Note 7.1. See Note 1.20 for method of valuation of inventories.

Note 7.2. Raw material include goods in transit amounting to Rs. 131.17 lakhs (previous year Nil).

Note 11.1 Balances with banks include restricted bank balances of Rs. 194.59 lakhs (Previous year Rs. 191.30 lakhs). The restrictions are primarily on account of bank balances held as margin money deposits against guarantees Rs. 4.86 lakhs (Previous year Rs. 4.60 lakhs) and earmarked bank balances for (1) unpaid dividends Rs. 94.73 lakhs (Previous year Rs. 105.70 lakhs) and (2) deposit repayment reserve account Rs. 95.00 lakhs (Previous year Rs. 81.00 lakhs).

Note 15.2 Terms/rights, Preferences and Restrictions attached to equity shares:

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in the case of interim dividend, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Board of directors has recommended a final dividend of Rs. 60 per equity share of Rs. 10 each, subject to approval of shareholders at the ensuing annual general meeting.

In the case of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential claims as provided in the Companies Act, 2013. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 15.4 There was no fresh issue or buying back of shares in the preceding five years.

Note 15.5 There was neither bonus issue nor any other issue of shares in the preceding five years.

Note 20.1 The cash credit facility is secured by (1) First Charge by way of hypothecation of all current assets of the Company and Plant and Machinery of Irinjalakuda and Konikkara Units; and (2) Equitable mortgage of immovable properties of Irinjalakuda and Konikkara Units by deposit of title deeds.

Note 20.2 See Note 17.2 for rate of interest and terms of repayment of public deposits.

Note 22.1 Public Deposits include deposits accepted from Directors Rs. 1.75 lakhs (Previous year Rs. 0.48 lakh) on the same terms and conditions as applicable to other depositors.

Note 22.2 Interest accrued but not due on public deposits includes Rs. 0.04 lakh (Previous year Rs. 0.16 lakh) due to Directors.

Note 22.3 See Note 17.2 for rate of interest and terms of repayment of public deposits.

1. ADDITIONAL INFORMATION

1.1 Fair Value Measurement

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities.

Level 2: Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The fair value of trade receivables, trade payables and other Current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature.

There were no transfers between Level 1 and Level 2 during the year.

Financial Risk Management - Objectives and Policies

The Company has a well-managed risk management framework, anchored to policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks (such as liquidity risk, market risk, credit risk and foreign currency risk) that may arise as a consequence of its business operations as well as its investing and financing activities.

Accordingly, the Company’s risk management framework has the objective of ensuring that such risks are managed within acceptable risk parameters in a disciplined and consistent manner and in compliance with applicable regulation.

1) Liquidity Risk

Liquidity risk is the risk that the Company will encounter due to difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The company has sound financial strength represented by its aggregate current assets including current investments as against aggregate current liabilities and its strong equity base. In such circumstances, liquidity risk is insignificant.

2) Market Risk

As the Company’s overall debt is less compared to its equity, the exposure to interest rate risk from the perspective of Financial Liabilities is negligible. Further, treasury activities, focused on managing investments in debt instruments, are administered under a set of approved policies and procedures guided by the tenets of liquidity, safety and returns. This ensures that investments are only made within acceptable risk parameters after due evaluation. The Company’s investments are predominantly held in fixed deposits and debt mutual funds. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility. The Company also invests in mutual fund under schemes of leading fund houses. Such investments are susceptible to market price risk that arise mainly from changes in interest rate which may impact the return and value of such investments. However, given the relatively short tenure of underlying portfolio of most of the mutual fund schemes in which the Company has invested, such price risk is not significant.

3) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks and other receivables.

The Company has adopted a policy of only dealing with counterparties that have sufficiently high credit rating. The Company’s exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties. Credit risk arising from investment in mutual funds, derivative financial instruments and other balances with banks is limited because the counterparties are banks and recognized financial institutions with high credit ratings.

For trade receivables, as a practical expedient, the company is accepting advance from customers against sale of goods. Hence credit risk is negligible.

4) Foreign Currency Risk

The Company undertakes transactions denominated in foreign currency (mainly US Dollar) which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency, are also subject to reinstatement risks.

The Company has established risk management policies to hedge the volatility arising from exchange rate fluctuations in respect of firm commitments and highly probable forecast transactions, through foreign exchange forward contracts. The proportion of forecast transactions that are to be hedged is decided based on the size of the forecast transaction and market conditions. As the counterparty for such transactions are highly rated banks, the risk of their non-performance is considered to be insignificant.

Capital Management

For the purpose of the Company’s capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value.

