, nor have we been informed of any such case by the Management.

21. The other clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), v(b), and (xi) of paragraph4 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 ofthe Company for the year, since in our opinion there is no matter which arisesto be reported in the aforesaid Order.

ANNEXURE TO AUDITORS’ REPORT (contd.)

96



Gunupati Sivakumar Reddy ChairmanGeorge Verghese Managing Director

Hemanshi Khanna Secretary

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 theCompany and the nature of its business for the purchase of inventory and fixedassets and for the sale of goods and services. Further, on the basis of ourexamination of the books and records of the Company, and according to theinformation and explanations given to us, we have neither come across, nor havebeen informed of, any continuing failure to correct major weaknesses in theaforesaid internal control system.

5. According to the information and explanations given to us, there have been nocontracts or arrangements referred to in Section 301 of the Act during the yearto be entered in the register required to be maintained under that Section.Accordingly, the question of commenting on transactions made in pursuance ofsuch contracts or arrangements does not arise.

6. The Company has not accepted any deposits from the public within the meaningof 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 withits size and the nature of its business.

8. The Central Government of India has not prescribed the maintenance of costrecords under clause (d) of sub-section (1) of Section 209 of the Act for any ofthe products of the Company.

9. (a) According to the information and explanations given to us and the recordsof the Company examined by us, in our opinion, the Company is regular indepositing the undisputed statutory dues, including provident fund, investoreducation and protection fund, employees’ state insurance, income tax, salestax, wealth tax, service tax, customs duty, excise duty and other materialstatutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the recordsof the Company examined by us, the particulars of dues of income tax, salestax, wealth tax, service tax, customs duty and excise duty as at March 31, 2012which have not been deposited on account of a dispute, are as follows:

Name of Period to Forum wherethe Nature of dues Amount (`)* which the the dispute

statute amount relates is pending A.P. General Sales Tax on 1,75,868 Financial year Sales Tax Sales Tax purchase from 1997-1998 Appeallate Act, 1957 unregistered dealers 5,46,539 Financial year Tribunal,

1998-1999 Andhra Pradesh. A.P. Value Exclusion of Service 10,90,519 April 1, 2005 to Hon’ble High Added Tax Tax in computation January 31, Court of Andhra Act, 2005 of liability 2008 Pradesh, Hyderabad. Income Tax Disallowance of 3,64,267 Financial year Hon’ble High Act, 1961 certain expenses 2001-02 Court of Andhra

Pradesh, Hyderabad.

*Net of amount paid under protest

For Lovelock & LewesChartered AccountantsFirm Registration Number : 301056ESunit Kumar BasuPartnerMembership Number : 55000Place: GurgaonDate : 27th April, 2012

For Lovelock & LewesChartered Accountants

Firm’s Registration Number : 301056E

Sunit Kumar BasuPlace: Gurgaon PartnerDate : 27th April, 2012 Membership No. : 55000

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 201231st March, 2012 31st March, 2011

(`) (`) (`) (`)A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 11,88,93,357 12,84,58,341ADJUSTMENT FOR:Depreciation 3,49,81,547 3,56,59,372Interest on Deposits (1,32,82,683) (81,49,906)Loss on Fixed Assets sold/discarded 4,82,624 60,47,258Dividend from Investments (2,90,38,221) (1,98,13,756)Liability no longer required written back (16,41,916) (36,60,275)Provision for Doubtful Debts/Bad Debts Written Off 3,27,717 (81,70,932) 6,22,506 1,07,05,199OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 11,07,22,425 13,91,63,540ADJUSTMENT FORTrade Receivables 30,73,426 23,22,695Inventories (13,09,553) 33,94,976Other Receivables (24,81,928) (15,87,925)Trade Payables 71,33,163 88,60,952Other Payables (3,06,395) 61,08,713 4,77,485 1,34,68,183CASH GENERATED FROM OPERATIONS 11,68,31,138 15,26,31,723Income Tax Paid (1,27,59,021) (3,57,23,600)NET CASH FROM OPERATING ACTIVITIES 10,40,72,117 11,69,08,123

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (4,20,22,059) (1,28,23,745)Sale of Fixed Assets 2,43,268 68,121Purchase of Current Investments (3,12,90,32,262) (2,58,33,43,606)Sale/Redemption of Current Investments 3,08,47,41,556 2,52,96,16,381Interest on Deposits 1,04,12,939 81,25,353Dividend from Investments 2,90,38,221 1,98,13,756NET CASH USED IN INVESTING ACTIVITIES (4,66,18,337) (3,85,43,740)

C. CASH FLOW FROM FINANCING ACTIVITIESDividends paid (4,80,00,000) (4,80,00,000)Dividend distribution tax paid (79,72,200) (81,57,600)NET CASH USED IN FINANCING ACTIVITIES (5,59,72,200) (5,61,57,600)

NET INCREASE IN CASH AND BANK BALANCES 14,81,580 2,22,06,783OPENING CASH AND BANK BALANCES 14,67,84,177 12,45,77,394CLOSING CASH AND BANK BALANCES 14,82,65,757 14,67,84,177CASH AND BANK BALANCES COMPRISE:Cash and Cash Equivalents 60,04,205 1,85,65,942Other Bank Balances 14,22,61,552 14,82,65,757 12,82,18,235 14,67,84,177This 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 Statements2. Previous Year’s Figures have been regrouped and/or rearranged wherever considered necessary to conform to those of current year.


Note No. 31st March, 2012 31st March, 2011(`) (`)

I. Revenue from OperationsRevenue from Sale of Services (Gross) 57,97,69,049 57,04,81,111Less : Taxes (Service tax and Luxury tax) 5,73,24,351 4,34,70,627Revenue from Sale of Services (Net) 52,24,44,698 52,70,10,484Other Operating Revenue 75,66,747 52,44,199Revenue from Operations (Net) 20 53,00,11,445 53,22,54,683

II. Other Income 21 4,65,66,243 2,81,20,928III. Total Revenue (I+II) 57,65,77,688 56,03,75,611

Expenses:Cost of materials consumed 22 6,41,73,818 6,19,50,321Employee Benefit Expense 23 10,77,07,354 9,71,44,358Depreciation and Amortization Expense 10 3,49,81,547 3,56,59,372Other Expenses 24 25,08,21,612 23,71,63,219

IV. Total Expenses 45,76,84,331 43,19,17,270V. Profit before tax (III-IV) 11,88,93,357 12,84,58,341VI. Tax Expense:

(a) Current Tax 2,62,92,499 3,75,00,000[Net of ` 27,07,501/- (Previous Year : ` Nil) on account ofreversal of tax liability pertaining to earlier years)(b) Deferred Tax (13,61,933) (16,42,098)

VII. Profit/(Loss) for the period (V-VI) 9,39,62,791 9,26,00,439VIII. Earning Per Equity Share 25

(a) Basic 3.92 3.86(b) Diluted 3.92 3.86

Summary of Significant Accounting Policies 2Notes are an integral part of these financial statementsThis is the Statement of Profit and Loss referred to in our Report of even date.

97




On behalf of the BoardGunupati Sivakumar Reddy Chairman

George Verghese Managing DirectorHemanshi Khanna Secretary

On behalf of the BoardGunupati Sivakumar Reddy Chairman

George Verghese Managing DirectorHemanshi Khanna Secretary

NOTES TO THE FINANCIAL STATEMENTS

IX) Proposed DividendTo provide for Dividends (including Dividend Distribution Tax thereon)in the books of account as proposed by the Directors, pendingapproval at the Annual General Meeting.

X) Employee BenefitsTo make regular monthly contributions to Provident Fund which arein the nature of defined contribution scheme and such paid/payableamounts are charged against revenue. The contributions in respectof provident fund and family pension are statutorily deposited withthe Government of India.To determine the liabilities towards gratuity and leave encashmentby an independent actuarial valuation as per requirements ofAccounting Standard - 15 (revised 2005) on “Employee benefits”.To determine actuarial gains or losses and to recognise such gainsor losses immediately in Profit and Loss Account as income or expense.The contributions in respect of gratuity fund are made to LifeInsurance Corporation.

XI) Taxes on IncomeTo provide Current tax as the amount of tax payable in respect oftaxable income for the period, measured using the applicable taxrates and tax laws.To provide Deferred tax on timing differences between taxableincome and accounting income subject to consideration of prudence,measured using the tax rates and tax laws that have been enactedor substantially enacted by the Balance Sheet date.Not to recognise Deferred tax assets on unabsorbed depreciationand carry forward of losses unless there is virtual certainty that therewill be sufficient future taxable income available to realise such assets.

XII) Foreign Currency TranslationsTo account for transactions in foreign currencies at the exchangerate prevailing on the date of the transaction. Gains/Losses arisingout of fluctuations in the exchange rates are recognised in the Profitand Loss in the period in which they arise. To account for gains /losses in the Profit and Loss account on foreign exchange ratefluctuation relating to monetary items at the year end.

XIII) Financial and Management Information SystemsThe books of account and other records have been designed tofacilitate compliance with the relevant provisions of the CompaniesAct, 1956 on one hand, and meet the internal requirements ofinformation and systems for Planning, Review and Internal Control(designed and based on “Uniform System of Accounts for Hotels”),on the other.

1. General InformationSrinivasa Resorts Limited, subsidiary of ITC Limited, is in the businessof Hoteliering. The Company was incorporated on December 20, 1984.

2. Summary of Significant Accounting PoliciesI) Convention

To prepare financial statements in accordance with applicableAccounting Standards in India. A summary of important accountingpolicies is set out below.

II) Basis of Preparation of Financial StatementsTo prepare financial statements in accordance with the historicalcost convention, generally accepted accounting principles in Indiaand relevant presentational requirements of the Companies Act, 1956.

III) Fixed AssetsTo state fixed Assets at cost of acquisition inclusive of inward freight,duties and taxes and incidental expenses related to acquisition. Inrespect of major projects involving construction, related pre-operationalexpenses form part of the value of the assets capitalised.

IV) DepreciationTo calculate Depreciation on fixed assets in a manner that amortisesthe cost of assets after commissioning, over their estimated usefullives or, where specified, lives based on the rates specified in ScheduleXIV to the Companies Act, 1956, whichever is lower, by equal annualinstalments.

V) InvestmentsTo state Current Investments at lower of cost and fair value; andLong Term Investments at cost. Where applicable, provision is madeto recognize a decline, other than temporary, in valuation of LongTerm investments.

VI) InventoriesTo state inventories at lower of cost and net realisable value. Thecost is calculated on weighted average method. Cost comprisesexpenditure incurred in the normal course of business in bringingsuch inventories to its location. Obsolete and slow moving inventoriesare identified at the time of physical verification of inventories and,where necessary, provision is made for such inventories.

VII) TurnoverTo recognize Gross Sales after delivery of goods and rendering ofservices net of Sales Tax / Value Added Tax recovered from customersbut including all other applicable taxes. Net sales are stated afterdeducting such applicable taxes.

VIII) Investment IncomeTo account for Income from Investments on an accrual basis, inclusiveof related tax deducted at source.


NOTES TO THE FINANCIAL STATEMENTSAs at As at

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

3. Share Capital

(a) Authorised2,40,00,000 (Previous Year: 2,40,00,000) Equity Shares of ` 10/- each 24,00,00,000 24,00,00,000

24,00,00,000 24,00,00,000(b) Issued, Subscribed & Paid Up

2,40,00,000 (Previous Year: 2,40,00,000) Equity Shares of ` 10/- each, fully paid 24,00,00,000 24,00,00,000Total 24,00,00,000 24,00,00,000

3.1 Rights, Preferences, and restrictions attached to sharesThe Ordinary Shares of the Company, having par value of ` 10/- per share, rank pari passu in all respects including entitlement to dividend. Repaymentof capital in the event of winding up of the Company will inter alia be subject to the provisions of the Articles of Association of Company and as maybe determined by the Company in General Meeting prior to such winding up.

31st March, 2012 31st March, 20113.2 Equity Shares held by Holding Company Nature of Relationship

ITC Limited Holding Company 1,63,20,477 1,63,20,477

3.3 Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company31st March, 2012 31st March, 2011

No. of Shares held % of Holding No. of Shares held % of Holding(a) ITC Limited 1,63,20,477 68.00% 1,63,20,477 68.00%(b) G Siva Kumar Reddy 13,04,230 5.43% 13,04,230 5.43%(c) G Sulochanamma 15,00,000 6.25% 15,00,000 6.25%

4. Reserves & Surplus(a) Capital Reserves

Balance as at the end of the year 94,603 94,603(b) General Reserve

Balance as at the beginning of the year 6,96,43,117 6,21,43,117Add: Transferred from surplus in Statement of Profit and Loss during the year 75,00,000 75,00,000Balance as at the end of the year 7,71,43,117 6,96,43,117

98

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

(`) (`)

99


NOTES TO THE FINANCIAL STATEMENTS (Contd.)31st March, 2012 31st March, 2011

(`) (`)(c) Surplus in Statement of Profit and Loss

Balance as at the beginning of the year 63,11,65,080 60,20,36,841

Add: Net Profit for the current year 9,39,62,791 9,26,00,439

Less: Appropriations

Proposed Dividends 4,80,00,000 4,80,00,000

Dividend Distribution Tax on Proposed Dividend 77,86,800 79,72,200

Transfer to General Reserve 75,00,000 75,00,000

Balance as at the end of the year 66,18,41,071 63,11,65,080

Total (a+b+c) 73,90,78,791 70,09,02,800

5. Deferred Tax Liability (Net)

(a) Deferred Tax Liability

Depreciation - Timing difference 8,08,08,745 8,19,61,949

Less:

(b) Deferred Tax Assets

Employee Benefits 11,55,986 9,39,874

Other Timing Differences 3,35,634 3,43,017

Deferred Tax Liability (Net) 7,93,17,125 8,06,79,058

5.1 Deferred Tax Assets and Deferred Tax Liabilities have been offsetas they relate to the same governing taxation laws.

6. Long Term Provisions

(a) Provision for Employee Benefits 9,29,455 12,35,850

Total 9,29,455 12,35,850

7. Trade Payables

(a) Trade Payables

- Dues to Micro and Small Enterprises — —

- Dues to Others 6,66,19,723 6,50,55,632

Total 6,66,19,723 6,50,55,632

7.1 There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the yearand also as at 31st March, 2012. This information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006has been determined to the extent such parties have been identified on the basis of information available with the Company.

8. Other Current Liabilities

(a) Advances from Customers 1,19,39,285 1,15,46,837

(b) Sundry Deposits 44,91,295 44,75,677

(c) Statutory Liabilities 65,38,982 73,69,962

2,29,69,562 2,33,92,476

Less: Deposits from normal Trade Debtors - Contra 5,14,504 1,86,913

Total 2,24,55,058 2,32,05,563

8.1 There is no outstanding amount to be credited to Investor Education & Protection Fund.

9. Short Term Provisions

(a) Provision For Employee Benefits 26,33,454 15,93,604

(b) Others

Proposed Dividend 4,80,00,000 4,80,00,000

Dividend Distribution Tax on Proposed Dividend 77,86,800 79,72,200

Total 5,84,20,254 5,75,65,804

10. FIXED ASSETS (`)

Gross Block Depreciation Net Book

Sr. Particulars April 1, Additions Disposals March 31, April 1, For the Disposals March 31, March 31, March 31,No. 2011 2012 2011 year 2012 2012 2011

I Tangible Assets

a Land - Freehold 1,00,00,000 — — 1,00,00,000 — — — — 1,00,00,000 1,00,00,000

b Buildings 30,55,09,578 6,42,716 — 30,61,52,294 6,52,66,585 49,96,434 — 7,02,63,019 23,58,89,275 24,02,42,993

c Plant and Equipment 33,22,77,709 1,59,63,816 23,01,986 34,59,39,539 12,72,01,799 1,60,64,194 16,32,459 14,16,33,534 20,43,06,005 20,50,75,910

d Furniture & Fixtures 19,04,45,547 17,66,331 14,26,441 19,07,85,437 12,23,01,269 1,08,74,856 14,26,441 13,17,49,684 5,90,35,753 6,81,44,278

e Vehicles (Cars) 1,47,00,082 — — 1,47,00,082 58,43,014 14,00,334 — 72,43,348 74,56,734 88,57,068

f Office Equipment 13,72,834 47,317 2,66,654 11,53,497 4,69,342 61,657 2,10,290 3,20,709 8,32,788 9,03,492

g Computers, etc. 1,80,44,521 39,01,931 6,99,172 2,12,47,280 1,44,44,217 15,84,072 6,99,172 1,53,29,117 59,18,163 36,00,304

Total 87,23,50,271 2,23,22,111 46,94,253 88,99,78,129 33,55,26,226 3,49,81,547 39,68,362 36,65,39,411 52,34,38,718 53,68,24,045

(Previous Year) 86,79,90,775 1,75,50,330 1,31,90,834 87,23,50,271 31,07,14,418 3,56,59,372 1,08,47,564 33,55,26,226 53,68,24,045

II. Capital Work-in- 11,80,396 2,75,79,709 1,73,11,881 1,14,48,224 — — — — 1,14,48,224 11,80,396progress

Total 11,80,396 2,75,79,709 1,73,11,881 1,14,48,224 — — — — 1,14,48,224 11,80,396

100


NOTES TO THE FINANCIAL STATEMENTS (Contd.)

31st March, 2012 31st March, 201111. Non Current Investments

Other Investments (Non quoted)- Government Securities - NationalSavings Certificates 10,000 10,000(Deposits with or for depositwith authorities)Total 10,000 10,000

12. Long Term Loans and Advances(a) Capital Advances (Unsecured,

Considered Good) 72,30,336 11,08,434(b) Security Deposit (Unsecured,

Considered Good) 28,54,091 34,01,508

Total 1,00,84,427 45,09,94213. Other Non Current Assets On Margin Money with maturity

period more than 12 months* 10,21,200 10,21,200*Pledged with Bank for BankGuarantee ` 10,21,200/-(Previous Year - ` 10,21,200/-)Total 10,21,200 10,21,200

14. Current InvestmentsInvestments in Mutual Funds (Unquoted)(a) Reliance Liquid Fund - cash plan -

Daily dividend reinvestment — 20,13,86,943Nil (Previous Year - 1,80,75,388.699)Units of ` 11.1415 each

(b) Birla Sun Life Cash Plus -Daily dividend reinvestment — 11,03,14,608Nil (Previous Year - 1,10,09,991.284)Units of ` 10.0195 each

(c) Religare Liquid Fund - Daily dividend reinvestment — 10,78,04,363Nil (Previous Year - 1,07,719.814)Units of ` 1000.7849 each

(d) Sundaram Money Fund Super Daily 14,52,10,714 —dividend reinvestment 1,43,83,992.02(Previous Year - Nil) Units of ` 10.0953 each

(e) Birla Sun Life Floating Rate Fund - 16,81,09,611 —Daily dividend reinvestment16,80,759.96 (Previous Year - Nil)Units of ` 100.02 each

(f) Reliance Liquid Fund Treasury Plan -Daily dividend reinvestment 15,04,76,294 —98,43,158.06 (Previous Year - Nil)Units of ` 15.2874 each

Total 46,37,96,619 41,95,05,91415. Inventories (Valued at Cost or below)

(a) Food, Beverage etc. 58,67,096 47,78,609(b) Stores & Spares 21,95,042 19,73,977Total 80,62,138 67,52,586

16. Trade Receivables(a) Outstanding for more than six months from

the date these are due for paymentUnsecured, Considered Good 17,06,897 20,03,271Doubtful 1,12,065 1,10,230

(b) OthersSecured, Considered Good 5,14,505 1,86,913Unsecured, Considered Good 1,60,49,140 1,94,81,502

1,83,82,607 2,17,81,916Less: Provision for Doubtful Debts 1,12,065 1,10,230Less: Deposits from normalTrade Debtors - Contra 5,14,504 1,86,913

Total 1,77,56,038 2,14,84,77317. Cash and Bank Balances

Cash and Cash Equivalents(a) Cash on Hand 5,81,718 5,47,299(b) Bank Balance

On Current Accounts 50,37,026 1,34,33,865(c) Cheques on Hand 3,85,461 45,84,778

Sub Total (A) 60,04,205 1,85,65,942

Other Bank BalancesOn Deposit Accounts- Maturity of greater than 3 months but less than 12 months (original maturity) 12,95,08,317 11,75,00,000- Maturity of greater than 12 months (original maturity) 1,07,18,235 1,07,18,235On Margin Money* 20,35,000 —*Pledged with Bank for Bank Guarantee` 20,35,000/- (Previous Year Nil)Sub Total (B) 14,22,61,552 12,82,18,235

Total 14,82,65,757 14,67,84,177

31st March, 2012 31st March, 201118. Short Terms Loans and Advances

(a) Advance Recoverable in cash or inkind or for value to be received(Unsecured, considered good) 1,08,40,433 82,69,088

(b) Advance Fringe Benefit Tax(Net of Provision of ` 33,53,052/-Previous Year ` 67,46,417/-) 6,47,499 5,76,328

(c) Advance Income Tax(Net of Provision of ` 42,40,04,972/-)(Previous Year - ` 39,84,40,872/-) 60,95,684 1,83,46,081

(d) Other Deposits 14,86,500 10,28,500Total 1,90,70,116 2,82,19,997

19. Other Current AssetsInterest accrued on Deposits 38,67,169 23,51,677Total 38,67,169 23,51,677


20. Revenue from Operations (Net)(a) Revenue from Sale of Services

- Rooms 28,15,03,058 27,74,07,224- Food and Beverage 20,30,89,014 20,64,23,667- Recreation and Services 3,78,52,626 4,31,79,593

(b) Other Operating Revenue 75,66,747 52,44,199Total 53,00,11,445 53,22,54,683

21. Other Income(a) Interest on Deposits

- with Banks 1,32,82,683 81,49,906- with Others 1,57,266 1,57,266

(b) Dividend from Investments 2,90,38,221 1,98,13,756(c) Miscellaneous Income 40,88,073 —Total 4,65,66,243 2,81,20,928

22. Cost of Material ConsumedConsumption of Food, Beverages, etc.

Opening Stock 47,78,609 76,98,913Add: Purchases 6,52,62,305 5,90,30,017

7,00,40,914 6,67,28,930Less: Closing Stock 58,67,096 47,78,609

Total 6,41,73,818 6,19,50,32123. Employee Benefit Expenses

(a) Salaries, Wages and Bonus * 8,68,42,963 7,97,60,647(b) Contribution to Provident and

Other Funds 37,86,792 27,07,193(c) Workmen and Staff Welfare Expenses 1,70,77,599 1,46,76,518Total 10,77,07,354 9,71,44,358* Includes reimbursement to Group Companies` 3,50,07,214/- (Previous Year : ` 3,35,72,192/-)

24. Other Expenses(a) Consumption of Stores and Supplies 1,73,92,003 1,50,93,513(b) Power and Fuel 4,52,56,000 4,17,45,279(c) Rent 54,04,960 55,87,704(d) Repairs - Building 69,83,250 62,73,089

- Machinery 1,30,27,800 85,57,237 - Others 42,95,781 43,03,491

(e) Insurance 26,05,848 33,40,467(f) Rates and Taxes 1,67,98,183 83,58,594(g) Advertising/Sales Promotion 68,81,960 56,25,640(h) Electronic Data Processing 53,83,379 34,97,217(i) Travelling and Conveyance 73,41,038 98,27,024(j) Guest Transport 24,39,162 23,34,960(k) Training 12,33,345 11,33,270(l) Legal Expenses 4,43,320 80,000(m) Postage, Telephone, Telex etc. 59,08,291 49,35,378(n) Commission paid to Travel Agents 20,13,128 8,49,053(o) Bank & Credit Card Charges 67,04,319 72,90,800(p) Technical & Consultancy Fees 4,42,32,547 4,89,64,699(q) Hotel Reservation/Marketing.Expenses 1,63,74,365 1,60,56,431(r) Contract Services 2,37,95,514 1,99,40,857(s) Printing & Stationary 12,93,172 15,92,757(t) Loss on Exchange (Net) 2,93,550 25,196(u) Loss on Fixed Assets sold/discarded 4,82,624 60,47,258(v) Provision for Doubtful Debts 1,12,065 —(w) Bad Debts Written off 2,15,652 6,22,506(x) Miscellaneous Expenses * 1,39,10,356 1,50,80,799Total 25,08,21,612 23,71,63,219* Includes Auditors' Remuneration and Expenses

- Audit Fees 7,50,000 7,50,000- Tax Audit Fees 75,000 75,000- Reimbursement of Expenses 20,000 17,500

25. Earnings Per Share(a) Profit after Taxation 9,39,62,791 9,26,00,439(b) Weighted average number of

equity shares outstanding 2,40,00,000 2,40,00,000(c) Basic and diluted earnings per share 3.92 3.86

in ` (Face value - ` 10/- per share)

As at As at As at As at


31st March, 2012 31st March, 201126. The Estimated Amount of Contracts remaining to be executed on Capital Account and

not provided for (Net of advances ` 72,30,336/- Previous Year ` 11,08,434/-) 1,43,62,036 29,53,87327. Contingent Liability

Claims against the Company not acknowledged as debts :i) Indirect Taxation Matters 19,85,698 19,85,698ii) Direct Taxation Matters 17,86,570 13,10,283

28. Earnings in Foreign Exchange* Includes ` 18,13,86,179/- (Previous Year - ` 21,05,47,557/-) being Earnings during the yearthrough International Credit Cards & Travel Agencies etc. as certified by Bankers. 21,52,40,721 21,66,72,748

29. Expenditure in Foreign Currency during the yearHotel Reservation / Marketing Expenses 1,59,41,638 1,56,38,715Technical & Consultancy Fees 4,16,822 12,83,389

1,63,58,460 1,69,22,10430. Value of Imports during the year (CIF Basis)

Capital Goods 1,13,67,718 11,23,590Other Goods 19,34,174 9,04,829

1,33,01,892 20,28,419


31. Value of Consumption of Raw Materials, Stores & Supplies (`) % (`) %(a) Raw Materials

Indigenous 6,41,73,818 100.00 6,19,50,321 100.00Imported — — — —

6,41,73,818 100.00 6,19,50,321 100.00(b) Stores & Supplies

Indigenous 1,54,57,829 88.88 1,41,88,684 94.01Imported 19,34,174 11.12 9,04,829 5.99

1,73,92,003 100.00 1,50,93,513 100.00

32. The Company operates in one operating segment i.e., Hoteliering and within one geographical segment i.e. India.33. The Company's significant lease arrangements are in respect of operating leases for residential premises. These leasing arrangements, which are cancellable, are

for a period of 11 months or longer and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are chargedas Rent under Note 24.

34. Employee Benefits :a) As per Actuarial Valuations as on March 31, 2012 and recognised in the financial statements in respect of Employee Benefit Schemes :

For the year ended March 31, 2012 For the year ended March 31, 2011Leave Leave

Gratuity Encashment Gratuity EncashmentFunded Unfunded Funded Unfunded

(`) (`) (`) (`)I Components of Employer Expense

1 Current Service Cost 8,33,645 4,71,959 7,56,542 4,57,6472 Interest Cost 3,95,382 1,01,518 3,46,239 58,3193 Expected Return on Plan Assets (3,24,114) — (2,95,557) —4 Curtailment Cost/(Credit) — — — —5 Settlement Cost/(Credit) — — — —6 Past Service Cost — — — —7 Actuarial Losses/(Gains) 1,14,178 (5,38,237) (3,19,004) 27,7768 Total expense recognised in the

statement of Profit & Loss Account 10,19,091 35,240 4,88,220 5,43,742The Gratuity Expense has been recognised in “Contribution to Provident and Other Funds” and Leave Encashment in “Salaries/Wages and Bonus” under Note 23.II Actual Returns 3,37,521 — 3,22,696 —III Net Asset/(Liability) recognised in Balance Sheet

1 Present Value of Obligation 60,04,512 12,71,090 52,36,642 13,02,1072 Fair Value on Plan Assets 37,12,693 — 37,09,295 —3 Status [Surplus/(Deficit)] (22,91,819) (12,71,090) (15,27,347) (13,02,107)4 Unrecognised Past Service Cost — — — —5 Net Asset/(Liability) recognised in Balance Sheet (22,91,819) (12,71,090) (15,27,347) (13,02,107)

IV Change in Defined Benefit Obligations (DBO)1 Present Value of DBO at the Beginning of Period 52,36,642 13,02,107 48,07,308 7,96,8112 Current Service Cost 8,33,645 4,71,959 7,56,542 4,57,6473 Interest Cost 3,95,382 1,01,518 3,46,239 58,3194 Curtailment Cost/(Credit) — — — —5 Settlement Cost/(Credit) — — — —6 Plan Amendments — — — —7 Acquisitions — — — —8 Actuarial (Gains)/Losses 1,27,585 (5,38,237) (2,91,865) 27,7769 Benefits Paid (5,88,742) (66,257) (3,81,582) (38,446)10 Present Value of DBO at the End of Period 60,04,512 12,71,090 52,36,642 13,02,107

V Change in Fair Value of Assets1 Plan Assets at the Beginning of Period 37,09,295 — 30,76,520 —2 Acquisition Adjustment — (2,865) —3 Expected Return on Plan Assets 3,24,114 — 2,95,557 —4 Actuarial Gains/(Losses) 13,407 — 27,139 —5 Actual Company Contribution 2,54,619 66,257 6,94,526 38,4466 Benefits Paid (5,88,742) (66,257) (3,81,582) (38,446)7 Plan assets at the End of Period 37,12,693 — 37,09,295 —

VI Actuarial Assumptions1 Discount Rate (%) 8.00 8.00 8.00 8.002 Expected Return on Plan Assets (%) 9.15 — 9.15 —The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such assupply and demand factors in the employment market.

VII Major Categories of Plan Assets as a % of the Total Plan Assets1 Insurance Companies 100% — 100% —

VIII Basis used to determine the Expected Rate of Return on Plan AssetsThe 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 capitaland optimised returns within acceptable risk parameters, the plan assets are well diversified.

101


As at As at

102



Sr. Subsidiaries Key - Management Relatives of KeyNo. Particulars Holding Company Personnel Management Personnel (*)

ITC India Infotech Ltd Others

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

a Sale of Goods 9,135 4,866 — — — — — — — —

b Sale of Services 1,59,10,664 86,19,352 — — — — — — — —

c Purchase of Goods 1,20,58,211 59,87,296 15,97,046 — 2,004 1,47,808 — — — —

d Purchase of Services

- Hotel Services 24,82,293 35,08,353 —— — — — — — — —

- Service Fee 4,03,32,625 4,50,26,573 3,86,050 3,08,840 — — — — — —

e Interest Income — — — — — — — — — —

f Dividend Income — — — — — — — — — —

g Rent Paid — — — — — — — — 3,60,000 8,00,000

h Reimbursement of

Contractual Remuneration 3,50,07,214 3,35,72,192 — —— — — — — — —

i Expenses recovered 2,29,97,488 1,32,24,959 — — — — — — — —

j Expenses reimbursed 1,80,63,704 1,61,18,234 — — 2,940 23,001 — — — —

k Remuneration — — — — — — 37,37,559 32,81,341 — —

l Dividend Payments 3,26,40,954 3,26,40,954 — — — — 26,08,460 26,08,460 1,18,31,620 1,18,31,620

m Sale of Fixed Assets — — — — — — — — — —

n Balance outstanding atthe year end :

- Debtors/Receivables 2,72,956 1,77,726 — — — — — — — —

- Creditors/Payables 1,46,71,923 1,36,22,236 — — — 5,843 — — — —

- * M/s. G. Sulochanamma M/o. G.Sivakumar Reddy, G.Samyuktha Reddy W/o G.Sivakumar Reddy, G.Pranav Reddy S/o. G.Sivakumar Reddy, G.Rachita Reddy D/o. G.Sivakumar Reddy,N.Shailaja Reddy W/o. N.R.Pradeep Reddy, G.Bharati Reddy W/o. B.N.Suresh Reddy.

36. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to thenotification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly,the previous year figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognitionand measurement principles followed for preparation of Financial statements.

iv) Summary of transactions during the year : (`)

35. Related Party Disclosures Under Accounting Standard 18

i) Holding Company : ITC Limited

ii) Other Related Parties with whom transactions have takenplace during the year :

Fellow Subsidiary Companies : Surya Nepal Private LimitedITC Infotech India Limited

iii) Key Management Personnel :Board of DirectorsG. Sivakumar Reddy - ChairmanNakul Anand - Vice Chairman & DirectorS. C. Sekhar - DirectorN. R. Pradeep Reddy - DirectorB. N. Suresh Reddy - DirectorGeorge Verghese - Managing DirectorDipak Haksar - Director

b) Contribution to Provident Fund and Employee State Insurance Scheme charged to the Statement of Profit and Loss (included in Note 23) ` 30,22,320/-(Previous Year: ` 29,10,634/-)


Gunupati Sivakumar Reddy ChairmanGeorge Verghese Managing Director

Hemanshi Khanna Secretary


6. The Annual General Meeting for the financial year ended on 31stMarch, 2011 was held on 28th June, 2011 after giving due notice tothe Members of the Company and other concerned and the resolutionspassed thereat were duly recorded in Minutes Book maintained for thepurpose.

7. No extraordinary general meeting was held during the financial year.

8. The Company has not advanced any loans to its Directors or personsor firms or companies referred to under Section 295 of the Act.

9. The Company has not entered into any contract falling within thepurview of Section 297 of the Act.

10. The Company was not required to make any entries in the registermaintained under Section 301(1) of the Act. However, it has madenecessary entries in register maintained under Section 301(3) of theAct.

11. As there were no instances falling within the purview of Section 314of the Act, the Company has not obtained any approvals from theBoard of Directors, Members or Central Government.

12. The Company has not issued any duplicate share certificate during thefinancial year.

13. The Company has:

(i) not made any allotment/transfer/transmission of securities duringthe financial year.

(ii) deposited the amount of final dividend declared in the separateBank Account, within 5 days.

(iii) paid dividends to all the members within a period of 30 days fromthe date of declaration and that there is no Unclaimed/UnpaidDividend, which is required to be transferred to a Special Account.

(iv) not transferred any amount in Investor Education and ProtectionFund as there is no unpaid dividend, application money due forrefund, matured deposits, matured debentures and the interestaccrued thereon, which have remained unclaimed or unpaid fora period of seven years.

(v) duly complied with the requirements of Section 217 of the Act.

DirectorsIn accordance with the provisions of Article 143 of the Articles of Associationof the Company, Mr. Nakul Anand will retire by rotation at the forthcomingAnnual General Meeting of the Company and being eligible, offers himself forre-appointment.Particulars of EmployeesNone of the employees fall under the purview of the provisions of Section217(2A) of the Companies Act, 1956, read with the Companies (Particularsof Employees) Rules, 1975.Compliance Certificate under Companies Act, 1956A certificate issued by M/s. P B & Associates, Company Secretaries, in termsof the provisions of Section 383 A of the Companies Act, 1956, to the effectthat the Company has complied with the applicable provisions of the said Actis attached to this Report.AuditorsThe Company’s Auditors, Messrs. Price Waterhouse, Chartered Accountants,retire at the ensuing Annual General Meeting and being eligible, offer themselvesfor re-appointment.Directors’ Responsibility StatementAs required under Section 217 (2AA) of the Companies Act, 1956, your Directorsconfirm having:(i) followed in the preparation of the Annual Accounts the applicable

accounting standards with proper explanations relating to materialdepartures if any;

(ii) selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to givea true and fair view of the state of affairs of your Company at the endof the financial year and of the profit of your Company for that period;

(iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of your Company and for preventing anddetecting fraud and other irregularities; and


On behalf of the BoardPlace: Gurgaon Chandrasekhar Subrahmoneyan DirectorDate : 27th April, 2012 Arun Pathak Director


Your Directors submit their Report for the financial year ended 31st March,2012.Financial PerformanceDuring the year under review, your Company recorded net revenue of` 2077.72 lacs (previous year - ` 1801.45 lacs) and earned a net profit of` 495.66 lacs (previous year - ` 411.73 lacs) after providing for income tax of` 221.88 lacs (previous year - ` 190.45 lacs). Earnings Per Share for the yearstands at ` 110.15 (previous year - ` 91.49).Your Directors are pleased to recommend a dividend of ` 10/- (previous year` 7/-) per equity share of ` 10/- each for the year ended 31st March, 2012.Your Board further recommends a transfer to General Reserve of ` 49.57 lacs(previous year - ` 41.17 lacs).The Company has expertise in operating and managing hotels in the 'midmarket to upscale' segment in India with a wide marketing and reservationnetwork. It has forged new alliances during the year taking the total numberof properties under the Fortune brand to 67, with a total inventory of 5164.Of these, 40 properties are operating hotels, 4 hotels are slated to becommissioned during the course of the financial year 2012-13 and remaining23 hotel projects are under various stages of development.The Company is renowned for superior product and service excellence thathas enabled a premium positioning for the ‘Fortune’ brand in the Indianhospitality sector. ‘My Fortune’ is the latest addition to the bouquet of brandsbeing offered by Fortune Hotels. These hotels offer a perfect blend of traditionalIndian hospitality with new age technology, while catering to the upscalebusiness traveller. With its globally benchmarked product and service excellenceand customer centricity the Company is well positioned to sustain its leadershipposition in the industry.The Company has won the following awards in the financial year 2011-2012:- Hospitality India Award for the ‘Best First Class Hotel Chain, 2011’.- SATTE award for ‘Leading Mid - market chain, 2012’.Fortune Select Exotica, Navi Mumbai has been awarded ‘World Luxury HotelAward’ for the year 2010 and 2011.Conservation of Energy, Foreign Exchange Earnings and OutgoYour Company has introduced an ‘Eco Friendly’ rating scheme under whichall hotels operating under the ‘Fortune’ brand are audited and rated based onvarious parameters. These include the adoption of ‘Star Rated’ energy appliances,CFL and LED lighting, intelligent lighting controls, usage of renewable energyetc. This scheme will catalyze energy conservation and adoption of eco friendlypractices at all hotels operating under your Company’s brand.There was no foreign exchange income during the year (previous year - Nil) butthere was a foreign exchange outgo of ` 13.04 lacs (previous year - ` 8.79 lacs).

COMPLIANCE CERTIFICATE

Company No. : U55101DL1995PLC099973Nominal Capital : ` 2 Crores

The Members ofFortune 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 ParkHotels Limited (hereinafter referred to as ‘the Company’) as required to bemaintained under the Companies Act, 1956 (the Act) and the Rules madethereunder, the provisions contained in the Memorandum and Articles ofAssociation of the Company and also the audited Annual Accounts, Auditors’Report on the said annual accounts for the financial year ended 31st March,2012 (‘financial year’). In our opinion and to the best of our informationand according to the examination carried out by us and explanations andconfirmation furnished to us by the Company, its officers and agents, wecertify 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 Rulesmade 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 withinthe time prescribed under the Act and the Rules made thereunder.

3. The Company, being a Public Limited Company, comments are notrequired.

4. The Board of Directors duly met 4 (Four) times respectively on 28thApril, 2011, 27th September, 2011, 16th December, 2011 & 26thMarch, 2012 in respect of which meetings proper notices were giventhe proceeding were properly recorded and signed and kept in theMinutes Book maintained for the purpose. There was no resolutionpassed, by circulation.

5. The Company has not closed its Register of Members during thefinancial year.

103

FORTUNE PARK HOTELS LIMITED

104


ANNEXURE – ‘A’

Registers maintained by the Company (As on March 31, 2012)Sl. Particulars Relevant SectionNo. of the Act1. Minutes Book of the meetings of the Board of Directors of the Company 1932. Minutes Book of General Body Meetings of the Members of the Company 1933. Copies of Annual Returns 1594. Register of Members 1505. Register of Particulars of Directors, Managing Director, Manager and Secretary 3036. Register of Directors’ Shareholding 3077. Register(s) of contracts, companies and firms in which Directors are interested 301(3)8. Books of Accounts 2099. Register of Investments 372A

10. Register of Share Transfer

ANNEXURE – ‘B’

A. Forms & Returns filed with the Registrar of Companies, New Delhi (During the Year ended on March 31, 2012)

Sl. Particulars of Forms & Returns Filed Date of Whether AdditionalNo. Filing filed within Fees paid

prescribed time1. Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March, 2011 12th July, 2011 Yes No2. Form 20B for Annual Return u/s 159 of the Act, made upto 28th June, 2011

i.e. the date of AGM for the financial year ended 31st March, 2011 24th August, 2011 Yes No3. Form 23ACXBRL and Form 23ACAXBRL for Annual Accounts u/s 220 for the year ended 31st March, 2011 29th November, 2011 Yes No

B. Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil

14. The Board of Directors of the Company is duly constituted. There wasno appointment of additional director /alternate Directors /Directorsto fill the casual vacancy.

15. The Company has not appointed any Managing Director/Whole-timeDirector/Manager during the financial year.

16. The Company has not appointed any sole selling agents during thefinancial year.

17. The Company was not required to obtain any approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar and/orsuch authorities prescribed under the various provisions of the Actduring the financial year.

18. The Directors have disclosed their interest in other firms/companies tothe Board of Directors pursuant to the provisions of the Act and theRules made thereunder.

19. The Company has not issued any shares, debentures or other securitiesduring the financial year.

20. The Company has not bought back any shares during the financialyear.

21. The Company has neither preference capital nor debentures, thus thecomments on the same are not required.

22. There were no transactions necessitating the Company to keep inabeyance the rights to dividend, rights shares and bonus shares pendingregistration of the transfer of shares.

23. The Company has not invited or accepted any deposits including anyunsecured loans falling within the purview of Section 58A during thefinancial year.

24. The Company has not made any borrowings during the financial year.

25. The Company, during the financial year, has made investments inmutual funds issued by the trusts and fixed deposits which are notcovered under the provisions of section 372A, of the Act, thus no

entries are made in the register kept for the purpose. However, therewere no loans made or guarantees given or the securities provided toother bodies corporate during the financial year.

26. The Company has not altered the provisions of the Memorandum withrespect to situation of the Company's Registered Office from one Stateto another during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandum withrespect to the objects of the Company during the year under scrutiny.

28. The Company has not altered the provisions of the Memorandum withrespect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of the Memorandum withrespect to Share Capital of the Company during the year under scrutiny.

30. The Company has not altered its Articles of Association during thefinancial year.

31. There was no prosecution initiated against or show cause noticesreceived by the Company for alleged offences under the Act. Similarly,no fines, penalties or punishment under the Act, was imposed on theCompany during the financial year.

32. The Company has not received any money as security from its employeesduring the financial year.

33. The Company has not constituted a separate provident fund trust forits employees or class of its employees as contemplated under Section418 of the Act.

For PB & AssociatesCompany Secretaries

Pooja BhatiaPlace: Gurgaon LLB, ACSDate : 27th April, 2012 CP : 6485

AUDITORS’ REPORT TO THE MEMBERS OF FORTUNE PARK HOTELSLIMITED

1. We have audited the attached Balance Sheet of Fortune Park HotelsLimited (the “Company”) as at March 31, 2012, and the related Statementof Profit and Loss and Cash Flow Statement for the year ended on thatdate annexed thereto, which we have signed under reference to thisreport. These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made byManagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amendedby the Companies (Auditor’s Report) (Amendment) Order, 2004 (togetherthe “Order”), issued by the Central Government of India in terms ofsub-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 ofthe Company as we considered appropriate and according to theinformation and explanations given to us, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3above, 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 purposesof our audit;

(b) In our opinion, proper books of account as required by law havebeen kept by the Company so far as appears from our examinationof those books;


Referred to in paragraph 3 of the Auditors’ Report of even date to themembers of Fortune Park Hotels Limited on the financial statements asof and for the year ended March 31, 2012.

1. (a) The Company is maintaining proper records showing fullparticulars, including quantitative details and situation, of fixedassets.

(b) The fixed assets of the Company have been physically verifiedby the Management during the year and no material discrepanciesbetween the book records and the physical inventory have beennoticed. In our opinion, the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanationsgiven to us, a substantial part of fixed assets has not been disposedoff by the Company during the year.

2. The Company does not hold any inventory. Therefore the provisionsof clauses (2) (a), (2) (b) and (2) (c) of paragraph 4 of the Order arenot 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 registermaintained 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 registermaintained under Section 301 of the Act.

4. In our opinion and according to the information and explanationsgiven to us , there is an adequate internal control system commensuratewith the size of the Company and the nature of its business for thepurchase of fixed assets and for the sale of services. Further, on thebasis of our examination of the books and records of the Company,and according to the information and explanations given to us, wehave neither come across nor have been informed of any continuingfailure to correct major weaknesses in the aforesaid internal controlsystem.

5. (a) According to the information and explanations given to us, therehave been no contracts or arrangements referred to in Section301 of the Act during the year to be entered in the registerrequired to be maintained under that Section. Accordingly, thequestion of commenting on transactions made in pursuance ofsuch contracts or arrangements does not arise.

(b) In our opinion and according to the information and explanationsgiven to us, there are no transactions made in pursuance of suchcontracts or arrangements exceeding the value of Rupees FiveLakhs in respect of any party during the year.

6. The Company has not accepted any deposits from the public withinthe meaning of Sections 58A and 58AA of the Act and the rulesframed there under.

7. In our opinion, the Company has an internal audit systemcommensurate with its size and the nature of its business.

8. The Central Government of India has not prescribed the maintenanceof cost records under clause (d) of sub-section (1) of Section 209 ofthe Act for any of the products of the Company.

9. (a) According to the information and explanations given to us andthe records of the Company examined by us, in our opinion, theCompany is regular in depositing the undisputed statutory dues,including provident fund, income tax, service tax, cess and othermaterial statutory dues, as applicable, with the appropriateauthorities.

(b) According to the information and explanations given to us andthe records of the Company examined by us, the particulars ofdues of income tax and service tax as at March 31, 2012 whichhave not been deposited on account of a dispute, are as follows:

Name Nature Amount Period to Forum where the of the of dues (`) which the dispute is pendingstatute amount

relates

Income Demand u/s Assessment Income TaxTax Act, 156 of 17,29,041 Year Appellate Tribunal1961 Income Tax 2001-02

Act, 1961

Finance Demand u/s Customs, Excise andAct,1994 73(1)(a)of The 45,70,992 2003-04 to Service Tax Appellate

Finance Act, 18-04-2006 Tribunal1994

Income Demand u/s Assessment CIT (Appeals)Tax Act, 156 of Income 3,18,993 Year Amount withheld1961 Tax Act, 1961 2008-09 by department

under Protest *

Income Demand u/s Assessment CIT (Appeals)Tax Act, 156 of Income 6,46,426 Year1961 Tax Act, 1961 2009-10

*decided in favor of the Company subsequent to the year end.

10. The Company has no accumulated losses.11. According to the records of the Company examined by us and the

information and explanation given to us, the Company has not defaultedin repayment of dues to any financial institution or bank or debentureholders as at the Balance Sheet date.

12. The Company has not granted any loans and advances on the basisof 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.


15. In our opinion, and according to the information and explanationsgiven to us, the Company has not given any guarantee for loans takenby 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 andexplanations given to us, there are no funds raised on a short-termbasis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares toparties and companies covered in the register maintained under Section301 of the Act during the year.

19. The Company has not issued any debentures during the year; anddoes not have any debentures outstanding as at the year end.

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 acceptedauditing practices in India, and according to the information andexplanations given to us, we have neither come across any instanceof fraud on or by the Company, noticed or reported during the year,nor have we been informed of any such case by the Management.

For Price WaterhouseFirm Registration Number: 012754N

Chartered Accountants Abhishek RaraPlace: Gurgaon PartnerDate : 27th April, 2012 Membership Number 77779

105


fair view in conformity with the accounting principles generallyaccepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the

company as at March 31, 2012;(ii) in the case of the Statement of Profit and Loss, of the profit for

the year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for

the year ended on that date.

For Price WaterhouseFirm Registration Number: 012754N

Chartered Accountants Abhishek RaraPlace: Gurgaon PartnerDate : 27th April, 2012 Membership Number 77779

(c) The Balance Sheet, Statement of Profit and Loss and Cash FlowStatement dealt with by this report are in agreement with the booksof account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss andCash Flow Statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section 211of the Act;

(e) On the basis of written representations received from the directors,as on March 31, 2012 and taken on record by the Board of Directors,none of the directors is disqualified as on March 31, 2012 frombeing 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 tothe explanations given to us, the said financial statements togetherwith the notes thereon and attached thereto give, in the prescribedmanner, the information required by the Act, and give a true and

BALANCE SHEET As at March 31, 2012 As at March 31, 2011Note (`) (`) (`) (`)

Equity and LiabilitiesShareholders' FundsShare Capital 2 45,00,080 45,00,080Reserves and Surplus 3 16,18,88,887 16,63,88,967 11,75,52,727 12,20,52,807Non - Current LiabilitiesOther Long - Term Liabilities 4 1,66,40,345 1,18,75,435Long - Term Provisions 5 2,36,69,849 4,03,10,194 2,05,06,415 3,23,81,850Current LiabilitiesTrade Payables 6 2,19,87,591 1,72,26,899Other Current Liabilities 7 95,68,407 1,18,56,376Short - Term Provisions 8 89,70,545 4,05,26,543 42,19,274 3,33,02,549

Total 24,72,25,704 18,77,37,206AssetsNon - Current AssetsFixed AssetsTangible Assets 9 42,37,464 38,68,539Intangible Assets 10 9,19,471 51,56,935 13,65,648 52,34,187Deferred Tax Assets (Net) 11 1,12,41,120 92,52,375Current AssetsCurrent Investments 12 7,15,48,707 4,40,82,435Trade Receivables 13 5,06,77,278 4,16,93,840Cash and Bank Balances 14 6,36,03,479 4,49,07,304Short - Term Loans and Advances 15 1,93,64,986 1,95,05,775Other Current Assets 16 2,56,33,199 23,08,27,649 2,30,61,290 17,32,50,644

Total 24,72,25,704 18,77,37,206

The notes are an integral part of these financial statementsThis is the Balance Sheet referred to in our Report of even date.

For PRICE WATERHOUSEFirm’s Registration No : 012754NChartered Accountants

Abhishek RaraPartnerMembership Number 77779



Chandrasekhar Subrahmoneyan DirectorArun Pathak Director

STATEMENT OF PROFIT AND LOSSYear ended Year ended

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

Revenue From Operations (Gross) 22,08,42,101 19,40,40,210Less : Service Tax (2,06,26,699) (1,80,68,543)Revenue From Operations (Net) 19 20,02,15,402 17,59,71,667Other Income 20 75,56,494 41,73,492

Total Revenue 20,77,71,896 18,01,45,159Expenses :Employee Benefits Expense 21 8,72,03,137 7,37,16,613Depreciation and Amortisation Expense 22 13,52,338 14,56,422Other Expenses 23 4,74,61,901 4,47,54,551

Total Expenses 13,60,17,376 11,99,27,586

Profit before tax 7,17,54,520 6,02,17,573Tax expense:Current Tax 2,41,77,000 1,94,10,000Deferred Tax (19,88,745) 2,21,88,255 (3,65,204) 1,90,44,796

Profit for the year 4,95,66,265 4,11,72,777Earnings Per Equity Share[Nominal value per share:` 10/- (2011: ` 10/-)] 25Basic and Diluted 110.15 91.49

The notes are an integral part of these financial statements.This is the Statement of Profit and Loss referred to in our Report of even date.

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For Price WaterhouseFirm Registration No : 012754NChartered Accountants

Abhishek RaraPartnerMembership Number 77779




CASH FLOW STATEMENTYear ended Year ended

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

A. Cash Flow from Operating ActivitiesProfit before tax 7,17,54,520 6,02,17,573Adjustments for:Depreciation and Amortisation Expense 13,52,338 14,56,422Bad Debts Written Off 9,93,513 37,66,756Loss on sale of fixed assets 29,676 54,684Interest Income (39,00,221) (25,86,009)Dividend Income (36,56,273) (15,64,562)Loss on sale of Investment from Mutual Funds — 2,27,892Operating profit before working capital changes 6,65,73,553 6,15,72,756Changes in Working Capital :Increase/(Decrease) in Trade Payables 47,60,692 46,39,173Increase/(Decrease) in Provisions 63,45,674 28,72,420Increase/(Decrease) in Other Current Liabilities (22,87,969) 69,62,729Increase/(Decrease) in Other Long - Term Liabilities 47,64,910 42,87,365(Increase)/Decrease in Trade Receivables (99,76,951) (1,00,12,315)(Increase)/Decrease in Loans and Advances (3,21,861) (8,53,452)(Increase)/Decrease in Other Current Assets (89,65,547) (1,96,01,181)Cash Generated from Operations 6,08,92,501 4,98,67,495Taxes paid (net of refunds) (2,37,14,350) (2,16,18,886)

Net cash generated from operating activities 3,71,78,151 2,82,48,609

B. Cash flow from investing activitiesPurchase of assets (13,46,412) (9,70,788)Sale of assets 41,651 50,916Purchases of current investments (18,96,56,273) (42,22,98,020)Sale of current investments 16,21,90,001 39,51,70,527Interest received 33,51,290 21,08,263Dividend Received 36,56,273 15,64,562Net cash used in investing activities (2,17,63,470) (2,43,74,540)

C. Cash flow from Financing ActivitiesDividend Paid (31,50,056) (27,00,048)Dividend Distribution Tax (5,11,018) (4,48,451)Net cash used in Financing Activities (36,61,074) (31,48,499)Net increase in cash and cash equivalents (A+B+C) 1,17,53,607 7,25,570Cash and Cash equivalents at the beginning of the year 1,75,07,304 1,67,81,734

Cash and Cash equivalents at the end of the year 2,92,60,911 1,75,07,304

Notes:1 Cash and cash equivalents comprise of:

Cash on Hand 82,888 18,249Cheques on Hand 32,91,891 21,35,892Balances with Banks 2,58,86,132 1,53,53,163Total 2,92,60,911 1,75,07,304

2 The above Cash flow statement has been prepared under the indirect method set out in AS-3 notified u/s 211(3C) of The Companies Act, 1956.3 Figures in brackets indicate cash outgo.4 Previous period figures have been regrouped and recasted, wherever necessary to conform to the current period classification.

This is the cash flow statement referred to in our report of even date.


1 SIGNIFICANT ACCOUNTING POLICIES

i) CONVENTIONTo prepare financial statements in accordance with applicableAccounting Standards notified u/s 211(3C) of the Companies Act,1956. A summary of important accounting policies is set out below.The financial statements have also been prepared in accordance withrelevant presentational requirements of the Companies Act, 1956.To prepare financial statements in accordance with the historical costconvention.

ii) REVENUETo recognise Revenue from Operations (net) at the time of renderingof services after deducting taxes and duties from invoiced value.

iii) FIXED ASSETSTo state Fixed Assets at cost of acquisition inclusive of inward freight,duties and taxes and incidental expenses related to acquisition.To capitalize software where it is expected to provide future enduringeconomic benefits. The costs are capitalised in the year in which therelevant software is implemented for use.

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For Price WaterhouseFirm Registration No : 012754NChartered AccountantsAbhishek RaraPartnerMembership Number 77779Place: GurgaonDate : 27th April, 2012



iv) DEPRECIATION/AMORTISATIONTo calculate depreciation / amortisation on Fixed Assets/ IntangibleAssets in a manner that amortises the cost of the assets aftercommissioning, over their estimated useful lives or lives based on therates specified in Schedule XIV to the Companies Act, 1956, whicheveris lower, by equal annual instalments. To amortise capitalised softwarecosts over a period of five years.

v) INVESTMENTTo state Current Investments at lower of cost and fair value; andLong-Term Investments at cost. Where applicable, provision is madeto recognise a decline, other than temporary, in valuation ofLong-Term Investments.

vi) INVESTMENT INCOMETo account for Income from Investments on an accrual basis, inclusiveof related tax deducted at source.

vii) EMPLOYEE BENEFITSTo make regular monthly contributions to the State administered


108


3 Reserves And Surplus

Capital Reserve 30,00,000 30,00,000General ReserveBalance as at beginning of the year 1,10,99,511 69,82,233Add : Transferred from Surplus in theStatement of Profit and Loss during the year 49,56,626 41,17,278

Balance as at end of the year 1,60,56,137 1,10,99,511

Surplus in Statement of Profit and LossBalance as at beginning of the year 10,34,53,216 7,00,58,791Profit for the year 4,95,66,265 4,11,72,777Less : AppropriationsProposed Dividend onEquity Shares for the year (45,00,080) (31,50,056)Dividend Distribution tax onProposed Dividend on Equity Shares (7,30,025) (5,11,018)Transfer to General Reserve (49,56,626) (41,17,278)

Balance as at end of the year 14,28,32,750 10,34,53,216

16,18,88,887 11,75,52,727

4 Other Long - Term Liabilities

Advance from customers 1,07,24,255 89,24,255

Income received in advance 59,16,090 29,51,180

1,66,40,345 1,18,75,435

5 Long - Term Provisions

Provisions for employee Benefits:

Provision for leave encashment(Refer Note 21) 1,36,26,899 1,23,25,265

Provision for loyalty bonus 1,00,42,950 81,81,150

2,36,69,849 2,05,06,415

6 Trade Payables

Total outstanding dues of microand small enterprises — —

Total outstanding dues of trade payablesother than micro and small enterprises 2,19,87,591 1,72,26,899

2,19,87,591 1,72,26,899

The Company, based on the information available on the status of the suppliers,does not have any dues to enterprises covered under the Micro, Small andMedium Enterprises Development Act, 2006.


(`) (`)

Provident Fund which are charged against revenue. To provide forlong-term defined benefit scheme of gratuity and compensatedabsences on the basis of actuarial valuation on the Balance Sheet datebased on the Projected Unit Credit Method. In respect of gratuity, theCompany funds the benefits through annual contributions to LifeInsurance Corporation of India (LIC) under its Group Gratuity Scheme.The actuarial valuation of the liability towards the Gratuity Retirementbenefits of the employees is made on the basis of certain assumptionswith respect to the variable elements affecting the computationsincluding estimation of interest rate of earnings on contributions to LIC.

To recognise the actuarial gains or losses in the statement of Profit &Loss as income or expense in the period in which they occur.

viii) PROPOSED DIVIDENDTo provide for Dividend (including income tax thereon) in the booksof account as proposed by the Directors, pending approval at theAnnual General Meeting.

ix) FOREIGN CURRENCY TRANSLATIONSTo account for transactions in foreign currency at the exchange ratesprevailing on the date of the transactions. Gains/Losses arising out offluctuations in the exchange rates are recognised in statement of profit& loss in the period in which they arise.To account for gains / losses in the statement of profit and loss onforeign exchange rate fluctuations relating to monetary items at theyear end.

x) BORROWING COSTSTo capitalise the borrowing costs that are directly attributable to theacquisition or construction of that capital asset. Other borrowing costsare recognised as an expense in the period in which they are incurred.

xi) TAXES ON INCOMETo provide Current tax as the amount of tax payable in respect oftaxable income for the period, measured using the applicable tax ratesand tax laws. To provide Deferred tax on timing differences betweentaxable income and accounting income subject to consideration ofprudence, measured using the tax rates and tax laws that have beenenacted or substantively enacted tax rates by the balance sheet date.Not to recognise Deferred tax assets on unabsorbed depreciation andcarry forward of losses unless there is virtual certainty that there willbe sufficient future taxable income available to realise such assets.

xii) FINANCIAL AND MANAGEMENT INFORMATION SYSTEMSTo practice an integrated Accounting System which unifies bothFinancial Books and Costing Records. The books of account and otherrecords have been designed to facilitate compliance of the relevantprovisions of the Companies Act, 1956 on one hand, and meet theinternal requirements of information and systems for Planning, Reviewand Internal Control , on the other.


