itc subsidiaries 2011 complete

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 16

Wimco Limited 23Prag Agro Farm Limited 40Pavan Poplar Limited 47

Technico Pty Limited 54Technico Technologies Inc. 65Technico Agri Sciences Limited 69Technico Asia Holdings Pty Limited 81

Technico Horticultural (Kunming)Company Limited 86

Srinivasa Resorts Limited 94Fortune Park Hotels Limited 102Bay Islands Hotels Limited 112

ITC Infotech India Limited 118ITC Infotech Limited 129ITC Infotech (USA), Inc. 136

Pyxis Solutions, LLC. USA 142

Wills Corporation Limited 146

Gold Flake Corporation Limited 154

Landbase India Limited 162

BFIL Finance Limited 172MRR Trading & InvestmentCompany Limited 180

Surya Nepal Private Limited 184

King Maker Marketing, Inc. 196

3

RUSSELL CREDIT LIMITED

6. INVESTMENT IN VST INDUSTRIES LIMITED

As stated in the Report of the Directors of the previous years, a petitionwas filed by an individual in the High Court at Calcutta, seeking aninjunction against the Company’s Counter Offer to the shareholdersof VST Industries Limited, made in accordance with the Securities andExchange Board of India (Substantial Acquisition of Shares & Takeovers)Regulations, 1997, as a competitive bid, pursuant to a Public Offermade by an Acquirer, which closed on 13th June, 2001.

The High Court at Calcutta, while refusing to grant such an injunction,instructed that the acquisition of shares pursuant to the Counter Offerby the Company and the other Acquirer would be subject to the finalOrder of the High Court, which is still awaited.

Similar petitions filed by an individual and two shareholders, in theHigh Court of Delhi at New Delhi and High Court of Judicature ofAndhra Pradesh at Hyderabad, had earlier been dismissed by therespective High Courts.

7. 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 particularsas applicable to the Company are appended to the Balance Sheet.

8. SUBSIDIARIES

Particulars as required under Section 212 of the Companies Act, 1956,in respect of your Company’s subsidiaries namely, Greenacre HoldingsLimited, Wimco Limited, Pavan Poplar Limited, Prag Agro Farm Limited,Technico Pty Limited - Australia, Technico Asia Holdings Pty Limited -Australia, Technico Technologies Inc.- Canada, Technico Horticultural(Kunming) Co. Limited - China and Technico Agri Sciences Limited areattached to the Accounts of the Company.

Technico ISC Pty Limited - Australia, an erstwhile subsidiary of theCompany, was deregistered with the Australian Securities & InvestmentsCommission on 3rd November, 2010 and consequently ceased to exist.

During the year, your Company subscribed to 50,00,000 Zero CouponRedeemable Preference Shares of ` 100/- each, aggregating ` 50 crores,of Wimco Limited, a subsidiary company, redeemable on or before15th September, 2015 at a premium of 6% per annum. Further theredemption date of 30,00,000 5% Cumulative Redeemable PreferenceShares of ` 100/- each, aggregating ` 30 crores, held by your Companyin Wimco Limited was extended by one year upto 15th March, 2012.Your Company also agreed that the 5% dividend for the year 2010-11,aggregating ` 2,75,000/-, on the outstanding 55,00,000 PreferenceShares held by the Company in Wimco Limited be kept in abeyance.

9. PARTICULARS OF EMPLOYEES

Particulars of Employees as required under Section 217(2A) of theCompanies Act, 1956, read with the Companies (Particulars ofEmployees) Rules, 1975 are provided in the Annexure to this Report.

10. 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.

11. 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.

During the year under review, there has been no foreign exchangeearnings. The foreign exchange outgo on account of Marketing ResearchExpenses was ` 1,11,487/- (previous year ` 9,74,036/-).

5th May, 2011 On behalf of the Board

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

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON31ST MARCH, 2011

1. Your Directors hereby submit their Report and Accounts for the financialyear ended on 31st March, 2011.

2. COMPANY PERFORMANCE

The overall performance of your Company has been satisfactory despitevolatility in the financial markets.

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

For the year ended For the year ended 31st March, 2011 31st March, 2010

(`) (`)

a. Profit Before Taxation 22,59,80,993 49,00,38,941

Less : Provision for Taxation 2,62,66,898 7,07,64,762

b. Profit After Taxation 19,97,14,095 41,92,74,179

c. Add : Profit broughtforward from previous years 56,05,63,702 22,51,44,359

d. Surplus available for Appropriation 76,02,77,797 64,44,18,538

e. Less : Transferred to SpecialReserve under Section 45-IC ofthe Reserve Bank of IndiaAct, 1934 3,99,42,819 8,38,54,836

f. Balance carried forward tothe following year 72,03,34,978 56,05,63,702

3. DIRECTORS

Mr. K. Vaidyanath, consequent to his retirement from the services ofITC Limited, the Holding Company, stepped down as the Chairmanand Director of your Company with effect from close of work on2nd January, 2011. Your Directors would like to place on record theirsincere appreciation for the contribution made by Mr. Vaidyanathduring his tenure with the Company. Mr. R. Tandon was appointed asthe Chairman of the Board of Directors of your Company with effectfrom 3rd January, 2011.

In accordance with the provisions of Article 143 of the Articles ofAssociation of the Company, Mr. P. Banerjea will retire by rotation atthe 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, 1956

The Board of Directors of your Company re-appointed Mr. Sharad Jainas Manager of the Company for a period of two years with effect from1st July, 2011, in terms of the provisions of Section 269 of the CompaniesAct, 1956, read with Schedule XIII thereto, subject to the approval ofthe Members of the Company at the next General Meeting. Appropriateresolution seeking your approval for re-appointment of Mr. Jain asManager is appearing in the Notice convening the ensuing AnnualGeneral Meeting of the Company.

5. DIRECTORS’ RESPONSIBILITY STATEMENT

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;

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

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

ANNEXURE TO THE REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2011

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

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

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

(Years) ment ofEmployment

(`) (`)

1 2 3 4 5 6 7 8 9

Sachidanand 52 Services on loan 83,49,620 38,97,050 B.Com (Hons.), 29 01.09.2007 COO, Technico Pty Ltd. -Madan to subsidiary company ACA and ACS Australia

Notes :

• Remuneration includes salary, performance bonus, allowances & other benefits and taxable value of perquisites except contribution to the approvedGroup Pension under the Defined Contribution Scheme and Gratuity Funds and provisions for leave encashment which are actuarially determinedon an overall Company basis. The term ‘remuneration’ has the meaning assigned to it in Section 198 of the Companies Act, 1956.

• Net remuneration comprises cash income less : a) income tax, surcharge & education cess deducted at source.

b) 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.

5th May, 2011 On behalf of the Board

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, 2011, the Profit and LossAccount and the Cash Flow Statement of the Company for the yearended 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 onour 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 (CARO)issued by the Central Government 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 it appears from our examinationof those books;

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

(d) in our opinion, the Balance Sheet, the Profit and Loss Account andthe Cash Flow Statement dealt with by this report are in compliancewith the Accounting Standards referred to in Section 211(3C) ofthe 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, 2011;

(ii) in the case of the Profit and Loss Account, of the profit of theCompany 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, 2011 taken on record by the Board of Directors,none of the Directors is disqualified as on 31st March, 2011 frombeing appointed as a director in terms of Section 274(1)(g) of theCompanies Act, 1956.

For A. F. Ferguson & Co.Chartered Accountants

(Registration No. 112066W)

R. A. BangaKolkata Partner5th May, 2011 (Membership No. 037915)

ANNEXURE TO THE AUDITORS’ REPORT

[Referred to in paragraph 3 of our report of even date]

Having regard to the nature of the Company’s business/activities clauses

4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xviii), (xix) and (xx)

of CARO are not applicable.

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of the fixed

assets.

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

Management in accordance with a regular programme of verification

which, in our opinion, provides for physical verification of all the

fixed assets at reasonable intervals. According to the information

and explanations given to us, no material discrepancies were

noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do

not constitute a substantial part of the fixed assets of the Company

and such disposal has, in our opinion, not affected the going

concern status of the Company.

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

given to us, having regard to the explanations given to us, there is

an adequate internal control system commensurate with the size of

the Company and the nature of its business with regard to

purchases of fixed assets and the sale of services. During the course of

our audit, we have not observed any major weakness in such internal

control system.

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

commensurate with the size and the nature of its business.

(iv) According to the information and explanations given to us in respect

of statutory dues:

(a) The Company has been regular in depositing undisputed dues,

including Provident Fund, Income-tax, Sales Tax, Service Tax,

Custom Duty, Cess and other material statutory dues applicable

to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident

Fund, Income-tax, Service Tax, Cess and other material statutory

dues in arrears as at 31st March, 2011 for a period of more than

six months from the date they became payable.

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

relates

Tamil Nadu Sales Tax Appellate 2003-04 3,96,900*General Sales Tax Assistant

Act & Central CommissionerSales Tax Act

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

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

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

Taxes

(c) Details of dues which have not been deposited on 31st March,2011 on account of dispute are given below:

*Of the above, ` 47,45,943 has been stayed for recovery by therelevant 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, except tothe extent of the exemption granted under Section 49 of the CompaniesAct, 1956.

(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 or on the Company has beennoticed or reported during the year.

For A. F. Ferguson & CoChartered Accountants

(Registration No. 112066W)



5


6

BALANCE SHEET AS AT 31ST MARCH, 2011

Schedule 31st March, 2011 31st March, 2010(`) (`) (`) (`)

I. SOURCES OF FUNDS 1. Shareholders' Funds

a) Capital 1 646,47,87,370 646,47,87,370b) Reserves and Surplus 2 139,10,73,744 785,58,61,114 119,13,59,649 765,61,47,019

2. Deferred Tax - Net 3 38,32,369 51,96,895Total 785,96,93,483 766,13,43,914

II. APPLICATION OF FUNDS1. Fixed Assets 4

a) Gross Block 12,08,96,456 12,63,59,638b) Less: Depreciation 4,08,05,006 3,09,94,461c) Net Block 8,00,91,450 9,53,65,177

2. Investments 5 491,92,14,563 358,51,16,4033. Current Assets, Loans & Advances

a) Inventories 6 257,05,24,808 372,30,07,211b) Sundry Debtors 7 2,89,29,010 1,52,20,516c) Cash and Bank Balances 8 32,37,843 3,08,98,557d) Other Current Assets 9 4,23,461 2,56,93,674e) Loans and Advances 10 29,40,46,649 20,82,94,622

289,71,61,771 400,31,14,580Less :

4. Current Liabilities and Provisionsa) Liabilities 11 1,62,85,996 45,23,102b) Provisions 12 2,04,88,305 1,77,29,144

3,67,74,301 2,22,52,246Net Current Assets 286,03,87,470 398,08,62,334

Total 785,96,93,483 766,13,43,914

Notes to the Accounts 19Significant Accounting Policies 20The Schedules referred to above form an integral part of the Balance Sheet.In terms of our report of even date

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

For A. F. Ferguson & Co.Chartered AccountantsR. A. BangaPartnerKolkata, 5th May, 2011

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011

Schedule For the year ended For the year ended31st March, 2011 31st March, 2010

(`) (`)I. INCOME

Interest on Loans 76,31,922 29,47,088Dividend Income 16,74,39,252 18,61,00,400Brokerage Income 6,15,62,537 7,93,84,607Profit on Sale of Stock-in-Trade (Net) 13 49,71,249 10,26,98,134Profit on Sale of Long Term Investments — 11,23,76,977Lease and Other Rentals 2,93,09,256 2,68,49,256Other Income 14 62,82,188 77,11,475

27,71,96,404 51,80,67,937II. EXPENDITURE

Employee Cost 15 1,56,07,205 1,11,86,198Financial Charges 16 3,61,036 39,037Establishment and Other Expenses 17 2,23,09,291 41,74,346Provision for Standard Assets 8,54,154 —Depreciation 4 1,20,83,725 1,26,29,415

5,12,15,411 2,80,28,996III. PROFIT

Profit before Taxation 22,59,80,993 49,00,38,941Provision for Taxation 18 2,62,66,898 7,07,64,762Profit after Taxation 19,97,14,095 41,92,74,179Profit brought forward 56,05,63,702 22,51,44,359Available for appropriations 76,02,77,797 64,44,18,538

IV. APPROPRIATIONSSpecial Reserve u/s 45-IC of the RBI Act, 1934 3,99,42,819 8,38,54,836(Refer to Note 9 of Schedule 19)Profit carried forward 72,03,34,978 56,05,63,702

76,02,77,797 64,44,18,538Earnings Per Share (Face Value ` 10/- each) 19(8) 0.31 0.65(Basic & Diluted)Notes to the Accounts 19Significant Accounting Policies 20The Schedules referred to above form an integral part of the Profit and Loss Account.In terms of our report of even date

On behalf of the Board

R. Tandon DirectorS. Dutta DirectorS. Jain Secretary


7


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011For the year ended For the year ended

31st March, 2011 31st March, 2010 (`) (`)

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX 22,59,80,993 49,00,38,941ADJUSTMENTS FOR:Depreciation 1,20,83,725 1,26,29,415Interest Expense/(Income) on Income Tax (Net) 40,40,543 (1,17,819)Unrealised Exchange Gain (24,72,500) (30,67,500)Profit on Sale of Investments — (11,23,76,977)Liabilities no longer required written back — (13,11,033)Proft on Sale of Fixed Assets (93,693) (14,73,491)OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 23,95,39,068 38,43,21,536ADJUSTMENTS FOR:Trade and Other Receivables 1,53,44,981 (2,29,70,231)Stock-in-Trade 115,24,82,403 (359,91,71,908)Trade Payables 1,28,96,801 (38,98,628)Sale of Fixed Assets given on lease 33,09,995 1,21,75,000CASH GENERATED FROM OPERATIONS 142,35,73,248 (322,95,44,231)Income Tax Paid (Including Fringe Benefit Tax) (1,71,09,502) (5,20,24,750)NET CASH FROM OPERATING ACTIVITIES 140,64,63,746 (328,15,68,981)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (26,300) —Purchase of Long Term Investments (83,40,98,160) (70,17,45,488)Investment in Subsidiary Company (50,00,00,000) (9,00,00,000)Sale of Long Term Investments — 414,21,59,162NET CASH USED IN INVESTING ACTIVITIES (133,41,24,460) 335,04,13,674

C. CASH FLOW FROM FINANCING ACTIVITIESIntercorporate Loans Received from Holding Company — 661,20,00,000Intercorporate Loans Repaid to Holding Company — (665,30,00,000)Intercorporate Loans Given to Subsidiary Company (40,00,00,000) —Intercorporate Loans Repaid by Subsidiary Company 30,00,00,000 —NET CASH USED IN FINANCING ACTIVITIES (10,00,00,000) (4,10,00,000)NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (2,76,60,714) 2,78,44,693OPENING CASH AND CASH EQUIVALENTS 3,08,98,557 30,53,864CLOSING CASH AND CASH EQUIVALENTS 32,37,843 3,08,98,557

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 :

Balance with Scheduled Banks - On Current Account 29,29,698 3,08,98,013Cash on Hand 4,345 544Cheques on Hand 3,03,800 —Cash and Bank Balances (Schedule 8) 32,37,843 3,08,98,557

In terms of our report of even date

SCHEDULES TO THE ACCOUNTS

1. CAPITAL As at As at31st March, 2011 31st March, 2010

(`) (`)Authorised70,00,00,000 Equity Shares of ` 10/- each(2010 - 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 Paid up59,74,54,177 (2010 - 59,74,54,177) Equity Shares of ̀ 10/- each, fully paid up (Of the above 59,74,04,170 Equity Shares allotted for consideration other than cash pursuant to a Scheme of Amalgamation) 597,45,41,770 597,45,41,770

7,54,22,400 (2010 - 7,54,22,400) Equity Shares of ` 10/- each, ` 6.50 per share paid up (Equity Shares allotted for consideration other than cash pursuant to a Scheme of Amalgamation) 49,02,45,600 49,02,45,600

646,47,87,370 646,47,87,370(All the above shares are held by the Holding Company, ITC Limited)

2. RESERVES AND SURPLUSAs at As at

31st March, 2011 31st March, 2010(`) (`) (`) (`)

Special Reserve u/s 45-IC of the RBI Act, 1934At the commencement of the year 58,81,92,201 50,43,37,365Add: Transferred from Profit and Loss Account 3,99,42,819 8,38,54,836

62,81,35,020 58,81,92,201Capital Reserve 2,87,67,445 2,87,67,445General Reserve 1,38,36,301 1,38,36,301Profit and Loss Account 72,03,34,978 56,05,63,702

139,10,73,744 119,13,59,649

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


8


3. DEFERRED TAX - NET As at As at31st March, 2011 31st March, 2010

(`) (`)Deferred Tax Liabilities

On fiscal allowances on fixed assets 56,16,364 60,53,77356,16,364 60,53,773

Deferred Tax AssetsOn employees' seperation and retirement etc. 12,15,322 2,60,342Other timing differences 2,91,543 5,96,536On Provision on Standard Assets 2,77,130 —

17,83,995 8,56,878

38,32,369 51,96,895

SCHEDULES TO THE ACCOUNTS (Contd.)

4. FIXED ASSETS

GROSS BLOCK (AT COST) DEPRECIATION NET BOOK VALUEParticulars As at Additions Deletions As at Upto For the Deletions Up to As at

commencement the end of 31st March, year 31st March, 31st March,of the year the year 2010 2011 2011

(`) (`) (`) (`) (`) (`) (`) (`) (`)Plant & Machinery* 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 8,00,91,450TOTAL 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 8,00,91,450Previous Year 14,17,35,259 — 1,53,75,621 12,63,59,638 2,30,39,158 1,26,29,415 46,74,112 3,09,94,461 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 ` 12,07,10,155/- ( 2010 - ` 12,61,99,637/-) and Accumulated Depreciation is ` 4,07,81,380/- ( 2010 - ` 3,09,74,204/-).

Depreciation for the period charged to Profit and Loss Account is ` 1,20,80,356/- (2010 - ` 1,26,19,287/-).

The aggregate lease rental of ` 2,09,09,256/- (2010 - ` 2,16,89,256/-) is included in Lease and Other Rentals in the Profit and Loss Account.

5. INVESTMENTS

As at 31st March, 2011 As at 31st March, 2010LONG TERM Number Value Number Value

(`) (`)

A. UNQUOTED

SUBSIDIARY COMPANIESEquity Shares of ` 10/- each, ofGreenacre Holdings Limited, fully paid 4,20,60,166 42,10,33,674 4,20,60,166 42,10,33,674Equity Shares of ` 1/- each, ofWimco Limited, fully paid 9,12,38,170 55,02,65,126 9,12,38,170 55,02,65,126

Ordinary Shares of Technico Pty Limited no par value 2,26,06,065 108,72,41,115 2,26,06,065 108,72,41,1155% Redeemable Cumulative Preference Shares of ` 100/-each, of Wimco Limited, fully paid 55,00,000 55,00,00,000 55,00,000 55,00,00,000Zero Coupon Redeemable Preference Shares of ` 100/-each, of Wimco Limited, fully paid 50,00,000 50,00,00,000 — —TRADE INVESTMENTSEquity Shares of ` 100/- each, ofMaharaja Heritage Resorts Limited, fully paid 90,000 90,00,000 90,000 90,00,000Equity Shares of ` 10/- each, ofRussell Investments Limited, fully paid 42,75,435 4,27,56,850 42,75,435 4,27,56,850Equity Shares of ` 10/- each, ofClassic Infrastructure & Development Limited, fully paid 37,50,000 3,76,88,280 37,50,000 3,76,88,280Equity Shares of ` 10/- each, ofDivya Management Limited, fully paid 41,82,915 6,93,07,630 41,82,915 6,93,07,630Equity Shares of ` 10/- each, ofAntrang Finance Limited, fully paid 43,24,634 4,39,56,071 43,24,634 4,39,56,071

OTHER INVESTMENTS

Class ‘G’ Shares of ` 48,000/- each, ofLotus 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

377,32,98,746 327,32,98,746B. QUOTED

TRADE INVESTMENTSEquity Shares of ` 10/- each, ofInternational Travel House Limited, fully paid 36,26,633 21,21,58,031 36,26,633 21,21,58,031Equity Shares of ` 10/- each, ofVST Industries Limited, fully paid 6,00,000 9,96,59,626 6,00,000 9,96,59,626OTHER INVESTMENTSEquity Shares of ` 2/- each, ofHotel Leelaventure Limited, fully paid 1,79,29,513 83,40,98,160 — —

114,59,15,817 31,18,17,657

Total (A + B) 491,92,14,563 358,51,16,403Market Value of Quoted Investments: ` 175,29,90,487/- (2010 – ` 81,15,00,078/-)

9



7. SUNDRY DEBTORSAs at As at

31st March, 2011 31st March, 2010(`) (`)

Good and UnsecuredOther Debts 2,89,29,010 1,52,20,516

2,89,29,010 1,52,20,516

8. CASH AND BANK BALANCESWith Scheduled Banks On Current Accounts 29,29,698 3,08,98,013Cash on Hand 4,345 544Cheques on Hand 3,03,800 —

32,37,843 3,08,98,557

9. OTHER CURRENT ASSETSGood and Unsecured

Deposits - Others 3,13,508 2,55,63,508Interest Receivable 1,09,953 1,30,166

4,23,461 2,56,93,674

10. LOANS AND ADVANCESAs at As at

31st March, 2011 31st March, 2010(`) (`)

Good and Secured Loans to Others 1,57,07,497 1,85,95,145(secured by mortgage of immovable property and hypothecation of moveables & receivables)Good and Unsecured Loans to Subsidiaries 24,30,53,750 14,05,81,250Advances recoverable in cash or in kind or for value to be received 2,76,262 11,71,877MAT Credit Entitlement 3,49,85,745 4,79,14,186Fringe Benefit Tax (net of provisions) 23,395 32,164

29,40,46,649 20,82,94,622

6. INVENTORIES (at lower of cost and fair value)

STOCKS AND SHARES

As at 31st March, 2011 As at 31st March, 2010PARTICULARS Quantity Value Quantity Value

(`) (`)

Equity Shares of ` 10/- each, fully paid up

Jind Textiles Limited 5,00,000 1 5,00,000 1

Patheja Brothers Forgings and Stampings Limited 50,000 1 50,000 1

SKH Metals Limited 40,000 1 40,000 1

Taib Capital Corporation Limited 2,45,000 1 2,45,000 1

Power Grid Corporation of India Limited — — 9,924 10,63,357

Reliance Industries Limited — — 12,500 1,34,33,125

Reliance Power Limited — — 40,000 59,80,000


Suzlon Energy Limited — — 40,000 28,76,000


GMR Infrastructure Limited — — 1,50,000 94,05,000

Sub - Total 4 3,27,57,486

Units of ` 10/- each, fully paid up

Birla Sun Life Short Term FMP - Series 7 Dividend Payout 4,80,00,000 48,00,00,000 — —

Birla Sun Life Savings Fund - Institutional Plan Daily Dividend - Reinvestment — — 2,49,86,433 25,00,34,233

BNP Paribas Fixed Term Fund Series 19F Cal.Qtrly.Div 1,00,00,000 10,00,00,000 — —

Canara Robeco Treasury Advantage Fund Super Instt Daily Div Reinvestment Fund — — 3,86,91,429 48,00,48,428

DWS Fixed Term Fund - Series 72 - Dividend Plan Payout 1,00,00,000 10,00,00,000 — —

Fortis Money Plus Fund - Institutional Plan - Daily Dividend — — 4,79,90,333 48,00,52,104

IDFC Cash Fund - Super Inst Plan C Daily Dividend 99,91,870 9,99,43,679 — —

JM Money Manager Fund - Super Plus Plan - Daily Dividend — — 4,79,79,650 48,00,50,797

Kotak Floater Long Term - Daily Dividend — — 4,76,24,888 48,00,49,342

Kotak Floater Short Term - Daily Dividend 6,03,28,390 61,02,94,055 — —

LIC Income Plus Fund Daily Dividend Reinvestment Plan — — 4,80,03,747 48,00,37,473

Principal Cash Mgt. Liquid Option IP Premium Dividend Reinvest. Daily — — 1,04,10,407 10,41,11,355

Religare Fixed Maturity Plan - Series III - Plan A (12 Months) - Dividend 2,50,00,000 25,00,00,000 — —

Religare Ultra Short Term Fund- Insti. Plan Daily Div Reinvestment — — 4,14,39,542 41,50,46,021

UTI - Fixed Income Interval Fund - Series II - Quarterly Interval

Plan- IV - Institutional Dividend Plan - Payout 2,00,00,000 20,00,00,000 — —


ICICI Prudential Flexible Income Plan Premium - Daily Dividend Plan — — 45,40,346 48,00,73,485


AIG Short Term Fund - Institutional Weekly Dividend — — 40,694 4,07,46,487

DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend 7,30,056 73,02,87,070 — —

Sub - Total 257,05,24,804 369,02,49,725

TOTAL 257,05,24,808 372,30,07,211

10



11. LIABILITIES

As at As at31st March, 2011 31st March, 2010

(`) (`)

Sundry CreditorsTotal outstanding dues of micro

enterprises and small enterprises — —Total outstanding dues of creditors other than micro enterprises and small enterprises; * 1,50,85,996 33,23,102Sundry Deposits ** 12,00,000 12,00,000

1,62,85,996 45,23,102

* Includes due to Holding Company ̀ 9,000/- (2010 - ̀ NIL)** Includes deposits from Holding Company ̀ 12,00,000/- (2010 - ̀ 12,00,000/-)

12. PROVISIONSAs at As at

31st March, 2011 31st March, 2010(`) (`)

Provision for Long Term Employee Benefits 10,63,503 7,83,750Current Taxation (net of advance tax) 1,85,70,648 1,69,45,394Contingent Provision against Standard Assets 8,54,154 —

2,04,88,305 1,77,29,144

13. PROFIT/ (LOSS) ON SALE OF STOCK-IN-TRADE (NET)As at As at

31st March, 2011 31st March, 2010(`) (`)

Sales 5859,05,47,086 1944,55,29,392Less: Purchases 5743,30,93,434 2294,20,03,166

115,74,53,652 (349,64,73,774)Add/Less: Increase/ (Decrease)in Closing Stock-in-Trade (115,24,82,403) 3 59,91,71,908Profit/(Loss) on Sale of Stock-in-Trade 49,71,249 10,26,98,134

14. OTHER INCOMEFor the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Foreign Exchange Gain 24,70,485 30,57,120Profit on Sale of Fixed Assets 93,693 14,73,491Interest on Income Taxes — 1,17,819Interest on Fringe Benefit Tax 693 —Liabilities no longer required written back — 13,11,033Miscellaneous Income 37,17,317 17,52,012

62,82,188 77,11,475

15. EMPLOYEE COSTFor the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Salaries / Wages and Bonus 1,04,10,902 94,10,924Contribution to Providentand Other Funds 48,42,648 11,84,431Staff Welfare Expenses 3,53,655 5,90,843

1,56,07,205 1,11,86,198

16. FINANCIAL CHARGES For the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Bank, Custodial andDepository Charges 3,61,036 39,037

3,61,036 39,037

17. ESTABLISHMENT AND OTHER EXPENSES

For the year ended For the year ended31st March, 2011 31st March, 2010

(`) (`)

Rent 8,28,000 8,02,333Repairs and Maintenance— Buildings 1,68,240 1,68,240— Others 3,92,347 3,22,316Travelling and Conveyance 62,088 53,820Rates and Taxes 24,600 44,665Professional and Legal Fees 3,39,348 6,02,980Auditors’ Remuneration(Excluding Service Tax)– Audit Fees 1,50,000 1,50,000– Tax Audit Fees * 1,00,000 —– Fees for Other Services * 2,00,000 —– Reimbursement of Expenses * 30,499 —Communication Expenses 26,177 25,860Printing, Stationery and Periodicals 69,589 91,791Interest on Income Tax 40,41,236 —Donation (Schedule 19, Note 19) 1,50,00,000 —Miscellaneous Expenses 8,77,167 19,12,341

2,23,09,291 41,74,346

* Paid to the erstwhile auditors, a firm in which some of the partners of the statutory auditors firm are partners.

18. PROVISION FOR TAXATIONFor the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Income Tax for the yearCurrent Tax 3,00,00,000 7,20,00,000Deferred Tax (13,64,526) 11,18,524

(A) 2,86,35,474 7,31,18,524Less: Adjustments related forprevious years

Current Tax 12,60,214 23,53,762MAT Credit Entitlement 11,14,020 —Fringe Benefit Tax (5,658) —

(B) 23,68,576 23,53,762

(A)-(B) 2,62,66,898 7,07,64,762

19. NOTES TO THE ACCOUNTS1. Uncalled liability on partly paid up shares : ` 10,885/- (2010 – ` 10,885/-).2. Dividend Income includes ` 3,15,17,837/- (2010 – ` 15,82,97,176/-) from Long

Term Investments. Of these ` 2,97,86,557 /- (2010 – ` 8,10,38,209/-) are fromTrade Investments and ` 17,31,280/- (2010 – ` 7,72,58,967/-) are from Other thanTrade Investments.Dividend from Stock In Trade is ` 13,59,21,414/- (2010 - ` 2,78,03,224/-)

3. Interest on Loans and Deposits is stated Gross, the amount of Income Taxdeducted is ` 5,60,848/- (2010 – ` 44,246/-)

4. Claims against the Company not acknowledged as debts :In respect of sales tax : ` 56,20,611/- (2010 – ` 54,71,774/-).

5. Guarantees and Counter Guarantees outstanding ` 1,78,605 /- (2010 – ` 3,27,442/-).6. Loans and Advances include :

Interest free loans to whollyowned subsidiaries, balances as at the year endare as follows :Technico Pty Limited, Australia – ` 2,30,53,750/- (2010 – ` 2,05,81,250/-).Technico Agri Sciences Limited – ` 12,00,00,000/- (2010 – ` 12,00,00,000/-).Loan to a subsidiary, balance as at the year end is as follows :Wimco Limited – ` 10,00,00,000/- (2010 – Nil)The maximum indebtedness during the year :Technico Pty Limited, Australia – ` 2,30,53,750/- (2010 – ` 2,05,81,250/-).Technico Agri Sciences Limited – ` 12,00,00,000/- (2010 – ` 12,00,00,000/-).Wimco Limited – ` 30,00,00,000/- (2010 – Nil)


15. Maturity pattern of certain assets and liablities :(` in crores)

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 year to 5 years

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

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

AssetsAdvances — — — — — — — — —Investments 257.05*1 — — — 55.00*2 — — 436.92*2 748.97

*1 Investments classified as Stock in Trade as per Schedule 6

*2 Investments classified as Long Term as per Schedule 4

16. Related Party Disclosures :(a) Relationships

Holding Company ITC LimitedSubsidiary Companies Greenacre Holdings Limited

Wimco Limited and its subsidiaries Pavan Poplar Limited Prag Agro Farm LimitedTechnico Pty Limited, Australia and its subsidiaries Technico Agri Sciences Limited Technico Technologies Inc., Canada Technico ISC Pty Limited, Australia (Deregistered on 3rd November, 2010) Technico Asia Holdings Pty Limited, Australia and its subsidiaries Technico Horticultural (Kunming) Co. Limited, China

Key Management PersonnelMr. K. Vaidyanath Non - Executive Chairman (upto 2nd January, 2011)Mr. R. Tandon Non - Executive Chairman (w.e.f. 3rd January, 2011)

Non - Executive Director (upto 2nd January, 2011)Mr. B. B. Chatterjee Non - Executive DirectorMr. P. Banerjea Non - Executive DirectorMr. S. Dutta Non - Executive DirectorOther Related Parties with whom the Company had transactionsduring the year:Associate Companies International Travel House Limited

Divya Management Limited(b) Disclosure of transactions between the Company and Related Parties

and the status of outstanding balances:Particulars For the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Holding CompanySale of Investments * Nil 387,31,40,993Intercorporate Loan Taken Nil 661,20,00,000Intercorporate Loan Repaid Nil 665,30,00,000Lease Rentals Received 84,00,000 51,60,000

Particulars For the year ended For the year ended31st March, 2011 31st March, 2010

(`) (`)

Miscellaneous Income Nil 4,40,229Rent, Repairs and Maintenance 2,76,240 2,76,240Miscellaneous Expenses 4,95,246 5,41,648Reimbursement of Expenses 2,13,935 Nil*Investments have been sold to the Holding Company at cost, the market valueof such shares on the date of sale was ` Nil (2010 – ` 1030.06 crores).

Balances as at 31st March, 2011 31st March, 2010(`) (`)

Holding CompanySecurity Deposits Received 12,00,000 12,00,000Payables 9,000 Nil


(`) (`)Subsidiary CompaniesGreenacre Holdings LimitedSubscription to Share Capital Nil 9,00,00,000Wimco LimitedSubscription to Preference Share Capital 50,00,00,000 NilIntercorporate Loan given 40,00,00,000 NilIntercorporate Loan repaid 30,00,00,000 NilInterest on Loan 55,49,918 NilSale of Plant & Machinery Nil 1,24,18,500


Subsidiary CompaniesLoans OutstandingTechnico Pty Limited, Australia 2,30,53,750 2,05,81,250Technico Agri Sciences Limited 12,00,00,000 12,00,00,000Wimco Limited 10,00,00,000 Nil

11


7. Expenditure in Foreign Currency during the year :Marketing Research Expenses : ` 1,11,487/- (2010 – ` 9,74,036/-)

8. Earnings Per ShareFor the year ended For the year ended

31st March, 2011 31st March, 2010Profit after Taxation (`) 19,97,14,095/- 41,92,74,179/-Weighted average number of EquityShares outstanding 64,64,78,737 64,64,78,737Basic and Diluted Earnings Per Sharein Rupees (Face Value – ` 10/- per share) ` 0.31 ` 0.65

9. Transfer to Special Reserve of ` 3,99,42,819/- (2010 – ` 8,38,54,836/-) hasbeen made in accordance with the provisions of Section 45-IC of the ReserveBank of India Act, 1934.

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

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

12. The Reserve Bank of India (RBI) vide its Notification No. DNBS. 223/CGM (US) – 2011dated 17th January 2011 has issued directions to all NBFCs to make provisionof 0.25% against standard assets with immediate effect. Accordingly, theCompany has made provision of ` 8,54,154/- during the year against standard

assets which has been charged to Profit and Loss Account. Further, in termsof the Notification, the above provision is treated as Tier II Capital.

13. Capital to Risk Adequacy Ratio :

Items 31st March, 2011 31st March, 2010i) CRAR (%) 99.32 100.38ii) CRAR - Tier I capital (%) 99.30 100.38iii) CRAR - Tier II Capital (%) 0.02 —

14. Exposure to Real Estate Sector :

Category 31st March, 2011 31st March, 2010a) Direct exposure

(i) Residential Mortgages Nil Nil(ii) Commercial Real Estate Nil Nil(iii) Investments in MortgageBacked Securities (MBS) andother securitised exposures -

a. Residential, Nil Nilb. Commercial Real Estate Nil Nil

b) Indirect ExposureFund based and non-fund based exposureson National Housing Bank (NHB) andHousing Finance Companies (HFCs). Nil Nil


12



(`) (`)Associates

Dividend IncomeInternational Travel House Limited 1,17,86,557 1,08,79,899Travelling ExpensesInternational Travel House Limited 8,706 1,231Reimbursement of ExpenseDivya Management Limited 4,18,331 3,87,334In addition, remuneration of managers on deputation, absorbed 1,12,05,286 94,27,460

17. Employee Benefits :Contribution to Defined Contribution Schemes – ` 34,92,126 /- (2010 – ` 7,23,600/-)Defined Benefit Plans / Long Term Compensated Absences - As per ActuarialValuations as on March 31, 2011 and recognised in the financial statementsin respect of Employee Benefit Schemes :

Amounts recognised as expense is included in Schedule 15 as below :Leave Encashment of ` 2,79,753/- [2010 – ` 3,12,686/-] in “Salaries Wagesand Bonus” and Gratuity of ` 13,50,522/- (2010 – ` 4,60,831/-) in“Contribution to Provident and Other Funds”.

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, 2011. This information as required to be disclosed

under the Micro, Small and Medium Enterprises Development Act, 2006 hasbeen determined to the extent such parties have been identified based oninformation available with the Company.

19. During the year a donation of ` 1,50,00,000/- (2010 – ` Nil) was made toAll India Congress Committee of the Indian National Congress.

20. Figures for the previous year have been regrouped / re-arranged wherevernecessary.

For the year ended For the year ended31st March, 2011 (`) 31st March, 2010 (`)

Leave LeavePension Gratuity Encashment Pension Gratuity Encashment

N.A. Funded Unfunded N.A. Funded Unfunded

I. Components of Employer Expenses

1. Current Service Cost N.A. 3,00,629 1,41,669 N.A. 37,295 1,24,740

2. Interest Cost N.A. 41,370 62,700 N.A. 73,197 34,925

3. Expected Return on Plan Assets N.A. (1,39,680) N.A. N.A. (77,053) N.A.

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

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

6. Past Service Cost N.A. Nil Nil N.A. Nil Nil

7. Actuarial Losses/(Gains) N.A. 11,48,203 75,384 N.A. (8,83,645) 1,53,021

8. Total expense recognised in the N.A. 13,50,522 2,79,753 N.A. (8,50,206) 3,12,686

Statement of Profit & Loss Account

II. Actual Returns N.A. 8% 8% N.A. 7% 7%

III. Net Asset / (Liability) recognised inBalance Sheet

1. Present Value of Defined BenefitObligation N.A. 19,08,738 10,63,503 N.A. 5,17,123 7,83,750

2. Fair Value of Plan Assets N.A. 20,00,000 N.A. N.A. 14,92,000 N.A.3. Status [Surplus/(Deficit)] N.A. 91,262 (10,63,503) N.A. 9,74,877 (7,83,750)4. Unrecognised Past Service Cost N.A. Nil Nil N.A. Nil Nil5. Net Asset/(Liability) recognised in N.A. 91,262 (10,63,503) N.A. 9,74,877 (7,83,750)

Balance Sheet


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

N.A. Funded Unfunded N.A. Funded Unfunded

1. Present Value of DBO at N.A. 5,17,123 7,83,750 N.A. 11,51,189 4,98,931Beginning of Period

2. Current Service Cost N.A. 3,00,629 1,41,669 N.A. 37,295 1,24,7403. Interest Cost N.A. 41,370 62,700 N.A. 73,197 34,9254. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Plan Amendments N.A. Nil Nil N.A. Nil Nil7. Acquisitions N.A. Nil Nil N.A. Nil Nil8. Actuarial (Gains)/Losses N.A. 10,49,616 75,384 N.A. (7,44,558) 1,53,0219. Benefits Paid N.A. Nil Nil N.A. Nil (27,867)10. Present Value of DBO at the End N.A. 19,08,738 10,63,503 N.A. 5,17,123 7,83,750

of the Period

V. Change in Fair Value of Assets

1. Plan Assets at Beginning of Period N.A. 14,92,000 N.A. N.A. 8,15,033 N.A.2. Acquisition Adjustment N.A. Nil N.A. N.A. Nil N.A.3. Expected Return on Plan Assets N.A. 1,39,680 N.A. N.A. 77,053 N.A.4. Actuarial Gains/(Losses) N.A. (98,587) N.A. N.A. 1,39,083 N.A.5. Actual Company Contributions N.A. 4,66,907 N.A. N.A. 4,60,831 N.A.6. Benefits Paid N.A. Nil N.A. N.A. Nil N.A.7. Plan Assets at the End of Period N.A. 20,00,000 N.A. N.A. 14,92,000 N.A.

VI. Actuarial Assumptions

1. Discount Rate (%) N.A. 8.00 8.00 N.A. 7.00 7.002. Expected Return on Plan Assets (%) N.A. 8.00 N.A. N.A. 7.00 N.A.

The estimates of future salary increases, considered in actuarial valuations takeaccount of inflation, seniority, promotion and other relevant factors such as supplyand 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 45.50% 45.30%2. High Quality Corporate Bonds 40.00% 38.90%3. Insurance Companies 7.00% 8.10%4. Mutual Funds 3.30% 3.20%5. Cash and Cash Equivalents 3.40% 3.30%6. Equity 0.80% 1.20%7. Term Deposit 0.00% 0.00%

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

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

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

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

IX. Net Asset / (Liability) recognisedin Balance Sheet (including N.A. Funded Unfunded N.A. Funded Unfunded N.A. Funded Unfunded N.A. Funded Unfundedexperience adjustment impact)

1. Present Value of DefinedBenefit Obligation N. A . 19,08,738 10,63,503 N. A . 5,17,123 7,83,750 N. A . 11,51,189 4,98,931 N. A . 13,22,680 5,31,699

2. Fair Value on Plan Assets N. A . 20,00,000 N.A. N. A . 14,92,000 N.A. N. A . 8,15,033 N.A. N. A . Nil N.A.3. Status [Surplus / (Deficit)] N. A . 91,262 (10,63,503) N. A . 9,74,877 (7,83,750) N. A . (3,36,156) (4,98,931) N. A . (13,22,680) (5,31,699)4. Experience Adjustment of

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

Obligation [(Gain) / Loss] N. A . 11,66,407 1,58,640 N. A . (6,39,036) 1,25,154 N. A . Nil Nil N. A . Nil Nil

13


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

Incorporation the Company 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, 2011 Subsidiary since it 31st March, 2011 Subsidiary since it

became the became theCompany’s Subsidiary Company’s Subsidiary

1. Greenacre Holdings Limited India 4,20,60,166Equity Shares of 100% 84,31,989 7,33,52,199 Nil Nil

` 10/- each

2. Technico Pty Limited Australia 2,26,06,065Ordinary Shares 100% 43,73,623 2,51,29,109 Nil Nil

without par value

3. Technico Agri Sciences India 3,79,62,800Limited Equity Shares of 100% 7,02,04,947 22,32,75,598 Nil Nil(a 100% Subsidiary of Technico Pty Limited) ` 10/- each

4. Technico Asia Holdings Pty Australia 36,84,522Limited Ordinary Shares 100% — 1,96,66,010 Nil Nil(a 100% Subsidiary of Technico Pty Limited) without par value

5. Technico Horticultural China Registered(Kunming) Co. Limited* Capital paid US 100% 31,50,034 11,60,934 Nil Nil(a 100% Subsidiary of Technico Asia Holdings) $ 2.3m

6. Technico Technologies Inc. Canada 10,87,999(a 100% Subsidiary of Technico Pty Limited) Common Shares 100% 3,19,246 91,50,145 Nil Nil

without par value

7. Wimco Limited India 9,12,38,170Equity Shares of 96.825% (57,75,64,807) (9,19,44,026) Nil Nil

` 1/- each

8. Pavan Poplar Limited India 53,35,061(a 100% Subsidiary of Wimco Limited) Equity Shares of 96.825% 4,29,105 (11,34,015) Nil Nil

` 10/- each

9. Prag Agro Farm Limited India 36,79,369(a 100% Subsidiary of Wimco Limited) Equity Shares of 96.825% 5,19,552 (4,76,432) Nil Nil

` 10/- each


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

* The financial year of Technico Horticultural (Kunming) Co. Limited ends on 31st December, 2010.

20. SIGNIFICANT ACCOUNTING POLICIESBasis of AccountingThe Financial Statements are prepared on accrual basis under thehistorical cost convention.Fixed AssetsFixed Assets are stated at cost including any incidental acquisition expenses.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.Stock-in-TradeStock-in-Trade has been valued at cost or at available market quotationor their fair values, whichever is lower, category wise, in compliancewith the Prudential Norms prescribed by the Reserve Bank of India forNon-Banking Financial Companies. Stock-in-Trade is accounted forbased on trade date.Foreign Currency TranslationTransactions in foreign currency are accounted for at the exchangerate prevailing on the date of transactions. Gains / Losses arising outof fluctuations in the exchange rates are recognised in the Profit andLoss Account 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 Profit and Loss Account except for thosecovered by forward contract rates where the gains / losses arising from

such 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 BenefitsRegular monthly contributions are made to various Provident Funds /Superannuation Funds which are in the nature of defined contributionscheme and such 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 Profit andLoss Account 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.


R Tandon DirectorKolkata S. Dutta Director5th May, 2011 S. Jain Secretary

Notes:

1. Wimco Limited held 100% of the subscribed and paid-up equity share capitalof Pavan Poplar Limited and Prag Agro Farm Limited.

2. Technico Pty Limited held 100% of the total subscribed and paid-up capital ofTechnico Agri Sciences Limited, Technico Asia Holdings Pty Limited, TechnicoTechnologies Inc. Technico Asia Holdings Pty Limited held 100% of the totalsubscribed and paid-up capital of Technico Horticultural (Kunming) Co. Limited.

3. There has been no change in the Company’s interest in Technico Horticultural(Kunming) Co. Limited between 31st December, 2010 and 31st March, 2011.

SCHEDULES TO THE ACCOUNTS (Contd.)Further there has been no material change in the fixed assets, investments,loans and borrowings of Technico Horticultural (Kunming) Co. Limited duringthe aforesaid period.


R. Tandon DirectorS. Dutta Director

Kolkata, 5th May, 2011 S. Jain Secretary

(` in Lakhs)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 Paper — —f) Other Loans — —Break-up of outstanding public deposits inclusiveof interest accrued thereon but not paid.Assets Side: Amount Outstanding

(2) Break-up of Loans and Advancesincluding bills receivables [otherthan those included in (4) below](a) Secured 157.07(b) Unsecured 2,430.54

(3) Break-up of Leased Assets and stockon hire and hypothecation loanscounting towards EL/HP activities(i) Lease assets including lease

rentals under sundry debtors 1,236.82(a) Financial lease —(b) Operating lease 1,236.82

(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: 25,705.25(i) Shares:(a) Equity —

(b) Preference —(ii) Debentures and Bonds —(iii) Units of Mutual Funds 25,705.25(iv) Government Securities —(v) Others (please specify) —

SCHEDULE TO THE BALANCE SHEET AS AT 31ST MARCH, 2011[as required in terms of Paragraph 13 of Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions, 2007]

Long Term Investments1. Quoted: 11,459.16

(i) Shares: (a) Equity 11,459.16(b) Preference —

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

2. Unquoted: 37,732.99(i) Shares: (a) Equity 27,232.99

(b) Preference 10,500.00(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 — 2,430.54 2,430.54(b) Companies in the same group — — —(c) Other related parties — — —

2. Other than related parties 157.07 1,236.82 1,393.89Total 157.07 3,667.36 3,824.43

(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 25,847.38* 31,085.39(b) Companies in the same group 8,906.92 4,148.67(c) Other related parties — —

2. Other than related parties 41,353.65 39,663.33Total 76,107.95 74,897.38

* Subsidiaries having further step down subsidiaries have been considered on a consolidated basis.

(7) Other InformationParticulars Amount (`)

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

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

(iii) Assets acquired in satisfaction of debt —

(` in Lakhs)Assets Side: Amount

Outstanding

14


15


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE(As per Schedule VI, Part IV of the Companies Act, 1956)

2 1

Net Current Assets Misc. Expenditure

Accumulated Losses

2 8 5 6 5 5 5 N I L

N I L

IV. Performance of Company (Amount in ` Thousands)

Turnover (Including other Income) Total Expenditure5 1 2 1 52 7 7 1 9 6

V. Generic Names of Three Principal Services of Company

Item Code No. (ITC Code) – Not Applicable

Service Description – Investments– Lending

– Asset Financing

0 . 3 1 N I L

Earning Per Share in ` Dividend Rate %

Profit/Loss Before Tax Profit/Loss After Tax

(Please tick appropriate box + for profit, – for loss)

� � 1 9 9 7 1 42 2 5 9 8 1

+ –+ –

Audit Committee : Mr. R. Tandon, Chairman, M/s. B. B. Chatterjee and S. Dutta, Members

N I L N I L

N I L N I L

6 4 6 4 7 8 7 # 1 3 9 1 0 7 4

N I L N I L

Application of Funds

Net Fixed Assets Investments8 0 0 9 1 4 9 1 9 2 1 5

I. Registration Details

Registration No. State Code

Balance Sheet DateDate Month Year

II. Capital raised during the year (Amount in ` Thousands)

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in` Thousands)

Total Liabilities Total Assets

Sources of Funds

Paid-up Capital Reserves & Surplus

3 1 0 3 2 0 1 1

0 6 1 6 8 4 of 1994

7 8 5 5 8 6 17 8 5 5 8 6 1

# Includes 59,74,04,170 Equity Shares of ` 10/- each, fully paid up,and 7,54,22,400 Equity Shares of ` 10/- each, partly paid up, issuedon Amalgamation.

Secured Loans Unsecured Loans

16

GREENACRE HOLDINGS LIMITED

the approval of the Members of the Company at the next GeneralMeeting. Appropriate resolution seeking your approval forre-appointment of Ms. Prasad as Manager is appearing in the Noticeconvening the ensuing Annual General Meeting of 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. A. F. Ferguson & Co., CharteredAccountants, retire at the ensuing Annual General Meeting of theCompany, and being eligible, offer themselves for re-appointment.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE 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.

5th May, 2011Registered Office : On behalf of the BoardITC Centre37, J. L. Nehru Road R. Tandon DirectorKolkata - 700 071 S. Dutta Director

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDEDON 31ST MARCH 2011

1. Your Directors hereby submit their Report and Accounts for the financialyear ended on 31st, March 2011.

2. PERFORMANCE OF THE COMPANYYour Company continues to provide maintenance services for realestate assets such as office building and there was no change in thebusiness activities of the Company during the year under review.

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


(`) (`)


Less : Provision for Taxation 25,36,041 25,44,041

b. Profit After Taxation 84,31,989 77,60,664

c. Add : Profit broughtforward from previous years 8,53,47,057 7,75,86,393

d. Balance carried forwardto the following year 9,37,79,046 8,53,47,057

Your Board of Directors is looking at various options to increase theCompany’s future revenues including by enhancement of maintenancecharges.

3. DIRECTORSMr. K. Vaidyanath, consequent to his retirement from the services ofITC Limited, the Ultimate Holding Company, stepped down as theChairman and Director of your Company with effect from close of workon 2nd January, 2011. Your Directors would like to place on recordtheir sincere appreciation for the contribution made by Mr. Vaidyanathduring his tenure with the Company. Mr. R. Tandon was appointed asthe Chairman of the Board of Directors of your Company with effectfrom 3rd January, 2011.

In accordance with the provisions of Article 143 of the Articles ofAssociation of the Company, Mr. A. Nayak will retire by rotation at theensuing Annual General Meeting of the Company, and being eligible,offers himself for re-election. Your Board of Directors has recommendedhis re-election.

4. RE-APPOINTMENT OF MANAGER UNDER SECTION 269 OF THECOMPANIES ACT, 1956The Board of Directors of your Company re-appointed Ms. Anjali Prasadas Manager of the Company for a period of three years with effectfrom 1st October, 2010, in terms of the provisions of Section 269 ofthe Companies Act, 1956, read with Schedule XIII thereto, subject to

AUDITORS’ REPORT TO THE MEMBERS OF GREENACRE HOLDINGSLIMITED

1. We have audited the attached Balance Sheet of GREENACRE HOLDINGSLIMITED (”the Company”) as at 31st March, 2011, the Profit and LossAccount and the Cash Flow Statement of the Company for the yearended 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 ouraudit.

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 (CARO)issued by the Central Government 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 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 it appears from our examinationof those books;

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

(d) in our opinion, the Balance Sheet, the Profit and Loss Account andthe Cash Flow Statement dealt with by this report are in compliancewith the Accounting Standards referred to in Section 211(3C) ofthe 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 the

Company as at 31st March, 2011;(ii) in the case of the Profit and Loss Account, of the profit of the

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

the Company for the year ended on that date.

5. On the basis of the written representations received from the Directorsas on 31st March, 2011 taken on record by the Board of Directors,none of the Directors is disqualified as on 31st March, 2011 from beingappointed as a director in terms of Section 274(1)(g) of the CompaniesAct, 1956.


(Registration No.112066W)


17


ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report of even date)

Having regard to the nature of the Company’s business/activities clauses4(ii), (iii), (v), (vi), (viii), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix)and (xx) of CARO are not applicable.

(i) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by theManagement in accordance with a regular programme of verificationwhich, in our opinion, provides for physical verification of all thefixed assets at reasonable intervals. According to the informationand explanations given to us, no material discrepancies werenoticed 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 is an adequate internal control system commensuratewith the size of the Company and the nature of its business with regardto purchases of fixed assets and the sale of services. During the courseof our audit, we have not observed any major weakness in such internalcontrol system.

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

(iv) According to the information and explanations given to us in respectof statutory dues:

(a) The Company has been regular in depositing undisputed dues,including Provident Fund, Employees’ State Insurance, Income-tax, Service Tax, Cess and other material statutory dues applicableto it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of ProvidentFund, Income-tax, Employees State Insurance, Service Tax,Cessand other material statutory dues in arrears as at 31st March, 2011for a period of more than six months from the date they becamepayable.

(c) There were no dues on account of Income-tax, Service Tax, andCess which have not been deposited as on 31st March, 2011 onaccount 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 or on the Company has beennoticed or reported during the year.


(Registration No.112066W)




I. SOURCES OF FUNDS

1. Shareholders’ Fundsa) Capital 1 42,06,01,660 42,06,01,660b) Reserves and Surplus 2 10,75,50,024 9,91,18,035

Total 52,81,51,684 51,97,19,695

II. APPLICATION OF FUNDS

1. Fixed Assets 3

a) Gross Block 43,35,86,629 42,34,68,927

b) Less: Depreciation 26,05,297 24,23,553

c) Net Block 43,09,81,332 42,10,45,374

2. Investments 4 11,94,35,572 11,77,69,308

3. Deferred Tax Assets 5 7,65,830 5,15,708

4. Current Assets, Loans and Advances

a) Inventories 6 1,23,71,911 1,23,71,911

b) Sundry Debtors 7 4,18,200 15,000

c) Cash and Bank Balances 8 10,05,915 34,36,415

d) Other Current Assets 9 2,63,867 1,55,000

e) Loans and Advances 10 58,93,350 59,43,688

1,99,53,243 2,19,22,014Less :

5. Current Liabilities and Provisions

a) Liabilities 11 4,06,72,777 3,98,15,142

b) Provisions 12 23,11,516 17,17,567

4,29,84,293 4,15,32,709

Net Current Liabilities (2,30,31,050) (1,96,10,695)

Total 52,81,51,684 51,97,19,695

Notes to the Accounts 18Significant Accounting Policies 19

The Schedules referred to above form an integral part of the Balance Sheet.In terms of our report of even date.


R. Tandon DirectorS. Dutta DirectorA. Prasad Secretary


18


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011


(`) (`)A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 1,09,68,030 1,03,04,705ADJUSTMENTS FOR :Depreciation 1,81,744 1,81,742Liabilities no longer required written back (6,35,326) —Dividend from Current Investments (26,17,910) (28,18,643)Interest on Income Tax 102 —Loss on Sale of Current Investments 1,02,400 7,11,929Excess of Cost over Fair Value of Investments — 27,695OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 79,99,040 84,07,428ADJUSTMENTS FOR :Trade and Other Receivables (1,10,647) 6,31,160Trade Payables 9,69,208 (4,58,644)CASH GENERATED FROM OPERATIONS 88,57,601 85,79,944Income Tax Paid (31,37,349) (27,26,123)NET CASH FROM OPERATING ACTIVITIES 57,20,252 58,53,821

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Current Investments (71,40,72,784) (140,48,94,452)Sale of Current Investments 71,37,99,111 143,94,81,968Dividend from Current Investments 11,22,921 28,18,643Purchase of Land (90,00,000) (13,02,28,547)NET CASH USED IN INVESTING ACTIVITIES (81,50,752) (9,28,22,388)

C. CASH FLOW FROM FINANCING ACTIVITIESIssue of Share Capital — 9,00,00,000NET CASH FROM FINANCING ACTIVITIES — 9,00,00,000NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (24,30,500) 30,31,433OPENING CASH AND CASH EQUIVALENTS 34,36,415 4,04,982CLOSING CASH AND CASH EQUIVALENTS 10,05,915 34,36,415

Notes :1. The above Cash Flow Statement has been prepared under the “Indirect Method”

as set out in Accounting Standard - 3 Cash Flow Statements.2. CASH AND CASH EQUIVALENTS :

Balance with Scheduled Banks - On Current Account 9,90,664 25,34,415Cash on Hand 15,251 20,000Cheques on Hand — 8,82,000Cash and Bank Balances (Schedule 8) 10,05,915 34,36,415


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011Schedule For the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

I. INCOMEService Income 2,19,19,628 2,21,01,848Other Income 13 52,49,603 45,98,643

2,71,69,231 2,67,00,491II. EXPENDITURE

Employee Cost 14 1,16,16,399 1,01,68,848Project Expenses 15 — — Management and Other Expenses 16 5,00,759 21,60,173Maintenance and Service Expenses 39,02,299 38,85,023Depreciation 3 1,81,744 1,81,742

1,62,01,201 1,63,95,786III. PROFIT

Profit before Taxation 1,09,68,030 1,03,04,705Provision for Taxation 17 25,36,041 25,44,041Profit after Taxation 84,31,989 77,60,664Profit brought forward 8,53,47,057 7,75,86,393Profit carried to Balance Sheet 9,37,79,046 8,53,47,057Earnings Per Share (Face Value ` 10/- each) 18(2) 0.20 0.20(Basic & Diluted)

Notes to the Accounts 18Significant Accounting Policies 19The Schedules referred to above form an integral part of the Profit and Loss Account.In terms of our Report of even date.







1. CAPITAL


(`) (`)

Authorised5,00,00,000 Equity Shares of ` 10/- each 50,00,00,000 50,00,00,000(2010 - 5,00,00,000 Equity Shares of ` 10/- each)

50,00,00,000 50,00,00,000

Issued, Subscribed & Paid-up4,20,60,166 (2010 - 4,20,60,166)Equity Shares of ` 10/- each, fully paid up 42,06,01,660 42,06,01,660(All the above shares are held by the HoldingCompany, Russell Credit Limited. TheUltimate Holding Company is ITC Limited.)

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

4. INVESTMENTSAs at As at

31st March, 2011 31st March, 2010(`) (`)

UNQUOTEDA. Long Term

TRADE INVESTMENTS

Classic Infrastructure &Development Limited16,50,000 (2010 – 16,50,000)Equity Shares of ` 10/- each, fully paid 6,63,26,700 6,63,26,700

6,63,26,700 6,63,26,700

B. CurrentOTHER INVESTMENTS

AIG Short Term Fund - InstitutionalWeekly Dividend — 4,07,18,261Nil (2010 – 40,667) Units of` 1,000/– each

DSP BlackRock Liquidity Fund - Institutional Plan - Daily Dividend 2,31,08,872 —23,102 (2010 - Nil) Units of ` 1,000/- each

Kotak Quarterly Interval Plan Series 2 - Dividend 3,00,00,000 —29,99,641(2010 - Nil) Units of ` 10/- each

LIC MF Liquid Plan - Dividend — 1,07,24,347Nil (2010 – 9,76,707 ) Unitsof ` 10/- each

5,31,08,872 5,14,42,608

Total (A + B) 11,94,35,572 11,77,69,308

2. RESERVES AND SURPLUS


(`) (`)

General Reserve 1,37,70,978 1,37,70,978

Profit and Loss Account 9,37,79,046 8,53,47,057

10,75,50,024 9,91,18,035


3. FIXED ASSETS

GROSS BLOCK (AT COST ) DEPRECIATION NET BOOKVALUE

Particulars As at Additions As at Upto For the year Upto As atcommencement during the the end 31st March, 31st March 31st March,

of the year year of the year 2010 2011 2011(`) (`) (`) (`) (`) (`) (`)

Freehold Land 41,24,07,025 1,01,17,702 42,25,24,727 — — — 42,25,24,727Building* 1,10,04,119 — 1,10,04,119 23,91,064 1,79,367 25,70,431 84,33,688Plant and Machinery 57,783 — 57,783 32,489 2,377 34,866 22,917

TOTAL 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

Previous Year 29,32,40,380 13,02,28,547 42,34,68,927 22,41,811 1,81,742 24,23,553 42,10,45,374

* Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms.The Gross Value of such assets is ` 1,10,04,119/- ( 2010 - ` 1,10,04,119/-) and Accumulated Depreciation ` 25,70,431/- ( 2010 - ` 23,91,064/-)Depreciation for the year charged to Profit and Loss Account is ` 1,79,637/- ( 2010 - ` 1,79,637/-).The aggregate lease rental received is included in Other Income (Schedule 13)

19



(`) (`)

5. DEFERRED TAX - NETDeferred Tax Assets

On fiscal allowances on fixed assets 15,859 18,368

On employees' seperation and retirement etc. 7,49,971 4,97,340

7,65,830 5,15,708

6. INVENTORIES

Work-in-Progress (at lower of cost and net realisable value) 1,23,71,911 1,23,71,911

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

7. SUNDRY DEBTORS

Good and Unsecured Other Debts 4,18,200 15,000[includes ` 4,00,000/- (2010 - Nil) due from Ultimate Holding Company ITC Limited]

4,18,200 15,000

8. CASH AND BANK BALANCES

With Scheduled Banks On Current Accounts 9,90,664 25,34,415

Cheques on Hand — 8,82,000Cash on Hand 15,251 20,000

10,05,915 34,36,415

9. OTHER CURRENT ASSETS

Good and UnsecuredDeposits 1,55,000 1,55,000Interest Receivable 1,08,867 —

2,63,867 1,55,000

20




(`) (`)

10. LOANS AND ADVANCESGood and Unsecured Advances recoverable in cash or in kind or for value to be received

Project Advances 11,90,278 11,90,278Staff Advances 1,22,000 2,17,000Other Advances 21,94,794 25,01,214

Current Taxation (net of provisions) 23,77,518 20,25,263Fringe Benefit Tax (net of provisions) 8,760 9,933

58,93,350 59,43,68811. LIABILITIES

Sundry Creditors Total Outstanding dues of micro enterprises and small enterprises; — —Total Outstanding dues of creditors other than micro enterprises and small enterprises 8,11,736 14,17,650Progress payments and advances against projects 1,00,00,000 1,00,00,000Sundry Deposits * 2,80,90,000 2,80,90,000Other liabilities 17,71,041 3,07,492

4,06,72,777 3,98,15,142*Includes Deposits from Ultimate Holding Company, ITC Limited ̀ 2,20,00,000/-

(2010 - ` 2,20,00,000/-)12. PROVISIONS

Provision for Retirement Benefits 23,11,516 17,17,56723,11,516 17,17,567


(`) (`)13. OTHER INCOME

Lease Rentals 18,87,500 17,80,000Income from Current Investments-others 26,17,910 28,18,643Interest on Income Tax 1,08,867 —Liability no longer required written back 6,35,326 —

52,49,603 45,98,64314. EMPLOYEE COST

Salaries/Wages and Bonus 94,92,363 91,72,942Contribution to Provident and Other Funds 16,94,742 5,71,409Staff Welfare Expenses 4,29,294 4,24,497

1,16,16,399 1,01,68,84815. PROJECT EXPENSES

Opening Work-in-progress 1,23,71,911 1,23,71,911 Add : Expenditure incurred on Projects during the year — —

1,23,71,911 1,23,71,911Less : Closing Work-in-progress 1,23,71,911 1,23,71,911Project Expenses — —

16. MANAGEMENT AND OTHER EXPENSESRates and Taxes 41,288 43,038Insurance 4,354 4,471Travelling 7,097 27,227Legal and Consultancy Charges 1,62,977 11,74,211Auditors' Remuneration (excluding Service Tax )

- Audit Fees 75,000 75,000- Tax Audit Fees * 50,000 —

Interest - Others 102 43,795Loss on Sale of Current Investments 1,02,400 7,11,929Excess of carrying cost over Fair Value of Investments — 27,695Miscellaneous Expenses 57,541 52,807

5,00,759 21,60,173* Paid to the erstwhile auditors, a firm in which some of the partners of the statutoryauditors firm are partners.17. PROVISION FOR TAXATION

Income Tax for the year - Current Tax 32,00,000 26,00,000- Deferred Tax (2,50,122) (55,959)

29,49,878 25,44,041Less: Adjustments related to previous years-Net

- Current Tax 4,17,167 —- Fringe Benefit Tax (3,330) —

25,36,041 25,44,041

18. NOTES TO THE ACCOUNTS

1. During the year, the following Current Investments were purchased andsold:

(i) 574 Units of AIG Short Term Fund Institutional Weekly Dividendat cost of ` 5,74,412/-

(ii) 10,11,297 Units of Birla Sun Life Cash Plus - Instl - Daily Dividend– Reinvestment at cost of ` 1,09,24,339/-

(iii) 23,64,053 Units of BNP Paribas Money Plus Institutional Plan DailyDividend at cost of ` 2,36,51,820/-

(iv) 23,59,579 Units of BNP Paribas Overnight Fund - InstitutionalDaily Dividend at cost of ` 2,36,02,874/-

(v) 14,92,777 Units of Canara Robeco Liquid Fund - Institutional DailyDividend Reinvest at cost of ` 1,50,09,874/-

(vi) 7,28,558 Units of Canara Robeco Treasury Advantage InstitutionalDaily Dividend Fund at cost of ` 90,39,290/-

(vii) 10,00,000 Units of DSP BlackRock FMP - 3M Series 22 - DividendPayout at cost of ` 1,00,00,000/-

(viii) 9,84,409 Units of DSP BlackRock Liquidity Fund - Regular Plan-Daily Dividend at cost of ` 98,53,939/-

(ix) 9,023 Units of DSP BlackRock Money Manager Fund – Regular -Daily Dividend at cost of ` 90,43,148/-

(x) 97,322 Units of DWS Insta Cash Plus Fund - Regular Plan DailyDividend - Reinvest at cost of ` 10,02,517/-

(xi) 30,00,000 Units of HDFC FMP 100D September 2010 (2) –Dividend - Series XIV, Option: Payout at cost of ` 3,00,00,000/-

(xii) 8,012 Units of ICICI Prudential Liquid Super Institutional Plan -Div - Daily at cost of ` 8,01,339/-

(xiii) 14,28,204 Units of JM High Liquidity Fund- Super InstitutionalPlan - Daily Dividend at cost of ` 1,43,05,609/-

(xiv) 12,31,196 Units of JM Money Manager Fund Super Plus Plan-Daily Dividend at cost of ` 1,23,18,485/-

(xv) 2,10,101 Units of JP Morgan India Liquid Fund - Retail - DailyDividend Plan - Reinvest at cost of ` 21,04,161/-

(xvi) 78,81,997 Units of JP Morgan India Liquid Fund Super Inst. DailyDividend Plan- Reinvest at cost of ` 7,88,82,236/-

(xvii) 48,00,686 Units of JP Morgan India Treasury Fund - Super Inst.Daily Div Plan - Reinvest at cost of ` 4,80,49,584/-

(xviii) 30,00,000 Units of Kotak FMP Series 31 - Dividend at cost of ` 3,00,00,000/-

(xix) 9,92,894 Units of Kotak Floater Long Term - Daily Dividend at costof ` 1,00,08,173/-

(xx) 8,17,854 Units of Kotak Liquid (Institutional) - Daily Dividend atcost of ` 1,00,00,798/-

(xxi) 6,12,325 Units of LIC Nomura MF Income Plus Fund - DailyDividend Plan at cost of ` 61,23,252/-

(xxii) 10,57,727 Units of LIC Nomura MF Liquid Fund - Dividend Planat cost of ` 1,16,14,791/-

(xxiii) 13,35,655 Units of Principal Cash Management Fund - LiquidOption - Instl. Plan - Dividend Reinvestment - Daily at cost of` 1,33,59,490/-

(xxiv) 21,36,855 Units of Reliance Liquid Fund - Cash Plan - Daily DividendOption at cost of ` 2,38,07,770/-

(xxv) 22,300 Units of Religare Liquid Fund - Institutional Daily Dividendat cost of ` 2,23,05,169/-

(xxvi) 61,93,687 Units of Sundaram Money Fund Inst. - Daily Div Reinat cost of ` 6,25,27,130/-

(xxvii) 5,952 Units of Templeton India Treasury Management AccountRegular Plan - Daily Dividend Reinvestment at cost of ` 90,01,172/-

(xxviii) 58,968 Units of Templeton India Treasury Management AccountInstitutional Plan - Daily Dividend Reinvestment at cost of` 5,90,07,390/-

(xxix) 59,00,593 Units of Templeton India Ultra Short Bond FundInstitutional Plan - Daily Dividend Reinvestment at cost of` 5,90,71,426/-

(xxx) 9,01,852 Units of Templeton India Ultra Short Bond Fund RetailPlan - Daily Dividend Reinvestment at cost of ` 90,28,085/-

(xxxi) 18,346 Units of UTI Liquid Cash Plan Institutional - Daily IncomeOption - Reinvestment at cost of ` 1,87,02,686/-

(xxxii) 18,734 Units of UTI Treasury Advantage Fund- Institutional Plan(Daily Dividend Option) - Reinvestment at cost of ` 1,87,37,944/-

21


6. Employee Benefits:Contribution to Defined Contribution Schemes – ` 8,25,782/- (2010 –` 5,57,243/-) Defined Benefit Plans / Long Term Compensated Absences- As per Actuarial Valuations as on March 31, 2011 and recognised in thefinancial statements in respect of Employee Benefit Schemes:



N.A. Funded Unfunded N.A. Funded UnfundedI. Components of Employer Expenses

1. Current Service Cost N.A. 2,11,698 1,28,601 N.A. 1,79,096 1,02,5642. Interest Cost N.A. 1,50,696 1,25,405 N.A. 1,33,418 1,06,8583. Expected Return on Plan Assets N.A. (1,88,083) Nil N.A. (1,60,114) Nil4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Past Service Cost N.A. 2,17,055 Nil N.A. Nil Nil7. Actuarial Losses/(Gains) N.A. 4,77,594 2,70,421 N.A. (1,38,234) (344)8. Total expense recognised in the N.A. 8,68,960 5,24,427 N.A. 14,166 2,09,078

Statement of Profit & Loss AccountII. Actual Returns N.A. 2,09,189 N.A. N.A. 1,93,153 N.A.III. Net Asset / (Liability) recognised in

Balance Sheet1. Present Value of Defined Benefit

Obligation N.A. 27,27,984 19,41,994 N.A. 20,89,233 17,17,5672. Fair Value of Plan Assets N.A. 23,58,462 N.A. N.A. 23,43,602 N.A.3. Status [Surplus/(Deficit)] N.A. (3,69,522) (19,41,994) N.A. 2,54,369 (17,17,567)4. Unrecognised Past Service Cost N.A. Nil Nil N.A. Nil Nil5. Net Asset/(Liability) recognised in N.A. (3,69,522) (19,41,994) N.A. 2,54,369 (17,17,567)

Balance SheetIV. Change in Defined Benefit

Obligations (DBO)1. Present Value of DBO at the N.A. 20,89,233 17,17,567 N.A. 19,76,274 15,44,591

Beginning of Period2. Current Service Cost N.A. 2,11,698 1,28,601 N.A. 1,79,096 1,02,5643. Interest Cost N.A. 1,50,696 1,25,405 N.A. 1,33,418 1,06,8584. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Plan Amendments N.A. Nil Nil N.A. Nil Nil7. Past Service Cost N.A. 2,17,055 Nil N.A. Nil Nil8. Actuarial (Gains)/Losses N.A. 4,70,360 2,70,421 N.A. (58,958) (344)9. Benefits Paid N.A. (4,11,058) (3,00,000) N.A. (1,40,597) (36,102)10. Present Value of DBO at the End N.A. 27,27,984 19,41,994 N.A. 20,89,233 17,17,567

of the PeriodV. Change in Fair Value of Assets

1. Plan Assets at Beginning of Period N.A. 23,43,602 N.A. N.A. 22,31,093 N.A.2. Acquisition Adjustment N.A. Nil N.A. N.A. Nil N.A.3. Expected Return on Plan Assets N.A. 1,88,083 N.A. N.A. 1,60,114 N.A.4. Actuarial Gains/(Losses) N.A. (7,234) N.A. N.A. 79,276 N.A.5. Actual Company Contributions N.A. 2,45,069 N.A. N.A. 13,716 N.A.6. Benefits Paid N.A. (4,11,058) N.A. N.A. (1,40,597) N.A.7. Plan Assets at the End of Period N.A. 23,58,462 N.A. N.A. 23,43,602 N.A.

VI. Actuarial Assumptions1. Discount Rate (%) N.A. 8.00 8.00 N.A. 7.00 7.002. Expected Return on Plan Assets (%) N.A. 8.00 N.A. N.A. 7.00 N.A.

VII. Major Category of Plan Assets as a % of the Total Plan AssetsAs at As at

31st March, 2011 31st March, 20101. Government Securities/Special

Deposit 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.

2. Earnings per share:For the year ended For the year ended

31st March, 2011 31st March, 2010Profit after Taxation (`) 84,31,989/- 77,60,664/-Weighted average number ofEquity Shares outstanding 4,20,60,166 3,84,84,824Basic and Diluted Earnings Per Share(Face Value - ` 10/- per share) ` 0.20 ` 0.20

3. Remuneration of Manager:Salaries : ` 15,88,800/- (2010 – ` 13,65,000/-)Provident Fund : ` 75,456/- (2010 – ` 63,000/-)Other Benefits : ` 1,65,520/- (2010 – ` 1,59,565/-)Total : ` 18,29,776/- (2010 – ` 15,87,565/-)The reappointment and the remuneration of ` 9,62,494/- from1st October, 2010 are both subject to the approval of the members atthe forthcoming Annual General Meeting.

4. Segment Reporting - The Company operates in a single business segmentnamely Property Maintenance and in a single geographical segment.

5. 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. K. Vaidyanath Non - Executive Chairman (upto 2nd January, 2011)Mr. R. Tandon Non - Executive Chairman (w.e.f. 3rd January, 2011)

Non - Executive Director (upto 2nd January, 2011)Mr. A. Nayak Non - Executive DirectorMr. S. Dutta Non - Executive Director

(b) Disclosure of transactions between the Company and RelatedParties and the status of outstanding balances:


(`) (`)Holding CompanyRussell Credit LimitedIssue of Equity Shares Nil 9,00,00,000/-Ultimate HoldingCompany : ITC LtdLease Rental Income 18,20,000/- 17,20,000/-Maintenance Income 2,19,19,629/- 2,21,01,849/-Other Reimbursements received 2,61,830/- 1,91,280/-Other Reimbursements made 26,332/- 7,292/-


Ultimate HoldingCompany : ITC LtdSecurity Deposit Received 2,20,00,000/- 2,20,00,000 /-Other Receivables 4,00,000/- Nil


(`) (`)Fellow Subsidiary CompanyLandbase India LtdReimbursement of Expenses 21,79,702/- 95,87,277/-Balances as at 31st March, 2011 31st March, 2010

(`) (`)Fellow Subsidiary CompanyLandbase India LtdOther Payables 11,17,702/- NilParticulars For the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Contribution to GreenacreHoldings Limited Provident Fund 3,35,206/- 3,00,942/-Contribution to GreenacreHoldings Limited Gratuity Fund 2,35,195/- 2,764/-

NOTES TO ACCOUNTS (Contd.)


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

Encashment Encashment Encashment EncashmentN.A. Funded Unfunded N.A. Funded Unfunded N.A. Funded Unfunded N.A. Funded Unfunded

VIII. Net Asset / (Liability) recognizedin Balance Sheet (includingexperience adjustment impact)

1. Present Value of DefinedBenefit Obligation N. A . 27,27,984 19,41,994 N. A . 20,89,233 17,17,567 N. A . 19,76,274 15,44,591 N. A . 16,38,837 12,91,053

2. Fair Value on Plan Assets N. A . 23,58,462 N.A. N. A . 23,43,602 N.A. N. A . 22,31,093 N.A. N. A . 19,19,289 N.A.3. Status [Surplus / (Deficit)] N. A . (3,69,522) (19,41,994) N. A . 2,54,369 (17,17,567) N. A . 2,54,819 (15,44,591) N. A . 2,80,452 (12,91,053)4. Experience Adjustment of

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

Obligation [(Gain) / Loss] N. A . 6,41,666 4,49,894 N. A . (58,958) (344) N. A . Nil Nil N. A . Nil Nil

22


Audit Committee : Mr. R. Tandon, Chairman, M/s. A. Nayak and S. Dutta, Members




Balance Sheet Date

Date Month Year




III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands)


Sources of Funds

Paid up Capital Reserves & Surplus



Net Fixed Assets Investments

Net Current Assets * Misc. Expenditure

*Includes Deferred Tax Asset


Turnover (Including other Income) Total Expenditure

Profit/Loss before Tax Profit/Loss after Tax

(Please tick appropriate box + for Profit, – for Loss)

Earnings per Share in ` Dividend Rate %

V. Generic Names of Three Principal Services of Company

Item Code No. - Not ApplicableService Description - Project Management

- Property Maintenance- Property Development

N I L N I L

N I L N I L

5 2 8 1 5 2 5 2 8 1 5 2

4 2 0 6 0 2 1 0 7 5 5 0

N I LN I L

4 3 0 9 8 1 1 1 9 4 3 6

– 2 2 2 6 5 N I L

N I L

2 7 1 6 9 1 6 2 0 1

1 0 9 6 8 8 4 3 2

0 . 2 0 N I L

2 1

3 1 0 3 2 0 1 1

0 4 9 4 6 7

√+ –

√+ –


(a) Amounts recognised as expense is included in Schedule 14 as below :Leave Encashment of ` 5,24,427/- (2010 – ` 2,09,078/-) in “Salaries Wagesand Bonus” and Gratuity of ̀ 8,68,960/- (2010 – ̀ 14,166/-) in “Contributionto Provident and Other Funds”.

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

(c) In the absence of detailed information regarding plan assets which isfunded with Insurance Company, the composition of each majorcategory of plan assets, the percentage or amount for each categoryto the fair value of plan assets have not been disclosed.

(d) The expected rate of return on plan assets is based on the currentportfolio of assets, investment strategy and market scenario. In orderto protect the capital and optimize returns within acceptable riskparameters, the plan assets are well diversified.

7. There are no Micro, Small and Medium Enterprises, to whom theCompany owes dues, which are outstanding for more than 45 daysduring the year and also as at 31st March, 2011. This information asrequired to be disclosed under the Micro, Small and Medium EnterprisesDevelopment Act, 2006 has been determined to the extent such partieshave been identified based on information available with the Company.

8. Figures for the previous year have been regrouped/re-arranged wherevernecessary.

19. SIGNIFICANT ACCOUNTING POLICIESBasis of AccountingThe financial statements are prepared on accrual basis under thehistorical cost convention.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.Investment IncomeIncome from Investments is accounted for on an accrual basis, inclusiveof related tax deducted at source.

Method of Accounting - ProjectsThe Company follows the proportionate completion method underwhich a portion of the estimated revenue is recognised taking intoaccount the extent of completion of projects.Revenue RecognitionService Income is recognized on rendering of service.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 BenefitsMonthly contributions is made to the Provident Fund administeredthrough duly constituted and approved independent trust, which is inthe nature of defined contribution scheme and such paid / payableamounts 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 Profit andLoss Account 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.

On behalf of the BoardR. Tandon DirectorS. Dutta Director

Kolkata, 5th May, 2011 A. Prasad Secretary

Accumulated Losses

DIRECTORS’ REPORTTO THE MEMBERS OF WIMCO LIMITEDYour Directors present their report for the financial year ended 31stMarch 2011.

Company PerformanceYour Company’s turnover, which stood at ` 192.19 crores has seen a declineby 10% as compared to last year primarily on account of lower volumesin the Matches business. During the year under review, the Companyincurred a net loss of ` 59.65 crores after taking into account a one-timecost of ̀ 37.46 crores, inter alia, for restructuring of the Company’s operationsat Chennai and Ambarnath.The income from Matches business for the year has decreased by 10% to` 184.78 crores from ` 205.85 crores earned in the previous year. YourCompany is facing challenge in its main business of Matches due to steeprise in input costs on one hand and growing competition from small scaleand cottage sector on the other hand. Your Company, with a view to makingits Matches business viable, restructured its operations in the Matches Factoriesat Chennai and Ambarnath. Alternative arrangements have been put in placeto ensure continued supplies of Company’s products in the market.The income from the engineering business during the year was ` 14.04 croresas compared to ` 14.36 crores in the previous year. Your Company isworking towards increasing its value capture through continuous productdevelopment in packaging machinery. This business is poised for growththrough new customer acquisitions, both in the domestic and overseasmarket.The income from the seedling business during the year was ` 9.76 croresas against ` 9.33 crores in the previous year. The Agro Forestry business ofyour Company is supplying high quality poplar ETPs (Entire Transplants)to farmers in Northern India. Apart from creating a long-term sustainablesupply of a critical raw material, your Company’s strategy of creatingsustainable and meaningful linkages across the farmer community is helpingus to contribute towards improving the green environment in the region.The initiatives taken by your Company during the year to restructure itsoperations, coupled with the possibility of alternative usage of land nowrendered surplus, are expected to yield positive results in the years to come.In furtherance of the objective of restructuring, the Company is also exploringthe possibility of raising further funds.DividendIn view of the losses incurred during the year, your Directors are unable torecommend any dividend. Further, the 5% Dividend on the outstanding55,00,000 Redeemable Cumulative Preference Shares of the Company hasbeen kept in abeyance.

DirectorsMr. Rajeev Gopal ceased to be the Managing Director of your Companywith effect from 30th December, 2010 consequent to withdrawal ofnomination by the Holding Company i.e. Russell Credit Limited (RCL).Pursuant to nomination by RCL, the Board of Directors (the Board) of yourCompany appointed Mr. V. M. Rajasekharan as Additional Director andManaging Director of the Company with effect from 7th January, 2011. Byvirtue of the provisions of Section 260 of the Companies Act, 1956,Mr. Rajasekharan will vacate his office at the ensuing Annual General Meetingof the Company. Your Board has recommended for the approval of theMembers the appointment of Mr. Rajasekharan as Managing Director ofyour Company for a period of three years with effect from the date of theensuing Annual General Meeting of the Company. Appropriate resolutionseeking the approval of the Members to such appointment is appearingin the Notice convening the ensuing Annual General Meeting of theCompany.In accordance with the provisions of Article 131, 132 and 133 of theArticles of Association of the Company, Mr. R. L. Auddy and Mr. DipakDutta will retire by rotation at the ensuing Annual General Meeting of theCompany and, being eligible, offer themselves for re-election. The Boardhas recommended their re-election.Redemption and Issue of Preference SharesPursuant to the approval of the members at the last Annual General Meeting,50,00,000 Zero Dividend Redeemable Cumulative Preference Shares of ` 100each, aggregating ` 50 crores, were issued for cash at par to RCL.

AUDITORS’ REPORT

TO THE MEMBERS OF WIMCO LIMITED

We have audited the attached balance sheet of Wimco Limited(’the Company’) as at 31 March 2011 and the related profit and loss accountand cash 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 theaudit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test

basis, 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.

1. As required by the Companies (Auditor’s Report) Order, 2003(’the Order’), issued by the Central Government of India in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956,(’the Act’) we enclose in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Order.

Further, the redemption date of 30,00,000 5% Redeemable CumulativePreference Shares of ` 100 each, aggregating ` 30 crores, held by RCL inthe Company was extended from 15th March, 2011 to 15th March, 2012,after receiving consent from RCL.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, 2011 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 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 AbsorptionInvestment made in upgraded match manufacturing machinery havebenefited the Company in waste reduction and enhancement of processefficiency and product consistency.During the year, the Company’s expenditure on Research and Developmentwas ` 21.35 lacs.

C) Foreign Exchange Earnings and OutgoDuring the year, the Company earned foreign exchange of ` 277.50 lacs.The total outflow on account of foreign exchange was ` 820.96 lacs.

EmployeesThe relations between the Company and its employees have generally beencordial and harmonious during the year under review. The operations atthe Company’s Kolkata Factory has been suspended due to industrial unrestwith effect from 29th April, 2011.None 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.

For and on behalf of the BoardKolkata K.N. Grant3rd May 2011 Chairman

23

WIMCO LIMITED

ANNEXURE TO THE AUDITORS’ REPORT - 31 MARCH 2011

(Referred to in our report of even date)

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

(b) The Company has a regular programme of physical verificationof its 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 concem 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 with regardto purchase of inventory and fixed assets and with regard to the saleof goods and services. We have not observed any major weakness inthe 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 under Section301of the Act.

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

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

(viii) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules prescribed by the Central Govemmentfor maintenance of cost records under Section 209(1)(d) of the Actin respect of generation of electricity from wind power and are of theopinion that, prima facie, the prescribed accounts and records havebeen made and maintained. However, we have not made a detailedexamination of the records.

(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 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.

There were no dues on account of cess under Section 441A of theAct since the date from which the aforesaid section comes intoforce has not yet been notified by the Central Government.

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 material statutory dueswere in arrears as at 31 March 2011 for a period of more than sixmonths 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 and explanations given to us, thefollowing statutory dues have not been deposited by the Companyon 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 48.51 2006-2008 Additional Commissioner -Excise Act, Excise, Kolkata III1944

Uttar Pradesh Sales tax 1.32 1977-1978 Member, Tribunal TradeSales Tax Act, Tax, Bareilly1948 0.14 1996-1997

Uttar 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

Income-Tax Income-tax 39.65 2002-2003 Commissioner of IncomeAct, 1961 Tax (Appeal), Mumbai

365.23 2007-2008 Commissioner of IncomeTax (Appeal), Mumbai

313.36 2008-2009 Commissioner of IncomeTax (Appeal), Mumbai

(x) The accumulated losses of the Company at the end of the financial year areless than fifty percent of its net wroth. However, it has incurred cash losses inthe financial year as well as in the immediately preceding financial year.

24

WIMCO LIMITED

2. Further to our comments in the Annexure referred to above, we reportthat:

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, profit and loss account and cash flow statementdealt with by this report are in agreement with the books of account;

d) In our opinion, the balance sheet, profit and loss account and cashflow statement dealt with by this report comply with the AccountingStandards referred to in sub-section (3C) of Section 211of the Act;

e) On the basis of written representations received from directors of theCompany as at 31 March 2011 and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on31 March 2011 from being appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the Act; and

f) In our opinion, and to the best of our information and according 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 theCompany as at 31 March 2011;

ii) in the case of the profit and loss account, of the loss of the Companyfor the year ended on that date; and

iii) in the case of the cash flow statement, of the cash flows of theCompany for the year ended on that date.

For BSR & Co.Chartered Accountants

Firm’s Registration No. : 101248W

Bhavesh DhupeliaKolkata Partner3rd May 2011 Membership No. : 042070

(xi) The Company did not have any outstanding dues to any banker,financial institution or debentureholders 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 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.

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

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

(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.


Schedule 31st March, 2011 31st March, 2010(` in Lacs) (` in Lacs)

SOURCES OF FUNDS :Shareholders’ Funds :Share Capital 1 11,442.30 6,442.30Reserves & Surplus 2 5,132.03 5,678.10

16,574.33 12,120.40Loan Funds :Unsecured Loans 3 1,303.29 315.27

1,303.29 315.27

TOTAL 17,877.62 12,435.67APPLICATION OF FUNDS :

Fixed Assets : 4Gross Block 27,316.38 22,496.54Less : Accumulated Depreciation 11,190.57 10,680.26 Provision for Impairment 414.35 414.35Net Block 15,711.46 11,401.93Capital Work-In-Progress 104.99 210.71

15,816.45 11,612.64Investments 5 599.10 599.10Deferred Tax Asset (Net) 6 — —Current Assets, Loans & Advances :

Plantation Work-In-Progress 204.77 210.55Inventories 7 2,931.65 3,290.89Sundry Debtors 8 329.84 207.83Cash and Bank Balances 9 60.71 51.60Loans and Advances 10 2,836.28 2,561.88

6,363.25 6,322.75Less : Current Liabilities and Provisions : 11

Current Liabilities 5,390.30 5,882.82Provisions 342.98 216.00

5,733.28 6,098.82Net Current Assets 629.97 223.93Profit and Loss Account 7,367.07 1,402.03Less : Adjusted against General Reserve (As per contra in Schedule 2) 6,534.97 832.10 1,402.03 —

TOTAL 17,877.62 12,435.67

Notes to the Accounts 18Segment Information 19Related Party Disclosure 20Significant Accounting Policies 21

The Schedules referred to above and the annexed notes form an integral part of the Accounts.This is the Balance Sheet referred to in our report of even date.

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

Bhavesh DhupeliaPartnerMembership No. 042070

Kolkata, 3rd May 2011

For and on behalf of the Board

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


25

WIMCO LIMITED


Firm’s Registration No. : 101248W

Bhavesh DhupeliaKolkata Partner3rd May 2011 Membership No. : 042070



(` in Lacs) (` in Lacs)

INCOME

Sales and Services 12 20,857.78 22,954.32Less : Excise Duty 1,638.60 19,219.18 1,642.12 21,312.20Other Income 13 253.58 1,323.43

19,472.76 22,635.63EXPENDITURE

Cost of Trading Products Sold 1,888.20 1,080.86Cost of Seeds 7.34 5.45Raw Materials Consumed 11,476.53 13,187.00Decrease in Stocks 14 69.33 1,132.54Employee Costs 15 3,244.42 3,489.83Other Costs 16 4,436.24 4,883.87Interest 17 55.28 (15.18)Depreciation 4 514.00 495.21

21,691.34 24,259.58

(LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION (2,218.58) (1,623.95)

Exceptional Item ( See Note 4 of Schedule 18) : 3,746.46 —

(LOSS) BEFORE TAXATION (5,965.04) (1,623.95)

Income Tax Expenses — —

(LOSS) AFTER TAXATION (5,965.04) (1,623.95)

(Loss)/Profit Brought Forward (1,402.03) 221.92

Balance Carried to Balance Sheet (7,367.07) (1,402.03)

Earnings per share (`) - Basic and Diluted (See Note 13 of Schedule 18) (6.67) (2.06)Face Value (`) 1.00 1.00Notes to the Accounts 18Segment Information 19Related Party Disclosure 20Significant Accounting Policies 21

The Schedules referred to above and the annexed notes form an integral part of the Accounts.This is the Profit and Loss Account referred to in our report of even date.

