BRITANNIA INDUSTRIES LIMITED
ANNUAL REPORT 2010-2011
NOTES ON ACCOUNTS
1. Significant accounting policies
(a) Basis of accounting and preparation of financial statements
The financial statements are prepared under the historical cost convention,
on the accrual basis of accounting to comply in all material aspects with
the applicable accounting principles in India, the mandatory Accounting
Standards ('AS') prescribed by the Companies (Accounting Standard), Rules
2006, the relevant provisions of the Companies Act, 1956 ('the Act') and
the guidelines issued by the Securities and Exchange Board of India (SEBI).
(b) Use of estimates
The preparation of the financial statements, in conformity with generally
accepted accounting principles in India, requires that the Management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent liabilities as at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates. Any revision to accounting estimates is recognised prospectively
in current and future periods.
(c) Fixed assets Tangible assets
Tangible assets are stated at their cost of acquisition or construction
less accumulated depreciation. Cost includes inward freight, duties, taxes
and expenses incidental to acquisition and installation or construction,
net of CENVAT and VAT credit, where applicable.
The cost of the fixed assets not ready for their intended use before such
date, are disclosed as capital work-in-progress.
Intangible assets
Intangible assets are stated at cost of acquisition less accumulated
amortisation.
(d) Depreciation and amortisation
Depreciation in respect of all the assets is provided on straight line
method. The rates of depreciation prescribed in Schedule XIV to the Act are
considered as minimum rates. If the Management's estimate of the useful
life of a fixed asset at the time of the acquisition of the asset or of the
remaining useful life on a subsequent review is shorter than envisaged in
the aforesaid schedule, depreciation is provided at a higher rate based on
the Management's estimate of the useful life / remaining useful life.
Pursuant to this policy, vehicles acquired on finance lease are depreciated
over a period of 5 years.
With effect from 1 April 2010, the Management has revised the estimated
useful life for computers to four years, based on a review of useful life
of such assets.
Assets costing individually upto Rs. 5 are fully depriciated in the year of
addition. Leasehold land is amortised over the period of primary lease.
(e) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset, including intangible, may be impaired. If any
such indication exists, the Company estimates the recoverable amount of the
asset. If such recoverable amount of the asset or the recoverable amount of
the cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable amount.
The reduction is treated as an impairment loss and is recognised in the
profit and loss account. If at the balance sheet date there is an
indication that if a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciable historical cost. An
impairment loss is reversed only to the extent that the carrying amount of
asset does not exceed the net book value that would have been determined,
if no impairment loss had been recognised.
(f) Leases
Assets acquired under lease where the Company has substantially all the
risks and rewards of ownership are classified as finance lease. Such leases
are capitalised at the inception of lease at lower of the fair value and
present value of minimum lease payments. Assets taken on finance lease are
depreciated over their estimated useful life or the lease term whichever is
lower.
Assets acquired under lease where the significant portion of risks and
rewards of ownership are retained by the lessor are classified as operating
lease. Lease rentals are charged to profit and loss account on accrual
basis.
(g) Inventories
Inventories are valued at the lower of cost (including prime cost, excise
duty and other overheads incurred in bringing the inventories to their
present location and condition) and estimated net realisable value, after
providing for obsolescence, where appropriate. The comparison of cost and
net realisable value is made on an item-by-item basis. The net realisable
value of materials in process is determined with reference to the selling
prices of related finished goods. Raw materials, packing materials and
other supplies held for use in production of inventories are not written
down below cost except in cases where material prices have declined, and it
is estimated that the cost of the finished products will exceed their net
realisable value.
The provision for inventory obsolescence is assessed regularly based on
estimated usage and shelf life of products.
Raw materials, packing materials and stores and spares are valued at cost
computed on monthly moving weighted average basis. The cost includes
purchase price, inward freight and other incidental expenses net of CENVAT
and VAT credit, where applicable.
Materials-in-process is valued at input material cost plus conversion cost
as applicable.
Finished goods are valued at lower of net realisable value and prime cost,
excise duty and other overheads incurred in bringing the inventories to
their present location and condition.
(h) Sundry debtors and loans and advances
Sundry debtors and loans and advances are stated after making adequate
provision for doubtful debts and advances.
(i) Investments
Long term investments are stated at cost. A provision for diminution is
made to recognise a decline, other than temporary, in the value of long
term investments.
Current investments are stated at lower of cost and fair value for each
investment individually. (j) Revenue recognition
Revenue from sale of goods (including sale of scrap) is recognised on
transfer of all significant risks and rewards of ownership to the buyer.
The amount recognised as sale is exclusive of sales tax and net of trade
discounts and sales returns. Sales are presented both gross and net of
excise duty.
Income from royalty and services is accounted based on contractual
agreements.
Dividend income is accounted for in the year in which the right to receive
the same is established.
Interest on investments is booked on a time-proportion basis taking into
account the amounts invested and the rate of interest.
(k) Foreign currency transactions
Transactions in foreign currency are recorded at exchange rates prevailing
on the respective dates of the relevant transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the exchange
rates prevailing at the balance sheet date. The gains or losses resulting
from such transactions are adjusted to the profit and loss account. Non-
monetary assets and non-monetary liabilities denominated in foreign
currency and measured at fair value / net realisable value are translated
at the exchange rate prevalent at the date when the fair value / net
realisable value was determined. Non-monetary assets and non-monetary
liabilities denominated in foreign currency and measured at historical cost
are translated at the exchange rate prevalent at the date of transaction.
The Company uses foreign exchange forward contracts to cover its exposure
towards movements in foreign exchange rates. The use of foreign exchange
forward contracts reduces the risk of fluctuations in exchange movements
for the Company. The Company does not use the foreign exchange forward
contract for trading or speculative purposes.
Premium or discount arising at the inception of the forward contracts
against the underlying assets is amortised as expense or income over the
life of contract. Exchange differences on forward contracts are recognised
in the profit and loss account in the reporting period in which the
exchange rates change.
(l) Taxes on income
Income tax expense comprises current tax (i.e. amount of tax for the year
determined in accordance with the Income tax law) and deferred tax charge
or credit (reflecting the tax effects of timing differences between
accounting income and taxable income for the year). Deferred tax in respect
of timing differences which originate during the tax holiday period but
reverse after the tax holiday period is recognised in the year in which the
timing differences originate. For this purpose, the timing differences
which originate first are considered to reverse first. The deferred tax
charge or credit and the corresponding deferred tax liabilities or assets
are recognised using the tax rates that have been enacted or substantively
enacted by the balance sheet date. Deferred tax assets are recognised only
to the extent where there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or
carried forward business loss under taxation laws, deferred tax assets are
recognised only if there is a virtual certainty of realisation of such
assets.
Deferred tax assets / liabilities are reviewed as at each balance sheet
date and written down or written up to reflect the amount that is
reasonably / virtually certain (as the case may be) to be realised.
The Company offsets, the current tax assets and liabilities (on a year on
year basis) and deferred tax assets and liabilities, where it has a legally
enforceable right and where it intends to settle such assets and
liabilities on a net basis.
Minimum Alternative Tax (MAT) credit is recognised as an asset only when
and to the extent there is convincing evidence that the Company will pay
normal income tax during the specified period. In the year in which the MAT
credit becomes eligible to be recognised as an asset in accordance with the
recommendations contained in the guidance note issued by ICAI, the said
asset is created by way of a credit to the profit and loss account. The
Company reviews the same at each balance sheet date and writes down the
carrying amount of MAT credit entitlement to the extent there is no longer
convincing evidence to the effect that Company will pay normal income tax
during the specified period.
(m) Employee benefits
(i) short-term employee benefits
All employee benefits falling due wholly within twelve months of rendering
the services are classified as short-term employee benefits, which include
benefits like salaries, wages, short-term compensated absences and
performance incentives and are recognised as expenses in the period in
which the employee renders the related service.
(ii) post-employment benefits
Contributions to defined contribution schemes such as Provident Fund,
Pension Fund etc., are recognised as expenses in the period in which the
employee renders the related service. In respect of certain employees,
Provident Fund contributions are made to a Trust administered by the
Company. The interest rate payable to the members of the Trust shall not be
lower than the statutory rate of interest declared by the Central
Government under the Employees' Provident Funds and Miscellaneous
Provisions Act, 1952 and shortfall, if any, shall be made good by the
Company. In respect of contributions made to government administered
Provident Fund, the Company has no further obligations beyond its monthly
contributions. The Company also provides for post-employment defined
benefit in the form of gratuity and medical benefits. The cost of providing
benefit is determined using the projected unit credit method, with
actuarial valuation being carried out at each balance sheet date.