Place: Gurgaon Chandrasekhar Subrahmoneyan DirectorDate : April 27, 2012 Arun Pathak Director


March 31, 2012 March 31, 2011

(`) (`)2 Share Capital

Authorised2,000,000 (March 31, 2011: 2,000,000)equity shares of ` 10/- each 2,00,00,000 2,00,00,000

Issued, Subscribed & Paid up450,008 (March 31, 2011: 450,008)equity shares of ` 10/- each 45,00,080 45,00,080

45,00,080 45,00,080

(a) Reconciliation of number of equity shares


No. of Amount No of AmountShares in ` Shares in `

Balance as at thebeginning of the year 4,50,008 45,00,080 4,50,008 45,00,080

Balance as at theend of the year 4,50,008 45,00,080 4,50,008 45,00,080

(b) Rights, preferences and restrictions attached to shares

The Ordinary Shares of the Company, having par value of ` 10/- per share,rank pari passu in all respects including entitlement to dividend. Repaymentof capital in the event of winding up of the Company will inter alia be subjectto the provisions of the Articles of Association of Company and as may bedetermined by the Company in General Meeting prior to such winding up.

(c) Shares held by Holding CompanyAs at As at

March 31, 2012 March 31, 2011

Equity Shares of ` 10/- eachfully paid up held by:ITC Limited, the Holding Company 4,50,002 4,50,002Held by management personnelas nominees of ITC Limited 6 6

(d) Details of shares held by shareholders holding more than5% of the aggregate shares in the Company


ITC Limited, the Holding Company 4,50,002 99.98% 4,50,002 99.98%

Held by management personnel 6 0.02% 6 0.02%as nominees of ITC Limited

7 Other Current Liabilities

Advance from customers 27,64,935 39,23,171

Statutory dues including ProvidentFund and Tax deducted at Source 31,66,079 46,36,407

Employees Bonus, LTA etc. payable 31,08,553 25,91,298

Income received in advance 5,28,840 7,05,500

95,68,407 1,18,56,376

9 Tangible Assets (Amount in `)

Gross Block Depreciation Net Block

As at Disposal/ As at As at For the Disposal/ As at As at As atParticulars April 1, 2011 Additions Adjustments March 31, April 1, year Adjustments March 31, March 31, March 31,

2012 2011 2012 2012 2011

Office Equipment 6,20,085 — 97,861 5,22,224 2,15,884 64,662 82,839 1,97,707 3,24,517 4,04,201

Plant & Machinery 56,19,352 13,30,178 1,45,872 68,03,658 29,53,869 7,63,529 89,568 36,27,830 31,75,828 26,65,483(Computers)

Furniture and Fixtures 13,90,481 16,234 — 14,06,715 6,16,647 74,061 — 6,90,708 7,16,007 7,73,834

Vehicle 41,150 — — 41,150 16,129 3,909 — 20,038 21,112 25,021

Total 76,71,068 13,46,412 2,43,733 87,73,747 38,02,529 9,06,161 1,72,407 45,36,283 42,37,464 38,68,539

Previous Year 75,32,784 9,70,788 8,32,504 76,71,068 35,98,092 9,31,341 7,26,904 38,02,529 38,68,539


109


8 Short - Term ProvisionsProvision for employee benefits:Provisions for Leave Encashment(Refer note 21) 5,80,840 —Provision for Loyalty Bonus 31,59,600 5,58,200Other Provisions:Provision for ProposedDividend on Equity Shares 45,00,080 31,50,056Provision for dividend distribution taxon proposed dividend on Equity Shares 7,30,025 5,11,018

89,70,545 42,19,274

As at As atMarch 31, 2012 March 31 , 2011

(`) (`)


(`) (`)

10 Intangible Assets (Amount in `)

Gross Block Amortisation Net Block

As at Disposal/ As at As at For the Disposal/ As at As at As atParticulars April 2011 Additions Adjustments March 31, April 1, 2011 year Adjustments March 31, March 31, March 31,

2012 2012 2012 2011

Computer Software 26,25,404 — — 26,25,404 12,59,756 4,46,177 — 17,05,933 9,19,471 13,65,648

Total 26,25,404 — — 26,25,404 12,59,756 4,46,177 — 17,05,933 9,19,471 13,65,648

Previous Year 26,25,404 — — 26,25,404 7,34,675 5,25,081 — 12,59,756 13,65,648


(`) (`)11 Deferred Tax Assets (Net)

Deferred Tax Asset :On Provision for doubtful debts 37,23,823 37,23,823On Other timing differences 82,87,278 63,03,913

1,20,11,101 1,00,27,736Deferred Tax Liabilities :Depreciation (7,69,981) (7,75,361)

1,12,41,120 92,52,375

Break-up of Deferred Tax Assets andLiabilities into major components ofthe respective balances is as under :I. Balance brought forward

- Deferred Tax Asset 92,52,375 88,87,171

II. For the Year :

(i) Tax impact of difference betweencarrying amount of fixed assets inthe financial statements and theincome tax return 5,380 (42,974)

(ii) Tax impact of Expenses allowedas deduction under Income Tax Acton actual payment — (11,77,889)

(iii) Tax impact of expenses chargedin the financial statements butallowable as deduction in futureyears under income tax 19,83,365 15,86,067

Net Deferred Tax Asset (Net) 19,88,745 3,65,204

III. Closing Deferred Tax Asset 1,12,41,120 92,52,375

12 Current Investments

At Cost or market value whichever is less:

Mutual Funds (Unquoted)

Religare Liquid Fund Inst. Daily Dividend — 4,40,82,435

(0 Units: Previous Year 44,703 Units)

JP Morgan India Liquid Fund SuperInt. Daily Dividend Plan-Reinvest(71,49,222.85 units: Previous Year 0 units) 7,15,48,707 —

7,15,48,707 4,40,82,435

Aggregate amount ofunquoted investment 7,15,48,707 4,40,82,435

13 Trade Receivables


Outstanding for a periodexceeding six months from thedate they are due for payment 59,88,459 48,86,030

Others 4,46,88,819 3,68,07,810

Unsecured, considered doubtful

Outstanding for a periodexceeding six months from thedate they are due for payment 92,21,083 92,21,083

Less: Provision for doubtful debts (92,21,083) (92,21,083)

5,06,77,278 4,16,93,840


(`) (`)

14 Cash and Bank BalancesCash and cash equivalentsCash on hand 82,888 18,249Cheques on hand 32,91,891 21,35,892Bank Balances- In Current accounts 1,58,86,132 1,03,53,163- Term Deposits (less than 3 months maturity) 1,00,00,000 50,00,000

2,92,60,911 1,75,07,304Other Bank BalancesTerm Deposits with maturity morethan 3 months but less than 12 months 3,43,42,568 2,74,00,000

6,36,03,479 4,49,07,30415 Short - Term Loans and Advances

Unsecured, considered goodOther Loans and AdvancesAdvance Income Tax (Net of Provisions) 1,77,74,911 1,82,37,561Prepaid expenses 15,90,075 12,48,114Others — 20,100

1,93,64,986 1,95,05,77516 Other Current Assets

Unsecured, considered goodSecurity Deposits 5,76,181 4,23,181Interest Accrued on deposits with banks 18,00,317 12,51,386Gratuity 27,11,385 24,24,026Contractual reimbursable expenses 2,05,45,316 1,89,62,697Unsecured, considered doubtfulContractual reimbursable expenses 22,56,258 22,56,258Less: Provision for doubtful debts (22,56,258) (22,56,258)

2,56,33,199 2,30,61,29017 Contingent Liabilities

Claims against the Companynot acknowledged as debtsIncome tax Matters 6,46,426 6,81,738Service tax Matter 45,70,992 45,70,992

a The Company has received demand for service tax amounting to ̀ 45,70,992/- (inclusive of cess and penalty) dated March 10, 2010 from AdditionalCommissioner, Service Tax pertaining to service tax on reimbursement ofsalary received by the Company during the period from 2003 to 2006. TheCompany has filed its appeal before the CESTAT for the same.

b Demands from Income Tax Authorities under appeal amounting to ̀ 6,46,426/- for Assessment year 2009 -10 (March 31, 2011: ` 6,81,738/- for Assessmentyear 2007 - 08 and 2008 - 09).

c It is not practicable for the Company to estimate the timings of cash outflows,if any, in respect of the above pending resolution of the respective proceedings


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Year ended Year endedMarch 31, 2012 March 31, 2011

(`) (`)

18 Proposed DividendThe Final Dividend proposed for the year is as followsOn Equity Shares of ` 10 each:Amount of Dividend Proposed 45,00,080 31,50,056Dividend Per Equity Share ` 10/- per share ` 7/- per share

19 Revenue from Operations (Net)Management Consultancyand Other Services 20,02,15,402 17,59,71,667

20,02,15,402 17,59,71,66720 Other Income

Interest Income on Deposits 32,15,160 18,29,712Interest on Income Tax Refund 6,85,061 7,56,297Dividend Income from Mutual Funds 36,56,273 15,64,562Miscellaneous Income — 22,921

75,56,494 41,73,49221 Employee Benefits Expense

Salaries, Wages and Bonus 14,83,78,006 11,76,24,723Reimbursement ofContractual Remuneration 3,18,98,193 2,78,85,505Contribution to Provident andOther Funds [Refer note (b) below] 73,25,578 54,32,593Gratuity [Refer note (a) below] 7,64,481 20,53,162Staff Welfare Expenses 91,72,958 67,84,774

19,75,39,216 15,97,80,757Less : Recoveries (11,03,36,079) (8,60,64,144)

8,72,03,137 7,37,16,613

The Company has accounted for the Defined Benefit Plan / Other long termemployee benefit and contribution scheme as under:

(a) Defined Benefit Plan / Other long-term employee benefit:

Gratuity : The employees are entitled to gratuity that is computed as half-month’s salary, for every completed year of service and is payable onretirement/termination. The Company makes provision of such gratuity liabilityin the books of accounts on the basis of actuarial valuation. The Company payscontribution to Life Insurance Corporation to fund its plan through trust.

Other long-term employee benefits: The employees are entitled for leave foreach year of service and part thereof and subject to the limits specified, theunavailed portion of such leaves can be accumulated or encashed during/atthe end of the service period. The plan is unfunded.


(`) (`)

The reconciliation of opening and closing balances of the present value of defined benefit obligations are as under :

Gratuity Leave Encashment

As at As at As at As atMarch 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011

(i) Present Value of Defined Benefit Obligation ` ` ` `

Balance at the beginning of the year 32,77,067 14,44,078 1,23,25,265 73,24,864Current Service Cost 21,66,120 19,68,440 24,68,454 24,32,235Interest Cost 2,52,610 1,06,719 8,67,276 5,17,813Actuarial (Gains)/Losses (11,13,179) (27,056) 21,72,406 37,54,767Benefits Paid (4,30,256) (2,20,173) (36,25,662) (17,04,414)Past Service Costs — 5,059 — —Balance at the end of the year 41,52,362 32,77,067 1,42,07,739 1,23,25,265

(ii) Fair Value of Plan AssetsBalance at the beginning of the year 57,01,093 26,20,979 — —Expected return on plan assets 5,65,418 3,74,493 — —Actuarial Gains/(Losses) (24,348) (3,74,493) — —Contribution by the Company 10,51,840 33,00,287 36,25,662 17,04,414Benefits Paid (4,30,256) (2,20,173) (36,25,662) (17,04,414)Settlements — — — —Balance at the end of the year 68,63,747 57,01,093 — —Actual return on Plan Assets 5,46,248 2,38,675 — —

(iii) Assets and Liabilities recognised in the Balance Sheet(Refer Note 5, 8 and 16)Present Value of Defined Benefit Obligation 41,52,362 32,77,067 1,42,07,739 1,23,25,265Less: Fair Value of Plan Assets (68,63,747) (57,01,093) — —Less: Unrecognised Past Service Costs — — — —Amounts recognised as Liability/(Assets) (27,11,385) (24,24,026) 1,42,07,739 1,23,25,265

The reconciliation of opening and closing balances of the present value of defined benefit obligations are as under : (Contd.)

Gratuity Leave EncashmentYear ended Year ended Year ended Year ended

March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011(iv) Expense recognised in the Statement of Profit and Loss ` ` ` `

Current Service Cost 21,66,120 19,68,440 24,68,454 24,32,235Interest Cost 2,52,610 1,06,719 8,67,276 5,17,813Expected return on Plan Assets (5,65,418) (3,74,493) — —Actuarial (Gains)/Losses (10,88,831) 3,47,437 21,72,406 37,54,767Past Service Costs — 5,059 — —Settlements — — — —Curtailments — — — —Total Expense 7,64,481 20,53,162 55,08,136 67,04,815

(v) Major Category of Plan Assets as a % of total Plan AssetsLife Insurance Corporation of India (100%) 68,63,747 57,01,093 — —

(vi) Actuarial AssumptionsDiscount Rate 8.25% p.a. 8.00% p.a. 8.25% p.a. 8.00% p.a.Expected Return on Plan Assets 9.00% p.a. 9.00% p.a. N/A N/ASalary Growth Rate 5.00% p.a. 5.00% p.a. 5.00% p.a. 5.00% p.a.

The estimates of future salary increases, considered in actuarial valuation, takes into account, inflation, seniority, promotions and other relevant factors, such as demandand supply factors in the employment market

Year ended Year ended Year ended Year ended Year endedMarch 31, 2012 March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008

(vii) Amounts recognised in current year and previous four years ` ` ` ` `GratuityDefined Benefit Obligation 41,52,362 32,77,067 14,44,078 11,84,312 5,40,083Plan Asset 68,63,747 57,01,093 26,20,979 15,94,197 5,11,554Surplus/(Deficit) 27,11,385 24,24,026 11,76,901 4,09,885 (28,529)Experience adjustments in Plan Liabilities [(Gain)/Loss] (11,13,179) (27,056) (7,07,222) (1,17,615) 89,555Experience adjustments in Plan Assets [Gain/(Loss)] (24,348) (3,74,493) 63,387 2,55,902 (84,277)

Leave EncashmentDefined Benefit Obligation 1,42,07,739 1,23,25,265 73,24,864 59,51,196 27,09,612Plan Asset — — — — —Surplus/(Deficit) (1,42,07,739) (1,23,25,265) (73,24,864) (59,51,196) (27,09,612)Experience adjustments in Plan Liabilities [(Gain)/Loss] 21,72,406 37,54,767 7,53,622 23,88,633 10,30,408Experience adjustments in Plan Assets [Gain/(Loss)] — — — — —

(viii) Expected Contribution to the Funds in the next year

Gratuity 11,04,432 10,51,840 — — —

111



(b) State Plans (Contribution Scheme):The Company deposits an amount determined at a fixed percentage of basicpay every month to the State administered Provident Fund for the benefitof the employees. Accordingly, the Company's contribution during theyear that has been charged to revenue amounts to ` 65,46,313/-(Previous Year ` 47,68,338/-)


` `22 Depreciation and Amortization

Expense [Refer Note 9 & 10]Depreciation on Tangible Assets 9,06,161 9,31,341Amortization on Intangible Assets 4,46,177 5,25,081

13,52,338 14,56,42223 Other Expenses

Power and Fuel 20,15,361 17,53,372Rent [Refer Note 27] 46,02,219 30,81,488Insurance 98,068 60,068Repairs - Others 16,68,817 16,06,616Rates and Taxes 2,06,671 —Information Technology Services 20,52,656 15,83,309Travelling and Conveyance 1,31,78,745 1,13,23,773Legal Expenses 8,00,300 14,55,680Consultancy/Professional Fees 26,85,569 29,17,302Printing and Stationery 11,87,842 6,40,675Communication Expenses 29,63,569 25,84,481Advertising/Sales Promotion 1,33,39,158 1,20,41,693Bad Debts written off 9,93,513 37,66,756Loss on Sale of Investment — 2,27,892Loss on Sale of Fixed Assets 29,676 54,684Miscellaneous Expenses 12,97,731 13,87,621Bank Charges 17,006 44,141Payment to AuditorsAs auditor:- Audit Fee 2,50,000 1,50,000- Tax Audit Fee 50,000 50,000- Reimbursement of Expenses 25,000 25,000

4,74,61,901 4,47,54,551


` `

24 Expenditure in Foreign Currency

Foreign Travel 2,99,697 4,01,411

Other Expenses 10,05,121 4,78,479

13,04,818 8,79,890

25 Earnings Per Equity Share

Profit after Tax 4,95,66,265 4,11,72,777

Weighted average numberof shares outstanding 4,50,008 4,50,008

Basic and Diluted earnings per share (in `) 110.15 91.49(Face value - ` 10/- per share)

26 Related Party disclosures under Accounting Standard 18

a) Names of related parties and nature of relationship:

i) Where control exists

Holding Company ITC Limited

ii) Other Related Parties with whom transactions have taken place duringthe year :

Fellow Subsidiaries Srinivasa Resorts Limited

Bay Islands Hotels Limited

Landbase India Limited

Associate of Holding Company International Travel House Limited

Joint Venture of Holding Company Maharaja Heritage Resorts Limited

Key Management Personnel Board of Directors

Nakul Anand

S. C. Sekhar

Arun Pathak

Gaj Singh Jodhpur

b) Summary of Transactions/Balances (`) :

Transactions/Balances Holding Company Fellow Subsidiaries Other Related Parties

31-03-2012 31-03-2011 31-03-2012 31-03-2011 31-03-2012 31-03-2011

1. Receipt of Management & Consultancy fees* 80,64,845 36,62,128 — — — —* Inclusive of Service Tax - ` 7,53,109/-(Previous Year - ` 3,32,017/-)

2. Purchase of Services 1,26,357 9,17,671 — — 47,86,900 40,15,041 3. Sale of Fixed Assets — — — 50,917 — — 4. Rent Paid 6,49,055 4,95,840 — — — —

5. Recovery of Contractual Remuneration 16,02,447 6,22,690 — — — — 6. Reimbursement of Contractual Remuneration 3,18,98,193 2,78,85,505 — — — — 7. Dividend Payments 31,50,056 27,00,048 — — — — 8. Expense Recovered during the year

(Amount recovered on account of paymentsmade on behalf of related parties) 1,05,70,737 1,23,04,443 — 10,498 — —

9. Expense Reimbursed during the year(Amount paid to related parties on accountof payments made by them on behalf ofthe Company) 1,02,02,848 79,13,338 — — 7,41,752 2,80,134

10. Closing Balance(i) Trade Receivables 3,725 3,725 — — — —(ii) Trade Payables 52,56,551 22,35,053 — — 1,99,123 5,15,541

c) Information regarding Significant Transactions/Balances (`):

Transactions with Holding Company Fellow Subsidiaries Other Related Parties

31-03-2012 31-03-2011 31-03-2012 31-03-2011 31-03-2012 31-03-2011

1. Receipt of Management & Consultancy fees 80,64,845 36,62,128 — — — —ITC Limited

2. Purchase of ServicesITC Limited 1,26,357 9,17,671 — — — —International Travel House Limited — — — — 47,86,900 40,15,041

3. Sale of Fixed AssetsLandbase India Limited — — — 50,917 — —

4. Rent PaidITC Limited 6,49,055 4,95,840 — — — —

5. Recovery of Contractual RemunerationITC Limited 16,02,447 6,22,690 — — — —

6. Reimbursement of Contractual RemunerationITC Limited 3,18,98,193 2,78,85,505 — — — —

7. Dividend PaymentsITC Limited 31,50,056 27,00,048 — — — —

8. Expense Recovered during the year(Amount recovered on account of paymentsmade on behalf of related parties)ITC Limited 1,05,70,737 1,23,04,443 — — — —Landbase India Limited — — — 10,498 — —

9. Expense Reimbursed during the year(Amount paid to related parties on accountof payments made by them onbehalf of the Company)ITC Limited 1,02,02,848 79,13,338 — — — —Maharaja Heritage Resorts Limited — — — — 7,41,752 2,80,134

10. Closing Balance(i) Trade Receivables

ITC Limited 3,725 3,725 — — — —(ii) Trade Payables

ITC Limited 52,56,551 22,35,053 — — — —International Travel House Limited — — — — 1,99,123 5,15,541


112


For Price WaterhouseFirm Registration No : 012754NChartered AccountantsAbhishek RaraPartnerMembership Number 77779Place: GurgaonDate : 27th April, 2012

27 Lease ArrangementsThe Company's significant leasing arrangements are in respect of operating leases for premises (residential, office etc.). These leasing arrangementswhich are cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeableterms. The aggregate lease rentals payable are charged as Rent under Note 23.

28 Segment ReportingThe Company operates in one operating segment i.e. Hoteliering and within one geographical segment i.e. India and accordingly, in accordance withAccounting Standard 17 - "Segment Reporting", no segment disclosures have been made.

29 Previous Year FiguresThe financial statements for the year ended March 31, 2012 had been prepared as per the then applicable, pre-revised Schedule VI to the CompaniesAct, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified / regrouped to conform to thisyear’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followedfor preparation of financial statements.




Your Directors submit their Report for the financial year ended 31st March,2012.Financial PerformanceDuring the year under review, your Company earned an income of ` 136.70lacs (previous year - ` 112.42 lacs) and post-tax profits of ` 91.84 lacs (previousyear - ` 75.94 lacs) after providing for income tax of ` 38.45 lacs (previousyear - ` 30.27 lacs). Earnings Per Share for the year stands at ` 773.40 (previousyear - ` 639.53). Cash flows from Operations were ` 70.15 lacs during the year(previous year - ` 46.21 lacs).Your Directors are pleased to recommend a dividend of ` 65/- (previous year- ` 50/-) per equity share of ` 100/- each for the year ended 31st March, 2012.Your Board further recommends a transfer to General Reserve of ` 9.18 lacs(previous year - ` 7.59 lacs).The Company has an Operating License Agreement with ITC Limited whichin turn has Operating and Marketing Services Agreement with Fortune ParkHotels Limited having expertise in operating and maintaining four/ three starcategories of hotels in India having a wide spread marketing and reservationnetwork for the operations of the hotel. The Company’s hotel in Port Blair isknown as ‘Fortune Resort Bay Island’.During the year your Company’s treasury operations continued to remainfocused on proactively investing surplus funds in Bank Fixed Deposits. Theprocess to invest in liquid mutual funds are being explored to enhance theyields.Conservation of Energy, Foreign Exchange Earnings and OutgoConsidering the fact that the hotel is under an operating licence with ITCLimited, no comment is made on conservation of energy. However, yourCompany’s hotel viz., Fortune Resort Bay Island continues to focus on energyconservation, safety and environment.The foreign exchange earnings of the hotel during the year were ` 54.26 lacsas against ` 34.44 lacs in the previous year.DirectorsIn accordance with the provisions of Article 143 of the Articles of Associationof the Company, Mr. Nakul Anand and Mr. Arun Pathak will retire by rotationat the forthcoming Annual General Meeting and being eligible, offer themselvesfor re-appointment.

COMPLIANCE CERTIFICATE

Company No. : U74899DL1976PLC105131Nominal Capital : ` 1.2 Crores

The Members ofBay Islands Hotels Limited25, Community CentreBasant Lok, Vasant ViharNew Delhi - 110 057

We have examined the registers, records, books and papers of M/s Bay IslandsHotels Limited (hereinafter referred to as ‘the Company’) as required to bemaintained under the Companies Act, 1956 (the Act) and the Rules madethereunder, the provisions contained in the Memorandum and Articles ofAssociation of the Company and also the audited Annual Accounts, Auditors’Report on the said annual accounts for the financial year ended 31st March,2012 (‘financial year’). In our opinion and to the best of our information andaccording to the examination carried out by us and explanations and confirmationfurnished to us by the Company, its officers and agents, we certify that inrespect 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 madethereunder 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 thetime prescribed under the Act and the Rules made thereunder.

3. The Company, being a Public Limited Company, comments are not required.4. The Board of Directors duly met 4 (Four) times respectively on 28th April

2011; 27th September 2011; 16th December 2011 and 26th March 2012in respect of which meetings proper notices were given and the proceedingwere properly recorded and signed. There was no resolution passed bycirculation.

5. The Company has not closed its Register of Members during the financialyear.

6. The Annual General Meeting for the financial year ended on 31st March,2011 was held on 28th June, 2011 after giving due notice to the membersof the Company and other concerned and the resolutions passed thereatwere 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.

113

BAY ISLANDS HOTELS LIMITED

Particulars of EmployeesNone of the employees fall under the purview of the provisions of Section217(2A) of the Companies Act, 1956, read with Companies (Particulars ofEmployees) Rules, 1975.Compliance Certificate under Companies Act, 1956A certificate issued by M/s P B & Associates, Company Secretaries, in terms ofthe provisions of Section 383A of the Companies Act, 1956 to the effect thatthe Company has complied with the applicable provisions of the said Act isattached to this Report.AuditorsThe Company’s Auditors Messrs. S B Dandekar & Co., Chartered Accountantsretire at the ensuing Annual General Meeting and being eligible, offer themselvesfor re-appointment.Directors’ Responsibility StatementAs required under Section 217 (2AA) of the Companies Act, 1956, your Directorsconfirm 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 givea true and fair view of the state of affairs of your Company at the end ofthe financial year and of the profit of your Company for that period;

(iii) taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of your Company and for preventing and detectingfraud and other irregularities; and


On behalf of the BoardPlace: Gurgaon Mohan Swarup Bhatnagar DirectorDate : 28th April, 2012 Chandrasekhar Subrahmoneyan Director

10. The Company was not required to make any entries in the Registermaintained under Section 301(1) of the Act. However, it has made necessaryentries in Register maintained under Section 301(3) of the Act.

11. As there were no instances falling within the purview of Section 314 of theAct, the Company has not obtained any approvals from the Board ofDirectors, Members or Central Government.

12. The Company has not issued any duplicate share certificate during thefinancial 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, within 5 days of declaration.(iii) paid dividends to all the members within a period of 30 days from

the date of declaration and that there is no Unclaimed/Unpaid Dividend,which is required to be transferred to a Special Account.

(iv) not transferred any amount in Investor Education and Protection Fundas there is no unpaid dividend, application money due for refund,matured deposits, matured debentures and the interest accruedthereon, which have remained unclaimed or unpaid for a period ofseven years.

(v) duly complied with the requirements of Section 217 of the Act.14. The Board of Directors of the Company is duly constituted. There was no

appointment of additional director/ alternate directors/directors to fill thecasual vacancy.

15. The Company has not appointed any Managing Director/Whole-timeDirector/ Manager during the financial year.

16. The Company has not appointed any sole selling agents during the financialyear.

17. The Company was not required to obtain any approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar and/orsuch authorities prescribed under the various provisions of the Act duringthe financial year.

18. The Directors have disclosed their interest in other firms/companies to theBoard of Directors pursuant to the provisions of the Act and the rules madethereunder.

19. The Company has not issued any shares, debentures or other securitiesduring 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.

ANNEXURE – 'B'A. Forms & Returns filed with the Registrar of Companies, New Delhi

(During the Year ended March 31, 2012)

Sl. Particulars of Date of Whether AdditionalNo. Forms & Returns Filed Filing filed within Fees paid

prescribedtime

1. Form 23AA u/s 209 for confirming 1st April Yes Nothe notice of address at which 2011books of account are kept

2. Form 66 for Compliance 12th July Yes NoCertificate u/s 383A of the Act, 2011for the financial year ended31st March, 2011

3. Form 20B for Annual Return 19th Yes Nou/s 159 of the Act, made upto August28th June 2011 i.e. the date of 2011AGM for the financial yearended 31st March, 2011

4. Form 23ACXBRL and Form 30th Yes No23ACAXBRL for Annual Accounts Novemberu/s 220 of the Act for the year 2011ended 31st March, 2011

B. Forms & Returns filed with the Regional Director, Central Governmentor other authorities : Nil

REPORT OF THE AUDITORS TO THE MEMBERS

We have audited the attached Balance Sheet of BAY ISLANDS HOTELSLIMITED as at 31st March, 2012 and the Statement of Profit & Loss andCash Flow Statement for the year ended on that date annexed thereto.These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditing standards generallyaccepted in India. Those standards require that we plan and perform ouraudit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examination, on a testbasis, evidence supporting the amount and disclosures in the financialstatements. An audit also includes assessing the accounting principles usedand significant estimates made by the management, as well as evaluatingthe overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order 2003, as amendedby the Companies (Auditor’s Report) Amendment Order 2004 issued bythe Central Government of India in terms of Section 227(4A) of theCompanies Act, 1956, and on the basis of such checks and according tothe information and explanations given to us, we enclose in the Annexurea statement on the matters specified in paragraphs 4 & 5 of the said Order.

Further to our comments in the Annexure, we report that:-

1. We have obtained all the information and explanations, which to thebest our knowledge and belief were necessary for the purpose of ouraudit.

2. In our opinion proper books of accounts, as required by law, have beenkept by the Company, so far as appears from our examination of thosebooks.

3. In our opinion, the Balance Sheet, Statement of Profit & Loss and CashFlow Statement dealt with by this Report are in agreement with thebooks of account.

4. In our opinion the Balance Sheet, Statement of Profit & Loss and CashFlow Statement comply with the Accounting Standards referred to inclause C of subsection 3 of Section 211 of the Companies Act, 1956.

5. On the basis of representations received from Directors as on31st March, 2012, and taken on record by the Board of Directors, noneof the Directors is disqualified as on 31st March, 2012, in terms ofclause (g) of subsection (1) of Section 274 of the Companies Act, 1956.

6. In our opinion and to the best of our information and according to theexplanations given to us, the said financial statements along with thestatement of significant accounting policies and notes thereon give theinformation required by the Companies Act, 1956, in the manner sorequired and give a true and fair view, in conformity with the accountingprinciples generally accepted in India;

• In case of the Balance Sheet, of the state of affairs of the Companyas at 31st March, 2012;

• In case of the Statement of Profit & Loss, of the Profit of theCompany for the year ended on that date; and

• In case of the Cash Flow Statement of the cash flows for the yearended on that date.

ANNEXURE – 'A'

Registers maintained by the Company (As on March 31, 2012)

Sl. Particulars Relevant SectionNo. of the Act

1. Minutes Book of the meetings of the Board ofDirectors of the Company 193

2. Minutes Book of General Body Meetings ofthe Members of the Company 193

3. Copies of Annual Returns 159

4. Register of Members 150

5. Register of Particulars of Directors, ManagingDirector, Manager and Secretary 303

6. Register of Directors’ Share holding 307

7. Register(s) of contracts, companies and firmsin which Directors are interested 301(3)

8. Books of Accounts 209

9. Register of Share Transfer

114


KEDARASHISH BAPATPartner

Membership No : 57903For S.B. DANDEKAR & COMPANY

Chartered AccountantsPort Blair, 28th April, 2012 Firm’s Registration No : 301009E

22. There were no transactions necessitating the Company to keep in abeyancethe rights to dividend, rights shares and bonus shares pending registrationof the transfer of shares.

23. The Company has not invited/accepted any deposits including any unsecuredloans falling within the purview of Section 58A of the Act during thefinancial 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, ofthe Act, thus no entries are made in the register kept for the purpose.However, there were no loans made or guarantees given or the securitiesprovided to other bodies corporate during the financial year.

26. The Company has not altered the provisions of the Memorandum withrespect to situation of the Company's Registered Office from one State toanother during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandum withrespect to the objects of the Company during the year under scrutiny.

28. The Company has not altered the provisions of the Memorandum withrespect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of the Memorandum withrespect to Share Capital of the Company during the year under scrutiny.

30. The Company has not altered its Articles of Association during the financialyear.

31. There was no prosecution initiated against or show cause notices receivedby the Company for alleged offences under the Act. Similarly, no fines,penalties or punishment under the Act was imposed on the Companyduring the financial year.

32. The Company has not received any money as security from its employeesduring the financial year.

33. The Company has not constituted a separate provident fund trust for itsemployees or class of its employees as contemplated under Section 418of the Act.

For PB & AssociatesCompany Secretaries

Pooja BhatiaPlace: New Delhi LLB, ACSDate : 28th April, 2012 CP: 6485


Statement on matters specified in paragraphs 4 & 5 of the Companies(Auditor’s Report) Order 2003, as amended by the Companies (Auditor’sReport) Amendment Order 2004 issued by the Central Government interms of Section 227(4A) of the Companies Act, 1956, for the year ended31st March, 2012.1. 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 atreasonable intervals during the year, and no material discrepancies werenoticed on such verification.No substantial part of the fixed assets of the Company have been disposedoff during the year.

2. As the company does not hold any inventory, clause (ii) of para 4 of theOrder is not applicable.

3. The Company has neither taken nor granted any loans, secured or unsecuredfrom or to companies, firms or other parties covered in the registermaintained under Section 301 of the Companies Act, 1956. As such provisionsof 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 thesize of the Company and nature of the business, for the purchase of fixedassets. We have not come across or have been informed of any majorweaknesses in the internal control procedures.

5. There are no transactions which require to be entered into a register inpursuance of Section 301 of the Companies Act, 1956, and hence provisionsof clause (v)(b) of the Order are not applicable.

6. In accordance with information and explanations given to us, the provisionsof Section 58A and 58AA of the Companies Act, 1956, and rules framedthereunder, and directions issued by the Reserve Bank of India are inapplicableto 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 applicableas the paid up capital of the Company is less than Rs. 50 lakhs.

8. As explained to us the Central Government has not prescribed any rulesfor maintenance of cost records for the Company under clause (d) ofsubsection (1) of Section 209 of the Companies Act, 1956.

9. The Company is regular in depositing of all undisputed statutory duesincluding Provident Fund, Investor Education and Protection Fund,Employees' State Insurance, Income-tax, Sales-tax, Custom Duty, ExciseDuty, cess and any other statutory dues, so far as applicable to the Company,with the appropriate authorities. The Company has no disputed statutorydues.

10. The Company has no accumulated losses as at 31st March, 2012. It hasnot incurred any cash losses in the financial year as well as in the immediatelypreceding financial year.

115


KEDARASHISH BAPATPartner

Membership No : 57903For S.B. DANDEKAR & COMPANY

Chartered AccountantsPort Blair, 28th April, 2012 Firm’s Registration No : 301009E

BALANCE SHEET AS AT 31ST MARCH, 2012 As at As atNote No. 31st March, 2012 31st March, 2011

(`) (`) (`) (`)EQUITY AND LIABILITIES

Shareholders’ FundsShare Capital 1 11,87,500 11,87,500Reserves & Surplus 2 10,88,90,684 11,00,78,184 10,14,29,708 10,26,17,208

— —Non Current Liabilities - — —

Current LiabilitiesTrade Payables 3 19,303 19,303Short-Term Provisions 4 8,97,092 6,90,071Total 11,09,94,579 10,33,26,582

ASSETSNon Current AssetsFixed Assets 5

Tangible Assets 7,16,76,692 7,27,73,585Deferred Tax Asset (Net) 6 28,68,769 24,08,258

Current AssetsTrade Receivables 7 33,29,935 30,63,436Cash and Bank Balances 8 3,19,30,625 2,38,48,123Short Term Loans and Advances 9 2,29,681 7,23,000Other Current Assets 10 9,58,877 5,10,180

3,64,49,118 2,81,44,739Total 11,09,94,579 10,33,26,582

Significant Accounting Policies 16The notes referred to above form an integral part of Balance Sheet.This is the Balance Sheet referred to in our Report of even date.


Mohan Swarup Bhatnagar DirectorChandrasekhar Subrahmoneyan Director


KEDARASHISH BAPATPartnerMembership No : 57903For S.B. DANDEKAR & COMPANYChartered AccountantsFirm’s Registration No : 301009EPlace: Port BlairDate : 28th April, 2012

11. In accordance with the information and explanations given to us, theCompany has no dues of any financial institution or Bank or debentureholder.

12. The Company has not granted any loan and/or advance on the basis ofsecurity by way of pledge of shares, debentures and other securities andhence the matter regarding deficiencies in documents in respect of suchloans and advances is inapplicable.

13. The Company is not a Nidhi, Mutual Benefit Fund or Society and hencewe have no comments to make regarding matters concerning suchorganisations.

14. The Company is not dealing in shares, securities, debentures or otherinvestments and hence we have no comment to make regarding mattersrelating to maintenance of records of transactions in such shares etc.

15. In accordance with the information and explanation given to us, theCompany has not given any guarantee for loans taken by others frombanks or financial institutions.

16. In accordance with the information given to us, the Company has nottaken any term loans.

17. In accordance with the information and explanation given to us, theCompany has not applied any short-term borrowings for purpose oflong- term investments or vice versa.

18. In accordance with the information and explanation given to us, theCompany has not made any preferential allotment of equity shares toparties covered in the register maintained under Section 301 of theCompanies Act, 1956, during the year.

19. No debentures have been issued by the Company and there are nooutstanding debentures as at the year end and hence clause (xix) of theOrder is not considered applicable.

20. No public issue has been made by the Company and hence we have nocomments regarding the matter of end use of money raised through suchpublic issue.

21. In accordance with our audit as per generally accepted auditing practicesand the information and explanation given to us, no fraud by or on theCompany has been noticed or reported during the year nor have we beeninformed of any such case by the management.


Note No. For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)

Revenue from Operations 11 1,14,70,178 99,60,456Other Income 12 22,00,340 12,81,560

Total Revenue 1,36,70,518 1,12,42,016ExpensesEmployee benefits Expense 13 2,37,954 1,76,598Depreciation and amortization expense 2,65,233 2,72,411Other Expenses 14 1,38,359 1,71,905

Total Expenses 6,41,546 6,20,914

Profit Before Taxation 1,30,28,972 1,06,21,102

Tax expense for the yearCurrent Tax 43,05,355 33,57,873Deferred Tax (4,60,511) (3,31,205)

Profit (Loss) for the period 91,84,128 75,94,434

Basic and Diluted Earnings Per Share (`) 15 773.40 639.53Significant Accounting Policies 16

The notes referred to above form an integral part of the Statement of Profit and Loss.This is the Statement of Profit & Loss referred to in our Report of even date.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012(Figures for the previous year have been rearranged to conform with the revised presentation)


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

A. NET PROFIT BEFORE TAX 1,30,28,972 1,06,21,102Adjustments for:Depreciation 2,65,233 2,72,411Profit on sale of Fixed Asset (1,20,400) —Interest Income (20,79,940) (19,35,107) (12,81,560) (10,09,149)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 1,10,93,865 96,11,953

Adjustments for:

Trade and Other Receivables (2,66,499) (11,03,088)Trade Payables — (2,66,499) 8,273 (10,94,815)CASH GENERATED FROM OPERATIONS 1,08,27,366 85,17,138Income Tax Paid 38,12,036 38,96,512NET CASH FROM OPERATING ACTIVITIES 70,15,330 46,20,626

B. CASH FLOW FROM INVESTING ACTIVITIES:Sale of Fixed Assets 1,26,000 —Interest Received 16,31,243 17,57,243 10,33,120 10,33,120

NET CASH FROM INVESTING ACTIVITIES 17,57,243 10,33,120

C. CASH FLOW FROM FINANCIAL ACTIVITIES:Dividends Paid (5,93,750) (5,93,750)Income Tax on Dividend Paid (96,321) (6,90,071) (98,614) (6,92,364)

NET CASH FLOW USED IN FINANCING ACTIVITIES (6,90,071) (6,92,364)NET INCREASE IN CASH AND CASH EQUIVALENTS 80,82,502 49,61,382OPENING CASH AND CASH EQUIVALENTS 2,38,48,123 1,88,86,741CLOSING CASH AND CASH EQUIVALENTS 3,19,30,625 2,38,48,123

CASH AND CASH EQUIVALENTS COMPRISE :Cash and Bank Balances 3,19,30,625 2,38,48,123

The above Cash Flow Statement has been prepared under the “Indirect Method”as set out in the Accounting Standard - 3 Cash Flow Statements.In terms of our report of even dateFor and on behalf of

116










NOTES TO THE ACCOUNTS(Figures for the previous year have been rearrangedto conform with the revised presentation)


(`) (`)1. SHARE CAPITAL

Authorised90,000 Equity Shares of ` 100/- each 90,00,000 90,00,00030,000 13.5% Redeemable CumulativePreference Shares of ` 100/- each 30,00,000 30,00,000

1,20,00,000 1,20,00,000Issued, Subscribed & Paid-up11,875 Equity Shares of ` 100/- eachfully paid-up 11,87,500 11,87,500

11,87,500 11,87,500

The above shares are held by the Holding Company-ITC Limited.

Reconciliation of number of equity sharesAs at As at

31st March, 2012 31st March, 2011No. of Shares Amount in ` No. of Shares Amount in `

Balance as at the beginning of the year 11,875 11,87,500 11,875 11,87,500 Balance as at the end of the year 11,875 11,87,500 11,875 11,87,500

Shares in the Company held by each shareholderholding more than 5 percent shares

As at As at Name of Shareholder 31st March, 2012 31st March, 2011

No. of % of No. of % ofShares held Holding Shares held Holding

ITC Limited 11,875 100 11,875 100

The Ordinary Shares of the Company, having par value of ` 100/- per share,rank pari passu in all respects including entitlement to dividend. Repayment ofcapital in the event of winding up of the Company will inter alia be subject tothe provisions of the Articles of Association of Company and as may be determinedby the Company in General Meeting prior to such winding up.

As at As at31st March, 2012 31st March, 2011(`) (`) (`) (`)

2. RESERVES & SURPLUSRevaluation ReserveAt the commencementof the year 6,35,58,766 6,43,84,826Less : Depreciation 8,26,060 6,27,32,706 8,26,060 6,35,58,766

Subsidy Reserve 43,38,099 43,38,099General ReserveAt the commencementof the year 35,87,205 28,27,762Add : Transferred from current years surplus 9,18,413 45,05,618 7,59,443 35,87,205

SurplusAt the commencementof the year 2,99,45,638 2,38,00,718Add: Net Profit/(Net Loss)for the current year 91,84,128 75,94,434Less: Proposed Dividend (7,71,875) (5,93,750)Less: Income Tax onProposed Dividends (1,25,217) (96,321)Less: Transfer toGeneral Reserve (9,18,413) 3,73,14,261 (7,59,443) 2,99,45,638

10,88,90,684 10,14,29,7083. TRADE PAYABLES

Sundry CreditorsTotal outstanding dues ofMicro and small enterprises — —Total outstanding dues of creditorsother than Micro and small Enterprise 19,303 19,303

19,303 19,303

There is no amount due and outstanding to becredited to Investor Education and Protection Fund

4. SHORT TERM PROVISIONSProvision for proposed dividend 7,71,875 5,93,750Tax on proposed dividend 1,25,217 96,321

8,97,092 6,90,071


(`) (`)6. DEFERRED TAX ASSET (NET)

Deferred Tax Assets — —— —

Less :Deferred Tax LiabilityDepreciation - Timing Difference (28,68,769) (24,08,258)

(28,68,769) (24,08,258)

Net Deferred Tax Assets 28,68,769 24,08,258

In view of the Company’s current financial performance and the future profitprojections, the Company expects to fully recover the deferred tax assets.

7. TRADE RECEIVABLESTrade receivables outstanding fora period exceeding six months fromthe date they are due for payment — —Trade receivables outstanding fora period less than six months fromthe date they are due for payment — —

Good and Secured — —Good and Unsecured 33,29,935 30,63,436

33,29,935 30,63,436


(`) (`) 8. CASH AND BANK BALANCES

With Scheduled Banks on Current Accounts 27,19,441 33,89,178Deposit with Scheduled Banks 2,92,11,184 2,04,58,945

3,19,30,625 2,38,48,123

9. SHORT TERM LOANS AND ADVANCESCurrent Taxation (net of provisions) 2,29,681 7,23,000

2,29,681 7,23,000

10. OTHER CURRENT ASSETSInterest accrued on investment 9,58,877 5,10,180

9,58,877 5,10,180


(`) (`)11. REVENUE FROM OPERATIONS

Operating Licence Fee 1,14,70,178 99,60,456

1,14,70,178 99,60,456

117


5. FIXED ASSETS - Tangible Assets

Gross Block Accumulated Depreciation Net BlockOriginal Cost/ Additions on Additions Withdrawals Original Cost Accumulated Depreciation Depreciation Depreciation Net Block Net BlockProfessional Amalgama- during the during the Professional Depreciation for the year on upto as at as at

Particulars Valuation as tions year year Valuation as as at withdrawals 31.03.2012 31.03.2011 31.03.2012at 31.03.2011 at 31.03.2012 31.03.2011

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

1. Land 5,70,00,000 — — — 5,70,00,000 — — — — 5,70,00,000 5,70,00,000

2. Building 3,89,89,750 — — — 3,89,89,750 2,32,35,310 10,81,283 — 2,43,16,593 1,57,54,440 1,46,73,157

3. Plant & Machinery 68,60,259 — — 13,01,414 55,58,845 68,41,114 10,010 12,95,814 55,55,310 19,145 3,535

4. Office Equipment 1,85,415 — — — 1,85,415 1,85,415 — — 1,85,415 — —

5. Furniture & Fittings 4,07,319 — — — 4,07,319 4,07,319 — — 4,07,319 — —

TOTAL 10,34,42,743 — — 13,01,414 10,21,41,329 3,06,69,158 10,91,293 12,95,814 3,04,64,637 7,27,73,585 7,16,76,692

Previous Year 10,34,42,743 — — — 10,34,42,743 2,95,70,687 10,98,471 — 3,06,69,158 7,38,72,056 7,27,73,585

Note: All assets mentioned above have been given under an Operating Lease to the Holding Company.


(`) (`)14. OTHER EXPENSES

Consumption of Stores and Spare Parts 32,800 30,000Travelling and Conveyance 36,000 70,375Miscellaneous Expenses 69,559 71,530

1,38,359 1,71,905

Miscellaneous Expenses includesAudit Fees 13,236 13,236Tax Audit Fees 6,067 6,067

15. EARNINGS PER SHAREProfit/(Loss) after Taxation 91,84,128 75,94,434Weighted average number ofequity shares outstanding 11,875 11,875Basic and diluted earnings per share inrupees (face value - ` 100/- per share) 773.40 639.53

NOTES TO THE ACCOUNTS (Contd.)

17. GENERAL INFORMATION:

Bay Islands Hotels Limited, a fully owned subsidiary of ITC Limited, ownsa hotel in Port Blair known as ‘Fortune Resort Bay Island’. The HotelOperations are under an Operating Licence Agreement with ITC Limited.

18. There are no Micro, Small and Medium Enterprises, to whom the Companyowes dues, which are outstanding for more than 45 days during the yearand also as at 31st March, 2012. This information as required to be disclosedunder the Micro, Small and Medium Enterprises Development Act, 2006has been determined to the extent such parties have been identified onthe basis of the information available with the Company.

19. The Company operates in a single reportable segment and hence thedisclosure requirements of AS-17 are not applicable.

20. RELATED PARTY DISCLOSURES

Related party disclosures under Accounting Standard 18 are as follows

i) Holding Company : ITC Limited

ii) Key Management Personnel:

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:-

2011-12 2010-11

1. Rent Received 1,14,70,178 99,60,456

2. Expenses Reimbursed 3,76,313 3,38,195

3. Expenses Recovered 1,26,000 —

4. Reimbursement of ContractualRemuneration 94,86,791 73,53,049

5. Dividend Payment 5,93,750 5,93,750

6. Balance as on 31st March, 12(i) Debtors /Receivables 33,29,935 30,63,436

(b) Transaction with Key Management Personnel - Nil(Previous Year - Nil).

21. Previous Year's figures have been regrouped/rearranged wherever necessary.







(`) (`)

12. OTHER INCOME

Interest on Fixed Deposit 20,79,940 12,81,560Profit on sale of Fixed Asset 1,20,400 —

22,00,340 12,81,560

13. EMPLOYEE BENEFITS EXPENSE

Salaries/Wages and Bonus 85,35,415 65,29,223Contribution to Provident Fund 6,59,198 3,76,126Contribution to Gratuity Fund 3,26,558 4,94,498Workmen and Staff Welfare Expenses 2,03,574 1,29,800

97,24,745 75,29,647

Less: Recoveries (94,86,791) (73,53,049)

2,37,954 1,76,598

16. SIGNIFICANT ACCOUNTING POLICIES

Convention

To prepare financial statements in accordance with applicable AccountingStandards in India. A summary of important accounting policies is set outbelow. The financial statements have also been prepared in accordancewith the relevant presentational requirements of the Companies Act, 1956.

Basis of Accounting

To prepare Financial Statements in accordance with the historical costconvention, modified by revaluation of certain fixed assets as and whenundertaken.

Fixed Assets

To state Fixed Assets at cost of acquisition inclusive of inward freight, dutiesand taxes and incidental expenses related to acquisition.

Depreciation

To calculate depreciation on fixed assets in a manner that amortises thecost of the assets after commissioning, over their estimated useful lives orlives based on the rates specified in Schedule XIV to Companies Act, 1956,whichever is lower, by equal annual installments.

Revaluation of Assets

As and when Fixed Assets are revalued, to adjust the provision for depreciationon such revalued Fixed Assets, where applicable, in order to make allowancefor consequent additional diminution in value on considerations of age,condition and unexpired useful life of such fixed assets; to transfer toRevaluation Reserve, the difference between the written up value of theFixed Assets revalued and depreciation adjustment and to charge RevaluationReserve Account with depreciation on that portion of the value which iswritten up.

Revenue Recognition

Income from operating licence fees is booked on accrual basis in accordancewith the provisions of operating licence agreement / arrangements withthe licencee viz, ITC Limited.

Proposed Dividend

To provide for Dividends (including income tax thereon) in the books ofaccount, as proposed by the Directors, pending approval at the AnnualGeneral Meeting.

Employee Benefits

To make regular monthly contributions to Provident Fund which are in thenature of defined contribution scheme and such paid/payable amountsare charged against revenue. The contribution in respect of Gratuity Fundis made to Life Insurance Corporation.

Taxes on Income

To provide current tax as the amount of tax payable in respect of taxableincome for the period, using the applicable tax rates and tax laws.

To provide Deferred Tax on timing differences between taxable incomeand accounting income subject to consideration of prudence, measuredusing the tax rates and tax laws that have been enacted or substantivelyenacted by the Balance Sheet date.

Not to recognise Deferred tax assets on unabsorbed depreciation and carryforward of losses unless there is virtual certainty that there will be sufficientfuture taxable income available to realize such assets.

118

An externally administered customer satisfaction survey reveals that customershave awarded your Company high scores, which are understood to be attopmost levels obtaining in the industry. While the scores validate the world-class quality of service, retaining such scores for the second consecutiveyear stands testimony to the commitment continuously raising the levelsof service to meet growing market expectations.

The overall service delivery capability of your Company continues to earnglobal recognition. Your Company was featured for the sixth consecutiveyear in the 2011 Global Services 100 survey, conducted by Global Servicesand Neo Advisory. Leading analyst firms such as Gartner and ForresterResearch, Inc. continue to highlight your Company’s capabilities in industryand technology reports, e.g. Forrester’s report on “Cloud strategies of theleading IT global service providers” identifies ITC Infotech as one of the20 leading global ITO and telecom providers considered for the report.

Uncertain economic conditions continue to persist, particularly in developedmarkets which account for about 80% of IT services spends. With a portfolioof differentiated solutions, expanding market presence and excellence indelivery, your Company is confident of sustaining the robust growth achievedin the year under review.

WHOLLY OWNED SUBSIDIARIES - FINANCIAL PERFORMANCE

Key aspects of financial performance of your Company’s wholly ownedsubsidiaries are tabulated below :

ITC Infotech (USA), Inc ITC Infotech LimitedConsolidated(*)

(millions) (millions)

US$ ` US$ ` GBP ` GBP `

Year Ended March 31, 2012 2012 2011 2011 2012 2012 2011 2011

Total Revenue 49.85 2395.43 38.43 1713.97 24.35 1870.89 22.22 1595.63

Net Profit 0.30 1.44 0.01 0.32 2.13 163.35 1.03 74.31

(*) including Pyxis Solutions, LLC, its wholly owned subsidiary

During the year under review, Pyxis Solutions, LLC, declared and paidUS$500,000 (` 240 lakhs) as dividend for the financial year 2011-12[previous year - US$ 750,000 (` 334.50 lakhs)] by way of distribution toits Sole Member i.e. ITC Infotech (USA), Inc.

TALENT MANAGEMENT

The talent management strategy aims to support the ambitious growthplans by positioning your Company as the employer of choice for existingand prospective employees. Towards this end, sharply focused initiativesencompassing recruitment, training, engagement and retention are beingimplemented and continuously refined. Training inputs to employees, apartfrom those that are generally prevalent among leading global IT servicecompanies, also include programmes specially designed by internationalexperts and the unique advantage of induction in the parent company’sbusinesses, thus defining the domain edge that is integral to your Company’sservice offering. The spawning of many employee leagues has served todeepen employee bonding. The broad spectrum of services, coupled withgrowing client engagements across the world, has created workplacechallenges necessary to motivate employees, offer attractive career growthopportunities and minimise attrition.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm:

(i) that in the preparation of the Annual Accounts for the financial yearended 31st March, 2012, the applicable accounting standards havebeen followed and there are no material departures;

(ii) having selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of your Companyat the end of the financial year and of the profit of your Company forthat period;

(iii) that proper and sufficient care has been taken for the maintenance of


Your Directors take pleasure in submitting their Report for the financial yearended 31st March, 2012.

FINANCIAL RESULTS

Key aspects of your Company’s consolidated financial performance andstandalone financial results are tabulated below:

(` Lakhs)

Consolidated(*) Standalone

Year Ended March 31, 2012 2011 2012 2011

Total Income 82990 63601 56623 42642

Total Expenditure 75073 59972 51630 40481

Operating Profit 7917 3629 4993 2161

Depreciation 1500 1285 1446 1222

Profit before Tax 6417 2344 3547 939

Provision for Tax 1393 512 678 193

Profit after Tax 5024 1832 2869 746

(*) including ITC Infotech Limited, UK and ITC Infotech (USA), Inc.,(I2A), whollyowned subsidiaries of the Company, and Pyxis Solutions, LLC, USA, a whollyowned subsidiary of I2A.

BUSINESS REVIEW

Whilst the global IT services industry continued to be buffeted in 2011 bythe headwinds of volatility in currency markets and macroeconomicuncertainties, particularly in Europe, which adversely impacted technologyspends, your Company has delivered robust results.

Despite such challenging circumstances, your Company’s consolidatedTotal Income grew by over 30% to ` 830 crores. Operating Profit grew by118% and Profit after Tax by 174%. This performance represents theoutcome of the strategy set and action plans that is built on the foundationof: (i) domain-led differentiation across identified industry verticals,(ii) geographic expansion to leverage emerging growth opportunitiesaligned to capabilities and (iii) sharp focus on delivery excellence, designedto demonstrate continuous value addition to clients while enhancing serviceproductivity.

Apart from enlarging the in-house domain-based solutioning capabilities,the initiatives also provided a fillip to partnered co-innovation with leadingindependent software vendors (ISVs), with concomitant benefits in themarket. With a view to securing the future, specific development programmeshave been implemented to embrace disruptive technologies such as cloudcomputing, social media and mobile computing.

As in the past, there was a selective expansion of market presence in highpotential geographies to leverage market opportunities and also to serveas a measure of risk mitigation in the event of challenges in other markets.Emerging geographies such as EMEA and Asia Pacific are growing at 1.5times that of mature geographies. In the Report of the Directors for theyear ended 31st March, 2011, your Company’s renewed focus on Indiaand Asia Pacific was highlighted. Continuing the trend, during 2011-12,branches were set up in Hong Kong, France, Germany and South Korea(Republic of Korea).

In addition, an important milestone in the evolution of your Company’sdelivery capability has been the commissioning of a new DevelopmentCentre at Pune during 2011-12. Another development centre at Trivandrumis planned to be commissioned in the first quarter of 2012-13.

While the quality of delivery continues to delight global customers, yourCompany has also been contributing in a meaningful manner to enhancingthe competitiveness of its parent, ITC Limited’s other businesses. YourCompany has also implemented a pioneering coalition loyalty programmefor two of the parent’s businesses on the world-leading Siebel technology.

The Company launched its first software product “OptSustain” in the Indianmarket during the year, which assists customers with managing and reportingcorporate sustainability performance; a notable addition to the Company’sintellectual property.

119

ITC INFOTECH INDIA LIMITED

adequate accounting records in accordance with the provisions of theCompanies Act, 1956, for safeguarding the assets of your Companyand for preventing and detecting fraud and other irregularities;

(iv) that the Annual Accounts for the financial year ended 31st March,2012 have been prepared on a going concern basis.

OTHER INFORMATION

I. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

In view of the nature of activities that are being carried on by yourCompany, particulars as required under Section 217(1)(e) of theCompanies Act, 1956 and Rules 2A and 2B of the Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988 concerningconservation of energy and technology absorption respectively are notapplicable to your Company.

Your Company being a software solution provider requires minimalenergy consumption and every endeavour has been made to ensurethe optimal use of energy, avoid wastage and conserve energy.

During the year under review your Company piloted an Enthalpy basedair conditioning system thereby leading to energy savings as fresh airbleed is carried in the evenings or during periods when the ambienttemperature is low.

II. FOREIGN EXCHANGE EARNINGS AND OUTGO

The foreign exchange earnings (FOB- Accrual basis) of your Companyduring the year were ` 42452.69 lakhs (previous year ` 31357.68 lakhs)while the outgoings (on accrual basis) were ` 12325.98 lakhs (previousyear ` 9327.08 lakhs).

III. PARTICULARS OF EMPLOYEES

The particulars of employees in terms of Section 217(2A) of theCompanies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975, as amended, is given in Annexure “A”.

DIRECTORS

In accordance with the provisions of Section 256 of the Companies Act,1956 and Articles 143 & 144 of the Articles of Association of the Company,Mr. S. Puri and Mr. A. Nayak will retire by rotation at the ensuing Sixteenth

Annual General Meeting (AGM) of the Company and, being eligible, offerthemselves for re-election.

The Board of Directors of your Company (’the Board’) at its meeting heldon 1st March, 2012 re-appointed Mr. Sumant Bhargavan as ManagingDirector of the Company, subject to your approval and such other approvalsas may be necessary, for a further period of three years with effect from1st April, 2012. Appropriate resolution seeking your approval to Mr. Sumant’sappointment is included in the Notice convening the AGM of the Company.

AUDIT COMMITTEE

The Audit Committee of your Company comprises Mr. B. B. Chatterjee(Chairman of the Committee), Mr. A. Nayak, Mr. R. Tandon and Mr. S. Puri,all non-executive Directors of your Company. The Managing Director, theChief Financial Officer, the Statutory Auditors and the Internal Auditors arePermanent Invitees to the Committee. The Company Secretary serves asthe Secretary to the Committee.

AUDITORS

M/s. Lovelock & Lewes, Statutory Auditors, retire at the AGM and, beingeligible, 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 contributionmade by employees at all levels; your Company’s consistent growth wasmade possible by their hard work, solidarity, co-operation and support.