26

WIMCO LIMITED








31st March, 2011 31st March, 2010(` in Lacs) (` in Lacs)

A. CASH FLOW FROM OPERATING ACTIVITIES :(LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION (2,218.58) (1,623.95)Adjustments for :

Depreciation 514.00 495.21Interest Expense 57.84 3.04Interest Income (2.56) (18.22)Provisions Written Back (60.10) (28.31)Profit/Loss on sale of fixed assets (net) 0.81 (917.50)Fixed assets/ Inventory written off 164.27 506.38Provision/Write off of Doubtful/Bad Debts, Advances & Deposits (Net) — 19.85

674.26 60.45

Operating Loss Before Working Capital Changes (1,544.32) (1,563.50)

Adjustments for :

Inventories 200.75 1,599.20Sundry Debtors (122.01) (12.83)Loans and Advances 90.22 328.88Current Liabilities and Provisions (305.04) 29.84

(136.08) 1,945.09Income Tax Paid (365.15) (198.53)

(2,045.56)

Exceptional Item (3,746.46)

NET CASH FLOW/(USED IN) FROM OPERATING ACTIVITIES (5,792.02) 183.06

B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (132.68) (362.93)Proceeds from sale of/advance against sale of Fixed Assets 1.20 405.05Interest Received 3.09 17.14

NET CASH FLOW FROM/(USED IN) INVESTING ACTIVITIES (128.39) 59.26

C. CASH FLOW FROM FINANCING ACTIVITIES :Proceeds from Borrowings :

Issue of Zero Coupon Preference Shares 5,000.00 — Cash Credit / Working Capital Demand Loan — (245.04)Loan from Subsidiary / Holding Company 988.02 0.65Interest Paid (Net) (58.50) (2.35)

NET CASH FLOW (USED IN)/FROM FINANCING ACTIVITIES 5,929.52 (246.74)

D. NET DECREASE IN CASH AND CASH EQUIVALENTS :(A+B+C) 9.11 (4.42)

E. RECONCILIATION :CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR (Refer Schedule 9) 51.60 56.02CASH AND CASH EQUIVALENTS - AT THE END OF THE YEAR (Refer Schedule 9)* 60.71 51.60

9.11 (4.42)*Includes ` 0.25 lacs in restricted bank account.

Notes :1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard -3

on Cash Flow Statement.2. The following have been considered under financing activities :

– Cash credit/working capital demand loan and other borrowings being source of finance.3. Proceeds from borrowings are shown net of repayments.4. Purchase of fixed assets are shown inclusive of movements in capital work-in-progress.5. Cash and cash equivalents represent cash and bank balances only.6. Previous year’s figures have been regrouped wherever necessary.

This is the Cash Flow Statement referred to in our report of even date.

27

WIMCO LIMITED








SCHEDULE 1 – SHARE CAPITAL As at As at31st March, 2011 31st March 2010

(` in Lacs) (` in Lacs)Authorised :35,00,00,000 (2009-10 : 55,00,00,000) Equity Shares of ` 1 (2009-10: ` 1) each(See Note (a) and (e) below) 3,500.00 5,500.00

113,00,000 (2009-10 : 93,00,000) Redeemable Preference Shares of ` 100 each(See Note (e) below) 11,300.00 9,300.00

14,800.00 14,800.00

Issued, Subscribed and Paid Up :9,42,30,000 (2009-10 : 9,42,30,000) Equity Shares of ` 1 each fully paid up(See Notes (a), (b) and (c) below) 942.30 942.30

50,00,000 (2009-10: NIL ) Zero Coupon Preference Shares of ` 100 each fullypaid ( See note (f) below ) 5,000.00 —

55,00,000 (2009-10 : 55,00,000) 5% Redeemable Cumulative Preference Sharesof ` 100 each fully paid up 5,500.00 5,500.00

11,442.30 6,442.30

Notes :

Of the above :(a) Pursuant to the provisions of Section 100 of the Companies Act, 1956, Article 8 of the Articles of Association of the Company and High Court order

dated February 11, 2005, the Issued, Subscribed and Paid Up Capital of the Company was reduced from ` 10,400 lacs to ` 5,720 lacs by reducingthe paid up value of Equity Shares by ` 9 per Equity Share and the amount so cancelled was utilised for reducing the accumulated losses as at March31, 2004 to the extent of ` 4,680 lacs.To give effect to the above, the composition of the Authorised Capital was modified from 5,50,00,000 EquityShares of ` 10 each to 55,00,00,000 Equity Shares of ` 1 each.

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

(c) 42,50,000 equity shares have been allotted as fully paid by way of bonus shares by capitalisation of reserves.(d) 9,12,38,170 (2009-10 : 9,12,38,170 ) equity shares of ` 1 each and 55,00,000 (2009-10: 55,00,000), 5% Redeemable Cumulative Preference shares

of ` 100 each are held by Russel Credit Limited, the holding company. Out of these, 30,00,000 preference shares were due for redemption on March15, 2011 but the same was extended upto March 15, 2012 with the consent of Russel Credit Limited. Further 25,00,000 preference shares are duefor redemption on March 15, 2012.

(e) Pursuant to the provision of Section 94 of the Companies Act, 1956, Article 3 of the Articles of Association of the Company, the Authorised Share Capitalof ` 148,00,00,000 comprising 55,00,00,000 Equity Shares of ` 1 each and 93,00,000 Redeemable Preference Shares of ` 100 each, is re-classifiedinto 35,00,00,000 (Thirty Five Crores) Equity shares of ` 1 (Rupee One) each and 1,13,00,000 (One Crore Thirteen Lakhs ) Redeemable Preferenceshares of ` 100 (Rupees One Hundred) each.

(f) 50,00,000, Zero coupon Preference Shares of ` 100 each, redeemable at 6% premium per annum were issued during the year to Russel Credit Limited.These shares shall be redeemable on or before 15th September, 2015.

SCHEDULE 2 – RESERVES AND SURPLUS As at As at31st March, 2011 31st March, 2010


Capital Reserve 29.96 29.96Capital Subsidy 14.93 14.93Securities Premium Account 0.27 0.27Less : Adjusted towards premium on Redeemable Preference

Shares ( See note 1(d) of Schedule 18 ) 0.27 — — 0.27Capital Redemption ReserveBalance at the beginning of the year 500.00 500.00Add : Transfer from General Reserve — 500.00 — 500.00

General Reserve as per last Balance Sheet 6,534.97 6,534.97Less : Profit and Loss Account (As Per contra) 6,534.97 — 1,402.03 5,132.94

Revaluation Reserve

Balance at the beginning of the year — —Add : Revaluation Reserve ( See note in Schedule 4 ) 4,587.14 4,587.14 — —

5,132.03 5,678.10SCHEDULE 3 – LOAN FUNDS

Unsecured Loans

Pavan Poplar Limited (See Note below) ( Subsidiary Company) 303.29 315.27Note: The said loan is interest free, with no stipulation as to repayment terms.Russell Credit Limited ( Holding Company ) 1,000.00 —

1,303.29 315.27

28

WIMCO LIMITED

SCHEDULE 5 – INVESTMENTS As at As at31st March, 2011 31st March, 2010

(` in Lacs) (` in Lacs)LONG TERM INVESTMENTS (UNQUOTED)(i) Government Securities (trade)

National Savings Certificates (pledged with various Mandi Samitis) 0.01 0.01(ii) Investments in wholly owned subsidiary companies

Pavan Poplar Limited55,10,004 (2009-10: 55,10,004) Equity Shares of ` 10 each, fully paid 599.06 599.06(including 6 Equity Shares held by nominees)Prag Agro Farm Limited38,00,020 (2009-10: 38,00,020) Equity Shares of ` 10 each, fully paid 381.90 381.90(including 6 Equity Shares held by nominees) 980.96 980.96

980.97 980.97Less : Provision for Diminution 381.90 381.90

599.07 599.07(iii) Other Investments (Non-trade)

Woodlands Hospital & Medical Research Centre Ltd.(Formerly known as The East India Clinic Limited)22, (2009-10: 22) 1/2% Debentures of ` 100 each fully paid 0.02 0.02Mirage Advertising and Marketing Limited12,488 (2009-10: 12,488) Equity Shares of ` 10 each fully paid 1.25 1.25Bilaspur Cane Development Corporation Limited100 (2009-10: 100) Equity Shares of ` 10 each 0.01 0.01

1.28 1.28Less : Provision for Diminution 1.25 1.25

0.03 0.03

599.10 599.10

Aggregate of Unquoted Investments - At Book Value 599.10 599.10

SCHEDULE 6 – DEFERRED TAX ASSETS (NET)

Deferred Tax Liability - Difference between book depreciation anddepreciation under the Income Tax Act, 1961. 459.95 442.52

Less : Deferred Tax Assets

- On Unabsorbed depreciation as per Income Tax Act, 1961* 577.45 623.62- On disallowance u/s 43B of the Income Tax Act, 1961* 216.35 36.84- On VRS Cost u/s 35 DDA of the Income Tax Act 1961* 764.44 —- On Provision for Doubtful Debts 156.59 156.59- On Long Term Capital Loss as per Income Tax Act.1961* 261.63 —- On Business Loss as per Income Tax Act, 1961* 1,874.18 1,372.65

3,850.64 2,189.69

459.95 442.52

*Deferred tax asset which is on account of unabsorbed depreciation/carry forwardlosses/disallowances has been recognised only to the extent of the deferred taxliabilities as this amount is considered to be virtually certain of realisation.

SCHEDULE 7 – INVENTORIES(See Note 3 of Schedule 18)

Stores and Spares 729.58 811.76Raw Materials * [including in transit ` 58.30 Lacs (2009 - 10 ` NIL)] 969.58 1,183.09Semi-finished goods * 236.85 500.75Finished Goods * 986.08 785.32Trading goods 9.56 9.97

* Net of obsolescence 2,931.65 3290.89

SCHEDULE 4 – FIXED ASSETS(` in Lacs)

29

WIMCO LIMITED

GROSS BLOCK ACCUMULATED DEPRECIATION / IMPAIRMENT NET BLOCKCost/Valuation Additions Revaluation Deduction/ Cost/Valuation As at Charge on account of Deductions/ As at As at As at

as at April 1, during the during the Adjustments as at March 31, April 1, 2010 Depreciation Impairment Held for Sale Adjustments March 31,2011 March 31, March 31,DESCRIPTION 2010 year year during the year 2011 for the during the 2011 2010

Depreciation Impairment year year Depreciation impairment

Intangible AssetsLeasehold Land 247.28 — — — 247.28 0.66 246.62 — — — — 0.66 246.62 — —Computer Software 288.54 1.30 — — 289.84 158.04 — 50.85 — — — 208.89 — 80.95 130.50Tangible AssetsFreehold Land 7,600.31 — 4,587.14 — 12,187.45 — 167.73 — — — — — 167.73 12,019.72 7,432.58Buildings 6,274.71 14.16 — 6,288.87 5,696.65 — 41.45 — — — 5,738.10 — 550.77 578.06Plant 1,117.47 0.96 — — 1,118.43 455.06 — 76.52 — — — 531.58 — 586.85 662.41Machinery 5,287.32 171.64 — — 5,458.96 3,252.11 — 263.76 — — — 3,515.87 — 1,943.09 2,035.21Factory Equipment 408.82 27.79 — — 436.61 264.06 — 12.61 — — — 276.67 — 159.94 144.76Furniture and Fittings/Computers/OfficeEquipment 1,117.83 22.55 — — 1,140.38 733.68 — 62.60 — — — 796.28 — 344.10 384.15Motor Cars, Lorries,Tractors and Launches 154.26 — — 5.70 148.56 120.00 — 6.21 — — 3.69 122.52 — 26.04 34.26

2010-11 22,496.54 238.40 4,587.14 5.70 27,316.38 10,680.26 414.35 514.00 — — 3.69 11,190.57 414.35 15,711.46 11,401.932009-10 22,825.97 996.08 — 1,325.51 22,496.54 10,516.63 414.35 495.21 — — 331.58 10,680.26 414.35

Capital Work in Progress [including capital advances ` Nil (2009-10: ` 6.06 Lacs)] 104.99 210.71Notes: Based on the valuation report submitted by the approved valuers the Company has revalued the land at Chennai by ` 4587.14 Lacs and the same has been transferred to revaluation reserved account. 15,816.45 11,612.64

SCHEDULE 8 – SUNDRY DEBTORS(Unsecured and considered good)

Considered Good (including debtors over six months old` 52.71 lacs (2009-10: ` 47.72 lacs)) 329.84 207.83

Considered Doubtful (over six months old) 471.43 471.43Less : Provision For Doubtful Debts 471.43 — 471.43 —

329.84 207.83SCHEDULE 9 – CASH AND BANK BALANCESCash in Hand [ including cheques : ` NIL ( 31.03.2010 : ` NIL ) ] 10.47 6.42Balances with Scheduled Banks in:Current Accounts * 49.46 44.40(includes ` 0.25 lacs (2009-10: ` 0.25 lacs) lying in 'Restricted' Bank Account)Deposit Accounts 0.78 0.78

50.24 45.18Cash Credit (including working capital demand loan) with Banksis secured by hypothecation of all stock in trade present and futureof the Company including raw materials, finished goods, tradingproducts and stock-in-process and present and future book debts,outstanding receivables,claims and bills.

60.71 51.60SCHEDULE 10 – LOANS AND ADVANCES(Unsecured, considered good - Unless otherwise stated)

Loans to Subsidiary Companies (See Note 5 of Schedule 18) 762.46 735.95

Sundry Advances and Claims Receivables

– Considered Good 328.94 431.12– Considered Doubtful 26.83 26.83

355.77 457.95

Less: Provision for Doubtful Advances 26.83 26.83

328.94 431.12

Prepaid Expenses 96.72 33.71Balance with Customs, Port Trust, Excise Authorities, etc 293.88 353.15

Deposits- Considered Good 254.94 256.54- Considered Doubtful 11.10 11.10

266.04 267.63Less : Provision for Doubtful Deposits 11.10 11.10

254.94 256.54

Advance Tax and Tax Deducted at Source (Net of Provision for Taxation 1,088.49 740.56` 446.77 lacs (2009-10: ` 429.56 lacs))Fringe Benefits Tax [(Net of Provision ` 49.80 lacs (2009-10: ` 49.80 lacs)] 10.85 10.85

2,836.28 2,561.88

SCHEDULE 11 – CURRENT LIABILITIES AND PROVISIONS

Current LiabilitiesAdvances Received from Customers 131.94 64.37Sundry Creditors 5,107.22 5,660.20(See Note 7 of Schedule 18)[Due to ultimate holding company ` 2606.97 lacs,(2009-10 : ` 3,016.56 lacs)]Dealers' Deposits 59.57 66.02Due to Subsidiaries 82.87 82.87Interest Accrued but not Due 8.70 9.36

5,390.30 5,882.82Provisions :Leave Encashment 85.82 110.90Diminution in value of machinery 7.94 7.94Gratuity 249.22 97.16

342.98 216.00

5,733.28 6,098.82

SCHEDULE 12 – SALES & SERVICESSales (Net of Sales Tax) [tax deducted at source` 365.11 lacs (2009-10: ` 215.28 lacs)] 20,782.04 22,932.34Technical Fees, Service Charges etc. [tax deducted at source` 0.74 lacs (2009-10: ` 0.07 lacs)] 75.74 21.99

20,857.78 22,954.32


As at As at31st March, 2011 31st March 2010


30

WIMCO LIMITED

SCHEDULE 13 – OTHER INCOME

Provisions/Liabilities Written Back As No Longer Required (Net) 60.10 28.31Insurance Claims 11.28 26.38Exchange Loss (Net) 3.51 —Income from Sale of Energy 17.88 26.07Profit on sale of fixed assets (net) — 917.50Other Receipts [includes sale of scrap and materials ` 95.15 lacs 160.81 325.17(2009-10 : ` 107.79 lacs)] and Lease/Rental Income ` NIL (2009-10 : ` 12.50 lacs)[tax deducted at source ` 5.15 lacs (2009-10 : ` 11.67 lacs)] 253.58 1,323.43SCHEDULE 14 – (INCREASE)/DECREASE IN STOCK

Plantation work in progress: Opening Stock 210.55 233.44Closing Stock 204.77 210.55

5.78 22.89Semi-finished Goods:

Opening Stock 500.75 500.15Closing Stock 236.85 500.75

263.90 (0.60)Finished and Trading Goods/Agriculture Produce:

Opening Stock 795.29 1,905.54Closing Stock 995.64 795.29

(200.35) 1,110.25

69.33 1,132.54SCHEDULE 15 – EMPLOYEE COSTS

Salaries, Wages and Bonus 2,462.97 2,741.15Contribution to Provident and Other Funds 505.42 455.37Staff and Workers’ Welfare Expenses 276.03 293.31

3,244.42 3,489.83SCHEDULE 16 – OTHER COSTSStores and Spares Consumed ( Including provision made for obsolete spares ) 671.24 763.86Power and Fuel 765.27 833.47Rent (See Note 14 of Schedule 18) 254.77 247.04Rates and Taxes 112.95 44.06Repairs and Maintenance: – Machinery 124.41 147.70– Buildings 37.44 58.88– Others 147.02 168.48Insurance 72.23 45.78Directors’ Sitting Fees 0.50 0.60Freight and Transport 661.64 601.24CFA’s/Stockists Costs 28.55 65.28Fixed assets/Inventory written off 129.36 506.38Provision/Write off of Doubtful/Bad Debts, Advances and Deposits (Net) — 19.85Travelling and Conveyance 201.32 210.78Export Commission 15.00 —Advertisement 7.38 22.99Sales Promotion 16.16 14.16Loss on sale of fixed assets (net) 0.81 —Exchange Loss (Net) — 2.66Plantation, Cultivation and Harvesting Charges 151.75 134.00Measurement and Extraction charges 22.49 16.04Commission to brokers 0.12 8.32Other Expenses 1,015.83 972.30

4,436.24 4,883.87

SCHEDULE 17 – INTEREST

Cash Credit (including Working Capital Demand Loan) — 1.87Others 57.84 1.17

57.84 3.04Less : Interest Income

On Income Tax Refund — 12.80Others 2.56 2.56 5.42 18.22

55.28 (15.18)




31

WIMCO LIMITED

SCHEDULE 18 - NOTES TO THE ACCOUNTS

1. Commitments:

(a) Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is ` Nil (2009-10: ` Nil).(b) The Company has issued letter of financial support to one of its subsidiary companies, viz., Prag Agro Farm Limited.(c) Arrears of dividend on redeemable cumulative preference shares aggregate ` 570.34 lacs (2009-10: ` 295.34 lacs) excluding dividend tax.(d) Premium on Redeemable preference shares remaining to be adjusted against profit of the Company ` 141.42 lacs.2. Contingencies:(a) Claims against the Company not acknowledged as debts ` 2,218.57 lacs (2009-10: ` 1,501.05 lacs). These comprise:� Excise Duty, Sales Tax and Indirect Taxes claims disputed by the Company relating to issues of applicability and classification, etc. aggregating ` 360.85

lacs (2009-10: ` 329.43 lacs)� Local authority taxes / Cess / Royalty on property, utilities, etc claims disputed by the Company relating to issues of applicability and determination

aggregating ` 342.09 lacs (2009-10: ` 341.08 lacs)� Third party claims arising from disputes relating to contracts aggregating to ` 400.51 lacs (2009-10: ` 382.01 lacs)� Other matters ` 1,115.12 lacs (2009-10: ` 448.52 lacs) [(includes Income Tax ` 1,048.72 lacs (2009-10: ` 370.13 lacs) excluding interest)](b) Test bonds/special valuation bonds aggregating ` 241 lacs (2009-10: ` 241 lacs) equivalent to CIF value of imports of certain raw materials in respect

of which additional liability of customs duty is not likely to exceed the above amount.(c) Claims have been filed by farmers in respect of disputes under the WIMCO NABARD Poplar Scheme amounting to ` 19.65 lacs (2009-10: ` 23.60 lacs).(d) The Company had issued ‘Legal Agreement - Undertaking’ in favour of the President of India acting through the Director General of Foreign Trade,

Ministry of Commerce, aggregating ` 1,362.62 lacs (2009-10: ` 1,362.62 lacs) and given declarations under the amended procedures of the ExportImport Policy 1992-1997 and issued bonds to the President of India acting through the Assistant Commissioner of Customs, Mumbai, aggregating` 235.35 lacs (2009-10: ` 235.35 lacs), where necessary formalities and entries have not been completed.

3. The Company suspended operations in its unit at Dhubri, Assam in an earlier year. Based on internal assessment as supported by a technical evaluationcarried out in the previous year, fixed assets (excluding land) aggregating ` 43.67 lacs (2009-10: ` 43.67 lacs) and inventories of stores and sparesaggregating ` 34.91 lacs (2009-10: ` 34.91 lacs) at Dhubri, were considered to be in good condition and usable. During the year, the Company hasprovided accelerated depreciation on these assets and made a provision for the stores & spares.

4. During the year, the Company has completed a voluntary separation scheme that has been accepted by all its workmen at its Chennai and Ambernathfactories. Consequently, the Safety Matches operations at these units stand suspended and related assets being released for alternate use. The Companyis evaluating various options for the utilization of its plant & machinery and inventory lying at these factories as also the alternate use for its land andbuilding at these locations in order to optimise value. The value of land and buildings at Chennai and Ambernath locations, amounting to ` 9,859.22lacs are now included under Unallocated Assets, while the restructuring costs incurred to get these assets released for alternate use have been includedunder Unallocated Expenditure in Schedule No.19 - Segment Information.

5. In respect of “Loans and Advances” from Subsidiary Company (Prag Agro Farm Limited), maximum amount due at any time during the year ` 762.46lacs (2009-10: ` 735.95 lacs).Interest free loans where no repayment schedule has been specified represents amounts advanced from time to time in previous years and currentyear to provide financial support to the subsidiary company.

6. The order passed by the District Magistrate authorising the State authorities to take possession of the land leased to Pavan Poplar Limited and PragAgro Farm Limited, subsidiaries of the Company, has been stayed by the order of the High Court. In the circumstances, no provision has been madefor advances to subsidiaries.

7. Micro and Medium scale business entities:There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the yearand as at 31st March 2011 and 31st March 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprise DevelopmentAct, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

8. Remuneration to Auditors2010-11 2009-10(` in lacs) (` in lacs)

Audit Fees 15.50 15.50Out-of -Pocket expenses 0.75 0.71

9. (a) Annual Licensed Capacity

Unit 2010-11 2009-10Matches Million boxes 5,000 5,000

(b) Annual Installed Capacity (As certified by the Management)

Unit 2010-11 2009-10Matches (on 3 shift basis,300 working days) Million boxes 5,000 5,000

(c) OPENING STOCK *31.03.2011 31.03.2010

Unit Quantity Amount Quantity Amount(` in lacs) (` in lacs)

Own ProductionMatches Million boxes 135 744.32 324 1,805.66Machines Numbers 7 35.71 6 51.46

ForestyWood (From own trees)# 5.29 —TradingMatches Million boxes 2 9.97 8 48.42Total 795.29 1,905.54

Plantation work in progressAgricultural Produce/ 7.75 9.38plants #Poplar ETPs # 98.15 96.60Poplar and Kadam trees Numbers 83,087 104.65 98,185 127.46Total 210.55 233.44

32

WIMCO LIMITED

(d) ACTUAL PRODUCTION

Unit 2010-11 2009-10Matches Million Boxes 2,675 3,344Machines Numbers 54 51

(e) COST OF TRADING PRODUCTS PURCHASED2010 - 2011 2009 - 2010


Matches Million boxes 352 1,888.20 195 1,010.98Machines Numbers — 2 10.13Total 1,888.20 1021.11

(f) COST OF PURCHASES-FORESTRY2010 - 2011 2009 - 2010


Seeds/Others N.A. N.A. 7.34 N.A. 5.45Wood (Traded) 0.00 0.00Total 7.34 5.45

(g) DETAILS OF SALES2010 - 2011 2009 - 2010


Own ProductionManufacturingMatches Million Boxes 2,634 16,357.36 3,533 19,421.83Machines Numbers 57 1,344.65 50 1,396.86

ForestryAgricultural 51.43 36.37produce/plants # $Poplar and Kadam 103.47 60.94wood (from own trees) # $ Poplar ETP’s Million 3.85 820.64 4.11 835.87

TradingMatches Million boxes 352 2,104.49 201 1,163.18Machines Numbers 0 2 17.29

20,782.04 22,932.34

(h) Closing Stock*31.03.2011 31.03.2010


Own ProductionMatches Million boxes 176 977.22 135 744.32Machines Numbers 4 8.86 7 35.71ForestryWood (from own trees) # — 5.29TradingMatches Million boxes 2 9.56 2 9.97Total 995.64 795.29Plantation work in progressAgricultural Produce/plants # 4.80 7.75Poplar ETPs # 114.67 98.15Poplar and Kadam trees Numbers 63,115 85.30 83,087 104.65Total 204.77 210.55

* Includes adjustments for shortage/excess and the effects of reduction of stock items to realisable value.# Due to the typical nature of the product, it is not possible to state quantities.$ Includes free issues and damages and is net of sales returns.

10. DETAILS OF RAW MATERIALS AND COMPONENTS CONSUMED*2010 - 2011 2009 - 2010


Wood CMHub 21,670 2,408.81 26,570 2,539.20Splints and Veneers Million 1,03,159 2,411.02 1,53,573 2,716.84Cardboard and Paper Tonnes 9,867 3,552.15 12,574 3,276.97Chemicals Tonnes 5,254 2,494.81 6,807 2,927.05Others 609.74 1,726.94

11,476.53 13,187.00

% %Imported 9 1,077.82 5 617.31Indigenous 91 10,398.71 95 12,569.69

11,476.53 13,187.00* includes shortages/excesses/damages due to flood

11. (a) Value of Imports calculated on C.I.F. basisRaw Material 819.20 555.00Spares Nil 33.80

(b) Expenditure in Foreign currencyTravelling 1.76 1.17

(c) Earnings in Foreign ExchangeExports of Goods calculated on FOB basis 277.50 39.66

33

WIMCO LIMITED


16. EMPLOYEE DEFINED BENEFITSIn 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 ` 27.58 lacs (2009-10; ` 27.50 lacs) has been recognised to the profit and loss accountfor the year.

Defined Benefit Plans

Gratuity Leave Encashment(Funded) (Unfunded)

2010-11 2009-10 2010-11 2009-10

Change in obligation during the year ended March 31, 2011

1. Obligation at the beginning of the year 1,066.52 951.89 110.90 94.212. Service Cost 41.93 57.51 32.09 30.203. Interest Cost 85.49 71.39 8.99 7.074. Actuarial (Gains)/Losses 143.14 99.87 37.68 5.355. Benefits payments (573.86) (114.14) (103.83) (25.92)

6. Obligations at the end of the year 763.22 1,066.53 85.83 110.90

Change in Plan Assets

1. Plan assets at the beginning of the year 969.37 956.07 — —2. Expected return on plan assets 88.58 86.05 — —3. Contribution by employers 32.00 39.54 — —4. Actual benefits paid (573.86) (114.14) — —5. Actuarial Gains/(Losses) (2.09) 1.85 — —

6. Plan assets at the end of the year 514.01 969.37 — —

Reconciliation of present value of the obligation and the fair value of the plan assets

1. Fair value of plan asset at the end of the year 514.01 969.37 — —2. Present value of the defined benefit obligations at the end of the period 763.22 1,066.53 85.83 110.90

3. Asset/(Liability) recognised in the balance sheet (249.21) (97.16) (85.83) (110.90)

Cost for the period

1. Service Cost 41.93 57.51 32.09 30.202. Interest Cost 85.49 71.39 8.99 7.073. Return on Plan Assets (88.58) (86.05) — —4. Actuarial (Gains)/Losses 143.14 99.87 37.68 5.355. Past Service Cost — — — —

Net Cost 181.98 142.72 78.76 42.62Investment 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 (88.58) (86.05) — —

Acturial Assumptions:

1. Discount Rate 8.00% 7.00% 8.00% 7.00%2 Salary escalation 4.00% 3.50% 4.00% 3.50%3 Expected return on plan assets 9.00% 9.00% — —

` in lacs

34

WIMCO LIMITED

12. UNHEDGED FOREIGN CURRENCY EXPOSURES NOT COVERED BY FORWARD CONTRACTS :

31.03.2011 31.03.2010Amount Amount Amount Amount(in lacs) (in lacs) (in lacs) (in lacs)

Sundry Debtors ` 0.98 ` 42.92 USD 0.03 ` 1.25Sundry Creditors — — — —

13. EARNINGS PER SHARE 2010-11 2009-10(Loss) after taxation (` in lacs) (5,965.04) (1,623.95)Arrears of preference dividend and includingPreference dividend tax (` in lacs) 320.67 320.67(Loss) attributable to equity shareholders (` in lacs) (6,285.61) (1,944.62)Weighted Average Number of equity shares 9,42,30,000 9,42,30,000Earnings per share (`) - Basic and Diluted (6.67) (2.06)Nominal value of an equity share (`) 1.00 1.00

14. LEASES: WHERE THE COMPANY IS A LESSEE/LICENSEE

The Company has taken various office and godown premises under operating lease on leave and license agreements. These are notnon-cancellable and range between 11 months and 3 years under leave and license or longer for other leases.

15. Research and development expenses incurred during the year as ascertained by the management, amounting to ` 21.35 lacs (2009-10: ` 17.53 Lacs)have been charged to appropriate heads of expenses.


There are no experience adjustments of Plan Assets/Obligations as at 31 March 2011.A. Amounts recognised as an expense and included in Schedule 17 - "Salaries, Wages and Bonus" ` 78.76 lacs (2009-10: ` 42.62 lacs) for leave encashment

and in "Contribution to Provident and Other Funds" ` 181.98 lacs (2009-10: ` 142.72 lacs) for gratuity.B. Basis used to determine expected rate of return on assets:

The Gratuity Scheme is invested in a Group-cum-Life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India. 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 expected return on each major class are not readily available. We understand that 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.

17. PROVIDENT FUND LIABILITYIn terms of the Guidance on implementing the revised AS 15, the provident fund set up by the Company is treated as a defined benefit plan sincethe Company has to meet the interest shortfall, if any. However, as at the year-end no shortfall remains unprovided for. As advised by an independentactuary, it is not practicable/feasible to actuarially value the provident fund liability.

18. PRIOR PERIOD COMPARATIVESThe previous year’s figures have been re-grouped or re-arranged as necessary to conform to the present year’s presentation.

SCHEDULE 19 – NOTES TO SEGMENT INFORMATION:(i) The business segment has been considered as the primary segment. The Company is organised into three main business segments: Match, Engineering

and Forestry.The segments have been identified and reported taking into account the nature of products and services, the differing risks and returns, the 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 havenot been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments for some units. TheCompany therefore believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities (including capitalexpenditure incurred during the period) other than debtors, since a meaningful segregation of the available data is onerous.

(iv) Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the above segments and amounts allocated ona reasonable basis.

For the year ended31st March, 2008

(` in Lacs)Net Asset/(Liability)recognized in Balance Sheet(including experienceadjustment impact)


(` in Lacs)


(` in Lacs)


(` in Lacs)

Gratuity LeaveEncashment Gratuity Leave

Encashment Gratuity LeaveEncashment Gratuity Leave

Encashment

1

2

3

Present Value of Defined

Benefit Obligation

Fair Value on Plan Assets

Status [Surplus/(Deficit)]

763.22 85.83 1,066.53 110.90 951.89 94.21 899.42 103.10

514.01 — 969.37 — 956.07 — 836.38 —

(249.21) (85.83) (97.16) (110.90) 4.18 (94.21) (63.04) (103.10)

35

WIMCO LIMITED

Match Engineering Forestry Unallocated Total2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10

RevenueExternal 18,478.00 20,585.02 1,404.25 1,436.14 975.53 933.17 20,857.78 22,954.33Inter-Segment — — — — 329.32 245.06 — — 329.32 245.06Total Revenue 18,478.00 20,585.02 1,404.25 1,436.14 1,304.85 1,178.23 — — 21,187.10 23,199.39Less: Eliminations on account of InterSegment Revenue — — — — (329.32) (245.06 ) — — (329.32) (245.06)Total Revenue 18,478.00 20,585.02 1,404.25 1,436.14 975.53 933.17 — — 20,857.78 22,954.33ResultSegment Result (2,201.19) (2,246.44 ) 173.84 230.58 736.45 683.74 — — (1,290.90) (1,332.12)Unallocated expenditure net ofunallocated income — — — — — — (872.39) (307.00 ) (872.39) (307.00)Operating Profit/(Loss) beforeexceptional items (2,201.19) (2,246.44 ) 173.84 230.58 736.45 683.74 (872.39) (307.00 ) (2,163.30) (1,639.12)Exceptional item(See Note 4 of Schedule 18) — — — — — — (3,746.46) — (3,746.46) —Operating Profit/(Loss) afterexceptional items (2,201.19) (2,246.44 ) 173.84 230.58 736.45 683.74 (4,618.86) (307.00 ) (5,909.76) (1,639.12)Interest Expenses — — — — — — (57.84) (3.05 ) (57.84) (3.05)Interest Income — — — — — — 2.56 18.22 2.56 18.22Net Profit/(Loss) (2,201.19) (2,246.44 ) 173.84 230.58 736.45 683.74 (4,674.14) (291.83 ) (5,965.04) (1,623.95)Other InformationSegment assets 8,944.15 14,872.71 681.16 717.47 1,935.02 2,133.60 11,218.48 810.70 22,778.81 18,534.48Segment liabilities 2,102.31 2,625.96 304.93 319.86 472.21 465.03 4,157.12 3,003.24 7,036.57 6,414.09Capital Expenditure 109.77 356.82 5.73 2.26 1.79 0.08 15.40 3.78 132.68 362.94Depreciation 406.07 375.16 8.65 9.16 3.33 3.70 95.95 107.19 514.00 495.21

Segment information for the year ended March 31, 2011(I) Information about Primay Business Segments: ` in lacs

3. Fixed Assets/Depreciation/Impairment(i) Fixed assets are stated at cost of acquisition less accumulated depreciation

and impairment loss except in case of certain Freehold Land which isshown at revalued amount and certain Buildings, which are shown atrevalued 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.

SCHEDULE 21 - SIGNIFICANT ACCOUNTING POLICIES1. Basis of Preparation of Financial Statements

The financial statements have been prepared and presented under thehistorical cost convention (except for fixed assets revalued in earlier years),on the accrual basis of accounting and in accordance with the provisionsof the Companies Act, 1956 and the accounting principles generallyaccepted in India and comply with the accounting standards (’AS’)prescribed in the Companies (Accounting Standards) Rules, 2006 issuedby the Central Government, in consultation with the National AdvisoryCommittee on Accounting Standards, to the extent applicable.

2. Use of Estimates

The 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. Actual results could differ from those estimates.Any revision to accounting estimates is recognised prospectively incurrent and future periods.


India Outside India Total2010-11 2009-10 2010-11 2009-10 2010-11 2009-10

Revenue by Geographical Segments:Sales 20,573.15 22,913.44 284.63 40.88 20,857.78 22,954.32Carrying Amount of Segment Assets 22,778.81 18,533.23 — 1.25 22,778.81 18,534.48Capital Expenditure 132.68 362.94 — — 132.68 362.94Unallocated income and expenditure relate mainly to the Corporate Office as also the Unallocated assets and Liabilities which include investments made centrally at the Corporate Office.

SCHEDULE 20 - RELATED PARTY DISCLOSURES :

1. Parties exercising control over the Company :

Related Party Relationship

ITC Limited Ultimate holding company

Russell Credit Limited Holds 96.82% of the equity share capital

2. Parties over whom Company exercises control :Subsidiary Companies (Wholly owned)Pavan Poplar Limited (PPL)Prag Agro Farm Limited (PAFL)

3. Other related Parties with whom the Company had transactions

Fellow subsidiariesITC Infotech India Limited

4. Directors of the Company :

Managing Director Rajeev Gopal (upto 29th December,2010)VM Rajasekharan (w.e.f. 7th January, 2011)

No remuneration is paid by the Company to the Managing director inaccordance with the terms of his appointment.

(II) Information about Secondary Business Segments

ULTIMATE HOLDING COMPANY HOLDING COMPANY SUBSIDIARY COMPANIES Fellow Subsidiaries Total

ITC Ltd. RUSSELL CREDIT Ltd. PPL PAFL ITC Infotech India Ltd.

2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10

Sale of goods & services 18,536.43 21,044.91 — — 5.35 5.12 4.88 14.80 — — 18,546.66 21,064.83

Sale of Fixed Asset — 1,400.00 — — — — — — — — — 1,400.00

Purchase of raw materialsand components 1,247.04 2,381.31 — — — — 306.78 307.79 — — 1,553.81 2,689.10

Purchase of Services 1.40 0.48 — — — — — — 98.22 84.09 99.62 84.57

Purchase of Fixed Assets — — — 124.19 — — — — — — — 124.19

Expenses Reimbursed 603.23 435.12 55.50 — 3.96 4.01 15.31 46.59 — — 678.00 485.72

Expenses Recovered 0.14 — — — 0.85 1.74 33.72 19.68 — — 34.71 21.42

Rent Received 51.48 63.98 — — — — — — — — 51.48 63.98

Loans & Advances givenduring the year — — — — — — 55.02 118.30 — — 55.02 118.30

Receipt towards Repayment ofLoans and advances given — — — — — — 28.51 53.05 — — 28.51 53.05

Outstanding Loans and Advances (Dr) — — — — — — 762.46 735.95 — — 762.46 735.95

Loans & Advances takenduring the year 127.10 400.00 4,000.00 — 1.33 15.50 — — — — 4,128.43 415.50

Repayment of loans & Advancesby the Company 330.61 1,400.00 3,000.00 — 13.30 12.00 — — — — 3,343.91 1,412.00

Unsecured Loans (Cr) — — 1,000.00 — 303.30 315.27 — — — — 1,303.30 315.27

Outstanding Receivables 87.06 259.82 — — — — — — — — 87.06 259.82

Outstanding Payables 126.95 505.79 — — 82.87 82.87 — — — — 209.82 588.66

Advance Payable 2,567.08 2,770.59 — — — — — — — — 2,567.08 2,770.59

Issue of Preference Shares — — 5,000.00 — — — — — — — 5,000.00 —

5. Transaction with related parties` in Lacs

36

WIMCO LIMITED

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.

IV. Application software, which is not an integral part of the relatedhardware, is shown as intangible asset and amortised on a straightline basis over its useful life, not exceeding 5 years, as determinedby the management.

V. In accordance with AS 28, where there is an indication of impairmentof 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 InvestmentsLong-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 andcondition. 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, noadjustment 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 realization/insurance claim for such trees is reduced from the total cost. Every year,plantation cost already incurred is compared with net realizable 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 matchwood ofsimilar 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 realizable 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 realizable value.

(iii) Fuel wood arising from poplar trees and lying in stock is valued at 75%of their net realizable value.

(iv) Livestock is valued at 75 % of their net realizable value.(v) The Company has considered an average yield of 0.22 cmh per tree

based on the evaluation carried out by the Company’s technical expertand further certified by an external technical expert.

6. Foreign Currency TransactionTransactions denominated in foreign currency are recorded at theexchange rate prevailing on the date of the transactions. Exchangedifferences arising on foreign exchange transactions settled during the

year are recognized in the profit and loss account of 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 theprofit and loss account.

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. ServiceIncome 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.

8. Taxes on Income

Income tax expense comprises current tax (i.e. amount of tax for theperiod determined in accordance with the income tax law), fringebenefits tax and deferred tax charge or credit (reflecting the tax effectsof timing differences between accounting income and taxable incomefor the period). 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 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)to be realized.

9. Employee Benefits:Short-term employee benefits

All 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 benefits

In 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 expensein the profit and loss account during the period in which the employeerenders the related service.In respect of other employees, the contributions made to Companymanaged provident fund are charged to profit and loss account asincurred. The interest rate payable by the trust to the beneficiariesevery year is being notified by the Government. The Company has anobligation to make good the shortfall, if any, between the return fromthe investments of the trust and the notified interest rate.

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 profit andloss account 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 value

37

WIMCO LIMITED


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE(Additional Information pursuant to Part IV of Schedule VI of The Act)

ANNEXURE

Application of FundsNet Fixed Assets Investments

Deferred Tax Net Current Assets

Miscellaneous Expenditure Accumulated Losses

IV. Performance of the Company: (Amount in ` Thousands)Turnover/Other Income Total Expenditure

+ – Profit / Loss Before Tax + – Profit / Loss After Tax


Earnings per Share in ` - Basic and Diluted Dividend rate (%)+ –

(Please tick appropriate box + for earnings, – for loss)

V. Generic Names of Three Principals Products / Services of the Company(as per monetary terms)

Item Code No. (ITC Code) Product Description



Balance Sheet Date

Date Month Year




III. Position of Mobilisation and Deployment of Funds(Amount in ` Thousands)


Sources of Funds



1 0 8 2

0 3

1 1

3 1 2 0 1 1

N I L N I L

N I L

2 3 6 1 0 9 0 2 3 6 1 0 9 0

1 1 4 4 2 3 0 5 1 3 2 0 3

1 5 8 1 6 4 5 5 9 9 1 0

N I L 6 2 9 9 7

N I L

1 9 4 7 2 7 6 2 1 6 9 1 3 4

5 9 6 5 0 4 5 9 6 5 0 4

6 . 6 7 N I L

3 6 0 5 0 0 0 1 1 0 M A T C H E S

M A C H I N E R Y8 4 2 2 3 0 0 08 4 2 2 3 0 0 0N I L 1 3 0 3 2 9

8 3 2 1 0

of 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 gains and losses are recognized immediately in the profit andloss account.

Other Long-term employment benefits:

Compensated 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 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.

10. Borrowing Costs

Borrowing 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 Contingencies

A 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. Leases

The 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 straight-line basis.

13. Earnings per share (EPS)

Basic earnings per share is computed by dividing the net profit for theyear 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 year attributableto the equity shareholders by the weighted average number of equityand equivalent dilutive equity shares outstanding during the year,except where the results would be anti-dilutive.

14. Research and development costs

Revenue expenditure incurred on different projects is charged toappropriate expense heads in the period incurred and amounts recoveredfrom the customer form part of the consultancy income.

Signatures to the Schedules forming part of the Balance Sheet and Profitand Loss Account and to the above notes.




38

WIMCO LIMITED




5 0 0 0 0 0

0 6 0 2 9 0 . 0 9 E N T I R ET R A N S P L A N T S

Place : KolkataDate : 3rd May 2011


1. Name of the Subsidiary Company PAVAN POPLAR LIMITED PRAG AGRO FARM LIMITED

2. Financial Year of the SubsidiaryCompany ended March 31, 2011 March 31, 2011

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, 2011 March 31, 2011ended (` in lacs) ` 4.43 ` 5.37

(ii) Profits/(Losses) for the previousfinancial years of the Subsidiarysince it became the Company’sSubsidiary (` in lacs) ` 135.17 ` (754.29)

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, 2011 March 31, 2011(` in lacs) Nil Nil

(ii) Profits for theprevious 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

39

WIMCO LIMITED



AuditorsThe Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting,and being eligible, offer themselves for re-appointment. Your Board hasrecommended 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 required under provisoto Section 383(1) of the Companies Act, 1956 is attached with this Report.Conservation of Energy, Technology Absorption, Foreign ExchangeEarnings and 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 AbsorptionDuring the year, there is no technology absorption 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 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.


Kolkata, 3rd May 2011 S. Limaye Chairman

DIRECTORS’ REPORTTO THE MEMBERS OF PRAG AGRO FARM LIMITEDYour Directors present their report for the financial year ended on 31stMarch 2011.Company PerformanceDuring the year, the Company’s turnover has declined to ` 3.77 croresfrom ` 3.92 crores as compared to last year. Consequently, current year’snet profit after tax has decreased to ` 5.37 lakhs as against a profit of` 6.21 lakhs in the last financial year.DividendIn view of accumulated losses, your Directors are unable to recommendany dividend for the year under review.DirectorsMr. S. Bhatia resigned as Director of the Company on 9th July 2010. YourDirectors would like to place on record their appreciation for the contributionmade by him during his tenure with the Company.Mr. Dipes Chakraborti was appointed Director of the Company with effectfrom 25th June 2010.Mr. S. Limaye will retire by rotation at the ensuing Annual General Meetingof the Company and, being eligible, offers himself for re-election. YourBoard 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 andjudgments 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 2011 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.

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, 2011. 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 seven times respectively on 5thMay, 2010, 25th June, 2010, 1st July, 2010, 9th July, 2010, 20th October,2010, 15th December, 2010 and 31st March, 2011 in respect of whichmeetings proper notices were given and the proceedings were properlyrecorded and signed including the circular resolutions passed in theMinutes 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, 2010 was held on 9th September, 2010 after giving due noticeto the members of the Company and the resolutions passed thereatwere 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 interim

dividend during the financial year under review.(iii) The Company was not required to post warrants to any member

of the company as no dividend was declared during 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 and theappointment of additional director and additional director as directorhas been duly made.

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;therefore the 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. The Company has not made any borrowings during the financial yearunder review.

25. The Company has not made any loans or advances or given guaranteesor provided securities to other bodies corporate and consequently noentries have been made in the register kept for the purpose.

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 with

41


ANNEXURE TO THE AUDITORS’ REPORT – 31 MARCH 2011(Referred to in our report of even date)(i) (a) The Company has maintained proper records showing full particulars,

including quantitative details and situation of fixed assets.(b) The Company has a regular programme of physical verification of

its fixed assets by which all fixed assets are verified annually. In 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.

(c) The Company has not disposed off any fixed assets during the year.(ii) (a) The inventory has been physically verified by the management

during the year. ln the opinion, the inventory of such 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) of theOrder 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 purchases, 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 audit.

(v) ln 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 under Section301 of the Act.

(vi) The Company has not accepted any deposits from the public.(vii) In our opinion, the Company has an internal audit system

commensurate with the size and nature of its business.(viii) The Central Government has not prescribed the maintenance of cost

records under Section 209(1)(d) of the Act for any of the productsmanufactured/services rendered by the Company.

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

AUDITORS’ REPORTTO THE MEMBERS OF PRAG AGRO FARM LIMITEDWe have audited the attached balance sheet of Prag Agro Farm Limited(’the Company’) as at 31 March, 2011 and the related profit and lossaccount and the cash flow statement for the year ended on that date,annexed thereto. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion onthese financial statements 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 ofsub-section (4A) of Section 227 of the Companies Act, 1956,(’the Act’), we enclose in the Annexure, a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.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 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;

respect to share capital of the company during the financial year underreview.

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 has

(c) the balance sheet, profit and loss account and cash flow statementdealt with by this report are in agreement with the books of account;

(d) in our opinion, the balance sheet, profit and loss account 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 of 31 March, 2011 and taken on record by the Boardof Directors, we report that none of the directors is disqualified as on31 March, 2011 from being appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the Act; and

(f) in our opinion, and to the best of our information and according 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, 2011;(ii) in the case of the profit and loss account, of the profit of the

Company for the year ended on that date; and(iii) in the case of the cash flow statement, of the cash flows of the

Company for the year ended on that date.


Firm’s Registration No: 101248WBhavesh Dhupelia

PartnerKolkata, 3rd May 2011 Membership No: 042070

not 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, 3rd May 2011 CP Number: 5168

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, 2011.1. Form 23AC/ Form 23ACA alongwith Balance Sheet and other required

documents u/s 220 of the Companies Act, 1956 for the year 2010 filedon 30.09.2010 with normal filing fees.

2. Form 20B alongwith Schedule V u/s 159 of the Companies Act, 1956for the year 2010 filed on 03.11.2010 with normal filing fees.

3. Form 66 alongwith Compliance Certificate u/s 383A of the CompaniesAct, 1956 for the year 2010 filed on 29.09.2010 with normalfiling fees.

4. Form 32 u/s 303(2) of the Companies Act, 1956 for Resignation ofDirector filed on 03.06.2010 with additional filing fees.

5. Form 32 u/s 303(2) and 264(2) of the Companies Act, 1956 forAppointment of Additional Director and Resignation of Director filedon 23.07.2010 with normal filing fees.

6. Form 32 u/s 303(2) of the Companies Act, 1956 for Appointment ofAdditional Director as Director filed on 24.09.2010 with normalfiling fees.

Name of CP Holder: Anchal R. JainChennai, 3rd May 2011 CP Number: 5168

BALANCE SHEET AS AT 31ST MARCH, 2011Schedule As at As at

31st March, 2011 31st March, 2010

(`) (`)SOURCES OF FUNDS

Shareholders’ FundsShare Capital 1 3,80,00,200 3,80,00,200

Loan FundsUnsecured Loans 2 7,62,46,057 7,35,95,020

Total 11,42,46,257 11,15,95,220Application of FundsFixed Assets 3

Gross Block 10,19,53,195 10,19,53,195Less : Accumulated Depreciation 2,73,75,561 2,62,21,261

Provision for Impairment 5,10,01,947 5,10,01,947

Net Block 2,35,75,687 2,47,29,987

Investments 4 32,000 27,000

Current Assets, Loans and AdvancesInventories 5 99,06,202 93,51,100Sundry Debtors 6 7,10,108 73,900Cash and Bank Balances 7 18,499 5,937Loans and Advances 8 53,81,196 26,65,739

1,60,16,005 1,20,96,676

Less : Current Liabilities and Provisions 9Current Liabilities 2,69,754 6,87,351

2,69,754 6,87,351Net Current Assets 1,57,46,251 1,14,09,325Profit and Loss Account 7,48,92,319 7,54,28,908Total 11,42,46,257 11,15,95,220

Notes to the Accounts 12Related Party Disclosure 13Significant Accounting Policies 14

The Schedules referred to above and the annexed notes form an integral part of this Balance Sheet.This is the Balance Sheet referred to in our report of even date.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248W For and on behalf of the Board

Bhavesh DhupeliaPartner S K Sipani DirectorMembership Number: 042070 S Limaye Director

Kolkata, 3rd May 2011 Kolkata, 3rd May 2011

on 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 income-tax and othermaterial statutory dues have been regularly deposited during theyear by the Company with the appropriate authorities. As explainedto us, 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.There are no dues on account of Cess under Section 441A of theAct since the date from which the aforesaid section comes intoforce has not yet been notified by the Central Government.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, 2011 fora period of more than six months from the date they becamepayable.

(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 year inexcess 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 debenture holders during the year.

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

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

given to us, the Company is not a chit fund or a nidhi/mutual benefitfund/society.

(xiv) In our opinion and according to the information and explanationsgiven to us, the Company is not dealing in or trading in shares,securities, debentures and other investments.

(xv) According to the information and explanations given to us, 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 during the year.(xvii) According to the information and explanations given to us, and on

overall examination of the balance sheet of the Company, we are ofthe opinion that the funds raised on short term basis have not beenused for long term investment.

(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 the year.(xx) The Company has not raised any money by public issues.(xxi) According to the information and explanations given to us, no fraud

on or by the Company has been noticed or reported during thecourse of our audit.


Firm’s Registration No: 101248WBhavesh Dhupelia

PartnerKolkata, 3rd May 2011 Membership No: 042070

42



31st March, 2011 31st March, 2010(`) (`) (`)

A. CASH FLOW FROM OPERATING ACTIVITIES :Profit before Taxation 6,59,847 7,33,495Adjustments for :

Interest Income (2,435) (1,879)Profit on sale of fixed assets — (16,040)Depreciation 11,54,300 11,54,300

Operating Profit Before Working Capital Changes 18,11,712 18,69,876Adjustments for :

Loans and Advances (21,21,896) (14,64,874)Debtors (6,36,208) (73,900)Inventories (5,55,102) (41,16,186)Current Liabilities (4,17,597) (11,74,728)

(37,30,803) (68,29,688)Direct Taxes Paid (7,14,384) (3,90,652)NET CASH FLOW USED IN OPERATING ACTIVITIES (26,33,476) (53,50,464)

B. CASH FLOW FROM INVESTING ACTIVITIESInvestment (5,000) (5,000)

NET CASH FLOW USED IN INVESTING ACTIVITIES (5,000) (5,000)C. CASH FLOW FROM FINANCING ACTIVITIES

Loans (repaid to)/taken from Holding Company 26,51,037 53,13,720NET CASH FLOW FROM FINANCING ACTIVITIES 26,51,037 53,13,720

D. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS : (A+B+C) 12,561 (25,704)E. RECONCILIATION

CASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEAR 5,937 31,641 CASH AND CASH EQUIVALENTS- AT THE END OF THE YEAR 18,499 5,937

12,562 (25,705)Notes :1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting Standard - 3 on Cash Flow Statement.2. Cash and cash equivalents represent cash and bank balances only.3. Previous year’s figures have been regrouped wherever necessary.This is the Cash Flow Statement referred to in our report of even date.

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 DirectorKolkata, 3rd May 2011 Kolkata, 3rd May 2011



(`) (`)INCOME

Sales and services 3,77,00,687 3,92,27,646Other Income 10 1,47,902 1,879

3,78,48,589 3,92,29,525EXPENDITURE(Increase)/Decrease in Stock (5,55,102) (41,16,186)Purchases 2,94,23,259 3,26,67,944Other Costs 11 71,66,285 87,89,971Depreciation/Amortisation 3 11,54,300 11,54,300TOTAL 3,71,88,742 3,84,96,029

Profitbefore taxation 6,59,847 7,33,495Less: Provision for taxation

Income Tax 1,23,258 1,12,915

Profit after taxation 5,36,589 6,20,580

Profit and Loss Account Balance Brought Forward (7,54,28,908) (7,60,49,488)

Balance Carried Forward (7,48,92,319) (7,54,28,908)

Earnings per share - Basic and Diluted (Refer Note 4 of Schedule 12) 0.14 0.16Face Value (`) 10 10Notes to the Accounts 12Related Party Disclosure 13Significant accounting policies 14The Schedules referred to above and the annexed notes form an integral part of this Profit and Loss Account.This is the Profit and Loss Account referred to in our report of even date.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248W For and on behalf of the Board

Bhavesh DhupeliaPartner S K Sipani DirectorMembership Number: 042070 S Limaye Director

Kolkata, 3rd May 2011 Kolkata, 3rd May 2011

43



(`) (`)SCHEDULE 10 - OTHER INCOME

Sale of scrap 85,142 —Insurance claim 60,325 —Interest Income 2,435 1,879

1,47,902 1,879SCHEDULE 11 - OTHER COSTS

Plantation and Cultivation 37,67,919 47,16,814Deputation Charges 12,18,507 13,80,698Travelling and Conveyance 1,15,813 1,94,079Power and Fuel 9,84,162 12,25,787Rent 8,197 8,197Rates and Taxes 50,332 39,292Freight outward 99,521 1,41,563Legal and Professional fees (includes prioryear expenses : ` 2,03,276) 3,30,348 5,32,327Insurance 34,865 12,011Auditors’ Remuneration– Audit Fees 1,00,000 1,00,000– Out of pocket expenses 4,940 5,120Repairs and Maintenance– Building 20,638 16,024– Plant and Machinery 1,09,699 1,30,321– Others 1,53,833 1,24,186Communication 29,372 35,475Printing and Stationery 16,572 22,044Bank Charges 81,938 42,724Tools Consumed 3,265 5,120Other Expenses 36,364 58,189

71,66,285 87,89,971

SCHEDULES TO THE ACCOUNTSAs at As at

31st March, 2011 31st March, 2010(`) (`)

SCHEDULE 1 - SHARE CAPITAL

Authorised :40,00,000 (2009-10: 40,00,000) Equity Shares of ` 10 Each 4,00,00,000 4,00,00,000

Issued, Subscribed and Paid-up :

38,00,020 (2009-10: 38,00,020) Equity Shares of ` 10 each fully paid. 3,80,00,200 3,80,00,2003,80,00,200 3,80,00,200

Notes:– the above includes 38,00,000 (2009-10: 38,00,000) fully paid

Equity Shares of ` 10 each issued for consideration other thancash to Wimco Limited, the Holding Company.

– All the above Equity Shares are held byWimco Limited, the holding Companyand its Nominees.

SCHEDULE 2 - UNSECURED LOAN

Wimco Limited (Holding Company) 7,62,46,057 7,35,95,020

7,62,46,057 7,35,95,020

(Above loans are interest free, with no stipulation as to repayment terms)

(`)SCHEDULE 3 - FIXED ASSETS

Gross Block Accumulated Depreciation/Impairment NET BLOCKUp to 01.04.2010 Up to 31.3.2011

As at Additions Deduction As at Charge Deduction / As at As atDescription 01.04.2010 during the during 31.03.2011 Depreciation Impairment for the year Adjustment Depreciation Impairment 31.03.2011 31.03.2010

year the year During the Year

Intangible AssetLeasehold Land 10,16,90,195 — — 10,16,90,195 2,61,08,828 5,10,01,947 11,43,224 — 2,72,52,052 5,10,01,947 2,34,36,196 2,45,79,420Tangible AssetBuilding 1,79,500 — — 1,79,500 53,135 — 5,880 — 59,015 — 1,20,485 1,26,365Plant and Machinery 45,500 — — 45,500 28,249 — 1,236 — 29,485 — 16,015 17,251Furniture and Fixture 1,500 — — 1,500 1,500 — — — 1,500 — — —Vehicle 36,500 — — 36,500 29,549 — 3,960 — 33,509 — 2,991 6,951Total 10,19,53,195 — — 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 2,47,29,987

2009-10 10,19,68,195 — — 10,19,53,195 2,50,66,961 5,10,01,947 11,54,300 — 2,62,21,261 5,10,01,947 2,47,29,987


(`) (`)SCHEDULE 4 - INVESTMENTS

National Saving Certificates 31,000 26,000Kissan Vikas Patra 1,000 1,000(lodged with the local authorities) 32,000 27,000

SCHEDULE 5 - INVENTORIESSemi Finished Produce 99,06,202 79,41,276Finished Goods/Produce — 14,09,824

99,06,202 93,51,100SCHEDULE 6 - SUNDRY DEBTORS

Unsecured - Considered GoodOver six months — —Debts outstanding for less than six months 7,10,108 73,900

7,10,108 73,900SCHEDULE 7 - CASH AND BANK BALANCES

Cash in Hand 12,091 2,947Balance with a Scheduled Bank– in Current Account 6,408 2,990

18,499 5,937SCHEDULE 8 - LOANS AND ADVANCES

Advances recoverable in Cash or in Kind or for value to be received 42,48,146 17,80,152Advance tax [net of provision for tax` 347,602 (2009-10 : ` 224,344)] 9,45,094 3,53,968Advance Fringe Benefit Tax[net of provision for tax ` 63,497 (2009-10 : ` 63,497)] 2,496 2,496Prepaid Expenses 8,525 8,040Interest accrued on investment 5,439 3,004Advance to suppliers 1,71,496 5,18,079

53,81,196 26,65,739SCHEDULE 9 - CURRENT LIABILITIES AND PROVISIONS

Current LiabilitiesSundry Creditors 2,01,888 6,16,755Advance received from customers 50,000 50,000Other Liabilities 17,866 20,596

2,69,754 6,87,351

44


SCHEDULE 14 - SIGNIFICANT ACCOUNTING POLICIES

1. Basis of AccountingThe financial statements have been prepared and presented underthe historical cost convention on the accrual basis of accountingand in accordance with provisions of the Companies Act, 1956,and the accounting principles generally accepted in India andcomply with accounting standards (’AS’) prescribed in the Companies(Accounting Standards) Rules, 2006, issued by the CentralGovernment, in consultation with the National Advisory Committeeon Accounting Standards, to the extent applicable.The accumulated losses of the Company as at March 31, 2011 haveresulted in erosion of Company’s net worth. At the year-end, theCompany’s current assets exceeded its current liabilities by` 1,57,46,251 (2009-10: ` 1,14,09,325) and its total liabilitiesexceeded its current assets by ` 6,04,99,806 (2009-10:` 6,21,85,695). These accounts have been prepared on a going

7. 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, 2011 and March 31, 2010. Thisinformation as required to be disclosed under the Micro, Small andMedium Enterprises Development Act, 2006 has been determined tothe extent such parties have been identified on the basis of informationavailable with the Company.

8. Information with regard to other matters specified in paragraphs 4-A,4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 iseither nil or not applicable to the Company for the current as well asprevious financial year.

9. Previous year's figures have been re-grouped / re-arranged wherevernecessary to conform to current year’s presentation.


SCHEDULE 12 - NOTES TO THE ACCOUNTS

1. Pursuant to the amalgamation of the holding company, WIMCO SeedlingsLimited (WSL) with WIMCO Limited, all amounts recoverable/payableby WSL to the Company stand transferred to WIMCO Limited with effectfrom 1 April 2007. Consequent to the merger, the Company has becomea wholly owned subsidiary of WIMCO Limited.

2. The Company is yet to obtain possession of certain portion of leaseholdland since the demarcation in the land revenue records is yet to becompleted, and additionally is in dispute, for which Court proceedingsare in progress.

3. The order passed by the District Magistrate authorizing the State revenueauthorities to take possession of the land leased to the Company hasbeen stayed by the Order of the High Court.

4. Earnings per share :

The computation of earnings per share is set out below:

2010-11 2009-10

Net Profit attributable to equityshareholders (A) (`) 5,36,589 6,20,580Weighted Average number of equity sharesoutstanding during the year (B) (`) 38,00,020 38,00,020Earnings per Share of face value ` 10each basic and diluted [(A)/(B)] 0.14 0.16

5. Segment information

The Company’s activities involve, predominantly, business of growingand selling agricultural produce and trading of poplar wood in India,which is considered to be a single business segment since these aresubject to similar risks and returns. Further, the business is carried outin India and product sold primarily in India, and hence, there are noreportable geographical segments. Hence, the financial statements arereflective of the information required by Accounting Standard 17-Segment Reporting.

Particulars Unit 2010-11 2009-10Quantity ` Quantity `

(a) OPENING STOCKSemi Finished- Agriculture produce * — 79,41,276 — 51,68,334Finished stock- Agriculture produce * — 48,330 — 66,580– Wood CMH 172.3167 13,61,494 — —

(b) PURCHASE- Wood * — 2,82,48,793 — 3,07,15,712- Seeds * — 6,86,107 — 4,72,644- Poplar ETPs Nos 21,233 4,88,359 67,254 14,79,588

(c) SALES- Wheat Qtls 3,253 41,11,307 2,821 34,39,189- Paddy Qtls 211 1,89,493 2,217 18,40,747- Sugarcane Qtls 8,229 17,36,943 12,349 27,61,776- Wood * — 3,00,76,071 — 3,01,75,476- Others * — 15,86,873 — 10,10,458

(d) CLOSING STOCKSemi Finished- Agriculture produce * — 99,06,202 — 79,41,276Finished stock- Wood CMH — — 172.3167 13,61,494- Agriculture produce * — — 48,330

*Due to typical nature of the product, it is not possible to state quantities.

6. Quantitative details :

concern basis as the Company has received a letter of financialsupport from WIMCO Limited (Holding Company).

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 liabilitieson the date of the financial statements. Actual results could differfrom those estimates. Any revision to accounting estimates isrecognized prospectively in current and future periods.

3. Fixed Assets/Amortisation/Impairment/DepreciationFixed Assets are stated at cost of acquisition less accumulateddepreciation and impairment loss. Cost includes all expensesattributable to the acquisition and development of the assets.

SCHEDULE 13 - RELATED PARTY DISCLOSURES

1. Parties exercising control over the Company :ITC Limited - Ultimate Holding Company #Russell Credit Limited - Holding Company of WIMCO Limited #WIMCO Limited - Holding Company

# No transaction during the years 2010 -11 and 2009-10.

2. Other related parties with whom the Company had transactionsPavan Poplar Limited (PPL) - Fellow subsidiary

3. Transaction between related parties

HOLDING COMPANY FELLOW SUBSIDIARY COMPANY TOTAL

Wimco Limited PPL

2010-11 2009-10 2010-11 2009-10 2010-11 2009-10

Purchases 4,88,359 14,79,588 4,01,403 1,33,300 8,89,762 16,12,888Sales 3,06,77,595 3,07,78,982 82,250 16,450 3,07,59,845 3,07,95,432Expenses Reimbursed 38,60,101 19,68,371 26,78,922 30,19,498 60,50,664 49,87,869Expenses Recovered 15,31,412 46,59,459 20,266 4,277 15,51,678 46,63,736Loans taken 55,01,714 1,18,29,924 — — 55,01,714 1,18,29,924Loan repayment 28,50,677 53,04,704 — — 28,50,677 53,04,704Loans given — — — — — —Receipts towardsloan repayments — — — — — —Outstanding unsecuredloans 7,62,46,057 7,35,95,020 — — 7,62,46,057 7,35,95,020

Amounts in (`)

PARTICULARS

45


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-line basis over the period of lease.Assets individually costing ` 5,000 or less are fully depreciated inthe year of acquisition.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 amortisedon a straight-line basis over the remaining period of the lease.In accordance with AS 28, where there is an indication of impairmentof 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 asset (orwhere applicable, that of the cash generating unit to which theasset belongs) is estimated as the higher of its net selling price andits value in use. An impairment loss is recognized whenever thecarrying amount of an asset or a cash-generating unit exceeds itsrecoverable amount. Impairment loss is recognized in the profitand loss account or against revaluation surplus, where applicable.

4. Inventories(i) In valuing poplar trees included under semi finished products,

no adjustment is made to the total cost of trees on account ofundeveloped / diseased trees, being normal loss during theperiod of maturity of plantation (based on a technical estimate)except that realization/insurance claim for such trees is reducedfrom the total cost. Every year, plantation cost already incurredis compared with net realizable value which is determined onthe basis of estimated selling price less estimated cost likely tobe incurred in future for bringing the plantation to maturityand the cost necessarily to be incurred in order to make sale.Cost includes all direct and indirect expenses in respect of thepoplar plantation.Further, 75% of net standard realizable value of intercropping,waste, etc is reduced from the above cost because entire farmcost is first added to the cost of plantation.

(ii) Agriculture produce/ standing crops and plants are valued at75% of their net realizable value.

5. Revenue recognition Revenue from sale of goods is recognized on transfer of all significant

risks and rewards of ownership to the buyer.6. Contingencies and Provisions

A provision is created where there is a present obligation as a resultof a past event that probably requires an outflow of resources anda reliable estimate can be made of the amount of the obligationA contingent liability is disclosed when there is a possible or apresent obligation that may, but probably will not, require anoutflow of resources. Where there is a possible or a present obligationand the likelihood of outflow of resources is remote, no provisionor disclosure is made.

7. TaxationIncome - tax expense comprises current tax and deferred tax chargeor credit.Current tax is determined in accordance with the IncomeTax Act 1961. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised usingthe tax rates and tax laws that have been enacted or substantivelyenacted by the balance sheet date. Deferred tax assets are recognisedonly to the extent there is reasonable certainty that the assets canbe realised in future; however, where there is unabsorbed depreciationor carried forward loss under taxation laws, deferred tax assets arerecognised only if there is a virtual certainty of realisation of suchassets. Deferred tax assets are reviewed as at each balance sheetdate and written down or written-up to reflect the amount that isreasonably/virtually certain (as the case may be) to be realised. Asthe Company is engaged in growing and selling agricultural produce,such income is exempt from income tax. Accordingly, there are nodeferred tax assets/ liabilities arising there from.

8. Earnings per share (‘EPS’)The basic earnings per share (’EPS’) is computed by dividing thenet profit attributable to the equity shareholders for the year 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 year by the weightedaverage number of equity and equivalent dilutive equity sharesoutstanding during the year, except where the results would beanti-dilutive.


S. K. Sipani DirectorS. Limaye Director


46


I. Registration Details:


Balance Sheet Date

Date Month Year

II. Capital raised during the year: (Amount in ` Thousands)





Sources of Funds

Paid up Capital Reserves and Surplus


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE(Additional Information pursuant to Part IV of Schedule VI to The Act)




Accumulated Losses

IV. Performance of the Company: (Amount in ` Thousands)

Turnover (including other income) Total Expenditure

Profit / Loss Before Tax Profit / Loss After Tax



(Please tick appropriate box + for Earnings, – for loss)

V. Generic Names of Three Principal Products/Services of the Company:(As per monetary terms)

Item Code No. (ITC Code)

Product Description

N I L N I L

N I L N I L

1 1 4 5 1 6 1 1 4 5 1 6

3 8 0 0 0 N I L

2 3 5 7 6 3 2

1 5 7 4 6 N I L3 1 0 3

5 3 7� + − + −

� 6 6 0

3 7 8 4 9 3 7 1 8 9

7 6 2 4 6N I LN O TA P P L I C A B L E

N I L + −� 0 . 1 4

2 0 1 1

1 1

7 4 9 3 6

ANNEXURE

N O TA P P L I C A B L E

1 2 8 8 4 8

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248WBhavesh DhupeliaPartnerMembership Number: 042070Kolkata, 3rd May 2011

Audit Committee

The Audit Committee comprises of M/s. S. Sipani, S. Limaye and D. Chakraborti. Auditors

The Auditors, M/s BSR & Co., retire at the ensuing Annual General Meeting,and being eligible, offer themselves for re-appointment. Your Board hasrecommended 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 ofSection 217(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 associates andthe dedication and hard work of its employees.

For and on behalf of the BoardKolkata, 3rd May 2011 S. Limaye Chairman

DIRECTORS’ REPORTTO THE MEMBERS OF PAVAN POPLAR LIMITEDYour Directors present their Report and Accounts for the financial year ended on31st March 2011.Company PerformanceThe Company’s turnover increased to ` 82.18 lakhs as against last year’s turnoverof ` 68.73 lakhs. Consequently, the Company has earned a net profit of ` 4.43lakhs as against a net loss of ` 1.80 lakhs incurred in the last financial year.DividendYour Directors are unable to recommend dividend.DirectorsMr. S. Bhatia resigned as Director of the Company on 9th July 2010. Your Directorswould like to place on record their appreciation for the contribution made byhim during his tenure with the Company.Mr. Dipes Chakraborti was appointed Director of the Company with effect from25th June 2010.Mr. S. Limaye will retire by rotation at the ensuing Annual General Meeting ofthe Company and, being eligible, offers 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 judgmentsand 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 2011 and of theprofits 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.

(c) the balance sheet, profit and loss account and cash flow statementdealt with by this report are in agreement with the books of account;

(d) in our opinion, the balance sheet, profit and loss account 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 directorsof the Company as of 31 March 2011 and taken on record by theBoard of Directors, we report that none of the directors is disqualifiedas on 31 March 2011 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 2011;(ii) in the case of the profit and loss account, of the profit of the

Company for the year ended on that date; and(iii) in the case of the cash flow statement, of the cash flows of the

Company for the year ended on that dateFor BSR & Co.

Chartered AccountantsFirm’s Registration No: 101248W

Bhavesh DhupeliaPartner

Kolkata, 3rd May 2011 Membership No: 042070

AUDITORS’ REPORTTO THE MEMBERS OF PAVAN POPLAR LIMITED

We have audited the attached balance sheet of Pavan Poplar Limited(’the Company’) as at 31 March 2011 and the related profit and loss accountand cash 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 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 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;

ANNEXURE TO THE AUDITORS’ REPORT – 31 MARCH 2011(Referred to in our report of even date)(i) (a) The Company has maintained proper records showing full particulars,

including quantitative details and situation of fixed assets.(b) The Company has a regular programme of physical verification

of its fixed assets by which all fixed assets are verified annually.In our opinion, this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of itsassets. No discrepancies were noticed upon such verification.

(c) The Company has not disposed off any fixed assets during the year.(ii) (a) The inventory has been physically verified by the management

during the year. In the opinion, the inventory of such verificationis reasonable.

(b) The procedures for the physical verification of inventories followedby the management are reasonable and adequate in relation to thesize 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 purchases 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 audit.

47

PAVAN POPLAR LIMITED

(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 system commensuratewith the size and nature of its business.

(viii) The Central Government has not prescribed the maintenance of costrecords under Section 209(1)(d) of the Act for any of the productsmanufactured/services rendered 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.

There are no dues on account of Cess under Section 441A of theAct since the date from which the aforesaid section comes intoforce has not yet been notified by the Central Government.

According to the information and explanations given to us, noundisputed amounts payable in respect of Income tax, Providentfund and other material statutory dues were in arrears as at 31March 2011 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 debenture holders during the year.

(xii) The Company has not granted loans and advances on the basis ofsecurity 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) In our opinion and according to the information and explanationsgiven to us, the Company is not dealing in or trading in shares,securities, debentures and other investments.

(xv) According to the information and explanations given to us, 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 the 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 been usedfor long term investment.

(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 the year.

(xx) The Company has not raised any money by public issues.

(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

Bhavesh DhupeliaPartner

Kolkata, 3rd May 2011 Membership No: 042070


31st March, 2011 31st March, 2010(`) (`)

SOURCES OF FUNDSShareholders’ Funds

Share Capital 1 5,51,00,040 5,51,00,040Reserves & Surplus 2 1,44,59,813 1,40,16,637

6,95,59,853 6,91,16,677APPLICATION OF FUNDS

Fixed Assets 3Gross Block 4,49,33,855 4,49,33,855Less : Accumulated Depreciation / Amortisation 1,80,68,422 1,69,16,913

: Provision for Impairment 32,59,487 32,59,487Net Block 2,36,05,946 2,47,57,455

Current Assets, Loans and AdvancesInventories 4 1,02,20,619 72,64,981Sundry Debtors 5 83,60,629 83,02,080Cash and Bank Balances 6 2,53,279 94,901Loans and Advances 7 3,04,09,313 3,15,49,273

4,92,43,840 4,72,11,235Less : Current Liabilities & Provisions

Current Liabilities 8 25,80,868 23,29,510Provisions 9 7,09,065 5,22,503

32,89,933 28,52,013

Net Current Assets 4,59,53,907 4,43,59,222

6,95,59,853 6,91,16,677

Notes to the Accounts 13Related Party Disclosure 14Significant Accounting Policies 15The Schedules referred to above and the annexed notes form an integral part of this Balance Sheet.This is the Balance Sheet referred to in our Report of even date.

For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248WBhavesh DhupeliaPartner Membership No: 042070Kolkata, 3rd May 2011

48


For and on behalf of the BoardS. K. Sipani Director

S. Limaye DirectorDr. R. C. Dhiman Manager




(`) (`)INCOMESales 82,18,773 68,72,985Other Income 10 12,356 14,228

82,31,129 68,87,213EXPENDITURE(Increase)/Decrease in Stock (29,55,638) (24,01,231)Purchases 9,08,272 8,87,228Employee Costs 11 22,41,543 17,49,906Other Costs 12 64,36,343 56,80,661Depreciation/Amortisation 3 11,51,509 11,51,509

77,82,029 70,68,073

Profit /(Loss) before Taxation 4,49,100 (1,80,860)Less: Provision for taxation

Current Tax 5,924 —

Profit /(Loss) after Taxation 4,43,176 (1,80,860)Balance in profit and loss account brought forward 1,35,16,637 1,36,97,497Profit and loss account balance carried forward 1,39,59,813 1,35,16,637

Earnings per share (in ` ) - Basic and Diluted 0.08 (0.03)(Refer Note 7 of Shedule 13)Notes to the Accounts 13Related Party disclosure 14Significant Accounting Policies 15

The Schedules referred to above and the annexed notes form an integral part of this Profit and Loss Account.This is Profit and Loss Account referred to in our report of even date.




(`) (`) (`) (`)A. CASH FLOW FROM OPERATING ACTIVITIES :

(Loss)/Profit before Taxation 4,49,100 (1,80,860)Adjustments for :

Interest Income (12,356) —Amortisation 11,51,509 11,51,509

Operating Profit Before Working Capital Changes 15,88,253 9,70,649

Adjustments for :Debtors (58,549) (4)Inventory (29,55,638) (24,01,231)Loans and Advances (60,511) (2,685)Current Liabilities and Provisions 4,37,920 1,37,132)

(26,36,778) (22,66,788)Direct Taxes Paid (2,471) (6,454)

NET CASH FLOW FROM OPERATING ACTIVITIES (10,50,996) (13,02,593)B. CASH FLOW FROM INVESTING ACTIVITIES :

Interest Received 12,356 (64,717)Loan to Holding Company 11,97,018

NET CASH FLOW USE IN INVESTING ACTIVITIES 12,09,374 (64,717)C. NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS :

(A+B+C) 1,58,378 (13,67,310)

D. RECONCILIATIONCASH AND CASH EQUIVALENTS - AT BEGINNING OF THE YEARCash and Bank Balances 94,901 14,62,211CASH AND CASH EQUIVALENTS - AT THE END OF THE YEARCash and Bank Balances 2,53,279 94,901

1,58,378 (13,67,310)Notes :1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Accounting

Standard - 3 on Cash Flow Statement.2. Cash and cash equivalents represent cash and bank balances only.3. Previous year’s figures have been regrouped wherever necessary.This is the Cash Flow Statement referred to in our Report of even date.


49









(`) (`)

SCHEDULE 4 - INVENTORIES

Semi Finished Produce 1,02,03,470 71,85,406

Finished Goods/Produce 17,149 79,575

1,02,20,619 72,64,981

SCHEDULE 5 - SUNDRY DEBTORS

Unsecured, considered good

[Refer Note (1) (ii) of Schedule 13]

Debts outstanding for a period

exceeding six months. 83,60,629 82,88,092

Other debts — 13,988

83,60,629 83,02,080

(Debtors include ` 82,87,088 (2009-10: ` 82,87,088) due from Wimco Limited,the holding company)

SCHEDULE 6 - CASH AND BANK BALANCES

Cash in Hand 12,582 6,292

Balance with Scheduled Banks– in Current Accounts 2,40,697 88,609

2,53,279 94,901

SCHEDULE 7 - LOANS AND ADVANCESUnsecured and considered goodLoans and advances to Wimco Limited, 3,03,29,547 3,15,26,565the Holding company [Refer Note (1) (i)of Schedule 13]Maximum amount outstanding at anytime during the year ` 3,25,26,184(2009-10: ` 3,23,72,244)Advances recoverable in cash or in kind orfor value to be received 5,992 14,283Security Deposit 68,802 —Income tax 4,972 8,425[Net of Provision for tax ` 65,591(2009-10 ` 59,667)]

3,04,09,313 3,15,49,273

SCHEDULE 8 - CURRENT LIABILITIESSundry Creditors 8,84,150 6,42,785Other current liabilities 16,96,718 16,86,725

25,80,868 23,29,510

SCHEDULE 9 - PROVISIONS

Leave encashment 97,706 80,073

Gratuity 6,11,359 4,42,430

7,09,065 5,22,503

SCHEDULE 10 - OTHER INCOME

Provision no longer requiredwritten back — 14,228Interest on fixed deposit with bank(tax deducted at source `2,471) 12,356 —

12,356 14,228

SCHEDULE 11 - EMPLOYEE COSTS

Salary, wages and bonus 18,20,403 14,82,309

Staff welfare expenses 44,472 46,860Contribution to provident & other funds 1,61,548 1,42,401Leave encashment 23,373 —

Gratuity 1,91,747 78,336

22,41,543 17,49,906

SCHEDULE 12 - OTHER COSTS

Plantation & cultivation 41,24,413 36,85,120

Travelling & conveyance 79,997 97,278

Power & fuel 12,09,066 11,24,056Rent 7,760 7,760Rates and taxes 33,963 28,845Freight outward 97,778 66,679Legal and professional fees(Includes prior year expenses: ` 2,07,526) 3,96,459 2,21,241Insurance 25,644 11,182Auditors remuneration– Statutory audit fees 1,00,000 1,00,000– Out of pocket expenses 5,185 5,400Repair & maintenance 2,73,283 2,55,460Communication 5,680 3,792Printing & stationary 8,188 14,680Bank charges 2,278 2,412Tools consumed 3,305 5,120Donation 501 1,002Bed Debts written off 1,004 —Others expenses 61,839 50,634

64,36,343 56,80,661

50



(`) (`)


31st March, 2011 31st March, 2010(`) (`)

SCHEDULE 1 - SHARE CAPITAL

Authorised :1,00,00,000 (2009 -10: 1,00,00,000) equity shares of ` 10 each 10,00,00,000 10,00,00,000

Issued, subscribed and paid up capital :55,10,004 (2009 -10: 55,10,004) equity shares of ` 10 each fully paid up. 5,51,00,040 5,51,00,040

Of the above, 38,00,000 (2009 -10: 38,00,000) equity shares of ` 10 each were issued for consideration other than cash.55,10,004 (2009-10: 55,10,004) equity shares are held by Wimco Limited, the holding company and its nominees.

SCHEDULE 2 - RESERVES AND SURPLUS

General Reserve 5,00,000 5,00,000Profit & Loss Account 1,39,59,813 1,35,16,637

1,44,59,813 1,40,16,637

SCHEDULE 3 - FIXED ASSETS

GROSS BLOCK ACCUMULATED DEPRECIATION/AMORTISATION/IMPAIRMENT NET BLOCK

Accumulated as at April, 2010 Accumulated as at 31st March, 2011

As at Additions As at Charge As at As atDescription 1st April, during the 31st March, Depreciation Impairment for the Depreciation Impairment 31st March, 31st March,

2010 year 2011 period 2011 2010

Intangible Asset

Leasehold Land 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 2,47,57,455Total 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 2,47,57,455

2009-10 4,49,33,855 — 4,49,33,855 1,57,65,404 32,59,487 11,51,509 1,69,16,913 32,59,487 2,47,57,455

(`)

51


SCHEDULE 13 - NOTES TO THE ACCOUNTS1. Pursuant to the amalgamation of the holding company, Wimco Seedlings

Limited (WSL) with Wimco Limited, all amounts recoverable / payable byWSL to the Company stand transferred to Wimco Limited with effect from1 April, 2007. Consequent to the merger, the Company has become awholly owned subsidiary of Wimco Limited. The following amounts are duefrom Wimco Limited, the holding company:i) The Company had in earlier years granted loans to erstwhile Wimco

Greens (AOP) of which the Company was a member. The balanceoutstanding from Wimco Greens as on March 31, 2002 amounted to` 5,40,38,549. On merger of Wimco Greens with erstwhile WimcoSeedlings Limited, the loan was taken over by WSL. The balancerecoverable amount as on March 31, 2011, is ` 3,03,29,547(2009-10: ` 3,15,26,565).

ii) Debtors include amount due ` 82,87,088 (2009-10: ` 82,87,088).

2. Claims against the Company not acknowledged as debts ` 7,33,326(2009-10: ` 6,64,524). These comprise:� Local authority Taxes / Cess / Royalty on property, utilities etc. claims

disputed by the Company relating to issues of applicability anddetermination aggregating ` 6,64,524 (2009-10: ` 6,64,524).Also refer note 3 below.

� Other matters ` 68,802 (2009-10: ` Nil).3. Certain legal formalities in respect of the land leased to Wimco Seedlings

Limited (now amalgamated with Wimco Limited) are pending for which theCompany has agreed to bear the costs. Accordingly, a liability of ` 16,49,000was created in the books of account in an earlier year. The Company receivedShow-cause notice from the local authority to pay ` 23,13,524 against thisliability which has been disputed by the Company.

4. The Company is yet to obtain possession of certain portion of leaseholdland since the demarcation in the land revenue records is yet to be completedand, additionally, is in dispute for which Court proceedings are in progress.

5. The order passed by the District Magistrate authorizing the State revenueauthorities to take possession of the land leased to the Company has beenstayed by the order of the High Court.

6. Employee Defined BenefitsThe following table sets out the status as required under AS 15 (Revised).

2010-11 2009-10 2010-11 2009-10

Change in plan Assets

1. Plan assets at the beginning of

the year — — — —

2. Expected return on plan assets — — — —

3. Contribution by employers 22,818 53,712 5,740 5,494

4. Actual benefits paid (22,818) (53,712) (5,740) (5,494)

5. Actuarial (Gains)/Losses — — — —

6. Plan assets at the end of the year Nil Nil Nil Nil

Reconciliation of present value of

the obligation and the fair value of

the plan assets

1. Fair value of plan assets at the end

of the year — — — —

2. Present value of the defined benifit

obligations at the end of the period 6,11,359 4,42,430 97,706 80,073

3. Asset recognised in the

balance sheet (6,11,359) (4,42,430) (97,706) (80,073)

Cost for the period

1. Service cost 36,910 28,882 25,493 21,327

2. Interest Cost 35,394 31,335 6,406 7,485

3. Expected Return on Plan Asset — — — —

4. Actuarial (Gains)/Losses 1,19,443 18,119 (8,526) (43,040)

Net cost 1,91,747 78,336 23,373 (14,228)

Actual return on plan assets — — — —

Actuarial Assumptions :

1. Discount Rate 8.00% 7.00% 8.00% 7.00%

2. Salary Escalation 4.00% 3.50% 4.00% 3.50%

3. Expected return on plan assets N/A N/A N/A N/A


2010-11 2009-10 2010-11 2009-10

Change in obligation during theyear ended March 31, 2011

1. Obligation at period beginning 4,42,430 4,17,806 80,073 99,795

2. Service Cost 36,910 28,882 25,493 21,327

3. Interest cost 35,394 31,335 6,406 7,485

4. Actuarial (Gains) / Losses 1,19,443 18,119 (8,526) (43,040)

5. Benefits payments (22,818) 53,712 (5,740) 5,494

6. Obligations at period end 6,11,359 4,42,430 97,706 80,073

Defined Benefit PlansGratuity Leave Encashment

( Unfunded) (Unfunded)

(`)

Defined Benefit PlansGratuity Leave Encashment

( Unfunded) (Unfunded)

(`)

Schedules to the financial statements as at and for the year ended March 31, 2011

Net Asset/(Liability) For the year ended For the year ended For the year ended For the year endedrecognized in Balance Sheet 31st March, 2011(`) 31st March, 2010(`) 31st March, 2009(`) 31st March, 2008(`)

(including experience Leave Leave Leave Leaveadjustment impact) Gratuity Encashment Gratuity Encashment Gratuity Encashment Gratuity Encashment

1 Present Value of Defined 6,11,359 97,706 4,42,430 80,073 4,17,806 99,795 3,95,023 66,823Benefit Obligation

2. Fair Value on Plan Assets — — — — — — — —

3. Status [Surplus /(Deficit)] (6,11,359) (97,706) (4,42,430) (80,073) (4,17,806) (99,795) (3,95,023) (66,823)

4. Experience Adjustment of — — — — — — — —Plan Assets [Gain/(Loss)]

5. Experience Adjustment of — — — — — — — —Obligation [(Gain)/(Loss)]

7. Earnings per share :2010-11 2009-10

Profit /(Loss) for the year after taxation (`) (A) 4,43,176 (1,80,860)

Weighted Average number of Equity Shares (B) 55,10,004 55,10,004 outstanding during the year

Earnings per Share - Basic and Diluted (`) (A/B) 0.08 (0.03)

Nominal Value of an Equity Share (`) 10 10

8. Segment information

The Company’s activities involve predominantly business of growing and sellingagricultural produce in India, which is considered to be a single business segmentsince these are subject to similar risks and returns. Further, the business is carriedout in India and product sold primarily in India and hence there are no reportablegeographical segments. Hence, the financial statements are reflective of theinformation required by Accounting Standard 17 on Segment Reporting.

9. No remuneration is payable to the Manager during the year (2009-10 : ` Nil).

A. Amounts recognised as an expense and included in Schedule 11 - “Salaries, Wages and Bonus” ` 23,273 [2009-10: ` (14,228)] for leave encashment and in “Contribution toProvident and Other Funds” ` 1,91,747 (2009-10: ` 78,336) for gratuity.

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

10. Quantitative details :

Particulars Unit 2010-11 2009-10Quantity ` Quantity `

(a) OPENING STOCKSemi Finished- Agriculture produce * 71,85,406 48,63,750Finished stock- Agriculture produce * 79,575 —

(b) PURCHASE- Poplar ETPs Nos 23,258 5,34,934 23,272 5,11,984- Seeds * 3,73,338 3,75,244

9,08,272 8,87,228(c) SALES

- Sugarcane Qtls 8,570 18,23,726 7,172 15,17,572- Paddy Qtls 214 2,08,440 — —- Wheat Qtls 5,679 52,57,004 3,982 44,69,696- Others * 9,29,603 8,85,717

(d) CLOSING STOCKSemi Finished- Agriculture produce * 1,02,03,470 71,85,406Finished stock- Agriculture produce * 17,149 79,575

of 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 realization/insurance claim for such trees is reduced from thetotal cost. Every year, plantation cost already incurred is comparedwith the net realizable 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 realizable 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 realizable value.

SCHEDULE 15 - 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 and theaccounting principles generally accepted in India and comply with theaccounting standards (’AS’) prescribed in the Companies (AccountingStandards) Rules, 2006 issued by the Central Government, in consultationwith the National Advisory Committee on Accounting Standards, tothe extent applicable.

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. 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 amounts


c) Transaction between related parties

PARTICULARS HOLDING COMPANY FELLOW SUBSIDIARY COMPANY TOTAL

Wimco Limited PAFL

2010-11 2009-10 2010-11 2009-10 2010-11 2009-10

Purchase of 5,34,934 5,11,984 82,250 16,450 6,17,184 5,28,434raw materialsand components

Sales — — 4,01,403 1,33,300 4,01,403 1,33,300

Expenses Reimbursed 84,974 1,742,04 20,266 4,277 1,05,240 1,78,481

Expenses Recovered 3,96,196 4,00,803 26,78,922 30,19,498 30,75,118 34,20,301

Loans given 1,32,653 15,50,102 — — 1,32,653 15,50,102

Receipts towards 13,29,671 12,00,000 — — 13,29,671 12,00,000Loan Repayments

Loans Taken — — — — — —

Loan repayment — — — — — —

Outstanding Loans 3,03,29,547 3,15,26,565 — — 3,03,29,547 3,15,26,565and Advances

Outstanding 82,87,088 82,87,088 — — 82,87,088 82,87,088Debtors

(`)

11. Information with regard to other matters specified in paragraphs 4-A,4-C and 4-D of Part II of Schedule VI to the Companies Act, 1956 areeither nil or not applicable to the Company for the current as well asprevious financial year.