The Britannia Industries Limited Covenanted Staff Pension Fund Trust
(BILCSPF) and Britannia Industries Limited Officers' Pension Fund Trust
(BILOPF) were established by the Company to administer pension schemes for
its employees. These trusts are managed by the trustees. The Pension scheme
is applicable to all the managers and officers of the Company who have been
employed up to the date of 15 September 2005 and any manager or officer
employed after that date, if he has opted for the membership of the scheme.
The Company makes a contribution of 15% of salary in respect of the
members, each month to the trusts. On retirement, subject to the vesting
conditions as per the rules of the trust, the member becomes eligible for
pension, which is paid from annuity purchased in the name of the member by
the trusts.
(iii) other long-term employee benefits
All employee benefits (other than post-employment benefits and termination
benefits) which do not fall due wholly within twelve months after the end
of the period in which the employees render the related services are
determined based on actuarial valuation carried out at each balance sheet
date. Provision for long term compensated absences is based on actuarial
valuation carried out as at 1st January every year.
(n) Employee share based payments
The Company measures compensation cost relating to employee stock options
using the intrinsic value
method. Compensation expense, if any, is amortised over the vesting period
of the option on a straight line basis.
(o) provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a
result of past events, for which it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made. Provisions are reviewed
regularly and are adjusted where necessary to reflect the current best
estimate of the obligation. When the Company expects a provision to be
reimbursed, the reimbursement is recognised as a separate asset only when
reimbursement is virtually certain.
A disclosure for contingent liabilities is made where there is a possible
obligation or a present obligation that may probably not require an outflow
of resources. When there is a possible or a present obligation where the
likelihood of outflow of resources is remote, no provision or disclosure is
made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable cost of meeting the obligations under the contract exceed the
economic benefits expected to be received under it, are recognised when it
is probable that an outflow of resources embodying economic benefits will
be required to settle a present obligation as a result of an obligating
event based on a reliable estimate of such obligation.
(p) Derivative contracts
Based on the principle of prudence as provided in Accounting Standard 1 -
'Disclosure of accounting policies', the Company assesses losses, if any,
by marking to market all its outstanding derivative contracts [other than
those accounted under Accounting Standard 11 - 'Effects of changes in
foreign exchange rates' (Refer to point (k) above)] at the Balance Sheet
date and provides for such losses. The net gain, if any, based on the said
evaluation is not accounted for in line with the Institute of Chartered
Accountants of India (ICAI) notification issued in March 2008 in relation
to such transactions.
(q) Earnings per share
Basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted earnings per share is
computed by dividing the net profit after tax by the weighted average
number of equity shares considered for deriving basic earnings per share
and also the weighted average number of equity shares that could have been
issued upon conversion of all dilutive potential equity shares. Dilutive
potential equity shares are deemed converted as of the beginning of the
year, unless issued at a later date. In computing diluted earnings per
share, only potential equity shares that are dilutive and that either
reduces earnings per share or increases loss per share are included. The
number of shares and potentially dilutive equity shares are adjusted
retrospectively for all periods presented for the share splits.
(r) cash flow statement
Cash flows are reported using indirect method, whereby net profits before
tax is adjusted for the effects of transactions of a non-cash nature and
any deferrals or accruals of past or future cash receipts or payments. The
cash flows from regular revenue generating, investing and financing
activities of the Company are segregated.
(s) Borrowing costs
Borrowing costs directly attributable to acquisition or construction of
those fixed assets which necessarily take a substantial period of time to
get ready for their intended use are capitalised. Other borrowing costs are
accounted as an expense in the profit and loss account.
2. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES:
(a) Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 346,674 (previous year: Rs. 118,159).
(b) Contingent liabilities for:
(1) Bank guarantee and letter of credit for Rs. 65,010 (previous year:
Rs.1,046,138).
(2) Discounted cheques Rs. 456,988 (previous year: Rs. 582,506).
(3) Claims / demands against the Company not acknowledged as debts
including excise, income tax, sales tax and trade and other demands of
Rs.578,773 (previous year: Rs. 1,058,882).
Notes:
(i) During the current year, the Company has reassessed the exposure with
respect to claims / demands for excise, income tax, sales tax and trade and
other matters. Exposure with respect to claims / demands where the
possibilty of any outflow in settlement is assessed as remote as at the
balance sheet date, have not been considered as contingent liability.
(ii) The above does not include non-quantifiable industrial disputes and
other legal disputes pending before various judicial authorities. Also
refer to note 7.
(c) The Company has furnished the following corporate guarantees:
Banking facilities Name of the bank 31 March 31 March
given to 2011 2010
(i) Britannia and ABN Amro Bank NV, 498,851 502,095
Associates (Mauritius) Singapore
Private Limited -
Mauritius Bank of America 1,115,000 -
(ii) Strategic Food National Bank of - 107,142
International Fujairah, Dubai
Co. LLC - Dubai
HSBC Bank Middle
East, Dubai - 36,588
Bank of Baroda,Dubai - 16,221
BBK Bank, Dubai - 78,542
Blom Bank, Dubai - 60,980
Commercial Bank - 12,196
of Dubai, Dubai
National Bank of Um Al - 13,415
Dahrain, Dubai
(iii) Britannia Dairy Bank of America 600,000 600,000
Private Limited
Regarding items (b) and (c) above, it is not practicable to disclose
information in respect of the estimate of the financial effect, an
indication of the uncertainties relating to outflow and the possibility of
any reimbursement as it is determinable only on occurrence of uncertain
future events / receipt of judgements pending at various forums.
(d) The Company has furnished the following letters of comfort / letters of
awareness:
Banking facilities Name of the bank 31 March 31 March
given to 2011 2010
(i) Britannia Dairy HSBC Bank 45,000 45,000
Private Limited
(ii) Strategic Food ABN Amro Bank 460,180 463,448
International Co.
LLC, Dubai
(iii) Al Sallan Food ABN Amro Bank 84,770 85,372
Industries Company
SAOC, Oman
These letters are not to be construed as a guarantee issued by the Company.
3(a) operating leases
The Company has certain operating leases for office facilities and
residential premises (cancellable leases). Such leases are generally with
the option of renewal against increased rent and premature termination of
agreement. Rental expenses of Rs. 37,675 (previous year: Rs. 130,230) in
respect of obligation under operating leases have been recognised in the
profit and loss account.
(b) Finance leases
The Company has taken motor vehicles on finance lease. The total minimum
lease payments and present value of minimum lease payments as at 31 March
2011 are as follows:
31 March 2011 31 March 2010
Minimum Present Minimum Present
lease value of lease value of
payments minimum payments minimum
lease lease
payments payments
Not later than 1 year 10,328 8,731 7,473 5,305
Later than 1 year and
not later than 5 years 9,215 7,561 16,764 14,386
19,543 16,292 24,237 19,691
The difference between minimum lease payments and the present value of
minimum lease payments of Rs. 3,251 (previous year: Rs. 4,546) represents
interest not due. The lease liability is secured by the relevant vehicles
acquired under lease.
4. 'Accounting for taxes on income' disclosure as per Accounting Standard
22: Major components of deferred tax assets and liabilities on account of
timing differences are as follows:
31 March 2011 31 March 2010
Asset Liability Asset Liabilit
Depreciation - 291,136 - 245,949
Voluntary retirement scheme, 58,676 - 97,146 -
terminal compensation
benefits
Statutory payments 108,620 - 201,091 -
Provisions allowed on
payments, write off 61,467 - 13,517 -
228,763 291,136 311,754 245,949
Deferred tax asset/
(liability), net (62,373) 65,805
5. The Company has an investment of Rs. 49 (previous year: Rs. 49) in a
partnership firm 'Britannia Sports' having a capital of Rs. 100 (previous
year: Rs. 100) in which it holds 49% share of the profit and loss and the
balance share is held by two subsidiary companies, Flora Investments
Company Private Limited and Gilt Edge Finance and Investments Private
Limited who hold 26 % and 25 % respectively. The Company has booked its
proportionate share of partnership losses which is disclosed in the profit
and loss account.