120



B. Sumant Managing DirectorS. Sivakumar Vice ChairmanBangalore, 8th May, 2012

ANNEXURE ‘A’ TO THE REPORT OF DIRECTORS

FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2012Particulars of Employees under Section 217(2A) of the Companies Act, 1956 and forming part of the Directors' ReportEmployed throughout the year and in receipt of remuneration aggregating ` 60,00,000 /- or more p.a.

Gross Net Experience Date of Previous Employment /Name Age Designation / Nature of Duties Remuneration (`) Remuneration (`) Qualifications (Years) Joining Position held

1 2 3 4 5 6 7 8 9

BABU V.V.R. 57 Sr Vice President - IT Services 7188936 3801865 M.Sc., M.Phil. 35 1-Oct-00 ITC Ltd. Divisional Head - India Operations (ISD)

Employed for a part of the year and in receipt of remuneration aggregating ` 5,00,000/- or more per month

SATYANARAYANA K.P.P. 58 General Manager - MIS 888641 793806 B.Com. (Hons.) 32 1-Oct-00 ITC Ltd.PGDCA MIS Manager

SINGH PARMINDER 39 Head - Business Development 865106 742878 B.Com., PGDBM 17 1-Aug-09 Wipro Ltd.(India) National Sales Manager

Notes :1. Remuneration includes salary, performance effectiveness pay, allowances, incentives, other benefits/applicable perquisites except contribution to the approved Group Pension under the

Defined Benefit Scheme and Gratuity Funds and provisions for leave encashment which are actuarially determined on an overall Company basis. The term ‘remuneration’ has the meaningassigned to it in Section 198 of the Companies Act, 1956.

2. Net Remuneration comprises cash income less (a) income tax & education cess deducted at source and (b) managers own contribution to provident fund.3. All appointments are / were contractual in accordance with terms & conditions as per Company’s rules.4. None of the above employees is a relative of any Director of the Company.

Bangalore, 8th May, 2012 On behalf of the BoardRegistered Office: Virginia House37 J. L. Nehru RoadKolkata 700 071 B. Sumant Managing DirectorIndia. S. Sivakumar Vice Chairman


[Referred to in paragraph 3 of the Auditors’ Report of even date to themembers of ITC INFOTECH INDIA LIMITED (“the Company”) on the financialstatements as at and for the year ended 31st March, 2012]

1. (a) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management accordingto a phased programme designed to cover all the items over aperiod of three years, which in our opinion, is reasonable havingregard to the size of the Company and the nature of its assets.Pursuant to the programme, a portion of the fixed assets has beenphysically verified by the Management during the year and nomaterial discrepancies between the book records and the physicalinventory have been noticed.

(c) In our opinion and according to the information and explanationsgiven to us, no substantial part of fixed assets has been disposedoff by the Company during the year.

2. The Company has neither granted nor taken any loans, secured orunsecured, to / from companies, firms or other parties covered in theregister maintained under Section 301 of the Act.

3. In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business for thepurchase of fixed assets and for the sale of services. The activities ofthe Company did not involve purchase of inventory and sale of goodsduring the year. Further, on the basis of our examination of the booksand records of the Company, and according to the information andexplanations given to us, we have neither come across nor have beeninformed of any continuing failure to correct major weaknesses, if any,in the aforesaid internal control system.

4. In our opinion and according to the information and explanationsgiven to us, there are no contracts or arrangements referred to in

Section 301 of the Act, the particulars of which needs to be enteredinto the register maintained under that Section.

5. The Company has not accepted any deposits from the public withinthe meaning of Sections 58A and 58AA of the Act and the Rules framedthere under.

6. In our opinion, the Company has an internal audit system commensuratewith its size and nature of its business.

7. (a) According to the information and explanations given to us andthe records of the Company examined by us, in our opinion, theCompany is regular in depositing the undisputed statutory duesincluding provident fund, employees’ state insurance, income tax,sales tax, service tax, customs duty, cess and other material statutorydues as applicable with the appropriate authorities in India. Investoreducation and protection fund, wealth tax and excise duty are notapplicable to the Company for the current year.

(b) According to the information and explanations given to us andthe records of the Company examined by us, there are no duesof income tax, sales tax, service tax, customs duty and cess whichhave not been deposited on account of any dispute. Investoreducation and protection fund, wealth tax and excise duty are notapplicable to the Company for the current year.

8. The Company has no accumulated losses as at 31st March, 2012, andit has not incurred any cash losses during the financial year ended onthat date or in the immediately preceding financial year.

9. The Company has neither taken any loans from a financial institutionor bank nor issued any debentures during the year nor were there anysuch amounts due for repayment as at the balance sheet date.


11. In our opinion and according to the information and explanations

(c) The Balance Sheet, the Statement of Profit and Loss and the CashFlow Statement dealt with by this report are in agreement withthe books of account;

(d) In our opinion, the Balance Sheet, the Statement of Profit and Lossand the Cash Flow Statement dealt with by this report complywith the accounting standards referred to in sub-section (3C) ofSection 211 of the Act;

(e) On the basis of written representations received from the directors,as on 31st March, 2012 and taken on record by the Board ofDirectors, none of the directors, who have given the saidrepresentations to the Company, is disqualified as on 31st March,2012 from being appointed as a director in terms of clause (g) ofsub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give, in theprescribed manner, the information required by the Act, and givea true and fair view in conformity with the accounting principlesgenerally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the

Company as at 31st March, 2012;(ii) in the case of the Statement of Profit and Loss, of the profit

for the year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for


For Lovelock & LewesFirm Registration Number: 301056E


Sunit Kumar BasuPlace : Bangalore PartnerDate : 8th May, 2012 Membership Number: 55000

AUDITORS’ REPORT TO THE MEMBERS OF ITC INFOTECH INDIA LIMITED

1. We have audited the attached Balance Sheet of ITC INFOTECH INDIALIMITED (”the Company”), as at 31st March, 2012, the related Statementof Profit and Loss and the Cash Flow Statement for the year ended onthat date annexed thereto, which we have signed under reference tothis report. These financial statements are the responsibility of theCompany’s Management. Our responsibility is to express an opinionon these financial statements based on our audit.


3. As required by the Companies (Auditor’s Report) Order, 2003, asamended by the Companies (Auditor’s Report) (Amendment) Order,2004 (together the “Order”), issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of ‘The CompaniesAct, 1956’ of India (the ‘Act’) and on the basis of such checks of thebooks and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we give inthe Annexure a statement on the matters specified in paragraphs 4and 5 of the Order.


the best of our knowledge and belief, were necessary for thepurposes of our audit;


121


122


For Lovelock & LewesFirm Registration Number: 301056E


Sunit Kumar BasuPlace : Bangalore PartnerDate : 8th May, 2012 Membership Number: 55000


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

I EQUITY AND LIABILITIES1 Shareholders’ funds

(a) Share capital 2 85,20,00,000 85,20,00,000(b) Reserves and surplus 3 85,07,55,353 56,38,09,242

2 Non-current liabilities(a) Long-term provisions 4 6,76,06,616 6,84,24,650

3 Current liabilities(a) Short-term borrowings 5 57,00,00,000 1,49,25,00,000(b) Trade payables 6 22,91,66,677 19,61,68,972(c) Other current liabilities 7 71,92,28,469 31,35,03,488(d) Short-term provisions 8 12,26,43,193 8,61,42,638

TOTAL 3,41,14,00,308 3,57,25,48,990

II ASSETS1 Non-current assets

(a) Fixed assets 9(i) Tangible assets 58,03,26,316 29,27,90,800(ii) Intangible assets 3,81,30,702 5,33,22,652(iii) Capital work-in-progress 1,92,22,099 48,20,840

(b) Non-current investments 10 87,04,34,087 87,04,34,087(c) Deferred tax assets (net) 11 7,60,67,526 6,12,96,983(d) Long-term loans and advances 12 2,15,82,514 1,99,49,493

2 Current assets(a) Trade receivables 13 1,36,21,64,274 1,27,65,10,676(b) Cash and bank balances 14 19,06,11,521 63,33,88,608(c) Short-term loans and advances 15 25,27,66,577 32,70,46,337(d) Other current assets 16 94,692 3,29,88,514

TOTAL 3,41,14,00,308 3,57,25,48,990

Significant Accounting Policies 1

The Notes 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 & LewesFirm Registration Number: 301056EChartered Accountants

Sunit Kumar BasuPartnerMembership Number: 55000

Place : BangaloreDate : 8th May, 2012

given to us, the Company has not given any guarantee for loans takenby others from banks or financial institutions during the year.

12. In our opinion, and according to the information and explanationsgiven to us, on an overall basis, the unsecured loans in the nature ofterm loans taken from the holding company have been applied for thepurposes for which they were obtained.

13. On the basis of an overall examination of the balance sheet of theCompany, in our opinion and according to the information andexplanations given to us, there are no funds raised on a short-termbasis which have been used for long-term investment.


15. The Company has not raised any money by public issues during theyear.

16. During the course of our examination of the books and records of theCompany, carried out in accordance with the generally accepted

auditing practices in India, and according to the information andexplanations given to us, we have neither come across any instanceof 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’sReport) (Amendment) Order, 2004, are not applicable in the case ofthe Company for the current year, since in our opinion there is nomatter which arises to be reported in the aforesaid Order.


B. Sumant Managing DirectorS. Sivakumar Vice Chairman

R. Batra Chief Financial Officer S. V. Shah Company Secretary


Notes For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)

I Revenue from Operations 17 5,63,10,51,222 4,21,39,16,281II Other Income 18 3,12,76,112 5,02,49,477

Total Revenue 5,66,23,27,334 4,26,41,65,758

III ExpensesEmployee Benefits Expense 19 3,73,36,40,650 2,93,58,02,198Other Expenses 20 1,42,92,99,786 1,11,22,49,756Depreciation and Amortisation 9 14,46,45,985 12,22,30,455Total Expenses 5,30,75,86,421 4,17,02,82,409

IV Profit before Tax 35,47,40,913 9,38,83,349

V Tax Expenses 21Current Tax 8,25,65,345 1,13,21,011Deferred Tax (1,47,70,543) 79,87,933

6,77,94,802 1,93,08,944VI Profit after Tax 28,69,46,111 7,45,74,405

Earnings Per Share (Face value ` 10 each) 28 3.37 0.88(Basic and Diluted)

Significant Accounting Policies 1The Notes referred to above form an integral part of the Statement of Profit and Loss.This is the Statement of Profit and Loss referred to in our Report of even date.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`) (`) (`)(Figures for the previous year have been rearranged to conformwith the revised presentation)A. NET PROFIT BEFORE TAX 35,47,40,913 9,38,83,349

ADJUSTMENTS FOR :Depreciation and Amortisation 14,46,45,985 12,22,30,455Fixed Assets - Loss on Sale / Write off (net) 33,09,836 10,25,906Unrealised (Gain) / Loss on Exchange 1,18,12,090 (33,46,501)Provision for Doubtful Loans & Advances 13,32,442 7,38,951Interest on Loans, Deposits etc (62,32,678) (3,63,60,697)Provision for Doubtful Debts 55,03,985 —Liability no longer required written back (87,30,894) (23,56,798)

15,16,40,766 8,19,31,316OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 50,63,81,679 17,58,14,665ADJUSTMENTS FOR :

Trade and Other Receivables (12,50,19,075) (36,99,65,576)Trade and Other Payables 48,31,36,102 35,81,17,027 (1,44,39,477) (38,44,05,053)

CASH FROM OPERATIONS 86,44,98,706 (20,85,90,388)Income Tax Paid (1,07,98,353) 5,00,04,984

NET CASH (USED IN) / FROM OPERATING ACTIVITIES 87,52,97,059 (25,85,95,372)B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (43,47,00,646) (17,95,55,139)Interest Received 3,91,26,500 36,67,301

NET CASH (USED IN) / FROM INVESTING ACTIVITIES (39,55,74,146) (17,58,87,838)C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from Short-Term Borrowings 3,03,85,00,000 2,39,61,00,000Repayments of Short-Term Borrowings (3,96,10,00,000) (2,01,25,00,000)NET CASH (USED IN) / FROM FINANCING ACTIVITIES (92,25,00,000) 38,36,00,000NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (44,27,77,087) (5,08,83,210)OPENING CASH AND CASH EQUIVALENTS 63,33,88,608 68,42,71,818CLOSING CASH AND CASH EQUIVALENTS 19,06,11,521 63,33,88,608CASH AND CASH EQUIVALENTS COMPRISE :

Cash and Bank Balances 18,93,51,297 63,26,86,429Unrealised (Loss)/Gain on Foreign Currency Cash and Cash Equivalents 12,60,224 19,06,11,521 7,02,179 63,33,88,608

This is the Cash Flow Statement referred to in our Report of even date.

123


For Lovelock & LewesFirm Registration Number: 301056EChartered Accountants

Sunit Kumar BasuPartnerMembership Number: 55000

Place : BangaloreDate : 8th May, 2012

For Lovelock & LewesFirm Registration Number: 301056EChartered AccountantsSunit Kumar BasuPartnerMembership Number: 55000Place : BangaloreDate : 8th May, 2012








Note No.

NATURE OF OPERATIONS

ITC Infotech India Limited (”the Company”) is a wholly owned subsidiary of ITCLimited (”the Holding Company”) providing information technology solutions andsoftware development services.

1 SIGNIFICANT ACCOUNTING POLICIES

a) Convention

To prepare financial statements in accordance with applicable Accounting Standardsin India. A summary of important accounting policies, which have been appliedconsistently, is set out below. The financial statements have also been prepared inaccordance with relevant presentational requirements of the Companies Act, 1956.

b) Basis of Accounting

To prepare financial statements in accordance with the historical cost convention.

c) Revenue Recognition

To recognise revenues from services performed on a “time and material” basis, asand when the services are performed.

To recognise revenues from services performed on “time bound fixed-priceengagements” using the percentage of completion method of accounting, if workcompleted can be reasonably estimated. The cumulative impact of any revision inestimates of the percentage of work completed is reflected in the period in whichthe change becomes known. Provisions for estimated losses on such engagementsare made during the period in which a loss becomes probable and can be reasonablyestimated.

To recognise revenue from trading in software packages / licenses / hardware upondelivery to customer.

To treat amounts received or billed in advance of services performed as unearnedrevenue. Unbilled revenue, included in debtors, represents amounts recognisedbased on services performed in advance of billing in accordance with contract terms.

d) Fixed Assets

To state fixed assets at actual cost less accumulated depreciation. The actual costcapitalised includes material cost, freight, installation cost, duties and taxes, financecharges and other incidental expenses incurred during the construction / installationstage.

To capitalise software where it is expected to provide future enduring economicbenefits. Capitalisation costs include license fees and costs of implementation /system integration services. The costs are capitalised in the year in which the relevantsoftware is implemented for use.

e) Capital Work-in-Progress

To treat cost of assets not put to use before the year-end as capital work-in-progress.

f) Depreciation

To calculate depreciation on fixed assets on the straight-line method over theirestimated useful lives at the rates, which are not less than those prescribed underSchedule XIV of the Companies Act, 1956.

The cost of and the accumulated depreciation for fixed assets sold, retired or otherwisedisposed off are removed from the stated values and the resulting gains and / orlosses are included in the Statement of Profit and Loss.

The estimated useful lives of fixed assets are as follows:

Buildings 25 years

Plant and Machinery - Computers / Computer Accessories 3 to 5 years

Other Equipment 5 years

Furniture and Fixtures 5 years

Motor Vehicles 5 years

Leasehold Improvements Shorter of lease period or estimated useful lives

Capitalised software costs are amortised on the straight-line method over a periodof five years or over the estimated useful lives, as is appropriate.

g) Impairment of Assets

Impairment loss, if any, is provided to the extent, the carrying amount of assetsexceed their recoverable amount. Recoverable amount is higher of an asset’s net

124


selling price and its value in use. Value in use is the present value of estimated futurecash flows expected to arise from the continuing use of an asset and from its disposalat the end of its useful life.

h) Investments

To state Current Investments at lower of cost and fair value; and Long-TermInvestments, including in Joint Ventures and Associates, at cost. Where applicable,provision is made to recognise a decline, other than temporary, in valuation ofLong-Term Investments.

i) Proposed Dividend

To provide for Dividends as proposed by the Directors in the books of accounts,pending approval at the Annual General Meeting.

j) Research and Development

To charge off all revenue expenditure incurred on research and development in theyear it is incurred. Assets purchased for research and development activities areincluded in fixed assets.

k) Taxes on Income

To provide and determine current tax as the amount of tax payable in respect oftaxable income for the period.

To provide and recognise deferred tax on timing differences between taxable incomeand accounting income subject to consideration of prudence.

Not to recognise deferred tax assets on unabsorbed depreciation and carry forwardlosses unless there is virtual certainty that there will be sufficient future taxableincome available to realise such assets.

l) Foreign Currency Translation

To account for transactions in foreign currency at the exchange rate prevailing onthe date of transactions. Gains / losses arising out of fluctuations in the exchangerates are recognized in the Statement of Profit and Loss in the period in whichthey arise.

To account for differences between the forward exchange rates and the exchangerates 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 exchangecontracts as income / expense for the period.

To account for gains / losses on foreign exchange rate fluctuations relating to currentassets and liabilities at the Balance Sheet date.

To translate the financial statements of the foreign branch offices of the Companyusing the same principles and procedures stated above as the operations of suchbranches are integral in nature.

m) Employee Benefits

To make regular monthly contributions to various Provident Funds which are in thenature of defined contribution scheme and to charge such paid / payable amountsagainst revenue. To administer through duly constituted and approved independenttrusts such Funds.

To administer through duly constituted and approved independent trusts, variousGratuity and Pension Funds which are in the nature of defined benefit schemes. Theliabilities towards such schemes including employee leave encashment are ascertainedby an independent actuarial valuation as per the requirements of AccountingStandard - 15 (revised 2005) on “Employee Benefits”. To determine actuarial gainsor 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 employeeturnover, early retirements, mortality or increase in salary benefits and the effect ofchanges in any other actuarial assumptions and to recognise such gains and lossesimmediately in the Statement of Profit and Loss as income or expense.

n) Claims

To disclose claims against the Company not acknowledged as debts after a carefulevaluation of the facts and legal aspects of the matter involved.

o) Segment Reporting

To identify segments having regard to the dominant source and nature of risks andreturns and the internal organisation and management structure.


(`) (`)


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

2 SHARE CAPITALAuthorised:8,60,00,000 (2011 - 8,60,00,000)Equity Shares of ` 10 each 86,00,00,000 86,00,00,000Issued, subscribed and paid-up:8,52,00,000 (2011 - 8,52,00,000)Equity Shares of ` 10 each 85,20,00,000 85,20,00,000(All Equity Shares are held by ITC Limited,the Holding Company. The Equity Shares of theCompany, having par value of ` 10 per share,rank pari passu in all respects includingentitlement to dividend. Repayment of capitalin the event of winding up of the Company willinter alia be subject to the provisions of theArticles of Association of Company and as may bedetermined by the Company in General Meetingprior to such winding up).

85,20,00,000 85,20,00,0003 RESERVES AND SURPLUS

Surplus in Statement of Profit and LossBalance at the beginning of the year 56,38,09,242 48,92,34,837

Add : Profit for the year 28,69,46,111 7,45,74,40585,07,55,353 56,38,09,242

4 LONG-TERM PROVISIONS

Provision for Employee BenefitsProvision for Retirement Benefits 6,76,06,616 6,84,24,650

6,76,06,616 6,84,24,650

125



(`) (`)

9. FIXED ASSETS

GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK

As at Additions Withdrawals / As at As at For the On As at As at As atDESCRIPTION 1st April, Adjustment 31st March, 1st April, year Withdrawals 31st March, 31st March, 31st March,

2011 2012 2011 /Adjustment 2012 2012 2011(`) (`) (`) (`) (`) (`) (`) (`) (`) (`)

(i) TANGIBLE ASSETSLeaseholdImprovements 13,06,49,788 14,17,59,642 1,22,366 27,22,87,064 7,41,48,900 2,54,36,034 84,650 9,95,00,284 17,27,86,780 5,65,00,888Plant and Equipments 18,44,11,560 12,46,32,823 21,84,160 30,68,60,223 10,00,53,746 3,10,17,948 18,71,191 12,92,00,503 17,76,59,720 8,43,57,814Office Equipments 1,66,93,493 8,37,837 10,00,703 1,65,30,627 1,11,89,731 1,38,992 9,36,141 1,03,92,582 61,38,045 55,03,762Computers etc. 28,80,67,738 8,21,71,272 3,04,37,987 33,98,01,023 17,18,22,383 4,56,25,672 2,82,72,769 18,91,75,286 15,06,25,737 11,62,45,355Furniture and Fixtures 9,26,10,959 5,70,50,747 39,98,025 14,56,63,681 6,24,27,978 1,33,88,323 32,68,654 7,25,47,647 7,31,16,034 3,01,82,981SUB TOTAL 71,24,33,538 40,64,52,321 3,77,43,241 1,08,11,42,618 41,96,42,738 11,56,06,969 3,44,33,405 50,08,16,302 58,03,26,316 29,27,90,80031st March, 2011 54,40,00,793 18,12,41,799 1,28,09,054 71,24,33,538 33,59,65,646 9,54,60,240 1,17,83,148 41,96,42,738 29,27,90,800

(ii) INTANGIBLE ASSETSCapitalised Software 31,13,36,940 1,38,47,066 — 32,51,84,006 25,80,14,288 2,90,39,016 — 28,70,53,304 3,81,30,702 5,33,22,652SUB TOTAL 31,13,36,940 1,38,47,066 — 32,51,84,006 25,80,14,288 2,90,39,016 — 28,70,53,304 3,81,30,702 5,33,22,65231st March, 2011 30,08,51,251 1,21,08,277 16,22,588 31,13,36,940 23,28,66,661 2,67,70,215 16,22,588 25,80,14,288 5,33,22,652

(iii) CAPITALWORK-IN-PROGRESSCapital Work-in-Progress 1,92,22,099 48,20,840

GRAND TOTAL 1,02,37,70,478 42,02,99,387 3,77,43,241 1,40,63,26,624 67,76,57,026 14,46,45,985 3,44,33,405 78,78,69,606 63,76,79,117 35,09,34,29231st March, 2011 84,48,52,044 19,33,50,076 1,44,31,642 1,02,37,70,478 56,88,32,307 12,22,30,455 1,34,05,736 67,76,57,026 35,09,34,292

5 SHORT-TERM BORROWINGSShort-Term Unsecured Loans

From Related Party 57,00,00,000 1,49,25,00,000(Interest-free Loan from theHolding Company, ITC Limited)

Terms of repayment for loans outstandingas at 31st March, 2012(i) ` 44,75,00,000 repayable within 5 years from

the date of disbursement or on demand(ii) ` 12,25,00,000 repayable on

19th December, 2012. 57,00,00,000 1,49,25,00,000

6 TRADE PAYABLESDues to Micro and Small Enterprises — —Dues to other than Micro and Small Enterprises 22,91,66,677 19,61,68,972

22,91,66,677 19,61,68,972

7 OTHER CURRENT LIABILITESOther Payables

Employee 46,67,86,350 15,48,93,100Statutory Dues 10,06,93,031 9,47,37,933Other Liabilities 15,17,49,088 6,38,72,455

71,92,28,469 31,35,03,488

8 SHORT-TERM PROVISIONSProvision for Employee Benefits

Provision for Retirement Benefits 12,26,43,193 8,61,42,63812,26,43,193 8,61,42,638


(`) (`)10 NON-CURRENT INVESTMENT

Long-Term, Non-Trade Investments -Unquoted (At Cost) Subsidiary CompaniesITC Infotech Limited (UK) 6,86,85,837 6,86,85,8376,85,815 (2011 - 6,85,815) Equity Sharesof GBP 1 each, fully paid-upITC Infotech (USA), Inc. 80,17,48,250 80,17,48,2501,82,000 (2011 - 1,82,000) Common Shareswithout par value, fully paid-up

87,04,34,087 87,04,34,087

11 DEFERRED TAX ASSETS (NET)Deferred Tax Assets

On provision for employees' separationand retirement etc. 6,17,26,551 5,25,37,421On provision for doubtful debts and advances 1,12,43,858 94,55,578On fiscal allowances on fixed assets 30,97,117 —

7,60,67,526 6,19,92,999Less : Deferred Tax Liabilities

On fiscal allowances on fixed assets — 6,96,016(Deferred tax assets and deferred tax liabilitieshave been offset as they relate to the samegoverning tax laws)

7,60,67,526 6,12,96,983

12 LONG-TERM LOANS AND ADVANCESGood and UnsecuredLoans to Employees 1,39,82,453 1,78,02,216Deposits with Government, Public Bodiesand Others 76,00,061 21,47,277

2,15,82,514 1,99,49,493

13 TRADE RECEIVABLESTrade receivables outstanding for a periodexceeding six months from the datethey are due for paymentUnsecured, considered good 10,39,02,274 5,23,56,509Unsecured, considered doubtful 2,28,62,560 1,73,58,575

12,67,64,834 6,97,15,084Less: Provision for doubtful debts (2,28,62,560) (1,73,58,575)

10,39,02,274 5,23,56,509OthersUnsecured, considered good * 1,25,82,62,000 1,22,41,54,167* Includes Unbilled Revenue ` 4,63,03,834(2011 - ` 4,72,03,828)

1,36,21,64,274 1,27,65,10,676

20 OTHER EXPENSESRent 4,72,13,851 4,01,23,527Rates and Taxes 18,76,941 15,71,771Insurance 2,66,32,892 2,30,22,871Travelling and Conveyance 38,17,46,903 29,40,21,493Recruitment Expenses 4,08,83,559 5,34,38,423Communication 3,13,79,423 2,81,38,724Power and Fuel 5,17,49,172 4,11,04,659Outsourcing Charges 47,09,35,852 30,92,25,973Software and Related Expenses 6,83,02,431 5,50,35,756Purchase of Hardware and Software for Resale 7,18,46,424 94,500Business Development Expenses 2,94,11,565 3,28,89,928Repairs and Maintenance- Buildings 2,36,64,432 1,30,36,883- Machinery 1,66,04,349 1,27,77,866- Others 45,62,153 64,10,177Legal, Professional and Consultancy Expenses 7,53,09,553 4,02,54,953Doubtful and Bad Debts 55,03,985 —Doubtful and Bad Loans and Advances 13,32,442 7,38,951Fixed Assets Discarded 33,09,836 10,25,906Auditors' Remuneration and Expenses(Refer Note 29) 18,19,291 17,62,409Training and Development 2,50,80,948 2,04,68,167Bank Charges 35,37,112 16,70,776Printing and Stationery 31,31,141 25,48,127Loss on Exchange (Net) 2,54,52,952 11,86,43,132Miscellaneous Expenses 1,80,12,579 1,42,44,784

1,42,92,99,786 1,11,22,49,756

21 TAX EXPENSESCurrent Tax 14,22,69,602 3,64,13,124(including tax on foreign branches` 95,75,838 (2011 - ` 83,22,746)Adjustment for earlier year based oncompleted assessment 6,46,016 (1,62,98,956)Deferred Tax (1,47,70,543) 79,87,933MAT Credit (6,03,50,273) (87,93,157)

6,77,94,802 1,93,08,944

22 Commitments and Contingenciesa) Estimated amount of contracts remaining to be executed on capital account (net

of advances ` Nil, 2011 - ` Nil) ` 1,89,06,870 (2011 - ` 2,23,23,643).b) Claims against the Company not acknowledged as debts ` 8,25,74,741

(2011 - ` 6,29,59,452) comprising certain claims relating to income tax disputedby the Company.

23 Micro and Medium scale business entitiesThere are no Micro, Small and Medium Enterprises, to whom the Company owesdues, which are outstanding for more than 45 days during the year and also as at31st March, 2012. This information as required to be disclosed under the Micro,Small and Medium Enterprises Development Act, 2006 has been determined to theextent such parties have been identified on the basis of information available withthe Company.

24 The Company’s significant leasing arrangements are in respect of operating leases forpremises (residential, office etc). These leasing arrangements, which are not noncancellable, range between 11 months and 9 years generally, and are usually renewableby mutual consent on mutually agreeable terms. The aggregate lease rentals payable` 4,54,93,100 (2011- ̀ 40,123,527) are charged as Rent under Note 20 to the Accounts.The Company has one non cancellable leasing arrangement with a lock-in period of3 years for which the lease rentals of ` 17,20,751 (2011 - ` Nil) has been chargedas Rent under Note 20 to the Accounts.The future minimum lease payment for the non-cancellable operating lease are asfollows:

31st March, 2012 31st March, 2011Within 1 year ` 41, 40,864 Nil2 to 3 years ` 66,36,727 Nil

25 The Company uses forward exchange contracts to hedge against its foreigncurrency exposure relating to the underlying transaction and firm commitments.The use of foreign exchange forward contracts reduces the risk or cost to theCompany. The Company does not use the foreign exchange forward contractsfor trading or speculation purposes. The information on such outstanding contractsas at the year end is as follows:

31st March, 2012 31st March, 2011Currency Pair Currency Buy Sell Buy SellGBP - USD GBP — 11,46,697 — 14,70,000EUR - USD EUR — 50,92,637 — 2,32,00,000USD - INR USD — 1,42,71,435 — 3,89,95,429AUD - USD AUD — 10,00,000 — 31,90,000USD - DKK DKK 96,00,000 — 4,79,78,225 —USD - SEK SEK 6,00,000 — 10,60,000 —USD - NOK NOK — — 24,00,000 —

14 CASH AND BANK BALANCES

Cash and Cash Equivalents Cash in Hand 1,26,193 1,08,067

Cheques, demand drafts on hand 2,31,13,426 81,20,108

Balances with banks :On Current Accounts 16,69,71,902 10,47,60,433

Other Bank BalancesOn Deposit Account* 4,00,000 52,04,00,000

*includes ` 4,00,000 (2011 - ` 4,00,000)held as margin money

19,06,11,521 63,33,88,608

15 SHORT - TERM LOANS AND ADVANCES

Good and UnsecuredAdvances recoverable in Cash or in kindor for value to be received 6,88,59,555 4,85,53,808Loans to Employees 1,13,47,510 1,07,17,361Advance Tax(Net of Provision for Income Tax) 16,83,87,610 26,17,51,308(Net of Provision for Indian Income Tax` 18,38,28,849 (2011 - ` 10,86,28,179)and Provision for Tax for Overseas Branches` 1,04,17,544 (2011 - ` 82,13,694))Deposits with Government,Public Bodies and Others 41,71,902 60,23,860

Doubtful and UnsecuredAdvances recoverable in Cash or in kindor for value to be received 93,30,338 80,40,083Loans to Employees 24,62,234 24,20,047

1,17,92,572 1,04,60,130

Less : Provision for Short - Term Loansand Advances (1,17,92,572) (1,04,60,130)

25,27,66,577 32,70,46,337

16 OTHER CURRENT ASSETS

Good and UnsecuredInterest accrued on Deposits,Loans, Advances, etc. 94,692 3,29,88,514

94,692 3,29,88,514


(`) (`)17 REVENUE FROM OPERATIONS

Sale of ServicesExports 4,24,51,02,468 3,13,57,67,526Domestic 1,27,64,37,254 1,07,54,56,957

Resale of Hardware and Software 10,07,80,606 3,35,000(includes Exports 2012 ` 1,66,107( 2011 ` Nil))Other Operating Revenues 87,30,894 23,56,798

5,63,10,51,222 4,21,39,16,281

18 OTHER INCOME

Interest on Deposits - Gross 62,32,678 3,63,60,697Interest Others 2,11,01,644 1,10,48,423Sale of Scrap etc. 5,84,337 1,31,734Miscellaneous Income 33,57,453 27,08,623

3,12,76,112 5,02,49,477

19 EMPLOYEE BENEFITS EXPENSE

Salaries and Bonus 3,51,57,92,634 2,79,27,29,043Contribution to Provident andOther Funds (Refer Note 26) 15,08,67,208 9,74,06,337Workmen and Staff Welfare Expenses 3,04,84,979 2,27,79,861Reimbursement of Contractual Remuneration 3,64,95,829 2,28,86,957

3,73,36,40,650 2,93,58,02,198


(`) (`)


(`) (`)

126


For the year ended 31st March, 2012 For the year ended 31st March, 2011

(`) (`)

Leave LeavePension Gratuity Encashment Pension Gratuity Encashment

I. Components of Employer Expense Funded Unfunded Funded Unfunded

1 Current Service Cost 1,92,58,933 1,31,75,100 1,32,33,474 1,71,66,880 1,29,15,384 1,31,79,8452 Interest cost 1,39,54,205 87,42,798 62,08,573 1,39,33,619 72,54,149 55,93,6493 Expected Return on Plan Assets (1,02,58,875) (73,21,875) — (93,36,000) (70,80,000) —4 Curtailment Cost / (Credit) — — — — — —5 Settlement Cost / (Credit) — — — — — —6 Past Service Cost — — — — — —7 Actuarial Losses / (Gains) (19,48,079) 62,01,024 (55,02,246) (2,73,39,272) 15,56,917 (14,29,551)

8 Total expense recognised in the Statement ofProfit & Loss 2,10,06,184 2,07,97,047 1,39,39,801 (55,74,773) 1,46,46,450 1,73,43,943

The Pension and Gratuity Expenses have been recognised in “Contribution to Provident and Other Funds” and Leave Encashment in “Salaries & Bonus” under Note 19.

II. Actual Returns 89,00,000 56,00,000 — 1,00,00,000 64,00,000 —

III. Net Asset / (Liability) recognised in Balance Sheet

1 Present Value of Defined Benefit Obligation 19,33,48,060 12,85,20,357 8,27,48,463 17,48,41,782 10,98,23,310 8,17,02,1962 Fair Value on Plan Assets 12,67,00,000 8,77,00,000 — 12,20,00,000 8,98,00,000 —3 Status [Surplus/(Deficit)] (6,66,48,060) (4,08,20,357) (8,27,48,463) (5,28,41,782) (2,00,23,310) (8,17,02,196)4 Unrecognised Past Service Cost — — — — — —

Short-Term Retirement benefits (5,92,24,503) (4,08,20,357) (2,25,65,404) (4,64,57,133) (2,00,23,310) (1,96,62,195)Long-Term Retirement benefits (74,23,557) — (6,01,83,059) (63,84,649) — (6,20,40,001)

5 Net Asset / (Liability) recognised in Balance Sheet (6,66,48,060) (4,08,20,357) (8,27,48,463) (5,28,41,782) (2,00,23,310) (8,17,02,196)

IV. Change in Defined Benefit Obligations (DBO)

1 Present Value of DBO at Beginning of Period 17,48,41,782 10,98,23,310 8,17,02,196 17,79,23,852 9,25,76,860 7,54,82,9682 Current Service Cost 1,92,58,933 1,31,75,100 1,32,33,474 1,71,66,880 1,29,15,384 1,31,79,8453 Interest Cost 1,39,54,299 87,42,798 62,08,573 1,39,33,619 72,54,149 55,93,6494 Curtailment Cost / (Credit) — — — — — —5 Settlement Cost / (Credit) — — — — — —6 Plan Amendments — — — — — —7 Acquisitions — — — — — —8 Actuarial (Gains) / Losses (33,06,954) 44,79,149 (55,02,246) (2,66,75,381) 8,76,917 (14,29,551)9 Benefits Paid (1,14,00,000) (77,00,000) (1,28,93,534) (75,07,188) (38,00,000) (1,11,24,715)

10 Present Value of DBO at the End of Period 19,33,48,060 12,85,20,357 8,27,48,463 17,48,41,782 10,98,23,310 8,17,02,196

V. Change in Fair Value of Assets

1 Plan Assets at Beginning of Period 12,20,00,000 8,98,00,000 — 11,14,00,000 8,72,00,000 —2 Acquisition Adjustment — — — — — —3 Expected Return on Plan Assets 1,02,58,875 73,21,875 — 93,36,000 70,80,000 —4 Actuarial Gains / (Losses) (13,58,875) (17,21,875) — 6,64,000 (6,80,00) —5 Actual Company Contributions 72,00,000 — 1,28,93,534 81,07,188 — 1,11,24,7156 Benefits Paid (1,14,00,000) (77,00,000) (1,28,93,534) (75,07,188) (38,00,000) (1,11,24,715)

7 Plan Assets at the End of Period 12,67,00,000 8,77,00,000 — 12,20,00,000 8,98,00,000 —

VI. Actuarial Assumptions For the year ended 31st March, 2012 For the year ended 31st March, 2011

1 Discount Rate (%) 8.25% 8%2 Expected Return on Plan Assets (%) 8.25% 8%3 Long-term rate of compensation increase (%)

– Management Staff 10% 10% – Others — 10%

The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such as supply and demandfactors in the employment market.

VII. Major Category of Plan Assets as a % of the Total For the year ended 31st March, 2012 For the year ended 31st March, 2011

1 Government Securities / Special Deposit with RBI 34% 33%2 High Quality Corporate Bonds 31% 34%3 Insurance Companies 26% 27%4 Mutual Funds 2% 4%5 Cash and Cash Equivalents 8% 3%

VIII. Basis used to determine the Expected Rate of Return on Plan AssetsThe 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 optimisereturns within acceptable risk parameters, the plan assets are well diversified.

26 Employee Benefits

(a) The following table sets out the Defined Benefit Plans / Long-Term Compensated Absences - as per Actuarial Valuation as on 31st March, 2012 and recognised in the financial statements in respect of Employee Benefit Schemes :

127


128


IX. For the year ended 31st March, 2012 For the year ended 31st March, 2011 For the year ended 31st March, 2010 For the year ended 31st March, 2009` ` ` `

Leave Leave Leave LeaveNet Asset / (Liability) recognised in Balance Sheet Pension Gratuity Encashment Pension Gratuity Encashment Pension Gratuity Encashment Pension Gratuity Encashment(Including experience adjustment impact)

1 Present Value of Defined Benefit Obligation 19,33,48,060 12,85,20,357 8,27,48,463 17,48,41,782 10,98,23,310 8,17,02,196 17,79,23,852 9,25,76,860 7,54,82,968 14,77,39,740 6,71,76,921 6,06,48,5722 Fair Value of Plan Assets 12,67,00,000 8,77,00,000 — 12,20,00,000 8,98,00,000 — 11,14,00,000 8,72,00,000 — 11,35,00,000 9,18,00,000 —3 Status [Surplus / (Deficit)] (6,66,48,060) (4,08,20,357) (8,27,48,463) (5,28,41,782) (2,00,23,310) (8,17,02,196) (6,65,23,852) (53,76,860 ) (7,54,82,968) (3,42,39,740) 2,46,23,079 (6,06,48,572 )4 Experience Adjustment of Plan Assets [Gain / (Loss)] (10,48,000) (15,08,000) — (91,40,000) (22,79,000) — 16,28,500 (1,04,70,250 ) — 10,05,000 40,02,500 —5 Experience Adjustment of Obligation [(Gain) / Loss] (5,08,889) 62,39,146 (55,71,828) (16,21,251) 62,46,134 28,44,651 (1,18,77,125) (55,18,904 ) (6,72,376) 2,14,94,741 75,60,838 43,52,583

(b) Amounts towards Defined Contribution Plans (approved Provident Fund administered through a duly constituted trust upto 31st March, 2012 and the Company is inthe process of transferring such fund to the Regional Provident Fund Commissioner) have been recognised under “Contribution to Provident and Other Funds” inNote 19 ` 9,48,75,647 (2011 ` 7,89,05,203).

27 Quantitative detailsThe Company is engaged in providing information technology solutions and softwaredevelopment services. The purchase, production and sale of such software cannotbe expressed in any generic unit.

For the year ended For the year ended 31st March, 2012 31st March, 2011

` `

28 Earnings per share

(a) Profit after Taxation 28,69,46,111 7,45,74,405(b) Weighted average number

of Equity Shares 8,52,00,000 8,52,00,000(c) Earnings Per Share 3.37 0.88

(Face value of ` 10 per share)(Basic and Diluted)

29 Auditors’ Remuneration and Expenses(Net of service tax credit)

Audit Fees 11,00,000 11,00,000Tax Audit Fees 2,00,000 2,00,000Fees for Other services 3,26,976 2,84,173Reimbursement of Expenses 1,92,315 1,78,236

18,19,291 17,62,409

30 Value of Imports during the year(C.I.F. Basis)

Capital Goods 5,81,71,990 6,58,47,0765,81,71,990 6,58,47,076

31 Expenditure in Foreign Currencyduring the year(On Accrual Basis)Travel 18,78,74,481 16,99,68,021Professional, Consultancy and AccountManagement Fees 44,33,40,717 28,74,76,149Software and Related Expenses 13,65,870 30,34,764Expenditure of foreign branches 57,27,30,154 46,29,75,090Others 2,72,86,941 92,54,405

1,23,25,98,163 93,27,08,429

32 Earnings in foreign exchange during the year(F.O.B. – Accrual Basis)

Sale of Services andResale of Software 4,24,52,68,575 3,13,57,67,526

4,24,52,68,575 3,13,57,67,526

33. SEGMENT REPORTINGThe Company operates in a single business segment - information technology, whichis its primary segment. The geographical segments are secondary segments andhave been identified accordingly as India and Rest of the World. In view of only onebusiness segment, disclosure of information relating to primary segment isnot applicable.

31st March, 2012 31st March, 2011` `

SECONDARY SEGMENT INFORMATION

(GEOGRAPHICAL SEGMENTS) :

Segment Revenue

India 1,37,70,51,753 1,07,57,91,957

Rest of the World 4,24,52,68,575 3,13,57,67,526

Total Revenue 5,62,23,20,328 4,21,15,59,483Segment Assets *

India 2,09,81,02,839 1,68,02,11,366Rest of the World 1,31,32,97,469 1,89,23,37,624Total Assets 3,41,14,00,308 3,57,25,48,990

Capital Expenditure *

India 43,47,00,646 17,95,55,139

Rest of the World — —

Total Capital Expenditure 43,47,00,646 17,95,55,139* Fixed Assets and Capital Expenditure

have been considered on the basisof physical location.

34. RELATED PARTY DISCLOSURES

(i) HOLDING COMPANY:

ITC Limited

(ii) ENTERPRISES WHERE CONTROL EXISTS:

Wholly Owned Subsidiaries:

lTC Infotech Limited (UK)

ITC Infotech (USA), Inc.

Pyxis Solutions LLC.

(iii) OTHER RELATED PARTIES WITH WHOM THE COMPANY HAD TRANSACTIONS, etc.

Fellow Subsidiary Companies:

Surya Nepal Private Limited

Wimco Limited

Technico Agri Sciences Limited

Technico Technologies Inc.

Srinivasa Resorts Limited

Landbase India Limited

(iv) KEY MANAGEMENT PERSONNEL

Non-Executive Directors Management Committee MembersMr. Y. C. Deveshwar - Chairman Mr. B. Sumant - Managing DirectorMr. S. Sivakumar - Vice Chairman Mr. R. BatraMr. A. Nayak Mr. A. TalwarMr. B. B. Chatterjee Mr. S. JanardhananMr. S. Puri Mr. V. V. R. BabuMr. R. Tandon Mr. S. K. Gupta

Mr. V. V. RajasekharMr. A. MaheshwariMr. S. V. Shah

Mr. V. Sreenivasan (w.e.f. 1st July, 2011)

5. DISCLOSURE OF TRANSACTIONS BETWEEN THE COMPANY AND RELATED PARTIES AND THE STATUS OF OUTSTANDING BALANCES AS ON 31ST MARCH

Holding Company Wholly Owned Subsidiaries Fellow Subsidiaries Key Management Personnel2012 2011 2012 2011 2012 2011 2012 2011

ITC Infotech ITC Infotech Pyxis Solutions ITC Infotech ITC Infotech Pyxis SolutionsLimited (UK) (USA), INC. LLC Limited (UK) (USA), INC. LLC

` ` ` ` ` ` ` ` ` ` ` `

Sale of Goods / Services 91,28,51,772 83,10,67,971 38,26,62,278 86,38,92,757 2,01,11,115 37,61,47,120 56,70,65,514 1,68,98,332 70,95,676 1,25,86,479 — —Purchase of Goods / Services 37,88,047 45,73,881 37,47,73,011 — — 24,67,15,727 27,03,589 — — 32,02,321 — —Rent paid 1,39,33,282 1,05,65,530 — — — — — — — — — ––Remuneration to Key Managerial Personnel — — — — — — — — — — 3,78,46,983 4,15,16,313Reimbursement of Contractual Remuneration 3,64,95,829 2,28,86,957 — — — — — — — — — ––Remuneration of managers ondeputation recovered 17,96,029 11,09,309 — — — — — — — — — ––Expenses recovered 22,73,846 41,39,281 73,02,820 2,58,88,632 — 32,87,992 2,55,91,005 — — 10,489 — —Expenses reimbursed 6,75,51,822 4,79,88,196 1,29,57,637 2,05,45,598 — 34,76,269 1,85,78,281 — — — — ––Receipt towards Loan Repayment — — — — — — — — — — 7,91,761 2,43,500Interest recovered on Loans — — — — — — — — — — 10,307 12,718Loans received 3,03,85,00,000 2,39,61,00,000 — — — — — — — — — ––Loan repaid 3,96,10,00,000 2,01,25,00,000 — — — — — — — — — ––Balances as on 31st March — — — — — — — — — — — —

i) Debtors / Receivables 96,38,027 1,80,90,356 8,07,08,913 35,20,96,438 19,17,784 6,93,10,266 31,47,62,165 14,76,451 — 39,87,635 — —ii) Loans Taken 57,00,00,000 1,49,25,00,000 — — — — — — — — — —iii) Loans Given — — — — — — — — — — 9,13,258 14,12,466iv) Creditors / Payables 93,87,302 81,32,468 20,53,14,450 2,05,45,598 — 16,47,00,500 2,81,57,825 — — — 19,64,762 —

129



B. Sumant Managing DirectorPlace : Bangalore S. Sivakumar Vice ChairmanDate : 8th May, 2012 R. Batra Chief Financial Officer S. V. Shah Company Secretary

35 The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent tothe notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared as per Revised Schedule VI.Accordingly, the previous year figures have also been reclassified to conform to this year’s classification. The adoption of Revised Schedule VI for previous year figures does notimpact recognition and measurement principles followed for preparation of financial statements.

STATEMENT REGARDING SUBSIDIARY COMPANIES

PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

Sl. Name of the Subsidiary Number of Extent of Profits / (Losses) so far it concerns the Profits / (Losses) so far it concerns theNo. Company Shares held Holding members of the Holding Company members of the Holding Company

by the and not dealt with in the books of and dealt with in the books ofCompany Account of the Holding Company Account of the Holding Company

For the Financial For the Previous For the Financial For the PreviousYear of the Financial Year(s) Year of the Financial Year(s)Subsidiary since it became Subsidiary since it became

a Subsidiary a Subsidiary

1 ITC INFOTECH LIMITED, (UK) (*) 685,815 100% GBP 21,25,817 GBP 41,80,399 NIL NILINR 17,31,69,053 INR 34,05,35,303

2 ITC INFOTECH (USA), INC. (**) 182,000 100% USD 7,11,869 (USD 10,72,695) NIL NILINR 3,62,19,895 (INR 5,45,78,722)

3 PYXIS SOLUTIONS LLC. (**) Note 100% USD 88,419 USD 14,20,016 NIL NILINR 44,98,759 INR 7,22,50,414

The financial year of all the subsidiaries ended on 31 March, 2012.

(*) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of GBP 1 = INR 81.46(**) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of USD 1 = INR 50.88

Note – Pyxis Solutions LLC. is a New York Limited Liability Company and does not have any share capital. ITC Infotech (USA), Inc., holds 100%membership interest of Pyxis Solutions LLC.

Description

ITC Infotech LimitedNorfolk House118, Saxon Gate WestMilton KeynesMK9 2DN

REPORT OF THE DIRECTORS

Your Directors present their Report together with the Audited FinancialStatements for the year ended 31st March, 2012.

The Company is a wholly owned subsidiary of ITC Infotech India Limited,incorporated in India.


The Company is engaged in providing IT services, software developmentand support services.

Key performance indicators

GBP (million)

Year Ended March 31, 2012 2011

Total Income 24.35 22.22

Cost of Sales 17.06 16.00

Gross Profit 7.29 6.22

Operating Profit 2.97 1.45

Profit before Tax 2.98 1.45

Profit after Tax 2.13 1.03

Business review

Your Company’s results substantially improved with Total Income, OperatingProfit and Profit After Tax growing by 10%, 105% and 107% respectively,through greater market penetration, improved realisations and effectiveoperations and cost management.

Your Company’s focus on identified Business Verticals has resulted inacquisition of several marquee customers in the Banking, Financial Servicesand Insurance sector. Market development activities in Europe, South Africaand Middle East have enabled acquisition of several clients in these regionswith potential for significant business opportunities.

While the overall business environment in Europe remains pessimistic, andIT budgets are under severe pressure, this also presents new opportunitiesfor your Company in its chosen focus areas as exemplified in the currentyear.

With a growing funnel in its chosen service lines, and a sales organisationaligned to and sharply focused on driving its value proposition in each ofthese service lines, your Company looks forward to 2012-13 with confidence.

Financial risk management objectives and policies

The objective of financial risk management is to protect the value of theCompany’s financial assets against possible erosion due to adversematerialisation of risks related to credit, liquidity, interest rate and foreigncurrency exposures.

The existence of financial assets exposes the Company to a number offinancial risks. The main risks are market risk due to currency risk, credit riskand liquidity risk.

a) Market risk - currency risk

The Company is exposed to translation and transaction foreign exchangerisk. Approximately 14% of its sales are in US dollars and the Companypays its major supplier, its parent company, mostly in US dollars. It limitsits exposure by holding foreign currency in currency bank accounts. It doesnot currently hold any hedging instruments but foreign exchangemanagement is kept under regular review.

b) Credit risk

The Company’s principal financial assets are cash and trade debtors. Thereis no credit risk associated with cash and so the principal credit risk ariseson trade debtors. However, the Company's customers are mostly blue chipcompanies and the Company has no history of significant bad debts.

c) Liquidity risk

The Company seeks to manage financial risk by ensuring sufficient liquidityis available to meet foreseeable needs and to invest cash assets safely andprofitably.

Directors

The Directors in office at the end of the year are listed below. All servedon the Board throughout the year, unless indicated otherwise. The interestsof the Directors in the shares of the Company as at 31st March, 2012 and1st April, 2011 were as follows:

2012 and 2011Ordinary Shares

Y. C.Deveshwar —

S.Sivakumar —

B. B. Chatterjee —

S. Puri —

B.Sumant —

R.Tandon —

Mr. B. B. Chatterjee, Director, and Mr. Y. C. Deveshwar, Director & Chairman,will retire by rotation at the Annual General Meeting and, being eligible,offer themselves for re-election.

Statement of directors' responsibilities

UK Company Law requires the Directors to prepare financial statements foreach financial year, which give a true and fair view of the affairs of theCompany and of the profit or loss of the Company for that year. In preparingthose 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 itis inappropriate to presume that the Company will continue in business;

The Directors are responsible for keeping proper accounting records, forsafeguarding the assets of the Company and for taking reasonable stepsfor the prevention and detection of fraud and other irregularities.

In so far as the directors are aware: (i) there is no relevant audit informationof which the Company's auditors are unaware; and (ii) they have taken allsteps that ought to have been taken to make themselves aware of anyrelevant audit information and to establish that the auditors are aware ofthat 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 opinionthat there are no material uncertainties that may cast significant doubtabout the Company's ability to continue as a going concern.

Auditors

PricewaterhouseCoopers LLP, Auditors, offer themselves for re-appointmentin accordance with the provisions of Section 485 of the Companies Act,2006.

Approved by the Board on 7th May, 2012 and signed on behalf of theBoard by

B. Sumant S. SivakumarDirector Vice Chairman

INDEPENDENT AUDITORS’ TO THE MEMBERS OF ITC INFOTECHLIMITED

We have audited the financial statements of ITC Infotech Limited for theyear ended 31 March, 2012 which comprise the profit and loss account,the balance sheet, cash flow statement, the statement of total recognisedgains and losses and the related notes. The financial reporting frameworkthat has been applied in their preparation is applicable law and UnitedKingdom Accounting Standards (United Kingdom Generally AcceptedAccounting Practice).

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors’ responsibilities thedirectors are responsible for the preparation of the financial statements andfor being satisfied that they give a true and fair view. Our responsibility isto audit and express an opinion on the financial statements in accordancewith applicable law and International Standards on Auditing (UK and

Ireland). Those standards require us to comply with the Auditing PracticesBoard’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for thecompany’s members as a body in accordance with Chapter 3 of Part 16of the Companies Act 2006 and for no other purpose. We do not, in givingthese opinions, accept or assume responsibility for any other purpose orto any other person to whom this report is shown or into whose hands itmay come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosuresin the financial statements sufficient to give reasonable assurance that thefinancial statements are free from material misstatement, whether causedby fraud or error. This includes an assessment of : whether the accounting

130

ITC INFOTECH LIMITED

policies are appropriate to the company’s circumstances and have beenconsistently applied and adequately disclosed; the reasonableness ofsignificant accounting estimates made by the directors; and the overallpresentation of the financial statements. In addition, we read all the financialand non-financial information in the annual report to identify materialinconsistencies with the audited financial statements. If we become awareof any apparent material misstatements or inconsistencies we consider theimplications for our report.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at31 March, 2012 and of its profit for the year then ended;

• have been properly prepared in accordance with United KingdomGenerally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of theCompanies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financialyear for which the financial statements are prepared is consistent with thefinancial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where theCompanies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequatefor our audit have not been received from branches not visited by us;or

• the financial statements are not in agreement with the accountingrecords and returns; or

• certain disclosures of directors’ remuneration specified by law are notmade; or

• we have not received all the information and explanations we requirefor our audit.

131


Mike Robinson (Senior Statutory Auditor)

For and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors

Milton Keynes

21 May, 2012

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

Unaudited UnauditedNote 2012 2012 2011 2011

£ ` £ `

Turnover 2 24,347,804 1,870,885,259 22,224,843 1,595,632,603

Cost of sales 17,059,773 1,310,872,957 16,002,587 1,148,905,734

Gross profit 7,288,031 560,012,302 6,222,256 446,726,869

Other operating charges 3 4,317,416 331,750,246 4,775,531 342,859,248

Operating profit 4 2,970,615 228,262,056 1,446,725 103,867,621

Operating profit before foreign exchange gain/(loss) 2,944,562 226,260,144 1,546,776 111,050,782

Foreign exchange gain/(loss) 26,053 2,001,913 100,051 7,183,161

Interest receivable and similar income 6 6,542 502,687 4,285 307,642

Profit on ordinary activities before taxation 2,977,157 228,764,743 1,451,010 104,175,263

Tax on profit on ordinary activities 7 851,340 65,416,965 416,021 29,868,228

Profit for the financial year 2,125,817 163,347,778 1,034,989 74,307,035

All of the activities of the company are classed as continuing.

There is no material difference between the profit on ordinary activities before taxation and the profit for the financial years stated above and their historicalcosts equivalents

The accompanying accounting policies and notes form part of these financial statements.

BALANCE SHEET AS AT 31 MARCH, 2012Unaudited Unaudited

Note 2012 2012 2011 2011£ ` £ `

Fixed assets

Tangible assets 8 21,607 1,660,282 31,059 2,229,882

Current assets

Debtors 9 6,001,667 461,168,091 6,730,710 483,231,324

Loans and advances 56,418 4,335,159 108,752 7,807,850

Deferred tax recoverable 10 2,532 194,559 3,694 265,211

Cash at bank 4,983,977 382,968,793 2,612,614 187,572,622

11,044,594 848,666,603 9,455,770 678,877,007

Creditors: amounts falling due within one year 11 3,525,944 270,933,537 4,082,681 293,116,082

Net Current Assets 7,518,650 577,733,066 5,373,089 385,760,925

Total assets less current liabilities 7,540,257 579,393,348 5,404,148 387,990,807

Capital and reservesCalled-up equity share capital 15 685,815 52,698,025 685,815 49,238,075

Profit and loss account 16 6,854,442 526,695,323 4,718,333 338,752,732

Shareholders’ funds 17 7,540,257 579,393,348 5,404,148 387,990,807

These financial statements were approved by the directors on 7th May, 2012 and are signed on their behalf by:

HS Garewal G BindalPresident Financial ControllerThe accompanying accounting policies and notes form part of these financial statements.

B. Sumant S. SivakumarDirector Vice Chairman

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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2012

Unaudited UnauditedNote 2012 2012 2011 2011

£ ` £ `

Net cash inflow/(outflow) from operating activities 18 3,008,231 231,152,470 852,194 61,183,268

Returns on investments and servicing of finance

Interest received 2,199 168,971 4,285 307,642

Net cash inflow from returns on investments andservicing of finance 2,199 168,971 4,285 307,642

Taxation (632,790) (48,623,583) (222,070) (15,943,516)

Capital expenditure

Payments to acquire tangible fixed assets (6,277) (482,325) (7,822) (561,580)

Net cash outflow from capital expenditure (6,277) (482,325) (7,822) (561,580)

Increase/(Decrease) in cash 18 2,371,363 182,215,533 626,587 44,985,814


STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH, 2012

Unaudited Unaudited2012 2012 2011 2011

£ ` £ `


Currency translation of (loss) / gain of retained earnings ofoverseas branches 10,292 790,837 832 59,733

Total recognised gains and losses relating to the financial year 2,136,109 164,138,615 1,035,821 74,366,768



Supplementary information - Indian Rupee amounts

The financial statements of ITC Infotech Limited are prepared in accordance with accounting principles generally accepted in the United Kingdom,the country of incorporation, and are presented in GBP. The supplementary information (comprising the pro-forma financial information disclosed inIndian Rupees) requested by the parent company has been arrived at by applying the year end interbank exchange rate of GBP 1 = ` 76.84(2011: GBP 1 = ` 71.80) as provided by the parent company. The supplementary information has not been audited.

1. Principal accounting policies

Basis of accounting

These financial statements are prepared on the going concern basis, under the historical cost convention, and in accordance with the Companies Act2006 and applicable accounting standards in the United Kingdom. The principal accounting policies, which have been applied consistently throughoutthe year, are set out below.

Financial instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrumentis 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 instrumentsare classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financialliabilities 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 equityinstrument. 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" agreedwith the customer is achieved.

Fixed assets

All fixed assets are initially recorded at cost.

Depreciation

Depreciation is calculated to write down the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

Leasehold improvements - 25%

Fixtures and fittings - 25%

Computer equipment - 25%

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 leaseterm.

2. Turnover

The turnover and profit before tax are attributable to the one principal activity of the company.An analysis of turnover is given below:


£ ` £ `

United Kingdom 17,539,289 1,347,718,967 16,133,769 1,158,323,945

India 4,782,616 367,496,213 3,606,992 258,963,991

US 129,455 9,947,322 236,794 17,000,625

Singapore 190,461 14,635,023 9,676 694,688

Europe 1,653,783 127,076,686 2,203,074 158,169,698

Other 52,200 4,011,048 34,538 2,479,656

24,347,804 1,870,885,259 22,224,843 1,595,632,603

3. Other operating charges

Administrative expenses 4,556,845 350,147,970 4,775,531 342,859,248

Provision for leave encashment no longer required (239,429) (18,397,724) — —

4,317,416 331,750,246 4,775,531 342,859,248

4. Operating profit

Operating profit is stated after charging:Depreciation of owned fixed assets 15,729 1,208,616 17,138 1,230,422

Auditor’s remuneration:- audit fees 19,750 1,517,590 20,775 1,491,541

- non-audit fees – taxation and other services 3,250 249,730 14,505 1,041,386

Loss / (gain) on foreign exchange (26,053) (2,001,913) 100,051 7,183,161

Operating lease costs:Land and buildings 41,919 3,221,056 53,191 3,818,848

Plant and equipment 1,809 139,004 1,809 129,877

5. Directors and employeesThe average number of staff employed by the company during the financial year amounted to:

2012 2011

No. No.