12. The Company has not appointed a whole-time Company Secretary asrequired by Section 383 A of The Companies Act, 1956 and accordingly,the accounts have not been authenticated by a whole-time CompanySecretary.

13. 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 31st March 2011 and 31st March 2010. Thisinformation as required to be disclosed under the Micro, Small andMedium Enterprises Development Act, 2006 has been determined tothe extent such parties have been identified on the basis of informationavailable with the Company.

14. Prior year's figures have been regrouped/rearranged wherever necessaryto conform to current year’s presentation.

SCHEDULE 14 – RELATED PARTY DISCLOSURES

a) Parties exercising control over the Company:ITC Limited # - Ultimate holding Company of WIMCO LimitedRussell Credit Limited # - Holding Company of WIMCO LimitedWIMCO Limited - Holding Company

# No transaction during the financial years 2010-11 and 2009-10

b) Other related parties with whom the Company had transactionsPrag Agro Farm Limited (PAFL) - Fellow Subsidiary Company

Certain assets of holding company are being used free of cost for administrative convenience.

* Due to typical nature of the product, it is not possible to state quantities.

52


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEAdditional Information pursuant to part IV of Schedule VI to the Act

I. Registration Details :


Balance Sheet Date

Date Month Year

II. Capital raised during the year: (Amount in ` Thousands)



III. Position of mobilisation and deployment of Funds: (Amount in ` Thousands)


Sources of Funds






Accumulated Losses

IV. Performance of the Company : (Amount in ` Thousands)




Earnings per Share in ` Dividend Rate (%) age

(Please tick appropriate box + for Earnings, – for loss)

V. Generic Names of three Principal Products/Services of the Company(As per monetary terms)

Item Code No.(ITC Code)

Product Description

N I L N I L

N I L N I L

7 2 8 5 0 7 2 8 5 0

5 5 1 0 0 1 4 4 6 0

2 3 6 0 6 N I L

4 5 9 5 4 N I L

1 1

3 1 0 3 2 0 1 1

N I L

+ − + −

8 2 3 1 7 7 8 2

N I LN I L

ANNEXURE

1 2 8 8 4 9

0 . 0 8�

+ −

N O T

N I L

� 4 4 9 4 4 3�

A P P L I C A B L E

N O T A P P L I C A B L E

5. Retirement 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.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 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 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 profit andloss account.

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 significantrisks and rewards of ownership to the buyer.


7. 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 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. Taxation

Income-tax expense comprises current tax, 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 year by the weightedaverage number of equity shares outstanding during the reportingperiod. Diluted EPS is computed by dividing the net profit attributableto the equity shareholders for the year by the weighted average numberof equity and equivalent dilutive equity shares outstanding during theyear, except where the results would be anti-dilutive.

53





For BSR & Co.Chartered AccountantsFirm’s Registration No: 101248WBhavesh DhupeliaPartnerMembership Number: 042070Kolkata, 3rd May 2011

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2011

Your directors present their report on the company for the financial yearended 31 March 2011.

Directors

The names of the directors in office at any time during or since the end ofthe year are:

Mr Surampndi Sivakumar Mr David Charles McDonald

Mr Arup Kumar Mukerji Mr Allan Hendry (effective 25 August 2010)

Mr Bhargavan Sumant (resigned effective 13 August 2010)

Mr Sachidanand Madan (effective 25 August 2010)

All the directors have been in office since the start of the financial year untilthe date of this report, unless otherwise stated.

Corporate information

Technico Pty Limited is a company limited by shares that is incorporatedand domiciled in Australia. Its parent entity is Russell Credit Limited, acompany registered in India and a wholly owned subsidiary of ITC Limited,a public company whose shares are listed on major stock exchanges inIndia.

The registered office of Technico Pty Limited is located at:

Suite 5, 20 Bundaroo Street

BOWRAL NSW 2576

Australia

There were two employees on the rolls of the company at 31 March 2011.The company also utilises the services of consultants to support its operations.

Principal activities

The principal activities of your company during the financial year underreview were anchored on horticulture technology together with itsdownstream implementation and commercialisation and activities associatedtherewith. The company owns the proprietary TECHNITUBER ® technologyin this field and has undertaken commercialisation of such technologythrough its wholly owned subsidiaries in different geographies viz:

— Technico Agri Sciences Limited, India— Technico Asia Holdings Pty Limited, Australia (‘TAHL’)— Technico Horticultural (Kunming) Co. Limited, China

(100% subsidiary of TAHL)— Technico Technologies Inc., Canada— Technico ISC Pty Limited (TISCPL), a 100% subsidiary of the company

and a dormant entity since its incorporation, was voluntarily deregisteredon 3 November 2010.

Review and results of operations

Your company is focused on ensuring the continuous upgrading of theTECHNITUBER ® technology and customising its application across various

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 MARCH 2011

In accordance with a resolution of the directors of Technico Pty Limited,we state that in the opinion of the directors :(a) the company is not a reporting entity as defined in the Australian

Accounting Standards;(b) the financial statements and notes of the company are in accordance

with the Corporations Act 2001, including:(i) giving a true and fair view of the company’s financial position as

at 31 March 2011 and of their performance for the year ended onthat date; and

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OFTECHNICO PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011

In relation to our audit of the financial report of Technico Pty Limited forthe financial year ended 31 March 2011, to the best of my knowledge andbelief, there have been no contraventions of the auditor independence

(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 Allan HendryDate: 26th April 2011 Director

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 2011 Partner

54

TECHNICO PTY LIMITED

geographies. 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$1,584,348 (2010: A$1,953,344) and a net profit of A$100,232 (2010:A$709,431). It may be recalled that the profits for the previous yearincluded A$0.51 million on account of reversal of the earlier write downof the company’s investment in its subsidiary Technico Asia Holdings PtyLtd, Australia. Further, sales and post tax profits for the year under reviewwere adversely affected by the appreciation in the Australia Dollar versusthe US Dollar, which is the invoicing currency for the company.

The property at Paddy’s River, Australia could not be sold due to a depressedreal estate market. The company has recently engaged a reputed real estateadvisory firm to facilitate disposal of the said property.

No dividends have been paid or declared during the financial year.

Significant changes in the state of affairs

No significant changes in the state of affairs occurred during the financial year.

Significant events after balance sheet date

There are no significant events after the balance sheet date to be reported.

Future developments and results

Further development of the TECHNITUBER® technology is being pursued.

Environmental regulation and performance

The company is not subject to any particular or significant 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$6,304 (2010: $6,303).

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 2011 Director

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO PTYLIMITED FOR THE YEAR ENDED 31 MARCH 2011

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 2011, 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 2011 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 2011

Suite 5, 20 Bundaroo Street David Duff

BOWRAL NSW 2576 Partner

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 20112011 2010

Notes $ ` $ `

CONTINUING OPERATIONS

Sale of goods 2(a) 1,584,348 69,133,025 1,953,344 74,412,640

Cost of Sales:

Other Cost of Sales (861,993) (37,613,065) (1,045,559) (39,830,570)

Inventory Write Off and Write Down — — — —

GROSS PROFIT 722,355 31,519,960 907,785 34,582,070

Other Income 2(a) 206,773 9,022,540 433,865 16,528,087Marketing Expenses — — (32) (1,219)MENA Expenses (203,741) (8,890,239) (288,286) (10,982,255)Research and Development Expenses (157,343) (6,865,662) (105,220) (4,008,356)Occupancy Expenses (3,705) (161,668) (3,429) (130,628)Administration Expenses:

Other Administration Expenses (443,218) (19,339,817) (646,623) (24,633,103)Recovery/(Write Down) Investments and Loans — — 429,188 16,349,917

Finance Costs 2(b) (20,889) (911,491) (17,817) (678,739)Reversal of Provision for Employee Share Scheme — — — —

PROFIT FROM CONTINUING OPERATIONS BEFORE

INCOME TAX EXPENSE 100,232 4,373,623 709,431 27,025,774

Income Tax Expense 3 — — — —

Total comprehensive income attributable to members of

Technico Pty Ltd 100,232 4,373,623 709,431 27,025,774

Other comprehensive income — — — —

Total comprehensive income for the period 100,232 4,373,623 709,431 27,025,774

Profit from continuing operations after income tax expense 100,232 4,373,623 709,431 27,025,774

Net profit for the period 100,232 4,373,623 709,431 27,025,774

Net profit attributable to members of Technico Pty Limited 100,232 4,373,623 709,431 27,025,774

55


BALANCE SHEET AS AT 31 MARCH 20112011 2010

Notes $ ` $ `

CURRENT ASSETSCash and Cash Equivalents 4 446,554 20,589,489 390,222 16,062,513Trade and Other Receivables 5(a) 808,879 37,295,388 797,142 32,812,358Other 6 26,910 1,240,753 16,298 670,866

1,282,343 59,125,630 1,203,662 49,545,737Non-Current Assets Classified as Held for Sale 8 376,381 17,353,987 376,381 15,492,783

Total Current Assets 1,658,724 76,479,617 1,580,043 65,038,520

Non-Current AssetsReceivables 5(b) 7,826 360,837 2,301 94,715Other Financial Assets 7 14,269,282 657,920,920 14,269,282 587,359,320Property, Plant and Equipment 8 2,068 95,350 3,005 123,693Intangible Assets 9 24,955 1,150,613 27,704 1,140,366

Total Non-Current Assets 14,304,131 659,527,720 14,302,292 588,718,094

Total Assets 15,962,855 736,007,337 15,882,335 653,756,614

CURRENT LIABILITIES

Trade and Other Payables 10 779,619 35,946,283 804,519 33,116,013

Loans and Borrowings 11 230,000 10,604,725 500,000 20,581,520Provisions 12 22,992 1,060,104 17,804 732,857

TOTAL CURRENT LIABILITIES 1,032,611 47,611,112 1,322,323 54,430,120Non-Current LiabilitiesLoans and Borrowings 11 500,000 23,053,750 230,000 9,467,375Provisions 12 — — — —

TOTAL NON-CURRENT LIABILITIES 500,000 23,053,750 230,000 9,467,375

TOTAL LIABILITIES 1,532,611 70,664,862 1,552,323 63,897,495

NET ASSETS 14,430,244 665,342,475 14,330,012 589,859,119

EQUITY

Contributed equity 13 43,989,182 2,028,231,209 43,989,182 1,810,704,704

Accumulated Losses 14 (29,558,938) (1,362,888,734) (29,659,170) (1,220,845,585)

TOTAL EQUITY 14,430,244 665,342,475 14,330,012 589,859,119

STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2011Share based

Contributed Retained payment equity earnings reserve Total

$ $ $ $

At 1 April 2009 43,989,182 (30,368,601) — 13,620,581

Profit for the Period — 709,431 — 709,431

At 31 March 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

Share basedContributed Retained payment

equity earnings reserve Total` ` ` `

At 1 April 2009

Profit for the Period 2,028,231,209 (1,400,220,271) — 628,010,938

Share Issue — 32,710,090 — 32,710,090

At 31 March 2010 2,028,231,209 (1,367,520,181) — 660,721,028

Profit for the Period — 4,621,447 — 4,621,447

At 31 March 2011 2,028,231,209 (1,362,888,734) — 665,342,475

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS ASAT 31 MARCH 2011

Corporate Information

Technico Pty Limited is a company limited by shares that is incorporatedand domiciled in Australia. Its parent entity is Russell Credit Limited, acompany registered in India and a wholly owned subsidiary of ITC Limited,a public company listed in National Stock Exchange and Bombay StockExchange 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 2011. 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 informationin ` (Indian Rupees), which are unaudited, have been arrived at byapplying the year end inter-bank exchange rate of 1 AUD = ` 46.1075for the current year balance sheet (2010: ` 41.1625) and the averagerate of 1 AUD = ` 43.6350 for the current year income statement(2010: ` 38.0950), and have been included in the financial report asrequired 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 not

have mandatory applicability to Technico Pty Limited in relation to theyear ended 31 March 2011. 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 $29,558,938 as at31 March 2011 (2010 : $29,659,170), the management believe thatthe application 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 and a key element of the strategicinvestment portfolio of Russell Credit Limited, the parent entity. Anyexposure of the parent entity in the Company is limited to equity orfund based commitments in accordance with the terms of approvalof its regulator in India.

(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.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 20112011 2010

Notes $ ` $ `

CASH FLOW FROM OPERATING ACTIVITIESReceipts from Customers 1,572,611 68,620,881 1,403,409 53,462,866Receipts of Sundry Income 188,577 8,228,557 417,316 15,897,653Payments to Suppliers and Employees (1,720,209) (75,061,320) (1,460,752) (55,647,347)Goods and Services Tax (GST) Received 19,817 864,715 25,590 974,851Interest Received 18,196 793,982 16,549 630,434Borrowing Costs (20,889) (911,491) (17,817) (678,739)Receipts from Management Fees — — — —

NET CASH FLOWS FROM OPERATING ACTIVITIES 58,103 2,535,324 384,295 14,639,718Cash Flow from Investing ActivitiesProceeds from Sale of Property, Plant and Equipment — — — —Payments for Protection of Technology (1,771) (77,278) (10,441) (397,750)Purchase of Property, Plant and Equipment — — (2,838) (108,114)Loans to Related Parties — — — —

NET CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES (1,771) (77,278) (13,279) (505,184)Cash Flows from Financing ActivitiesInvestment in Subsidiary — — (87,048) (3,316,094)Proceeds from Issue of Shares — — — —Repayment of Borrowings — — — —

NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES — — (87,048) (3,316,094)

NET INCREASE/(DECREASE) IN CASH HELD 56,332 2,458,046 283,968 10,817,760

Add Opening Cash Brought Forward 390,222 — 106,254 —

CASH AND CASH EQUIVALENTS AT END OF PERIOD 446,554 20,589,489 390,222 16,062,513

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(c) Foreign currency translation

The functional and presentation currency of Technico Pty Limited isAustralian 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 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.

(h) Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciationand any accumulated impairment losses.

Depreciation is calculated on a straight line basis over the estimateduseful life of the assets as follows :

Class of fixed asset 2011 2010Buildings 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 use

of 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.

Deferred income tax liabilities are recognised for all taxable temporarydifferences 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

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• 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 deductible temporarydifferences, carry forward of unused tax assets and unused tax losses,to the extent that it is probable that taxable profit will be availableagainst which the deductible temporary differences and the carryforward of unused tax credits and unused tax 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 at eachbalance sheet date and reduced to the extent that it is no longerprobable that sufficient taxable profit will be available to allow all orpart of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balancesheet date and are recognised to the extent that it has become probablethat future taxable profit will allow the deferred tax 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 arerecognised in 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 sametaxable 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, the taxationauthority, 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 of

expected 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.

(t) Adoption of new and revised accounting standards

During the current year, the company has adopted the revised AustralianAccounting Standard AASB 101: Presentation of Financial Statements,which became mandatory. The adoption of this standard has impactedthe recognition, measurement and disclosure of certain transactions.The following is an explanation of the impact the adoption of thisstandard has had on the financial statements of Technico Pty Ltd.

AASB 101: Presentation of Financial Statements

In September 2007, the Australian Accounting Standards Board revisedAASB 101, and as a result there have been changes to the presentationand disclosure of certain information within the financial statements.Below is an overview of the key changes and the impact on thecompany’s financial statements.

Disclosure impact

Terminology changes – The revised version of AASB 101 contains anumber of terminology changes, including the amendment of thenames of the primary financial statements. These changes are notexpected to impact the financial performance or financial position ofthe company.

Reporting changes in equity – The revised AASB 101 requires all changesin equity arising from transactions with owners in their capacity asowners to be presented separately from the non-owner changes inequity. Owner changes in equity are to be presented in the statementof changes in equity, with non owner changes in equity presented inthe statement of comprehensive income. The previous version of AASB101 required that owner changes in equity be presented in the incomestatement.

The impact of this change is that dividends recognised as distributionsto owners and dividends per share are now disclosed in Note 4 to thefinancial statements.

Statement of comprehensive income – The revised AASB 101 requiresall income and expenses to be presented in either one statement – thestatement of comprehensive income, or two statements – a separateincome statement and a statement of comprehensive income. Theprevious version of AASB 101 required only the presentation of a singleincome statement.

The company’s financial statements now contain a statement ofcomprehensive income.

Other comprehensive income – The revised version of AASB 101introduces the concept of “other comprehensive income” whichcomprises of income and expense that are not recognised in profit orloss as required by other Australian Accounting Standards. Items ofother comprehensive income are to be disclosed in the statement ofcomprehensive income. Entities are also required to disclose the incometax relating to each component of other comprehensive income. Theprevious version of AASB 101 did not contain an equivalent concept.

The impact of this requirement is the disclosure within Note 3 to thefinancial statements, which reflects the grossed up value of each itemof other comprehensive income and the income tax expense/benefitattributed to the item.

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NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 20112011 2010

$ ` $ `

Note 2: Revenues and ExpensesRevenue and Expenses from Continuing Activities

(a) RevenueSale of Goods 1,584,348 69,133,025 1,953,344 74,412,640Finance Revenue 18,196 793,982 16,549 630,434Agronomy Support Income 69,670 3,040,050 — —

Sundry Income 118,907 5,188,508 417,316 15,897,653

1,791,121 78,155,565 2,387,209 90,940,727Breakdown of Finance Revenue:Bank Interest 18,196 793,982 16,549 630,434

(b) Finance CostsBank Loans and Overdrafts 20,889 911,491 17,817 678,739

(c) Depreciation, Amortisation and Costs of InventoriesIncluded in the Income StatementDepreciation of Non Current Assets:

Buildings — — — —Plant and Equipment 937 40,886 896 34,133

Total Depreciation of Non Current Assets 937 40,886 896 34,133Amortisation of Non Current Assets:

Leased Plant and Equipment — — — —Technology and trademarks 4,520 197,230 4,788 182,399

Total Amortisation of Non Current Assets 4,520 197,230 4,788 182,399

Total Depreciation and Amortisation Expenses 4,520 197,230 4,788 182,399

Cost of Inventories Recognised as an Expense Includes

Write Down of Inventory to Net Realisable Value — — — —

(d) Employee Benefit ExpenseWages and Salaries 290,259 12,665,451 436,782 16,639,210Workers’ Compensation Costs 830 36,217 3,892 148,266Annual Leave Provision 7,740 337,735 3,943 150,209Share Options — — — —

Note 3: Income TaxThe 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 Expenses 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% 30,070 1,312,104 212,829 8,107,732Amortisation of Technology (101) (4,407) (100) (3,829)Movement in employee entitlements 1,556 67,896 (2,297) (87,485)Write Back or Write Down of Investments in Wholly Owned Subsidiaries — — (164,004) (6,247,721)Non deductible expenses/timing differences 13,428 585,931 29,125 1,109,513(Recoupment of prior year tax losses) / Futureincome tax benefits not brought to account (44,953) (1,961,524) (75,554) 2,878,211

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 $44,953 (2010: $75,554). 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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61

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 (Contd.)2011 2010

Notes $ ` $ `Note 4: Cash and cash equivalentsCurrentCash at Bank 11,583 534,063 15,946 656,377Deposits at Call 434,971 20,055,426 374,276 15,406,136

446,554 20,589,489 390,222 16,062,513

(a) Terms and conditions relating to the above financial instruments:(i) cash at bank has a weighted average interest rate of 0% (2010: 0%); and(ii) deposits at call has a weighted average effective interest rate of 4.5% (2010: 4.5%).

(b) Reconciliation of net profit / (loss) after tax to the netcash flows from operations:Net profit / (loss) 100,232 4,373,623 709,431 27,025,774Non-cash items:

Amortisation of non-current assets 4,520 197,230 4,788 182,399Depreciation of non-current assets 937 40,886 896 34,133Decrease in value of inventories — — — —Provision for doubtful debts — — — —(Increase) / decrease in value of receivables in subsidiaries (5,525) (241,083) 16,590 631,996(Increase) / decrease in value of investments in subsidiaries — — (429,188) (16,349,917)Unrealised foreign currency revaluation — — — —(Profit) on sale of property, plant and equipment — — — —Employee benefits equity reserve — — — —

Changes in assets and liabilities:(Increase) / decrease in trade and other receivables (11,737) (512,144) (566,525) (21,581,770)Decrease in inventories — — — —(Increase) / decrease in other current assets (10,612) (463,055) (429) (16,343)(Decrease) / increase in trade creditors and accruals (24,900) (1,086,511) 656,387 25,005,063(Decrease) in employee provisions 5,188 226,378 (7,655) (291,617)

Cash flows from operation 58,103 2,535,324 384,295 14,639,718

(c) Financial facilities availableAt reporting date, the following financing facilities had beennegotiated and were available:Total FacilitiesBank Loans 230,000 10,604,725 230,000 9,467,375Loan from Russell Credit Ltd (parent company) 500,000 23,053,750 500,000 20,581,250Facilities used at reporting dateBank Loans 230,000 10,604,725 230,000 9,467,375Loan from Russell Credit Ltd. 500,000 23,053,750 500,000 20,581,250

Note 5: Trade and other receivablesCurrentTrade Debtors (a) 809,015 37,301,659 795,057 32,726,534Provision for doubtful debts — — — —

809,015 37,301,659 795,057 32,726,534Other Debtors (a) (136) (6,271) 2,085 85,824

808,879 37,295,388 797,142 32,812,358Non-CurrentAmounts receivable from wholly owned subsidiaries 7,826 360,837 2,301 94,715Provision for doubtful debts — — — —

7,826 360,837 2,301 94,715(a) Terms and conditions

Terms and conditions relating to the above financial instruments:(i) current trade debtors are non-interest bearing and generally on 180 day terms; and(ii) other debtors are non-interest bearing and generally have repayment terms of 30 days.

2011 2010Notes $ ` $ `

Note 6: Other assetsCurrentPrepayments 26,910 1,240,753 16,298 670,866

Note 7: Other financial assetsNon-currentShares in subsidiaries:

At cost 18,180,409 838,253,208 18,180,411 748,351,168Provision for write-down (a) (3,911,127) (180,332,288) (3,911,129) (160,991,848)

Total other financial assets 14,269,282 657,920,920 14,269,282 587,359,320

(a) Provision for write-down of subsidiaries

The losses generated within the subsidiaries have resulted in a provision for write-down to net assets being recorded against the cost amount of theinvestment.


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2011 2010Notes $ ` $ `

Note 8: Property, plant and equipmentNon-currentLand and buildingLand at cost 327,725 15,110,580 327,725 13,489,980Accumulated amortisation and impairment — — — —Net carrying amount transferred to assets held for sale 327,725 15,110,580 327,725 13,489,980

Buildings at cost 191,765 8,841,805 191,765 7,893,527Accumulated depreciation and impairment (143,109) (6,598,398) (143,109) (5,890,724)

Net carrying amount transferred to assets held for sale 48,656 2,243,407 48,656 2,002,803

Plant and equipment at cost 439,281 20,254,149 439,281 18,081,904Accumulated depreciation and impairment (439,281) (20,254,149) (439,281) (18,081,904)Net carrying amount transferred to assets held for sale — — — —Total net carrying amount of land and buildings transferred toassets held for sale 376,381 17,353,987 376,381 15,492,783Plant and equipment at cost 158,237 7,295,912 158,237 6,513,430Accumulated depreciation and impairment (156,169) (7,200,562) (155,232) (6,389,737)

Net carrying amount 2,068 95,350 3,005 123,693Total net carrying amount of plant and equipment 2,068 95,350 3,005 123,693

Total property, plant and equipment at cost 158,237 7,295,912 158,237 6,513,430

Accumulated depreciation, amortisation and impairment (156,169) (7,200,562) (155,232) (6,389,737)Total property, plant and equipment transferred to assets held for sale 376,381 17,353,987 376,381 15,492,783Total property, plant and equipment 2,068 95,350 3,005 123,693LandBalance at beginning of the year – net of accumulated depreciation and impairment 327,725 15,110,580 327,725 13,489,980Additions — — — —Balance at end of the year – net of accumulateddepreciation and impairment 327,725 15,110,580 327,725 13,489,980Buildings at costBalance at beginning of the year – net of accumulateddepreciation and impairment 48,656 2,243,407 48,656 2,002,803Additions — — — —Depreciation expense — — — —Balance at end of the year – net of accumulateddepreciation and impairment 48,656 2,243,407 48,656 2,002,803Plant and equipment at costBalance at beginning of the year – net of accumulateddepreciation and impairment 3,005 138,553 1,063 43,756Additions — — 2,838 116,819Disposals — — — —Depreciation expense (937) (43,203) (896) (36,882)Balance at end of the year – net of accumulateddepreciation and impairment 2,068 95,350 3,005 123,693

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011

Interest in subsidiariesPercentage of equity Investmentinterest held by the (Provision for diminution)consolidated entity 2011 2010

country ofincorporation % $ ` $ `

Technico Asia Holdings Pty Ltd.(formerly known as Technico China Pty Ltd.) Australia 100 3,684,522 169,884,098 3,684,522 151,664,137

(2,714,786) (125,171,995) (2,714,786) (111,747,379)

969,736 44,712,103 969,736 39,916,758

Technico ISC Pty Ltd. Australia 100 — — 2 82— — (2) (82)— — — —

Technico Technologies Inc. Canada 100 1,196,341 55,160,293 1,196,341 49,244,386(1,196,341) (55,160,293) (1,196,341) (49,244,386)

— — — —Technico Agri Sciences Ltd.(formerly known as Chambal Agritech Ltd.) India 100 13,299,546 613,208,817 13,299,546 547,442,562

— — — —

13,299,546 613,208,817 13,299,546 547,442,562

2011 2010

Notes $ ` $ `

Note 11: Loans and borrowings

Current

Russell Credit Limited – unsecured (non interest bearing) (b) — — 500,000 20,581,250

Bank loan – secured (interest bearing) 230,000 10,604,725 — —

230,000 10,604,725 500,000 20,581,250

Non current

Bank loan – secured (interest bearing) (a) — — 230,000 9,467,375

Russell Credit Limited – unsecured (non interest bearing) (b) 500,000 23,053,750 — —

500,000 23,053,750 230,000 9,467,375

(a) The bank loan with the ANZ bank is secured over the land, buildingsand plant and equipment at Paddy’s River. An amount of $25,129is being held on term deposit as security against the loan of $230,000.The loan was redrawn at the completion of the initial two year termin December 2009. The loan is repayable after three years (maximumterm) from date of redraw. The effective interest rate is 9.08%.

(b) Russell Credit Limited, has provided an interest free loan for anamount of $500,000 to meet working capital requirement of thecompany. The loan is repayable by August 2012.

2011 2010

Notes $ ` $ `

Note 12: Provisions

Current

Employee entitlements 22,992 106,104 17,804 732,857

Non-Current

Employee entitlements — — — —

Note 13: Contributed equity

(a) Issued and paid up capital

Ordinary shares fully paid 22,606,065 shares (2010: 22,606,065) 44,098,046 2,033,250,656 44,098,046 1,815,185,818

Discount on issue (108,864) (5,019,447) (108,864 ) (4,481,114)

43,989,182 2,028,231,209 43,989,182 1,810,704,704

NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011

(b) Assets pledged as securityIncluded in the balances of land, buildings and equipment are assets over which a property charge and first mortgage have been granted as securityover bank loans (see note 11). The terms of the first mortgage and charge preclude the assets from being used as security for further mortgages withoutthe permission of the first mortgage holder. Assets under lease are pledged as security for the associated lease liabilities.

(c) Non-current assets held for saleThe assets held for sale correspond to the land, buildings and equipment at the Paddy’s River TECHNITUBER® facility.

2011 2010Notes $ ` $ `

Note 9: Intangible assets

Non current

TECHNITUBER® technology, patents and trademarks at cost 3,407,000 157,088,253 3,405,229 140,167,739

Less: Accumulated amortisation (3,382,045) (155,937,640) (3,377,525) (139,027,373)

24,955 1,150,613 27,704 1,140,366

Movement in intangiblesBalance at beginning of the year 27,704 1,277,362 22,051 907,674

Additions 1,771 81,657 10,441 429,778

Amortisation expense (4,520) (208,406) (4,788) (197,086)

Balance at the end of the year 24,955 1,150,613 27,704 1,140,366

Note 10: Trade and other payables

Current

Trade creditors 577,402 26,622,563 541,052 22,271,053

Sundry Creditors & Accruals 202,217 9,323,720 263,467 10,844,960

779,619 35,946,283 804,519 33,116,013

Terms and conditions relating to the above financial instruments:

(i) trade creditors are non interest bearing and are normally settled on 180 day terms; and(ii) balance due to sundry creditors is non interest bearing and is normally settled on 30 day terms.

63


NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS AS AT 31 MARCH 2011 (Contd.)

(b) Terms and conditions of contributed equity

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from thesale 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, eitherin person or by proxy, at a meeting of the company.

2011 2010

Notes $ ` $ `

Note 14: Reserve and accumulated losses

Accumulated losses 29,558,938 1,362,888,734 29,659,170 1,220,845,585

Balance at the beginning of year 29,659,170 1,367,510,181 30,368,601 1,250,047,539

Net (profit)/ loss attributable to the members of Technico Pty Ltd. (100,232) (4,621,447) (709,431) (29,201,954)

Total unavailable for appropriation 29,558,938 1,362,888,734 29,659,170 1,220,845,585

Dividends paid or provided for — — — —

Aggregate amount transferred (to)/from reserves — — — —

Balance at the end of period 29,558,938 1,362,888,734 29,659,170 1,220,845,585

Note 15: Contigent liabilities

Estimates of material amounts of contingent liabilities,

not provided for in the financial report — — — —

Note 16: Events subsequent to reporting date

There are no subsequent events to be reported.

Note 17: Remuneration of auditors

Amounts received or due and receivable by auditor:

Audit of the entity by auditor/group auditor 70,000 3,054,450 62,700 2,388,557

Other services in relation to the entity 15,000 654,525 — —

85,000 3,708,975 62,700 2,388,557

64


material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the financial statements. The proceduresselected 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.


Opinion

In our opinion, these financial statements present fairly, in all materialrespects, the financial position of Technico Technologies Inc. as at March31, 2011 and the results of its operations and its cash flows for the yearthen ended in accordance with Canadian generally accepted accountingprinciples.

Place : Fredericton, New Brunswick Teed Saunders Doyle & Co.

Date : April 7, 2011 Chartered Accountants

BALANCE SHEET AS AT MARCH 31, 2011(Unaudited) (Unaudited)

2011 2011 2010 2010$ ` $ `

ASSETS

Current AssetsCash 33,217 1,527,650 18,067 798,200Accounts receivable 2,921 134,337 2,879 127,194Inventory 224,193 10,310,636 206,448 9,120,873Prepaid expenses 2,780 127,852 2,759 121,893

263,111 12,100,475 230,153 10,168,160

Capital Assets (note 3) 165,192 7,597,180 215,237 9,509,172

428,303 19,697,655 445,390 19,677,332

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2011

Your directors submit their report for the financial year ended 31 March 2011.

Directors

The following directors held office since the start of the financial year untilthe date of this report, unless otherwise stated:

Ms. Bhavani Parameswar

Mr. David Charles McDonald

Mr. Sachidanand Madan


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.

The registered office of Technico Technologies Inc is located at:

Stewart McKelvey Stirling ScalesSuite 600, Frederick Square,77 WestmorelandFredericton, New BrunswickE3B 5B4 Canada

Employees

The company operates through employees engaged on casual basis withtechnical 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 though overallvolumes are still small. The company expects its operations to improve

further with stronger market demand, better product mix and its seedpotatoes commanding premium.

The company continued to provide the services of skilled informationtechnology professionals to ITC Infotech India Limited (wholly ownedsubsidiary of ITC Limited the ultimate holding entity of the company) andmade a net margin of C$13,650 (Previous year - C$14,566). However, ITCInfotech India Limited has informed that it may not be requiring this servicefrom the company in future.

Technico Technologies Inc., Canada registered sales of Canadian Dollar(C$) 0.20 million (previous year C$ 0.12 million) and posted a net profitof C$ 0.01 million (previous year loss of C$ 0.11 million).

For the first time the company exported 30,000 number of TECHNITUBER®seed to Turkey out of its Canada facility.

No dividends have been paid or declared during the financial year.

Auditors

The Company has engaged M/s Teed Saunders Doyle & Co as auditors 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: 12th April 2011 Director

AUDITOR’S REPORT

To the Shareholder of Technico Technologies Inc.

We have audited the accompanying financial statements of TechnicoTechnologies Inc., which comprise the statement of financial position asat March 31, 2011 and the statements of income (loss), retained earningsand cash flows for the year then ended, and a summary of significantaccounting policies and other explanatory information. These financialstatements have been prepared in accordance with Canadian generallyaccepted accounting principles using a differential reporting option availableto nonpublicly accountable enterprises, as described in Note 2 to thefinancial statements. These financial statements are the responsibility ofthe company's management. Our responsibility is to express an opinionon these financial statements based on our audit.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation ofthese financial statements in accordance with Canadian generally acceptedaccounting principles, 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.

Auditors' 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 from

65

TECHNICO TECHNOLOGIES INC.

STATEMENT OF RETAINED EARNINGS (DEFICIT) FOR THE YEAR ENDED MARCH 31, 2011

(Unaudited) (Unaudited) 2011 2011 2010 2010 $ ` $ `

Deficit At Beginning Of Year (1,141,418) (50,427,846) (1,031,582) (41,804,861)

Net Income (Loss) For The Year 7,081 319,246 (109,836) (4,651,828)

Change In Unrealized Foreign Exchange During The Year — (2,059,558) — (3,971,157)

Deficit At End Of Year (1,134,337) (52,168,158) (1,141,418) (50,427,846)

BALANCE SHEET AS AT MARCH 31, 2011(Unaudited) (Unaudited)

2011 2011 2010 2010$ ` $ `

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities 13,876 638,157 25,404 1,122,349

Current portion of long-term debt 70,000 3,219,300 10,000 441,800

Deferred revenue — — 2,640 116,635

83,876 3,857,457 38,044 1,680,784

Long–Term Debt (note 4) 190,766 8,773,328 260,766 11,520,642

274,642 12,630,785 298,810 13,201,426

SHAREHOLDERS’ EQUITY

Capital Stock (note 6) 1,287,998 59,235,028 1,287,998 56,903,753

Deficit (1,134,337) (52,168,158) (1,141,418) (50,427,846)

153,661 7,066,870 146,580 6,475,906

428,303 19,697,655 445,390 19,677,332

Approved By The Board :

V R Bhavani Director

STATEMENT OF INCOME (LOSS) FOR THE YEAR ENDED MARCH 31, 2011

(Unaudited) (Unaudited) 2011 2011 2010 2010 $ ` $ `

Sales 199,191 8,980,526 124,497 5,272,759

Cost Of Sales 139,314 6,280,972 180,098 7,627,601

Gross Profit (Loss) 59,877 2,699,554 (55,601) (2,354,842)

Expenses

Advertising 594 26,780 460 19,482

Amortization of capital assets 15,007 676,591 16,625 704,110

Bank charges 396 17,854 579 24,522

Bad debts — — 4,250 179,998

Insurance 5,586 251,845 4,960 210,068

Occupancy costs 5,638 254,189 6,643 281,348

Office and supplies 1,534 69,160 2,301 97,453

Professional services 10,501 473,438 11,135 471,595

Staff training 322 14,517 316 13,383

Telephone 4,271 192,558 4,770 202,021

Vehicle and travel 6,190 279,076 1,708 72,338

Wages and benefits 16,407 739,710 15,054 637,575

66,446 2,995,718 68,801 2,913,893

(6,569) (296,164) (124,402) (5,268,735)

Other Income

Net revenue – Support services (note 9) 13,650 615,410 14,566 616,907

Net Income (Loss) For The Year 7,081 319,246 (109,836) (4,651,828)

66


67


NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED MARCH 31, 2011

1. Nature of Business Activities

The company is a whollyowned subsidiary of Technico Pty Limited(Australia) and produces early generation seed potatoes for the NorthAmerican Market.

2. 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 = ` 45.99 (2010CAD $1 = ` 44.18) to the balance sheet and the average annualexchange rate of CAD $1 = ` 45.085 (2010 CAD $1 = ` 42.3525) tothe income statement as provided by the parent company.

The company, with the consent of its parent company, has elected toprepare its financial statements in accordance with Canadian generallyaccepted accounting principles using the differential reporting optionavailable to nonpublicly accountable enterprises described below:

Class A Preferred Shares

The company’s Class A preferred shares, redeemable on the basis of50% of after tax profits starting in the 2011 fiscal year and retractableby the holder should specified corporate obligations not be met, arerecorded as equity rather than liabilities.

In addition, the company has applied the following significant accountingpolicies without reference to differential reporting:

Use of Estimates

The preparation of financial statements in conformity with Canadiangenerally accepted accounting principles requires management tomake estimates and assumptions that affect the recorded amounts ofassets and liabilities and the disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts ofrevenue and expenses during the year. Actual amounts could differfrom those estimates.

Financial Instruments

The carrying values of cash, accounts receivable and accounts payableand other liabilities approximate fair values due to the short termmaturity of these instruments. The carrying amount of long term debthas not been determined because there is no ready market for thisfinancial instrument. It is management's opinion that the company is

not exposed to significant interest, currency or credit risks arising fromfinancial instruments.

Income taxes

The company uses the asset and liability method to account for incometaxes. Under this method, current income taxes are recognized forthe estimated income taxes payable for the current year. Future incometax assets and liabilities are recognized for temporary differencesbetween the carrying amounts of assets and liabilities for financialreporting purposes compared with tax purposes as well as the benefitof losses available to be carried forward to future years for tax purposes. A valuation allowance is recorded to reduce future income tax assetsto the amount more likely than not to be realized.

Inventory

Inventory is valued at the lower of production cost and net realizablevalue. Inventory includes capitalized amortization of $40,026 (2010$41,766).

Revenue

Revenue is recognized when products and services are delivered to thecustomer and ultimate collection is reasonably assured.

Amortization

Amortization of capital assets is recorded on a straight line basis at thefollowing annual rates:Buildings 10%

Equipment 13.34%, 20%

3. Capital Assets

Accumulated 2011 2010Cost Amortization Net Net

$ $ $ $

Land 46,564 — 46,564 46,564

Buildings 285,348 216,220 69,128 97,663

Equipment 277,738 228,238 49,500 71,010

609,650 444,458 165,192 215,237

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2011

(Unaudited) (Unaudited) 2011 2011 2010 2010

$ ` $ `

Cash Provided By (Required For):

Operating Activities

Net income (loss) for the year 7,081 319,246 (109,836) (4,651,828)

Items not affecting cash

Amortization of capital assets 15,007 676,591 16,625 704,110

Amortization capitalized to inventory 40,026 1,804,573 41,766 1,768,895

Foreign currency fluctuations — 88,916 — (32,554)

62,114 2,889,326 (51,445) (2,211,377)

Changes in non–cash operating working capital (note 7) (31,977) (1,470,624) (2,665) (117,740)

30,137 1,418,702 (54,110) (2,329,117)

Investing Activities

Purchase of capital assets (4,987) (229,352) (24,639) (1,088,551)

Financing Activities

Capital stock issuance — — 80,000 3,534,400

Repayment of long–term debt (10,000) (459,900) — —

(10,000) (459,900) 80,000 3,534,400

Increase In Cash During The Year 15,150 729,450 1,251 116,732

Cash Position At Beginning Of Year 18,067 798,200 16,816 681,468

Cash Position At End Of Year 33,217 1,527,650 18,067 798,200

68


6. Capital Stock

2011 2011 2010 2010$ ` $ `

Authorized

An unlimited number ofcommon shares

200,000 non-voting, non-cumulative,non-participating, redeemable andretractable Class A preferred shares

Issued

1,087,999 Commonshares 1,087,998 50,037,028 1,087,998 48,067,752

200,000 Class A preferredshares 200,000 9,198,000 200,000 8,836,000

1,287,998 59,235,028 1,287,998 56,903,752

7. Changes In Non-Cash Operating Working Capital

2011 2011 2010 2010$ ` $ `

Accounts receivable (42) (1,932) 224 9,896

Inventory (17,745) (816,093) (6,506) (287,435)

Prepaid expenses (21) (966) (65) (2,872)

Accounts payable andaccrued liabilities (11,529) (530,219) 11,580 511,605

Deferred revenue (2,640) (121,414) (7,898) (348,934)

(31,977) (1,470,624) (2,665) (117,740)

8. Government Assistance

During the year, the company received a grant of $nil (2010-$7,175)from the government of New Brunswick in relation to land clearingand improvements. In 2010, this had been recorded as a reduction tothe cost of land improvements in the financial statements.

9. Net Revenue-Support Services

2011 2011 2010 2010$ ` $ `

Revenue 83,252 3,753,416 68,743 2,911,438Expense-wagesand salaries 69,602 3,138,006 54,177 2,294,531Net revenue-Support services 13,650 615,410 14,566 616,907

Support services revenue is received entirely from ITC Infotech IndiaLimited, a subsidiary company of ITC Limited (India), which is theultimate parent company of Technico Pty Limited (Australia) andTechnico Technologies Inc. (Canada). These related party transactionsare recorded at the exchange amount as established and agreed to bythe related parties and are subject to normal trade terms.

Accumulated 2011 2010Cost Amortization Net Net

` ` ` `

Land 2,141,478 — 2,141,478 2,057,198

Buildings 13,123,155 9,943,958 3,179,197 4,314,752

Equipment 12,773,171 10,496,666 2,276,505 3,137,222

28,037,804 20,440,624 7,597,180 9,509,172

4. Long–Term Debt

2011 2011 2010 2010$ ` $ `

Non-interest bearing loanpayable to the AtlanticCanada OpportunitiesAgency in annual installmentsof $70,000, $100,000 and$90,766, unsecured, due August 2013. 260,766 11,992,628 270,766 11,962,442

Less current portion 70,000 3,219,300 10,000 441,800

190,766 8,773,328 260,766 11,520,642

Principal repayment of long-term debt over the next three years is as follows:

$ `

2012 70,000 3,219,300

2013 100,000 4,599,000

2014 90,766 4,174,328

260,766 11,992,628

5. Income Taxes

A valuation allowance has been recorded to reduce the company’sfuture income tax assets to $nil. The company has non-capital lossesfor income tax purposes of $1,197,811 which may be carried forwardto reduce taxable income in future years. If not applied against taxableincome, the non-capital losses will expire as follows:

$ `

2014 205,382 9,445,5182026 366,483 16,854,5532027 283,750 13,049,6632028 214,636 9,871,1102030 115,010 5,289,3102031 12,550 577,175

1,197,811 55,087,328

The company has investment tax credits of $33,409 available to reducetaxes payable of future years. The benefit of investment tax creditsand non-capital losses carried forward have not been recorded in thefinancial statements due to the uncertainty that they may ever berealized.

DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2011

Your Directors submit their Report for the financial year ended 31st March,2011.

During the year under review, your Company’s leadership in the productionof early generation seed potatoes and strong agronomy skills continued tobe leveraged by the ultimate holding company’s Branded Packaged Foodsbusiness in its chip stock sourcing operations for the ‘Bingo!’ brand ofpotato chips as well as by the Agri Commodities business in servicing theseed potato requirements of its extensive farmer base supported by its e-Choupal system. Further, your Company has embarked upon the distributionof farm inputs for seed potatoes at competitive prices, to meet the needsof its farmer base. This initiative has been well received by farmers.

In the year under review, a record potato crop drove down the table potatoprices. Consequently, sales realisation for seed potatoes were also lowercompared to the prices achieved in the previous financial year. While thisresulted in lower post tax profits relative to the previous year, your Companywas successful in wiping out its accumulated losses and looks forward tothe future with confidence.

FINANCIAL RESULTS(` Crore)

Particulars 2010-11 2009-10

Turnover 47.65 54.31

Profit before interest, depreciation & tax 7.85 15.07

Financial expenses 0.05 0.29

Depreciation 0.78 0.76

Profit before tax 7.02 14.02

Profit after tax 7.02 14.02

Balance of (loss) brought forward (6.60) (20.62)

Balance carried forward to Balance Sheet 0.42 (6.60)

COMPANY’S PERFORMANCE

(A) PRODUCTION OF TECHNITUBER® SEED POTATOES

During the year under review, your Company’s facility at Manpura, HimachalPradesh produced 101.28 lakh TECHNITUBER® seed potatoes as against100.95 lakh produced during the previous financial year.

(B) FIELD OPERATIONS

Your Company’s field generated seed potato production was slightly lowerby 1.5% at 50,403 MT (previous year 51,182 MT).

Your Company has continued to focus on adopting modern agronomypractices using the TECHNITUBER® Seed Potato Technology, upgradingthe capabilities of its team as well as farmers through continuous trainingand introducing appropriate mechanisation. This coupled with its strongemphasis on quality by maintaining an early generation seed potato pipelineand stringent field inspections has enabled your Company to maintain itsproduct superiority in the market.

Based on its substantial R&D programme, agronomy practices for differentvarieties and locations continue to be updated on a regular basis, thusgiving better returns to farmers. During the year, new varieties of seedpotatoes have been introduced by your Company to meet specificregion/industry requirements. Your Company is also encouraging use ofdrip irrigation amongst farmers to improve both farm yields and productquality at substantially reduced water consumption. Trials have been setup in UP, Punjab etc. to demonstrate these benefits to farmers. Investmentshave also been made in a modern grading machine to help farmers gradetheir harvested potatoes better and faster.

(C) MARKETING

Your Company expanded its marketing reach to cover new regions in Indiawhich resulted in increased sales volumes by 14 % over the previous financialyear from 35079 MT to 39859 MT, thus minimising the impact of the sharpreduction in selling prices.

Your Company continues to be the only exporter of TECHNITUBER® seedpotatoes and field generated seed potatoes from India. During the year,your Company exported 46.78 lakh TECHNITUBER® seed potatoes (previousyear: 33.24 lakh) and 546.09 MT of early generation seed potatoes to SaudiArabia and Pakistan (previous year: 628.40 MT).

Your Company recognizes that the business is subject to agricultural andcyclical risks. However, the strength of the TECHNITUBER® Seed PotatoTechnology, the expertise of its employees and the loyalty of its farmers,distributors and customers, have enabled it to deliver superior performancein the field and command a premium over competition even in depressedmarket conditions to minimise these risks.

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 a significant improvement in yourCompany’s operations.

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

The Board of Directors of the Company has re-appointed Mr. SachidanandMadan as Wholetime Director of the Company for a period of three yearswith effect from 1st June, 2011, in terms of the provisions of Section 269of the Companies Act, 1956, read with Schedule XIII thereto, subject tothe approval of the Members of the Company at the next General Meeting.Appropriate resolution seeking your approval for re-appointment ofMr. Madan as Wholetime Director is appearing in the Notice conveningthe ensuing Annual General Meeting of the Company.

In accordance with the provisions of Articles 122 and 123 of the Articlesof Association of the Company, Mr. Sachidanand Madan and Mr. SurampudiSivakumar 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 for thatperiod;

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 for preventingand 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 BoardFor Technico Agri Sciences Ltd.

Place : Hyderabad S. Sivakumar

Dated : 26.04.2011 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)The 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 plans to test market the same next year.Technology Absorption, Adaptation and InnovationBased on the efforts made towards technology absorption, the 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. TheCompany 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 entity.

Foreign Exchange Earnings and Outgo (` Crore)Foreign Exchange Earnings : 2.22Foreign Exchange Outgo : 0.07

On behalf of the BoardFor Technico Agri Sciences Ltd.

Place : Hyderabad S. SivakumarDated : 26.04.2011 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, 2011 and also the Profit and Loss account andthe 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.


i. We have obtained all the information and explanations, which tothe 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, profit and loss account and cash flow statement

dealt with by this report are in agreement with the books ofaccount;

iv. In our opinion, the balance sheet, profit and loss account and cashflow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of section 211 of theCompanies Act, 1956.

v. On the basis of the written representations received from thedirectors, as on March 31, 2011, and taken on record by the Boardof Directors, we report that none of the directors is disqualified ason March 31, 2011 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 theCompany as at March 31, 2011;

(b) in the case of the profit and loss account, of the profit for theyear ended on that date; and

(c) in the case of cash flow statement, of the cash flows for theyear ended on that date.

For S.R. Batliboi & Co.Firm registration number: 301003E

Chartered Accountantsper Manoj Gupta

Place : Gurgaon PartnerDate : 26.04.2011 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) Fixed assets have been physically verified by the managementduring the year and no material discrepancies were identified onsuch 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 carriedout at the end of the year.

(iii) (a) As informed, the Company has not granted any loans, secured orunsecured to companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956.Accordingly, the provisions of clause 4 (iii) (b), (c) & (d) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are notapplicable to the Company.

(e) As informed, the Company has not taken any loans, secured or

unsecured from companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956.Accordingly, the provisions of clause 4 (iii) (f) & (g) of the Companies(Auditor’s Report) Order, 2003 (as amended) are not applicableto 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, for thepurchase of inventory and fixed assets and for the sale of goods andservices. During the course of our audit, no major weakness has beennoticed in the internal control system in respect of these areas. Duringthe course of our audit, we have not observed any continuing failureto correct major weakness in internal control system of the company.

(v) (a) According to the information and explanations provided by themanagement, we are of the opinion that there are no contractsor arrangements referred to in section 301 of the Act that need tobe entered into the register maintained under section 301.Accordingly, the provisions of clause 4 (v) (b) of the Companies(Auditor’s Report) Order, 2003 (as amended) are not applicableto the Company.

(vi) The Company has not accepted any deposits from the public.(vii) In our opinion, the Company has an internal audit system commensurate

with the size and nature of its business.(viii)To the best of our knowledge and as explained, the Central Government

70


BALANCE SHEET AS AT 31ST MARCH, 2011As at As at

Particulars Schedules 31st March, 2011 31st March, 2010(` in ‘000) (` in ‘000)

SOURCES OF FUNDS :Shareholders’ Funds :

Share Capital 1 379,628 379,628Reserves & Surplus 2 4,229 —

Loan FundsUnsecured Loans 3 120,000 120,000

TOTAL 503,857 499,628

APPLICATION OF FUNDS : Fixed Assets : 4

Gross Block 192,340 187,242Less : Accumulated Depreciation 81,822 74,639Net Block 110,518 112,603Capital Advances — 426

110,518 113,029Investments 5 222,762 156,322Current Assets, Loans & Advances :

Inventories 6 370,494 346,871Sundry Debtors 7 18,379 10,801Cash and Bank Balances 8 1,140 38,889Loans and Advances 9 6,635 6,132

396,648 402,693Less : Current Liabilities and Provisions :

Current Liabilities 10 224,089 236,976Provisions 11 1,982 1,416

226,071 238,392Net Current Assets 170,577 164,301Profit and loss account — 65,976TOTAL 503,857 499,628Significant accounting policies and notes to accounts 18The schedules referred to above and notes to accounts form an integral part of the Balance Sheet.As per our report of even date

has 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 authoritiesundisputed statutory dues including provident fund, employees’state insurance, income-tax, sales tax, wealth-tax, service tax, cessand other material statutory dues applicable to it.Further, since the Central Governrnent has till date not prescribedthe amount of cess payable under section 441 A of the CompaniesAct, 1956, we are not in a position to comment upon the regularityor otherwise of the company in depositing the same.

(b) 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,custom duty, service tax, cess and other undisputed statutory dueswere outstanding, at the year end, for a period of more than sixmonths 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, andcess which have not been deposited on account 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 banks. TheCompany has no outstanding dues in respect of financial institutionsand debenture holders.

(xii) According to the information and explanations given to us and basedon the documents and records produced to us, the Company has notgranted loans and advances on the basis of security by way of pledgeof 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 the

Companies (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 provisionsof 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 on anoverall 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.

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

(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 course of our audit.

For S.R. Batliboi & Co.Firm registration number: 301003E

Chartered Accountantsper Manoj Gupta

Place : Gurgaon PartnerDate : 26.04.2011 Membership No.: 83906

71


For S.R. Batliboi & Co.Firm Registration No. : 301003EChartered Accountantsper Manoj GuptaPartnerMembership No. 83906Gurgaon, April 26, 2011

For and on behalf of the Board of Directors of Technico Agri Sciences Limited

Arup K Mukerji Director

Sachidanand Madan Director and Company Secretary

Sanjeev Madan General Manager (Finance)

Hyderabad, April 26, 2011

72


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 Year ended Year ended

31st March, 2011 31st March, 2010Particulars (` in ‘000) (` in ‘000)

A. CASH FLOWS FROM OPERATING ACTIVITIESNet Profit/(Loss) before tax 70,205 140,207Adjustment for:

Depreciation 7,801 7,625Profit on assets sold (2) (30)Loss on assets sold 7 66Assets written off 333 876Unrealised Foreign exchange loss/(Profit) (529) 206Provision for doubtful debts — 258Provision written back (1,917) (4,187)Interest 290 2,743Dividend on Investments (8,646) (4,142)

Operating profit before working capital changes 67,542 143,622Movements in working capital :Decrease/(Increase) in sundry debtors (7,049) (5,120)Decrease/(Increase) in loans and advances (503) (1,217)Decrease/(Increase) in inventories (23,623) (15,277)Increase/(Decrease) in current liabilities (10,404) 121,072

Cash generated from operations 25,963 243,080Direct Taxes Paid (Fringe benefit tax) — (65)Net cash from operating activities 25,963 243,015

B. CASH FLOWS FROM INVESTING ACTIVITIESPurchase of fixed assets (5,636) (11,763)Purchase of current investments (1,777,291) (881,500)Sale/Redemption of current investments 1,710,888 727,000Proceeds from sale of fixed assets 8 422Dividend on Investments (received) 8,609 2,321

Net cash used in investing activities (63,422) (163,520)


Particulars Schedules Year ended Year ended31st March, 2011 31st March, 2010

(` in ‘000) (` in ‘000)INCOME

Sales 12 476,483 543,099Other Income 13 21,430 18,112Increase/(Decrease) in inventories 14 23,403 14,132

TOTAL 521,316 575,343EXPENDITURE

Personnel expenses 15 24,836 20,119Production and other expenses 16 400,115 402,714Purchase of finished goods for resale 17,879 1,762Depreciation 4 7,801 7,625Financial expenses 17 480 2,916

TOTAL 451,111 435,136Profit before tax 70,205 140,207Tax Expense — —Net profit after tax 70,205 140,207Balance brought forward from previous year (65,976) (206,183)Balance carried to Balance Sheet 4,229 (65,976)Earnings per shareBasic [Nominal value of shares ` 10 (Previous year: ` 10)] 1.85 3.69Diluted [Nominal value of shares ` 10 (Previous year: ` 10)] 1.85 3.69

Significant accounting policies and notes to accounts 18

The Schedules referred to above and the notes to accounts form an integral part of the Profit & Loss account.

As per our report of even date







73


SCHEDULES ANNEXED TO & FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2011As at As at

Particulars 31st March, 2011 31st March, 2010(` in ‘000) (` in ‘000)

SCHEDULE 1 : SHARE CAPITALAuthorised :40,000,000 (Previous year 40,000,000) Equity shares of ` 10/- each 400,000 400,000Issued, Subscribed & Paid up :37,962,800 (Previous year 37,962,800) Equity shares of ` 10/- each 379,628 379,628

379,628 379,628Of the above :Out of the above 37,962,794 (Previous year 37,962,794) shares are held by the holding company, Technico Pty Ltd., Australia.Balance 6 (Previous year 6) shares are held by Technico Pty Ltd. Australia, jointly with other share holders.SCHEDULE 2 : RESERVES & SURPLUSProfit & Loss Account 4,229 —

4,229 —SCHEDULE 3 : UNSECURED LOANSOther Loans & Advances

- From Body Corporate 120,000 120,000(From Russell Credit Limited, the Indian parent of the holding company)

120,000 120,000Note :(Repayable with in one year ` 120,000 thousands (Previous year ` Nil))

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 (Contd)Year ended Year ended

Particulars 31st March, 2011 31st March, 2010(` in ‘000) (` in ‘000)

C. CASH FLOWS FROM FINANCING ACTIVITIESNet proceeds of short term borrowings/vehicle loan — (39,612)Interest (290) (2,743)Net cash generated from/(used in) financing activities (290) (42,355)Net increase in cash and cash equivalents (A+B+C) (37,749) 37,140Cash and cash equivalents at the beginning of the year 38,889 1,749Cash and cash equivalents at the end of the year 1,140 38,889

COMPONENTS OF CASH AND CASH EQUIVALENTSCash on hand 50 44Balances with scheduled banks:On current accounts 1,080 38,835On fixed deposit 10 10(including fixed deposits of ` 10 thousand pledged with sales tax authorities)

1,140 38,889As per our report of even date

GROSS BLOCK DEPRECIATION NET BLOCKAs at 1st Additions Withdrawal/ As at 31st As at 1st Withdrawal/ As at 31st As at 31st As at 31st

Particulars April, during the Adjustments March, 2011 April, 2010 For the year Adjustments March, 2011 March, 2011 March, 20102010 year

Land-freehold 15,193 — — 15,193 — — — — 15,193 15,193Buildings 46,548 — — 46,548 12,525 1,313 — 13,838 32,710 34,023Plant & machinery 101,320 5,385 66 106,639 53,521 4,791 29 58,283 48,356 47,799Furniture & fixtures 2,377 17 72 2,322 1,436 90 42 1,484 838 941Leasehold improvements 4,951 78 — 5,029 44 526 — 570 4,459 4,907Equipment & appliances 8,730 582 826 8,486 4,080 523 547 4,056 4,430 4,650Electric installation 4,492 — — 4,492 1,599 213 — 1,812 2,680 2,893Vehicles 3,631 — — 3,631 1,434 345 — 1,779 1,852 2,197

Total 187,242 6,062 964 192,340 74,639 7,801 618 81,822 110,518 112,603

Previous Year 180,183 11,445 4,386 187,242 70,065 7,625 3,051 74,639 112,603 110,118

Note :- Freehold land amounting to ` 328 thousand (Previous Year ` 328 thousand) is pending registration in the name of the Company.

(` in ‘000)SCHEDULE 4 : FIXED ASSETS







74


SCHEDULES ANNEXED TO & FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2011 (Contd.)

As at As atParticulars 31st March, 2011 31st March, 2010

(` in ‘000) (` in ‘000)SCHEDULE 5 : INVESTMENTSCurrent, other than trade (At lower of carrying cost and fair value)In units of mutual fund – unquoted72,496 units – DSP Black Rock Liquidity Fund-Inst Plan – Daily Dividend 72,519 —6,921,384 units – Kotak Floater Fund Short Term 70,018 —2,498,376 units – Reliance Interval Fund MIP- Series 1 -Inst. Dividend Plan 25,000 —2,019,065 units – Reliance Interval Fund QIP- Series 1 Inst. Dividend Plan 20,213 —3,500,865 units – Tata Fixed Income Portfolio Fund Scheme A-2 Institutional 1 35,012 —9,023,874 units – LIC Income Plus Fund – Daily Dividend — 90,2395,326,222 units – Canara Robeco Treasury Advantage Fund – Daily Dividend — 66,083

222,762 156,322Aggregate amount of unquoted investments - Fair value ` 223,552 thousands(previous year ` 156,322 thousands) 222,762 156,322

SCHEDULE 6 : INVENTORIESStores and spares 6,603 6,383TECHNITUBER® Seed Potatoes* 20,528 19,873Field Generated Seed Potatoes** 342,911 320,615Banana Tissue Culture Plantlets 450 —Insecticides, Fungicides and Micronutrients 2 —

370,494 346,871Includes borrowing cost (Amount ` in thousand)* ` 6 (Previous year ` 56)** ` 153 (Previous year ` 1,147)

SCHEDULE 7 : SUNDRY DEBTORS

Debts outstanding for a period exceeding six months

Unsecured, Considered doubtful 619 1,798619 1,798

Other debtsUnsecured, considered good* 18,379 10,801

18,379 10,80118,998 12,599

Less: Provision for doubtful debts 619 1,79818,379 10,801

Included in sundry debtors are :*Dues from :– ITC Limited (ultimate holding company) 1,059 3,750– Technico Pty Limited, Australia (parent company) 11,601 6,607

SCHEDULE 8 : CASH AND BANK BALANCESCash on hand 50 44Balances with scheduled banks :On current accounts 1,080 38,835On fixed deposit 10 10(Fixed deposits of ` 10 thousand is pledged with sales tax authorities)

1,140 38,889

SCHEDULE 9 : LOANS AND ADVANCES(Unsecured, considered good )Advances recoverable in cash or kind or for value to be received 2,446 1,522Tax deducted at source 2,462 1,709Advance FBT 219 219Deposits 1,508 2,682(Unsecured, Considered Doubtful)Advances recoverable in cash or kind or for value to be received 393 —

7,028 6,132Less: Provision for Doubtful Advances 393 —

6,635 6,132

SCHEDULE 10 : CURRENT LIABILITIES

Sundry creditors- Total outstanding dues of Micro and Small Enterprises* — —- Total outstanding dues to creditors other than Micro and Small Enterprises 174,126 187,637Advance received from customers 48,644 47,752Deposit from dealers 240 240Other liabilities 1,079 1,347

224,089 236,976* Refer Schedule 18 note no.10 (a)

SCHEDULE 11 : PROVISIONSProvision for Leave encashment 1,982 1,416

1,982 1,416

SCHEDULES ANNEXED TO & FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011

Year ended Year endedParticulars 31st March, 2011 31st March, 2010

(` in ‘000) (` in ‘000)

SCHEDULE 12 : SALESTECHNITUBER® Seed Potatoes 21,755 14,056Field Generated Seed Potatoes 446,589 529,043Insecticides, Fungicides and Micronutrients 8,139 —

476,483 543,099

SCHEDULE 13 : OTHER INCOMEExcess Provision written back 1,917 4,187Dividend Income from short term investments 8,646 4,142Rental income 8,424 8,424Exchange difference (net) 976 —Profit on sale of assets 2 30Miscellaneous income 1,465 1,329

21,430 18,112SCHEDULE 14 : INCREASE / (DECREASE) IN INVENTORIESOpening StockTECHNITUBER® Seed Potatoes 19,873 18,538Field Generated Seed Potatoes 320,615 307,082Standing crop — 736Banana Tissue Culture Plantlets — —Insecticides, Fungicides and Micronutrients — —

340,488 326,356Less : Closing StockTECHNITUBER® Seed Potatoes 20,528 19,873Field Generated Seed Potatoes 342,911 320,615Standing crop — —Banana Tissue Culture Plantlets 450 —Insecticides, Fungicides and Micronutrients 2 —

363,891 340,488

Increase / (Decrease) in inventories 23,403 14,132

SCHEDULE 15 : PERSONNEL EXPENSESSalaries, wages, bonus and other allowances 21,853 16,306Contribution to provident and other funds 829 809Gratuity expense (Refer Schedule 18 note no.8) 379 204Workmen and staff welfare expenses 1,775 2,800

24,836 20,119SCHEDULE 16 : PRODUCTION AND OTHER EXPENSESConsumption of Stores- Plantlets 248 10- Chemicals and fertilisers 1,937 1,974- Consumables 1,067 1,024- Packing Stores 35,087 31,051Power and fuel 9,914 8,623Seed farming charges 194,161 208,459Land management charges ( Net ) 1,783 1,650Contract labour 6,513 4,999Freight and cartage 49,458 51,786Travelling 7,759 7,343Insurance 1,503 2,667Lease Rent 3,989 3,881Storage and handling cost 66,408 56,592Rates and taxes 394 378Repair and maintenance :- Building 265 320- Plant and machinery 2,501 3,650- Others 1,389 1,392Auditors’ remuneration :- Audit fee including service tax 441 441- Tax audit fee including service tax 165 165- Out of pocket expenses 61 45Bad & Doubtful Debts — 258Provision for Doubtful Debts and Advances 393 —Exchange difference (net) — 1,225Assets written off 333 876Miscellaneous expenses 14,346 13,905

400,115 402,714SCHEDULE 17 : FINANCIAL EXPENSESInterest on cash credit 290 2,743Bank charges 190 173

480 2,916

75


1. 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 severalstages like 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. During the year the Company has started supplying AgriInputs comprising Insecticides, Fungicides and Micronutrients to thefarmers associated with the Company for growing Field GeneratedSeed Potatoes. During the year the Company has also started productionof Tissue Culture Plantlets of Banana in the facility situated at Vill.Manpura, Distt. Solan, Himachal Pradesh.

2. 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 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 years whichis determined based on technical evaluation.

Assets Rates (SLM) Rates Schedule XIV

Buildings 1.63% - 3.34% 1.63% - 3.34%Electric Installation 4.75% 4.75%Plant and Machinery 4.75% - 20% 4.75%Equipment and Appliances 4.75% - 16.21% 4.75% - 16.21%Furniture and Fittings 6.33% 6.33%Vehicles 9.5% 9.5%Leasehold Improvements Over the Primary —

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 & Spares

At cost, arrived at on FIFO basis or net realizable value, whicheveris lower.

(ii) TECHNITUBER® Seed Potatoes, Field Generated Seed Potatoes andBanana Tissue Culture Plantlets

At 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 weighted average basis.

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 Micronutrients

At cost, arrived at on FIFO basis or net realizable value, whicheveris lower.

g) Foreign Currency Transactions

(i) Initial Recognition

Foreign currency transactions are recorded in the reporting currencyby applying to the foreign currency amount, the exchange ratebetween the reporting currency and the foreign currency at thedate of the transaction.

(ii) Conversion

Foreign 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 Differences

Exchange 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) Investment

Investments 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 Cost

Borrowing 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 Recognition

Revenue 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) Interest

Revenue from interest (incl. of tax deducted at source) is recognizedon a time proportion basis taking into account the amountoutstanding and the rate applicable.

(iii) Dividend

Revenue from dividend is recognised when the right to receivepayment is established at the balance sheet date.

(iv) Rental Income

Rental income is recognised in the Profit and Loss Account as perlease terms.

76


SCHEDULE-18 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

of three months 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 Segment

The 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.

3. Notes on Accounts

1. Segment Reporting

Geographical segment wise revenue (` in ‘000)

S. No. Particulars 2010-11 2009-10

(a) Revenue from Domestic Market 451,601 508,596(b) Revenue from Overseas Market 24,882 34,503

Total 476,483 543,099

Geographical segment wise receivables (Gross): (` in ‘000)


(a) Receivable from Domestic Market 7,397 5,992(b) Receivable from Overseas Market 11,601 6,607

Total 18,998 12,599

The Company has common assets for producing goods for domesticmarkets and overseas markets. Hence, separate figures for assets /addition to fixed assets cannot be furnished.

2. Earnings per Share (EPS)


(a) Total equity shares outstandingat the beginning and end of theyear `10 (previous year `10)paid up on each share

No. of Shares 37,962,800 37,962,800

Paid up Value (` ‘000) 379,628 379,628

Equivalent no. of Shares of `10 37,962,800 37,962,800

(b) Weighted average number ofequity shares outstanding duringthe year. 37,962,800 37,962,800

(c) Net Profit/(Loss) after tax (` ‘000) 70,205 140,207

(d) Basic earnings per share (`) 1.85 3.69

(e) Diluted earnings per share (`) 1.85 3.69

3. 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) Holding Company of Technico Pty Ltd.

Technico Pty Limited Australia (TPL) Holding Company

Technico Asia Holdings Pty Limited,Australia Fellow Subsidiary

Technico Horticultural (Kunming)Company Limited, China Fellow Subsidiary

Technico ISC Pty Limited, Australia. Fellow Subsidiary (Deregistered on3rd November 2010)

Technico Technologies Inc., Canada. Fellow Subsidiary

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

k) Retirement Benefits

(i) Retirement benefits in the form of Provident Fund are a definedcontribution 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 of the employees andthe premium paid to LIC is charged to Profit & Loss Account. Thedifference between the actuarial valuation of the gratuity ofemployees at the year-end and the contribution paid to LIC isfurther adjusted in the books of accounts.

(iii) Short term compensated absences are provided for based onestimates. Long term compensated absences are provided forbased on actuarial valuation at the year end. The actuarial valuationis done as per projected unit credit method.

(iv) Actuarial gains/losses are immediately charged off to profit andloss account and are not deferred.

l) Income Tax

Tax 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) Leases

Leases 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 Share

Basic 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 treated asa fraction of an equity share to the extent that they were entitled toparticipate in dividends relative to a fully paid equity share during thereporting 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) Provisions

A 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.

p) Cash and Cash equivalents

Cash and cash equivalents in the cash flow statement comprisecash on hand and at bank and short-term deposits with maturity

77


ee) 2,397,459 Units of ` 10 each of Templeton India Ultra Short BondFund Retail Plan- Daily Dividend

ff) 36,492 Units of ` 1000 each of UTI Treasury Advantage Fund-Institutional Plan - Daily Dividend

gg) 1,987,755 Units of ` 13 each of UTI Fixed Income Interval Fund- MIP-II

hh) 3,738 Units of ` 1070 each of UTI Liquid Cash Plan Regular - DailyIncome Option

ii) 1,992,905 Units of ` 10 each of Tata Floater Fund - Daily Dividendjj) 31,404 Units of ` 1115 each of Tata Liquid Super High Investment

Fund - Daily Dividendkk) 3,500,865 Units of ` 10 each of Tata Fixed Income Portfolio Fund

Scheme A2 – Inst. Ill) 4,500,000 Units of ` 10 each of Fidelity FMP Series 4 - Plan B -

Dividendmm)2,480,405 Units of ` 10 each of DWS Money Plus Fund – Inst.

Daily Dividendnn) 5,746,954 Units of ` 10 each of JM Money Manager Fund Super

Plus Plan - Daily Dividendoo) 998,293 Units of ` 10 each of Religare Ultra Short Term Fund –

Inst. Daily Dividendpp) 139,890 Units of ` 1001 each of Religare Liquid Fund - Super Inst.

Daily Dividendqq) 1,000,000 Units of ` 10 each of Sundaram Interval Fund QIP A –

Inst. Dividendrr) 1,008,288 Units of ` 10 each of Sundaram Money Fund – Inst.

Daily DividendYear 2009-10a) 5,996,822 units of ` 10 each of JM Money Manager Fund – Daily

Dividendb) 2,417,970 units of ` 10 each of Canara Robeco Treasury Advantage

Fund - Daily Dividendc) 5,798,203 units of ` 10 each of Fortis Money Plus Fund - Daily

Dividendd) 9,649,905 units of ` 10 each of Kotak Liquid - Daily Dividende) 11,955,599 units of ` 10 each of Kotak Floater Long Term - Daily

Dividendf) 87,981 units of ` 1000 each of UTI Treasury Advantage Fund –

Daily Dividendg) 9,750,000 units of ` 10 each of LIC income Plus Fund - Daily

Dividendh) 3,996,443 units of ` 10 each of JP Morgan India Treasury Fund –

Daily Dividendi) 232,790 units of ` 1000 each of Reliance Money Manager Fund

- Daily Dividend5. In accordance with Accounting Standard 22 on "Accounting for Taxes

on Income" as notified under the Companies Accounting StandardsRules, 2006 (as amended), on conservative basis, deferred tax assetshave not been accounted for in the books of accounts, since theestimation of future taxable profits cannot be made with virtual certaintyagainst which such Deferred Tax Assets would be realised.

6. Estimated amount of contracts remaining to be executed on capitalaccount and not provided for ` Nil (Previous Year ` 474 thousand).

7. 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 noticeperiod rent in lieu thereof;

• the lease is generally renewable on the expiry of lease periodsubject to 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, 2011 March 31, 2010

Lease rentals charged to theprofit and loss account. 3,989 3,881

8. 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 fund, 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 andLeave encashment.

(ii) The following transactions were carried out with the related partiesand the balances of these related parties as at March 31, 2011 forthe period then ended are presented here in below:

Ultimate Holding Holding CommonParticulars Holding Company Company Control

Company of TPL (TPL)(ITC) (RCL)

Sale of Seed Potatoes 3,516 — 15,385 —(5,377) (—) (11,862) (—)

Purchase — — — —(225) (—) (—) (—)

Rental Income 8,424 — — —(8,424) (—) (—) (—)

Services Received 2,957 — — —(1,347) (—) (—) (74)

Expenses Reimbursed 627 — — —(512) (—) (—) (10)

Expenses Recovered 45 — 677 —(—) (—) (693) (—)

Loan Outstanding — 120,000 — —(—) (120,000) (—) (—)

Accounts Receivable 1,059 — 11,601 —(3,750) (—) (6,607) (—)

Other Payable 164 — — —(1,454) (—) (—) (77)

Previous Year figures are given in the brackets.

4. The following investments were purchased and sold :Year 2010-11a) 1,648,879 Units of ` 10 each of Birla Sun Life Savings Fund-Inst.-

Daily Dividendb) 2,941,864 Units of ` 12 each of Canara Robeco Treasury Advantage

Inst.- Daily dividendc) 1,249,285 Units of ` 12 each of Canara Robeco Treasury Advantage-

Retail Daily Dividendd) 1,000,000 Units of ` 10 each of Canara Robeco Interval Series 2-

QIP 2,Inst.Dividende) 496,524 Units of ` 10 each of Canara Robeco Liquid Fund – Daily

Dividendf) 2,000,000 Units of ` 10 each of DSP Black Rock FMP 3M Series 22

- Dividendg) 52,458 Units of ` 1001 each of DSP Black Rock Money Manager

Fund-Inst. Daily Dividendh) 97,488 Units of ` 1000 each of DSP Black Rock Liquidity Fund –

Inst. Plan Daily Dividendi) 44,725 Units of ` 119 each of ICICI Prudential Liquid Plan – Inst.

Daily Dividendj) 5,750,000 Units of ` 10 each of ICICI Prudential Interval Fund IV

QIP-B – Inst. Dividendk) 2,249,798 Units of ` 10 each of ICICI Prudential Interval Fund QIP

Plan 1 - Retail Dividend.l) 2,499,950 Units of ` 10 each of ICICI Prudential Interval Fund –

V - MIP-A Dividendm) 999,774 Units of ` 100 each of ICICI Prudential Liquid Super Inst.

Plan - Daily Dividendn) 599,101 Units of ` 10 each of JP Morgan India Liquid Fund - Retail

Daily Dividend Plano) 4,745,776 Units of ` 10 each of JP Morgan India Treasury Fund -

Super Inst. Daily Dividendp) 4,906,731 Units of ` 12 each of Kotak Floater Long Term - Daily

Dividendq) 3,000,000 Units of ` 10 each of Kotak QIP Series 10 - Dividendr) 2,749,423 Units of ` 10 each of Kotak QIP Series 4 – Dividends) 1,099,980 Units of ` 10 each of Kotak QIP Series 8 - Dividendt) 2,500,000 Units of ` 10 each of Kotak FMP 6 M Series 9 - Dividendu) 6,921,384 Units of ` 10 each of Kotak Floater Fund Short Termv) 4,605,000 Units of ` 10 each of LIC Income Plus Fund - Daily

Dividend Planw) 3,000,000 Units of ` 10 each of Reliance Fixed Horizon Fund-XV

Series 1 - Dividend Planx) 3,000,000 Units of ` 10 each of Reliance Fixed Horizon Fund-XV

Series 2 - Dividend Plany) 15,437,778 Units of ` 11 each of Reliance Liquid Fund -Cash Plan

- Daily Dividendz) 3,517,222 Units of ` 10 each of Reliance Interval Fund QIP- Series

1 - Inst. Dividendaa) 2,998,950 Units of ` 10 each of Reliance Monthly Interval Fund

Series 2 - Inst. Dividendbb) 23,973 Units of ` 1001 each of Reliance Money Manager Fund -

Daily Dividendcc) 2,498,376 Units of ` 10 each of Reliance Interval Fund MIP - Series

1 - Inst Dividend Plandd) 13,693,017 Units of ` 10 each of Reliance Liquidity Fund - Daily

Dividend

(` in ‘000)

78


b) Earnings in foreign currency(` in ‘000)


FOB value of Exports 24,882 34,503

c) Expenditure in foreign currency(` in ‘000)


Travelling 151 139

Testing Charges, 526 102

Temperature Data Loggers

S.No. Particulars 2010-11 2009-10

d) the amount of interest accrued and remainingunpaid at the end of each accounting year;and

e) the amount of further interest remaining dueand payable even in the succeeding years,until such date when the interest dues asabove are actually paid to the small enterprisefor the purpose of disallowance as a deductibleexpenditure under section 23 of the MicroSmall and Medium Enterprise DevelopmentAct, 2006.

10. Supplementary Statutory Information

a) Details of dues to Micro, Small and Medium Enterprises as perMSMED Act, 2006

S.No. Particulars 2010-11 2009-10

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 payment made to the supplier beyond the appointed dayduring each accounting year

c) the amount of interest due and payable forthe period of delay in making payment (whichhave been paid but beyond the appointedday during the year) but without adding theinterest specified under Micro Small andMedium Enterprise Development Act, 2006.

Profit and Loss account

Net employee benefit expense (recognised in Employee Cost)(` in ‘000)

Particulars 2010-11 2009-010

Gratuity Leave Gratuity LeaveEncashment Encashment

(Funded) (Unfunded) (Funded) (Unfunded)

Current service cost 313 130 220 123Interest cost on benefitobligation 77 107 54 77Expected return on planassets (97) — (66) —Net actuarial (gain) / lossrecognised in the year (11) 470 (4) 246Past service cost 97 — — —Net benefit expense 379 707 204 446Actual return on plan assets 190 — 9 —

Balance Sheet

Details of Provision for Gratuity and Leave Encashment(` in ‘000)

Particulars 2010-11 2009-010


Defined benefit obligation (1,519) (1,982) (975) (1,416)Fair value of plan assets 1,600 - 993 -Less: Un-recognized

past service cost - - - -Plan asset / (liability) 81 (1,982) 18 (1,416)

Changes in the present value of the defined benefit obligation are as follows:(` in ‘000)

Particulars 2010-11 2009-010


Opening defined benefitobligation 975 1,416 790 1,223Interest cost 77 107 54 77Current service cost 313 130 220 123Past service cost 97 - - -Benefits paid (25) (141) (28) (253)Actuarial (gains)/ losseson obligation 81 470 (61) 246Closing defined benefitobligation 1,519 1,982 975 1,416

Changes in the fair value of plan assets are as follows:(` in ‘000)

Particulars 2010-11 2009-010Gratuity Leave Gratuity Leave

Encashment Encashment

Opening fair value ofplan assets 993 — 779 —Expected return 97 — 66 —Contributions by employer 442 141 233 253Benefits paid (25) (141) (28) (253)Actuarial gains / (losses) 93 — (57) —Closing fair value ofplan assets 1,600 — 993 —

The Company expects to contribute ` 400 (Previous year ` 443)thousands to gratuity fund in 2011-12.The major categories of plan assets as a percentage of the fair valueof total 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 of inflation, seniority,promotion and other relevant factors on long term basis.The principal assumptions used in determining gratuity obligations forthe Company’s plans are shown below:

Particulars 2010-11 2009-10(In %) (In %)

Discount rate 8.00 7.00Expected rate of return on plan assets 7.50 7.50

The estimates of future salary increases, considered in actuarial valuation,take account of inflation, seniority, promotion and other relevant factors,such as supply and demand in the employment market.Amounts for the current and previous years are as follows:

(` in ‘000)

Particulars Gratuity

2010-11 2009-10 2008-09 2007-08

Defined benefit obligation (1,519) (975) (790) (746)Fair value of Plan assets 1,600 993 779 813Plan asset / (liability) 81 18 (11) 67Experience loss/(gain) on 81 (61) (253) 127plan liabilitiesExperience loss/(gain) on (93) 57 94 2plan assets

The Company adopted AS-15 (Revised 2005) Employee Benefits, duringthe year ended March 31, 2008. Since similar valuations for previous yearended March 31, 2007 is not available with the Company, therefore,disclosures as required by paragraph 120(n) of AS-15 (Revised 2005) havenot been furnished in respect of that year.

79


—

—

—

—

—

—

—

—

—

—

9. Particulars of Un-hedged Foreign Currency Exposure(` in ‘000)

Particulars Currency 2010-11 2009-10

Debtors AUD$ 251.60 —Debtors US$ — 147.14

` 11,601 6,607

(` in ‘000)

Particulars 2010-11 2009-10Qty. Value Qty. Value

Opening StockTECHNITUBER® Seed Potatoes(qty. in ‘000 Nos.) 6,946 19,873 8,441 18,538Field Generated Seed Potatoes(qty. in MT) 50,194 320,615 45,172 307,082Standing crops — — — 736Banana Tissue Culture Plantlets(qty. in ‘000 Nos.) — — — —Insecticides and Fungicides (qty. in Kgs.) — — — —Insecticides and Fungicides (qty. in Ltrs.) — — — —Micronutrients (qty. in Kgs.) — — — —Closing StockTECHNITUBER® Seed Potatoes(qty. in ‘000 Nos.) 6,641 20,528 6,946 19,873Field Generated SeedPotatoes (qty. in MT) 50,523 342,911 50,194 320,615Standing crops — — — —Banana Tissue Culture Plantlets(qty. in ‘000 Nos.) 120 450 — —Insecticides and Fungicides (qty. in Kgs.) 3 2 — —Insecticides and Fungicides (qty. in Ltrs.) — — — —Micronutrients (qty. in Kgs.) — — — —

b) Consumption of Plantlets and Chemicals and fertilisers(` in ‘000)

Particulars 2010-11 % 2009-10 %Imported — — — —Indigenous 2,185 100.00 1,984 100.00Total 2,185 100.00 1,984 100.00

c) Consumption of Consumables(` in ‘000)


d) Consumption of Packing Stores(` in ‘000)


a) Particulars regarding Production, Sales and Stock(` in ‘000)

Particulars 2010-11 2009-10Qty. Value Qty. Value

ProductionTECHNITUBER® Seed Potatoes(qty. in ‘000 Nos.) 10,128 — 10,095 —Field Generated Seed Potatoes(qty. in MT) 50,403 — 51,182 —Banana Tissue Culture Plantlets(qty. in ‘000 Nos.) 120 — — —PurchaseField Generated Seed Potatoes (qty. in MT) 1,212 10,749 212 1,762Insecticides and Fungicides (qty. in Kgs.) 8,791 5,498 — —Insecticides and Fungicides (qty. in Ltrs.) 1,070 617 — —Micronutrients (qty. in Kgs.) 1,624 1,015 — —Internal ConsumptionTECHNITUBER® Seed Potatoes(qty. in ‘000 Nos.) 4,101 — 4,272 —Field Generated Seed Potatoes(qty. in MT) 9,197 — 9,146 —Insecticides and Fungicides (qty. in Kgs.) 14 — — —Insecticides and Fungicides (qty. in Ltrs.) 5 — — —Micronutrients (qty. in Kgs.) 1 — — —Losses/Shortages/Discarded SeedTECHNITUBER® Seed Potatoes(qty. in ‘000 Nos.) 744 — 3,486 —Field Generated Seed Potatoes(qty. in MT) 2,230 — 2,147 —SalesTECHNITUBER® Seed Potatoes(qty. in ‘000 Nos.) 5,588 21,755 3,832 14,056Field Generated Seed Potatoes(qty. in MT) 39,859 446,589 35,079 529,043Banana Tissue Culture Plantlets(qty. in ‘000 Nos.) — — — —Insecticides and Fungicides (qty. in Kgs.) 8,774 6,213 — —Insecticides and Fungicides (qty. in Ltrs.) 1,065 675 — —Micronutrients (qty. in Kgs.) 1,623 1,251 — —

80


I Registration No. 98646State Code 55Balance Sheet Date 31st March, 2011

(` ‘000)II Capital raised during the year

Public issue —Right issue —Bonus issue —Private placement —

III Position of mobilization and deployment of fundsTotal liabilities 503,857Total assets 503,857Source of fundsPaid up capital 379,628Reserve & Surplus 4,229Secured loans —Unsecured loans 120,000Application of fundsNet fixed assets 110,518Intangible assets —Capital work in progress —Capital advances —Investments 222,762Net current assets 170,577Misc expenditure —Profit & Loss Account —

12. Previous years’ figures has been regrouped and/or rearranged wherever necessary to make their classification comparable with that of the current year.












IV Performance of the Company

Turnover (including other income) 497,913Total expenditure 427,708Profit/(loss) before tax 70,205Profit/(loss) after tax 70,205Earning per equity share (in `) - Basic 1.85

- Diluted 1.85

Dividend rate percentage- Equity shares N/A

V Generic Names of Principal Products of the company

Item Code No. (ITC Code) : 07011000

Product Description : TECHNITUBER® Seed PotatoesItem Code No. (ITC Code) : 07011000

Product Description : Field Generated Seed Potatoes

11. Additional information pursuant to the provisions of Part II of Schedule VI to the Companies Act, 1956.

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH, 2011

Your directors present their report on the company for the financial year ended31 March, 2011.

Directors

The names of the directors in office at any time during or since the end of theyear are:

Mr. David Charles McDonald

Mr. Sachidanand Madan

Mr. Arup Kumar Mukerji

Mr. Allan Hendry (effective 18 August 2010)


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.

The registered office of Technico Asia Holdings Pty Limited is located at:

Suite 5,20 Bundaroo StreetBOWRAL 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 [2010: A$0.51 million].It may be recalled that the profit recorded in the previous year was on accountof reversal of the previous write down of its investment in its subsidiary, Technico

Horticultural (Kunming) Co. Ltd., China so as to reflect this investment at thenet book value of the underlying assets of the Chinese company.

Significant events after balance date

There are no significant events after the balance date to be reported.


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:

Sydney, Australia Allan Hendry

26th April 2011 Director

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 MARCH 2011

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 2011 and of their performance for the year ended onthat date; and

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OFTECHNICO ASIA HOLDINGS PTY LIMITED FOR THE YEAR ENDED31 MARCH 2011

In relation to our audit of the financial report of Technico Asia Holdings PtyLimited for the financial year ended 31 March 2011, to the best of myknowledge and belief, there have been no contraventions of the auditor

(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.

Sydney, Australia On behalf of the Board:

26 April 2011 Allan Hendry Director

independence requirements of the Corporations Act 2001 or any applicablecode of professional conduct.


Suite 5, 20 Bundaroo StreetBOWRAL NSW 2576 David Duff26 April 2011 Partner

81

TECHNICO ASIA HOLDINGS PTY LIMITED

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF TECHNICO ASIAHOLDINGS PTY LIMITED FOR THE YEAR ENDED 31 MARCH 2011

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 2011, the statement ofcomprehensive income, statement of changes in equity and statement ofcash flows for the year then ended, notes comprising a summary or significantaccounting policies and other explanatory information, and the directors’declaration.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of 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.

INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

2011 2010

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 — — 516,236 19,666,010

Finance Costs — — — —

Other revenues/(expenses) from ordinary activities — — — —

PROFIT FROM CONTINUING OPERATIONS BEFORE

INCOME TAX EXPENSE — — 516,236 19,666,010

Income tax expense — — — —

NET PROFIT ATTRIBUTABLE TO MEMBERS OF

TECHNICO ASIA HOLDINGS PTY LIMITED — — 516,236 19,666,010

82


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 at31 March 2011 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.


Suite 5, 20 Bundaroo StreetBOWRAL NSW 2576 David Duff26 April 2011 Partner

STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2011

Contributed RetainedEquity Earnings Total

$ $ $

At 1 April 2009 3,684,522 (3,231,022) 453,500

Profit for the Period — 516,236 516,236

At 31 March 2010 3,684,522 (2,714,786) 969,736

Profit for the Period — — —

At 31 March 2011 3,684,522 (2,714,786) 969,736

Contributed Contributed Retained Equity Earnings Total

` ` `

At 1 April 2009 169,884,098 (148,974,347) 20,909,751

Profit for the Period — (23,802,352) 23,802,352

At 31 March 2010 169,884,098 (125,171,995) 44,712,103

Profit for the Period — — —

At 31 March 2011 169,884,098 (125,171,995) 44,712,103

BALANCE SHEET AS AT 31 MARCH 20112011 2010

Notes $ ` $ `

CURRENT ASSETSCash and Cash Equivalents — — — —Trade and Other Receivables 2 — — — —Inventories — — — —

Other — — — —

TOTAL CURRENT ASSETS — — — —

NON-CURRENT ASSETSReceivables — — — —Other Financial Assets 3 969,736 44,712,103 969,736 39,916,758Property, Plant and Equipment — — — —Intangible Assets — — — —

TOTAL NON-CURRENT ASSETS 969,736 44,712,103 969,736 39,916,758

TOTAL ASSETS 969,736 44,712,103 969,736 39,916,758

CURRENT LIABILITIESTrade and Other Payables 4 — — — —Loans and Borrowings 5 — — — —Provisions — — — —

TOTAL CURRENT LIABILITIES — — — —

NON-CURRENT LIABILITIESInterest free loans and borrowings — — — —Provisions — — — —

TOTAL NON-CURRENT LIABILITIES — — — —

TOTAL LIABILITIES — — — —

NET ASSETS 969,736 44,712,103 969,736 39,916,758

EQUITYContributed equity 6 3,684,522 169,884,098 3,684,522 151,664,137

Accumulated Losses 7 (2,714,786) (125,171,995) (2,714,786) (111,747,379)

TOTAL EQUITY 969,736 44,712,103 969,736 39,916,758

83


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 20112011 2010

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 — — — —

NOTES TO FORMING PART OF THE FINANCIAL STATEMENTS AS AT31 MARCH 2011

Note 1: Statement of significant accounting policies

(a) Basis of preparation and going concern

The financial report is a special purpose financial report prepared 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 46.1075for the current year balance sheet (2010: INR 41.1625) and the averagerate of 1 AUD = INR 43.6350 for the current year income statement(2010: INR 38.0950) 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 2011. 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

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.

