Annual Report - NDDB Dairy Services

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Annual
Report
2013-2014
Board of Directors
Shri Deepak Tikku
Chairman
Shri S. Parthasarathy
Shri Dilip Rath
IAS (Retd.) MD, NDDB
Smt. Shyamala Gopinath
Prof. M.S. Sriram
Ex Deputy Governor, RBI
Visiting Faculty, IIM Bangalore
Shri Sangram Chaudhary
Shri S. Nagarajan
ED, NDDB
MD, MDFVPL
Shri A.S. Parmar *
Shri A.K. Khosla
COO, NDDB Dairy Services
ED, NDDB Dairy Services
(* Since May 2013)
Contents
Producer Companies
5
Guidelines for Setting Up Milk Producer Companies
8
Setting Up Milk Producer Companies
11
Assistance to Producer Companies
14
Training & Capacity Building
15
Information & Communication Technology 18
Quality Assurance
18
Standard Operating Procedures
19
Productivity Services
21
International Cooperation
23
Accounts
25
Directors’ Report 46
The Staff
48
NDDB Dairy Services, a not-for-profit company
under Section 25 of the Companies Act,
is a wholly-owned subsidiary of the
National Dairy Development Board (NDDB).
Annual Report 2013-2014 I 5
Producer Companies
Historically, cooperatives in India, with a few exceptions, have evolved as social
organisations and as vehicles for carrying out welfare programmes – not as professionallymanaged businesses. State cooperative regulations in India restrict the flexibility and
autonomy required by cooperatives to compete in the prevalent market economy.
Economic liberalisation opened up Indian markets to competition. Liberalisation and
globalisation assumed that competitors are more or less equally endowed with resources,
opportunities and skills – but these conditions are often absent in rural India. Therefore
producer-owned enterprises provide a powerful countervailing force against any possible
exploitation of smallholder producers by
investor-owned corporations.
A Producer Company combines the institutional and
Cooperatives in developed countries
ideological strengths of cooperatives – ownership
are professionally-managed business
limited to users; limited interest on shares; no trading
enterprises. Incorporated, they generally
of shares; patronage not capital-based – with the
operate under laws that also govern
companies and corporations, with the
flexibility and autonomy available under company law.
exception that their ownership features
are recognised and respected.
Based on the recommendations of the High Powered
Committee appointed by the Government of India,
the Companies Act 1956 was amended in the year
2002 incorporating Part IX A – which provides for
incorporation of Producer Companies. It also provides
voluntary conversion of cooperatives which have
extended any of its objects to more than one state
into Producer Companies. This amendment came into
effect from February 2003.
A Producer Company combines the institutional and
ideological strengths of cooperatives – ownership
limited to users; limited interest on shares; no trading
of shares; patronage not capital-based – with the
flexibility and autonomy available under company
law. A Producer Company is a business enterprise
registered under provisions of Part IX A of the
Companies Act but is run on the basis of principles
that are by and large the same as those adopted by
the International Cooperative Alliance.
6 I NDDB DAIRY SERVICES
Why Producer Companies in the Dairy Sector?
About 50% of the milk produced in the country is retained for local consumption. Of
the remaining 50% – or the marketable surplus – cooperatives procure about 17% of
the milk produced from around 20% of rural milk-producing households in 23% of the
country’s villages.
Meanwhile, the organised private sector unlike the cooperative sector, barring some
exceptions, is rapidly expanding its operations. While the organised private sector will
grow, it is important – in the interest of livelihoods and inclusiveness – that cooperatives
and producer companies continue to handle at least 50 per cent of the milk procured
by the organised sector.
About 50% of the milk produced in the country is retained
A substantial part of the marketable surplus
continues to be handled by traders and
for local consumption. Of the remaining 50% – or the
vendors. To ensure that consumers get
marketable surplus – cooperatives procure about 17% of the
good quality milk and milk products
milk produced from around 20% of rural milk-producing
processed under hygienic conditions, it
is necessary that cooperatives continue
households in 23% of the country’s villages. There is
to be strengthened, and that more
therefore a need for many more cooperatives and producer
Producer Companies are incorporated and
companies.
operationalised.
Annual Report 2013-2014 I 7
Producer Companies vis-à-vis Cooperatives
A Producer Company is a private limited company to which provisions contained in Part
IX A of the Companies Act 1956, apply. A Producer Company is a business enterprise
run on the basis of ‘Mutual Assistance Principles’ – which are broadly similar to the
Cooperative Principles adopted by the International Cooperative Alliance for cooperatives.
There are however a few key enabling features in a Producer Company’s legal framework
which differentiate it from cooperatives:
Producer Company vis-à-vis Cooperatives
Producer Company (Act)
Cooperative Act
Legal framework
Central Act, enabling in nature
State Act, restrictive in nature
Area of operation
Not restricted
Restricted
Shareholders
Only user members can hold
shares
Non-users can also hold shares
Voting rights
One member, one vote.
Members of Producer Company
having only Producer Institutions
as its members shall have
patronage-based voting rights.
One member, one vote
Audit
Regular audit by a Chartered
Accountant as per provisions of
the Companies Act
Audit by the Cooperative Audit
Department, or in some states, by
an auditor from a panel of auditors
approved by Government
Producer Company vis-à-vis Other Companies
Even though a Producer Company is a private limited company, there are certain distinct
features which differentiate it from other companies:
Producer Company vis-à-vis Other Companies
Producer Company
Other Companies
Only producers can be members/shareholders
Anyone can be a shareholder
Owned by user members
Owned by investors
One member, one vote or patronage-based voting
Voting rights based on shareholding
No trading of shares is permitted. However transfer of
shares among members is permitted.
Trading of shares is permitted
Limited dividend
No limit on dividend
Patronage-based returns
Capital-based returns
8 I NDDB DAIRY SERVICES
Guidelines for Setting Up
Milk Producer Companies
NDDB Dairy Services (NDS) has readied a handbook for individuals or organisations
who wish to assist milk producers in setting up a Milk Producer Company (MPC). The
handbook, drawing on the expertise and experience of NDS staff, details the various
processes involved in setting up an MPC – namely, Pre-Incorporation, Incorporation,
and Post-Incorporation of the Company.
1
2
Pre-Incorporation
Incorporation
• Identification of potential
location
• Preparation of Business Plan
• Pre-launch consultations with
stakeholders
• Identification of first subscribers
• Orientation of first subscribers
• Documentation of first
subscribers and Directors
• Applying for name for Milk
Producer Company
• Preparation of MoA and AoA
• Submission of application for
incorporation along with fee
3
Post-Incorporation
•
•
•
•
•
•
•
First Board Meeting
Member enrolment
Fulfilling statutory requirements
Engaging manpower
First Annual General Meeting
Commencing business operations
Capacity building
Annual Report 2013-2014 I 9
Identification & Orientation of First Subscribers of a Milk Producer Company
Identification of First Subscribers
• Identification of
potential milk
producers
• Are supportive of the concept of a Producer Company
• Agree to the concept of ‘share capital contribution by
producer members’
• Validation and
screening, based
on educational
qualifications and
social profile
• Are good listeners
• Can communicate his/her ideas in a coherent manner
• Willing to take initiative
• Can read and write
Identification
of Potential Milk
Producers
Personal interviews
with the shortlisted
potential milk
producers to assess
their interest in
taking initiative
in forming a Milk
Producer Company
Assessing
Interest of First
Subscribers
Incorporation & Operationalisation of a Milk Producer Company
rs
c r ib e
s
ers and Identification of
F ir
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Annual Report 2013-2014 I 11
Setting Up Milk Producer Companies
NDDB Dairy Services is assisting producers in some states to establish Milk Producer
Companies. While Producer Companies have been incorporated and operationalised in
Rajasthan and Gujarat, work is in progress in Andhra Pradesh, Punjab and Uttar Pradesh.
Preliminary work for setting up a Producer Company has also been initiated in the
backward regions of Maharashtra, namely, Vidarbha and Marathwada, following the
signing of an MoU between NDDB and the Government of Maharashtra.