6(i) Details of investments purchased, reinvested and sold during the year:
In Units
Mutual funds Face value Purchase Reinvested Sold
per unit - (including (including
Rs. switch in) switch out)
(a) Investment in
mutual funds
(Unquoted,
non-trade)
HDFC Floating Rate 10 5,030,324 - 5,030,324
Income Fund - Short
Term Plan-Wholesale-
Growth
Birla Floating Rate 10 32,091,012 - 32,091,012
Fund - Long Term
Institutional
Growth
Kotak Liquid Fund -
Institutional Premium-
Growth 10 9,392,063 - 9,392,063
Reliance Floating Rate
Fund - Short Term Plan -
Growth 10 1,358,963 - 1,358,963
SBI - SHF - Ultra Short
Term Fund - Institutional
Plan - Growth 10 35,802,281 - 35,802,281
ICICI Prudential Liquid
Super Institutional Plan - 100 1,375,910 - 1,375,910
Growth
Birla Sunlife Cash Plus -
Institutional Premium - 10 20,488,871 - 20,488,871
Growth
UTI Liquid Cash Plan -
Institutional - Growth 1,000 79,049 - 79,049
ICICI Prudential Floating
Rate Fund - Plan D - Growth 100 2,952,388 - 2,952,388
UTI Floating Rate Fund -
Short Term Plan - 1,000 39,969 44 40,013
Institutional - Daily
Dividend Reinvestment
UTI Treasury Advantage
Plan - Institutional Plan - 1,000 70,367 - 70,367
Growth
Reliance Liquid Fund
Cash Plan - Growth
Option - Growth Plan 10 12,852,964 - 12,852,964
SBI Premier Liquid Fund-
Super Institution Plan- 10 5,294,332 - 5,294,332
Growth
IDFC Cash Fund - Super
Institutional Plan-Growth 10 7,700,469 - 7,700,469
Tata Liquid Super High
Investment Fund -
Appreciation 1,000 50,729 - 50,729
Templeton Treasury
Management Account-Super 10 63,013 - 63,013
Institutional Plan-Growth
DSP Black Rock Money
Manager Fund-Institutional 1,000 44,303 - 44,303
Plan - Growth
Kotak Flexi Debt Fund -
Institutional - Growth 10 42,728,034 - 42,728,034
Templeton Floating Rate
Income Fund - Super 10 63,800,587 - 63,800,587
Institutional Option -
Growth
ICICI Prudential Flexible
Income Plan - Growth Option 100 4,269,320 - 4,269,320
IDFC Money Manager Fund -
Treasury Plan - Super 10 47,890,155 - 47,890,155
Institutional - Plan C -
Growth
BNP Paribas Money Plus Fund
Institutional - Growth 10 4,241,388 - 4,241,388
Plan
UTI Floating Rate Fund
Short-Term Plan -
Institutional Growth 1,000 406,044 - 406,044
Reliance Medium Term Fund-
Retail Plan - Growth 10 7,758,497 - 7,758,497
Kotak Floater Fund - Long
Term Plan - Growth 10 19,969,186 - 19,969,186
Birla Sunlife Savings Fund-
Institutional - Growth 10 9,941,048 - 9,941,048
Tata Floater Fund - Growth 10 81,943,321 - 81,943,321
Birla Sunlife Ultra Short-
Term Fund - Institutional- 10 54,426,886 - 54,426,886
Growth
Tata Treasury Manager SHIP -
Growth 10 44,854 - 44,854
Templeton Ultra Short Bond
Fund - Super Institutional 10 62,921,909 - 62,921,909
Plan - Growth
Reliance Money Manager Fund-
Institutional - Growth 1,000 224,385 - 224,385
Birla Sunlife Cash Manager-
Institutional - Growth 10 29,444,389 - 29,444,389
(b) Bank Certificate of
Deposit (unquoted,
non-trade) -
Kotak Bank - 7.30% 100 2,500 - 2,500
Canara Bank - 7.56% 100 2,500 - 2,500
(c) Non-convertible
debentures (unquoted,
non-trade) -
Mahindra & Mahindra 1,000,000 250 - 250
Financial Services
Limited - 6.65%
Mahindra & Mahindra 1,000,000 250 - 250
Financial Services
Limited - 6.75%
(ii) Details of
investments purchased,
reinvested and sold
during the previous
year:
Investment in mutual
funds (unquoted,
non-trade)
Birla Cash Plus -
Institutional Premium
Plan - Daily Dividend
Reinvestment 10 45,910,475 4,571 45,915,046
ICICI Prudential
Liquid Plan - Super
Institutional - Daily 10 49,991,101 5,393 49,996,494
Dividend Reinvestment
Kotak Liquid Plan -
Institutional Premium
Plan - Daily Dividend 10 82,596,642 7,915 82,604,557
Reinvestment
Templeton India Treasury
Management Account - Super 1,000 339,771 37 339,808
Institutional Plus - Daily
Dividend Reinvestment
Reliance Liquidity Fund -
Institutional - Daily
Dividend Reinvestment 10 85,973,348 8,489 85,981,837
Fortis Overnight Fund -
Institutional - Daily
Dividend Reinvestment 10 70,978,706 5,719 70,984,425
UTI Liquid Cash Plan -
Institutional - Daily
Dividend Reinvestment 1,000 382,561 39 382,600
HDFC Liquid Fund - Daily
Dividend Reinvestment 10 67,658,999 6,452 67,665,451
Kotak Flexi Debt Scheme-
Daily Dividend
Reinvestment 10 49,767,422 511,294 50,278,716
Templeton Floating
Rate Income Fund -
LT Plan-Super - Daily
Dividend Reinvestment 10 22,005,187 115,729 22,120,916
HDFC Cash Management
Fund- Treasury Advantage 10 19,938,820 64,756 20,003,576
Plan - Daily Dividend
Reinvestment
Templeton India Ultra
Short Term Bond Fund - 10 24,973,629 52,932 25,026,561
Institutional - Daily
Dividend Reinvestment
IDFC Money Manager Fund-
Treasury Plan C - Daily 10 5,529,721 17,754 5,547,475
Dividend Reinvestment
IDFC Cash Fund - Super
Institutional - Plan C
- Daily Dividend
Reinvestment 10 47,988,003 4,534 47,992,537
Reliance Medium Term
Fund - Daily Dividend 10 17,728,941 45,858 17,774,799
Reinvestment
Kotak Floater - Long
Term Plan - Institutional-
Growth 10 22,327,258 - 22,327,258
Tata Floater Fund-Growth 10 2,920,305 - 2,920,305
Templeton India Ultra
Short-term Bond Fund - 10 16,905,885 - 16,905,885
Institutional Growth
ICICI Prudential Flexible-
Income Plan - Daily 10 60,383,511 1,641,370 62,024,881
Dividend
Reliance Money Manager
Fund - Institutional
Option - Daily Dividend 1,000 958,178 21,650 979,828
Tata Floater Fund -
Dividend Daily
Reinvestment 10 33,879,389 353,237 34,232,626
UTI Treasury Advantage
Fund - Institutional Plan - 10 389,957 8,104 398,061
Daily Dividend
Birla Sunlife Savings
Fund - Daily Dividend 10 57,965,163 1,598,162 59,563,325
Reinvestment
Fortis Money Plus Fund -
Institutional Plus- Daily 10 82,979,997 1,782,202 84,762,199
Dividend Reinvestment
Prudential ICICI Floating
Rate Fund - Plan D - Daily 10 - 43,382 43,382
Dividend
HDFC Floating Rate Income-
Short Term Plan - Daily 10 52,579,583 880,489 53,460,072
Dividend Reinvestment
Wholesale
Birla Sunlife Short Term
Fund - Institutional -
Daily Dividend 10 - 29,214 29,214
IDFC Money Manager Fund -
Treasury Plan - Super 10 51,996,735 316,095 52,312,830
Institutional - Plan C -
Daily Dividend Folio 1
Kotak Floater Long Term -
Daily Dividend 10 94,767,001 1,229,288 95,996,289
Reinvestment
Fortis Money Plus Fund
Institutional - Growth
Plan 10 28,802,258 - 28,802,258
UTI Floating Rate Fund
Short Term Plan -
Institutional - Growth 1,000 96,675 - 96,675
Reliance Medium Term Fund-
Retail Plan - Growth 10 5,245,406 - 5,245,406
Birla Sunlife Savings
Fund - Institutional -
Growth 10 8,606,296 - 8,606,296
7. In accordance with Accounting Standard 29 on 'Provisions, contingent
liabilities and contingent assets', prescribed by the Companies (Accounting
Standard), Rules 2006, certain classes of liabilities have been identified
as provisions which have been disclosed as under:
31 March Additions Utilisation Reversals/ 31 March
2010 adjustments 2011
(a) Excise related 262,796 57,873 (181) - 320,488
issues
(b) Sales tax and
other issues 163,855 20,678 - (1,400) 183,133
(c) Trade and
other issues 481,638 21,453 - (151,900) 351,191
31 March Additions Utilisation Reversals/ 31 March
2009 adjustments 2010
(a) Excise related
issues 131,126 137,403 - (5,733) 262,796
(b) Sales tax and
other issues 164,597 49,155 - (49,897) 163,855
(c) Trade and
other issues 109,468 324,891 (259) 47,538 481,638
(a) and (b) represents estimates made for probable cash outflow arising out
of pending disputes / litigations with various regulatory authorities.