84


Note 2: Trade and Other Receivables2011 2010

$ ` $ `

CurrentTrade and other receivables — — — —

Note 3: Other Financial Assets

Non-current

Shares in subsidiaries:

At cost 3,684,522 169,884,098 3,684,522 151,664,137

Provision for write-down (2,714,786) (125,171,995) (2,714,786) (111,747,379)

Total other financial assets 969,736 44,712,103 969,736 39,916,758

Provision for write-down of subsidiaries

The losses generated within the subsidiaries have resulted in a provision for write-down to net assets being recorded against the cost amount of the investment.

Percentage of equity Investmentinterest held by the (Provision for diminution)consolidated entity 2011 2010

country of incorporation (%) $ ` $ `

Technico Horticultural (Kunming) Co. Ltd. China 100 3,684,522 169,884,098 3,684,522 151,664,137

(2,714,786) (125,171,995) (2,714,786) (111,747,379)

969,736 44,712,103 969,736 39,916,758

Note 4: Trade and other payables2011 2010

$ ` $ `

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 3,684,522 169,884,098 3,684,522 151,664,137

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 losses2011 2010

$ ` $ `

Accumulated losses

Balance at beginning of year (2,714,786) (125,171,995) (3,231,022) (132,996,943)

Net profit attributable to the membersof Technico Asia Holdings Pty Ltd. — — 516,236 21,249,564

Total available for appropriation (2,714,786) (125,171,995) (2,714,786) (111,747,379)

Dividends paid or provided for — — — —

Aggregate amount transferred (to)/ from reserves — — — —

Balance at end of period (2,714,786) (125,171,995) (2,714,786) (111,747,379)

Note 8: Events subsequent to reporting date

There are no subsequent events to be reported.

85


MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2010

Your management submit their report for the financial year ended31 December 2010.

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 44 employees on the rolls of the Company as at 31 December,2010.


The Company is primarily engaged in production and supply ofTECHNITUBER® seed potatoes to export markets.

REPORT OF THE AUDITOR TO THE MANAGEMENT OF TECHNICOHORTICULTURAL (KUNMING) CO. LIMITED

We have audited the attached financial statements of Technico Horticultural(Kunming) Company (the “Company”), including the balance sheet as at31 December 2010, and the income and Statement of Changes In Equity,cash flow statement, notes to financial statements for the year ended 31December 2010.

1. Responsibility of the Company’s management for the financialstatements

The Company’s responsibility is to prepare these financial statementsin accordance with the requirements of “The Accounting Standardsfor PRC Enterprises” and “The Accounting Systems of PRC Enterprises”,which includes (1) designing, implementing and maintaining theinternal controls relative to the preparation of these financial statements,so that there aren’t material misstatements in these financial statementsled by fraud and error; (2) selecting and using proper accountingpolicies and making rational accounting estimates.

2. Responsibility of the certified public accounts

Our responsibility is to express an opinion on these financial statementsbased on our audit. We conducted our audit in accordance with theIndependent Auditing Standards of China. The standards require thatwe comply with ethical requirements and plan and perform the auditto obtain reasonable assurance whether the financial statements arefree of material misstatements.

An audit involves performing procedures to obtain audit evidenceabout the amount and disclosures in the financial statements. Theprocedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to theentity’s preparation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity’sinternal control. An audit also includes evaluating the appropriatenessof accounting policies used and reasonableness of accounting estimatesmade by management, as well as evaluating the overall presentationof the financial statements.


3. Audit opinion

In our opinion, the financial statements have been prepared in accordancewith the requirements of “The Accounting Standards for PRC Enterprises”and “The Accounting Systems of PRC Enterprises”. The financialstatements fairly present the financial position of the Company as at31 December 2010, operating results and cash flows for the year thenended in all material resects.

Yunnan Tianying Certified Public Accountants

Certified Public Accountants

Certified Public Accountants

Kunming, The People’s Republic of China

15 March 2011

Business Review

For the year under review, the Company achieved a turnover of CNY6,283,417 (2009: CNY 4,262,165) and made a net profit of CNY 460,074(2009: Loss of CNY 1,696,763). Current year profit is on account of highersales and reduction in overhead costs. The business continues to focuson TECHNITUBER® seed potato exports.

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 Zhang

Date : 15 March 2011 Legal Representative

86

TECHNICO HORTICULTURAL (KUNMING) CO. LIMITED

ITEMS LINE NO 31 Dec 2009 31 Dec 2009 31 Dec 2010 31 Dec 2010

CNY ` CNY `

CURRENT ASSETS : 1

Cash and cash equivalents 2 2,516,033 17,207,147 2,639,163 18,090,140

Transaction monetary assets 3 0.00 0.00 0.00 0.00

Short-term investments 4 0.00 0.00 0.00 0.000

Notes receivable 5 0.00 0.00 0.00 0.00

Accounts receivable 6 0.00 0.00 2,899,782 19,876,554

Advance to suppliers’ debts 7 5,688 38,900 0.00 0.00

Dividend receivable 8 0.00 0.00 0.00 0.00

Interest receivable 9 0.00 0.00 0.00 0.0

Other notes receivable 10 596 4,077 21,077 144,469

Inventories 11 3,554,054 24,306,177 1,746,182 11,969,208

Including : Raw materials 12 0.00 0.00 0.00 0.00

Finished goods 13 3,227,762 22,074,667 1,746,182 11,969,208

In one year expired noncurrent assets 14 0.00 0.00 0.00 0.00

Other current assets 15 20,457 139,906 20,381 139,700

Total current assets 16 6,096,828 41,696,208 7,326,584 50,220,072

NON CURRENT ASSETS: 17 0.00 0.00 0.00 0.00

Financial assets available for sale 18 0.00 0.00 0.00 0.00

Hold investment due 19 0.00 0.00 0.00 0.00

Long-term investment on bonds 20 0.00 0.00 0.00 0.00

Long-term account receivable 21 0.00 0.00 0.00 0.00

Long-term investment on stocks 22 0.00 0.00 0.00 0.00

Right to trade in previously non-tradable shares 23 0.00 0.00 0.00 0.00

Investment real eastate 24 0.00 0.00 0.00 0.0

Fixed assets-cost 25 26,039,135 178,081,643 26,071,597 178,707,760

Less: Accumulated depreciations 26 20,035,549 137,023,118 20,414,802 139,933,261

Fixed asset-net value 27 6,003,586 41,058,525 5,656,795 38,774,499

Less: Fixed assets depreciation reserves 28 0.00 0.00 0.00 0.00

Fixed asset-net equity 29 6,003,586 41,058,525 5,656,795 38,774,499

Construction in progress liab. 30 0.00 0.00 0.00 0.00

Project goods and material 31 0.00 0.00 0.00 0.00

Liquidation of fixed assets 32 0.00 0.00 0.00 0.00

Productive living assets 33 0.00 0.00 0.00 0.00

Oil and gas assets 34 0.00 0.00 0.00 0.00

Intangible assets 35 1,578,019 10,792,070 1,537,031 10,535,581

Including: right to use land 36 1,578,019 10,792,070 1,537,031 10,535,581

Development expenditures 37 0.00 0.00 0.00 0.00

Business reputation 38 0.00 0.00 0.00 0.00

Cost-book value differentials 39 0.00 0.00 0.00 0.00

Long-term deferred and prepaid expenses 40 0.00 0.00 0.00 0.00

Deferred income tax assets 41 0.00 0.00 0.00 0.00

Deferred taxes debit 42 0.00 0.00 0.00 0.00

Other noncurrent assets 43 0.00 0.00 0.00 0.00

Including: specially approved reserving materials 44 0.00 0.00 0.00 0.00

Total noncurrent assets 45 7,581,605 51,850,596 7,193,826 49,310,080

TOTAL ASSETS 46 13,678,433 93,546,803 14,520,410 99,530,151

CURRENT LIABILITIES: 47 0.00 0.00 0.00 0.00

Short term loans 48 0.00 0.00 0.00 0.00

Transaction financial liabilities 49 0.00 0.00 0.00 0.00

Warrants payable 50 0.00 0.00 0.00 0.00

Notes payable 51 0.00 0.00 0.00 0.00

Accounts payable 52 0.00 0.00 0.00 0.00

BALANCE SHEET AS AT 31 DECEMBER 2010Printed by Technico Horticultural (Kunming) Co. Ltd.

87


Advances from customers 53 0.00 0.00 227,500 1,559,399

Employee pay payable 54 279,075 1,908,595 284,836 1,952,412

Including: Accrued wages 55 278,242 1,902,894 282,682 1,937,645

Accrued welfarism 56 834 5,701 2,154 14,767

Including: Staff and worker’ bonus and welfare fund 57 0.00 0.00 0.00 0.00

Taxes and dues payable 58 0.00 0.00 0.00 0.00

Including:Taxes payable 59 0.00 0.00 0.00 0.00

Interest payable 60 0.00 0.00 0.00 0.00

Dividends payable 61 0.00 0.00 0.00 0.00

Other payables 62 0.00 0.00 104,468 716,076

Due within one year of noncurrent liabilities 63 0.00 0.00 0.00 0.00

Other current liabilities 64 0.00 0.00 0.00 0.00

Total current liabilities 65 279,075 1,908,595 616,804 4,227,886

NONCURRENT LIABILITIES: 66

Long-term loans 67 0.00 0.00 0.00 0.00

Bonds payable 68 0.00 0.00 0.00 0.00

Long-term account payable 69 8,341 57,042 52,515 359,961

Special payable 70 0.00 0.00 0.00 0.00

Projected liabilities 71 0.00 0.00 0.00 0.00

Deferred income tax liabilities 72 0.00 0.00 0.00 0.00

Deferred taxes credit 73 0.00 0.00 0.00 0.00

Other noncurrent liabilities 74 0.00 0.00 0.00 0.00

Including: special reserve fund 75 0.00 0.00 0.00 0.00

Total non-current liabilities 76 8,341 57,042 52,515 359,961

Total liabilities 77 287,416 1,965,637 669,319 4,587,847

OWNER’S EQUITY: 78 0.00 0.00 0.00 0.00

Practical capital collected (or share capital) 79 19,013,598 130,033,997 19,013,598 130,328,708

National capital 80 0.00 0.00 0.00 0.00

Collective capital 81 0.00 0.00 0.00 0.00

Legal person’s capital 82 0.00 0.00 0.00 0.00

Including: State-owned legal person’s capital 83 0.00 0.00 0.00 0.00

Collective legal person’s capital 84 0.00 0.00 0.00 0.00

Personal capital 85 0.00 0.00 0.00 0.00

Foreign businessmen’s capital 86 19,013,598 130,033,997 19,013,598 130,328,708

Less: Investment returned 87 0.00 0.00 0.00 0.00

Net paid in capital 88 19,013,598 130,033,997 19,013,598 130,033,997

Capital reserve 89 42,667 291,797 42,667 292,458

Less: treasury stock 90 0.00 0.00 0.00 0.00

Surplus reserves 91 0.00 0.00 0.00 0.00

Including: Legal surplus 92 0.00 0.00 0.00 0.00

Free surplus reserves 93 0.00 0.00 0.00 0.00

Reserve fund 94 0.00 0.00 0.00 0.00

Enterprise expansion fund 95 0.00 0.00 0.00 0.00

Profits capitalized on return of investment 96 0.00 0.00 0.00 0.00

Unaffirmed investment loss 97 0.00 0.00 0.00 0.00

Undistributed profit 98 (5,665,247) (35,880,754) (5,205,173) (32,730,721)

Including: cash dividends 99 0.00 0.00 0.00 0.00

*Margin of Translation of Foreign CurrencyFinancial Statements 100 0.00 (2,863,872) 0.00 (2,653,430)

Total equity attributable to equity holders of the parent 101 13,391,017 91,581,167 13,851,091 94,942,304

*minority stockholder’s interest 102 0.00 0.00 0.00 0.00

Total owners’ equity 103 13,391,017 91,581,167 13,851,091 94,942,304

Less: assets loss 104 0.00 0.00 0.00 0.00

Total owners’ equity (net value less on assets) 105 13,391,017 91,581,167 13,851,091 94,942,304

TOTAL LIABILITIES AND OWNERS’ EQUITY 106 13,678,433 93,546,803 14,520,410 99,530,151

BALANCE SHEET AS AT 31 DECEMBER 2010 (Contd.)Printed by Technico Horticultural (Kunming) Co. Ltd.

ITEMS LINE NO 31 Dec 2009 31 Dec 2009 31 Dec 2010 31 Dec 2010

CNY ` CNY `

88


Gross operating income 1 4,262,165 29,875,223 6,283,417 43,021,298

Including: Operating income 2 4,262,165 29,875,223 6,283,417 43,021,298

Including: main business income 3 4,255,608 29,829,262 6,276,667 42,975,082

Other business income 4 6,557 45,961 6,750 46,216

Gross operating cost 5 5,977,790 41,900,722 5,831,987 39,930,448

Including: Operating cost 6 2,656,154 18,618,047 4,204,581 28,787,928

Including: main business cost 7 2,656,154 18,618,047 4,204,581 28,787,928

Other business expense 8 0.00 0.00 0.00 0.00

Business tax and surcharges 9 0.00 0.00 0.00 0.00

Selling expenses 10 1,501,373 10,523,722 419,288 2,870,782

Administrative expenses 11 1,712,212 12,001,577 1,179,578 8,076,333

Including: Business entertainment 12 0.00 0.00 0.00 0.00

Research and development expense 13 0.00 0.00 0.00 0.00

Financial Expenses 14 108,052 757,376 28,539 195,404

Including: Interest exchange 15 6,426 45,042 0.00 0.00

Interest income 16 16,504 115,684 18,767 128,496

Foreign exchange profit and loss 17 101,245 709,664 43,096 295,067

Asset impairment losses 18 0.00 0.00 0.00 0.00

Other 19 0.00 0.00 0.00 0.00

Add: Changes in fair value of the profit and loss 20 0.00 0.00 0.00 0.00

Investment income 21 0.00 0.00 0.00 0.00

Including: for the investment benefits from the investedbusiness and the united business and joint venture 22 0.00 0.00 0.00 0.00

Operating profit 23 (1,715,625) (12,025,499) 451,430 3,090,850

Add: Non-operating income 24 44,696 313,294 10,453 71,571

Including: income from disposal of long term assets 25 0.00 0.00 0.00 0.00

Income from non-monetary assets exchange 26 0.00 0.00 0.00 0.00

Government grands (subsidy income) 27 0.00 0.00 0.00 0.00

Income from debt restructuring 28 0.00 0.00 0.00 0.00

Less: Non-operating expenses 29 25,834 181,081 1,809 12,388

Including: Loss on disposal of long-term assets 30 0.00 0.00 0.00 0.00

Loss on non-monetary assets exchange 31 0.00 0.00 0.00 0.00

Loss on debt restructuring 32 0.00 0.00 0.00 0.00

TOTAL PROFIT 33 (1,696,763) (11,893,287) 460,074 3,150,034

Less: Income tax expense 34 0.00 0.00 0.00 0.00

Add: unaffirmed investment loss 35 0.00 0.00 0.00 0.00

NET INCOME 36 (1,696,763) (11,893,287) 460,074 3,150,034

Less: Minority interest income 37 0.00 0.00 0.00 0.00

Net income attributable to equity holders of the Parent 38 (1,696,763) (11,893,287) 460,074 3,150,034

ITEMS LINE NO 2009 2009 2010 2010

CNY ` CNY `

INCOME AND PROFIT DISTRIBUTION STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010Printed by Technico Horticultural (Kunming) Co. Ltd.

89


1. Cash Flow from Operating Activities 1

Cash from selling commodities or offering labor 2 3,717,490 25,452,912

Refund of tax and fee received 3 10,453 71,571

Other cash received related to operating activities 4 266,809 1,826,786

Cash Inflow Subtotal 5 3,994,752 27,351,269

Cash paid for commodities or labor 6 1,815,037 12,427,196

Cash paid to and for employees 7 1,706,912 11,686,886

Taxes and fees paid 8 222,975 1,526,664

Other cash paid related to operating activities 9 0.00 0.00

Cash Outflow Subtotal 10 3,744,924 25,640,746

Cash flow generated from operating activities Net Amount 11 249,828 1,710,523

2. Cash Flow from Investing Activities 12 0.00 0.00

Cash from investment withdrawal 13 0.00 0.00

Cash from investment income 14 0.00 0.00

Net cash from disposing fixed assets, intangible assets and

other long term assets 15 50,000 342,340

Net cash inflows of disposal of subsidiaries and

other business entities 16 0.00 0.00

Other cash received related to investing activities 17 0.00 0.00

Cash Inflow Subtotal 18 50,000 342,340

Cash paid for buying fixed assets, intangible assets and

other long term investments 19 172,487 1,180,984

Cash paid for investment 20 0.00 0.00

Net cash outflows of procurement of subsidiaries and

other business units 21 0.00 0.00

Other cash paid related to investing activities 22 0.00 0.00

Cash Outflow Subtotal 23 172,487 1,180,984

Cash flow generated from investing activities Net Amount 24 - 122,487 - 838,644

3. Cash Flow from Financing Activities 25 0.00 0.00

Cash received from accepting investment 26 0.00 0.00

Including: cash inflows from minority investment in subsidiaries 27 0.00 0.00

Borrowings 28 0.00 0.00

Other cash received related to financing activities 29 0.00 0.00

Cash Inflow Subtotal 30 0.00 0.00

Cash paid for debt 31 0.00 0.00

Cash paid for dividend, profit or interest 32 4,211 28,833

Including: dividends and earnings paid to minorities by subsidiaries 33 0.00 0.00

Other cash paid related to financing activities 34 0.00 0.00

Cash Outflow Subtotal 35 4,211 28,833

Cash flow from financing activities Net Amount 36 - 4,211 - 28,833

4. Foreign Currency Translation Gains (Losses) 37 0.00 20,322

5. Net Increase Of Cash and Cash Equivalents 38 123,130 863,368

Add: cash and cash equivalents beginning bal. 39 2,516,033 17,226,773

6. Cash and cash equivalents ending bal. 40 2,639,163 18,090,140

ITEMS LINE NO RMB `

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010Printed by Technico Horticultural (Kunming) Co. Ltd.

90


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 inthe 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 amount of cash and 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 the

proportion 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.)

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 not inuse in the long term, or been damage, and the recoverable amountof the fixed asset is less than its carrying amount, the provision forimpairment is determined according to the difference of therecoverable 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 stipulated inthe relevant contract or the effective period stipulated by law, theamortization period of an intangible asset is determined in accordancewith the following rules:

a. If the relevant contract stipulates the beneficial period but the lawdoes not stipulate the effective period, the amortization period isnot longer than the beneficial stipulated by the relevant contract;

b. If the relevant contract does not stipulate the beneficial period butthe law stipulates the effective period, the amortization period isnot longer than the effective period stipulated by law;

c. If the relevant contract stipulates the beneficial period but the lawalso stipulate the effective period, the amortization period is notlonger than the shorter of the beneficial period and the effectiveperiod.

If the relevant contract does not stipulate the beneficial period andthe law does not stipulate the effective period, the amortization perioddoes not exceed 10 years.

If an intangible asset is no longer expected to be able to generate anyeconomic benefits that flow to the enterprise, the carrying amountof the intangible asset is written off and is recognized as gain or lossthe current period.

The Company reviews the carrying amount of the intangible asset atthe 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 actual paymentsand amortized on the straight-line basis in the beneficial period.

The expenses (except for acquiring fixed assets), which occur in thepreparative duration, are recorded as long-term expense, and areamortized in the month starting the operating

(12) Principle for recognition of revenue

a. Revenue from the sale of goods

The revenue is recognized when all the following conditions havebeen satisfied: the Company has transferred to the buyer thesignificant risks and rewards of ownership of the goods; theenterprise retains neither continuing managerial involvement tothe degree usually associated with ownership nor effective controlover the goods sold; it is probable that the economic benefits willflow to the Company; the relevant amount of revenue and costscan be measured reliably.

91


(2) Account receivable

2009-12-31 2010-12-31

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

2009-12-31 2010-12-31

Provision for Provision forLength after occurrence RMB Percentage bad debts RMB Percentage bad debts

Within 1 year 596.15 100.00% 21,076.59 100.00%Total 596.15 100.00% 21,076.59 100.00%

(4) Advances to suppliers

Length after occurrence 2009-12-31 2010-12-31

RMB Percentage RMB Percentage

Within 1 year 5,688.00 100.00%

Total 5,688.00 100.00%

(5) Inventories and provision for loss on realization of inventory

2009-12-31 2010-12-31

Provision ProvisionItems RMB for loss on RMB for loss on

realization realizationof inventory of inventory

Finished goods 3,227,762.42 1,419,890.62

Work-in-progress 326,291.82 326,291.82

Total 3,554,054.24 1,746,182.44

(6) Fixed assets

Items Cost 2009-12-31 Add Less 2010-12-31

Total Capex 26,039,134.83 172,487.03 140,025.00 26,071,596.86

Accumulated depreciation

Total Depreciation 20,035,548.71 467,469.25 88,215.75 20,414,802.21

Fixed assets depreciation reserves

Net book value 6,003,586.12 5,656,794.65

NOTES TO FINANCIAL STATEMENTS (Contd.)

4. Notes to significant items in the financial statements

(1) Cash

Items 2009-12-31 2010-12-31 RMB RMB

Cash on hand 42,762.49 17,182.14Cash in bank 2,473,270.19 2,621,980.47

Total 2,516,032.68 2,639,162.61

b. Revenue from rendering of services

When the provision of services is started and completed within thesame accounting year, revenue is recognized at the time of completionof the services, and receipt of money or holding the qualification ofacquiring money;

When the provision of services is started and completed in differentaccounting year, the total income and the completion degree involvingthe service contract can be estimated reliably, it is probable that theeconomic benefits will flow to the Company, the outcome of a

3. Tax

VAT: According to the relevant tax laws in the PRC, the Company is exempted from VAT for the sales of the agricultural produce harvested by theCompany.

Corporate income tax: at a rate of 25% on its taxable income. However, according to the new income tax laws in the PRC, the Company is an agriculturalproduction company which is exempted from corporate income tax for its agricultural income.

transaction involving the rendering of services can be estimated reliably,the service revenue is recognized at the balance sheet date by the useof the percentage of completion method.

The revenue referred to above is recognized when all the followingconditions have been satisfied:

a. It is probable that the economic benefits will flow to the Company;

b. The amount of the revenue can be measured reliably.

(13) Corporation income tax

Corporation income tax is accounted on the tax payable basis.

92


(7) Intangible assets

2009-12-31 Add Less 2010-12-31Items RMB RMB RMB RMB

Land-use-right 2,049,375.00 2,049,375.00

Amortization 471,356.25 40,987.50 512,343.75

Total 1,578,018.75 1,537,031.25

The amortization term is 50 years, and there have been 37 years and 6 months left by 31 December 2010.

(8) Advances from customers

Length after occurrence 2009-12-31 2010-12-31RMB RMB

Within 1 Year 227,500.00

Total 227,500.00

(9) Other payables

2009-12-31 2010-12-31Length after occurrence RMB RMB

Within 1 Year 104,468.00

Total 104,468.00

(10) Long-term account payable

2009-12-31 2010-12-31RMB RMB

8,340.65 52,514.58

The amount due to investor is unsecured, interest free and has no fixed term of repayment.

(11) Paid-in capital

Investors 2009-12-31 Add Less 2010-12-31

RMB Proportion RMB RMB RMB Proportion

Technico ChinaPty 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%

(12) Primary operating profit

Operating Operatingrevenue cost

6,276,666.75 4,204,581.45

(13) Finance expense

Items From 2010-1-1to 2010-12-31

Interest expense

Less: Interest income 18,767.38

Foreign exchange loss 43,095.65

Other 4,211.17

Total 28,539.44

5. Contingencies

Up to 31 December 2010, there are no material contingencies for the Company.

6. Promised events

Up to 31 December 2010, there are no material promised events for the Company.

7. Non-adjusting events subsequent to the balance sheet date

Not material non-adjusting events subsequent to the balance sheet date for the Company.

8. Other material events stated

Up to 31 December 2010, there are no other material matters specially stated for the Company.

NOTES TO FINANCIAL STATEMENTS (Contd.)

93


Human ResourceYour Company continues to attract and retain talent of the highest quality. YourCompany has initiated various training and development programmes to sustaincompetitive edge.The relationship between the staff and the management continued to be cordial. YourDirectors place on record their sincere appreciation of the efforts made and the supportrendered by the employees of the Company.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.AuditorsThe Company’s Auditors, Messrs. Lovelock & Lewes, Chartered Accountants, retireat 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) fol lowed in the preparation of the Annual Accounts the applicable

Accounting Standards along 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 give a trueand fair view of the state of affairs of the Company at the end of the financial yearand of the profit of the 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 the Company and for preventing and detecting fraudand other irregularities; and

(iv) prepared the Annual Accounts on a going concern basis.Other InformationThe Audit Committee of the Company reviewed the financial statements for the yearunder review at its meeting held on 28th April, 2011 and recommended the same forthe approval of the Board of Directors.


G. Sivakumar ReddyGurgaon, 28th April, 2011 Chairman

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED31ST MARCH, 2011

Your Directors submit their Report and Accounts for the financial year ended31st March, 2011.Performance and Hotel OperationsDuring the year under review, your Company recorded an income of ` 56.04 crores(previous year - ` 54.57 crores), pre-tax profit at ` 12.85 crores (previous year -` 14.11 crores) and post-tax profit at ` 9.26 crores (previous year - ` 9.62 crores) afterproviding for income tax of ` 3.59 crores (previous year - ` 4.49 crores). Earnings PerShare for the year stands at ` 3.86 (previous year - ` 4.01). Cash flows from Operationswere ` 15.37 crores during the year (previous year - ` 14.44 crores). Your Directorsare pleased to recommend a dividend of ` 2/- (previous year - ` 2/-) per Equity Shareof ` 10/- each for the year ended 31st March 2011. Your Board further recommendsa transfer to General Reserve of ` 0.75 crores (previous year - ` 0.75 crores).The political volatility in the State of Andhra Pradesh partially prevailed in the financialyear 2010-11 as well, making the growth static. The Company however took varioustechnical initiatives to maintain the contemporariness of the hotel property and madeadditional capital expenditure which in turn would enhance the quality of guestexperience. In a continuous endeavour towards sustainable growth, the Company hasapplied for the LEED Certification from USGBC and the first review report received inMarch 2011.AwardsThe Company received Times Food Guide awards for Kebabs & Kurries and Dakshinfor best restaurants in their respective categories.Foreign Exchange Earnings and OutflowDuring the year, your Company earned foreign exchange of ` 21.67 crores (previousyear - ` 23.02 crores). The utilization of foreign exchange was ` 1.89 crores (previousyear - ` 2.64 crores).Energy / Environment and SafetyThe thrust on energy conservation continues, resulting in savings in energy costs. YourCompany continues to focus on hygiene, safety and environment.DirectorsThe Board of Directors at its meeting held on 28th April, 2011, reappointed, subjectto the approval of the Members, Mr George Verghese as the Managing Director of theCompany for a period of one year effective 1st June, 2011. The resolution seekingyour approval to such appointment appears in the Notice convening the 26th AnnualGeneral Meeting of the Company.In accordance with the provisions of Article 151 of the Articles of Association of theCompany, Mr. B. N. Suresh Reddy and Mr. G. Sivakumar Reddy will be retiring byrotation at the forthcoming Annual General Meeting and being eligible, offer themselvesfor re-appointment.

AUDITORS’ REPORT TO THE MEMBERS OF SRINIVASA RESORTS LIMITED

1. We have audited the attached Balance Sheet of Srinivasa Resorts Limited (the“Company”) as at, March 31, 2011, and the related Profit and Loss Account andCash Flow Statement for the year ended on that date annexed thereto, which wehave 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 by theCompanies (Auditor’s Report) (Amendment) Order, 2004 (together ‘the Order’),issued by the Central Government of India in terms of sub-section (4A) of Section227 of The Companies Act, 1956 (’the Act’) and on the basis of such checks of thebooks and records of the Company as we considered appropriate and accordingto the information 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 paragraph 3 above, we report that:(a) We have obtained all the information and explanations which, to the best

of our knowledge and belief, were necessary for the purposes of our audit;(b) In our opinion, proper books of account as required by law have been kept

by the Company so far as appears from our examination of those books;(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt

with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash FlowStatement 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, 2011 and taken on record by the Board of Directors, none of thedirectors is disqualified as on March 31, 2011 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, 2011;(ii) in the case of the Profit and Loss Account, of the profit for the year

ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for the year

ended on that date.

Partha MitraPartner

Membership No. : 50553

For Lovelock & LewesFirm’s Registration Number : 301056E

Gurgaon, 28th April, 2011 Chartered Accountants

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 for the year endedMarch 31, 2011.1. (a) The Company is maintaining proper records showing full particulars including

quantitative details and situation, of fixed assets.(b) The fixed assets of the Company have been physically verified by the

Management during the year and no material discrepancies between 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.

94

SRINIVASA RESORTS LIMITED

(b) The Company has not taken any loans, secured or unsecured, from companies,firms or other parties covered in the register maintained under Section 301of the Act.

4. In our opinion and according to the information and explanations given to us,there is an adequate internal control system commensurate with the size of theCompany and the nature of its business for the purchase of inventory, fixed assetsand for the sale of goods and services. Further, on the basis of our examinationof the books and records of the Company, and according to the information andexplanations given to us, we have neither come across nor have been informedof any continuing failure to correct major weaknesses in the aforesaid internalcontrol 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 with itssize and 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 of theproducts 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, cess and other materialstatutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records ofthe Company examined by us, the particulars of dues of income-tax, sales-tax,wealth tax, service-tax, customs duty, excise duty and cess as at March 31, 2011which have not been deposited on account of a dispute, are as follow:

10. The Company has no accumulated losses as at March 31, 2011, 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 forlong-term investment.

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 raised any money by public issues during the year.19. During the course of our examination of the books and records of the Company,

carried out in accordance with the generally accepted auditing practices in India,and according to the information and explanations given to us, we have neithercome across any instance of fraud on or by the Company, noticed or reportedduring the year, nor have we been informed of such case by the Management.

20. The other clauses, (iii) (b), (iii) (c), (iii) (d), (iii) (f), (iii) (g), (v) (b), (xi) and (xix)of paragraph 4 of the Companies (Auditors Report) Order 2003, as amended bythe Companies (Auditor’s Report) (Amendment) Order, 2004, are not applicablein the case of the Company for the year, since in our opinion there is no matterwhich arises to be reported in the aforesaid Order.

Partha MitraPartner

Membership No. : 50553

For Lovelock & LewesFirm’s Registration Number : 301056E




I. SOURCES OF FUNDS1. Shareholders’ Funds

a) Capital 1 24,00,00,000 24,00,00,000b) Reserves and Surplus 2 70,09,02,800 94,09,02,800 66,42,74,561 90,42,74,561

2. Deferred Tax Liability - Net 3 8,06,79,058 8,23,21,156Total 1,02,15,81,858 98,65,95,717


a) Gross Block 87,23,50,271 86,79,90,775b) Less : Depreciation 33,55,26,226 31,07,14,418c) Net Block 53,68,24,045 55,72,76,357d) Capital Work-in-Progress 11,80,396 53,80,04,441 84,57,834 56,57,34,191

2. Investments 5 41,95,15,914 36,57,88,6903. Current Assets, Loans and Advances

a) Inventories 6 67,52,586 1,01,47,562b) Sundry Debtors 7 1,81,45,548 2,42,74,108c) Cash and Bank Balances 8 14,78,05,377 12,45,77,394d) Other Current Assets 9 67,81,685 78,76,786e) Loans and Advances 10 2,82,99,931 2,89,72,895

20,77,85,127 19,58,48,745Less :

4. Current Liabilities and Provisionsa) Liabilities 11 8,49,21,970 8,20,90,710b) Provisions 12 5,88,01,654 5,86,85,199

14,37,23,624 14,07,75,909Net Current Assets 6,40,61,503 5,50,72,836Total 1,02,15,81,858 98,65,95,717

Notes to the Accounts 19Significant Accounting Policies 20The 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.

ANNEXURE TO AUDITORS’ REPORT (contd.)

95


On behalf of the BoardG. Sivakumar Reddy Chairman

George Verghese Managing Director

Partha MitraMembership Number : 50553PartnerFor Lovelock & LewesFirm’s Registration Number : 301056EChartered AccountantsGurgaon, 28th April, 2011

Name of Nature of dues Amount (`) Period to Forum wherethe which the the dispute is

statute amount pendingrelates

APGST Sales Tax on 1,75,868 Financial year Sales TaxAct, 1957 purchase from 1997-1998 Appellate

unregistered dealers 5,46,539 Financial year Tribunal,1998-1999 Hyderabad

APVAT Exclusion of Service 10,90,519 April 1, 2005 to Hon’ble HighAct, 2005 Tax in computation January 31, Court of

of VAT liability 2008 Andhra Pradesh,Hyderabad.


31st March, 2011 31st March, 2010(`) (`)

I. INCOMEGross Income from Operations 57,04,81,110 54,95,21,034Less : Taxes 4,34,70,627 4,04,43,017Net Income from Operations 13 52,70,10,483 50,90,78,017Other Income 14 3,33,65,127 3,66,03,436

56,03,75,611 54,56,81,453II. EXPENDITURE

Food, Beverage etc. consumed 15 6,19,50,321 5,94,94,337Operating and Administrative Expenses 16 33,43,07,577 31,11,99,208Depreciation 3,56,59,372 3,38,66,514

43,19,17,270 40,45,60,059III. PROFIT

Profit before Taxation 12,84,58,341 14,11,21,394Provision for Taxation 17 3,58,57,902 4,49,37,186Profit after Taxation 9,26,00,439 9,61,84,208Profit brought forward 60,20,36,841 56,95,10,233Available for appropriation 69,46,37,280 66,56,94,441

IV. APPROPRIATIONSGeneral Reserve 75,00,000 75,00,000Proposed Dividend 4,80,00,000 4,80,00,000Income Tax on Proposed Dividend 79,72,200 81,57,600Profit Carried Forward 63,11,65,080 60,20,36,841

69,46,37,280 66,56,94,441

Basic and Diluted Earnings Per Share (`) 18 3.86 4.01Notes to the Accounts 19Significant Accounting Policies 20The Schedules referred to above form an integral part of the Profit and Loss Account.

This is the Profit and Loss Account referred to in our Report of even date.

96









31st March, 2011 31st March, 2010(`) (`) (`) (`)

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX 12,84,58,341 14,11,21,394ADJUSTMENT FORDepreciation 3,56,59,372 3,38,66,514Interest Income (81,49,906) (1,03,50,560)Fixed Assets Discarded - Net 60,47,258 5,17,237Income from Current Investments (1,98,13,756) (1,16,59,377)Profit on Sale of Current Investments - Net — (46,98,742)Liability no longer required written back (36,60,275) —Provision for doubtful debts/Bad Debts Written Off 6,22,506 1,07,05,199 17,04,981 93,80,053OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 13,91,63,540 15,05,01,447ADJUSTMENT FORTrade & Other Receivables 50,95,193 19,50,137Inventories 33,94,976 33,84,763Trade Payables 59,99,212 1,44,89,382 (1,14,68,923) (61,34,023)CASH GENERATED FROM OPERATIONS 15,36,52,922 14,43,67,424Income Tax Paid (3,57,23,600) (3,16,94,066)NET CASH FROM OPERATING ACTIVITIES 11,79,29,322 11,26,73,358

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (1,28,23,747) (4,18,96,452)Sale of Fixed Assets 68,121 9,05,024Purchase of Current Investments (2,58,33,43,606) (91,32,78,690)Sale/Redemption of Current Investments 2,52,96,16,381 87,41,27,828Interest Received 81,25,353 1,00,85,937Income from Current Investments 1,98,13,756 1,63,58,119NET CASH USED IN INVESTING ACTIVITIES (3,85,43,742) (5,36,98,234)

C. CASH FLOW FROM FINANCING ACTIVITIESDividends etc., paid (4,80,00,000) (4,80,00,000)Income Tax on Dividend Paid (81,57,600) (81,57,600)NET CASH USED IN FINANCING ACTIVITIES (5,61,57,600) (5,61,57,600)

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,32,27,981 28,17,524OPENING CASH AND CASH EQUIVALENTS 12,45,77,394 12,17,59,870CLOSING CASH AND CASH EQUIVALENTS 14,78,05,375 12,45,77,394CASH AND CASH EQUIVALENTS COMPRISE:Cash and Bank Balances 14,78,05,375 14,78,05,375 12,45,77,394 12,45,77,394This 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.

SCHEDULES TO THE ACCOUNTS(Figures for the previous year have been rearranged to conform with the revised presentation)


(`) (`) (`) (`)1. CAPITAL

Authorised2,40,00,000 Equity Shares of ` 10/- each 24,00,00,000 24,00,00,000

24,00,00,000 24,00,00,000

Issued and Subscribed*2,40,00,000 Equity Shares of ` 10/- each fully paid up. 24,00,00,000 24,00,00,000

Of the above, 10,00,000 Equity Shares of ` 10/- each wereallotted as fully paid up to the shareholders of the amalgamatingcompany pursuant to the scheme of amalgamation withoutpayment being received in cash.

24,00,00,000 24,00,00,000* Includes 1,63,20,477 Equity Shares of ` 10/- each fully paid up, held by the Holding Company, ITC Limited.

2. RESERVES AND SURPLUSCapital Reserve 94,603 94,603General ReserveAt the Commencement of the year 6,21,43,117 5,46,43,117Add : From Profit and Loss Account 75,00,000 6,96,43,117 75,00,000 6,21,43,117Profit & Loss Account 63,11,65,080 60,20,36,841

70,09,02,800 66,42,74,561

3. DEFERRED TAX LIABILITY - NETDeferred Tax LiabilitiesDepreciation - Timing difference 8,19,61,949 8,35,31,280Less:Deferred Tax AssetsEmployee Benefits 9,39,874 8,59,131Other Timing Differences 3,43,017 3,50,993

Deferred Tax Liability - Net 8,06,79,058 8,23,21,156

4. FIXED ASSETS

Original Cost Additions Withdrawals Original Cost Depreciation Depreciation Depreciation Net Blockas at as at for the year on up to as at

Particulars March 31, 2010 March 31, 2011 Withdrawals March 31, 2011 March 31, 2011(`) (`) (`) (`) (`) (`) (`) (`)

Freehold Land 1,00,00,000 — — 1,00,00,000 — — — 1,00,00,000

Buildings 30,25,76,934 40,44,644 11,12,000 30,55,09,578 49,32,582 2,71,338 6,52,66,585 24,02,42,993

Plant and Machinery 33,11,00,505 94,36,157 53,54,947 33,51,81,715 1,63,14,884 40,41,259 12,80,47,237 20,71,34,478

Computers etc. 1,75,61,941 7,96,042 18,44,634 1,65,13,349 22,67,907 18,11,142 1,40,68,121 24,45,228

Furniture and Fixtures 19,11,22,980 32,73,487 39,50,920 19,04,45,547 1,07,47,491 37,95,492 12,23,01,269 6,81,44,278

Motor Vehicles 1,56,28,415 — 9,28,333 1,47,00,082 13,96,508 9,28,333 58,43,014 88,57,06886,79,90,775 1,75,50,330 1,31,90,834 87,23,50,271 3,56,59,372 1,08,47,564 33,55,26,226 53,68,24,045

Capital Work-in-Progress 84,57,834 1,25,59,620 1,98,37,058 11,80,396 — — — 11,80,396

Total 87,64,48,609 3,01,09,950 3,30,27,892 87,35,30,667 3,56,59,372 1,08,47,564 33,55,26,226 53,80,04,441

Previous Year 84,60,07,951 5,62,46,085 2,58,05,427 87,64,48,609 3,38,66,514 12,22,140 31,07,14,418 56,57,34,191

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SCHEDULES TO THE ACCOUNTS (Contd.)(Figures for the previous year have been rearranged to conform with the revised presentation)


(`) (`)5. INVESTMENTS

Unquoted, Other than TradeLong TermGovernment Securities - NationalSavings Certificates 10,000 10,000(Deposits with or for depositwith authorities)Current - Other InvestmentsLIC MF Income Plus Fund -Daily Dividend Plan Nil — 14,34,72,768(Previous Year - 1,43,47,276)Units of ` 10.00 eachKotak Floater Long Term - DailyDividend Reinvest Nil — 12,12,18,596(Previous Year - 1,20,25,893) Unitsof ` 10.0798 eachCanara Robeco Treasury AdvantageFund - Daily Dividend Reinvest Nil — 10,10,87,326(Previous Year - 81,47,538) Units of` 12.4071 eachReliance Liquid Fund - Cash Plan - DailyDividend Reinvestment 1,79,94,134.53 20,13,86,943 —(Previous Year - Nil)Units of ` 11.1415 eachBirla Sun Life Cash Plus - Inst Prem - DailyDiv Reinverstment 1,09,78,591.75 11,03,14,608 —(Previous Year - Nil) Unitsof ` 10.0195 each

Religare Liquid Fund - Daily DividendReinvestment 1,07,415.69 10,78,04,363 —(Previous Year - Nil)Units of ` 1000.7849 each

41,95,15,914 36,57,88,690

During the year, the following current investments were purchased and sold;

01) Purchased 1,20,76,653.716 Units of JM Money Manager Fund Super Plus Plan - DailyDividend at a cost of ` 12,08,30,543/-

02) Purchased 1,28,20,971.204 Units of LIC MF Income Plus Fund - Daliy Dividend Planat a cost of ` 12,82,09,712/-

03) Purchased 1,00,08,102.2634 Units of JP Morgan India Liquid Fund - Super Inst.Daily Dividend Plan at a cost of ` 10,01,60,086/-

04) Purchased 1,50,32,086.4437 Units of JP Morgan India Liquid Fund - Super Inst.Daily Dividend Plan-reinvest at a cost of ` 15,04,39,617/-

05) Purchased 1,69,75,073.3157 Units of JP Morgan India Treasury Fund - Super Inst.Daily Dividend Plan-reinvest at a cost of ` 16,99,01,811/-

06) Purchased 81,95,202.2932 Units of Kotak Liquid Institutional Premium Dalily Dividendat a cost of ` 10,02,11,753/-

07) Purchased 1,40,53,545.365 Unit of Kotak Floater Long Term - Daily Dividend at acost of ` 14,16,56,926/-

08) Purchased 72,89,023.6445 Units of Canara Robeco Treasury Advantage Super Inst.Daily Div Reinv Fund at a cost of ` 9,04,35,645/-

09) Purchased 1,17,99,832.3036 Units of Canara Robeco Treasury Advantage Super Inst.Daily Div Reinv Fund at a cost of ` 14,64,01,699.37p

10) Purchased 1,49,40,742.1891 Units of Canara Robeco Liquid Super Inst. Daily DivReinv Fund at a cost of ` 15,02,29,162/-

11) Purchased 89,73,526.0975 Units of Canara Robeco Liquid Super Inst. Daily Div ReinvFund at a cost of ` 9,02,28,804/-

12) Purchased 1,12,54,532.241 Units of TATA Floater Fund - Daily Dividend at a cost of` 11,29,45,983/-

13) Purchased 1,10,139.405 Units of DSP Black Rock Liquidty Fund - Inst Plan-Daily Div-Reinvest Dividend at a cost of ` 11,01,74,220/-

14) Purchased 93,283.135 Units of DSP Black Rock Money Manager-Fund - Inst. Plan-Daily Div-Reinvest Dividend at a cost of ` 9,33,57,761/-

15) Purchased 1,50,59,972.533 Units of Religare Liquid Fund - Super Inst. Daily Dividendat a cost of ` 15,07,17,193/-

16) Purchased 1,50,04,817.980 Units of Religare Ultra Short Term Fund - Inst. DailyDividend at a cost of ` 15,03,04,762/-

17) Purchased 80,42,253.190 Units of Birla Sun Life Savings Fund-Inst. Daily Dividend-Reinvestment at a cost of ` 8,04,77,219/-

18) Purchased 80,06,358.984 Units of Birla Sun Life Cash plus - Inst. Daily Dividend-Reinvestment at a cost of ` 8,02,19,713/-

19) Purchased 99,53,939.050 Units of Sundaram Money Fund Super Inst. DailyDividend Reinvest at a cost of ` 10,01,88,000/-


(`) (`)6. INVENTORIES

Food, Beverage, etc. 47,78,609 76,98,913Stores and Spare Parts 19,73,977 24,48,649

67,52,586 1,01,47,5627. SUNDRY DEBTORS

Over Six months oldGood and Unsecured 1,40,101 48,60,654Doubtful 1,10,230 1,10,230Other DebtsGood and Secured 1,86,913 3,42,778Good and Unsecured 1,80,05,447 1,94,13,454

1,84,42,691 2,47,27,116Less : Provision for Doubtful Debts 1,10,230 1,10,230Less : Deposits from normal Trade Debtors - Contra 1,86,913 3,42,778

1,81,45,548 2,42,74,1088. CASH AND BANK BALANCES

Cash and Cheques on Hand 51,32,077 27,93,980With Scheduled Banks

On Current Accounts 1,34,33,865 1,06,50,022On Margin Money* 10,21,200 10,21,200On Deposit Accounts 12,82,18,235 11,01,12,192

14,78,05,377 12,45,77,394*Pledged with Bank for BankGuarantee ` 10,21,200/-(Previous Year ` 10,21,200/-)

9. OTHER CURRENT ASSETSGood and Unsecured

Deposits with Government,Public Bodies and Others 44,30,008 47,05,486

Interest Accrued onDeposits/ Investments 23,51,677 31,71,300

67,81,685 78,76,78610. LOANS AND ADVANCES

Good and UnsecuredAdvances recoverable in cash or inkind or for value to be received* 80,82,343 78,23,082Advances with Government andPublic Bodies 12,95,179 12,95,179Advance Fringe Benefit Tax(Net of Provision of ` 67,46,417/-)(Previous Year - ` 67,46,417/-) 5,76,328 5,76,328Advance Income Tax (Net ofProvision of ` 39,84,40,872/-)(Previous Year - ` 36,06,40,872/-) 1,83,46,081 1,92,78,306

2,82,99,931 2,89,72,895 * Includes Capital Advances of

` 11,08,434/- (Previous Year –` 16,91,377/-).

11. LIABILITIESSundry Creditors

Dues to Micro and Small enterprises — —Dues to Others 6,50,55,632 6,23,20,338

Advances from Customers 82,07,612 92,05,380Other Liabilities 73,69,962 62,72,018Sundry Deposits 44,75,677 46,35,752

8,51,08,882 8,24,33,488Less : Deposits from Normal

Trade Debtors – Contra 1,86,913 3,42,7788,49,21,970 8,20,90,710

# There is no outstanding amountto be credited to InvestorEducation & Protection Fund.

12. PROVISIONSProvision for Retirement Benefits 28,29,454 25,27,599Proposed Dividend 4,80,00,000 4,80,00,000Income Tax onProposed Dividend 79,72,200 81,57,600

5,88,01,654 5,86,85,199


(`) (`)13. INCOME FROM OPERATIONS (NET)*

Rooms 27,74,07,224 26,23,95,208Food and Beverage 20,64,23,667 20,70,52,404Recreation and Services 4,31,79,593 3,96,30,405

52,70,10,483 50,90,78,017

* Income from operations are stated at net of tax amounting to ` 4,34,70,627/-(Previous year ` 4,04,43,017/-)Income from operations are stated at gross, the amount of tax deductedthereon is ` 44,13,024/- (Previous Year - ` 76,37,005/-)

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# #


14. OTHER INCOMEMiscellaneous Income* 15,83,924 98,82,317Gain on exchange - Net — 12,440Income from Current Investments-Others 1,98,13,756 1,16,59,377Interest on Deposits**– with Banks 81,49,906 1,01,93,294– with Others 1,57,266 1,57,266Profit on Sale of Current Investments — 46,98,742Liability no longer required written back 36,60,275 —

3,33,65,127 3,66,03,436 * The Income includes ` Nil

(Previous Year ` 62,32,541) relating toPrevious Year

** The Income from Deposits are statedgross, the amount of income tax deductedtheron is ` 8,44,176(Previous Year - ` 10,14,695).

15. FOOD, BEVERAGE ETC. CONSUMEDOpening Stock 76,98,913 1,01,77,208Add : Purchases 5,90,30,017 5,70,16,042

6,67,28,930 6,71,93,250Less : Closing Stock 47,78,609 76,98,913

6,19,50,321 5,94,94,337

(`) (`)16. OPERATING AND

ADMINISTRATIVE EXPENSESSalaries, Wages andBonus 4,61,88,455 4,49,64,148Contribution to Providentand Other Funds 27,07,193 30,53,535Workmen and StaffWelfare Expenses 1,46,76,518 1,22,93,654Reimbursement ofContractual Remuneration 3,35,72,192 9,71,44,359 2,68,69,301 8,71,80,638Consumption of Storesand Supplies 1,50,93,513 1,54,41,195Power and Fuel 4,17,45,279 3,80,22,590Rent 55,87,704 47,29,190Rates and Taxes 83,58,594 1,02,14,532Insurance 33,40,467 29,77,406Repairs — Building 62,73,089 75,30,713

— Machinery 85,57,237 78,92,491— Others 43,03,491 19,99,420

Advertising/Sales Promotion 56,25,640 44,69,189Electronic Data Processing 34,97,217 24,00,378Travelling and Conveyance 98,27,024 89,81,118Guest Transport 23,34,960 27,09,572Training 11,33,270 18,32,674Legal Expenses 80,000 1,79,200Postage, Telephone, Telex etc. 49,35,378 51,56,089Commission paid to Travel Agents 8,49,053 10,83,401Bank & Credit Card Charges 72,90,800 62,78,988Technical & Consultancy Fees 4,89,64,699 4,60,68,745Hotel RSVN/MKTG. Expenses 1,60,56,431 1,60,82,819Contract Services 1,99,40,857 1,57,24,176Provision for doubtful debts — 1,10,230Bad debts written off 6,22,506 15,94,751Miscellaneous Expenses 1,50,80,800 1,95,43,022Printing & Stationary 15,92,757 24,79,444Loss on Exchange (Net) 25,196 —Fixed Assets Discarded – Net 60,47,258 5,17,237

33,43,07,577 31,11,99,208Miscellaneous Expenses include :Auditors’ Remunerationand Expenses :— Audit Fees 7,50,000 5,00,000— Fee for Other Services 75,000 75,000— Reimbursement of Expenses 17,500 12,500

17. PROVISION FOR TAXATIONIncome Tax :Current Year 3,75,00,000 4,13,00,000Deferred Tax (16,42,098) 36,37,186

3,58,57,902 4,49,37,186

18. EARNINGS PER SHAREProfit after Taxation 9,26,00,439 9,61,84,208Weighted average numberof equity shares outstanding 2,40,00,000 2,40,00,000Basic and diluted earningsper share in rupees 3.86 4.01(face value – ` 10/- per share)

2011 2010(`) (`)

19. NOTES TO THE ACCOUNTSi) The Estimated Amount of Contracts

remaining to be executed on CapitalAccount and not provided for (net ofadvances ` 11,08,434/- Previous Year` 16,91,378/-) 29,53,873 15,50,541

ii) Contingent Liabilitya) Claims against the Company not acknowledged as debts :

i) The Commercial Tax Officer hasraised a Value Added Tax (VAT)demand along with interest andpenalty under the APVAT Act, 2005for the period from April 01, 2005 toJanuary 31, 2008 towards exclusion ofservice tax in the computation of VATliability. The Company filed an appealwith the Hon’ble High Court ofAndhra Pradesh against the demand. 19,85,698 19,85,698

ii) Additional Tax assessed bydepartment consequent todisallowance of certain expensespertaining to AssessmentYear 2006-07. 13,10,283 13,10,283

iii) Managing Director’s RemunerationSalary 22,84,140 17,97,325Other Perquisites 6,21,511 2,75,450Contribution to Provident Fund &

Other Funds 3,75,690 4,26,677

32,81,341 24,99,452

iv) Earnings in Foreign Exchange 21,66,72,748 23,01,67,803*Includes ` 21,05,47,557/-(Previous Year - ` 22,21,82,704/-)being Earnings during the yearthrough International CreditCards & Travel Agencies etc.as certified by Bankers.

v) Expenditure in Foreign Currencyduring the year (On payment basis)

Hotel Reservation / MarketingExpenses / Others 13,75,585 31,37,890Technical & Consultancy Fees 1,55,46,519 2,17,06,581

1,69,22,104 2,48,44,471vi) Value of Imports during the year

(CIF Basis)Capital Goods 11,23,590 11,29,265Other Goods 9,04,829 3,89,149

20,28,419 15,18,414

2011 2010(`) % (`) %

vii) Value of Consumption ofRaw Materials,Stores & Suppliesa) Raw Materials Indigenous 6,19,50,321 100.00 5,94,94,337 100.00

Imported — — — —

6,19,50,321 100.00 5,94,94,337 100.00

b) Stores & Supplies Indigenous 1,41,88,684 94.01 1,50,52,046 97.48

Imported 9,04,829 5.99 3,89,149 2.521,50,93,513 100.00 1,54,41,195 100.00

viii) The Company is exempted from disclosure of quantitative details as perNotification S.O. 301 (E) dated Feb.8 2011 exercised the powers conferredby sub-section (3) of section 211 of the Companies Act, 1956 (1 of 1956),the Central Government, Issued by Ministry of Corporate Affairs The sameis subject to the consent of the Board of Directors at the board meeting.

ix) The Company operates in one operating segment i.e., Hoteliering andwithin one Geographical segment i.e. India.

x) The Company’s significant lease arrangements are in respect of operatingleases for residential premises. These leasing arrangements, which are notnon-cancellable, are for a period of 11 months or longer and are usuallyrenewable by mutual consent on mutually agreeable terms. The aggregatelease rentals payable are charged as Rent under Schedule 16.


(`) (`)

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xi) Employee Benefits : As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements in respect of Employee Benefit Schemes :

2011 2010Leave Leave

Gratuity Encashment Gratuity EncashmentFunded Unfunded Funded Unfunded

(`) (`) (`) (`)I. Components of Employer Expense

1 Current Service Cost 7,58,542 4,57,647 5,53,333 1,13,1492 Interest Cost 3,46,239 58,319 2,90,123 62,6273 Expected Return on Plan Assets (2,95,557) — (1,85,331) —4 Curtailment Cost /(Credit) — — — —5 Settlement Cost /(Credit) — — — —6 Past Service Cost — — — —7 Actuarial Losses/(Gains) (3,19,004) 27,776 1,34,890 (2,06,009)8 Total expense recognised in the statement

of Profit & Loss Account 4,88,220 5,43,742 7,93,015 (30,233)The Gratuity Expense has been recognised in “Contribution to Provident and Other Funds” and Leave Encashment in “Salaries/Wages and Bonus” under Schedule 16.II. Actual Returns 3,22,696 — 2,79,546 —III. Net Asset/(Liability) recognised in Balance Sheet

1 Present Value of Obligation 52,36,642 13,02,107 48,07,308 7,96,8112 Fair Value on Plan Assets 37,09,295 — 30,76,520 —3 Status [Surplus /(Deficit)] (15,27,347) (13,02,107) (17,30,788) (7,96,811)4 Unrecognised Past Service Cost — — — —5 Net Asset/(Liability) recognised in Balance Sheet (15,27,347) (13,02,107) (17,30,788) (7,96,811)

IV. Change in Defined Benefit Obligations (DBO)1 Present Value of DBO at the Beginning of Period 48,07,308 7,96,811 40,01,868 8,43,0112 Current Service Cost 7,56,542 4,57,647 5,53,333 1,13,1493 Interest Cost 3,46,239 58,319 2,90,123 62,6274 Curtailment Cost /(Credit) — — — —5 Settlement Cost/(Credit) — — — —6 Plan Amendments — — — —7 Acquisitions — — — —8 Actuarial (Gains)/Losses (2,91,865) 27,776 2,29,105 (2,06,009)9 Benefits Paid (3,81,582) (38,446) (2,67,121) (15,967)10 Present Value of DBO at the End of Period 52,36,642 13,02,107 48,07,308 7,96,811

V. Change in Fair Value of Assets1 Plan Assets at the Beginning of Period 30,76,520 — 22,18,660 —2 Acquisition Adjustment (2,865) — — —3 Expected Return on Plan Assets 2,95,557 — 1,85,331 —4 Actuarial Gains/(Losses) 27,139 — 94,215 —5 Actual Company Contribution 6,94,526 38,446 8,45,435 15,9676 Benefits Paid (3,81,582) (38,446) (2,67,121) (15,967)7 Plan assets at the End of Period 37,09,295 — 30,76,520 —

VI. Asset Assumptions1 Discount Rate (%) 8.00 8.00 7.50 7.502 Expected Return on Plan Assets (%) 9.15 — 7.50 —

The estimates of future salary increases, considered in actuarial valuations take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.VII. Major Categories of Plan Assets as a % of the Total Plan Assets

1 Insurance Companies 100% — 100% —VIII. Basis used to determine the Expected Rate of Return on

Plan 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 optimised returns within acceptable risk parameters, the plan assets are well diversified.

iv) Summary of transactions during the year : (`)

Sr. Particulars Holding Company Enterprises under control of Holding Company Key Management Relatives of KeyNo. Personnel Management Personnel (*)

Subsidiaries Others2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

1. Sale of Goods 4,866 66,308 — — — — — — — —2. Sale of Services 86,19,352 44,40,097 — 36,855 — 1,58,720 — — — —3. Purchase of Goods 59,87,296 48,41,055 1,47,808 28,954 — — — — — —4. Purchase of Services

- Hotel Services 35,08,353 26,88,126 —— — — — — — — —- Service Fee 4,50,26,573 4,35,98,900 3,08,840 — — — — — — —- Rent towards Godown — — —— — — — — — 8,00,000 6,30,000

5. Reimbursement ofContractual Remuneration 3,35,72,192 2,68,69,301 — —— — — — — — —

6. Expenses recovered 1,32,24,959 97,67,087 — 3,752 — — — — — —7. Expenses reimbursed 1,61,18,234 1,41,39,834 23,001 6,595 — — — — — —8. Dividend Payments 3,26,40,954 3,26,40,954 — — — — 26,08,460 26,08,460 1,18,31,620 1,18,31,6209. Sale of Fixed Assets — — — — — — — — — —

10. Balance outstanding atthe year end :i) Debtors/Receivables 1,77,726 17,88,443 — 36,855 — 1,58,720 — — — —ii) Creditors/Payables 1,36,22,236 1,95,50,634 5,843 35,549 — — — — — —

Note : Details of remuneration to the Managing Director is given in the note (iii) of the Notes to Accounts and for other members the remuneration for the year is ` Nil.(*) M/s G. Sulochanamma M/o G. Sivakumar Reddy, G. Samyuktha Reddy W/o G. Sivakumar Reddy, G. Pranav Reddy S/o G. Sivakumar Reddy, G. Rachita ReddyD/o G. Sivakumar Reddy, N. Shailaja Reddy W/o N. R. Pradeep Reddy, G. Bharati Reddy W/o B. N. Suresh Reddy.

xiii) Previous Year’s figures have been regrouped/rearranged wherever necessary.

xii) Related Party Disclosures Under Accounting Standard 18i) Holding Company : ITC Limitedii) Other Related Parties with whom transactions have taken place

during the year :Fellow Subsidiary Companies : Fortune Park Hotels Limited

Surya Nepal Private LimitedITC Infotech India Limited

Other entities under controlof Holding company : ITC Sangeet Research Academy

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

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To determine the liabilities towards gratuity and leave encashmentby an independent actuarial valuation as per the Accounting Standard– 15 (revised 2005) on “Employee benefits”. The contributions inrespect of gratuity fund are made to Life Insurance Corporation.

x) TAXES ON INCOMETo provide and determine Current tax as the amount of tax payablein respect of taxable income for the period.To provide and recognise Deferred tax on timing differences betweentaxable income and accounting income subject to consideration ofprudence.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.

xi) FOREIGN CURRENCY TRANSLATIONSTo record transactions in foreign currencies at the exchange ratesprevailing on the date of the transaction. Gains/Losses arising outof fluctuations in the exchange rates are recognised in the Profit andLoss in the period in which they arise. Liability/Receivables on accountof foreign currency are converted at the exchange rates prevailingas at the end of the year.

xii) BORROWING COSTSTo capitalise the borrowing costs that are directly attributable to theacquisition or construction as cost of that capital asset. Otherborrowing costs are recognised as an expense in the period in whichthey are incurred.

xiii) FINANCIAL AND MANAGEMENT INFORMATION SYSTEMSThe books of account and other records have been designed toensure compliance of the relevant provisions of the Companies Act,1956 on one hand, and meet the internal requirements of informationand systems for Planning, Review and Internal Control (designedand based on “Uniform System of Accounts for Hotels”), onthe other.


G. Sivakumar Reddy ChairmanGurgaon, 28th April, 2011 George Verghese Managing Director

20. SIGNIFICANT ACCOUNTING POLICIES

i) BASIS OF PREPARATION OF FINANCIAL STATEMENTSTo prepare financial statements in accordance with the historical costconvention, generally accepted accounting principles in India andrelevant presentational requirements of the Companies Act, 1956.

ii) 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.

iii) DEPRECIATIONTo calculate depreciation on fixed assets in a manner that amortisesthe cost of assets after commissioning, over their estimated usefullives or lives based on the rates specified in Schedule XIV to theCompanies Act, 1956, whichever is lower, by equal annual installments.

iv) INVESTMENTSTo state Current Investments at lower of cost and fair value; andlong term investments at cost. Where applicable, provision is madewhere there is a permanent fall in valuation of Long Term investments.

v) INVENTORIESTo value all inventories at lower of cost or net realisable value. Costincludes freight and other related incidental expenses and is computedon weighted average method.

vi) TURNOVERTo state gross income from operations, which represents invoicedvalue of goods sold and services rendered, net of sales tax butinclusive of all applicable taxes.

vii) INVESTMENT INCOMETo account for Income from Investments on an accrual basis, inclusiveof related tax deducted at source.

viii) PROPOSED DIVIDENDTo provide for Dividend as proposed by the Directors in the Booksof Account, pending approval at the Annual General Meeting.

ix) 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.




Balance Sheet Date

Date Month Year






Sources of Funds



Deferred Tax Liability - Net




Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands)

Turnover * Total Expenditure

* Includes Other Income



Earnings per Share in Rs. Dividend Rate %

V. Generic Names of Three Principal Products/Services of Company(as per monetary terms)

Item Code No.

Product Description

** No item code has been assigned to ‘Hotels’ under the Indian Trade Classification.

N . A . N . A .

N . A . N . A .

1 1 6 5 3 0 4 1 1 6 5 3 0 4

2 4 0 0 0 0 7 0 0 9 0 2

5 3 6 8 2 4 4 1 9 5 1 5

6 4 0 6 1 N . A .

5 1 9 2 0 1

3 1 0 3 2 0 1 1

** N . A .

3 . 8 6 2 0

H O T E L S

9 2 6 0 0� + −

� 1 2 8 4 5 8

5 6 0 3 7 5 4 3 1 9 1 7

N . A .

N . A .N . A .

+ −

101


Partha MitraPartnerMembership No. : 50553For Lovelock & LewesFirm’s Registration Number : 301056EChartered Accountants

Audit Committee : Chairman: Mr. S. C. Sekhar, Members: M/s. N. R. Pradeep Reddy & Dipak HaksarPermanent Invitees: Representative of Statutory Auditors.

8 0 6 7 9

resolutions passed thereat were duly recorded in Minutes Bookmaintained 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 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 the Act.

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, on 29th June 2010 (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

14. The Board of Directors of the Company is duly constituted and theappointment of Additional Director has been duly made. However,there was no appointment of Alternate Directors /Directors to fill thecasual vacancy.

15. The Company has not appointed any Managing Director/Whole-timeDirector/Manager during the financial year.

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 the 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 saidAct is attached to this Report.AuditorsThe Companys’ Auditors, Messrs. Price Waterhouse, Chartered Accountants,retire at the ensuing Annual General Meeting and being eligible, offerthemselves for re-appointment.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 along with proper explanations relating tomaterial departures, if any;

(ii) selected such accounting policies and applied them consistently andmade judgements 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 and of the profit of theCompany 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

(iv) prepared the Annual Accounts on a going concern basis.The required disclosures and significant accounting policies followed areappearing in Schedules 17 and 18 respectively, in the annual accounts.

On behalf of the BoardS. C. Sekhar Director

Gurgaon, 28th April, 2011 Arun Pathak Director


Your Directors submit their Report for the financial year ended 31st March, 2011.Financial PerformanceDuring the year under review, your Company recorded net revenueof ` 1801.45 lacs (previous year - ` 1491.89 lacs) and earned a net profitof ` 411.73 lacs (previous year - ` 213.06 lacs) after providing for incometax of ` 190.45 lacs (previous year- ` 120.41 lacs). Earnings Per Share forthe year stands at ` 91.49 (previous year ` 47.35).Your Directors are pleased to recommend a dividend of ` 7/- (previous year` 6/-) per Equity Share of ` 10/- each for the year ended 31st March, 2011.Your Board further recommends a transfer to General Reserve of ` 41.17lacs (previous year - ` 21.31 lacs).The Company, which caters to the ‘mid market to upscale’ segment, forgednew alliances during the year taking the total number of properties underthe Fortune brand to 63, with a total room count of 4915. Of these, 38properties are operating hotels. Another 4 hotels are slated to becommissioned during the course of the financial year 2011-12. The remaining21 hotel projects are under various stages of development. The Companyseeks to be a lead player in the mid market to upscale segment, providingquality products and services that would position ‘Fortune’ as the premier‘value’ brand in the Indian hospitality sector.Conservation of Energy, Foreign Exchange Earnings and outflowDuring the year your Company has introduced an ‘Eco Friendly’ratingscheme under which all hotels operating under the ‘Fortune’ brand areaudited and rated based on various parameters. These include the adoptionof ‘Star Rated’ energy appliances, CFL and LED lighting, intelligent lightingcontrols, usage of renewable energy etc. This scheme will catalyze energyconservation and adoption of eco friendly practices at all hotels operatingunder your Company’s brand.During the year under review, there was no foreign exchange income(previous year - nil) but there was a foreign exchange outflow of ` 13.71lacs (previous year - ` 5.26 lacs).DirectorsMr. Pawan K. Verma, Director of your Company resigned with effect from6th September, 2010. Your Directors would like to place on record theirsincere appreciation of the valuable services rendered by Mr. Verma.In accordance with the provisions of Article 143 of the Articles of Associationof the Company, Mr. Gaj Singh will retire by rotation at the forthcomingAnnual General Meeting of the Company and being eligible, offers himselffor re-appointment.

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 FortunePark Hotels Limited (hereinafter referred to as ‘the Company’) as requiredto be maintained under the Companies Act, 1956 (the Act) and the Rulesmade thereunder, the provisions contained in the Memorandum and Articlesof Association of the Company and also the audited Annual Accounts,Auditor’s Report on the said annual accounts for the financial year ended31st March, 2011(financial year). In our opinion and to the best of ourinformation and according to the examination carried out by us andexplanations and confirmation furnished to us by the Company, its officersand agents, we certify that in respect of the financial year:

1. The Company has kept and maintained registers as stated in ”Annexure:A”to this Certificate, as per the provisions of the Act and the 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 on28th April 2010, 29th September 2010, 24th December 2010 &25th March 2011 in respect of which meetings proper notices weregiven the proceedings were properly recorded and signed and kept inthe Minutes Book maintained for the purpose. There was no resolutionpassed, by circulation.

5. The Company has not closed its Register of Members during thefinancial year.

6. The Annual General Meeting for the financial year ended on31st March, 2010 was held on 28th June, 2010 after giving due noticeto the Members of the Company and other concerned and the

102

FORTUNE PARK HOTELS LIMITED

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 /or such authorities prescribed under the various provisions of the Actduring the financial year.

18. The Directors have disclosed their interest in other firms / companiesto the 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 financial year.

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 noentries 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 BhatiaLLB, ACS

Gurgaon, 28th April, 2011 CP : 6485

103


REPORT OF THE AUDITORS’ 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, 2011, and the related Profitand Loss Account 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 statement

presentation. 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 (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 givein the 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

ANNEXURE – ‘A’

Registers maintained by the Company(As on March 31, 2011)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, 2011)Sl. Particulars of Forms & Returns Filed Date of Whether AdditionalNo. Filing filed within Fees paid

prescribedtime

1. Form 32 u/s 303 of the Act for appointment of Mr. Arun Pathak as an AdditionalDirector and resignation of Mr. M Riaz Ahmed from directorship on 26th March, 2010 12th April, 2010 Yes No

2. Form 32 u/s 303 of the Act for the change in designation of Mr. Arun Pathak fromAdditional Director to Director in the Annual General Meeting held on 28th June 2010 6th July, 2010 Yes No

3. Form 23AC and From 23ACA for Annual Accounts u/s 220 for the year ended 31st March 2010 12th July, 2010 Yes No4. Form 66 for Compliance Certificate u/s 383A of the Act, for the financial year ended 31st March 2010 12th July, 2010 Yes No5. Form 20B for Annual Return u/s 159 of the Act, made upto 28th June 2010 i.e. the date of

AGM for the financial year ended 31st March 2010 26th August, 2010 Yes No6. Form 32 u/s 303 of the Act for resignation of Mr. Pawan Verma from directorship on 6th September 2010 1st October, 2010 Yes No 7. Form 23AA u/s 209 for confirming the notice of address at which books of account are kept 1st October, 2010 Yes NoB. Forms & Returns filed with the Regional Director, Central Government or other authorities : Nil


Referred to in paragraph 3 of the Auditors’ Report of even date to themembers of Fortune Park Hotels Limited on the financial statements forthe year ended March 31, 2011.

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 and exceeding the value of RupeesFive Lakhs in respect of any party during the year, which havebeen made at prices which are not reasonable having regard tothe prevailing market prices at 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 rulesframed there under.

7. In our opinion, the Company has an internal audit systemcommensurate with 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, income - tax, service tax, cess andother material 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 as at March 31, 2011 which have not beendeposited 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 CIT (Appeals) ruled inTax Act, 156 of 17,29,041 Year favour of the Company1961 Income Tax 2001-02 by its order dated

Act, 1961 December 13, 2004. The Income Tax department had thenfiled an appeal in Income Tax Appelate Tribunal in the financialYear 2005-06

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 3,62,745 Year Amount withheld1961 Tax Act, 1961 2007-08 by department

under ProtestIncome 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

10. The Company has no accumulated losses as at March 31, 2011 andit has not incurred any cash losses in the financial year ended on thatdate or in the immediately preceding 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.

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 the register maintained under Section301 of the Act during the year.

19. The Company has not issued any debentures.20. The Company has not raised any money by public issues during the year.21. During the course of our examination of the books and records of the

Company, carried out in accordance with the generally 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.

For Price WaterhouseFirm Registration Number: 012754N

Chartered Accountants Abhishek Rara

PartnerGurgaon, 28th April, 2011 Membership Number 77779

104


the best of our knowledge and belief, were necessary for thepurpose 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, Profit & Loss Account and Cash Flow Statementdealt with by this report are in agreement with the books ofaccount;

(d) In our opinion, the Balance Sheet, Profit & Loss Account 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,as on March 31, 2011 and taken on record by the Board ofDirectors, none of the directors is disqualified as on March 31,2011 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

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, 2011;(ii) in the case of the Profit & Loss Account, of the profit for the

year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for

the year ended on that date.

For Price WaterhouseFirm Registration Number: 012754N

Chartered Accountants Abhishek Rara

PartnerGurgaon, 28th April, 2011 Membership Number 77779

BALANCE SHEET AS AT 31ST MARCH, 2011 As at 31st March, 2011 As at 31st March, 2010Schedule (`) (`) (`) (`)


a) Capital 1 45,00,080 45,00,080b) Reserves and Surplus 2 11,75,52,727 12,20,52,807 8,00,41,024 8,45,41,104

Total 12,20,52,807 8,45,41,104II. APPLICATION OF FUNDS

1. Fixed Assets 3a) Gross Block 1,02,96,472 1,01,58,188b) Less : Depreciation 50,62,285 43,32,767c) Net Block 52,34,187 58,25,421

2. Investments 4 4,40,82,435 1,71,82,8343. Deferred Tax Assets 5 92,52,375 88,87,1714. Current Assets, Loans and Advances

a) Sundry Debtors 6 6,06,56,537 4,57,48,441b) Cash and Bank Balances 7 4,49,07,304 3,44,90,402c) Other Current Assets 8 16,74,567 13,79,605d) Loans and Advances 9 2,19,29,801 1,86,04,707

12,91,68,209 10,02,23,155Less :

5. Current Liabilities and Provisionsa) Liabilities 10 4,08,74,940 2,83,66,332b) Provisions 11 2,48,09,459 1,92,11,145

6,56,84,399 4,75,77,477Net Current Assets 6,34,83,810 5,26,45,678Total 12,20,52,807 8,45,41,104Notes to the Accounts 17Significant Accounting Policies 18

The Schedules referred to above form an integral part of the Balance Sheet.This is the Balance Sheet referred to in our Report of even date.

For PRICE WATERHOUSEFirm’s Registration No : 012754NChartered Accountants

Abhishek RaraPartnerMembership Number 77779

Gurgaon, 28th April, 2011


S. C. Sekhar DirectorArun Pathak Director

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011For the year ended For the year ended

31st March, 2011 31st March, 2010Schedule (`) (`) (`) (`)

I. INCOMEGross Income from Operations 19,40,40,210 16,18,65,166Less : Service Taxes 1,80,68,543 1,47,86,670Net Income from Operations 12 17,59,71,667 14,70,78,496Other Income 13 41,73,492 21,10,770

18,01,45,159 14,91,89,266II. EXPENDITURE

Operating and Administrative Expenses 14 11,84,71,164 11,44,92,487Depreciation 3 14,56,422 13,49,129

11,99,27,586 11,58,41,616III. PROFIT

Profit before Taxation 6,02,17,573 3,33,47,650Provision for Tax 15 1,90,44,796 1,20,41,385Profit after Taxation 4,11,72,777 2,13,06,265Profit brought Forward 7,00,58,791 5,40,31,651Available for Appropriation 11,12,31,568 7,53,37,916

IV. APPROPRIATIONSGeneral Reserve 41,17,278 21,30,626Proposed Dividend 31,50,056 27,00,048Income Tax on Proposed Dividend 5,11,018 4,48,451Profit Carried Forward 10,34,53,216 7,00,58,791

11,12,31,568 7,53,37,916Basic and Diluted Earnings Per Share (`) 16 91.49 47.35Notes to the Accounts 17Significant Accounting Policies 18The Schedules referred to above form an integral part of the Profit and Loss Account.This is the Profit and Loss Account referred to in our Report of even date.

105







CASH FLOW STATEMENTFor the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

A. NET PROFIT BEFORE TAX 6,02,17,573 3,33,47,650ADJUSTMENTS FOR

Depreciation 14,56,422 13,49,129Interest Income (25,86,009) (13,53,678)Dividend from Current Investment (15,64,562) (4,24,318)Fixed Assets - Loss on Sale/Write off-Net 54,684 13,068Provision for Doubtful Debts — 1,14,77,341(Profit)/Loss on Sale of Investments 2,27,892 (3,32,774)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 5,78,06,000 4,40,76,418 ADJUSTMENTS FOR CHANGES IN WORKING CAPITAL :

Increase in Trade and Other Receivables (1,58,41,520) (22,94,159)Increase in Trade and Other Payables 1,75,94,347 27,21,229

CASH GENERATED FROM OPERATIONS 5,95,58,827 4,45,03,488Income Tax Paid including TDS (Net of Refunds) (2,16,18,886) (2,15,90,813)

NET CASH GENERATED FROM OPERATING ACTIVITIES 3,79,39,941 2,29,12,675B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (9,70,788) (9,99,729)Sale of Fixed Assets 50,916 8,999Purchase of Investment (42,22,98,020) (1,04,24,318)Interest Received 21,08,263 12,97,312Dividend from Current Investment 15,64,562 4,24,318Sale of Investments 39,51,70,527 33,32,774

NET CASH USED IN INVESTING ACTIVITIES (2,43,74,540) (63,60,644)C. CASH FLOW FROM FINANCING ACTIVITIES

Dividend Paid (27,00,048) (22,50,040)Income Tax on Dividend Paid (4,48,451) (3,82,395)

NET CASH USED IN FINANCING ACTIVITIES (31,48,499) (26,32,435)NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 1,04,16,902 1,39,19,596OPENING CASH AND CASH EQUIVALENTS 3,44,90,402 2,05,70,806

CLOSING CASH AND CASH EQUIVALENTS 4,49,07,304 3,44,90,402

Notes :1. Cash and cash equivalents comprise

Cash and Cheques in hand 21,54,141 38,85,873Balance with Scheduled Banks in - Current Accounts etc. 1,03,53,163 1,28,95,861 - Deposit Accounts 3,24,00,000 1,77,08,668

Total 4,49,07,304 3,44,90,402

2. The above cash flow statement has been prepared under the indirect method set out in AS-3 notified u/s 211 (3C) of The Companies Act, 1956 .3. Figures in brackets indicate cash outgo.4. Previous period figures have been regrouped and recasted, wherever necessary to conform to the current period classification.This is the cash flow statement referred to in our Report of even date.



(`) (`)

1. CAPITAL

Authorised20,00,000 Equity Sharesof ` 10/- each 2,00,00,000 2,00,00,000

Issued, Subscribed and Paid-up*4,50,008 Equity Sharesof ` 10/- each 45,00,080 45,00,080

45,00,080 45,00,080* Includes– 4,50,002 Equity Shares of ` 10/-

each fully paid-up held by the HoldingCompany, ITC Limited and 6 sharesheld by ITC Limited jointly withManagement personnel

As at As at31st March, 2011 31st March, 2010(`) (`) (`) (`)

106



Capital Reserve 30,00,000 30,00,000General Reserve

At the commencement of the year 69,82,233 48,51,607Add : From Profit and Loss Account 41,17,278 21,30,626

1,10,99,511 69,82,233Profit and Loss AccountAt the commencement of the year 7,00,58,791 5,40,31,651Add : From Profit and Loss Account 3,33,94,425 10,34,53,216 1,60,27,140 7,00,58,791

11,75,52,727 8,00,41,024






4. INVESTMENTS

Unquoted – CurrentFortis Money Plus Regular Plan DailyDividend0 Units (Previous Year - 3,85,798 Units)of ` 10/- each — 38,58,167J P Morgan India Liquid Plus Fund -Retail - Daily Dividend Plan - Reinvested0 Units (Previous Year -3,17,180 Units)of ` 10/- each — 31,76,748LIC Mutual Fund Income Plus - DailyDividend Plan 0 Units ( PreviousYear - 6,11,006 Units) of ` 10/- each — 61,10,066Canara Robeco Treasure AdvantageRetail Daily Dividend Fund 0 Units( Previous Year - 3,25,447 Units)of ` 12.40/- each — 40,37,853Religare Liquid Fund Inst. Daily Dividend44073 Units (Previous Year - 0 Units)of ` 1000.23 each 4,40,82,435 —

4,40,82,435 1,71,82,834

5. DEFERRED TAX ASSETS / (LIABILITY)-(NET)

Deferred Tax Assets

On Expenditure for the current year allowed under Income Tax Act, 1961 onpayment/actual basis only 63,03,913 60,73,060

On Provision for Doubtful Debts 37,23,823 35,46,498

Less :

Deferred Tax Liability

Depreciation - Timing Difference (7,75,361) (7,32,387)

Net Deferred Tax Assets 92,52,375 88,87,171

6. SUNDRY DEBTORS

Over 6 months oldGood and Unsecured 81,12,658 1,32,29,474Doubtful and Unsecured 1,14,77,341 1,14,77,341

Other DebtsGood and Unsecured 5,25,43,879 3,25,18,967

7,21,33,878 5,72,25,782

Less : Provision for Doubtful Debts 1,14,77,341 1,14,77,341

6,06,56,537 4,57,48,441


Cash and Cheques in hand 21,54,141 38,85,873With Scheduled Banks

On Current Accounts 1,03,53,163 1,28,95,861On Deposit Accounts 3,24,00,000 1,77,08,668

4,49,07,304 3,44,90,402


Good and Unsecured

Deposits with Government,Public Bodies and Others 4,23,181 4,22,993

Interest Accrued on Deposit with Bank 12,51,386 9,56,612

16,74,567 13,79,605


(`) (`)

9. LOANS AND ADVANCES

Good and Unsecured

Advances recoverable in cash orin kind or for value to be received 36,92,240 27,59,004

Current Tax [ Net of Provisions of` 1,94,10,000/- 1,82,37,561 1,58,45,703(Previous Year – ` 1,76,00,000/-)]

2,19,29,801 1,86,04,707

10. LIABILITIES [Refer Note (iv) 0n Schedule 17]

Sundry CreditorsTotal outstanding dues of micro andsmall enterprises — —

Total outstanding dues of creditors otherthan micro and small enterprises 1,97,34,427 1,58,84,615

Advance from Customers 1,65,04,106 84,49,883

Other Liabilities 46,36,407 40,31,834

4,08,74,940 2,83,66,332

11. PROVISIONS [Refer Note (vii) 0n Schedule 17]

Provision for Employee Benefits 2,11,48,385 1,60,62,646

Proposed Dividend 31,50,056 27,00,048

Income Tax on Proposed Dividend 5,11,018 4,48,451

2,48,09,459 1,92,11,145


(`) (`)

12. NET INCOME FROM OPERATIONS

Management Consultancyand Other Services 17,59,71,667 14,70,78,496

17,59,71,667 14,70,78,496

13. OTHER INCOME

Interest on Deposits* 18,29,712 13,53,678Interest on Income Tax Refunds 7,56,297 —Dividend from Current Investment 15,64,562 4,24,318Profit on Sale of Investments — 3,32,774Others 22,921 —

41,73,492 21,10,770

* The income from Interest onDeposits is stated gross, theamount of Income Tax deductedthereon is ` 1,82,972/-(Previous Year - ` 1,35,369/-)

14. OPERATING ANDADMINISTRATIVE EXPENSESSalaries, Wages and Bonus 11,76,24,723 9,45,18,882[includes ` 70,94,899/-(Previous Year - ` 26,27,324/-)on account of compensatedabsences]Contribution to Providentand Other Funds 74,85,755 38,20,619


(`) (`)


107


3. FIXED ASSETS

Particulars Gross Block Depreciation/Amortisation Net BlockOriginal Cost Additions Deletions/ Original Cost Depreciation Depreciation Deletions/ Depreciation Net Block Net Block

as at during the Adjustments as at upto for the Adjustments up to as at as at01.04.2010 year 31.03.2011 01.04.2010 year 31.03.2011 31.03.2011 31.03.2010

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

Intangible AssetsCapitalised software 26,25,404 26,25,404 7,34,675 5,25,081 — 12,59,756 13,65,648 18,90,729Tangible AssetsPlant and Machinery - Office Equipment 7,15,084 58,600 1,53,599 6,20,085 2,33,764 1,15,033 1,32,913 2,15,884 4,04,201 4,81,320Computers 53,35,980 9,12,188 6,28,816 56,19,352 27,58,745 7,39,026 5,43,902 29,53,869 26,65,483 25,77,235Furniture and Fixtures 14,40,570 — 50,089 13,90,481 5,93,363 73,373 50,089 6,16,647 7,73,834 8,47,207Motor Vehicle 41,150 — — 41,150 12,220 3,909 — 16,129 25,021 28,930Total 1,01,58,188 9,70,788 8,32,504 1,02,96,472 43,32,767 14,56,422 7,26,904 50,62,285 52,34,187 58,25,421Previous Year 86,06,272 16,73,889 1,21,973 1,01,58,188 30,83,544 13,49,129 99,906 43,32,767 58,25,421


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

[includes ` 20,53,162/-(Previous Year ` 2,11,010/-)on account of Gratuity]Workmen and StaffWelfare Expenses 67,84,774 42,36,824Reimbursement ofcontractual remuneration 2,78,85,505 2,66,28,527

15,97,80,757 12,92,04,852Less : Recoveries 8,60,64,144 7,37,16,613 6,58,88,511 6,33,16,341Consumption of Storesand Supplies 6,40,675 6,65,197Power and Fuel 17,53,372 13,73,777Rent [Refer Note (v) on Schedule 17] 30,81,488 29,10,837Insurance 60,068 57,823Repairs - Others 31,89,925 25,88,651Advertising/Sales Promotion 1,20,41,693 1,53,44,166Traveling and Conveyance 1,13,23,773 77,37,850Legal Expenses 14,55,680 12,14,605Postage, Telephones etc. 25,84,481 25,04,456Bank Charges 44,141 27,874Technical and Consultancy Fees 29,17,302 24,69,879Bad Debts Written Off 37,66,756 16,71,441Provision for Doubtful and Bad Debts — 1,14,77,341Interest on delayed Payment of Service Tax 14,236 —Fixed Assets Discarded 54,684 13,068Loss on Sale of CurrentInvestment 2,27,892 —

Miscellaneous Expenses 15,98,385 11,19,181

11,84,71,164 11,44,92,487


108


For the Year ended For the Year ended31st March, 2011 31st March, 2010

S.No. Particulars Units Purchased Purchase Unit Sold Units Purchased Purchase Unit Soldin numbers at cost (in `) in Numbers in numbers at cost (in `) In numbers

1. Fortis Money Plus Regular Plan Daily Dividend 5,164 52,629 3,90,962 15,573 1,55,779 —2. Fidelity Fixed Maturity Plan Series 1 Plan B Retail Growth — — — — — 2,50,0003. JP Morgan India Liquid Plus Fund - Retail - Daly Div Plan- Rein 4,317 48,539 3,21,497 12,026 1,20,619 —4. LIC Mutual Fund Income Plus - Daily Dividend Plan 5,11,529 51,15,287 11,22,535 6,11,006 61,10,067 —5. DSP Black Rock Fixed Maturity Plan 12M Series 3 - Regular Growth Maturity — — — — — 50,0006. Canara Robeco Treasure Advantage Retail Daily Dividend Fund 32,82,764 4,07,29,582 36,08,211 3,25,447 40,37,8537. JP Morgan India Liquid Fund - Super Inst - Daily Div Plan - Reinvestment 29,92,104 2,99,44,678 29,92,104 — — —8. JP Morgan India Treasury Fund - Super Inst - Daily Div plan - Reinvestment 30,03,797 3,00,64,708 30,03,797 — — —9. Templeton India Ultra Short Bond Fund Inst Plan - Daily Div Reinvestment 30,00,262 3,00,35,923 30,00,262 — — —10. Fortis Money Plus Institutional Plan Daily Dividend 30,03,744 3,00,53,357 30,03,744 — — —11. UTI Treasury Advantage Fund Inst Plan Daily Div. Reinvestment 30,379 3,03,85,453 30,379 — — —12. UTI Floating Rate Fund Short Term Plan Ins. Daily-Dividend 30,397 3,04,20,052 30,397 — — —13. DSP Black Rock Money Manager Fund Inst Plan Daily Dividend 30,677 3,07,01,425 30,677 — — —14. Canara Robeco Treasure Advantage Inst Daily Div Fund 36,18,956 4,49,00,744 36,18,956 — — —15. Sundaram Ultra ST Fund Inst Div Rein Daily 37,59,678 3,77,35,893 37,59,678 — — —16. Sundaram Money Fund Inst.Daily Div Rein 37,66,834 3,80,27,315 37,66,834 — — —17. Religare Liquid Fund Inst.Daily Dividend 44,073 4,40,82,435 — — — —

Total 42,22,98,020 1,04,24,318

iii) Contingent Liabilitiesa) 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 it’s appeal before the CESTAT for the same.

b) Demands from Income Tax Authorities under appeal amounting to ` 6,81,738for Assessment year 2007-08 and 2008-09 (previous year ` Nil) for

iv) The Company, based on the information available on the status of the suppliers,does not have any dues to enterprises covered under the Micro, Small andMedium Enterprises Development Act, 2006.

v) The Company’s Significant leasing arrangements are in respect of operatingleases for premises (residential, office etc.).These leasing arrangements whichare not non-cancellable range between 11 months and 3 years generally, orlonger, and are usually renewable by mutual consent on mutually agreeableterms. The aggregate lease rentals payable are charged as rent underSchedule 14.

vi) The Company operates in one operating segment i.e. Hoteliering and within onegeographical segment i.e. India and accordingly. in accordance with AccountingStandard 17- “Segment Reporting”,no segment Disclosures have been made.

vii) The Company has accounted for the long term defined benefits and contributionschemes as under:

A) Defined Benefit Schemes:(a) Gratuity

The employees are entitled to gratuity that is computed as half-month’ssalary, for every completed year of service and is payable on retirement /termination. The Company makes provision of such gratuity liability in thebooks of accounts on the basis of actuarial valuation. The Company payscontribution to Life Insurance Corporation to fund its plan.

(b) Other BenefitThe employees are entitled for leave for each year of service and partthereof and subject to the limits specified, the unavailed portion of suchleaves can be accumulated or encashed during/at the end of the serviceperiod. The plan in unfunded.


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

Miscellaneous Expenses Include :Auditors’ Remunerationand Expenses : (excluding Service Tax)– Audit Fees 1,50,000 1,50,000– Fees for Other Services - Tax Audit 50,000 50,000– Reimbursement of Expenses 25,000 20,000

2,25,000 2,20,000

15. PROVISION FOR TAXATIONIncome Tax for the year :– Current Tax 1,94,10,000 1,76,00,000

– Deferred Tax (3,65,204) (55,58,615 )

1,90,44,796 1,20,41,385

16. EARNINGS PER SHAREProfit after Taxation 4,11,72,777 2,13,06,265

Weighted average number ofequity shares outstanding 4,50,008 4,50,008

Basic and diluted earnings per sharein rupees (Face value - ` 10/- per share) 91.49 47.35


i) Expenditure in Foreign Currency (On Payment Basis) : Travelling ` 4,01,411/-(Previous year - ` 1,72,812/-), Others ` 9,69,897/- (Previous year - ` 3,53,100).

ii) Following are the details of investments purchased and sold/redeemed duringthe year.

