Corporate overview Statutory Reports Financial statements

Management Discussion and Analysis

INDUSTRY STRUCTURE AND DEVELOPMENTS Country Wise Share in Milk Production - 2017
Indian Dairy Industry
India
The Indian dairy plays an important role in the socio-economic 20.5
26.4 EU-28
development of the rural economy and is an important source of
USA
income for millions of homes in villages. Since most of rural India
depends on agriculture, which is prone to the vagaries of nature Pakistan

such as droughts and floods, dairying is an important secondary China

2.6 19.9
source of income for them. Often, one or two milch animals, allow 3.5 Russia
these farmers to generate sufficient income and provides year- 3.8 Brazil
round stability, especially in the years of drought. 4.9 New Zealand
6.6 11.9
The Indian Dairy Industry is one of the largest and fastest Others
(Source: IMARC)
growing markets for milk and milk products. The total industry
size stands at approximately ` 7.1 trillion in 2018 (as per market
Top Milk Producing Countries (million MT)
realisations) and is projected to reach a value of ` 9.4 trillion by
2020. Rising urbanisation, changing consumer lifestyles, higher Countries 2017 2018E 2019E 2020E 2027E CAGR
disposable income, higher proportion of working women and India 169 174 181 188 244 3.7%
an increasing youth population is boosting the dairy industry. EU-28 164 167 167 169 177 0.8%
USA 98 98 99 100 105 0.7%
The dairy industry comprises mainly two sub-categories: Pakistan 54 56 58 59 70 2.8%
1. Commodity: Comprises of fresh milk and skimmed milk China 40 43 44 45 50 2.3%
powder Russia 31 31 31 31 31 0.0%
Brazil 29 30 30 31 36 2.1%
2. Value-added products: Comprises of a gamut of products New 21 22 22 23 25 1.5%
like Ghee, Curd, Cheese, Paneer, Beverages and Whey Zealand
protein, among others World 823 844 859 875 994 1.9%
In 2017 India’s milk production stood at 169 MMT, contributing India’s monthly per capita expenditure on the consumption of
to around 20.5% of the total global production. 77% of milk and milk-based products has witnessed a 9.5% CAGR over
this production is retained by the producers for household the past four decades. On an average, dairy products account
consumption and the rest is available for commercial use. for 19% of household expenditure. This growth has translated
The milk production grew by 4.5% volume CAGR between into making the Indian dairy industry, the world’s fastest
FY10-16. In terms of value, the Indian Dairy Industry recorded growing industry valued at ` 7.1 trillion currently. However,
an impressive 16.9% CAGR during the same time period with India’s per capita milk consumption (97 litres annually) is lower
strong growth in organised sector. This was mainly led by than other major milk markets – nearly 1/3rd of USA and EU27.
better realisations and value-added products which grew Led by urbanization, higher disposable incomes and changing
23% annually as compared to the 15% for liquid milk. Going consumer habits, the per capita consumption is estimated to
forward, the milk production is expected to witness 4.2% CAGR rise in the years to come. (Source: NDDB)
and the industry size is expected to grow by ~14-15% CAGR in
value terms to ` 9.4 tn between FY17-20E.
India’s per capita milk consumption (litres per year), 2011
(Source: National Action Plan for Dairy Development Vision
300 285 281
2020, IMARC Report, 2015)
240 220

180 156

120 97

60
24

0
USA EU27 Russian Brazil India China
Federation

Source: IMARC Report

Annual Report 2018 43

PRODUCT CATEGORIES Paneer
Fresh milk Paneer is to India what cheese is to the Western world and is
Fresh milk is the largest category in the Indian dairy industry. an integral part of many Indian recipes. It is the third largest
However, a majority (77%) of the milk sold in India is still segment in the milk-based products category. Current paneer
unorganised and in the form of loose milk sold by milkmen. The market is 1.5 million MTs, expected to reach 1.8 million MTs by
organised sector, too, is highly fragmented with several regional 2020 representing a market size of ` 65,000 crores. However,
players and co-operatives. The organized fresh milk market is only ~3% of the total market is organized due to the fact that
growing faster than the unorganised market and is estimated to Paneer is consumed like vegetables in Indian households
account for 26% of the total liquid milk market by 2020. and therefore purchased fresh on a daily basis. Given that
consumers are now preferring paneer which is hygienic and
We are seeing an increasing trend of consumers shifting from is consistent in taste, the trend towards branded packaged
loose liquid milk to branded packaged milk due to safety and paneer is gaining momentum.
quality concerns. The Company has a strong presence in the
urban parts of West and South India and is currently the largest The Company has pioneered the concept of fresh paneer with
private player in Mumbai, the second largest private player long shelf life to capture the consumer’s preferences. Being a
in Pune and amongst the top players in newer markets like leader in the cheese category, PMFL intends to establish its
Bangalore, Hyderabad, Chennai and Nagpur, among others. leadership in the paneer category as well. With innovation
in manufacturing & packaging, the Company has created a
Ghee long-shelf life for fresh paneer, which is made from 100% cow
Ghee is traditionally used as cooking oil in Indian households milk, and has created rapid consumer acceptance. Moreover,
and is the second largest category in the Indian dairy industry although paneer was previously largely consumed in the
after fresh milk. Current ghee volumes are estimated to be ~1.8 northern and western regions of India, Southern and Eastern
million MTs and expected to reach 2 million MTs by 2020. The cuisines are now seeing a proliferation of paneer, causing a
organised Ghee market is very low at around 18-20% of total but rapid growth in this category.
is witnessing a CAGR of 17%. In order to differentiate ourselves
Curd (Dahi)
in such a large category, we created a new segment “Cow Ghee”
and are currently the most sought after brand in the category. Curd industry has seen a dramatic shift from being a product that
With higher consumer acceptance and availability, along with was traditionally made at home or bought from a nearby dairy
increasing health consciousness, the cow ghee segment is outlet to a branded and packaged product. The organized curd
growing faster than the overall ghee market. market is currently very low at ~6% of total market. However, it
is witnessing a rapid CAGR of over 20%, with even higher growth
Cheese in the metro markets. Current Curd volumes are estimated at
India’s cheese market is one of the fastest growing segments around 3.2 million MTs and expected to reach 4 million MTs by
among dairy products. Current cheese volumes are around 2020, translating to a market size of ` 50,000 crores.
50,000 MTs and are expected to reach 85,000 MTs by 2020. Rise The Company is well-positioned to dominate this category in
in food service outlets and changing food habits has triggered major markets owing to its distinctive home-made recipe made
the increase in demand of cheese products. Till a few years from 100% Cow’s milk. The Company also has a significant
ago, India’s cheese market was dominated by block cheese, presence in major metros like Mumbai, Pune, Nagpur,
slices and cubes. However, through innovation, the Company Hyderabad, Bangalore & Chennai and is now expanding into
has created a special place for itself in this category, garnering Delhi NCR and nearby markets of North and East India.
a leadership position in the cheese segment.
UHT & Beverages
The Company also dominates the Institutional & HORECA
segments and through product innovations, is trying to Ultra-High Temperature (UHT) milk is a value-added dairy
capture a larger share of the consumer market. Maharashtra, product with a niche market owing to its longer shelf life and ease
where the Company started off from, is the largest market for of use. India’s UHT milk market is accelerated by several factors
cheese consumption, followed by Gujarat, Delhi, Tamil Nadu like increasing disposable incomes, improving standards of living,
and Uttar Pradesh. high proportion of working population and western influence
on the dietary patterns. As a result, the consumers have shifted

44 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

towards purchasing products which are healthy and meet high Consumers are also becoming brand conscious, which means
quality and hygiene standards. Moreover, as UHT milk does not that they are moving away from making dairy products at
need to be boiled and can be consumed directly, it provides a home or purchasing it from the local dairy outlet, and are now
convenient option to consumers who lead busy lives. Besides preferring consistency in quality and taste of products that is
this, flavoured milk has also gained popularity and consumer provided by organized dairy players like us. Hectic lifestyles
acceptance has improved in the recent years. and growing health problems, means that consumers to do
not mind paying a premium for quality products.
The Company has a strong presence in the UHT milk segment.
Besides this, we are also present in the beverages segment Changing health consciousness is causing a shift from aerated
through the introduction of buttermilk, lassi, flavoured milk and ‘brown’ drinks to healthier beverages made from milk
(Topp up & Go Badam Milk) and juice drink (Slurp). such as buttermilk, lassi, flavoured milk, amongst others.
Moreover, with a greater per capita income and urbanization,
Whey Protein Indians are changing their dietary pattern in favour of protein.
Whey Proteins market is estimated at 35,000 MTs, translating We have seen that Indian households are consuming lesser
into a market size of ` 3,000 crores, growing at more than 25% cereals and increasing their consumption of milk and dairy
every year. The market today is evenly divided between sports products. In 2012, Indian households spent approximately
nutrition and nutrition foods at ~` 1,500 crores each. The 20.3% (urban) and 18.7% (rural), respectively, out of their total
Company has the most integrated & largest whey processing monthly expenditure on milk and dairy products.
facility in the country and intends to dominate this market.
Given that a large part of the Indian population is protein
We have already introduced ‘Avvatar’ whey protein under the
deficient, protein products are becoming increasingly popular.
sports nutrition category and are in process of launching other
For those training at the gym regularly, the basic requirement of
products under the health and nutrition space as well. With
protein is even higher. Hence, with milk being an essential and
this, PMFL not only intends to have its nutrition business as
relatively cheaper commodity, consumption is bound to increase.
7% of its portfolio in the medium term, but more importantly,
intends to drive the profitability and growth for both its Cheese Another trend that is driving the multi-year growth in this
& Whey businesses. industry is the shift from the ‘unorganised’ to the ‘organised’
market. Only ~25% of the milk production is procured,
Skimmed-Milk Powder processed and sold through organized dairies in India. In
The Company has made investments in quality enhancement the fresh milk products segment, there is a huge scope for
of SMP and have focused its efforts to develop a speciality organised sector to grow as their market share is as low as 3%
institutional business for SMP by signing long-term contracts for paneer and 6% for curd.
with leading FMCG companies and companies selling high-end
This shift from the unorganized to the organized market also
nutrition products. This will not only provide visibility in terms
means that there is a rising demand from value-added dairy
of the revenue garnered from the sale of SMP, but will also
products (VAP) and consumers are upgrading from ‘pouch
help the company combat the volatility faced in the sale and
milk/powders’ to VAP. Traditional milkmen or small dairy
realization of SMP.
shops selling, for instance, curd, have disappeared today,
GROWTH DRIVERS mainly in urban areas, with many branded players launching
The Indian dairy industry has seen a strong and sustained curd with consistency in quality and taste.
growth in the last decade based on two factors – increase in
per capita consumption and consumers favouring branded Government Initiatives
packaged products. With rising urbanization, a higher The Government has laid out certain measures for the dairy sector
disposable income and a large proportion of working women, in the Union Budget 2018-19. It has given great importance to
there is a tendency to use ready-to-eat and high-quality milk increase the milk production in the country and for this purpose,
products, which has made value-added products like cheese, it plans to register 40 million milch animals with UID and issuance
ghee, paneer, etc, essential items in one’s monthly grocery list. of health card, which will lead to 20% increase in milk production
This trend is increasingly seen in urban India and it is expected by 2020. The Government has also planned to allocate ` 200
to be followed by rural areas as well. crores in FY19 for the establishment of 20,000 plus self-employed
dairy units, provide training to 4,000 multipurpose artificial

Annual Report 2018 45

insemination technicians and to introduce sex sorted semen Our focus continues to remain on growing our consumer
technology of 1.5 million doses to increase the availability of high business and strengthening our position as a strong dairy FMCG
genetic merit heifers to increase milk production and profitability player. We will continue to increase our share of consumer
in dairy farming. The outcome of these factors and of these efforts products in our portfolio, through distribution expansion and
of the Government would increase the value of output of milk by launch of innovative value added products.
` 15,000 crores along with additional employment to 1 lakh
RISK MANAGEMENT
people and increase in artificial insemination by 15% over the
The Company has developed robust risk management policies
medium term.
to proactively identify possible business risks, and thereby
Further, in Union Budget 2018-19, ` 10,000 crore fund was allocated implement the right mitigation strategies.
by the Government of India in for the upgradation and modernising
As a dairy FMCG player, ensuring continuous availability of
of milk procurement, processing and marketing operations. This will
high quality cow milk is the company’s topmost priority. The
lead to an increase in number of milk collection centres at the village
Company has over time developed strong relationships with
level and encourage farmers to supply more milk to the organised
farmers which helps in the procurement of the right quality
sector. Farmers will get the right price for the milk they produce,
and quantity of milk. The Company also educates farmers
owing to the elimination of middle men, which in turn will benefit the
about cow well being and trains them for improvements in
overall industry through the availability of better quality of milk.
cow productivity, thereby improving both the cow yield as well
FINANCIAL PERFORMANCE as milk quality. Milk, being a perishable commodity, efficient
The company recorded a Consolidated Revenue of ` 19,545.1 cold chain management is required to keep the milk fresh
million for FY18 as compared to ` 1,7307.4 million in the and healthy. Any disruption in the cold chain can significantly
previous financial year, representing a growth of 12.9%. reduce the quality of milk that reaches the plant. In this regard,
Growth in revenue was driven by a growth in the consumer the Company has built collection centres at the village level
products category, mainly in value added products like cheese, and an efficient cold-chain network to keep the milk chilled
paneer, and ghee. throughout, thereby maintaining its freshness till it reaches
the plant for further processing.
Gross Profit for FY18 was ` 5,866.2 million as compared to
` 4,719.1 million in FY17, signifying a growth of 270bps YoY Technology and innovation play a key role in improving our
driven by better revenue mix management. The Gross Profit value-added product portfolio and increasing our presence in
Margin was 30.0% in FY18. the market. PMFL’s manufacturing facilities are equipped with
state-of-the-art technologies which reflect our future readiness.
EBITDA witnessed a growth of 594 bps from ` 683.2 million in
Technology plays an important role across our value chain –
FY17 to ` 1,932.9 million in FY18. The EBITDA Margin stood at
starting with the real-time assessment of milk quality at the time
9.9% for FY18 driven by operating efficiencies.
that it is procured, to processing of milk into innovative products,
PAT for FY18 stood at ` 870.6 million with a PAT Margin of 4.5% right uptill it is seamlessly distributed across India. Furthermore,
driven by higher EBITDA margin and volume leverage. our continuous innovation leading to a robust R&D pipeline
The consumer products category, which is the largest revenue is what allows the Company to deliver value-added products
generator for the company, witnessed a 15.7% growth YoY, aligned to the varied needs of its consumers.
rising from ` 11,079 million in FY17 to ` 12,818 million in FY18. A strong distribution network is essential for maintaining a
The revenue mix changed in favour of consumer products with healthy market share. The Company has in place well-built
the total share of consumer products increasing from 64.0% in supply chain networks at the back-end and strong distribution
FY17 to 65.6% in FY18. channels at the front-end which ensures the timely availability
The share of Fresh Milk, Skimmed Milk Powder and other of products to the consumers. The Company has a strong
revenue (category which includes the conversion income from presence in tier II cities as well owing to its efficient product
the job-work done for others) was 19.9%, 12.9% and 1.6% of handling and distribution systems.
total revenues for FY18. Finally, exports consisted of 3.1% of Apart from this, the Company also monitors the economic and
the revenue mix. political environment and takes preventive actions to mitigate
any unfavourable factors that could impact the Company’s
future prospects.

46 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

HUMAN RESOURCE is designed to ensure management efficiency, reliability of

We believe that people equity is the foundation for the long- accounting practices, compliance with all applicable laws and
term sustainability of our business. People with the right regulations, and the protection of the Company’s assets. The
capabilities, who are engaged with the organization’s goals Board of Directors, responsible for the internal control system,
and values contribute to the growth of the Company. set the guidelines, verifying its adequacy, effectiveness and
application. The Company regularly assesses the effectiveness of
The Company has over the years promoted a spirit of
controls to provide an objective and independent opinion on the
entrepreneurship, leadership and teamwork that has led to
overall governance processes within the Company, including the
enhanced employee performance. The Company has also
application of a systematic risk management framework.
implemented several learning and development programmes
for the professional growth of each individual. The Company The internal controls are constantly upgraded based on
strives to provide a congenial work environment that respects internal audit recommendations. Every quarter based on the
individuals and encourages career growth and has in place recommendations, corrective steps and their implementation
effective employment policies, procedures and practices as status are presented to the Board of Directors. The Company
well as rewards and recognition programmes, to attract and also has a dedicated code of business conduct for its
retain the right talent. employees which are periodically reviewed and monitored. A
prompt action is initiated in the event of violations of the code
The Company continues to work towards improving its
of conduct.
Industrial relations by focusing on improving employee
engagement through formal and informal programs. As on CAUTIONARY STATEMENT
March 31, 2018, the Company had a total of 1,787 employees Certain statements in the “Management Discussion and Analysis”
on its pay roll. section may be ‘forward-looking’. Such ‘forward-looking’
statements are subject to risks and uncertainties and therefore
INTERNAL CONTROLS & ADEQUACY
actual results could be different from what the Directors envisage
The Company’s Internal Financial Control (IFC) framework
in terms of the future performance and outlook.
has robust internal control procedures commensurate with its
size and operations. The Company’s internal control system MT – Metric Tonnes

Annual Report 2018 47

Directors’ Report
Dear Members,
Your Directors are pleased to present the Twenty Sixth Annual Report of the Company together with the Audited Financial Statements
(Standalone and Consolidated), for the financial year ended 31 March, 2018.
FINANCIAL HIGHLIGHTS
The comparable financial performance of the Company (Standalone & Consolidated) for the Financial year ended 31 March, 2018 is
summarized as under:

(` In million)
Particulars Standalone Consolidated
FY 2017-18 FY 2016-17 FY 2017-18 FY 2016-17
Revenue from Operations 19,181.18 17,010.85 19,545.06 17,307.39
Other Income 56.30 86.28 119.98 128.90
Total Income 19,237.48 17,097.13 19,665.04 17,436.29
Profit before Tax before exceptional items 1,076.23 99.58 1,189.58 182.62
Exceptional Items - (193.84) - (193.84)
Profit from ordinary activities before tax 1,076.23 (94.26) 1,189.58 (11.22)
Less:- Tax expenses 291.43 (76.63) 319.02 (58.78)
Profit After Tax (PAT) 784.80 (17.63) 870.56 47.56
Dividend on equity shares(including tax on dividend) 75.85 50.62 - -
Earnings per Share
Basic 9.36 (0.21) 10.38 0.58
Diluted 9.33 (0.21) 10.35 0.58
Figures for FY 2016-17 have been restated as per Ind AS and therefore may not be comparable with financials for FY 2016-17 approved by
the Directors and disclosed in the financial statement of previous year.

INDIAN ACCOUNTING STANDARD is primarily on account of growth in value added products

The Ministry of Corporate Affairs (MCA) on 16 February, and product mix. Profit after tax on consolidated basis was
2015, notified that Indian Accounting Standards (Ind AS) are ` 870.56 in comparison to ` 47.56 million in the previous
applicable to certain classes of companies from 1 April, 2017 year on account of gross margin expansion and operational
with a transition date of 1 April, 2016. Ind AS has replaced efficiency.
the previous Indian IGAAP prescribed under Section 133 of
DIVIDEND
the Companies Act, 2013 (“the Act”) read with Rule 7 of the
The Board of Directors is pleased to recommend a final
Companies (Accounts) Rules, 2014. Ind AS is applicable to the
dividend of ` 0.75/- per equity share of face value of ` 10/- each
Company from 1 April, 2017.
for the financial year ended 31 March, 2018 payable to those
The effect of the transition from IGAAP and Ind AS has been Member’s whose names appear in the register of Members as
explained by way of a reconciliation in the standalone financial on the Record date amounting to ` 75.85 million (inclusive of
statements and consolidated financial statements. dividend distribution tax of ` 12.93 million.
RESULTS OF OPERATIONS AND THE STATE OF COMPANY’S The final dividend is subject to the approval of Members at the
AFFAIRS ensuing Annual General Meeting (AGM).

The Highlights of the Company’s Performance (Standalone) TRANSFER TO RESERVES

for the Year Ended 31 March, 2018 are as under: The Company did not transfer any sum to the General Reserve
for the financial year under review.
Revenue from operations increased by 12.76% to ` 19,181.18
million from ` 17,010.85 million in previous year. BUSINESS OVERVIEW
Parag Milk Foods Limited (PMFL) is India’s leading manufacturer
Profit before Tax was ` 1,076.23 million as compared to a loss
and marketer of branded dairy foods and beverages based on
of ` 94.26 million in the previous year.
100% cow milk. The Company started off with collection and
Profit after Tax was ` 784.80 million in comparison to a loss of ` distribution of milk in 1992, and, over the years, it has evolved as
17.63 million in the previous year. India’s largest dairy FMCG player by developing a large portfolio
of dairy and value-added products with a strong focus on health
Financial Performance Review and Analysis (Consolidated) and nutrition. The Company has diverse range of products like
The Company achieved a consolidated turnover of ` cheese, ghee, fresh milk, whey proteins, paneer, curd, yoghurt,
19,545.06 million for the year ended 31 March, 2018, milk powder and dairy based beverages targeting a wide range
resulting in an increase of 12.90%, as compared to ` of consumer groups under the brands Gowardhan, Go, Topp Up,
17,307.39 million in the previous year. Increase in revenue Pride of Cows, Avvatar, Milkrich and Slurp.

48 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Innovation has been an essential driver of the Company’s this product will help us strengthen our distribution network
progress. It has transformed the way the Company meets the in tier II & tier III markets where the penetration of cheese is
consumer demands by consistently introducing innovative increasing rapidly
products that have re-defining categories. Besides, it has
In the whey protein segment, the Company widened its product
also brought in innovation across its integrated business
offerings under the Avvatar brand by launching Advance Muscle
value chain, strengthening Company’s competitiveness. The
Gainer. Advanced Muscle Gainer is the 1st Gainer in India to get
Company has built a strong portfolio of value-added products
Informed-Sports certification from WADA approved lab in UK
to stay in sync with the evolving consumer preferences.
confirming that it is banned substance free making it a perfect
The financial year 2017-18 was ruled by several innovative product for consumers and athletes.It is a healthy balance of
and new product launches, line extensions, consumer freshest blend of protein and carbohydrates to help consumer
engagement, supply chain enhancements, brand building and gain lean muscle mass. Each 60g scoop offers highest protein
most importantly, an enhanced focus on health and nutrition (25.5g) in mass gainer segment along with 24g carbohydrates
segment. and naturally occurring 5.7g BCAA and 4.3g glutamic acid.
It is a right blend of Protein-Carb Matrix – Whey Protein
To strengthen the company’s presence in north region, we have
Concentrate and Isolate, Casein, Maltodextrin and Dextrose,
introduced fresh dahi. With this launch, we have expanded our
specially designed for Indian consumers understanding Indian
geographical reach and have entered into ` 1,500 cr curd
diet patterns. It has No added sugar which ensures that all
market of Delhi. The Northern region contributes ~33% of curd
the required calories comes from good quality Protein-Carb
consumption in India.
matrix. It is enriched with 21 vital vitamins and minerals to
We have also launched Mishti Doi which is nutritionally rich in support overall well-being and growth
protein. We believe the addition of Mishti Doi to our product
To strengthen the presence in north we have acquired the
portfolio will further build up the Gowardhan Dahi category.
manufacturing unit of Danone Foods and Beverages India
This traditional Bengali dessert is a delicious way to end every
Pvt Ltd., the local entity of French dairy firm Danone SA.
meal.
The acquisition will strengthen the Company’s distribution
We have launched Gowardhan Paneer as a fresh paneer of fresh category products like milk, dahi, paneer, yogurt in
category with a shelf life of 75 days and is made from 100 the Northern and Eastern regions of India, which is largely
% cows’ milk. It is a rich source of proteins and vitamins. dominated by buffalo milk consumption. This move will bring
Being the 1st mover, we intend to create Branded category us closer to the end consumer and will give us an edge to
of fresh Paneer and rule the market as category leader. It is understand the consumer preferences in northern India. The
unadulterated and despite of 75 days of shelf life, it is free from plant is spread across 5,500 square meters on the outskirts of
preservatives and additives. This is the only product which has Delhi NCR. Its current milk processing capacity is 0.75 LLPD
used ESL technology. (lakh litre per day) along with curd processing capacity of 15
tonne. We aim to educate farmers on best practices and help
As we call ourselves “The Cheese People” and innovation is
enhance their income. Initially we have associated with over
in our DNA. We have helped in developing and expanding the
2,000 farmers (to procure cows milk) and we will keep on
cheese market through the launch of several one-of-its-kind
adding to these numbers going forward.
products like Cheese slices in the flavours of Green chutney
(Mint leaves), Schezwan, Piri-Piri, Cheese spreads in the During the year, the Company laid strong emphasis on
flavours of Smoked Paprika, Herbs and Olives, Garlic, Spice and enhancing the supply-chain management and distribution
Gourmet cheese, amongst others in the past. To continue the network. The Company also appointed a consulting group
legacy, this year, we have launched G0 Cheese Cubes and Go to optimise its distribution model through the concept of
Chocolate Cheese this year. Go chocolate cheese is the unique ‘Theory of Constraints’. It allowed the Company to improve the
variant - a product that combines the taste of chocolate in the distribution reach with lower stock outs, reducing non-moving
form of cheese. inventory and better rationalisation of inventory at dealers,
retailers and the company level. The roll out of SFA (sales force
With a mix of tasty and healthy, Go Chocolate Cheese is
automation) and DMS (distribution management system) will
a distinctive product specially introduced to satiate the
further strengthen the distribution network.
consumers’ changing preferences, while at the same time to
provide nutrition to kids. We have also strengthened our leadership team with strategic
hirings and created new positions including Chief Operations
‘Go Cheese Cubes’ are creamy, tasty, and are all natural with
Officer and Chief Commercial Officer (CCO). All these senior
no preservatives, emulsifiers, artificial colours or flavours,
executives are seasoned professionals with long stints in
making it suitable even for health conscious consumers. It is a
the FMCG sector. As a strategy, we are focusing on becoming
rich in calcium and milk protein. With the launch of ‘Go Cheese
a strong national FMCG dairy company and putting more
Cubes’, our aim is to cater to the growing retail segment by
emphasis on growing our consumer business. With the support
providing a mass-consumption item like cheese cubes, which
of the new senior leadership team, we are aiming at a double
is versatile in terms of applications. We are confident that
digit growth this fiscal.