(c) represents provisions made for probable liabilities / claims arising
out of commercial transactions with vendors / others. Further disclosures
as required in Accounting Standard 29 are not made since it can be
prejudicial to the interests of the Company.
* Included under various heads in the profit and loss account.
8. In the Annual General Meeting held on 9 August 2010, the shareholders of
the Company approved the subdivision of equity shares, wherein each equity
share with a face value of Rs. 10/- has been subdivided into 5 equity
shares with a face value of Rs. 2/- each. The effective date for the sub-
division was 10 September 2010. In compliance with Accounting Standard 20,
the disclosure of earnings per share for the year ended 31 March 2010 has
been arrived at after giving effect to the above sub-division.
9. Pursuant to the Labour Commissioner's Order under section 25 O (1) of
the Industrial Disputes Act, 1947, production at the Company owned facility
in Mumbai was closed effective 24 March 2004. As per the Order of the
Honourable Bombay High Court, the Company as on the date of the balance
sheet has paid an amount of Rs. 58,317 (previous year: Rs. 58,317)
equivalent to eligible compensation under section 25 O (1) of the
Industrial Disputes Act, 1947. Further, based on the appeal filed by the
worker union, the Industrial Tribunal has reversed the Order of the Labour
Commissioner. The Company has preferred an appeal against the Order of the
Industrial Tribunal.
As per interim direction of the Honourable Bombay High Court, the Company
has paid Rs. 12,579 (previous year: Rs. 14,703) as compensation equivalent
to 70% of the last drawn amount for the year ended 31 March 2011.The
Company has made the above payments as compensation under the Industrial
Disputes Act, 1947. The case is currently pending in the Honourable Bombay
High Court.
10 (a) Gross sales
Quantity Value
Product group 31 March 31 March 31 March 31 March
2011 2010 2011 2010
Tonnes Tonnes
Biscuits and high
protein food 554,336 477,728 36,041,252 29,281,961
Bread, bread toast
and rusk 123,735 117,050 4,080,726 3,468,737
Cake 17,218 11,069 1,936,193 1,193,097
Others (including
scrap sales) 401,634 322,616
42,459,805 34,266,411
(a) The above value does not include sale of raw materials (including
wheat) and by-products on conversion of inputs aggregating to Rs. 547,833
(previous year: Rs. 483,273), which has been netted off with cost of
material.
(b) The above quantity does not include finished goods issued for sales
promotion and any write-off and damages for finished goods.
(b) Raw materials including packing materials consumed
Quantity Value
Product group 31 March 31 March 31 March 31 March
2011 2010 2011 2010
Tonnes Tonnes
Flour 417,630 373,938 6,349,879 5,633,298
Fats and oils 79,554 68,877 3,636,054 2,930,948
Sugar 129,837 118,294 4,523,204 3,183,695
Lamination roll 8,418 7,273 2,127,204 1,589,818
Others 7,082,905 5,380,790
23,719,246 18,718,549
31 March 2011 31 March 2010
Value % Value %
Imported 1,663,452 7.01 457,712 2.45
Indigenous 22,055,794 92.99 18,260,837 97.55
23,719,246 100.00 18,718,549 100.00
(c) Stores and spare
parts consumed
Imported 879 0.73 1,021 0.88
Indigenous 118,833 99.27 115,652 99.12
119,712 100.00 116,673 100.00
11(a) In accordance with Accounting Standard 13 - 'Accounting for
Investments', prescribed by the Companies (Accounting Standard), Rules 2006
of the Companies Act, 1956, the Company has, based on its assessment of
Britannia Dairy Private Limited's business, retained provision of Rs.
325,000 (previous year: Rs. 325,000) for diminution, other than temporary,
on long term investment made in equity shares of Britannia Dairy Private
Limited.
(b) The Company has discontinued the business operations of Britannia Lanka
Private Limited, Sri Lanka (Subsidiary of Britannia Industries Limited).
Pursuant to this, an amount of Rs. 136,281 has been provided for diminution
in value of investments. The total provision of Rs. 182,756 (previous year:
Rs. 46,475) has been retained for diminution in value of investments.
(c) During the year, redeemable preference shares amounting to Rs. 730,634
in Britannia and Associates (Mauritius) Private Limited, Mauritius and loan
amounting of Rs. 51,814 due from Britannia and Associates (Mauritius)
Private Limited, Mauritius have been converted into equivalent investment
in equity shares of face value of USD 1 at par.
(d) As per the approval by the Honourable Karnataka High Court, vide order
no. 8771/11, for reduction of equity share capital of Daily Bread Gourmet
Foods (India) Private Limited, face value of Rs. 10/- each, has been
restated to Rs. 4/- each and equivalent value has been incorporated in
investments. Giving effect to the same, the provision for diminution in
value of investment of Rs. 390,000 has been reversed and a charge of Rs.
372,100 has been made on account of loss due to reduction in value of the
investment.
12. In the current year, due to the revision of estimated useful life for
computers to four years, additional depreciation charged amounts to
Rs.20,846.
13. directors and managerial remuneration of Rs. 66,817 (previous year:
Rs.58,130) includes:
- Basic salary, fees and estimated cost of benefits Rs. 48,967 (previous
year: Rs. 42,368)
- Contribution to provident fund, pension fund Rs. 2,835 (previous year:
Rs. 2,700)
- Perquisites or benefits in cash or in kind Rs. 15 (previous year: Rs. 62)
- Commission to non-wholetime directors Rs. 15,000 (previous year:
Rs.13,000)
Statement of computation of net profits as per section 349 of the companies
act, 1956
31 March 2011 31 March 2010
Profit before taxation 1,981,415 1,207,771
Add:
Managerial remuneration 50,750 44,229
Directors sitting fees 1,067 901
Commission to non-wholetime directors 15,000 13,000
Depreciation and amortisation as per accounts 445,860 375,434
Provision for diminution in value of investments - 436,475
Provision for corporate guarantee and
other claims in relation to a subsidiary 8,000 142,282
VRS and terminal compensation benefits 14,479 328,695
Provision for doubtful debts
and loans and advances 3,844 17,017
2,520,415 2,565,804
Less:
Profit on sale of investments, net 86,636 81,040
Provision for doubtful debts
and advances written back 41,042 390,000
Reversal of provision for diminution
in value of investment, consequent 17,843 -
to reduction of share capital (net)
Provisions and liabilities no longer
required written back 5,644 13,679
Depreciation and amortisation as per
Section 350 of the Companies Act, 443,092 372,721
1956
Profit on sale of properties 122,844 37,670
Profit on sale of assets 280 174
Profit under Section 349 of
the Companies Act, 1956 1,803,034 1,670,520
Non-wholetime directors' commission
restricted to 1% 18,030 16,705
Managerial remuneration @ 5% 90,152 83,526
Notes:
(i) Contributions to employee retirement / post retirement and other
employee benefits which are based on actuarial valuation done on an overall
Company basis are excluded from the above.
(ii) Ms. Vinita Bali was appointed as Managing Director for a period of 5
years with effect from 31 May 2006.
14. Licensed and installed capacities per annum
(in tonnes)
Product group Licensed Licensed Installed Installed
Capacity Capacity Capacity Capacity
31 March 31 March 31 March 31 March
2011 2010 2011 2010
Biscuits and high
protein food - - 152,100 148,800
Installed Capacity as at 31 March 2011 [including Mumbai factory (Refer
to note 9 above) and excluding Chennai factory] has been certified by the
Management and relied upon by the auditors; the certificate being technical
in nature.