For the Year ended For the Year ended31st March, 2011 31st March, 2010

Gratuity Leave Gratuity Leaveencashment/ encashment/compensated compensated

absences absences

Obligations at year beginning 14,44,078 73,24,864 11,84,312 59,51,196Service Cost – Current 19,68,440 24,32,235 9,85,528 14,74,374Service Cost – Past 5,059 — — —Interest Cost 1,06,719 5,17,813 84,943 3,99,328Actuarial (gain) / loss (27,056) 37,54,767 (7,07,222) 7,53,622Benefit Paid (2,20,173) (17,04,414) (1,03,483) (12,53,656)Obligations at year end 32,77,067 1,23,25,265 14,44,078 73,24,864Change in plan assetsPlan assets at year beginning, at fair value 26,20,979 — 15,94,197 —Expected return on plan assets 3,74,493 — 1,58,069 —Actuarial gain/(loss) (3,74,493) — 63,387 —Contributions 33,00,287 17,04,414 9,08,809 12,53,656Benefits paid (2,20,173) (17,04,414) (1,03,483) (12,53,656)Plan assets at year end, at fair value 57,01,093 — 26,20,979 —Reconciliation of present value of the obligation and the fairvalue of the plan assets :Present value of the defined benefit obligations at the end of the year 32,77,067 1,23,25,265 14,44,078 73,24,864Fair value of the plan assets at the end of the year (57,01,093) — (26,20,979) —Liability recognised in the Balance Sheet (24,24,026) 1,23,25,265 (11,76,901) 73,24,864Defined benefit obligations cost for the yearService Cost – Current 19,68,440 24,32,235 9,85,528 14,74,374Interest Cost 1,06,719 5,17,813 84,943 3,99,328Expected return on plan assets (3,74,493) — (1,58,069) —Past Service Cost 5,059 — — —Actuarial (gain)/ loss 3,47,437 37,54,767 (7,70,609) 7,53,622Net defined benefit obligations cost* 20,53,162 67,94,815 1,41,793 26,27,324

(Amount in `)

109



B) State Plans :

The Company deposits an amount determined at a fixed percentage of basicpay every month to the State administered Provident Fund for the benefit ofthe employees. Accordingly, the Company’s contribution during the year thathas been charged to revenue amounts to ` 47,68,338/- Previousyear ` 35,54,620/-

viii) Related party disclosures under Accounting Standard 18

i) Holding Company : ITC Limited

ii) Fellow Subsidiary Companies with Whom Transactions have taken placeduring the year:

a. Srinivasa Resorts Limitedb. Bay Islands Hotels Limitedc. Landbase India Limited

1. Present Value of Defined Benefit Obligation 32,77,067 1,23,25,265 1,44,4078 73,24,864 11,84,312 59,51,196 5,40,083 27,09,6122. Fair Value of Plan Assets 57,01,093 — 26,20,979 — 15,94,197 — 5,11,554 —3. Status [Surplus(Deficit)] 24,24,026 (1,23,25,265) 11,76,901 (73,24,864) 4,09,885 (59,51,196) (28,529) (27,09,612)4. Experience Adjustment of Plan

Assets [Gain/(Loss)] (3,74,493) — 63,387 — 2,55,902 — (84,277) —5. Experience Adjustment of Plan

Obligation [Gain/(Loss)] (27,056) 37,54,767 (7,07,222) 7,53,622 (1,17,615) 23,88,633 89,555 10,30,408

Net Assets (Liabilities) recognised in For the year ended For the year ended For the year ended For the year endedBalance Sheet March 31,2011 March 31,2010 March 31,2009 March 31,2008

(Including experience adjustment Impact) Gratuity Leave Gratuity Leave Gratuity Leave Gratuity LeaveEncashment Encashment Encashment Encashment

iii) Other Related Parties with Whom Transactions have taken place duringthe year:

a. International Travel House Limited ( Associate of Holding Company)b. Maharaja Heritage Resorts Limited (Joint venture of Holding Company)

iv) Key Management Personnel :

Board of DirectorsNakul AnandS. C. SekharArun PathakPawan Verma((Resigned on 6 September,2010)H. H. Maharaja Gaj Singh

* Included under operating and Administrative Expenses.

Investment details of plan assets

100% of the plan assets are lying in the Gratuity fund administered through Life Insurance Corporation of India (LIC) under its Group Gratuity Scheme.

The principal assumptions used in determining post-employment benefit obligations are shown below :

2011 (in %) 2010 (in %)

Discount Rate 8.00 p.a. 7.50 p.a.

Future salary increases 5.00 p.a. 5.00 p.a.

Expected return on plan assets 9.00 p.a. 7.50 p.a.

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

The reconciliation of opening and closing balances of the present value of the defined benefit obligations are as below :

110


(Amount in `)

v) Summary of transactions (Rupees) :Transaction with Holding Company Fellow Subsidiaries Other Related Parties

31-03-2011 31-03-2010 31-03-2011 31-03-2010 31-03-2011 31-03-2010 1. Receipt of Management & Consultancy fees* 36,62,128 30,98,641 — — — —

* Inclusive of Service Tax - ` 3,32,017/-(Previous Year - ` 2,89,357/-)

2. Purchase of Goods/Service 9,17,671 3,56,858 — 36,855 36,73,382 17,85,688 3. Sale of Fixed Assets — — 50,917 — — — 4. Rent Paid 4,95,840 4,95,840 — — — —

5. Recovered of Contractual Remuneration 1,74,666 — 4,48,024 5,04,027 — — 6. Reimbursement of Contractual Remuneration 2,78,85,505 2,66,28,527 — — — — 7. Dividend Payments 27,00,048 22,50,040 — — — — 8. Expense Recovered during the year

(Amount recovered on account of paymentsmade on behalf of related parties) 1,22,17,266 1,41,32,520 97,675 2,47,412 — —

9. Expense Reimbursed during the year(Amount paid to related parties on accountof payments made by them onyour behalf) 75,63,666 60,39,174 3,49,672 1,19,982 2,80,134 3,45,241

10. Closing Balance(i) Debtors/Receivables 3,725 10,26,826 — — — —(ii) Creditors/Payables 21,08,240 76,040 1,26,813 — 4,36,376 3,07,426

Information regarding Significant Transactions/Balance

Transaction with Holding Company Fellow Subsidiaries Other Related Parties

31-03-2011 31-03-2010 31-03-2011 31-03-2010 31-03-2011 31-03-2010

1. Receipt of Management & Consultancy fees 36,62,128 30,98,641 — — — —ITC Limited

2. Purchase of Goods/ServiceITC Limited 9,17,671 3,56,858 — — — —Srinivasa Resorts Limited — — — 36,855 — —International Travel House Limited — — — — 36,73,382 17,85,688

3. Sale of Fixed AssetsLandbase India Limited — — 50,917 — — —

4. Rent PaidITC Limited 4,95,840 4,95,840 — — — —

5. Recovered of Contractual RemunerationITC Limited 1,74,666 — — — — —Bay Island Hotels Limited — — 4,48,024 5,04,027 — —

6. Reimbursement of Contractual RemunerationITC Limited 2,78,85,505 2,66,28,527 — — — —

7. Dividend PaymentsITC Limited 27,00,048 22,50,040 — — — —

8. Expense Recovered during the year(Amount recovered on account of paymentsmade on behalf of related parties)ITC Limited 1,22,17,266 1,41,32,520 — — — —Bay Island Hotels Limited — — 87,177 2,19,473 — —Landbase India Limited — — 10,498 27,939 — —

9. Expense Reimbursed during the year(Amount paid to related parties on accountof payments made by them onyour behalf)ITC Limited 75,63,666 60,39,174 — — — —Srinivasa Resorts Limited — — — 3,752Bay Island Hotels Limited — — 3,49,672 — — —Maharaja Heritage Resorts Limited — — — — 2,80,134 3,45,241Landbase India Limited — — — 1,16,230 — —

10. Closing Balance(i) Debtors/Receivables

ITC Limited 3,725 10,26,826 — — — —(ii) Creditors/Payables

ITC Limited 21,08,240 76,040 — — — —Bay Island Hotels Limited — — 1,26,813 — — —International Travel House Limited — — — — 4,35,376 3,07,426

ix) Taxation

Deferred Tax : Break-up of Deferred Tax Assets and Liabilities into major Components of the Year ended Year ended

respective balances is as under : March 31,2011 March 31,2010

I. Balance brought forward - Deferred Tax Asset 88,87,171 33,28,556II. For the Year:

i) Tax impact of difference between carrying amount of fixed assets in the financialstatements and the income tax return (42,974) (8,903)

ii) Tax impact of Expenses allowed as deduction under Income Tax Act on actual payment (11,77,889) 39,12,626iii) Tax impact of expenses charged in the financial statements but allowable

as deductionin future years under income tax 15,86,067 16,54,892

Net Deferred Tax Asset 3,65,204 55,58,615

III. Closing Deferred Tax Asset 92,52,375 88,87,171

x) Previous Year’s figures have been regrouped/rearranged wherever necessary to conform with current year’s presentation.



111





Accumulated Losses Deferred Tax Asset-Net


Turnover * Total Expenditure





V. Generic Names of Three Principal Products / Services of Company(as per monetary terms)

Item Code No.

Product Description





Balance Sheet Date

Date Month Year






Sources of Funds


Secured Loan Unsecured Loan

N . A . N . A .

N . A . N . A .

1 8 7 7 3 7 1 8 7 7 3 7

4 5 0 0 1 1 7 5 5 3

N . A .N . A .

5 2 3 4 4 4 0 8 2

6 3 4 8 3 -

1 8 0 1 4 5 1 1 9 9 2 8

9 9 9 7 3 5 5

3 1 0 3 2 0 1 1

N . A .

** N . A .

9 1 . 4 9 7 0

H O T E L S

� 6 0 2 1 8 � 4 1 1 7 3 + – + –

9 2 5 2

18. SIGNIFICANT ACCOUNTING POLICIESi) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements are prepared to comply in all material aspectswith all the applicable accounting principles in India, the applicableaccounting standards notified u/s 211 (3C) of the Companies Act, 1956and the relevant provisions of the Companies Act, 1956.

ii) TURNOVERTo state Net Income from Operations after deducting taxes and dutiesfrom invoiced value of services rendered.

iii) FIXED ASSETSTo state Fixed Assets at cost of acquisition inclusive of inward freight,duties and taxes and incidental expenses related to acquisition. Tocapitalise 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.

iv) DEPRECIATION / AMORTISATIONTo calculate depreciation on Fixed Assets in a manner that amortisesthe cost of the assets after commissioning, over their estimated usefullives or lives based on the rates specified in Schedule XIV to theCompanies Act, 1956, whichever is lower, by equal annual installments.Capitalised software costs are amortised over a period of five years.

v) INVESTMENTTo state Current Investments at lower of cost and fair value; and LongTerm Investments at cost. Where applicable, provision is made wherethere is permanent fall in valuation of Long 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 contributions to the State administered Provident Fundwhich are charged against revenue. To provide for long term definedbenefit schemes of gratuity and compensated absences on the basis ofactuarial valuation on the Balance Sheet date based on the ProjectedUnit Credit Method. In respect of gratuity, the Company funds thebenefits through annual contributions to Life Insurance Corporation ofIndia (LIC) under its Group Gratuity Scheme. The actuarial valuationof the liability towards the Gratuity Retirement benefits of the employeesis made on the basis of certain assumptions with respect to the variableelements affecting the computations including estimation of interestrate of earnings on contributions to LIC.To recognise the actuarial gains and losses in the Profit & Loss accountas income and expense in the period in which they occur.

viii) PROPOSED DIVIDENDTo provide for Dividend as proposed by the Directors in the books ofaccount, pending approval at the Annual General Meeting.

ix) FOREIGN CURRENCY TRANSLATIONSTo record transactions in foreign currencies at the exchange ratesprevailing on the date of the transaction. Gains / Losses arising out offluctuations in the exchange rates are recognised in profit & loss in theperiod in which they arise. Liability / Receivables on account of foreigncurrency are converted at the exchange rates prevailing as at the endof the year.

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 and determine Current tax as the amount of tax payable inrespect of taxable income for the period.To provide and recognise Deferred tax on timing differences betweentaxable income and accounting income subject to consideration ofprudence. Deferred tax is recognised at enacted or substantively enactedtax rates.Not to recognise Deferred tax assets or unabsorbed depreciation andcarry forward of losses unless there is virtual certainty that there will besufficient future taxable income available to realise such assets.

xii) FINANCIAL AND MANAGEMENT INFORMATION SYSTEMSTo practice an integrated Accounting System which unifies both FinancialBooks and Costing Records. The books of accounts and other recordshave been designed to facilitate compliance of the relevant provisionsof the Companies Act, 1956 on the one hand, and meet the internalrequirements of information and systems for Planning, Review andInternal Control (designed and based on ‘Uniform System of Accountsfor Hotels’), on the other.


S. C. Sekhar Director

Arun Pathak Director




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, on 26th June 2010.(iii) paid dividends to all the members within a period of 30 days from

the date of declaration and that there is no Unclaimed/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.14. The Board of Directors of the Company is duly constituted and the

appointment of Additional Directors has been duly made. However,there was no appointment of Alternate Directors /Directors to fill 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 thefinancial year.

17. The Company was not required to obtain any approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar and/or such authorities prescribed under the various provisions of the Actduring the financial year.

18. The Directors have disclosed their interest in other firms /companiesto the 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 / accepted any deposits including anyunsecured loans falling within the purview of Section 58A of the Actduring the financial year.

24. The Company has not made any borrowings during the financial year.25. The Company, during the financial year, has made investments in fixed

deposits, which are not covered under the provisions of section 372A,

Compliance Certificate under Companies Act, 1956A certificate issued by M/s P B & Associates, Company Secretaries, in termsof the provisions of Section 383A of the Companies Act, 1956 to the effectthat the Company has complied with the applicable provisions of the saidAct is attached to this Report.AuditorsThe Company’s Auditors, Messrs. S B Dandekar & Co., Chartered Accountants,retire at the ensuing Annual General Meeting and being eligible, offerthemselves for re-appointment.Director’s Responsibility StatementAs required under Section 217 (2AA) of the Companies Act, 1956, yourDirectors confirm having:a) followed in the preparation of the Annual Accounts the applicable

Accounting 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 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;

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; and

d) prepared the Annual Accounts on a going concern basis.The required disclosures and the significant accounting policies followed areappearing in Schedules 15 and 16 respectively, to the annual accounts.

On behalf of the BoardMohan Bhatnagar Director

Gurgaon, 29th April, 2011 S. C. Sekhar Director


Your Directors submit their Report and Accounts for the financial year ended31st March, 2011.Financial PerformanceDuring the year under review, your Company earned an income of` 112.42 lacs (previous year - ` 101.08 lacs) and post-tax profits of ` 75.94lacs (previous year - ` 67.94 lacs) after providing for income tax of ` 30.27lacs (previous year - ` 26.69 lacs). Earnings Per Share for the year standsat ` 639.53 (previous year - ` 572.11). Cash flows from Operations were` 46.21 lacs during the year (previous year - ` 85.31 lacs).Your Directors are pleased to recommend a dividend of ` 50/- (previousyear - ` 50/-) per Equity Share of ` 100/- each for the year ended 31stMarch, 2011. Your Board further recommends a transfer to General Reserveof ` 7.59 lacs (previous year - ` 6.79 lacs).Conservation of EnergyConsidering 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 onenergy conservation, safety and environment.Foreign Exchange Earnings and OutflowThere has been no foreign exchange income or outflow during the year(previous year - Nil).DirectorsIn accordance with the provisions of Article 143 of the Articles of Associationof the Company, Mr G.H.C. Jadwet and Mr. Mohan Bhatnagar will retireby rotation at the forthcoming Annual General Meeting and being eligible,offer themselves for re-appointment.Particulars of EmployeesNone of the employees fall under the purview of the provisions ofSection 217(2A) of the Companies Act, 1956, read with Companies(Particulars of Employees) Rules, 1975.

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 BayIslands Hotels Limited (hereinafter referred to as ‘the Company’) as requiredto be maintained under the Companies Act, 1956 (the Act) and the Rulesmade thereunder, the provisions contained in the Memorandum and Articlesof Association of the Company and also the audited Annual Accounts,Auditors’ Report on the said Annual Accounts for the financial year ended31st March, 2011 (financial year). In our opinion and to the best of ourinformation and according to the examination carried out by us andexplanations and confirmation furnished to us by the Company, its officersand agents, we certify that in respect of the financial year:1. The Company has kept and maintained Registers as stated in “Annexure:

A” to this Certificate, as per the provisions of the Act and the 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 27thApril 2010; 29th September 2010; 24th December 2010 and 25thMarch 2011 in respect of which meetings proper notices were givenand the proceeding were properly recorded and signed. There was noresolution passed by circulation.

5. The Company has not closed its Register of Members during thefinancial year.

6. The Annual General Meeting for the financial year ended on 31st March,2010 was held on 28th June 2010 after giving due notice to the 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.10. The Company was not required to make any entries in the Register

maintained under Section 301(1) of the Act. However, it has madenecessary entries in Register maintained under Section 301(3) of the Act.

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.

112

BAY ISLANDS HOTELS LIMITED

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.

REPORT OF THE AUDITORS TO THE MEMBERS

We have audited the attached Balance Sheet of BAY ISLANDS HOTELS LTD.as at 31st March, 2011 and the Profit & Loss Account and Cash FlowStatement for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements basedon 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 the bestour knowledge and belief were necessary for the purpose of our audit.

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 those books.

3. In our opinion, the Balance Sheet, Profit & Loss Account and Cash FlowStatement dealt with by this Report are in agreement with the booksof account.

4. In our opinion the Balance Sheet, Profit & Loss Account and Cash FlowStatement 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 2011 and taken on record by the Board of Directors, noneof the Directors is disqualified as on 31st March, 2011 in terms of clause(g) of subsection (1) of section 274 of the Companies Act 1956.

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 2011; and

• In case of the Profit & Loss Account of the Profit of the Companyfor the year ended on that date.

• In case of the Cash Flow Statement of the cash flows for the yearended on that date.

of the Act, thus no entries are made in the register kept for the purpose.However, there were no loans made or guarantees given or the securitiesprovided to other bodies corporate during the finnacial 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.

ANNEXURE – 'A'Registers maintained by the Company(As on March 31, 2011)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’ Share holding 3077. Register(s) of contracts, companies and firms

in which Directors are interested 301(3)8. Books of Accounts 2099. Register of Share Transfer

ANNEXURE – 'B'A. Forms & Returns filed with the Registrar of Companies, New Delhi

(During the Year ended on March 31, 2011)Sl. Particulars of Date of Whether AdditionalNo. Forms & Returns Filed Filing filed within Fees paid

prescribedtime

1. Form 32 u/s 303 for theappointment of Mr. Arun Pathakas Additional Director andresignation of Mr. M. Riaz Ahmedfrom directorship on26th March 2010 13th April 2010 Yes No

Sl. Particulars of Date of Whether AdditionalNo. Forms & Returns Filed Filing filed within Fees paid

prescribedtime

2. Form 32 u/s 303 for the changein designation of Mr. Arun Pathakfrom Additional Director to Directorin the Annual General Meetingheld on 28th June 2010 6th July 2010 Yes No

3. Form 23AC and Form 23ACAfor Annual Accounts u/s 220of the Act for the year ended31st March, 2010 12th July 2010 Yes No

4. Form 66 for ComplianceCertificate u/s 383A of theAct, for the financial yearended 31st March 2010 12th July 2010 Yes No

5. Form 20B for Annual Returnu/s 159 of the Act, made upto28th June 2010 i.e. the dateof AGM for the financial yearended 31st March 2010 26th August 2010 Yes No

6. Form 23AA u/s 209 forconfirming the notice ofaddress at which books ofaccount are kept 1st October 2010 Yes No

The following form does not correspond to the financial year in review but are relevant for issuing the Compliance Certificate.7. Form 23AA u/s 209 for

confirming the notice ofaddress at which books ofaccount are kept 1st April 2011 Yes No

B. Forms & Returns filed with the Regional Director, Central Governmentor other authorities : Nil

113


KEDARASHISH BAPATPartner

Membership No : 57903For S.B. DANDEKAR & COMPANY

Chartered AccountantsPort Blair, 29th April, 2011 Firm’s Registration No : 301009E

For PB & AssociatesCompany Secretaries

Pooja BhatiaLLB, ACS

New Delhi, 29th April, 2011 CP : 6485

BALANCE SHEET AS AT 31ST MARCH, 2011 As at As atSchedule 31st March, 2011 31st March, 2010

(`) (`) (`) (`)I. SOURCES OF FUNDS

1. Shareholders’ Funds(a) Capital 1 11,87,500 11,87,500(b) Reserves and Surplus 2 10,14,29,708 10,26,17,208 9,53,51,405 9,65,38,905

10,26,17,208 9,65,38,905II. APPLICATION OF FUNDS

1. Fixed Assets 3(a) Gross Block 10,34,42,743 10,34,42,743(b) Less : Depreciation 3,06,69,158 2,95,70,687(c) Net Block 7,27,73,585 7,38,72,056

2. Deferred Tax Asset (Net) 4 24,08,258 20,77,053

3. Current Assets, Loans & Advances(a) Sundry Debtors 5 30,63,436 19,60,348(b) Cash and Bank Balances 6 2,38,48,123 1,88,86,741(c) Other Current Assets 7 5,10,180 5,17,645(d) Loans and Advances 8 7,23,000 2,31,575

2,81,44,739 2,15,96,309Less :Current Liabilities and Provisions(a) Liabilities 9 19,303 11,030(b) Provisions 10 6,90,071 9,95,483

7,09,374 10,06,513Net Current Assets 2,74,35,365 2,05,89,796Total 10,26,17,208 9,65,38,905Notes to the Accounts 15Significant Accounting Policies 16The Schedules referred to above form an integral part of the Balance Sheet.



Statement on matters specified in paragraphs 4 & 5 of the Companies (Auditor’sReport) Order 2003, as amended by the Companies (Auditor’s Report)Amendment Order 2004 issued by the Central Government in terms of Section227(4A) of the Companies Act, 1956, for the year ended 31st March, 2011.1. The Company is maintaining proper records to show full particulars, including

quantitative details and situation of fixed assets.The fixed assets have been physically verified by the management at reasonableintervals during the year, and no material discrepancies were noticed on suchverification.No substantial part of the fixed assets of the Company have been disposed offduring the year.

2. As the Company does not hold any inventory, clause (ii) of para 4 of the Orderis 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 register maintainedunder Section 301 of the Companies Act, 1956. As such provisions ofsub-clause (b), (c) and (d) of clause (iii) of the order are not applicable.

4. The Company has an internal control procedure commensurate with the sizeof the Company and nature of the business, for the purchase of fixed assets.We have not come across or have been informed of any major weaknesses inthe internal control procedures.

5. There are no transactions which require to be entered into a register in pursuanceof Section 301 of the Companies Act, 1956, and hence provisions of clause(v)(b) of the Order are not applicable.

6. In accordance with information and explanations given to us, the provisionsof Section 58A and 58AA of the Companies Act, 1956, and rules framed thereunder, and directions issued by the Reserve Bank of India are inapplicable tothe 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 ` 50 lakhs.

8. As explained to us the Central Government has not prescribed any rules formaintenance of cost records for the Company under clause (d) of subsection(1) of Section 209 of the Companies Act ,1956.

9. The Company is regular in depositing of all undisputed statutory dues includingProvident Fund, Investor Education and Protection Fund, Employees’ StateInsurance, Income-tax, Sales-tax, Custom Duty, Excise Duty, cess and any otherstatutory dues, so far as applicable to the Company, with the appropriateauthorities.The Company has no disputed statutory dues.

10. The Company has no accumulated losses as at 31st March, 2011.It has not incurred any cash losses in the financial year as well as in theimmediately preceding financial year.

11. In accordance with the information and explanations given to us the Companyhas no dues of any financial institution or Bank or debenture holder.

12. The Company has not granted any loan and/or advance on the basis of securityby way of pledge of shares, debentures and other securities and hence thematter regarding deficiencies in documents in respect of such loans andadvances is inapplicable.

13. The Company is not a Nidhi, Mutual Benefit Fund or Society and hence wehave no comments to make regarding matters concerning such organisations.

14. The Company is not dealing in shares, securities, debentures or other investmentsand hence we have no comment to make regarding matters relating tomaintenance of records of transactions in such shares etc.

15. In accordance with the information and explanation given to us the Companyhas not given any guarantee for loans taken by others from banks orfinancial institutions.

16. In accordance with the information given to us, the Company has not takenany term loans.

17. In accordance with the information and explanation given to us the Companyhas not applied any short term borrowings for purpose of long term investmentsor vice versa.

18. In accordance with the information and explanation given to us the Companyhas not made any preferential allotment of equity shares to parties covered inthe register maintained under Section 301 of the Companies Act, 1956, duringthe year.

19. No debentures have been issued by the Company and there are no outstandingdebentures as at the year end and hence clause (xix) of the Order is notconsidered 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 practices andthe information and explanation given to us, no fraud by or on the Companyhas been noticed or reported during the year nor have we been informed ofany such case by the management.

114


KEDARASHISH BAPATPartner

Membership No : 57903For S.B. DANDEKAR & COMPANY

Chartered AccountantsPort Blair, 29th April, 2011 Firm’s Registration No : 301009E


Mohan Bhatnagar DirectorS. C. Sekhar Director


KEDARASHISH BAPATPartnerMembership No : 57903For S.B. DANDEKAR & COMPANYChartered AccountantsFirm’s Registration No : 301009EPort Blair, 29th April, 2011



(`) (`)I. INCOME

Operating Licence Fee 99,60,456 84,27,855Other Income 11 12,81,560 16,80,198

1,12,42,016 1,01,08,053II. EXPENDITURE

Operating and Administrative Expenses 12 3,48,503 3,71,137Depreciation 2,72,411 2,74,471

6,20,914 6,45,608III. PROFIT/(LOSS)

Profit before Taxation 1,06,21,102 94,62,445Taxation for the year 13 30,26,668 26,68,643Profit after Taxation 75,94,434 67,93,802Profit Brought Forward from Previous Year 2,38,00,718 1,83,78,660Available for Appropriation 3,13,95,152 2,51,72,462

IV. APPROPRIATIONSGeneral Reserve 7,59,443 6,79,380Proposed Dividend 5,93,750 5,93,750Tax on Proposed Dividend 96,321 98,614Profit Carried Forward 2,99,45,638 2,38,00,718

3,13,95,152 2,51,72,462

Basic and Diluted Earnings Per Share (`) 14 639.53 572.11Notes to the Accounts 15Significant Accounting Policies 16The Schedules referred to above form an integral part of the Profit and Loss Account.

This is the Profit & Loss Account referred to in our Report of even date.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011(Figures for the previous year have been rearranged to conformwith the revised presentation)


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

A. NET PROFIT BEFORE TAX 1,06,21,102 94,62,445Adjustments for:Depreciation 2,72,411 2,74,471Interest (12,81,560) (10,09,149) (16,05,895) (13,31,424)OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 96,11,953 81,31,021Adjustments for:Trade and Other Receivables (11,03,088) 29,81,340Trade Payables 8,273 (10,94,815) — 29,81,340CASH GENERATED FROM OPERATIONS 85,17,138 1,11,12,361Income Tax Paid (38,96,512) (25,81,587)NET CASH FROM OPERATING ACTIVITIES 46,20,626 85,30,774

B. CASH FLOW FROM INVESTING ACTIVITIES:Interest Received 10,33,120 10,33,120 9,73,411 9,73,411NET CASH FROM INVESTING ACTIVITIES 10,33,120 9,73,441

C. CASH FLOW FROM FINANCIAL ACTIVITIES:Dividends Paid (5,93,750) (5,93,750)Income Tax on Dividend Paid (98,614) (6,92,364) (1,00,908) (6,94,658)

NET CASH FLOW USED IN FINANCING ACTIVITIES (6,92,364) (6,94,658)NET INCREASE IN CASH AND CASH EQUIVALENTS 49,61,382 88,09,527OPENING CASH AND CASH EQUIVALENTS 1,88,86,741 1,00,77,214CLOSING CASH AND CASH EQUIVALENTS 2,38,48,123 1,88,86,741CASH AND CASH EQUIVALENTS COMPRISE :Cash and Bank Balances 2,38,48,123 1,88,86,741Per our Report attached to the Balance Sheet

115












(`) (`)1. 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 1,20,00,000

Issued, Subscribed and Paid-up11,875 Equity Shares of ` 100/- each,fully 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


2. RESERVES & SURPLUSRevaluation ReserveAt the commencementof the year 6,43,84,826 6,52,10,886Less : Depreciation 8,26,060 6,35,58,766 8,26,060 6,43,84,826Subsidy Reserve 43,38,099 43,38,099General ReserveAt the commencementof the year 28,27,762 21,48,382Add : Transferred from Profit & Loss Account 7,59,443 35,87,205 6,79,380 28,27,762Balance in Profit &Loss Account 2,99,45,638 2,38,00,718

10,14,29,708 9,53,51,405


(`) (`)4. DEFERRED TAX ASSET (NET)

Deferred Tax AssetsUnabsorbed Depreciation/Losses — —MAT Credits — —

— —Less :Deferred Tax LiabilityDepreciation - Timing Difference (24,08,258) (20,77,053)

(24,08,258) (20,77,053)Net Deferred Tax Assets 24,08,258 20,77,053

5. SUNDRY DEBTORSOver 6 months old

Good and Unsecured — —Doubtful and Unsecured — —

Other DebtsGood and Secured — —Good and Unsecured 30,63,436 19,60,348

Less : Provision for Doubtful Debts — —30,63,436 19,60,348

Less : Deposits from normal TradeDebtors - Contra — —

30,63,436 19,60,348

6. CASH AND BANK BALANCESWith Scheduled Banks on Current Accounts 33,89,178 10,916Deposit with Scheduled Banks 2,04,58,945 1,88,75,825

2,38,48,123 1,88,86,7417. OTHER CURRENT ASSETS

Interest accrued on investment 5,10,180 5,17,6455,10,180 5,17,645

8. LOANS AND ADVANCESIncome Tax-Refund Due for the year 2008-09 1,82,557 1,82,557Income Tax-Refund Due for the year 2009-10 49,018 49,018Income Tax-Refund Due for the year 2010-11 4,91,425 —

7,23,000 2,31,575

9. LIABILITIESSundry CreditorsTotal outstanding dues to Micro andsmall enterprises — —Total outstanding dues to creditorsother than Micro and small Enterprises 19,303 11,030

19,303 11,030There is no amount due and outstandingto be credited to Investor Education andProtection Fund.


(`) (`)10. PROVISIONS

Income Tax (Provision for Taxation) — —Provision for Proposed Dividend 5,93,750 5,93,750Tax on Proposed Dividend 96,321 98,614Provision for Tax (net of advance tax) — 3,03,119

6,90,071 9,95,483


(`) (`)11. OTHER INCOME

Interest on Fixed Deposit 12,81,560 16,05,895Interest on Income Tax Refund A/Y 2006-07 — 25,285Miscellaneous Income — 49,018

12,81,560 16,80,198

12. OPERATING ANDADMINISTRATIVE EXPENSESSalaries, Wages and Bonus 75,29,647 65,90,803Less : Recovered from ITC Ltd. (73,53,049) (64,37,146)Salaries, Wages and Bonus 1,76,598 153,657Consumption of Stores and Spare Parts 30,000 30,000Travelling and Conveyance 70,375 90,000Miscellaneous Expenses 71,530 97,480

3,48,503 3,71,137Miscellaneous Expenses include :– Audit Fees 13,236 11,030– Tax Audit Fees 6,067 4,964

13. PROVISION FOR TAXATIONIncome Tax on :Tax on Current Year’s Profits 33,57,873 29,99,545Add : Deferred Tax Expense/(Credit) (3,31,205) (3,30,902)

30,26,668 26,68,64314. EARNINGS PER SHARE

Profit/(Loss) after Taxation 75,94,434 67,93,802Weighted average number of equityshares outstanding 11,875 11,875Basic and diluted earnings per share in Rupees(face value - ` 100/- per share) 639.53 572.11

116


3. FIXED ASSETS

Original Cost/ Additions Withdrawals Original Cost/ Depreciation Depreciation Depreciation Net BlockParticulars Professional Valuation during the during the Professional for the year on upto as at

as at 01.04.2010 year year Valuation withdrawals 31.03.2011 31.03.2011as at 31.03.2011

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

1. Land 5,70,00,000 — — 5,70,00,000 — — — 5,70,00,000

2. Building 3,89,89,750 — — 3,89,89,750 10,81,283 — 2,32,35,310 1,57,54,440

3. Plant & Machinery 70,45,674 — — 70,45,674 17,188 — 70,26,529 19,145

4. Furniture & Fittings 4,07,319 — — 4,07,319 — — 4,07,319 —

Total 10,34,42,743 — — 10,34,42,743 10,98,471 — 3,06,69,158 7,27,73,585

Previous Year 10,34,42,743 — — 10,34,42,743 11,00,531 — 2,95,70,687 7,38,72,056


15. NOTES TO THE ACCOUNTS1. The Hotel operations are under an Operating License Agreement

with ITC Limited.2. The Land and Building were revalued as on 31st March, 1999 at

` 5,70,00,000/- and ` 3,89,89,750/- respectively, by an approvedvaluer and accordingly the gross block reflects the revised valuesin respect of these assets, in the books of accounts.

3. In view of the Company’s current financial performance and thefuture profit projections, the Company expects to fully recover thedeferred tax assets.

4. Related party disclosures under Accounting Standard 18i) Holding Company : ITC Limitedii) Key Management Personnel :

Board of DirectorsNakul AnandS.C. SekharMohan BhatnagarArun PathakG.H.C. Jadwet

iii) Summary of transactions during the year (Rupees) :(a) Transactions with Holding Company:-

2010-11 2009-101. Rent Received 99,60,456 84,27,8552. Expenses Reimbursed 3,38,195 3,66,8973. Reimbursement of Contractual

Remuneration 73,53,049 64,37,1464. Dividend Payment 5,93,750 5,93,7505. Balance as on March 31, 2011

(i) Debtors/Receivables 30,63,436 19,60,348

(b) Transaction with Key Management Personnel - Nil(Previous Year - Nil)

5. Previous Year’s figures have been regrouped/rearranged wherevernecessary.

16. SIGNIFICANT ACCOUNTING POLICIES1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

To prepare Financial Statements in accordance with the historical costconvention, generally accepted accounting principles in India andrelevant presentational requirements of the Companies Act, 1956.

2. FIXED ASSETSTo state Fixed Assets at cost of acquisition inclusive of inward freight,duties and taxes and incidental expenses related to acquisition.

3. DEPRECIATIONTo calculate depreciation on Fixed Assets in a manner that amortisesthe cost of the assets after commissioning, over their estimateduseful lives or lives based on the rates specified in Schedule XIV tothe Companies Act, 1956, whichever is lower, by equal annualinstallments.

4. REVALUATION OF ASSETSTo review the original book value of Fixed Assets, from time totime, and revalue such of those Fixed Assets as have appreciatedin value significantly, in order to relate them more closely tocurrent replacement values, to adjust the provision for depreciationon such revalued Fixed Assets, where applicable, in order to makeallowance for consequent additional diminution in value onconsiderations of age, condition and unexpired useful life of suchFixed Assets; to transfer to Revaluation Reserve, the differencebetween the written up value of the Fixed Assets revalued anddepreciation adjustment and to charge Revaluation ReserveAccount with depreciation on that portion of the value which iswritten up.

5. REVENUE RECOGNITIONIncome from operating license fees is booked on accrual basis inaccordance with the provisions of operating license agreement /arrangements with the licencee viz., ITC Limited.

6. PROPOSED DIVIDENDTo provide for Dividend as proposed by the Directors in the booksof account, pending approval at the Annual General Meeting.

7. TAXES ON INCOMETo provide and determine current tax as the amount of tax payablein respect of taxable income for the period.To provide and recognise Deferred tax on timing differencesbetween taxable income and accounting income subject toconsideration of prudence.Not to recognise Deferred tax assets on unabsorbed depreciationand carry forward of losses unless there is virtual certainty thatthere will be sufficient future taxable income available to realizesuch assets.


117

On behalf of the BoardMohan Bhatnagar Director

S. C. Sekhar DirectorGurgaon, 28th April, 2011





Accumulated losses Deferred Tax Liability-Net


Turnover* Total Expenditure




V. Generic Names of Three Principal Products / Services of Company(as per monetary terms)

Item Code No.

Product Description





Balance Sheet Date

Date Month Year






Sources of Funds


Secured Loan Unsecured Loan

N . A . N . A .

N . A . N . A .

1 0 0 2 0 9 1 0 0 2 0 9

1 1 8 8 1 0 1 4 2 9

N . A .N . A .

7 2 7 7 4 N . A .

2 7 4 3 5 N . A .

1 1 2 4 2 6 2 0

1 0 5 1 3 1 5 5

3 1 0 3 2 0 1 1

6 3 9 . 5 3 5 0

+ – + –� 1 0 6 2 1 � 7 5 9 4

** N . A .

H O T E L S

N . A .


- 2 4 0 8

growing funnel of prospects. During the year the Group has renewed itsfocus on India and the larger Asia-Pacific region and this has already resultedin significant traction in acquiring new customers, particularly in India.Market focus has also been extended to specific regions in Western Europe.

Based on a survey commissioned through a reputed external agency, existingcustomers have given your Company the highest satisfaction scores everrecorded. These ratings are amongst the highest in the industry.

Given its expanded customer base, supplemented by its rapidly increasingrepertoire of value additive solutions and accredited partnerships with globalsoftware vendors, the Group is confident of an aggressive growth path. Itwill continue with its aforesaid strategies of sharp focus on a portfolio setof differentiated service lines and solutions, superior customer care andexcellence in delivery.

With strategies in place to expand to new markets, a portfolio of differentiatedsolutions, the ability to provide superior customer care and excellence indelivery through project management capabilities, knowledge management,solution accelerators and a robust quality system, the Group is poised toachieve rapid growth.

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 Limited, UKConsolidated(*)

(millions) (millions)

US$ ` US$ ` GBP ` GBP `

Year Ended March 31, 2011 2011 2010 2010 2011 2011 2010 2010

Total Revenue 38.43 1713.97 30.99 1391.35 22.22 1595.63 19.44 1321.22

Net Profit 0.01 0.32 0.08 3.73 1.03 74.31 0.69 46.76

(*) including Pyxis Solutions, LLC, its wholly owned subsidiary

During the year under review, Pyxis Solutions, LLC, declared and paidUS$750,000 (` 334.50 lakhs) as dividend for the financial year 2010-11(previous year - Nil) by way of distribution to its Sole Member i.e. ITCInfotech (USA), Inc.

TALENT MANAGEMENT

To support the quantum growth plans of your Company, talent managementhas been an area of focus and, as expected, there has been a build-up ofpressure on availability of quality talent. The aim has been to recruit, retain,nurture and engage high quality people to enable optimum delivery ofservices. Your Company has put in place a process of growing and nurturingtalent internally through continuous employee engagement and trainingprograms. While internal communication channels spanned a broader anddeeper spectrum to sense every pulse of the organisation, talent engagementas a whole has become a collaborative effort with concentrated participationfrom all spheres of the organisation.

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, 2011, the applicable accounting standards havebeen followed and there are no material departures;

(ii) having selected such accounting policies and applied them consistentlyand made judgments 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 ofadequate 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, 2011have been prepared on a going concern basis.


Your Directors take pleasure in submitting their Report for the financial yearended 31st March, 2011.

FINANCIAL RESULTS

Key aspects of your Company’s consolidated financial performance andstandalone financial results are tabulated below:

(` Lakhs)

Consolidated(*) Standalone

Year Ended March 31, 2011 2010 2011 2010

Total Income 63601 56772 42642 37771

Total Expenditure 59972 50178 40481 32446

Operating Profit 3629 6594 2161 5325

Depreciation 1285 1001 1222 935

Profit before Tax 2344 5593 939 4390

Provision for Tax 512 1269 193 989

Profit after Tax 1832 4324 746 3401

(*) including ITC Infotech Limited, UK and ITC Infotech (USA), Inc.,(I2A), whollyowned subsidiaries of the Company, and Pyxis Solutions, LLC, a wholly ownedsubsidiary of I2A.

BUSINESS REVIEW

In the wake of the economic recovery, global IT spends improved in 2010.While this was largely driven by increased investments in software andhardware, software services are expected to grow over the next 24 monthsas companies will need to implement the application and enterprise systemspost their investments in hardware and software. Understandably, growthin IT Services has been relatively moderate. Further, in the US, althoughthe recessionary conditions eased towards the latter part of the financialyear, client budgets continued to be tightly monitored. These trends reflectthe continuing uncertainty during the economic recovery.

In line with its peers in the mid tier of the IT services industry, the ITCInfotech Group (Group) has delivered a top line growth of approximately13%. Your Company’s aspiration to scale up rapidly required large investmentsin building differentiated capability and strengthening sales and technicaldelivery teams. While the investments, predominantly in manpower, haveimpacted the profits this year, the capabilities built are expected to strengthenthe platform of growth over the next few years. Some of these capabilitiesinclude solutions in the areas of ‘customer loyalty’, end-to-endtransformational services in IT outsourcing and Global Reporting Initiativebased sustainability reporting.

The Group continues to invest and focus on continuously improving programmanagement and processes to ensure the highest levels of quality intechnical delivery to its customers. Your Company’s delivery processes havebeen accorded a maturity Level 3 in the Software Engineering Institute’s(SEI) Capability Maturity Model Integration framework.

The Group’s investments, as mentioned above, in building differentiatedcapabilities are enabling it to provide end to end transformational services.Further, the Group has maintained its partnerships with some of the leadingIndependent Software Vendors (ISVs) in building niche solutions to addresswhite spaces and strong joint go-to-market initiatives.

Your Company has been ranked 26th in the Leader’s Category for the 2011Global Outsourcing 100 by the International Association of OutsourcingProfessionals (IAOP); this is the fifth consecutive year that your Companyhas featured in this prestigious list. In addition, your Company has featuredin 8 sub-lists, placing it amongst the Top 20 companies globally in somecategories such as “Best 20 Leaders by Industry Focus - Financial Services(Banking, Markets)”, “Best 20 Leaders by Industry Focus - Retail andConsumer Goods”.

The partner co-innovation strategy and the focused strategy in launchingsolutions which demonstrate value to clients in addressing some of theircritical business challenges such as effective client relationship managementand lowering the cost of operations, have yielded encouraging results interms of the acquisition of several marquee, high potential clients and a

118

ITC INFOTECH INDIA LIMITED

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 undertook Six SigmaProject on energy conservation and installed energy efficient serversas initiatives towards energy conservation and reduction of wastages.

II. FOREIGN EXCHANGE EARNINGS AND OUTGO

The foreign exchange earnings (FOB – realisation basis) of your Companyduring the year were ` 28,158.65 lakhs (previous year` 30,460.99 lakhs) while the outgoings (on payment basis) were` 7,900.37 lakhs (previous year ` 12,491.22 lakhs).

III. PARTICULARS OF EMPLOYEES

The particulars of employees in terms of Section 217(2A) of 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 Article 143 & 144 of the Articles of Association of the Company,Mr. B. B. Chatterjee and Mr. S. Sivakumar will retire by rotation at theensuing Fifteenth Annual General Meeting (AGM) of the Company and,being eligible, offer themselves for re-election.

Consequent to his retirement from the services of ITC Limited, the holdingcompany, Mr. K. Vaidyanath ceased to be a Director of the Company witheffect from close of business on 2nd January, 2011. Your Board of Directorsplaces on record its appreciation of the contribution made by Mr. Vaidyanathduring his tenure as Chairman and Director of the Company.

Mr. Y. C. Deveshwar and Mr. R. Tandon were appointed by the Board ofDirectors as Additional Non-Executive Directors of the Company with effect

from 3rd January, 2011 in terms of Section 260 of the Companies Act,1956, read with Article 130 of the Articles of Association of the Company.Mr. Deveshwar and Mr. Tandon will vacate office at the AGM of the Companyand have filed their respective requisite consent to act as a Director of theCompany, if appointed. Notices under Section 257 of the Companies Act,1956 have been received for appointment of Mr. Deveshwar and Mr. Tandonas a Director of the Company. Appropriate resolutions seeking your approvalto the appointments of Mr. Deveshwar and Mr. Tandon are included in theNotice convening the AGM.

In terms of Article 157 of the Articles of Association of the Company,Mr. Deveshwar and Mr. Sivakumar were respectively appointed as Chairmanand Vice Chairman of the Board of Directors of the Company with effectfrom 3rd January, 2011.

AUDIT COMMITTEE

The Board of Directors at its meeting held on 21st December, 2010,reconstituted the Audit Committee of your Company which now comprisesMr. B. B. Chatterjee (Chairman of the Committee), Mr. A. Nayak,Mr. R. Tandon and Mr. S. Puri, all non-executive Directors of your Company.The Managing Director, the Chief Financial Officer, the Statutory Auditorsand the Internal Auditors are Permanent Invitees to the Committee.The Company Secretary serves as the Secretary to the Committee.

AUDITORS

M/s. Lovelock & Lewes, Statutory Auditors, retire at the AGM and, 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.

119


Bangalore, 9th May, 2011 On behalf of the BoardRegistered Office: Virginia House37 J. L. Nehru RoadKolkata 700 071 B. Sumant Managing DirectorIndia. S. Sivakumar Vice Chairman

ANNEXURE ‘A’ TO THE REPORT OF DIRECTORS

FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2011Particulars 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 ` 6,000,000 /- 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. 56 Sr Vice President - IT Services 8403527 4381262 M.Sc., M.Phil. 34 1-Oct-00 ITC Ltd. Divisional Head - India Operations (ISD)

GUPTA S.K. 55 Sr Vice President - IT Services 6126275 4220265 M.Tech. 33 1-Oct-04 Vmokasha TechnologiesExe. - Vice President

JANARDHANAN S. 53 Sr Vice President - IT Services 6988173 4518224 M.Sc. 31 1-Oct-00 ITC Ltd.Head - ITC IT Services

TALWAR A. 52 Sr. Vice President - Talent Management 6580003 3530941 M.B.A. 27 9-Apr-01 Reliance Telecom Ltd.Vice President - HRD

Employed for a part of the year and in receipt of remuneration aggregating ` 500,000/- or more per month

AITHANI K.S. 52 On secondment to subsidiary company 2154386 1594829 M.Tech. 28 1-Oct-00 ITC Infotech Ltd. U.K.Chief Executive Officer

Notes :1. Remuneration includes salary, performance effectiveness pay, allowances, one time deferred income, other benefits/applicable perquisites except contribution to the approved Group Pension

under the Defined Benefit Scheme and Gratutity Funds and provisions for leave encashment which are actuarially determined on an overall Company basis. The term ‘remuneration’ hasthe meaning assigned to it in Section 198 of the Companies Act, 1956.

2. Net Remuneration comprises cash income less (a) income tax, surcharge & education cess deducted at source and (b) managers own contribution to provident fund.3. All appointments are / were contractual in accordance with terms & conditions as per Company’s rules.4. None of the above employees is a relative of any Director of the Company.


B. Sumant Managing DirectorS. Sivakumar Vice ChairmanBangalore, 9th May 2011


[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 March 31 2011]

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 disposedof 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, income tax, sales tax, service tax, customsduty, cess and other material statutory dues as applicable with theappropriate authorities in India. Employees' state insurance, wealthtax, and excise duty are not applicable to the company for thecurrent year.

(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, service tax, customs duty and cess which havenot been deposited on account of any dispute. Wealth tax and exciseduty are not applicable to the company for the current year.

8. The company has no accumulated losses as at 31st March, 2011, 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 explanationsgiven to us, the terms and conditions of the guarantee given by the

(c) The Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in agreement with thebooks of account;

(d) In our opinion, the Balance Sheet, the Profit and Loss Account andthe 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 3Ist March 2011 and taken on record by the Board of Directors,none of the directors, who have given the said representations tothe Company, is disqualified as on 31st March 2011 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 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 2011;(ii) in the case of the Profit and Loss Account, of the profit for the

year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for


For Lovelock & LewesFirm Registration Number: 301056E


Sunit Kumar BasuPlace : Bangalore PartnerDate : 9th May 2011 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 2011, the related Profitand Loss Account 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.

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 (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.

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 thepurposes of our audit;


120


121


For Lovelock & LewesFirm Registration Number: 301056E


Sunit Kumar BasuPlace : Bangalore PartnerDate : 9th May 2011 Membership Number: 55000


Schedule 31st March, 2011 31st March, 2010(`) (`)

I. SOURCES OF FUNDS :1. Shareholders’ Funds

Capital 1 852,000,000 852,000,0002. Reserves and Surplus 2 563,809,242 489,234,8373. Loan Funds

Unsecured Loans 3 1,492,500,000 1,108,900,000Total 2,908,309,242 2,450,134,837

II. APPLICATION OF FUNDS :1. Fixed Assets 4

(a) Gross Block 1,023,770,478 844,852,044(b) Less: Depreciation and Amortisation 677,657,026 568,832,307(c) Net Block 346,113,452 276,019,737(d) Capital Work-in-Progress 4,820,840 18,615,777

350,934,292 294,635,5142. Investments 5 870,434,087 870,434,0873. Deferred Tax - Net 6 61,296,983 69,284,9164. Current Assets, Loans and Advances

(a) Sundry Debtors 7 1,276,510,676 887,537,207(b) Cash and Bank Balances 8 633,388,608 684,271,818(c) Other Current Assets 9 41,159,651 7,074,969(d) Loans and Advances 10 338,824,693 317,932,349

2,289,883,628 1,896,816,343Less:

5. Current Liabilities and Provisions(a) Liabilities 11 509,672,460 533,652,343(b) Provisions 12 154,567,288 147,383,680

664,239,748 681,036,023

Net Current Assets 1,625,643,880 1,215,780,320

Total 2,908,309,242 2,450,134,837Notes to the Accounts 18Segment Reporting 19Related Party Disclosures 20Significant Accounting Policies 21

The Schedules referred to above form an integral part of the Balance Sheet.


For Lovelock & LewesFirm Registration Number: 301056EChartered Accountants

Sunit Kumar BasuPartnerMembership Number: 55000

Place : BangaloreDate : 9th May, 2011

Company, for letter of credit facility taken by a subsidiary from a bankare not prejudicial to the interest of the Company.

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.

14. 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.

15. The Company has not raised any money by public issues during the year.

16. During the course of our examination of the books and records of 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



(`) (`)I. INCOME

Sales and Services 13 4,211,559,483 3,675,744,065Other Income 14 52,606,275 101,326,482

4,264,165,758 3,777,070,547

II. EXPENDITUREPersonnel Expenses 15 2,935,635,165 2,547,955,194Operating and Administrative Expenses 16 1,112,416,789 696,586,221Depreciation and Amortisation 122,230,455 93,459,231

4,170,282,409 3,338,000,646III. PROFIT BEFORE TAXATION 93,883,349 439,069,901

Provision for Taxation 17 19,308,944 98,921,812IV. PROFIT AFTER TAXATION, CARRIED FORWARD 74,574,405 340,148,089

Earnings Per Share (Face value ` 10 each) 18 (vii) 0.88 3.99(Basic and Diluted)

Notes to the Accounts 18Segment Reporting 19Related Party Disclosures 20Significant Accounting Policies 21

The Schedules referred to above form an integral part of the Profit and Loss Account.

This is the Profit and Loss Account referred to in our Report of even date.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011For the year ended For the year ended31st March, 2011 31st March, 2010

(`) (`) (`) (`)(Figures for the previous year have been rearranged to conformwith the revised presentation)A. NET PROFIT BEFORE TAX 93,883,349 439,069,901

ADJUSTMENTS FOR :Depreciation 122,230,455 93,459,231Fixed Assets - Loss on Sale / Write off (Net) 1,025,906 1,199,193Unrealised (Gain) / Loss on Exchange (Net) (3,346,501) (37,155,101)Provision for Doubtful Deposits, Loans & Advances 738,951 9,721,179Interest on Loans, Deposits etc (36,360,697) (48,360,358)Provision for Doubtful Debts — (352,817)Liability no longer required written back (2,356,798) (8,040,172)

81,931,316 10,471,155OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 175,814,665 449,541,056ADJUSTMENTS FOR :

Trade and Other Receivables (369,965,576) (185,910,018)Trade Payables (14,439,477) (384,405,053) 228,524,437 42,614,419

CASH FROM OPERATIONS (208,590,388) 492,155,475Income Tax Paid 50,004,984 126,196,703

NET CASH (USED IN) / FROM OPERATING ACTIVITIES (258,595,372) 365,958,772B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (179,555,139) (84,961,431)Interest Received 3,667,301 48,654,611

NET CASH (USED IN) / FROM INVESTING ACTIVITIES (175,887,838) (36,306,820)C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from Long Term Borrowings 2,396,100,000 1,482,500,000Repayments of Long Term Borrowings (2,012,500,000) (1,994,000,000)NET CASH (USED IN) / FROM FINANCING ACTIVITIES 383,600,000 (511,500,000)NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (50,883,210) (181,848,048)OPENING CASH AND CASH EQUIVALENTS 684,271,818 866,119,866CLOSING CASH AND CASH EQUIVALENTS 633,388,608 684,271,818CASH AND CASH EQUIVALENTS COMPRISE :

Cash and Bank Balances 632,686,429 686,148,858Unrealised (Loss)/Gain on Foreign Currency Cash and Cash Equivalents 702,179 633,388,608 (1,877,040) 684,271,818

This is the Cash Flow Statement referred to in our Report of even date.

122





For Lovelock & LewesFirm Registration Number: 301056EChartered AccountantsSunit Kumar BasuPartnerMembership Number: 55000Place : BangaloreDate : 9th May, 2011








(`) (`)5. INVESTMENTS

Long Term, Unquoted (at Cost)Other than tradeSubsidiary CompaniesITC Infotech Limited, U.K.

685,815 (2010 - 685,815) Equity Shares ofGBP 1 each, fully paid-up 68,685,837 68,685,837

ITC Infotech (USA), Inc.182,000 (2010 - 182,000) CommonShares without par value, fully paid-up 801,748,250 801,748,250

870,434,087 870,434,087

6. DEFERRED TAX - NET

Deferred Tax Assets

On employees’ separation and retirement 52,537,421 50,095,713

On provision for doubtful debts and advances 9,455,578 9,204,408

On unabsorbed depreciation — 18,608,855

61,992,999 77,908,976Deferred Tax Liabilities

On fiscal allowances on fixed assets 696,016 8,624,060

61,296,983 69,284,916

7. SUNDRY DEBTORS

Over six months old

Good and Unsecured- From Others 76,504,636 14,702,066

Doubtful and Unsecured- From Others 17,358,575 17,358,575

Other DebtsGood and Unsecured- From Holding Company 9,957,888 —- From Subsidiaries * 288,080,791 212,045,234- From Others * 901,967,361 660,789,907

1,293,869,251 904,895,782Less: Provision for Doubtful Debts 17,358,575 17,358,575

1,276,510,676 887,537,207

* Includes Unbilled Revenue ` 47,203,828 (2010 - ` 17,708,202)


(`) (`)


Cash in Hand 108,067 255,870Cheques in Hand 8,120,108 1,229,742Balances with Scheduled Banks

On Current Accounts 90,698,474 138,926,794On Deposit Accounts * 520,400,000 520,400,000

* including marked as Lien ` Nil(2010 - ` 514,700,000) for corporateguarantee extended on behalf of whollyowned subsidiary (refer Note (ii)(c) ofSchedule 18 and ` 400,000 (2010 -` 400,000) held as margin money

Balances with other BanksOn Current Account- Fokus Bank, Norway 1,440,280 1,172,265Maximum balance outstanding at anytime during the year :` 9,491,410 (2010 - ` 17,761,390)- Danske Bank AS, Denmark 9,983,736 20,225,641Maximum balance outstanding at anytime during the year` 68,605,449 (2010 - ` 68,075,470)- Nordea Bank, Finland 727,431 1,936,648Maximum balance outstanding at anytime during the year` 2,244,525 (2010 - ` 5,224,731)- Nordea Bank, Sweden 901,938 124,858Maximum balance outstanding at anytime during the year` 2,187,957 (2010 - ` 1,721,176)- Deutsche Bank, Netherland 10,182 —Maximum balance outstanding at anytime during the year` 1,557,343 (2010 - ` Nil)- Standard Bank, South Africa 736,189 —Maximum balance outstanding at anytime during the year` 909,593 (2010 - ` Nil)- Westpac Bank, Australia 262,203 —

Maximum balance outstanding at anytime during the year` 4,315,000 (2010 - ` Nil)

633,388,608 684,271,818

4. 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 31st March, 31st March, 31st March, year Withdrawals 31st March, 31st March, 31st March,

2010 2011 2010 2011 2011 2010(`) (`) (`) (`) (`) (`) (`) (`) (`) (`)

Leasehold Improvements 111,504,365 19,145,423 — 130,649,788 57,091,425 17,057,475 — 74,148,900 56,500,888 54,412,940Plant and Machinery 150,994,108 55,979,696 5,868,751 201,105,053 90,928,907 25,693,048 5,378,478 111,243,477 89,861,576 60,065,201Computers etc. 218,799,604 73,538,919 4,270,785 288,067,738 138,749,422 36,940,429 3,867,468 171,822,383 116,245,355 80,050,182Furniture and Fixtures 62,702,716 32,577,761 2,669,518 92,610,959 49,195,892 15,769,288 2,537,202 62,427,978 30,182,981 13,506,824Capitalised Software 300,851,251 12,108,277 1,622,588 311,336,940 232,866,661 26,770,215 1,622,588 258,014,288 53,322,652 67,984,590

844,852,044 193,350,076 14,431,642 1,023,770,478 568,832,307 122,230,455 13,405,736 677,657,026 346,113,452 276,019,737Capital Work-in-Progress 4,820,840 18,615,777Total 844,852,044 193,350,076 14,431,642 1,023,770,478 568,832,307 122,230,455 13,405,736 677,657,026 350,934,292 294,635,514

Previous Year 779,001,536 75,449,083 9,598,575 844,852,044 483,772,458 93,459,231 8,399,382 568,832,307 276,019,737


31st March, 2011 31st March, 2010(`) (`)

1. CAPITALAuthorised:86,000,000 (2010 - 86,000,000)Equity Shares of ` 10 each 860,000,000 860,000,000Issued, subscribed and paid-up:85,200,000 (2010 - 85,200,000)Equity Shares of ` 10 each 852,000,000 852,000,000(All Equity Shares are held byITC Limited, the Holding Company) 852,000,000 852,000,000

2. RESERVES AND SURPLUSProfit and Loss Account

As at the commencement of the year 489,234,837 149,086,748Add : Profit for the year 74,574,405 340,148,089

563,809,242 489,234,837

3. UNSECURED LOANS

Short TermFrom Others 830,000,000 730,000,000(Interest-free Loan fromITC Limited, the Holding Company, duefor repayment within one year from the dateof the balance sheet)

Other LoansFrom Others 662,500,000 378,900,000(Interest-free Loan fromITC Limited, the Holding Company)

1,492,500,000 1,108,900,000

123



(`) (`)

Power and Fuel 41,104,659 28,305,519

Outsourcing Charges 309,225,973 173,434,570

(including Payment to SubsidiaryCompanies ` 249,419,316)(2010 - ` 142,209,880)

Software and Related Expenses 55,130,256 49,797,541

Business Development Expenses 32,889,928 21,665,503

Repairs and Maintenance

- Buildings 13,036,883 21,560,348

- Machinery 12,777,866 20,615,287

- Others 6,410,177 9,687,509

Legal, Professional and Consultancy Expenses 40,254,953 28,703,808

Doubtful and Bad Deposits, Loans and Advances 738,951 9,721,179

Doubtful and Bad Debts — (352,817)

Fixed Assets Discarded (Net) 1,025,906 1,199,193

Auditors’ Remuneration and Expenses 1,762,409 1,727,972

Training and Development 20,468,167 22,638,256

Recruitment Expenses 53,438,423 10,657,047

Loss on Exchange - Net 118,643,132 —

Miscellaneous Expenses 18,630,720 13,286,091

1,112,416,789 696,586,221

17. PROVISION FOR TAXATION

Current Tax (including tax on foreign branches 36,413,124 85,538,399(` 8,322,746) (2010 - ` 9,369,606)

Income Tax Provision Adjusted for Previous Years (16,298,956) —

Deferred Tax 7,987,933 13,383,413

MAT Credit Entitlement utilized (8,793,157) —

19,308,944 98,921,812


(i) Nature of Operations

lTC Infotech India Limited (”the Company”) is a wholly owned subsidiary oflTC Limited (”the Holding Company”) providing information technology solutionsand software development services.

(ii) Commitments and Contingencies

(a) Estimated amount of contracts remaining to be executed on capital account,(net of advances ` Nil, 2010 - ` Nil) - ` 22,323,643 (2010 - ` 9,585,703)

(b) Guarantees and Counter Guarantees outstanding - ` 43,073,548(2010 - ` 11,200,000).

(c) Outstanding corporate guarantee extended on behalf of wholly ownedsubsidiary - USD Nil (2010 - USD 8,233,532 approximately ` 369,685,586).

(d) Claims against the Company not acknowledged as debts ` 62,959,452(2010 - ` 46,032,665) comprising of certain claims relating to income taxdisputed by the Company.

(iii) The Company’s significant leasing arrangements are in respect of operatingleases for premises (residential, office etc). These leasing arrangements, whichare not non-cancelable, range between 11 months and 9 years generally, andare usually renewable by mutual consent on mutually agreeable terms. Theaggregate lease rentals payable ` 40,123,527 (2010 - ` 52,422,742) arecharged as Rent under Schedule 16 to the Accounts.

(iv) The Company uses forward exchange contracts to hedge against its foreigncurrency exposure relating to the underlying transactions 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 outstandingcontracts as at the year end is as follows:

Currency Pair Currency 31st March 2011 31st March 2010

Buy Sell Buy Sell

GBP - USD GBP — 1,470,000 — 1,350,000

EUR - USD EUR — 23,200,000 — 17,750,000

USD - INR USD — 38,995,429 — 27,100,000

AUD - USD AUD — 3,190,000 — —

USD - DKK DKK 47,978,225 — — —

USD - SEK SEK 1,060,000 — — —

USD - NOK NOK 2,400,000 — 5,902,650 —


Good and UnsecuredDeposits with Government,Public Bodies and Others 8,171,137 6,779,851Interest accrued on Loans, Advances, etc. 32,988,514 295,118

41,159,651 7,074,969


Good and UnsecuredLoans to Employees 28,519,577 41,720,042

Advances recoverable in cashor in kind or for valueto be received 48,553,808 53,144,972Advance Tax 261,751,308 223,067,335(Net of Provision for Indian Income Tax` 108,628,179 (2010 - ` 129,063,709)and Provision for Tax for Overseas Branches` 8,213,694 (2010 - ` 9,036,786))

Doubtful and UnsecuredLoans to Employees 2,420,047 1,681,096Advances recoverable in cash orin kind or for value to be received 8,040,083 8,040,083

349,284,823 327,653,528

Less: Provision for DoubtfulLoans and Advances 10,460,130 9,721,179

338,824,693 317,932,349

11. LIABILITIES

Sundry Creditors

- Dues to micro and small enterprises — —

- Dues to creditors other than microand small enterprises * 414,934,528 412,025,125

Other Liabilities 94,737,932 121,627,218

*Includes Dues to Holding Company` Nil (2010 - ` 3,957,956) and toSubsidiary Companies ` 95,390,234(2010 - ` Nil)

509,672,460 533,652,343

12. PROVISIONS

Provision for Retirement Benefits 154,567,288 147,383,680

154,567,288 147,383,680

13. SALES AND SERVICES

Exports 3,136,102,526 2,869,632,233

Domestic 1,075,456,957 806,111,832

4,211,559,483 3,675,744,065

14. OTHER INCOME

Interest on Deposits - Gross 36,360,697 48,360,358(Tax Deducted at Source ` 3,632,584)(2010 - ` 4,761,169)

Interest Others (Tax Deducted at Source ` Nil)(2010 - ` Nil) 11,048,423 —

Liabilities no longer required written back 2,356,798 8,040,172

Miscellaneous Income 2,840,357 3,898,633

Gain on Exchange - Net — 41,027,319

52,606,275 101,326,482

15. PERSONNEL EXPENSES

Salaries and Bonus 2,792,729,043 2,370,795,731

Contribution to Provident and Other Funds 97,406,337 139,424,819

Staff Welfare Expenses 22,612,828 20,296,446

Reimbursement of Contractual Remuneration 22,886,957 17,438,198

2,935,635,165 2,547,955,194

16. OPERATING AND ADMINISTRATIVE EXPENSES

Rent 40,123,527 52,422,742

Rates and Taxes 1,571,771 1,435,923

Insurance 23,022,871 14,906,366

Travelling and Conveyance 294,021,493 191,471,993

Communication 28,138,724 23,702,191


(`) (`)


(`) (`)

124


For the year ended 31st March, 2011 For the year ended 31st March, 2010(`) (`)


I. Components of Employer Expense Funded Unfunded Funded Unfunded

1 Current Service Cost 17,166,880 12,915,384 13,179,845 20,059,515 12,805,221 12,192,9832 Interest cost 13,933,619 7,254,149 5,593,649 9,708,283 4,690,763 3,884,5003 Expected Return on Plan Assets (9,336,000) (7,080,000) — (7,871,500) (6,270,250) —4 Curtailment Cost / (Credit) — — — — — —5 Settlement Cost / (Credit) — — — — — —6 Past Service Cost — — — — — —7 Actuarial Losses / (Gains) (27,339,272) 1,556,917 (1,429,551) 16,887,783 18,774,189 9,068,3298 Total expense recognised in the Statement of

Profit & Loss Account (5,574,773) 14,646,450 17,343,943 38,784,081 29,999,923 25,145,812

The Pension and Gratuity Expenses have been recognised in “Contribution to Provident and Other Funds” and Leave Encashment in “Salaries & Bonus” under Schedule15.


II. Actual Returns 10,000,000 6,400,000 — 9,500,000 (4,200,000) —

III. Net Asset / (Liability) recognised in Balance Sheet

1 Present Value of Defined Benefit Obligation 174,841,782 109,823,310 81,702,196 177,923,852 92,576,860 75,482,9682 Fair Value on Plan Assets 122,000,000 89,800,000 — 111,400,000 87,200,000 —3 Status [(Surplus) / Deficit] (52,841,782) (20,023,310) (81,702,196) (66,523,852) (5,376,860) (75,482,968)4 Unrecognised Past Service Cost — — — — — —5 Net Asset / (Liability) recognised in Balance Sheet (52,841,782) (20,023,310) (81,702,196) (66,523,852) (5,376,860) (75,482,968)

IV. Change in Defined Benefit Obligations (DBO)

1 Present Value of DBO at Beginning of Period 177,923,852 92,576,860 75,482,968 147,739,756 67,176,937 60,648,5722 Current Service Cost 17,166,880 12,915,384 13,179,845 20,059,515 12,805,221 12,192,9833 Interest Cost 13,933,619 7,254,149 5,593,649 9,708,283 4,690,763 3,884,5004 Curtailment Cost / (Credit) — — — — — —5 Settlement Cost / (Credit) — — — — — —6 Plan Amendments — — — — — —7 Acquisitions — — — — — —8 Actuarial (Gains) / Loss (26,675,381) 876,917 (1,429,551) 18,516,298 8,303,939 9,068,3299 Benefits Paid (7,507,188) (3,800,000) (11,124,715) (18,100,000) (400,000) (10,311,416)10 Present Value of DBO at the End of Period 174,841,782 109,823,310 81,702,196 177,923,852 92,576,860 75,482,968

V. Change in Fair Value of Assets

1 Plan Assets at Beginning of Period 111,400,000 87,200,000 — 113,500,000 91,800,000 —2 Acquisition Adjustment — — — — — —3 Expected Return on Plan Assets 9,336,000 7,080,000 — 7,871,500 6,270,250 —4 Actuarial Gains / (Loss) 664,000 (680,000) — 1,628,500 (10,470,250) —5 Actual Company Contributions 8,107,188 — 11,124,715 6,500,000 — 10,311,4166 Benefits Paid (7,507,188) (3,800,000) (11,124,715) (18,100,000) (400,000) (10,311,416)7 Plan Assets at the End of Period 122,000,000 89,800,000 — 111,400,000 87,200,000 —

VI. Actuarial Assumptions For the year ended 31st March, 2011 For the year ended 31st March, 2010

1 Discount Rate (%) 8.0% 7.0%2 Expected Return on Plan Assets (%) 8.0% 7.0%3 Long term rate of compensation increase (%)

– Management Staff 10.0% 10.0% – Others 10.0% 10.0%

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, 2011 For the year ended 31st March, 2010

1 Government Securities / Special Deposit with RBI 33.0% 30.0%2 High Quality Corporate Bonds 34.0% 32.0%3 Insurance Companies 27.0% 32.0%4 Mutual Funds 4.0% 4.0%5 Cash and Cash Equivalents 3.0% 3.0%

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 optimisereturn within acceptable risk parameters, the plan assets are well diversified.

IX. For the year ended 31st March, 2011 For the year ended 31st March, 2010 For the year ended 31st March, 2009 For the year ended 31st March, 2008` ` ` `

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 174,841,782 109,823,310 81,702,196 177,923,852 92,576,860 75,482,968 147,739,740 67,176,921 60,648,572 106,691,172 46,191,902 49,181,5622 Fair Value of Plan Assets 122,000,000 89,800,000 — 111,400,000 87,200,000 — 113,500,000 91,800,000 — 99,700,000 79,600,000 —3 Status [Surplus / (Deficit)] (52,841,782) (20,023,310) (81,702,196) (66,523,852) (5,376,860) (75,482,968) (34,239,740) 24,623,079 (60,648,572) (6,991,172) 33,408,098 (49,181,562 )4 Experience Adjustment of Plan Assets [Gain / (Loss)] (9,140,000) (2,279,000) — 1,628,500 (10,470,250) — 1,005,000 4,002,500 — (90,000) (2,170,113) —5 Experience Adjustment of Obligation [(Gain) / Loss] (1,621,251) 6,246,134 2,844,651 (11,877,125) (5,518,904) (672,376) 21,494,741 7,560,838 4,352,583 (843,812) (1,894,354) 4,209,505

(b) Amounts towards Defined Contribution Plans have been recognised under “Contribution to Provident and Other Funds” in Schedule 15: ` 78,905,203 (2010 ` 59,724,521)

(v) Employee Benefits

(a) The following tables sets out the Defined Benefit Plans / Long Term Compensated Absences - as per Actuarial Valuation as on 31st March, 2011 and recognised in the financialstatements in respect of Employee Benefit Schemes :

125


(vi) Quantitative detailsThe Company is engaged in providing informaton technology solutions andsoftware development services. The purchase, production and sale of suchsoftware cannot be expressed in any generic unit. Hence, it is not possible togive the quantitative details of sales and the information as required underParagraphs 3 and 4C of Part II of Schedule VI of the Companies Act, 1956.

(vii) Earnings per shareFor the year ended For the year ended

31st March, 2011 31st March, 2010` `

(a)Profit after Taxation 74,574,405 340,148,089(b)Weighted average number

of Equity Shares 85,200,000 85,200,000(c) Earnings Per Share 0.88 3.99

(Face value of ` 10 per share)(Basic and Diluted)

(viii) Auditors’ Remuneration and Expenses(Including service tax considered under other services)Audit Fees 1,100,000 1,000,000Tax Audit Fees 200,000 200,000Fees for Other services 284,173 386,630Reimbursement of Expenses 178,236 141,342

1,762,409 1,727,972(ix) Value of Imports during the year

(C.I.F. Basis)

Capital Goods 65,847,076 49,991,15965,847,076 49,991,159

(x) Expenditure In Foreign Currency during the year(On Payment Basis)

Travel 166,871,935 133,244,083Professional, Consultancy and AccountManagement Fees 152,444,701 425,247,244Software and Related Expenses 4,546,412 14,700,686Expenditure of overseas branches 460,078,492 655,300,058Others 6,095,419 20,630,425

790,036,959 1,249,122,496(xi) Earnings in foreign exchange during the year

(F.O.B. – Realisation Basis)

Sale of services includingreimbursement of expenses 2,815,864,769 3,046,099,079

2,815,864,769 3,046,099,079

(xii) Previous year’s figures have been regrouped / rearranged wherever necessary.

19. 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 one business segment, disclosure of information relating to primarysegment is not applicable.

31st March, 2011 31st March, 2010` `

SECONDARY SEGMENT INFORMATION

(GEOGRAPHICAL SEGMENTS) :

Segment Revenue

India 1,075,456,957 806, 111,832

Rest of the World 3,136,102,526 2,869,632,233

Total Revenue 4,211,559,483 3,675,744,065Segment Assets *

India 1,258,800,933 1,133,629,722Rest of the World 1,990,699,766 1,705,188,887Total Assets 3,249,500,699 2,838,818,609

Capital Expenditure *

India 179,555,139 84,961,431

Rest of the World — —

Total Capital Expenditure 179,555,139 84,961,431

* Fixed Assets and Capital Expenditure have been considered on the basis of physicallocation.

20. RELATED PARTY DISCLOSURES

1. HOLDING COMPANY:

ITC Limited

2. ENTERPRISES WHERE CONTROL EXISTS:

Wholly Owned Subsidiaries:

lTC Infotech Limited

ITC Infotech (USA), Inc.

Pyxis Solutions LLC.

3. 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

4. KEY MANAGEMENT PERSONNEL

Non-Executive Directors Management Committee MembersMr. Y. C. Deveshwar - Chairman Mr. B. Sumant - Managing Director (w.e.f. 3rd January, 2011) Mr. R. BatraMr. K. Vaidyanath - Mr. A. Talwar (till 2nd January, 2011) Mr. K. S. Aithani (till 31st May, 2010)Mr. S. Sivakumar - Vice Chairman Mr. S. JanardhananMr. A. Nayak Mr. V. V. R. BabuMr. B. B. Chatterjee Mr. S. K. GuptaMr. S. Puri Mr. V. V. RajasekharMr. R. Tandon Mr. A. Maheshwari (w.e.f. 6th August, 2010) (w.e.f. 3rd January, 2011) Mr. A. Jagannath (w.e.f. 6th August, 2010)Mr. R. Srinivasan (till 30th April, 2010) Mr. S. V. Shah (w.e.f. 6th August, 2010)

126


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 Personnel2011 2010 2011 2010 2011 2010 2011 2010

ITC Infotech ITC Infotech Pyxis Solution ITC Infotech ITC Infotech Pyxis SolutionsLimited (USA), INC. LLC Limited (USA), INC. LLC

` ` ` ` ` ` ` ` ` ` ` `

Sale of Goods / Services 831,067,971 719,355,031 376,147,120 567,065,514 16,898,332 413,122,924 428,931,322 15,714,052 12,586,479 8,782,377 — —Purchase of Goods / Services 4,573,881 3,849,095 246,715,727 2,703,589 — 135,587,021 6,622,859 — 3,202,321 3,051,562 — —Rent paid 10,565,530 8,167,183 — — — — — — — — — ––Remuneration to Key Managerial Personnel — — — — — — — — — — 41,516,313 33,209,276Reimbursement of Contractual Remuneration 22,886,957 17,438,198 — — — — — — — — — ––Remuneration of managers ondeputation recovered 1,109,309 — — — — — — — — — — ––Expenses recovered 4,139,281 3,514,001 3,287,992 25,591,005 — 1,611,842 13,785,799 — 10,489 — — —Expenses reimbursed 47,988,196 38,291,933 3,476,269 18,578,281 — 816,954 8,129,896 — — — — ––Receipt towards Loan Repayment — — — — — — — — — — 243,500 463,529Interest recovered on Loans — — — — — — — — — — 12,718 28,543Loans received 2,396,100,000 1,482,500,000 — — — — — — — — — ––Loan repaid 2,012,500,000 1,994,000,000 — — — — — — — — — ––Balances as on 31st March,

i) Debtors / Receivables 18,090,356 — 69,310,266 314,762,165 1,476,451 80,737,925 187,314,899 1,677,547 3,987,635 772,100 — —ii) Loans Taken 1,492,500,000 1,108,900,000 — — — — — — — — — —iii) Loans Given — — — — — — — — — — 1,412,466 2,419,878iv) Creditors / Payables 8,132,468 3,957,956 164,700,500 28,157,825 — 43,259,492 14,425,645 — — — — 1,116,472v) Corporate Guarantee Outstanding — — — — — — 369,685,586 — — — — —

Proposed Dividend

To provide for Dividends as proposed by the Directors in the books of accounts,pending approval at the Annual General Meeting.

Research and Development

To charge off all revenue expenditure incurred on research and development in theyear it is incurred. Assets purchased for research and development activities areincluded in fixed assets.

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.

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 Profit and Loss Account in the period in which they 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.

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 Accounting Standard- 15 (revised 2005) on “Employee Benefits”. To determine actuarial gains or lossesas the difference between the actual and expected returns on plan assets, effect ofchanges in discount rates, unexpectedly high or low rates of employee turnover,early retirements, mortality or increase in salary benefits and the effect of changesin any other actuarial assumptions and to recognise such gains and losses immediatelyin Profit and Loss Account as income or expense.

Claims

To disclose claims against the Company not acknowledged as debts after a carefulevaluation of the facts and legal aspects of the matter involved.

Segment Reporting

To identify segments having regard to the dominant source and nature of risks andreturns and the internal organisation and management structure.

21. SIGNIFICANT ACCOUNTING POLICIESIT IS CORPORATE POLICY

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.

Basis of Accounting

To prepare financial statements in accordance with the historical cost convention.

Revenue Recognition

To recognise revenues from services performed on a “time and material” basis, 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 upon delivery tocustomer.

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.

Fixed Assets

To state fixed assets at actual cost less accumulated depreciation. The actual costcapitalized includes material cost, freight, installation cost, duties and taxes, financecharges and other incidental expenses incurred during the construction / installationstage.

To capitalize software where it is expected to provide future enduring economicbenefits. Capitalization costs include license fees and costs of implementation /system integration services. The costs are capitalized in the year in which the relevantsoftware is implemented for use.

Capital Work in Progress

To treat cost of assets not put to use before the year-end as capital work in progress.

Depreciation

To calculate depreciation on fixed assets on the straight-line method over 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 profit and loss account.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 orestimated 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.

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 netselling 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.

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 of LongTerm Investments.




127





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 1,034,989 GBP 3,145,410 NIL NILINR 74,312,210 INR 224,893,944

2 ITC INFOTECH (USA), INC. (**) 182,000 100% USD 732,567 (USD 1,805,262) NIL NILINR 32,672,488 (INR 88,438,236)

3 PYXIS SOLUTIONS LLC. (**) Note 100% USD 24,672 USD 1,395,344 NIL NILINR 1,100,371 INR 67,163,237

The financial year of all the subsidiaries ended on 31 March, 2011.

(*) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of GBP 1 = INR 71.80(**) The Indian Rupee (INR) equivalent figures have been arrived at by applying the year end interbank exchange rate of USD 1 = INR 44.60

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.

128




Profit / Loss Before Tax Profit / Loss After Tax

(Please tick appropriate box + for Profit, – for Loss)

Earnings per Share in ` Dividend Rate (%)

V. Generic Names of Principal Products / Services of Company (as per monetaryterms)


Product Description

N I L

4 1 7 0 2 8 24 2 6 4 1 6 6

N I L

N I L

3 5 7 2 5 4 9

N I L

N I L

8 5 2 0 0 0 5 6 3 8 0 9

6 6 4 2 4 0

8 7 0 4 3 4

1 4 9 2 5 0 0

3 5 0 9 3 4

2 2 8 9 8 8 4

N I L 6 1 2 9 7

. 8 8









Sources of FundsPaid-up Capital Reserves & Surplus

Unsecured Loans Current Liabilities and Provisions


Current Assets Misc. Expenditure

Accumulated Losses Deferred Tax - Net

3 5 7 2 5 4 9


3 1

7 7 3 4 1

0 3 1 1

2 1

N I L

8 5 2 4 9 0 0 9

C O M P U T E R S O F T W A R E

+ – 9 3 8 8 3�

+ – 7 4 5 7 4�

+ –�


B. Sumant Managing DirectorPlace : Bangalore S. Sivakumar Vice ChairmanDate : 9th May, 2011 R. Batra Chief Financial Officer S. V. Shah Company Secretary

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 31 March, 2011.The Company is a wholly owned subsidiary of ITC Infotech India Limited(I3L), which is incorporated in India.

Principal activitiesThe Company is engaged in providing IT services, software developmentand support services.

Key performance indicators

GBP (million)

Year Ended March 31, 2011 2010

Total Income 22.22 19.44

Cost of Sales 16.00 13.67

Gross Profit 6.22 5.77

Operating Profit 1.45 1.04

Profit before Tax 1.45 1.04

Profit after Tax 1.03 0.69

Business review

Your Company has delivered a robust financial performance with TotalIncome, Operating Profit and Profit After Tax growing by 14%, 39% and49% respectively through effective operations and cost management.

Your Company has been successful in acquiring marquee Banking andFinancial Services customers with a potential for large offshore deliverycentres in India. Your Company has also expanded its market developmentactivities across Europe, South Africa, Middle East and Asia Pacific. Duringthe year under review your Company established a branch office in Singaporeto provide a base for the Asia Pacific market.

Your Company’s strategy of focussed account management has resultedin growth in revenue from existing accounts and has also supplementedthe efforts of business development in winning new references/clients.

With a healthy sales funnel your Company looks forward to 2011-12 withconfidence.

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 16% 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 liquidity isavailable to meet foreseeable needs and to invest cash assets safely and profitably.

Directors

Consequent to his retirement from the services of ITC Limited, the holdingcompany, Mr. K. Vaidyanath ceased to be a Director of the Company witheffect from close of business on 2nd January, 2011. Your Board of Directors

places on record its appreciation of the contribution made by Mr. K. Vaidyanathduring his tenure as Chairman and Director of the Company.In terms of Article 17 of the Articles of Association of the Company andas nominated by 13L, the Board of Directors of the Company at itsmeeting held on 21st December, 2010 appointed Mr. Y. C. Deveshwar,Mr. S. Sivakumar and Mr. R. Tandon as Directors of the Company.In terms of Article 19 of the Articles of Association of the Company,Mr. Y. C. Deveshwar and Mr. S. Sivakumar were appointed Chairman andVice Chairman respectively of the Board of Directors of the Company witheffect from 3rd January, 2011.The Directors in office at the end of the year are listed below. All served onthe Board throughout the year, unless indicated otherwise. The interestsof the Directors in the shares of the Company as at 31st March, 2011 and1st April, 2010 were as follows:

2011 and 2010Ordinary Shares

Y. C. Deveshwar (from 3rd January, 2011) —S. Sivakumar (from 3rd January, 2011) —R. Tandon (from 3rd January, 2011) —K. Vaidyanath (till 2nd January, 2011) —B. B. Chatterjee —S. Puri —B. Sumant —Mr. S. Puri and Mr. B. Sumant, Directors, will retire by rotation at the AnnualGeneral Meeting (AGM) and, being eligible, offer themselves for re-election.Statement of directors' responsibilitiesUK 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 it

is 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.AuditorsM/s. Grant Thornton UK LLP, Auditors, vacate office at the ensuing AnnualGeneral Meeting.In terms of the Company’s policy on ‘Rotation of Statutory Auditors’,your Board has recommended to the Members the appointment ofM/s. PricewaterhouseCoopers LLP, Exchange House, Central BusinessExchange, Midsummer Boulevard, Central Milton Keynes MK9 2DF,as the Auditors of the Company for the financial year 2011-12 at aremuneration to be agreed between the Board and the said Auditors.M/s. PricewaterhouseCoopers LLP have given their consent to act as Auditorsof the Company, if appointed.Approved by the Board on 9th May, 2011 and signed on behalf of theBoard by

B. Sumant S. SivakumarDirector Vice Chairman

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OFITC INFOTECH LIMITED

We have audited the financial statements of ITC Infotech Limited for theyear ended 31 March 2011 which comprise the principal accountingpolicies, profit and loss account, balance sheet, cashflow statement, statementof total recognised gains and losses and the related notes, excluding thesupplementary information disclosed in Indian Rupees. The financial reportingframework that has been applied in their preparation is applicable law andUnited Kingdom Accounting Standards (United Kingdom Generally AcceptedAccounting Practice).

We have not audited the supplementary information stated in Indian Rupeesincluded in these financial statements. The information has been includedat the request of the parent company and is for information only.

This report is made solely to the company’s members, as a body, inaccordance with Chapter 3 of Part 16 of the Companies Act 2006. Ouraudit work has been undertaken so that we might state to the company’smembers those matters we are required to state to them in an auditor’s

129

ITC INFOTECH LIMITED

PRINCIPAL ACCOUNTING POLICIES

Basis of accounting

The financial statements have been prepared under the historical costconvention.

The principal accounting policies of the company are set out below andremain unchanged from the previous year.

Financial instruments

Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrumentis any contract that evidences a residual interest in the assets of the entityafter deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including sharecapital) are equivalent to a similar debt instrument, those financial instrumentsare classed as financial liabilities. Financial liabilities are presented as suchin the balance sheet. Finance costs and gains or losses relating to financialliabilities are included in the profit and loss account. Finance costs arecalculated so as to produce a constant rate of return on the outstandingliability.

Where the contractual terms of share capital do not have any terms meetingthe definition of a financial liability then this is classed as an equity instrument.Dividends and distributions relating to equity instruments are debited directto equity.

Turnover

Turnover is the total amount receivable by the company for goods suppliedand services provided, excluding VAT and trade discounts.

Turnover from services performed on a “time and materials” basis isrecognised 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 estimatedresidual 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 chargedto the profit and loss account on a straight-line basis over the lease term.

Deferred taxation

Deferred tax is recognised on all timing differences where the transactionsor 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 sheetdate. Deferred tax assets are recognised when it is more likely than notthat they will be recovered. Deferred tax is measured using rates of taxthat have been enacted or substantively enacted by the balance sheet date.

Foreign currencies

Transactions in foreign currencies are translated at the exchange rate rulingat the date of the transaction. Monetary assets and liabilities are translatedat the rate of exchange ruling at the balance sheet date. All exchangedifferences are dealt with through the profit and loss account except thatgains and losses arising from the retranslation of the opening retainedearnings in overseas branches are adjusted against the reserves.

Recruitment costs

Legal costs and other charges incurred to obtain visas and other requiredimmigration papers for recruits, recruitment fees and relocation costs arecharged to the Profit & Loss Account when such costs are incurred.

report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than thecompany and the company’s members as a body, for our audit work, forthis report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of directors’ responsibilities, thedirectors are responsible for the preparation of the financial statementsand for being satisfied that they give a true and fair view. Our responsibilityis to audit the financial statements in accordance with applicable law andInternational Standards on Auditing (UK and Ireland). Those standardsrequire us to comply with the Auditing Practices Board’s (APB’s) EthicalStandards for Auditors.

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 accountingpolicies 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.

Opinion on financial statements

In our opinion the financial statements, excluding the supplementaryinformation:

• give a true and fair view of the state of the company's affairs as at 31March 2011 and of the company’s 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 Report of the directors for thefinancial year for which the financial statements are prepared is consistentwith the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where 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.

Simon JonesSenior Statutory Auditor

for and on behalf of Grant Thornton UK LLP,Statutory Auditor, Chartered Accountants

Central Milton Keynes

9 May, 2011

130


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

Unaudited UnauditedNote 2011 2011 2010 2010

£ ` £ `

Net cash inflow/(outflow) from operating activities 17 852,194 61,183,268 1,828,623 124,273,191

Returns on investments and servicing of finance

Interest received 4,285 307,642 3,087 209,765

Net cash inflow from returns on investments andservicing of finance 4,285 307,642 3,087 209,765

Taxation (222,070) (15,943,516) (749,899) (50,963,064)

Capital expenditure

Payments to acquire tangible fixed assets (7,822) (561,580) (29,974) (2,037,027)

Net cash outflow from capital expenditure (7,822) (561,580) (29,974) (2,037,027)

Increase/(Decrease) in cash 17 626,587 44,985,814 1,051,837 71,482,865

The accompanying accounting policies and notes form part of these financial statements.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2011

Unaudited UnauditedNote 2011 2011 2010 2010

£ ` £ `

Turnover 1 22,224,843 1,595,632,603 19,441,141 1,321,219,921

Cost of sales 16,002,587 1,148,905,734 13,667,905 928,870,835

Gross Profit 6,222,256 446,726,869 5,773,236 392,349,086

Other operating charges 2 4,775,531 342,859,248 4,736,471 321,890,541

Operating profit 3 1,446,725 103,867,621 1,036,765 70,458,545

Operating profit before foreign exchange loss/(gain) 1,546,776 111,050,782 1,171,045 79,584,212Foreign exchange loss/(gain) 100,051 7,183,161 134,280 9,125,667

Interest receivable 5 4,285 307,642 3,087 209,765

Profit on ordinary activities before taxation 1,451,010 104,175,263 1,039,852 70,668,310

Tax on profit on ordinary activities 6 416,021 29,868,228 351,811 23,909,073

Profit for the financial year 1,034,989 74,307,035 688,041 46,759,237

All of the activities of the company are classed as continuing.