Two Milk Producer Companies Show the Way
Paayas MPC in Rajasthan and Maahi in Gujarat were both incorporated in mid-2012 with
the active guidance of NDDB Dairy Services. By 2013-14, Paayas was on an average
procuring about 3.25 lakh kg of milk a day, its turnover touching about Rs.450 crores
with a profit of about Rs.1.75 crores. In the same year, the Maahi MPC on an average
procured about 6.0 lakh kg of milk a day and achieved a turnover of about Rs.900
crores with a profit of around Rs.3.0 crores. The frontrunners have clearly proved their
ability and viability.
Paayas Milk Producer Company
Maahi Milk Producer Company
12 I NDDB DAIRY SERVICES
Paayas Milk Producer Company
As on 31st March 2014, about 39,000 members contributed a share capital of about
Rs.9 crores to their Producer Company. The milch animal-holding profile of the
members is:
Number of Milch
Animals Owned
Members %
1
10%
2 to 3
42%
4 to 6
31%
7 to 10
13%
Above 10
4%
39,000
members
contributed a
share capital
of about
Rs.9 crores
The distribution of members across different classes of shareholding is:
Class
Annual Milk Quantity
(in lt)
Members
%
A
>= 6,000
11%
B
>= 2,000 to <6,000
19%
C
500 to <2,000
70%
Paayas MPC markets polypack milk and ghee besides
making bulk supplies to institutions. It makes available
With
a turnover
of Rs.450 crores,
Paayas MPC on an
average procured
about 3.25 lakh
kg of milk per
day
cattle feed under the brand name ‘Mudrika’ and area-specific
mineral mixture to its producer members.
Annual Report 2013-2014 I 13
Maahi Milk Producer Company
As on 31st March 2014, about 71,000 members contributed a share capital of about
Rs.23 crores to their Producer Company. The milch animal-holding profile of the
members is:
Number of Milch
Animals Owned
Members %
1
14%
2 to 3
50%
4 to 6
23%
7 to 10
7%
Above 10
6%
71,000
members
contributed a
share capital of
about Rs.23
crores
The distribution of members across different classes of shareholding is:
Class
Annual Milk Quantity
(in lt)
Members
%
A
>= 6000
10%
B
>= 2000 to <6000
32%
C
500 to <2000
58%
Maahi MPC markets polypack milk, ghee, curd and buttermilk
With
a turnover
of Rs.900 crores,
Maahi MPC on an
average procured
about 6.0 lakh kg
of milk per
day
besides making bulk supplies to institutions. It makes available
cattle feed under the brand name ‘Rajdan’ and area-specific mineral
mixture to its producer members.
14 I NDDB DAIRY SERVICES
Assistance
to
Producer Companies
The professional team at NDDB Dairy Services assisted the Producer Companies in
Training & Capacity Building, Information & Communication Technology, Quality
Assurance, and developing Standard Operating Procedures (SOPs).
Annual Report 2013-2014 I 15
Training & Capacity Building
Key to the success of any business venture are the people responsible for its governance
and the professionals who manage the day-to-day business. A Producer Company has
a range of stakeholders who require orientation or training:
Board Members and Senior Professionals
A business orientation programme for the Board of
Directors was organised at Maahi and Paayas Milk
Producer Companies (MPCs), followed by a two-day
interface workshop for both Board members and senior
professionals. The workshop enabled participants to
re-visit the company’s Values, Vision and Mission, and
re-look at the priority areas of the company. Further,
the workshop focussed on providing clarity with regard
to the roles and responsibilities of the Board members
and that of the Chief Executive.
Producer Members
Education programmes for MPC members were
conducted through organisations (including NGOs),
located at the regional level. NDS has designed modules
on producer awareness, women awareness, and clean
milk production. The organisations have been trained
to take these education programmes to milk producers,
in their respective languages.
Strengthening Member Relations
The MPCs have created informal groups for members
at two levels. One, at the milk route level (or a Bulk
Milk Cooling Centre level) for every 10 to 12 villages
called the ‘Member Relations Group’; second, at the
village Milk Pooling Point level, called the ‘Village
Contact Group’.
Such informal groups help strengthen the relationship
and bonding between the members and their company,
and promote an effective two-way communication.
These groups also provide members the opportunity
for speedy redressal of problems by their company.
16 I NDDB DAIRY SERVICES
Skills Development
Various orientation programmes were organised for
field personnel of Maahi and Paayas Milk Producer
Companies to enable them appreciate their role
in making the companies strong, member-owned,
producer-centric, and inclusive. The topics covered
included the rationale of the formation of an MPC,
its salient features and benefits of being a member,
importance of dairying in India and importance of
institution building.
Various training modules were developed for
Village Contact Groups/Member Relations Groups,
Sahayaks, Milk Chilling Centre staff, rural youth,
rural schoolchildren, and others. With a view to
Trainer’s Training for the Producer Institution-building team.
Sahayak Training Programme.
Rural Youth Programme.
develop the capacity of identified trainers in the Milk
Producer Companies to take up such programmes on
a regular basis, the NDS team also conducted training
programmes and field demos for these trainers.
NDS also conducted programmes on skill and
competency development for MPC staff, covering
subjects such as team-building, communications,
motivation, and leadership.
Training in Quality Assurance formed an important
part of the programme, not only for QA officers and
Programme for rural schoolchildren.
assistants but also facilitators and area officers.
Annual Report 2013-2014 I 17
Extension & Communication
NDDB Dairy Services has also developed and supplied
communication materials like awareness posters,
information booklets, pamphlets and video manuals
on various themes to MPCs for use
in their training programmes and
extension activities.
18 I NDDB DAIRY SERVICES
Information & Communication Technology
To ensure timely, secure and seamless flow of requisite data, NDS assisted the Milk
Producer Companies to formulate and implement their information and communication
strategies.
NDS supported the Producer Companies in establishing and training their staff in
IT-related infrastructure and software application for various systems such as:
• Centralised Milk Procurement Data for
milk procured at village pooling points/
chilling centres;
• KYP (Know Your Producer);
• Quality Assurance at milk chilling centres;
• Financial Management;
• Sales Management; and
• Asset Maintenance at village pooling
points/chilling centres.
Quality Assurance
To ensure that the Producer Companies meet the standards laid down by the Food
Safety and Standards Authority of India (FSSAI), it is important that they put in place
quality and food safety systems. NDS assisted the Producer Companies in developing
and implementing quality and food safety systems.
NDS has also developed training modules for use of the staff of the Producer Companies
in implementation of the Quality
Assurance systems, some of
which are:
•Clean Milk Production;
•Hygiene and sanitation at
village milk pooling points
and chilling centres;
•Testing for milk quality
parameters at the chilling
centres;
•Regulatory compliance;
•E-quality MIS reporting; and
•Processing facility assessment
prior to commissioning.
Annual Report 2013-2014 I 19
Standard Operating Procedures
For clarity and consistency in how to ensure best practices in various applications
especially repetitive ones, Standard Operating Procedures (SOPs) play an important role.
NDS assisted the Producer Companies in implementation of SOPs that it has developed.
Some of these are:
• Activities to be undertaken prior to commencement of milk procurement;
• Milk handling, quality testing, data management, dispatch at village pooling points
and chilling centres;
• Ration balancing programme;
• AI delivery system;
• Member enrolment; and
• Milk transport system.
NDS has also assisted the Producer Companies in conducting an audit of the various
operations, so as to check compliance/non-compliance with SOPs, and to take corrective
action if required.
SOPs for AI Delivery System
1
On-call AI service
through trained
technician
6
Calf birth
2
Ear tagging &
animal registration
All transactions captured directly in INAPH (Information Network
for Animal Productivity & Health) application by AI technician
5
3
Pregnancy diagnosis
4
Post-AI advice
Doorstep AI delivery
following SOPs using
superior genetics
Annual Report 2013-2014 I 21
Productivity Services
Enhancing Semen Production
Increasing the productivity of our milch animals to meet rapidly growing demand
requires a special thrust to genetic improvement of our animals, and feeding them
balanced rations. Genetic improvement can be achieved through the use of quality
semen from bulls of high genetic merit and increased coverage of milch animals by
Artificial Insemination (AI).
NDDB Dairy Services currently manages the two largest semen stations in the country –
Sabarmati Ashram Gaushala in Bidaj (Gujarat), and the Animal Breeding Centre in Salon,
Rae Bareli (UP), which together produced over 18 million Frozen Semen Doses (FSDs)
in 2013-14. Both semen stations have world-class facilities where semen produced is
processed, stored and supplied.