15. Production* (in tonnes)
Product group 31 March 2011 31 March 2010
Biscuits and high protein food 489,418 430,194
Bread, bread toast and rusk 123,354 113,122
Cake 5,592 4,615
618,364 547,931
* Includes third party processing
Biscuits and high protein food 369,972 324,967
Bread, bread toast and rusk 123,354 113,122
Cake 5,592 4,535
498,918 442,624
16. opening and closing stock of finished goods
31 March 2011 31 March 2010
Quantity Value Quantity Value
Tonnes Tonnes
(a) Opening stock
Biscuits and high
protein food 18,628 926,819 17,471 766,173
Bread, bread toast
and rusk 850 50,334 489 23,594
Cake 554 51,108 272 24,589
Others 5,151 4,187
1,033,412 818,543
(b) Closing stock
Biscuits and high 19,868 1,127,062 18,628 926,819
protein food
Bread, bread toast
and rusk 685 40,444 850 50,334
Cake 426 41,400 554 51,108
Others 6,429 5,151
1,215,335 1,033,412
17. purchase of
finished goods
Biscuits and high
protein food 65,411 2,822,628 54,484 2,309,377
Bread, bread
toast and rusk 1,452 83,996 5,855 154,282
Cake 11,470 1,050,269 6,827 576,234
Others 4,113 146,180 2,704 91,328
82,446 4,103,073 69,870 3,131,221
31 March 31 March
2011 2010
18 Expenditure in foreign currency
(a) Trade promotion and media related 11,112 9,805
(b) Professional fees 1,597 21,358
(c) Others 2,980 4,104
19. Value of imports on c.I.F. basis
(a) Capital goods 47,427 2,101
(b) Raw materials 1,009,329 616,389
(c) Finished goods - 15,340
(d) Components and spare parts 672 811
20 Earnings in foreign currency
(a) Exports at free on board value 474,221 365,086
(b) Royalty 21,125 14,412
(c) Others 20,065 28,965
21 Dividend remitted in foreign
currency (net of tax)
Relating to the year ended
Number of non-resident shareholders 6 6
Number of equity shares held (at
Rs. 10/- per share) 12,173,219 12,173,219
Amount remitted 304,331 486,929
22 Earnings per share
(a) Net profit attributable to
the equity shareholders 1,452,913 1,165,110
(b) Weighted average number of equity
shares outstanding during the year 119,450,815 119,450,815
(c) Effect of potential equity shares
on employee stock option outstanding 61,559 35,940
(d) Weighted average number of equity
shares outstanding for computing diluted
earnings per share [(b)+(c)] 119,512,374 119,486,755
Nominal value of equity shares (Rs.) 2 2
Basic earnings per share (Rs.) 12.16 9.75
Diluted earnings per share (Rs.) 12.16 9.75
23 Based on guiding principles in the Accounting Standard 17 on Segment
Reporting, the primary business segment of the Company is foods, comprising
bakery and dairy products. As the Company operates in a single primary
business segment, disclosure requirements are not applicable. The Company
primarily caters to the domestic market and export sales are not
significant and accordingly there is no reportable secondary segment.
24 Related party disclosures under Accounting Standard 18 relationships
1. Ultimate holding company The Bombay Burmah Trading Corporation Limited
ABI Holdings Limited (ABIH), UK (till 14
April 2009)
Holding company Associated Biscuits International Limited
(ABIL), UK
2. Subsidiary companies Al Sallan Food Industries Company SAOC, Oman
Boribunder Finance and Investments Private
Limited
Britannia and Associates (Dubai) Private
Company Limited, Dubai
Britannia and Associates (Mauritius) Private
Limited, Mauritius
Britannia Dairy Holdings Private Limited,
Mauritius
Britannia Dairy Private Limited
Britannia Lanka Private Limited, Sri Lanka
Daily Bread Gourmet Foods (India) Private
Limited
Flora Investments Company Private Limited
Ganges Vally Foods Private Limited
Gilt Edge Finance and Investments Private
Limited
International Bakery Products Limited
J B Mangharam Foods Private Limited
Manna Foods Private Limited
Strategic Brands Holding Company Limited,
Dubai
Strategic Food International Co. LLC, Dubai
Sunrise Biscuit Company Private Limited
3. Fellow subsidiary Bannatyne Enterprises Pte Limited, Singapore
companies Dowbiggin Enterprises Pte Limited, Singapore
Nacupa Enterprises Pte Limited, Singapore
Spargo Enterprises Pte Limited, Singapore
Valletort Enterprises Pte Limited, Singapore
4. Associates Klassik Foods Private Limited
Nalanda Biscuits Company Limited
5. Others Britannia Sports (partnership firm)
6. Key management personnel
(KMP) Managing Director Ms. Vinita Bali
Related party transactions
Relationship 31 March 31 March
2011 2010
Investments made during
the year in
Britannia and Associates
(Mauritius) Private Limited, Subsidiary 132,461 589,182
Mauritius
Sunrise Biscuit Company
Private Limited Subsidiary 69,001 -
Britannia Dairy Private
Limited Subsidiary - 155,601
Daily Bread Gourmet
Foods (India) Private
Limited Subsidiary - 548,481
Britannia Dairy Holdings
Private Limited, Mauritius Subsidiary - 500
Britannia Lanka Private
Limited, Sri Lanka Subsidiary 136,281 46,475
Boribunder Finance and
Investments Private Limited Subsidiary 20,001 -
Total 357,744 1,340,239
Conversion of preference
shares to equity shares
Britannia and Associates
(Mauritius) Private Limited, Subsidiary 730,634 -
Mauritius
conversion of loan to
equity shares
Britannia and Associates
(Mauritius) Private Limited, Subsidiary 51,814 -
Mauritius
Reduction in the value
of investments
Daily Bread Gourmet Foods
(India) Private Limited
[Refer to note 11 (d) of
schedule S] Subsidiary 373,708 -
Consideration received on
capital reduction Daily
Bread Gourmet Foods
(India) Private Limited Subsidiary 1,551 -
Redemption of debentures
J B Mangharam Foods
Private Limited Subsidiary 5,000 5,000
Remittance of dividend
Associated Biscuits
International Limited Holding company 269,523 431,236
Others Fellow Subsidiary 34,808 55,693
companies
Total 304,331 486,929
Purchase of shares
Boribunder Finance and
Investments Private Limited Subsidiary 3,018 8,741
Flora Investments Company
Private Limited Subsidiary 12,456 2,672
Gilt Edge Finance and
Investments Private Limited Subsidiary 16,046 3,069
Total 31,520 14,482
Purchase of finished goods/
consumables and ingredients
Strategic Food International
Co. LLC, Dubai Subsidiary - 10,915
Al Sallan Food Industries
Company SAOC, Oman Subsidiary 955 279
Sunrise Biscuit Company
Private Limited Subsidiary 964,018 1,889,275
Britannia Dairy Private
Limited Subsidiary 3,146 2,613
Nalanda Biscuits Company
Limited Associate 804,691 1,274,591
Total 1,772,810 3,177,673
Conversion charges
International Bakery
Products Limited Subsidiary 135,332 85,397
J B Mangharam Foods
Private Limited Subsidiary 181,406 158,172
Ganges Vally Foods
Private Limited Subsidiary 135,414 100,259
Manna Foods Private
Limited Subsidiary - 10,204
Klassik Foods Private
Limited Associate 47,864 49,622
Total 500,016 403,654
Royalty income
Strategic Food
International Co.
LLC, Dubai Subsidiary 21,125 14,412
Interest and
dividend income
Boribunder Finance and
Investments Private Limited Subsidiary 120 686
J B Mangharam Foods
Private Limited Subsidiary 1,049 1,225
Sunrise Biscuit Company
Private Limited Subsidiary 8,675 4,599
Britannia and Associates
(Mauritius) Private Limited Subsidiary 5,283 3,278
Daily Bread Gourmet Foods
(India) Private Limited Subsidiary - 8,555
Klassik Foods Private
Limited Associate 652 326
Ms. Vinita Bali KMP 3 20
Total 15,782 18,689
Management contracts
including reimbursement
of expenses, net
Ganges Vally Foods Private
Limited Subsidiary 3,859 (1,574)
International Bakery
Products Limited Subsidiary 2,504 (819)
J B Mangharam Foods
Private Limited Subsidiary 5,655 2,167
Manna Foods Private
Limited Subsidiary (21) 48,723
Sunrise Biscuit Company
Private Limited Subsidiary 4,689 18,088
Al Sallan Food Industries
Company SAOC, Oman Subsidiary (243) (404)
Strategic Food International
Co. LLC, Dubai Subsidiary (1,685) 1,274
Britannia Dairy Private
Limited Subsidiary 2,223 (13,124)
Nalanda Biscuits
Company Limited Associate 4,706 3,017
Klassik Foods
Private Limited Associate 180 (24)
Total 21,867 57,324
Remuneration
Ms. Vinita Bali KMP 50,750 44,229
Share of loss in
partnership firm
Britannia Sports Others 7 1
Loan given during the year
Sunrise Biscuit Company
Private Limited Subsidiary - 28,000
Daily Bread Gourmet
Foods (India) Private
Limited Subsidiary 15,000 555,000
Boribunder Finance and
Investments Private Limited Subsidiary 31,900 -
Manna Foods Private Limited Subsidiary 229,500 -
Total 276,400 583,000
Loan repaid during the year
Daily Bread Gourmet Foods
(India) Private Limited Subsidiary - 450,000
Sunrise Biscuit Company
Private Limited Subsidiary 50,180 54,000
Boribunder Finance and
Investments Private Limited Subsidiary 52,089 -
Ms.Vinita Bali KMP 687 194
Total 102,956 504,194
Sale of goods/consumables
and ingredients
Sunrise Biscuit Company
Private Limited Subsidiary 5,113 30,910
Strategic Food
International Co.