Staff 232 210

The aggregate payroll costs of the above were:


£ ` £ `

Wages and salaries 10,020,001 769,936,877 8,719,581 626,022,318

Social security costs 997,985 76,685,167 787,840 56,562,973

11,017,986 846,622,044 9,507,421 682,585,291

Remuneration in respect of directors was nil (2011: £nil).

6. Interest receivable & similar income

Bank interest receivable 2,199 168,971 4,285 307,642

Other miscellaneous income 4,343 333,716 — —

6,542 502,687 4,285 307,642

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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 notthat 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 translatedat the rate of exchange ruling at the balance sheet date. All exchange differences are dealt with through the profit and loss account except that gainsand 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 arecharged to the Profit & Loss Account when such costs are incurred.


£ ` £ `

7. Taxation on ordinary activities(a) Analysis of charge in the yearCurrent tax:- UK Corporation tax on profits of the year 612,937 47,098,079 350,140 25,138,302

- Adjustment in respect of previous years 237,241 18,229,598 81,345 5,840,164

- Foreign Tax – Current Year — — 3,864 277,416

– Prior Year — — (23,994) (1,722,649)

Total current tax 850,178 65,327,677 411,355 29,533,233

Deferred tax:

Origination and reversal of timing differences 1,162 89,288 4,666 334,995

Tax on profit on ordinary activities 851,340 65,416,965 416,021 29,868,228

Taxation on ordinary activities

(b) Factors affecting current tax charge

The tax assessed on the profit on ordinary activities for the year is higherthan the standard rate of corporation tax in the UK of 26% (2011 - 28%).

Profit on ordinary activities before taxation 2,977,157 228,764,743 1,451,010 104,175,263

Profit on ordinary activities multiplied by rate of tax 776,736 59,684,393 406,283 29,169,074

Expenses not deductible for tax purposes 29,221 2,245,342 30,851 2,214,962

Movement in capital allowances (1,062) (81,604) (1,785) (128,154)

Adjustments to tax charge in respect of previous periods 45,283 3,479,546 (23,994) (1,722,649)

Total current tax (note 6(a)) 850,178 65,327,677 411,355 29,533,233

The standard rate of corporation tax in the UK changed from 28% to 26% with effect from 1 April, 2011. Accordingly, the company’s profits for thisaccounting period are taxed at an effective rate of 26%.Finance Act 2011 received Royal Assent on 19 July, 2011, and included legislation in respect of corporation tax rate changes as follows:- A reduction in the main rate of corporation tax to 26% with effect from 1 April, 2011;- A reduction in the main rate of corporation tax to 25% with effect from 1 April, 2012.Deferred tax assets and liabilities at 31 March, 2012 have been measured using the rate of 24%.The 2012 Budget included an announcement that the main rate will be reduced by an additional 1% to 24% on 1 April, 2012. Further reductions inthe main rate of corporation tax to 23% effective from 1 April, 2013 and 22% effective from 1 April, 2014 are expected to be enacted. However, theseproposed rate reductions had not been substantively enacted at the balance sheet date of 31 March, 2012 and have therefore not been reflected inthese financial statements.It has also been previously announced that capital allowances rates will reduce to 18% writing down allowances per annum on the main plant andmachinery pool and 8% writing down allowances per annum on the special rate pool, both changes becoming effective from 1 April, 2012.The impact of these changes is not expected to be material to the balance sheet.

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8. Tangible fixed assets

Unaudited Fixtures Unaudited UnauditedLeasehold Leasehold and Fixtures and Computer Computer Unaudited

improvements improvements fittings fittings equipment equipment Total Total£ ` £ ` £ ` £ `

Cost

At 1 April, 2011 50,965 3,916,151 60,215 4,626,921 175,666 13,498,175 286,846 22,041,247

Additions — — — — 6,277 482,325 6,277 482,325

At 31 March, 2012 50,965 3,916,151 60,215 4,626,921 181,943 13,980,500 293,123 22,523,572

Depreciation

At 1 April, 2011 40,207 3,089,506 53,974 4,147,362 161,606 12,417,805 255,787 19,654,673

Charge for the year 4,965 381,532 2,958 227,293 7,806 599,813 15,729 1,208,638

At 31 March, 2012 45,172 3,471,038 56,932 4,374,655 169,412 13,017,618 271,516 20,863,311

Net book value

At 31 March, 2012 5,793 445,134 3,283 252,266 12,531 962,882 21,607 1,660,282

At 31 March, 2011 10,758 826,645 6,241 479,558 14,060 1,080,370 31,059 2,386,574

For simplicity, the brought forward Rupee amounts at 1 April, 2011 have been translated at the 31 March, 2012 exchange rate.

9. Debtors

Unaudited Unaudited

2012 2012 2011 2011£ ` £ `

Trade debtors 4,460,994 342,782,778 5,295,551 380,194,084

Amounts owed by group undertakings 1,538,248 118,198,976 1,367,764 98,198,616

Prepayments and accrued income 2,425 186,337 67,395 4,838,624

6,001,667 461,168,091 6,730,710 483,231,324

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11. Creditors: amounts falling due within one year


£ ` £ `

Trade creditors 304,317 23,383,718 839,628 60,281,092

Corporation tax 339,095 26,056,060 121,707 8,737,954

Other taxation and social security 835,952 64,234,552 937,259 67,290,510

Other creditors 2,046,580 157,259,207 2,184,087 156,806,526

3,525,944 270,933,537 4,082,681 293,116,082

12. Leasing commitments

At 31 March, 2012 the company had annual commitments under non-cancellable operating leases as set out below.

2012 2011Unaudited Unaudited Unaudited Unaudited

Land & Land & Other Other Land & Land & Other OtherBuildings Buildings Items Items Buildings Buildings Items Items

£ ` £ ` £ ` £ `

Operating leases whichexpire:

Within 1 year 62,878 4,831,546 — — — — — —

Within 1 to 2 years — — — — — — — —

Within 2 to 5 years — — 1,809 139,004 60,941 4,375,259 1,809 129,877

62,878 4,831,546 1,809 139,004 60,941 4,375,259 1,809 129,877

13. Capital commitments

There were no capital commitments at 31 March, 2012 or 31 March, 2011.

14. Contingent liabilities

There were no contingent liabilities at 31 March, 2012 or 31 March, 2011.

15. Share capital

Authorised share capital:

Unaudited Unaudited

2012 2012 2011 2011£ ` £ `

1,629,700 Ordinary shares of £1 each 1,629,700 125,226,148 1,629,700 117,004,312

Allotted, called up and fully paid:

Unaudited Unaudited

2012 2012 2011 2011

No. £ ` No. £ `

Ordinary shares of £1 each 685,815 685,815 52,698,025 685,815 685,815 49,238,075

16. Profit and loss account Unaudited£ `

At 1 April 2011 4,718,333 362,556,708

Profit for the financial year 2,125,817 163,347,778

Other recognised losses and gains 10,292 790,837

At 31 March 2012 6,854,442 526,695,323


10. Deferred taxation

The deferred tax included in the Balance sheet is as follows:

Deferred tax asset 2,532 194,559 3,694 265,211

The movement in the deferred taxation account during the year was:

Balance brought forward 3,694 283,847 8,360 600,206

Profit and loss account movement arising during the year (1,162) (89,288) (4,666) (334,995)

Balance carried forward 2,532 194,559 3,694 265,211

The balance of the deferred taxation account consists of the tax effectof timing differences in respect of:

Excess of depreciation over taxation allowances on fixed assets 2,532 194,559 3,694 265,211


£ ` £ `

18. Notes to the statement of cash flows

Unaudited Unaudited

2012 2012 2011 2011£ ` £ `

Reconciliation of operating profit to net cash inflow/(outflow) from operating activities

Operating profit 2,970,615 228,262,057 1,446,725 103,867,621

Foreign exchange movement 10,292 790,837 832 59,733

Depreciation 15,729 1,208,616 17,138 1,230,423

Miscellaneous Income 4,343 333,716 — —

Decrease/ (Increase) in debtors 781,377 60,041,009 (1,015,648) (72,918,448)

(Decrease)/Increase in creditors (774,125) (59,483,765) 403,147 28,943,939

Net cash inflow/(outflow) from operating activities 3,008,231 231,152,470 852,194 61,183,268

Reconciliation of net cash flow to movement in net funds

Increase/ (decrease) in cash in the period 2,371,363 182,215,533 626,587 44,985,814

Movement in net funds in the period 2,371,363 182,215,533 626,587 44,985,814

Net funds at 1 April, 2011 2,612,614 200,753,260 1,986,027 142,586,808

Net funds at 31 March, 2012 4,983,977 382,968,793 2,612,614 187,572,622

Analysis of changes in net funds

At At Cash Cash At At

1 April 2011 1 April 2011 flows flows 31 March 2012 31 March 2012

£ ` £ ` £ `

Net cash:

Cash in hand and at bank 2,612,614 200,753,260 2,371,363 182,215,533 4,983,977 382,968,793

Net funds 2,612,614 200,753,260 2,371,363 182,215,533 4,983,977 382,968,793


19. Controlling related party

The immediate parent undertaking is ITC Infotech India Limited, which is incorporated in India and is a wholly owned subsidiary of ITC Limited.This is the smallest group of undertakings for which consolidated accounts are being drawn up including this company.

The ultimate parent undertaking and controlling related party is ITC Limited, which is incorporated in India. This is the largest group of undertakingsfor 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 therequirements of FRS8 to disclose transactions with other members of the group headed by ITC Limited.

136


17. Reconciliation of movements in shareholders’ funds

Unaudited Unaudited

2012 2012 2011 2011

£ ` £ `


Other recognised losses and gains 10,292 790,837 832 59,733

Net addition to shareholders' funds 2,136,109 164,138,615 1,035,821 74,366,768

Opening shareholders' funds 5,404,148 415,254,733 4,368,327 313,624,039

Closing shareholders' funds 7,540,257 579,393,348 5,404,148 387,990,807


REPORT OF THE DIRECTORS

Your Directors present their Report together with the Audited Financial Statementsfor the year ended 31st March, 2012.

The Corporation is a wholly owned subsidiary of ITC Infotech India Limited,incorporated in India.

Principal Activities

The Corporation is engaged in providing IT services, software development andsupport services.

Financial Results (US$ million)

ITC Infotech (USA), Inc.Consolidated(*)

Year Ended March 31 2012 2011

Total Revenue 49.85 38.43

Operating Income before Amortization 1.19 0.82

Net Cash Flow provided by Operating activities 0.93 1.25

(*) including Pyxis Solutions, LLC, a wholly owned subsidiary of the Corporation.

Business Review

During 2011, spends on IT services in the United States grew by 4.4%, representingthe second consecutive year of growth post the recent recession. The overhang ofglobal economic uncertainties continued to reflect upon IT spending patterns, withcustomers adopting a save-to-invest approach across the business verticals servicedby the Corporation. While early signs of an uptick in budget allocations becamevisible, actual allocations to projects continued to be carefully calibrated.

In the midst of such uncertain market conditions, the Corporation is pleased toreport another year of significant growth. Total Revenues grew by 30% to US$49.85 million, while Operating Income before Amortization grew by 45% to US$1.19 million. The robust growth rates are outcomes of the Corporation’s successfuldomain centric service delivery and marketplace strategies.

Several value added solutions were launched including some which wereco-innovated with leading independent software vendors. These solutions addressedcritical business challenges such as shrinking time-to-market on new productlaunches, managing complex global infrastructure, ensuring design integrity,insightfully segmenting clients and many more areas that enhance competitiveness.

Solution capability aligned to market needs enabled the Corporation to add severalmarquee customers, thus sustaining the pace of growth.

The expanded customer base, the strong sales funnel and the bank of market-relevant capabilities, augur well for the year 2012-13.

Wholly Owned Subsidiary - Pyxis Solutions, LLC (Pyxis)

Pyxis primarily provides high end, domain-based software quality consulting tomarquee clients in the financial services industry. During 2011, growth in IT servicesspends in the US financial services industry lagged that of overall IT services growth.The sector posted a growth of only 1.5 per cent compared to the overall growthof 4.4 per cent, and continued to be characterized by sporadic rate cuts andfurloughs. Amidst challenging market conditions, Pyxis’ focus was on client retention,cost management and strengthening solution capability aligned to market needs.Pyxis was chosen by its largest client to support a high visibility project that wasrevived after being put on hold due to market conditions. Further, the strength ofPyxis’ capability enabled major new client acquisition towards the end of the financialyear. The increased client activity and the efforts towards successful client retentionpresent attractive growth possibilities in the next financial year.

During the year under review, Pyxis declared and paid US$ 500,000 (previousyear - US$ 750,000) as dividend for the financial year 2011-12 by way of distributionto the Corporation, the Sole Member of Pyxis.

Directors

M/s. Y. C. Deveshwar, S. Sivakumar, B. B. Chatterjee, (Ms) B. Parameswar, S. Puri,B. Sumant and R. Tandon, Directors of the Corporation, will retire at the AnnualMeeting, and, being eligible, offer themselves for re-appointment.

Auditors

M/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Corporation, offerthemselves for re-appointment as Auditors of the Corporation to audit the FinancialStatements of the Corporation for the financial year ending 31st March, 2013.


B. Sumant DirectorMay 7, 2012 S. Sivakumar Vice Chairman

INDEPENDENT AUDITORS’ REPORT

Board of DirectorsITC Infotech (USA), Inc.

We have audited the accompanying special-purpose balance sheets of ITC Infotech(USA), Inc. as of March 31, 2012 and 2011, and the related special-purposestatements of operations and accumulated deficit, and cash flows for each of theyears then ended. The financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audits.

We conducted our audits in accordance with auditing standards generally acceptedin the United States of America. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes consideration of internal controlover financial reporting as a basis for designing audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting. Accordingly,we express no such opinion. An audit also includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

The accompanying special-purpose financial statements were prepared for thepurpose of reporting to the members’ of ITC Infotech (USA), Inc., and its Companies,

as described in Note B[1], the Company does not consolidate Pyxis Solutions, LLC,a 100% owned subsidiary and is not intended to be a presentation in conformitywith generally accepted accounting principles.

In our opinion, the special-purpose financial statements referred to above presentfairly, in all material respects, the financial position of ITC Infotech (USA), Inc. asof March 31, 2012 and 2011 and the results of its operations and its cash flows foreach of the years then ended in accordance with the Basis of Presentation asdescribed in Note B[1].

As discussed in Note B[1] to the financial statements, the Indian Rupee equivalentfigures have been included in the financial statements as required by the parentcompany, and is not a representation in conformity with accounting principlesgenerally accepted in the United States of America.

This report is intended solely for the information and use of the board of directorsand management of ITC Infotech (USA), Inc. and its group Companies and is notintended to be and should not be used by anyone other than these specified parties.

EisnerAmper LLPEdison, New JerseyMay 7, 2012

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ITC INFOTECH (USA), INC.

138


BALANCE SHEET

March 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011$ ` $ `

ASSETS

CURRENT ASSETS

Cash and cash equivalents 3,430,992 164,859,166 2,286,054 101,958,008

Accounts receivable, net of allowance for doubtfulaccounts of $465,493 (` 22,366,938) and$396,427 (` 17,680,644) for 2012 and 2011, respectively 10,195,797 489,908,046 9,390,245 418,804,927

Due from ITC Infotech Ltd. (UK), net 40,036 1,923,730 — —

Advances to employees 231,334 11,115,599 103,965 4,636,839

Deferred income taxes 1,095,009 52,615,182 1,119,362 49,923,546

Total current assets 14,993,168 720,421,723 12,899,626 575,323,320

EQUIPMENT, SOFTWARE, FURNITURE AND FIXTURES AND

LEASEHOLD IMPROVEMENTS 562,739 27,039,609 660,722 29,468,201

Less: Accumulated depreciation and amortization 486,250 23,364,313 533,432 23,791,067

76,489 3,675,296 127,290 5,677,134

INTANGIBLE ASSETS 14,184,523 681,566,330 14,184,523 632,629,729

Less: Accumulated amortization 2,792,438 134,176,646 2,024,938 90,312,235

11,392,085 547,389,684 12,159,585 542,317,491

Other assets, principally unsecured advances 251,898 12,103,699 292,829 13,060,173

26,713,640 1,283,590,402 25,479,330 1,136,378,118

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES

Accounts payable 1,153,203 55,411,404 1,171,826 52,263,440

Accrued expenses and other current liabilities 1,665,422 80,023,527 1,274,087 56,824,280

Accrued payroll and payroll taxes 553,605 26,600,720 491,350 21,914,210

Due to ITC Infotech Ltd. (UK), net — — 165 7,359

Due to Pyxis Solutions, LLC., net 29,888 1,436,118 75,797 3,380,546

Due to ITC Infotech India Ltd., net 6,512,588 312,929,853 6,359,410 283,629,686

Total current liabilities 9,914,706 476,401,622 9,372,635 418,019,521

NON-CURRENT LIABILITIES

Deferred income taxes 138,597 6,659,586 158,227 7,056,924

COMMITMENTS AND CONTINGENCIES (see Note G)

STOCKHOLDER'S EQUITY

Capital stock, no par value; 185,000 shares authorised;

182,000 shares issued and outstanding atMarch 31, 2012 and 2011 200,000 9,610,000 200,000 8,920,000

Additional paid-in capital 18,000,000 864,900,000 18,000,000 802,800,000

Accumulated deficit (1,539,663) (73,980,806) (2,251,532) (100,418,327)

Total stockholder's equity 16,660,337 800,529,194 15,948,468 711,301,673

26,713,640 1,283,590,402 25,479,330 1,136,378,118

The accompanying notes are an integral part of these financial statements


L. N. Balaji B. Sumant S. SivakumarPresident Director Vice Chairman

G SatishFinancial ControllerDate : May 7, 2012

STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT

For the year ended For the year ended For the year ended For the year endedMarch 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

$ ` $ `

RevenuesService fees 33,064,146 1,588,732,216 24,966,387 1,113,500,860Account management fees - affiliates 177,931 8,549,585 114,337 5,099,430Project fees 11,017,012 529,367,427 7,252,758 323,473,007

Total revenues 44,259,089 2,126,649,228 32,333,482 1,442,073,297Cost of revenues, principallyemployment costs and fees chargedby affiliates 34,432,400 1,654,476,820 25,264,653 1,126,803,524Gross profit 9,826,689 472,172,408 7,068,829 315,269,773General and administrative expenses 8,726,432 419,305,058 6,273,750 279,809,250Operating income before amortization 1,100,257 52,867,350 795,079 35,460,523Amortization of intangible assets 767,500 36,878,375 767,500 34,230,500Operating income 332,757 15,988,975 27,579 1,230,023Other income 505,642 24,296,098 757,663 33,791,770Income before income tax expense 838,399 40,285,073 785,242 35,021,793Income tax expense

Current 121,806 5,852,778 38,467 1,715,628Deferred 4,724 226,988 14,208 633,677

Total income tax expense 126,530 6,079,766 52,675 2,349,305Net income 711,869 34,205,307 732,567 32,672,488Accumulated deficit at beginning of year (2,251,532) (108,186,113) (2,984,099) (133,090,815)Accumulated deficit at end of year (1,539,663) (73,980,806) (2,251,532) (100,418,327)


STATEMENT OF CASH FLOWMarch 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

$ ` $ `Cash flows from operating activitiesNet income 711,869 34,205,307 732,567 32,672,488Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities

Depreciation and amortization 851,585 40,918,659 879,272 39,215,531Deferred income taxes 4,724 226,988 14,208 633,677Bad debt expense 838,417 40,285,937 — —

(Increase) decrease in assetsAccounts receivable (1,643,970) (78,992,759) (2,602,700) (116,080,420)Due from ITC lnfotech Ltd. (UK), net (40,200) (1,931,610) — —Advances to employees (127,369) (6,120,080) (47,028) (2,097,449)Security deposits and other advances 40,932 1,966,783 (121,613) (5,423,940)

Increase (decrease) in liabilitiesAccounts payable (18,623) (894,835) (122,840) (5,478,664)Accrued expenses and other liabilities 391,335 18,803,647 157,925 7,043,455Accrued payroll and payroll taxes 62,256 2,991,401 179,551 8,007,975Due to ITC Infotech Ltd. (UK), net — — (78,804) (3,514,658)Due to Pyxis Solutions, LLC., net (45,909) (2,205,927) 75,797 3,380,546Due to ITC Infotech India Ltd., net 153,175 7,360,059 2,314,283 103,217,022

Net cash provided by operating activities 1,178,222 56,613,570 1,380,618 61,575,563

Cash flows from investing activitiesCapital expenditures (33,284) (1,599,296) (52,636) (2,347,566)Increase in goodwill acquired (see Note C) — — (598,741) (26,703,849)

Net cash used in investing activities (33,284) (1,599,296) (651,377) (29,051,415)Cash flows from financing activities — — — —Net cash provided by financing activities — — — —Net increase in cash and cash equivalents 1,144,938 55,014,274 729,241 32,524,148Cash and cash equivalents at beginning of year 2,286,054 109,844,892 1,556,813 69,433,860Cash and cash equivalents at end of year 3,430,992 164,859,166 2,286,054 101,958,008Supplemental disclosures of cash flow information:Income taxes paid were $24,519 (` 1,178,138) and $44,865 (` 2,000,979) during 2012 and 2011, respectively.


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NOTES TO THE FINANCIAL STATEMENTSMarch 31, 2012 and 2011

NOTE A - BUSINESS BACKGROUND AND PRINCIPAL TRANSACTIONSWITH AFFILIATES

ITC Infotech (USA), Inc. (the “Company”), a New Jersey corporation, isprincipally engaged in the information technology services business. Majorityof its customers are commercial entities and software developers throughoutthe United States of America. The work is usually performed under contractswhich specify fixed hourly rates (which depend upon the skill level of theemployee staffed at the customer’s location) and which vary in length, butare typically less than two years in duration. The Company generates revenuethrough specific projects, whereby the Company and its overseas affiliatesundertake the responsibility to deliver specific software solutions (”ProjectBusiness”) on a contractual basis. Substantially all of these contracts forProject Business were co-sourced, in terms of the marketing agreement withits affiliates (see Note D), or fulfilled with resources drawn from affiliates, ona contractual basis, to supplement the Company’s resources. The Companyeither receives fees from affiliates for client account management in respectof work contracted between ITC Infotech India Ltd. or ITC Infotech Ltd. (UK)with clients in the United States, or incurs subcontract costs for technicalservices provided by affiliates to support customer contracts entered into bythe Company.

The Company is a wholly owned subsidiary of ITC Infotech India Ltd. (”InfotechIndia”), an Indian company. There are 185,000 common shares authorisedof which 182,000 have been issued, and are outstanding, to Infotech India.ITC Infotech Ltd. (”Infotech UK”) is also a wholly owned subsidiary ofITC Infotech India Ltd.

The Company acquired 100% of the membership interests of Pyxis Solutions,LLC (”Pyxis”) on August 11, 2008. Pyxis was formed as a New York Statelimited liability company in 2000. One of the founder members of Pyxis alsoowns a majority interest in an entity performing similar services in Singapore(”Pyxis Singapore”). Pyxis is principally engaged in the information technologyservices business offering Quality Assurance (QA) solutions and testing services.Its customers are commercial entities throughout the United States of America.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1) Basis of Presentation

As required by the parent company the financial statements of the Companyare not prepared in accordance with accounting principles generally acceptedin the United States as this presentation does not consolidate the results ofits wholly owned subsidiary Pyxis. So accordingly, these financial statementsdo not purport to follow US GAAP. Furthermore, as permitted by accountingprinciples generally accepted in the United States, the impact of the acquisitionof Pyxis was not pushed-down to Pyxis. Accordingly, the intangible assetspresented herein relate to the excess purchase price over the fair value ofcurrent assets and liabilities. These financial statements are presented in U.S.dollars. However, as required by the parent company, the Indian Rupeeequivalent figures, arrived at by applying the average interbank exchangerate of US$1 = 48.05 (2011 US$1 = Rs. 44.60) as provided by the parentcompany, have been included solely for informational purposes and is notin conformance with the provisions of FASB ASC 830-30 - Foreign CurrencyMatters - Translation of Financial Statements and U.S. GAAP.

2) Recognition of Revenue

Service Revenue

Service revenues are based upon hours worked by Company employees oncustomer assignments and are recognized when the work is performed.Revenue is determined by multiplying the hours worked by the contractualbilling rates. Substantially all customers are invoiced weekly, biweekly, ormonthly.

Project Revenue

Revenues on the project business are recognized as earned, typically in themonth the service is performed. Costs associated with the use of subcontractorsto 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 whena non-cancellable agreement has been executed, fees are fixed anddeterminable and collection is considered probable unless there is significantuncertainty about customer acceptance, in which case revenues are recognisedupon such acceptance. Losses on contracts are recognised when determinable.

3) Account Management Fees

Fees for client account management in respect of work contracted by InfotechIndia and Infotech UK with clients in the United States are billed monthly ata predetermined rate applied on the amount billed by Infotech India andInfotech UK, to its clients.

4) Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cash accountswhich are not subject to withdrawal restrictions or penalties, and certificatesof deposit with maturities of ninety days or less, when purchased, to be cashor cash equivalents.

5) Accounts Receivable

Credit is extended based on evaluation of a customer’s financial conditionand, generally, collateral is not required. Accounts receivable are generallydue within 30 to 60 days and are stated at amounts due from customers netof an allowance for doubtful accounts. Accounts outstanding longer thanthe contractual payment terms are considered past due. The Companycreates an allowance for accounts receivable based on historical experienceand management’s evaluation of outstanding accounts receivable. Accountsare written off when they are deemed uncollectible.

6) Equipment, Software, Furniture and Fixtures and LeaseholdImprovements

Equipment, purchased or internally developed software, furniture and fixturesand leasehold improvements are stated at cost. Depreciation is providedunder the straight line method based upon the estimated useful lives of theassets, with such lives ranging up to five years.

7) Income Taxes

The Company accounts for income taxes pursuant to ASC 740, “IncomeTaxes” (”ASC 740”). ASC 740 requires recognition of deferred tax assets andliabilities for the expected future tax consequences of events that have beenincluded in the financial statements or tax returns. Under this method,deferred tax assets and liabilities are determined based on the differencesbetween the financial reporting and tax bases of assets and liabilities usingenacted tax rates in effect for the year in which the differences are expectedto reverse. Future tax benefits, such as net operating loss carry forwards, arerecognised to the extent that realisation of these benefits is considered tobe more likely than not. If the future realisation of such benefits is uncertain,then a valuation allowance is provided.

The Company provides for income tax in accordance with the FinancialAccounting Standards Board (”FASB”) issued ASC 740-10, “Income Taxes”(”ASC 740-10”). ASC 740-10 provides recognition criteria and a relatedmeasurement model for uncertain tax positions taken or expected to betaken in income tax returns. ASC 740-10 requires that a position taken orexpected to be taken in a tax return be recognised in the financial statementswhen it is more likely than not that the position would be sustained uponexamination by tax authorities. Tax positions that meet the more likely thannot threshold are then measured using a probability weighted approachrecognising the largest amount of tax benefit that is greater than 50% likelyof being realised upon ultimate settlement. There were no significant mattersdetermined to be unrecognised tax benefits taken or expected to be takenin a tax return that have been recorded in the Company’s financial statementsfor the year ended March 31, 2012. The income tax returns of the Companyare subject to examination by the IRS and other taxing authorities, generallyfor three years after they are filed.

8) Use of Estimates

In preparing financial statements in conformity with accounting principlesgenerally accepted in the United States of America, management is requiredto make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements, as well as the reported amounts of revenuesand expenses during the reporting period. Although actual results coulddiffer from those estimates, in the opinion of management such estimateswould not materially affect the financial statements.

9) Reclassifications

Certain prior year amounts have been reclassified to conform to the currentyear 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 anasset may not be recoverable, the Company assesses the recoverability ofthe asset. No impairment charge has been recorded in fiscal years endedMarch 31, 2012 or 2011.

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After paying the Second Anniversary Payment, as above, the irrevocablestandby letter of credit, to each of the two founder members of Pyxis, wasclosed on December 6, 2010.

The total purchase price for the acquisition of membership interestand allocation thereof, is as follows:Purchase price $ 12,434,878 ` 597,495,888Transaction costs 493,755 23,724,928Total purchase price at the time of acquisition 12,928,633 621,220,816Contingent anniversary payment 1,083,668 52,070,247Second anniversary payment 598,741 28,769,505Total purchase price 14,611,042 702,060,568Allocation of purchase priceCurrent assets acquired 2,567,021 123,345,359Less: Current liabilities assumed 957,064 45,986,925Net assets acquired (working capital) 1,609,957 77,358,434Identifiable intangible assets (see Note F) 5,390,000 258,989,500Goodwill (see Note F) 5,502,156 264,378,596Add: Deferred tax benefit adjusted 426,520 20,494,286Total purchase price at the time of acquisition 12,928,633 621,220,816Add: Contingent anniversary payment added togoodwill (see Note C and Note F) 1,083,668 52,070,247Add: Second anniversary payment added togoodwill (see Note C and Note F) 598,741 28,769,505

Total purchase price $ 14,611,042 ` 702,060,568

NOTE D - RELATED PARTY TRANSACTIONS

The Company had transactions with the following parties:Year ended March 31,

2012 2012 2011 2011$ (`) $ (`)

Transactions with Infotech IndiaCosts for project consultations /other expenses, included in cost ofrevenues / general and administrative expenses $17,600,501 845,704,060 $12,424,265 554,122,219Project / other expensesreimbursements from Infotech India 515,468 24,768,238 562,030 25,066,538Service / account management feesrecognised as revenue — — 53,262 2,375,485Transactions with Infotech UKService / account management fees /others, recognised as revenue 119,275 5,731,151 61,075 2,723,945Costs for project consultations /other expenses, included in cost ofrevenues / general andadministrative expenses 209,165 10,050,369 366,423 16,342,466Project / other expensereimbursements from Infotech UK — — 556 24,798Transactions with PyxisService / account management fees /others, recognised as revenue 58,656 2,818,421 — —Costs for project consultations /other expense reimbursements,included in cost of revenues /general and administrative expenses 184,240 8,852,732 241,176 10,756,450Other expense reimbursementsfrom Pyxis 508,597 24,438,098 233,665 10,421,459Other expense reimbursementsto Pyxis 604 29,041 29,149 1,300,045

Rent paid includes $106,217 (` 5,103,727) and $95,048 (` 4,239,141) towardsrent paid to King Maker Marketing Inc. (see Note G) for the fiscal years endedMarch 31, 2012 and 2011 respectively.Accounts receivable includes $0 (` 0) and $38,277 (` 1,707,154) receivable fromPyxis Solutions Pte. Ltd. for the fiscal years ended March 31, 2012 and 2011,respectively.

NOTE E - ACCOUNTS RECEIVABLEAccounts receivable includes both billed and unbilled receivable. Changesin the allowance for doubtful accounts in 2012 and 2011 are as follows:

2012 2012 2011 2011$ (`) $ (`)

Beginning balance 396,427 19,048,317 396,427 17,680,644Increase to allowance 838,417 40,285,937 — —Accounts written off (769,351) (36,967,316) — —Provision written back — — — —Ending balance 465,493 22,366,938 396,427 17,680,644

Unbilled receivables were approximately $ 1,091,194 (` 52,431,872) and$818,623 (` 36,510,586) as at March 31, 2012 and 2011 respectively.

12) Intangible Assets

Intangible assets are stated at fair value at the date of Pyxis acquisition andare amortized on the straight line method over their estimated useful life of4 to 8 years. Goodwill is not amortized but is subjected to annual impairmenttesting.

13) Impairment of Goodwill

The Company tests goodwill for impairment annually on March 31 at thereporting unit level using a fair value approach, in accordance with theprovisions of ASC 350, “Intangibles - Goodwill and Other”. Annual testingresulted in no impairments of goodwill in fiscal years ended March 31, 2012and 2011. If an event occurs or circumstances change that would more likelythan not reduce the fair value of a reporting unit below its carrying value,goodwill will be evaluated for impairment between annual tests.

14) Fair Value Measurements

The Company’s financial instruments include cash and cash equivalents,accounts receivable from customers, advances, other assets, accounts payable,and accruals which are short-term in nature. The Company believes thecarrying amounts of these financial instruments reasonably approximate theirfair value.

ASC 820 “Fair Value Measurements” (”ASC 820”) defines fair value, establishesa common framework for measuring fair value under the U.S. GAAP, andexpands disclosures about fair value measurements for financial andnon-financial assets and liabilities.

15) Capitalised Software Costs

Costs incurred for development of computer software for internal use of theCompany are capitalised. Any costs incurred in the preliminary stages ofdevelopment and in the operating stages of the software are expensedimmediately. Capitalised software costs are amortized over a period of fiveyears or over the estimated useful lives, whichever is lower. There were nosuch costs capitalised in fiscal years ended March 31, 2012 or 2011.

16) Subsequent Events

The Company evaluated all events or transactions that occurred after March31, 2012 up through May 7, 2012, the date when the financial statementswere available to be issued.

NOTE C - ACQUISITION OF MEMBERSHIP INTERESTS

On August 11, 2008, the Company acquired 100% of the membershipinterests of Pyxis for $12,434,878 (Rs. 597,495,888). Accordingly, Pyxisbecame a wholly owned subsidiary from that date. In connection with theMembership Interest Purchase Agreement (”MIPA”), each of the two foundermembers of Pyxis, receive certain allocable portion of Pyxis’s earning as“contingent payments”. The first of such contingent payment, “ContingentAnniversary Payment”, was contingent on Pyxis’s earnings before interest,taxes, depreciation and amortization (EBITDA) as determined from the “FirstAnniversary Income Statement” in accordance with the terms of meeting orexceeding the target EBITDA. The second and last such payment, “SecondAnniversary Payment”, was computed on Pyxis’s EBITDA as determined fromthe “Second Anniversary Income Statement”.

The Company recorded this acquisition as a purchase, and the results ofPyxis’s operations were included from the date of acquisition. The fair valueof current assets and liabilities approximated their book value at the date ofacquisition. For income tax purposes, Pyxis is considered a disregarded entity,and accordingly, its results of operations are included in the income taxreturn of the Company from the date of acquisition and forward. For incometax purposes, the Company has recognised intangible assets on a stepped-up basis and such intangible assets are being amortized over 15 years.

In accordance with MIPA, based on Pyxis’s EBITDA for the year ended August31, 2009, the Company paid the founder members of Pyxis $1,083,668(Rs. 52,070,247) towards contingent anniversary payment, computed onthe basis of the first anniversary income statement. This payment is reflectedas an increase in goodwill in accordance with ASC 805. The ContingentAnniversary Payment was made from the Company’s internal cash accruals.

In accordance with MIPA, based on Pyxis’s EBITDA for the year ended August31, 2010, the Company paid the founder members of Pyxis $598,741(Rs. 28,769,505). This payment is reflected as an increase in goodwill inaccordance with ASC 805. The Second Anniversary Payment was made fromthe Company’s internal cash accruals.

In accordance with MIPA, the Company had provided an irrevocable standbyletter of credit, expired on April 30, 2011 for $4,650,000 (Rs. 223,432,500),to each of the two founder members of Pyxis as a security for full and timelydischarge of payments. The Company received the funding for this acquisitionfrom an additional contribution of capital from its parent company of$13,500,000 (Rs. 648,675,000) in 2009.

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NOTE F - INTANGIBLE ASSETS

The Company has assets arising on acquisition of membership interest in accordance with ASC 805,”Business Combinations” (”ASC 805”). Accordingly, thecomponents of intangible assets (including goodwill) as at March 31, 2012 and 2011, are as follows:

2012 2011

Identifiable Estimated Currency Gross Accumulated Net carrying Gross carrying Accumulated Net carryingintangible useful life carrying amortization amount amount amortization amountassets amount

Trade name 8 $ 300,000 136,438 163,562 300,000 98,938 201,062` 14,415,000 6,555,846 7,859,154 13,380,000 4,412,635 8,967,365

Non-compete 4 $ 90,000 81,863 8,137 90,000 59,363 30,637agreement ` 4,324,500 3,933,517 390,983 4,014,000 2,647,590 1,366,410

Customer 8 $ 3,900,000 1,773,699 2,126,301 3,900,000 1,286,199 2,613,801relationship ` 187,395,000 85,226,237 102,168,763 173,940,000 57,364,475 116,575,525

Know how 5 $ 1,100,000 800,438 299,562 1,100,000 580,438 519,562` 52,855,000 38,461,046 14,393,954 49,060,000 25,887,535 23,172,465

Total $ 5,390,000 2,792,438 2,597,562 5,390,000 2,024,938 3,365,062` 258,989,500 134,176,646 124,812,854 240,394,000 90,312,235 150,081,765

Goodwill $ 7,184,566 — 7,184,566 7,184,566 — 7,184,566(see Note C) ` 345,218,396 — 345,218,396 320,431,644 — 320,431,644

Net assets acquired (working $ 1,609,957 — 1,609,957 1,609,957 — 1,609,957capital) (see Note C) ` 77,358,434 77,358,434 71,804,082 71,804,082

Total intangible assets $ 14,184,523 2,792,438 11,392,085 14,184,523 2,024,938 12,159,585` 681,566,330 134,176,646 547,389,684 632,629,726 90,312,235 542,317,491

Amortization of identifiable intangible assets for the years ended March 31,2012 and 2011 was $767,500 (Rs. 36,878,375) and $767,500 (` 34,230,500),respectively. At March 31, 2012 the expected amount of amortization ofidentifiable intangible assets, over the next five years are as follows:

2012-2013 $ 753,137 ` 36,188,2332013-2014 604,562 29,049,2042014-2015 525,000 25,226,2502015-2016 525,000 25,226,2502016-2017 189,863 9,122,917

Total amortization expense $ 2,597,562 ` 124,812,854

NOTE G - COMMITMENTS AND CONTINGENCIESLEASESThe Company has leased offices and storage spaces under non-cancellableoperating leases, some of these expiring through fiscal 2017. One such officehas been leased from King Maker Marketing Inc. whose parent Company(ITC Limited) is same as the Company’s ultimate parent company. Total rentand other reimbursements to King Maker Marketing Inc. was approximately$106,217 (Rs. 5,103,727) and $95,048 (Rs. 4,239,141) for the fiscal yearsended March 31, 2012 and 2011, respectively. Total rent expense under allfacilities leases was approximately $158,950 (Rs 7,637,546) and $152,898(` 6,819,251) for the fiscal years ended March 31, 2012 and 2011, respectively.In addition, the Company has entered into various non-cancellable operatingleases for the rental of equipment.The future minimum annual lease payments as at March 31, 2012 are asfollows:

Offices Equipment Total$ ` $ ` $ `

2012-2013 151,436 7,276,500 4,309 207,047 155,745 7,483,5472013-2014 153,417 7,371,687 3,320 159,526 156,737 7,531,2132014-2015 155,437 7,468,748 2,991 143,718 158,428 7,612,4662015-2016 157,498 7,567,779 2,991 143,718 160,489 7,711,4972016-2017 78,804 3,786,532 2,991 143,718 81,795 3,930,250Total MinimumLease Payments 696,592 33,471,246 16,602 797,727 713,194 34,268,973

NOTE H - INCOME TAXESThe provision for income taxes consists of the following:

Year ended March 31,$ 2012 2012(`) $ 2011 2011(`)

Federal TaxesCurrent — — — —Deferred 39,456 1,895,861 (155,075) (6,916,345)

State and local taxesCurrent 33,123 1,591,560 38,467 1,715,628Deferred (34,732) (1,668,873) (1,178) (52,539)

Foreign Taxes 88,683 4,261,218 170,461 7,602,561Total current expense $ 126,530 ` 6,079,766 $ 52,675 ` 2,349,305

As a result of the Pyxis acquisition, the Company’s amortizable tax basisgoodwill exceeds it financial reporting goodwill. Under ASC 740, this isknown as component 2 goodwill. No tax benefit is recorded for amortization

of component 2 goodwill until such deduction reduces taxes payable. As atMarch 31, 2012, no tax benefit related to the amortization of component2 goodwill has been recorded.The Company’s 2012 and 2011 expected Federal income tax provision wasoffset by the utilisation of net operating loss carry forwards.

Deferred tax assets and liabilities consist of the following:

$ 2012 2012(`) $ 2011 2011 (`)Net Operating Loss 19,720 947,546 281,844 12,570,242carry forwards

Other temporary 488,445 23,469,782 294,789 13,147,589differences (net)

Foreign tax 423,309 20,339,997 359,564 16,036,575credit carry-over

Federal Alternate 24,938 1,198,271 24,938 1,112,235Minimum Tax carry over

Net deferred tax asset $ 956,412 ` 45,955,596 $ 961,135 ` 42,866,641

As at March 31, 2012, the Company has NOL of approximately $57,999(` 2,786,852) available to offset future taxable income, as summarised below.

For the financial year ended March 31, 2011, Other Assets included a sumof $ 170,461 (` 7,602,561) being deferred tax asset created on foreign taxcredits. This amount has been reclassified under deferred tax asset in thecurrent year’s presentation.

Operating loss carry forwards for Federal income tax purposes will expireas follows:

Year Expiring ExpiringAmount ($) Amount (`)

March, 2025 1,329 63,858

March, 2026 10,805 519,180

March, 2027 17,343 833,331

March, 2028 22,564 1,084,200

March, 2030 5,958 286,282

$ 57,999 ` 2,786,851

NOTE I - CONCENTRATION OF CUSTOMER SALESA significant portion of the Company’s sales are to several key customers,some of which are also agencies providing software consulting services tocommercial entities and software developers. Three such key customersaccounted for approximately 33% (13%, 12% and 8%) and approximately37% (18%, 11% and 8%) of the Company’s net revenues for the years endedMarch 31, 2012 and 2011, respectively. Accounts receivable from thesecustomers approximated 26% (9%, 9%, and 8%) and 32% (14%, 14%, and4%) of total accounts receivable as at March 31, 2012 and 2011, respectively.NOTE J - CONCENTRATION OF CREDIT RISKFinancial instruments that potentially subject the Company to concentrationsof credit risk consist principally of cash deposits. Accounts at each institutionare insured by the Federal Deposit Insurance Corporation up to regulatorylimits. The Company has not experienced any losses in such accounts.

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REPORT OF THE CHIEF EXECUTIVE OFFICER TO THE SOLE MEMBER, ITCINFOTECH (USA), INC.

I take pleasure in presenting my Report together with the Audited FinancialStatements of the Company for the f inancial year ended31st March, 2012.

Principal ActivitiesYour Company is engaged in providing Software Testing and QualityAssurance services primarily for the Banking, Financial Services & Insurancebusiness segments.

Business ReviewPyxis primarily provides high-end, domain-based quality consulting tomarquee clients in the financial services industry.During 2011, growth in IT services spends in the US financial servicesindustry lagged that of overall IT services growth. The sector posted agrowth of only 1.5 per cent compared to the overall growth of 4.4 percent, and continued to be characterised by sporadic rate cuts and furloughs.Amidst challenging market conditions, your Company’s focus was on clientretention, cost management and strengthening solution capability alignedto market needs. Your Company was chosen by its largest client to supporta high visibility project that was revived after being put on hold due to

market conditions. Further, the strength of Pyxis’ capability enabled majornew client acquisition towards the end of the financial year. The increasedclient activity and the efforts towards successful client retention presentattractive growth possibilities in the next financial year.During the year under review your Company registered a Turnover ofUS$5.84 million (previous year - US$6.34million) and a Net Income ofUS$0.09 million (previous year - US$0.02million).Your Company declared and paid US$ 500,000 (previous year - US$750,000)as dividend for the financial year 2011-12 by way of distribution to the SoleMember.

AuditorsM/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Company,offer themselves for re-appointment as Auditors of the Company to auditthe Financial Statements of the Company for the financial year ending 31stMarch, 2013.

Amar Singh DuggalMay 7, 2012 Chief Executive Officer

INDEPENDENT AUDITORS’ REPORT

ITC Infotech (USA), Inc., sole member of Pyxis Solutions, LLC.

We have audited the accompanying balance sheets of Pyxis Solutions, LLCas of March 31, 2012 and 2011, and the related statements of operationsand member’s equity and cash flows for each of the years then ended. Thefinancial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statementsbased on our audits.We conducted our audits in accordance with auditing standards generallyaccepted in the United States of America. Those standards require that weplan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includesconsideration of internal controls over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly we expressno such opinion. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, andassessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for ouropinion.In our opinion, the financial statements referred to above present fairly, inall material respects, the financial position of Pyxis Solutions, LLC as ofMarch 31, 2012 and 2011, and the results of its operations and their cashflows for each of the years then ended in conformity with accountingprinciples generally accepted in the United States of America.As discussed in Note B[1], the Indian Rupee equivalent figures have beenincluded in the financial statements as required by ITC Infotech IndiaLimited, the ultimate parent company for informational purpose only, andis not intended to be a presentation in conformity with accounting principlesgenerally accepted in the United States of America.

EisnerAmper LLPEdison, New JerseyMay 7, 2012

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PYXIS SOLUTIONS, LLC. USA

BALANCE SHEET AS AT 31ST MARCH, 2012March 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

$ ` $ `

AssetsCurrent assetsCash and cash equivalents 1,549,410 74,449,151 1,800,796 80,315,502Accounts receivable, net of allowance for doubtfulaccounts of $ 8,391 (` 403,188) for 2012 and$ 8,391 (` 374,239) for 2011, respectively 951,422 45,715,827 985,224 43,940,990Due from ITC Infotech (USA), Inc., net 29,888 1,436,118 75,797 3,380,546Advances to employees — — 4,713 210,200Prepaid expenses 11,030 529,992 11,211 500,011Total current assets 2,541,750 122,131,088 2,877,741 128,347,249Computer equipment, net of accumulateddepreciation of $1,120 (` 53,816) and $814(`36,304) for 2012 and 2011 respectively 102 4,901 407 18,152

2,541,852 122,135,989 2,878,148 128,365,401Liabilities and Member’s EquityCurrent liabilitiesAccounts payable 86,000 4,132,300 86,000 3,835,600Accrued expenses and other current liabilities 375,891 18,061,562 290,493 12,955,988Accrued payroll and payroll taxes 173,873 8,354,598 188,574 8,410,400Due to ITC Infotech India Ltd., net 37,696 1,811,293 33,108 1,476,617Total current liabilities 673,460 32,359,753 598,175 26,678,605Commitments and contingencies (Note F)Member’s equity 1,868,392 89,776,236 2,279,973 101,686,796

2,541,852 122,135,989 2,878,148 128,365,401

Date : May 7, 2012V. Sawhney Greg Zvi Brener A. DuggalFinancial Controller Chief Operating Officer Chief Executive Officer


144


STATEMENT OF OPERATIONS AND MEMBER’S EQUITY FOR THE YEAR ENDED 31ST MARCH, 2012

Year Ended Year Ended Year Ended Year EndedMarch 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

$ ` $ `

Revenue

Service Fees 5,836,637 280,450,408 6,337,487 282,651,920

Total revenue 5,836,637 280,450,408 6,337,487 282,651,920

Cost of revenue, principallyemployment cost and subcontractor fees 4,713,368 226,477,332 5,122,152 228,447,979

Gross profit 1,123,269 53,973,076 1,215,335 54,203,941

General and administrative expenses 1,037,293 49,841,929 1,194,272 53,264,531

Operating income 85,976 4,131,147 21,063 939,410

Other income 2,443 117,386 3,609 160,961

Net income 88,419 4,248,533 24,672 1,100,371

Member’s equity at the beginning of year 2,279,973 109,552,703 3,005,301 134,036,425

Member’s distribution (500,000) (24,025,000) (750,000) (33,450,000)

Member’s equity at the end of year 1,868,392 89,776,236 2,279,973 101,686,796

V. Sawhney Greg Zvi Brener A. DuggalFinancial Controller Chief Operating Officer Chief Executive OfficerDate : May 7, 2012


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

Year Ended Year Ended Year Ended Year EndedMarch 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

$ ` $ `

Cash flows from operating activities

Net income 88,419 4,248,533 24,672 1,100,371

Adjustments to reconcile net income to net cashprovided by operating activities

Depreciation and amortization 305 14,655 305 13,603

Changes in assets and liabilities

Accounts receivable 33,802 1,624,186 620,966 27,695,084

Due from ITC Infotech (USA), Inc. 45,909 2,205,927 (75,797) (3,380,546)

Advances to employees 4,713 226,460 (4,713) (210,200)

Trade advance — — 48,500 2,163,100

Prepaid expenses 181 8,697 5,901 263,185

Accrued expenses and other current liabilities 85,398 4,103,374 55,440 2,472,624

Accrued payroll and payroll taxes (14,701) (706,383) (47,898) (2,136,251)

Due to ITC Infotech India Ltd., net 4,588 220,453 (4,254) (189,728)

Net cash provided by operating activities 248,614 11,945,902 623,122 27,791,242

Cash flows from financing activities

Member’s distribution (500,000) (24,025,000) (750,000) (33,450,000)

Net cash used in financing activities (500,000) (24,025,000) (750,000) (33,450,000)

Net decrease in cash and cash equivalents (251,386) (12,079,098) (126,878) (5,658,758)

Cash and cash equivalents at beginning of the year 1,800,796 86,528,249 1,927,674 85,974,260

Cash and cash equivalents at end of the year 1,549,410 74,449,151 1,800,796 80,315,502

V. Sawhney Greg Zvi Brener A. DuggalFinancial Controller Chief Operating Officer Chief Executive OfficerDate : May 7, 2012



March 31, 2012 and 2011

NOTE A - BUSINESS BACKGROUND AND PRINCIPAL TRANSACTIONS WITH AFFILIATES

Pyxis Solutions, LLC. (the “Company”) is principally engaged in the informationtechnology services business offering Quality Assurance (QA) solutions andtesting services. Its customers are commercial entities throughout the UnitedStates of America. The work is usually performed under contracts whichspecify fixed hourly rates (which depend upon the skill level of the consultantstaffed at the customer’s location) and which vary in length, but are typicallymore than one year in duration. The Company was formed as a New YorkState 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 acquisitionof 100% of the membership interest by ITC Infotech (USA), Inc.

One of the founding members of the Company, who is also the CEO of theCompany, owns a majority interest in entities performing similar servicesin India and Singapore. Similarly, both the founding members of theCompany equally own the entire interest in an entity performing similarservices in the United Kingdom. See Note D for transactions with theserelated parties.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Basis of presentation

The financial statements of the Company are prepared in accordancewith accounting principles generally accepted in the United States ofAmerica, the country of formation. The amounts are represented inU.S. dollars. As required by ITC Infotech India Limited, theparent’s parent company, the Indian Rupee equivalent figures, arrivedat by applying the average interbank exchange rate of US$1 = ` 48.05(2011: US$1 = ` 44.60) as provided by the parent’s parent company,have been included solely for informational purposes and is not inconformance with the provisions of FASB ASC 830-30 – Foreign CurrencyMatters – Translation of Financial Statements and U.S. GAAP.

2. Recognition of revenueService revenue

Service revenue is based upon hours worked by the Company employeeson customer assignments and is recognised when the work is performed.Revenue is determined by multiplying the hours worked by thecontractual billing rates. Substantially all customers are invoicedbi-weekly or monthly.


For purposes of reporting cash flows, the Company considers all cashaccounts which are not subject to withdrawal restrictions or penalties,and certificates of deposit with maturities of ninety days or less, whenpurchased, to be cash or cash equivalents.

4. Accounts receivable and allowance for doubtful accounts

Credit is extended based on evaluation of a customer’s financialcondition and, generally, collateral is not required. Accounts receivableare generally due within 30 to 60 days and are stated at amounts duefrom customers net of an allowance for doubtful accounts. Accountsoutstanding longer than the contractual payment terms are consideredpast due. The Company creates an allowance for accounts receivablebased on historical experience and management’s evaluation ofoutstanding accounts receivable. Accounts are written off when theyare deemed uncollectible.

5. Computer equipment

Computer equipment is stated at cost. Depreciation is provided underthe straight-line method based upon the estimated useful lives of theassets, with such lives ranging up to four years.

6. Income Taxes

As a result of the Company electing to be a disregarded entity, it is notliable for any federal or state income taxes and is not entitled to anytax benefits resulting from operating losses. The Parent Company doesnot allocate any of its tax liabilities or benefits to the Company.

7. Use of estimates

In preparing financial statements in conformity with accounting principlesgenerally accepted in the United States of America, management isrequired to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements, as well as thereported amounts of revenue and expenses during the reporting period.Although actual results could differ from those estimates, in the opinionof the management such estimates would not materially affect thefinancial statements.

8. Foreign currency translationThe Company maintains a foreign currency bank account denominatedin GBP (Pound Sterling). Foreign currency transaction gains resultingfrom exchange rate fluctuations on transactions denominated in foreigncurrencies totaled $96 (` 4,613) and $1,619 (` 72,207) as of March 31,2012 and 2011, respectively, and are included in Other Income in theaccompanying statements of operations.

9. Subsequent eventsThe Company evaluated subsequent events from March 31, 2012through May 7, 2012, the date the financial statements were availableto be issued.

NOTE C - ACQUISITION OF MEMBERSHIP INTERESTS

On August 11, 2008, the membership interests of the founders wereacquired by the Parent Company. As permitted by accounting principlesgenerally accepted in the United States, the impact of the purchase wasnot “pushed-down” to the Company. Accordingly, the financial statementspresented do not reflect the adjustment of any asset, liability or equityaccounts to fair value on such date, and the amounts presented do reflecta continuity of operations and basis of presentation.

NOTE D - RELATED PARTY TRANSACTIONS

The Company has entered into various transactions with its related partiesas follows:

Year Ended Year Ended Year Ended Year EndedMarch 31, March 31, March 31, March 31,

2012 2012 2011 2011$ ` $ `

Transactions with ITCInfotech (USA ), Inc.

Service / AccountManagement fees / othersrecognised as revenue 184,240 8,852,732 241,176 10,756,450by Pyxis

Costs for project consultations /other expenses, included incost of revenue 58,656 2,818,421 — —

Project / other expensesreimbursements incurredby Pyxis 604 29,022 29,149 1,300,045

Project / other expensesreimbursements incurredby Parent Company 508,597 24,438,086 233,665 10,421,459

Transactions with ITCInfotech India Ltd.Costs for project consultations /other expenses, included incost of revenue 421,552 20,255,574 371,314 16,560,604

Trade advance of $48,500 (` 2,163,100) receivable from Pyxis Singaporeas of March 31, 2010 was received during the year 2010-11.

NOTE E - ACCOUNTS RECEIVABLE

Accounts receivable consist of trade accounts receivable and unbilledaccounts receivable (representing services performed prior to the balance

145


sheet dates, but not invoiced to the customer until thereafter). Unbilledreceivables were $ 205,032 (` 9,851,788) and $ 456,983 (` 20,381,442)as of March 31, 2012 and 2011, respectively.

NOTE F - COMMITMENTS AND CONTINGENCIES

Leases

The Company has leased office space under a non-cancellable operatinglease expiring March 31, 2015. Total rent expense under this leasewas $73,524 (` 3,532,828) and $48,955 (` 2,183,393) for years endingMarch 31, 2012 and 2011, respectively. In addition, the Company has enteredinto a non-cancellable operating lease for rental of equipment expiringthrough 2014. Total expense under this lease for years ending March 31,2012 and 2011 was $2,976 (` 142,997) and $2,171 (` 96,827), respectively.

The future minimum annual lease payments at March 31, 2012 are as follows:

Office Rent Equipment Total

Year $ ` $ ` $ `

2012-13 63,261 3,039,691 2,391 114,888 65,652 3,154,579

2013-14 63,261 3,039,691 1,196 57,468 64,457 3,097,159

2014-15 42,174 2,026,461 — — 42,174 2,026,461

Total minimumlease payments 168,696 8,105,843 3,587 172,356 172,283 8,278,199

NOTE G - CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERSA significant portion of the Company’s sales are to several key customers.Two such customers accounted for approximately 80% and approximately60% of the Company’s net revenues for the year ended March 31, 2012and 2011 respectively. These two customers accounted for approximately87% and 49% of total accounts receivable at March 31, 2012 and 2011,respectively.

Financial instruments that potentially subject the Company to concentrationsof credit risk consist principally of cash deposits. Accounts at each institutionare insured by the Federal Deposit Insurance Corporation (FDIC) up toregulatory limits. The Company has not experienced any losses insuch accounts.

NOTE H - EMPLOYMENT AGREEMENTThe Parent Company entered into consultation agreements with Mr. AmarDuggal and Mr. Greg Zvi Brener through their respective companies, asthe Company’s Chief Executive Officer and Chief Operating Officer,respectively during the year 2010-11. The term of these consultationagreements are for a period of two years (expiring November 2012).

NOTE I - MEMBER’S DISTRIBUTIONThe Company paid a dividend of $500,000 (` 24,025,000) by way ofdistribution to the Parent Company, on March 5, 2012.The Company paid a dividend of $750,000 (` 33,450,000) by way ofdistribution to the Parent Company, on March 31, 2011.

146



AUDITORS’ REPORT TO THE MEMBERS OF WILLS CORPORATION LIMITED

1 We have audited the attached Balance Sheet of Wills Corporation Limited,as at 31st March 2012, and the related Statement of Profit and Loss andCash Flow Statement for the year ended on that date annexed thereto,collectively hereinafter referred to as financial statements, which we havesigned under reference to this report. These financial statements are theresponsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

3 As required by the Companies (Auditor’s Report) Order, 2003, as amendedby the Companies (Auditor’s Report) (Amendment) Order, 2004,collectively referred to as ‘Order’, issued by the Government of Indiain terms of sub-section (4A) of Section 227 of the Companies Act, 1956of India (’Act’) and on the basis of such checks of the books and recordsof the Company as we considered appropriate and according to theinformation and explanations given to us, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4 Further to our comments in the Annexure referred to in paragraph 3above, we report that:

(a) We have obtained all the information and explanations, which tothe best of our knowledge and belief were necessary for the purposesof our audit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as appears from our examinationof those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash FlowStatement dealt with by this report are in agreement with the booksof account;

(d) In our opinion the Balance Sheet, Statement of Profit and Loss andCash Flow Statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section 211of the Act;

(e) On the basis of written representations received from the directorsand taken on record by the Board of Directors, none of the directorsis disqualified as on 31st March 2012, from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 ofthe Act;

(f) In our opinion and to the best of our information and according tothe explanations given to us, the said financial statements togetherwith the notes thereon and attached thereto give in the prescribedmanner the information required by the Act and also give a trueand fair view in conformity with the accounting principles generallyaccepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of theCompany as at 31st March 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit forthe year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows forthe year ended on that date..

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON31ST MARCH, 2012

1. Your Directors hereby submit their Report and Accounts for the financialyear ended 31st March, 2012.

2. COMPANY PERFORMANCE

Your Company has earned a total revenue of ` 80.83 lakhs in the yearunder review. The temporary surplus funds of the Company have beeninvested in debt mutual funds and bank fixed deposits. The Board ofDirectors of your Company continues to explore business opportunitiesfor growth and sustainability.