131


BALANCE SHEET AS AT 31 MARCH 2011Unaudited Unaudited

Note 2011 2011 2010 2010£ ` £ `

Fixed assets

Tangible assets 7 31,059 2,229,882 40,375 2,743,922

Current assets

Debtors 8 6,730,710 483,231,324 5,837,704 396,730,352

Loans and advances 108,752 7,807,850 53,688 3,648,648

Deferred tax recoverable 9 3,694 265,211 8,360 568,146

Cash at bank 2,612,614 187,572,622 1,986,027 134,970,416

9,455,770 678,877,007 7,885,779 535,917,562

Creditors: amounts falling due within one year 10 4,082,681 293,116,082 3,557,827 241,790,038

Net Current Assets 5,373,089 385,760,925 4,327,952 294,127,524

Total assets less current liabilities 5,404,148 387,990,807 4,368,327 296,871,446

Capital and reservesCalled-up equity share capital 14 685,815 49,238,075 685,815 46,609,960

Profit and loss account 15 4,718,333 338,752,732 3,682,512 250,261,486

Shareholders’ funds 16 5,404,148 387,990,807 4,368,327 296,871,446

These financial statements were approved by the directors on 9th May 2011 and are signed on their behalf by:

V. Sreenivasan A. SreenivasanResident Officer Financial Controller


B. Sumant S. SivakumarDirector Vice Chairman

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

Supplementary information - Indian Rupee amounts

The financial statements of ITC Infotech Limited are prepared in accordance with accounting principles generally accepted in the United Kingdom,the country of incorporation, and are presented in GBP. The supplementary information requested by the parent company has been arrived at byapplying the year end interbank exchange rate of GBP 1 = ` 71.80 (2010: GBP 1 = ` 67.96) as provided by the parent company. The supplementaryinformation has not been audited.

1. Turnover

The turnover and profit before tax are attributable to the one principal activity of the company.An analysis of turnover is given below:

Unaudited Unaudited2011 2011 2010 2010

£ ` £ `

United Kingdom 16,133,769 1,158,323,945 14,928,120 1,014,515,028

India 3,606,992 258,963,991 1,813,678 123,257,536

US 236,794 17,000,625 127,222 8,645,975

Malaysia 9,676 694,688 38,628 2,625,150

Europe 2,203,074 158,169,698 2,528,083 171,808,549

Other 34,538 2,479,656 5,410 367,683

22,224,843 1,595,632,603 19,441,141 1,321,219,921

2. Other operating charges

Administrative expenses 4,775,531 342,859,248 4,736,471 321,890,541

3. Operating profit

Operating profit is stated after charging:Depreciation of owned fixed assets 17,138 1,230,422 21,823 1,483,075

Auditor’s remuneration:- audit fees 20,775 1,491,541 19,976 1,357,569

- non audit fees – taxation and other services 14,505 1,041,386 9,202 625,368

Loss / (Gain) on foreign exchange 100,051 7,183,161 134,280 9,125,667

Operating lease costs:Land and buildings 53,191 3,818,848 53,720 3,650,815

Plant and equipment 1,809 129,877 1,714 116,502

4. Directors and employeesThe average number of staff employed by the company during the financial year amounted to:

2011 2010

No. No.

Staff 210 176

The aggregate payroll costs of the above were:


£ ` £ `

Wages and salaries 8,719,581 626,022,318 7,219,807 490,658,097

Social security costs 787,840 56,562,973 712,939 48,451,336

9,507,421 682,585,291 7,932,746 539,109,433

Remuneration in respect of directors was nil (2010: £nil).

5. Interest receivable

Bank interest receivable 4,285 307,642 3,087 209,765

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2011


£ ` £ `


Currency translation of (loss) / gain of retained earnings ofoverseas branches 832 59,733 (19,176) (1,303,201)

Total recognised gains and losses relating to the financial year 1,035,821 74,366,768 668,865 45,456,036


132



£ ` £ `

6. Taxation on ordinary activities(a) Analysis of charge in the yearCurrent tax:In respect of the year:UK Corporation tax based on the results for the yearat 28% (2010 - 28%) 350,140 25,138,302 262,140 17,815,034

Under / (over) provision in prior year 81,345 5,840,164 48,187 3,274,789

Foreign Tax – Current Year 3,864 277,416 40,185 2,730,973

– Prior Year (23,994) (1,722,649) 40,185 2,730,973

Total current tax 411,355 29,533,233 350,512 23,820,796

Deferred tax:

Origination and reversal of timing differences 4,666 334,995 1,299 88,277

Tax on profit on ordinary activities 416,021 29,868,228 351,811 23,909,073

(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 28% (2010 - 28%).

Profit on ordinary activities before taxation 1,451,010 104,175,263 1,039,852 70,668,310

Profit on ordinary activities multiplied by rate of tax 406,283 29,169,074 291,158 19,787,127

Expenses not deductible for tax purposes 30,851 2,214,962 11,511 782,258

Movement in capital allowances (1,785) (128,154) (344) (23,378)

Adjustments to tax charge in respect of previous periods (23,994) (1,722,649) 48,187 3,274,789

Total current tax (note 6(a)) 411,355 29,533,233 350,512 23,820,796

7. 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 2010 50,965 3,659,032 58,821 4,223,054 169,010 12,134,073 278,796 20,016,159

Additions — — 1,394 100,082 6,428 461,498 7,822 561,580

At 31 March 2011 50,965 3,659,032 60,215 4,323,136 175,438 12,595,571 286,618 20,577,739

Depreciation

At 1 April 2010 35,242 2,530,199 51,039 3,664,345 152,140 10,922,891 238,421 17,117,435

Charge for the year 4,965 356,462 2,935 210,718 9,238 663,242 17,138 1,230,422

At 31 March 2011 40,207 2,886,661 53,974 3,875,063 161,378 11,586,133 255,559 18,347,857

Net book value

At 31 March 2011 10,758 772,371 6,241 448,073 14,060 1,009,438 31,059 2,229,882

At 31 March 2010 15,723 1,128,833 7,782 558,709 16,870 1,211,182 40,375 2,898,723

For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March 2011 exchange rate.

8. Debtors

Unaudited Unaudited

2011 2011 2010 2010£ ` £ `

Trade debtors 5,295,551 380,194,084 5,746,154 390,508,615

Amounts owed by group undertakings 1,367,764 98,198,616 — —

Prepayments and accrued income 67,395 4,838,624 23,972 1,629,158

Corporation Tax — — 67,578 4,592,579

6,730,710 483,231,324 5,837,704 396,730,352

9. Deferred taxation

The deferred tax included in the Balance sheet is as follows:

Deferred tax assets 3,694 265,211 8,360 568,146

The movement in the deferred taxation account during the year was:

Balance brought forward 8,360 600,206 9,659 656,423

Profit and loss account movement arising during the year (4,666) (334,995) (1,299) (88,277)

Balance carried forward 3,694 265,211 8,360 568,146

The balance of the deferred taxation account consists of the taxeffect of timing differences in respect of:

Excess of depreciation over taxation allowances on fixed assets 3,694 265,211 8,360 568,146

133


10. Creditors: amounts falling due within one year


£ ` £ `

Trade creditors 839,628 60,281,092 452,334 30,740,629

Amounts owed to group undertakings — — 523,338 35,566,058

Corporation tax 121,707 8,737,954 — —

Other taxation and social security 937,259 67,290,510 828,689 56,317,729

Other creditors 2,184,087 156,806,526 1,753,466 119,165,622

4,082,681 293,116,082 3,557,827 241,790,038

11. Leasing commitments

At 31 March 2011 the company had annual commitments under non-cancellable operating leases as set out below.

2011 2010Unaudited Unaudited Unaudited Unaudited

Land & Land & Other Other Land & Land & Other OtherBuildings Buildings Items Items Buildings Bulidings Items Items

£ ` £ ` £ ` £ `

Operating leases whichexpire:

Within 1 year — — — — 68,944 4,685,464 224 15,223

Within 1 to 2 years — — — — — — — —

Within 2 to 5 years 60,941 4,375,259 1,809 129,877 — — 2,591 176,099

60,941 4,375,259 1,809 129,877 68,944 4,685,464 2,815 191,322

12. Capital commitments

There were no capital commitments at 31 March 2011 or 31 March 2010.

13. Contingent liabilities

There were no contingent liabilities at 31 March 2011 or 31 March 2010.

14. Share capital

Authorised share capital:

Unaudited Unaudited

2011 2011 2010 2010£ ` £ `

1,629,700 Ordinary shares of £1 each 1,629,700 117,004,312 1,629,700 110,754,412

Allotted, called up and fully paid:

Unaudited Unaudited

2011 2011 2010 2010

No. £ ` No. £ `

Ordinary shares of £1 each 685,815 685,815 49,238,075 685,815 685,815 46,609,960

Equity sharesOrdinary shares of £1 each 685,815 685,815 49,238,075 685,815 685,815 46,609,960

15. Profit and loss account Unaudited

£ `

At 1 April 2010 3,682,512 264,385,964

Profit for the financial year 1,034,989 74,307,035

Other recognised losses and gains 832 59,733

At 31 March 2011 4,718,333 338,752,732

For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March, 2011 exchange rate.

16. Reconciliation of movements in shareholders’ funds

Unaudited Unaudited

2011 2011 2010 2010

£ ` £ `


Other recognised losses and gains 832 59,733 (19,176) (1,303,201)

Net addition to shareholders’ funds 1,035,821 74,366,768 668,865 45,456,036

Opening shareholders’ funds 4,368,327 313,624,039 3,699,462 251,415,410

Closing shareholders’ funds 5,404,148 387,990,807 4,368,327 296,871,446

For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March, 2011 exchange rate.

134


17. Notes to the statement of cash flows

Unaudited Unaudited

2011 2011 2010 2010£ ` £ `

Reconciliation of operating profit to net cash inflow/(outflow) from operating activities

Operating profit 1,446,725 103,867,621 1,036,765 70,458,545

Foreign exchange movement 832 59,733 (19,176) (1,303,201)

Depreciation 17,138 1,230,423 21,823 1,483,074

(Increase)/decrease in debtors (1,015,648) (72,918,448) 785,640 53,392,082

Increase/(decrease) in creditors 403,147 28,943,939 3,571 242,691

Net cash inflow/(outflow) from operating activities 852,194 61,183,268 1,828,623 124,273,191

Reconciliation of net cash flow to movement in net funds

Increase/(decrease) in cash in the period 626,587 44,985,814 1,051,837 71,482,865

Movement in net funds in the period 626,587 44,985,814 1,051,837 71,482,865

Net funds at 1 April 2010 1,986,027 142,586,808 934,190 63,487,551

Net funds at 31 March 2011 2,612,614 187,572,622 1,986,027 134,970,416

Analysis of changes in net funds

At At Cash Cash At At

1 April 2010 1 April 2010 flows flows 31 March 2011 31 March 2011

£ ` £ ` £ `

Net cash:

Cash in hand and at bank 1,986,027 142,586,808 626,587 44,985,814 2,612,614 187,572,622

Net funds 1,986,027 142,586,808 626,587 44,985,814 2,612,614 187,572,622

For simplicity, the brought forward Rupee amounts at 1 April 2010 have been translated at the 31 March 2011 exchange rate.

18. Controlling related party

The immediate parent undertaking is ITC Infotech India Limited, which is incorporated in India and is a wholly owned subsidiary of ITC Limited.This is the smallest group of undertakings for which consolidated accounts are being drawn up including this company.

The ultimate parent undertaking and controlling related party is ITC Limited, which is incorporated in India. This is the largest group of 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.

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REPORT OF THE DIRECTORS

Your Directors present their Report together with the Audited Financial Statementsfor the year ended 31st March, 2011.The Corporation is a wholly owned subsidiary of ITC Infotech India Limited (I3L),which is incorporated in India.

Principal ActivitiesThe Corporation is engaged in providing IT services, software development andsupport services.

Financial Results (US$ million)

ITC Infotech (USA), Inc.Consolidated(*)

Year Ended March 31, 2011 2010

Total Revenue 38.43 30.99

Operating Income before Amortization 0.82 0.73

Net Cash Flow provided by Operating activities 1.25 0.66

(*)including Pyxis Solutions, LLC, a wholly owned subsidiary of the Corporation.

Business ReviewThe Corporation is pleased to report another year of strong growth even as the USeconomy gradually began emerging from the historic recessionary crisis. Recentanalyst estimates for 2010 based on data from the US Department of Commerceindicates growth in IT consulting services and IT outsourcing at 2.8% and 5.7%respectively, reversing the de-growth in IT purchases during 2009. Driven byaggressive growth in new client acquisition and focused account management, theCorporation’s Total Revenue increased by 24% over that of the previous year.The smart upturn in the Corporation’s financial performance validates the robustnessof its strategy of investing proactively to create unique domain-led solutions towardsenhancing the competitiveness of clients across identified industry verticals. Inparticular, these solutions enabled demonstrable value to clients in addressing someof their critical business challenges such as effective client relationship management,collaborative product development to shrink time to market, and lowering cost ofoperations.Although the recessionary conditions eased towards the latter part of the financialyear, client budgets continue to be tightly monitored. Several CIO surveys by leadinganalysts indicate that (a) new project funding was largely sourced from savings incost of operations and (b) the focus was on quickening ROI on projects. Thesetrends reflect the continuing uncertainty during the economic recovery. Consequently,the Corporation’s margins remained under pressure, despite the gradual renegotiationof prices upwards for some customers. The margins during the financial year2010-11 reflect the impact of (a) cost management initiatives (b) partnered approachto co-innovation where feasible and (c) growing share of higher order consultingservices.The partnered co-innovation strategy has yielded encouraging results in terms ofacquisitions of several marquee, high potential clients and a growing funnel ofprospects. The Corporation has begun implementing some business transformationprojects for clients, with salutary impact on margins, and more importantly inbuilding market standing for the future. The high scores in the customer satisfactionsurvey, independently conducted by a reputed firm, serves to validate the Corporation’sworth as a value-adding business partner.

The expanded customer base, the strong sales funnel and the bank ofmarket-relevant capabilities, augur well for the year 2011-12.

Wholly Owned Subsidiary – Pyxis Solutions, LLCAs stated in the Report of the Directors last year, the Corporation acquired 100%Membership Interest in Pyxis Solutions, LLC (Pyxis) with effect from 11th August,2008. Pyxis provides high end, domain-based quality consulting to marquee clientsin the financial services industry. In line with the Corporation’s approach towardscapability building, new niche capabilities were added to Pyxis’ range. Delayedrecovery in IT spending in the capital markets sector adversely impacted Pyxis’revenues and margins for 2010-11. It is a testimony to Pyxis’ capabilities that allmajor clients were retained during the financial year, besides acquiring new clientsand projects. Towards the end of the financial year, Pyxis was chosen to providequality assurance services in a new business-critical area by their largest client.A healthy funnel of projects based on the combined capabilities of Pyxis and theCorporation provides a sound foundation for growth in the next financial year.During the year under review, Pyxis declared and paid US$ 750,000 (previousyear-Nil) as dividend for the financial year 2010-11 by way of distribution to theCorporation, the Sole Member of Pyxis.

DirectorsConsequent to his retirement from the services of ITC Limited, the ultimate holdingcompany, Mr. K. Vaidyanath ceased to be a Director of the Corporation with effectfrom close of business on 2nd January, 2011. Your Board of Directors places onrecord its appreciation of the contribution made by Mr. Vaidyanath during histenure as Chairman and Director of the Corporation.In terms of Article III Clause 4(a) of the By Laws of the Corporation and as nominatedby I3L, the Board of Directors of your Corporation at its meeting held on21st December, 2010 appointed Mr. Y. C. Deveshwar and Mr. S. Sivakumar asDirectors of the Corporation to hold office until the next succeeding Annual Meetingof the Shareholders of the Corporation. Your approval for appointment ofMr. Y. C. Deveshwar and Mr. S. Sivakumar as Directors of the Corporation is beingsought at the Annual Meeting of the Corporation for the financial year ended31st March, 2011.In terms of Article III Clause 6A of the By Laws of the Corporation, Mr. Y. C. Deveshwarand Mr. S. Sivakumar were appointed Chairman and Vice Chairman respectivelyof the Board of Directors of the Corporation with effect from 3rd January, 2011.In terms of Article III Clause 4(c) of the By Laws of the Corporation and as nominatedby I3L, Mr. R. Tandon was appointed as a Director of the Corporation at a SpecialMeeting of the Shareholders of the Corporation held on 21st December, 2010.M/s. B. B. Chatterjee, (Ms) B. Parameswar, S. Puri, B. Sumant and R. Tandon,Directors of the Corporation, will retire at the Annual Meeting, and, being eligible,offer themselves for re-appointment.

Auditors

M/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Corporation, offerthemselves for reappointment as Auditors of the Corporation to audit the FinancialStatements of the Corporation for the financial year ending 31st March, 2012.


B. Sumant DirectorMay 9, 2011 S. Sivakumar Vice Chairman

AMPER, POLITZINER & MATTIA, LLP

Report of the Independent Auditors' to the members of ITC Infotech (USA), Inc.and its group Companies

Board of DirectorsITC Infotech (USA), Inc.We have audited the accompanying special-purpose balance sheet of ITC Infotech(USA), Inc. as of March 31, 2011, and the related special-purpose statements ofoperations and accumulated deficit, and cash flows for the year then ended. Thesefinancial statements are the responsibility of the Company's management. Ourresponsibility is to express an opinion on these financial statements based on ouraudit. The special-purpose financial statements as of and for the year endedMarch 31, 2010 were audited by Amper, Politziner & Mattia, LLP, whose practicewas combined with the practice of Eisner LLP to form EisnerAmper LLP as of August16, 2010 and whose report dated May 10, 2010, expressed an unqualified opinionon those statements.We conducted our audit 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 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.

The accompanying special-purpose financial statements were prepared for thepurpose of reporting to the members’ of ITC Infotech (USA), Inc., and its Companiesand is not intended to be a presentation in conformity with generally acceptedaccounting principles.

The Company does not include the financial position of Pyxis Solutions, LLC, a100% owned subsidiary, as required under accounting principles generally acceptedin the United States (”US GAAP”). Accordingly, this does not purport to be presentedunder US GAAP.

The Indian Rupee equivalent figures have been included in the financial statementsas required by the parent company, and is not intended to be a representation inconformity with accounting principles generally accepted in the United States ofAmerica.

In our opinion, the special-purpose financial statements referred to above presentfairly, in all material respects, the financial position of ITC Infotech (USA), Inc.as of March 31, 2011 and the results of its operations and its cash flows for theyear then ended, in accordance with the Basis of Presentation as describedin Note B.

This report intended solely for the information and use of the board of directorsand management of ITC Infotech (USA), Inc. and its group Companies and isnot intended to be and should not be used by anyone other than thesespecified parties.

Edison, New Jersey EisnerAmper LLPMay 9, 2011

136

ITC INFOTECH (USA), INC.

137


BALANCE SHEETS

March 31, 2011 March 31,2011 March 31, 2010 March 31, 2010$ ` $ `

ASSETS

CURRENT ASSETS

Cash and cash equivalents 2,286,054 101,958,008 1,556,813 69,900,904

Accounts receivable, net of allowance for doubtful

accounts of $396,427 (` 17,680,644) and$396,427 (` 17,799,573) for 2011 and 2010, respectively 9,390,245 418,804,927 6,787,545 304,760,771

Advances to employees 103,964 4,636,795 56,936 2,556,426

Deferred income taxes 948,901 42,320,985 911,097 40,908,255

Total current assets 12,729,164 567,720,715 9,312,391 418,126,356

EQUIPMENT, SOFTWARE, FURNITURE AND FIXTURES AND

LEASEHOLD IMPROVEMENTS 660,722 29,468,201 608,086 27,303,061

Less: Accumulated depreciation and amortization 533,432 23,791,067 421,660 18,932,534

127,290 5,677,134 186,426 8,370,527

INTANGIBLE ASSETS 14,184,523 632,629,726 13,585,782 610,001,612

Less: Accumulated amortization 2,024,938 90,312,235 1,257,438 56,458,966

12,159,585 542,317,491 12,328,344 553,542,646

Other assets, principally unsecured advances 463,291 20,662,778 341,678 15,341,342

25,479,330 1,136,378,118 22,168,839 995,380,871

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES

Accounts payable 1,171,826 52,263,440 1,294,666 58,130,503

Accrued expenses and other current liabilities 1,274,087 56,824,280 1,116,162 50,115,674

Accrued payroll and payroll taxes 491,350 21,914,210 311,799 13,999,775

Due to ITC Infotech Ltd. (UK), net 165 7,359 78,969 3,545,708

Due to Pyxis Solutions, LLC., net 75,797 3,380,546 – –

Due to ITC Infotech India Ltd., net 6,359,410 283,629,686 4,045,127 181,626,202

Total current liabilities 9,372,635 418,019,521 6,846,723 307,417,862

Non current liabilities

Deferred income taxes 158,227 7,056,924 106,215 4,769,054

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER'S EQUITY

Capital stock, no par value; 185,000 shares authorized;

182,000 shares issued and outstanding atMarch 31, 2011 and 2010 200,000 8,920,000 200,000 8,980,000

Additional paid-in capital 18,000,000 802,800,000 18,000,000 808,200,000

Accumulated deficit (2,251,532) (100,418,327) (2,984,099) (133,986,045)

Total stockholder's equity 15,948,468 711,301,673 15,215,901 683,193,955

25,479,330 1,136,378,118 22,168,839 995,380,871

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 9, 2011

STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT

For the year ended For the year ended For the year ended For the year endedMarch 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

$ ` $ `

RevenuesService fees 24,966,387 1,113,500,860 18,245,280 819,213,072Account management fees - affiliates 114,337 5,099,430 129,357 5,808,129Project fees 7,252,758 323,473,007 4,419,365 198,429,489

Total revenues 32,333,482 1,442,073,297 22,794,002 1,023,450,690Cost of revenues, principallyemployment costs and fees chargedby affiliates 25,264,653 1,126,803,524 16,930,121 760,162,433Gross profit 7,068,829 315,269,773 5,863,881 263,288,257General and administrative expenses 6,273,750 279,809,250 5,749,625 258,158,163Operating income before amortization 795,079 35,460,523 114,256 5,130,094Amortization of intangible assets 767,500 34,230,500 767,500 34,460,750Operating income (loss) 27,579 1,230,023 (653,244) (29,330,656)Other income 757,663 33,791,770 145,505 6,533,175Income (loss) before income tax expense 785,242 35,021,793 (507,739) (22,797,481)Income tax expense (benefit)

Current 38,467 1,715,628 (19,014) (853,729)Deferred 14,208 633,677 48,157 2,162,250

Total income tax expense (benefit) 52,675 2,349,305 29,143 1,308,521Net income (loss) 732,567 32,672,488 (536,882) (24,106,002)Accumulated deficit at beginning of year (2,984,099) (133,090,815) (2,447,217) (109,880,043)Accumulated deficit at end of year (2,251,532) (100,418,327) (2,984,099) (133,986,045)

The accompanying notes are an integral part of these statements

STATEMENT OF CASH FLOWSMarch 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

$ ` $ `Cash flows from operating activitiesNet income (loss) 732,567 32,672,488 (536,882) (24,106,002)Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities

Depreciation and amortization 879,272 39,215,531 872,716 39,184,954Deferred income taxes 14,208 633,677 48,157 2,162,249Bad debt expense — — 180,800 8,117,920

(Increase) decrease in assetsAccounts Receivable (2,602,700) (116,080,420) (3,375,236) (151,548,096)Due from ITC lnfotech Ltd. (UK), net — — 245,109 11,005,394Advances to employees (47,028) (2,097,449) (388) (17,421)Security deposits and other advances (121,613) (5,423,940) (287,021) (12,887,243)

Increase (decrease) in liabilitiesAccounts payable (122,840) (5,478,664) 443,372 19,907,403Accrued expenses and other liabilities 157,925 7,043,455 51,929 2,331,612Accrued payroll and payroll taxes 179,551 8,007,975 46,112 2,070,429Due to ITC Infotech Ltd. (UK), net (78,804) (3,514,658) 78,969 3,545,708Due to Pyxis Solutions, LLC. 75,797 3,380,546 — —Due to ITC Infotech India Ltd., net 2,314,283 103,217,022 2,268,706 101,864,899

Net cash provided by operating activities 1,380,618 61,575,563 36,343 1,631,806

Cash flows from investing activitiesCapital expenditures (52,636) (2,347,566) (25,811) (1,158,914)Increase in goodwill acquired (see Note C) (598,741) (26,703,849) (1,083,668) (48,656,693)Notes receivable — — 290,758 13,055,029

Net cash used in investing activities (651,377) (29,051,415) (818,721) (36,760,578)Cash flows from financing activities — — — —Net cash provided by financing activities — — — —Net increase (decrease) in cash and cash equivalents 729,241 32,524,148 (782,378) (35,128,772)Cash and cash equivalents at beginning of year 1,556,813 69,433,860 2,339,191 105,029,676Cash and cash equivalents at end of year 2,286,054 101,958,008 1,556,813 69,900,904Supplemental disclosures of cash flow information:Income taxes paid were $44,865 (` 2,000,979) and $260,384 (` 11,691,242) during 2011 and 2010, respectively.

The accompanying notes are an integral part of these statements

138








NOTES TO THE FINANCIAL STATEMENTS

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(“Project Business”) on a contractual basis. Substantially all of these contractsfor Project Business were co-sourced, in terms of the marketing agreementwith its affiliates (see Note D), or fulfilled with resources drawn from affiliates,on a 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.(“Infotech India”), an Indian company. There are 185,000 common sharesauthorized of which 182,000 have been issued, and are outstanding, toInfotech India. ITC Infotech Ltd. (“Infotech UK”) is also a wholly-ownedsubsidiary of ITC Infotech India Ltd.

The Company owns 100% of the membership interests of Pyxis Solutions,LLC (“Pyxis”). Pyxis was formed as a New York State limited liability companyin 2000. One of the founder members of Pyxis also owns a majority interestin an entity performing similar services in Singapore (“Pyxis Singapore”).Pyxis is principally engaged in the information technology services businessoffering Quality Assurance (QA) solutions and testing services. Its customersare commercial entities throughout the United States of America.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1) Basis of Presentation

The financial statements of the Company are prepared in accordance withaccounting principles generally accepted in the United States, the countryof incorporation and are represented in U.S. dollars. As required by theparent company, the Indian Rupee equivalent figures, arrived at by applyingthe year end interbank exchange rate of US$1 = ` 44.60 (2010: US$1 = `44.90) as provided by the parent company, have been included. As requiredby the parent company, this presentation does not consolidate the resultsof its wholly-owned subsidiary Pyxis. Accounting principles generallyaccepted in the United States would require consolidation of a wholly-owned subsidiary. So accordingly, these financial statements do not purportto follow US GAAP. Futhermore, as permitted by accounting principlesgenerally accepted in the United States, the impact of the acquisition ofPyxis 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.

2) Recognition of Revenue

Service Revenue

Service revenues are based upon hours worked by Company employeeson customer 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 deliverywhen a non-cancelable agreement has been executed, fees are fixed anddeterminable and collection is considered probable unless there is significantuncertainty about customer acceptance, in which case, revenues arerecognized upon such acceptance. Losses on contracts are recognized whendeterminable.

3) Account Management Fees

Fees for client account management in respect of work contracted byInfotech India and Infotech UK with clients in the United States are billedmonthly at a predetermined rate applied on the amount billed by InfotechIndia and Infotech UK, to its clients.

4) Cash and Cash EquivalentsFor purposes of reporting cash flows, the Company considers all cashaccounts which are not subject to withdrawal restrictions or penalties, andcertificates of deposit with maturities of ninety days or less, when purchased,to be cash or cash equivalents.

5) Accounts ReceivableCredit 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 customersnet of an allowance for doubtful accounts. Accounts outstanding longerthan the 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 LeaseholdImprovementsEquipment, purchased or internally developed software, furniture andfixtures and leasehold improvements are stated at cost. Depreciation isprovided under the straight line method based upon the estimated usefullives of the assets, with such lives ranging up to five years.

7) Income TaxesThe Company accounts for income taxes pursuant to ASC 740, “IncomeTaxes” (“ASC 740”). ASC 740 requires recognition of deferred tax assetsand liabilities for the expected future tax consequences of events that havebeen included 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,are recognized to the extent that realization of these benefits is consideredto be more likely than not. If the future realization of such benefits isuncertain, then a valuation allowance is provided.

On July 1, 2007, the Financial Accounting Standards Board ("FASB") issuedASC 740-10, “Income Taxes” (“ASC 740-10”). ASC 740-10 providesrecognition criteria and a related measurement model for uncertain taxpositions taken or expected to be taken in income tax returns. ASC 740-10 requires that a position taken or expected to be taken in a tax returnbe recognized in the financial statements when it is more likely than notthat the position would be sustained upon examination by tax authorities.Tax positions that meet the more likely than not threshold are then measuredusing a probability weighted approach recognizing the largest amount oftax benefit that is greater than 50% likely of being realized upon ultimatesettlement. The Company adopted the provisions of FASB ASC 740-10 onApril 1, 2009 and its adoption did not have a material impact on thefinancial statements. The income tax returns of the Company are subjectto examination by the IRS and other taxing authorities, generally for threeyears after they are filed.

8) Use of EstimatesIn 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) ReclassificationsCertain prior year amounts have been reclassified to conform to the currentyear presentation.

10) Advertising CostsAdvertising costs are expensed as incurred.

11) Long-Lived AssetsThe Company follows ASC 360, “Property, Plant and Equipment”.Accordingly, whenever events or circumstances indicate that the carryingamount of an asset may not be recoverable, the Company assesses therecoverability of the asset. No impairment charge has been recorded in2011 or 2010.

12) Intangible AssetsIntangible assets are stated at fair value at the date of Pyxis acquisition andare amortized on the straight line method over their estimated useful lifeof 4 to 8 years. Goodwill is not amortized but is subjected to annualimpairment testing.

139


The total purchase price for the acquisition of membership interestand allocation thereof, is as follows:Purchase price $ 12,434,878 ` 554,595,559Transaction costs 493,755 22,021,473Total purchase price at the time of acquisition 12,928,633 576,617,032Contingent anniversary payment 1,083,668 48,331,593Second anniversary payment 598,741 26,703,849Total purchase price 14,611,042 651,652,474Allocation of purchase priceCurrent assets acquired 2,567,021 114,489,137Less: Current liabilities assumed 957,064 42,685,055Net assets acquired (working capital) 1,609,957 71,804,082Identifiable intangible assets (see Note F) 5,390,000 240,394,000Goodwill (see Note F) 5,502,156 245,396,158Add: Deferred tax benefit adjusted 426,520 19,022,792Goodwill (on acquisition before deferred tax adjustment) 5,928,676 264,418,950Total purchase price at the time of acquisition 12,928,633 576,617,032Add: Contingent anniversary payment added to 1,083,668 48,331,593goodwill (see Note C and Note F)Add: Second anniversary payment added togoodwill (see Note C and Note F) 598,741 26,703,849

Total purchase price $ 14,611,042 ` 651,652,474

NOTE D - RELATED PARTY TRANSACTIONS

The Company had transactions with the following parties:Year ended March 31,

2011 2011 2010 2010$ (`) $ (`)

Transactions with Infotech IndiaCosts for project consultations /other expenses, included in cost ofrevenues / general and administrative expenses $12,424,265 554,122,219 $9,725,682 436,683,122Project / other expensesreimbursements from Infotech India 562,030 25,066,538 176,037 7,904,061Service / account management feesrecognized as revenue 53,262 2,375,485 143,744 6,454,106Transactions with Infotech UKService / account management fees /others, recognized as revenue 61,075 2,723,945 110,671 4,969,128Costs for project consultations /other expenses, included in cost ofrevenues / general andadministrative expenses 366,423 16,342,466 185,210 8,315,929Project / other expensereimbursements from Infotech UK 556 24,798 63,335 2,843,742Transactions with PyxisCosts for project consultations /other expense reimbursements,included in cost of revenues /general and administrative expenses 241,176 10,756,450 58,192 2,612,821Other expense reimbursementsfrom Pyxis 233,665 10,421,459 83,224 3,736,758Other expense reimbursementsto Pyxis 29,149 1,300,045 — —

Other assets include $0 (` 0) and $25,000 (` 1,122,500) advance to PyxisSingapore as at March 31, 2011 and 2010 respectively.Other assets include $0 (` 0) and $18,052 (` 810,535) notes receivable fromofficers of Pyxis as at March 31, 2011 and 2010 respectively.Rent paid includes $95,048 (` 4,239,141) and $96,476 (` 4,331,772) towardsrent paid to King Maker Marketing Inc. (see Note G) for the year endedMarch 31, 2011 and 2010 respectively.Accounts receivable includes $38,277 (` 1,707,154) and $27,859(` 1,250,869) receivable from Pyxis Solutions Pte. Ltd. for the year endedMarch 31, 2011 and 2010, respectively.

NOTE E - ACCOUNTS RECEIVABLEAccounts receivable includes both billed and unbilled receivable. Changesin the allowance for doubtful accounts in 2011 and 2010 are as follows:

2011 2011 2010 2010$ (`) $ (`)

Beginning balance 396,427 17,680,644 433,390 19,459,211Increase to allowance — — 180,800 8,117,920Accounts written off — — (105,147) (4,721,100)Provision written back — — (112,616) (5,056,458)Ending balance 396,427 17,680,644 396,427 17,799,573

Unbilled receivables were approximately $ 818,623 (` 36,510,586) and$ 492,777 (` 22,125,687) as at March 31, 2011 and 2010 respectively.

13) Impairment of GoodwillThe 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, 2011and 2010. If an event occurs or circumstances change that would morelikely than not reduce the fair value of a reporting unit below its carryingvalue, goodwill will be evaluated for impairment between annual tests.14) Fair Value MeasurementsThe Company’s financial instruments include cash and cash equivalents,accounts receivable from customers, advances, other assets, accountspayable, and accruals which are short-term in nature. The Company believesthe carrying amounts of these financial instruments reasonably approximatetheir fair 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 assets and liabilities.ASC 820 does not require additional assets or liabilities to be accountedfor at fair value beyond that is already required under other U.S. GAAPaccounting standards. The effective date of ASC 820 for all non-financialassets and non-financial liabilities, except those that are recognized ordisclosed at fair value in the financial statements on at least an annual basis,is Company’s 2011 fiscal year end.15) Capitalized Software CostsCosts incurred for development of computer software for internal use ofthe Company are capitalized. Any costs incurred in the preliminary stagesof development and in the operating stages of the software are expensedimmediately. Capitalized software costs are amortized over a period of fiveyears or over the estimated useful lives, whichever is lower. There were nosuch costs capitalized in 2011 or 2010.16) Subsequent EventsThe Company evaluated all events or transactions that occurred after March31, 2011 up through May 9, 2011, when the financial statements wereavailable to be issued.NOTE C - ACQUISITION OF MEMBERSHIP INTERESTSOn August 11, 2008, the Company acquired the membership interests ofPyxis for $12,434,878 (` 554,595,559). Accordingly, Pyxis became a whollyowned subsidiary from that date. In connection with the MembershipInterest Purchase Agreement (“MIPA”), each of the two founder membersof Pyxis, receive certain allocable portion of Pyxis's earning as “contingentpayments”. The first of such contingent payment, “Contingent AnniversaryPayment”, was contingent on Pyxis’s earning before interest, taxes,depreciation and amortization (EBITDA) as determined from the “FirstAnniversary Income Statement” in accordance with the terms of meetingor exceeding the target EBITDA. The second and last such payment, “SecondAnniversary Payment”, was computed on Pyxis's EBITDA as determinedfrom the “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 dateof acquisition. The fair value of the intangible assets, as described inNote F, was determined by an independent outside appraiser. For incometax purposes, Pyxis is considered a disregarded entity, and accordingly, itsresults of operations are included in the income tax return of the Companyfrom the date of acquisition and forward. For income tax purposes, theCompany has recognized intangible assets on a stepped-up basis and suchintangible assets are being amortized over 15 years.In accordance with MIPA, based on Pyxis’s EBITDA for the year endedAugust 31, 2009, the Company paid the founder members of Pyxis$1,083,668 (` 48,331,593) towards contingent anniversary payment,computed on the basis of the first anniversary income statement. Thispayment is reflected as an increase in goodwill in accordance with ASC805. The Contingent Anniversary Payment was made from the Company'sinternal cash accruals.In accordance with MIPA, based on Pyxis’s EBITDA for the year endedAugust 31, 2010, the Company paid the founder members of Pyxis $598,741(` 26,703,849). This payment is reflected as an increase in goodwill inaccordance with ASC 805. The Second Anniversary Payment was madefrom the Company’s internal cash accruals.In accordance with MIPA, the Company had provided an irrevocable standbyletter of credit, expiring on April 30, 2011 for $ 4,650,000 (`207,390,000),to each of the two founder members of Pyxis as a security for full and timelydischarge of payments. The Company received the funding for this acquisitionfrom an additional contribution of capital from its parent company of$13,500,000 (` 602,100,000).After paying the Second Anniversary Payment, as above, the irrevocablestandby letterof credit, to each of the two founder members of Pyxis, wasclosed on December 6, 2010.

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NOTE F - INTANGIBLE ASSETSThe Company has fair valued assets arising on acquisition of membership interest in accordance with ASC 805, “Business Combinations” (“ASC 805”),through an independent outside appraiser. Accordingly, the components of intangible assets (including goodwill) as at March 31, 2011 and 2010,are as follows:

2011 2010

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 98,938 201,062 300,000 61,438 238,562` 13,380,000 4,412,635 8,967,365 13,470,000 2,758,566 10,711,434

Non-compete 4 $ 90,000 59,363 30,637 90,000 36,863 53,137agreement ` 4,014,000 2,647,590 1,366,410 4,041,000 1,655,149 2,385,851

Customer 8 $ 3,900,000 1,286,199 2,613,801 3,900,000 798,699 3,101,301relationship ` 173,940,000 57,364,475 116,575,525 175,110,000 35,861,585 139,248,415

Know how 5 $ 1,100,000 580,438 519,562 1,100,000 360,438 739,562

` 49,060,000 25,887,535 23,172,465 49,390,000 16,183,666 33,206,334

Total $ 5,390,000 2,024,938 3,365,062 5,390,000 1,257,438 4,132,562` 240,394,000 90,312,235 150,081,765 242,011,000 56,458,966 185,552,034

Goodwill (after deferred $ 7,184,566 — 7,184,566 6,585,824 — 6,585,824tax benefit adjustment) ` 320,431,644 — 320,431,644 295,703,498 — 295,703,498(see Note C)

Total intangible assets $ 12,574,566 2,024,938 10,549,628 11,975,824 1,257,438 10,718,386` 560,825,644 90,312,235 470,513,409 537,714,498 56,458,966 481,255,532

Amortization of identifiable intangible assets for the year ended March 31, 2011and 2010 was $767,500 (`34,230,500) and $767,500 (`34,460,750), respectively.At March 31, 2011 the expected amount of amortization of identifiable intangibleassets, over the next five years are as follows:

2011-2012 $767,500 `34,230,5002012-2013 753,137 33,589,9102013-2014 604,562 26,963,4652014-2015 525,000 23,415,0002015-2016 525,000 23,415,000

Total amortization expense $3,175,199 `141,613,875

NOTE G - COMMITMENTS AND CONTINGENCIESLEASESThe Company has leased offices, storage spaces under non cancelable operatingleases, some of these expiring through fiscal 2015. One such office has been leasedfrom King Maker Marketing Inc. whose parent Company (ITC Limited) is same asthe Company’s ultimate parent Company. Total rent and other reimbursements toKing Maker Marketing Inc. was approximately $ 95,048 (` 4,239,141) and $ 96,476(` 4,331,772) for the years ended March 31, 2011 and 2010, respectively. Totalrent expense under all facilities leases was approximately $ 152,898 (` 6,819,251)and $ 142,313 (` 6,389,854) for the years ended March 31, 2011 and 2010,respectively.In addition, the Company has entered into various non-cancelable operating leasesfor the rental of equipment.The future minimum annual lease payments as at March 31, 2011 are as follows:

Offices Equipment Total$ ` $ ` $ `

2011-2012 128,179 5,716,783 4,175 186,205 132,354 5,902,9882012-2013 22,467 1,002,028 4,175 186,205 26,642 1,188,2332013-2014 — — 3,845 171,487 3,845 171,4872014-2015 — — 2,142 95,533 2,142 95,5332015-2016 — — — — — —Total MinimumLease Payments 150,646 6,718,811 14,337 639,430 164,983 7,358,241

NOTE H - INCOME TAXESThe provision for income taxes consists of the following:

Year ended March 31,$ 2011 2011(`) $ 2010 2010(`)

Federal TaxesCurrent — — (130,898) (5,877,320)Deferred (155,075) (6,916,345) 45,686 2,051,301State and local taxesCurrent 38,467 1,715,628 111,884 5,023,592Deferred (1,178) (52,539) 2,471 110,948Foreign Taxes 170,461 7,602,561 — —Total current expense $ 52,675 ` 2,349,305 $ 29,143 ` 1,308,521

As a result of the Pyxis acquisition, the Company’s amortizable tax basisgoodwill exceeds it financial reporting goodwill. Under ASC 740, this is known asComponent II goodwill. No tax benefit is recorded for amortization ofComponent II goodwill until such deduction reduces taxes payable. As ofMarch 31, 2011, no tax benefit related to the amortization of Component II goodwillhas been recorded.

The Company’s 2011 and 2010 expected Federal income tax provision was offsetby the utilization of net operating loss carry forwards.

Deferred tax assets and liabilities consist of the following:

$ 2011 2011(`) $ 2010 2010 (`)

Net Operating Loss 281,844 12,570,242 288,059 12,933,849carry forwards

Other temporary 483,892 21,581,583 491,885 22,085,637differences (net)Federal Alternate 24,938 1,112,235 24,938 1,119,716

Minimum Tax carry over

Net deferred tax asset $ 790,674 ` 35,264,060 $ 804,882 ` 36,139,202

As at March 31, 2011, the Company has NOL of approximately $ 800,517(` 35,703,058) available to offset future taxable income, as summarizedbelow.

Operating loss carry forwards for Federal income tax purposes will expireas follows:

Year Expiring ExpiringAmount ($) Amount (`)

March, 2024 314,278 14,016,799

March, 2025 435,527 19,424,504

March, 2026 10,805 481,903

March, 2027 17,343 773,498

March, 2028 22,564 1,006,354

$ 800,517 ` 35,703,058

NOTE I - CONCENTRATION OF CUSTOMER SALES

A 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 37% (18%, 11% and 8%) and approximately36% (16%, 14% and 6%) of the Company’s net revenues for the yearsended March 31, 2011 and 2010, respectively. Accounts receivable fromthese customers approximated 32% (14%, 14% and 4%) and 35% (22%,5% and 8%) of total accounts receivable as at March 31, 2011 and 2010,respectively.

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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 financial year ended 31st March, 2011.

Principal ActivitiesYour Company is engaged in providing Software Testing and Quality Assuranceservices primarily for the Banking, Financial Services & Insurance businesssegments.

Business ReviewPyxis provides high end, domain-based quality consulting to marquee clientsin the financial services industry. In line with the holding company’s approachtowards capability building, new niche capabilities were added to yourCompany’s range. Delayed recovery in IT spending in the capital marketssector adversely impacted the revenues and margins for 2010-11. It is atestimony to your Company’s capabilities that all major clients were retainedduring the financial year, beside acquiring new clients and projects. Towardsthe end of the financial year, your Company was chosen to provide qualityassurance services in a new business-critical area by their largest client.A healthy funnel of projects based on the combined capabilities of your

Company and the holding company provides a sound foundation for growthin the next financial year.During the year under review your Company registered a Turnover ofUS$ 6.34 million (previous year - US$ 8.25 million) and a Net Income ofUS$ 0.02 million (previous year - US$ 0.62 million).During the year under review, your Company declared and paid US$ 750,000(previous year - Nil) as dividend for the financial year 2010-11 by way ofdistribution to the Sole Member.

Auditors

M/s. EisnerAmper LLP, Accountants and Advisors, Auditors of the Company,offer themselves for reappointment as Auditors of the Company to audit theFinancial Statements of the Company for the financial year ending31st March, 2012.

Amar Singh DuggalMay 9, 2011 Chief Executive Officer

REPORT OF INDEPENDENT AUDITORS’

ITC Infotech (USA), Inc., sole member of Pyxis Solutions, LLC.

We have audited the accompanying balance sheets of Pyxis Solutions, LLCas of March 31, 2011 and the related statements of operations and member’sequity and cash flows for the year ended March 31, 2011. These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements basedon our audit. The financial statements as of and for the year endedMarch 31, 2010 were audited by Amper, Politziner & Mattia, LLP, whosepractice was combined with the practice of Eisner LLP to form EisnerAmperLLP as of August 16, 2010 and whose report dated May 10, 2010, expressedan unqualified opinion on those statements.We conducted our audit 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 the

Company’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. An auditalso includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for ouropinion.The Indian Rupee equivalent figures have been included in the financialstatements as required by ITC Infotech India Limited, the parent’s parentcompany, and is not intended to be a presentation in conformity withaccounting principles generally accepted in the United States of America.In our opinion, the financial statements referred to above present fairly, inall material respects, the financial position of Pyxis Solutions, LLC as ofMarch 31, 2011, and the results of its operations and its cash flows for theyear then ended in conformity with accounting principles generally acceptedin the United States of America.

Edison, New Jersey EisnerAmper LLPMay 9, 2011

142

PYXIS SOLUTIONS, LLC. USA

BALANCE SHEET AS AT 31ST MARCH, 2011March 31, 2011 March 31,2011 March 31, 2010 March 31, 2010

$ ` $ `

AssetsCurrent AssetsCash and cash equivalents 1,800,796 80,315,502 1,927,674 86,552,563Accounts receivable, net of allowance for doubtfulaccounts of $ 8,391 (` 374,239) for 2011 and$ 8,391 (` 376,756) for 2010, respectively 985,224 43,940,990 1,606,190 72,117,931Due from ITC Infotech (USA), Inc. 75,797 3,380,546 – –Advances to employees 4,713 210,200 – –Trade advance – – 48,500 2,177,650Prepaid expenses 11,211 500,011 17,112 768,329Total Current Assets 2,877,741 128,347,249 3,599,476 161,616,473Computer Equipment, net of accumulateddepreciation of $814 (` 36,304) and $509(`22,854) for 2011 and 2010 respectively 407 18,152 712 31,969

2,878,148 128,365,401 3,600,188 161,648,442Liabilities and Members’ EquityCurrent liabilitiesAccounts payable 86,000 3,835,600 86,000 3,861,400Accrued expenses and other current liabilities 290,493 12,955,988 235,053 10,553,880Accrued payroll and payroll taxes 188,574 8,410,400 236,472 10,617,593Due to ITC Infotech India Ltd., net 33,108 1,476,617 37,362 1,677,554Total Current Liabilities 598,175 26,678,605 594,887 26,710,427Commitments and contingenciesMember’s equity 2,279,973 101,686,796 3,005,301 134,938,015

2,878,148 128,365,401 3,600,188 161,648,442

Date : May 9, 2011V. Sawhney Greg Zvi Brener A. DuggalFinancial Controller Chief Operating Officer Chief Executive Officer


143


STATEMENTS OF OPERATIONS AND MEMBER’S EQUITY FOR THE YEAR ENDED 31ST MARCH, 2011

Year Ended Year Ended Year Ended Year EndedMarch 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

$ ` $ `

Revenue

Service Fees 6,337,487 282,651,920 8,209,496 368,606,370

Project Fees – – 42,400 1,903,760

Total revenue 6,337,487 282,651,920 8,251,896 370,510,130

Cost of revenue, principallyemployment cost and subcontractor fees 5,122,152 228,447,979 6,162,774 276,708,553

Gross profit 1,215,335 54,203,941 2,089,122 93,801,577

General and administrative expenses 1,194,272 53,264,531 1,471,538 66,072,056

Operating income 21,063 939,410 617,584 27,729,521

Other income 3,609 160,961 2,452 110,095

Net income 24,672 1,100,371 620,036 27,839,616

Member’s equity at the beginning of year 3,005,301 134,036,425 2,385,265 107,098,399

Member’s distribution (750,000) (33,450,000) – –

Member’s equity at the end of year 2,279,973 101,686,796 3,005,301 134,938,015

V. Sawhney Greg Zvi Brener A. DuggalFinancial Controller Chief Operating Officer Chief Executive OfficerDate : May 9, 2011


STATEMENTS OF CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2011

Year Ended Year Ended Year Ended Year EndedMarch 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

$ ` $ `

Cash flows from operating activities

Net income 24,672 1,100,371 620,036 27,839,616

Adjustments to reconcile net income to net cashprovided by operating activities

Depreciation and amortization 305 13,603 305 13,695

Changes in assets and liabilities

Accounts receivable 620,966 27,695,084 70,374 3,159,793

Due from ITC Infotech (USA), Inc. (75,797) (3,380,546) – –

Advances to employees (4,713) (210,200) – –

Trade advance 48,500 2,163,100 – –

Prepaid expenses 5,901 263,185 (11,101) (498,435)

Accounts payable – – 50,524 2,268,528

Accrued expenses and other current liabilities 55,440 2,472,624 (63,771) (2,863,318)

Accrued payroll and payroll taxes (47,898) (2,136,251) (76,263) (3,424,209)

Due to ITC Infotech India Ltd., net (4,254) (189,728) 37,362 1,677,554

Net cash provided by operating activities 623,122 27,791,242 627,466 28,173,224

Cash flows from financing activities

Member’s distribution (750,000) (33,450,000) – –

Net cash used in financing activities (750,000) (33,450,000) – –

Net increase in cash and cash equivalents (126,878) (5,658,758) 627,466 28,173,224

Cash and cash equivalents at beginning of the year 1,927,674 85,974,260 1,300,208 58,379,339

Cash and cash equivalents at end of the year 1,800,796 80,315,502 1,927,674 86,552,563

V. Sawhney Greg Zvi Brener A. DuggalFinancial Controller Chief Operating Officer Chief Executive OfficerDate : May 9, 2011


NOTES TO THE FINANCIAL STATEMENTS

NOTE A - BUSINESS BACKGROUND AND PRINCIPAL TRANSACTIONS WITH AFFILIATES

Pyxis Solutions, LLC. (the “Company”) is principally engaged in theinformation technology services business offering Quality Assurance (QA)solutions and testing services. Its customers are commercial entitiesthroughout the United States of America. The work is usually performedunder contracts which specify fixed hourly rates (which depend upon theskill level of the consultant staffed at the customer’s location) and whichvary in length, but are typically more than one year in duration. TheCompany was formed as a New York State limited liability company in2000.

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

Basis of Presentation

The financial statements of the Company are prepared in accordance withaccounting principles generally accepted in the United States of America,the country of formation. The amounts are represented in U.S. dollars.As required by the parent company, the Indian Rupee equivalent figures,arrived at by applying the period end interbank exchange rate ofUS$1 = ` 44.60 as at March 31, 2011 (March 31, 2010: US$ 1= ` 44.90)as provided by the parent company, have been included.

Recognition of Revenue

Service Revenue

Service revenue is based upon hours worked by the Company employeeson customer assignments and is recognized when the work is performed.Revenue is determined by multiplying the hours worked by thecontractual billing rates. Substantially all customers are invoiced biweeklyor monthly.

Project Revenue

Revenue on the project business is recognized as earned, typically inthe month the service is performed. Costs associated with the use ofconsultants to fulfill such project business are recognized in the sameperiod.

In accordance with Accounting Standards Codification Topic (”ASC”)605, “Revenue Recognition”, the Company recognizes revenues ondelivery when a non-cancelable agreement has been executed, feesare fixed and determinable and collection is considered probable unlessthere is significant uncertainty about customer acceptance, in whichcase revenues are recognized upon such acceptance. Losses on contractsare recognized when determinable.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cashaccounts which are not subject to withdrawal restrictions or penalties, andcertificates of deposit with maturities of ninety days or less, when purchased,to be cash or cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Credit is extended based on evaluation of a 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 customersnet of an allowance for doubtful accounts. Accounts outstanding longerthan the 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.

Computer Equipment

Computer equipment is stated at cost. Depreciation is provided under thestraight-line method based upon the estimated useful lives of the assets,with such lives ranging up to four years.

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 any taxbenefits resulting from operating losses. ITC does not allocate any of its taxliabilities or benefits to the Company.

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 revenueand expenses during the reporting period. Although actual results coulddiffer from those estimates, in the opinion of the management such estimateswould not materially affect the financial statements.

Reclassifications

Certain prior year amounts have been reclassified to conform to the currentyear presentation.

Foreign Currency Translation

The Company maintains a foreign currency bank account denominated inGBP (Pound Sterling). Foreign currency transaction gains resultingfrom exchange rate fluctuations on transactions denominated in foreigncurrencies totaled $ 1,619 (` 72,207) as of March 31, 2011, and areincluded in Other Income in the accompanying statements of operations.

Subsequent Events

The Company evaluated subsequent events from March 31, 2011 throughMay 9, 2011, the date the financial statements were available to be issued.

NOTE C - ACQUISITION OF MEMBERSHIP INTERESTS

On August 11, 2008, the membership interests of the founders wereacquired by ITC Infotech (USA), Inc. In connection with the MembershipInterest Purchase Agreement (”Purchase Agreement”) a sum of $2,500,000(` 111,500,000) was paid by ITC Infotech (USA), Inc. on behalf of theCompany. Thereafter, the Company became a wholly-owned subsidiary ofITC Infotech (USA), Inc. As permitted by accounting principles generallyaccepted in the United States, the impact of the purchase was not “pushed-down” to the Company. Accordingly, the financial statements presenteddo not reflect the adjustment of any asset, liability or equity accounts tofair value on such date, and the amounts presented do reflect a continuityof operations and basis of presentation.

In connection with the Purchase Agreement, each seller receives a certainallocable portion of the Company’s earning as “contingent anniversarypayments”. Such contingent anniversary payments are contingent on theCompany’s earnings before interest, taxes, depreciation and amortization(EBITDA) as determined from the first anniversary income statement andthe second anniversary income statement in accordance with the terms ofmeeting or exceeding the Target EBITDA.

In connection with this transaction, the Company entered into employmentagreements with two of the founding members (see Note H).

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,

2011 2011 2010 2010$ ` $ `

Transactions with ITCInfotech (USA ), Inc.

Service / AccountManagement fees / othersrecognized as revenue 241,176 10,756,450 58,192 2,612 ,821

Project / other expensesreimbursements incurredby ITC Infotech (USA), Inc. 233,665 10,421,459 83,224 3,736,758

Project / other expensesreimbursements incurredby Pyxis 29,149 1,300,045 – –

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Year Ended Year Ended Year Ended Year EndedMarch 31, March 31, March 31, March 31,

2011 2011 2010 2010$ ` $ `

Transactions with ITCInfotech India Ltd.

Costs for project consultations /other expenses, included incost of revenue 371,314 16,560,604 333,305 14,965,395

Transaction with Pyxis IndiaCosts for project consultations /other expenses, included incost of revenue – – 41,820 1,877,718

Transaction with Pyxis UKCosts for project consultations /other expenses, included incost of revenue – – 95,483 4,287,187

Trade advance of $48,500 (` 2,163,100) receivable from Pyxis Singaporeas of March 31, 2010 was received during the current year.

NOTE E - ACCOUNTS RECEIVABLE

Accounts receivable consist of trade accounts receivable and unbilledaccounts receivable (representing services performed prior to the balancesheet dates, but not invoiced to the customer until thereafter). Unbilledreceivables were approximately $ 456,983 (` 20,381,442) and $ 407,430(` 18,293,607) as of March 31, 2011 and 2010 respectively.

NOTE F - COMMITMENTS AND CONTINGENCIES

Leases

The Company has leased office space under a non-cancelable operatinglease expiring March 31, 2015. Total rent expense under this lease for yearending March 31, 2011 was $ 48,955 (` 2,183,393) and $ 63,261(` 2,840,419) for year ending March 31, 2010. In addition, the Companyhas entered into a non-cancelable operating lease for rental of equipmentduring the current year. Total expense under this lease for year endingMarch 31, 2011 was $ 2,171 (` 96,827).

The future minimum annual lease payments at March 31, 2011 are asfollows :

Office Rent Equipment Total

Year $ ` $ ` $ `

2011-12 63,261 2,821,441 2,391 106,639 65,652 2,928,080

2012-13 63,261 2,821,441 2,391 106,639 65,652 2,928,080

2013-14 63,261 2,821,441 1,196 53,342 64,457 2,874,783

2014-15 42,174 1,880,960 – – 42,174 1,880,960

Total minimumlease payments 231,957 10,345,283 5,978 266,620 237,935 10,611,903

NOTE G - CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

A significant portion of the Company’s sales are to several key customers.Two such customers accounted for approximately 60% and approximately40% of the Company’s net revenues for the year ended March 31, 2011and for the year ended March 31, 2010 respectively. These two customersaccounted for approximately 49% and 55% of total accounts receivableat March 31, 2011 and 2010 respectively.

NOTE H - EMPLOYMENT AGREEMENT

In connection with employment agreements (”Agreements”), the Company’sChief Executive Officer and the Chief Operating Officer agree that the termof these Agreements are for a period of two years (expiring August 2010).

These Agreements provide for certain minimum level of base salary andother amounts of contingent compensation to be earned, all of which aredefined in the Agreements. In November 2010, the employment agreementsterminated and ITC Infotech (USA), Inc. entered into consultation agreementswith Mr. Amar Duggal and Mr. Zvi Brener as the Company’s Chief ExecutiveOfficer and Chief Operating Officer, respectively.

NOTE I - MEMBER’S DISTRIBUTION

On March 28, 2011 the Company proposed a distribution of $ 750,000(` 33,450,000) to ITC Infotech (USA), Inc. (sole member), which wasapproved and paid on March 31, 2011.

145


AUDITORS’ REPORT TO THE MEMBERS OF WILLS CORPORATION LIMITED

We have audited the attached Balance Sheet of WILLS CORPORATIONLIMITED, as at 31st March 2011, the Profit and Loss Account and CashFlow Statement for the year ended on that date and 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.

1. 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 by themanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

2. As required by the Companies (Auditor's Report) Order, 2003 issued bythe Central Government of India in terms of sub-section (4A) of section227 of the Companies Act, 1956, we enclose in the Annexure a statementon the matters specified in paragraph 4 and 5 of the said Order.


i. We have obtained all the information and explanations, which tothe best of our knowledge and belief were necessary for thepurposes of our audit;


iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report are in agreement with the books of account ;

iv. In our opinion, the Balance Sheet, Profit and Loss Account 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 written representations received from the Directorsas on 31st March, 2011 and taken on record by the Board ofDirectors, we report that none of the Directors is disqualified ason 31st March, 2011 from being appointed as a Director in termsof clause (g) 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 theCompany as at 31st March, 2011.

(b) In the case of the Profit and Loss Account, of the profit for theyear ended on that date.

(c) 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, 2011



During the year under review, your Company has not contracted anyfresh business and the temporary surplus funds of the Company havebeen invested in debt mutual funds.



(`) (`)

a. Profit Before Taxation 44,20,739 49,52,085Less : Provision for Taxation 1,33,419 2,89,042

b. Profit After Taxation 42,87,320 46,63,043c. Add : Profit brought

forward from previous years 2,35,13,868 1,88,50,825d. Balance carried forward to

the following year 2,78,01,188 2,35,13,868

3. DIRECTORS

Mr. K. Vaidyanath, consequent to his retirement from the services of ITCLimited, the Holding Company, stepped down as the Chairman andDirector of your Company with effect from close of work on 2nd January,2011. Your Directors would like to place on record their sincere appreciationfor the contribution made by Mr. Vaidyanath during his tenure with theCompany. Mr. R. Tandon was appointed as the Chairman of the Boardof Directors of your Company with effect from 3rd January, 2011.

In accordance with the provisions of Article 92 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;


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 theCompany and for preventing and detecting fraud and otherirregularities; and


5. PARTICULARS OF EMPLOYEESNone of the employees of your Company is covered under the provisionsof Section 217 (2A) of the Companies Act, 1956, read with theCompanies (Particulars of Employees) Rules, 1975.

6. AUDITORSThe Company’s Auditors, Messrs. Basu, Chatterjea & Co., CharteredAccountants, who retire at the ensuing Annual General Meeting, haveexpressed that they would not like to offer themselves for re-appointmentas Auditors of the Company.Your Company has received a Special Notice in terms of the provisions ofSection 225 of the Companies Act, 1956 (the Act) proposing theappointment of Messrs. L. B. Jha & Co., Chartered Accountants, as StatutoryAuditors of the Company at the ensuing Annual General Meeting.Your Board of Directors has recommended the appointment of Messrs.L. B. Jha & Co. as Auditors of the Company from the conclusion of theensuing Annual General Meeting. Messrs. L. B. Jha & Co. have confirmedtheir eligibility under Section 224(1B) of the Act for appointment asAuditors of the Company.

7. 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.

5th May, 2011

Registered Office:Virginia House37 J. L. Nehru RoadKolkata 700 071

146

WILLS CORPORATION LIMITED



For Basu, Chatterjea & Co. Chartered Accountants

(Registration No. 301066E)

S. K. Chatterjea Partner

Membership No. 005629Kolkata5th May, 2011

ANNEXURE TO THE AUDITORS' REPORT TO THE MEMBERS OF WILLSCORPORATION LIMITED(Referred to in paragraph 3 thereof)

1. (a) The Company is maintaining proper records to show full particulars,including quantitative details and situation of fixed assets.

(b) In our opinion, the fixed assets have been physically verified bythe management at reasonable intervals, having regard to the sizeof the Company and nature of its assets. No material discrepanciesbetween the book records and the physical inventory were noticed.

(c) During the year, in our opinion, and according to information andexplanations given to us, a substantial part of the fixed assets hasnot been disposed off by the Company.

2. According to information and explanations given to us and as per thebooks and records of the Company examined by us, there was no stockheld by the Company at any time during the year.

3. (a) The Company has not granted any loans, secured or unsecured,to companies, firms or other parties covered in the Registermaintained under section 301 of the Companies Act, 1956. As theCompany has not granted any loans, secured or unsecured toparties covered in the Registrar mentioned under section 301 ofthe Companies Act, 1956, paragraphs (iii) (b), (c) and (d) of theOrder are not applicable.

(b) The Company has not taken any loans, secured or unsecured fromcompanies, firms or other parties covered in the Register maintainedunder section 301 of the Companies Act, 1956. As the Companyhas not taken any loans, secured or unsecured from parties coveredin the Register maintained under section 301 of the CompaniesAct, 1956, paragraphs (iii) (f) and (g) of the Order are not applicable.

4. 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 nature of its business for purchaseof fixed assets. Further, on the basis of our examination and accordingto the information and explanations given to us, we have neither comeacross nor have been informed of any instance of major weakness inthe aforesaid internal control systems.

5. In our opinion and according to the information and explanationsgiven to us, there are no contracts or arrangements that need to beentered in the Register maintained under section 301 of the CompaniesAct, 1956.

6. The Company has not accepted any deposit from the public.7. In our opinion, the Company has an internal audit system commensurate

with the size and nature of its business.

8. (a) According to the information and explanations given to us, andaccording to the books and records examined by us, in our opinion,the Company has been regular in depositing undisputed statutorydues including Income Tax, Cess and other material statutory duesas applicable to it with the appropriate authorities during the year.

(b) According to the information and explanations given to us, thereare no undisputed dues, including Income Tax, Cess which wereoutstanding for more than 6 months as at 31st March, 2011.

(c) According to the information and explanations given to us, thereare no undisputed dues, including Income Tax, Cess which wereoutstanding as at 31st March, 2011.

9. The Company does not have accumulated losses as at 31st March,2011, and has not incurred cash losses during the year ended on thatdate and in the immediately preceding financial year.

10. According to the information and explanations given to us, the Companyhas not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

11. In our opinion and according to the information and explanationsgiven to us, the Company is not a dealer or trader in securities.

12. According to the information and explanations given to us, the Companyhas not given any guarantees for loans taken by others from banks andfinancial institutions.

13. The Company has not made any preferential allotment of shares toparties and companies covered in the Register maintained under section301 of the Companies Act, 1956, during the year.

14. The Company has not raised money by public issue during the year.15. According to the information and explanations given to us, during the

year, no fraud on or by the Company has been noticed or reported.16. The nature of the Company's activities during the year ended 31st

March, 2011 indicate that the provisions of clauses 4(viii), (xi), (xiii),(xvi), (xvii), (xix) of the Companies (Auditor's Report) Order, 2003 arenot applicable.

147


Kolkata5th May, 2011



I. SOURCES OF FUNDS1. Shareholders' Funds

a) Capital 1 4,88,56,260 4,88,56,260b) Reserves and Surplus 2 2,89,16,389 2,46,29,069

7,77,72,649 7,34,85,329TOTAL 7,77,72,649 7,34,85,329

II. APPLICATION OF FUNDS1. Fixed Assets 3 60,57,401 60,57,401

a) Gross Block 15,83,689 14,90,534b) Less: Depreciationc) Net Block 44,73,712 45,66,867


a) Cash and Bank Balances 5 6,31,864 4,14,315b) Other Current Assets 6 4,59,200 57,891c) Loans and Advances 7 1,07,937 39,393

11,99,001 5,11,599Less :

4. Current Liabilities and Provisionsa) Liabilities 8 20,82,019 20,54,028b) Provisions 9 1,97,252 1,07,398

22,79,271 21,61,426 Net Current Liabilities (10,80,270) (16,49,827)

TOTAL 7,77,72,649 7,34,85,329Notes to the Accounts 13Significant Accounting Policies 14The Schedules referred to above form an integral part of the Balance Sheet.In terms of our report of even date



T. Ghosal Secretary

For Basu, Chatterjea & Co.Chartered AccountantsS. K. ChatterjeaPartnerMembership No. 005629Kolkata, 5th May, 2011

For Basu, Chatterjea & Co. Chartered Accountants

(Registration No. 301066E) S. K. Chatterjea

PartnerMembership No. 005629



(`) (`)I. INCOME

Dividend Income 40,87,622 40,59,174Rental Income 8,20,000 7,20,000Interest Income on Income Tax Refunds — 8,01,401Profit on sale of Current Investments (net) 624 —Other Income 10 7,27,449 5,75,911

56,35,695 61,56,486II. EXPENDITURE

Employee Cost 10,07,316 6,89,575Loss on Sale of Current Investments (net) — 3,14,620Operating and Establishment Expenses 11 1,14,485 1,07,051Depreciation 3 93,155 93,155

12,14,956 12,04,401III. PROFIT

Profit before Taxation 44,20,739 49,52,085Provision for Taxation 12 1,33,419 2,89,042Profit after Taxation 42,87,320 46,63,043Profit brought forward 2,35,13,868 1,88,50,825Available for appropriations 2,78,01,188 2,35,13,868

IV. APPROPRIATIONSProfit carried forward 2,78,01,188 2,35,13,868

Earnings Per Share (Face Value ` 10/- each) 13(2) 0.88 0.95(Basic & Diluted)Notes to the Accounts 13Significant Accounting Policies 14

The Schedules referred to above form an integral part of the Profit and Loss Account.In terms of our report of even date

148




T. Ghosal Secretary




T. Ghosal Secretary



31st March, 2011 31st March, 2010 (`) (`)

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX 44,20,739 49,52,085ADJUSTMENTS FOR :Depreciation 93,155 93,155Dividend Income (40,87,622) (40,59,174)Interest on Income Tax (Net) 332 —Profit on Sale of Current Investments (624) 3,14,620OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 4,25,980 13,00,686ADJUSTMENTS FOR :Trade and Other Receivables (4,01,309) 1,39,098Trade Payables 1,17,845 (20,161)CASH GENERATED FROM OPERATIONS 1,42,516 14,19,623Income Tax Refund/(Payment) (2,02,294) 15,98,562NET CASH USED IN OPERATING ACTIVITIES (59,778) 30,18,185

B. CASH FLOW FROM INVESTING ACTIVITIESIncome from Current Investments 9,32,535 18,13,433Purchase of Current Investments (108,26,49,132) (111,17,41,285)Sale of Current Investments 108,19,93,924 110,67,69,713NET CASH FROM INVESTING ACTIVITIES 2,77,327 (31,58,139)

C. CASH FLOW FROM FINANCING ACTIVITIES

NET CASH FROM FINANCING ACTIVITIES — —

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 2,17,549 (1,39,954)OPENING CASH AND CASH EQUIVALENTS 4,14,315 5,54,269CLOSING CASH AND CASH EQUIVALENTS 6,31,864 4,14,315

Notes :1 The above Cash Flow Statement has been prepared under the “Indirect Method”

as set out in Accounting Standard - 3 Cash Flow Statement.2 CASH AND CASH EQUIVALENTS :

Balance with Scheduled Banks - On Current Account 3,19,632 4,14,185Cash on Hand — 130Cheques on Hand 3,12,232 —Cash and Bank Balance (Schedule 5) 6,31,864 4,14,315


SCHEDULES TO THE ACCOUNTS1. CAPITAL As at As at

31st March, 2011 31 st March, 2010(`) (`)

Authorised50,00,000 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 Equity Shares of ` 10/- each, fully paid up 4,88,56,260 4,88,56,260

(All the above shares are held by the Holding Company, ITC Limited) 4,88,56,260 4,88,56,260


31st March, 2011 31st March, 2010(`) (`)

General Reserve 11,15,201 11,15,201Profit and Loss Account 2,78,01,188 2,35,13,868

2,89,16,389 2,46,29,069

149


As at As at Upto 31st For the Upto 31st As at 31stcommencement the end March, 2010 year March, 2011 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 11,48,186 93,155 12,41,341 44,73,712Total 60,57,401 60,57,401 14,90,534 93,155 15,83,689 44,73,712Previous Year 60,57,401 60,57,401 13,97,379 93,155 14,90,534 45,66,867

3. FIXED ASSETS

* Includes assets given on operating leases, which are not non-cancellable and are usually renewable by mutual consent on mutually agreeable terms

Particulars

GROSS BLOCK (AT COST) DEPRECIATION NET BOOKVALUE

4. INVESTMENTS


(`) (`)UNQUOTEDCurrentOther Investments

Canara Robeco Interval Series 2 - Quarterly Plan2 - Inst Dividend Fund — 3,00,00,000NIL (2010 - 30,00,000) Units of ` 10/- each

DSP BlackRock Liqudity Fund - Institutional Plan -Daily Dividend 7,43,79,207 —74,356 (2010 - NIL) Units of ` 1,000/- each

LIC MF Liquid Fund - Dividend Plan — 4,05,68,289NIL (2010 - 36,94,710) Units of ` 10/- each

7,43,79,207 7,05,68,289



(`) (`)With Scheduled Banks

– On Current Accounts 3,19,632 4,14,185Cheques on Hand 3,12,232 —Cash on Hand — 130

6,31,864 4,14,315



(`) (`)Good and Unsecured

Deposits 56,563 56,563Others* 4,02,637 1,328

4,59,200 57,891

* Includes due from Holding Company ` 4,00,000/- (2010 - ` NIL)



(`) (`)Good and Unsecured

Current Taxation (net of provisions) 1,07,339 36,455Fringe Benefit Tax (net of provisions) 598 2,938

1,07,937 39,393

8. LIABILITIES


(`) (`)Sundry Creditors

Total outstanding dues of microenterprises and small enterprises — —Total outstanding dues of creditorsother than micro enterprises andsmall enterprises 45,304 49,228

Others Liabilities 36,715 4,800Security Deposits* 20,00,000 20,00,000

20,82,019 20,54,028

* Includes deposits from Holding Company ` 20,00,000/- (2010 - ` 20,00,000/-)

9. PROVISIONS


(`) (`)

Provision for Retirement Benefits 1,97,252 1,07,3981,97,252 1,07,398

10. OTHER INCOME


(`) (`)

Miscellaneous Income 7,27,449 5,51,659Provision no longer required written back — 24,252

7,27,449 5,75,911

11. OPERATING AND ESTABLISHMENT EXPENSES


(`) (`)

Rates and Taxes 43,278 46,288Insurance 1,971 662Auditor’s Remuneration (excluding Service Tax)– Audit Fees 18,000 18,000– Other Services 17,437 7,500Travelling and Conveyance 1,866 240Postage, Telephone, Telex, etc. 2,839 3,622Professional Fees 12,500 12,510Filing Fees 2,040 1,500Printing and Stationery — 1,664Miscellaneous Expenses 14,554 15,065

1,14,485 1,07,051

12. PROVISION FOR TAXATIONFor the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

Income Tax for the year– Current Tax 1,00,000 4,00,000Less : Adjustments relating to previous year– Current Tax (33,472) 1,10,958

– Fringe Benefit Tax 53 —1,33,419 2,89,042


1. During the year, the following Current Investments were purchasedand sold: -

(i) 11,13,355 Units of Birla Sun Life Cash Plus- Instl.- Daily Dividend –Reinvestment at a cost of ` 1,20,26,795/-

(ii) 51,20,296 Units of BNP Paribas Money Plus Institutional PlanDaily Dividend at a cost of ` 5,12,23,479/-

(iii) 51,09,066 Units of BNP Paribas Overnight Fund- InstitutionalDaily Dividend at a cost of ` 5,11,05,987/-

(iv) 1,79,345 Units of Canara Robeco Interval Series 2- QuaterlyPlan 2- Inst Dividend Fund at a cost of ` 17,93,459/-

(v) 12,43,629 Units of Canara Robeco Liquid Super Instt Daily DivReinvest Fund at a cost of ` 1,25,04,691/-

(vi) 8,90,684 Units of Canara Robeco Treasury Advantage SuperInstt Daily Div Reinv Fund at a cost of ` 1,10,50,804/-

(vii) 10,00,000 Units of DSP BlackRock FMP- 3M Series 22- DividendPayout at a cost of ` 1,00,00,000/-

(viii) 10,998 Units of DSP BlackRock Liquidity Fund- InstitutionalPlan- Daily Dividend at a cost of ` 1,10,01,612/-

(ix) 10,012 Units of DSP BlackRock Liquidity Fund- Regular Plan-Daily Dividend at a cost of ` 1,00,216/-

(x) 11,013 Units of DSP BlackRock Money Manager Fund-Institutional Plan- Daily Dividend at a cost of ` 1,10,22,146/-

(xi) 97,322 Units of DWS Insta Cash Plus Fund– Regular Plan DailyDividend- Reinvest at a cost of ` 10,02,517/-

(xii) 10,00,000 Units of Fidelity FMP Series 2- Plan B- Dividend ata cost of ` 1,00,00,000/-

(xiii) 20,00,000 Units of HDFC FMP 100D September 2010 (2)-Dividend- Series XIV, Option: Payout at a cost of` 2,00,00,000/ -

(xiv) 1,690 Units of ICICI Prudential Liquid Institutional Plus Plan-Div- Daily at a cost of ` 2,00,306/-

(xv) 9,273 Units of ING Liquid Fund- Daily Dividend Option at acost of ` 1,00,026/-

(xvi) 41,36,464 Units of JM High Liquidity Fund Institutional Plan-Daily Dividend at a cost of ` 4,14,30,411/ -

(xvii) 40,83,967 Units of JM Money Manager Fund Super Plus Plan- Daily Dividend at a cost of ` 4,08,61,315/-(xviii) 50,086 Units of JP Morgan India Liquid Fund- Retail- Daily

Dividend Plan- Reinvest at a cost of ` 5,01,613/-(xix) 50,91,184 Units of JP Morgan India Liquid Fund- Super Inst.

Daily Dividend Plan- Reinvest at a cost of ` 5,09,52,065 / -(xx) 31,03,372 Units of JP Morgan India Treasury Fund- Super Inst.

Daily Div Plan- Reinvest at a cost of ` 3,10,61,342/-


150


(xxi) 20,00,000 Units of Kotak FMP Series 31- Dividend at a costof ` 2,00,00,000/-

(xxii) 39,74,392 Units of Kotak Floater Long Term- Daily Dividendat a cost of ` 4,00,61,075/-

(xxiii) 32,71,415 Units of Kotak Liquid (Institutional)- Daily Dividendat a cost of ` 4,00,03,193/-

(xxiv) 41,06,635 Units of LIC Nomura MF Income Plus Fund- DailyDividend Plan at a cost of ` 4,10,66,351/-

(xxv) 38,63,702 Units of LIC Nomura MF Liquid Fund- DividendPlan at a cost of ` 4,24,23,835/-

(xxvi) 40,96,955 Units of Principal Cash Management Fund- LiquidOption- Instl. Plan- Dividend Reinvestment- Daily at a cost of` 4,09,78,567/-

(xxvii) 20,01,830 Units of Reliance Liquid Fund- Cash Plan- DailyDividend Option at a cost of ` 2,23,03,392/-

(xxviii) 74,254 Units of Religare Liquid Fund- Institutional Daily Dividendat a cost of ` 7,42,70,394/-

(xxix) 53,79,421 Units of Sundaram Money Fund Inst.- Daily DivRein at a cost of ` 5,43,06,872/-

(xxx) 1,12,470 Units of Templeton India Treasury ManagementAccount Institutional Plan- Daily Dividend Reinvestment at acost of ` 11,25,45,993/-

(xxxi) 1,12,55,196 Units of Templeton India Ultra Short Bond FundInstitutional Plan- Daily Dividend Reinvestment at a cost of` 11,26,76,891/-

(xxxii) 20,995 Units of UTI Liquid Cash Plan Institutional- Daily IncomeOption- Re-investment at a cost of ` 2,14,03,074/-

(xxxiii) 21,439 Units of UTI Treasury Advantage Fund- InstitutionalPlan (Daily Dividend Option)- Re-investment at a cost of` 2,14,43,424/-

2. Earnings per ShareFor the year ended For the year ended


Profit after Taxation (`) 42,87,320/- 46,63,043/-

Weighted average number of 48,85,626 48,85,626Equity Shares outstanding

Basic and Diluted Earnings Per Share ` 0.88 ` 0.95(Face Value - ` 10/- per share)

3. Provision for Taxation included in the Profit and Loss Account representsCurrent Tax. The incidence of Deferred Tax being insignificant, is notconsidered.

4. Related Party Disclosures :

(a) Relationships :

Holding Company ITC Limited

Key Management Personnel

Mr. K. Vaidyanath Non Executive Chairman (Upto 2nd January, 2011)Mr. R. Tandon Non-Executive Chairman (w.e.f. 3rd January, 2011)

Non-Executive Director (Upto 2nd January, 2011)Mr. B. B. Chatterjee Non-Executive DirectorMr. S. Dutta Non-Executive Director

(b) Disclosure of transaction between the Company and Related Partiesand the status of outstanding balances :


(`) (`)

Holding CompanyPostage, Telephone, Telex etc. 2,839/- 3,622/-Miscellaneous Expenses 11,030/- 11,030/-Rental Income 8,20,000/- 7,20,000/-Miscellaneous Income 7,27,674/- 5,51,659/-

Balance as at 31st March, 2011 31st March, 2010(`) (`)

Holding CompanyReceivables 4,00,000/- NilPayables Nil NilSecurity Deposit Received 20,00,000/- 20,00,000/-

5. Segment Reporting - The Company operates in a single business andgeographical segment.

151



6. Employee Benefits :

Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statementsin respect of Employee Benefit Schemes:


(`) (`)

Pension Gratuity Leave Pension Gratuity Leave


N.A. Unfunded Unfunded N.A. Unfunded Unfunded

I. Components of Employer Expense

1. Current Service Cost N.A. 16,232 9,166 N.A. (9,202) (7,864)2. Interest Cost N.A. 3,645 4,426 N.A. (2,873) (3,105)3. Expected Return on Plan Assets N.A. Nil Nil N.A. Nil Nil4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Past Service Cost N.A. 12,411 Nil N.A. Nil Nil7. Actuarial Losses/(Gains) N.A. 11,892 32,082 N.A. 1,635 (2,843)8. Total expense recognised in the N.A. 44,180 45,674 N.A. (10,440) (13,812)


The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost.

II. Actual Returns N.A. Nil Nil N.A. Nil Nil

III.Net Asset/(Liability) recognised inBalance Sheet

1. Present Value of Defined N.A. 96,256 1,00,996 N.A. 52,076 55,322Benefit Obligation

2. Fair value on Plan Assets N.A. N.A. N.A. N.A. N.A. N.A.3. Status [Surplus / (Deficit)] N.A. (96,256) (1,00,996) N.A. (52,076) (55,322)4. Unrecognised Past Service Cost N.A. Nil Nil N.A. Nil Nil5. Net Asset/(Liability) recognised in N.A. (96,256) (1,00,996) N.A. (52,076) (55,322)

Balance Sheet

IV. Change in Defined BenefitObligations (DBO)

1. Present Value of DBO at Beginning of Period N.A. 52,076 55,322 N.A. 62,516 69,1342. Current Service Cost N.A. 16,232 9,166 N.A. (9,202) (7,864)3. Interest Cost N.A. 3,645 4,426 N.A. (2,873) (3,105)4. Past Service Cost N.A. 12,411 Nil N.A. Nil Nil5. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil7. Plan Amendments N.A. Nil Nil N.A. Nil Nil8. Acquisitions N.A. Nil Nil N.A. Nil Nil9. Actuarial (Gains)/Losses N.A. 11,892 32,082 N.A. 1,635 (2,843)

10. Benefits Paid N.A. Nil Nil N.A. Nil Nil11. Present Value of DBO at the End N.A. 96,256 1,00,996 N.A. 52,076 55,322

of Period

V. Change in Fair value of Assets

1. Plan Assets at Beginning of Period N.A. N.A. N.A. N.A. N.A. N.A.2. Acquisition Adjustment N.A. N.A. N.A. N.A. N.A. N.A.3. Expected Return on Plan Assets N.A. N.A. N.A. N.A. N.A. N.A.4. Actuarial Gains/(Losses) N.A. N.A. N.A. N.A. N.A. N.A.5. Actual Company Contributions N.A. N.A. N.A. N.A. N.A. N.A.6. Benefits Paid N.A. N.A. N.A. N.A. N.A. N.A.7. Plan Assets at the End of Period N.A. N.A. N.A. N.A. N.A. N.A.

VI.Actuarial Assumptions

1. Discount Rate (%) N.A. 8.00 8.00 N.A. 7.00 7.002. Expected Return on Plan Assets (%) N.A. Nil Nil N.A. Nil Nil

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


152


Kolkata, 5th May, 2011

7. There are no Micro, Small and Medium Enterprises, to whom theCompany owes any dues, as at 31st March, 2011. This information asrequired to be disclosed under the Micro, Small and Medium Enterprises

Development Act, 2006 has been determined to the extent such partieshave been identified based on information available with the Company.

8. Figures for the previous year have been regrouped / re-arrangedwherever necessary.


Basis of Accounting

The Financial Statements are prepared on accrual basis under the

historical cost convention.

Fixed Assets

Fixed Assets are stated at cost including any incidental acquisition

expenses.

Depreciation

Depreciation is provided on “Straight Line” basis at the rates prescribed

in Schedule XIV to the Companies Act, 1956.

Investments

To state Current Investments at lower of cost and fair value; and Long

Term Investments, including in Joint Ventures and Associates, at cost.

Where applicable, provision is made to recognise a decline, other than

temporary, in valuation of Long Term Investments.

Inventories

The inventories are valued at cost or below. The average cost is computed

on the basis of weighted average method.

Foreign Currency Liabilities

Foreign Currency Liabilities are restated at the rates ruling at the year

end and all exchange gains / losses arising there from are adjusted in

the Profit and Loss Account except for those covered by forward

contract rates where the gains / losses arising from such restatement

are recognized over the period of such contracts.

Borrowing Costs

Borrowing cost that are directly attributable to the acquisition or

construction of qualifying assets, are capitalized as part of cost of such

assets. All other borrowing costs are charged to revenue.

Lease Rentals

Lease Rentals are being accounted for on an accrual basis.

Retirement Benefits

Liability for Leave Encashment and Gratuity payable to employees is

provided for at the year-end on actuarial basis.

Taxes on Income

To provide Current Tax as the amount of tax payable in respect of

taxable income for the period.

To provide Deferred Tax on timing differences between taxable income

and accounting income subject to consideration of prudence.

Not to recognise Deferred Tax Assets on unabsorbed depreciation and

carry forward of losses unless there is virtual certainty that there will

be sufficient future taxable income available to realise such assets.



T. Ghosal Secretary

As at 31st March, 2011 As at 31st March, 2010

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 Assets

The expected rate of return on plan assets are based on the current portfolio of assets, investment strategy and market scenario. In order to protect

the capital and optimise returns within acceptable risk parameters, the plan assets are well diversified.

For the year ended For the year ended For the year ended For the year ended

31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008

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

Pension Gratuity Leave Pension Gratuity Leave Pension Gratuity Leave Pension Gratuity Leave

Encashment Encashment Encashment Encashment

N.A. Unfunded Unfunded N.A. Unfunded Unfunded N.A. Unfunded Unfunded N.A. Unfunded Unfunded

IX. Net Asset/(Liability) recognised in Balance Sheet(including experience adjustment impact)

1. Present Value of Defined Benefit Obligation N.A. 96,256 1,00,996 N.A. 52,076 55,322 N.A. 62,516 69,134 N.A. 47,897 54,062

2. Fair Value of Plan Assets N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

3. Status [Surplus/(Deficit)] N.A. (96,256) (1,00,996) N.A. (52,076) (55,322) N.A. (62,516) (69,134) N.A. (47,897) (54,062)

4. Experience Adjustment of Plan Assets [Gain/(Loss)] N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil

5. Experience Adjustment of Obligation [(Gain) /Loss] N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil

153


BALANCE SHEET ABSTRACT AND COMPANY’S GEtNERAL BUSINESS PROFILE(As per Schedule VI, Part IV of the Companies Act, 1956)







III. Position of Mobilisation and Deployment of Funds (Amount in `Thousands)


Sources of Funds






Accumulated Losses

3 1

0 0 0 8 7 1 4 9

0 3 2 0 1 1

2 1

N I L

7 7 7 7 3 7 7 7 7 3

4 8 8 5 6 2 8 9 1 7

N I L N I L

4 4 7 4 7 4 3 7 9

- 1 0 8 0 N I L

N I L

N I L N I L

N I L



+ – Profit/Loss Before Tax + – Profit/Loss After Tax

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

Earnings Per Share in ` Dividend Rate (%)

V. Generic Names of Principal Products/Services of Company(As per monetary terms)


Product Description

5 6 3 6 1 2 1 5

4 4 2 1 4 2 8 7� �

0 . 8 8 N I L

N . A .

N . A .

iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report are in agreement with the booksof account;

iv. In our opinion, the Balance Sheet, Profit and Loss Account 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 written representations received from the Directorsas on 31st March, 2011 and taken on record by the Board ofDirectors, we report that none of the Directors is disqualified ason 31st March, 2011 from being appointed as a Director in termsof clause (g) 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 31st March, 2011;(b) In the case of the Profit and Loss Account, of the profit for the

year ended on that date;(c) In the case of the Cash Flow Statement, of the cash flows for


For Basu, Chatterjea & Co.Chartered Accountants

(Registration No. 301066E)

S. K. ChatterjeaKolkata Partner5th May, 2011 (Membership No. 005629)

AUDITORS' REPORT TO THE MEMBERS OF GOLD FLAKE CORPORATIONLIMITED

We have audited the attached Balance Sheet of GOLD FLAKE CORPORATIONLIMITED, as at 31st March, 2011, the Profit and Loss Account and Cash FlowStatement for the year ended on that date and annexed thereto. Thesefinancial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements basedon our audit.1. We conducted our audit in accordance with Auditing Standards generally

accepted 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 also 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 by themanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

2. As required by the Companies (Auditor’s Report) Order, 2003 issued bythe Central Government of India in terms of sub-section (4A) of Section227 of the Companies Act, 1956, we enclose in the Annexure a statementon the matters specified in paragraphs 4 and 5 of the said Order.

3. 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;


REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDEDON 31ST MARCH, 2011



During the year under review, your Company has not contracted anyfresh business and the temporary surplus funds of the Company havebeen invested in debt mutual funds.



(`) (`)


Less : Provision for Taxation (88,486) –

b. Profit After Taxation 2,96,95,954 3,05,63,721

c. Add : Profit brought

forward from previous years 4,09,09,930 1,03,46,209

d. Balance carried forward tothe following year 7,06,05,884 4,09,09,930

3. DIRECTORS

Mr. K. Vaidyanath, consequent to his retirement from the services of ITCLimited, the Holding Company, stepped down as the Chairman andDirector of your Company with effect from close of work on 2nd January,2011. Your Directors would like to place on record their sincere appreciationfor the contribution made by Mr. Vaidyanath during his tenure with theCompany. Mr. R. Tandon was appointed as the Chairman of the Boardof Directors of your Company with effect from 3rd January, 2011.

In accordance with the provisions of Article 92 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 applicableAccounting Standards with proper explanations relating to materialdepartures, if any;

ii) selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and

prudent 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

iv) prepared the Annual Accounts on a going concern basis.5. PARTICULARS OF EMPLOYEES

None of the employees of your Company is covered under the 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. Basu, Chatterjea & Co., CharteredAccountants, who retire at the ensuing Annual General Meeting, haveexpressed that they would not like to offer themselves for re-appointmentas Auditors of the Company.

Your Company has received a Special Notice in terms of the provisionsof Section 225 of the Companies Act, 1956 (the Act) proposing theappointment of Messrs. L. B. Jha & Co., Chartered Accountants, asStatutory Auditors of the Company at the ensuing Annual GeneralMeeting.

Your Board of Directors, on the recommendation of the Audit Committee,has recommended the appointment of Messrs. L. B. Jha & Co. asAuditors of the Company from the conclusion of the ensuing AnnualGeneral Meeting. Messrs. L. B. Jha & Co. have confirmed their eligibilityunder Section 224(1B) of the Act for appointment as Auditors of theCompany.

7. 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.