The Company’s financial strategy aims to support its strategic priorities and provide adequate capital to its businesses for growth and creation of sustainable stakeholder value. The Company funds its operations through internal accruals. The Company aims at maintaining a strong capital base largely towards supporting the future growth of its businesses as a going concern.

As at 31^st March, 2018, the Company has only one class of equity shares. The company is not subject to any externally imposed capital requirements.

1.2 First Time Adoption of Ind AS

These financial statements, for the year ended 31^st March 2018, are the first financial statements prepared by the company in accordance with Ind AS. For the periods upto and including the year ended 31^st March 2017, the company prepared its financial statements in accordance with Indian GAAP including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended).

Accordingly, the company has prepared financial statements which comply with Ind AS applicable for periods ending on or after 31^st March 2018, together with the comparative period data as at and for the year ended 31^st March 2017, as described in the summary of significant accounting policies. For the purpose of these financial statements, the opening balance sheet was prepared as at 1^st April 2016, the date of transition to Ind AS. The principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1^st April 2016 and the financial statements as at and for the year ended 31^st March 2017 has been explained in Note No. 33.3.

Exemptions applied:

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS and the following exemptions have been applied while preparing the financial statements complying with Ind AS:

a. Deemed cost for Property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

b. Determining whether an arrangement contains a lease

Appendix C of Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease, at the inception of the contract or arrangement. However, Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

c. Derecognition of financial assets and financial liabilities

Company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

d. Classification and measurement of financial assets

Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS

e. Impairment of financial assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date.

3. Details of Measurement and recognition difference between Ind AS and Previous GAAP for the year ended 31^st March 2017

1) Fair Valuation of Investments

Under the previous GAAP investments in mutual funds were classified as long term investments or current investments based on the intended holding period and realisability. Long term investments were carried at cost less provision for other than the temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31^st March, 2017. This increased the retained earnings by Rs. 6.75 lakhs (net of deferred tax) as at 31^st March 2017 (1^st April 2016 by Rs.Nil)

2) Proposed dividend

Under Previous GAAP upto year ended 31^st March, 2016, proposed dividend including dividend distribution tax (DDT), are recognized as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as liability in the period in which it is declared by Company, usually when approved by shareholders in a general meeting or paid.

Therefore, the dividend liability (proposed dividend) including dividend distribution tax liability amounting to Rs. 770.29 lakhs has been derecognised in the retained earnings as on the date of transition.

Proposed dividend including dividend distribution tax liability amounting to Rs. 770.29 lakhs which was derecognised as on the transition date, has been recognised in retained earnings during the year ended 31^st March, 2017 as declared and paid.

3) Remeasurement benefit of defined benefit plans

Under previous GAAP actuarial gains and losses on employees defined benefit obligations were recognised as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognised in Other Comprehensive Income as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognised in Other Comprehensive Income.

For the year ended 31^st March, 2017, remeasurement of gratuity liability resulted in a net benefit of Rs. 135.55 lakhs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognised separately in Other Comprehensive Income. This has resulted in decrease in employee benefits expense by Rs. 135.55 lakhs and loss in Other Comprehensive Income by Rs. 135.55 lakhs for the year ended 31^st March, 2017. Consequently, tax effect of the same amounting to Rs. 46.91 lakhs is also recognised separately in Other Comprehensive Income.

The above changes do not affect Equity as at date of transition to Ind AS and as at 31^st March, 2017. However, Profit before tax and profit for the year ended 31^st March, 2017 decreased by Rs. 135.55 lakhs.

4) Deferred tax

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under previous GAAP

5) Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognized in profit or loss, but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans and effective portion of cash flow hedge. The concept of other comprehensive income did not exist under the previous GAAP

6) Statement of cash flows

The transition from Previous GAAP to Ind AS has not had a material impact on the statement of cash flows.

Under Ind AS, bank overdrafts repayable on demand and which form an integral part of the cash management process are included in cash and cash equivalents for the purpose of presentation of statement of cash flows. However, the management is of the view that the Cash Credit facility availed from banks by the company is distinct from an overdraft facility and hence, they are continued to be shown as part of financing activities, as hitherto done under the previous GAAP

7) Other matters

In the preparation of these Ind-AS Financial Statements, Company has made several presentation differences between previous GAAP and Ind-AS. These differences have no material impact on reported profit or total equity. Accordingly, some assets and liabilities have been reclassified into another line item under Ind-AS at the date of transition. Further, in these Financial Statement, some line items as described differently under Ind-AS compared to previous GAAP although the assets and liabilities included in these line items are unaffected.

