i) Commitments and contingent liabilities
As at As at
Particulars 31 March 2011 31 March 2010
Estimated amount of contracts
remaining to be executed on
capital account and not provided
for (net of advances) 120.24 110.48
Guarantees given by bank * 95.81 6.95
Claims against the Company not a
debts in respect of:
Sales tax matters, under dispute 615.21 615.21
Other matters, under dispute 43.61 43.61
The amounts included above, represent the best possible estimates
arrived at on the basis of available information. The uncertainties and
possible reimbursements are dependent on the outcome of the different
legal processes which have been invoked by the Company or the claimants
as the case may be and therefore cannot be predicted accurately. The
Company engages reputed professional advisors to protect its interests
and has been advised that it has strong legal positions against such
* Represent guarantees given in the normal course of the Companys
operations and are not expected to result in any loss to the Company on
the basis of the benefciaries fulflling their ordinary commercial
ii) During the year, the Company has sold its vanaspati brand Rath
to Cargill India Private Limited vide an agreement dated 12 November
2010 for a consideration of Rs. 258. The transaction was consummated on
15 December 2010. The profit on sale of the brand amounted to Rs. 174.46
has been credited to the profit and loss account and disclosed under the
head Exceptional item. This divestiture is consistent with Companys
long term strategy of focusing on value added products.
iii) Operating leases
The Company leases offce facilities under cancellable and
non-cancellable operating lease agreements. Total rental expense under
cancellable operating leases was Rs. 53.41 (Previous year: Rs. 48.30) and
under non-cancellable portion was Rs. 11.80 (Previous year: Rs. 3.82),
which has been disclosed as rent.
iv) Intangible assets
Brands purchased by the Company are being amortised on straight line
method based on their estimated useful lives. Consequently,
amortisation cost for the year includes a sum of Rs. 8.45 (Previous year
- Rs. 9.28) being the amortisation relating to these brands. On the
Balance Sheet date, the management has reassessed the value of these
brands through an independent valuer to ensure that the recoverable
amounts of these assets are not lower than their carrying amounts.
Since, the Company does not have any potential equity shares hence, the
basic and diluted earnings per share are the same.
v) Employee benefits
a) The employee beneft schemes are as under:
i). Provident fund:
All employees of the Company receive benefits under the provident fund
which is a defned beneft plan wherein the Company provides the
guarantee of a specifed return on contribution. The contribution is
made both by the employee and the Company equal to 12% of the
employees salary. These contributions are made to the fund
administered and managed by the Companys own Trust.
ii). Superannuation fund:
The Company has a defned contribution scheme to provide pension to the
eligible employees. The Company makes monthly contributions equal to a
specifed percentage of the covered employees salary. These
contributions are administered by Companys own Trust which has
subscribed to Group superannuation policy of ICICI Prudential Life
Insurance Company Limited. The Companys monthly contributions are
charged to the profit and Loss Account.
In accordance with the payment of Gratuity Act, 1972 of India, the
Company provides for gratuity, a defned retirement beneft scheme (the
Gratuity Plan), covering eligible employees. Liabilities with regard to
such gratuity plan are determined by an actuarial valuation as at the
end of the year and are charged to profit and Loss Account. The gratuity
plan is a funded plan administered by Companys own Trust which has
subscribed to Group gratuity scheme of ICICI Prudential Life
Insurance Company Limited.
vi). Compensated absences:
The accrual for unutilised leave is determined for the entire available
leave balance standing to the credit of the employees at the year end.
The value of such leave balances that are eligible for carry forward,
is determined by an actuarial valuation as at the end of the year and
is charged to the profit and Loss Account.
Discount rate: The discount rate is based on the prevailing market
yields of Indian Government securities as at the Balance Sheet date for
the estimated term of the obligations.
Expected rate of return on plan assets: This is based on the
expectation of the average long term rate of return expected on
investments of the fund during the estimated term of the obligations.
Salary escalation rate: The estimates of future salary increase
considered in the actuarial valuation takes into account factors like
infation, seniority, promotion and other relevant factors such as
supply and demand in the employment market.
*It represents the employee beneft expense which has been included
under salaries,wages and bonus in Schedule 14.
**The Company has not recognised an asset amounting to Rs. Nil (Previous
year Rs. 2.01) as there are no future economic benefits available to the
Company in the form of reduction in future contribution or a cash
vii) Agro Tech Foods Limited Employee Stock Option Plan
The Company instituted the Agro Tech Foods Limited Employee Stock
Option Plan (Plan) to grant equity-based incentives to its eligible
employees. The company has established a trust called the Agro Tech
ESOP Trust (Trust) to implement the Plan.
viii) Segment information
The entire operations relate to only one segment Branded Foods.
Accordingly there are no reportable segments to be disclosed as
required by Accounting Standard 17 Segment reporting.
ix) Amounts payable to micro, small and medium enterprises
The Ministry of Micro, Small and Medium Enterprises has issued an Offce
Memorandum dated 26 August 2008 which recommends that the Micro and
Small Enterprises should mention in their correspondence with its
customers the Entrepreneurs Memorandum Number as allocated after fling
of the Memorandum. Accordingly, the disclosure in respect of the
amounts payable to such enterprises as at 31 March 2011 has been made
in the fnancial statements based on information received and available
with the Company. The Company has not received any claim for interest
from any supplier under the said Act.
x) Disclosure regarding derivative instruments
The Company uses forward exchange contracts to hedge against its
foreign currency exposures relating to the underlying transactions and
frm commitments. The use of this foreign exchange forward contracts
reduces the risk or cost to the Company and the Company does not use
the foreign exchange forward contracts for trading or speculation
xi) Leasehold land
On 23 February 2011, the Company, has been allotted 24.71 acres of land
by Gujarat Industrial Development Corporation (GIDC) on 99 years lease
for construction of food manufacturing facility and generation of
employment within the stipulated time periods, on contravention of
which GIDC would be entitled to terminate the agreement and take back
such portion of land which has not been developed by the Company.
xi) Previous year figures
Previous year figures have been regrouped/reclassified wherever
necessary, to conform to current year classification.