Sabarmati Ashram Gaushala, Bidaj
Producing 11.9 million semen doses in
2013-14, the Sabarmati Ashram Gaushala
maintained its top position in the country.
The sale of semen touched 12.5 million
doses, attaining a growth of 11% over the
previous year.
Animal Breeding Centre, Salon
The Animal Breeding Centre (ABC) is the
second largest semen-producing station in the
country. In 2013-14, it produced 6.5 million
semen doses and sold 6.6 million doses, an
Sabarmati Ashram Gaushala, Bidaj
11% increase over the previous year.
New Semen Stations
NDDB Dairy Services has initiated work on
setting up two new semen stations in Tamil
Nadu and Maharashtra, each with a capacity
to produce about 10 million FSDs annually.
NDDB Dairy Services will also be setting
up a semen station in Odisha State. Land
has already been allotted by the State
Government and the MOU is expected to
be signed shortly.
Animal Breeding Centre, Salon
22 I NDDB DAIRY SERVICES
AI Delivery Services
Artificial Insemination ensures a more rapid
pace for the genetic improvement of the
bovine population. NDS supports Producer
Companies and coops in providing AI services
to farmers at their doorstep.
NDS facilitated training of 300 AI technicians
to provide AI services to producers of the
Paayas and Maahi Milk Producer Companies.
Further, NDS signed an MoU with the West
Assam Milk Union to provide technical and
management support in implementing a
World Bank-funded AI project in six districts
of Assam.
Ration Balancing
Breed-improvement programmes need to be supported by feeding milch animals a
balanced diet to enable them produce milk commensurate with their genetic potential.
Normally, the diet comprises locally-available feed, grasses and crop residues – often
leading to imbalanced feeding with protein, energy, mineral and vitamins being either
in excess or deficient. This impacts the milk yield and the cost of milk production.
NDDB has developed a
Ration Balancing Programme
to balance the diet of milch
animals for different milk
production levels, using a
simple software with linear
programming. Its use will result
in optimising the cost of milk
production and producers’
income on a sustainable basis.
NDS has facilitated the training
of about 300 Local Resource
Persons from villages to advise
small producers on ration
balancing.
Annual Report 2013-2014 I 23
International Cooperation
Visitors from CARE, Bangladesh...
A seven-member team from CARE-Bangladesh visited
the Maahi Milk Producer Company to observe the
infrastructure facilities for milk collection, weighing,
testing and data recording at the village level. They
also discussed the process of incorporation and
operationalisation of the company.
...& from Land O’ Lakes, USA
The participants of a workshop on Cooperative
Development organised by the Institute of Rural
Management Anand (IRMA) and Land O’ Lakes,
USA, visited Maahi in Gujarat to share information
on best practices, and operationalisation of a milk
producer company as an innovative example of a
producer-owned enterprise in India.
Exposure to US Coops
A team of senior executives from
NDDB Dairy Services, NDDB, and
Milk
Producer
Companies
participated in the 2013 Graduate
Institute of Cooperative Leadership
Conference at the University of
Missouri, conducted by Prof.
Michael Cook, a renowned expert
on cooperatives.
The team also visited cooperatives
and institutions in USA – Land O’
Lakes and Dairy Farmers of America.
Annual Report 2013-2014 I 25
Deloitte Haskins & Sells
Chartered Accountants
7th Floor, Building 10, Tower B
DLF Cyber City Complex
DLF City Phase-ll
Gurgaon - 122 002, Haryana
India
Tel 3+ 91 (124) 679 2000
Fax I + 91 (I24) 679 2012
INDEPENDENT AUDITORS REPORT
TO THE MEMBERS OF NDDB Dairy Services
Report on the Financial Statements
We have audited the accompanying financials statements of NDDB Dairy Services (‘the Company’)
which comprise the Balance Sheet as at 31 March, 2014, the Income and Expenditure Account and
the Cash Flow Statement for the year then ended, and a summary of the significant accounting
policies and other explanatory information.
Management’s Responsibility on the Financial Statements
The Company’s Management is responsible for the preparation of these financial statements that
give a true and fair view of the financial position, financial performance and cash flows of the
Company in accordance with the Accounting Standards notified under the Companies Act, 1956
(“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013
in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs)
and in accordance with the accounting principles generally accepted in India. This responsibility
includes the design, implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a true and fair view and are free
from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the Standards on Auditing issued by the Institute
of Chartered Accountants of India. Those Standards require that we comply with the ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and the
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers the internal controls
relevant to the Company’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of the accounting policies used and the reasonableness of the accounting
estimates made by the Management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
26 I NDDB DAIRY SERVICES
Deloitte Haskins & Sells
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the
aforesaid financial statements give the information required by the Act in the manner so required
and give a true and fair view in conformity with the accounting 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, 2014;
(b) in the case of the Income and Expenditure Account , of the Excess of Income over Expenditure
of the Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on
that date.
Report on Other Legal and Regulatory Requirements
1. As the Company is registered under section 25 of the Act, it is not required to enclose a statement
on the matters specified in paragraphs 4 and 5 of the Companies (Auditor’s Report) Order, 2003
(CARO) issued by the Central Government of India in terms of Section 227(4A) of the Companies
Act, 1956.
2. As required by Section 227(3) of the Act, 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 it appears from our examination of those books
(c) The Balance Sheet, the Income and Expenditure Account, and the Cash Flow Statement
dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, the Income and Expenditure Account, and the Cash Flow
Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.
(e) On the basis of the written representations received from the directors as on 31st March,
2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st
March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm Registration No. O15125N)
Jitendra Agarwal
Partner
GURGAON, 20 May, 2014 (Membership No. 87104)
Annual Report 2013-2014 I 27
NDDB Dairy Services
B alan c e S heet as at 3 1 M ar c h , 2 0 1 4
Particulars
Note No.
As at 31 March, 2014
Rupees
As at 31 March, 2013
Rupees
I EQUITY AND LIABILITIES
1 Shareholder’s funds
(a) Share capital
(b) Reserves and surplus
3
4
2,000,000,000
29,553,940
2,029,553,940
2,000,000,000
10,943,091
20,10,943,091
(a) Long-term borrowings
(b) Long-term provisions
5
6
123,710,000
5,967,300
129,677,300
3,610,268
3,610,268
3 Current liabilities
(a) Trade payables
(b) Other current liabilities
(c) Short-term provisions
7
8
9
14,500,717
83,027,053
576,123
98,103,893
2,257,335,133
12,118,946
20,477,296
221,538
32,817,780
2,047,371,139
10,844,950
1,953,206
62,387,807
155,840,788
231,026,751
5,732,804
1,442,291
44,636,307
51,811,402
2,007,057,573
2,061,283
17,189,526
2,026,308,382
1,929,362,549
2,053,437
30,263,164
33,880,587
1,995,559,737
2,257,335,133
2,047,371,139
2 Non-current liabilities
Total
II ASSETS
1 Non-current assets
(a) Fixed Assets
i. Tangible assets
ii. Intangible assets
iii. Capital work-in-progress
(b) Long-term loans and advances
11
2 Current assets
(a) Cash and bank balances
(b) Short-term loans and advances
(c) Other current assets
(d) Assets held for sale
12
13
14
15
10
Total
See accompanying notes forming part of the financial statements
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
For and on behalf of the Board of Directors
Jitendra Agarwal
Deepak Tikku Ajit Singh Parmar
Partner Chairman Chief Operating Officer & Director
Place: Gurgaon
Date: May 20, 2014
K.S. Mehta Tapash Chakravarty
Head Legal & Company Secretary
Practice Head Finance & Accounts
Place: New Delhi
Date: May 20, 2014
28 I NDDB DAIRY SERVICES
NDDB Dairy Services
I n c ome & E x penditure A c c ount
f or the y ear ended 3 1 M ar c h , 2 0 1 4
Particulars
Note
No.