(`) (`)

a. Profit Before Tax 67,07,971 44,20,739Less : Tax Expense 1,80,000 1,33,419

b. Profit After Tax 65,27,971 42,87,320c. Add : Profit brought

forward from previous years 2,78,01,188 2,35,13,868d. Balance carried forward to


3. DIRECTORS

In accordance with the provisions of Article 92 of the Articles ofAssociation of the Company, Mr. B. B. Chatterjee will retire by rotationat the ensuing Annual General Meeting of the Company, and beingeligible, offers himself for re-election. Your Board of Directors hasrecommended his re-election.


As required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm having : -

i) followed in the preparation of the Annual Accounts, the applicableAccounting Standards with proper explanations relating to materialdepartures, if any;


iii) taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;and



None of the employees of your Company is covered under the provisionsof Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975.

6. AUDITORS

The Company’s Auditors, Messrs. L. B. Jha & Co., Chartered Accountants,retire at the ensuing Annual General Meeting of the Company, andbeing eligible, offer themselves for re-appointment.

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGNEXCHANGE EARNINGS AND OUTGO

Considering the nature of business of your Company, no comment isrequired on conservation of energy and technology absorption. Therehas been no foreign exchange earnings or outflow during the yearunder review.

2nd May, 2012

Registered Office:Virginia House37 J. L. Nehru RoadKolkata 700 071

147

WILLS CORPORATION LIMITED


R. Tandon DirectorS. Dutta Director

For L. B. Jha & Co. Chartered Accountants

(Registration No. 301088E)

Kamal Kumar Bhanja Partner

Membership No. 14722Kolkata2nd May, 2012

ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF WILLSCORPORATION LIMITED(Referred to in paragraph 3 of the Auditors’ Report of even date)

1. (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the managementduring the year and no material discrepancies between the bookrecords 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 explanationsgiven to us, no substantial part of fixed assets has been disposed ofby the Company during the year.

2. The Company does not have any inventory.3. The Company has neither granted nor taken any loans, secured or

unsecured, to/ from companies, firms or other parties covered in theregister maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations givento us, there is an adequate internal control system commensurate withthe size of the Company and the nature of its business for the purchaseof fixed assets and for the sale of services. Further, on the basis of ourexamination of the books and records of the Company, and accordingto the information and explanations given to us, we have neither comeacross nor have been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanationsgiven to us, the particulars of contracts or arrangements referred toin Section 301 of the Act have been entered in the register requiredto be maintained under that section.

(b) In our opinion and according to the information and explanationsgiven to us, the transactions made in pursuance of such contractsor arrangements and exceeding the value of Rupees Five Lakhs inrespect of any party during the year have been made at prices whichare reasonable having regard to the prevailing market prices at therelevant time.

6. The Company has not accepted any deposits from the public within themeaning of Sections 58A and 58AA of the Act and the rules framed thereunder.

7. In our opinion, the Company has an internal audit system commensuratewith the size and nature of its business.

8. (a) According to the information and explanations given to us and therecords of the Company examined by us, in our opinion, theCompany is regular in depositing the undisputed statutory dues

including provident fund, income-tax, sales-tax, wealth tax, servicetax, cess and other material statutory dues as applicable with theappropriate authorities.

(b) According to the information and explanations given to us and therecords of the Company examined by us, there are no dues ofincome-tax, sales tax, wealth tax, service tax, and cess which havenot been deposited on account of any dispute.

9. According to the records of the Company examined by us and theinformation and explanation given to us, the Company has neitherborrowed moneys from any financial institution or bank nor has issuedany debentures during the year.

10. In our opinion and according to the information and explanations givento us, the Company has not given any guarantee for loans taken byothers from banks or financial institutions.

11. The Company has not obtained any term loans.12. On the basis of an overall examination of the Balance Sheet of the

Company, in our opinion and according to the information andexplanations given to us, there are no funds raised on a short-term basis,which have been used for long-term investment.

13 According to the records of the Company examined by us and theinformation and explanation given to us, the Company has not madeany preferential allotment of shares to parties and companies coveredin the register maintained under Section 301 of the Act during the year.

14 In our opinion clauses vii,xii to xiv,xix and xx of paragraph 4 of the Orderare not applicable to the Company for the current year.

15 During the course of our examination of the books and records of theCompany, carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanationsgiven to us, we have neither come across any instance of fraud on or bythe Company, noticed or reported during the year, nor have we beeninformed of such case by the management.

148


Kolkata2nd May, 2012



I. EQUITY AND LIABILITIES(1) Shareholder's Funds

(a) Share Capital 2 4,88,56,260 4,88,56,260(b) Reserves and Surplus 3 3,54,44,360 8,43,00,620 2,89,16,389 7,77,72,649

(2) Non-Current Liabilities(a) Long-Term Liabilities 4 20,00,000 20,00,000(b) Long-Term Provisions 5 2,28,134 22,28,134 1,97,252 21,97,252

(3) Current Liabilities(a) Other Current Liabilities 6 67,024 67,024 82,019 82,019

Total 8,65,95,778 8,00,51,920

II. ASSETS(1) Non-Current Assets

(a) Fixed AssetsTangible Assets 7 43,80,557 44,73,712

(b) Other Non-Current Assets 8 56,563 44,37,120 56,563 45,30,275

(2) Current Assets(a) Current Investments 9 — 7,43,79,207(b) Cash and Cash Equivalents 10 8,19,98,231 6,31,864(c) Short-Term Loans and Advances 11 69,633 1,07,937(d) Other Current Assets 12 90,794 8,21,58,658 4,02,637 7,55,21,645

Total 8,65,95,778 8,00,51,920

The accompanying Notes 1 to 17 are an integral part of the Financial StatementsIn terms of our report of even date



T. Ghosal Secretary

For L. B. Jha & Co.Chartered AccountantsKamal Kumar BhanjaPartnerKolkata, 2nd May, 2012

For L. B. Jha & Co. Chartered Accountants

(Registration No. 301088E) Kamal Kumar Bhanja

PartnerMembership No. 14722



(`) (`)RevenueOther Income 13 80,83,264 56,35,695

Total Revenue 80,83,264 56,35,695

ExpensesEmployee Benefits Expense 14 11,82,344 10,07,316Depreciation and Amortisation Expense 7 93,155 93,155Other Expenses 15 99,794 1,14,485

Total Expenses 13,75,293 12,14,956

Profit before Tax 67,07,971 44,20,739Tax Expense:

Current Tax 16 1,80,000 1,33,419

Profit for the year 65,27,971 42,87,320

Earning per equity share (Face Value of ` 10/- each) 17(2) 1.34 0.88(Basic & Diluted)


149




T. Ghosal Secretary

For L. B. Jha & Co.Chartered Accountants

Kamal Kumar BhanjaPartner

Kolkata, 2nd May, 2012



T. Ghosal Secretary


Kamal Kumar BhanjaPartner



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

A. NET PROFIT BEFORE TAX 67,07,971 44,20,739ADJUSTMENTS FOR:Depreciation 93,155 93,155Dividend Income (60,83,930) (40,87,622)Interest on Income Tax (8,729) 332Profit on Sale of Current Investments (601) (624)Liability no longer required written back (19,374) —

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 6,88,492 4,25,980ADJUSTMENTS FOR:Current Assets, Loans and Advances 3,11,843 (4,01,309)Current Liabilities and Provisions 35,261 1,17,845

CASH GENERATED FROM OPERATIONS 10,35,596 1,42,516Income Tax Refund / (Payment) (1,41,698) (2,01,962)

NET CASH FROM OPERATING ACTIVITIES 8,93,898 (59,446)

B. CASH FLOW FROM INVESTING ACTIVITIESIncome from Current Investments 37,78,800 9,32,535Purchase of Current Investments (76,55,60,000) (108,26,49,132)Sale of Current Investments 84,22,44,940 108,19,93,924Interest on Income Tax 8,729 —

NET CASH USED IN INVESTING ACTIVITIES 8,04,72,469 2,77,327

C. CASH FLOW FROM FINANCING ACTIVITIESInterest on Income Tax — (332)

NET CASH FROM FINANCING ACTIVITIES — (332)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 8,13,66,367 2,17,549OPENING CASH AND CASH EQUIVALENTS 6,31,864 4,14,315CLOSING CASH AND CASH EQUIVALENTS 8,19,98,231 6,31,864

Notes:1 The above Cash Flow Statement has been prepared under the "Indirect Method"

as set out in Accounting Standard - 3 Cash Flow Statements2 CASH AND CASH EQUIVALENTS:

Fixed Deposit with Banks 8,11,00,000 —Balance with Scheduled Banks - On Current Account 8,97,861 3,19,632Cash in Hand 370 —Cheques on Hand — 3,12,232Cash and Bank Balances (Note 10) 8,19,98,231 6,31,864

The accompanying Notes 1 to 17 are an integral part of the Financial Statement.In terms of our report of even date

Note 1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements are prepared on accrual basis under thehistorical cost convention.

All assets and liabilities have been classified as current or non-currentas per the Company’s normal operating cycle and other criteria set outin the Revised Schedule VI to the Companies Act, 1956 based on thenature of products/services and the time between the acquisition ofassets for processing and their realization in cash and cash equivalents.

Fixed Assets

Fixed Assets are stated at cost including any incidental acquisitionexpenses.

Depreciation

Depreciation is provided on ‘Straight Line’ basis at the rates prescribedin Schedule XIV to the Companies Act, 1956.

Investments

It is corporate policy that Current Investments are stated at lower ofcost and fair value; and Long Term Investments, including in JointVentures and Associates, at cost. Where applicable, provision is madeto recognise a decline, other than temporary, in valuation of Long TermInvestments.

Inventories

The inventories are valued at cost or below. The cost is computed onthe basis of weighted average method.

Foreign Currency Liabilities

Foreign Currency Liabilities are restated at the rates ruling at the yearend and all exchange gains / losses arising there from are adjusted inthe Statement of Profit and Loss except for those covered by forwardcontract rates where the gains / losses arising from such restatementare recognized over the period of such contracts.

Borrowing Costs

Borrowing cost that are directly attributable to the acquisition orconstruction of qualifying assets, are capitalized as part of cost of suchassets. All other borrowing costs are charged to revenue.

Lease Rentals

Lease Rentals are accounted for on accrual basis.

Retirement Benefits

Liability for leave encashment and gratuity payable to employees isprovided for at the year-end on actuarial basis.

Taxes on Income

Current tax is provided as the amount of tax payable in respect oftaxable income for the period.

Deferred Tax is provided on timing differences between taxable incomeand accounting income subject to consideration of prudence.

Deferred tax assets is not recognised on unabsorbed depreciation andcarry forward of losses unless there is virtual certainty that there willbe sufficient future taxable income available to realise such assets.

150



3. Reserves and Surplus As at As at31st March, 2012 31st March, 2011

(`) (`)General Reserve

Balance at the beginning and at the end of the year 11,15,201 11,15,201Surplus in Statement of Profit and Loss

At the beginning of the year 2,78,01,188 2,35,13,868Add: From Statement of Profit and Loss 65,27,971 42,87,320At the end of the year 3,43,29,159 2,78,01,188

3,54,44,360 2,89,16,389

2. Share Capital As at As at31st March, 2012 31st March, 2011

(`) (`)

Authorised50,00,000 (2011-50,00,000) Equity Shares of ` 10 each 5,00,00,000 5,00,00,000

5,00,00,000 5,00,00,000Issued,Subscribed and Paid-up48,85,626 (2011-48,85,626) Equity Shares of ` 10 each, fully paid 4,88,56,260 4,88,56,260

4,88,56,260 4,88,56,260

(i) Reconciliation of number of shares and amounts outstanding As at As at31st March, 2012 31st March, 2011

Particulars Equity Shares Equity Shares(Number) (`) (Number) (`)

Equity Shares of ` 10/- each, outstanding at the beginning andend of the year 48,85,626 4,88,56,260 48,85,626 4,88,56,260

48,85,626 4,88,56,260 48,85,626 4,88,56,260(ii) Details of the Shareholders holding more than 5% of Equity Shares

of the CompanyAs at As at

31st March, 2012 31st March, 2011Name of the Shareholder No. of Shares held No. of Shares held

(%) (Number) (%) (Number)ITC Limited - Holding Company 100% 48,85,626 100% 48,85,626

(iii) Other disclosuresNo shares were either issued otherwise than for payment being received in cash or bought back or alloted fully paid up bonus shares in thepreceeding five years from the date of this Balance Sheet.Equity Shares of the Company, having a par value of ` 10/- per share, rank pari passu in all respects including voting rights and entitlement to dividend.


151


4. Long-Term Liabilities


(`) (`)

Security Deposits 20,00,000 20,00,000(from Holding Company)

20,00,000 20,00,000

5. Long-Term Provisions


(`) (`)

Provision for Employee Benefits:

Provision for Gratuity 1,11,862 96,256

Provision for Compensated Absences 1,16,272 1,00,996

2,28,134 1,97,252



(`) (`)

Liability towards Expenses 20,224 45,304

Other Payables

Statutory Remittances (TDS Payable) 46,800 36,715

67,024 82,019

7. Fixed AssetsTangible Assets

As at As at Upto 31st For the Upto 31st As at 31st As at 31stcommencement the end March, 2011 year March, 2012 March, 2012 March, 2011

of the year of the year(`) (`) (`) (`) (`) (`) (`)

Plant and Machinery 3,42,348 3,42,348 3,42,348 — 3,42,348 — —Building (*) 57,15,053 57,15,053 12,41,341 93,155 13,34,496 43,80,557 44,73,712

Given on operating leaseT O T A L 60,57,401 60,57,401 15,83,689 93,155 16,76,844 43,80,557 44,73,712Previous Year 60,57,401 60,57,401 14,90,534 93,155 15,83,689 44,73,712 45,66,867

Particulars

GROSS BLOCK DEPRECIATION NET BLOCK

* Operating lease with respect to the building is for three years and is non-cancellable and renewable on mutually agreeable terms.

12. Other Current Assets


(`) (`)

Unsecured, Considered Good

Lease Rent Receivable — 4,00,000(due from holding company ITC Limited)

Interest Accrued and Not Due on Fixed Deposits 89,461 —

Prepaid Expense 1,333 2,637

90,794 4,02,637

13. Other Income


(`) (`)

Dividend Income

From Current Investments 60,83,930 40,87,622

Rental Income 9,60,000 8,20,000

Profit on Sale of Current Investments 601 624

Interest On Fixed Deposit 89,461 —

Interest On Income Tax Refund 8,729 —

Liability no longer required written back 19,374 —

Other Non Operating Income 9,21,169 7,27,449

80,83,264 56,35,695

14. Employee Benefits Expense


(`) (`)

Salaries and Wages 11,14,196 8,79,656

Retirement Benefits 30,882 89,854

Staff Welfare Expense 37,266 37,806

11,82,344 10,07,316

8. Other Non-Current AssetsAs at As at

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

Sundry Deposits 56,563 56,56356,563 56,563

9. Current Investments(at lower of cost and fair value)


(`) (`)DSP BlackRock Liquidity Fund - Institutional Plan -Daily Dividend — 7,43,79,207Nil (2011 - 74,356 ) Units of ` 1,000 each

— 7,43,79,207Aggregate value of unquoted investments — 7,43,79,207

10. Cash and Cash EquivalentsAs at As at

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

Balances with BanksBalances in Current Account 8,97,861 3,19,632Deposit Accounts 8,11,00,000 —

Cheques on Hand — 3,12,232Cash on Hand 370 —

8,19,98,231 6,31,864

11. Short-Term Loans and AdvancesAs at As at

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

Unsecured, Considered GoodAdvance Income Tax (net of provisions) 69,633 1,07,339Advance Fringe Benefit Tax (net of provisions) — 598

69,633 1,07,937

152



15. Other Expenses


(`) (`)

Rates and Taxes 41,278 43,278

Insurance 3,299 1,971

Professional Fees 5,465 12,500

Filing Fees 1,010 2,040

Payment to Auditor

As auditors- statutory audit 18,000 18,000

For taxation matters (*) 5,000 10,000

For other matters (*) 7,500 7,500

Travelling and Conveyance 730 1,866

Postage, Telephone, Telex, etc. 1,376 2,839

Miscellaneous Expense 16,136 14,491

99,794 1,14,485* Paid to erstwhile auditors

16. Current Tax


(`) (`)

Income Tax for the year

- Current Tax 1,80,000 1,00,000

1,80,000 1,00,000

Adjustments relating to previous years

- Current Tax — 33,472

- Fringe Benefit Tax — (53)

Net Current Tax Liability 1,80,000 1,33,419

17. Additional Notes to the Financial Statements

17.1. The Revised Schedule VI has become effective from 1st April, 2011 for the preparationof finanacial statements. This has significantly impacted the disclosure and presentationmade in the financial statements. Previous year’s figures have been regrouped/reclassifiedwherever necessary to correspond with current year’s classification/disclosure.

17.2. Earnings per ShareFor the year ended For the year ended


Profit after Taxation (`) 65,27,971 42,87,320

Weighted average number of 48,85,626 48,85,626Equity Shares outstanding

Basic and Diluted Earnings Per Share ` 1.34 ` 0.88(Face Value - ` 10/- per share)

17.3. The incidence of Deferred Tax being insignificant, is not considered.

17.4 Related Party Disclosures :

(a) Relationships :

Holding Company ITC Limited

Key Management Personnel

Mr. R. Tandon Non-Executive ChairmanMr. B. B. Chatterjee Non-Executive DirectorMr. S. Dutta Non-Executive DirectorMr. T. Ghosal Company Secretary

(b) Disclosure of transaction between the Company and Related Parties and thestatus of outstanding balances :Particulars For the year ended For the year ended

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

Holding CompanyPostage, Telephone, Telex etc. 1,376 2,839Miscellaneous Expenses Nil 11,030Rental Income 9,60,000 8,20,000Miscellaneous Income 9,21,169 7,27,674

Balance as at 31st March, 2012 31st March, 2011(`) (`)

Holding CompanyReceivables Nil 4,00,000Security Deposit Received 20,00,000 20,00,000Key Management PersonnelRemuneration paid 11,41,562 9,17,462

17.5 Segment Reporting - The Company operates in a single business and geographicalsegment.

17.6. Employee Benefits :

Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2012 and recognised in the financial statementsin respect of Employee Benefit Schemes:


(`) (`)


Unfunded Unfunded Unfunded Unfunded

I Components of Employer Expense

1 Current Service Cost 17,709 9,964 16,232 9,166

2 Interest Cost 7,941 8,332 3,645 4,426

3 Expected Return on Plan Assets Nil Nil Nil Nil

4 Curtailment Cost/(Credit) Nil Nil Nil Nil

5 Settlement Cost/(Credit) Nil Nil Nil Nil

6 Past Service Cost Nil Nil 12,411 Nil

7 Actuarial Losses/(Gains) (10,044) (3,020) 11,892 32,082

8 Total expense recognised in the Statement of Profit & Loss Account 15,606 15,276 44,180 45,674

The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost.

II Actual Returns Nil Nil Nil Nil

III Net Asset/(Liability) recognised in Balance Sheet

1 Present Value of Defined Benefit Obligation 1,11,862 (1,16,272) (96,256) (1,00,996)

2 Fair Value on Plan Assets Nil Nil Nil Nil

3 Status [Surplus/(Deficit)] (1,11,862) (1,16,272) (96,256) (1,00,996)

4 Unrecognised Past Service Cost Nil Nil Nil Nil

5 Net Asset/(Liability) recognised in Balance Sheet (1,11,862) (1,16,272) (96,256) (1,00,996)


153





T. Ghosal Secretary

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

VII Major Category of Plan Assets as a % of the Total Plan Assets1 Government Securities/Special Deposit with RBI N. A. N. A.2 High Quality Corporate Bonds N. A. N. A.3 Insurance Companies N. A. N. A.4 Mutual Funds N. A. N. A.5 Cash and Cash Equivalents N. A. N. A.


Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded IX Net Asset / (Liability) recognized in Balance Sheet

(including experience adjustment impact)1 Present Value of Defined Benefit Obligation 1,11,862 1,16,272 96,256 1,00,996 52,076 55,322 62,516 69,134 47,897 54,0622 Fair Value on Plan Assets Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil3 Status [Surplus/(Deficit)] (1,11,862) (1,16,272) (96,256) (1,00,996) (52,076) (55,322) (62,516) (69,134) (47,897) (54,062)4 Experience Adjustment of Plan Assets [ Gain / (Loss) ] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil5 Experience Adjustment of Obligation [ (Gain) / Loss ] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil


(`)


(`)


(`)


(`)


(`)

VIII Basis used to determine the Expected Rate of Return on Plan AssetsThe expected rates of return on plan assets are based on the current portfolio of assets, investment strategy and market scenario. In order to protectthe capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.

17.7 There are no Micro and Small Enterprises, to whom the Company owes any dues, as at 31st March 2012. This information as required to be disclosedunder the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified basedon information available with the Company.


(`) (`)


Unfunded Unfunded Unfunded Unfunded

IV Change in Defined Benefit Obligations (DBO)1 Present Value of DBO at Beginning of Period 96,256 1,00,996 52,076 55,3222 Current Service Cost 17,709 9,964 16,232 9,1663 Interest Cost 7,941 8,332 3,645 4,4264 Past Service Cost Nil Nil 12,411 Nil5 Curtailment Cost/(Credit) Nil Nil Nil Nil6 Settlement Cost/(Credit) Nil Nil Nil Nil7 Plan Amendments Nil Nil Nil Nil8 Acquisitions Nil Nil Nil Nil9 Actuarial (Gains)/Losses (10,044) (3,020) 11,892 32,08210 Benefits Paid Nil Nil Nil Nil11 Present Value of DBO at the End of Period 1,11,862 1,16,272 96,256 1,00,996

V Change in Fair Value of Assets1 Plan Assets at Beginning of Period N.A. N.A. N.A. N.A.2 Acquisition Adjustment N.A. N.A. N.A. N.A.3 Expected Return on Plan Assets N.A. N.A. N.A. N.A.4 Actuarial Gains/(Losses) N.A. N.A. N.A. N.A.5 Actual Company Contributions N.A. N.A. N.A. N.A.6 Benefits Paid N.A. N.A. N.A. N.A.7 Plan Assets at the End of Period N.A. N.A. N.A. N.A.

VI Actuarial Assumptions1 Discount Rate (%) 8.25 8.25 8.00 8.002 Expected Return on Plan Assets (%) Nil Nil Nil Nil

The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such assupply and demand factors in the employment market.

(c) The Balance Sheet, Statement of Profit and Loss and Cash FlowStatement dealt with by this report are in agreement with thebooks of account;

(d) In our opinion the Balance Sheet, Statement of Profit and Loss andCash Flow Statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section211 of the Act;

(e) On the basis of written representations received from the directorsand taken on record by the Board of Directors, none of the directorsis disqualified as on 31st March 2012, from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 ofthe Act;

(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give in theprescribed manner the information required by the Act and alsogive a true and fair view in conformity with the accounting principlesgenerally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the

company as at 31st March 2012;(ii) in the case of the Statement of Profit and Loss, of the profit

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..


(Registration No. 301088E)

Kamal Kumar BhanjaKolkata Partner2nd May, 2012 Membership No. 14722

AUDITORS' REPORT TO THE MEMBERS OF GOLD FLAKE CORPORATIONLIMITED

1 We have audited the attached Balance Sheet of Gold Flake CorporationLimited, as at 31st March 2012, and the related Statement of Profitand Loss and Cash Flow Statement for the year ended on that dateannexed thereto, collectively hereinafter referred to as financialstatements, which we have signed under reference to this report. Thesefinancial statements are the responsibility of the company’s management.Our responsibility is to express an opinion on these financial statementsbased on our audit.

2 We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

3 As required by the Companies (Auditor’s Report) Order, 2003, asamended by the Companies (Auditor’s Report) (Amendment) Order,2004, collectively referred to as ‘Order’, issued by the Government ofIndia in terms of sub-section (4A) of Section 227 of Companies Act,1956 of India (’Act’) and on the basis of such checks of the books andrecords of the company as we considered appropriate and accordingto the information and explanations given to us, we give in the Annexurea statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4 Further to our comments in the Annexure referred to in paragraph 3above, we report that:(a) We have obtained all the information and explanations, which to

the best of our knowledge and belief were necessary for thepurposes of our audit;

(b) In our opinion proper books of account as required by law havebeen kept by the company so far as appears from our examinationof those books;

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDEDON 31ST MARCH, 2012

1. Your Directors hereby submit their Report and Accounts for the financialyear ended 31st March, 2012.

2. COMPANY PERFORMANCEYour Company has earned a total revenue of ` 3.58 crores in the yearunder review. The temporary surplus funds of the Company have beeninvested in debt mutual funds and bank fixed deposits. The Companyalso remains committed to its growth strategies through its joint ventureinterest in ITC Filtrona Limited.The financial results of your Company, summarised, are as under :


(`) (`)


Less : Tax Expense (8,802) (88,486)

b. Profit After Tax 3,48,83,393 2,96,95,954

c. Add : Profit brought forward from previous years 7,06,05,884 4,09,09,930

d. Balance carried forward tothe following year 10,54,89,277 7,06,05,884

3. DIRECTORSIn accordance with the provisions of Article 92 of the Articles ofAssociation of the Company, Mr. B. B. Chatterjee will retire by rotationat the ensuing Annual General Meeting of the Company, and beingeligible, offers himself for re-election. Your Board of Directors hasrecommended his re-election.

4. RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THECOMPANIES ACT, 1956The Board of Directors of your Company re-appointed Ms. Nidhi Bajajas Manager of the Company for a period of two years with effectfrom 1st October, 2011, in terms of the provisions of Section 269 ofthe Companies Act, 1956, read with Schedule XIII thereto,subject to the approval of the Members of the Company atthe next Annual General Meeting. Appropriate resolution seekingyour approval for re-appointment of Ms. Bajaj as Manager isappearing in the Notice convening the ensuing Annual General Meetingof the Company.

5. DIRECTORS’ RESPONSIBILITY STATEMENTAs required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm having : -i) followed in the preparation of the Annual Accounts, the applicable

Accounting Standards with proper explanations relating to materialdepartures, if any;


iii) taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities; and


6. PARTICULARS OF EMPLOYEESNone of the employees of your Company is covered under the provisionsof Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975.

7. AUDITORSThe Company’s Auditors, Messrs. L. B. Jha & Co., Chartered Accountants,retire at the ensuing Annual General Meeting of the Company, andbeing eligible, offer themselves for re-appointment.

8. AUDIT COMMITTEEThe Audit Committee of the Company comprises Mr. B. B. Chatterjeeas Chairman and M/s. R. Tandon and Saradindu Dutta as Members.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGNEXCHANGE EARNINGS AND OUTGOConsidering the nature of business of your Company, no comment isrequired on conservation of energy and technology absorption. Therehas been no foreign exchange earnings or outflow during the yearunder review.



2nd May, 2012Registered Office :Virginia House37 J. L. Nehru RoadKolkata 700 071

154

GOLD FLAKE CORPORATION LIMITED

service tax, customs duty, excise duty, cess and other materialstatutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us andthe records of the company examined by us, there are no dues ofincome-tax, sales tax, wealth tax, service tax, customs duty, exciseduty and cess which have not been deposited on account of anydispute.

9. According to the records of the company examined by us and theinformation and explanation given to us, the company has neitherborrowed moneys from any financial institution or bank nor has issuedany debentures during the year.

10. In our opinion and according to the information and explanationsgiven to us, the company has not given any guarantee for loans takenby others from banks or financial institutions.

11. The company has not obtained any term loans.12. On the basis of an overall examination of the balance sheet of the

company, in our opinion and according to the information andexplanations given to us, there are no funds raised on a short-termbasis, which have been used for long-term investment.

13. According to the records of the company examined by us and theinformation and explanation given to us, the company has not madeany preferential allotment of shares to parties and companies coveredin the register maintained under Section 301 of the Act during theyear.

14. In our opinion clauses vii,xii to xiv, xix and xx of paragraph 4 of theOrder are not applicable to the company for the current year.

15. During the course of our examination of the books and records of thecompany, carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanationsgiven to us, we have neither come across any instance of fraud on orby the company, noticed or reported during the year, nor have webeen informed of such case by the management.


(Registration No. 301088E)Kamal Kumar Bhanja

Kolkata Partner2nd May, 2012 Membership No. 14722

ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF GOLD FLAKECORPORATION LIMITED(Referred to in paragraph 3 of the Auditors’ Report of even date)

1. (a) The company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the managementduring the year and no material discrepancies between the bookrecords and the physical inventory have been noticed. In ouropinion, the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanationsgiven to us, no substantial part of fixed assets has been disposedof by the company during the year.

2. The company does not have any inventory.3. The company has neither granted nor taken any loans, secured or

unsecured, to/ from companies, firms or other parties covered in theregister maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the company and the nature of its business for thepurchase of fixed assets and for the sale of services. Further, on thebasis of our examination of the books and records of the company,and according to the information and explanations given to us, wehave neither come across nor have been informed of any continuingfailure to correct major weaknesses in the aforesaid internal controlsystem.

5. (a) In our opinion and according to the information and explanationsgiven to us, the particulars of contracts or arrangements referredto in Section 301 of the Act have been entered in the registerrequired to be maintained under that section.

(b) In our opinion and according to the information and explanationsgiven to us, the transactions made in pursuance of such contractsor arrangements and exceeding the value of Rupees Five Lakhs inrespect of any party during the year have been made at priceswhich are reasonable having regard to the prevailing market pricesat the relevant time.

6. The company has not accepted any deposits from the public withinthe meaning of Sections 58A and 58AA of the Act and the rules framedthere under.

7. In our opinion, the company has an internal audit system commensuratewith the size and nature of its business.

8. (a) According to the information and explanations given to us andthe records of the company examined by us, in our opinion, thecompany is regular in depositing the undisputed statutorydues including provident fund, income-tax, sales-tax, wealth tax,

155





I. EQUITY AND LIABILITIES(1) Shareholder's Funds

(a) Share Capital 2 15,99,83,850 15,99,83,850(b) Reserves and Surplus 3 11,42,15,500 27,41,99,350 7,93,32,107 23,93,15,957

(2) Non-current Liabilities(a) Long-Term Liabilities 4 4,64,204 4,64,204(b) Long-Term Provisions 5 40,756 5,04,960 30,769 4,94,973

(3) Current Liabilities(a) Other Current Liabilities 6 21,424 21,424 33,345 33,345

Total 27,47,25,734 23,98,44,275

II. ASSETS(1) Non-current Assets

(a) Fixed AssetsTangible Assets 7 — 277

(b) Non-Current Investments 8 6,00,63,750 6,00,63,750 6,00,63,750 6,00,64,027

(2) Current Assets(a) Current Investments 9 — 17,92,70,431(b) Cash and Cash Equivalents 10 21,43,84,266 4,04,876(c) Short Term Loans and Advances 11 54,987 1,04,941(d) Other Current Assets 12 2,22,731 21,46,61,984 — 17,97,80,248

Total 27,47,25,734 23,98,44,275

The accompanying notes 1 to 17 are an integral part of the Financial StatementsIn terms of our report of even date


R. Tandon DirectorS. Dutta DirectorN. Bajaj Manager & Secretary



156




(`) (`)RevenueOther Income 13 3,57,71,334 3,03,35,101Total Revenue 3,57,71,334 3,03,35,101

ExpensesEmployee Benefits Expense 14 8,31,792 6,49,276Depreciation and Amortisation Expense 7 277 83Other Expenses 15 64,674 78,274Total Expenses 8,96,743 7,27,633

Profit before Tax 3,48,74,591 2,96,07,468Tax Expense:

Current Tax 16 (8,802) (88,486)

Profit for the year 3,48,83,393 2,96,95,954

Earning per equity share (Face Value of ` 10/- each) 17(3) 2.18 1.86(Basic & Diluted)







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

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit before Tax 3,48,74,591 2,96,07,468ADJUSTMENTS FOR:Depreciation 277 83Income from Investments in Equity Shares (2,02,50,000) (2,02,50,000)Income from Investments in Mutual Fund (1,46,32,150) (95,71,661)Interest on Income Tax (9,890) (9,032)Accrued Interest on Fixed Deposit (2,22,731) —Loss/(Gain) on Sale of Current Investments — (1,044)OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (2,39,903) (2,24,186)ADJUSTMENTS FOR:Receivables and Other Assets (2,22,731) 500Liabilities and Provisions (1,932) 20,586CASH GENERATED FROM OPERATIONS (4,64,566) (2,03,100)Income Tax Refund/(Payment) 58,635 (19,099)NET CASH USED IN OPERATING ACTIVITIES (4,05,931) (2,22,199)

B. CASH FLOW FROM INVESTING ACTIVITIESIncome from Investments in Equity Shares 2,02,50,000 2,02,50,000Income from Investments in Mutual Fund 68,00,788 29,60,033Accrued Interest on Fixed Deposit 2,22,731 —Purchase of Long Term Investment — (1,04,34,376)Purchase of Current Investments (244,85,50,000) (294,78,61,223)Sale of Current Investments 263,56,51,912 293,53,90,210Interest income from Income Tax 9,890 9,032NET CASH FROM INVESTING ACTIVITIES 21,43,85,321 3,13,676

C. CASH FLOW FROM FINANCING ACTIVITIES — —NET CASH FLOW USED IN FINANCING ACTIVITIES — —NET INCREASE IN CASH AND CASH EQUIVALENTS 21,39,79,390 91,477OPENING CASH AND CASH EQUIVALENTS 4,04,876 3,13,399CLOSING CASH AND CASH EQUIVALENTS 21,43,84,266 4,04,876

Notes:1. The above Cash Flow Statement has been prepared under the "Indirect Method"

as set out in Accounting Standard - 3 Cash Flow Statements2. CASH AND CASH EQUIVALENTS:

Fixed Deposit with Banks 21,35,00,000 —Balance with Scheduled Banks - On Current Account 8,83,296 1,67,988Cash in Hand 970 —Cheques on Hand — 2,36,888Cash and Bank Balances (Note 10) 21,43,84,266 4,04,876


157


1 Significant Accounting Policies

Basis of AccountingThe Financial Statements are prepared on accrual basis under thehistorical cost convention.All assets and liabilities have been classified as current or non-currentas per the Company’s normal operating cycle and other criteria set outin the Revised Schedule VI to the Companies Act, 1956 based on thenature of products/services.Fixed AssetsFixed Assets are stated at cost including any incidental acquisitionexpenses.DepreciationDepreciation is provided on ‘Written Down Value’ basis at the ratesprescribed in Schedule XIV to the Companies Act, 1956.InvestmentsCurrent Investments are stated at lower of cost or fair value; and NonCurrent Investments, including in Joint Ventures and Associates, at cost. Where applicable, provision is made to recognise a decline, other thantemporary, in valuation of Long Term Investments.InventoriesThe inventories are valued at cost or below. The average cost is computedon the basis of weighted average method.

Foreign Currency LiabilitiesForeign Currency Liabilities are restated at the rates ruling at the yearend and all exchange gains / losses arising therefrom are adjusted inthe Statement of Profit and Loss except for those covered by forwardcontract rates where the gains / losses arising from such restatementare recognised over the period of such contracts.Borrowing CostsBorrowing cost that are directly attributable to the acquisition orconstruction of qualifying assets, are capitalised as part of cost of suchassets. All other borrowing cost are charged to revenue.Lease RentalsLease Rentals are accounted for on accrual basis.Retirement BenefitsLiability for leave encashment and gratuity payable to employees isprovided for at the year-end on actuarial basis.Taxes on IncomeCurrent tax is provided as the amount of tax payable in respect oftaxable income for the period.Deferred tax is provided on timing differences between taxable incomeand accounting income subject to consideration of prudence.Deferred tax assets is not recognised on unabsorbed depreciation andcarry forward of losses unless there is virtual certainty that there willbe sufficient future taxable income available to realise such assets.


2. Share Capital As at As at31st March, 2012 31st March, 2011

(`) (`)

Authorised

2,00,00,000 (2011 - 2,00,00,000) Equity Shares of ` 10/- each 20,00,00,000 20,00,00,000

20,00,00,000 20,00,00,000

Issued, Subscribed & Paid-up

1,59,98,385 (2011- 1,59,98,385) Equity Shares of ` 10/- each, fully paid 15,99,83,850 15,99,83,850

15,99,83,850 15,99,83,850

(i) Reconciliation of number of shares and amounts outstanding As at As at31st March, 2012 31st March, 2011

Equity Shares Equity SharesParticulars (Number) (`) (Number) (`)

Equity Shares of ` 10/- each, outstanding at the beginning andend of the year 1,59,98,385 15,99,83,850 1,59,98,385 15,99,83,850

1,59,98,385 15,99,83,850 1,59,98,385 15,99,83,850

(ii) Details of the Shareholders holding more than 5% ofequity shares of the company


Name of the Shareholder No. of Shares held No. of Shares held(%) (Number) (%) (Number)

ITC Limited-Holding Company 100% 1,59,98,385 100% 1,59,98,385

100% 1,59,98,385 100% 1,59,98,385

(iii) Other disclosures

No shares were either issued otherwise than for payment being received in cash or bought back or alloted fully paid up bonus shares in thepreceeding five years from the date of this Balance Sheet.

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

3. Reserves and Surplus As at As at31st March, 2012 31st March, 2011

(`) (`)

General Reserve

At the beginning and at the end of the year 87,26,223 87,26,223

Surplus in Statement of Profit and Loss

At the beginning of the year 7,06,05,884 4,09,09,930

Add: Profit for the year 3,48,83,393 2,96,95,954

At the end of the year 10,54,89,277 7,06,05,884

11,42,15,500 7,93,32,107

158



4. Long-Term Liabilities


(`) (`)

Sundry Liabilities 4,64,204 4,64,204

4,64,204 4,64,204

5. Long-Term Provisions


(`) (`)

Provision for Employee Benefits:

Provision for Gratuity 18,414 13,412

Provision for Compensated Absences 22,342 17,357

40,756 30,769



(`) (`)

Liability for Expenses 20,224 25,930

Other Payables

Statutory Remittances (TDS Payable) 1,200 7,415

21,424 33,345

As at As at Upto 31st For the Upto 31st As at 31st As at 31st31st March, 31st March, March, 2011 year March, 2012 March, 2012 March, 2011

2011 2012(`) (`) (`) (`) (`) (`) (`)

Plant and Machinery 85,853 85,853 85,739 114 85,853 — 114Furniture and Fixtures 5,090 5,090 4,927 163 5,090 — 163

T O T A L 90,943 90,943 90,666 277 90,943 — 277Previous Year 90,943 90,943 90,583 83 90,666 277 360

Tangible Assets

Particulars


7. Fixed Assets

8. Non-Current Investments(at cost)


(`) (`)

Long Term - Trade

Unquoted

Investments In Equity Instruments

Associate

ATC Limited

55,650 (2011 - 55,650) Equity Shares of ` 100/- each, fully paid 83,47,500 83,47,500

1,39,125 (2011 - 1,39,125) Equity Shares of` 100/- each, ` 70/- paid 2,92,16,250 2,92,16,250

Joint Venture

ITC Filtrona Limited

22,50,000 (2011 - 22,50,000) Equity Shares of` 10/- each, fully paid 2,25,00,000 2,25,00,000

6,00,63,750 6,00,63,750

Aggregate value of unquoted investments 6,00,63,750 6,00,63,750

9. Current Investments(at lower of cost and fair value)


(`) (`)

Other Investments

Unquoted

Investments in Mutual Funds

DSP BlackRock Liquidity Fund-Institutional Plan-Daily Dividend — 17,92,70,431

Nil (2011-1,79,214) units of `1,000/- each

— 17,92,70,431

Aggregate value of unquoted investments — 17,92,70,431

10. Cash and Cash EquivalentsAs at As at

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

Balances with BanksCurrent Accounts 8,83,296 1,67,988Deposit Accounts 21,35,00,000 —

Cheques on hand — 2,36,888Cash on hand 970 —

21,43,84,266 4,04,876

11. Short-Term Loans and AdvancesAs at As at

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

Unsecured, Considered GoodAdvance Income Tax ( net of provisions ) 49,987 97,091Advance Fringe Benefit Tax ( net of provisions ) — 2,850Sundry Deposits 5,000 5,000

54,987 1,04,941

12. Other Current AssetsAs at As at

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

Interest accrued on Fixed Deposit 2,22,731 —2,22,731 —

13. Other IncomeFor the year ended For the year ended

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

Dividend IncomeLong Term Investments 2,02,50,000 2,02,50,000Current Investments 1,46,32,150 95,71,661

Interest on Income Tax Refund 9,890 9,032Interest on Fixed Deposit 2,22,731 —Profit on Sale of Current Investments 119 1,044Other Non Operating Income 6,56,444 5,03,364

3,57,71,334 3,03,35,101


Financial Statements of ITC Filtrona Limited are drawn up according to the FinancialYear ending on 31st December.

The Company’s interests in this Joint Venture is reported as Non Current Investment(Note 8) and stated at cost. However, the Company’s share of each of the assets,liabilities, income and expenses, etc. (each without elimination of the effect oftransactions between the Company and the Joint Venture) related to its interests inthe Joint Venture are :

17.5 The incidence of Deferred Tax being insignificant, is not considered.

17.6 Interest in Joint Venture :

The Company’s interests, as a venturer, in jointly controlled entity (incorporated JointVentures) is :

Name Country of Percentage ofIncorporation Voting Power as at

31st March, 2012

ITC Filtrona Limited India 50

(b) Disclosure of transaction between the Company and Related Party :

Particulars For the year ended For the year ended31st March, 2012 31st March, 2011

(`) (`)

Joint Venture Company

Dividend Received 2,02,50,000 2,02,50,000

Holding Company

Miscellaneous Income 6,56,444 5,03,364

Miscellaneous Expenses Nil 11,030

Key Management PersonnelRemuneration of Manager 8,21,805 6,32,181


17.7 Segment Reporting :The Company operates in a single business and geographical segment.

As at 31st As at 31stDecember, 2011 December, 2010

(`) (`)

I. ASSETS

1. Fixed Assets (net) 9,77,24,297 9,48,62,622

2. Current Assets, Loans and Advances

a) Inventories 16,12,75,618 13,11,96,676

b) Sundry Debtors 3,84,75,452 2,58,10,436

c) Cash and Bank Balances 1,50,45,705 1,61,92,143

d) Other Current Assets 10,75,497 11,17,319

e) Loans and Advances 3,17,33,488 2,64,38,300

II. LIABILITIES

1. Current Liabilities and Provisions

a) Liabilities 13,00,33,066 9,66,06,464

b) Provisions 2,80,42,496 2,58,55,745

2. Deferred Tax (net) 68,25,000 75,14,132

III. INCOME

1. Sales 82,14,76,495 63,27,37,162

2. Other Income 31,09,132 19,33,851

IV. EXPENSES

1. Raw Materials, etc. 67,21,67,916 52,05,79,396

2. Manufacturing, Selling, etc. Expense 6,12,46,496 4,15,59,788

3. Depreciation 1,30,20,940 1,21,44,300

4. Provision for Taxation 2,50,60,868 1,94,88,031

V. OTHER MATTERS

1. Capital Commitments 4,84,70,000 2,41,88,020

14. Employee Benefits Expense


(`) (`)

Salaries and Wages 7,95,296 6,06,184

Retirement Benefits 9,987 17,095

Staff Welfare Expense 26,509 25,997

8,31,792 6,49,276

15. Other Expense


(`) (`)

Rates and Taxes 7,430 8,750

Payment to Auditor

As auditors- statutory audit 18,000 18,000

For taxation matters * 5,000 10,000

For other matters * 7,500 7,500

Filing Fees 2,570 3,800

Travelling Expense 980 128

Professional Fees 7,464 14,500

Insurance Expense 662 662

Miscellaneous Expense 15,068 14,934

64,674 78,274

* Paid to the erstwhile auditors

16. Current Tax


(`) (`)

Income Tax for the year:

– Current Tax 1,000 —

1,000 —

Adjustments related to previous years - Net

– Current Tax and Fringe Benefit Tax (9,802) (88,486)

Net Current Tax Liability (8,802) (88,486)

17 Additional Notes to the Financial Statements

17.1 The Revised Schedule VI has become effective from 1st April, 2011 for the preparartionof financial statements. This has significantly impacted the disclosure and presentationmade in the financial statements. Previous year’s figures have been regrouped/reclassifiedwherever necessary to correspond with the current year’s classification/disclosure.

17.2 Uncalled liability in respect of partly paid-up 1,39,125 shares of ATC Limited @ ` 90/-per share is ` 1,25,21,250/- (2011- ` 1,25,21,250/-).

17.3 Earnings Per Share: For the year ended For the year ended


Profit after Taxation (`) 3,48,83,393 2,96,95,954

Weighted average number of 1,59,98,385 1,59,98,385Equity Shares outstanding

Basic and Diluted Earnings Per Share ` 2.18 ` 1.86(Face Value - ` 10/- per share)

17.4 Related Party Disclosures :(a) Relationships :

Holding Company ITC LimitedJoint Venture ITC Filtrona LimitedKey Management PersonnelMr. R. Tandon Non-Executive ChairmanMr. B. B. Chatterjee Non-Executive DirectorMr. S. Dutta Non-Executive DirectorMs. N. Bajaj Manager and Company Secretary

159

160


17.8 Employee Benefits :Defined Benefit Plans / Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2012 and recognised in the financial statementsin respect of Employee Benefit Schemes:

As at 31st March, 2012 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 N. A. N. A.2 High Quality Corporate Bonds N. A. N. A.3 Insurance Companies N. A. N. A.4 Mutual Funds N. A. N. A.5 Cash and Cash Equivalents N. A. N. A.

VIII Basis used to determine the Expected Rate of Return on Plan AssetsThe expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protectthe capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.


Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded Unfunded IX Net Asset / (Liability) recognized in Balance Sheet

(including experience adjustment impact)1 Present Value of Defined Benefit Obligation 18,414 22,342 13,412 17,357 5,568 8,106 2,734 5,308 2,371 2,2502 Fair Value of Plan Assets Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil3 Status [Surplus/(Deficit)] (18,414) (22,342) (13,412) (17,357) (5,568) (8,106) (2,734) (5,308) (2,371) (2,250)4 Experience Adjustment of Plan Assets [Gain/(Loss)] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil5 Experience Adjustment of Obligation [Gain/(Loss)] Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil


(`)


(`)


(`)


(`)


(`)

17.9 There are no Micro and Small Enterprises, to whom the Company owes any dues, as at 31st March 2012. This information as required to be disclosedunder the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified basedon information available with the Company.



R. Tandon DirectorS. Dutta DirectorN. Bajaj Manager & SecretaryKolkata, 2nd May, 2012


(`) (`)Gratuity Leave Gratuity Leave

Encashment EncashmentUnfunded Unfunded Unfunded Unfunded

I Components of Employer Expense1 Current Service Cost 5,281 2,804 4,956 2,5522 Interest Cost 1,106 1,432 445 6483 Expected Return on Plan Assets Nil Nil Nil Nil4 Curtailment Cost/(Credit) Nil Nil Nil Nil5 Settlement Cost/(Credit) Nil Nil Nil Nil6 Past Service Cost Nil Nil Nil Nil7 Actuarial Losses/(Gains) (1,385) 749 2,443 6,0518 Total expense recognised in the Statement of Profit & Loss Account 5,002 4,985 7,844 9,251

II Actual Returns — — — — III Net Asset/(Liability) recognised in Balance Sheet

1 Present Value of Defined Benefit Obligation 18,414 22,342 13,412 17,3572 Fair Value of Plan Assets Nil Nil Nil Nil3 Status [Surplus/(Deficit)] (18,414) (22,342) (13,412) (17,357)4 Unrecognised Past Service Cost Nil Nil Nil Nil5 Net Asset/(Liability) recognised in Balance Sheet (18,414) (22,342) (13,412) (17,357)

IV Change in Defined Benefit Obligations (DBO)1 Present Value of DBO at Beginning of Period 13,412 17,357 5,568 8,1062 Current Service Cost 5,281 2,804 4,956 2,5523 Interest Cost 1,106 1,432 445 6484 Curtailment Cost/(Credit) Nil Nil Nil Nil5 Settlement Cost/(Credit) Nil Nil Nil Nil6 Plan Amendments Nil Nil Nil Nil7 Acquisitions Nil Nil Nil Nil8 Actuarial (Gains)/Losses (1,385) 749 2,443 6,0519 Benefits Paid Nil Nil Nil Nil10 Present Value of DBO at the End of Period 18,414 22,342 13,412 17,357

V Change in Fair Value of Assets1 Plan Assets at Beginning of Period N.A. N.A. N.A. N.A.2 Acquisition Adjustment N.A. N.A. N.A. N.A.3 Expected Return on Plan Assets N.A. N.A. N.A. N.A.4 Actuarial Gains/(Losses) N.A. N.A. N.A. N.A.5 Actual Company Contributions N.A. N.A. N.A. N.A.6 Benefits Paid N.A. N.A. N.A. N.A.7 Plan Assets at the End of Period N.A. N.A. N.A. N.A.

VI Actuarial Assumptions1 Discount Rate (%) 8.25 8.25 8.00 8.002 Expected Return on Plan Assets (%) Nil Nil Nil Nil

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31stMARCH, 2012

Your Directors submit their Report and Accounts for the financial year ended31st March, 2012.

FINANCIAL PERFORMANCE

During the year under review, your Company earned a gross income of` 1056.90 lakhs (previous year ` 1022.94 lakhs) and incurred a net loss of` 321.57 lakhs (previous year ` 325.79 lakhs).

OPERATIONS

The Company owns and operates ‘Classic Golf Resort’, a Jack NicklausSignature Golf Course, 45 Kms from Delhi. The Golf Resort continues tohold prestigious Golf Tournaments which has received extensive electronicmedia coverage.

Golf based resorts present attractive long-term prospects in view of theirgrowing popularity all over the world. Work towards creating a destinationluxury resort hotel at the Classic Golf Resort is under construction and theproject is estimated to be completed by second quarter of 2013.

During the year, the Company issued and allotted 23,00,000 RedeemablePreference Shares of ` 100/- each for cash at par, aggregating ` 23 Crores,to ITC Limited, the Holding Company. The total preference capital of theCompany subsequent to the above issue stands at ` 149 Crores. Theproceeds from the said issue are being utilised towards the constructionof the destination resort.

CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGNEXCHANGE EARNINGS AND OUTGO

The applicable information pursuant to Section 217(1)(e) of the CompaniesAct, 1956 read with the Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988 is given below :

(a) Conservation of EnergyThe dedicated electricity feeder at The Classic Golf Resort continues to yieldsavings during operations. Efforts to conserve electricity by operating onlynecessary lighting, fittings and fixtures and judicious use of diesel generatingsets continue.

(b) Technology AbsorptionThe 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 underreview.

(c) Foreign Exchange Earnings and Outgo

i) Earnings: During the year under review, gross foreign exchange earningsof the Company were ` 66.43 lakhs (previous year ` 35.58 lakhs)ii) Outgo: Foreign exchange outgo during the year under reviewwas ` 111.70 lakhs (previous year ` 68.59 lakhs).

DIRECTORS

In accordance with Articles 106 and 107 of the Articles of Association ofthe Company, Mr. Nakul Anand will retire by rotation at the forthcomingAnnual General Meeting and being eligible, offers himself for re-election.Your Board of Directors has recommended his re-election.

PARTICULARS OF EMPLOYEES

None of the employees of the Company fall under the purview of theprovisions of Section 217(2A) of the Companies Act, 1956 read with theCompanies (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 conclusionof the ensuing Annual General Meeting.

AUDIT COMMITTEE

The Audit Committee of the Company comprises of Mr. Rajiv Tandon asChairman and Messrs Nakul Anand and Bhagwateshwaran Hariharan asmembers.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm having:a) followed in the preparation of the Annual Accounts the applicableaccounting standards along with proper explanations relating to materialdepartures, if any;b) selected such accounting policies and applied them consistently andmade judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the endof the financial year and of the loss of the Company for that period;c) taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;d) prepared the Annual Accounts on a going concern basis. The significantaccounting policies and required disclosures followed are appearing inNotes, in the Annual Accounts.

On behalf of the BoardPlace : Gurgaon Chandrasekhar Subrahmoneyan Managing DirectorDate : 27th April, 2012 Bhagwateshwaran Hariharan Director

AUDITORS’ REPORT TO THE MEMBERS OF LANDBASE INDIA LIMITED

1. We have audited the attached Balance Sheet of Landbase IndiaLimited (the “Company”) as at March 31, 2012, and the relatedStatement of Profit and Loss and Cash Flow Statement for the yearended on that date annexed thereto, which we have signed underreference to this report. These financial statements are the responsibilityof the Company’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.


3. As required by the Companies (Auditor's Report) Order, 2003, asamended by the Companies (Auditor's Report) (Amendment) Order,2004 (together the “Order”), issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of ‘The CompaniesAct, 1956’ of India (the ’Act’) and on the basis of such checks of thebooks and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we give in

the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.





(d) In our opinion, the Balance Sheet, Statement of Profit and Loss andCash Flow Statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section 211of the Act;

(e) On the basis of written representations received from the directors,as on March 31, 2012 and taken on record by the Board ofDirectors, none of the directors is disqualified as on March 31,2012 from being appointed as a director in terms of clause (g) ofsub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and accordingto the explanations given to us, the said financial statements

161

LANDBASE INDIA LIMITED

162


together with the notes thereon and attached thereto give, in theprescribed manner, the information required by the Act, and givea true and fair view in conformity with the accounting principlesgenerally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the

company as at March 31, 2012;(ii) in the case of the Statement of Profit and Loss, of the loss for

the year ended on that date; and

ANNEXURE TO THE AUDITORS’ REPORT

Referred to in paragraph 3 of the Auditors’ Report of even date to themembers of Landbase India Limited on the financial statements for the yearended March 31, 2012.

1. (a) The Company is maintaining proper records showing full particulars,including quantitative details and situation, of fixed assets.

(b) The fixed assets of the Company have been physically verifiedby the Management during the year and no material discrepanciesbetween the book records and the physical inventory have beennoticed. In our opinion, the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanationsgiven to us, a substantial part of fixed assets has not been disposedof by the Company during the year.

2. (a) The inventory has been physically verified by the Managementduring the year. In our opinion, the frequency of verification isreasonable.

(b) In our opinion, the procedures of physical verification of inventoryfollowed by the Management are reasonable and adequate inrelation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in ouropinion, the Company is maintaining proper records of inventory.The discrepancies noticed on physical verification of inventoryas compared to book records were not material.

3. (a) The Company has not granted any loans only, secured orunsecured, to companies, firms or other parties covered in theregister maintained under Section 301of the Act.

(b) The Company has not taken any loans, secured or unsecured,from companies, firms or other parties covered in the registermaintained under Section 301of the Act.

4. In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business for thepurchase of inventory, fixed assets and for the sale of goods and services.Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanationsgiven to us, we have neither come across nor have been informed ofany continuing failure to correct major weaknesses in the aforesaidinternal control system.

5. According to the information and explanations given to us, there havebeen no contracts or arrangements referred to in Section 301 of theAct during the year to be entered in the register required to bemaintained under that Section. Accordingly, the question of commentingon transactions made in pursuance of such contracts or arrangementsdoes not arise.

6. The Company has not accepted any deposits from the public withinthe meaning of Sections 58A and 58AA of the Act and the rules framedthere under.

7. In our opinion, the Company has an internal audit system commensuratewith its size and nature of its business.

8. The Central Government of India has not prescribed the maintenanceof cost records under clause (d) of sub-section (1) of Section 209 ofthe Act for any of the products of the Company,

9. (a) According to the information and explanations given to us andthe records of the Company examined by us, in our opinion, theCompany is regular in depositing the undisputed statutory duesincluding provident fund, employees’ state insurance, income-tax,sales-tax, wealth tax, service tax, customs duty, excise duty, cessand other material statutory dues as applicable with the appropriateauthorities.

Name of the Nature of Amount Period to which Forum whereStatute dues (`) the amount the dispute is

relates pending

Income Tax Income Tax 11,59,41,813 A.Y. 2001-02 Income TaxAct, 1961 Appellate Tribunal

Income Tax Income Tax 32,98,817 A.Y. 2003-04 Income TaxAct, 1961 Appellate Tribunal

Income Tax Income Tax 13,82,55,172 A.Y. 2005-06 Income TaxAct, 1961 Appellate Tribunal

10. The accumulated losses of the Company as at March 31, 2012 are notmore than fifty percent of its net worth and it has incurred cash lossesin the financial year ended on that date and in the immediatelypreceding financial year.

11. According to the records of the Company examined by us and theinformation and explanation given to us, the Company has not defaultedin repayment of dues to any financial institution or bank or debentureholders as at the balance sheet date.


13. The provisions of any special statute applicable to chit fund / nidhi /mutual benefit fund/societies are not applicable to the Company.


15. In our opinion and according to the information and explanationsgiven to us, the Company has not given any guarantee for loans takenby 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 theCompany, in our opinion and according to the information andexplanations given to us, there are no funds raised on a short-termbasis which have been used for long-term investment.


19. The Company has not issued any debentures and there are no debenturesoutstanding as at year end.

20. The Company has not raised any money by public issues during theyear or in earlier years.

21. During the course of our examination of the books and records of theCompany, carried out in accordance with the generally acceptedauditing practices in India, and according to the information andexplanations given to us, we have neither come across any instanceof fraud on or by the Company, noticed or reported during the year,nor have we been informed of such case by the Management.

(b) According to the information and explanations given to us andthe records of the Company examined by us, there are no duesof sales-tax, wealth-tax, service-tax, customs duty, excise duty andcess which have not been deposited on account of any dispute.The particulars of dues of income-tax as at March 31, 2012 whichhave not been deposited on account of a dispute, are as follows:

(iii) in the case of the Cash Flow Statement, of the cash flows forthe year ended on that date.

For Price WaterhouseFirm Registration Number : 12754N

Chartered AccountantsAbhishek Rara

Partner

Gurgaon, 27th April, 2012 Membership No : 077779

For Price WaterhouseFirm Registration Number : 012574N


Abhishek RaraPartner

Gurgaon, 27th April, 2012 Membership No : 077779

BALANCE SHEET AS AT 31ST MARCH, 2012Note No. As at As at

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

I. EQUITY AND LIABILITIESShareholders’ Funds

Share Capital 1 1,99,00,00,000 1,76,00,00,000Reserves and Surplus 2 (83,59,26,536) 1,15,40,73,464 (80,37,69,458) 95,62,30,542

Non-current LiabilitiesOther Long Term Liabilities 3 31,63,07,991 31,07,10,096Long-Term Provisions 4 18,33,528 31,81,41,519 17,94,668 31,25,04,764

Current LiabilitiesTrade Payables 5 63,28,091 95,15,319Other Current Liabilities 6 6,50,97,010 4,71,98,230Short-Term Provisions 7 6,87,450 7,21,12,551 34,267 5,67,47,816

TOTAL 1,54,43,27,534 1,32,54,83,122

II. ASSETSNon Current AssetsFixed Assets

Tangible Assets 8 95,24,40,789 94,84,15,213Intangible Assets 9 7,41,126 1,42,355Capital Work-in-Progress 8 45,17,33,199 20,43,88,532

Non-Current Investments 10 150 250Long-Term Loans and Advances 11 3,93,27,354 6,53,12,367Other Non-Current Assets 12 1,41,74,975 1,45,84,17,593 1,68,06,693 1,23,50,65,410

Current AssetsInventories 13 2,93,44,221 1,66,43,021Trade Receivables 14 57,64,921 46,42,528Cash and Bank Balances 15 3,52,73,321 5,92,22,164Short-Term Loans and Advances 16 1,54,69,478 98,16,844Other Current Assets 17 58,000 8,59,09,941 93,155 9,04,17,712

TOTAL 1,54,43,27,534 1,32,54,83,122The Notes referred to above form an integral part of the Accounts.This is the Balance Sheet referred to in our Report of even date.

