Terms and rights attached to Equity Shares

The Company has only one class of Equity Share having par value of Rs. 10/- per share. Each holder of Equity Share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of Equity Share will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the Shareholders.

Terms and rights attached to Preference Shares

During the year ended 31st March, 2004, the Company had issued 40,000 7% Non Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid up. Preference Shares carry a dividend of 7%, only when it is declared by the Company. The dividend is paid by the Company in Indian Rupees only. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Each holder of Preference Share is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to Preference Shares.

The 7% Non Convertible Preference Shares will be redeemed in the year ended 31st March, 2023 at par value only. In the event of liquidation of the company before redemption of Preference Shares, the holder of Preference Shares will have priority over Equity Shares in the payment of dividend and repayment of capital.

1. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

2. Contingent Liabilities

Claims, disputes and demands not acknowledged as debts:

3. Demand of Rs.7,94,960/- (P.Y. Rs.7,94,960/-) for F.Y. 2009-10 has been raised under West Bengal Value Added Tax Rules, 2005 by Joint Commissioner of Commercial Taxes, for which an appeal has been filed on 18/03/2014 before the West Bengal Commercial Taxes Appellate & Revision Board, West Bengal.

4. Income Tax demand of Rs. 1,24,257/- for the A.Y. 2010-11 has been raised by the I.T.O. Ward 4(4) after giving effect to the order of CIT (Appeals)-IV passed under section 250 of the Income Tax Act, 1961 against which the Company has filed a rectification application.

5 The Company has paid Rs.24,72,214/- as interim measure as per order of Hon’ble High Court at Guwahati against debit note raised by GAIL (India) Limited for Rs. 68,80,820/- (P.Y. Rs.68,80,820/-). Matter is now pending with Hon’ble Supreme Court.

6. Demand of Rs.35,684/- has been raised vide order u/s 143(3) of the Income Tax Act,1961 for the A.Y 2012-13 dated 13/06/2014 and an appeal against the same has been filed with CIT (Appeal)-2, Kolkata.

7. Demand of Rs.100/- has been raised vide order u/s 143(3) of the Income Tax Act,1961 for the A.Y 2013-14 dated 20/01/2016 and an appeal against the same has been filed with CIT (Appeal)-2, Kolkata.

The amounts shown in the item (a) represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

8. Commitments

Outstanding commitment in respect of Irrevocable Stand by Revolving Letter of Credit issued in favour of GAIL (India) Ltd. Rs.22,07,139/- (Previous Year Rs.22,68,177/-).

9. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to Rs. 51,48,910/-/- (Previous Year Rs. 3,60,000/-)

10. Sundry Creditors do not include any amount due (Previous Year Rs. Nil) from suppliers as defined under the “Micro Small & Medium Enterprises Development Act, 2006” as per the information available with the Company. Hence disclosures regarding a) Amount due and outstanding to suppliers as at the accounting period, b) Interest paid during period, c) Interest payable at the end of the accounting period and d) Interest accrued at the end of the accounting period has not been disclosed or provided.

The Estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.

The past service cost has been recognized as Rs.71,67,366/- as Ryam Commerce & Plantations Limited has transferred Rs. 63,00,000/- as current liabilities on account of Gratuity in terms of Business Transfer Agreement dated 29th March, 2017. The said Rs. 63,00,000/- has been subtracted from the total purchase consideration payable to Ryam Commerce & Plantations Limited.

11. Amount recognized as an expense in respect of Compensated Leave Absences is Rs.2,37,113/- and (Previous Year Rs. 3,52,711/-) based on actuarial valuation. During the year ended 31st March, 2017 the Company has paid Rs. 1,64,545/- and (Previous Year Rs. 1,55,890/-) as actual leave encashment.

Note: Encashment of leave is payable on death whilst in service, withdrawal from service or from retirement from services. In the view of salary growth rates have been used to project the salary at the time when encashment of leave is assumed to take place. While making actuarial valuations certain assumptions, such as mortality rates, withdrawal rates, retirement age, etc. have been taken into consideration by the actuarial valuer. The Method used for such valuation is projected Unit Credit Method, which are in compliance with AS-15 (Revised 2005) as issued by ICAI and Guidance Note 26 issued by Institute of Actuaries of India.

12. SEGMENT REPORTING

The Company has only one segment i.e. manufacturing of Black Tea and as a result the reporting required of AS - 17 “Segment Reporting” are not attracted.

13. The Company has made a provision of Rs.6,03,759/- (Previous Year Rs.7,92,306/- in its books of accounts towards contribution for Corporate Social Responsibility under Section 135 of the Companies Act, 2013. Out of Rs.10,11,802/- earmarked for CSR activities in F.Y. 2016-2017 and F.Y. 2015-2016, Rs.8,08,000/- has been incurred for activities specified in Schedule VII of the Companies Act, 2013 in the financial year 2016-2017 through “Kanco CSR Trust”.

14. CORPORATE INFORMATION

Kanco Tea & Industries Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed at ‘‘The Calcutta Stock Exchange Limited’’ and permitted to be traded at the ‘‘Bombay Stock Exchange’’. The Company is engaged in the manufacturing and selling of black tea. The Company caters to only the domestic market. The food safety system and the quality management system of Mackeypore Tea Estate has been assessed and found to meet the requirement of HACCP (Hazard Analysis and Critical Point), ISO 22000 Food Safety Management. The quality management system of Mackeypore Tea Estate has been assessed and found to meet the requirements of ISO 9001:2008. Mackeypore Tea Estate & Lakmijan Tea Estate has been issued verification certificate under trusttea code for sustainable tea in India.

15. During the year, the Company has acquired Bamonpookrie Tea Estate from Ryam Commerce & Plantations Limited (herein after referred as Seller) in terms of Business Transfer Agreement dated 29th March, 2017 executed between the Company and Seller at a purchase consideration of Rs.28,50,00,000/-(Rupees Twenty Eight Crores Fifty Lakhs Only) and the undernoted assets have been shown as addition to Property, Plant & Equipments in Notes on Financial Statements No.11 as given below: -

16. In accordance with revised accounting standard AS-10 on “Property, Plant & Equipment (PPE)” effective from 1st April, 2016, Bearer Plants have been recognized as an item of PPE and has been depreciated over their useful life resulting an additional depreciation amounting to Rs.10,81,363/- for the year ended 31st March, 2017. Expenditure on replanting of old tea bushes have been capitalized to the tune of Rs.47,03,805/- during the year ended 31st March, 2017 to comply with the requirements of revised AS-10, which was hitherto charged to Statement of Profit & Loss.

During the year due to change in accounting policy in respect of Property, Plant & Equipment, corresponding changes as depreciation, profit for the year has been affected as below: -

17. During the year, profit has increased by Rs. 47,03,805/- on account of replanting expenses, capitalized due to change in AS-10 on “Property, Plant & Equipment (PPE)” effective from 1st April, 2016

18. During the year, profit has decreased by Rs.10,81,363/- on account of depreciation on bearer plants as per revised AS-10 on “Property, Plant & Equipment (PPE)” effective from 1st April, 2016.