1. Other Income
For the Year ended
31 March, 2014
For the Year ended
31 March, 2013
Rupees
Rupees
185,304,911
189,426,182
185,304,911
189,426,182
16
2. Total revenue
3. Expenses
a) Employee benefit expense
17
74,359,629
57,388,592
b) Depreciation and amortisation expense
10
1,926,746
4,954,200
c) Other expense
18
90,407,687
105,535,218
166,694,062
167,878,010
18,610,849
21,548,172
-
-
18,610,849
21,548,172
a) Basic
0.09
0.11
b) Diluted
0.09
0.11
Total Expenses
4. Excess of income over expenditure
Before tax (2-3)
5. Tax expense:
a) Current tax expense
6. Excess of income over expenditure (4-5)
7. Surplus per equity share:
(Face value - Rs. 10 per share)
19
See accompanying notes forming part of the financial statements
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
For and on behalf of the Board of Directors
Jitendra Agarwal Deepak Tikku Partner Chairman Place: Gurgaon
Date: May 20, 2014
K.S. Mehta Head Legal & Company Secretary
Place: New Delhi
Date: May 20, 2014
Ajit Singh Parmar
Chief Operating Officer
& Director
Tapash Chakravarty
Practice Head Finance & Accounts
Annual Report 2013-2014 I 29
NDDB Dairy Services
Cash Flo w S tatement
f or the y ear ended 3 1 M ar c h , 2 0 1 4
For the Year
ended
31 March, 2014
For the Year
ended
31 March, 2013
Rupees
Rupees
18,610,849
21,548,172
A. CASH FLOW FROM OPERATING ACTIVITIES
Net surplus before tax
Adjustments for:
Depreciation and amortisation expense
Interest income
Provision for employee benefits
Loss/(Profit) on sale of fixed assets (net)
1,926,746
4,954,200
(185,291,969)
(187,404,563)
2,711,617
575,545
(12,942)
Operating surplus/(deficit) before working capital changes
-
(162,055,699)
(160,326,646)
Short term loans and advances
(7,845)
(477,819)
Long term loans and advances
(2,500)
Changes in working capital:
Adjustment for (increase)/decrease in operating assets:
-
Adjustment for increase/(decrease) in operating liabilities:
Trade payables
Other current liabilities
Cash generated from/(used in) operations
Net Income tax (paid)/ refund (net)
Net cash flow from/(used in) operating activities
[A]
2,381,771
3,735,291
35,289,528
(88,096,674)
(124,394,745)
(245,165,848)
(12,862,288)
(18,848,433)
(137,257,033)
(264,014,281)
B. CASH FLOW FROM INVESTING ACTIVITIES
Bank deposits not considered as cash and cash equivalents
Capital expenditure on fixed assets including capital advances
Proceeds from sales of fixed assets
40,892,694
(2,420,007)
33,972,859
Interest received
Net cash from/(used in) investing activities
(78,715,670)
(141,096,409)
-
198,365,607
180,847,257
[B]
12,526,387
219,319,944
123,710,000
-
[C]
123,710,000
-
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceedings of long-term borrowings
Net cash from/(used in) financing activities
Net increase /(decrease) in cash and cash equivalents [A+B+C]
Cash and Cash equivalents in the beginning of the year
Cash and Cash equivalents at the end of the year
(1,020,646)
(44,694,337)
28,317,092
73,011,429
27,296,446
28,317,092
30 I NDDB DAIRY SERVICES
For the Year
ended
31 March , 2014
For the Year
ended
31 March, 2013
Rupees
Rupees
Components of Cash and Cash equivalents
a) Cheques in Hand
-
600,000
b) Balances with scheduled banks:
- In current accounts
- In deposit accounts
(maturity less than 3 months)
Cash and Cash equivalents as per Cash Flow Statement
4,296,446
17,217,092
23,000,000
10,500,000
27,296,446
28,317,092
1,979,200,000
1,900,642,551
561,127
402,906
2,007,057,573
1,929,362,549
c) Other Bank balances
- In deposit accounts
(maturity more than three months)
- Deposits under lien
Cash and bank balances as per Balance Sheet
Note:
1 The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard-3 on Cash flow
Statement prescribed by the Companies (Accounting Standards) Rules, 2006.
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
For and on behalf of the Board of Directors
Jitendra Agarwal Deepak Tikku Partner Chairman Ajit Singh Parmar
Chief Operating Officer
& Director
Place: Gurgaon
Date: May 20, 2014
K.S. Mehta Head Legal & Company Secretary Tapash Chakravarty
Practice Head
Finance & Accounts
Place: New Delhi
Date: May 20, 2014
Annual Report 2013-2014 I 31
N otes f ormin g part o f the f inan c ial statements
1. Corporate Information
NDDB Dairy Services (‘the Company’) was incorporated on 12 October, 2009 as a wholly owned subsidiary of National
Dairy Development Board (NDDB), a body corporate formed under the National Dairy Development Act, 1987. Thereafter,
the Company obtained license under Section 25 of the Companies Act, 1956 on 10 March, 2010.
The Company has been set up to promote operations related to enhancement of livestock production and productivity,
to promote cooperative strategy by carrying out facilities relating to milk procurement, processing, transportation,
marketing and quality assurance by itself and through dairy and other cooperatives, producer companies (new
generation cooperatives) and other entities by providing technical, managerial and financial support.
2. Significant Accounting Policies
The significant accounting policies are as follows:
a. Basis of accounting
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting
Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the
Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act,
2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs)
and the relevant provisions of the 1956 Act/2013 Act, as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention.
b. Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and
assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the
reported income and expenses during the year. The management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the
differences between the actual results and the estimates are recognized in the period in which results are known/
materialize.
c. Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with
an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily
convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
d. Cash flow statement
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted
for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
The cash flows from operating, investing and financing activities of the Company are segregated based on the available
information.
e. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliable measured and there is no material uncertainty as to its ultimate recovery.
Revenue from services are recognized when services are rendered and related costs are incurred.
Interest on Investments/deposits and Income from rent and hire charges is recognized on accrual basis.
f. Fixed Assets
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and impairment losses, if any.
All costs related to the acquisition and installation of fixed assets are capitalized and includes interest on borrowings
attributable to construction or acquisition of fixed assets, up to the date the asset is ready for its intended use. The cost
of fixed assets includes other incidental expenses incurred up to the date the asset is ready for use.
Capital work in progress - Projects under which tangible fixed assets are not yet ready for their intended use are carried
at cost, comprising direct cost, related incidental expenses and attributable interest.
32 I NDDB DAIRY SERVICES
g. Depreciation
Depreciation is provided on straight line method at the rates specified in Schedule XIV to the Companies Act 1956 or
based on the useful life of the assets. Whichever is higher.
The depreciation rates used are as follows:
Description
Depreciation per annum (%)
Plant and Machinery
Office equipment
9.50
4.75
Computers
20.00
Software
16.21
Furniture and Fixtures
10.00
Mobile Phones
33.33
Trademarks
25.00
Vehicles
9.50
Depreciation is provided pro-rata from the date of addition.
All assets costing Rs. 5,000 or less individually are fully depreciated in the year of acquisition.
h. Employee Benefits
Employee benefits include provident fund, gratuity and compensated absences. Employee benefits are accrued in
accordance with Accounting Standard — 15 (Revised) “Employee Benefits”
i. Defined-contribution plans
The Company’s contributions to provident fund are considered as defined contribution plan. The Company’s contribution
to the Employee’s Provident Fund is deposited with the Regional Provident Fund Commissioner (RPFC). These are
charged to the Income and Expenditure Account, when the contribution to RPFC is due.
ii. Defined Benefit Plans
Gratuity is considered as defined benefit plan. Gratuity is provided based on actuarial valuation carried out at the balance
sheet date. The incremental liability based on an actuarial valuation as per the ‘Projected Unit Credit’ method, as at the
reporting date, is charged to the Income and Expenditure Account. Actuarial gains and losses are recognized in the
Income and Expenditure Account.
iii. Short Term Employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered
by employees are recognised during the year when the employees render the services.
iv. Long Term Employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the
employee renders the related services are valued and provided on the basis of actuarial valuation.
i. Foreign currency transactions and translations
Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the
transaction. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated
at the exchange rate ruling on that date.