Details in respect of claims against the Company not acknowledged as debts disclosed above are as follows:

(i) Assistant Commissioner, Central Excise and Service Tax has issued Order demanding Central Excise Duty of Rs. 34,52,320 (including penalty of Rs. 3 lakhs) and interest as applicable, by disallowing exemption claimed on fatty acid from levy of Central Excise Duty from December, 2014 to October, 2016. Aggrieved by the Order Company has filed an appeal before the Commissioner (Appeals), Central Excise and Service Tax.

(ii) Assistant Commissioner (Assessment), Department of Commercial taxes, Thrissur had issued order demanding Rs. 25,40,012 (including interest Rs. 12,63,624) for the financial year 2000-01 against sales tax exemption claimed on sale of refined vegetable oil. On appeal, The Deputy Commissioner (Appeals), Ernakulam had issued an order directing the assessing authority to reconsider the matter. The final order from the Assistant Commissioner (Assessment) is not yet received.

(iii) Assistant Commissioner (Assessment), Department of Commercial taxes, Thrissur had issued order demanding Rs. 2,12,062 (including interest Rs. 96,181) for the financial year 2010-11 for the difference in the monthly purchase turnover uploaded to the website of Kerala Commercial Taxes. Aggrieved by the Order, Company has filed appeal before the Deputy Commissioner (Appeals), Department of Commercial Taxes, Thrissur.

(iv) Southern Railway had raised two demands aggregating to Rs. 57,10,829 on grounds of undercharge due to incorrect classification of deoiled rice bran. The claim has been challenged by the Company before the Hon. High Court of Kerala and the writ petition is still pending before the Court.

(v) (a) Some of the employees of the company had challenged the enhancement of wage limit for coverage of ESI, before the Hon. High Court of Kerala and the Court had granted stay. The cases were disposed off by the Court in favour of ESI Corporation and Company had remitted contributions of employer and employees.

Subsequently, ESI Corporation demanded interest amounting to Rs. 1,56,862 for delay in payment of contributions relating to the period when the above stay was in operation and Rs. 19,214 towards employees’ contribution in respect of retired/resigned employees during the said period. Company had preferred appeal before the ESI Court, Palakkad which was decided in favour of the Company. Aggrieved by the order, ESI Corporation had filed appeal before the Hon. High Court of Kerala challenging the orders of ESI Court, Palakkad, and the said appeal is still pending.

ESI Corporation had also demanded damages of Rs. 1,14,199 for the delay in remittance of contribution mentioned above and the Company had filed an appeal before the ESI Court, Palakkad which is still pending.

(b) ESI Corporation has issued order demanding Rs. 1,62,952 as interest and Rs. 60,080 as damages for delay in remittance of contribution on omitted wages for the period from 01.04.1996 to 31.03.2002. The Company remitted Rs. 75,000 towards this demand on the direction of the Court, while granting stay. The balance demand not paid is Rs. 1,48,032, and the case is still pending before ESI Court, Palakkad.

(vi) Kerala State Electricity Board (KSEB) had issued an order demanding Rs. 1,11,780 as charges for additional connected load in Konikkara Dairy Unit of the company relating to the period from November, 2001 to July, 2002. This order has been challenged by the company before the Hon. High Court of Kerala which is still pending.

In all the above cases company is legally advised that there is a good chance for full relief and hence no provision is considered necessary at this stage.

(xi) Note on actuarial risks

These plans typically expose the Company to actuarial risks such as: Investment Risk, Interest Risk, Longevity Risk and Salary Risk.

(a) Investment Risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

(b) Interest Risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan debt investments.

(c) Longevity Risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

(d) Salary Risk

The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

Notes:

1. The above disclosures are based on information certified by the independent actuary and relied upon by the Company.

2. The plan assets of the Company are managed by the Life Insurance Corporation of India in terms of insurance policies taken to fund the obligations of the Company with respect to its Gratuity and Compensated Absences Plan. Information on categories of plan assets is not available with the Company.

3.1 Stores and spares consumed includes cost of materials used for repairs and maintenance.

3.2 In the opinion of the Board, current assets and long term loans & advances have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

3.3 The Company is purchasing freezers and selling the same at concessional rate to distributors of ice cream. The cost of purchases and the sales value of the freezers are debited/credited to the Advertisement and Sales Promotion shown under Note 31 - Other Expenses.

3.4 Balance with Government Authorities under Note 14 includes Goods and Service Tax (GST) which in the opinion of the management is either refundable or eligible for set off against future GST liabilities.

3.5 The company has a system of periodically obtaining and reconciling confirmations of balances with banks, suppliers and customers.

3.6 Figures of the previous year have been regrouped and recast wherever necessary to suit the current year’s layout.