Annual Report 2018 49

Export Market The Company has not issued shares with differential voting
PMFL enjoys a strong reputation and brand recall across several rights nor granted any stock options or sweat equity during the
geographies through its exports across UAE, Singapore, Oman, year under review. None of the Directors of the Company hold
Kuwait, Mauritius, New Zealand, Australia, Congo, Seychelles, instruments convertible into equity shares of the Company.
Iraq, Hong Kong, Philippines, Sri Lanka, UAE and Bangladesh. Material Changes and Commitments affecting the Financial
During the year, the Company recorded an export turnover Position of the Company which have occurred Between the
of was ₹ 596.43 million as against ₹ 568.22 million last year, end of the Financial Year of the Company to which Date the
increasing ~5% during the year. Financial Statement relate and Date of the Report.
I. During the year, the Company sought approval of
Bhagyalaxmi Dairy Farm Pvt. Ltd.
Members by way of Special Resolutions through Postal
Bhagyalaxmi is India’s first modern dairy farm consisting of Ballot as required pursuant to Section 110 of the Act
approximately 2,500 Holstein Frieisan cows, equipped with read with Rule 22 of the Companies (Management and
state-of-the-art technology for feeding, milking and processing Administration) Rules, 2014 (the “Act”) for the following
of fresh milk. It is PMFL’s subsidiary with a production capacity Special Resolutions.
of approximately 30,000 LPD. It produces “Farm- to-Home”
premium milk under the brand name of “Pride of Cows” 1. Re-classification of IRIS Business Solutions Private
(POC). Over the years the brand has gained demand from the Limited from Promoter Category to Public Category; and
markets due to its unique characteristics like fresh, untouched 2. Increase of Investment Limit by Non-Resident
and unadulterated milk. Being fully automated without any Individuals to 24% of the Paid –up Equity Capital of
human intervention the quality and safety of the milk has the Company.
been accepted by our 20,000 households in Mumbai, Pune The resolutions were approved by the requisite majority and
and Surat. The farm also operates as a R&D centre for dairy were deemed to have been passed on Monday, 9 April, 2018.
farming in India that educates farmers on best practices in
II. Acquisition of manufacturing plant from Danone Foods
animal feeding, rearing and milking for improving their cows’
and Beverages India Private Limited (“the Seller”)
productivity. PMFL also created a bioscience division with
which is part of the global food products multinational
the aim of converting waste into developing cattle feed and
corporation headquartered in Paris (hereinafter referred
organic manure for farmers.
to as “Danone”). The Company has acquired Danone’s
Future Prospects factory situated at Plot No. 2266-2268, Food Park Phase -2
HSIIDC Industrial Estate- Rai, Sonipat, Haryana-131029,
The Company enjoys strong partnerships with top institutional
and proposes to spend additional capex for further
buyers in the country and will continue to deliver quality-
expansion to be carried out in it.
consistent, customised product requirements.
SUBSIDIARY COMPANY
The Company is bullish about its prospects in the health and
nutrition segment. With the launch of its first 100% natural
As on 31 March, 2018, the Company has one Wholly Owned
immunity booster called ‘GO Colo Power’ in July 2018, the
Subsidiary called Bhagyalaxmi Dairy Farms Private Limited
Company has further strengthened its offerings in the health &
(BDFPL) which is located at Manchar, Pune. BDFPL which is
nutrition segment, which further reiterates its leadership in the
fully automated cow farm, housing over 2,500 Holstein Friesian
value-added products category.
cows with superior quality yield. BDFPL was established with
Colo Power is made from the first milk of cows just after calving the aim to educate farmers about best practice of breeding,
and is enriched with immunoglobulins and probiotics and feeding, animal management and improving productivity.
has the same goodness equivalent to that of a mother’s first
BDFPL’s total revenue Stood at ` 832.45 Mn in FY 17-18 in comparison
milk. The colostrum helps to build long-term immunity and
to ` 517.98 Mn in FY 16-17. BDFPL made Profit After Tax of ` 85.78 Mn
improves and strengthens the digestive system.
for FY 17-18 in comparison to ` 65.19 Mn in FY 16-17.
With the ongoing investments in solidifying the supply chain
The accounts of the Subsidiary are also uploaded on the
management, the Company is hopeful of expanding its
website of the Company at www. paragmilkfoods.com
distribution reach to the untapped markets as well as improve
existing distribution efficiency and productivity. Pursuant to the provisions of Section 129 of the Company’s Act,
2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a
SHARE CAPITAL
separate statement containing the salient features of the financial
During the year under review, there was no change in the statements of the Subsidiary Company in the prescribed format
Equity Share Capital of the Company. AOC-1 is appended as Annexure - I to this Report.
The Authorised Share Capital of the Company is ` 1,000,000,000/- CONSOLIDATED FINANCIAL STATEMENTS
made up of 100,000,000 Equity Shares of ` 10/- each, and The Consolidated Financial Statements of the Company for the
the Issued, Subscribed and Paid Up Share Capital remains ` FY 2017-18 are prepared in accordance with the requirements
841,145,820/- made up of 84,114,582 Equity Shares of ` 10/- each. of Indian Accounting Standards AS 110 (read with IND AS

50 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

28), issued by, Central Government under section 133 of No commission was paid during the year to the Managing
the Companies Act, 2013 read with the Companies (Indian Director/Whole Time Director from the Company or from its
Accounting Standards) Rules, 2015, the Listing regulations, the subsidiary company.
Audited Consolidated Financial Statements of the Company
ANNUAL EVALUATION OF BOARD’S PERFORMANCE
forms a part of this Annual Report.
Pursuant to the provisions of the Companies Act, 2013 read with
DIRECTORS AND KEY MANAGERIAL PERSONNEL Rules thereunder and the Corporate Governance requirements
Retirement by rotation and subsequent re-appointment as prescribed under Listing Regulations, the Board has carried
out an annual evaluation of its own performance and that of
Pursuant of the provisions of Section 152 of the Act, Mr. B.M.Vyas,
its committees as well as the performance of the Directors
Non-Executive Director (DIN-00043804) is liable to retire by
individually.
rotation at the ensuing AGM and being eligible, offers himself for
re-appointment. The performance of the Board and individual Directors was
evaluated by the Board seeking inputs from all the Directors.
i. Mr. Bharat Kedia resigned w.e.f 10 July, 2017, as Chief
The performance of the Committees was evaluated by the
Financial Officer (Key Managerial Personnel) of the
Board seeking inputs from the Committee Members. The
Company. Pursuant to the recommendation of the
Nomination and Remuneration Committee reviewed the
Nomination and Remuneration Committee and Audit
performance of the individual Directors .
Committee, Mr. Vimal Agarwal has been appointed as
Chief Financial Officer (Key Managerial Personnel) of the A separate meeting of Independent Directors was held on 24
Company w.e.f 21 December, 2017. March, 2018 chaired by Mr. Ramesh Chandak, Independent
Director, pursuant to Schedule IV of the Act and the Listing
ii. Mr. Pritam Shah (DIN- 01127247) has been re-
Regulations,. This was followed by the Board Meeting that
appointed as Managing Director and Mr. Devendra
discussed the performance of the Board, its Committees and
Shah (DIN-01127319) has been re-appointed as
the Individual Directors.
Whole-time Director respectively for a further term of
5 years w.e.f 1 April, 2018 to 31 March, 2023, subject to The criteria for performance evaluation of the Board included
the approval by the Members in the ensuing AGM. composition and structure of the Board & Committee(s),
attendance of Directors at Board and committee
iii. Mrs. Rachana Sanganeria is the Company Secretary and
meetings,participation at meetings, domain knowledge,
Compliance Officer of the Company as on 31 March, 2018.
cohesion in the Board’s meeting, awareness and observance
Pursuant to Regulation 36(3) of the Listing Regulations, the of governance, constructive contribution and inputs in the
brief profile of the Directors eligible for re-appointment forms meetings and decision making process and effectiveness of
part of the Notice of the AGM. Board processes etc.
DECLARATION OF INDEPENDENCE FROM INDEPENDENT FAMILIARIZATION PROGRAMMES FOR THE INDEPENDENT
DIRECTORS: DIRECTORS
Pursuant to Section 134(3)(d) of the Act, the Company has
In compliance with the requirements of the Listing Regulations,
received declaration from all the Independent Directors
the Company has put in place familiarization programme
confirming that they meet the criteria of Independence as laid
for the Independent Directors to familiarize them with their
down under Section 149(6) of the Companies Act, 2013 read
role, rights and responsibility as Directors, the working of
with the Schedules and Rules issued thereunder as well as
the Company, nature of the industry in which the Company
Regulation 16(1)(b) of the Listing Regulations.
operate business model etc,. The familiarisation programme
POLICY ON APPOINTMENT AND REMUNERATION OF for Independent Directors in terms of provisions of Regulation
DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR 46(2)(i) of Listing Regulations, is uploaded on the website of
MANAGEMENT. the Company at www.paragmilkfoods.com.
Appointment and Remuneration of Directors is in accordance
MEETINGS OF THE BOARD
with the Nomination and Remuneration Policy formulated
The Board of Directors met 5(five) times in the FY 2017-2018.The
in accordance with Section 178 of the Companies Act, 2013
details of the Board Meetings and the attendance of the Directors
and Regulation 19 of the Listing Regulations (including any
are provided in the Corporate Governance Report which forms
statutory modification(s) or re-enactment(s) thereof for the
part of this Annual Report. Further, the Board has also dealt with
time being in force is available on the website of the Company
certain items through circular resolutions, which were confirmed
at www.paragmilkfoods.com.
by the Directors at the subsequent Board Meeting.
The information required under Section 197 of the
COMMITTEES OF THE BOARD
Companies Act, 2013 read with Companies (Appointment and
There are currently 4 (Four) Statutory Committees of the Board
Remuneration of Managerial Personnel) Rules, 2014 (including
and 1 (one) Non-mandatory committee, as follows:
any statutory modifications(s) thereof in respect of Directors/
employees of the Company is set out in this report. I. Audit Committee;
II. Stakeholders’ Relationship Committee;

Annual Report 2018 51

III. Nomination and Remuneration Committee; is in accordance with the SEBI Regulations and the relevant
IV. Corporate Social Responsibility Committee; and provisions of the Companies Act, 2013 along with the Rules
V. Finance Committee. made there under including any amendments made there to
During the Financial Year under review, the Board re-constituted or notifications thereof.
some of the Committees in accordance with the Act and the There is no material change in the ESOS 2015 during the year
Listing Regulations. Details of all the Committees along with their under review and the scheme is in line with the SEBI (Share
terms of reference, composition and meetings of each Committee Based Employee Benefits) Regulations, 2014.
held during the Financial Year are provided in the Corporate
The ESOS 2015 is administered by the ESOP Trust. 2,27,000
Governance Report annexed to the Annual Report, and on the
Equity Shares were allotted to the ESOP Trust on 3 September,
website of the Company at www.paragmilkfoods.com.
2015. The Options were granted to the eligible employees
AUDIT COMMITTEE pursuant to the Nomination & Remuneration Committee
The composition of the Audit Committee is covered under Meeting on 04 September, 2015. The Nomination &
the Corporate Governance Report, which forms a part of the Remuneration Committee on 24 June, 2016 approved vesting
report. of the options in accordance with the ESOS 2015 and conditions
of grant based on the Company’s performance during the FY
The Board has accepted all the recommendations made by the
2015- 2016 and subject to the continued employment of the
Audit Committee during the year under review.
eligible employees till 3 September, 2016 and that the right to
Buy Back exercise would extinguish on 3 September, 2018.
The Company has not bought back any of its securities during Details required to be provided under Section 62 of the Companies
the Financial Year ended 31 March, 2018. Act, 2013 and Rule 12(9) of Companies (Share Capital and Debenture
Directors Responsibility Statements Rules, 2014) and SEBI (Share Based Employee Benefits) Regulations,
Pursuant to the requirements under Section 134 of the 2014 are set out as Annexure II to this report.
Companies Act, 2013, with respect to the Director’s As the aforesaid ESOS 2015 scheme was formulated in the pre-
Responsibility Statements, the Board of Directors of the IPO period the Company is seeking to ratify the existing ESOS
Company hereby confirms: 2015 scheme by the Members in the ensuing AGM.
a) that in the preparation of the annual accounts for the RISK & INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Financial Year ended 31 March, 2018, the applicable The Company’s internal control systems are commensurate
accounting standards have been followed along with with the nature of its business and the size and complexity of
proper explanation relating to material departures; its operations. These are routinely tested and certified by the
b) that the Directors had selected such accounting policies Statutory Auditors as well as Internal Auditors and cover all
and applied them consistently and made judgments and offices, factories and key business areas.
estimates that are reasonable and prudent so as to give a M/s. KPMG (In India), Chartered Accountants, Pune, appointed as
true and fair view of the state of affairs of the Company at Internal Auditors of the Company, conducted Internal Audit for the
the end of the Financial Year and of the profit and loss of the FY 2017-18 as per the provisions of Section 138 of the Companies
Company for the Financial Year ended 31 March, 2018. Act, 2013 read with Rule 13 of the Companies (Accounts) Rules,
2014. Their reports were reviewed by the Audit Committee and
c) that the Directors had taken proper and sufficient
follow-up measures taken wherever necessary.
care for the maintenance of adequate accounting
records in accordance with the provisions of this Act The Audit Committee reviews the adequacy and effectiveness
for safeguarding the assets of the Company and for of the Company’s internal control system and the risk
preventing and detecting fraud and other irregularities; management policies and systems. The Audit Committee
reviews the risks faced by the Company on periodic basis and
d) that the Directors had prepared the annual accounts submits its periodical report to the Board about the measures
for the Financial Year ended 31 March, 2018 on a going taken for mitigation of Risk in the organization.
concern basis; and
The risks faced by the Company and the various measures
e) that the Directors had devised proper systems to ensure taken by the Company are detailed in Management Discussion
compliance with the provisions of all applicable laws and and Analysis section.
that such systems were adequate and operating effectively.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS The Company has established a vigil mechanism in form of
The Company had instituted the ESOP Trust in the name of Whistle Blower Policy for Directors and employees to report
“Parag Milk Foods Employees Stock Option Trust” and the their genuine concerns about unethical behavior, actual or
“Parag Milk Foods Limited- Employee Stock Option Scheme suspected fraud or violation of the Company’s Code of Conduct
2015” (ESOS 2015) during the Per-IPO period. The ESOS 2015 or ethics policy.

52 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

The Policy provides for adequate safeguards against clear guidelines and provide right direction in case of any reported
victimization of Directors/employees who avail of the incidence of sexual harassment across the Company’s offices, and
mechanism and also provides for direct access to the Chairman take appropriate decision in resolving such issues.
of the Audit Committee. During the FY 2017-18, the Company has not received any
The Whistle Blower Policy has been placed on the website of complaint on sexual harassment.
the Company at www.paragmilkfoods.com
CORPORATE GOVERNANCE
CORPORATE SOCIAL RESPONSIBILITY The Company is committed to maintain the highest standards
The details of the Corporate Social Responsibility Committee of Corporate Governance and adhere to the Corporate
has been provided in the Corporate governance section of this Governance requirements set out by the Securities and
Annual Report. Exchange Board of India (SEBI). The Company has also
The report as per Section 135 of the Companies Act, 2013 read implemented several best Corporate Governance practices
with Companies (Corporate Social Responsibility Policy) on as prevalent globally. The report on Corporate Governance
the CSR activities is annexed to this report as “Annexure III”. as stipulated under Regulation 34(4) read with Schedule V of
the Listing Regulations, together with certificate received from
CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES Company Secretaries in Practice confirming compliance with
All contracts/arrangements/transactions entered by the Company the conditions of Corporate Governance is attached to the
during the financial year with related parties were in ordinary Report on Corporate Governance.
course of business and on arm’s length basis.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
During the year, the Company had not entered into any
Management Discussion and Analysis Report for the year
contract /arrangement / transaction with related parties which
under review, as stipulated under the Listing Regulations is
could be considered material in accordance with the Policy of
presented in a separate section, forming part of the Annual
the Company on materiality of related party transactions.
Report and provides details of the overall industry structure,
The Policy on materiality and dealing with related party developments, performance and state of affairs of the
transactions as approved by the Board is uploaded on the Company’s various business along with internal controls and
Company’s website and can be accessed at the website at : their adequacy, Risk Management Systems and other material
www.paragmilkfoods.com. developments during the financial year ended 31 March, 2018.
Members may refer to Note 43 to the standalone financial CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION
statement which sets out related party disclosures pursuant to AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Ind AS. Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of
PARTICULARS OF INVESTMENTS, LOANS, AND GUARANTEES Companies (Accounts) Rules, 2014, the particulars relating to
The particulars of Investments, Loans, Guarantees covered conservation of energy, technology absorption, foreign exchange
under the Provisions Section 186 of the Companies Act, 2013 earnings and outgo, as required to be disclosed under the Act are
read with rules made thereunder form part of the notes to the annexed as “Annexure IV” to this report.
financial statements provided in the Annual Report. EXTRACT OF ANNUAL RETURN
DEPOSITS Pursuant to the provisions of Section 134(3)(a) and 92(3) of
During the year under review, the Company has not accepted the Act and Rule 12(1) of the Companies (Management and
any deposit within the meaning of Section 73 and 74 of the Administration) Rules, 2014, Extract of Annual Return of the
Companies Act, 2013 read with the Companies (Acceptance of Company as on 31 March, 2018 in the prescribed Form MGT-9 is
Deposits) Rules, 2014 (including any statutory modification(s) annexed to this report as “Annexure V”.
or re-enactment(s) thereof for the time being in force). The PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Company has neither accepted nor renewed any deposits Disclosure pertaining to remuneration as per Section 197(12)
during the Financial Year ended 31 March, 2018. of the Companies Act, 2013 read with Rule 5 of the Companies
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT (Appointment and Remuneration of Managerial Personnel)
WORKPLACE Rules, 2014 as amended from time to time, the disclosures
As per the requirement of the Sexual Harassment of Women pertaining to the remuneration and other details are annexed
at Workplace (Prevention, Prohibition and Redressal) Act, 2013 as “Annexure VI” to this Report.
[‘POSH Act’]. Details of employee remuneration as required under provisions
The Company has zero tolerance for sexual harassment at of Section 197 of the Companies Act, 2013 and Rule 5(2) and(3)
workplace and has adopted a policy on prevention, prohibition of Companies (Appointment and Remuneration of Managerial
and redressal of sexual harassment at workplace in line with the Personnel) Rules, 2014, drawing in excess of the limits set out in
provisions of the Sexual Harassment of Women at Workplace these Rules forms part of this Annual Report. In terms of Section
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules 136 of the Act, this report is being sent to the Members and
thereunder for prevention and redressal of complaints of sexual others entitled thereto, excluding the aforesaid information. The
harassment at workplace. The objective of this policy is to lay

Annual Report 2018 53

said information shall be available for inspection by the Members Act, 2013, read with Companies (Audit and Auditors) Rules, 2014,
at the Registered Office of the Company during the business as amended, the remuneration payable to the Cost Auditors has to
hours on all working days (Monday to Friday) upto the date of be ratified by the Members of Company. Accordingly, recommends
the ensuing AGM. The said information shall also be provided to to the Members, the resolution as stated in Item No. 6 of the Notice
any Member of the Company, who sends a written request to the convening the ensuing AGM.
Company. The Company has received consent from M/s. Harshad
SIGNIFICANT / MATERIAL ORDERS PASSED BY THE Deshpande & Associates, Cost Accountants to act as Cost
REGULATORS Auditors of the Company for FY 2018-19 along with certificate
confirming their independence and arm’s length relationship.
There are no significant/material orders passed by the
Regulators or Courts or Tribunals impacting the going concern SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT
status of the Company and its operations in future. Pursuant to the provisions of Section 204 of the Act and the
Companies (Appointment and Remuneration of Managerial
COMPLIANCE WITH SECRETARIAL STANDARDS Personnel) Rules, 2014, the Company had appointed M/s. N. L.
During the year under review , the Company has complied Bhatia & Associates, a firm of Company Secretaries in Practice,
with the applicable Secretarial Standards i.e.SS-1 and SS-2, to undertake the Secretarial Audit of the Company for the
relating to “Meetings of the Board of Directors” and “General financial year 2017-18. The Secretarial Audit Report in Form
Meetings“, respectively, issued by The Institute of Company MR-3 is annexed as “Annexure – VII” to this Report.
Secretaries of India.
The Secretarial Audit Report for the financial year ended 31,
STATUTORY AUDITORS March, 2018 does not contain any qualification, reservation,
In accordance with the provisions of Companies Act, 2013, adverse remark in their report.
at the Annual General Meeting held on 26 June, 2015, the
ACKNOWLEDGMENTS
shareholders had appointed M/s Haribhakti & Co, LLP,
Your Directors wish to place on record their sincere appreciation
Chartered Accountants, Pune (Firm Registration No. 103523W
for the assistance and support extended by the employees,
/ W100048), as Statutory Auditors of the Company, for a period
shareholders, customers, financial institutions, banks,
of 5 years i.e. upto the conclusion of the Annual General
vendors, dealers, the Central and State Governments and
Meeting to be held for the FY 2019-2020.
others associated with the activities of the Company. We look
Pursuant to the notification issued by the Ministry of forward to their continued support in future. Your Company
Corporate Affairs on 7 May, 2018, amending Section 139 of takes pride in its highly motivated employees, workers, staff
the Companies Act, 2013, the mandatory requirement for and wishes to place on record its deep sense of appreciation
ratification of Auditors by the Members at every AGM has for their committed services and best contribution towards
been omitted and hence your Company has not proposed growth and success of your Company.
ratification of appointment of M/s. Haribhakti & Co., LLP,
Chartered Accountants, at the forthcoming AGM.
There is no qualification or adverse remark in Auditors’ report.
There is no incident of fraud requiring reporting by the auditors
under Section 143(12) of the Companies Act, 2013.
COST AUDITORS
The Board of Directors of the Company in its Board Meeting held on
09 May, 2018, on recommendations made by the Audit Committee
For and on behalf of the Board of Directors
have reappointed M/s. Harshad Deshpande & Associates, Cost
Accountants, Pune (Firm Registration Number: 00378) as the Cost
Devendra Shah
Auditors of the Company to conduct the cost records for the FY 2018 Place: Mumbai Executive Chairman
-2019. In terms of the provisions of Section 148(3) of the Companies Date: 9 May, 2018 (DIN: 01127319)

54 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Annexure – I

FORM AOC-1
(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014)
Statement containing salient features of the financial statement of subsidiaries / associate companies / joint ventures as per the
Companies Act, 2013 for the financial year ended 31 March, 2018
( ` in million)
1. Name of the Subsidiary Bhagyalaxmi Dairy Farms Private Limited
2. The date since when subsidiary was incorporated 2 December, 2003
3. Reporting period for the subsidiary - concerned, if different 1 April, 2017 to 31 March, 2018
from the holding company’s reporting period
4. Reporting Currency and Exchange rate as on the last date of Indian Rupees
the relevant - Financial year in the case of foreign subsidiaries
5. Share Capital 57.85
6. Reserves & Surplus 518.54
7. Total Assets 920.53
8. Total Liabilities 344.16
9. Investments NIL
10. Total Revenue 832.45
11. Profit before Taxation 113.37
12. Tax Expense 27.59
13. Profit after Taxation 85.78
14. Proposed Dividend NIL
15. % of shareholding 100.00%

NOTE:
1. The Company does not have any Associate / Joint Venture Company.

For and on behalf of the Board of Directors

Devendra Shah Pritam Shah

Place: Mumbai Executive Chairman Managing Director
Date: 9 May, 2018 (DIN: 01127319) (DIN: 01127247)

Annual Report 2018 55

Annexure – II
Details of Employee Stock Options Scheme under Section 62 of the Companies Act, 2013 read with Rule 12(9) of the Companies (Share
Capital and Debentures) Rules, 2014 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014

Sr. Particulars Shares/Options

No.
1. Options granted (through ESOP Trust) 227,000
2. Options vested 126,927
Options forfeited/lapsed 122,701
3. Total number of options in force/outstanding 104,299
4. Options exercised Nil
5. The total number of shares arising as a result of exercise of -
option granted (net of cancelled options)
6. Exercise price ` 250/-
7. Variation of terms of options -
8. Money realised by exercise of options -
9 Any other employee who receives a grant of options in any one Nil
year of option amounting to five percent or more of options
granted during the year
10 Identified employees who were granted option, during any Nil
one year, equal to or exceeding one percent of the issued
capital (excluding outstanding warrants and conversion) of the
Company at the time of grant.

For and on behalf of the Board of Directors

Devendra Shah
Place: Mumbai Executive Chairman
Date: 9 May, 2018 (DIN: 01127319)

56 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Annexure –III
CORPORATE SOCIAL RESPONSIBILITY REPORT
1. A BRIEF OUTLINE OF THE PROJECTS OR PROGRAMS UNDERTAKEN
(a) Focus Area
The Company has been an early adopter of CSR initiatives and has been contributing regularly to Panjrapole, where all
cattle are accepted free of cost, the aim of the Panjrapole is to nurture and care for animals in distress and protect these
strays from ending up at slaughterhouses or being tranquilized. Panjrapole provides an infirmary dedicated to taking
care of cows & other stray animals. The Company has also supported projects in eradication of hunger and malnutrition,
promoting education, healthcare, destitute care and rehabilitation, disaster relief and rural development.
The Company has also undertaken other need based initiatives in compliance with Schedule VII of the Act.
During the Financial Year 2017-2018, the Company has undertaken activities relating to Promoting Education, ensuring
environmental sustainability.

2. THE COMPOSITION OF THE CSR COMMITTEE AS ON 31 MARCH 2018 IS AS FOLLOWS.

1. Mr. B. M. Vyas - Chairman- Non Executive Director
2. Mr. Devendra Shah - Member-Executive Director
3. Ms. Radhika Pereira - Member- Independent Director
4. Mr. Narendra Ambwani - Member- Independent Director
3. AVERAGE NET PROFIT OF THE COMPANY FOR THE LAST THREE YEARS AND PRESCRIBED CSR EXPENDITURE FOR FY 2017-2018:
(` in million)
Sr. A brief outline of the Company’s CSR Policy including overview of Projects or CSR Policy is available for
No. programs proposed to be undertaken and a reference to the web-link to the inspection by Members of the
CSR Policy and projects or programs and the Composition of CSR Committee. Company
1 Average net profit of the Company for last three financial years 384.26
2 Prescribed CSR expenditure for FY 2017-2018 (two percent of the amount 7.69
mentioned in item 1 above)
3 Details of CSR spent during the financial year. 8.05
4 Amount unspent if any -

(` in million)
Sr. CSR Projected or Activity Sector in which Location of Amount Amount spent Cumulative Amount
No. Identified the project is Projects or Outlay on Projects or Expenditure Spent Direct
covered Programmes (Budget) Programmes up to the or through
undertaken Project or reporting Implementing
Programme period Agency
wise
1 Education Promotion of Maharashtra 0.30 0.30 0.30 Direct
education
2 Contributing to Ensuring Maharashtra 7.75 7.75 7.75 Direct
Panjrapole, where all environmental
cattle are accepted free of sustainability
cost, to nurture and care
for animals in distress and
protect these strays cows
& other stray animals
Total expenditure towards CSR 8.05 8.05 8.05

4. Responsibility Statement
The CSR committee confirms the implementation and monitoring of CSR Policy, in compliance with CSR objectives and Policy of
the Company.

Devendra Shah B.M.Vyas

Place: Mumbai Executive Chairman Non Executive Director & Chairman of CSR Committee
Date: 9 May, 2018 (DIN : 01127319) (DIN: 00043804)

Annual Report 2018 57

Annexure-IV
Conservation of Energy, Technology Absorption and Foreign Exchange
Earning & Outgo
[Section 134(3)(m) of the Companies Act, 2013 Read with Rule 8(3) of the Companies (Accounts) Rules, 2014]

A. CONSERVATION OF ENERGY on product packaging and delivery systems in order to

Company is engaged in processing of milk and ensure that the product reaches to the end consumer in a
manufacturing of Milk products. Total consumption healthy state. Our R&D team at the bio-science division has
during the financial year 2017-18 is given in the form as developed several cow-comfort processes to enhance their
below. productivity. They have also innovatively formulated cattle
feed from the waste, that can help farmers to improve their
Sr. Power & fuel Consumption Total Unit cow productivity.
No.
Going ahead, the team will continue to ideate newer product
1. Electricity Consumption ( Total 2,28,85,263
no of units) offerings as well as develop several productivity-enhancing
2. Own generator through TG sets 37,84,200 strategies and processes.
( Units) C. FOREIGN EXCHANGE EARNINGS AND OUTGO
3. D.G Unit 1,28,602 Following are the details of the foreign exchange earned
4. Diesel/SKO Consumed ( LTR) 47,013
and used during the financial year 2017-18
5. Furnace oil Consumed ( LTR) 3,43,858
6. Coal (Kg ) 2,83,63,144 (` In million)
During the financial year under review the following Particulars 2017-18 2016-17
Foreign exchange earned 596.43 568.22
steps were under taken by the Company which resulted
Foreign exchange used 101.77 377.18
in saving in energy consumption.
D. TECHNOLOGY ABSORPTION
1. Installation of Biogas Generator of 800 KW capacity, The Company has been at the forefront of technology
which will run on Bio- gas generated by ETP. adoption. It has regularly invested in equipping itself with
2. Replacement of conventional lighting with LED light. automated technology with latest production processes
and techniques to achieve high level of productivity
3. Replacement & upgradation of Less energy efficient and operational efficiencies. Besides, technology has
process & equipment’s by new technology & also helped delivering innovative product offerings in a
automation. For example the Company is in process timely manner. The role of technology is evident across
to make centralised refrigeration system with energy the value chain, right from ensuring real-time analysis of
efficient equipment’s & automation to improve the quality and quantity of milk procurement to automated
monitoring action plan & performance of system w.r.t processes and distribution methodology.
Energy & manpower. Old separator, Homogenisers, air
compressor is replaced by energy efficient machines. The Company has collaborations with the global-best
consulting companies that advise best practices in the
4. Saving of 36500 KWH during the year on account of field of manufacturing processes, product formulations,
installation of VSD operated air compressor. maintaining quality, health and nutritional aspects of
B. RESEARCH AND DEVELOPMENT (R&D) the product as well as market dynamics of our product
offerings. During the year, the Company collaborated with
The Company’s R&D team drives innovation which leads ColoPlus AB a Swedish biotech company to manufacture
to delivering international-standard product offerings in colostrum based natural immunity booster in India as per
the market. As a leading dairy FMCG player, the Company patented technology of ColoPlus.
consistently focuses on maintaining quality through
efficient processes and checks. The R&D team has developed The knowledge transfer with respect to technology has
innovative process engineering that takes care of the quality allowed the Company to attain leadership and remain
consistency, ensuring that all regulatory compliances are competitive within the dairy FMCG space.
met. Besides that, the team has also laid strong emphasis

For and on behalf of the Board of Directors

Devendra Shah
Place: Mumbai Executive Chairman
Date: 9 May, 2018 (DIN: 01127319)

58 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Annexure – V
EXTRACT OF ANNUAL RETURN
Form No. MGT-9
as on the financial year ended on 31 March, 2018
[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

i CIN : L15204PN1992PLC070209
ii Registration Date : 29 December, 1992
iii Name of the Company : Parag Milk Foods Limited
iv Category/ Sub-Category of the Company Public Company limited by Shares/Indian Non-Government Company
v Address of the Registered Office and : Flat No 1, Nav Rajasthan Society, Shivaji Nagar, Pune – 411 016.
contact details Tel : +91 7276470001
vi Whether listed company : Yes - BSE Limited and National Stock Exchange of India Limited
vii Name, Address and Contact details of : Karvy Computershare Private Limited
Registrar and Transfer Agent, if any Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda,
Hyderabad – 500 032
Phone:(040) 67161562/67161583
E-mail: [email protected]
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

All the business activities contributing 10% or more of the total turnover of the company shall be stated: -
Sr. Name and Description of main products / services NIC Code of the Product / Service % to total turnover of the Company
No.
1 Value added products 1050 66%
2 Liquid Milk 1050 20%
3 Milk Powder 1050 13%
4 Others 1050 1%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

Sr. Name and address of the CIN / GLN Holding / Subsidiary % of shares held Applicable
No. Company / Associate Section
1 Bhagyalaxmi Dairy Farms U01211PN2003PTC018624 Wholly Owned 100.00% 2(87) of the
Private Limited Subsidiary Companies Act,
2013
Address: A 602 Kumar
Purammukund Nagar, Pune
– 411 037 Maharashtra -India

Annual Report 2018 59

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
(i ) Category-wise Share Holding

Sr. Category of Shareholders No. of Shares held at the beginning of the No. of Shares held at the end of the year % Change
No. year (as on 1 April, 2017) (as on 31 March, 2018) during the
Demat Physical Total % of Total Demat Physical Total % of Total year
Shares Shares
A PROMOTERS & PROMOTER
GROUP
1) Indian
a Individual / HUF 37,626,989 - 37,626,989 44.73 38,661,435 - 38,661,435 45.96 1.23
b Central Govt. - - - - - - - - -
c State Govt.(s) - - - - - - - - -
d Bodies Corporate 2,314,200 - 2,314,200 2.75 2,314,200 - 2,314,200 2.75 -
e Banks / FIs - - - - - - - - -
f Any Other - - - - - - - - -
Sub - Total (A) (1) 39,941,189 - 39,941,189 47.48 40,975,635 - 40,975,635 48.71 1.23
2) Foreign
a NRIs / Individuals - - - - - - - - -
b Other – Individuals - - - - - - - - -
c Bodies Corporate - - - - - - - - -
d Banks / FIs - - - - - - - - -
e Any Other - - - - - - - - -
Sub - Total (A) (2) Total Shareholding - - - - - - - - -
of Promoters & Promoter Group
(A) = (A)(1) + (A)(2) 39,941,189 - 39,941,189 47.48 40,975,635 - 40,975,635 48.71 1.23
B PUBLIC SHAREHOLDING
1) Institutions
a Mutual Funds 1,864,728 - 1,864,728 2.22 36,53,621 - 36,53,621 4.34 2.12
b Banks / FIs 29,478 - 29,478 0.04 51,583 - 51,583 0.06 0.02
c Central Govt. - - - - - - - - -
d State Govt. - - - - - - - - -
e Venture Capital Funds 7,486,104 - 7,486,104 8.89 68,97,104 - 68,97,104 8.19 (0.70)
f Insurance Companies - - - - - - - - -
g Foreign Portfolio 20,525,251 - 20,525,251 24.40 12,660,846 - 12,660,846 15.05 (9.35)
Investors (Corporate)
h Foreign Venture Capital - - - - - - - - -
Funds
i Others (please specify)
a. Foreign body 442,511 - 442,511 0.53 - - - - (0.53)
b. Alternate - - - - 647,584 - 647,584 0.77 0.77
Investment Fund
Sub – Total (B) (1) 30,348,072 - 30,348,072 36.09 23,910,738 23,910,738 28.42 (7.67)
2) Non - Institutions
a Bodies Corporate
(i) Indian 2,707,233 - 2,707,233 3.22 3,428,678 - 3,428,678 4.08 0.86
(ii) Overseas - - - -
b Individuals
Individual shareholders 4,549,752 3 4,549,755 5.41 7,922,082 53 7,922,135 9.42 4.01
having nominal share
capital upto ` 2 Lakh
Individual shareholders 4,251,895 - 4,251,895 5.05 4,783,943 - 4,783,943 5.69 (0.64)
having nominal share
capital in excess of ` 2
Lakh
NBFCs registered with 1,451,630 - 1,451,630 1.72 1,420,470 - 1,420,470 1.69 (0.03)
RBI
C Others (Please specify) 864,808 - 864,808 1.03 1,672,983 - 1,672,983 1.99 0.96