Exchange differences arising on translation of monetary assets and liabilities and realised gains and losses on settlement
of foreign currency transactions are recognised in the Income and Expenditure Account.
j. Earnings per share
The Company reports basic and diluted surplus per share in accordance with Accounting Standard 20 on ‘Earnings
per Share’ prescribed by the Companies (Accounting Standards) Rules, 2006. Basic surplus per share are computed by
dividing the Excess of Income over Expenditure for the year by weighted average number of equity shares outstanding
during the year. Diluted surplus per share is computed by dividing the Excess of Income over Expenditure for the year
by the weighted average number of equity shares outstanding during the year as adjusted to the effects of all dilutive
potential equity shares, except where results are anti dilutive.
Annual Report 2013-2014 I 33
k. Taxes on Income
Income tax comprises current tax and deferred tax. Current tax is the amount expected to be paid for the year as
determined in accordance with the provisions of Income Tax Act, 1961. Deferred tax assets and liabilities are recognized
for future tax consequences of timing differences, being the difference between taxable incomes and accounting
income that originate in one period and are capable of reversal in one or more subsequent periods, subject to the
consideration of prudence. Deferred tax assets and liabilities are measured using the tax rate enacted or substantively
enacted by the balance sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses
are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such
assets. Tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws
and the Company has a legal enforceable right for such set off.
l. Impairment
At each balance sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there is
any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an assets net
selling price and value in use. In assessing value in use the estimated future cash flows expected from the continuing use
of the asset and from its disposal are discounted to their present value using a pre-discount rate that reflects the current
market assessments of time value of money and the risks specific to the asset.
Reversal of impairment loss is recognized as income in the Income and Expenditure Account.
m. Borrowing costs
Borrowing costs include interest and amortisation of ancillary costs incurred. Costs in connection with the borrowing
of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit
and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the
period from commencement of activities relating to construction / development of the qualifying asset upto the date
of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and
charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying
assets is interrupted.
n. Material Events
Material events occurring after the Balance Sheet date are taken into cognizance.
o. Provisions and Contingent Liabilities:
A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow
of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are
not discounted to their present value and are determined based on best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities are disclosed
by way of notes.
p. Operating cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their
realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of
classification of its assets and liabilities as current and non-current.
34 I NDDB DAIRY SERVICES
N otes f ormin g part o f the f inan c ial S tatements
Particulars
As at March 31, 2014
As at March 31, 2013
Number of
Shares
Amount
Rupees
Number of
Shares
Amount
Rupees
Authorised share capital
Equity Shares of Rs. 10 each
200,000,000
2,000,000,000
200,000,000
2,000,000,000
Issued, Subscribed and Paid up capital
Equity Shares of Rs. 10 each fully paid up
200,000,000
2,000,000,000
200,000,000
2,000,000,000
Note No. 3 - Share Capital
(i) Reconciliation of number of shares and amount outstanding at the beginning and at the end of the year:
Particulars
Shares outstanding at the beginning of
the year
Shares issued during the year
Shares outstanding at the end of the year
As at March 31, 2014
As at March 31, 2013
Number of
Shares
Amount
Rupees
Number of
Shares
Amount
Rupees
200,000,000
2,000,000,000
200,000,000
2,000,000,000
-
-
-
-
200,000,000
2,000,000,000
200,000,000
2,000,000,000
(ii) Rights, preferences and restrictions attached to shares
The Company has issued one class of equity shares having face value of Rs. 10 each. Each shareholder is entitled to one vote per
share. As per the license issued by Ministry of Corporate Affairs under Section 25 of Companies Act, 1956, no portion of income
derived shall be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise by way of profit, to person who
at any time are or have been members of the company. In the event of liquidation, the equity shareholders are eligible to receive
the remaining assets of the Company after distribution of all preferential amounts. in proportion to their shareholding
(iii) Shares held by holding company, ultimate holding company, their subsidiaries and associates
Particulars
National Dairy Development Board, the Holding
entity and its nominees
As at March 31, 2014
As at March 31, 2013
Number of
Shares
Amount
Rupees
Number of
Shares
Amount
Rupees
200,000,000
2,000,000,000
200,000,000
2,000,000,000
200,000,000
2,000,000,000
200,000,000
2,000,000,000
(iv) Shareholders holding more than 5 percent shares:
Particulars
National Dairy Development Board and its
nominees
As at March 31, 2014
As at March 31, 2013
Number of
Shares held
% of Holding
Number of
Shares held
% of Holding
200,000,000
100
200,000,000
100
Annual Report 2013-2014 I 35
N otes f ormin g part o f the f inan c ial S tatements
Particulars
As at 31 March, 2014
As at 31 March, 2013
Rupees
Rupees
(i) Opening balance
10,943,091
(10,605,081)
(ii) Add: Surplus for the year
18,610,849
21,548,172
29,553,940
10,943,091
123,710,000
-
123,710,000
-
Note No. 4 - Reserves and Surplus
a. Surplus/ (Deficit) in Income and Expenditure Account
Note No. 5 - Long-term borrowings
Secured
a. Term loan from holding entity
Notes:
(i) Term loan from National Dairy Development Board (NDDB) is obtained for the purpose of setting up a large frozen semen station at Alamadhi, Tamil Nadu. Term loan is secured against first charge on all movable assets present and future created under
semen station i.e. machinery, inventories, spares, tools and accessories.
(ii) Interest and terms of repayment:
Total Loans sanctioned is Rs. 773,692,000/-
Loans Disbursed till March 31, 2014 is Rs. 123,710,000/-
Term loan from NDDB is free of interest. However, any income earned on unutilised balance of loan is to be repaid to NDDB.
Term loan is to be repaid in the period of 10 years in 16 equal half yearly instalments after the end of the initial moratorium
period of 2 years from the date of sanction on 3 January, 2014.
Note No. 6 - Long-term provisions
a. Provisions for employee benefits
(i) For compensated absences
3,543,971
2,633,670
(ii) For gratuity
2,423,329
976,598
5,967,300
3,610,268
36 I NDDB DAIRY SERVICES
N otes f ormin g part o f the f inan c ial S tatements
Particulars
As at 31 March, 2014
As at 31 March, 2013
Rupees
Rupees
14,500,717
12,118,946
14,500,717
12,118,946
27,610,357
350,128
Note No: 7 - Trade payables
a. Trade Payables (Other than acceptances)
(Refer Note 21)
Note No. 8 - Other Current Liabilities
a. Payables on purchase of fixed assets
b. Earnest money deposit
c. Statutory dues
d. Security deposits received
e. Due to related parties ( Refer note 25)
-
650,000
4,365,942
2,217,645
55,000
55,000
50,995,754
17,204,523
83,027,053
20,477,296
576,123
221,538
576,123
221,538
Note No. 9 - Short-term Provisions
a. Provisions for employee benefits
(i) For compensated absences
274,905
4,954,200
1,565,759
360,987
1,926,746
-On Intangible Assets
4,679,295
Year ended
31 March, 2013
-On Tangible Assets
Depreciation and amortisation expense
Year ended
31 March, 2014
838,107
1,442,291
363,486
274,905
88,581
1,805,776
-
879,088
926,688
Particulars
1,442,291
1,953,206
724,473
-
360,987
363,486
2,677,679
-
871,903
1,805,776
Total
(Previous Year)
1,442,291
1,938,772
724,107
-
360,621
363,486
2,662,879
-
-
14,434
366
-
366
857,103
14,800
-
14,800
1,805,776
-
b. Software
a. Trademarks
Intangible Assets
-
42,603,018
5,732,804
1,677,326
5,449,147
4,679,295
2,447,178
7,410,130
39,329,733
1,689,667
45,050,196
(Previous Year)
5,732,804
10,884,950
3,215,522
27,563
1,565,759
1,677,326
14,060,472
106,893
6,757,235
7,410,130
Total
2,292,251
2,517,418
1,934,469
12,416
745,002
1,201,883
4,451,887
26,607
984,360
3,494,134
d. Computers
2,255,515
2,549,019
655,812
366,489
293,504
4,452,804
c. Office Equipment
1,036,101
925,351
3,796,992
240,441
4,181
-
110,750
129,691
1,165,792
-
1,973,105
1,165,792
b. Vehicles
-
As at
31 March, 2013
69,320
As at
31 March, 2014
148,937
As at
31 March, 2014
3,605,189
On sales/
disposal
384,800
For the year
10,966
As at
1 April, 2013
343,518
As at
31 March, 2014
52,248
3,799,770
a. Furniture and Fixtures
Sales
Net Block
3,989,989
Additions
Accumulated Depreciation
Amount in Rupees
10,966
As at
1 April, 2013
Gross Block
201,185
Tangible Assets
(Owned)
Particulars
Note No. 10 – Fixed Assets
Refer Note 2(g)
N otes f ormin g part o f the f inan c ial S tatements
Annual Report 2013-2014 I 37
38 I NDDB DAIRY SERVICES
N otes f ormin g part o f the f inan c ial S tatements
Particulars
As at 31 March, 2014
As at 31 March, 2013
Rupees
Rupees
(i) Secured, considered good
82,720,000
-
(ii) Unsecured, considered good
15,619,693
-
Note No. 11 - Long-term loans and advances
a. Capital advances
b. Security deposits (Unsecured, considered good)
c. Advance income tax (net of provisions Rs. Nil)
(Unsecured, considered good)
37,500
35,000
57,463,595
44,601,307
155,840,788
44,636,307
Note No: 12 - Cash and bank balances
a. Cash and cash equivalents
(i) Cheques in Hand
-
600,000
(ii) Balances with banks
- In current accounts
- In deposit accounts
(Original maturity less than 3 months)
4,296,446
17,217,092
23,000,000
10,500,000
27,296,446
28,317,092
1,979,200,000
1,900,642,551
561,127
402,906
2,007,057,573
1,929,362,549
27,296,446
28,317,092
b. Other bank balances
(i) In deposit accounts
(Original maturity more than 3 months)
(ii) Balances held as margin money
Of the above, balances that meet the definition of cash and cash
equivalents as per Accounting Standard 3 Cash Flow Statement
Notes:
(i) Balances with banks include deposits amounting to Rs. 1,425,650,602 (previous year Rs. 1,901,038,151) which have an original
maturity of more than 12 months.