LLC, Dubai Subsidiary 13,906 2,133
Al Sallan Food Industries
Company SAOC, Oman Subsidiary - 6
Britannia Dairy Private
Limited Subsidiary 11,735 13,799
Nalanda Biscuits Company
Limited Associate 3,581 166,748
Total 34,335 213,596
Outstanding as at year
end - net receivables/
(payables)
Boribunder Finance and
Investments Private Limited Subsidiary 11,900 33,456
Ganges Vally Foods Private
Limited Subsidiary 2,180 3,339
J B Mangharam Foods Private
Limited Subsidiary 7,575 2,804
International Bakery
Products Limited Subsidiary 17,699 7,477
Sunrise Biscuit Company
Private Limited Subsidiary 33,624 81,200
Manna Foods Private
Limited Subsidiary 236,979 11,902
Al Sallan Food Industries
Company SAOC, Oman Subsidiary (35) 6,223
Strategic Food International
Co. LLC, Dubai Subsidiary 3,955 (3,372)
Britannia and Associates
(Mauritius) Private Limited, Subsidiary 12,278 59,256
Mauritius
Britannia Lanka Private
Limited, Sri Lanka Subsidiary 11,243 11,243
Daily Bread Gourmet Foods
(India) Private Limited Subsidiary 15,061 -
Britannia Dairy
Private Limited Subsidiary 853 16,542
Britannia Dairy Holdings
Private Limited, Mauritius Subsidiary 46 46
Nalanda Biscuits Company
Limited Associate 15,657 17,827
Klassik Foods Private
Limited Associate 375 (2,312)
Britannia Sports
(partnership firm) Others 746 746
Ms.Vinita Bali KMP - 687
Total 370,136 247,064
Provision for doubtful
loans/advances
Boribunder Finance and
Investments Private Limited Subsidiary - 21,042
Manna Foods Private Limited Subsidiary 10,403 10,403
Sunrise Biscuit Company
Private Limited Subsidiary - 20,000
Britannia Lanka Private
Limited, Sri Lanka Subsidiary 11,243 11,243
Britannia Sports
(partnership firm) Others 746 746
Total 22,392 63,434
Investment in
shares held
Britannia Dairy
Private Limited Subsidiary 760,247 760,247
Britannia and Associates
(Mauritius) Private Limited, Subsidiary 791,431 607,156
Mauritius
Sunrise Biscuit Company
Private Limited Subsidiary 105,322 36,321
Ganges Vally Foods
Private Limited Subsidiary 7,164 7,164
J B Mangharam Foods
Private Limited Subsidiary 5,432 5,432
International Bakery
Products Limited Subsidiary 4,010 4,010
Boribunder Finance and
Investments Private Limited Subsidiary 20,800 799
Britannia Lanka Private
Limited, Sri Lanka Subsidiary 182,756 46,475
Daily Bread Gourmet Foods
(India) Private Limited Subsidiary 206,726 580,434
Klassik Foods Private
Limited Associate 3,198 3,198
Nalanda Biscuits Company
Limited Associate 2,788 2,788
Britannia Sports
(partnership firm) Others 49 49
Others Subsidiaries 4,156 3,886
Total 2,094,079 2,057,959
Investment in
debentures held
J B Mangharam Foods
Private Limited Subsidiary 12,500 17,500
International Bakery
Products Limited Subsidiary 58,200 58,200
Total 70,700 75,700
Provision for diminution
in value of investment
Britannia Dairy Private
Limited Subsidiary 325,000 325,000
Daily Bread Gourmet Foods
(India) Private Limited Subsidiary - 390,000
Britannia Lanka Private
Limited, Sri Lanka Subsidiary 182,756 46,475
Total 507,756 761,475
Guarantees/collaterals/
contingent liability
Strategic Food
International Co.
LLC, Dubai Subsidiary - 325,084
Britannia and Associates
(Mauritius) Private Limited Subsidiary 1,613,851 502,095
Britannia Dairy Private
Limited Subsidiary 600,000 600,000
Total 2,213,851 1,427,179
Provision for corporate
guarantee and other claims
Britannia Lanka Private
Limited, Sri Lanka Subsidiary 14,002 142,282
Letter of awareness/
comfort
Strategic Food
International
Co. LLC, Dubai Subsidiary 460,180 463,448
Al Sallan Food Industries
Company SAOC, Oman Subsidiary 84,770 85,372
Britannia Dairy Private
Limited Subsidiary 45,000 45,000
Total 589,950 593,820
Relationship
Letter of financial and operational support
Strategic Food International Co. LLC, Dubai Subsidiary
Al Sallan Food Industries Company SAOC, Oman Subsidiary
Britannia and Associates (Mauritius)
Private Limited Subsidiary
Strategic Brands Holding Company Limited, Dubai Subsidiary
Notes:
(i) The above does not include related party transactions with retiral
funds, as key management personnel who are trustees of the funds cannot
individually exercise significant influence on the retiral funds
transactions.
(ii) The above information has been determined to the extent such parties
have been identified on the basis of information available with the Company
and relied upon by the auditors.
(iii) SAP licenses held by the Company are also used by Britannia Dairy
Private Limited and Al Sallan Food Industries Company SAOC, Oman.
25 Employee benefits
(a) Post-retirement benefit - defined contribution plans
The Company has recognised an amount of Rs. 50,889 (previous year Rs.
47,555) as expenses under the defined contribution plans in the profit and
loss account for the year:
31 March 31 March
2011 2010
Benefit (contribution to)
Provident Fund* 23,971 22,577
Family Pension Scheme 11,505 10,222
Pension Fund 15,408 14,749
Labour Welfare Fund 5 7
Total 50,889 47,555
* With regard to the assets of the fund and the return on the investments,
the Company does not expect any deficiency in the foreseeable future.
(b) Post-retirement benefit - defined benefit plans
The Company makes annual contributions to the Britannia Industries Limited
Covenanted Staff Gratuity Fund and Britannia Industries Limited Non
Covenanted Staff Gratuity Fund, which are funded defined benefit plans for
qualifying employees.
(i) The Scheme in relation to Britannia Industries Limited Non Covenanted
Staff Gratuity Fund provides for lumpsum payment to vested employees at
retirement, death while in employment or on termination of employment of an
amount equivalent to 15 days salary payable for each completed year of
service or part thereof in excess of six months subject to the maximum
amount payable as per the Payment of Gratuity Act, 1972.
(ii) The Scheme in relation to Britannia Industries Limited Covenanted
Staff Gratuity Fund provides for lumpsum payment to vested employees at
retirement, death while in employment or on termination of employment of an
amount equivalent to 15 days salary payable for each completed year of
service or part thereof in excess of six months subject to the higher of
maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty
months salary.
Vesting (for both the funds mentioned above) occurs only upon completion of
five years of service, except in case of death or permanent disability. The
present value of the defined benefit obligation and the related current
service cost are measured using the projected unit credit method with
actuarial valuation being carried out at balance sheet date.