60 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Sr. Category of Shareholders No. of Shares held at the beginning of the No. of Shares held at the end of the year % Change
No. year (as on 1 April, 2017) (as on 31 March, 2018) during the
Demat Physical Total % of Total Demat Physical Total % of Total year
Shares Shares
Non-Resident Indian(NRI) 362,976 - 362,976 0.43 973,669 - 973,669 1.16 0.73
Non -Resident Indian non 86,381 - 86,381 0.10 289,920 - 289,920 0.34 0.24
Repatriable
Clearing Members 177,451 - 177,451 0.21 182,394 - 182,394 0.22 0.01
Trust 11,000 - 11,000 0.01 - - - - (0.01)
Employee Benefit Trust 227,000 - 227,000 0.27 227,000 - 227,000 0.27 -
Sub – Total (B) (2) 13,825,318 3 13,825,321 16.44 19,228,156 53 19,228,209 22.86 6.42
Total Public Shareholding (B) = (B) 44,173,390 3 44,173,393 52.52 43,138,894 53 43,138,947 51.29 (1.23)
(1) + (B)(2)
C SHARES HELD BY CUSTODIAN - - - - - - - - -
FOR GDRS & ADRS
GRAND TOTAL (A+B+C) 84,114,579 3 84,114,582 100.00 84,114,529 53 84,114,582 100.00 -
(ii) Shareholding of Promoters
Sr. Shareholder’s Name Shareholding at the beginning of the Shareholding at the end of the year % change in
No. year (as on 1 April, 2017) (as on 31 March, 2018) shareholding
No. of % of total % of Shares No. of % of total % of Shares during the
Shares Shares Pledged / Shares Shares Pledged / year
of the encumbered of the encumbered
Company to total shares Company to total shares
1 Mr. Devendra Shah 14,570,832 17.32 - 15,006,400 17.84 1,400,000 0.52
2 Mr. Pritam Shah 9,159,888 10.89 - 9,159,888 10.89 - -
3 Mr. Parag Shah 100,000 0.12 - 100,000 0.12 - -
4 Mr. Prakash Shah 100 0.00 - 100 0.00 - -
5 Mrs. Rajni Shah 100 0.00 - 100 0.00 - -
6 Mrs. Priti Shah 2,222,820 2.64 - 2,222,820 2.64 - -
7 Mrs. Netra Shah 8,268,149 9.83 - 8,867,027 10.54 5,078,878 0.71
8 Mr. Poojan Shah 3,295,000 3.92 - 3,295,000 3.92 - -
9 Mr. Stavan Shah 100 0.00 - 100 0.00 - -
10 Mrs. Shabdali Desai 10,000 0.01 - 10,000 0.01 - -
11 IRIS Business Solutions 2,314,200 2.75 - 2,314,200 2.75 - -
Private Limited

(iii) Change in Promoters’ (including Promoter Group) Shareholding (please specify, if there is no change)
Sr. Name of Shareholders Shareholding at the Date Reason Increase/Decrease in Cumulative
No. beginning of the year Shareholding Shareholding during the
(as on 1 April, 2017) year
No. of % to total No. of % to total No. of % to total
Shares shares Shares shares Shares shares of the
of the of the Company
Company Company
1 Mr. Devendra Shah 14,570,832 17.32 25-Jul-17 5,568 0.01 14,576,400 17.33
31-Jul-17 20,000 0.02 14,596,400 17.35
29-Aug-17 100,000 0.12 14,696,400 17.47
05-Sep-17 200,000 0.24 14,896,400 17.71
12-Sep-17 Market 100,000 0.12 14,996,400 17.83
29-Nov-17 Purchase 10,000 0.01 15,006,400 17.84
Closing Balance 31- Mar-18 15,006,400 17.84
2 Mr. Pritam Shah 1 -April-17
9,159,888 10.89 No change - - 9,159,888 10.89
31-Mar-18
3 Mr. Parag Shah 100,000 0.12 1 -April-17
No change - - 100,000 0.12
31-Mar-18
4 Mr. Prakash Shah 100 0.00 1 -April-17
No change - - 100 0.00
31-Mar-18

Annual Report 2018 61

 Sr. Name of Shareholders Shareholding at the Date Reason Increase/Decrease in Cumulative
No. beginning of the year Shareholding Shareholding during the
(as on 1 April, 2017) year
No. of % to total No. of % to total No. of % to total
Shares shares Shares shares Shares shares of the
of the of the Company
Company Company
5 Mrs. Rajni Shah 100 0.00 1 -April-17
No change - - 100 0.00
31-Mar-18
6 Mrs. Priti Shah 2,222,820 2.64 1 -April-17 No change 2,222,820 2.64
31-Mar-18
7 Mrs. Netra Shah 8,268,149 9.83 05-Jun-17 Purchase 20,000 0.02 8,288,149 9.85
21-Apr-17 Purchase 40,000 0.05 8,328,149 9.90
20-Apr-17 Purchase 50,000 0.06 8,378,149 9.96
19- Apr-17 Purchase 1,48,917 0.18 8,527,066 10.14
18-Apr-17 Purchase 15,000 0.02 8,542,066 10.16
17-Apr-17 Purchase 30,000 0.04 8,572,066 10.19
13-Apr-17 Purchase 29,346 0.03 8,601,412 10.23
12-Apr-17 Purchase 30,000 0.04 8,631,412 10.26
11-Apr-17 Purchase 209,615 0.25 8,841,027 10.51
10-Apr-17 Purchase 15,000 0.02 8,856,027 10.53
31-Mar-17 Purchase 11,000 0.01 8,867,027 10.54
Closing Balance 31-Mar-18 8,867,027 10.54
8 Mr. Poojan Shah 3,295,000 3.92 1-Apr-17
No Change - - 3,295,000 3.92
31-Mar-18
9 Mr. Stavan Shah 100 0.00 1-Apr-17
No Change - - 100 0.00
31-Mar-18
10 Mrs. Shabdali Desai 10,000 0.01 1-Apr-17
No Change - - 10000 0.01
31-Mar-18
11 IRIS Business Solutions 2,314,200 2.75 1-Apr-17
No Change - - 2,314,200 2.75
Private Limited 31-Mar-18

(Iv) Shareholding pattern of top ten shareholders (other than Directors, Promoters and holders of GDRs and ADRs ):

Sr. Name of the Share Holder Shareholding at the Date Increase/ Reason Cumulative Shareholding
No. beginning of the Year Decrease during the Year
No of % of total in share No of % of total
Shares shares holding Shares shares
of the of the
company company
1 IDFC TRUSTEE CO. LTD A/C IDFC 5,074,234 6.03 31/03/2017 5,074,234 6.03
INFRASTRUCTURE FUND NIL movement during
the year
Closing Balance 31/03/2018 5,074,234 6.03
2 CANARA ROBECO MUTUAL FUND 730,463 0.87 31/03/2017 730,463 0.87
A/C CANARA ROBECO FORCE
14/04/2017 10,000 Transfer 740,463 0.88
12/05/2017 16,200 Transfer 756,663 0.90
23/06/2017 119,000 Transfer 875,663 1.04
23/06/2017 (70,500 ) Transfer 805,163 0.96
30/06/2017 635,000 Transfer 1,440,163 1.71
07/07/2017 450,000 Transfer 1,890,163 2.25
14/07/2017 50,000 Transfer 1,940,163 2.31
21/07/2017 50,000 Transfer 1,990,163 2.37
28/07/2017 48,673 Transfer 2,038,836 2.42

62 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Sr. Name of the Share Holder Shareholding at the Date Increase/ Reason Cumulative Shareholding
No. beginning of the Year Decrease during the Year
No of % of total in share No of % of total
Shares shares holding Shares shares
of the of the
company company
04/08/2017 (10,000 ) Transfer 2,028,836 2.41
18/08/2017 9,660 Transfer 2,038,496 2.42
08/09/2017 (10000) Transfer 2,028,496 2.41
15/09/2017 (1,556) Transfer 2,026,940 2.41
06/10/2017 (4510) Transfer 2,022,430 2.40
13/10/2017 438,263 Transfer 2,460,693 2.93
20/10/2017 220,000 Transfer 2,680,693 3.19
03/11/2017 50,000 Transfer 2,730,693 3.25
10/11/2017 (20,000) Transfer 2,710,693 3.22
24/11/2017 19,000 Transfer 2,729,693 3.25
01/12/2017 100,000 Transfer 2,829,693 3.36
01/12/2017 (82,000) Transfer 2,747,693 3.27
15/12/2017 50,000 Transfer 2,797,693 3.33
22/12/2017 (25,000) Transfer 2,772,693 3.30
05/01/2018 (24,118) Transfer 2,748,575 3.27
19/01/2018 6,400 Transfer 2,754,975 3.28
19/01/2018 (20,000) Transfer 2,734,975 3.25
16/02/2018 485000 Transfer 3,219,975 3.83
16/02/2018 (180,013) Transfer 3,039,962 3.61
23/02/2018 15,000 Transfer 3,054,962 3.63
09/03/2018 (20,000) Transfer 3,034,962 3.61
16/03/2018 (1,06,512) Transfer 2,928,450 3.48
23/03/2018 (1,22,829) Transfer 2,805,621 3.34
30/03/2018 (110,000) Transfer 2,695,621 3.20
Closing Balance 31/03/2018 2,695,621 3.20
3 GOLDMAN SACHS INDIA LIMITED 2,458,724 2.92 31/03/2017 NIL movement during 2,458,724 2.92
Closing Balance 31/03/2018 the year 2,458,724 2.92
4 NEW HORIZON OPPORTUNITIES 2,533,000 3.01 31/03/2017 2,533,000 3.01
MASTER FUND
09/06/2017 (45,000) Transfer 2,488,000 2.96
16/06/2017 (43,000) Transfer 2,445,000 2.91
09/03/2018 (58,000) Transfer 2,387,000 2.84
16/03/2018 (77,100) Transfer 2,309,900 2.75
23/03/2018 (60,900) Transfer 2,249,000 2.67
Closing Balance 31/03/2018 2,249,000 2.67
5 GOVERNMENT PENSION FUND 2,236,595 2.66 31/03/2017 NIL movement during 2236595 3 .00
GLOBAL the year
31/03/2018 2236595 3.00
6 IDFC SPICE FUND 2,411,870 2.87 31/03/2017 2,411,870 2.87
10/11/2017 (245,000) Transfer 2,166,870 2.58

Annual Report 2018 63

 Sr. Name of the Share Holder Shareholding at the Date Increase/ Reason Cumulative Shareholding
No. beginning of the Year Decrease during the Year
No of % of total in share No of % of total
Shares shares holding Shares shares
of the of the
company company
17/11/2017 (55,000) Transfer 2,111,870 2.51
19/01/2018 (189,000) Transfer 1,922,870 2.29
26/01/2018 (100,000) Transfer 1,822,870 2.17
Closing Balance 31/03/2018 1,822,870 2.17
7 ASHISH KACHOLIA 1,699,995 2.02 31/03/2017 1,699,995 2.02
08/09/2017 (200,000) Transfer 1,499,995 1.78
29/09/2017 (45,274) Transfer 1,454,721 1.73
Closing Balance 31/03/2018 1,454,721 1.73
8 NOMURA INDIA INVESTMENT 2947008 3.50 31/03/2017 2,947,008 3.50
FUND MOTHER FUND
14/07/2017 (100,000) Transfer 2,847,008 3.38
21/07/2017 (500,000) Transfer 2,347,008 2.79
28/07/2017 (306,568) Transfer 2,040,440 2.43
06/10/2017 (350,000) Transfer 1,690,440 2.01
03/11/2017 (50000) Transfer 1,640,440 1.95
10/11/2017 (258,918) Transfer 1,381,522 1.64
Closing Balance 31/03/2018 1,381,522 1.64
9 MADHULIKA AGARWAL 962040 1.14 31/03/2017 NIL movement during 962,040 1.14
Closing Balance 31/03/2018 the year 962,040 1.14
10 INFINA FINANCE PRIVATE LTD 664528 0.79 31/03/2017 664,528 0.79
07/04/2017 3,454 Transfer 667,982 0.79
02/06/2017 (3,454) Transfer 664,528 0.79
18/08/2017 10,000 Transfer 674,528 0.80
29/09/2017 20,000 Transfer 694,528 0.83
13/10/2017 200,000 Transfer 894,528 1.06
05/01/2018 (89,453) Transfer 805,075 0.96
02/03/2018 5,000 Transfer 810,075 0.96
09/03/2018 91,657 Transfer 901,732 1.07
16/03/2018 55,000 Transfer 956,732 1.14
Closing Balance 31/03/2018 956,732 1.14

(v) Shareholding of Directors and Key Managerial Personnel:

Sr. For Each of the Directors Date Reason Shareholding at the Cumulative Shareholding
No. and KMPs beginning of the year during the year
(as on 1 April, 2017) (as on 31 March, 2018)
No. of Shares % to total No. of Shares % to total
shares of the shares of the
Company Company
1 Mr. Devendra Shah 01-Apr-17 Opening Balance 1,45,70,832 17.32 1,45,70,832 17.32
25-Jul-17 Purchase 5,568 0.01 1,45,76,400 17.33
31-Jul-17 Purchase 20,000 0.02 1,45,96,400 17.35
29-Aug-17 Purchase 1,00,000 0.12 1,46,96,400 17.47

64 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Sr. For Each of the Directors Date Reason Shareholding at the Cumulative Shareholding
No. and KMPs beginning of the year during the year
(as on 1 April, 2017) (as on 31 March, 2018)
No. of Shares % to total No. of Shares % to total
shares of the shares of the
Company Company
05-Sep-17 Purchase 2,00,000 0.24 1,48,96,400 17.71
12-Sep-17 Purchase 1,00,000 0.12 1,49,96,400 17.83
29-Nov-17 Purchase 10,000 0.01 1,50,06,400 17.84
31-Mar-18 Closing Balance 1,50,06,400 1,50,06,400 17.84
2 Mr. Pritam Shah 01-Apr-17 Opening Balance 91,59,888 10.89 91,59,888 10.89
- Puchase/Sale/ - - - -
Transfer
31-Mar-18 Closing Balance 91,59,888 10.89 91,59,888 10.89
3 Mr. B.M.Vyas 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
4 Mr. Sunil Goyal 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
5 Mr. Ramesh Chandak 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
6 Mr. Narendra Ambwani 01-Apr-17 Opening Balance 1000 0.00 1000 0.00
- Puchase/Sale/ - - -
Transfer
31-Mar-18 Closing Balance 1000 0.00 1000 0.00
7 Mr. Nitin Dhavalikar 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
8 Ms. Radhika Pereira 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
9 Mr. Bharat Kedia # 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
10 Mr. Vimal Agarwal * 01-Apr-17 Opening Balance - - - -
31-Mar-18 Closing Balance - - - -
11 Mrs. Rachana Sanganeria 01-Apr-17 Opening Balance 845 0.00 845 0.00
- Puchase/Sale/ - - -
Transfer
31-Mar-18 Closing Balance 845 0.00 845 0.00
# Resigned w.e.f 10 July, 2017
* Appointed w.e.f. 21 December, 2017.

Annual Report 2018 65

V. INDEBTEDNESS:
Indebtedness of the Company including interest outstanding/accrued but not due for payment
(` in million)
Particulars Secured Loans Secured Unsecured Deposits Total
excluding deposits Loans Loans Indebtedness
Indebtedness at the beginning of the
financial year
i) Principal Amount 1,167.44 1,440.88 - - 2,608.32
ii) Interest due but not paid - - - - -
iii) Interest accrued but not due 13.84 3.15 - - 16.99
Total (i+ii+iii) 1,181.28 1,444.03 - - 2,625.31
Change in Indebtedness during the
financial year
• Addition 210.00 559.51 - 769.51
• Reduction 468.23 - - 468.43
Net Change (258.23 ) 559.51 - 301.28
Indebtedness at the end of the financial
year
i) Principal Amount 910.05 2,001.48 - - 2,911.53
ii) Interest due but not paid - - - - -
iii) Interest accrued but not due 13.00 2.06 - - 15.06
Total (i+ii+iii) 923.05 2,003.54 - - 2,926.59

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
(` in million)
Sr. Particulars of Remuneration Name of MD / WTD Total Amount
No. Mr. Pritam Shah Mr. Devendra Shah
(Managing Director) (Whole Time Director)
1 Gross salary (per annum) 24.0 24.0 48.0
a. Salary as per provisions contained in Section 17(1) - - -
of the Income-Tax Act, 1961
b. Value of perquisites u/s 17(2) Income-Tax Act, 1961 - - -
c. Profits in lieu of salary under Section 17(3) Income- - - -
Tax Act, 1961
2 Stock Option - - -
3 Sweat Equity - - -
4 Commission - - -
- as % of profit - - -
Total (A) 24.00 24.00 48.00
Whether Total Managerial Remuneration within the
Yes
Ceiling as per the Act

66 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

B. Remuneration to other directors:

(` in million)
Sr. Particulars of Name of the Directors Total
No. Remuneration Mr. Sunil Mr. Ramesh Mr. Narendra Mr. Nitin Ms. Radhika Amount
Goyal Chandak Ambwani Dhavalikar Pereira
(Independent (Independent (Independent (Independent (Independent
Director)# Director) Director) Director) Director)
1 INDEPENDENT
DIRECTORS
a. Fee for attending - 0.9 1.0 1.1 0.8 3.8
Board / Committee
meetings
b. Commission - - - - - -
c. Others - - - - - -
Total (1) - 0.9 1.0 1.1 0.8 3.8
2 OTHER NON- Mr. B. M. Vyas
EXECUTIVE
DIRECTORS
a. Fee for attending 8.4 8.4
Board / Committee
meetings
b. Commission - -
c. Others - -
TOTAL (2) 8.4
Total (B) = (1+2) 12.20
Whether Total Managerial
Remuneration within the YES
Ceiling as per the Act
# Does not take any sitting fees for attending Board / Committee Meetings.
* Being paid in professional capacity consultancy fees exclusive of taxes and out of pocket expenses.
Note: Being paid sitting fees exclusive of applicable taxes.
C. Remuneration to Key Managerial Personnel other than MD / MANAGER / WTD :

(` in million)
Sr. Particulars of Remuneration Key Managerial Personnel Total
No. Mr. Bharat Kedia Mr. Vimal Agarwal Mrs. Rachana Sanganeria
(Chief Financial Officer)# (Chief Financial Officer)* (Company Secretary)
1 Gross Salary
a. Salary as per provisions 3.50 3.29 1.88 8.67
contained in Section 17(1)
of the Income-Tax Act, 1961
b. Value of perquisites u/s -
17(2) Income-Tax Act, 1961
c. Profits in lieu of salary under
Section 17(3) Income-Tax
Act,1961
2 Stock Option (No. of share) - - 796 796
3 Sweat Equity -
4 Commission -
a. as % of profit
b. Others, -
5 Others, please -
Total 3.50 3.29 1.88 8.67
# Resigned w.e.f. 10 July, 2017.
* Appointed w.e.f. 21 December, 2017.

Annual Report 2018 67

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type Section of the Brief Description Details of Penalty Authority [RD / Appeal made, if
Companies Act / Punishment / NCLT/COURT] any (give details)
Compounding
fees imposed
A. COMPANY
Penalty
Punishment None
Compounding
B. DIRECTORS
Penalty
Punishment None
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment None
Compounding

For and on behalf of the Board of Director

Devendra Shah
Place: Mumbai Executive Chairman
Date: 9 May, 2018 (DIN: 01127319)

68 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Annexure –VI
Disclosure in Board’s Report as per the provisions of Section 197 of the Companies Act, 2013 read with Rule (5)(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended )
SI. Disclosure Requirement Disclosure Details
No.
1. The ratio of the remuneration of each Name of the Directors Category Ratio
Director to the median remuneration of
the employees of the Company for the
financial year
Mr. Devendra Shah Executive Chairman- Whole 113.7
Time Director
Mr. Pritam Shah Managing Director 113.7
Mr.B.M. Vyas Non-Executive Director 46.4
2. The percentage increase in remuneration Name of the Directors Category % Increase in
of each Director, Chief Financial Officer remuneration
and Company Secretary during the
financial year
Mr. Devendra Shah Executive Chairman- Whole 14.3 %
Time Director
Mr. Pritam Shah Managing Director 15.9 %
Mr. B.M. Vyas Non-Executive Director 2.1 %
Mr. Bharat Kedia# Chief Financial Officer NA
Mr. Vimal Agarwal* Chief Financial Officer NA
Mrs. Rachana Sanganeria Company Secretary & 12.0 %
Compliance Officer
3. The percentage increase in the median The median percentage increase in the median remuneration of employees in the
remuneration of employees in the financial financial year is 14.1 %
year
4. Number of permanent employees on the There were 1,787 permanent employees of Parag Milk Foods Limited as on 31
rolls of the Company March, 2018
5. The average annual increase excluding the For the employees other than managerial personnel who were in employment
managerial personnel in the financial year in FY 2017-2018, the average increase is 15.7 %.
2017-2018.
Average decrease for managerial personnel is 26.2%.
6. Affirmation that the remuneration is as per
Yes
the Remuneration Policy of the Company
# Resigned w.e.f 10 July, 2017
*Appointed w.e.f 21 December, 2017

For and on behalf of the Board of Director

Devendra Shah
Place: Mumbai Executive Chairman
Date: 9 May, 2018 (DIN: 01127319)

Annual Report 2018 69

Annexure - VII
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31 MARCH, 2018
[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014]
To, d. Securities and Exchange Board of India (Share Based
The Members, Employee Benefits) Regulations, 2014;
Parag Milk Foods Limited e. The Securities and Exchange Board of India (Issue
We have conducted the Secretarial Audit of the compliance of and Listing of Debt Securities) Regulations, 2008; Not
applicable statutory provisions and the adherence to good Applicable for this financial year
corporate practices by Parag Milk Foods Limited (hereinafter f. The Securities and Exchange Board of India
called “the Company”). Secretarial Audit was conducted in a (Registrars to an Issue and Share Transfer Agents)
manner that provided us a reasonable basis for evaluating the Regulations, 1993 regarding the Companies Act and
corporate conducts/statutory compliances and expressing our dealing with client; Not Applicable for this financial
opinion thereon. year
Based on our verification of the Company’s books, papers, g. The Securities and Exchange Board of India (Delisting
minute books, forms and returns filed and other records of Equity Shares) Regulations, 2009; Not Applicable
maintained by the company and also the information for this financial year
provided by the Company, its officers, agents and authorised h. The Securities and Exchange Board of India (Buyback
representatives during the conduct of Secretarial Audit, We of Securities) Regulations, 1998; Not Applicable for
hereby report that in our opinion, the company has, during the this financial year
audit period covering the financial year ended on 31 March,
Amongst the various laws which are applicable to the
2018 complied with the statutory provisions listed hereunder
Company, following are the laws which are specifically
and also that the Company has proper Board-processes and
applicable to the Company:
compliance-mechanism in place to the extent, in the manner
and subject to the reporting made hereinafter: 1. Food Safety and Standard Act, 2006
We have examined the books, papers, minute books, forms and • Food Safety and Standards Rules, 2011
returns filed and other records maintained by the Company for • Food safety and Standards (Licensing and
the financial year ended on 31 March, 2018 according to the Registration of Food businesses) regulation, 2011
provisions of: • Food Safety and standards (Packaging and Labelling)
i. The Companies Act, 2013 (the Act) and the Rules made regulation, 2011
thereunder; • Food safety and standards (Food product standards
ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and Food Additives) regulation, 2011
and the Rules made thereunder; • Food safety and standards (Prohibition and
iii. The Depositories Act, 1996 and the Regulations and Bye- Restriction on sales) regulation, 2011
laws framed thereunder; • Food safety and standards (contaminants, toxins and
iv. Foreign Exchange Management Act, 1999 (“FEMA”) and residues) regulation, 2011
the Rules and Regulations made thereunder to the extent • Food Safety and Standards (Laboratory and sampling
of Foreign Direct Investment, Overseas Direct Investment analysis) regulation, 2011
and External Commercial Borrowings;
2. Petroleum and Explosive Act
v. The Securities and Exchange Board of India ( Listing
3. Legal Metrology Laws
Obligation and Disclosure Requirement) Regulations,
2015; 4. The States Shops and Establishment Act
The following Regulations and Guidelines prescribed 5. Inflammable Substances Act, 1952
under the Securities and Exchange Board of India Act, 1992 6. Factories Act, 1948 and Maharashtra Factories Rules, 1963
(‘SEBI Act’):- 7. Environment (Protection) Act, 1986
a. The Securities and Exchange Board of India 8. Water (Prevention & Control of Pollution) Act, 1974 and Air
(Substantial Acquisition of Shares and Takeovers) (Prevention & Control of Pollution) Act, 1981
Regulations, 2011;
9. The Standards of Weight & Measures Act, 1976
b. The Securities and Exchange Board of India
10. Water (Prevention and Control of Pollution) Cess Rules,
(Prohibition of Insider Trading) Regulations, 2015;
1977 & 2003
c. The Securities and Exchange Board of India (Issue of
11. The Hazardous Wastes (Management and Handling) Rules,
Capital and Disclosure Requirements) Regulations,
1989 (as amended, May, 2003) Rules, 2008
2009;- Not Applicable for this financial year
12. The Noise Pollution (Regulation and Control) Rules, 2000

70 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

13. The Public Liability Act, 1991, Rules 1991 28. Information Technology Act, 2000
14. The Energy Conservation Act, 2010 29. Sexual Harassment of Women at Workplace (Prevention,
15. Biological Diversity Act, 2002 Prohibition and Redressal) Act, 2013.
16. The Public Liability Act, 1991 and The Public Liability We have also examined compliance with the applicable clauses
Insurance (Amendment) Rules, 2007 of the following:
17. The Manufacture, Use, Import, Export, and Storage of i. Secretarial Standards issued by The Institute of Company
hazardous Microorganisms/ Genetically Engineered Secretaries of India (ICSI)
Organisms or Cells Rules, 1989 During the period under review, the Company has complied
18. The Environment (Protection) Act, 1986 & Rules and with the provisions the Act, Rules, Regulations, Guidelines,
notifications issued under the Act Standards, etc. mentioned above.
19. Hazardous Waste (Management and Handling) Rules, 1989 We further report that The Board of Directors of the Company is
duly constituted with proper balance of Executive Directors, Non-
20. Monopolies and Restrictive Trade Practices Act, 1969
Executive Directors and Independent Directors. The changes in
21. Consumer Protection Act, 1986 the composition of the Board of Directors that took place during
22. Tax Laws: the period under review were carried out in compliance with the
• Value Added Tax (VAT) Act provisions of the Act.
• The Finance Act, 1994 (Service Tax) We further report that during the period under review, Mr. Vimal
Agarwal appointed as Chief Financial Officer of the Company.
• Income Tax Act, 1961
We further report that during the period under review, Company
• Goods and Services Tax
has acquired Danone Foods and Beverages India Private Limited
23. Employee Laws: (a French, Dairy Based MNC) Manufacturing Facility in Sonipat.
• Payment of Gratuity Act, 1972 and Payment of Adequate notice is given to all directors to schedule the Board
Gratuity (Central) Rules, 1972; and Committee Meetings. Agenda and detailed notes on
• The Payment of Bonus Act, 1965 and Payment of agenda were sent adequately in advance of the meetings, and a
Bonus Rules, 1975; system exists for seeking and obtaining further information and
• The Payment of Wages Act, 1936; clarifications on the agenda items before the meeting and for
• The Minimum Wages Act 1948; meaningful participation at the meeting.

• The Employees’ Provident Fund and Miscellaneous Majority decision is carried through while the dissenting
Provisions Act, 1952,and Scheme framed thereunder; members’ views are captured and recorded as part of the
minutes where applicable. All the decisions have been taken
• The Employees’ State Insurance Act 1948;
unanimously and no dissent recorded in Board Meetings.
• The Maternity Benefit Act, 1961;
We further report that; during the audit period the Members at
• The Contract Labour (Abolition and Regulation) Act, the Annual General Meeting held on 09 August, 2017 approved
1970 & Rules; and authorised the Board of Directors to;
• Equal Remuneration Act, 1976; • Approval for Payment of Managerial Remuneration to Mr.
• Workmen’s Compensation Act, 1923; Devendra Shah,
• Employment Standing Orders Act, 1946; • Approval for Payment of Managerial Remuneration to Mr.
• Child Labour (Prohibition and Regulation) Act, 1986; Pritam Shah, and

• The Employment Exchanges (Compulsory • Ratification of Cost Auditors’ Remuneration.

Notification of Vacancies) Act, 1959; We further report that; during the audit period the Members by
• Labour Welfare Fund Act way of Postal Ballot held from 11 March, 2018 to 09 April, 2018
approved and authorised the Board of Directors to;
24. Indian Stamp Act, 1899 and the State Stamp Acts;
• Re-Classification of IRIS Business Solutions Private Limited
25. The Labour Welfare Fund, Act, 1953;
(IRIS) from Promoter Category to Public Category, and
26. Indian Contract Act, 1872
• Increase of Investment Limit by Non- Resident Individuals
27. Negotiable Instruments Act, 1881 to 24% of the Paid-Up Equity Capital of the Company.

For M/s N. L. Bhatia & Associates N L Bhatia

Practicing Company Secretaries Managing Partner
Place: Mumbai UIN: P1996MH055800 FCS No.1176
Date: 9 May, 2018 C.P. No. 422

Annual Report 2018 71

To,
The Members,
Parag Milk Foods Limited

Our report of even date is to be read along with this letter.

1. Maintenance of Secretarial record is the responsibility of the Management of the Company. Our responsibility is to express an
opinion on these Secretarial Records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the
correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts
are reflected in the Secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for
our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Where ever required, we have obtained the Management representation about the compliance of Laws, Rules and Regulations
and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable Laws, Rules, Regulations, standards is the responsibility of
the Management. Our examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor the efficacy or effectiveness with
which the Management has conducted the affairs of the Company.