(ii) Balances with banks include deposits amounting to Rs. 575,650,602 (previous year Rs. 699,000,000) which have maturity of
more than 12 months from the balance sheet date.
Annual Report 2013-2014 I 39
N otes f ormin g part o f the f inan c ial S tatements
Particulars
As at 31 March, 2014
As at 31 March, 2013
Rupees
Rupees
Note No. 13 - Short-term loans and advances
(Unsecured, considered good)
a. Loans and advances to related parties
b. Loan and advances to employees
c. Prepaid expenses
56,324
48,690
318,195
-
414,723
413,522
d. Balances with government authorities
(i) VAT credit receivable
e. Advances to vendors
25,000
1,046,804
1,516,546
274,916
2,061,283
2,053,437
17,189,526
30,263,164
17,189,526
30,263,164
Note No. 14 - Other current assets
a. Accruals
(i) Interest accrued on bank deposits
Note No. 15 - Assets held for sale
a. Assets held for sale
(i) Plant and equipment
-
33,880,587
-
33,880,587
185,291,969
187,404,563
Note No. 16 - Other income
a. Interest income
- Bank deposits
b. Lease rent
-
c. Miscellaneous income
12,942
2,017,577
4,042
185,304,911
189,426,182
Note No. 17 - Employee benefits expenses
a. Salaries and wages
68,807,386
53,775,780
b. Gratuity
1,446,731
-
c. Contribution to provident and other funds (Refer Note 24)
3,646,086
3,312,696
d. Staff welfare expenses
459,426
300,116
74,359,629
57,388,592
40 I NDDB DAIRY SERVICES
N otes f ormin g part o f the f inan c ial S tatements
Particulars
For the Year ended
31 March , 2014
For the Year ended
31 March, 2013
Rupees
Rupees
Note No. 18 - Other Expenses
a. Financial support to New Generation Co-operatives (Refer Note 22)
47,795,263
63,203,204
b. Power and fuel
1,916,642
1,864,010
c. Security expenses
1,843,853
1,659,083
d. Recruitment expenses
e. Retainership and contractual expenses
f. Rent, Rates and taxes
705,048
1,248,993
3,019,065
2,862,825
11,248
20,986
679,817
1,847,469
1,408,517
1,213,159
1,441,617
330,139
g. Repairs and maintenance:
- Building
- Others
h. Meeting and conference expenses
i. Communication expenses
2,319,663
2,613,682
j. Travelling and conveyance
18,199,119
11,140,796
k. Auditors remuneration (refer note below)
1,963,125
1,298,252
l. Legal and professional charges
3,511,410
9,639,768
31,521
7,129
410,831
512,227
m. Bank charges
n. Printing and stationery
o. Insurance expenses
p. Training, awareness and incentives to milk producers
q. Miscellaneous expenses
605,281
355,907
3,869,931
5,291,137
675,736
426,452
90,407,687
105,535,218
350,000
300,000
75,000
75,000
1,275,000
775,000
Note:
(i) Auditors remuneration comprises:
Statutory audit fee
Tax audit fee
Taxation matters
Reimbursement of expenses
Service tax on above
47,174
5,440
215,951
142,812
1,963,125
1,298,252
Annual Report 2013-2014 I 41
N otes f ormin g part o f the f inan c ial S tatements
Note No. 19 - Surplus Per Equity Share
Particulars
Unit
Excess of Income over expenditure
Rupees
Weighted average number of equity shares outstanding
during the year
Numbers
Nominal Value of Equity Shares
Rupees
Basic surplus/(deficit) per share
Rupees
Equity shares used to compute diluted surplus per share
Numbers
Diluted surplus/(deficit) per share
Rupees
31 March, 2014
31 March, 2013
18,610,849
21,548,172
200,000,000
200,000,000
10.00
10.00
0.09
0.11
2,00,000,000
2,00,000,000
0.09
0.11
Note No. 20 - Contingent Liabilities and Commitments (to the extent not provided for)
Particulars
As at 31 March, 2014
As at 31 March, 2013
Rupees
Rupees
a. Contingent Liabilities
(i) Outstanding bank guarantees
(ii) Income Tax Demand for the Assessment year 2011-12
561,127
402,906
28,151,835
-
273,815,372
706,212
b. Commitments
(i) Estimated amount of contracts remaining to be executed on capital
account (net of advances of Rs. 98,339,693)
Note No. 21 - MSMED disclosure
According to the records available with the Company, there were no dues payable to entities that are classified as Micro and Small
Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Hence disclosures, if any,
relating to amounts unpaid as at the period end together with the interest paid / payable as required under the said Act have not
been given.
Note No. 22 - Financial support to New Generation Co-operatives
The Company has provided financial support to New Generation Co-operatives, Producer Institutions and Producer Companies,
to facilitate the operations of village level functionaries i.e. ‘Sahayak’ in the form of remuneration to Sahayak through Mother Dairy
Fruit and Vegetable Private Limited on the basis of eligibility criteria.
Note No: 23 - Expenditure in foreign currency
Particulars
a. Conference Fees
b. Travelling expenses
Year ended
31 March , 2014
Year ended
31 March, 2013
Rupees
Rupees
732,381
-
1,982,398
1,265,147
2,714,779
1,265,147
42 I NDDB DAIRY SERVICES
N otes f ormin g part o f the f inan c ial S tatements
Note No. 24 - Employee Benefit Obligation
i. Defined-contribution plans
The Company’s Provident Fund Scheme is a defined contribution plan. The contributions paid/payable to the defined contribution plans are reported as expenses in the period in which the employees render the related service. The Company has recognised Rs. 3,646,086 (previous year Rs. 3,312,696) for Provident Fund contributions in Income and Expenditure Account.
ii. Defined benefit plans
The Company’s Gratuity Scheme is a defined benefit plan. The Company‘s net obligation is calculated by estimating the present
value of the amount of future benefit that the employees have earned in return for their service in the current and prior years.
The present value of the obligation under such benefit plan is determined on the basis of actuarial valuation using the Projected
Unit Credit method which recognises each period of service that gives rise to additional unit of employee benefit entitlement
and measures each unit separately to build up the final obligation. The obligation is measured at present values of estimated
future cash flows. The discounting rates used for determining the present values are based on the market yields on Government
securities as at the balance sheet date.
Disclosure as required under Accounting standard - 15 on “Employee Benefits” for Gratuity is as under.