163


For Price WaterhouseFirm Registration Number : 012574NChartered AccountantsAbhishek RaraPartnerMembership No : 077779Gurgaon, 27th April, 2012


Chandrasekhar Subrahmoneyan Managing DirectorBhagwateshwaran Hariharan Director

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2012Particulars Note No. For the year ended For the year ended

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

Revenue from Operations (Net) 18 10,08,45,697 9,90,76,298Other Income 19 48,44,942 32,17,610

Total Revenue 10,56,90,639 10,22,93,908

Expenses:Cost of Material Consumed 20 (a) 57,66,252 52,28,629Purchase of Stock in Trade 20 (b) 24,68,399 23,77,022Changes in Inventories of Finished Goods, Stock in Process, 20 (c) (1,31,96,963) (35,31,611)Manufactured Components (Intermediates) and stock in TradeEmployee Benefits expense 21 4,66,71,761 4,46,69,487Depreciation and Amortisation expense 22 3,22,93,556 3,26,54,928Other Expense 23 6,38,44,712 5,34,74,482

Total Expense 13,78,47,717 13,48,72,937

Profit/(Loss) Before Tax (3,21,57,078) (3,25,79,029)Tax Expense:Current Tax — —Deferred Tax — —Profit/(Loss) for the year (3,21,57,078) (3,25,79,029)

Earnings Per Equity Share: 28 (0.64) (0.65)Basic & Diluted

The Notes referred to above form an integral part of the Accounts.The Statement of Profit and Loss referred to in our Report of even date.





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

A. Cash Flow from Operating ActivitiesNET PROFIT BEFORE TAX (3,21,57,078) (3,25,79,029)ADJUSTMENTS FOR :

Depreciation 3,22,59,371 3,26,31,559Amortisation 34,185 23,369Interest Income (48,44,942) (32,15,895)Fixed Assets - Loss on Sale - Net 30,05,284 34,15,657

Write off of subscription fees — 6,53,022

Write off of Long Term Investment/Joint Venture 100Doubtful and Bad Debts 2,25,756 —Amortisation of Miscellaneous Expenditure 10,53,348 10,53,347

Liability no longer required written back (3,73,983) 3,13,59,119 (61,20,555) 2,84,40,504OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (7,97,959) (41,38,525)ADJUSTMENTS FOR :

Increase/(Decrease) in Trade Payables (28,13,245) 1,21,16,769Increase/(Decrease) in Provisions 6,92,043 3,67,158Increase/(Decrease) in Other Current Liabilities 1,78,98,780 1,99,18,264Increase/(Decrease) in Other long term Liabilities 55,97,895 6,40,183(Increase)/Decrease in Trade Receivables (13,48,149) 3,41,381(Increase)/Decrease in Inventories (1,27,01,200) (43,05,215)(Increase)/Decrease in Loans & Advances (32,90,905) (16,97,759)(Increase)/Decrease in Other non- current Current Assets 34,09,587 74,44,804 32,90,413 3,06,71,194CASH GENERATED FROM OPERATIONS 66,46,845 2,65,32,669Income Tax paid (34,15,077) 39,89,826

NET CASH FROM OPERATING ACTIVITIES 32,31,768 3,05,22,495

B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets (1,46,09,329) (11,52,58,732)Capital Work-in-Progress (24,69,11,029) (12,18,11,559)Sale of Fixed Assets 2,37,517 —Interest Received 41,02,230 (25,71,80,611) 24,71,171 (23,45,99,120)

NET CASH USED IN INVESTING ACTIVITIES (25,71,80,611) (23,45,99,120)

C. Cash Flow from Financing ActivitiesProceeds from issue of Share Capital 23,00,00,000 23,00,00,000 25,00,00,000 25,00,00,000

NET CASH USED IN FINANCING ACTIVITIES 23,00,00,000 25,00,00,000NET INCREASE IN CASH AND CASH EQUIVALENTS (2,39,48,843) 4,59,23,375OPENING CASH AND CASH EQUIVALENTS 5,92,22,164 1,32,98,791CLOSING CASH AND CASH EQUIVALENTS 3,52,73,321 5,92,22,166

Notes :1 The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard - 3 “Cash Flow Statements”.2 CASH AND CASH EQUIVALENTS :

Cash and Cash Equivalents as above 4,98,427 1,89,161Balance in Statutory Restricted Accounts 3,47,74,894 5,90,33,003Other Restricted Balances — — Unrealised (Loss) / Gain on Foreign Currency Cash and Cash Equivalents - Net — — Cash and Bank Balances 3,52,73,321 5,92,22,164

The Statement of Cash Flow referred to in our Report of even date

164





(Figures for the previous year have been rearranged toconform with the revised presentation)

165



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

NOTE 1

SHARE CAPITAL

Authorised

50,000,000 Equity Shares (Previous Year 50,00,00,000 50,00,00,00050,000,000 Equity Share) of ` 10/- each15,000,000 Redeemable Preference Shares 1,50,00,00,000 2,00,00,00,000 1,50,00,00,000 2,00,00,00,000(Previous Year 15,000,000) of ` 100 /- each

Issued, Subscribed and Paid up

50,000,000 (Previous Year 50,000,000) 50,00,00,000 50,00,00,000Equity Shares of ` 10/- each fully paid up.

14,900,000 (Previous Year 12,600,000) Redeemable Preference Shares 1,49,00,00,000 1,26,00,00,000of ` 100/- each fully paid up

TOTAL 1,99,00,00,000 1,76,00,00,000


Number of Amount Number of AmountShares (`) Shares (`)

(a) Reconciliation of number of shares

Equity Shares:Balance as at beginning of the year 5,00,00,000 50,00,00,000 5,00,00,000 50,00,00,000Add: Shares issued — — — —

Balance as at end of the year 5,00,00,000 50,00,00,000 5,00,00,000 50,00,00,000

Preference Share:

Balance as at beginning of the year 1,26,00,000 1,26,00,00,000 1,01,00,000 1,01,00,00,000Add: Shares issued 23,00,000 23,00,00,000 25,00,000 25,00,00,000Balance as at end of the year 1,49,00,000 1,49,00,00,000 1,26,00,000 1,26,00,00,000

(b)Rights, preferences and restrictions attached to Shares

Equity Shares : This class of shares having a par value of ` 10/- per share. Each shareholder is eligible for one vote per share held. In the event ofliquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportionto their shareholding.

Preference Shares : This class of Preference Shares having a par value of ` 100/- per Share, are not entitled to any dividend. They are redeemable onor after 5 years from the date of allotment and carry a call/put option exerciseable any time after 3 years after giving 3 month’s notice to either party.

As at As at

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

(c) Shares held by holding company and subsidiary of holding companyEquity Shares

50,000,000 shares (March 31, 2011: 50,000,000 shares) 50,00,00,000 50,00,00,000held by ITC Limited, the Holding Company along with its nominees

Preference Shares

14,900,000 shares (March 31,2011: 12,600,000 shares) 1,49,00,00,000 1,26,00,00,000held by ITC Limited, the Holding Company

(d)Details of shares held by shareholders holding more than 5%of the aggregate shares of the Company

Equity Shares

ITC Limited, the Holding Company 5,00,00,000 5,00,00,000

100% 100%Preference Shares

ITC Limited, the Holding Company 1,49,00,000 1,26,00,000100% 100%



NOTE 2 (`) (`) (`) (`)

RESERVES AND SURPLUSGeneral Reserve/(Deficit) 6,11,62,181 6,11,62,181Surplus/(Deficit) in the statement of Profit and LossAt the commencement of the year (86,49,31,639) (83,23,52,610)Add: Net Profit/(Net Loss) For the current year (3,21,57,078) (89,70,88,717) (3,25,79,029) (86,49,31,639)

TOTAL (83,59,26,536) (80,37,69,458)

NOTE 3OTHER LONG-TERM LIABILITIESMembership Deposits (Refer Note 26) 31,55,18,793 31,39,08,793Less: Subscription Fees receivable 1,80,91,337 29,74,27,456 2,10,09,662 29,28,99,131Others

– Income received in advance 1,88,80,535 1,78,10,965

TOTAL 31,63,07,991 31,07,10,096

NOTE 4LONG-TERM PROVISIONSProvision for Employee Benefits: (Also refer Note 21)Provision for Gratuity 10,81,654 9,00,003Provision for Compensated Absenses 7,51,874 8,94,665TOTAL 18,33,528 17,94,668

NOTE 5TRADE PAYABLESDues from Micro and Small Enterprises — —Dues other than Micro and Small Enterprises (Refer Note 27) 63,28,091 95,15,319TOTAL 63,28,091 95,15,319

NOTE 6OTHER CURRENT LIABILITIESSundry Deposits 2,65,961 2,50,961Income Received in Advance 1,36,98,055 1,33,25,677Advances from customers 1,98,441 9,01,730Statutory dues including Provident Fund and Tax Deducted at source 27,81,496 43,72,608Provision for Expenses under Capital Contracts 2,46,48,773 1,65,35,421Retention Money under Capital Contracts 39,68,654 38,09,949Other Payables 1,95,35,630 80,01,884

TOTAL 6,50,97,010 4,71,98,230

NOTE 7SHORT-TERM PROVISIONSProvision for Employee Benefits: Provision for Gratuity 1,85,134 —Provision for Compensated Absenses 5,02,316 34,267

TOTAL 6,87,450 34,267

NOTE 8TANGIBLE ASSETS (At Cost)

166



(in `)


Particulars As at 1st Additions Withdrawals/ As at 31st As at 1st For the year** Withdrawals/ As at 31st As at 31st As at 31stApril, 2011 Adjustments March, 2012 April, 2011 Adjustments March, 2012 March, 2012 March, 2011

Own AssetsLand (Freehold) 55,31,70,741 2,84,74,980 — 58,16,45,721 — — — — 58,16,45,721 55,31,70,741Building* 23,04,18,179 25,06,485 — 23,29,24,664 5,34,40,487 36,88,070 — 5,71,28,557 17,57,96,107 17,69,77,692Plant & Machinery 24,59,30,897 78,76,227 69,81,896 24,68,25,228 13,45,63,731 1,19,68,651 39,11,669 14,26,20,713 10,42,04,515 11,13,67,166Golf Course 22,57,78,037 — — 22,57,78,037 14,42,45,296 1,07,24,458 — 15,49,69,754 7,08,08,283 8,15,32,741Office & Other Equipment 22,60,757 38,246 3,53,943 19,45,060 7,77,178 1,04,313 2,06,599 6,74,892 12,70,168 14,83,579Furniture & Fixtures 78,89,746 5,27,333 1,84,829 82,32,250 45,21,352 3,47,452 1,78,393 46,90,411 35,41,839 33,68,394Computers 64,64,129 5,38,115 4,08,609 65,93,635 32,51,514 9,74,401 4,08,607 38,17,308 27,76,327 32,12,615Vehicles 87,55,897 — 57,966 86,97,931 35,77,873 8,31,809 39,179 43,70,503 43,27,428 51,78,024Golf Carts 1,72,01,112 — 13,50,329 1,58,50,783 74,87,677 26,84,044 13,50,325 88,21,396 70,29,387 97,13,434Tented Accomodation 27,39,620 — — 27,39,620 3,28,795 13,69,811 — 16,98,606 10,41,014 24,10,825TOTAL 1,30,06,09,115 3,99,61,386 93,37,572 1,33,12,32,929 35,21,93,903 3,26,93,009 60,94,772 37,87,92,140 95,24,40,789 94,84,15,211

Capital Work-in-Progress — — 45,17,33,199 20,43,88,615

Previous Year 1,26,66,05,173 5,20,65,091 1,78,86,061 1,30,07,84,203 33,35,05,542 3,31,79,925 1,44,58,831 35,22,26,636 94,85,57,567

Note:* Building includes vehicular roads of ` 45,95,709/- (Previous Year ` 45,95,709/- ) which have been fully depreciated over a period of five years** Capital Work-in-progress includes depreciation amounting to ` 433,638 / - (Previous Year ` 524,998 / -) on Assets used for the Resort Project & stock in progress include depreciation amounting to

` 147,235/- (Previous Year ` 116,058/-) pertaining to Golf Hut Project.


167



As at 1st Additions Withdrawals/ As at 31st As at 1st For the year** Withdrawals/ As at 31st As at 31st As at 31stParticulars April, 2011 Adjustments/Intra March, 2012 April, 2011 Adjustments March, 2012 March, 2012 March, 2011

group transfers

Computer Software 1,75,088 6,32,956 — 8,08,044 32,733 34,185 — 66,918 7,41,126 1,42,355TOTAL 1,75,088 6,32,956 — 8,08,044 32,733 34,185 — 66,918 7,41,126 1,42,355

NOTE 9INTANGIBLE ASSETS (At Cost) (in `)


(`) (`) (`) (`)NOTE 10NON CURRENT INVESTMENTSOther InvestmentsOthers: — —

Gilt Facilities India Private Ltd.545 Redeemable Preference Shares (0.5%) of ` 100,000/- each fully paid — 5,45,00,000Less: Provision for diminution in Investments — — 5,44,99,900 100

Prime Golf Ranking Private Ltd.150 Equity Share (March 31, 2011: 150 Equity Share) of ` 1/- each fully paid 150 150 150 150

TOTAL 150 250

NOTE 11LONG-TERM LOANS AND ADVANCESCapital AdvancesUnsecured, considered good 3,85,67,354 6,45,52,367

Other Loans and AdvancesAdvance recoverable in cash or kind — —Unsecured, considered good 7,60,000 7,60,000Tax paid under protest 6,49,767 6,49,767Less: Provision for doubtful loans and advances 6,49,767 7,60,000 6,49,767 7,60,000

TOTAL 3,93,27,354 6,53,12,367

NOTE 12OTHER NON-CURRENT ASSETSMargin Money Deposits 1,13,77,970 1,47,87,557(Against guarantee issued by Banks)Interest Accrued on Loans and Deposits 27,97,005 20,19,136

TOTAL 1,41,74,975 1,68,06,693

NOTE 13INVENTORIESRaw Materials including Packing Material 4,33,967 5,23,182Stock in Process - Golf Huts 1,94,66,598 68,97,563Stock in Trade - Proshop 21,08,618 14,80,690Stock of parking slot/servant quarters 13,19,908 13,19,908Stores and Spare Parts 73,84,684 77,91,232Less: Provision for Slow Moving Inventory of parking slot/servant quarters (13,19,908) (13,19,908)Less: Provision for Slow Moving stores and spares (49,646) (13,69,554) (49,646) (13,69,554)

TOTAL 2,93,44,221 1,66,43,021

NOTE 14TRADE RECEIVABLESUnsecured, considered goodOutstanding for a period exceeding six months from the date they are due for 4,14,223 5,64,132Others 53,50,698 57,64,921 40,78,396 46,42,528Unsecured, considered doubtfulOutstanding for a period exceeding six months from the date they are due for 7,28,444 5,02,688Less: Provision for doubtful debts 7,28,444 5,02,688TOTAL 57,64,921 46,42,528

NOTE 15CASH AND BANK BALANCEBalances with banks on Current Account 3,47,74,894 5,90,33,003Cheques, drafts on hand 1,00,000 —Cash on hand 3,98,427 1,89,161

TOTAL 3,52,73,321 5,92,22,164

NOTE 16SHORT-TERM LOANS AND ADVANCESSundry DepositsUnsecured, considered good 6,32,836 5,30,128

Other Loans and AdvancesAdvance Income Tax [Net of provision of ` 1,886,593(March 31, 2011: ` 1,886,593)] 24,28,819 24,10,602Balance with Government Authorities 67,13,702 33,16,842SFIS Credit Entitlement 7,33,883 —Prepaid Expenses 27,30,724 10,61,776Unsecured, considered good 22,29,514 1,48,36,642 24,97,496 92,86,716

TOTAL 1,54,69,478 98,16,844

NOTE 17OTHER CURRENT ASSETSInterest accrued on Loans, Deposits etc. 58,000 93,155

TOTAL 58,000 93,155


NOTE 18 (`) (`)REVENUE FROM OPERATIONS (GROSS)Sale of Products

Food and Beverage Sale 1,15,61,459 1,14,11,553Proshop Items 29,06,179 1,44,67,638 28,84,601 1,42,96,154

Sale of ServicesCaddie Rental 75,99,632 72,56,493Cart Income 68,90,278 54,52,356Green Fees 2,54,45,155 2,43,36,451Health Club & Other Facilities 22,59,892 21,99,514Proshop Income 22,263 49,358Tented Accomodation Income 11,50,713 8,86,993Sponsorship Income 29,85,166 4,63,53,099 32,14,288 4,33,95,453

Membership Income 3,82,94,878 3,48,75,000Other Operating IncomeLiability Written Back 3,73,983 61,20,555SFIS Income 7,33,883 —Others 6,22,216 17,30,082 3,89,136 65,09,691

TOTAL 10,08,45,697 9,90,76,298

NOTE 19OTHER INCOMEInterest Income

On Fixed Deposits 35,18,239 21,14,818Income Tax Refund 78,027 8,80,000Others 12,48,676 48,44,942 2,21,077 32,15,895

Others — 1,715

TOTAL 48,44,942 32,17,610

NOTE 20(a) Cost of Materials Consumed (including Packing Materials) Opening Stock 5,23,182 5,56,797 Purchases 56,77,037 51,95,014 Less:Closing Stock 4,33,967 57,66,252 5,23,182 52,28,629(b)Purchases of Stock in Trade 24,68,399 23,77,022(c) Changes in inventories of Stock in Trade and stock in progress

Stock in Trade and stock in progressOpening Stock 83,78,253 48,46,642

Less: Closing Stock 2,15,75,216 (1,31,96,963) 83,78,253 (35,31,611)TOTAL (49,62,312) 40,74,040

(d) Changes in inventory of stock in progress and stock in trade(Increase)/decrease in stocksStock at end of the yearStock in Trade - Proshop 21,08,618 14,80,690Stock in Progress - Golf Huts 1,94,66,598 68,97,563TOTAL (A) 2,15,75,216 83,78,253Less: Stock at beginning of the year:Stock in Trade - Proshop 14,80,690 9,09,456Stock in Progress - Golf Huts 68,97,563 39,37,186TOTAL (B) 83,78,253 48,46,642Increase/(Decrease) in Stocks (A-B) 1,31,96,963 35,31,611

168


NOTES TO THE ACCOUNTS (Contd.)As at As at

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


169


Employer’s Contribution As at As at

March 31, 2012 March 31, 2011

Provident Fund 11,45,123 9,62,615

Employee’s State Insurance Corporation 4,52,609 3,94,659

15,97,732 13,57,274

(A) Present Value of Defined Benefit Obligation

Employee’s Gratuity Fund As at As at

March 31, 2012 March 31, 2011

Balance at the beginning of the year 9,00,003 7,02,851Interest Cost 74,250 47,288Current Service Cost 3,89,155 4,18,916Benefits paid — (2,23,508)Actuarial (gain)/ loss due to changein assumption/ interest guarantee (96,620) (45,544)

Balance at the end of the year 12,66,788 9,00,003

(B) Assets and Liabilities recognised in the Balance Sheet

Employee’s Gratuity Fund

As at As at As at As at As at March 31, 2012 March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008

Liability at the end of the year (12,66,788) (9,00,003) (7,02,851) (6,30,127) (4,70,063)Ending Assets — — — — —Funded Status asset/(liability) — — — — —Unrecognised Past Service Cost — — — — —

Asset/(Liability) recognised in the Balance Sheet (12,66,788) (9,00,003) (7,02,851) (6,30,127) (4,70,063)

Employee’s Gratuity Fund As at As at

March 31, 2012 March 31, 2011

Current Service Cost 3,89,155 4,18,916Interest Cost 74,250 47,288Net Actuarial (Gain)/Loss To Be Recognised (96,620) (45,544)

Expense Recognised in P& L** 3,66,785 4,20,660

(C) Expense recognised in Statement of Profit and Loss

Actuarial AssumptionsIn accordance with Accounting Standard 15, actuarial valuation was done in respect of the aforesaid plans based on the following assumptions –

Assumptions March 31, 2012 March 31, 2011 March 31, 2010 March 31, 2009

Employee’s Gratuity Fund (Unfunded)Discount Rate 8.25% 8.00% 7.50% 7.00%Salary Escalation Rate 5.00% 5.00% 5.00% 5.00%Normal Retirement Age 58 years 58 years 58 years 58 yearsAttrition Rate 10% p.a 10% p.a 10% p.a 10% p.a

NOTE 21EMPLOYEE BENEFITS EXPENSESalaries / Wages and Bonus 4,37,44,007 4,22,94,862Contribution to Provident and Other Funds 15,97,732 13,57,274Workmen and Staff Welfare Expenses 13,30,022 10,17,351

TOTAL 4,66,71,761 4,46,69,487

The details of liabilities recognized by the Company in respect of long term defined benefits and contribution schemes in accordance with AccountingStandard 15 (Revised 2005) for its employees are given below.

The Company has classified the various benefits provided to the employees as under:I. Defined Contribution Plan

Contribution to Regional Provident Fund Commissioner (State Plans) Contribution to Employee’s State Insurance Corporation (ESIC)

II. Defined Benefit Plans - Gratuity for employeesDuring the current year the Company has recognized the following amounts in the Statement of Profit & Loss:


(`) (`)

Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supplyand demand in the employment market.


Asset/(Liability) recognised in the Balance Sheet* (12,05,352) (8,88,260)Amount recognised in the Income Statement** 3,51,538 3,12,720

Other Long-Term Benefits – Leave Encashment

170



* Provision for compensated absences as disclosed under Note 8 includes ` 48,838/- (Previous Year ` 34,267/-) provided for short-term leave of the employees.** Leave encashment and Provision for Gratuity are included in Salary, Wages and Bonus. Contribution to Provident Fund and ESIC is included in Contribution

to Provident and Other Funds (Refer Note 21)For the year ended For the year ended

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

(d) Expected Contribution to the Funds in the next year

Grauity 4,00,000 3,66,785

NOTE 22DEPRECIATION AND AMORTISATION EXPENSEDepreciation on Tangible Assets 3,22,59,371 3,26,31,559Amortisation on Intangible Assets 34,185 23,369TOTAL 3,22,93,556 3,26,54,928

NOTE 23OTHER EXPENSESPower and Fuel 1,43,46,429 1,19,76,468Consumption of Stores and Spare Parts 46,38,955 51,56,168Rent 5,72,000 5,93,745Rates and Taxes 23,03,928 11,90,061Insurance 14,21,271 11,92,824Repairs - Buildings 17,01,739 7,69,749 - Machinery 7,67,465 8,46,650 - Others 28,04,054 32,16,482Maintenance and Upkeep 47,13,718 37,68,941Advertising / Sales Promotion 2,34,045 2,74,162Travelling and Conveyance 28,88,997 29,63,692Vehicle Maintenance 18,70,955 17,40,582Hire Charges 12,08,741 12,16,052Legal Expenses 25,34,820 37,65,779Consultancy / Professional fees 1,28,96,347 44,32,525Communication, Postage and Telegram Expenses 12,91,491 12,98,567Bad Debts written off 2,25,756 —Loss on Assets sold & written offs 30,05,284 34,15,657Auditors Remuneration 9,11,520 7,17,400Provision for doubtful debts — 6,53,022Miscellaneous Expenses 35,07,197 42,85,956

6,38,44,712 5,34,74,482NOTE 24DETAILS OF EXPENSES CAPITALISED TO CWIP

The Board of Directors had approved a detailed plan in Financial Year 2009-10 of the Green Bharat Project (resort project) of the Company. The Capitalwork-in-progress amounting to ` 45,17,33,199/- (Previous Year ` 20,43,88,532/-) relates to the Resort project. Details of project management expensesdirectly attributable to resort project, transferred to capital work-in-progress relating to resort project are as under:

Particulars Resort Project (Capital Work-in-Progress) Stock in Process-Golf HutMarch 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011

Opening Balance as at April 1, 2011 11,16,49,051 8,14,62,283 68,97,563 39,37,186Add:- Expenses Incurred

Salaries, Wages and Bonus 50,63,451 54,77,110 4,603 11,582Welfare Expenses 11,16,360 — — —Rates & Taxes 4,46,417 5,06,288 6,40,040Travelling & Conveyance 12,78,757 21,22,497 1,88,663 55,037Vehicle Maintenance 3,18,196 56,482 — 3,336Power & Fuel 3,74,759 1,75,749 — —Insurance 3,34,199 16,904 — —Legal & Professional Charges 2,59,35,562 1,97,56,882 1,10,38,237 27,54,165Repairs & Maintenance - Plant & Machinery 1,14,964 5,447 — —Repairs & Maintenance - Others 1,92,305 4,87,470 — —Printing & stationery 5,78,682 4,26,970 — 16,249Miscellaneous exp. 22,72,609 6,17,184 60,000 3,949Hire Charges 4,98,076 12,788 — —Consumption of Stores — — 4,90,258 —Bank Charges 14,844 — — —Depreciation 4,33,638 5,24,997 1,47,235 1,16,059

TOTAL 3,89,72,819 3,01,86,768 1,25,69,036 29,60,377

Closing Balance as at March 31, 2012 15,06,21,870 11,16,49,051 1,94,66,599 68,97,563


171



(`) (`)NOTE 25CONTINGENT LIABILITIESA) Claims against the Company

not acknowledged as debts:(a) Income Tax matters 38,55,05,802 38,55,05,802(b) Legal Cases 2,92,745 6,32,716(c) Bank Guarantees given to

Government Authorities 1,13,77,970 1,14,77,970(d) Letter of Credits given to vendors NIL 33,00,000

(a) The Company had received Income Tax demands of ̀ 11,59,41,813/-(Previous Year ` 11,59,41,813/-) for Assessment Year 2001-02,` 32,98,817/- (Previous Year ` 32,98,817/-) for the Assessment Year2003-04 and ` 26,62,65,172/- (Previous Year ` 26,62,65,172/-), forAssessment Year 2005-06. All the assessments are currently underappeal with Income Tax Authorities.

(b) Pertaining to legal suits against the Company for recovery of dues/compensation aggregating to ` 2,92,745/- (Previous Year ` 6,32,716/-)plus future interest, the amount of which is unascertainable, underlitigation. As opined by Company’s lawyers, the chances of suitsucceeding are remote and accordingly Company does not foreseeany liability in this regard.

In the opinion of the management, the likelihood of the appealbeing decided against the Company is highly unlikely, hence noprovision of these amounts has been considered necessary in thebooks of account.

It is not practicable for the Company to estimate the timings of cashoutflows, if any, in respect of above pending resolution of therespective proceedings.

B) Outstanding Capital CommitmentsAs at As at

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

Estimated value of contracts in 26,91,45,076 41,81,13,474capital account remaining tobe executed

NOTE 26Non Current Liabilities include ` 31,10,18,793/- (Previous Year` 31,10,08,793/-) as deposits received from individuals towards golfmemberships and ` 45,00,000/- (Previous Year ` 29,00,000/-) receivedfrom Corporate towards Golf Memberships. These represent long termtradable memberships which, are to be refunded at the time of terminationof the membership.

NOTE 27There are no Micro, Small and Medium Enterprises, to whom the Companyowes dues, which are outstanding for more than 45 days during the yearand also at March 31, 2012. This information as required to be disclosedunder the MSME Development Act, 2006 has been determined to theextent such parties have been identified on the basis of information availablewith the Company.

NOTE 28

EARNING PER SHARE

Basic/Diluted Earnings Per Share As at As at 31st March, 2012 31st March, 2011

(`) (`)Net Profit/(Loss) after tax availablefor Equity Shareholders (`) (3,21,57,078) (3,25,79,029)Weighted Average Number of EquityShares outstanding during the year 5,00,00,000 5,00,00,000Nominal Value of Equity Shares (`) 10 10Basic/Diluted (Loss)/Earnings perShare of ` 10/- each (0.64) (0.65)

NOTE 29ACCOUNTING FOR TAXES ON INCOMEIn view of the significant carry forward income tax losses (business anddepreciation) and there being no virtual certainty of profits in the nearfuture, net deferred tax asset as at March 31, 2012 has not been recognizedin the books of accounts.

NOTE 30VALUE OF IMPORTS CALCULATED ON CIF BASIS DURING THE YEAR IN RESPECT OF

For the year ended For the year ended 31st March, 2012 31st March, 2011

(`) (`)

Capital Goods 30,68,070 75,60,411

NOTE 31EXPENDITURE IN FOREIGN CURRENCY (Accrual Basis):Professional & Consultancy 1,11,70,798 68,59,370

NOTE 32EARNINGS IN FOREIGN EXCHANGE(Accrual Basis):Service Income 66,42,973 35,58,156

NOTE 33VALUE OF INDIGENOUS AND IMPORTED RAW MATERIAL, STORES & SPARES CONSUMED

DURING THE PERIOD & PERCENTAGE OF EACH TO THE TOTAL CONSUMPTION

(a) Details of Raw Material/Packing Material consumed

Raw Material 57,66,252 52,28,629

TOTAL 57,66,252 52,28,629

(b) Value of imported and indigenous materials consumed

PARTICULARS For the year ended For the year endedMarch 31, 2012 March 31, 2011Value (`) % Value (`) %

Raw Material - F&BImported — — — —Indigenous 57,66,252 100 52,28,629 100

TOTAL 57,66,252 100 52,28,629 100

Stores & SparesImported 16,88,550 36 18,99,400 37Indigenous 29,50,405 64 32,56,768 63

TOTAL 46,38,955 100 51,56,168 100

(c) Purchase of Traded Goods

Proshop 24,68,399 23,77,022

TOTAL 24,68,399 23,77,022

NOTE 34SEGMENT REVENUE, RESULT & OTHER INFORMATIONThe Company carries on activities primarily under the Leisure & Hospitalitysegment and operates within one geographical segment in India. Hencethe segment disclosure has not been provided.

NOTE 35RELATED PARTY DISCLOSURE

(i) Names of related parties and nature of relationship:Holding Company ITC Limited

(ii) Other Related Parties with whom transactions have taken placeduring the year:

Fellow Subsidiaries M/s Fortune Park Hotels LimitedM/s Greenacre Holdings Limited

Associates M/s International Travel House LimitedM/s Classic Infrastructure and Development Limited

(iii) Key Management Personnel:Mr. Nakul Anand ChairmanMr. S.C. Sekhar Managing DirectorMr. Rajiv Tandon DirectorMr. B. Hariharan DirectorMr. Ravi Puri Chief Executive OfficerMr. Atul Kumar Head of Finance & Commercial

172


iv) Details of Transaction carried out during the financial year ended March 31, 2012 with related party in the ordinary course of business :

(Consolidated) (Amount in `)

S. No Particulars Holding Company Fellow Subsidiaries Associates KMP

March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March March31, 2012 31, 2011

1 Sale of Services 65,313 4,05,434 — — 8,574 — 58,560 79,002

2 Purchase of Fixed Assets — — — 50,917 — — — —

3 Sale of Fixed Assets 2,58,691 — — — — — — —

4 Purchase of services 1,75,883 5,38,802 3,72,263 — 3,32,973 3,25,434 — —

5 Expenses Recovered 9,65,840 5,99,840 4,33,591 21,79,702 — 23,915 — —

6 Expenses Reimbursed 87,58,222 94,56,522 — 10,498 — — — —

7 Project Expenses Reimbursed 27,22,688 25,17,869 — — — 16,690 — —

8 Balances Outstanding

at the year end

i) Debtors/Receivables — — — 11,17,702 9,301 13,412 — —

ii) Creditors/Payables 1,48,40,338 39,47,268 — — 5,789 — — —

v) Disclosure in respect of transactions which are more than 10% of the total transactions of the same type with related parties (Amount in `)

S. No Particulars Holding Company Fellow Subsidiaries Associates KMP

March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March March31, 2012 31, 2011

1 Sale of Services— ITC Limited 65,313 4,05,434 — — — — — —KMP — — — — — — 58,560 79,002

2 Purchase of Fixed AssetsFortune Park Hotels Limited — — — 50,917 — — — —

3 Sale of Fixed Assets— ITC Limited 2,58,691 — — — — — — —

4 Purchase of services— ITC Limited 1,75,883 5,38,802 — — — — — —— International Travel House Limited — — — — 3,32,973 3,25,434 — —— ITC Infotech India Limited — — 3,72,263 — — — — —

5 Expenses Recovered— ITC Limited 9,65,840 5,99,840 — — — — — —— Greenacre Holdings Limited — — 4,33,591 21,79,702 — — — —

6 Expenses Reimbursed— ITC Limited 87,58,222 94,56,522 — — — — — —

7 Project Expenses Reimbursed— ITC Limited 27,22,688 25,17,869 — — — — — —

8 Balances Outstandingat the year end

i) Debtors/Receivables— Greenacres Holdings Limited — — — 11,17,702 — — — —— CIDL — — — — 9,301 — — —

ii) Creditors/payables— ITC Limited 1,48,40,338 39,47,268 — — — — — —

NOTE 36PREVIOUS YEAR FIGURES - The financial statements for the year ended March 31, 2012 had been prepared as per the then applicable, pre-revised scheduleVI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act 1956, the financial statements for theyear ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to thisyear’s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed forpreparation of financial statements.


NOTE 37

SIGNIFICANT ACCOUNTING POLICIESConventionTo prepare financial statements in accordance with applicable AccountingStandards notified under Section 211(3C) of the Companies Act, 1956 andthe relevant provisions of the Companies Act, 1956, in India. A summaryof important accounting policies is set out below. The financial statementshave also been prepared in accordance with relevant presentationalrequirements of the Companies Act, 1956.

Basis of AccountingTo prepare financial statements in accordance with the historical costconvention.

Tangible and Intangible AssetsTo state Fixed Assets at cost of acquisition inclusive of inward freight, dutiesand taxes and incidental expenses related to acquisition. In respect ofmajor projects involving construction, related pre-operational expenses

NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2012


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iv) Sale of merchandising stock (Proshop Income) is recognised at the timeof delivery of goods to the customer.

Employee Benefitsi) To make regular contributions to State plan namely Employee’s Provident

Fund and Employee’s State Insurance Fund are charged to revenueevery year.

ii) Company has Gratuity (Unfunded Plan) which are in the nature ofdefined benefit/schemes. To determine the liabilities towards suchschemes, as applicable, and towards employee leave encashment byan independent actuarial valuation as per the requirements of AccountingStandard - 15 (revised 2005) on ‘Employee Benefits’. To determineactuarial gains or losses and to recognise such gains or losses immediatelyin Statement of Profit and Loss as income or expense. Other long-termbenefit of the Company includes leave encashment/ compensatedabsence, the liability for which is determined on the basis of an actuarialvaluation at the end of the year using the projected unit credit method.

Taxes on IncomeTo provide Current tax as the amount of tax payable in respect of taxableincome for the period, measured using the applicable tax rates and tax laws.

To provide Deferred tax on timing differences between taxable income andaccounting income subject to consideration of prudence, measured usingthe tax rates and tax laws that have been enacted or substantially enactedby the Balance Sheet date.

Not to recognise Deferred tax assets on unabsorbed depreciation and carryforward of losses unless there is virtual certainty that there will be sufficientfuture taxable income available to realise such assets.

Foreign Currency TranslationTo account for transactions in foreign currency at the exchange rateprevailing on the date of transactions. Gains/Losses arising out of fluctuationsin the exchange rates are recognised in the Statement of Profit and Lossin the period in which they arise.

To account for gains/losses in the Statement of Profit and Loss on foreignexchange rate fluctuations relating to monetary items at the year end.

Provisions and Contingent LiabilitiesA provision is recognised when there is a present obligation as a result ofa past event, it is probable that an outflow of resources will be required tosettle the obligation and in respect of which reliable estimate can be made.A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, requirean outflow of resources. Where there is a possible obligation or a presentobligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made.

Financial and Management Information SystemsTo practise an Integrated Accounting System which unifies Financial Books.The books of account and other records have been designed to facilitatecompliance with the relevant provisions of the Companies Act on one hand,and meet the internal requirements of information and systems for Planning,Review and Internal Control on the other.




form part of the value of assets capitalised. Expenses capitalised also includeapplicable borrowing costs, if any.To capitalise software where it is expected to provide future enduringeconomic benefits. Capitalisation costs include licence fees and costs ofimplementation/system integration services.All upgradation/enhancements are generally charged off as revenueexpenditure unless they bring similar significant additional benefits.

DepreciationTo calculate depreciation on Fixed Assets and Intangible Assets in a mannerthat amortises the cost of the assets after commissioning, over their estimateduseful lives or lives based on the rates specified in Schedule XIV to theCompanies Act, 1956, whichever is lower, by equal annual instalmentsexcept for the following assets on which based on management’s assessmentof useful life, depreciation has been provided at higher rates:

Rate (%)

Golf Carts 20Tents 50Vehicular Roads 20

Assets costing less than ` 5,000/- are fully depreciated in the year.

InvestmentsTo state Long-Term Investments at cost. Where applicable, provision ismade to recognise a decline, other than temporary in valuation of Long-Term Investments.

InventoriesTo state inventories including work-in-progress at lower of cost and netrealisable value. The cost is calculated on weighted average method. Costcomprises expenditure incurred in the normal course of business in bringingsuch inventories to its location and includes, where applicable, appropriateoverheads based on normal level of activity. Obsolete, slow moving anddefective inventories are identified at the time of physical verification ofinventories and, where necessary, provision is made for such inventories.Stock in progress - Golf huts includes cost of work-in-progress properties.Cost included in inventory includes development expenses, cost of servicesand other overheads relating to projects and is valued at lower ofcost/estimated cost and estimated net realisable value.

Revenue Recognitioni) Consequent to the completion of the Laburnum Project the Company

had disclosed the unsold stock of Parking Slots and Servant Quartersunder inventory and the revenue on account of the sale of such stockis being accounted for on accrual basis.

ii) Membership Incomea) 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 isrecognized at the time such services are rendered to the customer.


Your Directors hereby present the Annual Report and Audited Accounts ofthe Company for the financial year ended 31st March, 2012.

Year ended Year ended31.03.2012 31.03.2011

(` Lakhs) (` Lakhs)

Gross operating Profit/(Loss) 44.98 (43.57)Less: Interest and finance charges 0.00 0.00

Profit/(Loss) before depreciationand taxation 44.98 (43.57)

Less: Depreciation & Impairment loss 2.37 2.51

Profit/(Loss) before Taxation 42.61 (46.08)

Less: Provision for Taxation — —

Profit/(Loss) after Taxation 42.61 (46.08)

Brought forward from previous year (6,033.33) (5,987.25)

Transfer from General Reserve — —

Balance carried to Balance Sheet (5,990.71) (6,033.33)

The gross operating profit for the year ended March 31, 2012 was ` 44.98lakhs, compared to a loss of ` 43.57 lakhs in the previous year and afterproviding depreciation, the net profit for the year was ` 42.61 lakhs asagainst a net loss of ` 46.08 lakhs in the previous year.

Economic ScenarioRecoveries of non-performing assets continued to be muted at ` 7.50 lakhsfor the year. Your Company continues to vigorously pursue various legalcases initiated against defaulting clients.

OperationsDuring the last fifteen years your Company has concentrated on recoveriesand has collected a total of ` 9,673.33 lakhs including by way of propertysettlements. The collections were largely utilized for repayment of debts -` 955.05 lakhs (Inter corporate deposits), ` 687.39 lakhs (Non-convertibledebentures), ` 161.08 lakhs (Bill Rediscounting), ` 1,571.43 lakhs (FixedDeposits), ` 528.67 lakhs (Financial Institutions), ` 4,371.72 lakhs (Banks)and ` 470 lakhs (Repayment of Loan from Holding Company), an aggregateof ` 8,745.34 lakhs.

Your Company has prepared the annual accounts on a going concern basisand continues to concentrate its efforts towards recovery of its dues. Thefuture plans for the Company will be reviewed post settlement of majoroutstandings.

Your Company has no other external liabilities outside the ITC Group.

Reserve Bank of India directions to NBFCsYour Company has made provisions as per the Reserve Bank of India’sDirections.

Directors’ Responsibility Statement

Your Directors have:i) followed, in the preparation of the annual accounts, the applicable

accounting standards with proper explanation relating to materialdepartures;

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BFIL FINANCE LIMITED

ii) selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit of the Company for that period;

iii) taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;

iv) prepared the annual accounts on a going concern basis.

DividendIn view of the accumulated loss, your Board regrets that the Company isnot in a dividend paying position.

Particulars of EmployeesThe Company has no employee in the category specified under Section217 (2A) of the Companies Act, 1956.

Subsidiary Companies

BFIL Securities LimitedYour Company’s subsidiary got dissolved on 25th November, 2011.

MRR Trading & Investment Company LimitedWith 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 approvalfrom the Central Government. The tenanted space is being utilized asCorporate Office and Registered Office of your Company.

DirectorsSri Anil Seth retires at the forthcoming Annual General Meeting and beingeligible, 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 andTechnology Absorption. There has been no foreign exchange earnings oroutgo.

DepositsThe Company has not accepted any deposits during the year under theCompanies (Acceptance of Deposits) Rules, 1975. As at 31st March 2012,the Company does not hold any Fixed Deposits.

Acknowledgements:The Directors have pleasure in recording their appreciation of the assistanceextended to the Company by various officials of the Central and StateGovernments and Commercial Banks.


Anil Seth P.K. SenSecunderabad, 02 May, 2012 Director Director

AUDITORS’ REPORT TO THE MEMBERS OF BFIL FINANCE LIMITED.

1. We have audited the attached Balance Sheet of BFIL Finance Limited(the “Company”) as at March 31, 2012, and the related Statement ofProfit and Loss and Cash Flow Statement for the year ended on thatdate annexed thereto, which we have signed under reference to thisreport. These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.


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

2004 (together the “Order”), issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of ‘The CompaniesAct, 1956’ of India (the ‘Act’) and on the basis of such checks of thebooks and records of the Company as we considered appropriate andaccording to the information and explanations given to us, we give inthe Annexure a statement on the matters specified in paragraphs4 and 5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3above, we report that:

(a) We have obtained all the information and explanations which, to thebest of our knowledge and belief, were necessary for the purposes ofour audit;

(b) In our opinion, proper books of account as required by law have beenkept by the Company so far as appears from our examination of thosebooks;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statementdealt with by this report are in agreement with the books of account;

175


(d) In our opinion, the Balance Sheet, Statement of Profit and Loss andCash Flow Statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of Section 211 ofthe Act;

(e) On the basis of written representations received from the directors, ason March 31, 2012 and taken on record by the Board of Directors,none of the directors is disqualified as on March 31, 2012 from beingappointed as a director in terms of clause (g) of sub-section (1) ofSection 274 of the Act;

(f) In our opinion and to the best of our information and according to theexplanations given to us, the said financial statements together withthe notes thereon and attached thereto give, in the prescribed manner,the information required by the Act, and give a true and fair view inconformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the companyas at March 31, 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit for theyear ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the yearended on that date.

For Lovelock & LewesFirm Registration No. 301056E

Chartered AccountantsSunit Kumar Basu

Partner

Hyderabad, May 02, 2012 Membership No: 55000


Referred to in paragraph 3 of the Auditors’ Report of even date to themembers of BFIL Finance Limited on the financial statements as of andfor the year ended March 31, 2012

1. (a) The Company is maintaining proper records showing full particulars,including quantitative details and situation, of fixed assets.

(b) The fixed assets are physically verified by the Management accordingto a phased programme designed to cover all the items over aperiod of two years which, in our opinion, is reasonable havingregard to the size of the Company and the nature of its assets.Pursuant to the programme, a portion of the fixed assets has beenphysically verified by the Management during the year and nomaterial discrepancies between the book records and the physicalinventory have been noticed.

(c) In our opinion, and according to the information and explanationsgiven to us, a substantial part of fixed assets has not been disposedof by the Company during the year.

2. (a) The inventory has been physically verified by the Managementduring the year. However, in respect of stock on hire, the Companyhas initiated legal proceedings for recovering its dues and no physicalverification was carried out. In our opinion, the frequency ofverification of stock in trade is reasonable.

(b) In our opinion, the procedures of physical verification of inventoryfollowed by the Management are reasonable and adequate inrelation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in ouropinion, the Company is maintaining proper records of inventory.There were no discrepancies noticed on physical verification ofinventory as compared to book records.

3. The Company has neither granted nor taken any loans, secured orunsecured, to companies, firms or other parties covered in the registermaintained under Section 301 of the Act.



6. In our opinion, the Company has an internal audit system commensuratewith its size and the nature of its business.


8. (a) According to the information and explanations given to us and therecords of the Company examined by us, in our opinion, theCompany is regular in depositing the undisputed statutory dues,including income tax, service tax and other material statutory dues,as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and therecords of the Company examined by us, the particulars of dues ofincome tax, sales tax, service tax, as at March 31, 2012 which hasnot been deposited on account of a dispute, are as follows:

Name of Nature Amount Period to which Forum where thethe statute of dues (Rupees) the amount relates dispute is pending

UP Trade tax Lease tax 37,01,037 1996-97 to Joint Commissioner (A),Act, 1948 1999-2000 Trade Tax, Kanpur

Rajasthan Lease tax 4,88,211 1996-97 Deputy CommissionerSales tax (A), Commercial taxes,

Jaipur

Income tax Penalty 76,56,074 A.Y 2002-03 Income Tax AppellateAct, 1961 Tribunal, Mumbai

9. The accumulated losses of the Company exceeded fifty percent of itsnet worth as at March 31, 2012. The Company has not incurred cashlosses in the financial year ended on March 31, 2012 and it has incurredcash losses in the immediately preceding financial year.

10. According to the records of the Company examined by us and theinformation and explanation given to us, the Company has not defaultedin repayment of dues to any financial institution or bank or debentureholders as at the balance sheet date.

11. The Company has not granted any loans and advances on the basisof security by way of pledge of shares, debentures and other securitiesduring the year.

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 has not entered into any transactions andcontracts relating to dealing or trading in shares, securities, debenturesand other investments during the year. However, the company as atMarch 31, 2012 holds certain securities as stock-in-trade and suchsecurities have been held by the company in its own name.


15. The Company has not obtained any term loans.16. On the basis of an overall examination of the balance sheet of the



18. The Company issued unsecured non-convertible debentures in earlieryears, aggregating Rs. 150,000,000 which is outstanding at the year-end, in respect of which it is not required to create security or charge.



21. The Clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g) and (iv) of paragraph4, of the Companies (Auditor’s Report) Order, 2003, as amended by theCompanies (Auditor’s Report)(Amendment) Order, 2004 are not applicablein the case of the company for the current year, since in our opinionthere is no matter which arises to be reported in the aforesaid order.


Chartered AccountantsSunit Kumar Basu

PartnerHyderabad, May 02, 2012 Membership No: 55000

176


STATEMENT OF PROFIT AND LOSS


REVENUEOther Income 16 67,95,144 52,24,974

TOTAL REVENUE 67,95,144 52,24,974

EXPENSESEmployee Benefit Expense 17 98,100 98,100Depreciation and Amortization Expenses 18 2,36,623 2,50,806Other Expense 19 21,99,094 94,83,996

TOTAL EXPENSES 25,33,817 98,32,902PROFIT/(LOSS) BEFORE TAX 42,61,327 (46,07,928)Tax Expense

Current Tax — —Deferred Tax — —

PROFIT/(LOSS) FOR THE YEAR 42,61,327 (46,07,928)Earnings per equity share:[Nominal Value per share: ` 10 (2011: ` 10)]Basic and Diluted 0.21 (0.23)

The notes are an integral part of these financial statementsThis is the Statement of Profit and Loss referred to in our report of even date.

For Lovelock & LewesFirm Registration No. 301056E For and On behalf of the Board of DirectorsChartered Accountants Anil Seth DirectorSunit Kumar Basu, Partner P. K. Sen DirectorMembership No. 55000 V. Radhakrishnan Manager &Hyderabad, May 02, 2012 Company Secretary

BALANCE SHEET

(All amounts in `, unless otherwise stated)

Note As at As at


Equity and Liabilities

Shareholders’ funds

Share Capital 3 20,00,00,000 20,00,00,000Reserves and Surplus 4 (59,90,71,464) (60,33,32,791)

Non-current LiabilitiesLong-term borrowing 5 47,54,11,077 47,54,11,077

Current LiabilitiesTrade Payables 6 1,07,347 1,05,516Other current liabilities 7 4,54,280 6,60,630Short-term provisions 8 76,56,074 76,56,074

Total 8,45,57,314 8,05,00,506

Assets

Non-current assets

Fixed Assets

Tangible Assets 9 11,15,284 45,29,340

Capital work-in-progress 2,81,72,250 2,81,72,250

Non-current investments 10 4,30,23,750 4,30,23,750

Current Assets

Inventories 11 1,000 1,000

Trade Receivables 12 — —

Cash and Bank balances 13 78,81,625 8,29,760

Short-term loans and advances 14 11,71,168 5,66,654

Other current assets 15 31,92,237 33,77,752

Total 8,45,57,314 8,05,00,506

The notes are an integral part of these financial statements

This is the Balance Sheet referred to in our report of even date

For Lovelock & Lewes

Firm Registration No. 301056E For and on behalf of the Board of Directors

Chartered Accountants Anil Seth Director

Sunit Kumar Basu, Partner P.K. Sen Director

Membership No. 55000 V. Radhakrishnan Manager &

Hyderabad, 02 May, 2012 Company Secretary

177


1 General InformationBFIL Finance Limited (the 'Company') is registered as Non-BankingFinance Company and was engaged in the business of Leasing, Hirepurchase and other allied finance activities. Currently, there are nooperational activities and the Company continues to pursue recoveryof its old dues in the normal course of business.

2 Summary of significant accounting policies2.1 Basis of preparation

These financial statements have been prepared in accordance withthe generally accepted accounting principles in India under thehistorical cost convention on accrual basis based on the principle ofgoing concern.All assets and liabilities have been classified as current or non-currentas per the Company’s normal operating cycle and other criteria setout in the Schedule VI to the Companies Act, 1956. Based on thenature of products and the time between the acquisition of assetsfor processing and their realisation in cash and cash equivalents, theCompany has ascertained its operating cycle as 12 months for thepurpose of current – non current classification of assets and liabilities.

2.2 Tangible AssetsAll tangible assets including assets given on lease are valued at costinclusive of direct and incidental expenses related to acquisition.Depreciation on tangible assets is provided on written down valuemethod on pro-rate basis in accordance with the rates prescribedunder amended Schedule XIV of the Companies Act, 1956. Leaseholdimprovements (excluding electrical installations) are being depreciated@ 5% on written down value and Electrical Installations included inLease hold improvements are being amortised @ 15%.All the tangible assets are assessed for any indication of impairmentat the end of each financial year. On such indication, the impairmentloss (being the excess of carrying value over the recoverable valueof the asset) is charged to the statement of profit and loss in therespective financial year. The impairment loss recognized in the prior

years is reversed where the recoverable value exceeds the carryingvalue of the asset upon re-assessment in the subsequent years.

2.3 InvestmentsAll investments are stated at cost i.e. cost of acquisition, inclusive ofexpense incidental to acquisition where applicable. Provision for anypermanent diminutions in the value of investments is made whichis considered to be appropriate. Income from investments is statedin revenue account in the year in which it is accrued and at grossvalue.

2.4 InventoriesStock in trade comprising stock of securities are stated at cost ormarket price whichever is lower. Stock on hire is valued at agreementvalue less amount receivable.

2.5 Revenue RecognitionAs per the directives of the Reserve Bank of India, revenue is recognisedupon realisation, on Non-Performing Assets.Revenue is not recognized on the grounds of prudence until realisedin respect of liquidated damages, penalties and delayed paymentcharges, as recovery of the amounts is uncertain.

2.6 Current and Deferred TaxTax expense for the period, comprising current tax and deferred tax,are included in the determination of the net profit or loss for theperiod. Current tax is measured at the amount expected to be paidto the tax authorities in accordance with the taxation laws prevailingin the respective jurisdictions.Deferred tax is recognised for all the timing differences, subject tothe consideration of prudence in respect of deferred tax assets.Deferred tax assets are recognised and carried forward only to theextent that there is a reasonable certainty that sufficient future taxableincome will be available against which such deferred tax assets canbe realised. Deferred tax assets and liabilities are measured usingthe tax rates and tax laws that have been enacted or substantivelyenacted by the Balance Sheet date.


CASH FLOW STATEMENT


A. Cash Flow from Operating Activities:Profit/(Loss) before taxation 42,61,327 (46,07,928)Adjustments for :Depreciation/Amortization 2,36,623 2,50,806Provision no longer required written back (7,50,000) (9,11,182)Interest Income (45,144) (63,724)Operating Profit Before Working Capital Changes 37,02,806 (53,32,028)Changes in Working Capital :Increase/(Decrease) in trade payables 1,831 1,72,145Increase/(Decrease) in other current liabilities (2,06,350) 76,56,074(Increase)/Decrease in short-term loans and advances (6,04,514) (4,21,373)(Increase)/Decrease in trade receivables 7,50,000 9,11,182(Increase)/Decrease in other current assets 33,62,948 (33,77,752)Cash Generated from Operations 70,06,721 (3,91,752)Taxes paid — —Net cash generated from operations activities 70,06,721 (3,91,752)

B. Cash flow from Investing ActivitiesInterest received 45,144 63,724Investments in bank deposits (Refer note 2 below) (38,178) (5,45,682)Net cash from investing activities 6,966 (4,81,958)

C. Cash flow from Financing Activities — —

Net increase in cash and cash equivalents 70,13,687 (8,73,710)Cash and Cash equivalents at the beginning of the year 2,84,078 11,57,788Cash and Cash equivalents at the end of the year 72,97,765 2,84,078

Cash and cash equivalents comprise of:Cash on Hand — —Balances with Banks 72,97,765 2,84,078Total 72,97,765 2,84,078

1. The above cash flow statement has been prepared under the “Indirect Method” as set out in AS-3 on ‘Cash Flow Statements’.2. “Other bank balances” included under Cash and Bank balances represent investment in fixed deposits with banks,maturing beyond 3 months. Such

balances have been excluded from opening and closing balances of Cash and Cash equivalents and movements in such balances have been shownunder “Investing Activities”.

3. The comparative figures for the previous year have been re-arranged to conform with the revised presentation of the accounts.This is the Cash Flow Statement referred to in our report of even date.

For Lovelock & LewesFirm Registration No. 301056E For and on behalf of the Board of DirectorsChartered Accountants Anil Seth DirectorSunit Kumar Basu P. K. Sen DirectorPartner V. Radhakrishnan Manager &Membership No. 55000 Company SecretaryHyderabad, May 02, 2012 Hyderabad, May 02, 2012


178




3 Share Capital

3.1 Break up of Share Capital

Authorised:

30,000,000 (2011:30,000,000) equity shares of Rs. 10 each 30,00,00,000 30,00,00,000

1,000,000 (2011: 1,000,000) cumulative redeemable/convertible preference share of Rs. 100 each 10,00,00,000 10,00,00,000

Issued:


Subscribed and paid up:


Total 20,00,00,000 20,00,00,000

3.2 Rights, preferences and restrictions attached to shares

Equity Shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per shareheld. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferentialamounts, in proportion to their shareholding.

3.3 Out of the above shares, 19,999,994 shares are held by ITC Limited, the holding company and the balance 6 shares are held by nominees of theholding company jointly with the holding company. There is no movement in the shareholder's equity during the year, including the previous year.

4 Reserves and Surplus

Surplus/(Deficit) in Statement of Profit and Loss

Balance as at the beginning of the year (60,33,32,791) (59,87,24,863)

Profit/(Loss) fot the year 42,61,327 (46,07,928)

Balance as at the end of the year (59,90,71,464) (60,33,32,791)

5 Long-term borrowings

5.1 Break up of Long-term borrowings

Unsecured:

1,500,000-0% Non-convertible debentures of Rs. 100 each issued to holding company. 15,00,00,000 15,00,00,000

Loans from holding company (Interest free) 32,54,11,077 32,54,11,077

Total 47,54,11,077 47,54,11,077

5.2 Above Long-term borrowings are repayable on April 01,2013.

6 Trade Payables

Trade Payables (Refer note 25 below) 1,07,347 1,05,516

Total 1,07,347 1,05,516

7 Other current liabilities

Statutory dues including Tax deducted at Source 4,54,280 6,60,630

Total 4,54,280 6,60,630

8 Short-term provisions

8.1 Break up of Short-term provisions

Provision for litigation/disputes 76,56,074 76,56,074

Total 76,56,074 76,56,074

8.2 Provision for litigation/disputes

Balance as at the beginning of the year 76,56,074 —Additions during the year — 76,56,074Balance as at the end of the year 76,56,074 76,56,074Classified as Current 76,56,074 76,56,074Total 76,56,074 76,56,074

8.3 Provision for litigation/disputes represents claims against the Company not acknowledged as debts that are expected to materialise in respect of mattersin litigation.