For M/s N. L. Bhatia & Associates N L Bhatia

Practicing Company Secretaries Managing Partner
Place: Mumbai UIN: P1996MH055800 FCS No.1176
Date: 9 May, 2018 C.P. No. 422

72 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Report On Corporate Governance

A report on compliance with the Corporate Governance 2. BOARD OF DIRECTORS:
provisions as prescribed under the Securities and Our Company recognises and embraces the importance
Exchange Board of India (Listing Obligations and Disclosure of a diverse board in its success.
Requirements) Regulation, 2015 (“Listing Regulations”) is
At Parag, the Board is well diversified and consists of
given here in below:
highly renowned professionals drawn from diverse fields,
1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE possessing the requisite qualifications and experience
Corporate Governance is a set of standards which which enable them to contribute to the Company’s
aims to improve the Company’s image, efficiency and growth and enhance the quality of Board’s decision
effectiveness. It is the road map, which guides and directs making process.
the Board of Directors of the Company to govern the
The Board of Directors of the Company (the “Board”)
affairs of the Company in a manner most beneficial to all
has an optimum combination of Executive and Non-
the Shareholders, the Creditors, the Government and the
Executive Directors.
Society at large.
As on 31 March, 2018, the Company had 8 (Eight) Directors
Our Corporate Philosophy envisages complete
comprising of 6 (Six) Non-Executive Directors and 2 (Two)
transparency and adequate disclosures with an ultimate
Executive Directors. Out of the 2 (Two) Executive Directors
aim about maintaining a valuable relationship and
one is the Executive Chairman and the other is Managing
trust with all stakeholders. We consider stakeholders
Director and 6 (Six) Non-Executive Directors comprising
as partners in our success with an ultimate aim of value
of 5 (Five) Independent Directors including a Woman
creation for all players i.e. the shareholders, employees,
Director and 1 (One) Non-Independent Non-Executive
suppliers, customers, investors, communities or policy
Director.
makers. At Parag, philosophy on Corporate Governance
is guided by strong emphasis on transparency, Since the Company has an Executive Chairman, half
accountability, responsibility, fairness, integrity, of its Board was comprised of Independent Directors
consistent value systems and delegation across facets in terms of Regulation 17 (1) of the Securities and
of its operations leading to sharply focused and Exchange Board of India (Listing Obligations and
operationally efficient growth. Disclosure Requirements) Regulations, 2015 (the “Listing
Regulations”). All the Independent Directors satisfy the
Parag is committed to continuously scaling up its
criteria of independence as defined under the Companies
corporate governance standards. Corporate Governance
Act, 2013 and the Listing Regulations.
is not just a destination, but a journey to constantly
improve sustainable value creation. All the Directors of the Company, except Independent
Directors, are liable to retire by rotation. The Company
does not have any Nominee Director of Financial
Institutions/Banks.

Number of Other Directorships and Chairmanships/Memberships of Committees of each Director in Various Companies
Name of the Director Category Number of Number of Committee(s) position
Directors Identification Shares held in Directorship(s)* (including in the
Number the Company (Including in the Company)
Company) Member+ Chairman+
EXECUTIVE DIRECTOR (S)
Mr. Devendra Shah - 01127319 Promoter/Whole 15,006,400 1 1 -
Time Director
Mr. Pritam Shah - 01127247 Promoter/ 9,159,888 1 2 -
Managing
Director
NON-EXECUTIVE DIRECTOR (S )
Mr. B. M. Vyas 00043804 Non-Executive _ 2 - 1
Non Independent
Director
Mr. Sunil Goyal 00503570 Independent _ 5 4 1
Director
Mr. Ramesh Chandak 00026581 Independent _ 6 2 4
Director

Annual Report 2018 73

 Name of the Director Category Number of Number of Committee(s) position
Directors Identification Shares held in Directorship(s)* (including in the
Number the Company (Including in the Company)
Company) Member+ Chairman+
Mr. Narendra 00236658 Independent 1,000 6 6 -
Ambwani Director
Mr. Nitin Dhavalikar 07239870 Independent - 1 1 -
Director
Ms. Radhika Pereira 00016712 Independent - 5 4 2
Director

None of the Director is a Director in more than 10 (Ten) Public Limited Company (as specified in Section 165 of the Act) or acts as an
Independent Director in more than 7 (Seven) Listed Entities or 3 (Three) Listed Entities in case he/she serves as a Whole-Time Director
in any Listed Entity (as specified in Regulation 25 of the Listing Regulations).
Pursuant to Regulation 26(1) of the Listing Regulations, none of the Directors on Board shall be a member in more than 10 (Ten)
committees or act as chairperson of more than 5 (Five) committees across all listed entities in which he/she is a Director.
* Excludes Private Limited Companies, Foreign Companies and Companies registered under Section 8 of the Companies Act, 2013.
+ Committees considered are Audit Committee and Stakeholders’ Relationship Committee, including that of your Company. Committee Membership(s) and
Chairmanship(s) are counted separately.

Number of Board Meetings, Attendance of the Number of Shares and convertible instruments held
Directors at Meetings of the Board and at the Annual by Non-Executive Directors
General Meeting (“AGM”) Mr. B. M. Vyas – Non – Executive Director is neither holding
The Board met at least once in each quarter and the any equity shares in the Company nor any convertible
maximum gap between two Board Meetings did not exceed instruments during the year under review.
the limit prescribed in the Act and the Listing Regulations.
During the year under review, 5 (Five) Board Meetings were Role of Independent Directors
held on 29 May, 2017, 09 August, 2017, 06 November, 2017, The Independent Directors of your Company have
08 February, 2018 and 01 March, 2018. The 25th AGM of your been appointed as per the provisions of the Act, Listing
Company was held on 09 August, 2017. Regulations and Governance Guidelines for Board
Effectiveness adopted by the Company. Formal letter(s)
Directors’ attendance at Board Meetings and AGM held.
of appointment have been issued to Independent
Number of Board Attendance Directors. The terms and conditions of their appointment
Meetings Held at AGM held are disclosed on the Company’s website.
Name of the during the Year on 9 August,
Director Held Attended 2017 A separate Meeting of Independent Directors of your
Mr. Devendra Shah 5 5 Yes Company, without the attendance of Non-Independent
Mr. Pritam Shah 5 5 Yes Directors and members of management, was held on
24 March, 2018, as required under Schedule IV of the Act
Mr. B. M. Vyas 5 3 Yes
(Code for Independent Directors) and Regulation 25(3) of
Mr. Sunil Goyal 5 3 Yes
the Listing Regulations.
Mr. Ramesh Chandak 5 5 Yes
Mr. Narendra 5 5 Yes These Meetings are conducted in an informal and flexible
Ambwani manner to enable the Independent Directors to, inter
Mr. Nitin Dhavalikar 5 5 Yes alia, discuss matters pertaining to review of performance
Ms. Radhika Pereira 5 5 Yes of Non-Independent Directors and Board as a whole,
review the performance of the Chairman of the Company
Relationship between the Directors inter-se (taking into account the views of the Executive and Non-
The Board comprises of combination of Independent, Executive Directors), and assess the quality, quantity and
Non-Executive and Executive Directors. None of the timeliness of flow of information between the Company
Directors have any relationship with each other except Mr. Management and the Board that is necessary for the
Devendra Shah and Mr. Pritam Shah, who are Brothers. Board to effectively reasonably perform their duties.
All Independent Directors of the Company attended the
Meeting. Mr. Ramesh Chandak chaired the Meeting.

74 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Familiarisation Programme for Independent Directors a. Matters required to be included in the Director’s
Regulation 25(7) of the Listing Regulations mandates Responsibility Statement to be included in the
the Company to familiarise the Independent Directors Board’s report in terms of clause (c) of sub-section
with the Company, their roles, rights, responsibilities 3 of section 134 of the Companies Act, 2013;
in the Company, nature of the industry in which the b. Changes, if any, in accounting policies and practices
Company operates, business model of the Company, and reasons for the same;
etc. through various programmes. The Company through c. Major accounting entries involving estimates based
its Managing Director/ Whole time Director/ Senior on the exercise of judgment by management;
Management conduct programmes/ presentations
d. Significant adjustments made in the financial
periodically to familiarise the Independent Directors
statements arising out of audit findings;
with the strategy, business and operations of the
Company. Such programmes/presentations will provide e. Compliance with listing and other legal
an opportunity to the Independent Directors to interact requirements relating to financial statements;
with the senior leadership team of the Company and help f. Disclosure of any related party transactions;
them to understand the Company’s strategy, business g. Qualifications in the draft audit report;
model, operations, services and product offerings,
5. Reviewing, with the management, the quarterly financial
organisation structure, finances, sales and marketing,
statements before submission to the board for approval;
quality of products, facilities and risk management and
such other areas as may arise from time to time. The 6. Reviewing, with the management, the statement of uses
above programmes/presentations also includes the / application of funds raised through an issue (public
familiarisation on statutory compliances as a Board issue, rights issue, preferential issue, etc.), the statement
member including their roles, rights and responsibilities. of funds utilised for purposes other than those stated in
Pursuant to Regulation 46 the details required are the offer document / prospectus / notice and the report
available on the website of your Company at the web submitted by the monitoring agency monitoring the
link: www.paragmilkfoods.com utilisation of proceeds of a public or rights issue, and
making appropriate recommendations to the Board to
3. BOARD COMMITTEES take up steps in this matter;
The Committees of Board plays a crucial role in the
7. Review and monitor the auditor’s independence and
governance structure of the Company and have been
performance, and effectiveness of audit process;
constituted to deal with specific areas/activities which
concern the Company and need a closer review. The 8. Approval or any subsequent modification of transactions
Committees of the Board are set up under formal of the company with related parties;
approval of the Board to carry out clearly defined 9. Scrutiny of inter-corporate loans and investments;
roles which are considered to be performed by Board 10. Valuation of undertakings or assets of the company,
of Directors as a part of good governance. The Board wherever it is necessary;
supervises the execution of its responsibilities by the
11. Evaluation of internal financial controls and risk
Committees and is responsible for their action. The
management systems;
Chairman of the respective Committees informs the
Board about the summary of the discussions held in the 12. Reviewing, with the management, performance of
Committee Meetings. The Board Committee can invite statutory and internal auditors, adequacy of the internal
special invitees to join the Board if appropriate. control systems;
A. Audit Committee 13. Reviewing the adequacy of internal audit function, if any,
The brief terms of reference of the Committee as on 31 including the structure of the internal audit department,
March, 2018 are broadly as under: staffing and seniority of the official heading the
1. Oversight of the company’s financial reporting process department, reporting structure coverage and frequency
and the disclosure of its financial information to ensure of internal audit;
that the financial statement is correct, sufficient and 14. Discussion with internal auditors of any significant
credible; findings and follow up there on;
2. Recommendation for appointment, remuneration and 15. Reviewing the findings of any internal investigations
terms of appointment of auditors of the company; by the internal auditors into matters where there is
3. Approval of payment to statutory auditors for any other suspected fraud or irregularity or a failure of internal
services rendered by the statutory auditors; control systems of a material nature and reporting the
matter to the board;
4. Reviewing, with the management, the annual financial
statements and auditor’s report thereon before 16. Discussion with statutory auditors before the audit
submission to the board for approval, with particular commences, about the nature and scope of audit as well
reference to: as post-audit discussion to ascertain any area of concern;

Annual Report 2018 75

17. To look into the reasons for substantial defaults in Name of the Category No. of Meetings
the payment to the depositors, debenture holders, Member during the year
shareholders (in case of non-payment of declared Held Attended
dividends) and creditors; Mr. Ramesh Independent 4 4
18. To review the functioning of the Whistle Blower Chandak - Chairman Director
mechanism; (Re-designated as
Chairman and w.e.f.
19. Approval of appointment of CFO (i.e., the whole-time
6 November, 2017)
Finance Director or any other person heading the finance
Mr. Pritam Shah Managing 4 4
function or discharging that function) after assessing the Director
qualifications, experience and background, etc. of the
Mr. Sunil Goyal Independent 4 2
candidate; (Ceased as Director
20. Carrying out any other function as is mentioned in the Chairman and Re
terms of reference of the Audit Committee. Explanation designated as a
(i): The term “related party transactions” shall have the Member w.e.f. 6
same meaning as provided in Clause 49(VII) of the Listing November, 2017)
Agreement. Mr. Narendra Independent 4 4
Ambwani Director
Review of Information by Audit Committee Mr. Nitin Dhavalikar Independent 4 4
The Audit Committee shall mandatorily review the Director
following information: The necessary quorum was present at all the Meetings.
1. Management discussion and analysis of financial Mr. Sunil Goyal, the past Chairman was present at the
condition and results of operations; 25th Annual General Meeting held on 9 August, 2017 to
answer the shareholder queries.
2. Statement of significant related party transactions
(as defined by the Audit Committee), submitted by B. Nomination And Remuneration Committee
management; The terms of reference of NRC are in line with the
regulatory requirements mandated in the Act and Part D
3. Management letters / letters of internal control of Schedule II of the Listing Regulations.
weaknesses issued by the statutory auditors;
The brief terms of reference of the Nomination and
Composition, Meetings held and Attendance during Remuneration Committee (NRC) as on 31 March, 2018 are
the Year broadly as under:
The Composition of the Audit Committee of the Board 1. To formulate the criteria for determining
is in conformity with Section 177 of the Companies qualifications, positive attributes and independence
Act, 2013 and Regulation 18 of the Listing Regulations. of a Director, and recommend to the Board a policy,
Members of the Audit Committee have requisite expertise relating to the remuneration for the Directors, Key
in the field of Finance and Management and have held or Managerial Personnel and other employees.
hold senior positions in reputed Organisations. The Audit
Committee Meetings were also attended by the Chief 2. To formulate the criteria for evaluation of
Financial Officer, Executives from Accounts and Finance Independent Directors and the Board.
department, Company Secretary, Statutory Auditors and 3. To devise a policy on Board diversity.
Internal Auditors. The functional heads are also invited as
and when required. Mrs. Rachana Sanganeria, Company 4. To identify persons who are qualified to become
Secretary acts as the Secretary to the Committee. Directors and who may be appointed in senior
management in accordance with the criteria
The Audit Committee met at least once in each quarter laid down and to recommend to the Board their
and the maximum gap between two Audit Committee appointment and/or removal.
Meetings did not exceed the limit prescribed in Regulation
18 of the Listing Regulations. 4 (Four) Meetings of the 5. To carry out evaluation of every Director’s
Audit Committee were held during the year, viz. 29 May, performance.
2017, 9 August, 2017, 6 November, 2017 and 8 February, 6. To consider extension or continuation of term
2018. The composition of the Audit Committee as on 31 of appointment of independent directors on the
March, 2018 and the details of attendance of Members at basis of the report of performance evaluation of
these Meetings are given below: independent directors.

76 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

7. To recommend/review remuneration of the Mr. B. M. Vyas Non- 2 1

Managing Director(s) and Whole-time Director(s) Executive
based on their performance and defined assessment Director
criteria. Mr. Ramesh Independent - -
Chandak Director
8. To administer, monitor and formulate detailed
(Appointed w.e.f. 6
terms and conditions of the Employees’ Stock November, 2017)
Option Scheme.
Performance Evaluation Criteria for Independent
9. To reviews and recommends to the Board,
Directors
remuneration including the Bonus/Performance
Linked Incentive of Managing Director, Whole-time Pursuant to the provisions of the Companies Act, 2013
Directors, Key Managerial and Senior Management and regulation 17 and 19 read with part D of Schedule II
Personnel based on the performance parameters of the Listing Regulations, the Board has carried out the
for the executives and the Company, subject to the annual performance evaluation of its own performance,
limits approved by the Members and as permitted the Directors individually as well as the evaluation of the
by law. The terms of reference of the Nomination working of its Committees.
and Remuneration Committee include the matters Feedback is sought by structured questionnaire covering
specified under Part D of Schedule II to Regulation various aspects of the Board’s functioning such as
19 (4) of the Listing Regulations as well as under adequacy of the composition of the Board and its
Section 178 of the Companies Act, 2013. Committees, Board culture, execution and performance
10. In addition to the above, the Committee’s role of specific duties, obligations and governance and
includes identifying persons who are qualified performance evaluation is carried out based on the
to become Directors and who may be appointed responses received from the Directors. During the
in Senior Management in accordance with the year, the questionnaires were further strengthened in
criteria laid down, recommending to the Board alignment with the Guidance Note on Board Evaluation
their appointment and removal and carrying out issued by Securities and Exchange Board of India, vide its
evaluation of every Director’s performance.] Circular dated 5 January, 2017.
The Company lay down the evaluation criteria and
Composition, Meetings held and Attendance during
procedure for performance evaluation of Independent
the Year
Directors. Criteria for evaluation of Independent Directors
The Nomination and Remuneration Committee of the Board includes aspects such as attendance and contribution to
was re-constituted on 06 November, 2017. the Board / Committee Meetings.
Pursuant to Section 178(7) of the Act and Secretarial C. Remuneration of Directors
Standards, the Chairman of the Committee, in his absence, Details of pecuniary relationship or transactions of the
any other Member of the Committee authorised by him in Non-Executive Directors vis-a-vis the Company
this behalf shall attend the General Meeting of the Company.
The Chairman of the Committee, Mr. Nitin Dhavalikar was Nil
present at the 25th AGM of the Company held on 09 August, Criteria of making payments to Non- Executive
2017 to answer the shareholder queries. Directors:
2 (Two) Meetings of the Nomination and Remuneration The Company has adopted a Remuneration Policy
Committee were held during the Year, viz. 29 May, 2017 for Directors, Key Managerial Personnel and other
and 6 November, 2017. Mrs. Rachana Sanganeria, Employees, regulated by the Nomination and
Company Secretary acts as the Secretary to the Remuneration Committee of the Board.
Committee. The composition of the NRC as on 31 March,
2018 and the details of attendance of Members at these Apart from Mr. B. M. Vyas, who is paid consultancy fees,
Meetings are given below: Non-Executive Directors are entitled to sitting fees for
attending Meeting of the Board and its Committees.
Name of the Category No. of Meetings
The remuneration to the Managing Director and Whole-
Member during the year
Time Director is paid on the scale determined by the
Held Attended
Nomination and Remuneration Committee/Board of
Mr. Nitin Dhavalikar Independent 2 2
Chairman Director Directors within limits approved by the shareholders at
the General Meeting.
Mr. Devendra Shah Executive 2 2
Director
Ms. Radhika Pereira Independent 2 2
Director

Annual Report 2018 77

 Non-Executive Directors • Issue of duplicate certificates and new certificates
During the year, the Company paid sitting fees on split/ consolidation/renewal;
` 1,00,000/- per meeting for attending Board and • Non-receipt of declared dividends, balance
Committee Meetings to the Independent Directors. There sheets of the Company or any other documents
is no sitting fees payable for Stakeholders Relationship or information to be sent by the Company to its
Committee. shareholders; and
• Carrying out any other function as prescribed
The Company also reimburses out-of-pocket expenses
under Securities and Exchange Board of India
incurred by the Directors for attending the Meetings and
(Listing Obligations & Disclosure Requirements)
for business of the Company.
Regulations, 2015.
None of the Directors have been issued any stock options • To further delegate all or any of the power to any
by the Company during the Year or any time in the past. other employee(s), officer(s), representative(s),
Further, none of the Directors of the Company are in consultant(s), professional(s), or agent(s).
receipt of any Commission from the Company. • Oversee the performance of the Company’s
Registrar and Share Transfer Agent.
Performance Linked Incentive Criteria
• Recommend methods to upgrade the standard of
The Company has internal norms for assessing the
services to the investors.
performance of its management including senior
• To deal with the Company’s unclaimed / undelivered
executives.
shares, as prescribed in the relevant Regulation of
Remuneration paid to Directors the Listing Regulations.
The Meetings of the Committee are generally held as
The details of remuneration paid to Executive Directors
and when deemed necessary, to review and ensure that
and Non-Executive Directors during the financial year
all investor requests / grievances are redressed within
ended 31 March, 2018 are given below:
stipulated time period.
` in million
Name of Director Remu- Sitting Total The Company’s Stakeholders Relationship Committee
neration Fees functions under the Chairmanship of Mr. B. M. Vyas –
Mr.Devendra Shah 24.00 - 24.00 Non – Executive Director, Devendra Shah – Whole Time
Whole Time Director Director and Mr. Pritam Shah – Managing Director.
Mr. Pritam Shah 24.00 - 24.00
Managing Director The composition of Stakeholders Relationship Committee
Mr.B.M.Vyas 8.40 - 8.40 of the Board is in conformity with Section 178 of the Act
Non-Executive Director and Regulation 20 of the Listing Regulations. During the
year, the Committee met once on 09 August, 2017 during
` in million the year under review. The composition of Stakeholders
Name of Director Remu- Sitting Total Relationship Committee and the details of attendance at
neration Fees
the Meetings was as under:
NON-EXECUTIVE INDEPENDENT DIRECTORS
Mr. Sunil Goyal - - - Name of the Category No. of Meetings
Mr.Ramesh Chandak - 0.9 0.9 Member during the year
Mr.Narendra Ambwani - 1.0 1.0 Held Attended
Mr. Nitin Dhavalikar - 1.1 1.1 Mr. B. M. Vyas - Non-Executive 1 1
Ms.Radhika Pereira - 0.8 0.8 Chairman Director Non
Independent
D. Stakeholders Relationship Committee
Director
Terms of reference: Mr. Devendra Shah Executive 1 1
The scope and function of the Stakeholders’ Relationship - Member Director
Committee is in accordance with Section 178 of the Mr. Pritam Shah - Executive 1 1
Companies Act, 2013 and Regulation 20 read with Part D Member Director
of Schedule II to the SEBI (LODR) Regulations, 2015. Mrs. Rachana Sanganeria, Company Secretary of the
This Committee is responsible for the redressal of Company is the Compliance Officer. The number of
shareholder grievances. The terms of reference of the shareholders’ complaints received during the FY18 is 13
Stakeholders’ Relationship Committee of our Company (previous year: 63) and all have been satisfactorily resolved
include the following: within the year. As on date, there are no pending complaints/
share transfers pertaining to the year under review.
• Redressal of shareholders’/investors’ grievances;
• Allotment of shares, approval of transfer or
transmission of shares, debentures or any other
securities;
78 Parag Milk Foods Limited
 Corporate overview Statutory Reports Financial statements

E. Corporate Social Responsibility Committee of the Company a Finance Committee of the Board of
The core theme of the Company’s CSR policy is giving Directors of the Company was constituted on 10 August,
back to the society from which it draws its resources 2016 for taking decisions on behalf of the Board, during
by extending helping hand to the needy and under the intervening period between two Board Meetings,
privileged. on the routine matters and also the matters on which
decisions are required to be taken urgently. The Finance
The broad terms of reference of the CSR Committee are
Committee looks into the financial affairs of the Company
as follows:
and would facilitate an enable quick/timely decisions to
• To formulate, monitor and recommend to the be taken and implemented by the Company and would
Board, a CSR Policy indicating the activities to not hinder the smooth functioning of the Company
be undertaken by the Company as specified in for want of Board approval in the ordinary course of
Schedule VII of the Act. business.
• Recommending the amount of expenditure to be During the year the Committee met 3(Three) times on 25
incurred on CSR activities of the Company September, 2017, 23 January, 2018 and 24 March, 2018.
• Monitoring the CSR policy of the Company from
The details of composition of the Finance Committee and
time to time
attendance of the Members at the Finance Committee
• Review the Company’s performance in the area of Meetings are as under:
CSR.
• Evaluate social impact of the Company’s CSR Name of Category No. of No. of
Members Meetings Meeting(s)
activities.
held Attended
• Review the Company’s disclosure of CSR matters. Mr. Nitin Independent 3 3
The Composition of the CSR Committee is in alignment Dhavalikar – Director
with the provisions of Section 135 of the Companies Act, Chairman
2013. Based on the recommendation of the Corporate Mr. Pritam Shah Executive 3 3
Social Responsibility Committee, the Board of Directors - Member Director
have formulated and adopted a Policy on Corporate Mr. Devendra Executive 3 3
Social Responsibility. The same is displayed under the Shah - Member Director
Investor Relations section on the Company’s website viz.
Independent Directors’ Meeting
www.paragmilkfoods.com. Report on Corporate Social
During the year, the Independent Directors met on 24
Responsibility activities carried out by the Company
March, 2018, inter alia, to review the performance of
during the year under review and details thereof are
Non - Independent Director and Board of whole, review
given in the Board of Directors’ Report.
the performance of the Chairman of the Company taking
During the year the Committee met once on 08 February, into account the views of Executive and Non-Executive
2018. The composition and the details of attendance at Directors, to assess the quality, quantity and timeliness of
the meeting are as under. flow of information between the Company management
and the Board that is necessary for the Board to effectively
Name of the Category No. of Meetings
Member during the year and reasonably perform its duties.
Held Attended All the Independent Directors were present at the
Mr. B. M. Vyas - Non-Executive 1 1 Meeting.
Chairman Director Non
Independent Subsidiary Company
Mr. Devendra Shah Executive 1 1 The Company does not have any material non-listed
- Member Director Indian Subsidiary as defined under Regulation 24 of
Ms. Radhika Pereira Independent 1 1 Listing Regulations.
- Member Director
The Company’s Audit Committee reviews the Standalone
Mr. Narendra Independent 1 1
and Consolidated Financial Statements of the Company
Ambwani – Director
as well as the Financial Statements of the Subsidiaries,
Member including the investments mode by the Subsidiaries, if any.
F. Finance Committee
The Company has formulated a policy for determining
Section 179 (3) of Companies Act, 2013 allows delegation
Material Subsidiaries and the policy is disclosed on the
of certain powers by the board viz. borrowings funds,
website of the Company at www.paragmilkfoods.com.
making investments, granting loans, etc. In the interest

Annual Report 2018 79

7. GENERAL BODY MEETINGS
a) Details of General Meetings:
Details of the Annual General Meetings (AGM) held during the preceding 3 years and Special Resolutions Passed there at are
given below:

Financial Year Date and Time Venue Details of Special

Resolution(s) Passed
25th AGM 2016-2017 9 August, 2017 at 12:30 P.M. Mahratta Chamber of 1. Approval for Payment of
Commerce Industries and Managerial Remuneration
Agriculture, MCCIA Trade to Mr. Devendra Shah- (DIN
Tower, A Wing, 5th Floor, 01127319) - Chairman.
Navalmal Firodia Seminar
2. Approval for Payment of
Hall, Senapati Bapat Road,
Managerial Remuneration
Pune 411016
to Mr. Pritam Shah
(DIN 01127247) Managing
Director.-
24th AGM-2015-2016 29 September, 2016 at 11:30 A.M. Mahratta Chamber of None
Commerce Industries and
Agriculture, MCCIA Trade
Tower, A Wing, 5th Floor,
Navalmal Firodia Seminar
Hall, Senapati Bapat Road,
Pune 411016
23rd AGM-2014-2015 26 June, 2015 at 11.30 A.M. Awasari Phata, Manchar, None
District Pune
(Manchar plant office)
b) During the year under review, the Company sought approval of Members by way of Special Resolutions through Postal Ballot
in compliance with Sections 108, 110 and other applicable provisions of the Act, read with Rules 20 and 22 of the Companies
(Management and Administration) Rules, 2014 and Regulation 44 of the Listing Regulations, the Company provided remote
electronic voting (“e-voting”) facility to all its Members, to enable them to cast their votes electronically for the following Special
Resolutions.

1. Re-classification of IRIS Business Solutions Private Limited from Promoter Category to Public Category; and

2. Increase of Investment Limit by Non-Resident Individuals to 24% of the Paid –up Equity Capital of the Company.

Details of the aforementioned Special Resolution proposed and passed through Postal Ballot is given below.

Name of Scrutiniser Ms. Dipti A. Mehta, Partner, M/s. Mehta & Mehta, Practicing Company Secretaries.
Mode of voting Postal Ballot & voting by electronic means
Date of Commencement of voting Sunday, 11 March, 2018 (9.00 a.m.)

Date of ending of voting Monday 9, April, 2018 (5.00 p.m.)

Brief Description of Resolution Voted in favour of the resolution Voted against the resolution
Number of Number of % of total Number of Number of % of total
Members Votes cast number of Members Votes cast number of
voted by them valid votes voted by them valid votes
(Shares) cast (Shares) cast
Re-classification of IRIS Business 100 38,684,113 100% 01 05 0.00%
Solutions Private Limited from
Promoter Category to Public Category
Increase of Investment Limit by Non- 100 50,158,472 99.9993% 07 341 0.0007%
Resident Individuals to 24% of the Paid
–up Equity Capital of the Company.

The above mentioned resolutions were passed with overwhelming majority on Monday 9, April, 2018
The results are also displayed on the website of the Company viz., www.paragmilkfoods.com besides being communicated to
the stock exchanges.

80 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

8. MEANS OF COMMUNICATION (b) Financial Year

(i) Quarterly/Annual Results The Financial Year covers the period from 01 April,
2017 to 31 March, 2018.
The Un-audited quarterly and half yearly financial
results are announced within forty –five days from (c) Record Date : 12 September, 2018
the end of the quarter/half year and the audited Book Closure period: 13 September, 2018 to 19
annual results within sixty days from the end of September, 2018. (both days inclusive)
the last quarter as stipulated under the Listing
(d) Dividend payment date:
Regulations with the Stock Exchanges and the
outcome of the Board Meeting(s) are sent to the Payment of Dividend 2017-2018 of ` 0.75/- per equity
Stock Exchanges within 30 minutes of conclusion shares recommended by the Board of Directors at its
of the Board Meeting(s) wherein the same are Meeting held on 09 May, 2018. On or before 18 October,
considered/approved. 2018 (subject to the shareholders’ approval).

(ii) Publication of Quarterly/ Annual Results Particulars of Dividend declared in the previous
year
The quarterly, half yearly and annual results are
published in Financial Express (English) and Lok Dividend at ` 0.50 per equity share of face value of `
Satta (Marathi) in Pune region. 10/-was declared out of the profits of the Company
for the financial year ended 31 March, 2017 on
(iii) Website where displayed: 841,14,582 of ` 10/- each fully paid up equity shares.
www.paragmilkfoods.com
Particulars of Dividend remaining unclaimed:
(iv) Whether website also displays official news releases: In terms of Section 124(5) of the Companies Act,
As and when applicable 2013, amounts transferred to the Unpaid Dividend
(v) Whether presentations made to institutional Account of the Company, which remains unpaid or
investors or the analysis: No unclaimed for a period of seven years from the date
of such transfer, shall be transferred by the Company
9. GENERAL SHAREHOLDER INFORMATION
to the Investor Education and Protection Fund (the
(a) AGM: Date, Time and Venue Fund) established by the Central Government.
Wednesday 19 September, 2018 at 11.30 A.M. at
Mahratta Chamber of Commerce Industries and Brief particulars of dividend amount remaining
Agriculture, MCCIA Trade Tower, A Wing, 5th Floor, unclaimed are given below:
Navalmal Firodia Seminar Hall, Senapati Bapat Details of the unclaimed dividend pertaining to the
Road, Pune 411016. year 2016-17 as on the date of last AGM (09 August,
2017) has been uploaded on Company’s website www.
paragmilkfoods.com under the Investor section.