5th May, 2011Registered Office :Virginia House37 J. L. Nehru RoadKolkata 700 071

154

GOLD FLAKE CORPORATION LIMITED

8. a. According to the information and explanations given to us, andaccording to the books and records examined by us, in our opinion,the Company has been regular in depositing undisputed statutorydues including Income Tax, Cess and other material statutory duesas applicable to it with the appropriate authorities during the year.

b. According to the information and explanations given to us, there areno undisputed dues, including Income Tax, Cess which wereoutstanding for more than 6 months as at 31st March, 2011.

c. According to the information and explanations given to us, there areno undisputed dues, including Income tax, Cess which were outstandingas at 31st March, 2011.

9. The Company does not have accumulated losses as at 31st March, 2011,and has not incurred cash losses during the year ended on that date andin the immediately preceding financial year.

10. According to the information and explanations given to us, the Companyhas not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

11. In our opinion and according to the information and explanations givento us, the Company is not a dealer or trader in securities.

12. According to the information and explanations given to us, the Companyhas not given any guarantees for loans taken by others from banks andfinancial institutions.

13. The Company has not made any preferential allotment of shares to partiesand companies covered in the Register maintained under section 301 ofthe Companies Act, 1956, during the year.

14. The Company has not raised money by public issue during the year.15. According to the information and explanations given to us, during the

year, no fraud on or by the Company has been noticed or reported.16. The nature of the Company’s activities during the year ended

31st March, 2011 indicate that the provisions of clauses 4(viii), (xi), (xiii),(xvi), (xvii), (xix) of the Companies (Auditor's Report) Order, 2003 arenot applicable.


(Registration No. 301066E)S. K. Chatterjea

Kolkata Partner5th May, 2011 (Membership No. 005629)

ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF GOLD FLAKECORPORATION LIMITED(Referred to in paragraph 3 thereof)1. a. The Company is maintaining proper records to show full particulars,

including quantitative details and situation of fixed assets.b. In our opinion, the fixed assets have been physically verified by the

management at reasonable intervals, having regard to the size of theCompany and the nature of its assets. No material discrepanciesbetween the book records and the physical inventory were noticed.

c. During the year, in our opinion, and according to the information andexplanations given to us, a substantial part of the fixed assets has notbeen disposed off by the Company.

2. According to the information and explanations given to us and as perthe books and records of the Company examined by us, there was nostock held by the Company at any time during the year.

3. a. The Company 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. As the Company hasnot granted any loans, secured or unsecured to parties covered in theRegister maintained under Section 301 of the Companies Act, 1956,paragraphs (iii) (b), (c) and (d) of the Order are not applicable.

b. The Company has not taken any loans, secured or unsecured fromcompanies, firms or other parties covered in the Register maintainedunder Section 301 of the Companies Act, 1956. As the Company hasnot taken any loans, secured or unsecured from parties covered in theRegister maintained under Section 301 of the Companies Act, 1956,paragraphs (iii ) (f) and (g) of the Order are not applicable.

4. In our opinion and according to the information and explanations givento us, there are adequate internal control systems commensurate with thesize of the Company and the nature of its business for purchase of fixedassets. Further, on the basis of our examination, and according to theinformation and explanations given to us, we have neither come acrossnor have been informed of any instance of major weakness in the aforesaidinternal control systems.

5. In our opinion and according to the information and explanations givento us, there are no contracts or arrangements that need to be entered inthe Register maintained under Section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposit from the public.7. In our opinion, the Company has an internal audit system commensurate

with the size and nature of its business.

On behalf of the BoardR. Tandon Director

S. Dutta DirectorN. Bajaj Secretary


155





a) Capital 1 15,99,83,850 15,99,83,850b) Reserves and Surplus 2 7,93,32,107 4,96,36,153

23,93,15,957 20,96,20,003

Total 23,93,15,957 20,96,20,003II. APPLICATION OF FUNDS

1. Fixed Assets 3a) Gross Block 90,943 90,943b) Less : Depreciation 90,666 90,583c) Net Block 277 360


a) Cash and Bank Balances 5 4,04,876 3,13,399b) Other Current Assets 6 5,000 5,500c) Loans and Advances 7 99,941 3,850

5,09,817 3,22,749Less :

4. Current Liabilities and Provisionsa) Liabilities 8 4,97,549 4,94,058b) Provisions 9 30,769 25,168

5,28,318 5,19,226

Net Current Liabilities (18,501) (1,96,477)

Total 23,93,15,957 20,96,20,003Notes to the Accounts 12Significant Accounting Policies 13The Schedules referred to above form an integral part of the Balance Sheet.In terms of our report of even date.



(`) (`)

I. INCOME

Dividend Income 2,98,21,661 3,11,34,582

Interest on Income Tax 9,032 3,450

Other Income 5,03,364 3,18,930

Profit on Sale Current Investments 1,044 —

3,03,35,101 3,14,56,962

II. EXPENDITURE

Employee Cost 6,49,276 3,94,636

Operating and Establishment Expenses 10 78,274 72,517

Loss on Sale of Current Investments (net) — 4,25,937

Depreciation 3 83 151

7,27,633 8,93,241

III. PROFIT

Profit before Taxation 2,96,07,468 3,05,63,721

Provision for Taxation 11 (88,486) —

Profit after Taxation 2,96,95,954 3,05,63,721

Profit brought forward 4,09,09,930 1,03,46,209

Available for appropriation 7,06,05,884 4,09,09,930

IV. APPROPRIATIONS

Profit carried forward 7,06,05,884 4,09,09,930

7,06,05,884 4,09,09,930

Earnings Per Share (Face Value ` 10/- each) 12(4) 1.86 1.91(Basic & Diluted)

Notes to the Accounts 12

Significant Accounting Policies 13

The Schedules referred to above form an integral part of the Profit and Loss Account.

In terms of our report of even date.


R. Tandon DirectorS. Dutta DirectorN. Bajaj Secretary


S. K. ChatterjeaPartnerMembership No. 005629Kolkata, 5th May, 2011

156


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011 For the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

A. CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX 2,96,07,468 3,05,63,721ADJUSTMENTS FOR :Depreciation 83 151Income from Long Term Investments (2,02,50,000) (2,02,50,000)Income from Current Investments (95,71,661) (1,08,84,582)Interest on Income Tax (Net) (9,032) (3,450)Loss/(Gain) on Sale of Current Investments (1,044) 4,25,937OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (2,24,186) (1,48,223)ADJUSTMENTS FOR :Trade and Other Receivables 500 78,188Trade Payables 20,586 3,252CASH GENERATED FROM OPERATIONS (2,03,100) (66,783)Income Tax Refund /(Payment) (10,067) 1,10,738NET CASH USED IN OPERATING ACTIVITIES (2,13,167) 43,955

B. CASH FLOW FROM INVESTING ACTIVITIESIncome from Long Term Investments 2,02,50,000 2,02,50,000Income from Current Investments 29,60,033 60,44,777Purchase of Long Term Investments (1,04,34,376) (83,47,500)Purchase of Current Investments (294,78,61,223) (238,55,46,321)Sale of Current Investments 293,53,90,210 236,77,05,497NET CASH FROM INVESTING ACTIVITIES 3,04,644 1,06,453

C. CASH FLOW FROM FINANCING ACTIVITIES

NET CASH FROM FINANCING ACTIVITIES — —

NET INCREASE IN CASH AND CASH EQUIVALENTS 91,477 1,50,408OPENING CASH AND CASH EQUIVALENTS 3,13,399 1,62,991CLOSING CASH AND CASH EQUIVALENTS 4,04,876 3,13,399

Notes :1 The above Cash Flow Statement has been prepared under the “Indirect Method”

as set out in Accounting Standard - 3 Cash Flow Statement.2 CASH AND CASH EQUIVALENTS :

Balance with Scheduled Banks - On Current Account 1,67,988 3,13,121Cheques on Hand 2,36,888 —Cash on Hand — 278Cash and Bank Balance (Schedule 5) 4,04,876 3,13,399


On behalf of the BoardR. Tandon Director

S. Dutta DirectorN. Bajaj Secretary


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

Plant and Machinery 85,853 85,853 85,692 47 85,739 114Furniture and Fixtures 5,090 5,090 4,891 36 4,927 163Total 90,943 90,943 90,583 83 90,666 277Previous Year 90,943 90,943 90,433 151 90,583 360

3. FIXED ASSETS

GROSS BLOCK (AT COST) DEPRECIATION NET BOOKVALUE

Particulars As at As at Upto 31st For the Upto 31st As at 31stcommencement the end March, 2010 year March, 2011 March, 2011

of the year of the year

157



1. CAPITAL As at As at31st March, 2011 31st March, 2010

(`) (`)Authorised2,00,00,000 Equity Shares of ` 10/- each 20,00,00,000 20,00,00,000

20,00,00,000 20,00,00,000Issued, Subscribed and Paid-up1,59,98,385 Equity Shares of ` 10/- each, fully paid 15,99,83,850 15,99,83,850(All the above shares are held by the Holding Company, ITC Limited) 15,99,83,850 15,99,83,850


31st March, 2011 31st March, 2010(`) (`)

General Reserve 87,26,223 87,26,223

Profit and Loss Account 7,06,05,884 4,09,09,9307,93,32,107 4,96,36,153

10.OPERATING AND ESTABLISHMENT EXPENSES


(`) (`)

Rates and taxes 8,750 8,692Filing Fees 3,800 1,168Auditor’s Remuneration (excluding Service Tax)

– Audit Fees 18,000 18,000– Other Services 17,437 7,500

Travelling and Conveyance 128 2,975Professional Fees 14,500 14,030Insurance 662 662Miscellaneous Expenses 14,997 19,490

78,274 72,517

11.PROVISION FOR TAXATION


(`) (`)

Income Tax for the year — —– Current Tax

Less: Adjustments relating to previous years– Current Tax 88,486 —

(88,486) —

12.NOTES TO THE ACCOUNTS1. Uncalled liability in respect of partly paid up 1,39,125 shares is ` 1,25,21,250/-

(2010 - ` 2,29,55,625/-).2. Dividend Income represents ` 2,02,50,000/- (2010 - ` 2,02,50,000/-) from Long

Term Investments.3. During the year, the following Current Investments were purchased and sold: -

(i) 30,24,614 Units of Birla Sun Life Cash Plus - Instl. - Daily DividendReinvestment at cost of ` 3,26,72,792/-

(ii) 18,369 Units of Birla Sun Life Cash Plus - Retail - Daily Dividend -Reinvestment at cost of ` 3,00,689/-

(iii) 1,42,39,190 Units of BNP Paribas Money Plus Institutional PlanDaily Dividend at cost of ` 14,24,47,520/-

(iv) 1,42,07,394 Units of BNP Paribas Overnight Fund – InstitutionalDaily Dividend at cost of ` 14,21,16,562/-

(v) 2,98,908 Units of Canara Robeco Interval Series 2 - Quaterly Plan2 - Inst Dividend Fund at cost of ` 29,89,098/-

(vi) 33,02,579 Units of Canara Robeco Liquid Super Instt Daily DivReinvest Fund at cost of ` 3,32,07,433/-

(vii) 25,91,080 Units of Canara Robeco Treasury Advantage Super InsttDaily Div Reinv Fund at cost of ` 3,21,47,792/-

(viii) 20,00,000 Units of DSP BlackRock FMP - 3M Series 22 - DividendPayout at cost of ` 2,00,00,000/-

(ix) 31,995 Units of DSP BlackRock Liquidity Fund - Institutional Plan -Daily Dividend at cost of ` 3,20,04,688/-

(x) 22,517 Units of DSP BlackRock Liquidity Fund - Regular Plan - DailyDividend at cost of ` 2,25,392/-

(xi) 32,039 Units of DSP BlackRock Money Manager Fund - InstitutionalPlan - Daily Dividend at cost of ` 3,20,64,427/-

(xii) 1,07,045 Units of DWS Insta Cash Plus Fund - Regular Plan DailyDividend - Reinvest at cost of ` 11,02,675/-

(xiii) 30,00,000 Units of Fidelity FMP Series 2 - Plan B - Dividend at costof ` 3,00,00,000/-

(xiv) 70,00,000 Units of HDFC FMP 100 D September 2010 (2) - Dividend -Series XIV, Option: Payout at cost of ` 7,00,00,000/-

(xv) 1,001 Units of ICICI Prudential Liquid Super Institutional Plan - Div -Daily at cost of ` 1,00,167/-

(xvi) 9,273 Units of ING Liquid Fund - Daily Dividend Option at cost of` 1,00,026/-

(xvii) 1,10,72,903 Units of JM High Liquidity Fund - Super InstitutionalPlan - Daily Dividend at cost of ` 11,09,11,736/-

(xviii) 1,10,50,735 Units of JM Money Manager Fund Super Plus Plan -Daily Dividend at cost of ` 11,05,65,918/-

(xix) 20,036 Units of JP Morgan India Liquid Fund - Retail - Daily DividendPlan - Reinvest at cost of ` 2,00,658/-

(xx) 1,61,22,772 Units of JP Morgan India Liquid Fund - Super Inst.Daily Dividend Plan - Reinvest at cost of ` 16,13,55,093/-

(xxi) 91,59,467 Units of JP Morgan India Treasury Fund - Super Inst.Daily Div Plan - Reinvest at cost of ` 9,16,76,194/-

(xxii) 70,00,000 Units of Kotak FMP Series 31- Dividend at cost of` 7,00,00,000/-

(xxiii) 1,09,29,775 Units of Kotak Floater Long Term - Daily Dividend atcost of ` 11,01,69,948/-

158


4. INVESTMENTSAs at As at

31st March, 2011 31st March, 2010(`) (`)

UNQUOTEDA. Long Term

TRADE INVESTMENTSITC Filtrona Limited22,50,000 (2010 - 22,50,000) EquityShares of ` 10/- each, fully paid 2,25,00,000 2,25,00,000ATC Limited55,650 (2010 - 55,650) Equity Sharesof ` 100/- each, fully paid 83,47,500 83,47,5001,39,125 (2010 - 1,39,125) EquityShares of ` 100/- each, ` 70/- paid 2,92,16,250 1,87,81,875(2010 - ` 45/- paid )

(a) 6,00,63,750 4,96,29,375B. Current

OTHER INVESTMENTSCanara Robeco Interval Series 2Quarterly Plan 2 - Inst Dividend Fund — 5,00,00,000Nil (2010 - 50,00,000) Units of ` 10/- eachDSP BlackRock Liquidity Fund - InstitutionalPlan - Daily Dividend 17,92,70,431 —1,79,214 (2010 - Nil) Units of ` 1,000/- eachLIC MF Liquid Fund - Dividend Plan — 11,01,86,745Nil (2010 - 1,00,35,131) Units of ` 10/- each

(b) 17,92,70,431 16,01,86,745

Total (a) + (b) 23,93,34,181 20,98,16,120

5.CASH AND BANK BALANCESAs at As at

31st March, 2011 31st March, 2010(`) (`)

With Scheduled Banks– On Current Accounts 1,67,988 3,13,121

Cheques on Hand 2,36,888 —Cash on Hand — 278

4,04,876 3,13,399

6. OTHER CURRENT ASSETSAs at As at

31st March, 2011 31st March, 2010(`) (`)

Good and UnsecuredDeposits 5,000 5,000Others — 500

5,000 5,500

7. LOANS AND ADVANCESAs at As at

31st March, 2011 31st March, 2010(`) (`)

Good and UnsecuredIncome Tax (net of provisions) 97,091 —Fringe Benefit Tax (net of provisions) 2,850 3,850

99,941 3,850

8.LIABILITIES


(`) (`)Sundry Creditors

Total outstanding dues of microenterprises and small enterprises — —Total outstanding dues of creditorsother than micro enterprises andsmall enterprises 33,345 29,854

Security Deposits 4,64,204 4,64,2044,97,549 4,94,058

9.PROVISIONS


(`) (`)

Provision for Retirement Benefits 30,769 13,674Provision for Income Tax (net of advance payment) — 11,494

30,769 25,168

159


(xxiv) 89,96,554 Units of Kotak Liquid (Institutional Premium) - DailyDividend at cost of ` 11,00,10,768/-

(xxv) 1,11,20,167 Units of LIC Nomura MF Income Plus Fund - DailyDividend Plan at cost of ` 11,12,01,671/-

(xxvi) 1,20,83,587 Units of LIC Nomura MF Liquid Fund - Dividend Planat cost of ` 13,26,78,999/-

(xxvii) 1,10,57,320 Units of Principal Cash Management Fund - DividendReinvestment Daily at cost of ` 11,05,80,940/-

(xxviii) 49,14,539 Units of Reliance Liquid Fund - Cash Plan - Daily DividendOption at cost of ` 5,47,55,336/-

(xxix) 1,79,144 Units of Religare Liquid Fund - Institutional Daily Dividendat cost of ` 17,91,83,902 / -

(xxx) 32,36,449 Units of Sundaram Money Fund Inst. - Daily Div Reinat cost of ` 3,26,72,927/-

(xxxi) 1,23,41,264 Units of S230 Sundaram Money Fund Super Inst.Daily Div. Rein at cost of ` 12,45,88,767/-

(xxxii) 2,93,936 Units of Templeton India Treasury Management AccountSuper Institutional Plan - Daily Dividend Reinvestment at cost of` 29,41,33,820/-

(xxxiii) 2,94,17,322 Units of Templeton India Ultra Short Bond Fund SuperInstitutional Plan - Daily Dividend Reinvestment at cost of` 29,45,14,459/-

(xxxiv) 51,212 Units of UTI Liquid Cash Plan Institutional - Daily IncomeOption - Re-investment at cost of ` 5,22,07,497/-

(xxxv) 52,295 Units of UTI Treasury Advantage Fund - Institutional Plan(Daily Dividend Option) - Re-investment at cost of ` 5,23,05,925/-

4. Earnings per Share For the year ended For the year ended31st March, 2011 31st March, 2010

Profit after Taxation (`) 2,96,95,954 /- 3,05,63,721/-Weighted average number ofEquity Shares outstanding 1,59,98,385 1,59,98,385Basic and Diluted Earnings Per Share(Face Value - ` 10/ - per share) ` 1.86 ` 1.91

5. Remuneration of Manager :Salaries : ` 5,84,200/- (2010 - ` 3,59,000/-)Other Benefits : ` 47,981/- (2010 - ` 30,004/-)

6. Related Party Disclosures :(a) Relationships

Holding Company ITC LimitedJoint Venture ITC Filtrona LimitedKey Management PersonnelMr. K. Vaidyanath Non-Executive Chairman (upto 2nd January, 2011)Mr. R. Tandon Non-Executive Chairman (w.e.f. 3rd January, 2011)

Non-Executive Director (upto 2nd January, 2011)Mr. B. B. Chatterjee Non-Executive DirectorMr. S. Dutta Non-Executive Director

(b) Disclosure of transaction between the Company and Related Party :Particulars For the year ended For the year ended

31st March, 2011 31st March, 2010 (`) (`)

Joint Venture CompanyDividend Received 2,02,50,000/- 2,02,50,000/-Holding CompanyMiscellaneous Income 5,03,364/- 3,18,930/-Miscellaneous Expenses 11,030/- 11,030/-

Financial Statements of ITC Filtrona Limited are drawn up accordingto the Financial Year Ended as at 31st December.

The Company’s interests in this Joint Venture is reported as Long TermInvestment (Schedule 4) and stated at cost. However, the Company’sshare of each of the assets, liabilities, income and expenses, etc. (eachwithout elimination of the effect of transactions between the Companyand the Joint Venture) related to its interests in the Joint Venture are :

7. Provision for Taxation included in the Profit and Loss Account representsCurrent Tax. The incidence of Deferred Tax being insignificant, is notconsidered.

8. Interest in Joint Venture :The Company’s interests, as a venturer, in jointly controlled entity(incorporated Joint Ventures) is :

Name Country of Percentage ofIncorporation Voting Power as at

31st March, 2011

ITC Filtrona Limited India 50

9. Segment Reporting :The Company operates in a single business and geographical segment.

As at 31st As at 31stDecember, 2010 December, 2009

(`) (`)

I ASSETS1. Fixed Assets (net) 9,48,62,622 9,27,63,2602. Current Assets, Loans and Advances

a) Inventories 13,11,96,676 12,04,43,314b) Sundry Debtors 2,58,10,436 3,33,30,218c) Cash and Bank Balances 1,61,92,143 1,06,45,004d) Other Current Assets 11,17,319 8,66,371e) Loans and Advances 2,62,36,800 2,30,04,589

II LIABILITIES1. Current Liabilities and Provisions

a) Liabilities 9,64,04,964 9,41,02,406b) Provisions 2,58,55,745 2,62,09,589

2. Deferred Tax (net) 75,14,132 69,26,101III INCOME

1. Sales 63,27,37,162 62,20,83,5652. Other Income 1,20,70,435 1,01,73,869

IV EXPENSES1. Raw Materials, etc. 53,07,15,980 49,94,12,1902. Manufacturing, Selling, etc. Expenses 4,15,59,788 4,51,78,4293. Depreciation 1,21,44,300 1,19,71,6024. Provision for Taxation 1,94,88,031 2,50,21,076

V OTHER MATTERS1. Capital Expenditure Commitments 2,41,88,020 Nil

10. Employee Benefits :Defined Benefit Plans/Long Term Compensated Absences - As per Actuarial Valuations as on March 31, 2011 and recognised in the financial statements inrespect of Employee Benefit Schemes:


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



I. Components of Employer Expense

1. Current Service Cost N.A. 4,956 2,552 N.A. 2936 1,4322. Interest Cost N.A. 445 648 N.A. 191 3723. Expected Return on Plan Assets N.A. Nil Nil N.A. Nil Nil4. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Past Service Cost N.A. Nil Nil N.A. Nil Nil7. Actuarial Losses/(Gains) N.A. 2,443 6,051 N.A. (293) 9948. Total expense recognised in the N.A. 7,844 9,251 N.A. 2,834 2,798


The Gratuity Expenses and Leave Encashment have been recognised in Employee Cost.

160



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

Encashment Unfunded Encashment


As at 31st March, 2011 As at 31st March, 2010

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.

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.


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

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

N.A. Unfunded Unfunded N.A. Unfunded Unfunded N.A. Unfunded Unfunded N.A. Unfunded Unfunded

IX. Net Asset /(Liability) recognised in Balance Sheet(including experience adjustment impact)

1. Present Value of Defined Benefit Obligation N.A. 13,412 17,357 N.A. 5,568 8,106 N.A. 2,734 5,308 N.A. 2,371 2,2502. Fair Value of Plan Assets N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.3. Status [Surplus/(Deficit)] N.A. (13,412) (17,357) N.A. (5,568) (8,106) N.A. (2,734) (5,308) N.A. (2,371) (2,250)4. Experience Adjustment of Plan Assets [Gain/(Loss)] N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil5. Experience Adjustment of Obligation [(Gain)/Loss] N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil N.A. Nil Nil

II. Actual Returns N.A. 8% 8% N.A. 7% 7%

III.Net Asset/(Liability) recognised in √Balance Sheet1. Present Value of Defined N.A. 13,412 17,357 N.A. 5,568 8,106

Benefit Obligation2. Fair value on Plan Assets N.A. N.A. N.A. N.A. N.A. N.A.3. Status [Surplus/(Deficit)] N.A. (13,412) (17,357) N.A. (5,568) (8,106)4. Unrecognised Past Service Cost N.A. Nil Nil N.A. Nil Nil5. Net Asset/(Liability) recognised in N.A. (13,412) (17,357) N.A. (5,568) (8,106)

Balance Sheet

IV. Change in Defined BenefitObligations (DBO)1. Present Value of DBO at Beginning N.A. 5,568 8,106 N.A. 2,734 5,308

of Period2. Current Service Cost N.A. 4,956 2,552 N.A. 2,936 1,4323. Interest Cost N.A. 445 648 N.A. 191 3724. Curtailment Cost/(Credit) N.A. Nil Nil N.A. Nil Nil5. Settlement Cost/(Credit) N.A. Nil Nil N.A. Nil Nil6. Plan Amendments N.A. Nil Nil N.A. Nil Nil7. Acquisitions N.A. Nil Nil N.A. Nil Nil8. Actuarial (Gains)/Losses N.A. 2,443 6,051 N.A. (293) 9949. Bentfits Paid N.A. Nil Nil N.A. Nil Nil

10. Present Value of DBO at the End N.A. 13,412 17,357 N.A. 5,568 8,106of Period

V. Change in Fair value of Asset1. Plan Assets at Beginning of Period N.A. N.A. N.A. N.A. N.A. N.A.2. Acquisition Adjustment N.A. N.A. N.A. N.A. N.A. N.A.3. Expected Return on Plan Assets N.A. N.A. N.A. N.A. N.A. N.A.4. Actuarial Gains/(Losses) N.A. N.A. N.A. N.A. N.A. N.A.5. Actual Company Contributions N.A. N.A. N.A. N.A. N.A. N.A.6. Benefits Paid N.A. N.A. N.A. N.A. N.A. N.A.7. Plan Assets at End of Period N.A. N.A. N.A. N.A. N.A. N.A.

VI. Actuarial Assumptions 1. Discount Rate (%) N.A. 8.00 8.00 N.A. 7.00 7.002. Expected Return on Plan Assets (%) N.A. Nil Nil N.A. Nil Nil

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

11. There are no Micro, Small and Medium Enterprises, to whom theCompany owes any dues, as at 31st March 2011. This information asrequired to be disclosed under the Micro, Small and Medium EnterprisesDevelopment Act, 2006 has been determined to the extent such parties

have been identified based on information available with the Company.12. Figures for the previous year have been re-grouped / re-arranged

wherever necessary.

161



Audit Committee : B. B. Chatterjee, Chairman, M/s. R. Tandon and S. Dutta, Members







III. Position of Mobilisation and Deployment of Funds (Amount in `Thousands)


Sources of Funds






Accumulated Losses

3 1

0 0 0 0 8 3 1 4

0 3 2 0 1 1

2 1

N I L

2 3 9 3 1 6 2 3 9 3 1 6

1 5 9 9 8 4 7 9 3 3 2

N I L N I L

0 2 3 9 3 3 4

- 1 8 N I L

N I L

N I L N I L

N I L



+ – Profit / Loss Before Tax + – Profit / Loss After Tax

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

Earnings Per Share in ` Dividend Rate %

V. Generic Names of Principal Products/Services of Company(As per monetary terms)


Product Description

3 0 3 3 5 7 2 8

2 9 6 0 7 2 9 6 9 6� �

1 . 8 6 N I L

N . A .

N . A .


Basis of Accounting

The Financial Statements are prepared on accrual basis under thehistorical cost convention.

Fixed Assets

Fixed Assets are stated at cost including any incidental acquisitionexpenses.

Depreciation

Depreciation is provided on “Written Down Value” basis at the ratesprescribed in Schedule XIV to the Companies Act, 1956.

Investments

To state Current Investments 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.

Inventories

The inventories are valued at cost or below. The average cost is computedon the 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 therefrom are adjusted inthe Profit and Loss Account except for those covered by forwardcontract rates where the gains / losses arising from such restatementare recognised over the period of such contracts.

Borrowing Costs

Borrowing 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 Rentals

Lease Rentals are being accounted for on an 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

To provide Current Tax as the amount of tax payable in respect oftaxable income for the period.

To provide Deferred Tax on timing differences between taxable incomeand accounting income subject to consideration of prudence.

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.


R. Tandon DirectorS. Dutta DirectorN. Bajaj SecretaryKolkata, 5th May, 2011

REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31stMARCH, 2011

Your Directors submit their Report and Accounts for the financial year ended31st March, 2011.

FINANCIAL PERFORMANCE

During the year under review, your Company earned a gross income of` 1022.94 lakhs (previous year ` 895.41 lakhs) and incurred a net loss of` 325.79 lakhs (previous year ` 490.22 lakhs).

OPERATIONS

The Company owns and operates ‘The Classic Golf Resort’, a Jack NicklausSignature Course, 45 Kms from Delhi. During the year, The Classic GolfResort was the venue for some very prestigious events such as AlbatrossHaryana Golf, The Economic Times, BT Pro Am, Vodafone, Audi Cup, BBCSprit of Golf and Indian Golf League. Most of the tournaments receivedextensive print and electronic media coverage. The course was rated asone of the best in the country by the officials and leading professionalplayers of the country.

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 last quarter of 2012.

During the year, the Company issued and allotted 25,00,000 RedeemablePreference Shares of ` 100 / - each for cash at par, aggregating ` 25Crores, to ITC Limited, the Holding Company. The total preferencecapital of the Company subsequent to the above issue stands at ` 126Crores. The proceeds from the said issue are being utilized towards theconstruction of 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 Outgoi) Earnings : During the year under review, gross foreign exchange earningsof the Company were ` 35.58 lakhs (previous year ` 38.58 lakhs).

ii) Outgo : Foreign exchange outgo during the year under review was` 68.59 lakhs (previous year ` 76.50 lakhs).

DIRECTORS

In accordance with Articles 106 and 107 of the Articles of Association ofthe Company, Mr. Rajiv Tandon 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.

The Board of Directors of your Company at its meeting held on 25th March2011 re-appointed Mr. S. C. Sekhar as Managing Director of the Companyfor a period of two years with effect from 1st April, 2011, in terms of theprovisions of Section 269 of the Companies Act, 1956, read with ScheduleXIII thereto, subject to the approval of the Members of the Company atthe next General Meeting. Appropriate resolution seeking your approvalfor re-appointment of Mr. Sekhar as Managing Director is appearing in theNotice convening the ensuing Annual General Meeting of the Company.

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. PriceWaterhouse, Chartered Accountants, as Auditors of the Company fromthe conclusion of the ensuing Annual General Meeting.

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 appliedthem consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of theloss of the Company for that period; c) taken proper and sufficient carefor the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud andother irregularities; d) prepared the Annual Accounts on a going concernbasis. The significant accounting policies and required disclosuresfollowed are appearing in Schedules 16 and 17, respectively, in theAnnual Accounts.

On behalf of the Board of Directors

Place : Gurgaon S. C. Sekhar Managing DirectorDate : 28th April, 2011 B. Hariharan Director

AUDITORS’ REPORT TO THE MEMBERS OF LANDBASE INDIA LIMITED

1. We have audited the attached Balance Sheet of Landbase India Limited(the “Company“) as at March 31, 2011 and the related Profit and LossAccount and Cash Flow Statement for the year ended on that dateannexed thereto, which we have signed under reference to this report.These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on these financialstatements 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 and disclosuresin the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by Management, as wellas evaluating 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, 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, tothe best of our knowledge and belief, were necessary for thepurposes of our audit;


(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report are in agreement with the books ofaccount;

(d) In our opinion, the Balance Sheet, Profit and Loss Account 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, 2011 and taken on record by the Board of Directors,none of the directors is disqualified as on March 31, 2011 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 statements

162

LANDBASE INDIA LIMITED

163


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 ofthe Company as at March 31, 2011;

(ii) In the case of the Profit and Loss Account, of the loss for the year ended on the date; and

(iii) In the case of the Cash Flow Statement, of the cash flowsfor the year ended on that date.

Abhishek RaraPartner

Membership No : 077779

For Price WaterhouseFirm Registration Number : 012574N


ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OFLANDBASE INDIA LIMITED

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, 2011.

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. (a) The inventory has been physically verified by the Managementduring the year. In our opinion, the frequency of verification isreasonable. There is no inventory lying with third parties.

(b) In our opinion, the procedures of physical verification ofinventory followed by the Management are reasonable andadequate in relation to the size of the Company and the natureof 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, 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 inventory, fixed assets and for the sale of goods andservices. Further, on the basis of our examination of the books andrecords 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 in theaforesaid internal 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 undisputed statutory duesincluding investor education and protection fund, employees’state insurance, entertainment duty, income-tax, wealth tax,service tax, customs duty, excise duty and other material statutorydues as applicable, with the appropriate authorities.

Name of the Nature of the 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

Income Tax Income Tax 12,80,10,000 A.Y. 2005-06 Commissioner ofAct, 1961 Income Tax (Appeals)

10. The accumulated losses of the Company as at March 31, 2011 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.





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.


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 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, the particulars ofdues of income-tax, sales-tax, wealth-tax, service-tax, customsduty, excise duty and cess as at March 31, 2011 which have notbeen deposited on account of a dispute, are as follows :

Abhishek RaraPartner

Membership No : 077779

For Price WaterhouseFirm Registration Number : 012574N



31st March, 2011 31st March, 2010(`) (`) (`) (`)


a) Share Capital 1 1,76,00,00,000 1,51,00,00,000b) Reserves and Surplus 2 6,11,62,181 6,11,62,181

Total 1,82,11,62,181 1,57,11,62,181II. APPLICATION OF FUNDS

1. Fixed Assets 3Gross Block 1,30,07,84,203 1,26,66,05,173Less : Depreciation 35,22,26,636 33,35,05,542Net Block 94,85,57,567 93,30,99,631Capital Work-in-Progress 20,43,88,532 1,15,29,46,099 8,20,51,975 1,01,51,51,606

2. Investments 4 250 2503. Current Assets, Loans and Advances

a) Inventories 5 1,66,43,020 1,23,37,806b) Sundry Debtors 6 46,42,530 56,36,932c) Cash and Bank Balances 7 7,40,09,721 3,13,76,762d) Other Current Assets 8 21,12,291 13,67,568e) Loans and Advances 9 8,09,32,584 2,10,80,365

17,83,40,146 7,17,99,433Less : Current Liabilities and Provisionsa) Current Liabilities 10 37,32,27,018 34,66,79,940b) Provisions 11 18,28,935 14,61,778

Net Current Liabilities (19,67,15,807) (27,63,42,285)

4. Profit and Loss Account 86,49,31,639 83,23,52,610Total 1,82,11,62,181 1,57,11,62,181Significant Accounting Policies 16Notes to the Accounts 17The Schedules referred to above form an integral part of the Accounts.This is the Balance Sheet referred to in our Report of even date.

164


Abhishek RaraPartnerMembership No : 077779For Price WaterhouseFirm Registration Number : 012574NChartered AccountantsGurgaon, 28th April, 2011

For and on behalf of the Board of Directors

S. C. Sekhar Managing DirectorB. Hariharan Director


31st March, 2011 31st March, 2010(`) (`)

I. INCOMEIncome from Operations 12 9,22,66,606 8,76,19,576Other Income 13 1,00,27,302 19,21,857

10,22,93,908 8,95,41,433

II. EXPENDITURERaw Material, Merchandising etc. Consumedand Expenditure incurred on Construction 14 70,34,417 64,85,177Operating and Administrative Expenses 15 9,52,99,651 10,00,00,744Depreciation on Fixed Assets(net) 5 3,25,38,869 3,20,78,246

13,48,72,937 13,85,64,167

III. PROFITProfit/(Loss) before Taxation (3,25,79,029) (4,90,22,734)

Current and Deferred Tax 17 (6) — —Profit/(Loss) after Taxation (3,25,79,029) (4,90,22,734)Profit/(Loss) Brought Forward (83,23,52,610) (78,33,29,876)Profit/(Loss) Carried Forward (86,49,31,639) (83,23,52,610)Earnings Per Share (Face Value ` 10/- each) 17 (5) (0.65) (4.02)

Significant Accounting Policies 16Notes to the Accounts 17The Schedules referred to above form an integral part of the Accounts.This is the Profit and Loss Account referred to in our Report of even date.




CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011For the year ended For the year ended

31st March, 2011 31st March, 2010(`) (`)

A. CASH FLOW FROM OPERATING ACTIVITIES :

NET (LOSS)/PROFIT BEFORE TAX (3,25,79,029) (4,90,22,734)

Adjustments for:Depreciation 3,25,38,869 3,20,78,246Interest Income (32,15,895) (14,27,123)(Profit)/Loss on Fixed Assets/Debtors sold/Write offs 34,15,657 —Miscellaneous Advances written off 10,53,347 10,53,347Write offs of Subscription Fees 6,53,024 —Provision for Doubtful Debts — 8,85,043Provision for Doubtful advances 6,49,767 —Liability no longer required written back (61,20,555) (1,43,157)Provision for Gratuity & Leave Encashment 7,74,051 2,75,260OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (28,30,764) (1,63,01,118)ADJUSTMENTS FOR CHANGES IN WORKING CAPITAL :

– (Increase)/Decrease in Sundry Debtors 9,94,402 (22,94,377)– (Increase)/Decrease in Other Receivables (19,38,270) 60,82,470– (Increase)/Decrease in Inventories (43,05,214) 5,96,397– Increase/(Decrease) in Trade and Other Payables 3,16,07,715 (98,09,52,187)

Cash generated from Operations 2,35,27,869 (99,28,68,815)

– Taxes (Paid)/Received (Net of TDS) 39,89,825 34,77,125

Net cash from Operating Activities 2,75,17,694 (98,93,91,690)

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (11,56,60,406) (4,79,00,522)

Increase in Capital Work in Progress (12,16,95,501) (1,18,25,822)

Interest Received 24,71,172 7,37,916

Net cash used in Investing Activities (23,48,84,735) (5,89,88,428)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from fresh issue of Equity Share Capital — 46,00,00,000

Proceeds from fresh issue of Preference Share Capital 25,00,00,000 1,01,00,00,000

Repayment of Long-Term Borrowings (Term Loans) — (40,00,00,000)

Net Cash from Financing Activities 25,00,00,000 1,07,00,00,000

Net Increase/(Decrease) in Cash and Cash Equivalents 4,26,32,959 2,16,19,882

Cash and Cash Equivalents as at 31.03.2010 3,13,76,762 97,56,880

Cash and Cash Equivalents as at 31.03.2011 7,40,09,721 3,13,76,762

Cash and Cash Equivalents comprise :

Cash in hand 1,89,161 2,36,664

Balance with Scheduled Banks 5,90,32,811 1,30,61,936

Deposit under Margin Money 1,47,87,557 1,80,77,970

Dividend Account 192 192

Total Cash and Cash equivalents 7,40,09,721 3,13,76,762

NOTES:-

1. The above Cash Flow Statement has been prepared under the indirect method set out in the Accounting Standard-3 Cash Flow Statement.

2. Figures in brackets indicate cash outgo.

3. Following other non cash transactions have not been considered in the Cash Flow Statement.

- Tax deducted at source (on income)

This is the Cash Flow Statement Account referred to in our report of even date.

165





6. SUNDRY DEBTORS(Unsecured)Debts Outstanding for a period exceeding six months

– Considered Good 5,64,132 4,47,762– Considered Doubtful 5,02,688 5,02,688

Other Debts– Considered Good 40,78,398 51,89,170

Total Debts 51,45,218 61,39,620Less : Provision for doubtful debts 5,02,688 46,42,530 5,02,688 56,36,932

46,42,530 56,36,932

7. CASH AND BANK BALANCESCash in hand 1,89,161 1,48,373Cheques in hand — 88,291Balance With Scheduled Banks on— Current Accounts 5,90,32,811 1,30,61,936— Dividend Accounts (including interest) 192 192— Fixed Deposit - Margin Money* 1,47,87,557 1,80,77,970

7,40,09,721 3,13,76,762* Pledged against Guarantees and Letter of Credit issued by Bank

8. OTHER CURRENT ASSETS(Unsecured - considered good)Interest Accrued on Fixed Deposits 21,12,291 13,67,568

21,12,291 13,67,568


166



31st March, 2011 31st March, 2010(`) (`) (`) (`)

1. SHARE CAPITALAuthorised

5,00,00,000 Equity Shares (Previous Year 50,00,00,000 50,00,00,0005,00,00,000 Equity Share) of ` 10/- each1,50,00,000 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 1,50,00,000) of ` 100 /- eachIssued and Subscribed

5,00,00,000 * (Previous Year 5,00,00,000) 50,00,00,000 50,00,00,000Equity Shares of ` 10/- each fully paid up.

[Out of the above 5,00,00,000 Equity Shares(Previous Year 5,00,00,000 Equity Shares)are held by the Holding Company, ITC Limited, and its nominees]

1,26,00,000 (Previous Year 1,01,00,000)Redeemable Preference Shares (redeemableon or after 5 years and not entitled to dividend) 1,26,00,00,000 1,01,00,00,000of ` 100 /- each fully paid up.[Out of the above 1,26,00,000 Preference Shares(Previous Year 1,01,00,000)are held by the Holding Company, ITC Limited]

1,76,00,00,000 1,51,00,00,000

* Out of the above Nil (Previous Year 4,60,00,000) shares have been allotted by the way of rights issue to the exisiting shareholders.


General Reserve 6,11,62,181 6,11,62,181

6,11,62,181 6,11,62,181

3. FIXED ASSETS (At Cost) [Refer Note (B) & (C) of Schedule 16 & Note 14 of Schedule 17] (in `)

GROSS BLOCK DEPRECIATION NET BLOCK

As at 1st Additions Deduction/ As at 31st As at 1st For the year** Deduction/ As at 31st As at 31st As at 31stParticulars April, 2010 Adjustments March, 2011 April, 2010 Adjustments March, 2011 March, 2011 March, 2010

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

Tangible AssetsLand (Freehold) 52,20,40,459 3,11,30,282 — 55,31,70,741 — — — — 55,31,70,741 52,20,40,459Building* 23,10,99,859 4,50,059 11,31,739 23,04,18,179 5,02,05,491 36,96,339 4,61,343 5,34,40,487 17,69,77,692 18,08,94,368Plant & Machinery-Others 24,36,83,433 74,03,170 51,55,706 24,59,30,897 12,52,07,635 1,24,09,477 30,53,381 13,45,63,731 11,13,67,166 11,84,75,798Plant & Machinery-Golf Course 22,57,78,037 — — 22,57,78,037 13,35,20,838 1,07,24,458 — 14,42,45,296 8,15,32,741 9,22,57,199Office & Other Equipment 26,78,969 6,04,303 10,22,515 22,60,757 12,26,874 1,33,329 5,83,025 7,77,178 14,83,579 14,52,095Furniture & Fixtures 64,41,877 20,85,654 6,37,785 78,89,746 43,94,433 6,78,550 5,51,631 45,21,352 33,68,394 20,47,444Computers 61,88,803 10,43,047 5,92,633 66,39,217 28,59,844 9,94,620 5,70,217 32,84,247 33,54,970 33,28,959Vehicles 79,33,474 10,18,197 1,95,774 87,55,897 28,35,016 8,32,197 89,340 35,77,873 51,78,024 50,98,458Golf Carts 1,50,92,071 55,90,759 34,81,718 1,72,01,112 90,15,914 19,53,467 34,81,704 74,87,677 97,13,435 60,76,157Tents 56,68,191 27,39,620 56,68,191 27,39,620 42,39,497 17,57,488 56,68,190 3,28,795 24,10,825 14,28,694TOTAL 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 93,30,99,631

Capital Work-in-Progress — — 20,43,88,532 8,20,51,975

Previous Year 1,19,16,29,929 7,49,75,244 — 1,26,66,05,173 30,14,05,853 3,20,99,689 — 33,35,05,542 93,30,99,631

* Building includes Vehicular Roads of ` 45,95,709/- (Previous Year ` 45,95,709/- ) which have been fully depreciated over a period of five years as per Note C of Schedule 16.** Depreciation includes ` 5,24,998/ - (Previous Year ` 21,443/ -) on Assets used for the Resort Project transferred to Capital Work-in-Progress and ` 1,16,058/ - (Previous Year ` Nil) transferred on Inventory

on Golf Huts work in progress used for the same.


4. INVESTMENTS(Refer Note (E) of Schedule 16)(Unquoted - Long-Term, Non-Trade)Gilt Facilities India Private Ltd.545 Redeemable PreferenceShares (0.5%) of ` 1,00,000/-each fully paid 5,45,00,000 5,45,00,000Less : Provision for Diminution

in Investments 5,44,99,900 100 5,44,99,900 100Prime Golf Ranking Private Limited150 Equity Shares of` 1/- each fully paid 150 150

250 250

5. INVENTORIES[Refer Note (F) of Schedule 16]Merchandising Stock 14,80,690 9,09,456Food & Beverage Stock 5,23,182 5,56,797Stores and Spares 77,91,231 69,84,013Stock of Parking Slot/Servant Qtrs 13,19,908 13,19,908Work in Progress-Golf Huts 68,97,563 39,37,186

1,80,12,574 1,37,07,360Less: Provision for Slow Moving stock

of parking slot/servant quarters 13,19,908 13,19,908Less: Provision for Slow Moving stock

of stores and spares 49,646 1,66,43,020 49,646 1,23,37,8061,66,43,020 1,23,37,806

167



14. RAW MATERIAL, MERCHANDISING, For the year ended For the year endedETC. CONSUMED AND EXPENDITURE 31st March, 2011 31st March, 2010INCURRED ON CONSTRUCTION (`) (`) (`) (`)

As at As at 31st March, 2011 31st March, 2010

(`) (`) (`) (`)9. LOANS AND ADVANCES

(Unsecured)Advances recoverable in cash orin kind or for value to be received

– Considered good* 7,79,91,854 1,33,64,810 —– Considered doubtful 6,49,767 —

7,86,41,621 1,33,64,810Less Provision for doubtful advances 6,49,767 7,79,91,854 — 1,33,64,810

Security Deposits– Considered good 5,30,128 13,15,128Advance Tax (Net of Provision for tax amounting to ` 18,86,593 2,41,06,02 64,00,427(Previous Year ` 18,86,593)

8,09,32,584 2,10,80,365

* Includes capital advances amounting to ` 6,49,54,041/- (Previous Year ` 13,47,153/-)

10. CURRENT LIABILITIESSundry Creditors— Total outstanding dues of creditors

other than micro & small enterprises(Refer Note 4 on Schedule 17) 4,51,14,907 1,86,45,221

Other Liabilities 40,56,181 36,38,910Investor Education and Protection Fund shallbe credited by the following amount :— Unpaid Dividend 157 157Advances received against GolfMembership 3,40,36,642 3,04,63,786Payments received against GolfMembership pending approval 20,000 32,18,133Security Deposit against Golf Membership(Refer Note 3 on Schedule 17) 31,10,08,793 31,08,75,115

34,50,65,435 34,45,57,034Less :Membership Subscription Receivable 2,10,09,662 32,40,55,773 2,01,61,382 32,43,95,652

37,32,27,018 34,66,79,940

11. PROVISIONS(Refer Note (G) of Schedule 16 and Note 15 of Schedule 17)

Provision for Employee Benefits 18,28,935 14,61,778

18,28,935 14,61,778


12. INCOME FROM OPERATIONS

Membership Fee 3,48,75,001 3,44,17,396Food and Beverage Sales 1,14,11,552 1,34,38,499Proshop Income 29,33,959 19,29,367Caddie Rental 72,56,493 74,08,340Cart Rental 54,52,356 37,65,112Green Fee 2,43,36,452 2,24,57,321Health Club and Other Facilities 21,99,514 10,06,580Tented Accomodation Rental Income 8,86,993 24,70,685Sponsorship Income 29,14,286 7,26,276

9,22,66,606 8,76,19,576

13. OTHER INCOMEInterest received— On Fixed Deposits – Gross* 21,14,818 8,89,119— Income Tax Refund 8,80,000 1,67,300— Others 2,21,077 3,70,704

Miscellaneous Receipts 4,67,516 2,84,329Sale of Scrap 2,23,336 67,248Liabilities Written Back 61,20,555 1,43,157

1,00,27,302 19,21,857

*[Tax deducted at source ` 2,11,549/- (Previous year - ` 88,717/-)]

1) Raw Material (Food & Beverage)Opening Stock 5,56,797 6,34,478Add : Purchases 51,95,014 55,52,575

57,51,811 61,87,053Less : Closing Stock 5,23,182 52,28,629 5,56,797 56,30,256

2) MerchandisingOpening Stock 9,09,456 11,61,900Add : Purchases 23,77,022 6,02,477

32,86,478 17,64,377Less : Closing Stock 14,80,690 18,05,788 9,09,456 8,54,921

3) Laburnum Project ExpensesOpening BalanceStock of Parking Slots & Servant Quarters andMaterial at Site 13,19,908 13,19,908

13,19,908 13,19,908Less : Provision for Parking Slots& Servant Quarter 13,19,908 13,19,908

4) Golf Hut Project ExpensesOpening Balance 39,37,186 31,92,661Add : Expenses during the year Salaries, Wages and Bonus 11,582 —

Travelling & Conveyance 55,037 —

Vehicle Maintenance 3,336 —

Legal & Professional Charges 27,54,165 7,44,525Printing & stationery 16,249 —

Miscellaneous exp 3,949 —

Depreciation 1,16,059 —

68,97,563 39,37,186Less : Closing Stock 68,97,563 39,37,186

70,34,417 64,85,177

15. OPERATING AND ADMINISTRATIVEEXPENSES(Refer Note 14 & 15 of Schedule 17)Salaries, Wages and Bonus 4,18,62,621 4,02,42,303Contribution to Provident andOther Funds [Includes ` 4,20,660/-(Previous Year ` 72,724/-) towardsprovision for Gratuity] 17,77,934 11,15,228Welfare Expenses 10,17,351 4,46,57,906 10,35,246 4,23,92,777Rent 5,93,745 7,64,728Rates & Taxes 11,90,061 6,10,304Travelling & Conveyance 29,08,655 30,99,703Vehicle Maintenance 17,37,246 17,20,715Communication Expenses 12,98,567 14,35,851Power & Fuel 1,19,76,468 1,01,80,779Consumption of Other Consumables 37,52,692 34,99,547Insurance 11,92,824 7,86,486Repair and Maintenance— Building 7,69,749 6,83,145— Plant and Machinery 8,46,650 5,50,430— Others 32,16,482 48,32,881 18,83,966 31,17,541Golf Course Maintenance [excludingdebited to other heads ` 74,99,247/-(Previous Year ` 53,21,852/-)] 51,56,170 50,40,585Business Promotion 2,48,336 1,61,655Printing & Stationery 53,083 51,407Auditors’ Remuneration— Audit Fee 6,61,800 6,61,800— Out of Pocket Expenses 55,600 7,17,400 57,900 7,19,700Legal & Professional Charges 54,44,139 98,62,640Advertisement & Sales Promotion 10,000 21,000Hire Charges 12,16,052 12,25,029Club Promotion Expenses 15,826 55,606Sundry Balances written off — 8,85,043Loss on Assets sold & written off 34,15,657 —Subscription fees written off 6,53,024 —Filing Fees for increase in Authorised Capital — 1,18,50,000Miscellaneous Expenses 42,28,919 25,19,648

9,52,99,651 10,00,00,744


16. SIGNIFICANT ACCOUNTING POLICIESA) BASIS OF PREPARATION OF ACCOUNTS

The Financial Statements have been prepared to comply in all material aspectswith all the applicable accounting principles in India, the applicable accountingstandards notified under section 211(3C) of the Companies Act, 1956 andthe relevant provisions of the Companies Act, 1956.

B) FIXED ASSETSFixed assets are stated at cost of acquisition less accumulated depreciation.Costs are inclusive of inward freight, duties and taxes and any other incidentalexpenditure relating to acquisition. In respect of major projects involvingconstruction, related project and pre-operational expenses form part of thevalue of assets capitalized.

C) DEPRECIATIONDepreciation on Fixed Assets, is provided on straight line method at the ratesand in the manner prescribed under Schedule XIV to the Companies Act, 1956except 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

Depreciation is provided on prorata basis on the assets capitalized during theyear. Assets costing less than ̀ 5,000/- are fully depreciated in the year of purchase.

D) FOREIGN CURRENCY TRANSACTIONSi) Transactions in foreign currency are recorded at the rate prevalent on

the date of the transaction.ii) All foreign currency liabilities and monetary assets are restated at the

exchange rate prevailing as at the date of the Balance Sheet. The differenceis taken to the Profit and Loss account as Exchange Fluctuation loss orgain.

E) INVESTMENTSInvestments made by the Company are long-term in nature and are recordedat cost. Provision for diminution is made to recognize a decline, other thantemporary, in the value of the investments.

F) INVENTORIESInventories are valued at the lower of cost, determined on the weightedaverage basis and net realizable value.Work in progress - golf huts includes cost of work for in progress properties.Cost included in inventory includes development expenses, cost of servicesand other overheads relating to project and is valued at lower of cost /estimated cost and estimated net realizable value.

G) EMPLOYEE BENEFITSi) The Company’s contributions to State plans namely Employee Provident

Fund and Employee’s State Insurance Fund are charged to revenue everyyear.

ii) The Company has defined Benefit plans namely Gratuity (unfunded plan)for all employees, the liability for which is determined on the basis of anactuarial valuation at the end of the year using the projected unit creditmethod.

iii) Other long term benefits of the Company includes leave encashment/compensated absence, the liability for which is determined on the basisof an actuarial valuation at the end of the year using the projected unitcredit method.

iv) Termination benefits are recognised as an expense immediately.v) Actuarial gains and losses comprise experience adjustments and the

effects of changes in actuarial assumptions and are recognised immediatelyin the Profit and Loss Account as income or expense.

H) 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 stock isbeing 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 is recognizedat the time such services are rendered to the customer.

iv) Sale of merchandising stock (Proshop Income) is recognised at the timeof delivery of goods to the customer.

I) TAXES ON INCOMEi) Provision for Current Tax is made on the basis of estimated taxable

income for the current accounting year in accordance with the applicableprovisions of the Income Tax Act, 1961.

ii) In accordance with Accounting Standard AS-22 “Accounting for taxeson Income”, the deferred tax liability on account of timing differencesbetween the book and the tax profits for the year is accounted for usingthe tax rates and laws that have been substantially enacted as on theBalance Sheet date.

iii) Deferred Tax Assets arising from timing differences are recognized subjectto consideration of prudence. However, where there are unabsorbed taxlosses and depreciation deferred tax assets are recognized to the extentthere is virtual certainty that these would be realised in future.

J) PROVISIONS AND CONTINGENT LIABILITIESA provision is recognised when there is a present obligation as a result of apast 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 is remote,no provision or disclosure is made.

17. NOTES TO THE ACCOUNTS1. Contingent Liabilities : Claims against the Company not acknowledged

as debts :a) Pertaining to legal suits against the Company for recovery of dues /

compensation aggregating to ` 6,32,716/- (Previous Year ` 3,32,338/-)plus future interest, the amount of which is unascertainable, under litigation.As opined by Company’s lawyers, the chances of suit succeeding are remoteand accordingly Company does not foresee any liability in this regard.

b) The Company has Income Tax demands outstanding of ` 11,59,41,813/-(Previous Year ` 11,59,41,813/-) for Assessment Year 2001-02, ` 1,56,29,691/-(Previous Year ` 1,56,29,691/-) for the Assessment Year 2003-04 and` 26,62,65,172/- (Previous Year ̀ 13,82,55,712/-) for Assessment Year 2005-06.All the assessments are currently under appeal with the Income Tax Authorities.

In the opinion of the management, the likelihood of the appeal beingdecided against the Company is highly unlikely, hence no provision of theseamounts has been considered necessary in the books of account.

c) Bank Guarantees** given to Government Authorities, ` 1,14,77,970/-(Previous Year ` 1,14,77,970/-).

d) Letter of Credits** given to vendors, ̀ 33,00,000/- (Previous Year ̀ 61,44,859/-)* The amounts shown in the item (a) and (b) above represent the best possible

estimates arrived at on the basis of available information. The uncertaintiesand possible reimbursements are dependent on the outcome of the differentlegal processes which have been invoked by the Company or the claimantsas the case may be and therefore cannot be predicted accurately.

** The amounts shown in items (c) and (d) represent guarantees and letterof credits given in the normal course of the Company’s operations andare not expected to result in any loss to the Company on the basis of thebeneficiaries fulfilling their ordinary commercial obligations.

2. Outstanding Capital Commitments :Unexpired amount (net of advances) of the contracts on Capital Account notprovided for in the accounts is ̀ 41,81,13,474/- (Previous Year ̀ 6,68,54,619/-).

3. Current Liabilities include ` 31,10,08,793/- (Previous Year ` 31,08,75,115/-)as deposits received from individuals towards golf memberships. Theserepresent long term tradable memberships which, are to be refunded at thetime of termination of the membership.

4. As per the information available with the Company, none of the vendorsare covered under the Micro, Small & Medium Enterprises DevelopmentAct, 2006.

5. Earnings Per Share :Basic/Diluted Earnings Per Share

As at As atMarch 31, 2011 March 31, 2010

Net Profit/(Loss) after tax available forEquity Shareholders (`) (3,25,79,029) (4,90,22,734)Weighted Average Number of Sharesoutstanding during the year 5,00,00,000 1,21,91,781Nominal Value of Equity Shares (`) 10.00 10.00Basic/Diluted (Loss)/Earnings perShare of ` 10/- each (0.65) (4.02)

6. Accounting for Taxes on Income :In view of the significant carry forward income tax losses (business anddepreciation) and there being no virtual certainty of profits in the near future,net deferred tax asset as at March 31, 2011 has not been recognised in thebooks of accounts.

7. Value of Imports calculated on CIF basis during the year in respect of :

For the year ended For the year endedMarch 31, 2011 March 31, 2010

(`) (`)

Capital Goods 75,60,411 18,51,547Total 75,60,411 18,51,547

8. Expenditure in Foreign Currency (Cash Basis) :March 31, 2011 March 31, 2010

(`) (`) Professional & Consultancy 68,59,370 76,49,661

9. Earnings in Foreign Exchange (Accrual) :March 31, 2011 March 31, 2010

(`) (`)Service Income 35,58,156 38,57,845

168



10. Value of indigenous and imported Raw Material, Stores & Sparesconsumed during the period & percentage of each to the totalconsumption :

March 31, 2011 March 31, 2010Value (`) % Value (`) %

Raw MaterialImported — — — —Indigenous 52,28,629 100 56,30,256 100

52,28,629 56,30,256Stores & SparesImported 18,99,400 15 14,29,562 14Indigenous 1,07,56,017 85 89,32,875 86

1,26,55,417 1,03,62,437

12. Segment Revenue, Result & Other Information

The Company carries on activities primarily under the Leisure & Hospitality

segment and operates within one geographical segment, India. Hence the

segment disclosure has not been provided.

13. Related Party Disclosure

i) Holding Company :

ITC Limited

ii) Key Management Personnel :

Mr. Nakul Anand Chairman

Mr. S. C. Sekhar Managing Director

Mr. Rajiv Tandon Director

Mr. B. Hariharan Director

Mr. Ravi Puri Chief Executive Officer

Mr. Atul Kumar Head of Finance & Commercial

iii)Fellow Subsidiaries with whom transactions have taken place :

M/s Fortune Park Hotels Limited

M/s Green Acre Holdings Limited

iv) Associate Companies with whom transactions have taken place :

M/s International Travel House Limited

M/s Classic Infrastructure Development Limited

169


Particulars Current Year Previous YearQty Value Qty Value

(Nos.) (`) (Nos.) (`)

a) Opening StockGolf Equipment * 13 6,72,888 13 6,72,887Golf Apparel etc 8,522 2,36,568 13,648 4,89,013Total 8,535 9,09,456 13,661 11,61,900

b) PurchasesGolf Equipment * — — — —Golf Apparel etc 9,981 23,77,022 3,795 6,02,477Total 9,981 23,77,022 3,795 6,02,477

c) Turnover (at selling price)Golf Equipment * — — — —Golf Apparel etc 12,217 22,60,435 8,921 10,54,711Total 12,217 22,60,435 8,921 10,54,711

d) Closing StockGolf Equipment * 13 6,72,888 13 6,72,888Golf Apparel etc 6,286 8,07,802 8,522 2,36,568Total 6,299 14,80,690 8,535 9,09,456

*Quantitative details reflects only high value golf equipment

11. Quantitative Details of Merchandising Stock

v)Details of Transaction carried out during the financial year ended March 31, 2011 with related party in the ordinary course of business : (in `)

S. No Particular Holding Company Fellow Subsidiaries Associates

Current Year Previous Year Current Year Previous Year Current Year Previous Year

1 Sale of Services— ITC Limited 4,05,434 1,54,855 — — — —

2 Purchase of Fixed Assets— Fortune Park Hotels Limited — — 50,917 — — —

3 Commission Income onConsignment Sales— ITC Limited — 15,517 — — — —

4 Purchase of services— ITC Limited 5,38,802 1,85,920 — — — —— International Travel House Limited — — — — 3,25,434 —— Fortune Park Hotels Limited — — — 8,400

5 Expenses Recovered— ITC Limited 5,99,840 1,86,161 — — — —— Green Acre Holdings Limited — — 21,79,702 94,71,047 — —— Classic Infrastructure &

Development Limited — — — — 23,915 92,460— Fortune Park Hotels Limited — — — 1,16,230 — —— International Travel House

Limited — — — — — 1,16,2306 Expenses Reimbursed

— ITC Limited 94,56,522 70,73,863 — — — —— Fortune Park Hotels Limited — — 10,498 27,939 — —— International Travel House Limited — — — — — 30,508

7 Project Expenses Reimbursed— ITC Limited 25,17,869 11,99,681 — — — —— Fortune Park Hotels Limited — — — 1,60,162 — —— International Travel House Limited — — — — 16,690 22,053

8 Repayment of Advances received— ITC Limited — 1,05,14,00,000 — — — —

9 Repayment Loans— ITC Limited — 40,00,00,000 — — — —

10 Advances Received— ITC Limited — 6,68,00,000 — — — —

11 Balances Outstanding at the year endi) Debtors/Receivables

— Green Acre Holdings Limited — — 11,17,702 — — —— Classic Infrastructure

Development Limited — — — — 9,301 —— International Travel House Limited — — — — 4,111 —

ii) Creditors/Payables— ITC Limited 39,47,268 10,87,529 — — — —— Fortune Park Hotels Limited — — — 17,549 — —— Green Acre Holdings Limited — — — 5,364 — —

170


vi)Summary of Transactions with the Key Management Personnel duringthe year :

S. No Particulars Current Year Previous Year1 Sale of Services 79,002 2,7002 Balances Outstanding at the year end

i) Debtors/Receivables — 2,700

14. The Board of Directors had approved a detailed plan in Financial Year 2009-10of the Green Bharat Project (resort project) of the Company which is proposedto be completed by 2012-13.The Capital work-in-progress amounting to ` 20,43,88,532/- (Previous Year` 8,20,51,975/-) includes ` 20,37,98,840/- (Previous Year ` 8,14,62,283/-)relating to the Resort project. Details of project management expensesdirectly attributable to resort project, transferred to capital work in progressrelating to resort project are as under:

Particulars 2010-11 2009-10Opening Balance as at April 1, 2010 8,14,62,283 7,03,59,545Add : Expenses incurred

— Salaries, Wages and Bonus 54,77,110 84,026— Welfare Expenses — 61,498— Rates & Taxes 5,06,288 30,000— Travelling & Conveyance 21,22,497 10,40,377— Vehicle Maintenance 56,482 3,621— Power & Fuel 1,75,749 —— Insurance 16,904 —— Technical & Professional Charges 1,97,56,882 95,98,797— Repairs & Maintenance - P & M 5,447 —— Repairs & Maintenance - Others 4,87,470 —— Printing & Stationary 4,26,970 1,84,954— Miscellaneous Expenses 6,17,184 78,022— Hire Charges 12,788 —— Depreciation 5,24,997 21,443

Sum Total 3,01,86,768 1,11,02,738Closing Balance as at March 31 2011 11,16,49,051 8,14,62,283

During the current year, management subsequent to change in its plans for

selling of golf huts has reclassified ` 39,37,186/- from Capital Work in progress

outstanding as at April 1, 2010 towards Work in Progress-Golf Huts.

15. The details of liabilities recognized by the Company in respect of long term

defined benefits and contribution schemes in accordance with Accounting

Standard 15 (Revised 2005) for its employees are given below.

The Company has classified the various benefits provided to the employees

as under:

I. Defined Contribution Plan

Contribution to Regional Provident Fund Commissioner (State Plans)

Contribution to Employee’s State Insurance Corporation (ESIC)

II. Defined Benefit Plans - Gratuity for employees

During the current year the Company has recognized the following

amounts in the Profit & Loss Account :

Employer’s Contribution As at As at

March 31, 2011 March 31, 2010

Provident Fund 9,62,615 7,61,235

Employee’s State Insurance Corporation 3,94,659 2,81,269

In accordance with Accounting Standard 15, actuarial valuation was done in respect of the aforesaid plans based on the following assumptions –

Employee’s Gratuity Fund (Unfunded)

Assumptions As at As at As at As at As at

March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007

Discount Rate 8.00% 7.50% 7.00% 7.50% 7.50%

Salary Escalation Rate 5.00% 5.00% 5.00% 5.00% 5.00%

Normal Retirement age 58 years 58 years 58 years 58 years 58 years

Attrition Rate 10% p.a. 10% p.a. 10% p.a. 10% p.a. 10% p.a.

Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply anddemand in the employment market.

Employee’s Gratuity Fund

(A) Changes in the Present Value of As at As at As at As at As at

Obligation March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007

Present value of Obligation as atApril 1, 2010 7,02,851 6,30,127 4,70,063 4,49,746 4,32,506

Interest Cost 47,288 47,260 21,014 32,975 22,066

Current Service Cost 4,18,916 2,78,817 2,43,208 36,721 1,24,659

Benefits Paid (2,23,508) NIL (3,39,719) (20,169) (2,76,576)

Actuarial (gain)/ loss due to change inassumption/interest guarantee (45,544) (2,53,353) 2,35,561 (29,210) 1,47,091

Present value of Obligation as atMarch 31, 2011 9,00,003 7,02,851 6,30,127 4,70,063 4,49,746


(B) Amount recognised in the Balance As at As at As at As at As at

Sheet March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007

Liability at the end of the year (9,00,003) (7,02,851) (6,30,127) (4,70,063) (4,49,746)

Ending Assets — — — — —

Funded Status Asset/(Liability) — — — — —

Unrecognised Past Service Cost — — — — —

Asset/(Liability) recognised in the BalanceSheet (9,00,003) (7,02,851) (6,30,127) (4,70,063) (4,49,746)

171


* Provision for employee benefits as disclosed under Schedule 11 includes` 40,671/- (Previous Year ` 48,001/-) provided for short term leave of theemployees.

** Leave encashment is included in Salary, Wages and Bonus and Contributionto Provident Fund, ESIC and Provision for Gratuity is included in Contributionto Provident and Other Funds (Refer Schedule 15)

18. Previous year figures have been regrouped and reclassified wherever necessaryto conform to current year’s classification.

Year ended Year endedMarch 31, 2011 March 31, 2010

Asset / (Liability) recognised inthe Balance Sheet * (8,88,261) (7,10,926)Amount recognised in the Income Statement** 3,12,720 2,49,355

III. Other Long Term Benefits – Leave Encashment

Abhishek RaraPartnerMembership No : 077779For Price WaterhouseFirm’s Registration Number : 012754NChartered AccountantsGurgaon, 28th April, 2011




(C) Expense recognised in the As at As at As at As at As at

Income Statement March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007

Current Service Cost 4,18,916 2,78,817 2,43,208 36,721 1,24,659

Interest Cost 47,288 47,260 21,014 32,975 22,066

Net Actuarial (Gain)/Loss to berecognised (45,544) (2,53,353) 2,35,561 (29,210) 1,47,091

Expense Recognised in P & L** 4,20,660 72,724 4,99,783 40,486 2,93,816

�

+ – + –




Balance Sheet Date

Date Month Year






Sources of Funds

Paid up Capital Share Application Pending Allotment

Reserves & Surplus Secured Loans

Unsecured Loans




Accumulated Losses

IV. Performance of the Company (Amount in ` Thousands)

Turnover Total Expenditure


(Please tick appropriate box, + for Profit, – for Loss)

Earning per Share in ` Dividend Rate %

V. Generic Names of Three Principal Products/Services of Company (as permonetary terms)


Product Description

N I L N I L

N I L 2 5 0 0 0 0

1 8 2 1 1 6 2 1 8 2 1 1 6 2

1 7 6 0 0 0 0 N I L

N I L

1 1 5 2 9 4 6 N I L

(1 9 6 7 1 6) N I L

8 6 4 9 3 2

1 0 2 2 9 4 1 3 4 8 7 3

� (3 2 5 7 9) (3 2 5 7 9)

N I L

N . A .

N . A .

4 7 3 3 1 5 5

3 1 0 3 2 0 1 1

(0 . 6 5)

6 1 1 6 2

N I L

Audit Committee : Chairman: Mr. Rajiv Tandon, Members: Mr. B. Hariharan and Mr. Nakul AnandPermanent Invitees: Representative of Statutory Auditors


Your Directors hereby present the Annual Report and Audited Accounts ofthe Company for the financial year ended 31st March, 2011.

Year ended Year ended31.03.2011 31.03.2010

(` Lakhs) (` Lakhs)Gross operating Profit/(Loss) (43.57) 52.86Less: Interest and finance charges 0.00 0.00Profit/(Loss) before depreciationand taxation (43.57) 52.86Less: Depreciation & Impairment loss 2.51 2.71Profit/(Loss) before Taxation (46.08) 50.15Less: Provision for Taxation — —Profit/(Loss) after Taxation (46.08) 50.15Brought forward from previous year (6,033.33) (6,037.40)Transfer from General Reserve — —Balance carried to Balance Sheet (6,033.33) (5,987.25)

The gross operating loss for the year ended March 31, 2011 was ` 43.57lakhs, compared to a profit of ` 52.86 lakhs in the previous year and afterproviding depreciation, the net loss for the year was ` 46.08 lakhs as againsta net profit of ` 50.15 lakhs in the previous year.

Economic ScenarioRecoveries of non-performing assets continued to be muted at ` 9.11 lakhsfor the year. Your Company continues to vigorously pursue various legalcases initiated against defaulting clients.

OperationsDuring the last fourteen years your Company has concentrated on recoveriesand has collected a total of ` 9,665.83 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.

For AY 2002-2003, an appeal filed with the Commissioner Income Tax onimposition of penalty of ` 76.56 lakhs was disallowed with regard tonegotiated out of court settlement with one of the defaulting parties. Thismatter is now in appeal before the Income Tax Appellate Tribunal Mumbai(ITAT) which is pending. Though your Company prima facie believes thatit has a strong case, as a matter of abundant caution, a provision has beenmade in the books of the Company for the demanded amount. YourCompany 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

172

BFIL FINANCE LIMITED

accounting standards with proper explanation relating to materialdepartures;

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 atthe end of the financial year and of the profit of the Company for thatperiod;

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 is in the process of Members’ voluntary windingup.

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 of your Company.

DirectorsSri Jagdish Singh retires at the forthcoming Annual General Meeting andbeing eligible, offers himself for re-appointment.

Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988.The Company has no activities relating to Conservation of Energy 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 2011,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.


P. K. Sen Jagdish SinghKolkata, 30th April, 2011 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, 2011, and the related Profit and LossAccount and Cash Flow Statement for the year ended on that dateannexed thereto, which we have signed under reference to this report.These financial statements are the responsibility of the Company’sManagement. Our responsibility is to express an opinion on thesefinancial statements based on our audit.



4. Further to our comments in paragraph 3 above, 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;

173


(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account 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, ason March 31, 2011 and taken on record by the Board of Directors,none of the directors is disqualified as on March 31, 2011 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 thecompany as at March 31, 2011;

(ii) in the case of the Profit and Loss Account, of the loss for theyear ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows forthe year ended on that date.

For Lovelock & LewesFirm Registration No. 301056E

Chartered AccountantsPartha Mitra

Partner

Kolkata, April 30, 2011 Membership No: 50553


[Referred to in paragraph 3 of the Auditors’ Report of even date to themembers of BFIL Finance Limited (”the Company”) on the financialstatements as at and for the year ended March 31, 2011]

1. (a) The Company is generally maintaining adequate records to showthe particulars of fixed assets, commensurate with the size of thecompany and the nature of its business.

(b) All the fixed assets of the company are physically verified by themanagement according to a phased program designed to coverall the items over a period of two years, except for the leased assetswhere parties have defaulted in payment of lease rentals and theCompany has initiated legal proceedings for recovering the dues,accordingly no physical verification of such leased assets have beencarried out during the year.

(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 management atthe year end. However, in respect of stock-on-hire, the Companyhas initiated legal proceedings for recovering its dues and nophysical verification was carried out. In our opinion, the frequencyof verification 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. The discrepancies noticed on physical verification of inventory ascompared to book records were not material.

3. 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.

4. 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.

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 undisputed statutory duesincluding provident fund, investor education and protection fund,employees’ state insurance, income tax, wealth tax, service tax,customs duty, excise duty, cess and other material statutory duesas applicable, with the appropriate authorities.

(b) According to the information and explanations given to us andthe records of the Company examined by us, the particulars ofdues of income tax, sales tax, wealth tax, service tax, customs duty,excise duty and cess as at March 31, 2011, which have not beendeposited 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 37,21,426 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,Act, 1994 Jaipur

Income tax Penalty 76,56,074 A.Y 2002-03 CIT(A), MumbaiAct, 1961 u/s. 156

8. The company’s accumulated losses as at March 31, 2011 are morethan fifty percent of its net worth and has incurred cash losses duringthe financial year ended on date and in the immediately precedingfinancial year.


10. 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. 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, 2011 holds certain securities as stock-in-trade and suchsecurities have been held by the company in its own name.


14. 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.

15. The Clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f), (iii)(g), (iv), (viii), (xv), (xvi),(xviii), (xix) and (xx) of paragraph 4, of the Companies (Auditor’sReport) Order, 2003, as amended by the Companies (Auditor’sReport)(Amendment) Order, 2004 are not applicable in the case of thecompany for the current year, since in our opinion there is no matterwhich arises to be reported in the aforesaid order.

For Lovelock & Lewes

Firm Registration No. 301056E

Chartered AccountantsPartha Mitra

Partner


174


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2011(Amount in Rupees)


INCOMEOther Income 11 52,24,974 69,92,944

52,24,974 69,92,944EXPENDITURE

Personnel, Operating andAdministration Expenses 12 95,82,096 17,06,880Depreciation and Impairment loss 2,50,806 2,71,222

98,32,902 19,78,102PROFIT BEFORE TAXATION (46,07,928) 50,14,842

Provision for Taxation — —PROFIT AFTER TAXATION (46,07,928) 50,14,842Surplus / (Deficit) Brought forward from previous year (59,87,24,863) (60,37,39,705)Balance carried to Balance Sheet (60,33,32,791) (59,87,24,863)Notes to the Accounts 13Basic and Diluted Earnings per Share (`) (0.23) 0.25Schedules 11 to 13 and Statement on Significant Accounting Policies form an integralpart of the Profit and Loss Account.This is the Profit and Loss Account referred to in our Report of even date.

For Lovelock & LewesFirm registration No. 301056E On behalf of the BoardChartered Accountants P. K. Sen DirectorPartha Mitra, Partner Jagdish Singh DirectorMembership No. 50553 V. Radhakrishnan Manager &Kolkata, 30th April, 2011 Company Secretary

BALANCE SHEET AS AT 31ST MARCH, 2011(Amount in Rupees)

Schedule As at As at31st March, 2011 31st March, 2010

I. SOURCES OF FUNDS1. Shareholders' Funds

Capital 1 20,00,00,000 20,00,00,0002. Loan Funds

Unsecured Loans 2 47,54,11,077 47,54,11,07767,54,11,077 67,54,11,077


a) Gross Block 22,02,12,551 23,15,68,059b) Depreciation and Impairment (12,36,54,186) (12,99,44,168)c) Lease Terminal Adjustment (3,53,45,463) (3,75,32,804)d) Net Block 6,12,12,902 6,40,91,087e) Capital Work-in-Progress 2,81,72,250 2,81,72,250f) Provision for Doubtful leased Assets (5,66,83,562) (5,93,10,941)

3,27,01,590 3,29,52,3962. Investments 4 4,30,23,750 4,30,23,7503. Current Assets, Loans and Advances

a) Stock-on-hire 3,06,66,715 3,06,66,715Less: Provision for Doubtful Assets 2,39,03,734 2,39,03,734

67,62,981 67,62,981Less: Unmatured finance charges 67,62,981 67,62,981

— —b) Stock-in-trade 5 1,000 1,000c) Sundry Debtors 6 — —d) Cash and Bank Balances 7 8,29,760 11,57,788e) Loans and Advances 8 5,66,654 1,45,281f) Other Current Assets 33,77,752 —

47,75,166 13,04,069Less: Current Liabilities and Provisions

Current Liabilities 9 7,66,146 5,94,001Provisions 10 76,56,074 —Net Current Assets/(Liabilities) (36,47,054) 7,10,068

4. Profit and Loss Account - Debit Balance 60,33,32,791 59,87,24,86367,54,11,077 67,54,11,077

Notes to the Accounts 13Schedues 1 to 10, 13 and Statement on Significant Accounting Policies form an integral part of the Balance Sheet.This is the Balance Sheet referred to in our Report of even date.

For Lovelock & LewesFirm registration No. 301056E On behalf of the BoardChartered Accountants P. K. Sen DirectorPartha Mitra, Partner Jagdish Singh DirectorMembership No. 50553 V. Radhakrishnan Manager &Kolkata, 30th April, 2011 Company Secretary

175


(Amount in Rupees)


5. STOCK-IN-TRADE

(Valued at Cost or Market Value whichever is lower)Stock of Shares & SecuritiesQuoted - Fully paid3 Equity Shares of ` 10/- each of Ultra Tech CemCo Limited 1,000 1,000Unquoted- Fully paid5,40,000 Optionally FullyConvertible Debentures ofG-Tech Stone Limited 5,94,00,000 5,94,00,000Less: Provision for erosion in value 5,94,00,000 — 5,94,00,000 —

1,000 1,000

6. SUNDRY DEBTORS(Unsecured, considered doubtful)Over 6 months :Lease and hire purchasedebtors 4,55,34,170 4,72,84,272

Trade debtors 9,39,55,367 10,45,60,247

13,94,89,537 15,18,44,519

Less: Provision for doubtful debts 13,94,89,537 15,18,44,519

— —

(Amount in Rupees)


4. INVESTMENTSUnquoted (At Cost)

Long Term:Government / Trust Securities(other than trade)National Savings Certificate fully paid 5,000 5,000(deposited with GovernmentAuthorities)Kisan Vikas Patra fully paid 5,000 5,000(deposited with GovernmentAuthorities)

10,000 10,000

Less : Provision for doubtfulinvestments 10,000 10,000

— —Trade Investments:Subsidiary Company

MRR Trading & InvestmentCompany Limited 5,06,44,520 5,06,44,520(includes 50,000 Equity Sharesof ` 10/- each fully paid)Less: Diminution in value ofinvestments (76,20,770) 4,30,23,750 (76,20,770) 4,30,23,750

4,30,23,750 4,30,23,750

SCHEDULES TO THE FINANCIAL STATEMENTS

(Amount in Rupees)


1. CAPITALAUTHORISED3,00,00,000 Equity Shares of ` 10/- each 30,00,00,000 30,00,00,00010,00,000 Cumulative Redeemable/ConvertiblePreference Shares of ` 100/- each 10,00,00,000 10,00,00,000

40,00,00,000 40,00,00,000ISSUED AND SUBSCRIBED2,00,00,000 Equity Shares of ` 10/- each fully paid-up in cash 20,00,00,000 20,00,00,000(all the above Shares are held by the Holding Company, ITC Limited)

20,00,00,000 20,00,00,0002. UNSECURED LOANS

Other than Short Term15,00,000 - 0% Non-Convertible Debentures of ` 100/- eachissued to the Holding Company and repayable at par on 31st March, 2012 15,00,00,000 15,00,00,000Loans from Holding Company 32,54,11,077 32,54,11,077

47,54,11,077 47,54,11,077

3. FIXED ASSETS (Amount in Rupees)

Gross Block (at cost) Depreciation Lease Terminal Adjustment Net Block

As at Additions Deductions As at As at On withdrawals As at As at As at As at As at1st April, during during 31st March, 1st April, For the and 31st March, 31st March, 31st March, 31st March, 31st March,

2010 the period the period 2011 2010 year adjustments 2011 2011 2010 2011 2010

Buildings 1,08,59,437 — — 1,08,59,437 73,38,734 1,76,036 — 75,14,770 — — 33,44,667 35,20,703

Office Equipment 29,68,955 — — 29,68,955 28,36,555 18,417 — 28,54,972 — — 1,13,983 1,32,400

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 54,82,051 56,353 — 55,38,404 — — 10,70,690 11,27,043

LEASED ASSETS

Plant and Machinery 19,63,24,915 — 1,13,55,508 18,49,69,407 9,94,81,170 — 65,40,788 9,29,40,382 3,53,45,463 3,75,32,804 5,66,83,562 5,93,10,941

Total 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

Previous Year 23,70,72,144 55,04,085 23,15,68,059 13,16,70,476 2,71,222 19,97,530 12,99,44,168 3,75,32,804 3,91,43,894 6,40,91,087 6,62,57,774

Capital Work-in-Progress 2,81,72,250 2,81,72,250

Leasehold Improvement represents the amount incurred on renovation of the premises of the wholly owned subsidiary, MRR Trading & Investment Co. Ltd. which holds the tenancy rights. Capital Work-in-Progress represents ` 2,81,72,250 (2010 : ` 2,81,72,250) being value of property received towards settlement of dues pending registration. Depreciation as at the year end include impairment loss as under :

(Amount in Rupees)As at


Buildings 32,00,858 32,00,858

Furniture and Fixtures 48,86,754 48,86,754

Total 80,87,612 80,87,612

2. Contingent Liabilities:

- Bank Guarantee issued to Rajasthan Tax Board - ` 5,45,682.

3. Claims against the Company not acknowledged as debts:

- Lease tax on account of non-accrual of lease rental ` 37,21,426.

4. The Company has initiated legal proceedings against various partiesfor recovery of dues and such legal proceedings are at different stagesas at the date of the Balance Sheet and upon culmination, are expectedto result in recovery of part of the dues in the future.

5. Deferred tax asset

(Amount in Rupees)As at As at

31st March, 2011 31st March, 2010(a) Deferred Tax Assets

Unabsorbed Depreciation 7,93,70,975 7,93,70,358 Accumulated Business Loss 10,70,58,857 10,56,35,625

18,64,29,832 18,50,05,983

(b) Deferred Tax LiabilitiesOn Account of Depreciation 1,21,99,728 1,25,41,874

1,21,99,728 1,25,41,874

Deferred Tax Assets (Net) 17,42,30,104 17,24,64,109

The Company has not recognized the net deferred tax assets, in respectof accumulated losses and unabsorbed depreciation in view of theuncertainty of availing the benefit in future.

6. The earnings considered in ascertaining the Company’s Earnings PerShare (EPS) comprise net profit / (loss) after taxation. The number ofshares used in computing basic and diluted EPS is the weighted averagenumber of shares outstanding during the year.

2010-11 2009-10Profit / (Loss) after Taxation (Amount in `) (46,07,928) 50,14,842Weighted average number of equityshares outstanding 2,00,00,000 2,00,00,000

Basic and diluted earnings per sharein rupees (Face value - ` 10/- per share) (0.23) 0.25

7. Information with regard to matters in clauses 3, 4(A), 4(C) and 4(D)of part II of Schedule VI of the Companies Act, 1956 to the extent thatthey are either Nil or not applicable to the Company, have not beengiven.

8. Segment Reporting – The Company operates in a single businesssegment and hence no further disclosure is being made.

9. Related Parties Disclosures:

a) Relationships:

Holding Company - ITC LimitedSubsidiary Company – MRR Trading & Investment Company Limited

b) Key Management Personnel –Mr. Anil Seth - Non-Executive DirectorMr. P. K. Sen - Non-Executive DirectorMr. Jagdish Singh - Non-Executive DirectorMr. V. Radhakrishnan - Manager & Company Secretary

c) Disclosure of transactions between the Company and relatedparties and the status of outstanding balances as at theyear end :-


Holding CompanyRepayment of unsecured loan NIL 45,00,000Rent 42,00,000 13,50,000Balance as at the year endReceivables 33,65,400 NIL0% Non-Convertible Debentures 15,00,00,000 15,00,00,000Loans from Holding Company 32,54,11,077 32,54,11,077Subsidiary CompanyRe-imbursement of expenses 1,70,463 1,70,179

(Amount in Rupees)


7. CASH AND BANK BALANCESCash on hand — —With Scheduled Banks- on current accounts 2,84,078 11,57,788

- Fixed Deposits 5,45,682 — (Bank Guarantee for the like amountwas given to Rajasthan Commercial TaxesDepartment against this fixed deposit) 8,29,760 11,57,788

8. LOANS AND ADVANCES(Unsecured, considered good)

Deposit with Govt., Public Bodies etc. — —Other Advances — — Advance payment of tax (TDS) 5,66,654 1,45,281

5,66,654 1,45,281

9. CURRENT LIABILITIESSundry CreditorsDues to Micro, Small andMedium enterprises — —

Other Liabilities 7,66,146 5,94,001(includes Nil (2010 - Nil)due to Subsidiary Company) 7,66,146 5,94,001

10. PROVISIONSProvisions for disputed penalty 76,56,074 —

76,56,074 —

11. OTHER INCOMEProvision no longer requiredwritten back 9,11,182 26,73,116 Interest on Fixed Deposit 13,724 — Interest - from customer 50,000 2,68,356Profit on sale of fixed assets — 23,26,884

Amount refunded by theSubsidiary Company — 3,67,612 Rent [ TDS ` 4,20,000 (2010 - ` 90,000)] 42,00,000 13,50,000 Dividend 68 —Others 50,000 6,976

52,24,974 69,92,944

12. PERSONNEL, OPERATING ANDADMINISTRATION EXPENSESSalaries 96,000 96,000Conveyance 29,806 14,636 Professional Charges 7,47,962 10,84,690Professional Tax 2,100 2,100Legal Expenses 7,44,989 2,15,000Rates & Taxes — 5,805

Remuneration to Auditors :Audit Fee 86,034 86,034 Other services 29,066 28,678

1,15,100 1,14,712 Reimbursement of Expenses incurred

by Subsidary Company 1,70,463 1,70,179 Miscellaneous* 76,75,676 3,758

95,82,096 17,06,880

* Includes ` 76,56,074 towards provision for disputed penalty for the A. Y. 2002 - 03 under Income Tax Act, 1961


1. The financial statements have been prepared on a going concern basis.There are no operational activities. The Company continued recoveryof its dues in the normal course of business. The Company will examineoptions for further business opportunities, on improvement of collectionsfrom debtors. No provision has been made for Income Tax during thecurrent financial year because of carry forward loss under Income TaxAct.

176


(Amount in Rupees)


10. QUANTITATIVE ANALYSIS FOR STOCK-IN-TRADE

Particulars Opening Stock Purchases Sales Closing Stock Closing StockAs at April 1, 2010 During the year During the year As at March 31, 2011 As at March 31, 2010

Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value(Nos.) (Amount in `) (Nos.) (Amount in `) (Nos.) (Amount in `) (Nos.) (Amount in `) (Nos.) (Amount in `)

Quantitative Information

Equity Shares of ` 10/- each of Ultra Tech CemCo. Ltd. 3 1,000 — — — — 3 1,000 3 1,000

Unquoted Convertible / Non-ConvertibleDebentures of G-Tech Stone Ltd. 5,40,000 5,94,00,000 — — — — 5,40,000 5,94,00,000 5,40,000 5,94,00,000

Less: Provision for Diminution in the value — (5,94,00,000) — — — — — (5,94,00,000) — (5,94,00,000)

Total — 1,000 — — — — — 1,000 — 1,000

11. Previous year’s figures have been regrouped wherever necessary to conform to the current year’s classification.



Accumulated Losses

IV. Performance of Company (Amount in ` Thousands)Turnover Total Expenditure



Earnings per Share (`) Dividend rate (%)

V. Generic Names of Principal Products/Services of Company (as per monetary terms)


Product Description

On behalf of the BoardP. K. Sen Director

Jagdish Singh DirectorV. Radhakrishnan Manager &

Kolkata, 30th April, 2011 Company Secretary




Balance Sheet Date

Date Month Year






Sources of Funds



Audit Committee : Mr. Anil Seth, Chairman, M/s. P. K. Sen, J. Singh Members.

3 1

0 1 - 6 4 6 6 2

0 3 1 1

1 1

— —

6 7 5 4 1 1 6 7 5 4 1 1

2 0 0 0 0 0 —

0 4 7 5 4 1 1

3 2 7 0 2 4 3 0 2 4

( 3 6 4 7 ) —

6 0 3 3 3 3

5 2 2 5 9 8 3 3

--

— —



– ( 4 6 0 8 ) – ( 4 6 0 8 )

( 0 . 2 3 )

STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

GENERALThese accounts have been prepared under the historical cost conventionand on accrual system based on the principle of going concern. Incomerecognition and provisioning for Non-performing Assets, consisting of Leaseand Hire Purchase Assets, Bills Discounted and Other Loans and Advances,is done as per Non-Banking Financial Companies Prudential Norms (ReserveBank) Directions, 1998 and as amended from time to time.REVENUE RECOGNITIONAs per the directives of the Reserve Bank of India, revenue is recognizedupon realization, on Non-Performing Assets.Revenue is not recognized on the grounds of prudence until realized inrespect of liquidated damages, penalties and delayed payment charges, asrecovery of the amounts is uncertain.INVESTMENTSAll investments are stated at cost i.e. cost of acquisition, inclusive of expensesincidental to acquisition where applicable. Provision for any permanentdiminutions in value of investments is made which is considered to beappropriate. Income from investments is stated in revenue account in theyear in which it is accrued and at gross value.