Particulars
31 March, 2014
31 March, 2013
Rupees
Rupees
I Change in present valuation of obligation
Present value of obligation at the beginning of the year
Interest cost
Current Service cost
Actuarial (gain)/ loss on obligation
Present value of obligation at the end of the year
976,598
1,018,282
86,429
79,935
1,255,064
613,281
105,238
(734,900)
2,423,329
976,598
1,255,064
613,281
86,429
79,935
105,238
(734,900)
1,446,731
(41,684)
2,423,329
976,598
Note: The Company’s obligation are unfunded
II Expense recognised in the Income and Expenditure Account
Current Service cost
Interest Cost
Net Actuarial (gain)/ loss recognized
Expenses/ (Income) recognized in the Income and Expenditure Account
III Liability recognised in the Balance Sheet
Present value of obligation at the end of the year
Funded status
Net asset/ (liability) recognised in balance sheet
-
-
2,423,329
976,598
976,598
1,018,282
1,446,731
(41,684)
IV Balance Sheet Reconciliation
Present Value of obligation at the beginning of the year
Expense/ (Income) as above
Benefits paid
Amount recognised in the balance sheet
-
-
2,423,329
976,598
Annual Report 2013-2014 I 43
The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions,
which if changed, would affect the defined benefit commitment’s size, funding requirements and expense.
Assumptions
Discount Rate
Salary Growth rate
Mortality
Withdrawal rate
31 March, 2014
31 March, 2013
8.85%
7.85%
10.00%
10.00%
IAL 2006-08
Ultimate
5.00%
IAL 2006-08
Ultimate
5.00%
Notes:
1. The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the
estimated term of obligations.
2. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant
factors.
3. Actuarial assumptions used to measure liability for compensated absences are same as above.
44 I NDDB DAIRY SERVICES
N otes f ormin g part o f the f inan c ial S tatements
Note No. 25 - Related party disclosures
Disclosures as required by the Accounting Standard (AS) 18 – “Related Party Disclosures” are as below:
A. Name of the related parties and nature of relationship (With whom the Company has transactions during the year):
Nature of Relationship Name of Entity
Holding Entity National Dairy Development Board (NDDB)
Fellow Subsidiaries IDMC Limited (IDMC)
Indian Immunologicals Limited (IIL)
Mother Dairy Fruit and Vegetable Private Limited (MDFVL)
Key Management Personnel Shri Deepak Tikku (Chairman)
Mr Ajit Singh Parmar (Chief Operating Officer & Director)
Mr. Ajay Khosla (Executive Director)
B. Details of balances and transactions during the year with related parties
Amount in Rupees
Particulars
Holding
Company
Fellow Subsidiaries
MDFVPL
IDMC
Key Managerial
Personnel
IIL
Total
Transactions during the Year
Rental income
-
(1,921,385)
Reimbursement of the expenses by the
Company
1,512,630
(403,588)
55,091
(786,743)
Reimbursement of the expenses to the
Company
221,369
-
2,024,696
-
Professional fees
(Included in capital work-in-progress)
4,044,960
-
-
-
(1,921,385)
132,181
-
-
1,763,692
(1,190,331)
14,050
-
-
2,260,115
-
-
-
4,044,960
-
4,562,245
-
-
-
-
4,768,647
-
-
47,795,263
(63,203,204)
-
-
-
47,795,263
(63,203,204)
123,710,000
-
-
-
-
-
123,710,000
-
-
-
-
-
45,770,566
(17,204,523)
-
-
-
50,995,752
(17,204,523)
206,402
-
Financial support for new generation cooperatives
Long-term borrowing taken
63,790
-
-
-
Purchase of fixed assets
Managerial remuneration
-
-
9,351,383
(13,808,131)
9,351,383
(13,808,131)
Balance Outstanding at the end of the year
Other current liabilities
5,225,186
-
Long-term borrowings
123,710,000
-
-
-
-
-
123,710,000
-
(236,486)
-
(19,732)
56,324
(61,977)
-
56,324
(318,195)
Short-term advances
Note: Figures in brackets represents previous year’s comparatives
Annual Report 2013-2014 I 45
N otes f ormin g part o f the f inan c ial S tatements
Note No. 26
The Company is registered under Section 12A of the Income Tax Act and has also complied with all required provisions of Section
12A, accordingly the Company’s income is exempt from Income tax in terms of the said section. Therefore, no provision for current
tax is required.
The Company will continue to claim exemption under Section 12A and expects no future tax liability, accordingly no provision for
Deferred Tax Asset or Deferred tax liability is created.
Note No. 27
Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification /
disclosure.
For Deloitte Haskins & Sells
Chartered Accountants
For and on behalf of the Board of Directors
Jitendra Agarwal Deepak Tikku Partner Chairman Ajit Singh Parmar
Chief Operating Officer
& Director
Place: Gurgaon
Date: May 20, 2014
K.S. Mehta Head Legal & Company Secretary Tapash Chakravarty
Practice Head
Finance & Accounts
Place: New Delhi
Date: May 20, 2014
46 I NDDB DAIRY SERVICES
Directors’ Report
to the
Shareholders
The Directors are pleased to present their Fifth Annual Report on the operations of the Company along with the Audited Accounts
for the year ended 31st March, 2014.
The Company is a wholly owned subsidiary of National Dairy Development Board (NDDB). Its main objects are to facilitate
setting up of Producer Companies for Procurement, Processing and marketing of milk and to undertake operations for productivity
enhancement and extension.
1. O perations
During the year under review, the company facilitated the following activities in the Milk Producing Companies (MPCs):
1. Assisted the Paayas Milk Producer Company Limited, Jaipur and Maahi Milk Producer Company Limited, Rajkot in increasing
the members equity. The equity now stands at Rs.9.3 crores and Rs.22.9 crores respectively in these Companies.
2. Training & Development
a. Member Relations Group (MRG) and VCG (Village Contact Groups) were constituted and trained in both MPCs.
b. Producer awareness programmes were carried out in both the MPCs.
c. Children and Youth awareness programmes were carried out in Paayas MPC.
d. Sahayaks, facilitators, QA executives, PIB executives MCCs in-charge, Chemists, and Operations & Maintenance executives
were trained in their respective domains in both the MPCs.
e. Senior Management of both MPCs were trained in Leadership & Behavioural programmes.
f. A two-day workshop on Good Manufacturing Practices (GMP) was organized for Quality and Manufacturing personnel of
both the MPCs.
3. Assisted in preparation and approval of Sub Project Plans under the National Dairy Plan of both the Milk Producer Companies.
4. Assisted both the Milk Producer Companies in initiation of the Production Enhancement Activities. Activities included supply
of cattle feed/mineral mixture, fodder demonstration plots, infertility camps, Al services etc.
5. Assisted both the Milk Producer Companies in their IT strategy implementation.
6. Assisted both the Milk Producer Companies in preparation of Quality Assurance SOP’s and Manuals.
Preliminary work for promoting Milk Producer Companies in the states of Punjab and Andhra Pradesh (AP) were carried out
during the year. The names of the company and draft MoA and AoA are being finalized. Initial share capital collected from the initial
subscribers and other formalities required before incorporation are being carried out. Orientation Programmes for initial subscribers
were carried out and a list of proposed producer directors was made.
New Semen Stations: Construction work commenced at Alamadhi Semen Station on 3rd January, 2014 and the progress is as per
the project schedule. The MoU for Rahuri Semen Station was signed on 28th February, 2014 and the survey, land demarcation and
possession of the land carried out.
The company became the managing agent for Sabarmati Ashram Gaushala (SAG) and Animal Breeding Centre (ABC) semen
stations during the year and has conducted periodic review of their progress.
The company signed an MoU with West Assam Milk Producers Union Ltd (WAMUL) to provide project management support to
implement World Bank funded AI delivery project in six districts of Assam. The company facilitated development of Assam Dairy
Development Plan (ADDP) for WAMUL which was approved by Government of Assam.
An MoU was signed between Maharashtra Government and NDDB under which the NDDB DS shall facilitate the setting up of a
Greenfield Milk Producer Company. The DPR of the project has been completed.