Annual Report 2018 81

 Year to which Declared at the AGM Date of transfer to Balance in the Unpaid Proposed Date of
Dividend pertains Unpaid Dividend dividend Account as transfer to IEPF
Account on 31 March, 2018 (`)
2016-2017 (final) 09 August, 2017 11 September, 2017 12623.00 10 September, 2024

Members can claim the unpaid dividend from the Company before it is transferred to the Investor Education and Protection
Fund. As per The Investor Education Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF),
the transferred dividend can be claimed by the concerned member by making an application in Form IEPF-5 along with
necessary documents from IEPF authority.

(e) Listing on the Stock Exchanges

Name and address of the Stock Exchanges Stock Code /Scrip ISIN Number
Code
BSE Limited P. J. Towers, Dalal Street, Mumbai – 400 001 539889
National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla PARAGMILK INE883N01014
Complex, Bandra (East), Mumbai – 400 051

(f) Market Price Data:

The details of monthly high/low market price of the Equity shares of the Company at BSE Ltd (BSE)and at the National
Stock Exchange of India Ltd (NSE) for the year under review is provided here under:

BSE NSE
MONTHS High Low Close High Low Close
April 2017 255.00 228.80 243.7 254.90 228.30 243.45
May 2017 258.00 232.10 237.7 257.70 231.30 237.40
June 2017 241.30 205.85 215.7 241.80 206.00 216.10
July 2017 265.00 215.20 247.2 265.00 215.00 247.10
August 2017 263.00 220.65 254.7 262.10 219.95 254.60
September 2017 261.00 226.20 246.1 260.85 226.05 245.90
October 2017 290.00 239.80 270.8 281.00 239.90 270.85
November 2017 290.00 231.80 241.4 289.65 230.85 240.65
December 2017 312.75 240.60 297.2 312.95 240.40 298.15
January 2018 318.90 268.00 279.7 318.40 267.05 279.45
February 2018 311.00 255.00 280.5 305.95 255.00 279.50
March 2018 286.80 245.60 249.8 286.90 244.65 249.60

Source: BSE and NSE Websites

82 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

(g) Performance of the Company’s Equity Share Price in comparison to BSE and NSE Indices
The performance of the Company’s equity share price vis-à-vis the broad based BSE and NSE indices during the year are as
under:

Parag Milk Foods Ltd`s Share Price vs BSE Sensex

350 40,000
300 35,000
30,000
250
25,000
200
20,000
150 15,000
100 10,000
50 5,000
0 0
Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18

Share Price BSE Sensex

Parag Milk Foods Ltd`s Share Price vs Nifty

350 11,500
300 11,000
250 10,500
10,000
200
9,500
150 9,000
100 8,500
50 8,000
0 0
Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18

Share Price NSE Nifty

Annual Report 2018 83

 (h) Registrar and Share Transfer Agents total number of transfers/transmissions received
The Company has appointed Karvy Computershare and total number of shares transferred/transmitted
Private Limited (“Karvy”) as its Registrar & Share during the year 01 April, 2017 to 31 March, 2018
Transfer Agents ( R&TA) to handle the entire share were.:
registry work, both physical and electronical shares Transfer/Transmissions: NIL
.Accordingly, all documents, transfer deeds, demat
requests and other communications/queries in (j) Dematerialisation of Shares
relation thereto should be addressed to the R&TA at The Company’s shares are available for
the following office. Shareholders holding shares in dematerialisation with both the Depositories i.e.
electronic mode should address all correspondence National Securities Depository Limited (NSDL) and
to their respective depository participants. Central Depository Services (India) Limited (CDSL).
Karvy Computer Share Private Limited Paid up capital of the Company were held in
Unit: Parag Milk Foods Limited dematerialised form as on 31 March, 2018 were as
Karvy Selenium, Tower B, Plot number 31 & 32, given below:
Financial District, Gachibowli, Hyderabad – 500032 Sr. No. of
Email ID: [email protected] Description Shares % of Equity
No. Holders
Phone :+91 40 67161562 /67161583 1. Physical 2 53 0.00%
Website: www.karvycomputershare.com 2. NSDL 17,790 6,61,29,390 78.62%
(i) Share Transfer System 3. CDSL 13,309 1,79,85,139 21.38%
Share transfers in physical form are registered within Total: 8,41,14,582 100.00
a period of 7 to 15 days from the date of receipt in
case documents are complete in all respects. The

(k) (i) Distribution of Shareholding

The broad shareholding distribution of the Company as on 31 March, 2018 with respect to categories of investors was as follows:

Total No. of % of Total No.

Category of Shareholder(s) Shares of Shares
(A) SHAREHOLDING OF PROMOTER AND PROMOTER GROUP
(a) Individuals 3,86,61,435 45.96
(b) Bodies Corporate 23,14,200 2.75
Total Shareholding of Promoter and Promoter Group (A) 4,09,75,635 48.71
(B) PUBLIC SHAREHOLDING
(1) Institutions
(a) Mutual Funds 36,53,621 4.34
(b) Banks/FI 51,583 0.06
(c) Venture Capital Funds 68,97,104 8.20
(d) Foreign Portfolio Investors 1,26,60,846 15.05
(e) Alternative Investment Funds 6,47,584 0.77
(f) Other Foreign Investors - -
Sub-Total (B)(1) 2,39,10,738 28.43
(2) Non-Institutions
(a) Bodies Corporate 34,28,678 4.08
(b) Individuals
(i) Individual shareholders holding nominal share capital upto 79,22,135 9.42
` 2 lakhs
(ii) Individual shareholders holding nominal share capital in excess 47,83,943 5.69
of ` 2 lakhs
(c) NBFCs registered with RBI 14,20,470 1.69
(d) Others 14,45,983 1.72
Sub-Total (B)(2) 1,90,01,209 22.59
Total Public Shareholding (B)=(B)(1)+(B)(2) 4,29,11,947 51.02
(C) NON PROMOTER - NON PUBLIC SHAREHOLDER
(a) Custodian/DR Holder - -
(b) Employee Benefit Trust (under SEBI(Share based Employee 2,27,000 0.27
Benefit) Regulations 2014)
Total (A)+(B)+(C) 8,41,14,582 100

84 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

(ii) Distribution of shareholding of shares of the Company as on 31 March, 2018 is as follows:

The broad shareholding distribution of the Company as on 31 March, 2018 with respect to size of holdings was
as follows:

Sr. Category Cases % of Cases Amount % of Amount

No.
1 1-5000 27,544 88.56 27,287,770.00 3.24
2 5001- 10000 1,551 4.99 13,049,860.00 1.55
3 10001- 20000 969 3.12 14,832,510.00 1.76
4 20001- 30000 381 1.23 9,692,780.00 1.15
5 30001- 40000 154 0.50 5,526,800.00 0.66
6 40001- 50000 128 0.41 5,965,850.00 0.71
7 50001- 100000 188 0.60 13,618,990.00 1.62
8 100001& Above 182 0.59 751,171,260.00 89.30
Total 31,097 100.00 841,145,820.00 100

The quarterly shareholding patterns filed with the stock exchanges are also available on the website of the
Company and on the website of the stock exchanges where equity shares of the Company are listed i.e., BSE
and NSE.
(l) Audit of Reconciliation of Share Capital (o) Plant Location
As stipulated by SEBI, a qualified Practicing The Company has 3 (Three) Plants as follows:
Company Secretary carries out the Audit of
Sr. Plant Locations
Reconciliation of Share Capital to reconcile the
No.
total admitted capital with National Securities 1. Plant 1 Manchar Plant: At Awasari Phata,
Depository Limited (NSDL) and Central Depository Post Manchar, Tal. Ambegoan Dist.
Services (India) Limited (CDSL) and the total issued Pune Maharashtra
and paid up capital. This audit is carried out every 2. Plant 2 Palamaner Plant; 149/1, Samudra
quarter and the report there on is submitted to the Palli Village, Pengaragunta (P.O.),
Palamaner, Chittoor, Andhra
Stock Exchanges, and is placed before the Board.
Pradesh – 517 408
The audit, inter alia, confirms that the total issued
3. Plant 3 Sonipat Plant: Plot No. 2266-2268,
and paid up capital of the Company is in agreement Food Park Phase-2, HSIDC Industrial
with the aggregate of the total number of shares in Estate- Rai, Sonipat, Haryana-
dematerialised form held with NSDL and CDSL and 131029
total number of shares in physical form. 10. OTHER DISCLOSURES
(m) Outstanding Global Depository Receipts A. Disclosure on Materially Significant Related
(“GDRs”) or American Depository Receipts Party Transactions
(“ADRs”) etc. All transactions entered into with Related Parties as
The Company has not issued any GDRs/ADRs/ defined under the Act and Regulation 23 of the Listing
Warrants. There are no outstanding Foreign Regulations during the Year were in the ordinary course
Currency Convertible Bonds and Employee Stock of business and on arm’s length basis. All Related
Options. Party Transactions (“RPTs”) were approved by the Audit
Committee. The Company did not enter into any materially
(n) Commodity price risk or foreign exchange risk significant related party transactions, which had potential
and hedging activities
conflict with the interest of the Company at large. The
Company has a natural hedging from the Export register of contracts containing the transactions in which
proceeds it receives. Directors are interested is placed before the Board regularly
for its approval. Transactions with related parties are

Annual Report 2018 85

 disclosed under Note No. 43 of the Notes to Accounts to • The Internal Auditors report directly to the Audit
the financial statements in the Annual Report. Further the Committee
details of the policy are also posted on the website of the
F. Code of Conduct
Company viz. www.paragmilkfoods.com.
The Company has laid down a Code of Conduct
B. Accounting Treatment: for Board of Directors and Senior Management
Pursuant to the notification issued by Ministry of Personnel of the Company. The Code has been
Corporate Affairs, the Company has adopted the posted on the Website of the Company at:
Indian Accounting Standards (‘IND AS’) with effect www.paragmilkfoods.com
from 01 April, 2017
The Managing Director has confirmed and declared
C. Details of Non-Compliance, Penalties, Strictures that all the members of the Board and Senior
Imposed by The Stock Exchange(S) or SEBI or management have affirmed compliance with the
any Statutory Authority on any Matter Related to Code of Conduct.
Capital Markets during since Listing.
G. CEO/CFO Certification
The Company has complied with all requirements
The Managing Director and the Chief Financial
of the SEBI (LODR) Regulations, 2015, with the Stock
Officer of the Company give annual certification
Exchanges as well as the regulations and guidelines
on financial reporting and internal controls to the
of SEBI and other regulatory authorities. No
Board in terms of Regulation 17(8) of the Listing
penalties were imposed or strictures passed against
Regulations. The Managing Director and the Chief
the Company by SEBI, Stock Exchanges or any other
Financial Officer also give quarterly certification on
statutory authorities on any matter relating to
financial results while placing the financial results
capital markets since listing of its shares.
before the Board in terms of Regulation 33(2) of the
D. Vigil Mechanism (Whistle Blower Policy) Listing Regulations. The annual certificate given by
the Chairman and Managing Director and the Chief
The Company has in place Vigil Mechanism/
Financial Officer is published in this Report.
Whistle Blower Policy and the details of the same
are provided in the Board’s Report. Further it is H. Compliance Certificate by Practicing Company
affirmed that no personnel has been denied access Secretary
to the Audit Committee. Certificate from M/s. N. L. Bhatia & Associates, a
E. Details of Compliance with Mandatory requirements firm of Company Secretaries in Practice, confirming
and adoption of Non-mandatory/discretionary compliance with conditions of Corporate
requirements: Governance, as stipulated under Regulation 34
read with Schedule V of the Listing Regulations, is
The Company has complied with all the mandatory
attached to this Report.
requirements of the Listing regulations. The status
of the non-mandatory requirements pursuant to I. Website Disclosures
regulation 27(1) read with Part E of Schedule II of
In compliance with Regulation 46 of the Listing
the Listing Regulations are as under:
Regulations, a separate dedicated section under
• Shareholder Rights; The complete Annual report is ‘Investors’ on the Company’s website gives
sent to each and every shareholder of the Company. information on various announcements made by
the Company, status of unclaimed dividend, stock
• Audit Qualifications; There is no qualification in the
quotes, Annual Report, Quarterly/Half yearly/
Independent Auditors Report on the Standalone &
Nine-months and Annual Financial Results along
Consolidated financial statement for FY 2017-18.
with the applicable policies of the Company. The
• The Company has separate post of Chairman and Company’s official news releases and presentations
Managing Director. made to the institutional investors and analysts
are also available on the Company’s website

86 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

www.paragmilkfoods.com. Companies (Accounts) Rules, 2014, service of documents

may be made to members through electronic mode.
J. Disclosure on Compliance with Corporate Governance
Requirement The Company has been sending Annual Reports from
FY 2015-2016 in by email to all those members whose
The Company has complied with the requirements
email addresses are registered in the member records as
specified in Regulations 17 to 27 and Regulation 46 of
maintained by the Registry and transfer Agent. Physical
Listing Regulations as applicable.
copies are also provided to such members on specific
The certificate as required pursuant to Regulation 17(8) request.
of the Listing Regulations is periodically furnished by the
We are therefore appeal to the members to join the
Managing Director and the Chief Financial Officer of the
“Green Initiative” and request the members to register
Company to the Board of Directors of the Company with
their name for receiving the said documents in electronic
respect to accuracy of financial statements and adequacy
mode by sending an email giving their Folio Number and /
of internal controls.
or DP ID/Client ID to the Registrars, Karvy Computershare
11. GREEN INITIATIVE Pvt. Ltd at [email protected]
By virtue of the Ministry of Corporate Affairs (“MCA”)
Circular Nos 17/2011 and 18/2011 dated 21 April, 2011
and 29 April, 2011 respectively, read with Rule 11 of the

For Parag Milk Foods Limtied

Sd/-
Devendra Shah
Place: Mumbai Executive Chairman
Date: 9 May, 2018 (DIN : 01127319)

Declaration By Managing Director On Compliance With The

Company’s Code Of Conduct
To,
The Members of
Parag Milk Foods Limited
The Company has formulated a Code of Conduct for Board of Directors and Senior Management Personnel of the Company. The Code
has been posted on the Website of the Company . It is hereby affirmed that all Directors and Senior Managers have complied with
the Code of Conduct framed by the Company and a confirmation to this effect for the year 2017-18 has been obtained from all the
Directors and Senior Managers.

Sd/-
Pritam Shah
Place : Mumbai Managing Director
Date : 9 May, 2018 (DIN : 01127247)

Annual Report 2018 87

Managing Director/CFO Certificate
To,
The Board of Directors,
Parag Milk Foods Limited

We, Pritam Shah – Managing Director and Vimal Agarwal – Chief Financial Officer of Parag Milk Foods Limited, to the best of our
knowledge and belief, certify that:

1) We have reviewed the Financial Statements for the Financial Year ended 31 March, 2018 and to the best of our knowledge and
belief:
a. these statements do not contain any materially untrue statement or omit any material fact or contain statements that
might be misleading;
b. these statements together present a true and fair view of the Company’s affairs and are in compliance with existing
Accounting Standards, applicable laws and regulations.
2) To the best of our knowledge and belief, no transactions entered into by the Company during the Financial Year ended 31 March,
2018 are fraudulent, illegal or violative of the Company’s code of conduct.
3) We accept responsibility for establishing and maintaining Internal Controls for Financial Reporting and we have evaluated
the Effectiveness of Internal Control Systems of the Company pertaining to financial reporting. Deficiencies in the design or
operation of such internal controls, if any, of which we are aware, have been disclosed to the auditors and the Audit Committee
and steps have been taken to rectify these deficiencies.
4) We have indicated to the auditors and the Audit Committee that:
a. There has not been any significant change in internal control over financial reporting during the year under reference;
b. There has not been any significant change in accounting policies during the year requiring disclosure in the notes to the
financial statements; and
c. We are not aware of any instance during the year of significant fraud with involvement therein of the management or any
employee having a significant role in the Company’s internal control system over financial reporting.

Pritam Shah Vimal Agarwal

Place : Mumbai Managing Director Chief Financial Officer
Date : 9 May, 2018 (DIN: 01127247)

88 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Practising Company Secretaries’

Certificate on Corporate Governance
To,
The Members of
Parag Milk Foods Limited

We have examined all the relevant records of Parag Milk Foods Limited (“the Company”) for the purpose of certifying compliance
of the conditions of the Corporate Governance under Chapter IV to the Securities and Exchange Board of India (Listing Obligations
And Disclosure Requirements) Regulations, 2015 (Listing Regulations) for the period from April 01, 2017 to March 31, 2018. We have
obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of
certification.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to
procedures and implementation process adopted by the Company for ensuring the compliance of the conditions of the Corporate
Governance. This certificate is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations and information furnished to us, we certify that
the Company has complied with all the conditions of Corporate Governance as stipulated in the said Listing Regulations.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the Management has conducted the affairs of the Company.

For N. L. Bhatia & Associates N L Bhatia

Practicing Company Secretaries Managing Partner
Place: Mumbai UIN: P1996MH055800 FCS No.:1176
Date: 9 May, 2018 CP. No. 422

Annual Report 2018 89

Independent Auditor’s Report
To the Members of Parag Milk Foods Limited An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the Standalone
REPORT ON THE STANDALONE IND AS FINANCIAL Ind AS Financial Statements. The procedures selected depend
STATEMENTS on the auditor’s judgement, including the assessment of
We have audited the accompanying Standalone Ind AS the risks of material misstatement of the Standalone Ind
Financial Statements of Parag Milk Foods Limited (“the AS Financial Statements, whether due to fraud or error. In
Company”), which comprise the Balance Sheet as at March making those risk assessments, the auditor considers internal
31, 2018, the Statement of Profit and Loss (including Other financial control relevant to the Company’s preparation of
Comprehensive Income), the Statement of Cash Flow and the Standalone Ind AS Financial Statements that give a true
the Statement of Changes in Equity for the year then ended and fair view in order to design audit procedures that are
and a summary of significant accounting policies and appropriate in the circumstances. An audit also includes
other explanatory information, (hereinafter referred to as evaluating the appropriateness of accounting policies used
“Standalone Ind AS Financial Statements”). and the reasonableness of the accounting estimates made
by the Company’s Directors, as well as evaluating the overall
MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE presentation of the Standalone Ind AS Financial Statements.
IND AS FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the OPINION
matters stated in Section 134(5) of the Companies Act, 2013 In our opinion and to the best of our information and according
(“the Act”) with respect to the preparation of these Standalone to the explanations given to us, the aforesaid Standalone
Ind AS Financial Statements that give a true and fair view of Ind AS Financial Statements give the information required
the (state of affairs) financial position, profit or loss (financial by the Act in the manner so required and give a true and fair
performance including other comprehensive income), cash view in conformity with the accounting principles generally
flows and changes in equity of the Company in accordance accepted in India including the Ind AS, of the state of affairs
with the accounting principles generally accepted in India, of the Company as at March 31, 2018, its profit (financial
including the Indian Accounting Standards (Ind AS) specified performance including other comprehensive income), its cash
under Section 133 of the Act, read with relevant rules issued flows and changes in equity for the year ended on that date.
thereunder. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions REPORT ON OTHER LEGAL AND REGULATORY
of the Act for safeguarding of the assets of the Company and REQUIREMENTS
for preventing and detecting frauds and other irregularities; (1) As required by the Companies (Auditors’ Report) Order,
selection and application of appropriate accounting policies; 2016 (“the Order”) issued by the Central Government of
making judgements and estimates that are reasonable and India in terms of sub-section (11) of Section 143 of the
prudent; and design, implementation and maintenance Act, we give in “Annexure 1”, a statement on the matters
of adequate internal financial controls and ensuring their specified in paragraphs 3 and 4 of the Order, to the extent
operating effectiveness and the accuracy and completeness applicable.
of the accounting records, relevant to the preparation and (2) As required by Section 143(3) of the Act, we report that:
presentation of the Standalone Ind AS Financial Statements
a. We have sought and obtained all the information
that give a true and fair view and are free from material
and explanations which to the best of our knowledge
misstatement, whether due to fraud or error.
and belief were necessary for the purposes of our
audit;
AUDITOR’S RESPONSIBILITY
b. In our opinion, proper books of account as required
Our responsibility is to express an opinion on these Standalone
by law have been kept by the Company so far as it
Ind AS Financial Statements based on our audit.
appears from our examination of those books;
We have taken into account the provisions of the Act, the
c. The Balance Sheet, the Statement of Profit and Loss,
accounting and auditing standards and matters which are
the Statement of Cash Flows and the Statement of
required to be included in the audit report under the provisions
Changes in Equity dealt with by this Report are in
of the Act and the Rules made thereunder.
agreement with the books of account;
We conducted our audit in accordance with the Standards
d. In our opinion, the aforesaid Standalone Ind AS
on Auditing specified under Section 143(10) of the Act. Those
Financial Statements comply with the Indian
Standards require that we comply with ethical requirements and
Accounting Standards specified under Section
plan and perform the audit to obtain reasonable assurance about
133 of the Act read with relevant rules issued
whether the Standalone Ind AS Financial Statements are free
thereunder;
from material misstatement.
90 Parag Milk Foods Limited
 Corporate overview Statutory Reports Financial statements

e. On the basis of written representations received (i) The Company has disclosed the impact of
from the directors as on March 31, 2018, and taken pending litigations on its financial position in
on record by the Board of Directors, none of the its Standalone Ind AS Financial Statements -
directors is disqualified as on March 31, 2018 from Refer Note no. 41 on Contingent Liabilities to
being appointed as a director in terms of Section the Standalone Ind AS Financial Statements;
164 (2) of the Act; (ii) The Company did not have any material
f. With respect to the adequacy of the internal foreseeable losses on long-term contracts
financial controls over financial reporting of the including derivative contracts. Hence the
Company and the operating effectiveness of such question of material foreseeable losses do not
controls, we give our separate Report in “Annexure arise; and
2”. (iii) There were no amounts which were required
g. With respect to the other matters to be included in to be transferred to the Investor Education
the Auditor’s Report in accordance with Rule 11 of and Protection Fund by the Company.
the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and
For Haribhakti & Co. LLP
according to the explanations given to us: Chartered Accountants
ICAI Firm Registration No. 103523W/ W100048
Anup Mundhra
Partner
Membership No. 061083
Place: Mumbai
Date: 09 May, 2018

Annual Report 2018 91

Independent Auditor’s Report (Contd.)
ANNEXURE 1 TO THE INDEPENDENT AUDITOR’S REPORT (vii) (a) The Company is generally regular in depositing with
[Referred to in paragraph 1 under ‘Report on Other Legal and appropriate authorities, undisputed statutory dues
Regulatory Requirements’ in the Independent Auditor’s Report including provident fund, sales tax, value added
of even date to the members of Parag Milk Foods Limited on tax, customs duty, excise duty, cess and any other
the standalone financial statements for the year ended March material statutory dues applicable to it, however,
31, 2018] there have been significant delays in all the months
for Goods & Services tax and large number of cases
(i) (a) The Company has maintained proper records
of delays in case of tax deducted at source and
showing full particulars, including quantitative
employees state insurance.
details and situation of fixed assets, except for
certain assets where quantitative details are not According to the information and explanations
available since inception. given to us, there are no undisputed dues in respect
of provident fund, employees’ state insurance,
(b) During the year, the fixed assets of the Company
income tax, sales tax, service tax, value added
have been physically verified by the management,
tax, customs duty, excise duty, cess and any other
except for certain assets where quantitative details
material statutory dues applicable to it, which
are not available as discussed above, and as
were outstanding, at the year-end for a period of
informed, no material discrepancies were noticed
more than six months from the date they became
on such verification. In our opinion, the frequency
payable.
of verification is reasonable having regard to the
size of the Company and the nature of its assets. (b) According to the information and explanation given
to us, there are no dues with respect to service tax,
(c) The title deeds of immovable properties recorded as
customs duty, excise duty, Goods & services tax
fixed assets in the books of account of the Company
which have not been deposited on account of any
are held in the name of the Company.
dispute, except in respect of sales tax and income
(ii) The inventory (excluding stocks lying with third parties) tax as below :
has been physically verified by the management during
the year. In our opinion, the frequency of verification is Amount Period to
` in which the Forum where
reasonable. As informed, no material discrepancies were
Name of the Nature millions amount dispute is
noticed on physical verification carried out during the statute of dues # relates pending
year. In respect of inventory lying with third parties, these
Maharashtra VAT 0.45 FY2006-07 Joint
have substantially been confirmed by them. Value Added Commissioner
(iii) As informed, the Company has not granted any loans, Tax Act, 2002 of Sales Tax
secured or unsecured to companies, firms, Limited (App) -1
Liability Partnerships or other parties covered in the Maharashtra VAT 37.90 FY 2009-10 Joint
register maintained under Section 189 of the Act. Value Added Commissioner
Tax Act, 2002 of Sales Tax
Accordingly, paragraph 3 (iii)(a), 3 (iii)(b) and 3 (iii)(c) of
(App) -1
the Order are not applicable to the Company.
Central Sales CST 8.72 FY 2006-07 Joint
(iv) Based on information and explanation given to us in Tax Act, 1956 Commissioner
respect of loans, investments, guarantees and securities, of Sales Tax
the Company has complied with the provisions of Section (App) -1
185 and 186 of the Act. Central Sales CST 20.25 FY 2009-10 Joint
(v) In our opinion and according to the information and Tax Act, 1956 Commissioner
of Sales Tax
explanations given to us, the Company has not accepted
(App) -1
any deposits from the public within the provisions of
Central sales CST 2.60 FY 2012-13 Dy.
Sections 73 to 76 of the Act and the rules framed there
tax Act, 1956 Commissioner
under. of sales Tax
(vi) We have broadly reviewed the books of account Maharashtra VAT 1.92 FY 2012-13 Dy.
maintained by the Company in respect of products where Value Added Commissioner
the maintenance of cost records has been specified by the Tax Act, 2002 of sales Tax
Central Government under sub-section (1) of Section 148 Maharashtra VAT 0.64 FY 2010-11 Joint
of the Act and the rules framed there under and we are of Value Added Commissioner
the opinion that prima facie, the prescribed accounts and Tax Act, 2002 of Sales Tax
records have been made and maintained. (App) -1

92 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Independent Auditor’s Report (Contd.)

Amount Period to (xi) According to the information and explanations given to
` in which the Forum where us, managerial remuneration has been paid / provided
Name of the Nature millions amount dispute is in accordance with the requisite approvals mandated by
statute of dues # relates pending the provisions of Section 197 read with Schedule V to the
Maharashtra VAT 2.41 FY 2013-14 Dy. Act.
Value Added Commissioner
(xii) In our opinion and according to the information and
Tax Act, 2002 of sales Tax
explanations given to us, the Company is not a Nidhi
Central sales CST 1.43 FY 2013-14 Dy.
Company. Therefore, paragraph 3(xii) of the Order is not
tax Act, 1956 Commissioner
of sales Tax applicable to the Company.

Income Tax Income 12.89 FY 2011-12 Income Tax (xiii) According to the information and explanation given
Act, 1961 tax Appellate to us, all transactions entered into by the Company
Tribunal with the related parties are in compliance with
Income Tax Income 49.32 FY 2012-13 Commissioner Sections 177 and 188 of Act, where applicable and
Act, 1961 tax of Income Tax the details have been disclosed in the Standalone
(Appeals) Financial Statements etc., as required by the applicable
Income Tax Income 136.39 FY 2013-14 Commissioner accounting standards.
Act, 1961 tax of Income Tax
(xiv) The Company has not made any preferential allotment or
(Appeals)
private placement of shares or fully or partly convertible
Income Tax Income 0.27 FY 2014-15 Assessing
debentures during the year under review. Therefore,
Act, 1961 tax Officer
paragraph 3(xiv) of the Order is not applicable to the
Income Tax Income 83.28 FY 2015-16 Assessing
Company.
Act, 1961 tax Officer
(xv) According to the information and explanations given
# Amount paid under protest against the disputed dues of VAT/
to us, the Company has not entered into any non-cash
CST is ` 6.66 Mn.
transactions with directors or persons connected with
(viii) According to the information and explanations given him during the year.
to us, the Company has not defaulted in repayment of (xvi) According to the information and explanation given to
loans or borrowings to financial institutions, banks, us the Company is not required to be registered under
governments or dues to debenture holders. Section 45-IA of the Reserve Bank of India Act, 1934.
(ix) In our opinion and according to the information and
explanations given to us, the Company has utilized the
For Haribhakti & Co. LLP
money raised by way of initial public issue offer and the
Chartered Accountants
term loans during the year for the purposes for which
ICAI Firm Registration No.103523W/W100048
they were raised.
_________________
(x) During the course of our examination of the books and
records of the Company, carried out in accordance with Anup Mundhra
the generally accepted auditing practices in India, and Partner
according to the information and explanations given to Membership No.: 061083
us, we have neither come across any instance of fraud by Place: Mumbai
the Company or any fraud on the Company by its officers Date: May 9, 2018
or employees, noticed or reported during the year, nor
have we been informed of any such instance by the
management.