Gross Block (at cost) Depreciation Lease Terminal Adjustment Net Block

Own Assets 1st April, Disposals/ 31st March, 1st April, For the Disposals/ 31st March, 31st March, 31st March, 31st March, 31st March,2011 Adjustments 2012 2011 year Adjustments 2012 2012 2011 2012 2011

Buildings 1,08,59,437 1,08,59,437 — 75,14,770 1,67,234 76,82,004 — — — — 33,44,667(Refer Note 9.4 below)

Office equipment 29,68,955 — 29,68,955 28,54,972 15,854 — 28,70,826 — — 98,129 1,13,983

Furniture and fixtures 1,48,05,658 — 1,48,05,658 1,48,05,658 — — 1,48,05,658 — — — —

Leasehold improvement 66,09,094 — 66,09,094 55,38,404 53,535 — 55,91,939 — — 10,17,155 10,70,690

Total (A) 3,52,43,144 1,08,59,437 2,43,83,707 3,07,13,804 2,36,623 76,82,004 2,32,68,423 — — 11,15,284 45,29,340

Assets given on Lease:

Plant and Machinery 18,49,69,407 — 18,49,69,407 9,29,40,382 — — 9,29,40,382 3,53,45,463 3,53,45,463 5,66,83,562 5,66,83,562

Less: Provision for — — — — — — — — — (5,66,83,562) (5,66,83,562)doubtful Leased Assets

Total (B) 18,49,69,407 — 18,49,69,407 9,29,40,382 — — 9,29,40,382 3,53,45,463 3,53,45,463 — —

Total (A) + (B) 22,02,12,551 1,08,59,437 20,93,53,114 12,36,54,186 2,36,623 76,82,004 11,62,08,805 3,53,45,463 3,53,45,463 11,15,284 45,29,340

March 31, 2011 23,15,68,059 1,13,55,508 22,02,12,551 12,99,44,168 2,50,806 65,40,788 12,36,54,186 3,53,45,463 3,75,32,804 6,12,12,902 6,40,91,087

Notes:

9.2 Leasehold Improvement represents the amount incurred on renovation of the premises of the wholly owned subsidiary, MRR Trading & Investment Company Limited, which holds the tenancy rights.9.3 Capital work in progress amounting to Rs. 28,172,250 (2011: Rs. 28,172,250) represents the value of the property received towards settlement of dues, for which the registration is pending.9.4 Disposal represents transfer of own assets to assets held for sale. (Refer Note 21 below)9.5 Depreciation as at the year end on own assets includes impairment loss as under:

As at As at


Buildings 32,00,858 32,00,858

Furniture and Fixtures 48,86,754 48,86,754

Total 80,87,612 80,87,612

9 Tangible Assets

9.1 Break up of Tangible Assets

179



10. Non-current InvestmentTrade Investments - Unquoted equityinstruments (valued at cost unlessstated otherwise)Investment in subsidiaries:50,000 (2011: 50,000) equity shares of 4,30,23,750 4,30,23,750Rs. 10 each held in MRR Trading &Investment Company Limited.(Net of provision aggregating toRs. 7,620,770 [2011: Rs. 7,620,770]for other than temporary diminution)

Other investmentsGovernment and trust securities:National Saving Certificate — —(Net of provision aggregating to Rs. 5,000[2011: Rs. 5,000])Kisan Vikas Patra — —(Net of provision aggregating toRs. 5,000 [2011: Rs. 5,000])

Total 4,30,23,750 4,30,23,750

Aggregate amount of unquoted investments 4,30,23,750 4,30,23,750Aggregate provision for diminution in 76,30,770 76,30,770value of investments

11. Inventories(valued at cost or market valuewhichever is less)Stock in TradeQuoted equity instruments:3 (2011:3) equity shares of Rs. 10 each ofUltra Tech Cemco Limited 1,000 1,000Unquoted investments:540,000 (2011: 540,000) Optionally fullyconvertible debentures of G-Tech StoneLimited – Rs. 59,400,000(2011 Rs. 59,400,000) — —

(Net of provision for erosion in value Rs. 59,400,000[2011: Rs. 59,400,000])


Stock on hire(Net of provision for doubtful assets amounting toRs.23,903,734 [2011: Rs. 23,903,734] andunmatured finance charges amounting toRs. 6,762,982 [2011: Rs. 6,762,982]) — —Total 1,000 1,000

12. Trade receivablesUnsecured, considered doubtfulOutstanding for a period exceeding 6 monthsfrom the date they are due for paymentLease and Hire purchase receivables 4,46,12,700 4,55,34,170Trade receivables 9,39,55,367 9,39,55,367Less: Provision for doubtful receivables (13,85,68,067) (13,94,89,537)

Total — —13. Cash and Bank balances

Cash and Cash equivalentsBank balanceIn current account 22,97,765 2,84,078

Demand deposits (Less than 3 months maturity) 50,00,000 —72,97,765 2,84,078

Other bank balancesDeposits with maturity more than 3months 5,83,860 5,45,682but less than 12 monthsTotal 78,81,625 8,29,760

14. Short-term loans and advancesAdvance Income Tax 11,71,168 5,66,654

Total 11,71,168 5,66,654

15. Other current assetsUnsecured, considered good:Interest accrued on deposits 14,804 12,352Dues from the Holding Company — 33,65,400Assets held for sale (at lower of cost and 31,77,433 —net realisable value)(Refer Note 21 below)Total 31,92,237 33,77,752



180



16. Other IncomeInterest Income 45,144 63,724Dividend Income — 68Service Income 60,00,000 42,00,000Provision no longer required written back 7,50,000 9,11,182Miscellaneous Income — 50,000Total 67,95,144 52,24,974

17. Employee Benefit ExpenseSalaries, Wages and Bonus 98,100 98,100

Total 98,100 98,100

18. Depreciation and Amortization ExpensesDepreciation 1,83,088 1,94,453Amortization 53,535 56,353

Total 2,36,623 2,50,806

19. Other ExpensesProfessional and Legal fees 17,77,658 14,92,951Travelling Expenses 85,703 29,806Audit Fee 75,000 75,000Tax Audit Fee 25,000 25,000Reimbursement of expenses (including service tax) 17,978 15,100Reimbursement of expenses incurred by 1,72,944 1,70,463Subsidiary CompanyMiscellaneous Expenses 44,811 76,75,676

Total 21,99,094 94,83,996

20. Contingent LiabilitesClaims against the Company not 37,21,426 37,21,426acknowledged as debts Lease taxon account of non-accrual of lease rentalTotal 37,21,426 37,21,426

21. Assets held for SaleOn February 14, 2012, the Board of Directors of the Company has approved theplan for disposing the Buildings. Carrying Amount as at March 31, 2012 isRs. 3,177,433 (March 31, 2011: Rs. 3,344,667).

22. Taxes on Income

22.1 No provision has been made for Current tax during the year because of carryforward loss under the Income Tax Act.

22.2 The Company has not recognized the net deferred tax assets, in respect ofaccumulated losses and unabsorbed depreciation in view of the uncertinity ofavailing the benefit in near future. Break up of such net deferred tax asset is givenbelow:Deferred Tax Liabilities:Depreciation (1,38,69,220) (1,21,99,728)Deferred Tax Assets:Accumulated business losses 1,77,12,028 10,70,58,857Unabsorbed depreciation 7,48,51,668 7,93,70,975Deferred Tax Asset/(Liability) 7,86,94,476 17,42,30,104

As at As at


23. Earnings per share

Profit/(Loss) after tax 42,61,327 (46,07,928)

Weighted average number of equity shares 2,00,00,000 2,00,00,000

Basic and Diluted earnings per share 0.21 (0.23)

(face value of Rs. 10)

The earnings considered in ascertaining the Company's Earning Per Share (EPS)

comprise net profit / (loss) after taxation. The number of shares considered in

computing Basic and Diluted EPS is the weighted average number of shares

outstanding during the year.

24. Segment ReportingThe Company operates in a single business segment and hence no further disclosure

is being made.

25. Micro, Small and Medium Enterprise Development Act, 2006There are no Micro and Small enterprises, to which the company owes dues, or

with which the company had transactions during the year, based on the information

available with the company.

26. Related party disclosures(a) Names of related parties and nature of relationship:Where control exists

Holding Company: ITC Limited

Subsidiary Company: MRR Trading & Investment Company Limited

Limited.

(b) Transactions/Balances

Holding Company Subsidiary Company31st March 31st March 31st March 31st March

2012 2011 2012 2011

Transactions:Service Income 60,00,000 42,00,000 — —Reimbursement of expenses — — 1,72,944 1,70,463

Balances at the year endReceivables — 33,65,400 — —0% Non-Convertible debentures 15,00,00,000 15,00,00,000 — —Unsecured Loans (Interest free) 32,54,11,077 32,54,11,077 — —

27. The financial statements for the year ended March 31, 2011 had been prepared as

per the then applicable, pre-revised Schedule VI to the Companies Act, 1956.

Consequent to the notification of Revised Schedule VI under the Companies Act,

1956, the financial statements for the year ended March 31,2012 have been prepared

as per Revised Schedule VI. Accordingly, the previous year figures have also been

reclassified to conform to current year’s classification. The adoption of Revised

Schedule VI for previous year figures does not impact recognition and measurement

principles followed for preparation of financial statements.

STATEMENT REGARDING SUBSIDIARY COMPANIES:

Pursuant to Section 212(1) and (3) of the Companies Act, 1956

MRR TRADING & INVESTMENT COMPANY LIMITED

(a) Holding Company’s interest:50,000 Equity Shares of Rs.10/- each, fully paid-up

(b) Net aggregate amount of Subsidiary’s profit/(loss) not dealt with in the Holding Company’s accounts:(Amount in Rs.)

(i) for the Subsidiary’s financial year ended March 31, 2012 Nil(ii) for the previous financial years (416,160)

(c) Net aggregate amount of Subsidiary’s profit/(loss) dealt with in the Holding Company’s accounts:(i) for the Subsidiary’s financial year ended March 31, 2012 Nil(ii) for the previous financial years Nil



181


Balance Sheet of a Non-Deposit Taking Non-Banking Financial Company as at March 31, 2012(as required in terms of Paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Prudential Norms (Reserve Bank) Directions, 2007)(All amount in Rupees' Lacs, unless otherwise stated)

Liabilities side:Amount Amount

outstanding overdue(1) Loans and advances availed by the NBFCs

inclusive of interest accrued thereon butnot paid:(a) Debentures — —

SecuredUnsecured (from Holding Company)(other than falling within the meaning of 1,500.00 —public deposits)

(b)Deferred Credits — —(c) Term Loans — —(d)Inter-corporate loans and borrowing

(from Holding Company) 3,254.11 —(e) Commercial Paper — —(f) Other Loans — —

Assets side:Amount

outstanding(2) Break-up of loans and advances including bills

receivables [other than those included in (4) below]:(a) Secured —(b)Unsecured 951.27

(3) Break-up of Leased Assets and stock on hire andother assets counting towards AFC activities(i) Lease assets including lease rentals under sundry debtors

(a) Financial lease 961.09(b) Operating lease —

(ii) Stock on hire including hire charges under sundry debtors:(a) Assets on hire 358.54(b) Repossessed Assets —

(iii) Other loans counting towards AFC activities(a) Loans where assets have been repossessed —(b) Loans other than (a) above —

(4) Break-up of Investments: AmountCurrent Investments: outstanding

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:1. Quoted: (i) Shares:

(a) Equity —(b) Preference —

(ii) Debentures and Bonds — (iii) Units of Mutual funds (iv) Government Securities — (v) Others2. Unquoted: (i) Shares: —

(a) Equity(b) Preference —

(ii) Debentures and Bonds — (iii) Units of Mutual funds — (iv) Government Securities — (v) Others 430.24

(5) Borrower group-wise classification of all assets financed as in (2) and (3) above :

Amount net of provisions

Secured Unsecured Total1. Related Parties** (a) Subsidiaries — — — (b) Companies in the same group — — — (c) Other related parties — — —2. Other than related parties — — —Total — — —

(6) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):

Market value/Break up or fair value or NAV Book value (net of provision)

1. Related Parties** (a) Subsidiaries 430.24 430.24 (b) Companies in the same group — — (c) Other related parties — —2. Other than related parties — —Total 430.24 430.24

** As per Accounting Standard of ICAI

(7) Other Information

Amount

(i) Gross Non-Performing Assets (a) Related parties — (b) Other than related parties (refer note 1 below) 3,542.05(ii) Net Non-Performing Assets —

(a) Related parties — (b) Other than related parties —(iii)Assets acquired in satisfaction of debt 390.32

Notes:1 Of the above, Rs. 1,849.69 lacs relates to the assets given on lease. The corresponding net block value of such assets are Rs. 566.83 lacs as atMarch 31, 2012.

182



The Directors hereby submit their report for the financial year ended31st March, 2012.OperationsThe operations of the Company during the year under review resulted inno loss / no profit.Fixed DepositsThe Company has not accepted deposits under the Companies (Acceptanceof Deposits) Rules, 1975.Particulars of EmployeesThe Company has no employee in the category specified under Section217 (2A) of the Companies Act, 1956.Conservation of energy, technology absorption, foreign exchangeearnings and outgoThe Company has no activities relating to Conservation of Energy andTechnology Absorption. There has been no foreign exchange earnings oroutgo during the year.DirectorsSri P. K. Sen, Director retires at the forthcoming Annual General Meetingand being eligible, offers himself for re-appointment.

Directors’ Responsibility StatementYour Directors have:

i) Followed, in the preparation of the annual accounts, the applicableaccounting standards with proper explanation relating to materialdepartures;

ii) Selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of theCompany at the end of the financial year which resulted in noprofit / no loss for that period;

iii) Taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;

iv) Prepared the annual accounts on a going concern basis.


Hyderabad P. K. Sen Director2nd May, 2012 M. Yelamanda Director

AUDITORS’ REPORT TO THE MEMBERS OF MRR TRADING &INVESTMENT COMPANY LIMITED

1. We have audited the attached Balance Sheet of MRR Trading &Investment Company Limited (the ‘Company’) as at March 31, 2012,and the related Statement of Profit and Loss and Cash Flow Statementfor the year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are theresponsibility of the Company’s Management. Our responsibility is toexpress an opinion on these financial statements based on our audit.


3. As required by the Companies (Auditor’s Report) Order, 2003, asamended by the Companies (Auditor’s Report) (Amendment) Order,2004 (together the ‘Order’), issued by the Central Government of Indiain 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 booksand records of the Company as we considered appropriate and accordingto the information and explanations given to us, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5of the Order.





(d) In our opinion, the Balance Sheet, Statement of Profit and Lossand Cash Flow Statement dealt with by this report comply withthe accounting standards referred to in sub-section (3C) of Section211 of the Act;

(e) On the basis of written representations received from the directors,as on March 31, 2012 and taken on record by the Board of Directors,none of the directors is disqualified as on March 31, 2012 frombeing 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 accordingto the explanations given to us, the said financial statementstogether with the notes thereon and attached thereto give, in theprescribed manner, the information required by the Act, and givea true and fair view in conformity with the accounting principlesgenerally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the

company as at March 31, 2012;(ii) in the case of the Statement of Profit and Loss, of the profit

(nil) for the year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for





Hyderabad, 2nd May, 2012 Membership No: 55000

ANNEXURE TO AUDITORS’ REPORTReferred to in paragraph 3 of the Auditors’ Report of even date to themembers of MRR Trading & Investment Company Limited on the financialstatements for the year ended March 31, 20121. The Company has neither granted nor taken any loans, secured or

unsecured, to companies, firms or other parties covered in the registermaintained under Section 301 of the Act.



4. In our opinion, the Company has an internal audit system commensuratewith its size and the nature of its business.


6 The accumulated losses of the Company exceeded fifty percent of itsnet worth as at March 31, 2012. The Company has not incurred cash

losses in the financial year ended on March 31, 2012 and in theimmediately preceding financial year.


8. The provisions of any special statute applicable to chit fund/ nidhi/mutual benefit fund/ societies are not applicable to the Company.

9. In our opinion, the company has not entered into any transactions andcontracts relating to dealing or trading in shares, securities, debenturesand other investments during the year.


11. The Company has not obtained any term loans.12. On the basis of an overall examination of the balance sheet of the



BALANCE SHEET

Note As at As at31st March, 2012 31st March, 2011

(`) (`)

Equity and Liabilities

Shareholders’ fundsShare Capital 3 5,00,000 5,00,000Reserves and Surplus 4 (4,16,160) (4,16,160)

Current Liabilities

Trade Payables 5 13,483 13,236Total 97,323 97,076

Assets

Non-current assetsLong-term loans and advances 6 7,120 7,120

Current AssetsCash and Bank balances 7 90,203 89,956

Total 97,323 97,076

The notes are an integral part of these financial statementsThis is the Balance Sheet referred to in our Report of even date.

For Lovelock & Lewes For and on behalf of the Board of DirectorsFirm Registration No. 301056EChartered Accountants

Sunit Kumar Basu Partner P. K. Sen DirectorMembership No: 55000 M. Yelamanda Director

Hyderabad, 2nd May, 2012 Hyderabad, 2nd May, 2012

183


14. The Company has not issued any debentures during the year; and doesnot have any debentures outstanding as at the year end.



17. The Clauses (i)(a), (i)(b), (i)(c), (ii)(a), (ii)(b), (ii)(c), (iii)(b), (iii)(c),(iii)(d), (iii)(f), (iii)(g), (iv), (ix)(a), (ix)(b) and (xi) of paragraph 4, of the

Companies (Auditor’s Report) Order, 2003, as amended by the Companies(Auditor’s Report) (Amendment) Order, 2004 are not applicable in thecase of the company for the current year, since in our opinion there isno matter which arises to be reported in the aforesaid order.




Hyderabad, 2nd May, 2012 Membership No: 55000

ANNEXURE TO AUDITORS’ REPORT (Contd.)

STATEMENT OF PROFIT AND LOSS

Note For the year ended For the year ended31st March, 2012 31st March, 2011(`) (`) (`) (`)

RevenueOperating Income — —Total Revenue — —ExpensesOther expense 8 1,72,944 1,70,463Less: Expenses reimbursed by the Holding Company 1,72,944 1,70,463

Total Expenses — —

Profit/(Loss) before tax — —Tax expense

Current Tax — —

Deferred Tax — —

Profit/(Loss) for the year — —

Earnings per equity share:[Nominal Value per share: Rs.10 (2011: Rs.10)]

Basic and Diluted — —

The notes are an integral part of these financial statementsThis is the Statement of Profit and Loss referred to inour report of even date.

For Lovelock & Lewes For and on behalf of the Board of DirectorsFirm Registration No. 301056EChartered Accountants

Sunit Kumar Basu Partner P. K. Sen DirectorMembership No: 55000 M. Yelamanda DirectorHyderabad, 2nd May, 2012 Hyderabad, 2nd May, 2012


184


CASH FLOW STATEMENT


(`) (`)

A. Cash Flow from Operating Activities:Profit/(Loss) before taxation — —Changes in Working Capital:Increase/(Decrease) in trade payables 247 —Cash Generated from Operations 247 —Taxes paid — —Net cash generated from operations activities 247 —

B. Cash flow from Investing Activities: — —C. Cash flow from Financing Activities: — —

Net increase in cash and cash equivalents 247 —Cash and cash equivalents at beginning of year 89,956 89,956Cash and cash equivalents at end of year 90,203 89,956

Cash and cash equivalents comprise of:Cash on Hand — —Balances with Banks 90,203 89,956

Total 90,203 89,956

1. The above cash flow statement has been prepared under the “Indirect Method” as set out in AS-3 on ‘Cash Flow Statements’.2. The comparitive figures for the previous year have been re-arranged to conform with the revised presentation of the accounts.

This is the Cash Flow Statement referred to in our report of even date.

For and on behalf of the Board of Directors

P. K. Sen DirectorM. Yelamanda Director

For Lovelock & LewesFirm Registration No. 301056EChartered AccountantsSunit Kumar BasuPartnerMembership No: 55000Hyderabad, 2nd May, 2012

1 General Information

MRR Trading & Investment Company Limited is a wholly ownedsubsidiary of BFIL Finance Limited. MRR is having tenancy rights in acommercial premise at Eucharistic Congress Building No.1, 4th Floor,5 Convent Street, Colaba, Mumbai 400 039. The premise is owned byRoman Catholic Cathedral Trust.

2 Summary of significant accounting policies

2.1 Basic of preparation

These financial statements have been prepared in accordance with thegenerally accepted accounting principles in India under the historicalcost convention on accrual basis based on the principle of going concern.

All assets and liabilities have been classified as current or non-currentas per the Company’s normal operating cycle and other criteria set outin the Schedule VI to the Companies Act, 1956. Based on the natureof products and the time between the acquisition of assets for processingand their realisation in cash and cash equivalents, the Company hasascertained its operating cycle as 12 months for the purpose ofcurrent – non current classification of assets and liabilities.

3 Share Capital

3.1 Break up of Share Capital

Notes to the financial statements

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

(`) (`)

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

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

Subscribed and paid up:50,000 (2011:50,000)equity shares of ` 10/- each 5,00,000 5,00,000

Total 5,00,000 5,00,000

3.2 Rights, preferences and restrictions attached to shares

Equity Shares: The company has one class of equity shares having apar value of Rs.10 per share. Each shareholder is eligible for one voteper share held. In the event of liquidation, the equity shareholders areeligible to receive the remaining assets of the Company after distributionof all preferential amounts, in proportion to their shareholding.

3.3 Out of the above shares, 49,994 shares are held by BFIL Finance Limited,the holding company and the balance 6 shares are held by nomineesof the holding company jointly with the holding company. There is nomovement in the shareholder's equity during the year, including theprevious year.

4 Reserves and SurplusAs at As at

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

Surplus/(Deficit) in Statementof Profit and Loss

Balance as at the beginning of the year (4,16,160) (4,16,160)

Profit/(Loss) for the year — —

Balance as at the end of the year (4,16,160) (4,16,160)

5 Trade Payables

Trade Payables (Refer note 11 below) 13,483 13,236

Total 13,483 13,236

6 Long-term loans and advances

Balances with Government Authorities 7,120 7,120

Total 7,120 7,120

7 Cash and Bank balances

Cash and Cash equivalentsBank balance in current account 90,203 89,956

Total 90,203 89,956


185


Notes to the financial statements (Contd.)

8 Other expenseAs at As at

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

Rent 85,560 83,592

Rates & Taxes 61,872 61,872

Water Charges 7,009 11,625

Payment to Auditors

Audit Fee 12,000 12,000

Reimbursement of Expenses(including service tax) 1,483 1,236

Professional Fees 4,965 —

Bank Charges 55 138

Total 1,72,944 1,70,463

9 Earnings per share

Profit/(Loss) after tax — —Weighted average number ofequity shares 50,000 50,000Basic and Diluted earnings pershare (face value of Rs. 10) — —The earnings considered in ascertaining the Company's Earning PerShare (EPS) comprise net profit/(loss) after taxation. The number ofshares considered in computing Basic and Diluted EPS is the weightedaverage number of shares outstanding during the year.

10 Segment Reporting

The Company operates in a single business segment and hence nofurther disclosure is being made.

11 Micro, Small and Medium Enterprise Development Act, 2006

There are no Micro and Small enterprises, to which the company owesdues, or with which the company had transactions during the year,based on the information available with the company.

12 Related party disclosures

(a) Names of related parties and nature of relationship:

Where control existsHolding Company: BFIL Finance Limited

(b) Transactions/BalancesHolding Company

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

Transactions:

Reimbursement of expenses 1,72,944 1,70,463

Balances at the year endReceivables — —

13 The financial statements for the year ended March 31, 2011 had beenprepared as per the then applicable, pre-revised Schedule VI to theCompanies Act, 1956. Consequent to the notification of RevisedSchedule VI under the Companies Act, 1956, the financial statementsfor the year ended March 31,2012 have been prepared as per RevisedSchedule VI. Accordingly, the previous year figures have also beenreclassified to conform to current year’s classification. The adoption ofRevised Schedule VI for previous year figures does not impact recognitionand measurement principles followed for preparation of financialstatements.


REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 32NDASADH 2068 (16TH JULY, 2011)

Your Directors are pleased to submit their Report and Audited Accounts of yourCompany for the year ended 32nd Asadh 2068 (16th July, 2011).

SOCIO-ECONOMIC ENVIRONMENTThe unsettled political environment in Nepal continued through the year underreview. Intermittent disruptions and industrial unrest were palpable. Workersat the industrial belts of Biratnagar and Simra including those at the company’sfactories, went on strike in March 2011 demanding, inter alia, a 100% increasein wages. While the Company’s factories resumed operations after 8 days ofstrike, the Company was forced to declare an indefinite lockout from 16thJune, 2011 at its garments manufacturing Unit at Biratnagar after Companyofficials were locked inside the factory premises by agitating workers who wereillegally demanding wages for the period when they stayed away from work.The industry-wide dispute on minimum wages is pending before the SupremeCourt of Nepal for resolution.In its Economic Survey, the Government of Nepal, has estimated GDP growthfor the financial year ended mid July 2011 at 3.5% against 4% in the previousyear with Industry growing only at 1.4% compared to 3.3 % last year.During the year, the Tobacco Products (Control and Regulation) Act waspromulgated, which lays down the legal framework for regulation of production,sale, distribution and consumption of tobacco products. Whilst the legal cigaretteindustry accounts for almost 50% of the overall tobacco consumption in Nepal,the balance 50% is consumed mainly in the form of smuggled cigarettes (6%)bidi and khaini/other smokeless tobacco products (44%). The legal cigaretteIndustry contributes about 91% of the Government’s revenue from tobaccowith a share of about 4.6% of the Government’s total tax revenue. Other formsof tobacco products, constituting a significant share of tobacco consumptionbeing lightly taxed/evasion prone contribute only 9% of the government’srevenue from tobacco, and constitute less than half percent of the Government’stotal tax revenue.

A recent report on Tobacco Control in Nepal published by Ministry of Healthand Population inter alia has highlighted the low taxation on bidis and lack ofuniform taxation on all forms of tobacco products as some of the weaknessesin the Government’s tobacco industry related policies. The twin impacts ofdiscriminatory taxation and regulatory policy framework against the legalcigarette industry has led to steady and continuous erosion of legal cigarette’sshare in the overall tobacco basket, leading to several unintended and adverseconsequences like increase in smuggling of cigarettes and other tobaccoproducts and increase in consumption of lightly taxed/tax evaded tobaccoproducts etc. The World Health Organisation (WHO) in its Technical Manualon Tobacco Administration recognising such impact has highlighted theimportance of increasing taxes and prices for all tobacco products.The Tobacco control legislation which took effect from 7th August 2011incorporated certain provisions that place the legal cigarette industry at adisadvantage and are out of step with those followed in neighbouring countries.These are likely to encourage smuggling of cigarettes, evasion of taxes, as wellas fuel further growth in consumption of other forms of tobacco over cigarettes.The disproportionate size of warning on cigarette packs, proposed to beimplemented from November 2011, may lead to increased smuggling ofcigarette packs with less stringent/no health warnings. Further, the absence ofstandards on declaration of nicotine and absence of definition and standardson declaration of “other harmful ingredients” for all tobacco products wouldencourage sale of tobacco products with inadequate/no declarations such assmuggled cigarettes and non-cigarette tobacco products like bidis, chewingtobacco, khaini etc. by creating the perception in the minds of consumers thatthese products are “safer”. The non-cigarette tobacco products are manufacturedmainly in the unorganised sectors and are therefore also prone to tax evasion.Therefore, such discriminatory tobacco control policies, as enunciated above,lead to a skewed pattern of Tobacco consumption thereby not supporting theobjectives of Tobacco control and sub-optimising tax revenue collections ofthe Government. As a responsible member of the industry, your Company iscommitted to a pragmatic and purposeful policy for the country’s tobaccoindustry and continues to represent to the Government for reconsideration of

SURYA NEPAL PRIVATE LIMITED

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certain provisions of the Tobacco Control legislation that may not be consistentwith the approach of creating a pragmatic and purposeful policy framework.

COMPANY PERFORMANCEAmidst the challenging operating environment, the company maintained itsgrowth trajectory during the year under review. For the year ended 32nd Asadh2068 (July 16, 2011), the company recorded a 19% growth in sales with GrossTurnover (net of VAT) increasing to NRs. 1,328 ( ` 830) Crores from NRs.1,116(` 697.5) Crores in the previous year. The Profits after Tax at NRs. 254(` 158.8) Crores increased by 29% and return on net worth increased to 110%from 90% in the previous year. Cash generated from operations at NRs 198(` 123.8) Crores was however lower by NRs. 43 (` 26.9) Crores as comparedto previous year due to higher Trade Advances and increased Inventory.

CONTRIBUTION TO THE EXCHEQUERYour Company retained its status as the single largest private sector contributorto the Government Exchequer, accounting for about 3.5% of the total revenuesof the Government of Nepal. Your Company paid NRs. 710 (` 443.7) Croresby way of Excise Duty, VAT, Income Tax and other taxes during the year {PreviousYear: NRs. 622 (Rs. 389) Crores}.Your Company’s Excise Duty contribution to the exchequer constitutes nearly16% of Government’s total Excise revenue while the VAT and Income Taxcontribution constitutes nearly 3% of Government’s total VAT & Income Taxrevenue. The corporate income tax policy of the Government for multi businesscorporations like your Company, provides limited scope for setting of lossesarising out of other businesses with profits of the cigarette business. This actsas a disincentive to the business diversification plans of your Company. YourCompany continues to represent to the government to widen the scope ofbusiness loss set off to create an investment friendly environment which willalso support your Company’s business diversification.

EMPLOYMENT GENERATIONYour Company, through its multiple businesses, continues to providedirectly/indirectly livelihood to est. 130000 people in the country which includes12000 farmers and est. 30000 farm labourers. As a responsible corporate citizenof the country, your Company will continue to create enablers for generatingemployment and economic surpluses for the nation.

BUSINESS SEGMENTS

CIGARETTE BUSINESS

Brand PortfolioThe Company continues to invest in providing consumers a wide range ofchoices at laddered price points and in upgrading product quality.Keeping in mind the wide income dispersion of Nepal, operating at severalprice points is imperative to satisfy consumer needs for the modern form oftobacco consumption and also to counter the menace of illegal smuggling,both at the premium end of the market as well as the lower end of the pricetable.The current specific duty structure is optimal for meeting the objectives offulfilling consumer needs at different price points, quality upgradation andrevenue collection for the Government in a transparent and litigation freemanner.

Distribution and Supply Chain ManagementAmidst challenging circumstances, the company’s proactive supply chain andinventory management system ensured uninterrupted supplies to the tradeand consumers.

Manufacturing, Quality and ProjectsOn the manufacturing front, your company continued to invest in newtechnology cigarette making and packing lines, additional infrastructure, anddevelopment of human talent to reinforce superior and consistent productquality and to augment capacity. The construction of a second cigarette factorynear Pokhara has commenced and will position the company well for servicingconsumer demand for its products over the longer term.Your Company has entered into Project Coordination Agreements for thePokhara Cigarette Factory Project and Kathmandu Housing, Corporate Officeand Warehousing Project with the Central Projects office of the HoldingCompany, ITC Limited (ITC), India, to leverage ITC’s vast experience andexpertise in setting up Cigarette factories and world class energy saving GreenBuildings. The approval from the Department of Industries, Nepal has also beenreceived for implementation of above Project Co-ordination agreements.

EnergyEnergy conservation and efficiency continue to engage your Company’s attentionas areas of critical priority. Accordingly, several energy saving initiatives wereimplemented during the year to reduce the energy consumption per unit.

Environment Health and SafetyInstitutionalising systems relating to Environment, Health and Safety has enabledbenchmarked work environment for all employees.

From legal cigarettes 91%

From other tobacco products 9%

Legal Cigarettes 50%

Smuggled cigarettes 6%

Other Tobacco Products 44%

Source: WHO Survey & Industry Estimates Source: Industry Estimates

CONSUMPTION SHARE TAX REVENUE SHARE

Leaf TobaccoDespite the agro-climatic challenges of growing tobacco in Nepal, yourCompany’s continuous engagement with tobacco farmers from the stage ofseed development to crop harvesting have assisted in enhancing productivityand quality at the farm level thereby improving returns for the farmers.Encouraged by the interventions of the company, farmers have stepped up theacreage under tobacco cultivation. Inputs provided by your Company, facilitatedimprovements in quality of domestic grades over a period of time.

GARMENT BUSINESS - EXPORTA disturbed labour and IR situation prevailing in Biratnagar Industrial belt, ledto frequent disruption of operations at the Garments Manufacturing Unit.Consequently, your Company could not execute export orders on schedule,leading to cancellation of orders by customers, who have also ceased to placefurther orders. This has rendered continuity of export operations unviable.Given the above circumstances, your Company decided to close down theGarments Manufacturing Unit at Biratnagar and to that effect has signed a finalsettlement agreement with the non-management staff at Biratnagar.

GARMENT BUSINESS - DOMESTICIn the domestic garments market, “John Players” continued to retain itsleadership status in the branded apparel segment while the company’s massmarket brand, “Springwood”, positioned as an alternative to low price importsfrom China and South East Asia, has further consolidated its position in the‘value for money’ segment.

MATCHES BUSINESSIn the Safety Matches business, the Company’s brand “Tir”, has established astrong consumer franchise within a few years of its launch and has grown nearly20% during the year.

BUSINESS ADVISORY SERVICESYour Company has entered into the Business Advisory Services Agreement withITC, for sourcing of business advisory services in various areas like identificationof world-class technology, sharing of best practices, quality protocols andsystems, identification and evaluation of overseas vendors and Audits in thearea of Process and systems, construction projects and environment, healthand safety. The approval of the Department of Industries, Nepal has also beenreceived for this purpose.

DIVIDENDYour Directors have declared an Interim Dividend of NRs. 15.50 (` 9.69) perOrdinary Share for the year ended 32nd Asadh 2068 (July 16, 2011). Theconsequent outflow on this account, including Dividend Tax, amounts toNRs. 31.25 (` 19.53) Crores. Your Board has also recommended a Final Dividendof NRs. 96 (` 60) per Ordinary Share.All dividends during the year have been paid within the prescribed period andthere were no unclaimed dividends lying with the Company.

FINANCEIn the context of growth initiatives taken by your Company, agreement hasbeen entered into with ITC for a loan facility of NRs.195 (` 121.87) Crores. Theapprovals for the agreement have been received from the Department ofIndustries, Nepal and Nepal Rashtra Bank.

TAX MATTERSAs reported last year the Hon’ble Supreme Court of Nepal, during the year2009-10, had passed judgements in favour of your Company, with regard tocertain Excise and Income Tax demands on the issue of theoretical production.The Inland Revenue Department, citing the judgements passed in favour ofyour Company by the Hon’ble Supreme Court of Nepal, on 11th February,2011 decided the following administrative review petitions in favor of theCompany:

1. VAT demand - NRs. 7.55 (` 4.7) Crores for the financial year2058-59 (2001-02).

2. Income Tax demand (received during the year) — NRs. 4.91 (` 3.07)Crores for the financial year 2062-63 (2005-06).

All other pending Show Cause Notices (SCNs) and demands related to excise,income tax and VAT received from time to time on the issue of theoreticalproduction, are similarly based on an untenable contention by the Revenueauthorities that the Company could have produced more cigarettes than it hasactually produced in a given year, based on an input-output ratio allegedlysubmitted by the Company in the year 2047-48 and, that the Company isliable to pay taxes on such cigarettes that could have been theoreticallyproduced. This, despite the fact that the Company’s cigarette factory is under‘physical control’ of the Revenue authorities and the cigarettes produced areduly accounted for and certified as such by the Revenue authorities. Thecumulative demands on the Company on account of theoretical productionthat remains pending stand at NRs. 80.44 (` 50.27) Crores and comprise:

(a) Excise Demands - NRs. 27.80 (` 17.37) Crores. No fresh demand hasbeen received during the year.

(b) VAT Demands - NRs. 28.96 (` 18.10) Crores. No fresh demand hasbeen received during the year.

(c) Income Tax Demands - NRs. 23.68 (` 14.80) Crores. No fresh demand,except for NRs 4.91 (` 3.07) Crores for the financial year 2062-63(2005-06) as mentioned above, has been received during the year.

Out of the above NRs. 80.44 (` 50.27) Crores, demands aggregatingNRs. 66.81 (` 41.76) Crores are under appeal before Supreme Court anddemands aggregating NRs. 13.63 (` 8.52) Crores are under appeal beforeRevenue Tribunal / DG-Inland Revenue Department.Your Company has been advised by its eminent counsel that the cases madeout by the Department have no legal or factual basis and that the demandnotices being raised against your Company are not sustainable, particularly inthe light of the decision passed on 29th October 2009 in favour of the Companyby the Full Bench of the Hon’ble Supreme Court on similar matters. Thesubsequent decisions of the Supreme Court of Nepal and the Inland RevenueDepartment have further reinforced this position.

RISK MANAGEMENTYour Company’s Corporate Governance Policy lays down the structure, rolesand responsibilities of the key entities in the governance process and alsomandates periodic reviews of the key areas of operations. In addition, yourCompany has amongst others, robust policies, procedures and internal controlsystems covering areas such as Finance & Accounting and Information Technology.During the year, your Company has initiated a Company-wide implementationof a robust Enterprise Resource Planning (ERP) system which is expected tosignificantly augment the quality of business processes and systems.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVESYour Company continued with its commitment towards social developmentand welfare and initiated construction of a school building for the localcommunity around its second cigarette factory site near Pokhara. At Simra,your company continued to support the local community and administrationby inter alia providing aid towards school construction, repair of police counters,irrigation development for farmers, health camps etc.

PROMOTION OF TOURISM AND SPORTSYour Company continued to remain committed to its role as a responsiblecorporate citizen and promoted Tourism and Sports in the country under SuryaNepal Khelparyatan. In association with Nepal Tourism Board and Nepal GolfAssociation, your Company sponsored the country’s most premier professionalGolf tournament — the ‘Surya Nepal Masters’ and initiated the Surya NepalJunior Golf program for identifying and encouraging young and upcomingtalent.

EMPLOYEESThe Directors of your Company place on record their sincere appreciation forthe contribution made by the employees during the year.Your Company continues to provide best of employment conditions, includingfacilities like housing, medical etc.

DIRECTORSThere were no changes in the composition of the Board of Directors duringthe year.The numbers of shares held by your Directors in the Company as on32nd Asadh 2068 are annexed to this Report (Annexure I). The Directors haveconfirmed that none of them or their close relatives has any direct involvementor any personal interest in any transaction of sale or purchase or any kind ofcontract or arrangement connected with the business of the Company. Noamounts are due to the Company from any of the Directors, Managing Directoror their close relatives.The details of payments made during the year to the Directors, ManagingDirector and other Officials, by way of Board meeting fees etc., are also annexedto this Report (Annexure II).Details of Management expenses for the year 2067 / 68 are also annexed tothis Report (Annexure III).

AUDITORSM/s. N Amatya & Company, Chartered Accountants, Kathmandu, Nepal andM/s. Lovelock & Lewes, Chartered Accountants, Kolkata, India retire at theensuing Annual General Meeting.M/s. N Amatya & Company being eligible, have offered themselves forreappointment. M/s. Lovelock & Lewes, Chartered Accountants, Kolkata, Indiahave not offered themselves for reappointment. The Board of Directors haverecommended for approval of Shareholders the appointment of M/s. N Amatya& Company, Chartered Accountants, Kathmandu, Nepal and M/s. T. R. Upadhya& Co, Chartered Accountants, Kathmandu, Nepal as Joint Statutory Auditorsof the Company to hold such office from the conclusion of this Annual GeneralMeeting till the conclusion of the next Annual General Meeting.

FUTURE OUTLOOKYour Company will continue to explore and pursue opportunities for profitablegrowth and looks forward to the future with optimism and confidence.


3rd Aswin 2068 Y. C. Deveshwar K. N. Grant Sanjiv Keshava(20th September 2011) Chairman Director Managing Director


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Annexure I

Sl. No. Name of Director Number of Ordinary Shares ofNRs. 100/- each held singly and / or

jointly as on 32nd Asadh 2068(16th July-2011)

1. Y. C. Deveshwar Nil

2. A. K. Mukerji Nil

3. B. B. Chatterjee Nil

4. K. N. Grant Nil

5. S. R. Pandey 67,212

6. S. SJB Rana 600

7. Sanjiv Keshava Nil

Annexure II

THE AMOUNT OF REMUNERATION, ALLOWANCE AND FACILITIES PAID TODIRECTOR, MANAGING DIRECTOR, CHIEF EXECUTIVE AND OFFICIALS

During the financial year 2067/68 (2010-11), the following amounts were paidto the Directors.

Board Meeting Fee paid NRs. 41,176 (`. 25,735)

Incidental expenses paid NRs. 7,500 (`. 4,687)

Payment to/on behalf of the Managing Director for the financial year 2067/68:

Salary - NRs. 51,00,000 (`. 31,87,500)

Allowances - NRs. 70,29,830 (`. 43,93,644)

In addition to the above, the Company also provided the following to theManaging Director:

Fully furnished accommodation with gas, electricity, water, three domestichelpers, furnishings and necessary security at his residence.Airfares incurred for the Managing Director and his family for the purposeof Leave Travel & Reporting Trips.Entrance fees and annual subscription charges for two clubs.Personal accident insurance.Company car with driver and telephone at residence.

Payment to/on behalf of officials for the financial year 2067/68:Salary - NRs. 1,47,10,172 (` 91,93,857)Allowances - NRs.1,27,06,855 (` 79,41,784)In addition to the above, some of the officials have been provided the followingas 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 ofLeave 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 administrationfor the financial year 2067/68 (2010-11) comprising postage, telephone, telex,fax, legal and service fees, bank charges, rates & taxes, printing & stationery,business entertainment, rent, electricity, fuel & water, repair & improvement,travel & conveyance, insurance premium, board meeting fees, donations, books& periodicals, miscellaneous expenses etc. amounted to NRs. 57,59,30,351(`35,99,56,469).

AUDITORS’ REPORT TO THE SHAREHOLDERS OF SURYA NEPAL PRIVATELIMITED

We have audited the accompanying Balance Sheet of Surya Nepal PrivateLimited as at Asadh 32, 2068 (July 16, 2011), the related Profit and Loss Accountfor the year ended on that date annexed thereto and the Cash Flow Statementfor the year ended on that date. These financial statements are the responsibilityof the management of the Company. Our responsibility is to express an opinionon these financial statements based on our audit.

We have conducted our audit in accordance with Nepal Standards on Auditingor relevant practices. Those Standards or relevant practices require that weplan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statements presentation. We believe that ouraudit provides a reasonable basis for our opinion.

We report that:

a) We have obtained all the information and explanations which to the bestof our knowledge and belief were considered necessary for the purposeof our audit;

b) The enclosed Balance Sheet, Profit and Loss Account and the Statementof 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 accountmaintained by the Company;

c) The books and records of the Company have been maintained accuratelyas required by law;

d) In our opinion and to the best of our information and according to theexplanations given to us the enclosed financial statements read with the

notes attached thereto, in accordance with Nepal Accounting Standardsor relevant practices, give a true and fair view of:

i) in the case of Balance Sheet, the state of affairs of the Company asat Asadh 32, 2068 (July 16, 2011);

ii) in the case of Profit & Loss Account, the profit of the Company forthe year ended on Asadh 32, 2068 (July 16, 2011);

iii) in the case of the Statement of Cash Flow, the cash flows of theCompany for the year ended on Asadh 32, 2068 (July 16, 2011).

e) In our opinion and to the best of our information and according to theexplanations given to us and from our examination of the books andrecords of the Company, carried out in accordance with the generallyaccepted auditing practices in Nepal, we have neither come across caseswhere the Board of Directors or any member thereof or any employee ofthe Company has acted contrary to the provisions of Law relating to theaccounts or committed any misappropriation or caused loss or damageto the Company nor any fraud relating to the accounts committed in theCompany.

Nem Lal Amatya Partha MitraPartner PartnerN Amatya & Co. Lovelock & LewesChartered Accountants Chartered Accountants

Date : 3rd Aswin 2068 (20th September 2011)

Place : Kolkata

BALANCE SHEET AS AT 32ND ASADH 2068 (16TH JULY, 2011)

Figures in NRs. Figures in Rs. Figures in NRs. Figures in Rs.

As at As at As at As at32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067

Schedule (16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

CAPITAL & LIABILITIES

SHARE CAPITAL AND RESERVES

(a) Share Capital 1 2,01,60,00,000 1,26,00,00,000 2,01,60,00,000 1,26,00,00,000

(b) Reserves & Surplus 2 69,29,87,549 43,31,17,214 39,68,03,659 24,80,02,287

Total 2,70,89,87,549 1,69,31,17,214 2,41,28,03,659 1,50,80,02,287

ASSETS

(1) Fixed Assets 3

(a) Gross Block 3,84,86,37,474 2,40,53,98,421 2,99,08,67,216 1,86,92,92,010

(b) Less: Accumulated Depreciation 1,62,70,82,817 1,01,69,26,761 1,38,36,10,520 86,47,56,575

(c) Net Block 2,22,15,54,657 1,38,84,71,660 1,60,72,56,696 1,00,45,35,435

(d) Capital Work-in-Progress and In-transit 14,41,22,586 9,00,76,616 36,06,01,827 22,53,76,142

(2) Investments 4 10,98,82,338 6,86,76,461 10,98,82,338 6,86,76,461

(3) Deferred Tax Asset (Net) (Refer 2F of Schedule 18) 1,09,15,022 68,21,889 2,89,86,715 1,81,16,697

(4) Current Assets

(a) Inventories 5 2,16,88,04,144 1,35,55,02,590 1,36,57,74,940 85,36,09,337

(b) Sundry Debtors 6 9,22,76,414 5,76,72,759 10,15,85,334 6,34,90,834

(c) Cash and Bank Balances 7 1,43,24,218 89,52,636 91,66,48,884 57,29,05,553

(d) Loans and Advances 8 1,89,82,87,023 1,18,64,29,388 60,98,42,066 38,11,51,291

Total 4,17,36,91,799 2,60,85,57,373 2,99,38,51,224 1,87,11,57,015

Less: Current Liabilities and Provisions

(a) Short Term Borrowings 9 73,32,47,775 45,82,79,859 — —

(b) Liabilities 10 85,19,70,328 53,24,81,457 78,13,71,014 48,83,56,884

(c) Provisions 11 2,36,59,60,750 1,47,87,25,469 1,90,64,04,127 1,19,15,02,579

Total 3,95,11,78,853 2,46,94,86,785 2,68,77,75,141 1,67,98,59,463

Net Current Assets 22,25,12,946 13,90,70,588 30,60,76,083 19,12,97,552

Total 2,70,89,87,549 1,69,31,17,214 2,41,28,03,659 1,50,80,02,287

Notes to the Accounts and Contingent Liabilities 18 — — — —

The schedules referred to above form an integral part of the Balance Sheet.

This is the Balance Sheet referred to in our Report of even date.


189

Subhraketan Mitra Sanjiv Keshava Saurya SJB Rana K N Grant Y C DeveshwarHead of Finance Managing Director Alternate Director Director Chairman

S R Pandey A K Mukerji B B Chatterjee Nem Lal Amatya Partha MitraDirector Director Director Partner Partner

N. Amatya & Co. Lovelock & LewesDate: 3rd Aswin 2068 (20th September 2011) Chartered Accountants Chartered Accountants


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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 32ND ASADH 2068 (16TH JULY, 2011)

Figures in NRs. Figures in ` Figures in NRs. Figures in `

For the year ended For the year ended For the year ended For the year ended32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067

Schedule (16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

Gross Revenue 12 13,27,66,46,095 8,29,79,03,809 11,15,51,95,592 6,97,19,97,245

Less: Duties 13 4,24,33,49,162 2,65,20,93,226 3,87,87,93,937 2,42,42,46,211

Net Sales 9,03,32,96,933 5,64,58,10,583 7,27,64,01,655 4,54,77,51,034

Raw Materials Consumed, etc. 14 3,41,16,08,705 2,13,22,55,441 2,92,35,79,313 1,82,72,37,071

Cost of Sales 3,41,16,08,705 2,13,22,55,441 2,92,35,79,313 1,82,72,37,071

Gross Profit 5,62,16,88,228 3,51,35,55,142 4,35,28,22,342 2,72,05,13,963

Other Income 15 6,06,11,071 3,78,81,920 10,12,62,733 6,32,89,208

Total 5,68,22,99,299 3,55,14,37,062 4,45,40,85,075 2,78,38,03,171

Manufacturing, Admin, Selling Expenses etc. 16 1,29,55,93,597 80,97,46,001 1,06,37,93,136 66,48,70,709

Provision for Employees' Bonus 35,26,02,982 22,03,76,864 27,24,88,766 17,03,05,479

Operating Profit 4,03,41,02,720 2,52,13,14,197 3,11,78,03,173 1,94,86,26,983

Interest 3,25,26,939 2,03,29,337 — —

Depreciation 26,97,01,443 16,85,63,403 22,44,55,190 14,02,84,494

Loss on Fixed Assets sold / discarded (Net) 17,05,951 10,66,219 1,07,03,671 66,89,794

Profit before Taxation 3,73,01,68,387 2,33,13,55,238 2,88,26,44,312 1,80,16,52,695

Provision for Taxation 17 1,18,61,44,497 74,13,40,311 90,82,98,132 56,76,86,332

Profit after Taxation 2,54,40,23,890 1,59,00,14,927 1,97,43,46,180 1,23,39,66,363

Available for Appropriation 2,54,40,23,890 1,59,00,14,927 1,97,43,46,180 1,23,39,66,363

Appropriation

Provision for Employees' Housing 20,41,38,568 12,75,86,605 15,77,56,654 9,85,97,909

Interim Dividend 31,24,80,000 19,53,00,000 25,20,00,000 15,75,00,000

Proposed Final Dividend 1,93,53,60,000 1,20,96,00,000 1,56,24,00,000 97,65,00,000

Balance Carried Over to Balance Sheet 9,20,45,322 5,75,28,322 21,89,526 13,68,454

2,54,40,23,890 1,59,00,14,927 1,97,43,46,180 1,23,39,66,363

Notes to the Accounts and Contingent Liabilities 18

The Schedules referred to above form an integral part of the Profit & Loss Account.

This is the Profit & Loss Account referred to in our Report of even date.





191

CASH FLOW STATEMENT FOR THE YEAR ENDED 32ND ASADH 2068 (16TH JULY, 2011)


For the year ended For the year ended For the year ended For the year ended32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067(16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

A Cash Flow From Operating Activities

Net Profit Before Tax 3,73,01,68,387 2,33,13,55,242 2,88,26,44,312 1,80,16,52,695

Adjustments for :

Depreciation 26,97,01,443 16,85,63,402 22,44,55,190 14,02,84,494

Interest 3,25,26,939 2,03,29,337 — —Interest from Investments (56,83,125) (35,51,953) (56,83,125) (35,51,953)

Interest on Short-Term/Call Deposits (3,39,86,968) (2,12,41,855) (8,14,64,792) (5,09,15,495)

Unrealised Loss/(Gain) on Foreign Exchange (Net) 4,71,157 2,94,473 8,93,315 5,58,322

Loss on Fixed Assets sold/discarded (Net) 17,05,951 10,66,219 1,07,03,671 66,89,794

Provision for Doubtful Debts and Advance 2,20,118 1,37,574 17,41,531 10,88,457

Provision for Sales Return 95,23,511 59,52,194 26,57,100 16,60,688

Provision for Doubtful Advance/Debts written back (25,82,676) (16,14,173) (68,987) (43,117)

Operating Profit Before Working Capital Changes 4,00,20,64,737 2,50,12,90,460 3,03,58,78,215 1,89,74,23,885

Adjustments for :

Trade and Other Receivables (1,26,66,75,623) (79,16,72,264) (40,25,09,616) (25,15,68,509)

Inventories (80,30,29,204) (50,18,93,253) (26,11,89,671) (16,32,43,544)

Trade Payables 4,73,62,619 2,96,01,637 4,00,27,379 2,50,17,111

Cash Generated From Operation 1,97,97,22,529 1,23,73,26,580 2,41,22,06,307 1,50,76,28,943

Income Tax Paid (1,14,42,15,434) (71,51,34,646) (92,51,49,911) (57,82,18,694)

Net Cash From Operating Activities (A) 83,55,07,095 52,21,91,934 1,48,70,56,396 92,94,10,249

B Cash Flow From Investing Activities

Purchase of Fixed Assets (66,50,42,172) (41,56,51,358) (50,28,30,267) (31,42,68,917)

Proceeds from Disposal of Fixed Assets 38,899 24,312 27,210 17,006

Interest Received 3,98,38,715 2,48,99,197 8,89,22,631 5,55,76,644

Net Cash Used in Investing Activities (B) (62,51,64,558) (39,07,27,849) (41,38,80,426) (25,86,75,267)

C Cash Flow From Financing Activities

Net Increase/(Decrease) in CashCredit/Overdraft Facilities 73,32,47,775 45,82,79,859 — —

Interest Paid (3,10,43,821) (1,94,02,388) — —

Dividends Paid (1,81,44,00,000) (1,13,40,00,000) (1,97,56,80,000) (1,23,48,00,000)

Net Cash Used in Financing Activities (C) (1,11,21,96,046) (69,51,22,529) (1,97,56,80,000) (1,23,48,00,000)

Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) (90,18,53,509) (56,36,58,444) (90,25,04,030) (56,40,65,018)

Cash and Cash Equivalents (Opening balance) 91,66,48,884 57,29,05,553 1,82,00,46,229 1,13,75,28,893

Cash and Cash Equivalents (Closing balance) 1,47,95,375 92,47,109 91,75,42,199 57,34,63,875

Cash and Cash Equivalents Comprises:

Cash and Bank Balances 1,43,24,218 89,52,636 91,66,48,884 57,29,05,553

Unrealised Loss/(Gain) on Foreign Currency Cash and Cash Equivalents 4,71,157 2,94,473 8,93,315 5,58,322

Total 1,47,95,375 92,47,109 91,75,42,199 57,34,63,875

This is the Cash Flow Statement referred to in our Report of even date.




STATEMENT OF CHANGE IN EQUITY FOR THE YEAR ENDED 32ND ASADH 2068 (16TH JULY, 2011)

Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in `

As at As at As at As at32nd Asadh 2067 32nd Asadh 2067 32nd Asadh 2068 32nd Asadh 2068(16th July, 2010) (16th July, 2010) Addition Addition Withdrawal Withdrawal (16th July, 2011) (16th July, 2011)

SCHEDULE 2 : RESERVES & SURPLUS

Capital Reserve

Revaluation of Land 1,21,81,280 76,13,300 — — — — 1,21,81,280 76,13,300

Revenue Reserve

General Reserve 1,34,85,985 84,28,741 9,20,45,322 5,75,28,322 — — 10,55,31,307 6,59,57,063

Housing Fund

Provision for Employee Housing 37,11,36,394 23,19,60,246 20,41,38,568 12,75,86,605 — — 57,52,74,962 35,95,46,851

Surplus

Profit & Loss Account — — 9,20,45,322 5,75,28,322 9,20,45,322 5,75,28,322 — —

39,68,03,659 24,80,02,287 38,82,29,212 24,26,43,249 9,20,45,322 5,75,28,322 69,29,87,549 43,31,17,214


192

Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in ` Figures in NRs. Figures in `

Share Capital Share Capital Revaluation Revaluation General General Employees' Employees' Surplus Surplus Total TotalReserve Reserve Reserve Reserve Housing Housing

Reserve Reserve

Balance as at 31st Asadh 2066 (15th July, 2009) 2,01,60,00,000 1,26,00,00,000 1,21,81,280 76,13,300 1,12,96,459 70,60,286 21,33,79,740 13,33,62,338 — — 2,25,28,57,479 1,40,80,35,924

Net Profit for the year — — — — — — — — 1,97,43,46,180 1,23,39,66,363 1,97,43,46,180 1,23,39,66,363

Transferred to Employees' Housing Reserve — — — — — — 15,77,56,654 9,85,97,909 (15,77,56,654) (9,85,97,909) — —

Issue of Bonus Shares — — — — — — — — — — — —

Dividend — — — — — — — — (1,81,44,00,000)(1,13,40,00,000)(1,81,44,00,000)(1,13,40,00,000)

Transferred to Reserve — — — — 21,89,526 13,68,454 — — (21,89,526) (13,68,454) — —

Total — — — — 21,89,526 13,68,454 15,77,56,654 9,85,97,909 — — 15,99,46,180 9,99,66,363

Balance as at 32nd Asadh 2067 (16th July, 2010) 2,01,60,00,000 1,26,00,00,000 1,21,81,280 76,13,300 1,34,85,985 84,28,740 37,11,36,394 23,19,60,247 — — 2,41,28,03,659 1,50,80,02,287

Net Profit for the year — — — — — — — — 2,54,40,23,890 1,59,00,14,927 2,54,40,23,890 1,59,00,14,927

Transferred to Employees' Housing Reserve — — — — — — 20,41,38,568 12,75,86,605 (20,41,38,568) (12,75,86,605) — —

Dividend — — — — — — — — (2,24,78,40,000)(1,40,49,00,000)(2,24,78,40,000)(1,40,49,00,000)

Transferred to Reserve — — — — 9,20,45,322 5,75,28,322 — — (9,20,45,322) (5,75,28,322) — —

Total — — — — 9,20,45,322 5,75,28,322 20,41,38,568 12,75,86,605 — — 29,61,83,890 18,51,14,927

Balance as at 32nd Asadh 2068 (16th July, 2011) 2,01,60,00,000 1,26,00,00,000 1,21,81,280 76,13,300 10,55,31,307 6,59,57,062 57,52,74,962 35,95,46,852 — — 2,70,89,87,549 1,69,31,17,214

SCHEDULES TO THE ACCOUNTS


As at As at As at As at32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067(16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

SCHEDULE 1: SHARE CAPITAL

Authorised

65,000,000 Ordinary Shares ofNRs. 100/-each 6,50,00,00,000 4,06,25,00,000 6,50,00,00,000 4,06,25,00,000

Issued, Subscribed & Paid up

20,160,000 Ordinary Shares ofNRs.100/- each, fully paid 2,01,60,00,000 1,26,00,00,000 2,01,60,00,000 1,26,00,00,000

2,01,60,00,000 1,26,00,00,000 2,01,60,00,000 1,26,00,00,000

Out of the above:

1. 16,800,000 Ordinary Shares were issued as fully paid up bonus shares in 2065/66 (2008/09).

2. 2,800,000 Ordinary Shares were issued as fully paid up bonus shares in 2060/61 (2003/04).

3. 280,000 Ordinary Shares were issued as fully paid up bonus shares in 2052/53 (1995/96).

4. 11,894,400 Ordinary Shares are held by the Holding Company, ITC Limited.