31 March 31 March 31 March
2011 2010 2009
1. Reconciliation of opening and
closing balances of the present
value of the defined benefit
obligation:
Obligations at 1 April 157,476 146,729 170,096
Service cost 10,122 9,424 9,717
Interest cost 12,598 11,738 13,608
Benefits settled (22,891) (10,254) (53,583)
Actuarial (gain)/loss (2,702) (161) 6,891
Obligations at year end 31 March 154,603 157,476 146,729
2. Change in plan assets:
Plan assets at 1 April at fair value 166,118 141,499 160,090
Expected return on plan assets 13,290 11,320 12,807
Actuarial gain/(loss) 655 (14) (636)
Contributions 17,860 23,567 22,821
Benefits settled (22,891) (10,254) (53,583)
Plan assets at 31 March at fair value 175,032 166,118 141,499
3. Reconciliation of present value
of the obligation and the fair value
of the plan assets:
Present value of obligation
as at 31 March 154,603 157,476 146,729
Plan assets as at 31 March
at fair value 175,032 166,118 141,499
Amount recognised in balance
sheet asset/(liability) 20,429 8,642 (5,230)
4. Expenses recognised in the
profit and loss account:
Current service cost 10,122 9,424 9,717
Interest cost 12,598 11,738 13,608
Expected return on plan assets (13,290) (11,320) (12,807)
Actuarial (gain)/loss (3,357) (147) 7,527
Net cost 6,073 9,695 18,045
5. Amount recognised in
the balance sheet:
Opening (asset)/liability (8,642) 5,230 10,006
Expense as above 6,073 9,695 18,045
Employers' contribution paid (17,860) (23,567) (22,821)
Closing (asset)/liability (20,429) (8,642) 5,230
6. Investment details: % Invested % Invested % Invested
Government of India securities 25.45 22.96 22.45
State Government securities 15.91 18.04 15.02
Public sector securities 50.35 50.11 53.32
Mutual funds 0.63 0.85 -
Special deposit scheme 7.66 8.04 9.21
100.00 100.00 100.00
7. Principal actuarial assumptions:
Discount factor [Refer
to note (i) below] 8.25% 8% 8%
Estimated rate of return on plan
assets [Refer to note (ii) below] 8.25% 8% 8%
Attrition rate 14% 1% 1%
Salary escalation rate 5% 5% 5%
Retirement age (in years) 58 58 58
Notes:
(i) The discount rate is based on the prevailing market yield on Government
Securities as at the balance sheet date for the estimated term of
obligations.
(ii) The expected return on plan assets is determined considering several
applicable factors mainly the composition of the plan assets held, assessed
risks of asset management, historical results of the return on plan assets
and the Company's policy for plan asset management.
(iii) The estimate of future salary increases considered in actuarial
valuation takes into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
(iv) The disclosure above includes amounts for both Britannia Industries
Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non
Covenanted Staff Gratuity Fund.
26 disclosure as per clause 32 of the Listing Agreement in respect of loans
and advances, the amount in the nature of loans outstanding at year end:
Outstanding Maximum outstanding
31 March 31 March 31 March 31 March
2011 2010 2011 2010
Subsidiaries
Sunrise Biscuits Company
Private Limited (net) - 19,306 19,306 84,180
Boribunder Finance and 11,900 11,047 31,900 11,047
Investments Private
Limited (net)
Daily Bread Gourmet Foods
(India) Private Limited
(net) 15,000 - 15,000 557,000
Britannia and Associates
(Mauritius) Private
Limited, Mauritius - 51,916 51,916 58,658
Manna Foods Private
Limited 229,500 - 229,500 -
Others
Purbasha Properties
Private Limited
(repayment schedule
in excess of 7 years) 41,324 43,326 43,326 44,000
27 In April 2007, the Commissioner of Income Tax (CIT), Kolkata issued a
notice to the Company's Covenanted Staff Pension Fund (BILCSPF) asking it
to show cause why recognition granted to the Fund should not be withdrawn
for refunding in the year 2004, the excess contribution of Rs. 121,199
(previous year: Rs. 121,199) received by it in earlier years. The Single
Judge of the Honourable Calcutta High Court, on a writ petition, granted a
stay restraining the CIT from proceeding with the show cause notice but
with a direction to the Company to deposit Rs. 121,199 (previous year: Rs.
121,199) (included in Deposits under Schedule I) with a nationalised bank
in the name of the Fund. On appeal, the Division Bench of the Honourable
Calcutta High Court disposed off the writ petition pending before the
Single Judge. The Fund filed a Special Leave Petition (SLP) before the
Honourable Supreme Court against the Order of the Division Bench. The
Honourable Supreme Court at its hearing on 12 May 2008 has set aside the
Order of the Division Bench of the Honourable Calcutta High Court. As a
condition of the stay Order granted, the Company has, under protest, made
the deposit as per the direction of the Honourable Calcutta High Court.
Pursuant to the directions of the Honourable Madras High Court, the CIT,
Kolkata passed Orders rejecting the deeds of variation submitted in May
2005 by the Company's Pension Funds on technical grounds. The Company
preferred appeals before the Central Board of Direct Taxes (CBDT), New
Delhi challenging the Orders of the CIT. CBDT passed Orders in the said
appeals in March 2011 directing the Company inter alia to submit deeds of
variation incorporating the modifications in line with the directions made
in the Orders effective 1 November 2004. The modified deeds of variation in
line with the directions contained in the CBDT Orders have already been
filed with the CIT. Kolkata, for his approval. In writ petitions filed by
some of the pensioners, the Honourable Madras High Court has passed an
interim Order restraining the CIT, Kolkata, from approving the deeds of
variation pending disposal of the writ petitions.
A suit was filed by the Britannia Industries Limited Pensioners Welfare
Association ('the Association') in the Honourable City Civil Court and
Sessions Judge, Bangalore, where the Honourable Court passed interim Orders
on 1 January 2009 and 10 February 2009 directing the Funds to pay pension
to the Members in accordance with the computation made and submitted by the
Pension Funds to the Court. This computation was on a defined contribution
basis, and is consistent with the pension offered by the Pension Funds to
eligible employees at the time of their retirement / exit. The Funds have
been complying with the said Order. In April 2010, the Honourable Judge
passed another interim Order requiring the Funds to pay pension as per Rule
11(a) of the Pension Fund Rules, i.e. on 'Defined Benefit Basis', and gave
the Funds two months' time for complying with the Order. In an appeal filed
against this Order in the Honourable Karnataka High Court, the Honourable
Karnataka High Court in April 2010 modified the Trial Court's Order so as
to extend the time limit from two months to three months and in July 2010,
further modified the Trial Court's Order directing inter alia that the
pension shall be paid as per Rule 11(a) from the date of filing of the suit
by the Association in the Honourable Bangalore City Civil Court, i.e. with
effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs)
in the Honourable Supreme Court against the above Order of the Honourable
Karnataka High Court. The Honourable Supreme Court passed an Order in
January 2011 disposing of the SLPs and directing inter alia that the
interim Order passed by it in September 2010 directing that the Pension
Funds should continue to pay pension as per the interim Order passed by the
Honourable Bangalore City Civil Court on 1 January 2009 would continue till
disposal of the suit by the Trial Court. The proceedings in the main suit
are currently in progress in the Honourable Bangalore City Civil Court.
The Company believes, based on current knowledge and after consultation
with eminent legal counsel that the resolution of the matter will not have
material adverse effect on the financial statements of the Company.
28 Derivative contracts
(a) Foreign currency forward contracts
The Company has entered into foreign exchange forward contracts for hedging
the foreign exchange fluctuation risks on foreign currency payables /
loans, which has been accounted for in line with Accounting Standard 11 -
'The effects of changes in foreign exchange rates'. Accordingly, the amount
receivable of Rs. 236,839 (previous year: Rs. 215,149) and loan payable of
Rs. 200,772 (previous year: Rs. 200,772), relating to foreign exchange
forward contracts for hedging have been netted off and disclosed under
'Loans and advances' [Refer to schedule J].
The Company has designated certain Foreign Exchange Forward Contracts
(relating to foreign currency receivabes) outstanding as on 31 March 2011
as Hedge of highly probable forecasted transaction. On that date, the
Company had forward contracts to sell USD 1,094 (in thousands), [previous
year: USD 974 (in thousands)]. As at the year end the unrealised exchange
loss of Rs. Nil (previous year: Rs. Nil) arrived on a mark to market basis
has been accounted for.
(b) Other Derivative Contracts
For all other derivative contracts, a mark to market valuation has been
obtained and any loss thereon has been accounted for in line with the ICAI
notification issued in March 2008 in relation to such transactions. Any
gain on such valuation is not accounted for based on the principle of
prudence.
As at the year end, the unrealized loss of Rs. Nil (previous year:
Rs.1,655) arrived on a mark to market basis for such contracts has been
duly accounted for.
29 There are no material dues owed by the Company to Micro and Small
enterprises, which are outstanding for more than 45 days during the year
and as at 31 March 2011. This information as required under the Micro,
Small and Medium Enterprises Development Act, 2006 has been determined to
the extent such parties have been identified on the basis of information
available with the Company and has been relied upon by the auditors.
31 March 2011 31 March 2010
The principal amount and the interest due
thereon remaining unpaid to any supplier
as at the end of each accounting year:
- Principal 28,369 38,615
- Interest - -
The amount of interest paid by the Company
along with the amounts of the payment made
to the supplier beyond the appointed day
during the year. - -
The amount of interest due and payable for
the period of delay in making payment (which
have been paid but beyond the appointed day
during the year) but without adding the
interest specified under this Act. - -
The amount of interest accrued and remaining
unpaid at the end of the year. - -
The amount of further interest remaining
due and payable even in the succeeding years,
until such date when the interest dues as
above are actually paid to the small
enterprise. - -
30. Amount due from companies under the same management:
Outstanding Maximum outstanding
during the year ended
31 March 31 March 31 March 31 March
2011 2010 2011 2010
Subsidiaries
Strategic Food
International Co.