Annual Report 2018 93

Independent Auditor’s Report (Contd.)
ANNEXURE 2 TO THE INDEPENDENT AUDITOR’S REPORT
[Referred to in paragraph 2 under ‘Report on Other Legal and Our audit involves performing procedures to obtain audit
Regulatory Requirements’ in the Independent Auditor’s Report evidence about the adequacy of the internal financial
of even date to the members of Parag Milk Foods Limited on controls system over financial reporting and their operating
the Standalone Ind AS Financial Statements for the year ended effectiveness.
March 31, 2018] Our audit of internal financial controls over financial reporting
Report on the Internal Financial Controls over Financial included obtaining an understanding of internal financial
Reporting under Clause (i) of Sub-section 3 of Section 143 controls over financial reporting, assessing the risk that a
of the Companies Act, 2013 (“the Act”) material weakness exists, and testing and evaluating the
We have audited the internal financial controls over financial design and operating effectiveness of internal control based
reporting of Parag Milk Foods Limited (“the Company”) as of on the assessed risk. The procedures selected depend on the
March 31, 2018 in conjunction with our audit of the Standalone auditor’s judgement, including the assessment of the risks of
Ind AS Financial Statements of the Company for the year material misstatement of the financial statements, whether
ended on that date. due to fraud or error.
We believe that the audit evidence we have obtained is
MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL sufficient and appropriate to provide a basis for our audit
CONTROLS opinion on the Company’s internal financial controls system
The Company’s management is responsible for establishing over financial reporting.
and maintaining internal financial controls based on the
internal control over financial reporting criteria established MEANING OF INTERNAL FINANCIAL CONTROLS OVER
by the Company considering the essential components of FINANCIAL REPORTING
internal control stated in the Guidance Note on Audit of A company’s internal financial control over financial reporting
Internal Financial Controls Over Financial Reporting issued is a process designed to provide reasonable assurance
by the Institute of Chartered Accountants of India (“ICAI”). regarding the reliability of financial reporting and the
These responsibilities include the design, implementation and preparation of financial statements for external purposes in
maintenance of adequate internal financial controls that were accordance with generally accepted accounting principles. A
operating effectively for ensuring the orderly and efficient company’s internal financial control over financial reporting
conduct of its business, including adherence to company’s includes those policies and procedures that (1) pertain to the
policies, the safeguarding of its assets, the prevention and maintenance of records that, in reasonable detail, accurately
detection of frauds and errors, the accuracy and completeness and fairly reflect the transactions and dispositions of the
of the accounting records, and the timely preparation of assets of the company;(2) provide reasonable assurance that
reliable financial information, as required under the Act. transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted
AUDITORS’ RESPONSIBILITY accounting principles, and that receipts and expenditures
Our responsibility is to express an opinion on the Company’s of the company are being made only in accordance with
internal financial controls over financial reporting based on authorisations of management and directors of the company;
our audit. We conducted our audit in accordance with the and (3) provide reasonable assurance regarding prevention
Guidance Note on Audit of Internal Financial Controls Over or timely detection of unauthorised acquisition, use, or
Financial Reporting (the “Guidance Note”) and the Standards disposition of the company’s assets that could have a material
on Auditing specified under section 143(10) of the Act to the effect on the financial statements.
extent applicable to an audit of internal financial controls, both
issued by the ICAI. Those Standards and the Guidance Note INHERENT LIMITATIONS OF INTERNAL FINANCIAL
require that we comply with ethical requirements and plan CONTROLS OVER FINANCIAL REPORTING
and perform the audit to obtain reasonable assurance about Because of the inherent limitations of internal financial
whether adequate internal financial controls over financial controls over financial reporting, including the possibility
reporting was established and maintained and if such controls of collusion or improper management override of controls,
operated effectively in all material respects. material misstatements due to error or fraud may occur and

94 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

not be detected. Also, projections of any evaluation of the established by the Company considering the essential
internal financial controls over financial reporting to future components of internal control stated in the Guidance Note on
periods are subject to the risk that the internal financial control Audit of Internal Financial Controls Over Financial Reporting
over financial reporting may become inadequate because of issued by the ICAI.
changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
For Haribhakti & Co. LLP
OPINION Chartered Accountants
ICAI Firm Registration No. 103523W/ W100048
In our opinion, the Company has, in all material respects, an
Anup Mundhra
adequate internal financial controls system over financial
Partner
reporting and such internal financial controls over financial Membership No. 061083
reporting were operating effectively as at March 31, 2018, Place: Mumbai
based on the internal control over financial reporting criteria Date: 09 May, 2018

Annual Report 2018 95

Standalone Balance Sheet
AS AT 31 MARCH, 2018
(All figures are in ` million unless otherwise stated)
Particulars Notes 31 March, 2018 31 March, 2017 31 March, 2016
ASSETS
Non-current assets
Property, plant and equipment 4 3,660.14 3,063.32 2,950.49
Capital work-in-progress 159.91 164.25 232.67
Other intangible assets 5 46.90 4.22 2.43
Intangible assets under development - 41.85 45.06
Investment in Subsidiary 6A 622.64 622.64 622.64
Financial assets
Investments 6B 5.05 0.06 0.06
Other financial assets 7 95.47 131.69 91.28
Deferred tax assets (Net) 34 73.04 83.63 -
Other non-current assets 8 119.69 479.02 70.95
Total 4,782.84 4,590.68 4,015.58
Current assets
Inventories 9 4,299.95 4,267.21 2,710.51
Financial assets
Trade receivables 10 2,458.71 1,713.25 2,130.65
Cash and cash equivalents 11 299.83 402.93 45.93
Other bank balances 12 185.90 597.21 24.65
Current tax Assets (Net) 13 - 110.08 -
Other current assets 14 1,652.19 1,249.22 702.75
Total 8,896.58 8,339.90 5,614.49
Total assets 13,679.42 12,930.58 9,630.07
EQUITY AND LIABILITIES
Equity
Equity share capital 15 838.88 838.88 701.89
Other equity 16 6,329.02 5,541.76 2,826.91
7,167.90 6,380.64 3,528.80
LIABILITIES
Non-current liabilities
Financial Liabilities
Borrowings 17 635.15 703.07 1,182.15
Provisions 18 34.22 14.58 5.71
Deferred tax liabilities (Net) 34 - - 12.07
Other non-current liabilities 19 58.20 120.00 120.00
Total 727.57 837.65 1,319.93
Current liabilities
Financial liabilities
Borrowings 20 2,001.48 1,440.88 2,357.01
Trade payables 21 2,912.56 3,058.25 1,621.18
Other financial liabilities 22 715.18 713.38 551.47
Other current liabilities 23 99.41 484.68 209.96
Provisions 18 13.48 15.10 3.58
Current Tax Liabilities (Net) 24 41.84 - 38.14
Total 5,783.95 5,712.29 4,781.34
Total liabilities 6,511.52 6,549.94 6,101.27
Total equity and liabilities 13,679.42 12,930.58 9,630.07
Significant accounting policies 3
The accompanying notes form an integral part of 4-55
these Financial Statements.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

96 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Standalone statement of Profit and Loss

FOR THE YEAR ENDED 31 MARCH, 2018
(All figures are in ` million unless otherwise stated)
Year ended Year ended
Particulars Notes 31 March, 2018 31 March, 2017
REVENUE
Revenue from operations 25 19,181.18 17,010.85
Other income 26 56.30 86.28
Total 19,237.48 17,097.13
EXPENSES
Cost of materials consumed 27 12,920.09 13,353.91
Purchases of stock-in-trade 28 688.18 734.41
Changes in inventories of work-in-progress and finished goods 29 7.92 (1,551.23)
Employee benefit expense 30 663.39 613.30
Finance costs 31 351.42 289.55
Depreciation and amortisation expense 32 487.56 472.63
Other expenses 33 3,042.69 3,084.98
Total 18,161.25 16,997.55
Profit before exceptional items and tax 1,076.23 99.58
Exceptional items - (193.84)
Profit/(Loss) before tax 1,076.23 (94.26)
Tax expense 34
Current tax 279.24 25.66
Deferred tax 12.19 (102.29)
Profit/(Loss) after tax 784.80 (17.63)
Other comprehensive income 34
Items that will not be reclassified to profit or loss
Remeasurements of the defined benefit plans (4.63) (10.71)
Income Tax effect 1.60 3.71
Items that will be reclassified to profit or loss - -
Other comprehensive income for the year, net of tax (3.03) (7.00)
Total comprehensive income for the year 781.77 (24.63)
Earnings per equity share of face value of ` 10/- each:
Basic earnings per share (in `) 46 9.36 (0.21)
Diluted earnings per share (in `) 46 9.33 (0.21)
Significant accounting policies 3
The accompanying notes form an integral part of these Financial 4-55
Statements.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

Annual Report 2018 97

Standalone statement of Cash Flow
FOR THE YEAR ENDED 31 MARCH, 2018
(All figures are in ` million unless otherwise stated)
Year ended Year ended
Particulars 31 March, 2018 31 March, 2017
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before taxation 1,076.23 (94.26)
Add :
Depreciation/amortisation 487.56 472.63
Provision for doubtful debts 160.00 288.78
Loss on sale of fixed assets - 0.18
Unrealised forex (gain)/loss 10.83 -
Fair valuation loss - mutual fund 0.08 -
Interest expense 351.42 289.55
Less :
Profit on sale of mutual fund
Other comprehensive income (3.03) (7.00)
Profit on sale of Property, Plant and Equipment - (0.04)
Interest income (37.30) (60.19)
Operating profit before working capital changes 2,045.79 889.65
Adjustments for :
(Increase) / decrease in inventories (32.75) (1,556.70)
(Increase) / decrease in trade receivables (905.47) 128.63
(Increase) / decrease in non-current and current financial assets 36.22 (40.41)
(Increase) / decrease in other non-current and current assets (351.37) (666.25)
(Increase) / decrease in other bank balances 411.31 (572.56)
Increase / (decrease) in non-current and current financial liabilities 193.23 (0.03)
Increase / (decrease) in other non-current and current liabilities (447.07) 274.72
Increase / (decrease) in trade payables (145.69) 1,437.07
Increase / (decrease) in provisions 18.01 20.39
Cash generated from operations 822.21 (85.49)
Direct taxes paid (net of refunds) (128.92) (167.29)
Net cash flow from operating activities 693.29 (252.78)
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets (710.89) (924.70)
Purchase of intangible assets (10.65) (0.09)
Sale of fixed assets - 0.97
Investment in fixed deposits/mutual funds (5.07) 0.01
Interest received 41.82 56.44
Net cash used in investing activities (684.79) (867.37)

98 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Standalone statement of Cash Flow

FOR THE YEAR ENDED 31 MARCH, 2018 (Contd.)
(All figures are in ` million unless otherwise stated)
Year ended Year ended
Particulars 31 March, 2018 31 March, 2017
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long term borrowings 210.00 3.01
Proceeds from issue of shares (net of issue expenses) - 3,000.00
Proceeds / (repayment) from short term borrowings (net) 560.60 (916.13)
Proceeds / (Repayment) from unsecured loan (net) - (180.00)
Repayment of long term borrowings (478.22) (133.36)
Payment of dividend (50.62) -
Interest paid (353.36) (296.37)
Net cash flow from financing activities (111.60) 1,477.15
Net increase in cash and cash equivalents (A+B+C) (103.10) 357.00
Cash and cash equivalents at the beginning of the year
Cash in hand 402.93 45.93
Cash and cash equivalents at the end of the year
Cash in hand 299.83 402.93
Note:
1. In part A of Statement of Cash Flows, amounts in bracket indicate deductions made from net profit for derving net cash flow
from operating activities and in part B & C amount in bracket indicate outflows.
2. The above cashflow statement has been prepared under the ‘Indirect Method’ as set out in Ind AS 7- Statement of Cashflow
3. Non cash movement in borrowings include addition on account of foreign exchange loss (gain) of ` 1.99 million ( March 31, 2017:
` (18.05) million ) in respect of Foreign Currency Loan.
Significant accounting policies 3
The accompanying notes form an integral part of these Financial Statements. 4-55

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

Annual Report 2018 99

Statement of changes in equity
FOR THE YEAR ENDED 31 MARCH, 2018
A. EQUITY SHARE CAPITAL
(All figures are in ` million unless otherwise stated)
Particulars Amount
Balance at the end of 1 April, 2016 159.70
Add: Issued during the year- face value per share at ` 10/- 544.46
Less: Shares held by ESOP Trust ( Treasury Shares) (2.27)
Balance at the end of 31 March, 2016 701.89
Add: Issued during the year- face value per share at ` 10/- 136.99
Balance at the end of 31 March, 2017 838.88
Add: Issued during the year- face value per share at ` 10/- -
Balance at the end of 31 March, 2018 838.88

OTHER EQUITY
(All figures are in ` million unless otherwise stated)
Reserves and Surplus Other
Securities General Debeture Employee Retained Comprehensive
Premium Reserve redemption Stock Earnings Income
Reserve reserve Options (Remeasurement
Outstanding in defined benefit
Particulars plans) Total
Balance as on 01.04.2016 1,647.18 20.00 18.00 9.60 1,132.21 (0.08) 2,826.91
Total comprehensive income for the year - - - - (17.63) - (17.63)
Other comprehensive income for the year - - - - - (7.00) (7.00)
Deferred Employee Compensation Expense - 7.39 - (0.23) - - 7.16
Creation of Debenture Redemption Reserve - - 4.50 - (4.50) - -
Securities premium credited on share issue 2,863.01 - - - - - 2,863.01
Securities premium debited on IPO expense (130.69) - - - - - (130.69)
Balance as on 31.03.2017 4,379.50 27.39 22.50 9.37 1,110.08 (7.08) 5,541.76
Total comprehensive income for the year - - - - 784.80 - 784.80
Other comprehensive income for the year - - - - - (3.03) (3.03)
Deferred Employee Compensation Expense - 1.67 - (1.67) - - -
Transfer of Debenture Redemption Reserve on - 22.50 (22.50) - - - -
redemption
Securities premium credited for unutilised IPO 56.11 - - - - - 56.11
expense provision
Dividend paid - - - - (42.06) - (42.06)
Tax on dividend - - - - (8.56) - (8.56)
Balance as on 31.03.2018 4,435.61 51.56 - 7.70 1,844.26 (10.11) 6,329.02

Significant accounting policies 3

The accompanying notes form an integral part of these Financial Statements. 4-55

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

100 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018
1. CORPORATE INFORMATION with the Companies (Accounting Standards) Rules,
Parag Milk Foods Limited (formerly Parag Milk Foods 2006, notified under Section 133 of the Act and
Private Limited) (“the Company”) was incorporated other relevant provisions of the Act.
under the provisions of the Companies Act, 1956 and its As these are the Company’s first standalone
equity shares are listed on the National Stock Exchange financial statements prepared in accordance
(NSE) and Bombay Stock Exchange (BSE) in India. The with Indian Accounting Standards (Ind AS), Ind
Company is engaged in the business of procurement AS 101, First-time Adoption of Indian Accounting
of cow milk mainly in western and southern region, Standards has been applied. An explanation of how
undertakes processing of milk and manufacture of the transition to Ind AS has affected the previously
various value added products namely cheese, butter, reported financial position, financial performance
ghee, fresh cream, milk powder, flavoured milk, lassi, is provided in Note 52.
curd etc. which are marketed under its registered brand The standalone financial statements were
name “Gowardhan”, “Go” and “Topp up”. The registered authorised for issue by the Company’s Board of
office of the Company is situated at Flat No. 1, Plot No. 19, Directors on May 9, 2018.
Nav Rajasthan Society, S. B. Road, Shivaji Nagar, Pune-
Details of the Company’s accounting policies are
411016.
included in Note 3.

2. BASIS OF PREPARATION B. Functional and presentation currency

A. Statement of compliance These standalone financial statements are

presented in Indian Rupees (`), which is also the
The financial statements of the Company have been
Company’s functional currency. All amounts have
prepared in accordance with Indian Accounting
been rounded-off to two decimal places to the
Standards (Ind AS) as per the Companies (Indian
nearest millions, unless otherwise indicated.
Accounting Standards) Rules, 2015 notified under
Section 133 of Companies Act, 2013, (the ‘Act’) and C. Basis of measurement
other relevant provisions of the Act. The standalone financial statements have been
The financial statements up to and for the year prepared on the historical cost basis except for the
ended 31 March 2017 were prepared in accordance following items:

Items Measurement Basis

Certain financial assets and liabilities Fair value
Shared-based payments Fair value
Net defined benefit (asset)/ liability Present value of defined benefit obligation less Fair value of plan
assets

D. Current / non-current classification of assets/ other factors that are considered to be relevant.
liabilities Actual results may differ from these estimates.
The Company has classified all its assets/liabilities Estimates and underlying assumptions are
into current/non-current portion based on the time reviewed on an ongoing basis. Revisions to
frame of 12 months from the date of the financial accounting estimates are recognised prospectively.
statements. Accordingly, assets/liabilities expected Information about assumptions, judgements and
to be realised /settled within 12 months from estimation uncertainties that have a significant
the date of financial statements are classified as risk of resulting in a material adjustment in the
current and other assets/liabilities are classified as year ending 31 March 2018 are as below and also
non-current been discussed in detail in the relevant section of
E. Use of estimates and judgements accounting policies.

In the preparation of the financial statements, - Measurement of defined benefit obligations:

the Company makes judgements, estimates and key actuarial assumptions;
assumptions about the carrying amount of assets - Useful life of property, plant and equipment
and liabilities that are not readily apparent from - Fair value measurement of financial
other sources. The estimates and associated instruments
assumptions are based on historical experience and - Impairment of financial assets.

Annual Report 2018 101

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
F. Measurement of fair values plant and equipment comprises the cost
Certain accounting policies and disclosures of the of materials, direct labour and any other
Company require the measurement of fair values, costs directly attributable to bringing the
for both financial and non-financial assets and item to its intended working condition and
liabilities. estimated costs of dismantling, removing
and restoring the site on which it is located,
Fair values are categorised into different levels in a
wherever applicable.If significant parts of an
fair value hierarchy based on the inputs used in the
item of property, plant and equipment have
valuation techniques as follows:
different useful lives, then they are accounted
- Level 1: quoted prices (unadjusted) in active for as separate items (major components) of
markets for identical assets or liabilities. property, plant and equipment.
- Level 2: inputs other than quoted prices Any gain or loss on disposal of an item of
included in Level 1 that are observable for the property, plant and equipment is recognised
asset or liability, either directly (i.e. as prices) in statement of profit or loss.
or indirectly (i.e. derived from prices).
ii. Transition to Ind AS
- Level 3: inputs for the asset or liability that
are not based on observable market data On transition to Ind AS, the Company has
(unobservable inputs). elected to continue with the carrying value
of all of its property, plant and equipment
When measuring the fair value of an asset or a
recognised as on 1 April 2016, measured as per
liability, the Company uses observable market data
the previous GAAP, and use that carrying value
as far as possible. If the inputs used to measure
as the deemed cost of such property, plant
the fair value of an asset or a liability fall into a
and equipment (refer note 55).
different levels of the fair value hierarchy, then the
fair value measurement is categorised in its entirety iii. Subsequent expenditure
in the same level of the fair value hierarchy as the Subsequent expenditure is capitalised only if it
lowest level input that is significant to the entire is probable that the future economic benefits
measurement. associated with the expenditure will flow to
Further information about the assumptions made the Company.
in the measuring fair values is included in the
iv. Depreciation
following notes:
Depreciation on cost of fixed assets is provided
- Share-based payments
on straight line method at estimated useful
- Financial instruments. life, which is in line with the estimated useful
life as specified in Schedule II of the Companies
3. SIGNIFICANT ACCOUNTING POLICIES Act, 2013, except for Second hand machineries
a) Property, plant and equipment which are depreciated over an estimated
useful life of 10 years based on management
i. Recognition and measurement
estimate.
Items of property, plant and equipment, are
Depreciation on additions is provided on
measured at cost (which includes capitalised
a prorata basis from the date of ready to
borrowing costs, if any) less accumulated
use and in case of Projects from the date of
depreciation and accumulated impairment
commencement of commercial production.
losses, if any.
Depreciation on deductions/disposals is
Cost of an item of property, plant and provided on a pro-rata basis upto the month
equipment includes its purchase price, proceeding the month of deduction/disposal.
duties, taxes, after deducting trade discounts
The residual values, useful lives and methods
and rebates, any directly attributable cost
of depreciation of property, plant and
of bringing the item to its working condition
equipment are reviewed at each financial
for its intended use and estimated costs
year-end and adjusted prospectively, if
of dismantling and removing the item and
appropriate.
restoring the site on which it is located.
The cost of a self-constructed item of property,

102 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
v. Reclassification to investment property losses. Cost includes expenditures that are
When the use of a property changes from directly attributable to the acquisition of the
owner-occupied to investment property, intangible asset.
the property is reclassified as investment ii. Subsequent expenditure
property at its carrying amount on the date of
Subsequent expenditure is capitalised only
classification.
when it increase the future economic benefits
vi. Capital work-in-progress includes cost embodied in the specific assets to which it
of property, plant and equipment under relates. All other expenditure are recognised in
installation / under development as at the profit or loss as incurred.
balance sheet date.
iii. Amortisation
b) Intangible assets
Amortisation is recognised in profit or loss on
i. Recognition and measurement a straight line basis over the estimated useful
Intangible assets that are acquired by the lives of the intangible assets from the date
Company, which have finite useful lives, that they are available for use. The estimated
are measured at cost less accumulated useful lives are as follows:
amortisation and accumulated impairment

Assets Useful life (years)

Trade Marks 10
Computer Software 3
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if
appropriate.

iv. Transition to Ind AS ii. Non -financial assets

On transition to Ind AS, the Company has Intangible assets and property, plant and
elected to continue with the carrying value of equipment
all of its intangible assets recognised as at 1
Intangible assets and property, plant and
April 2016, measured as per the previous GAAP,
and use that carrying value as the deemed equipment are evaluated for recoverability
cost of such intangible assets (Refer note 55). whenever events or changes in circumstances
indicate that their carrying amounts may not
c) Impairment
be recoverable. For the purpose of impairment
i. Financial assets testing, the recoverable amount (i.e. the
The Company recognises loss allowances higher of the fair value less cost to sell and the
using the expected credit loss (ECL) model for value-in-use) is determined on an individual
the financial assets which are not fair valued asset basis unless the asset does not generate
through profit or loss. Loss allowance for cash flows that are largely independent of
trade receivables with no significant financing those from other assets. In such cases, the
component is measured at an amount equal recoverable amount is determined for the CGU
to lifetime ECL with simplified approach. For to which the asset belongs. If such assets are
all other financial assets, expected credit
considered to be impaired, the impairment to
losses are measured at an amount equal to
be recognised in the Statement of Profit and
the 12-month ECL, unless there has been a
Loss is measured by the amount by which
significant increase in credit risk from initial
recognition in which case those are measured the carrying value of the assets exceeds the
at lifetime ECL. The amount of expected credit estimated recoverable amount of the asset. An
losses (or reversal) that is required to adjust impairment loss is reversed in the statement
the loss allowance at the reporting date to of profit and loss if there has been a change
the amount that is required to be recognised in the estimates used to determine the
is recognised as an impairment gain or loss in recoverable amount. The carrying amount of
statement of profit or loss. the asset is increased to its revised recoverable

Annual Report 2018 103

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
amount, provided that this amount does not process is determined with reference to the selling
exceed the carrying amount that would have prices of related finished goods. Raw materials,
been determined (net of any accumulated packing materials and other supplies held for use
amortisation or depreciation) had no in production of inventories are not written down
impairment loss been recognised for the asset below cost except in cases where material prices
in prior years. have declined, and it is estimated that the cost of
the finished products will exceed their net realisable
d) Leases
value.
The determination of whether an arrangement is
The provision for inventory obsolescence is
(or contains) a lease is based on the substance of
assessed regularly based on estimated usage and
the arrangement at the inception of the lease. The
shelf life of products.
arrangement is, or contains, a lease if fulfilment
of the arrangement is dependent on the use of Raw materials, packing materials and stores and
a specific asset or assets and the arrangement spares are valued at cost computed on first in
conveys a right to use the asset or assets, even if that first out basis. The cost includes purchase price,
right is not explicitly specified in an arrangement. inward freight and other incidental expenses
For arrangements entered into prior to 1 April 2016, net of refundable duties, levies and taxes, where
the date of inception is deemed to be 1 April 2016 in applicable.
accordance with Ind-AS 101 First-time Adoption of Work-in-progress is valued at input material cost
Indian Accounting Standard. plus conversion cost as applicable.
For arrangements entered into prior to 1 April Stock-in-trade and finished goods are valued at the
2016, the Company has determined whether the lower of net realisable value and cost (including
arrangement contains lease on the basis of facts and prime cost and other overheads incurred in bringing
circumstances existing on the date of transition. the inventories to their present location and
condition), computed on a first in first out basis.
As a lessee
Leases in which a significant portion of the risks f) Financial instruments
and rewards of ownership are not transferred to i. Recognition and initial measurement
the Company as lessee are classified as operating
The Company initially recognises financial
leases. Payments made under operating leases
assets and financial liabilities when it
(net of any incentives received from the lessor) are
becomes a party to the contractual provisions
charged to profit or loss on a straight-line basis over
of the instrument. All financial assets and
the period of the lease unless the payments are
liabilities are measured at fair value on initial
structured to increase in line with expected general
recognition. Transaction costs that are directly
inflation to compensate for the lessor’s expected
attributable to the acquisition or issue of
inflationary cost increases.
financial assets and financial liabilities that
As a lessor are not at fair value through profit or loss are
Lease income from operating leases where the added to the fair value on initial recognition.
Company is a lessor is recognised in income on Regular way purchase and sale of financial
a straight-line basis over the lease term unless assets are accounted for at trade date.
the receipts are structured to increase in line with ii. Classification and subsequent measurement
expected general inflation to compensate for the Financial Assets
expected inflation.
Financial assets carried at amortised cost
e) Inventories A debt instrument is subsequently measured
Inventories are valued at the lower of cost (including at amortised cost if it is held within a business
prime cost, excise duty and other overheads model whose objective is to hold the asset in
incurred in bringing the inventories to their order to collect contractual cash flows and the
present location and condition) and estimated net contractual terms of the financial asset give
realisable value, after providing for obsolescence, rise on specified dates to cash flows that are
where appropriate. The comparison of cost and solely payments of principal and interest on
net realisable value is made on an item-by-item the principal amount outstanding.
basis. The net realisable value of materials in

104 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
Financial assets at fair value through other If the Company enters into transactions
comprehensive income whereby it transfers assets recognised on
A debt instrument is subsequently measured its balance sheet, but retains either all or
at fair value through other comprehensive substantially all of the risks and rewards of the
income if it is held within a business model transferred assets, the transferred assets are
whose objective is achieved by both collecting not derecognised.
contractual cash flows and selling financial Financial liabilities
assets and the contractual terms of the The Company derecognises a financial
financial asset give rise on specified dates liability when its contractual obligations are
to cash flows that are solely payments of discharged or cancelled, or expire.
principal and interest on the principal amount
The Company also derecognises a financial
outstanding.
liability when its terms are modified and the
In case, the Company’s management has cash flows under the modified terms are
made an irrevocable election at the time of substantially different. In this case, a new
initial recognition to account for the equity financial liability based on the modified terms
investment (Other than Investments in equity is recognised at fair value. The difference
instruments of Subsidiary) fair value through between the carrying amount of the financial
other comprehensive income. This election is liability extinguished and a new financial
not permitted if the equity investment is held liability with modified terms is recognised in
for trading. The classification is made on initial the statement of profit and loss.
recognition and is irrevocable.
iv. Offsetting
Investment in subsidiary
Financial assets and financial liabilities are
Investment in subsidiary is carried at cost in
offset and the net amount presented in the
the financial statements.
balance sheet when, and only when, the
Financial assets at fair value through profit or Company currently has a legally enforceable
loss right to set off the amounts and it intends
A financial asset which is not classified in any either to settle them on a net basis or realise the
of the above categories are subsequently fair asset and settle the liability simultaneously.
valued through profit or loss.
g) Revenue recognition
Financial liabilities
Revenue is recognised when it is probable that the
Financial liabilities are subsequently carried economic benefits associated with a transaction
at amortised cost using the effective interest flow to the company in the ordinary course of
method. For trade and other payables its activities and the amount of revenue can be
maturing within one year from the balance measured reliably. Revenue is measured at the fair
sheet date, the carrying amounts approximate value of the consideration received or receivable,
fair value due to the short maturity of these net of returns, trade discounts and volume rebates
instruments. allowed by the company.
iii. Derecognition Revenue includes only the gross inflows of
Financial assets economic benefits, including excise duty, received
or receivable by the company, on its own account.
The Company derecognises a financial asset
Amount collected on behalf of third parties such as
when the contractual rights to the cash flows
sales tax, value added tax and goods and services
from the financial asset expire, or it transfers
tax are excluded from revenue.
the right to receive the contractual cash flows
in a transaction in which substantially all of the Processing charges is recognised as per the terms of
risks and rewards of ownership of the financial the contract when the related services are rendered.
assets are transferred or in which the Company Dividend income is recognised when the Company’s
neither transfers nor retains substantially all of right to receive the payment is established, which is
the risks and rewards of ownership and does generally when shareholders approve the dividend.
not retain control of the financial asset. Interest income is recognised using the effective

Annual Report 2018 105

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
interest method. payable or receivable in respect of previous
years. The amount of current tax reflects the
h) Foreign currencies
best estimate of the tax amount expected
Initial Recognition
to be paid or received after considering the
On initial recognition, transaction in foreign uncertainty, if any related to income taxes.
currencies entered into by the company are It is measured using tax rates (and tax laws)
recorded in the functional currency (INR), by enacted or substantively enacted by the
applying to the foreign currency amount, the spot reporting date.
exchange rate between the functional currency and
ii. Deferred tax
the foreign currency at the date of the transaction.
Exchange differences arising on foreign exchange Deferred tax is recognised in respect of
transactions settled during the year are recognised temporary differences between the carrying
in the Statement of Profit & Loss. amounts of assets and liabilities for financial
reporting purposes and the corresponding
Measurement of foreign currency items at reporting
amounts used for taxation purposes. Deferred
date
tax is also recognised in respect of carried
Foreign currency monetary items of the company
forward tax losses and tax credits. Deferred tax
are translated at the closing exchange rates. Non
is not recognised for:
monetary items that are measured at historical
- temporary differences arising on the
cost in foreign currency are translated using the
initial recognition of assets or liabilities
exchange rates at the date of the transaction. Non
in a transaction that is not a business
monetary items that are measured at fair value in a
combination and that affects neither
foreign currency, are translated using the exchange
accounting nor taxable profit or loss at
rates at the date when the fair value is measured.
the time of transaction.
Exchange differences arising out of these
- temporary differences related to
translations are recognised in the Statement of
investments in subsidiaries, associates
Profit & Loss except exchange differences on long
and interests in joint ventures, when the
term foreign currency monetary items related to
timing of the reversal of the temporary
acquisition of fixed assets prior to transition to Ind
differences can be controlled and it is
AS, which are included in the cost of fixed assets.
probable that the temporary differences
i) Government grants will not reverse in the foreseeable future.
Government grants are recognised where there is Deferred tax assets are recognised to the
reasonable assurance that the grant will be received extent that it is probable that future taxable
and all attached conditions will be complied with. profits will be available against which they can
When the grant relates to revenue, it is recognised be used.
in the statement of profit and loss on a systematic
Deferred tax assets recognised or unrecognised
basis over the periods to which they relate. When
are reviewed at each reporting date and are
the grant relates to an asset, it is treated as deferred
recognised / reduced to the extent that it is
income and recognised in the statement of profit
probable / no longer probable respectively
and loss on a systematic basis over the useful life of
that the related tax benefit will be realised.
the asset.
Deferred tax is measured at the tax rates that
j) Income tax
are expected to apply to the period when
Income tax comprises current and deferred tax. It the asset is realised or the liability is settled,
is recognised in profit or loss except to the extent based on the laws that have been enacted or
that it relates to a business combination or to substantively enacted by the reporting date.
an item recognised directly in equity or in other
The measurement of deferred tax reflects the
comprehensive income.
tax consequences that would follow from the
i. Current tax manner in which the Company expects, at the
Current tax comprises the expected tax reporting date, to recover or settle the carrying
payable or receivable on the taxable income or amount of its assets and liabilities.
loss for the year and any adjustment to the tax

106 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
The Company offsets, the current tax assets tax rate that reflects when appropriate, the risk
and liabilities (on a year on year basis) and specific to the liability. When discounting is used,
deferred tax assets and liabilities, where it has the increase in provision due to passage of time is
a legally enforceable right and where it intends recognised as a finance cost.
to settle such assets and liabilities on a net A disclosure for a contingent liability is made when
basis. there is possible obligation or a present obligation
Presentation of current and deferred tax that may, but probably will not require an outflow
Current and deferred tax are recognised as of resources embodying the economic benefits or
income or an expense in the Statement of the amount of such obligation cannot be measured
Profit & Loss, except when they relate to items reliably. When there is possible obligation or a
that are recognised in Other Comprehensive present obligation in respect of which likelihood
Income, in which case, the current and of outflow of resources embodying the economic
deferred tax income/ expense are recognised benefits is remote, no provision or disclosure is
in Other Comprehensive Income. made.