1.1 F inancial R esults
During the year under review, the Company earned total income of Rs.1,853.04 lakhs, mainly from interest earned on Fixed
Deposits with Scheduled Banks. The total Expenditure incurred was Rs.1,666.94 lakhs. This resulted in surplus of Rs.215.48 lakhs. The
expenditure includes Financial Support provided to New Generation Cooperatives amounting to Rs.477.95 lakhs. The surplus of
Rs.186.11 lakhs after adding the surplus amounting to Rs.109.43 of the last year totalling Rs.295.53 lakhs is proposed to be carried
forward as surplus in Income & Expenditure Account in the Balance Sheet.
The summarized Financial Results are as under:
(Rs. in lacs)
Item
2013-14
2012-13
Other Income
1,853.04
1,894.26
Expenditure
1,666.94
1,678.78
186.10
215.48
Surplus/(Deficit) before tax
Provision for tax/Deferred Tax
Nil
Nil
Surplus (Deficit) after tax
186.10
215.48
(Surplus/Deficit) brought forward from last year
109.43
(106.05)
Total Surplus (Deficit) carried forward to Balance Sheet
295.53
109.43
Annual Report 2013-2014 I 47
2. Way F orward
During the current year, the company shall be assisting in the setting up of four Milk Producer Companies in the States of Punjab,
AP, UP and Maharashtra (Greenfield MPC).
The Company shall support Producer Companies for activities related to Animal Breeding, Nutrition, and Ration Balancing
advisory services.
The Company has taken over the management of Sabarmati Ashram Gaushala (SAG) at Bidaj and Animal Breeding Centre (ABC),
Salon. Two hundred lakh doses of frozen semen would be produced at these stations during the current year.
The project progress of both Alamadhi and Rahuri Semen stations will be closely monitored to ensure timely commissioning to
meet the growing demand of semen doses.
NDDB Dairy Services would continue to monitor and assist the Producer Companies with regard to the activities to be undertaken
under the National Dairy Plan (NDP) and would also assist them in achieving physical and financial parameters under the NDP.
3. D irectors
Shri Dilip Rath, Shri Ajay Kumar Khosla and Shri Sangramsinh Raysangbhai Chaudhary retire by rotation and being eligible offer
themselves for re-appointment.
None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 274 of the
Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.
4. Conservation of E nergy, T echnology A bsorption and F oreign E xchange E arnings and
O utgo
Particulars required to be furnished pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure
of Particulars in the Report of Board of Directors) Rules, 1988:
i. Part A and B of the Rules pertaining to Conservation of energy and Technology absorption are presently not applicable to the
Company.
ii. Foreign Exchange earnings and outgo: Earnings — Nil (Previous year — Nil); Outgo — Rs.27.50 lakhs (Previous year —
Rs.12.65 lakhs).
5. Particulars of employees
In accordance with provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975, as amended, no employee was in receipt of remuneration of Rs.60 lakhs or more, if employed throughout the year or
Rs.5 lakhs or more per month, if employed for the part of the year.
6. D irectors’ R esponsibility S tatement
In accordance with section 217 (2AA) the Board of Directors of the Company informs the members that:
a) in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation
relating to material departures;
b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that
are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial
Year and of the excess of income over expenditure for that period;
c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with
the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other
irregularities;
d) the directors have prepared the annual accounts on a going concern basis.
7. Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors retire at the ensuing Annual General Meeting and being
eligible offer themselves for re-appointment. The Company has received a certificate from the auditors to the effect that their
re-appointment if made, would be in accordance with the relevant provisions of the Companies Act, 2013.
You are requested to appoint auditors and fix their remuneration.
8. Acknowledgement
The Board acknowledges the support provided by the National Dairy Development Board and the Mother Dairy Fruit & Vegetable
Pvt Ltd to the Company.
For and on behalf of the Board
New Delhi 20 May 2014 Deepak Tikku
Chairman
48 I NDDB DAIRY SERVICES
The Staff
Chairman
Deepak Tikku
Chief Operating Officer
Ajit Singh Parmar
Executive Director
Ajay Khosla
Company Secretary, Legal &
Administration
K.S. Mehta, Practice Head
BCom, CS
Harmeet Kaur, Analyst
BCom, LLB, CS
Producer Institution Building
Sriram Singh, Practice Head
BTech, PGDRM, CFA
R. Mariappan, Senior Associate
BSc (Agriculture)
Brajesh Narain Singh, Senior Associate
BA (Hons), DCM
Alok Kumar Gupta, Associate
BSc, MBA
Rachana Deodhar Goel, Analyst
BSc, PGDRM
Gargi Pragya Vaicaknavi, Analyst
BBA, PGDM
Ravi Ranjan, Analyst
BCom, PGDM
Yashwanth Kumar Srinagula,
Management Trainee
BTech, MA (Social Work)
Productivity Enhancement
Services
Dr. C.P. Devanand, Practice Head
MVSc
L Ilamurugun, Senior Analyst
BE (Civil)
Ashish Gupta, Analyst
BSc, MCA
Dairy Value Chain
Vinod Kaushik, Practice Head
BSc (Hons), PGDRM
Business Excellence
Rajeev Krishnan, Senior Associate
MV Sc, PGP-ABM
Ashok Jawa, Specialist
BSc (Dairy Technology),
PGDM (Agriculture)
Amit Kumar Makkar, Analyst
BTech (Mechanical), PGDBA
Basant Choudhary, Associate
BSc (Dairy Technology), PGDCA,
MBA (Marketing)
Cijo Joseph, Analyst
MVSc, PGDRM
Digvijay Bisht, Analyst
BTech, MBA
Lokesh Lalwani, Analyst
BCom, PGDM
Debashree Adhikary, Analyst
BA (Hons), MBA (Marketing)
Anshumani Pandey, Management
Trainee
BSc (Agriculture), PGDM-RM
Mukesh Pratap Singh, Management
Trainee
MTech (Dairy Technology)
Nishant Aggarwal, Analyst
Dip. (Mechanical), PGDBA
Farm Services
Dr. C.S. Thomas, Senior Associate
MSc, PhD (Animal Science)
Finance & Accounts
Amit Budhiraja, Practice Head
BCom, CS, CA
Surya Prakash Gupta, Associate
BCom, CS, CA
Sunil Mittal, Analyst
BCom, CA
Rajeev Ranjan Pathak, Management
Trainee
BTech (Chemistry), MBA
Mitali Singh, Management Trainee
BTech (Biotech), MBA
Human resources
Anuradha Sapra, Practice Head
BA, PGHRM, MSc (Organisational
Development)
Quality Assurance
M.D. Mustafa, Practice Head
MSc (Food Science), PGDM (Operations)
Shwet Awasthi, Associate
BCom, PGDBM
Ashwani Sharma, Analyst
BSc, PG (Food Technology)
Neeraj Kumar Mongia, Analyst
BTech (Dairy Technology),
MBA (Agriculture)
Anjali Bhardwaj, Senior Analyst
BSc (Maths), MCA
Nishit Lal, Analyst
BTech (Mechanical), PGDM
Abhimanyu Singh, Management Trainee
BA (Hons), LLB, MBA-IB
Dr. Ashis Roy Burman, Specialist
BVSc & AH
Priti Choudhary, Management Trainee
MSc (Dairy Chemistry)
Dr. K. Durairaj, Specialist
MVSc
Sari T.P., Management Trainee
MTech (Dairy Chemistry)
Purchase
B. Dutta Biswas, Specialist
BE (Chemical), ME (High Polymer
Engineering)
Information Technology
Jai Narain, Practice Head
BA, BCom, GNIIT
Hari Ome Choudhary, Analyst
MTech, MBA
Dr. Raghu Mallegowda, Senior Associate
MVSc
Dr. Manvir Singh, Associate
MVSc
Dr. Rajesh Roshan, Analyst
BVSc & AH, MBA-RM
Dr. Prafull Verma, Analyst
BVSc & AH, EPBM
Rohit Rajput, Associate
BE (Computer Science), MBA
Sachin Jain, Senior Analyst
BE (Electronics & Communication), MBA
Kumar Saurabh, Management Trainee
BTech (Mechanical), PGDM (Finance)
Edited, Designed & Printed by IMAGINE
Acknowledgement
National Dairy Development Board, Anand
Mother Dairy Fruit & Vegetable Pvt Ltd, Delhi
NDDB House, Safdarjung Enclave
New Delhi 110 029
INDIA
Phone: (011) 49883000, 49883088
email: [email protected]
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