LLC, Dubai 3,955 - 8,525 4,082
Boribunder Finance and
Investments Private
Limited 11,900 33,456 64,004 35,505
International Bakery
Products Limited 17,699 7,477 27,004 17,229
J B Mangharam Foods
Private Limited 7,575 2,804 25,691 22,308
Sunrise Biscuit
Company Private 33,641 81,200 150,193 159,716
Limited
Manna Foods
Private Limited 236,979 11,902 236,979 61,315
Ganges Vally Foods
Private Limited 2,180 3,339 10,563 8,221
Al Sallan Food
Industries Company - 6,223 6,223 6,223
SAOC, Oman
Britannia and
Associates (Mauritius) 12,278 59,256 62,656 63,980
Private Limited, Mauritius
Britannia Lanka
Private Limited,
Sri Lanka 11,243 11,243 11,243 13,164
Daily Bread Gourmet
Foods (India) 15,061 - 15,038 511,872
Private Limited
Britannia Dairy
Private Limited 853 16,542 16,735 16,553
Britannia Dairy
Holdings Private 46 46 46 46
Limited, Mauritius
Others
Britannia Sports
(partnership firm) 746 746 746 746
31 The Committee of the Board of Directors ('the Board'), at its meeting
held on 22 March 2010, pursuant to the scheme of arrangement ('the Scheme')
sanctioned by the Honourable Calcutta High Court on 11 February 2010 under
Section 391(2) of the Companies Act, 1956 ('the Act'), allotted 8.25%
secured fully paid-up Redeemable non-convertible bonus debentures ('the
bonus debentures') from the general reserve, in the ratio of one debenture
of the face value of Rs. 170/- for every equity share held by the
shareholders of the Company as on 9 March 2010. The date of allotment of
bonus debentures is 22 March 2010. The Scheme was earlier approved by the
Board at its meeting held on 27 May 2009 and by the shareholders at the
general meeting held on 31 August 2009. The bonus debentures have been
listed on the Bombay Stock Exchange Limited, National Stock Exchange of
India Limited and the Calcutta Stock Exchange Limited. The Issue of bonus
debentures has been treated as 'deemed dividend' under the provisions of
the Income Tax Act, 1961. Accordingly the Company has remitted Rs. 690,222
as dividend distribution tax and has utilised general reserve for the
payment of the same, pursuant to the Scheme. The scheme involves issuance
of bonus debentures out of General Reserve and does not entail any real
borrowing, accordingly, the requirement of creating a Debenture Redemption
Reserve pursuant to Section 117C of the Act or Clause 10.3 of SEBI
(Disclosure and Investor Protection) Guidelines, 2000 issued under the
Securities and Exchange Board of India Act, 1992 is not applicable. This
has also been noted in the scheme of arrangement sanctioned by the
Honourable Calcutta High Court.
32 During the financial year 2008-09, the Company introduced Britannia
Industries Limited Employee Stock Option Scheme (Scheme). As per the
Scheme, the Remuneration / Compensation Committee grants options to the
employees and Executive Directors of the Company. The vesting period of the
option is one year from the date of grant. Options granted under the Scheme
can be exercised within a period of three years from the date of vesting.
Exercise of an option is subject to continued employment.
Under the scheme, the Company granted 15,000 options on 29 October 2008 at
an exercise price of Rs. 1,125.30/; 15,000 options on 27 May 2009 at an
exercise price of Rs. 1,698.15/- and 20,000 options on 27 May 2010 at an
exercise price of Rs. 1,668.55/- to the Managing Director of the Company.
Each option represents one equity share of Rs. 10/- each. The said price
was determined in accordance with the pricing formula approved by the
shareholders i.e. the latest available closing price, prior to the date of
the meeting of the Board of Directors or Remuneration / Compensation
Committee in which options were granted, on the stock exchange having
higher trading volume.
Exercise prices as stated above are adjusted downwards by Rs. 170/- per
share for options granted on 29 October 2008 and 27 May 2009, being the
face value of bonus debentures issued pursuant to the Scheme of Arrangement
approved by the Honourable Calcutta High Court on 11 February 2010.
The number of options have been appropriately adjusted, consequent upon the
sub-division of the equity shares. Also refer to note 8.
Method used for accounting for share based payment plan:
The Company has used intrinsic value method to account for the compensation
cost of stock options to employees and Executive Directors of the Company.
Intrinsic value is the amount by which the quoted market price of the
underlying share exceeds the exercise price (without considering the impact
of Rs. 170/- on account of issue of bonus debentures) of the option. Since
the options under the Scheme were granted at the market price, the
intrinsic value of the option is Rs. Nil. Consequently the accounting value
of the option (compensation cost) is also Rs. Nil.
Movement in the options under the scheme
31 March 31 March
2011 2010
Options outstanding at the beginning of the year 150,000 75,000
Options granted during the year 100,000 75,000
Options vested during the year 75,000 75,000
Options exercised during the year Nil Nil
Options lapsed during the year Nil Nil
Shares under option at the end of the year 250,000 150,000
Exercisable at the end of year 150,000 75,000
Weighted average price per option (Rs.) 282.49 248.38
Fair Value Methodology:
Options have been valued based on Fair Value method of accounting as
described under Guidance Note on Accounting for Employee Share-based
Payments using Black Scholes valuation option- pricing model, using the
market values of the Company's shares as quoted on the National Stock
Exchange.
The key assumptions used in Black-Scholes model for calculating fair value
of options under the scheme as on the date of grant are as follows:
Particulars 31 March 31 March
2011 2010
Number of options granted 100,000 75,000
Date of grant 27 May 2010 27 May 2009
Vesting period (years) 1 1
Expected life of option (years) 3 3
Expected volatility 26.95% 31.01%
Risk free rate 6.56% 5.86%
Expected dividends expressed
as a dividend yield 1.80% 1.31%
Weighted-average fair value of
options per share (Rs.) 81.24 81.71
Had the compensation cost for the scheme been determined based on fair
value approach, the Company's net profit and earnings per share would have
been as per the pro-forma amounts indicated below:
Particulars 31 March 31 March
2011 2010
Net profit (as reported) 1,452,913 1,165,110
Less: Stock-based compensation expense
determined under fair value based method
net of Intrinsic Value (without considering
tax impact) 7,785 9,401
Net profit (pro forma) considered for
computing EPS (pro-forma) 1,445,128 1,155,709
Basic earnings per share (as reported) (Rs.) 12.16 9.75
Basic earnings per share (pro-forma) (Rs.) 12.09 9.68
Diluted earnings per share (as reported) (Rs.) 12.16 9.75
Diluted earnings per share (pro-forma) (Rs.) 12.09 9.68
33 The Company had offered a VRS scheme to workers at its manufacturing
unit at M.T.H Road, Padi, Chennai during the month of April 2008. The same
was accepted by all workers. Consequently, manufacturing operations have
been suspended effective 7 April 2008.
34 Voluntary Retirement Scheme (VRS) expenditure for the year 2009-10
includes payment made towards VRS expenditure of Manna Foods Private
Limited, Subsidiary of Britannia Industries Limited, amouting to Rs. 49,381
as per arbitration award dated 25 January 2010.
35 Figures in rupees have been rounded off to the nearest thousand, unless
otherwise stated.
36 Previous year's figures have been regrouped / reclassified as per the
current year's presentation for the purpose of comparability. The following
significant regroupings / reclassifications of the previous year figures
have been made:
Particulars Previous year Current year grouping Amount
grouping
In balance sheet
Advance income tax Provisions for Advance income tax, 162,195
income taxes net of provisions
In profit and loss
account
Voluntary retirement Exceptional items Staff cost 62,321
scheme
In cash flow statement
Investments in money Cash and cash Investing activity 2,562,807
market funds equivalent
37 Previous year audit was carried out by a firm other than B S R & Co.
As per our report attached
for B S R & co.
Chartered Accountants
Firm registration number: 101248W
Natrajh Ramakrishna
Partner
Membership number: 32815
for and on behalf of the Board of directors:
Chairman : Nusli N Wadia
Managing Director : Vinita Bali
Directors : Keki Dadiseth
Nimesh N Kampani
S S Kelkar
Vijay L Kelkar
Nasseer Munjee
Ness N Wadia
Chief Financial
Officer : Raju Thomas
Company Secretary : P Govindan
Place: Mumbai
Date : 27 May 2011
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