The Company offsets current tax assets and Contingent assets are not recognised. However,
current tax liabilities, where it has legally when the realisation of income is virtually certain,
enforceable right to set off the recognised then the related asset is no longer a contingent
amounts and where it intends either to settle asset, and is recognised as an asset.
on a net basis, or to realize the asset and m) Employee benefits
settle the liability simultaneously. In case of
Short-term employee benefits
deferred tax assets and deferred tax liabilities,
the same are offset if the company has legally All employee benefits falling due wholly within
enforceable right to set off corresponding twelve months of rendering the services are
current tax assets against current tax liabilities classified as short-term employee benefits, which
and the deferred tax assets and deferred tax include benefits like salaries, wages, short-term
liabilities relate to income taxes levied by the compensated absences and performance incentives
same tax authority on the company. and are recognised as expenses in the period in
which the employee renders the related service.
MAT Credits are in the form of unused tax
credits that are carried forward by the Post-employment benefits
Company for a specified period of time, hence Contributions to defined contribution schemes such
it is grouped with Deferred Tax Asset/Net of as Provident Fund, Employees State Insurance., are
Deferred tax liabilities. recognised as expenses in the period in which the
k) Borrowing costs employee renders the related service. The Company
Borrowing costs directly attributable to the has no further obligations beyond its monthly
acquisition or construction of those property, contributions. The Company also provides for post-
plant and equipment which necessarily takes a employment defined benefit in the form of gratuity.
substantial period of time to get ready for their The cost of providing benefit is determined using
intended use are capitalised. All other borrowing the projected unit credit method, with actuarial
costs are expensed in the period in which they incur valuation being carried out at each balance sheet
in the statement of profit and loss. date. Remeasurement of the net benefit liability,
which comprise actuarial gains and losses, the
l) Provisions, contingent liabilities and contingent return on plan assets (excluding interests) and the
assets
effect of the assets ceiling (if any, excluding interest)
The company recognizes the provisions when a are recognised in other comprehensive income. he
present obligation (legal or constructive) as a result effect of any plan amendments are recognised in
of past event exists and it is probable that an outflow net profit in the Statement of Profit and Loss.
of resources embodying economic benefits will be
Other long-term employee benefits
required to settle such obligation and the amount
of such obligation can be reliably estimated. All employee benefits (other than post-employment
benefits and termination benefits) which do not
If the effect of time value of money is material,
fall due wholly within twelve months after the end
provisions are discounted using a current pre-
of the period in which the employees render the

Annual Report 2018 107

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
related services are determined based on actuarial q) Cash flow statement
valuation or discounted present value method Cash flows are reported using indirect method,
carried out at each balance sheet date. The expected whereby net profits before tax is adjusted for the
cost of accumulating compensated absences is effects of transactions of a non-cash nature and any
determined by actuarial valuation performed by deferrals or accruals of past or future cash receipts
an independent actuary as at every year end using or payments and items of income or expenses
projected unit credit method on the additional associated with investing or financing cash flows.
amount expected to be paid / availed as a result of The cash flows from regular revenue generating
the unused entitlement that has accumulated at the (operating activities), investing and financing
balance sheet date. Expense on non-accumulating activities of the Company are segregated.
compensated absences is recognised in the period
r) Segment Reporting
in which the absences occur.
Operating segments are reported in a manner
n) Share-based payments
consistent with the internal reporting provided to
The cost of equity-settled transactions is determined the Chief Operating Decision Maker (CODM) of the
by the fair value at the date when the grant is made company. The CODM is responsible for allocating
using an appropriate valuation model. That cost is resources and assessing performance of the
recognised, together with a corresponding increase operating segments of the company
in share-based payment (SBP) reserves in equity,
s) Recent accounting pronouncements/ Standards
over the period in which the performance and/or
issued but not yet effective:
service conditions are fulfilled in employee benefits
expense. The dilutive effect of outstanding options In March 2018, the Ministry of Corporate Affairs
is reflected as additional share dilution in the (MCA) issued the Companies (Indian Accounting
computation of diluted earnings per share. Standards) Amendment Rules, 2018, notifying Ind
AS 115, Revenue from Contract with Customers,
o) Cash and cash equivalents
Appendix B to Ind AS 21, Foreign currency
Cash and cash equivalents includes cash on hand, transactions and advance consideration and
demand deposits with banks, other short-term amendments to certain other standards. These
highly liquid investments with original maturities of amendments are in line with recent amendments
three months or less. made by International Accounting Standards Board
p) Earnings per share (IASB). These amendments are applicable to the
Company from 1st April, 2018. The Company will be
Basic Earnings Per Share (‘EPS’) is computed by
adopting the amendments from their effective date.
dividing the net profit attributable to the equity
shareholders by the weighted average number of i. Ind AS 115, Revenue from Contract with
equity shares outstanding during the year. Diluted Customers:
earnings per share is computed by dividing the net Ind AS 115 supersedes Ind AS 11, Construction
profit by the weighted average number of equity Contracts and Ind AS 18, Revenue. Ind AS
shares considered for deriving basic earnings per 115 requires an entity to report information
share and also the weighted average number of regarding nature, amount, timing and
equity shares that could have been issued upon uncertainty of revenue and cash flows arising
conversion of all dilutive potential equity shares. from a contract with customers. The principle
Dilutive potential equity shares are deemed of Ind AS 115 is that an entity should recognize
converted as of the beginning of the year, unless revenue that demonstrates the transfer of
issued at a later date. In computing diluted earnings promised goods and services to customers
per share, only potential equity shares that are at an amount that reflects the consideration
dilutive and that either reduces earnings per share to which the entity expects to be entitled in
or increases loss per share are included. The number exchange for those goods or services. The
of shares and potentially dilutive equity shares are standard can be applied either retrospectively
adjusted retrospectively for all periods presented to each prior reporting period presented or can
for the share splits. be applied retrospectively with recognition
of cumulative effect of contracts that are not

108 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
TO STANDALONE FINANCIAL STATEMENTS FOR YEAR ENDED MARCH 31, 2018 (Contd.)
completed contracts at the date of initial iii. Ind AS 12 - Income taxes
application of the standard. In March 2018, the Ministry of Corporate Affairs
Based on the preliminary assessment issued the Companies (Indian Accounting
performed by the Company, the impact of Standards) (Amendments) Rules, 2018,
application of the Standards is not expected notifying amendments to Ind AS 12, ‘Income
to be material. taxes’. The amendments are applicable
to the Company from April 01, 2018. The
ii. Appendix B to Ind AS 21, Foreign currency
amendments explain how to apply the
transactions and advance consideration:
recognition and measurement requirements
The Appendix clarifies that the date of the in Ind AS 12 Income taxes when there is
transaction for the purpose of determining the uncertainty over income tax treatment. The
exchange rate to use on initial recognition of amendments considers that:
assets, expense or income (or part of it) is the
- Tax law determines which deductions
date on which the entity initially recognises
are offset against taxable income in
the non-monetary asset or non monetary
determining taxable profits
liability arising from the payment or receipt of
advance consideration towards such assets, - No deferred tax asset is recognised if the
expenses or income. If there are multiple reversal of the deductible temporary
payments or receipt in advance, then an entity difference will not lead to tax deductions.
must determine transaction date for each The Company is evaluating the impact of
payment or receipts of advance consideration. this amendment on its financial statements.
The impact of the appendix on the financial However, based on preliminary assessment,
statements, as assessed by the Company, is there will not be any material impact on the
expected to be not material. financial position and performance of the
Company.

Annual Report 2018 109

 NOTE 4: PROPERTY, PLANT AND EQUIPMENT
(All figures are in ` million unless otherwise stated)
Leasehold
building Plant and Furniture and Office
Particulars Freehold land Improvements Buildings Machinery Fixtures Vehicles equipment Computer Total
Notes
Year ended 31 March, 2017
Gross carrying amount
Deemed cost as at 1 April, 2016 33.08 6.48 576.24 2,296.57 11.96 16.34 7.00 2.82 2,950.49
Additions during the year - 31.39 8.50 505.39 9.93 8.80 2.83 18.25 585.09
Disposals during the year - - - (0.18) - (0.97) - - (1.15)

110 Parag Milk Foods Limited

Closing gross carrying amount as at 31 33.08 37.87 584.74 2,801.78 21.89 24.17 9.83 21.07 3,534.43
March, 2017
Accumulated depreciation
Depreciation charge during the year - 3.90 27.67 428.26 1.90 5.12 2.43 1.83 471.11
Closing accumulated depreciation as at - 3.90 27.67 428.26 1.90 5.12 2.43 1.83 471.11
31 March, 2017
Net carrying amount as at 31 March, 2017 33.08 33.97 557.07 2,373.52 19.99 19.05 7.40 19.24 3,063.32
Year ended 31 March, 2018
Gross carrying amount
Opening gross carrying amount 33.08 37.87 584.74 2,801.78 21.89 24.17 9.83 21.07 3,534.43
Additions during the year - 0.21 136.07 925.23 2.14 0.16 1.18 9.57 1,074.56
Closing gross carrying amount as at 31 33.08 38.08 720.81 3,727.01 24.03 24.33 11.01 30.64 4,608.99
March, 2018
Accumulated depreciation
Opening accumulated depreciation - 3.90 27.67 428.26 1.90 5.12 2.43 1.83 471.11
Depreciation charge during the year - 14.26 29.47 417.38 2.51 3.52 2.24 8.36 477.74
Closing accumulated depreciation as at - 18.16 57.14 845.64 4.41 8.64 4.67 10.19 948.85
31 March, 2018
Net carrying amount as at 31 March, 2018 33.08 19.92 663.67 2,881.37 19.62 15.69 6.34 20.45 3,660.14
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS

Under the Indian GAAP, Company was following the accounting treatment as per paragraph 46/ 46A of AS 11 ‘The Effects of Changes in Foreign Exchange Rates’, with respect to exchange
differences arising on restatement of long term foreign currency monetary items. Exchange differences on account of depreciable assets was added/ deducted from the cost of the
depreciable asset, which was depreciated over the balance life of the asset. Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting
treatment in respect of the long-term foreign currency monetary items recognised in the Financial Statements for the period ending immediately before the beginning of the first Ind AS
financial reporting period. The Company has opted to apply this exemption and accordingly the Company has adjusted foreign exchange gain/(loss) of `(0.40) millions for the year ended
31 March, 2018 (31 March, 2017: ` 15.75 million) arising on reporting of long term foreign currency monetary item against the historical cost of fixed assets.
For property, plant and equipment existing as at April 1, 2016, i.e. date of transition to Ind AS, the Company has used Indian GAAP carrying values as deemed cost as permitted by Ind AS
101 - First time adoption. Accordingly, the net carrying value as per previous GAAP as at April 1, 2016 has been considered as deemed cost under Ind AS.
For details of assets given as security against borrowings, Refer note 17 and 20
Amount of contractual commitments for the acquisition of PPE, Refer note 41
 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 5: OTHER INTANGIBLE ASSETS
(All figures are in ` million unless otherwise stated)
Particulars Computer software Brands / Trade Marks Total
Year ended 31 March, 2017
Gross carrying amount
Deemed cost as at 1 April, 2016 2.25 0.18 2.43
Additions during the year 3.31 - 3.31
Closing gross carrying amount as at 31 March, 2017 5.56 0.18 5.74
Accumulated amortisation
Amortisation charge for the year 1.46 0.06 1.52
Closing accumulated amortisation as at 31 March, 2017 1.46 0.06 1.52
Closing net carrying amount as at 31 March, 2017 4.10 0.12 4.22
Year ended 31 March, 2018
Gross carrying amount
Opening gross carrying amount 5.56 0.18 5.74
Additions during the year 52.50 - 52.50
Closing gross carrying amount as at 31 March, 2018 58.06 0.18 58.24
Accumulated amortisation
Opening accumulated amortisation 1.46 0.06 1.52
Amortisation charge for the year 9.74 0.08 9.82
Closing accumulated amortisation as at 31 March, 2018 11.20 0.14 11.34
Closing net carrying amount as at 31 March, 2018 46.86 0.04 46.90
There are no contractual commitments for the acquisition of intangible assets.
For intangible assets existing as at 1 April, 2016, i.e. date of transition to Ind AS, the Company has used Indian GAAP carrying values
as deemed cost as permitted by Ind AS 101 - First time adoption. Accordingly, the net carrying value as per previous GAAP as at April
1, 2016 has been considered as deemed cost under Ind AS.

NOTE 6 A: INVESTMENT IN SUBSIDIARIES

(All figures are in ` million unless otherwise stated)
% of 31 March, 2018 31 March, 2017 1 April 2016
Particulars Face value holding Quantity Value Quantity Value Quantity Value
Unquoted
Investment in equity instruments
(fully paid-up)
Investment in wholly owned
subsidiaries carried (at cost)
Bhagyalaxmi Dairy Farm Private ` 10 100% 5,785,354 622.64 5,785,354 622.64 5,785,354 622.64
Limited

NOTE 6 B: OTHER INVESTMENTS

(All figures are in ` million unless otherwise stated)
31 March, 2018 31 March, 2017 1 April 2016
Particulars Quantity Value Quantity Value Quantity Value
Unquoted
Investment in equity instruments (fully paid-up)
Investment in other entities (fair value through Profit
and Loss)
OPGS Power Gujarat Private Limited 218,000 0.07 - - - -
Other Investments
Investment in other entities which are carried at
amortised cost
Rupee Co-Operative Bank Ltd. 3,800 0.04 3,800 0.04 3,800 0.04

Annual Report 2018 111

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 6 B: OTHER INVESTMENTS (Contd.)
(All figures are in ` million unless otherwise stated)
31 March, 2018 31 March, 2017 1 April 2016
Particulars Quantity Value Quantity Value Quantity Value
Sharad Sahakari Bank Ltd. 318 0.02 318 0.02 318 0.02
Investment in mutual fund (fair value through Profit and
Loss)
UBI Mutual Fund 499,990 4.92 - - -
Total 5.05 0.06 0.06

Total non-current investments 627.69 622.70 622.70

Aggregate amount of quoted investments and market value - - -
thereof
Aggregate amount of unquoted investments 627.69 622.70 622.70
Aggregate amount of impairment in the value of - - -
investments

NOTE 7: OTHER FINANCIAL ASSETS - NON-CURRENT

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Unsecured, considered good
Fixed deposits having maturity of more than one year 2.62 15.26 8.77
Interest Receivable 0.34 2.89 2.23
Deposits 92.51 113.54 80.28
Total 95.47 131.69 91.28

NOTE 8: OTHER NON-CURRENT ASSETS

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Unsecured, considered good
Capital advances 119.69 479.02 70.95
Total 119.69 479.02 70.95

NOTE 9 : INVENTORIES (AT LOWER OF COST AND NET REALISABLE VALUE)

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Raw materials 21.24 33.98 28.97
Work-in-progress 2,212.34 2,010.08 1,371.23
Finished goods 1,839.77 2,049.95 1,137.57
Packing material 103.60 74.20 90.38
Stores and spares 123.00 99.00 82.36
Total 4,299.95 4,267.21 2,710.51
For Inventories pledged as securities against borrowings, see note 17.
The above includes goods in transit as below:
(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Stock in transit - finished goods - 4.18 1.44
The cost of inventories recognised as an expense includes ` 13.91 million (31 March, 2017: ` 10.50 million) in respect of write down of
inventories to net realisable value. Further, a sum of ` 10.50 million (31 March, 2017: Nil) in respect of reversal of such write downs.
Previous write downs have been reversed as a result of appreciation in market price of such inventories.

112 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 10: TRADE RECEIVABLES
(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Unsecured, Considered good 2,458.71 1,713.25 2,130.65
Unsecured, Considered doubtful 804.96 644.96 367.42
Less: Allowance for doubtful debts (804.96) (644.96) (367.42)
- - -
Total 2,458.71 1,713.25 2,130.65

No trade receivables are due from directors or other officers of the Company, either severally or jointly with any other person, nor any
trade and other receivables are due from firms or private companies respectively in which any directors is a partner, a director or a
member.

The Company’s exposure to credit and currency risk and loss allowances related to trade receivables are disclosed in note 36 A & 36 C

NOTE 11: CASH AND CASH EQUIVALENTS

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Balances with banks
- in current accounts 57.05 47.18 37.78
Deposits with maturity of less than three months 236.08 336.61 2.14
Cash in hand 6.70 19.14 6.01
Total 299.83 402.93 45.93

NOTE 12: OTHER BANK BALANCES

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Fixed deposits (having original maturity of more than three 185.90 597.21 24.65
months but less than twelve months)
Total 185.90 597.21 24.65

NOTE 13 : CURRENT TAX ASSETS (NET)

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Advance income tax (Net of Provisions) - 110.08 -
Total - 110.08 -

NOTE 14: OTHER CURRENT ASSETS

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Advances other than capital advances
Unsecured, considered good:
Prepaid Expenses 10.92 6.80 4.97
Advances & other recoverables 944.24 713.75 288.16
Advance to subsidiary - 44.97 67.27
Sub-Total 955.16 765.52 360.40
Recoverable from statutory and government authorities
Unsecured, considered good:
Electricity duty receivable 23.11 23.11 18.86
PSI incentive & export subsidy receivable 626.45 439.11 292.74
VAT & Sales tax receivable 47.47 12.48 23.12
Unsecured, considered doubtful 17.21 17.21 17.21
Less: Provision for doubtful advances (17.21) (17.21) (17.21)
Sub-Total 697.03 474.69 334.72
Unsecured, considered good:

Annual Report 2018 113

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 14: OTHER CURRENT ASSETS (Contd.)
(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 1 April 2016
Deposits - 3.29 2.53
Interest receivables - 4.51 0.77
Others - 1.21 4.33
Sub-Total - 9.01 7.63
Grand Total 1,652.19 1,249.22 702.75

EQUITY SHARE CAPITAL AND OTHER EQUITY

NOTE 15: EQUITY SHARE CAPITAL
Authorised equity share capital
(All figures are in ` million unless otherwise stated)
Particulars Number of shares Face Value (`) Amount
As at 1 April, 2016 100,000,000 10 1,000.00
Change during the year - - -
As at 31 March, 2017 100,000,000 10 1,000.00
Change during the year - - -
As at 31 March, 2018 100,000,000 10 1,000.00

(i) Issued, subscribed and fully paid up share capital

(All figures are in ` million unless otherwise stated)
Particulars Number of shares Face Value (`) Amount
As at 1 April, 2016* 70,188,887 10.00 701.89
Issued during the year 13,698,695 10.00 136.99
As at 31 March, 2017 83,887,582 10.00 838.88
Issued during the year - - -
As at 31 March, 2018 83,887,582 10.00 838.88

* excluding shares issued to ESOP trust

Terms and rights attached to equity shares
The Company has only one class of shares referred to as equity shares having a par value of ` 10/- per share. Each holders of
equity shares carry one vote per share without restrictions and are entitled to dividend, as and when declared. In the event
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 amounts. The distribution will be in proportion to the number of Equity Shares held by the
shareholders.
(ii) Details of shareholders holding more than 5% shares in the Company
(All figures are in ` million unless otherwise stated)
31 March, 2018 31 March, 2017 01 April, 2016
Number of % Number of % Number of %
Particulars shares holding shares holding shares holding
Mr. Devendra Prakash Shah 15,006,400 17.89% 14,570,832 17.37% 14,570,832 20.76%
Mr. Pritam Prakash Shah 9,159,888 10.92% 9,159,888 10.92% 9,159,888 13.05%
Mrs. Netra Pritam Shah 8,867,027 10.57% 8,268,149 9.85% 10,272,782 14.63%
IDFC Trustee Co. Ltd A/C IDFC Infrastructure Fund 5,074,234 6.05% 5,074,234 6.05% 14,134,162 20.13%
India Business Excellence Fund - - 442,511 0.53% 4,359,749 6.21%
As per records of the company, including its register of shareholders/members, the above shareholding represents legal
ownerships of shares. The above percentage have been computed after excluding 227,000 nos of equity shares issued to ESOP
Trust.

114 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 15: EQUITY SHARE CAPITAL (Contd.)
(iii) Information on equity shares alloted without receipt of cash or alloted as bonus shares or shares bought back
(All figures are in ` million unless otherwise stated)
31 March, 31 March, 31 March, 31 March, 31 March,
Particulars 2018 2017 2016 2015 2014
Equity shares allotted as fully paid-up pursuant to contracts for - - 12,084,385 - -
consideration other than cash, by way of conversion of compulsorily
convertible debentures
Equity shares allotted as fully paid bonus shares by capitalisation - - 42,135,038 - -
of securities premium and surplus balance.

NOTE 16: OTHER EQUITY

(All figures are in ` million unless otherwise stated)
Particulars Notes 31 March 2018 31 March, 2017 01 April, 2016
Securities Premium Reserve (a) 4,435.61 4,379.50 1,647.18
General Reserve (b) 51.56 27.39 20.00
Debeture redemption reserve (c) - 22.50 18.00
Retained Earnings (d) 1,844.26 1,110.08 1,132.21
Employee Stock Options Outstanding (e) 7.70 9.37 9.60
Other Comprehensive Income (10.11) (7.08) (0.08)
Total 6,329.02 5,541.76 2,826.91
Movement in Reserves
(All figures are in ` million unless otherwise stated)
Particulars 31 March 2018 31 March, 2017
Securities Premium Reserve
Opening Balance 4,379.50 1,647.18
Add: Securities premium credited on share issue - 2,863.01
Less: Securities premium debited on IPO expense 56.11 (130.69)
Closing Balance 4,435.61 4,379.50
General Reserves
Opening Balance 27.39 20.00
Add: Transfer from Surplus - 7.39
Add: Transfer from Employee Stock Options Outstanding 1.67 -
Add: Transfer from Debenture redemption reserve 22.50 -
Closing Balance 51.56 27.39
Debeture redemption reserve
Opening Balance 22.50 18.00
Transfer from Surplus - 4.50
Less: Transfer to General Reserve (22.50) -
Closing Balance - 22.50
Retained earnings
Opening Balance 1,110.08 1,132.21
Add: Net profit for the year 784.80 (17.63)
Less: Bonus share issued - -

Annual Report 2018 115

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 16: OTHER EQUITY (Contd.)

(All figures are in ` million unless otherwise stated)

Particulars 31 March 2018 31 March, 2017
Less: Transfer to debenture redemption reserve - (4.50)
Less: Dividends (42.06) -
Less: Dividend distribution tax (8.56) -
Closing Balance 1,844.26 1,110.08
Employee Stock Options Outstanding
Opening Balance 9.37 9.60
Add: Deferred Employee Compensation Expense - (0.23)
Less: Transfer to General reserve (1.67) -
Closing Balance 7.70 9.37
Other Comprehensive Income
Opening Balance (7.08) (0.08)
Add: For the year (3.03) (7.00)
Closing Balance (10.11) (7.08)
Closing balance 6,329.02 5,541.76
(a) Securities premium reserve represents premium received on equity shares issued, which can be utilised only in accordance with
the provisions of the Companies Act, 2013 (the Act) for specified purposes.
(b) General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such
as dividend payout, bonus issue, etc
(c ) Debenture redemption reserve represents reserve created out of profit / retained earnings at specified value of debentures to
be redeemed. The Company has transferred the balance to general reserve as the debentures have been redemeed during the
year.
(d) Retained earnings represents surplus/ accumulated earnings of the Company and are available for distribution to shareholders.
(e) The shares option outstanding account is used to recognise the grant date fair value of options issued to employees under the
Employee Stock Grant Scheme which are unvested as on the reporting date and is net of the deferred employee compensation
expense.
Distribution made and proposed to be made
(All figures are in ` million unless otherwise stated)
Particulars 31 March 2018 31 March, 2017
Cash dividends on equity shares declared and paid :
Final dividend
For the year ended on 31 March, 2017: ` 0.50 per share (March 31, 2016 : Nil) 42.06 -
DDT on final dividend 8.56 -
Proposed dividend on equity shares :
Final equity dividend
For the year ended on 31 March, 2018: ` 0.75 per share (31 March, 2017 : ` 0.50 per 62.92 42.06
share)
DDT on proposed dividend 12.93 8.56
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability
(including DDT thereon) for the year ended March 31 2018.

116 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 17: BORROWINGS - NON-CURRENT
(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Secured
Term loans
From banks
Rupee Currency Loan 164.12 64.53 180.64
Foreign currency loan 461.50 616.66 791.36
Vehicle Loan 0.43 1.58 2.63
From Other Parties
Vehicle Loan 9.10 20.30 27.52
Unsecured
0% Non-Convertible Debentures (payale to promoter) - - 180.00
Total 635.15 703.07 1,182.15
Indian rupee loans from a bank of ` 164.12 million (31 March, 2017 : ` 64.53 million, April 01, 2016 : ` 180.64 million) carry interest @
10.50%-13.00%. The loans are repayable in 38-59 monthly instalments starting from Feb 2013, November 2013 and March 2018 along
with interest .The loan is secured by pari passu charge on fixed assets and second pari passu charge on current assets of the Company
and personal guarantee of Promoter Directors.
Foreign currency loan from a financial institution of ` 461.50 million (31 March, 2017 : ` 616.66 million, April 01, 2016 : ` 791.36 million)
carries interest @ 5.15%-5.92%. The loans are repayable in 12 semi annual instalments along with interest starting from June, 2016.
The loan is secured by first pari passu charge on movable and immovable fixed property of the Company and second pari passu
charge of entire current assets of the Company along with other banks and personal guarantees of Directors and their relatives.
Hire purchase loan from banks of ` 0.43 million (31 March, 2017 : ` 1.58 million, April 01, 2016 : ` 2.63 million) carries interest @
9.38% to 11.24 % p.a. The loans are repayable in 36 to 60 monthly instalments starting from the respective date of finance. The loan
is secured by specific assets financed (vehicle).
Indian rupee loans from financial institutions of ` 9.10 million (31 March, 2017 : ` 20.30 million, April 01, 2016 : ` 27.52 represents
loan secured by hypothecation of equipments and vehicles. The loans are repayable over 36 - 78 instalments and carry interest in the
range of 9.75 - 12.98%.
The Company had made an issue of 18,000,000 Nos of Non Convertible Debentures of nominal value of ` 10 each aggregating ` 180.00
million at 0% interest to the Promoters. The life of such debentures is 10 years from the issue date, i.e., March 2013 or any time to be
redeemed on demand after the Company’s IPO. During the year 2017-18, all debenture have been redeemed based on demand made
by promoters.

NOTE 18: PROVISIONS - NON-CURRENT

(All figures are in ` million unless otherwise stated)

Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Provision for compensated absences 12.22 8.44 5.71
Provision for gratuity (net) (Refer note No. 39) 22.00 6.14 -
Total 34.22 14.58 5.71

NOTE 18: PROVISIONS

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Provision for compensated absences 3.16 3.77 1.10
Provision for gratuity (net) (Refer note No. 39) 10.32 11.33 2.48
Total 13.48 15.10 3.58

NOTE 19: OTHER NON-CURRENT LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Deposit from customer 58.20 120.00 120.00
Total 58.20 120.00 120.00

Annual Report 2018 117

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 20: BORROWINGS - CURRENT
(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Secured
Loans repayable on demand
From banks- Cash Credit 2,001.48 1,440.88 2,357.01
Total 2,001.48 1,440.88 2,357.01
Note:
Cash credit from banks is secured by first pari passu charge on all current assets of the Company and second pari passu charge on
fixed assets of the Company, personal guarantee of Promoter Directors. The cash credit is repayable on demand and carries interest
@ 12.40% p.a. to 15.00% p.a.