STATEMENT REGARDING SUBSIDIARY COMPANIES:Pursuant to Section 212(1) and (3) of the Companies Act, 1956MRR TRADING & INVESTMENT COMPANY LIMITED(a) Holding Company’s interest:

50,000 Equity Shares of ` 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 `)(i) for the Subsidiary’s financial year ended

March 31, 2011 Nil

(Amount in `)(ii) for the previous financial years (4,16,160)

(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, 2011 Nil(ii) for the previous financial years Nil

177


STOCK-IN-TRADEStock of securities are stated at cost or market price whichever is lower.Stock-on-hire is valued at agreement value less amounts receivable.FIXED ASSETSAll fixed assets including assets given on lease are valued at cost inclusiveof direct and incidental expenses related to acquisition.Depreciation of fixed assets is provided on written down value method onpro-rata basis in accordance with the rates prescribed under amendedSchedule XIV of the Companies Act, 1956. Leasehold improvements(excluding electrical installations) are being depreciated @ 5% on writtendown value and Electrical Installations included in Leasehold improvementsare being depreciated @ 15%.All the fixed assets are assessed for any indication of impairment at the endof each financial year. On such indication, the impairment loss (being theexcess of carrying value over the recoverable value of the asset) is chargedto the profit and loss account in the respective financial years. The impairmentloss recognized in the prior years is reversed where the recoverable valueexceeds the carrying value of the asset upon re-assessment in the subsequentyears.



A. CASH FLOW FROM OPERATING ACTIVITIES:Net Profit/(Loss) Before Tax (46,07,928) 50,14,842Adjustments For :Depreciation 2,50,806 2,71,222Provision no longer required written back (9,11,182) (6,60,376) (26,73,116) (24,01,894)OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (52,68,304) 26,12,948ADJUSTMENTS FOR :Sundry Debtors - (increase)/decrease 9,11,182 26,73,116Trade and Other Receivables - (increase)/decrease (37,99,125) (86,936)Trade Payables & Provisions - increase/(decrease) 78,28,219 49,40,276 (23,247) 25,62,933Cash Generated From Operations (3,28,028) 51,75,881Income Tax Paid — —NET CASH FROM OPERATING ACTIVITIES (3,28,028) 51,75,881

B. CASH FLOW FROM INVESTING ACTIVITIES — —

C. CASH FLOW FROM FINANCING ACTIVITIES :Repayments of Long Term Borrowings-Holding Company — (45,00,000)

NET CASH USED IN FINANCING ACTIVITIES — (45,00,000)

NET INCREASE IN CASH AND CASH EQUIVALENTS (3,28,028) 6,75,881OPENING CASH AND CASH EQUIVALENTS 11,57,788 4,81,907CLOSING CASH AND CASH EQUIVALENTS 8,29,760 11,57,788

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 Lovelock & LewesFirm registration No. 301056E On behalf of the BoardChartered Accountants P. K. Sen DirectorPartha Mitra Jagdish Singh DirectorPartner V. Radhakrishnan Manager &Membership No. 50553 Company SecretaryKolkata, April 30, 2011 Kolkata, April 30, 2011

178


SCHEDULE TO THE BALANCE SHEET OF A NON-DEPOSIT TAKINGNON-BANKING FINANCIAL COMPANY AS AT 31ST MARCH, 2011

[as required in terms of paragraph 13 of Non-Banking Financial(Non-Deposit Accepting or Holding) Prudential Norms (Reserve Bank)Directions, 2007]

Particulars (` In lakhs)Liabilities side:

1. Loans and advances availed Amount Amountby the NBFCs inclusive of interest outstanding overdueaccrued thereon but not paid:(a) Debentures: Secured Nil Nil

: Unsecured (from Holding Company) 1,500.00 Nil(other than falling within the meaningof public deposits)

(b) Deferred Credits Nil Nil(c) Term Loans Nil Nil(d) Inter-corporate loans and borrowing

(from Holding Company) 3,254.11 Nil(e) Commercial Paper Nil Nil(f) Other Loans Nil Nil

Assets side: Amount

outstanding

2. Break-up of loans and advances including bills receivables[other than those included in (4) below]:

(a) Secured Nil(b) Unsecured 978.87

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 Nil

(` In lakhs)Amount

outstanding

(ii) Stock on hire including hire chargesunder sundry debtors:(a) Assets on hire 367.76(b) Repossessed Assets Nil

(iii) Other loans counting towards AFC activities (a) Loans where assets have been repossessed Nil

(b) Loans other than (a) above Nil

4. Break-up of Investments:Current Investments:

(1) Quoted:(i) Shares: (a) Equity Nil

(b) Preference Nil(ii) Debentures and Bonds Nil(iii) Units of Mutual funds Nil(iv) Government Securities Nil(v) Others Nil

(2) Unquoted:(i) Shares: (a) Equity Nil

(b) Preference Nil(ii) Debentures and Bonds Nil(iii) Units of Mutual funds Nil(iv) Government Securities Nil(v) Others Nil

Long Term investments:1. Quoted:

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

(Amount in Rupees)

(` In lakhs) (` In lakhs)

(ii) Debentures and Bonds Nil(iii) Units of Mutual funds Nil(iv) Government Securities Nil(v) Others Nil

2. Unquoted:(i) Shares: (a) Equity Nil

(b) Preference Nil(ii) Debentures and Bonds Nil(iii) Units of Mutual funds Nil(iv) Government Securities Nil(v) Others - Investment in subsidiary Company 430.24

5. Borrower group-wise classification of all assetsfinanced as in (2) and (3) above :

Category Amount net of provisionsSecured Unsecured Total

1. Related Parties**(a) Subsidiaries Nil Nil Nil(b) Companies in the same group Nil Nil Nil(c) Other related parties Nil Nil Nil

2. Other than related parties Nil Nil NilTOTAL Nil Nil Nil

6. Investor group-wise classification of all investments (current andlong term) in shares and securities (both quoted and unquoted):Category Market value/Break up Book value

or fair value or NAV (Net ofprovisions)

1. Related Parties**(a) Subsidiaries 430.24 430.24(b) Companies in the same group Nil Nil(c) Other related parties Nil Nil

2. Other than related parties Nil NilTOTAL 430.24 430.24

** As per Accounting Standard of ICAI

7. Other informationParticulars(i) Gross Non-Performing Assets

(a) Related parties Nil(b) Other than related parties 3,664.82

(ii) Net Non-Performing Assets(a) Related parties Nil(b) Other than related parties Nil

(iii) Assets acquired in satisfaction of debt 390.32

179


180

MRR TRADING & INVESTMENT COMPANY LIMITED


The Directors hereby submit their report for the financial year ended31st March, 2011.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 Jagdish Singh, 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.


Kolkata P. K. Sen Director30th April, 2011 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, 2011,and the related Profit and Loss Account and Cash Flow Statement forthe 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.



4. Further to our comments in the Annexure referred to in paragraph3 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 thepurposes of our audit;


(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report are in agreement with the books ofaccount;

(d) In our opinion, the Balance Sheet, Profit and Loss Account 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 directors,as on March 31, 2011 and taken on record by the Board of Directors,none of the directors is disqualified as on March 31, 2011 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, 2011;(ii) in the case of the Profit and Loss Account, of the profit

(` Nil) for the year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows for




Partha MitraPartner



Referred 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, 20111. 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.

2. 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, commenting on transactionsmade in pursuance of such contracts or arrangements does not arise.

3. The company’s accumulated losses as at March 31, 2011 is more thanfifty percent of its net worth and has not incurred cash losses duringthe financial year ended on date and in the immediately precedingfinancial year.

4. 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 and

explanations 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.

5. The Clauses (i)(a), (i)(b), (i)(c), (ii)(a), (ii)(b), (ii)(c), (iii)(b), (iii)(c),(iii)(d), (iii)(f), (iii)(g), (iv), (vi), (vii), (viii), (ix)(a), (ix)(b), (xi), (xii),(xiii)(a), (xiii)(b), (xiii)(c), (xiii)(d), (xiv), (xv), (xvi), (xvii), (xviii), (xix)and (xx) of paragraph 4, of the Companies (Auditor’s Report) Order,2003, as amended by the Companies (Auditor’s Report)(Amendment)Order, 2004 are not applicable in the case of the company for thecurrent year, since in our opinion there is no matter which arises to bereported in the aforesaid order.



Partha MitraPartner



Schedule As at As at31st March, 2011 31st March, 2010

(`) (`)

SOURCES OF FUNDS

1. Shareholders’ Fundsa) Capital 1 5,00,000 5,00,000

TOTAL 5,00,000 5,00,000

APPLICATION OF FUNDS

1. Current Assets, Loans and Advancesa) Cash and Bank Balances 2 89,956 89,956b) Loans and Advances 3 7,120 7,120

97,076 97,076

Less: Current Liabilities and Provisionsa) Current Liabilities - Sundry Creditors 4 13,236 13,236

Net Current Assets 83,840 83,8402. Debit Balance in Profit & Loss Account 4,16,160 4,16,160

TOTAL 5,00,000 5,00,000

Notes to the Accounts 5

Schedules 1 to 5 form an integral part of the Balance Sheet.This is the Balance Sheet referred to in our Report of even date.

For Lovelock & Lewes On behalf of the BoardFirm Registration No. 301056EChartered Accountants

Partha Mitra Partner P. K. Sen DirectorMembership No: 50553 M. Yelamanda Director

Kolkata, April 30, 2011 Kolkata, April 30, 2011


Schedule For the year ended For the year ended31st March, 2011 31st March, 2010(`) (`) (`) (`)

INCOMEIncome — 3,67,612Less: Refunded to the Holding Company — (3,67,612)TOTAL — —EXPENDITURERent 83,592 81,696Rates and Taxes 61,872 61,872Water Charges 11,625 13,309Bank Charges 138 66Audit Fees 13,236 13,236

1,70,463 1,70,179Less: Expenses reimbursed by the Holding Company 1,70,463 1,70,179

TOTAL — —Profit/(Loss) Before Taxation — —Provision for Taxation — —Profit/(Loss) After Taxation — —Balance Carried Forward from previous year (4,16,160) (4,16,160)Balance Carried to Balance Sheet (4,16,160) (4,16,160)Notes to the Accounts 5Earnings Per Share 0.00 0.00Schedule 5 forms an integral part of the Profit and Loss Account.This is the Profit & Loss Account referred to in our report of even date.

For Lovelock & Lewes On behalf of the BoardFirm Registration No. 301056EChartered Accountants

Partha Mitra Partner P. K. Sen DirectorMembership No: 50553 M. Yelamanda Director

Kolkata, April 30, 2011 Kolkata, April 30, 2011

181



1. The financial statements have been prepared on a going concern basis.

2. Significant Accounting Policies

(a) The accounts have been prepared on historical cost basis.

(b) All revenue and expenses are accounted on accrual basis.

3. Segment Reporting - The Company operates in a single businesssegment and hence no further disclosure is being made.

4. Related Parties Disclosures :

a) Relationships :

Holding Company - BFIL Finance Limited

b) Key Management Personnel -

Mr. P. K. Sen - Director

Mr. J. Singh - Director

Mr. M. Yelamanda - Director

c) Disclosure of transactions between the Company and relatedparties and the status of outstanding balances as at the yearend.

Particulars 2010-11 2009-10(`) (`)

Holding Company -BFIL Finance LimitedExpenses Re-imbursed 1,70,463 1,70,179

Receivables as at the year end — —

5. The earnings considered in ascertaining the Company’s EarningsPer Share (EPS) comprise net Profit /Loss after Taxation. The numberof shares used in computing basic and diluted EPS is the weightedaverage number of shares outstanding during the year.

Description 2010-11 2009-10

Profit/(loss) after taxation (Amount in `) — —

Weighted average number of equityshares outstanding 50,000 50,000Basic and diluted earnings per sharein rupees (face value - ` 10/- per share) 0.00 0.00

6. Previous year figures have been regrouped wherever necessary.

SCHEDULES TO THE BALANCE SHEET

As at As at March 31, 2011 March 31, 2010

(`) (`)

1. CAPITAL

AUTHORISED

50,000 Equity Sharesof ` 10/- each 5,00,000 5,00,000

ISSUED AND SUBSCRIBED AND PAID-UP50,000 Equity Shares of ` 10/- eachfully paid-up 5,00,000 5,00,000(All the shares are held by the HoldingCompany, BFIL Finance Limited,a subsidiary of ITC Limited, ultimateHolding Company)

5,00,000 5,00,000


Balances with Scheduled Bank- on Current Account 89,956 89,956

89,956 89,956


Deposits with Government,Public Bodies, etc. 7,120 7,120

7,120 7,120

4. CURRENT LIABILITIES - SUNDRY CREDITORS

Dues to Micro, Small and Medium enterprises — —

Others 13,236 13,236

13,236 13,236




Accumulated Losses

IV. Performance of Company (Amount in ` Thousands)Turnover Total Expenditure



Earnings per Share (`) Dividend rate (%)

V. Generic Names of Principal Products/Services of Company (as per monetary terms)

Item Code No.(ITC CODE)

Product Description

On behalf of the BoardP. K. Sen Director

Kolkata, April 30, 2011 M. Yelamanda Director



Balance Sheet Date

Date Month Year






Sources of Funds



3 1

1 1 - 2 3 2 5 9

0 3 1 1

1 1

— —

5 0 0 5 0 0

5 0 0 —

— —

— —

8 4 —

4 1 6

0 . 0 0 0 . 0 0

—

— —



— 0 . 0 0 — 0 . 0 0

0 . 0 0

SCHEDULES TO THE FINANCIAL STATEMENTS

182




(`) (`)

Cash flow from Operating Activities:Net Profit before Tax — —Adjustments for:Depreciation etc. — —Operating profit before working capital changes — —Adjustment for:Trade and other receivables - (increase)/decrease — 2,451Trade payables - Increase/(decrease) — —Cash generated from Operations — 2,451Income Tax paid — —Net Cash from Operating Activities — 2,451Cash flow from Investing Activities: — —Cash flow from Financing Activities: — —Net increase in cash and cash equivalents — 2,451Cash and cash equivalents at beginning of period 89,956 87,505Cash and cash equivalents at end of period 89,956 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


P. K. Sen DirectorM. Yelamanda Director

For Lovelock & LewesFirm Registration No. 301056EChartered AccountantsPartha MitraPartnerMembership No: 50553Kolkata, April 30, 2011

183


REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 32NDASADH 2067 (16TH JULY 2010)

Your Directors are pleased to submit their Report and Audited Accounts of yourCompany for the year ended 32nd Asadh 2067 (16th July 2010).SOCIO-ECONOMIC ENVIRONMENTThe political environment in Nepal remained disturbed during the yearculminating in the resignation of the Prime Minister and installation of a caretakergovernment. Subsequent attempts at re-election of a new prime ministerremained inconclusive. The proposed new constitution stayed unwritten andsocial, economic and political disruptions continued to take place from timeto time.However, Nepal remained relatively sheltered from the global recession. In itsEconomic Survey, the Government of Nepal has estimated the GDP growth at3.5% for the financial year ending 32nd Ashad 2067, a marginal decline fromthe level of 3.8% achieved in the previous year. This decline was an outcomeof the slowdown in the agricultural sector from 3 % to 1.2 % due to adverseclimatic conditions. Despite disruptions and frequent power outages, theManufacturing sector grew by 2.6% compared to a negative growth of 1% inthe previous year. The hospitality sector recorded a growth of 8.5% against3% last year driven by higher tourist inflows. As in the previous year remittancesgrew at 7% and fueled consumption.COMPANY PERFORMANCEDespite the challenging political environment your Company’s performancewas robust in the year under review. In the year ended 32nd Asadh 2067, thecompany recorded a 36% growth in sales with Gross Turnover (net of VAT)increasing to NRs. 1116 (` 697) Crores from NRs. 821 (` 513) Crores in theprevious year. Despite exponential increase of input costs in the CigaretteBusiness, your Company’s Profits after Tax at NRs. 197 (` 123) Crores increasedby 37% over the previous year. Return on net worth increased to 90% from65% in the previous year. Cash Generated from Operations during the yearstood at NRs. 241.2 (` 150.8) Crores, lower by NRs. 10.4 (` 6.5) Crores fromthe levels achieved in the previous year, primarily due to higher cost ofprocurement of tobacco leaf.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, with a payment of NRs. 622 (` 389) Crores duringthe year {(Previous Year: NRs. 454 (` 284) Crores} by way of Excise Duty, VAT,Income Tax and other taxes.BUSINESS SEGMENTSCIGARETTE BUSINESSBrand PortfolioRelentless focus on value creation for the consumer at the premium end of themarket underlined the company’s strong performance and leadership positionin the Cigarette market. The “Surya” trademark emerged as the undisputedleader in the premium segment capturing consumer franchise in the face ofcompeting International Brands. “Khukuri”, the largest selling brand of thecompany showed healthy growth and “Pilot Filter”, launched in recent yearsin the regular size filter segment, garnered significant volume share. “PassportFilter Kings” which was successfully test marketed during the year will furtherreinforce the brand portfolio.Distribution and Supply Chain ManagementAmidst challenging circumstances, the company’s proactive supply chain andsuperior management practices ensured uninterrupted supplies to the tradeand consumers to sustain the volume and value growth in the cigarette business.QualityOn the Manufacturing front, the company continued to invest in new technologycigarette making and packing lines to reinforce the superiority and consistencyof product quality. Investments were made in upgrading infrastructure to caterto the enhanced production capacity and the requirements of new technologymachines.EnergyEnergy conservation and efficiency continue to engage your Company’s attentionas areas of critical priority. Energy saving initiatives implemented by the Companyover the years has enabled substantial energy savings through reduced energyconsumption per unit.Environment Health and SafetyThe Company’s commitment to inclusive growth manifested in the accreditationof its cigarette factory under the upgraded version of Social Accountability8000:2008 certification.A system led approach, implemented with detailed attention and effectivemonitoring, continued to provide a safe work environment for all employees.Leaf TobaccoDespite the agro-climatic challenges in growing tobacco in Nepal, the Companycontinued to engage with the farmers from the stage of seed development tocrop harvesting and provided customized services to farmers during the year.These interventions have helped in enhancing productivity and quality at thefarm level thereby enhancing returns to the farmers. Encouraged by theinterventions of the Company, farmers have increased the acreage under leafcultivation. Efforts are underway to further improve the quality of the domesticgrades.GARMENT BUSINESS – EXPORTThe Garments export business was constrained for the better part of the yearby the import tax increases in India from July 2009. In this context, the businessreinforced its efforts at market expansion through forays into new exportmarkets while continuing to cater to orders for the “John Players” and “Wills”range of apparels. Such business development efforts have resulted in thirdcountry export volumes increasing by 36% over the previous year. The Company

is hopeful that these efforts will result in the delivery of improved exportrevenues and profitability in future.GARMENT BUSINESS – DOMESTICIn the domestic market “John Players” retained its leadership status in thebranded apparel segment with a strong presence in the minds of the consumer.“Springwood”, the home grown western wear brand positioned as an alternativeto low price imports from China and South East Asia, has further consolidatedand strengthened its position in the ‘value for money’ segment.MATCHES BUSINESSIn the Safety Matches business, the Company’s brand “Tir”, has established astrong consumer franchise and significant market share within a few years ofits launch. The brand achieved a top line growth of 25% during the year.DIVIDENDYour Directors have declared an Interim Dividend of NRs. 12.50 (` 7.81) perOrdinary Share for the year ended 32nd Asadh 2067. The consequent outflowon this account, including Dividend Tax, amounts to NRs. 25.2 (` 15.75) Crores.Your Board has also recommended a Final Dividend of NRs. 77.5 (` 48.44) perOrdinary Share.All dividends during the year have been paid within the prescribed period andthere were no unclaimed dividends lying with the Company.TAX MATTERSThe Hon’ble Supreme Court of Nepal, during the year, passed judgements infavour of your Company, with regard to certain Excise and Income Tax demandson the issue of theoretical production. These are summarised below:

1. For the financial years 2050-51 & 2051-52 (1993-94 & 1994-95), Revenue authorities had raised a Excise demand for NRs. 13,59,81,616(` 8,49,88,510) which was quashed by a Division Bench of the Supreme Court on 8th April 1998. The Government filed a review petition on 8th October 1998. The Full Bench of the Supreme Courton 29th October 2009 decided the matter in favour of the Company.

2. For the financial years 2055-56 to 2059-60 (1998-99 to 2002-03) anExcise demand for NRs. 37,17,24,680 (` 23,23,27,925) was issued to the Company by the Inland Revenue Office. The Company challengedthe demand in the Supreme Court, which has pronounced its verdicton 1st April 2010 in favour of the Company.

3. An Income Tax demand for the financial year 2058-59 (2001-02) wasissued to the Company for an amount of NRs. 16,07,61,328(` 10,04,75,830) related to the matter of theoretical production. TheCompany filed a writ petition before the Supreme Court seeking thatthe said demand order be quashed. The Supreme Court pronouncedits verdict on 1st April 2010 in favour of the Company.

All other pending Show Cause Notices (SCNs) and demands related to excise,income tax and VAT received from time to time on the issue of 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 remain pending stand at NRs.92.90 (` 58.06) Crores and comprise:

(a) Excise Demands – NRs. 27.80 (` 17.38) Crores. No fresh demand hasbeen received during the year.

(b) VAT Demands – NRs. 36.51 (` 22.82) Crores. This includes a freshdemand received during the year for an amount of NRs. 11.47(` 7.17) Crores pertaining to year 2064-65 (2007-08).

(c) Income Tax Demands – NRs. 28.59 (` 17.87) Crores. This includesfresh demands received during the year for an amount of NRs. 7.06(` 4.41) Crores pertaining to the years 2061-62 and 2062-63(2004-05 and 2005-06).

Out of the above NRs. 92.90 (` 58.06) Crores, demands aggregatingNRs. 66.81 (` 41.76) Crores are under appeal before Supreme Court anddemands aggregating NRs. 21.18 (` 13.24) Crores are under appeal beforeRevenue Tribunal / DG-Inland Revenue Department. Your Company is in theprocess of challenging the balance demand, received on 20.09.2010, ofNRs. 4.91 (` 3.07) Crores through appropriate legal remedies.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 in favour of the Company by the Full Bench of theHon’ble Supreme Court on similar matters.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.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’.EMPLOYEESHuman Resource Development continued to be a critical focus area. Industrial

SURYA NEPAL PRIVATE LIMITED

184

AUDITORS’ REPORT TO THE SHAREHOLDERS OF SURYA NEPAL PRIVATELIMITED

We have audited the accompanying Balance Sheet of Surya Nepal PrivateLimited as at Asadh 32, 2067 (July 16, 2010), 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 best

of 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 as

at Asadh 32, 2067 (July 16, 2010).ii) in the case of Profit & Loss Account, the profit of the Company for

the year ended on Asadh 32, 2067 (July 16, 2010).iii) in the case of the Statement of Cash Flow, the cash flows of the

Company for the year ended on Asadh 32, 2067 (July 16, 2010).e) In our opinion and to the best of our information and according to the

explanations given to us and from our examination of the books 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 : 18th Aswin 2067 (4th October 2010)

Place : Kolkata

Annexure I

Sl.No. Name of Director Number of Ordinary shares ofNRs. 100/- each held singly and/or

jointly as on 32nd Asadh 2067(16th July 2010)

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 2066/67, the following amounts were paid to theDirectors.

Board Meeting Fee paid NRs. 58,824 (` 36,765)

Incidental expenses paid NRs. 40,000 (` 25,000)

Payment to/on behalf of Managing Director for the financial year 2066/67:

Salary - NRs. 49,20,000 (` 30,75,000)

Allowances - NRs. 60,34,809 (` 37,71,756)

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 2066/67:Salary - NRs. 1,00,69,580 (` 62,93,488)Allowances - NRs. 1,14,44,917 (` 71,53,073)In addition to the above, some of the officials have been provided the 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 2066/67 comprising telephone, telex, fax, legal and servicefees, bank charges, rates & taxes, printing & stationery, entertainment, rent,electricity, fuel & water, repair & improvement, travel & conveyance, insurancepremium, postage, board meeting fees, donations and charity, books &periodicals, miscellaneous expenses etc. amounted to NRs. 44,07,35,185(` 27,54,59,491).

relations with employees remain harmonious. The Directors of your Companyplace on record their sincere appreciation for the dedication and performanceof the employees during the year.DIRECTORSMr. A Singh, Director nominated by ITC Limited, ceased to be a Director ofyour Company with effect from 21st March 2010, in view of his retirementfrom the services of ITC Limited. Mr. K N Grant has been nominated by ITCLimited and was appointed a Director of your Company from 22nd March2010.Your Directors would like to place on record their appreciation for the significantservices rendered by Mr. A Singh during his tenure as Director of the Company.There were no other changes in the composition of the Board of Directorsduring the year.The number of shares held by your Directors in the Company as on 32nd Asadh2067 are annexed to this Report (Annexure I). The Directors have confirmedthat none of them or their close relatives have any direct involvement or anypersonal interest in any transaction of sale or purchase or any kind of contractor arrangement connected with the business of the Company. No amounts aredue to the Company from any of the Directors, Managing Director or theirclose relatives.The details of payments made during the year to the Directors, Managing

Director and other Officials, by way of Board meeting fees etc., are also annexedto this Report (Annexure II).Details of Management expenses for the year 2066 / 67 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, and being eligible, have offered themselvesfor reappointment.FUTURE OUTLOOKA second cigarette factory near Pokhara has been proposed to meet the growingmarket demand. Investment is also planned in Employee housing, CorporateOffice and Warehouse at Kathmandu. Your Company will continue to exploreand pursue opportunities for profitable growth and looks forward to the futurewith optimism and confidence.

On behalf of the Board18th Aswin 2067 Y. C. Deveshwar K. N. Grant Sanjiv Keshava(4th October 2010) Chairman Director Managing Director


185

BALANCE SHEET AS AT 32ND ASADH 2067 (16TH JULY 2010)

Figures in NRs. Figures in ` Figures in NRs. Figures in `

As at As at As at As at32nd Asadh 2067 32nd Asadh 2067 31st Asadh 2066 31st Asadh 2066

Schedule (16th July 2010) (16th July 2010) (15th July 2009) (15th July 2009)

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 39,68,03,659 24,80,02,287 23,68,57,479 14,80,35,924

Total 2,41,28,03,659 1,50,80,02,287 2,25,28,57,479 1,40,80,35,924

ASSETS

(1) Fixed Assets 3

(a) Gross Block 2,99,08,67,216 1,86,92,92,010 2,90,29,16,483 1,81,43,22,802

(b) Less : Accumulated Depreciation 1,38,36,10,520 86,47,56,575 1,23,51,49,076 77,19,68,172

(c) Net Block 1,60,72,56,696 1,00,45,35,435 1,66,77,67,407 1,04,23,54,630

(d) Capital Work-in-Progress and In-transit 36,06,01,827 22,53,76,142 3,24,46,920 2,02,79,325

(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 2G of Schedule 17) 2,89,86,715 1,81,16,697 1,64,49,586 1,02,80,991

(4) Current Assets

(a) Inventories 5 1,36,57,74,940 85,36,09,337 1,10,45,85,269 69,03,65,793

(b) Sundry Debtors 6 10,15,85,334 6,34,90,834 12,16,38,498 7,60,24,061

(c) Cash and Bank Balances 7 91,66,48,884 57,29,05,553 1,82,00,46,229 1,13,75,28,893

(d) Loans and Advances 8 60,98,42,066 38,11,51,291 19,07,26,544 11,92,04,090

Total 2,99,38,51,224 1,87,11,57,015 3,23,69,96,540 2,02,31,22,837

Less: Current Liabilities and Provisions

(a) Liabilities 9 78,13,71,014 48,83,56,884 73,08,18,721 45,67,61,701

(b) Provisions 10 1,90,64,04,127 1,19,15,02,579 2,07,98,66,591 1,29,99,16,619

Total 2,68,77,75,141 1,67,98,59,463 2,81,06,85,312 1,75,66,78,320

Net Current Assets 30,60,76,083 19,12,97,552 42,63,11,228 26,64,44,517

Total 2,41,28,03,659 1,50,80,02,287 2,25,28,57,479 1,40,80,35,924

Notes to the Accounts and Contingent Liabilities 17

The schedules referred to above form an integral part of the Balance Sheet.


Subhraketan Mitra Sanjiv Keshava Saurya SJB Rana K N Grant Y C DeveshwarFinancial Controller 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: 18th Aswin 2067 (4th October 2010) Chartered Accountants Chartered Accountants


186

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010)


For the year ended For the year ended For the year ended For the year ended32nd Asadh 2067 32nd Asadh 2067 31st Asadh 2066 31st Asadh 2066

Schedule (16th July 2010) (16th July 2010) (15th July 2009) (15th July 2009)

Gross Revenue 11 11,15,51,95,592 6,97,19,97,245 8,21,33,92,623 5,13,33,70,389

Less: Duties 12 3,87,87,93,937 2,42,42,46,211 2,83,91,04,742 1,77,44,40,464

Net Sales 7,27,64,01,655 4,54,77,51,034 5,37,42,87,881 3,35,89,29,925

Raw Materials Consumed, etc. 13 2,92,35,79,313 1,82,72,37,071 2,04,89,11,992 1,28,05,69,995

Cost of Sales 2,92,35,79,313 1,82,72,37,071 2,04,89,11,992 1,28,05,69,995

Gross Profit 4,35,28,22,342 2,72,05,13,963 3,32,53,75,889 2,07,83,59,930

Other Income 14 10,12,62,733 6,32,89,208 11,73,63,861 7,33,52,413

Total 4,45,40,85,075 2,78,38,03,171 3,44,27,39,750 2,15,17,12,343

Manufacturing, Admin, Selling Expenses etc. 15 1,06,37,93,136 66,48,70,709 98,31,17,616 61,44,48,509

Provision For Employees’ Bonus 27,24,88,766 17,03,05,479 20,04,53,876 12,52,83,673

Operating Profit 3,11,78,03,173 1,94,86,26,983 2,25,91,68,258 1,41,19,80,161

Depreciation 22,44,55,190 14,02,84,494 13,79,83,391 8,62,39,619

Loss on Fixed Assets sold / discarded (Net) 1,07,03,671 66,89,794 5,93,867 3,71,167

Profit before Taxation 2,88,26,44,312 1,80,16,52,695 2,12,05,91,000 1,32,53,69,375

Provision for Taxation 16 90,82,98,132 56,76,86,332 67,97,38,016 42,48,36,260

Profit after Taxation 1,97,43,46,180 1,23,39,66,363 1,44,08,52,984 90,05,33,115

Transferred from General Reserve — — 65,08,79,260 40,67,99,538

Available for Appropriation 1,97,43,46,180 1,23,39,66,363 2,09,17,32,244 1,30,73,32,653

Appropriation

Provision For Employees’ Housing 15,77,56,654 9,85,97,909 11,60,52,244 7,25,32,653

Interim Dividend 25,20,00,000 15,75,00,000 10,08,00,000 6,30,00,000

Second Interim Dividend — — 1,14,91,20,000 71,82,00,000

Proposed Final Dividend 1,56,24,00,000 97,65,00,000 72,57,60,000 45,36,00,000

Balance Carried Over to Balance Sheet 21,89,526 13,68,454 — —

1,97,43,46,180 1,23,39,66,363 2,09,17,32,244 1,30,73,32,653

Notes to the Accounts and Contingent Liabilities 17

The schedules referred to above form an integral part of the Profit & Loss Account.

This is the Profit & Loss Account referred to in our Report of even date.





187

CASH FLOW STATEMENT FOR THE YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010)


For the year ended For the year ended For the year ended For the year ended32nd Asadh 2067 32nd Asadh 2067 31st Asadh 2066 31st Asadh 2066

(16th July 2010) (16th July 2010) (15th July 2009) (15th July 2009)

A. Cash Flow From Operating Activities

Net Profit Before Tax 2,88,26,44,312 1,80,16,52,695 2,12,05,91,000 1,32,53,69,375

Adjustments for :

Depreciation 22,44,55,190 14,02,84,494 13,79,83,391 8,62,39,619

Interest from Investments (56,83,125) (35,51,953) (56,83,125) (35,51,953)

Interest on Short Term/Call Deposits (8,14,64,792) (5,09,15,495) (9,35,10,614) (5,84,44,134)

Unrealised Loss/(Gain) on Foreign Exchange (Net) 8,93,315 5,58,322 (19,76,097) (12,35,061)

Loss on Fixed Assets sold/discarded (Net) 1,07,03,671 66,89,794 5,93,867 3,71,167

Claims and advance written off — — 3,58,160 2,23,850

Provision for Doubtful Debts and Advance 17,41,531 10,88,457 62,40,537 39,00,336

Liability no longer required written back — — (3,13,355) (1,95,847)

Provision for Doubtful Advance/Debts written back (68,987) (43,117) (2,72,695) (1,70,434)

Operating Profit Before Working Capital Changes 3,03,32,21,115 1,89,57,63,197 2,16,40,11,069 1,35,25,06,918

Adjustments for :

Trade and Other Receivables (40,25,09,616) (25,15,68,509) 23,19,96,438 14,49,97,774

Inventories (26,11,89,671) (16,32,43,544) (24,96,77,060) (15,60,48,163)

Trade Payables 4,26,84,479 2,66,77,799 36,94,06,556 23,08,79,098

Cash Generated From Operation 2,41,22,06,307 1,50,76,28,943 2,51,57,37,003 1,57,23,35,627

Income Tax Paid (92,51,49,911) (57,82,18,694) (66,55,32,991) (41,59,58,119)

Net Cash From Operating Activities (A) 1,48,70,56,396 92,94,10,249 1,85,02,04,012 1,15,63,77,508

B. Cash Flow From Investing Activities

Purchase of Fixed Assets (50,28,30,267) (31,42,68,917) (66,10,26,919) (41,31,41,824)

Proceeds from Disposal of Fixed Assets 27,210 17,006 52,53,296 32,83,310

Interest Received 8,89,22,631 5,55,76,644 9,73,26,620 6,08,29,136

Net Cash Used in Investing Activities (B) (41,38,80,426) (25,86,75,267) (55,84,47,003) (34,90,29,378)

C. Cash Flow From Financing Activities

Dividends Paid (1,97,56,80,000) (1,23,48,00,000) (87,36,00,000) (54,60,00,000)

Net Cash Used in Financing Activities (C) (1,97,56,80,000) (1,23,48,00,000) (87,36,00,000) (54,60,00,000)

Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) (90,25,04,030) (56,40,65,018) 41,81,57,009 26,13,48,130

Cash and Cash Equivalents (Opening Balance) 1,82,00,46,229 1,13,75,28,893 1,39,99,13,123 87,49,45,702

Cash and Cash Equivalents (Closing Balance) 91,75,42,199 57,34,63,875 1,81,80,70,132 1,13,62,93,832

Cash and Cash Equivalents Comprises:

Cash and Bank Balances 91,66,48,884 57,29,05,553 1,82,00,46,229 1,13,75,28,893

Unrealised Loss/(Gain) on Foreign Currency Cash and Cash Equivalents 8,93,315 5,58,322 (19,76,097) (12,35,061)

Total 91,75,42,199 57,34,63,875 1,81,80,70,132 1,13,62,93,832





188

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 2065 (15th July 2008) 33,60,00,000 21,00,00,000 1,21,81,280 76,13,300 2,34,21,75,719 1,46,38,59,824 9,73,27,496 6,08,29,685 — — 2,78,76,84,495 1,74,23,02,809Net Profit for the year — — — — — — — — 1,44,08,52,984 90,05,33,115 1,44,08,52,984 90,05,33,115

Transfer to Employees’ Housing Reserve — — — — — — 11,60,52,244 7,25,32,653 (11,60,52,244) (7,25,32,653) — —

Issue of Bonus Shares 1,68,00,00,000 1,05,00,00,000 — — (1,68,00,00,000)(1,05,00,00,000) — — — — — —

Transfer to Profit and Loss Appropriation Account — — — — (65,08,79,260) (40,67,99,538) — — 65,08,79,260 40,67,99,538 — —

Dividend — — — — — — — — (1,97,56,80,000)(1,23,48,00,000)(1,97,56,80,000)(1,23,48,00,000)

Transfer to Reserve — — — — — — — — — — — —

Total 1,68,00,00,000 1,05,00,00,000 — — (2,33,08,79,260)(1,45,67,99,538) 11,60,52,244 7,25,32,653 — — (53,48,27,016) (33,42,66,885)

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

Transfer to Employees’ Housing Reserve — — — — — — 15,77,56,654 9,85,97,909 (15,77,56,654) (9,85,97,909) — —

Dividend — — — — — — — — (1,81,44,00,000)(1,13,40,00,000)(1,81,44,00,000)(1,13,40,00,000)

Transfer 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




(16th July 2010) (16th July 2010) (15th July 2009) (15th July 2009)

SCHEDULE 1 : SHARE CAPITAL

Authorised

6,50,00,000 Ordinary Shares ofNRs. 100.00 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

2,01,60,000 Ordinary Shares ofNRs. 100.00 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. 1,68,00,000 Ordinary Shares were issued as fully paid up bonus shares in 2065/66(2008/09).

2. 28,00,000 Ordinary Shares were issued as fully paid up bonus shares in 2060/61(2003-04).

3. 2,80,000 Ordinary Shares were issued as fully paid up bonus shares in 2052/53 (1995-96).

4. 1,18,94,400 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 33,60,000

Add: Issue of Bonus Share — 1,68,00,000

At the end of the year 2,01,60,000 2,01,60,000

STATEMENT OF CHANGE IN EQUITY FOR THE YEAR ENDED 32ND ASADH 2067 (16TH JULY 2010)

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 at31st Asadh 2066 31st Asadh 2066 32nd Asadh 2067 32nd Asadh 2067(15th July 2009) (15th July 2009) Addition Addition Withdrawal Withdrawal (16th July 2010) (16th July 2010)

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 1,12,96,459 70,60,286 21,89,526 13,68,454 — — 1,34,85,985 84,28,740

Housing Fund

Provision for Employee Housing 21,33,79,740 13,33,62,338 15,77,56,654 9,85,97,909 — — 37,11,36,394 23,19,60,247

Surplus

Profit & Loss Account — — 21,89,526 13,68,454 21,89,526 13,68,454 — —

23,68,57,479 14,80,35,924 16,21,35,706 10,13,34,817 21,89,526 13,68,454 39,68,03,659 24,80,02,287


189


190

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s W

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31

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) (15

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(15.0

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Land &

Land

Dev

elopm

ent

14

,52,10

,811

9,07,5

6,757

7,59,7

7,180

4,74,8

5,738

——

22,11

,87,99

113

,82,42

,495

——

——

——

——

22,11

,87,99

1 13

,82,42

,495

14,52

,10,81

1 9,

07,56

,757

Build

ings

1.65

45,55

,19,83

4 28

,46,99

,896

2,46

,20,61

51,5

3,87,8

84 —

— 48

,01,40

,449

30,00

,87,78

0 8,

83,99

,972

5,52

,49,98

3 1,

34,64

,376

84,15

,235

— —

10,18

,64,34

8 6,

36,65

,218

37,82

,76,10

123

,64,22

,562

36,71

,19,86

2 22

,94,49

,913

Plant

& Ma

chine

ry 5.3

02,1

2,65,7

8,958

1,32,9

1,11,8

494,4

8,40,2

43 2,

80,25

,152

7,60,4

2,520

4,75

,26,57

52,0

9,53,7

6,681

1,30,9

6,10,4

26 1,

08,43

,24,35

3 67

,77,02

,721

19,72

,61,42

912

,32,88

,393*

6,77,5

4,154

4,23,4

6,346

1,21

,38,31

,628

75,86

,44,76

8 88

,15,45

,053

55,09

,65,65

8 1,

04,22

,54,60

5 65

,14,09

,128

Furni

ture &

Fixtu

res

3.40 &

5.30

2,55,9

3,157

1,59,9

5,724

17,28

,513

10,80

,319

8,47

,762

5,29,8

51 2,

64,73

,908

1,65

,46,19

2 1,

14,53

,354

71,58

,345

19,85

,299

12,40

,812

7,49,7

334,6

8,583

1,26,8

8,920

79,30

,574

1,37,8

4,988

86,15

,618

1,41

,39,80

3 88

,37,37

9

Vehic

les

5.30

5,66,4

1,612

3,54,0

1,006

1,17,3

5,088

73,34

,432

23,63

,951

14,77

,469

6,60,1

2,749

4,12,5

7,969

91,69

,867

57,31

,167

43,58

,240

27,23

,900

10,09

,168

6,30,7

301,2

5,18,9

39 78

,24,33

75,3

4,93,8

103,3

4,33,6

32 4,

74,71

,745

2,96

,69,83

9

Comp

uters

7.30

4,98,6

3,958

3,11

,64,97

4 39

,04,27

0 24

,40,16

9 46

,70,80

829

,19,25

54,9

0,97,4

203,0

6,85,8

88 2,

70,00

,537

1,68,7

5,336

43,22

,405

27,01

,503

43,60

,954

27,25

,596

2,69

,61,98

81,6

8,51,2

432,2

1,35,4

32 1,

38,34

,645

2,28,6

3,421

1,42

,89,63

8

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ipmen

ts 5.3

04,3

5,08,1

532,7

1,92,5

96 1,

18,69

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74,18

,405

27,99

,586

17,49

,741

5,25,7

8,018

3,28,6

1,260

1,48,0

0,993

92,50

,620

30,63

,441

19,14

,651

21,19

,737

13,24

,836

1,57

,44,69

7 98

,40,43

53,6

8,33,3

212,3

0,20,8

25 2,

87,07

,160

1,79

,41,97

6

Total

2,9

0,29,1

6,483

1,81

,43,22

,802

17,46

,75,36

0 10

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8,67,2

4,627

5,42,0

2,891

2,99,0

8,67,2

161,8

6,92,9

2,010

1,23,5

1,49,0

7677

,19,68

,172

22,44

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014

,02,84

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7,59,9

3,746

4,74

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1 1,

38,36

,10,52

0 86

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1,60

,72,56

,696

1,00

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1,66,7

7,67,4

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4,23,5

4,630

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2,02,7

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47,14

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14,32

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58,9

5,29,6

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22,53

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— —

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3,63,4

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40,37

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14,37

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5,14,6

9,043

2,09,4

6,68,1

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3,51,4

9,076

77,19

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222

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14,02

,84,49

4 7,

59,93

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4,74

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1 1,

38,36

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1,96

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1,22,9

9,11,5

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1,06,2

6,33,9

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28,43

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2,77,4

9,282

1,53,3

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88,23

,56,16

055

,14,72

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2,93,5

3,63,4

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83,46

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71,1

0,13,8

0,892

68,83

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7 13

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8,62

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942

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7 26

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4 1,

23,51

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6 77

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1,70

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1,06

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——

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191

SCHEDULES TO THE ACCOUNTS (Contd.)Figures in NRs. Figures in ` Figures in NRs. Figures in `


(16th July 2010) (16th July 2010) (15th July 2009) (15th July 2009)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 Government6.50% 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) 6,94,63,908 4,34,14,943 5,95,35,918 3,72,09,948Raw Materials (including in-transit) 78,11,22,138 48,82,01,335 46,02,80,092 28,76,75,057Stock-In-Process 2,48,30,840 1,55,19,275 2,86,12,049 1,78,82,531Finished Goods

At Cost 47,09,44,945 29,43,40,591 54,16,55,964 33,85,34,978At Net Realisable Value 1,94,13,109 1,21,33,193 1,45,01,246 90,63,279

1,36,57,74,940 85,36,09,337 1,10,45,85,269 69,03,65,793

SCHEDULE 6 : SUNDRY DEBTORS(Receivable within twelve months, unless otherwise stated)Due for more than six months

Good and Secured 2,66,137 1,66,336 6,29,249 3,93,281Good and Unsecured

From Holding Company 21,60,000 13,50,000 12,45,925 7,78,703From Others 24,23,264 15,14,540 — —

Doubtful and Unsecured - From Others 10,26,983 6,41,864 10,95,970 6,84,981Due for less than six months - Considered good

Secured 15,63,247 9,77,029 24,70,751 15,44,219Unsecured

From Holding Company 3,60,69,509 2,25,43,443 6,21,25,275 3,88,28,297From Others 5,91,03,177 3,69,39,486 5,51,67,298 3,44,79,561

10,26,12,317 6,41,32,698 12,27,34,468 7,67,09,042Less : Provision for Doubtful Debts 10,26,983 6,41,864 10,95,970 6,84,981

10,15,85,334 6,34,90,834 12,16,38,498 7,60,24,061

SCHEDULE 7 : CASH AND BANK BALANCESCash on Hand 1,20,394 75,246 1,04,257 65,161Cheques on Hand 1,99,00,000 1,24,37,500 4,45,639 2,78,524Cash At Bank

Current Account 1,82,92,668 1,14,32,918 2,02,57,739 1,26,61,087Savings Account (Provident Fund) 54,026 33,766 53,114 33,196

Short Term - Call Deposits 87,82,81,796 54,89,26,123 1,79,91,85,480 1,12,44,90,92591,66,48,884 57,29,05,553 1,82,00,46,229 1,13,75,28,893

SCHEDULE 8 : LOANS & ADVANCES

(Recoverable within twelve months, unless otherwise stated)

Receivables from Holding Company (Net) 36,84,74,089 23,02,96,306 — —Loan/Advance to Employees 11,05,75,415 6,91,09,634 11,64,72,957 7,27,95,598[Includes NRs. 9,59,90,118 (` 5,99,93,824){(2065-66 - NRs. 10,36,19,531) (` 6,47,62,207)}recoverable after twelve months]Margin Money Deposit 1,10,355 68,972 24,66,412 15,41,508Advance to Others 4,83,94,692 3,02,46,682 2,77,73,316 1,73,58,323Prepaid Expenses 43,52,841 27,20,526 44,28,515 27,67,822Accrued Interest Receivable 10,01,371 6,25,857 27,76,085 17,35,053Deposits : With Government Authorities 6,80,01,045 4,25,00,653 2,93,64,008 1,83,52,505

With Others 1,67,05,865 1,04,41,165 1,34,77,327 84,23,32961,76,15,673 38,60,09,795 19,67,58,620 12,29,74,138

Less : Provision for Doubtful Advance 77,73,607 48,58,504 60,32,076 37,70,04860,98,42,066 38,11,51,291 19,07,26,544 11,92,04,090

SCHEDULE 9 : CURRENT LIABILITIES

(Payble within twelve months, unless otherwise stated)Payable to Holding Company (Net) — — 5,28,31,698 3,30,19,811Retention Money 78,11,885 48,82,428 74,16,410 46,35,256Sundry Creditors 50,55,30,502 31,59,56,564 41,06,68,595 25,66,67,872Advances from Wholesale Dealers 24,85,24,613 15,53,27,883 24,25,49,934 15,15,93,709Deposits from Wholesale Dealers 59,50,000 37,18,750 69,50,000 43,43,750Other Liabilities 1,35,54,014 84,71,259 1,04,02,084 65,01,303

78,13,71,014 48,83,56,884 73,08,18,721 45,67,61,701SCHEDULE 10 : PROVISIONSProvision for Income Tax 5,34,46,736 3,34,04,210 5,77,61,386 3,61,00,866[Net of payment of Income Tax Advance/Deposits amounting toNRs. 95,17,97,108 (` 59,48,73,193) {(2065-66 NRs. 69,44,30,542)(` 43,40,19,089)}]Provision for Gratuity and Leave Encashment 3,85,57,391 2,40,98,369 4,64,25,205 2,90,15,753Provision for Interim/First Interim Dividend 25,20,00,000 15,75,00,000 10,08,00,000 6,30,00,000Provision for Second Interim Dividend — — 1,14,91,20,000 71,82,00,000Provision for Proposed Final Dividend 1,56,24,00,000 97,65,00,000 72,57,60,000 45,36,00,000

1,90,64,04,127 1,19,15,02,579 2,07,98,66,591 1,29,99,16,619

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 2067 32nd Asadh 2067 31st Asadh 2066 31st Asadh 2066(16th July 2010) (16th July 2010) (15th July 2009) (15th July 2009)

SCHEDULE 11 : GROSS REVENUEDomestic :

Cigarette 10,78,63,71,147 6,74,14,81,967 7,74,34,19,542 4,83,96,37,214Garments 7,47,59,603 4,67,24,752 10,23,43,054 6,39,64,409Matches 7,97,26,289 4,98,28,931 6,39,39,580 3,99,62,238

Exports :Garments 21,43,38,553 13,39,61,595 30,36,90,447 18,98,06,528

11,15,51,95,592 6,97,19,97,245 8,21,33,92,623 5,13,33,70,389

SCHEDULE 12 : DUTIESExcise Duty 3,81,42,13,414 2,38,38,83,384 2,79,71,54,281 1,74,82,21,426Sticker Charges 6,45,80,523 4,03,62,827 4,19,50,461 2,62,19,038

3,87,87,93,937 2,42,42,46,211 2,83,91,04,742 1,77,44,40,464

SCHEDULE 13 : RAW MATERIALS CONSUMED ETC.Leaf 1,63,54,05,858 1,02,21,28,661 94,99,37,527 59,37,10,954Casing Materials 1,90,27,953 1,18,92,471 1,54,20,198 96,37,624Wrapping Materials 94,39,19,217 58,99,49,511 72,41,13,512 45,25,70,945Fabrics, Trims etc 20,38,49,632 12,74,06,020 28,31,47,836 17,69,67,398Purchase and Contract Manufacturing Charges 10,19,73,039 6,37,33,149 10,35,53,431 6,47,20,894

2,90,41,75,699 1,81,51,09,812 2,07,61,72,504 1,29,76,07,815Adjustment of overheads loaded, etc. on Finished GoodsOpening 6,40,28,932 4,00,18,083 3,67,68,420 2,29,80,263Closing (4,46,25,318) (2,78,90,824) (6,40,28,932) (4,00,18,083)

2,92,35,79,313 1,82,72,37,071 2,04,89,11,992 1,28,05,69,995

Note : Includes write down of inventories amounting to NRs. 1,31,63,896 (` 82,27,435) {(2065-66 – NRs. 36,43,460 (` 22,77,163)}

SCHEDULE 14 : OTHER INCOMEInterest Received 67,68,502 42,30,314 54,28,543 33,92,840Less : Interest paid on Trading Debts 20,00,883 12,50,552 23,83,212 14,89,508

47,67,619 29,79,762 30,45,331 19,03,332Interest on Short Term /Call Deposit with Bank 8,14,64,792 5,09,15,495 9,35,10,614 5,84,44,134Gain on Foreign Exchange (Net) — — 23,86,834 14,91,771Interest from Investments 56,83,125 35,51,953 56,83,125 35,51,953Liability no longer required written back — — 3,13,355 1,95,847Provision for doubtful advance/debts written back 68,987 43,117 2,72,695 1,70,434Miscellaneous Income 92,78,210 57,98,881 1,21,51,907 75,94,942

10,12,62,733 6,32,89,208 11,73,63,861 7,33,52,413

SCHEDULE 15 :MANUFACTURING, ADMIN, SELLING EXPENSES ETC.Salaries, Wages & Allowances 25,92,90,147 16,20,56,341 23,10,86,780 14,44,29,237Contribution to Provident Fund 84,74,071 52,96,294 75,82,495 47,39,059Labour & Staff Welfare 1,89,85,556 1,18,65,973 1,69,10,622 1,05,69,139Uniform 26,25,683 16,41,052 14,65,479 9,15,924Rent 4,43,93,855 2,77,46,159 4,47,82,685 2,79,89,178Electricity, Fuel & Water 8,10,81,841 5,06,76,151 8,36,77,379 5,22,98,362Rates & Taxes 11,03,162 6,89,476 69,27,710 43,29,819Insurance Premium 3,97,57,392 2,48,48,370 3,25,99,423 2,03,74,639Repairs & Improvement - Depreciable Assets 9,80,67,962 6,12,92,476 10,67,97,769 6,67,48,606Safety & Pollution Control Cost 50,62,937 31,64,336 47,43,343 29,64,589Maintenance to Other Properties 1,76,83,275 1,10,52,046 1,63,12,708 1,01,95,442Consumable Stores & Spares 1,43,45,842 89,66,151 1,33,00,274 83,12,671Freight 3,99,72,863 2,49,83,039 3,61,81,760 2,26,13,600Product Development 1,13,12,113 70,70,071 96,64,849 60,40,531Advertising 15,50,29,004 9,68,93,128 13,00,90,726 8,13,06,704Travel & Conveyance 7,19,48,263 4,49,67,664 4,29,30,856 2,68,31,785Training & Recruitment Expenses 1,14,50,044 71,56,278 72,10,959 45,06,849Postage, Telephone, Telex, Fax etc. 92,68,988 57,93,118 78,69,019 49,18,137Bank Charges and Commission 33,01,067 20,63,167 21,63,289 13,52,056Audit Fees 8,00,000 5,00,000 4,50,000 2,81,250Legal Fees 7,95,800 4,97,375 8,70,300 5,43,938Printing & Stationery 24,25,855 15,16,159 20,16,446 12,60,279Consultancy, Service Charges & Other Fees 4,71,76,273 2,94,85,170 3,31,72,252 2,07,32,657Licence Fee 14,07,498 8,79,686 13,74,006 8,58,754Entertainment 45,50,713 28,44,196 35,87,127 22,41,954Sales Promotion 9,18,76,468 5,74,22,792 10,23,71,917 6,39,82,448Board Meeting Fees 58,824 36,765 23,529 14,706Donations & Charity 6,76,250 4,22,656 13,16,977 8,23,111Books & Periodicals 3,78,212 2,36,383 2,69,878 1,68,674Membership Fee 4,27,457 2,67,160 9,34,532 5,84,082Claims and Advances Written off — — 3,58,160 2,23,850Provision for Doubtful Debts and Advances 17,41,531 10,88,457 62,40,537 39,00,336Provision for Retirement Benefits 49,98,812 31,24,258 1,49,13,303 93,20,814Loss on Foreign Exchange (Net) 3,20,862 2,00,539 — —Miscellaneous Expenses {Refer 2F of Schedule 17} 1,30,04,516 81,27,823 1,29,20,527 80,75,329

1,06,37,93,136 66,48,70,709 98,31,17,616 61,44,48,509

SCHEDULE 16 : PROVISION FOR TAXATIONCurrent Tax 92,08,35,261 57,55,22,038 66,99,12,880 41,86,95,550Deferred Tax (1,25,37,129) (78,35,706) 98,25,136 61,40,710

90,82,98,132 56,76,86,332 67,97,38,016 42,48,36,260



192


SCHEDULE 17 - NOTES TO THE ACCOUNTS1. Significant Accounting Policies

i) ConventionThese financial statements have been prepared in accordance with applicable AccountingStandards in Nepal and generally accepted accounting principles. 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. Thepreparation 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 in the period in which they arise. Differences between the forward exchangerates and the exchange rates at the date of transactions are recognised as income orexpense over the life of the contracts. Profit / loss arising on cancellation or renewal offorward exchange contracts is recognised as income / expense for the period. Gains /losses in the Profit and Loss Account on foreign exchange rate fluctuations relating tomonetary items are accounted for 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 on profit for the period covered by the financialstatements with reference to 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 not recognised unless there is virtual certainty that there will besufficient future taxable income available to realise such assets.Deferred tax is determined using the tax rates that have been enacted or substantivelyenacted by 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 2067, the Board of Directors of the Company at its

meeting held on 18th Aswin 2067 (4th October 2010) have:a) declared interim dividend of NRs. 12.50 (` 7.81) per share andb) recommended final dividend of NRs. 77.50 (` 48.44) per share.

B. Claims against the Company not acknowledged as debts:a) Demands raised by Revenue Authorities on theoretical production of cigarettes:

The Company has been receiving Show Cause Notices (SCNs) and demands fromExcise, Income Tax and VAT authorities. The basis of all these SCNs and demandsis an untenable contention by the Revenue authorities that the Company couldhave produced more cigarettes than it has actually produced in a given year, byapplying an input-output ratio allegedly submitted by the Company in the year2047-48 and, that, the Company is liable to pay taxes on such cigarettes that couldhave been theoretically produced and sold. This, despite the fact that the Company’scigarette factory is under ‘physical control’ of the Revenue authorities and cigarettesproduced are duly accounted for and certified as such by the Revenue authorities.It may be pointed out that such levy of taxes on such theoretical production ofcigarettes has absolutely no basis in law.The Hon’ble Supreme Court of Nepal has, during the year, passed judgements infavour of your Company, with regard to certain Excise and Income Tax demandson the issue of theoretical production. These are summarised below:(i) Excise Related:

1. For the financial years 2050-51 & 2051-52 (1993-94 & 1994-95),Revenue authorities had raised a Excise demand for NRs. 13,59,81,616(` 8,49,88,510), which was quashed by a Division Bench of the SupremeCourt on 8th April 1998. Government filed a review petition on 8thOctober 1998. The Full Bench of the Supreme Court on 29th October2009 decided the matter in favour of the Company. Our counselappearing in the matter has opined that this verdict will add substantialstrength to the Company’s case in all other matters relating to the issueof theoretical production.

2. An Excise demand dated 12th July 2005 for NRs. 37,17,24,680(` 23,23,27,925) for the financial years 2055-56 to 2059-60 (1998-99to 2002-03) was issued to the Company by the Inland Revenue Office.On 21st September 2006 the Company challenged the demand in theSupreme Court, which on 1st April 2010, has decided the matter infavour of the Company.

(ii) Income Tax Related:An Income Tax demand dated 13th October 2006 for the financial year2058-59 (2001-02) was issued to the Company for an amount ofNRs. 16,07,61,328 (` 10,04,75,830) related to the matter of theoreticalproduction. On 7th November 2006, the Company filed a writ petitionbefore the Supreme Court seeking that the said demand order bequashed. The Supreme Court, on 1st April 2010, has decided the matterin favour of the Company.

Following is the status on other demands issued to the Company on the same matterwhich are based on similar untenable contention by the Revenue authorities:

(i) Excise Demand for NRs. 27,80,26,266 (` 17,37,66,416)1. A demand letter dated 22nd February 2008 was issued to the Company

by the Inland Revenue Office, Simra, Bara. The demand ofNRs. 14,95,15,509 (` 9,34,47,193) by way of Excise duty, relate to thefinancial years 2060-61 to 2062-63 (2003-04 to 2005-06). The Companyfiled a writ petition in the Supreme Court on 1st April 2008 requestingthat the said demand order be quashed and orders issued such thatthe tax demanded not be collected. The Supreme Court admitted thepetition on 2nd April 2008 and directed issue of Show Cause Noticesto the respondents, and the hearing on the matter is pending.

2. A demand letter dated 30th November 2008 was issued to the Companyby the Inland Revenue Office, Simra, Bara. The demand of NRs.12,85,10,757 (` 8,03,19,223) by way of Excise duty, relate to thefinancial year 2063-64 (2006-07). The Company had filed a writ petitionin the Supreme Court on 31st December 2008 requesting that the saiddemand order be quashed and orders issued such that the tax demandednot be collected. The Supreme Court admitted the petition on 6thJanuary 2009 and directed issue of Show Cause Notices to therespondents, and the hearing on the matter is pending.

(ii) VAT Demand for NRs. 36,50,65,785 (` 22,81,66,116)1. A demand letter dated 7th August 2006 for the financial year 2058-59

(2001-02) was issued to the Company by the Large Taxpayers Office,Kathmandu. Of a total demand of NRs. 7,54,63,766 (` 4,71,64,854),the basis of a demand for NRs. 7,54,51,113 (` 4,71,56,946) is theoreticalproduction. An administrative review petition on the Value Added Taxmatter was filed before the Director General on 1st September 2006,and the matter is pending.

2. A demand letter dated 8th August 2007 was issued to the Companyby the Large Taxpayers Office, Lalitpur, for the financial year 2059-60(2002-03). The total demand is for NRs. 5,72,38,860 (` 3,57,74,288)and the basis of demand is theoretical production. The Company hasfiled a writ petition in the Supreme Court on 11th September 2007requesting that the said demand order be quashed and orders issuedsuch that the tax demanded not be collected. The Supreme Courtadmitted the petition on 12th September 2007 and directed issue ofShow Cause Notices to the respondents, and the hearing on the matteris pending.

3. A demand letter dated 5th August 2008 was issued to the Companyby the Large Taxpayers Office, Lalitpur, for the financial year 2060-61(2003-04). Of a total demand of NRs. 1,13,28,199 (` 70,80,124), thebasis of a demand for NRs. 1,07,18,107 (` 66,98,817) is theoreticalproduction. The Company has filed a writ petition in the Supreme Courton 1st September 2008 requesting that the said demand order bequashed and orders issued such that the tax demanded not be collected.The Supreme Court admitted the petition on 5th September 2008 anddirected issue of Show Cause Notices to the respondents and the hearingon the matter is pending.

4. A demand letter dated 10th July 2009 was issued to the Company bythe Large Taxpayers Office, Lalitpur, for the financial years2061-62 to 2063-64 (2004-05 to 2006-07). The total demand is for

193



NRs. 10,69,66,056 (` 6,68,53,785) and the basis of demand is theoreticalproduction. The Company has filed a writ petition in the Supreme Courton 7th August 2009 requesting that the said demand order be quashedand orders issued such that the tax demanded not be collected. TheSupreme Court admitted the petition on 9th August 2009 and directedissue of Show Cause Notices to the respondents and the hearing onthe matter is pending.

5. A demand letter dated 14th May 2010 was issued to the Company bythe Large Taxpayers Office, Lalitpur, for the financial year 2064-65(2007-08) for NRs. 11,46,91,649 (` 7,16,82,280) the basis of which istheoretical production. An administrative review petition on the ValueAdded Tax matter was filed before the Director General on 11th July2010, and the matter is pending.

(iii) Income Tax Demand for NRs. 28,58,68,507 (` 17,86,67,817)1. A demand letter dated 12th August 2007, for the financial year 2059-

60 (2002-03) was issued to the Company by the Large Taxpayers Office,Lalitpur, on 14th August 2007 for a sum of NRs. 19,60,92,971(` 12,25,58,107) on theoretical production. The Company has filed awrit petition in the Supreme Court on 11th September 2007 requestingthat the said demand order be quashed and orders issued such thatthe tax demanded not be collected. The Supreme Court admitted thepetition on 12th September 2007, and the hearing on the matter ispending.

2. A demand letter dated 15th September 2008 for the financial year2060-61 (2003-04) was issued to the Company by the Large TaxpayersOffice, Lalitpur. Of a total demand of NRs. 2,25,36,944 (` 1,40,85,590)the basis of the demand for NRs. 1,91,39,653 (` 1,19,62,283) is ontheoretical production.The Company has filed a writ petition in the Supreme Court on 7thDecember 2008 seeking that the said demand order be quashed andorders issued such that the tax demanded not be collected. The SupremeCourt admitted the petition on 8th December 2008 and hearing onthe matter is pending.

3. A demand letter dated 16th October 2009 for the financial year 2061-62 (2004-05) was issued to the Company by the Large Taxpayers Office,Lalitpur. Out of a total demand of NRs. 2,26,26,609 (` 1,41,41,631),the basis of the demand for NRs. 2,15,65,409 (` 1,34,78,381) is ontheoretical production. The Company has filed an administrative reviewpetition before the Director General, Inland Revenue Department on18th December 2009. However, the Director General without dealingwith the issues raised by the Company, summarily dismissed the petition

by an order dated 2nd March 2010. The Company thereafter filed anappeal before the Revenue Tribunal, on 17th June 2010, and the matteris pending.

4. A demand letter dated 16th September 2010 for the financial year2062-63 (2005-06) was issued to the Company by the Large TaxpayersOffice, Lalitpur. Out of a total demand of NRs. 4,92,55,186(` 3,07,84,491), the basis of the demand for NRs. 4,90,70,474(` 3,06,69,046) is on theoretical production. The Company, inconsultation with its counsel, is in the process of challenging it throughappropriate legal remedies.The Management considers that all the demands listed above have nolegal or factual basis. Accordingly, the Management is of the view thatthere is no liability that is likely to arise, particularly in the light of thedecision in favour of the Company by the Full Bench of the HoníbleSupreme Court.

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) {(2065-66 - NRs. 10,32,83,725(` 6,45,52,328)} (net of provision made for the above assessment years)against which the Company has filed appeals with the appropriateauthorities.

2. Value Added Tax matters under dispute, pertaining to financial years2055-56 to 2057-58, amounting to NRs. 31,00,750 (` 19,37,969){(2065-66 - NRs. 31,00,750 (` 19,37,969))}, which are under appeal.

C. In the matter related to theoretical production, a Show Cause Notice dated 19thJanuary 2010 was issued by the Inland Revenue Office seeking reasons as to whya demand of NRs. 19,65,37,807 (` 12,28,36,129) by way of Excise Duty shouldnot be raised on the Company for the financial year 2064-65 (2007-08). TheCompany has filed a writ petition in the Supreme Court on 4th February 2010seeking a stay order on the Department from raising a demand on this matter inview of the favourable decision of the Hon’ble Supreme Court in the matter narratedin paragraph B(a)(i)(1) above. On 7th March 2010, Supreme Court stayed thedemand, pending final disposal.In respect of the above Show Cause Notice, the management is of the view thatthe Company has a strong case on merits and has been advised by eminent counselthat the Show Cause Notice is not sustainable, particularly in the light of the decisionby the Full Bench of the Supreme Court on a similar manner

D. Estimated amount of contracts remaining to be executed on capital accountNRs. 38,94,00,452 (` 24,33,75,283) {(2065-66 NRs. 1,36,12,442 (` 85,07,776))}.

SCHEDULE 17 - NOTES TO THE ACCOUNTS (Contd.)


194

E. Payment to Managing Directors:

Particulars Year ended Year ended32nd Asadh 2067 31st Asadh 2066(16th July 2010) (15th July 2009)

In NRs. In ` In NRs. In `Salary, Bonus etc. (Short Term) 1,31,55,061 82,21,913 1,11,98,602* 69,99,126*Post Employment Benefits** — — — —Total 1,31,55,061 82,21,913 1,11,98,602 69,99,126

* Includes NRs. 39,44,756 (` 24,65,473) paid to former Managing Director as per terms and conditions approved by the Shareholders.**Post employment benefits are actuarially determined on overall basis for all employees.

F. Miscellaneous Expenses include reimbursement of expenses to statutory auditors amounting to NRs. 68,410 (` 42,756) {(2065-66 – NRs. 2,48,754 (` 1,55,471))}.G. The major components of the Deferred Tax Assets/Liabilities, based on the tax effect of the timing difference are as under:

Particulars As at As at31st Asadh 2067 31st Asadh 2066(16th July 2010) (15th July 2009)

In NRs. In ` In NRs. In `Deferred Tax Asset

On employees’ separation and retirement 1,08,20,523 67,62,827 1,36,75,628 85,47,268On fiscal allowance on fixed assets 2,22,01,471 1,38,75,919 77,30,612 48,31,632On doubtful advance 12,66,614 7,91,634 9,60,155 6,00,097

3,42,88,608 2,14,30,380 2,23,66,395 1,39,78,997Deferred Tax Liability

On finished goods 53,01,893 33,13,683 59,16,809 36,98,006Deferred Tax – Net 2,89,86,715 1,81,16,697 1,64,49,586 1,02,80,991

H. Explanation of the relationship between tax expenses and accounting profit:

Particulars For the Year ended For the Year ended32nd Asadh 2067 31st Asadh 2066(16th July 2010) (15th July 2009)

In NRs. In ` In NRs. In `Accounting Profit 2,88,26,44,312 1,80,16,52,695 2,12,05,91,000 1,32,53,69,375Tax at the applicable tax rate 88,00,80,163 55,00,50,102 64,81,82,492 40,51,14,057(Cigarette manufacturing @ 30%,Garments Manufacturing @ 20% andTrading @ 25%)Factors affecting tax charge for the yearEffect of :Unused Tax Losses not recognised 2,72,77,870 1,70,48,668 2,56,08,895 1,60,05,559Expenses not deductible for tax purposes 9,40,099 5,87,562 10,42,934 6,51,834Movement in other timing differences — — 36,96,313 23,10,196Reduction in opening deferred taxes resulting from reduction in tax rate — — 12,07,382 7,54,614Total Tax Expense 90,82,98,132 56,76,86,332 67,97,38,016 42,48,36,260


I. Capital:The Company is not subject to any capital adequacy norms under regulations presentlyin force. Employees Housing Reserve is set aside as required by law. It is the Company’spolicy to maintain a sound capital base that is supportive of the Company’s businessplans . Return on Capital employed is monitored based on Asset Turnover & Profitabilityratio.

J. 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 Hotel Limited, Indiad) Russell Credit Limited, India and its subsidiary

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, AustraliaTechnico 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(became subsidiary with effect from 11.08.2008)

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)

i. Hup Hoon Traders Pte. Limited, Singaporeii. AOZT “Hup Hoon”, Moscowiii. Hup Hoon Impex SRL, Romania

b) BFIL Securities Limited (a subsidiary of BFIL Finance Ltd.) which isunder voluntary winding up proceedings.

3. Key Management Personnel:Y. C. Deveshwar Chairman & Non-Executive DirectorS. Puri Alternate Director to Y. C. Deveshwar (w.e.f. 22nd March,2010)A. Singh Non-Executive Director (till 21st March, 2010)A. K. Mukerji Non-Executive Director (w.e.f. 17th August, 2009)B. B. Chatterjee Non-Executive DirectorK. N. Grant Non-Executive Director (w.e.f. 22nd March, 2010)P. Chatterjee Non-Executive Director (till 16th August, 2009)S. R. Pandey Non-Executive DirectorS. SJB Rana Non-Executive DirectorSaurya SJB Rana Alternate Director to Mr. S. SJB RanaS. Keshava Managing Director

SCHEDULE 17 - NOTES TO THE ACCOUNTS (Contd.)

In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In ` In NRs. In `

Sale of Goods /Services 9,63,46,535 6,02,16,584 59,820 37,388 22,10,73,693 13,81,71,058

Purchase of Goods /Services 1,98,87,64,823 1,24,29,78,014 23,03,064 14,39,415 1,18,74,63,779 74,21,64,862 31,29,830 19,56,144

Payment to Managing Director 1,31,55,061 82,21,913 72,53,846 45,33,654

Sitting Fees / IncidentalExpenses to Other Directors 98,824 61,765 48,529 30,331

Machine Hire Charges 69,19,105 43,24,441 34,79,199 21,74,499

Rent Received 12,24,946 7,65,591 51,20,000 32,00,000

Dividend Payments 1,16,56,51,200 72,85,32,000 51,54,24,000 32,21,40,000

Expenses recovered 91,83,785 57,39,866 12,073 7,546 97,54,500 60,96,563

Expenses reimbursed 58,02,919 36,26,824 84,70,386 52,93,991 2,36,848 1,48,030

Advances Given (after adjustmentof purchase) 50,22,62,979 31,39,14,362 4,56,037 2,85,023

Issue of Bonus Share 99,12,00,000 61,95,00,000

Balances as on 16th July

— Debtors 3,82,29,509 2,38,93,443 6,33,71,200 3,96,07,000

— Advances/Other Receivables 50,46,56,336 31,54,10,210 11,30,246 7,06,404

— Creditors / Payables 13,61,82,247 8,51,13,904 5,39,61,944 3,37,26,215 8,41,281 5,25,801

For the year ended For the year ended32nd Asadh, 2067 (16th July, 2010) 31Asadh, 2066 (15th July, 2009)

Holding Company Fellow Key Management Holding Company Fellow Key ManagementSubsidiaries Personnel Subsidiaries Personnel

Disclosure of transactions between the Company and related parties and the status of outstanding balances as on 16th July, 2010:

K. Figures have been rounded off to the nearest rupee.L. Previous Year’s figures have been regrouped and/or rearranged wherever necessary.





195

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. as of March 31, 2011 and 2010, and the related statements of incomeand retained earnings and cash flows for the years then ended. Thesefinancial 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 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 as

evaluating the overall financial statement presentation. We believe thatour audits 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, 2011 and 2010, 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 made for the purpose of forming an opinion on the basicfinancial statements taken as a whole. The supplemental informationpresented on page 199 is for purposes of additional analysis and is not arequired part of the basic financial statements. Such information has beensubjected to the auditing procedures applied in the audits of the basicfinancial statements and, in our opinion, is fairly stated in all materialrespects in relation to the basic financial statements taken as a whole.

Albany, New YorkApril 15, 2011 Bollam, Sheedy, Torani & Co. LLP

STATEMENTS OF INCOME AND RETAINED EARNINGS


$ ` $ `SALES

Revenues, net of customer returns 37,105,170 1,659,320,351 54,201,154 2,581,247,900Less quick pay discounts (1,552,876) (69,487,319) (1,687,326) (80,671,056)

Net sales 35,552,294 1,589,833,032 52,513,828 2,500,576,844COST OF SALES 27,138,915 1,214,978,284 38,299,134 1,852,522,704

8,413,379 374,854,748 14,214,694 648,054,140MSA SETTLEMENT CHARGES, NET 3,068,464 137,306,093 8,939,313 427,388,555Gross profit 5,344,915 237,548,655 5,275,381 220,665,585OPERATING EXPENSES 4,828,352 216,056,681 5,310,056 253,873,778Income (loss) from operations 516,563 21,491,974 (34,675) (33,208,193)OTHER

Business service income 360,000 16,109,100 360,000 17,211,600Reserve for inventory write-off (74,400) (3,317,868) (355,000) (15,939,500)Loss on diposal of property and equipment (1,499) (67,077) — —Interest income 80,825 3,616,717 102,550 4,902,916Other income 1,960 87,705 12,253 585,815

366,886 16,428,577 119,803 6,760,831Income before provision for income taxes 883,449 37,920,551 85,128 (26,447,362)PROVISION FOR INCOME TAXES (361,846) (16,191,704) (27,668) (1,322,807)Net Income 521,603 21,728,847 57,460 (27,770,169)RETAINED EARNINGS, beginning of year 5,022,928 225,529,513 4,965,468 253,299,682RETAINED EARNINGS, end of year 5,544,531 247,258,360 5,022,928 225,529,513The accompanying Notes to Financial Statements are an integral part of these statements.

196

KING MAKER MARKETING, INC.

BALANCE SHEETSMarch 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

$ ` $ `ASSETSCURRENT ASSETS

Cash and cash equivalents 8,962,492 399,682,331 12,383,287 556,009,586Accounts receivable 457,226 20,389,994 477,464 21,438,134Accounts receivable, other 282,809 12,611,867 226,240 10,158,176Inventory, net of reserve for write-off 939,039 41,876,444 2,765,161 124,155,684Due from related parties, net — — 27,946 1,254,775Prepaid expenses 306,417 13,664,666 441,867 19,839,828Income tax receivable 77,852 3,471,810 436,724 19,608,954Deferred income taxes 51,938 2,316,175 191,903 8,616,445

11,077,773 494,013,288 16,950,592 761,081,582

PROPERTY AND EQUIPMENT, net 27,729 1,236,575 40,322 1,810,502OTHER ASSETS 26,110 1,164,375 26,610 1,194,789

11,131,612 496,414,238 17,017,524 764,086,873LIABILITIES AND STOCKHOLDER’S EQUITYCURRENT LIABILITIES

Accounts payable 1,040,653 46,407,921 1,585,786 71,201,791Due to related parties, net 69,829 3,114,024 — —Accrued settlement charges 4,188,026 186,765,019 10,121,083 454,436,627Accrued expenses and other 192,500 8,584,538 230,409 10,345,364

5,491,008 244,871,502 11,937,278 535,983,782LONG-TERM LIABILITIES

Deferred income taxes 91,993 4,102,428 53,238 2,390,386COMMITMENTS AND CONTINGENCIESSTOCKHOLDER’S EQUITY

Common stock, voting, no par value, 1,000 shares authorized;204 shares issued and outstanding 4,080 181,948 4,080 183,192Retained earnings 5,544,531 247,258,360 5,022,928 225,529,513

5,548,611 247,440,308 5,027,008 225,712,70511,131,612 496,414,238 17,017,524 764,086,873

The accompanying Notes to Financial Statements are an integral part of these statements.

STATEMENTS OF CASH FLOWS YEAR ENDED MARCH 31, 2011For the year For the year For the year For the yearended 31st ended 31st ended 31st ended 31st

March, 2011 March, 2011 March, 2010 March, 2010$ ` $ `

CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIESNet income 521,603 21,728,847 57,460 (27,770,169)Adjustments to reconcile net income to net cashprovided (used) by operating activitiesDepreciation 11,094 496,429 17,054 815,352Loss on disposal of property and equipment 1,499 67,077 — —Deferred income taxes 178,720 7,997,273 (77,981) (3,728,272)(Increase) decrease in

Accounts receivable 20,238 902,514 176,512 11,731,529Accounts receivable, other (56,569) (2,522,695) (21,611) (494,495)Inventory 1,751,722 78,385,180 1,127,757 75,359,217Due from related parties 97,775 4,360,276 28,478 1,607,050Prepaid expenses 135,450 6,040,393 (131,610) (4,377,482)Income taxes receivable 358,872 16,003,897 (314,843) (13,427,104)Other assets 500 22,298 (1,545) (76,508)

Increase (decrease) inAccounts payable (545,133) (24,310,206) 876,855 35,244,811Reserve for inventory write-off 74,400 3,317,868 355,000 15,939,500Accrued settlement charges (5,933,057) (267,125,854) (5,362,750) (327,482,511)Accrued expenses and other (37,909) (1,690,552) (9,370) (1,816,227)

(3,420,795) (156,327,256) (3,280,594) (238,475,309 )

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES

Payments for the purchase of property and equipment — — (2,208) (99,139)

Net decrease in cash and cash equivalents (3,420,795) (156,327,256) (3,282,802) (238,574,448)CASH AND CASH EQUIVALENTS, beginning of year 12,383,287 556,009,586 15,666,089 794,584,034CASH AND CASH EQUIVALENTS, end of year 8,962,492 399,682,331 12,383,287 556,009,586SUPPLEMENTAL CASH FLOW INFORMATIONCash paid during the year forIncome taxes 183,127 8,166,549 105,647 5,050,981

The accompanying Notes to Financial Statements are an integral part of these statements.

NOTES TO FINANCIAL STATEMENTSMarch 31, 2011 and 2010

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.NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Accounting MethodThe Company uses the accrual basis of accounting.b. Use of EstimatesThe preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America (GAAP) requiresthat management make estimates and assumptions relevant to the reportedamounts of assets and liabilities, disclosure of contingent assets and liabilitiesat the date of the financial statements, and revenues and expenses duringthe 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 andshort-term highly liquid investments with an original maturity of three orfewer months. The Company has a restricted cash deposit balance of $1.6million as collateral for a letter of credit issued in order to securitize a U.S.Customs Bond posted for $2.1 million.e. InventoryInventory consists mainly of cigarettes. The lower of cost (first-in, first out)or market method has been used in determining the inventory value andincludes applicable duty, federal excise taxes, tobacco buyout costs, FDAUser Fee, MSA, freight-in, storage, and other direct costs.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 otherwise

disposed 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 depreciation anddepreciates equipment and fixtures over 5 to 7 years; software over 3 to 5years, 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, 2011 and 2010.g. Revenue Recognition/Accounts ReceivableThe Company recognizes 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, 2011 and 2010.Revenues are reflected net of customer returns. Total customer returns were$539,626 and $371,869 for the years ended March 31, 2011 and 2010,respectively.h. Shipping and Handling 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 $1,274,442 and $1,511,664 for the years endedMarch 31, 2011 and 2010, respectively.j. Income TaxThe Company follows the asset and liability approach to account for incometaxes. This approach requires the recognition of deferred tax assets andliabilities for the expected future tax consequences of temporary differencesbetween the carrying amounts and the tax basis of assets and liabilities.The Company presently discloses or recognizes 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 uncertain tax positions thatrequire adjustment in its financial statements.The Company’s federal andstate tax returns are subject to examination by taxing authorities. TheCompany is no longer subject to tax examination for the year ended March31, 2006, and prior.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continuedk. Subsequent EventsIn preparing the financial statements and notes thereto, the Company hasconsidered subsequent events through April 15, 2011, the date the financialstatements were available to 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 31,2011 2010

$ $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 has leased office space in New York City and hiredpersonnel to develop business opportunities. The revenues and inventoryon account of this business included in the financial statements are $238,539and $74,400, respectively, for 2011. The inventory as of March 31, 2011,is fully reserved for write-off. The revenues and inventory for 2010 were$26,556 and $165,833, respectively. On August 24, 2010, the Board ofDirectors approved the winding down of the apparel business.NOTE 5 - ROLL - YOUR - OWN AND CIGARETTE INVENTORY WRITE-OFFOn April 1, 2009, the federal excise tax increased by approximately 160%on cigarettes and 2,170% on roll-your-own (RYO) tobacco, which significantlyimpacted the Company in the year ended March 31, 2010, with substantiveloss of the RYO business and increased costs. Effective June 22, 2010, the FDAmandated packaging changes, which required that all current design packagingmanufactured before the due date be sold into commerce by July 22, 2010.For the year ended March 31, 2010, management reserved for write-off, anamount of $355,000 for the projected unsaleable inventory based on itemsmost at risk of being liquidated by that date. As of March 31, 2011, theCompany wrote-off the $355,000 plus an additional $253,000 of the remainingunsaleable inventory, totaling $608,000.NOTE 6 - PROPERTY AND EQUIPMENT, NETProperty and equipment, net, consist of the following:

March 31, 2011 March 31, 2010$ ` $ `

Equipment and fixtures 100,248 4,470,560 111,257 4,995,439Leasehold improvements 19,847 885,077 19,847 891,130Computer software 74,082 3,303,687 74,082 3,326,782

194,177 8,659,323 205,186 9,212,851Less accumulated depreciation 166,448 7,422,749 164,864 7,402,349

27,729 1,236,575 40,322 1,810,502

Depreciation expense for property and equipment was $ 11,094 and $ 17,054 for theyears ended March 31, 2011 and 2010, respectively.

NOTE 7 - COMMITMENTS AND CONTINGENCIESa. LeasesThe Company’s main office is located in Paramus, New Jersey. It has 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, 2011 and 2010, was approximately $134,000 and $133,000, respectively.The Company leases two additional offices in Paramus, New Jersey, whichare across the hall from the main office, with the same terms and anannual rent of approximately $95,000 and $96,000 for the years endedMarch 31, 2011 and 2010, respectively. These offices are sublet to ITCInfotech, Inc. (an ITC Group Company) for the full term of the lease. ITCInfotech, Inc. has fully reimbursed the Company for the rent expense underthe lease for the years ended March 31, 2011 and 2010.The Company leases accommodations for its managers seconded from ITCLtd. India to ease their transition to the United States. The Company paysmonthly rent, which is included in the employees’ payroll for tax purposes.These amounts were approximately $24,600 and $26,400 for the yearsended March 31, 2011 and 2010, respectively.The Company leases automobiles under noncancelable operating leaseswith 36-month terms. Vehicle lease expense was $16,807 and $14,328for the years ended March 31, 2011 and 2010, respectively. Quarterlyrental payments for the leasing of office equipment (postage meter) areincluded in operating expense.Future minimum lease payments as of March 31, 2011, are:

2012 $ 202,1492013 57,7922014 9,842Total minimum payments required $ 269,783

Total rental expense for all operating leases, less sublease rentals recovered,is as follows:

March 31, 2011 March 31, 2010$ ` $ `

Minimum rentals 228,652 10,231,605 229,620 10,978,132Less sublease rentals 95,048 4,253,160 96,476 4,612,518

133,604 5,978,445 133,144 6,365,615

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 8 - 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, 2011 and 2010, from ITC were$4,791,774 and $5,746,131, respectively. At March 31, 2011 and 2010,respectively, the Company owed ITC $71,390 and $-0-. At March 31, 2011 and2010, respectively, $1,561 and $27,946 is due from ITC.Furthermore, the Company billed approximately $360,000 to ITC forexpenses related to business services for the years ended March 31, 2011and 2010.

NOTE 9 - 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. The Company estimates its relativemarket share gain as defined in the MSA and the resultant settlementcontribution required. The MSA contributions are subject to several revisionsand recalculations by the independent auditor.MSA settlement charges are as follows:

March 31, 2011 March 31, 2010$ ` $ `

Estimated cost based on currentactivity, net of credits 4,257,259 190,501,697 9,455,918 452,087,440Change in estimate of MSA settlement costs based on actualresults for calendar year end (1,188,795) (53,195,604) (516,605) (24,698,885)

3,068,464 137,306,093 8,939,313 427,388,555

The Company disputes a portion of the calculated settlement amount asallowed by the MSA. Under the agreement, the Company has four yearsto formally protest. The total amount disputed is approximately $7.7million as of March 31, 2011. There has been no resolution to these disputesto date. An arbitration panel as provided under the MSA has commencedhearings on some of those disputes as of September 2010.Further, the Company also disagrees with the independent auditor’s treatmentof unapplied recalculation credits due to the Company of $533,110.The Company is unable to avail itself to these credits at this time as well.

NOTE 10 - TOBACCO BUYOUTAs required by Title VI of the American Jobs Creation Act of October 2004,and 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, 2011 and 2010, were$1,209,161 and $1,755,349, respectively.

NOTE 11 - PROFIT-SHARING PENSION PLANThe Company offers a profit-sharing pension plan for all eligible employees.Employees become eligible as long as they are twenty-one years of ageand have credited twelve months of 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 someexceptions. Employees become fully vested with six or more years ofservice. Contributions to the Plan are discretionary, with a 3% minimum,under certain circumstances, on an employee’s Social Security base income.Expenses for the years ended March 31, 2011 and 2010, were $133,306and $128,246, respectively.

NOTE 12 - 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 no customers that exceeded10% of total sales for the year ended March 31, 2011. The Companyhad one customer that exceeded 10% of total sales for the year endedMarch 31, 2010. As of March 31, 2010, accounts receivable for this customerwas $38,597.

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SUPPLEMENTAL INFORMATION – OPERATING EXPENSES

Year ended Year ended Net Year ended Year ended Net31st March, 2011 31st March, 2011 Sales 31st March, 2010 31st March, 2010 Sales

$ ` % $ ` %Marketing and promotion 1,274,442 57,028,093 3.6 1,511,664 72,272,655 2.9Salaries 1,084,734 48,539,135 3.1 1,224,358 58,536,556 2.3Shipping and handling 611,980 27,384,575 1.7 841,729 40,243,063 1.6Professional fees 340,795 15,249,724 1.0 305,679 14,614,513 0.6Fees and Licenses 292,262 13,077,994 0.8 204,447 9,774,611 0.4Travel 246,736 11,040,819 0.7 329,763 15,765,969 0.6Office supplies and expense 137,026 6,131,571 0.4 89,865 4,296,446 0.2Rent 133,604 5,978,445 0.4 133,144 6,365,615 0.3Pension 133,306 5,965,110 0.4 128,246 6,131,441 0.2General insurance 128,033 5,729,157 0.4 93,873 4,488,068 0.2Group insurance 103,593 4,635,528 0.3 96,451 4,611,322 0.2Payroll tax 90,831 4,064,460 0.3 84,797 4,054,145 0.2Miscellaneous/other expenses 90,316 4,041,415 0.3 78,865 3,770,536 0.2Dues and subscriptions 55,060 2,463,797 0.2 63,928 3,056,398 0.1Auto 34,751 1,555,020 0.1 39,921 1,908,624 0.1Telephone/communication 32,539 1,456,039 0.1 38,347 1,833,370 0.1Training and placement fees 27,250 1,219,369 0.1 27,925 1,335,094 0.1Depreciation 11,094 496,429 0.0 17,054 815,352 0.0

4,828,352 216,056,681 13.6 5,310,056 253,873,778 10.1

199


Year ended Year ended Year ended Year ended31st March, 2011 31st March, 2011 31st March, 2010 31st March, 2010

$ ` $ `

Current income tax expenseFederal 124,572 5,574,286 108,946 5,208,708States 58,554 2,620,145 (3,297) (157,630)

Total current 183,126 8,194,431 105,649 5,051,079

Deferred income tax expenseFederal (148,157) (6,629,655) (67,464) (3,225,454)States (30,563) (1,367,618) (10,517) (502,818)

Total deferred (178,720) (7,997,273) (77,981) (3,728,272)

Net income tax expenseFederal 272,729 12,203,941 41,482 1,983,254States 89,117 3,987,763 (13,814) (660,447)

Total income tax expense charged to operations 361,846 16,191,704 27,668 1,322,807

The difference between the statutory rate and the rate reflected in the financial statements is due to state taxes.The Company’s total deferred tax assets (liabilities) arise from basis differences summarized as follows:

Year ended Year ended Year ended Year ended31st March, 2011 31st March, 2011 31st March, 2010 31st March, 2010

$ ` $ `

Deferred tax assetsInventory 51,938 2,316,175 191,903 8,616,445

Deferred tax liabilitiesDepreciation (91,993) (4,102,428 ) (53,238) (2,390,386)

SUPPLEMENTAL INFORMATION – COST OF SALESYear ended Year ended Net Year ended Year ended Net

31st March, 2011 31st March, 2011 Sales 31st March, 2010 31st March, 2010 Sales$ ` % $ ` %

Beginning inventory 2,765,160 124,155,684 7.8 4,247,918 215,454,401 8.1Cigarette tax, duty, and harbor processing fees 18,489,982 827,380,470 52.0 28,893,010 1,381,374,808 55.0Cigarette purchases 4,644,548 207,834,234 13.1 5,587,497 267,138,232 10.6Tobacco buyout expense 1,209,161 54,107,536 3.4 1,755,349 83,923,236 3.3FDA 439,161 19,651,576 1.2 230,508 11,020,587 0.4Other expenses / purchases 241,386 10,801,541 0.7 158,634 7,584,292 0.3Storage 205,777 9,208,109 0.6 463,273 22,149,082 0.9Freight-in 114,842 5,138,950 0.3 37,280 1,782,357 0.1Customs brokerage 27,782 1,243,189 0.1 37,462 1,791,058 0.1Destruction charges 14,555 651,307 0.0 8,363 399,835 0.0

28,152,354 1,260,172,596 79.1 41,419,294 1,992,617,888 78.9Ending inventory prior to reserve (1,013,439) (45,194,312) (2.9) (3,120,160) (140,095,184) (5.9)Provision for inventory write-off 74,400 3,317,868 0.2 355,000 15,939,500 0.7

27,138,915 1,214,978,284 76.3 38,299,134 1,852,522,704 72.9

NOTE 13 - INCOME TAXESThe income tax provision reflected in the statements of income and retained earnings consists of the following components:

itc subsidiaries 2011 complete

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