Reconciliation of number of Shares outstanding:

Number of Shares

At the beginning of the year 2,01,60,000 2,01,60,000

At the end of the year 2,01,60,000 2,01,60,000


193

SCH

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As at

As

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.2067

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s Ad

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s W

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Fo

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/ W

ithdr

awals

/ 32

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32.03

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32

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32

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) (16

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(16.0

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0) Ad

justm

ents

Adjus

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ts (1

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(16.0

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(16.0

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justm

ents

Adjus

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1) (1

6.07.2

011)

(16.0

7.201

1) (1

6.07.2

010)

(16.0

7.201

0)

Land &

Land

Dev

elopm

ent

22,11

,87,99

113

,82,42

,495

2,46,0

2,000

1,53,7

6,250

——

24,57

,89,99

115

,36,18

,745

—

——

——

——

—24

,57,89

,991

15,36

,18,74

522

,11,87

,991

13,82

,42,49

5

Build

ings

1.65

48,01

,40,44

930

,00,87

,780

2,69,7

3,891

1,68,5

8,682

13,98

,788

8,74,2

4350

,57,15

,552

31,60

,72,21

910

,18,64

,348

6,36,6

5,218

1,44,2

9,132

90,18

,208

7,98,5

724,9

9,108

11,54

,94,90

87,2

1,84,3

1839

,02,20

,644

24,38

,87,90

137

,82,76

,101

23,64

,22,56

2

Plant

& Ma

chine

ry 5.3

02,0

9,53,7

6,681

1,30,9

6,10,4

2678

,95,67

,813

49,34

,79,88

31,9

4,73,7

661,2

1,71,1

042,8

6,54,7

0,728

1,79,0

9,19,2

051,2

1,38,3

1,628

75,86

,44,76

824

,03,75

,146*

15,02

,34,46

61,9

4,61,8

961,2

1,63,6

851,4

3,47,4

4,878

89,67

,15,54

91,4

3,07,2

5,850

89,42

,03,65

688

,15,45

,053

55,09

,65,65

8

Furni

ture &

Fixtu

res

3.40 &

5.30

2,64,7

3,908

1,65,4

6,192

31,15

,330

19,47

,081

18,37

,353

11,48

,346

2,77,5

1,885

1,73,4

4,927

1,26,8

8,920

79,30

,574

17,82

,241

11,13

,901

16,51

,924

10,32

,453

1,28,1

9,237

80,12

,022

1,49,3

2,648

93,32

,905

1,37,8

4,988

86,15

,618

Vehic

les

5.30

6,60,1

2,749

4,12,5

7,969

1,47,5

8,106

92,23

,816

6,39,8

523,9

9,908

8,01,3

1,003

5,00,8

1,877

1,25,1

8,939

78,24

,337

49,69

,576

31,05

,985

3,55,0

892,2

1,931

1,71,3

3,426

1,07,0

8,391

6,29,9

7,577

3,93,7

3,486

5,34,9

3,810

3,34,3

3,632

Comp

uters

7.30

4,90,9

7,420

3,06,8

5,888

87,46

,902

54,66

,814

31,09

,777

19,43

,611

5,47,3

4,545

3,42,0

9,091

2,69,6

1,988

1,68,5

1,243

43,43

,794

27,14

,871

29,58

,591

18,49

,119

2,83,4

7,191

1,77,1

6,995

2,63,8

7,354

1,64,9

2,096

2,21,3

5,432

1,38,3

4,645

Offic

e Equ

ipmen

ts 5.3

05,2

5,78,0

183,2

8,61,2

601,7

9,80,2

121,1

2,37,6

3515

,14,46

09,4

6,538

6,90,4

3,770

4,31,5

2,357

1,57,4

4,697

98,40

,435

38,01

,554

23,75

,972

10,03

,074

6,26,9

211,8

5,43,1

771,1

5,89,4

865,0

5,00,5

933,1

5,62,8

713,6

8,33,3

212,3

0,20,8

25

Total

2,9

9,08,6

7,216

1,86,9

2,92,0

1088

,57,44

,254

55,35

,90,16

12,7

9,73,9

961,7

4,83,7

503,8

4,86,3

7,474

2,40,5

3,98,4

211,3

8,36,1

0,520

86,47

,56,57

526

,97,01

,443

16,85

,63,40

32,6

2,29,1

461,6

3,93,2

171,6

2,70,8

2,817

1,01,6

9,26,7

612,2

2,15,5

4,657

1,38,8

4,71,6

601,6

0,72,5

6,696

1,00

,45,35

,435

Capit

al Wo

rk-in-

Progre

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din

Transi

t36

,06,01

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22,53

,76,14

262

,84,22

,353

39,27

,63,97

084

,49,01

,594

52,80

,63,49

614

,41,22

,586

9,00,7

6,616

—

——

——

——

— 14

,41,22

,586

9,00

,76,61

636

,06,01

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22,53

,76,14

2

Gran

d Tota

l 3,3

5,14,6

9,043

2,09

,46,68

,152

1,51,4

1,66,6

07 94

,63,54

,131

87,28

,75,59

0 54

,55,47

,246

3,99

,27,60

,060

2,49

,54,75

,037

1,38

,36,10

,520

86,47

,56,57

5 26

,97,01

,443

16,85

,63,40

3 2,

62,29

,146

1,63,9

3,217

1,62,7

0,82,8

171,0

1,69,2

6,761

2,36,5

6,77,2

431,4

7,85,4

8,276

1,96,7

8,58,5

231,2

2,99,1

1,577

Previo

us Ye

ar 2,9

3,53,6

3,403

1,83,4

6,02,1

2764

,60,77

,772

40,37

,98,60

722

,99,72

,132

14,37

,32,58

23,3

5,14,6

9,043

2,09

,46,68

,152

1,23,5

1,49,0

76 77

,19,68

,172

22,44

,55,19

014

,02,84

,494

7,59,9

3,746

4,74

,96,09

11,3

8,36,1

0,520

86,47

,56,57

51,9

6,78,5

8,523

1,22,9

9,11,5

77


194

SCHEDULES TO THE ACCOUNTS (Contd.)Figures in NRs. Figures in ` Figures in NRs. Figures in `

As at As at As at As at32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067(16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

SCHEDULE 4 : INVESTMENTS – LONG TERMInvestment in Stocks issued by Nepal Government5% Bikash Rinpatra, 2071* 8,42,50,000 5,26,56,250 8,42,50,000 5,26,56,250Investment in Promissory Note issued by Nepal Government6.5% Bikash Rinpatra, 2075* 2,56,32,338 1,60,20,211 2,56,32,338 1,60,20,211

10,98,82,338 6,86,76,461 10,98,82,338 6,86,76,461* Pledged with a bank for obtaining letter of credit, guarantee facilities.

SCHEDULE 5 : INVENTORIESStores & Supplies (including in-transit) 6,70,00,391 4,18,75,244 6,94,63,908 4,34,14,943Raw Materials (including in-transit) 94,15,55,595 58,84,72,247 78,11,22,138 48,82,01,335Stock-In-Process 4,88,97,470 3,05,60,919 2,48,30,840 1,55,19,275Finished Goods

At Cost 1,10,59,49,490 69,12,18,431 47,09,44,945 29,43,40,591At Net Realisable Value 54,01,198 33,75,749 1,94,13,109 1,21,33,193

2,16,88,04,144 1,35,55,02,590 1,36,57,74,940 85,36,09,337

SCHEDULE 6 : SUNDRY DEBTORS(Receivable within twelve months, unless otherwise stated)Due for more than six months

Good and Secured 2,22,269 1,38,918 2,66,137 1,66,336Good and Unsecured

From Holding Company 21,60,000 13,50,00 21,60,000 13,50,000From Others 32,06,036 20,03,773 24,23,264 15,14,540

Doubtful and Unsecured - From Others — — 10,26,983 6,41,864Due for less than six months - Considered good

Secured 15,27,117 9,54,448 15,63,247 9,77,029Unsecured

From Holding Company 2,07,51,909 1,29,69,943 3,60,69,509 2,25,43,443From Others 6,44,09,083 4,02,55,677 5,91,03,177 3,69,39,486

9,22,76,414 5,76,72,759 10,26,12,317 6,41,32,698Less : Provision for Doubtful Debts — — 10,26,983 6,41,864

9,22,76,414 5,76,72,759 10,15,85,334 6,34,90,834

SCHEDULE 7 : CASH AND BANK BALANCESCash on Hand 74,092 46,308 1,20,394 75,246Cheques on Hand — — 1,99,00,000 1,24,37,500Cash At Bank

Current Account 70,93,018 44,33,135 1,82,92,668 1,14,32,918Savings Account (Provident Fund) 54,417 34,011 54,026 33,766

Short-Term Call Deposits 71,02,691 44,39,182 87,82,81,796 54,89,26,1231,43,24,218 89,52,636 91,66,48,884 57,29,05,553

SCHEDULE 8 : LOANS & ADVANCES(Recoverable within twelve months, unless otherwise stated)Receivables from Holding Company (Net) 1,68,47,71,406 1,05,29,82,129 36,84,74,089 23,02,96,306Loan/Advance to Employees 10,16,24,407 6,35,15,254 11,05,75,415 6,91,09,634[Includes NRs. 8,85,60,703 (` 5,53,50,439){(2066-67(2009-10) - NRs. 9,59,90,118 (` 5,99,93,824)}recoverable after twelve months]Margin Money Deposit 1,60,198 1,00,124 1,10,355 68,972Advance to Others 3,66,07,793 2,28,79,870 4,83,94,692 3,02,46,682Prepaid Expenses 41,52,510 25,95,318 43,52,841 27,20,526Accrued Interest Receivable 8,32,749 5,20,468 10,01,371 6,25,857Deposits : With Government Authorities 6,42,86,000 4,01,78,750 6,80,01,045 4,25,00,653

With Others 1,22,89,993 76,81,246 1,67,05,865 1,04,41,1651,90,47,25,056 1,19,04,53,159 61,76,15,673 38,60,09,795

Less : Provision for Doubtful Advance 64,38,033 40,23,771 77,73,607 48,58,5041,89,82,87,023 1,18,64,29,388 60,98,42,066 38,11,51,291

SCHEDULE 9 : SHORT TERM BORROWINGSSecuredCash Credit/Overdraft Facilities from Banks * 73,32,47,775 45,82,79,859 — —

73,32,47,775 45,82,79,859 — —*Secured by charge over certain land and building of the Company.

SCHEDULE 10 : CURRENT LIABILITIES(Payable within twelve months, unless otherwise stated)

Interest Accrued but not due - Short Term Borrowings 14,83,118 9,26,949 — —Retention Money 77,01,794 48,13,621 78,11,885 48,82,428Sundry Creditors 62,57,55,214 39,10,97,009 50,55,30,502 31,59,56,564Advances From Wholesale Dealers 19,07,97,357 11,92,48,348 24,85,24,613 15,53,27,883Deposits From Wholesale Dealers 59,00,000 36,87,500 59,50,000 37,18,750Other Liabilities 2,03,32,845 1,27,08,030 1,35,54,014 84,71,259

85,19,70,328 53,24,81,457 78,13,71,014 48,83,56,884SCHEDULE 11: PROVISIONSProvision for Income Tax 7,73,04,106 4,83,15,066 5,34,46,736 3,34,04,210[Net of payment of Income Tax Advance/Deposits amounting toNRs. 1,17,90,32,927 (` 73,68,95,579)2066-67 (2009-10) NRs. 95,17,97,108 (` 59,48,73,193)}]Provision for Retirement and Other Employee Benefits 4,08,16,644 2,55,10,403 3,85,57,391 2,40,98,369Provision for Interim Dividend 31,24,80,000 19,53,00,000 25,20,00,000 15,75,00,000Provision for Proposed Final Dividend

1,93,53,60,000 1,20,96,00,000 1,56,24,00,000 97,65,00,002,36,59,60,750 1,47,87,25,469 1,90,64,04,127 1,19,15,02,579

SCHEDULES TO THE ACCOUNTS (Contd.) Figures in NRs. Figures in ` Figures in NRs. Figures in `For the year ended For the year ended For the year ended For the year ended

32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067(16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

SCHEDULE 12 : GROSS REVENUEDomestic :

Cigarette 12,79,09,40,843 7,99,43,38,027 10,78,63,71,147 6,74,14,81,967Garments 8,68,42,480 5,42,76,550 7,47,59,603 4,67,24,752

Matches 9,51,45,565 5,94,65,978 7,97,26,289 4,98,28,931Export :

Garments 30,37,17,207 18,98,23,254 21,43,38,553 13,39,61,595 13,27,66,46,095 8,29,79,03,809 11,15,51,95,592 6,97,19,97,245SCHEDULE 13 : DUTIESExcise Duty 4,17,66,29,284 2,61,03,93,303 3,81,42,13,414 2,38,38,83,384Sticker Charges 6,67,19,878 4,16,99,923 6,45,80,523 4,03,62,827

4,24,33,49,162 2,65,20,93,226 3,87,87,93,937 2,42,42,46,211SCHEDULE 14 : RAW MATERIALS CONSUMED ETC.Leaf 1,88,13,51,475 1,17,58,44,672 1,63,54,05,858 1,02,21,28,661Casing Materials 2,15,25,431 1,34,53,394 1,90,27,953 1,18,92,471Wrapping Materials 1,09,78,30,138 68,61,43,836 94,39,19,217 58,99,49,511Fabrics, Trims etc. * 31,17,06,854 19,48,16,784 20,38,49,632 12,74,06,020Purchase and Contract Manufacturing Charges 12,68,40,185 7,92,75,116 10,19,73,039 6,37,33,149

3,43,92,54,083 2,14,95,33,802 2,90,41,75,699 1,81,51,09,812Allocation of overheads etc. on Finished GoodsOpening 4,46,25,318 2,78,90,824 6,40,28,932 4,00,18,083Closing (7,22,70,696) (4,51,69,185) (4,46,25,318) (2,78,90,824)

3,41,16,08,705 2,13,22,55,441 2,92,35,79,313 1,82,72,37,071Note:* Includes write down of Inventories amounting to NRs. 5,69,71,291 (` 3,56,07,057) {2066-67 (2009-10) - NRs 1,28,18,439 (` 80,11,524)}

SCHEDULE 15 : OTHER INCOME

Interest Received 1,03,99,820 64,99,888 67,68,502 42,30,314Less: Interest paid on Trading Debts 17,16,584 10,72,865 20,00,883 12,50,552

86,83,236 54,27,023 47,67,619 29,79,762Interest on Short Term/Call Deposit with Bank 3,39,86,968 2,12,41,855 8,14,64,792 5,09,15,495Interest from Investments 56,83,125 35,51,953 56,83,125 35,51,953Provision for doubtful advance/debts written back 25,82,676 16,14,173 68,987 43,117Miscellaneous Income 96,75,066 60,46,916 92,78,210 57,98,881

6,06,11,071 3,78,81,920 10,12,62,733 6,32,89,208SCHEDULE 16 : MANUFACTURING, ADMIN, SELLING EXPENSES ETC.

Salaries, Wages & Allowances 30,54,02,776 19,08,76,735 25,92,90,147 16,20,56,341Contribution to Provident Fund 97,93,702 61,21,064 84,74,071 52,96,294Labour & Staff Welfare 2,30,62,861 1,44,14,288 2,16,11,239 1,35,07,024Rent 5,54,74,912 3,46,71,820 4,43,93,855 2,77,46,159Electricity, Fuel & Water 10,37,85,608 6,48,66,005 8,10,81,841 5,06,76,151Rates & Taxes 52,16,431 32,60,269 11,03,162 6,89,476Insurance Premium 4,13,42,734 2,58,39,209 3,97,57,392 2,48,48,370Repairs & Improvement - Depreciable Assets 13,01,98,565 8,13,74,103 9,80,67,962 6,12,92,476Maintenance - Other Properties 2,75,12,667 1,71,95,417 1,93,23,349 1,20,77,093Safety & Pollution Control Cost 74,83,639 46,77,274 50,62,937 31,64,336Consumable Stores & Spares * 6,06,18,465 3,78,86,541 1,43,45,842 89,66,151Freight 4,59,23,670 2,87,02,294 3,99,72,863 2,49,83,039Product Development 79,03,015 49,39,384 1,13,12,113 70,70,071Advertising 1,73,65,559 1,08,53,474 1,27,60,233 79,75,146Market Research 82,26,057 51,41,286 59,05,501 36,90,938Retail Accessories 8,61,88,601 5,38,67,876 7,02,58,297 4,39,11,436Trade Marketing Expenses 11,45,86,315 7,16,16,447 10,42,11,218 6,51,32,010Travel & Conveyance 7,27,99,377 4,54,99,611 7,19,48,263 4,49,67,664Training & Recruitment Expenses 1,12,12,593 70,07,871 1,14,50,044 71,56,278Postage, Telephone, Telex, Fax etc. 89,25,505 55,78,441 92,68,988 57,93,118Bank Charges and Commission 37,44,539 23,40,337 33,01,067 20,63,167Audit Fees 8,00,000 5,00,000 8,00,000 5,00,000Legal Fees 11,41,700 7,13,563 7,95,800 4,97,375Printing & Stationery 1,69,33,624 1,05,83,515 1,62,92,910 1,01,83,069Consultancy / Professional Service Charges & Other Fees 7,25,02,379 4,53,13,987 6,74,01,607 4,21,26,004Licence Fee 20,12,329 12,57,706 14,07,498 8,79,686Business Entertainment Expenses 59,88,919 37,43,074 45,50,713 28,44,196Promotion & Sponsorship 1,65,35,426 1,03,34,641 1,36,66,913 85,41,821Board Meeting Fees 41,176 25,735 58,824 36,765Donations 6,41,000 4,00,625 6,76,250 4,22,656Books & Periodicals 3,72,053 2,32,533 3,78,212 2,36,383Membership Fee 11,69,665 7,31,041 4,27,457 2,67,160Provision for Doubtful Debts and Advances 2,20,118 1,37,574 17,41,531 10,88,457Provision for Retirement and Other Employee Benefits 80,51,568 50,32,230 49,98,812 31,24,258Loss on Foreign Exchange (Net) 5,90,526 3,69,079 3,20,862 2,00,539Miscellaneous Expenses {Refer 2E of Schedule 18}** 2,18,25,523 1,36,40,952 1,73,75,363 1,08,59,602

1,29,55,93,597 80,97,46,001 1,06,37,93,136 66,48,70,709

* Includes provision for obsolescence of spares, relating to plant & machinery with no residual useful life, for NRs. 3,90,35,987 (` 2,43,97,492){2066-67 (2009-10) NRs. 17,54,507 (` 10,96,567)}.

** Includes provision for sales return, relating to Garments domestic business, for NRs. 95,23,511 (` 59,52,194){2066-67 (2009-10) - NRs. 26,57,100 (` 16,60,688)}

SCHEDULES TO THE ACCOUNTS (Contd.)


195

196


SCHEDULES TO THE ACCOUNTS (Contd.)Figures in NRs. Figures in ` Figures in NRs. Figures in `

For the year ended For the year ended For the year ended For the year ended32nd Asadh 2068 32nd Asadh 2068 32nd Asadh 2067 32nd Asadh 2067(16th July, 2011) (16th July, 2011) (16th July, 2010) (16th July, 2010)

SCHEDULE 17 : PROVISION FOR TAXATIONCurrent Tax 1,16,80,72,804 73,00,45,503 92,08,35,261 57,55,22,038Deferred Tax 1,80,71,693 1,12,94,808 (1,25,37,129) (78,35,706)

1,18,61,44,497 74,13,40,311 90,82,98,132 56,76,86,332

SCHEDULE 18 - NOTES TO THE ACCOUNTS1. Significant Accounting Policies

i) ConventionThese financial statements have been prepared in accordance with applicable AccountingStandards and generally accepted accounting principles in Nepal. A summary of significantaccounting policies, which have been applied consistently, is set out below. The financialstatements have also been prepared in accordance with the relevant presentationalrequirements of the Company Act, 2063 of Nepal.

ii) Basis of AccountingThese financial statements have been prepared in accordance with the historical costconvention modified by revaluation of certain freehold land as detailed in (iii) below.The preparation of the accounts requires management to make estimates and assumptionsthat affect the reported amounts of revenues, expenses, assets and liabilities at the dateof the financial statements. The key estimates and assumptions are set out in theaccounting 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 involveestimates 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 futureevents, may extend over several years and so the amount and/or timing may differfrom current assumptions. The accounting policy for taxation is disclosed belowin point no. (xiv) including the recognised deferred tax assets and liabilities.

iii) Fixed AssetsFreehold land acquired up to 17.12.2043 (31.03.1987) was revalued and the resultantincrease in the value of such land was credited to Capital Reserve. Subsequent acquisitionof the above asset and the other assets are stated at cost of acquisition inclusive of inwardfreight, duties and taxes and incidental expenses related to acquisition.Depreciation on fixed assets has been provided on straight-line basis at the rates prescribedby the erstwhile Income Tax (First Amendment) Rules, 2039. The said rates have furtherbeen increased by 33 1/3 % as allowed by the Industrial Enterprises Act, 2049. Additionaldepreciation arising from a change in estimated useful life of assets is charged againstrevenue.Impairment loss, if any, ascertained as per Nepal Accounting Standard -18 ‘Impairmentof Assets’ issued by Institute of Chartered Accountants of Nepal, is recognised.

iv) InventoriesInventories are valued at cost or net realisable value whichever is lower. The cost iscalculated on weighted average method. Cost comprises expenditure incurred in thenormal course of business in bringing such inventories to its location and includes, whereapplicable, appropriate overheads based on normal level of activity.Obsolete, slow moving and defective inventories are identified at the time of physicalverification and where necessary provision is made for such inventories.

v) InvestmentsLong Term Investments are valued at cost. Provision is made where there is a permanentfall in the valuation of such Investments.

vi) SalesNet sales are stated after deducting taxes, duties and sticker charges from invoiced valueof goods sold.

vii) Investment IncomeIncome from investments is accounted for on an accrual basis, inclusive of related taxdeducted at source.

viii) Foreign Exchange TransactionForeign Exchange transactions are recorded at the exchange rate prevailing on the dateof 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 Profitand Loss Account in the period in which they arise. Differences between the forwardexchange rates and the exchange rates at the date of transactions are recognised asincome or expense over the life of the contracts. Profit/loss arising on cancellation orrenewal of forward exchange contracts is recognised as income/expense for the period.Gains/losses on account of foreign exchange rate fluctuations relating to monetary itemsare accounted for in the Profit and Loss Account at the year end.

ix) Lease RentalsOperating 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 determinedat the year end and provided for.

(b) Provident FundRegular monthly contributions are made to Provident Funds, which are chargedagainst revenue.

(c) Leave Encashment and Other Retirement BenefitsLeave encashment and other retirement benefits, wherever applicable, are determinedon the basis of actuarial valuation at the year end and provided for.

xi) BonusBonus is provided as per the provisions of the Bonus Act, 2030.

xii) Employees’ HousingEmployees’ Housing is provided as per the provisions of Labour Act, 2048.

xiii) Cash and Cash EquivalentsCash and cash equivalents represent cash and cheques on hand and balance in bankaccounts.

xiv) Tax on IncomeProvision for current tax is made with reference to profit for the period covered by thefinancial statements as per the provisions of Income Tax Act, 2058.Deferred Tax is recognised and provided for on timing differences between taxableincome and accounting income subject to consideration of prudence.Deferred tax assets are recognised to the extent it is probable that future taxable profitwill be available against which the temporary difference, unused tax losses and unusedtax credit can be utilised, unless the deferred tax asset arises from the initial recognitionof an asset or liability in a transaction.Deferred tax is determined using the tax rates that have been enacted or substantivelyenacted at the balance sheet date and are expected to apply when the related deferredtax asset is realised or deferred tax liability is settled.

xv) DividendFinal Dividend is provided for as proposed by the Directors, pending approval at theAnnual General Meeting. Interim dividend is provided for as declared by the Board ofDirectors and confirmed at the Annual General Meeting.

2. Notes to the AccountsA. For the year ended 32nd Asadh 2068, the Board of Directors of the Company at its

meeting held on 3rd Aswin 2068 (20th September 2011) have:a) declared interim dividend of NRs. 15.50 (` 9.69) per share andb) recommended final dividend of NRs. 96 (` 60) per share.

B. Claims against the Company not acknowledged as debts:a) Demands raised by Revenue Authorities on theoretical production of cigarettes:

Excise, Income Tax and VAT authorities issued Show Cause Notices (SCNs) andraised demands to recover taxes for different years on theoretical production ofcigarettes. The basis for all these SCNs and demands is an untenable contentionby the Revenue Authorities that the Company could have produced more cigarettesthan it has actually produced in a given year, by applying an input-output ratioallegedly submitted by the Company in the year 2047-48 (1990-91) and, that, theCompany is liable to pay taxes on such cigarettes that could have been theoreticallyproduced and sold. This, despite the fact that the Company’s cigarette factory isunder ‘physical control’ of the Revenue authorities and cigarettes produced areduly accounted for and certified as such by the Revenue authorities.As reported last year, the above basis of theoretical production has been rejectedby the Supreme Court of Nepal vide its orders dated 29th October 2009 and1st April 2010. In the said order of the Supreme Court of Nepal dated 1st April,2010, the Excise demands {(for the financial years 2055-56 to 2059-60 (1998-99to 2002-03)} and Income Tax demands {for the financial year 2058-59(2001-02)}were set aside. During the year, citing the aforesaid decisions of the Supreme Courtof Nepal, the Inland Revenue Department has, on 11th February 2011 decided thefollowing administrative review petitions in favour of the Company relating totheoretical production:

(i) Value Added Tax-NRs. 7,54,51,113 (` 4,71,56,946) for the financial year2058- 59 (2001-02).

(ii) Income Tax - NRs. 4,90,70,474 (` 3,06,69,046) for the financial year 2062-63(2005-06).

The Company’s counsel appearing in the matter has opined that the verdict of theSupreme Court of Nepal dated 29th October 2009, which was delivered by a Full Benchof the Court, will add substantial strength to Company’s case in all the other mattersrelating to the issue of theoretical production.Following is the status of pending demands and Show Cause Notices received from theRevenue Authorities based on similar untenable contention:Excise Demands and Show Cause Notice1. Excise demand letter dated 22nd February 2008 for NRs. 14,95,15,509

(` 9,34,47,193) relating to the financial years 2060-61 to 2062-63 (2003-04 to2005-06). The Company’s writ petition, challenging the demand, has been admittedby the Supreme Court of Nepal on 2nd April 2008 and it has issued Show CauseNotices to the respondents.

2. Excise demand letter dated 30th November 2008 for NRs. 12,85,10,757(` 8,03,19,223) relating to the financial year 2063-64 (2006-07). The Company’swrit petition, challenging the demand, has been admitted by the Supreme Courtof Nepal on 6th January 2009 and it has issued Show Cause Notices to therespondents.

3. Show Cause Notice dated 19th January 2010 seeking to demand NRs. 19,65,37,807(`12,28,36,129) by way of Excise Duty for the financial year 2064-65 (2007-08).Company’s writ petition challenging the Notice was admitted by the SupremeCourt of Nepal. On 7th March 2010, Supreme Court of Nepal issued interim orderdirecting Inland Revenue Department not to raise demand, pending final disposalof the writ petition.

D. Remuneration to Managing Director:

Particulars For the year ended For the year ended32nd Asadh 2068 32nd Asadh 2067(16th July 2011) (16th July 2010)

In NRs. In ` In NRs. In `Salary, Bonus etc. (Short Term) 1,48,93,852 93,08,658 1,31,55,061 82,21,913Post Employment Benefits * * * *Total 1,48,93,852 93,08,658 1,31,55,061 82,21,913

*Post employment benefits are actuarially determined on overall basis for all employees.

E. Miscellaneous Expenses include reimbursement of expenses to statutory auditors amounting to NRs. 99,633 (` 62,271) {2066-67 - NRs. 68,410 (` 42,756)}.

F. The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing difference are as under:

As at As at32nd Asadh 2068 32nd Asadh 2067(16th July 2011) (16th July 2010)

In NRs. In ` In NRs. In `

Deferred Tax AssetOn employees’ separation and retirement 1,05,98,101 66,23,813 1,08,20,523 67,62,827On fiscal allowance on fixed assets 14,30,310 8,93,944 2,22,01,471 1,38,75,919On doubtful advance 9,60,155 6,00,097 12,66,614 7,91,634On provision for inventories 98,36,065 61,47,541 — —

2,28,24,631 1,42,65,395 3,42,88,608 2,14,30,380Deferred Tax LiabilityOn finished goods 1,19,09,609 74,43,506 53,01,893 33,13,683Deferred Tax - Net 1,09,15,022 68,21,889 2,89,86,715 1,81,16,697

G. Reconciliation between tax expenses and accounting profit:

For the year ended For the year ended32nd Asadh 2068 32nd Asadh 2067(16th July 2011) (16th July 2010)

In NRs. In ` In NRs. In `

Accounting Profit 3,73,01,68,387 2,33,13,55,238 2,88,26,44,312 1,80,16,52,695Tax at the applicable tax rate(Cigarette manufacturing @ 30%, GarmentsManufacturing @ 20% and Trading @ 25%) 1,14,10,55,678 71,31,59,799 88,00,80,163 55,00,50,102Factors affecting tax charge for the yearEffect of :Unused Tax Losses not recognised 4,48,30,483 2,80,19,052 2,72,77,870 1,70,48,668Expenses not deductible for tax purposes 2,58,336 1,61,460 9,40,099 5,87,562Total Tax Expense 1,18,61,44,497 74,13,40,311 90,82,98,132 56,76,86,332


VAT Demands

4. VAT demand letter dated 8th August 2007 for NRs. 5,72,38,860 (` 3,57,74,288)relating to the financial year 2059-60 (2002-03). The Company’s writ petition,challenging the demand, has been admitted by the Supreme Court of Nepal on12th September 2007 and it has issued Show Cause Notices to the respondents.

5. VAT demand letter dated 5th August 2008 for NRs. 1,07,18,107 (` 66,98,817)relating to the financial year 2060-61 (2003-04). The Company’s writ petition,challenging the demand, has been admitted by the Supreme Court of Nepal on5th September 2008 and it has issued Show Cause Notices to the respondents.

6. VAT demand letter dated 10th July 2009, for NRs. 10,69,66,056 (` 6,68,53,785)relating to the financial years 2061-62 to 2063-64 (2004-05 to 2006-07).The Company’s writ petition, challenging the demand, has been admitted by theSupreme Court of Nepal on 9th August 2009 and it has issued Show Cause Noticesto the respondents.

7. VAT demand letter dated 14th May 2010, for NRs. 11,46,91,649 (` 7,16,82,281)relating to the financial year 2064-65 (2007-08). The Company has filed anadministrative review petition before the Director General on 11th July 2010, andthe matter is pending.

Income Tax Demands

8. Income Tax demand letter dated 12th August 2007 for NRs. 19,60,92,971(` 12,25,58,107) relating to the financial year 2059-60 (2002-03). The Company’swrit petition, challenging the demand, has been admitted by the Supreme Courtof Nepal on 12th September 2007 and it has issued Show Cause Notices to therespondents.

9. Income Tax demand letter dated 15th September 2008 for the financial year2060-61 (2003-04). Out of total demand of NRs. 2,25,36,944 (` 1,40,85,590),the basis of the demand for NRs. 1,91,39,653 (` 1,19,62,283) is on theoreticalproduction. The Company’s writ petition, challenging the demand, has beenadmitted by the Supreme Court of Nepal on 8th December 2008 and it has issuedShow Cause Notices to the respondents.

10. Income Tax demand letter dated 16th October 2009 for the financial year 2061-62 (2004-05). Out of a total demand of NRs. 2,26,26,609 (` 1,41,41,631), thebasis 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 DirectorGeneral without dealing with the issues raised by the Company, summarily dismissedthe petition by an order dated 2nd March 2010. The Company thereafter filed anappeal before the Revenue Tribunal, on 17th June 2010, and the matter is pending.

The Management considers that all the demands and show cause notice listed abovehave no legal or factual basis. Accordingly, the Management is of the view that there isno liability that is likely to arise, particularly in the light of the decisions in favour of theCompany by the Supreme Court of Nepal and the Inland Revenue Department.b) Other demands raised on account of:

1. Income Taxes for various assessment years amounting to NRs. 10,32,83,725(` 6,45,52,328) {Previous year - NRs. 10,32,83,725 (` 6,45,52,328)}(net of provision made for the above assessment years) against which theCompany has filed appeals with the appropriate authorities/Courts.

2. Value Added Tax matters under dispute, pertaining to financial years2055-56 to 2057-58, amounting to NRs. 31,00,750 (`19,37,969){Previous year - NRs. 31,00,750 (` 19,37,969)}, which are underappeal /reassessment.

C. Estimated amount of contracts remaining to be executed on capital accountNRs. 50,11,25,637 (` 31,32,03,523) {2066-67 NRs. 38,94,00,452 (` 24,33,75,283)}.


197

H. CapitalThe Company is not subject to any capital adequacy norms under regulations presently in force. Employees Housing Reserve is set aside as required by law. It is the Company’s policy to maintaina sound capital base that is supportive of the Company’s business plans. Return on Capital employed is monitored based on Asset Turnover & Profitability ratio.



198

I. Related party DisclosuresNature of relationship and name of the related parties:1. Holding Company

ITC Limited, India2. Fellow Subsidiaries

a) Srinivasa Resorts Limited, Indiab) Fortune Park Hotels Limited, Indiac) Bay Islands Hotels Limited, Indiad) Russell Credit Limited, India and its subsidiaries

i. Greenacre Holdings Limited, Indiaii. Wimco Limited, India and its subsidiaries

Pavan Poplar Limited, IndiaPrag Agro Farm Limited, India

iii. Technico Pty Limited, Australia and its subsidiariesTechnico ISC Pty. Limited, Australia (deregistered on 03.11.2010)Technico Agri Sciences Limited, IndiaTechnico Technologies Inc., CanadaTechnico Asia Holdings Pty Limited, Australia and its subsidiary

Technico Horticultural (Kunming) Co. Limited, Chinae) ITC Infotech India Limited, India and its subsidiaries

i. ITC Infotech Limited, United Kingdomii. ITC Infotech (USA), Inc., United States of America and its subsidiary

Pyxis Solutions, LLC, United States of America

f) Wills Corporation Limited, Indiag) Gold Flake Corporation Limited, Indiah) Landbase India Limited, Indiai) BFIL Finance Limited, India and its subsidiary

MRR Trading & Investment Company Limited, Indiaj) King Maker Marketing, Inc., United States of AmericaThe above list does not include:a) ITC Global Holdings Pte. Limited, Singapore

(under liquidation) and its subsidiariesi. Hup Hoon Traders Pte. Limited, Singapore

(struck off w.e.f. 31.03.2011 by the Registrar of Companies, Signapore)ii. AOZT “Hup Hoon”, Moscowiii. Hup Hoon Impex SRL, Romania

b) BFIL Securities Limited (a subsidiary of BFIL Finance Ltd.)which is under voluntary winding up proceedings.

3. Key Management Personnel:Y. C. Deveshwar Chairman & Non-Executive DirectorS. Puri Alternate Director to Mr Y C DeveshwarA. K. Mukerji Non-Executive DirectorB. B. Chatterjee Non-Executive DirectorK. N. Grant Non-Executive DirectorS. R. Pandey Non-Executive DirectorS. SJB Rana Non-Executive DirectorSaurya SJB Rana Alternate Director to Mr. S. SJB RanaS. Keshava Managing Director

For the year ended For the year ended32nd Asadh 2068 (16th July 2011) 32nd Asadh 2067 (16th July 2010)

Holding Company Fellow Key Management Holding Company Fellow Key ManagementSubsidiaries Personnel Subsidiaries Personnel

Disclosure of transactions between the Company and related parties during the year and outstanding balances as on 16th July 2011:

In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In `

Sale of Goods/Services 15,62,97,542 9,76,85,964 2,23,496 139,685 9,63,46,535 6,02,16,584 59,820 37,388

Purchase of Goods/ Services 2,37,43,65,594 1,48,39,78,496 58,86,072 36,78,795 1,98,87,64,823 1,24,29,78,014 23,03,064 14,39,415

Payment to Managing Director 1,48,93,852 93,08,658 1,31,55,061 82,21,913

Sitting Fees/ IncidentalExpenses to Other Directors 48,676 30,423 98,824 61,765

Machine Hire Charges 1,32,14,370 82,58,981 69,19,105 43,24,441

Rent Received 12,24,946 7,65,591

Dividend Payments 1,07,04,96,000 66,90,60,000 1,16,56,51,200 72,85,32,000

Expenses recovered 78,12,677 48,82,923 35,280 22,050 91,83,785 57,39,866 12,073 7,546

Expenses reimbursed 82,49,302 51,55,814 58,02,919 36,26,824

Advances Given 2,92,33,70,637 1,82,71,06,648 50,22,62,979 31,39,14,362

Issue of Bonus Share

Balances as on 16th July

— Debtors 2,29,11,909 1,43,19,943 3,82,29,509 2,38,93,443

— Advances/Other Receivables 1,84,54,29,165 1,15,33,93,228 50,46,56,336 31,54,10,210

— Creditors / Payables 16,06,57,760 10,04,11,100 13,61,82,247 8,51,13,904

J. Figures have been rounded off to the nearest rupee.K. Previous Year’s figures have been regrouped and/or rearranged wherever necessary.




199

KING MAKER MARKETING, INC.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of DirectorsKing Maker Marketing, Inc.Paramus, New JerseyWe have audited the accompanying balance sheets of King Maker Marketing,Inc. (”Company”) as of March 31, 2012 and 2011, and the related statementsof income and retained earnings and cash flows for the years then ended.These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audits.We conducted our audits in accordance with auditing standards generallyaccepted in the United States of America. Those standards require that weplan and perform the audits to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, inall material respects, the financial position of King Maker Marketing, Inc.

as of March 31, 2012 and 2011, and the results of its operations and itscash flows for the years then ended in conformity with accounting principlesgenerally accepted in the United States of America.Our audits were conducted for the purpose of forming an opinion on thefinancial statements taken as a whole. The supplemental information onpage 199 is presented for purposes of additional analysis and is not arequired part of the financial statements. Such information is the responsibilityof management and was derived from and relates directly to the underlyingaccounting and other records used to prepare the financial statements. Theinformation has been subjected to the auditing procedures applied in theaudits of the financial statements and certain additional procedures, includingcomparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements orto the financial statements themselves, and other additional procedures inaccordance with auditing standards generally accepted in the United Statesof America. In our opinion, the information is fairly stated in all materialrespects in relation to the financial statements as a whole.

Albany, New YorkApril 15, 2012 Bollam, Sheedy, Torani & Co. LLP

STATEMENTS OF INCOME AND RETAINED EARNINGSFor the year ended For the year ended For the year ended For the year ended

31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011$ ` $ `

SALESRevenues, net of customer returns 28,360,745 1,353,800,163 37,105,170 1,660,367,133Less quick pay discounts (1,408,994) (67,258,329) (1,552,876) (69,487,319)

Net sales 26,951,751 1,286,541,834 35,552,294 1,590,879,814COST OF SALES 20,315,910 962,461,528 27,138,915 1,214,978,284 6,635,841 324,080,306 8,413,379 375,901,530MSA SETTLEMENT CHARGES, NET 2,176,098 103,876,038 3,068,464 137,306,093Gross profit 4,459,743 220,204,268 5,344,915 238,595,437OPERATING EXPENSES 3,794,799 181,144,730 4,828,352 216,056,681Income (loss) from operations 664,944 39,059,538 516,563 22,538,756OTHER

Business service income — — 360,000 16,109,100Reserve for inventory write-off — — (74,400) (3,317,868)Loss on disposal of property and equipment (4,562) (217,767) (1,499) (67,077)Interest income 104,987 5,011,554 80,825 3,616,717Other income 18,703 892,788 1,960 87,705

119,128 5,686,575 366,886 16,428,577Income before provision for income taxes 784,072 44,746,113 883,449 38,967,333PROVISION FOR INCOME TAXES 305,045 14,561,323 361,846 16,191,704Net income 479,027 30,184,790 521,603 22,775,629RETAINED EARNINGS, beginning of year 5,544,531 250,852,733 5,022,928 228,077,104RETAINED EARNINGS, end of year 6,023,558 281,037,523 5,544,531 250,852,733

The accompanying Notes to Financial Statements are an integral part of these statements.

BALANCE SHEETSMarch 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

$ ` $ `ASSETSCURRENT ASSETS

Cash and cash equivalents 5,983,342 304,402,524 7,362,492 328,330,331Restricted cash 1,622,167 82,527,746 1,600,000 71,352,000Accounts receivable 313,569 15,952,823 457,226 20,389,994Accounts receivable, other 300,659 15,296,027 282,809 12,611,867Inventory, net of reserve for write-off 1,391,673 70,801,364 939,039 41,876,444Due from related parties, net 1,782 90,659 — —Prepaid expenses 410,733 20,896,041 306,417 13,664,666Income tax receivable — — 77,852 3,471,810Deferred income taxes 27,875 1,418,141 51,938 2,316,175

10,051,800 511,385,325 11,077,773 494,013,288

PROPERTY AND EQUIPMENT, net 25,381 1,291,258 27,729 1,236,575OTHER ASSETS 10,390 528,591 26,110 1,164,375

10,087,571 513,205,174 11,131,612 496,414,238LIABILITIES AND STOCKHOLDER'S EQUITYCURRENT LIABILITIES

Accounts payable 713,978 36,323,631 1,040,653 46,407,921Income tax payable 260,712 13,263,723 — —Due to related parties, net — — 69,829 3,114,024Accrued settlement charges 2,830,593 144,006,419 4,188,026 186,765,019Accrued expenses and other 137,521 6,996,381 192,500 8,584,538

3,942,804 200,590,154 5,491,008 244,871,502LONG-TERM LIABILITIES

Deferred income taxes 117,129 5,958,938 91,993 4,102,428COMMITMENTS AND CONTINGENCIESSTOCKHOLDER'S EQUITY

Common stock, voting, no par value, 1,000 shares authorized;204 shares issued and outstanding 4,080 181,948 4,080 181,948Retained earnings 6,023,558 281,037,523 5,544,531 250,852,733Foreign Exchange Translation Reserve — 25,436,611 — (3,594,373)

6,027,638 306,656,082 5,548,611 247,440,30810,087,571 513,205,174 11,131,612 496,414,238


STATEMENTS OF CASH FLOWS YEAR ENDED MARCH 31, 2012For the year For the year For the year For the yearended 31st ended 31st ended 31st ended 31st

March, 2012 March, 2012 March, 2011 March, 2011$ ` $ `

CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIESNet income 479,027 30,184,790 521,603 22,775,629Adjustments to reconcile net income to net cashprovided (used) by operating activitiesDepreciation 7,714 368,228 11,094 496,429Loss on disposal of property and equipment 4,562 217,767 1,499 67,077Deferred income taxes 49,199 2,754,500 178,720 7,997,273(Increase) decrease in

Accounts receivable 143,657 4,437,170 20,238 902,514Accounts receivable, other (17,850) (2,684,159) (56,569) (2,522,695)Inventory (378,234) (28,924,920) 1,751,722 78,385,180Due from related parties (71,611) (3,204,684) 97,775 43,60,276Prepaid expenses (104,316) (7,231,375) 135,450 60,40,393Income taxes receivable 338,564 16,735,533 358,872 16,003,897Other assets 15,720 635,784 500 22,298

Increase (decrease) inAccounts payable (326,675) (10,084,290) (545,133) (24,312,932)Reserve for inventory write-off (74,400) (3,317,868) 74,400 3,317,868Accrued settlement charges (1,357,433) (42,758,601) (5,933,057) (264,614,342)Accrued expenses and other (54,979) (1,588,157) (37,909) (1,690,552)

(1,347,055) (44,460,281) (3,420,795) (152,771,688)CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES

Payments for the purchase of property and equipment (9,928) (505,087) — —

Net decrease in cash and cash equivalents (1,356,983) (44,965,368) (3,420,795) (152,771,688)CASH AND CASH EQUIVALENTS, beginning of year 8,962,492 399,682,331 12,383,287 556,009,586

Foreign Exchange Translation Reserve — (32,213,307) — 3,555,568

CASH AND CASH EQUIVALENTS, end of year 7,605,509 386,930,270 8,962,492 399,682,331SUPPLEMENTAL CASH FLOW INFORMATIONCash paid during the year for Income taxes 97,476 4,959,092 183,127 8,166,549


200


NOTES TO FINANCIAL STATEMENTSMarch 31, 2012 and 2011

NOTE 1 - ORGANIZATIONKing Maker Marketing, Inc. (”Company”) is organized and headquarteredin New Jersey. Its business is to import and distribute tobacco products tolicensed wholesale distributors and retailers throughout the United States.The Company employs an independent warehouse located in Illinois. TheCompany has significant transactions with ITC Limited (ITC), its solestockholder, which is organized under the laws of the Republic of India.The Company is subject to the inherent risks associated with the industry,such as new or increased taxes/assessments, as well as litigation.A summary of the significant accounting policies consistently applied inthe preparation of the accompanying financial statements follows.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Basis of Accounting and Financial Statement PresentationThe financial statements are prepared in conformity with accountingprinciples generally accepted in the United States of America (GAAP).b. Use of EstimatesThe preparation of financial statements requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities, disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expensesduring the reporting period. Actual results may differ from estimates.c. Fair Value MeasurementFair value is defined as an exchange price that would be received for anasset or paid to transfer a liability (an “exit” price) in the principal or mostadvantageous market for the asset or liability between market participantson the measurement date.d. Cash and Cash EquivalentsThe Company’s cash and cash equivalents are defined as cash and short-term highly liquid investments with an original maturity of three or fewermonths. The Company has a restricted cash deposit balance of $1,622,167as collateral for a letter of credit issued in order to securitize a U.S. CustomsBond posted for $2.1 million.e. InventoryInventory consists mainly of cigarettes and includes bonded and availablefor sale inventory. The lower of cost (first manufactured, first out) or marketmethod has been used in determining the inventory value. The availablefor sale inventory includes the cost of the cigarettes plus, applicable duty,federal excise taxes, tobacco buyout costs, FDA User Fee, MSA, freight-in,storage, and other direct costs. The available for sale inventory amountsto approximately $313,000 and $91,000 as of March 31, 2012 and 2011,respectively. The bonded inventory includes cost of the cigarettes, plusfreight-in, storage, and other direct costs. The bonded inventory amountsto approximately $1,078,000 and $848,000 as of March 31, 2012 and2011, respectively.

f. Property and Equipment, NetProperty 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 ofan asset are expensed as incurred. When equipment is retired or otherwisedisposed of, the appropriate accounts are relieved of costs and accumulateddepreciation, and any resultant gain or loss is credited or charged tooperations. The Company uses the straight-line method of depreciationand depreciates equipment and fixtures over 5 to 7 years, software over3 to 5 years, and leasehold improvements over 7 to 40 years.Long-lived assets to be held and used are tested for recoverability wheneverevents or changes in circumstances indicate that the related carrying amountmay not be recoverable. When required, impairment losses on assets to beheld and used are recognized based on the excess of the asset’s carryingamount over the fair value of the assets. There were no impairment lossesdeemed necessary for the years ended March 31, 2012 and 2011.

g. Revenue Recognition/Accounts ReceivableThe Company recognises revenue when title is transferred as the productis shipped. Trade discounts are offered to customers on invoiced prices,which are reflected in net sales. Accounts receivable are charged to baddebt expense as they are deemed uncollectible based upon management’speriodic review of the accounts. Management considers accounts receivableto be fully collectible, and, therefore, no allowance is considered necessaryas of March 31, 2012 and 2011.Revenues are reflected net of customer returns. Total customer returns were$542,703 and $539,626 for the years ended March 31, 2012 and 2011,respectively.

h. Shipping and Handling ExpensesShipping and handling expenses are classified under operating expenses.A portion of the expenses relating to inbound receipt of materials is classifiedunder cost of goods sold.

i. Marketing and Promotion CostsThe Company’s policy is to expense marketing and promotion costs asincurred. Total marketing and promotion costs, which are included inoperating expenses, were $950,480 and $1,274,442 for the years endedMarch 31, 2012 and 2011, respectively.

j. Income TaxThe Company records income taxes using the asset and liability methodwhereby deferred tax assets and liabilities are determined based on thedifference between the financial statement and tax bases of assets andliabilities as measured by the enacted tax rates which will be in effect whenthese differences reverse. Deferred tax expense is the result of changes indeferred tax assets and liabilities.

March 31, 2012 March 31, 2011$ ` $ `

Costs based on current activity,net of credits 2,691,752 128,490,782 4,257,259 190,501,697Adjustment to prior period MSAsettlement costs based onactual results for calendar year end (515,654) (24,614,744) (1,188,795) (53,195,604)

2,176,098 103,876,038 3,068,464 137,306,093

March 31, 2012 March 31, 2011$ ` $ `

Minimum rentals 223,177 10,653,354 246,560 11,032,944Less sublease rentals 106,217 5,070,268 95,048 4,253,160

116,960 5,583,086 151,512 6,779,783

201


March 31, 2012 March 31, 2011$ ` $ `

Equipment and fixtures 110,045 5,598,539 100,248 4,470,560Leasehold improvements 13,306 676,943 19,847 885,077Computer software 74,082 3,768,922 74,082 3,303,687

197,433 10,044,404 194,177 8,659,323Less accumulated depreciation 172,052 8,753,146 166,448 7,422,749

25,381 1,291,258 27,729 1,236,575

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - ContinuedWhen income tax returns are filed, some tax positions taken are highlycertain to be sustained upon examination by the taxing authorities, whileother tax positions are subject to uncertainty about the technical merits ofthe position or the amount of the position’s tax benefit that would beultimately sustained. The portion of the benefits associated with tax positionstaken that exceeds the amount measured as previously described is reflectedas a liability for unrecognized tax benefits in the accompanying balancesheets and includes, where applicable, accrued interest and/or penaltiesattributable to the unrecognized tax benefits.The Company presently discloses or recognises income tax positions basedon management’s estimate of whether it is reasonably possible or probablethat a liability has been incurred for unrecognized income taxes. Managementhas concluded that the Company has taken no material tax position thatrequires an adjustment in the financial statements as of March 31, 2012.The Company’s tax returns are subject to examination by the respectivetaxing authorities. The Company is no longer subject to tax examinationfor the years ended March 31, 2009, and prior.k. Subsequent EventsThe Company has evaluated subsequent events that provide additionalevidence about conditions that existed at the financial statement datethrough April 15, 2012, the date the financial statements were availableto be issued.

NOTE 3 - STOCKHOLDER’S EQUITYITC Limited is the sole owner of the Company. The Company’s Certificateof 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 sharesof voting common stock representing the capital on the books of $4,080.

March 31, March 31,2012 2011

$ $Capital structure

Common stock, no par value, 1,000 shares authorized,204 shares issued and outstanding 4,080 4,080

NOTE 4 - APPAREL BUSINESSDuring fiscal year ended 2009, the Company made a foray into the apparelbusiness. The Company exited the apparel business in July 2011. Therevenues on account of this business included in the financial statementswere $11,588 and $238,539, respectively, for the years ended March 31,2012 and 2011. The inventory as of March 31, 2011, was fully reserved forwrite-off. As of March 31, 2012, the inventory was fully written off sincethe Company is no longer in the apparel business.

NOTE 5 - PROPERTY AND EQUIPMENT, NETProperty and equipment, net, consist of the following:

Depreciation expense for property and equipment was $7,714 and $11,094for the years ended March 31, 2012 and 2011, respectively.

NOTE 6 - COMMITMENTS AND CONTINGENCIESa. LeasesThe Company’s main office is located in Paramus, New Jersey. It had alsoleased an office for its apparel division in the garment district in New YorkCity from April 2008 to June 2011. Rent expense for the years ended March31, 2012 and 2011, was approximately $103,000 and $134,000, respectively.The Company leases two additional offices in Paramus, New Jersey, whichare across the hall from the main office, with the same terms and an annualrent of approximately $106,000 and $95,000 for the years ended March31, 2012 and 2011, respectively. These offices are sublet to ITC Infotech,Inc. (an ITC Group Company) for the full term of the lease. ITC Infotech,Inc. has fully reimbursed the Company for the rent expense under the leasefor the years ended March 31, 2012 and 2011.The Company leases accommodations for its managers seconded from ITCLtd. India to ease their transition to the United States. These amounts wereapproximately $26,400 and $24,600 for the years ended March 31, 2012and 2011, respectively.The Company leases automobiles under noncancellable operating leaseswith 36-month terms. Vehicle lease expense was $13,668 and $16,807 forthe years ended March 31, 2012 and 2011, respectively. Quarterly rentalpayments for the leasing of office equipment (postage meter) are includedin operating expense.Future minimum lease payments as of March 31, 2012, are as follows:2013 $ 190,1692014 189,3792015 183,1282016 186,7912017 190,526Thereafter 48,183Total minimum payments required $ 988,176

Total expenses under all operating leases, less sublease rentals recovered,is as follows:

b. Legal MattersIn the ordinary course of business, the Company may be a defendant inlegal matters. Management does not believe the impact of such matterswill have a material effect on the financial position or results of operationsof the Company.

NOTE 7 - RELATED PARTY TRANSACTIONSThe Company has in place an Exclusive Distribution, Private Label Supply,and a Controlled Label Distribution Agreement with ITC. These agreementsdesignate ITC as the sole supplier to the Company, and the Company asthe exclusive importer and distributor for all ITC manufactured tobaccoproducts in the United States, Canada, and Mexico.Purchases for the years ended March 31, 2012 and 2011, from ITC were$3,859,671 and $4,791,774, respectively. At March 31, 2011, the Companyowed ITC $71,390. At March 31, 2012 and 2011, respectively, $1,782 and$1,561 is due from ITC.Furthermore, the Company billed approximately $360,000 to ITC forexpenses related to business services for the year ended March 31, 2011.

NOTE 8 - SETTLEMENT CHARGES, NETThe Company is a signatory to the Master Settlement Agreement (”MSA”)as a Subsequent Participating Manufacturer (”SPM”) as stated in AmendmentNo. 11 to the MSA, dated February 11, 1999.The MSA is similar to the Agreement reached by the major cigarettemanufacturers. However, it provides small cigarette manufacturers, suchas the Company, exemption from liability for any market share in 1998(base year). These companies are defined in the MSA as SPMs. Under theMSA, the Company is required to pay annually, a proportionate share ofthe ultimate liability as stipulated in the MSA, based on the additionalmarket share gained by the Company over and above the base year, asmeasured by the federal excise tax paid units of the Company and ascalculated by an independent auditor.MSA settlement charges are as follows:

The MSA allows the Company, following payment of assessed settlementcharges, to separately account those amounts which it challenges. As ofMarch 31, 2012, the maximum recoverable amount, which is subject toarbitration, is approximately $8.0 million. An arbitration panel, as providedunder the MSA, has been constituted as of September 2010.Furthermore, the Company also has unapplied recalculation credits due tothe Company of $479,025.

NOTE 9 - TOBACCO BUYOUTAs required by Title VI of the American Jobs Creation Act of October 2004and related regulations thereof, the Company is required to pay its shareof the “Tobacco Buyout”assessment issued by the Commodity CreditCorporation, USDA. This assessment is for a ten-year period commencingJanuary 2005, and is payable quarterly. Each quarterly payment is basedon the Company’s market share as determined by the federal excise taxpaid units during the previous quarter per the rules and regulations notified.Total payments for the years ended March 31, 2012 and 2011, were$907,300 and $1,209,161, respectively.

NOTE 10 - PROFIT-SHARING PENSION PLANThe Company offers a profit-sharing pension plan (Plan) for all eligibleemployees. Employees become eligible as long as they are twenty-one yearsof age and have twelve months of credited service. To continue in the plan,employees must have a minimum of 1,000 hours of employment annuallyand 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. Contributionsto the Plan are discretionary, with a 3% minimum, under certain circumstances,on an employee’s Social Security base income. Expenses for the years endedMarch 31, 2012 and 2011, were $47,240 and $133,306, respectively.For the year ended March 31, 2012, the Company utilized their forfeitureaccount balance in the Plan to reduce the required case contribution made.The forfeiture balance utilized amounted to $62,394.

NOTE 11 - CONCENTRATION OF CREDIT RISKFinancial instruments that potentially subject the Company to concentrationsof credit risk consist principally of cash and cash equivalents, short-terminvestments, and accounts receivable.The Company deposits its cash and short-term investments at two majorfinancial institutions in the United States. At times, the Company’s cashbalances exceed the current insured amount under the Federal DepositInsurance Corporation.With respect to accounts receivable, concentration of credit risk is limiteddue to the large number of customers and their dispersion across variousgeographic regions. The Company had one customer which accounted forapproximately 11% of total sales for the year ended March 31, 2012. Asof March 31, 2012, this customer represented approximately 14% of totalaccounts receivable, which has been recovered before the date of thisreport. The Company had no customers that exceeded 10% of total salesfor the year ended March 31, 2011.

Year ended Year ended Year ended Year ended 31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011

$ ` $ `

Current income tax expenseFederal 206,243 98,45,010 124,572 5,574,286States 49,603 2,367,799 58,554 2,620,145

Total current 255,846 12,212,809 183,126 8,194,431Deferred income tax expense

Federal (42,933) (2,049,407) (148,157) (6,629,655)States (6,267) (299,155) (30,563) (1,367,618)

Total deferred (49,200) (2,348,562) (178,720) (7,997,273)Total income tax expense

Federal 249,175 11,894,369 272,729 12,203,941States 55,870 2,666,954 89,117 3,987,763

305,045 14,561,323 361,846 16,191,704

The Company’s effective income tax rate varies from the federal statutory rate primarily as the result of state taxes, net of federal effect.Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows:

Year ended Year ended Year ended Year ended 31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011

$ ` $ `

Deferred tax assetsInventory 27,875 1,418,141 51,938 2,316,175

Deferred tax liabilitiesProperty and Equipment (8,524) (433,659) (7,713) (343,961)Accounts receivable, other (62,706) (3,190,168) (84,280) (3,758,467)

Prepaid expenses (45,899) (2,335,112) — —

(117,129) (5,958,938) (91,993) (4,102,428)SUPPLEMENTAL INFORMATION – COST OF SALES

Year ended Year ended Net Year ended Year ended Net31st March, 2012 31st March, 2012 Sales 31st March, 2011 31st March, 2011 Sales

$ ` % $ ` %Beginning inventory 939,039 41,876,444 3.5 2,765,160 124,155,684 7.8Cigarette tax, duty, and harbor processing fees 15,322,735 731,430,755 56.9 18,489,982 827,380,470 52.0Cigarette purchases 3,859,671 184,241,395 14.3 4,644,548 207,834,234 13.1Tobacco buyout expense 907,300 43,309,966 3.4 1,209,161 54,107,536 3.4FDA 470,124 22,441,369 1.7 439,161 19,651,576 1.2Other expenses/purchases 2,502 119,433 0.0 241,386 10,801,541 0.7Storage 110,978 5,297,535 0.4 205,777 9,208,109 0.6Freight-in 72,506 3,461,074 0.3 114,842 5,138,950 0.3Customs brokerage 20,249 966,586 0.1 27,782 1,243,189 0.1Destruction charges 2,479 118,335 0.0 14,555 651,307 0.0

21,707,583 1,033,262,892 80.5 28,152,354 1,260,172,596 79.1Ending inventory prior to reserve (1,391,673) (70,801,364) (5.2) (1,013,439) (45,194,312) (2.9)Provision for inventory write-off — — — 74,400 3,317,868 0.2

20,315,910 962,461,528 75.3 27,138,915 1,214,978,284 76.3

202


NOTE 12 - INCOME TAXESIncome taxes consist of the following components:

SUPPLEMENTAL INFORMATION – OPERATING EXPENSES

Year ended Year ended Net Year ended Year ended Net31st March, 2012 31st March, 2012 Sales 31st March, 2011 31st March, 2011 Sales

$ ` % $ ` %Marketing and promotion 950,480 45,371,163 3.5 1,274,442 57,028,093 3 .6Salaries 920,289 43,929,995 3.4 1,084,734 48,539,135 3 .1Shipping and handling 535,373 25,556,030 2.0 611,980 27,384,575 1 .7Professional fees 330,962 15,798,471 1.2 340,795 15,249,724 1 .0Travel 161,904 7,728,487 0.6 246,736 11,040,819 0 .7Fees and licenses 137,429 6,560,173 0.5 292,262 13,077,994 0 .8Rent 102,325 4,884,484 0.4 133,604 5,978,445 0 .4Group insurance 97,163 4,638,076 0.4 103,593 4,635,528 0 .3General insurance 82,220 3,924,772 0.3 128,033 5,729,157 0 .4Payroll tax 80,190 3,827,870 0.3 90,831 4,064,460 0 .3Miscellaneous/other expenses 77,619 3,705,143 0.3 90,316 4,041,415 0 .3Office supplies and expense 76,749 3,663,614 0.3 137,026 6,131,571 0 .4Dues and subscriptions 75,369 3,597,739 0.3 55,060 2,463,797 0 .2Pension 47,240 2,255,001 0.2 133,306 5,965,110 0 .4Training and placement fees 45,075 2,151,655 0.2 27,250 1,219,369 0 .1Auto 40,078 1,913,123 0.1 34,751 1,555,020 0 .1Telephone/communication 26,620 1,270,706 0.1 32,539 1,456,039 0 .1Depreciation 7,714 368,228 0.0 11,094 496,429 0 .0

3,794,799 181,144,730 14.1 4,828,352 216,056,681 13.6

Documents

ITC SUBSIDIARIES 2012 · Further, 55,00,000 5% Cumulative Redeemable Preference Shares of ` 100/- each, aggregating ` 55 crores, held by the Company in Wimco were redeemed during