NOTE 21: TRADE PAYABLES - CURRENT (Also refer Note 36B & 36C)
(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Current
Due to micro and small enterprises (refer note 45) 18.91 24.76 42.43
Others 2,893.65 3,033.49 1,578.75
Total 2,912.56 3,058.25 1,621.18

NOTE 22: OTHER CURRENT FINANCIAL LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Current maturities of long-term debt (refer note 17)* 274.90 464.37 295.65
Interest accrued on borrowings 15.06 16.99 23.81
Deposits 160.10 73.83 60.78
Employee related Liabilities 53.31 65.62 60.01
Creditor for Capital Goods 201.69 83.48 85.97
Finance Guarantee Obligation - 5.20 24.03
Directors remuneration payable 10.12 3.89 1.22
Total 715.18 713.38 551.47
* includes NCD issued to promoters (refer note 43)

NOTE 23: OTHER CURRENT LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Statutory tax payables 56.30 212.34 45.05
Advances from customers 43.11 272.34 164.91
Total 99.41 484.68 209.96

NOTE 24: CURRENT TAX LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Current Tax Liability (Net of advance) 41.84 - 38.14
Total 41.84 - 38.14

NOTE 25 : REVENUE FROM OPERATIONS

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars 31 March, 2018 31 March, 2017
Sale of products 18,657.96 16,531.89
Other operating revenue 523.22 478.96
Total 19,181.18 17,010.85

118 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 26: OTHER INCOME
(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Interest income
Bank Deposits 36.24 59.98
Others 0.73 -
Exchange Fluctuation (Net) - 5.52
Profit on sale of Property, Plant and Equipments - 0.04
Recoupment of Financial Guarantee Contract 5.20 18.83
Interest Income on Security Deposit 0.34 0.21
Miscellaneous Income 13.79 1.70
Total 56.30 86.28

NOTE 27 : COST OF MATERIALS CONSUMED

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
(a) Raw material consumed
Inventory at the beginning of the year 33.98 28.97
Add: Purchases 11,693.34 12,320.33
11,727.32 12,349.30
Less: Inventory at the end of the year (21.24) (33.98)
11,706.08 12,315.32
(b) Packing material, stores spares & consumables consumed
Inventory at the beginning of the year 173.20 172.73
Add: Purchases 1,267.41 1,039.06
1,440.61 1,211.79
Less: Inventory at the end of the year (226.60) (173.20)
1,214.01 1,038.59
Total 12,920.09 13,353.91

NOTE 28 : PURCHASE OF STOCK IN TRADE

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars 31 March, 2018 31 March, 2017
Milk products 688.18 734.41
Total 688.18 734.41

Annual Report 2018 119

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 29: CHANGES IN INVENTORIES OF WORK-IN-PROGRESS AND FINISHED GOODS
(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Inventories at the begining of the year
Finished goods- Milk Products 2,049.95 1,137.57
Work-in progress- Milk Products 2,010.08 1,371.23
4,060.03 2,508.80
Inventories at the end of the year
Finished goods-Milk Products 1,839.77 2,049.95
Work-in progress-Milk Products 2,212.34 2,010.08
4,052.11 4,060.03
(Increase)/decrease in inventories of work-in-progress and finished goods 7.92 (1,551.23)

NOTE 30: EMPLOYEE BENEFIT EXPENSES

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Salaries and wages 581.85 539.67
Contributions to provident and other funds 31.25 24.24
Gratuity 11.22 4.43
Staff welfare expenses 39.07 37.79
Expenses on Employees Stock Options Scheme - 7.17
Total 663.39 613.30

NOTE 31: FINANCE COSTS

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Interest on debts and borrowings 301.02 278.85
Interest others 50.40 10.70
Total 351.42 289.55

NOTE 32: DEPRECIATION AND AMORTISATION EXPENSES

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Depreciation of property, plant and equipment 477.74 471.11
Amortisation of intangible assets 9.82 1.52
Total 487.56 472.63

NOTE 33: OTHER EXPENSES

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Transport, octroi & freight 46.69 40.33
Power and fuel 496.56 461.44
Rent,rates & taxes 226.63 291.47
Insurance 13.52 12.93
Repairs to Plant and machinery 65.51 115.56
Repairs to Building 9.88 11.92
Repairs to Others 29.42 30.49
Other factory expenses 95.47 103.29
Labour charges 210.56 162.94
Office Expense 16.95 23.53
Exchange fluctuation (net) 10.83 -

120 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 33: OTHER EXPENSES (Contd.)
(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Security charges 16.79 17.58
Travelling & conveyance 61.56 67.59
Communication costs 10.60 11.03
Printing and stationery 4.13 5.48
Legal & professional fees * 94.06 34.53
Director's remmuneration 48.00 41.70
Auditor's remmuneration [refer note 33(a)] 4.31 4.15
Advertisements and marketing expenses 123.70 251.62
Sales promotion expenses 389.46 260.70
Commission on sales 57.76 53.83
Agency charges for export 7.70 9.26
Carriage outward 715.16 716.36
Bad debts [adjested with provision for bad debts ` Nil (31 March, 2017: ` 11.24 million)] - -
Provision for doubtful debts 160.00 288.78
Loss on sale of assets - 0.18
Donations 1.11 0.78
CSR expenses [refer note 48] 8.05 12.38
Miscellaneous expenses 118.28 55.14
Total 3,042.69 3,084.98
* Includes consultancy fee paid to director ` 9.80 million (31 March, 2017: ` 9.61 million)
Note 33(a): Details of payments to auditors

(All figures are in ` million unless otherwise stated)

For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Payment to auditors
As auditor:
Audit fee 4.18 4.08
Re-imbursement of expenses 0.13 0.07
Total 4.31 4.15

NOTE 34: INCOME TAX

(a) The major components of deferred tax (liabilities)/assets arising on account of timing differences are as follows:
For the year ended 31 March, 2018
(All figures are in ` million unless otherwise stated)
Net
Recognised balance
Net balance Recognised in Recognised directly in equity March 31,
April 1, 2017 profit or loss in OCI / Balance-Sheet 2018
Deferred tax liabilities
Property, plant and equipment & Intangible assets 210.86 86.00 - - 296.86
Others 12.08 2.41 - - 14.49
Sub-Total 222.94 88.41 - - 311.35
Deferred tax assets
Expected credit loss on financial assets 229.17 49.41 - - 278.58
Expenses allowed on payment basis u/s 43B 14.14 0.77 1.60 - 16.51
Sub-Total 243.31 50.18 1.60 - 295.09
Minimum Alternate Tax (MAT) credit
Recognised 63.26 26.04 - - 89.30
Sub-Total 63.26 26.04 - - 89.30
Net Deferred tax (assets)/Liabilties 83.63 (12.19) 1.60 - 73.04

Annual Report 2018 121

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 34: INCOME TAX (Contd.)
For the year ended 31 March, 2017
(All figures are in ` million unless otherwise stated)
Net
Recognised balance
Net balance Recognised in Recognised directly in equity March 31,
April 1, 2016 profit or loss in OCI / Balance-Sheet 2017
Deferred tax liabilities
Property, plant and equipment & Intangible assets 208.07 2.79 210.86
Others 6.73 5.35 12.00
Sub-Total 214.80 8.14 - - 222.94
Expected credit loss on financial assets 133.12 96.05 229.17
Expenses allowed on payment basis u/s 43B 6.82 3.61 3.71 14.14
Sub-Total 139.94 99.66 3.71 - 243.31
Minimum Alternate Tax (MAT) credit
Recognised 62.79 10.77 - (10.30) 63.26
Sub-Total 62.79 10.77 - (10.30) 63.26
Net Deferred tax (assets)/Liabilties (12.07) 102.29 3.71 (10.30) 83.63

(b) Income tax expense

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended 31
Particulars 31 March, 2018 March, 2017
Income tax expense
Current tax
Current tax on profits for the year 276.72 34.42
Adjustments for current tax of earlier periods 2.52 (8.74)
Total 279.24 25.68
Deferred tax
Deferred tax change/(credit) 38.23 (91.52)
MAT Credit entitlement (26.04) (10.77)
Total 12.19 (102.29)
Income tax expense 291.43 (76.61)

(c) Reconciliation of effective tax rate

(All figures are in ` million unless otherwise stated)
Particulars 2017-2018 2016-2017
Profit before income tax expense 1,076.23 (94.26)
Indian statutory income tax rate 34.61% 34.61%
Expected income tax expense 372.46 (32.62)
Tax effect of adjustments to reconcile expected income tax expense to
reported income tax expense:
Effect of non deductible expenses 3.17 51.61
"Effect of additional allowances for tax purpose - (24.45)
(deduction under section 32AC)"
Effect of tax exempt income (exemption under section 80IB) (110.38) (67.18)
Effect of tax adjustment in respect of earlier years 2.52 (8.74)
Effect of tax deduction (under section 80G) - (1.99)
Effect of income charged at lower rate of tax - (1.04)
Others 23.66 7.80
Income tax expense 291.43 (76.61)
Effective tax rate 27.08% 81.27%
(d) Amounts recognised in Other comprehensive income
(All figures are in ` million unless otherwise stated)
Particulars 2017-2018 2016-2017
Before tax Tax exp. Net of tax Before tax Tax exp. Net of tax
(benefit) (benefit)
Items that will not be reclassified to profit or loss
Remeasurement of the defined benefit plans (4.63) 1.60 (3.03) (10.71) 3.71 (7.00)

122 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 35: FAIR VALUE MEASUREMENTS
A. Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels
in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at
fair value if the carrying amount is a reasonable approximation of fair value.
B. Measurement of fair value
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities,
short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term
maturities of these instruments.
C. Fair Value Hierarchy
The fair value of financial instruments as referred to above have been classified into three categories depending on the inputs
used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments,
traded bonds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued
using the closing price as at the reporting period.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques
which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant
inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This
is the case for unlisted equity securities included in level 3.
Fair value hierarchy &
Carrying value Fair Value
Financial Assets and Fair Value Chart
Measurement
Liabilities 31-Mar- 31-Mar- 01-Apr-
31-Mar-18 31-Mar-17 01-Apr-16 31-Mar-18 31-Mar-17 01-Apr-16
18 17 16
Financial Assets
Investments - mutual 4.92 - - Fair Value through Level 1 - - 4.92 - -
fund Profit and Loss
Investments - Others 0.13 0.06 0.06 Fair Value through Level 3 Level 3 Level 3 0.13 0.06 0.06
Profit and Loss
Trade receivable 2,458.71 1,713.25 2,130.65 Amortised cost Level 3 Level 3 Level 3 2,458.71 1,713.25 2,130.65
Cash and Cash 299.83 402.93 45.93 Amortised cost Level 3 Level 3 Level 3 299.83 402.93 45.93
equivalents
Other Bank Balance 185.90 597.21 24.65 Amortised cost Level 3 Level 3 Level 3 185.90 597.21 24.65
Other Financial Assets 95.47 131.69 91.28 Amortised cost Level 3 Level 3 Level 3 95.47 131.69 91.28
Total 3,044.97 2,845.13 2,292.59 3,044.97 2,845.13 2,292.59
Financial Liabilities
Borrowings - non- 635.15 703.07 1,182.15 Amortised cost Level 3 Level 3 Level 3 635.15 703.07 1,182.15
current
Borrowings - current 2,001.48 1,440.88 2,357.01 Amortised cost Level 3 Level 3 Level 3 2,001.48 1,440.88 2,357.01
Trade Payables 2,912.56 3,058.25 1,621.18 Amortised cost Level 3 Level 3 Level 3 2,912.56 3,058.25 1,621.18
Other Financial 715.18 713.38 551.47 Amortised cost Level 3 Level 3 Level 3 715.18 713.38 551.47
Liabilities
Total 6,264.36 5,915.58 5,711.82 6,264.36 5,915.58 5,711.82

NOTE 36: FINANCIAL RISK MANAGEMENT

Risk management framework
The Company has in place a mechanism to inform the Board about the risk assessment and minimisation procedures and periodical
review to ensure that management controls risk through means of a properly defined framework. The Company has formulated and

Annual Report 2018 123

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 36: FINANCIAL RISK MANAGEMENT (Contd.)
adopted Risk Management Policy to prescribe risk assessment, management, reporting and disclosure requirements of the Company.
The Company’s audit committee also oversees how management monitors compliance with the Company’s risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of
risk management controls and procedures, the results of which are reported to the audit committee.
The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company’s primary focus is to foresee the
unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance.
This note explains the sources of risk to which the Company is exposed to and how the entity manages the risk.
(A) Credit risk
Trade and Other receivables
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Company’s trade and other receivables. The carrying amounts of
financial assets represent the maximum credit risk exposure.
Trade receivables are typically unsecured and are derived from revenue earned from customers located in India. Credit risk
has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring
the creditworthiness of customers to which the Company grants credit terms in the normal course of business. In monitoring
customer credit risk, customers are grouped according to their credit characteristics, including whether they are General trade,
Modern trade, Institutional and Horeca customers. Outstanding customers are regularly monitored.
On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company
computes the expected credit loss allowance as per simplified approch for trade receivables based on available external and
internal credit risk factors such as the ageing of its dues, market information about the customer and the Company’s historical
experience for customers. The Company has used a practical expedient by computing the expected credit loss allowance for
trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is
based on the ageing of the receivable days and the rates as given in the provision matrix.
The movement in the loss allowance in respect of trade receivables is as follows
Loss allowance on trade receivables Amount in ` (million)
Balance as at 1 April, 2016 367.42
Less: Utilised during the year (11.24)
Add: Provision during the year 288.78
Balance as at 31 March, 2017 644.96
Add: Provision during the year 160.00
Balance as at 31 March, 2018 804.96
(B) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far
as possible, that it will have sufficient liquidity to meet its liabilities when they are due. Management monitors rolling forecasts
of the Company’s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of
expected cash flows. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the
use of bank overdraft/ cash credit facility. The Company also monitors the level of expected cash inflows on trade receivables
together with expected cash outflows on trade payables and other financial liabilities. The Company has access to a sufficient
sources of short term funding with existing lenders that could be arrange upon should there be need.

(i) Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross
and undiscounted.
(All figures are in ` million unless otherwise stated)
Contractual maturities of financial liabilities 31 March, 2018 Carring Value 1 year or less 1-2 years 2- 5 years Total
Non-derivatives financial liabilities
Borrowings - non-current 635.15 - 231.44 462.82 694.26
Borrowings - current 2,001.48 2,001.48 - - 2,001.48
Trade payables 2,912.56 2,912.56 - - 2,912.56
Other financial liabilities 715.18 715.18 - - 715.18
Total non-derivative liabilities 6,264.37 5,629.22 231.44 462.82 6,323.48

124 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 36: FINANCIAL RISK MANAGEMENT (Contd.)
(All figures are in ` million unless otherwise stated)
Contractual maturities of financial liabilities 31 March, 2017 Carring Value 1 year or less 1-2 years 2- 5 years Total
Non-derivatives financial liabilities
Borrowings - non-current 703.07 - 241.33 498.17 739.50
Borrowings - current 1440.88 1,440.88 - - 1,440.88
Trade payables 3058.25 3,058.25 - - 3,058.25
Other financial liabilities 713.38 713.38 - - 713.38
Total non-derivative liabilities 5,915.58 5,212.51 241.33 498.17 5,952.01

(All figures are in ` million unless otherwise stated)

Contractual maturities of financial liabilities 1 April, 2016 Carring Value 1 year or less 1-2 years 2- 5 years Total
Non-derivatives financial liabilities
Borrowings - non-current 1,182.15 - 495.26 759.98 1,255.24
Borrowings - current 2,357.01 2,357.01 - - 2,357.01
Trade payables 1,621.18 1,621.18 - - 1,621.18
Other financial liabilities 551.47 551.47 - - 551.47
Total non-derivative liabilities 5,711.81 4,529.66 495.26 759.98 5,784.90

(C) Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market
rates and prices (such as interest rates and foreign currency exchange rates) or in the price of market risk-sensitive instruments
as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial
instruments, all foreign currency receivables and payables and all short-term and long-term debt. The Company is exposed to
market risk primarily related to foreign exchange rate risk and interest rate risk.

(i) Foreign currency risk

The Company is subject to risk of changes in foreign currency values that impact costs of imported raw material and import
of equipment for expansion of plants, primarily with respect to USD and EURO. The Company’s business model incorporates
assumptions on currency risks and ensures any exposure is covered through the normal business operations.
The Company has not entered into any derivative transactions during the year and there were no derivative transactions
outstanding as on 31 March, 2018, 31 March, 2017 and 1st April 2016.
(a) The Company unhedged exposure to foreign currency risk at the end of the reporting period are as follows

(All figures are in ` million unless otherwise stated)

31 March, 2018 31 March, 2017 1 April 2016
Sr Foreign Foreign Foreign
no Particulars Currency ` currency ` currency ` currency
A Financial assets
(i) Trade receivables USD 74.36 1.15 1.01 0.02 19.65 0.30
B Financial liabilities
(i) Foreign currency loan
Loan USD 628.76 9.67 783.47 12.08 961.83 14.50
Interest Payable USD 12.69 0.20 13.19 0.20 15.24 0.23
(ii) Trade payables USD 0.47 0.01 80.97 1.25 - -
EURO 19.82 0.25 13.89 0.20 2.88 0.04
GBP - - 0.01 0.01 0.01 0.01
AUD 4.62 0.09 - - - -
CHF 0.38 0.01 0.08 0.01 - -

Annual Report 2018 125

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 36: FINANCIAL RISK MANAGEMENT (Contd.)
(b) Sensitivity
A reasonably possible strengthening (weakening) of the Indian Rupee against various currency mentioned in the table below
as at March 31 would have affected the measurement of financial instruments denominated in foreign currency and affected
equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates,
remain constant and ignores any impact of forecast sales and purchases.

Profit / (loss) before tax gain / (loss) Equity, gross of tax

Strengthening Weakening Increased (Decreased)
Mar-18
Effect in `
1 % movement
USD 5.68 (5.68) 5.68 (5.68)
EUR 0.20 (0.20) 0.20 (0.20)
GBP - - - -
CHF - - - -
AUD 0.05 (0.05) 0.05 (0.05)
Mar-17
Effect in `
1 % movement
USD 8.77 (8.77) 8.77 (8.77)
EUR 0.14 (0.14) 0.14 (0.14)
GBP 0.00 (0.00) 0.00 (0.00)
CHF 0.00 (0.00) 0.00 (0.00)

NOTE 37: FINANCIAL RISK MANAGEMENT

Cash flow and fair value interest rate risk
Interest rate risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes in
market interest rates. The Company main interest rate risk arises from long-term borrowings with variable rates, which expose
the Company to cash flow interest rate risk.
The company’s borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS
107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(a) Interest rate risk exposure

The exposure of the Company’s borrowing to interest rate changes at the end of the reporting period are as follows:
31 March, 2018 31 March, 2017 01 April, 2016
Particulars Nominal amount Nominal amount Nominal amount
Variable rate borrowings 2901.36 2,575.19 3,791.92
Fixed rate borrowings 10.17 33.13 42.89
Total borrowings 2,911.53 2,608.32 3,834.81

(b) Cash flow sensitivity analysis for variable-rate instruments

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period.
For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period
was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to
key management personnel and represents Management’s assessment of the reasonably possible change in interest rates. This
analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

Impact on profit /(loss) - Increase /

(Decrease) in profit
Particulars 31 March, 2018 31 March, 2017
Interest rates – increase by 100 basis points * (29.01) (25.75)
Interest rates – decrease by 100 basis points * 29.01 25.75
* Holding all other variables constant

126 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 38: CAPITAL MANAGEMENT
For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable
to the equity holders of the Company. The primary objective of the Company’s capital management is to safeguard the Company’s
ability to remain as a going concern and maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating
plans, long term and other strategic plans and the requirements of the financial covenants. To maintain or adjust the capital structure,
the Company may adjust its dividend payment ratio to shareholders, return capital to shareholders or issue fresh shares.
The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘equity’. For this purpose, adjusted net debt is defined as
liabilities, comprising interest-bearing loans and borrowings less cash and cash equivalents. Equity comprises all components of
equity including share premium and all other equity reserves attributable to the equity share holders.
The Company’s adjusted net debt to equity ratio are as follows.
Particulars 31 March, 2018 31 March, 2017 01 April, 2016
Borrowings
Long term and Short term borrowings 2,636.63 2,143.95 3,539.16
Current maturities of Long term borrowings 274.90 464.37 295.65
Less: Cash and cash equivalents (299.83) (402.93) (45.93)
Adjusted net debt 2,611.70 2,205.39 3,788.88
Total Equity 7,167.90 6,380.64 3,528.80
Adjusted net debt to equity ratio 0.36 0.35 1.07

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have
been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital of the Company during the current and previous
year.

NOTE 39: EMPLOYEE BENEFITS

A. Defined Benefit Plan- Gratuity
The Company operates a defined benefit gratuity plan, which is governed by the Payment of Gratuity Act, 1972. The plan entitles
an employee who has completed at least five years of continuous service, to gratuity at the rate of fifteen days wages for every
completed year of service or part thereof in excess of six months, based on the last drawn wage by the employee concerned.
The defined benefit gratuity plan is administered by a Trust that is legally separate from the Company. The gratuity plan is a
funded plan, managed by Life Insurance Company (“LIC”) and the Company’s makes annual contributions to Group Gratuity
cum Life Assurance Scheme managed by LIC.
The most recent actuarial valuation of the defined benefit obligation was carried out as at 31 March, 2018. The present value of
the defined benefit obligations and the related current service cost and past service costs were measured using Projected Unit
Credit Method.
These plans typically expose the Company to actuarial risks such as: investment risk, inherent interest rate risk, longevity risk
and salary risk.

Investment Risk The present value of the defined benefit plan liability (denominated in Indian Rupee) is calculated using
a discount rate which is determined by reference to market yields at the end of the reporting period on
government bonds. Currently for the plan in India, it has relatively balanced mix of investments in government
securities, and other debt instruments.
Interest Rate Risk The defined benefit obligation calculated uses a discount rate based in government bonds. If bond yield fall,
the defined benefit obligation will tend to increase.
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.
Salary Risk Higher than expected increases in salary will increase the defined benefit obligation.

Annual Report 2018 127

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 39: EMPLOYEE BENEFITS (Contd.)
Based on the actuarial valuation obtained in this respect, the table below sets out the status of the gratuity plan and the amounts
recognised in the Company’s financial statements as at the balance sheet date.
For the year ended For the year ended
Defined benefit plans 31 March, 2018 31 March, 2017
I Expenses recognised in statement of profit and loss during the year:
Current Service Cost 7.64 4.26
Past Service Cost 2.37 -
Expected return on plan assets (1.17) (1.17)
Interest cost on benefit obligation 2.38 1.34
Total Expenses 11.22 4.43

II Expenses recognised in OCI

Actuarial (Gain) / Losses due to Financial Assumption changes in DBO (1.20) 2.03
Actuarial (Gain)/ Losses due to Experience on DBO 6.27 7.51
Return on Plan Assets (Greater) / Less than Disount rate (0.44) 1.17
Total Expenses 4.63 10.71

III Net Asset /(Liability) recognised as at balance sheet date:

Present value of defined benefit obligation (49.68) (34.34)
Fair Value of Plan Assets 17.36 16.87
Funded status [Surplus/(Deficit)] (32.32) (17.47)

IV Movements in present value of defined benefit obligation

Present value of defined benefit obligation at the beginning of the year 34.34 19.34
Current Service Cost 7.64 4.26
Past service cost 2.37 -
Interest Cost 2.38 1.34
Actuarial (Gain)/Loss 5.07 9.54
Benefits paid (2.12) (0.14)
Present value of defined benefit obligation at the end of the year 49.68 34.34

V Movements in fair value of the plan assets

Opening fair value of plan assets 16.87 16.87
Expected returns on Plan Assets 1.17 1.17
Actuarial (Gain)/Loss on Plan assets 0.44 (1.17)
Contribution from Employer 1.00 0.14
Benefits paid (2.12) (0.14)
Closing fair value of the plan asset 17.36 16.87

VI Maturity profile of defined benefit obligation

Within the next 12 months (next annual reporting period) 9.83 5.26
Between 1 and 5 years 26.19 14.67
Between 5 and 10 years 13.65 9.34
Over 10 years - 5.07

VII Quantitative sensitivity analysis for significant assumptions is as below:

1 Increase/(decrease) on present value of defined benefit obligation at the
end of the year
(i) +100 basis points increase in discount rate (2.24) (2.12)
(ii) -100 basis points decrease in discount rate 2.46 2.20
(iii) +100 basis points increase in rate of salary increase 2.44 1.86
(iv) -100 basis points decrease in rate of salary increase (2.28) (1.85)
2 Sensitivity analysis method
Sensitivity analysisis performed by varying a single parameter while keeping all the other parameters unchanged. Sensitivity
analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may vary if two or more
variables are changed simultaneously. The method used does not indicate anything about the likelihood of change in any
parameter and the extent of the change if any.
128 Parag Milk Foods Limited
 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 39: EMPLOYEE BENEFITS (Contd.)
As at As at
Actuarial Assumptions: 31 March, 2018 31 March, 2017
Discount rate 7.45% 6.95%
Expected return on assets 7.45% 6.95%
Expected rate of salary increase 6.00% p.a 6.00% p.a
Withdrawal rate 14.00% 14.00%
Mortality Indian Assured Lives Indian Assured Lives
Mortality (2006-08) Mortality (2006-08)
Ultimate Ultimate
Notes:
a) The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of
the reporting period on government bonds.
b) The estimates of future salary increases considered in the actuarial valuation take account of inflation, seniority, promotion
and other relevant factors, such as supply and demand in the employment market.
c) The gratuity fund is managed by life insurance company, details of fund invested by insurer are not available with
company.
d) The Company expects to make a contribution of ` 9.83 million to the defined benefit plans (gratuity - funded) during the
next financial year.
e) The average duration of the defined benefit plan obligation at the end of the reporting period is 6.59 years.
B. Defined contribution plan- Provident Fund/Employee State Insurance
The Company has recognised an amount of ` 31.25 million as expenses under the Defined Contribution Plans in the Statement
of Profit & Loss as below:

As at As at
Benefit/Contribution to 31 March, 2018 31 March, 2017
Provident Fund 26.91 21.73
National Pension Scheme 0.97 0.50
Employees State Insurance 3.34 1.98
Labour Welfare Fund 0.03 0.03
Total 31.25 24.24

NOTE 40: GOVERNMENT GRANTS

In accordance with Ind AS 20- “Accounting for Government Grants and disclosure of Government assistance”,
Company has accounted for Industrial Promotion Subsidy under Package Scheme of Incentives, 2013 amounting
to ` 184.83 million ( 31 March, 2017: ` 310.03 million) as Other Operating Income in Statement of Profit and Loss.
The Company has also made duty free imports resulting in custom duty saving amounting to ` 17.07 million (31 March, 2017: 17.08
million), under Advance License Scheme. There is an export commitment, as disclosed under Note 41 f.

NOTE 41: CONTINGENT LIABILITIES

(All figures are in ` million, unless otherwise stated)
Sr As at As at As at
no Particulars 31 March, 2018 31 March, 2017 01 April, 2016
a) Guarantees given by banks on behalf of the Company 5.62 50.10 9.72
b) Sales tax matter under litigation in respect of 76.32 67.35 83.32
Company for FY.2006-07, FY 2009-10 and F.Y. 2010-11
for pending forms and lower allowance on account
of Central Quantum Benefit, against which appeal
has been filed.
c) Claim against the Company not acknowledge as debt 70.68 70.68 70.68
in relation to claim made by France International
Trade, Rennes, vide Special Civil Suit No. 692/2012
dated 07 March, 2012 in the Court of Honourable Civil
Judge, Senior Division, Pune for damaged goods
supplied by the Company. The amount includes
interest of ` 20.37 million

Annual Report 2018 129

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 41: CONTINGENT LIABILITIES (Contd.)
(All figures are in ` million, unless otherwise stated)
Sr As at As at As at
no Particulars 31 March, 2018 31 March, 2017 01 April, 2016
d) Income tax matter under litigation for the AY 2012-13 282.12 135.33 56.55
to AY 2016-17.
f) Duty Liability under advance license scheme 12.91 135.68 62.75
i. The amounts shown above represent the best possible estimates of pending litigations/disputes arrived at on the basis of
available information. The above do not include potential risks/demands, if any, for ongoing issues where no claims have
been made against the Company.
ii. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash
outflows, if any, in respect of the above as it is determinable only on receipt of judgements/ decisions pending with various
forums/ authorities.

NOTE 42: COMMITMENTS

(a) Capital commitments
Capital expenditure contracted for at the end of the reporting period net of capital advance amounting ` 146.64( ` 288.52 million
as on March 31, 2017 and 160.9 million as on April 1, 2016) but not recognised as liabilities.
(b) Other commitments
For commitments in respect of non-cancellable lease refer note 44

NOTE 43: RELATED PARTY DISCLOSURES

Details of related parties:
Description of relationship Name of the related party
A) Enterprise where company exercise control
Subsidiary Bhagyalaxmi Dairy Farms Private Limited
B) Other Related Parties
Key Management Personnel (KMP) Mr. Devendra Shah – Chairman
Key Management Personnel (KMP) Mr. Pritam Shah – Director
Key Management Personnel (KMP) Mr. Vimal Agarwal - CFO (w.e.f. Dec 21, 2017)
Key Management Personnel (KMP) Mr. Bharat Kedia – CFO (till July 11 2017)
Key Management Personnel (KMP) Mr. Nitin R. Dhavalikar - Director
Key Management Personnel (KMP) Mr. Radhika Pereira - Director
Key Management Personnel (KMP) Mr. Narendra Ambwani - Director
Key Management Personnel (KMP) Mr. Ramesh Chandak - Director
Key Management Personnel (KMP) Mr. B. M. Vyas - Director
Key Management Personnel (KMP) Mr. Sunil Goyal - Director
Relative of Key Management Personnel* Late Mr. Parag Shah
Relative of Key Management Personnel* Mr. Prakash Shah
Relative of Key Management Personnel* Miss. Akshali Shah
Relative of Key Management Personnel* Mrs. Priti Shah
Relative of Key Management Personnel* Mrs. Netra Shah
Relative of Key Management Personnel* Mrs. Prity Kedia (till July 11, 2017)
Entity in which KMP can exercise significant influence* Bharat Trading Company
Entity in which KMP can exercise significant influence* SBM Advisors LLP

130 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 43: RELATED PARTY DISCLOSURES (Contd.)
Details of related party transactions for the year ended on 31 March, 2018:

Particulars 2017-18 2016-17

Purchase of Goods
Bhagyalaxmi Dairy Farms Private Limited 364.78 168.95
Bharat Trading Company 13.53 10.12
Sale of Goods
Bhagyalaxmi Dairy Farms Private Limited 11.44 3.26
Commission income on corporate gurantee given
Bhagyalaxmi Dairy Farms Private Limited - 9.00
Remuneration to Key Management Personnel and their relatives *
Devendra Shah 24.00 21.00
Pritam Shah 24.00 20.70
Vimal Agarwal 2.76 -
Bharat kedia 6.34 8.94
Akshali Shah 2.66 1.86
Rent Payment
Bhagyalaxmi Dairy Farms Private Limited 6.60 6.60
Devendra Shah 3.39 3.39
Pritam Shah 0.45 0.45
Priti Shah 0.39 0.39
Netra Shah 0.39 0.39
Prity kedia - 0.96
Interest expense
Devendra Shah 1.43 -
Pritam Shah 7.08 -
Reimbursment of expenses KMP
Devendra Shah 2.02 2.27
Pritam Shah 0.48 0.14
Director sitting fees
Nitin R. Dhavalikar 1.10 1.00
Radhika Pereira 0.80 0.70
Narendra Ambwani 1.00 0.50
Ramesh Chandak 0.90 0.30
Consultancy fee
B.M. Vyas 9.80 9.61
SBM Advisor LLP 2.83 -
Conversion income
Bhagyalaxmi Dairy Farms Private Limited 22.06 -
Advances received (Net)
Bhagyalaxmi Dairy Farms Private Limited 206.99 22.30
Repayment of NCD
Devendra Shah 30.00 -
Pritam Shah 150.00 -
Loan taken
Devendra Shah 30.00 -
Pritam Shah 150.00 -
Loan Paid to
Devendra Shah 30.00 -
Pritam Shah 150.00 -
Corporate guarantee released 300.00 -
* The remuneration to the key managerial person comprises of only Short Form benefits and does not include the provisions made
for gratuity and leave benefits, as they are determined on an actuarial basis for the Company as a whole. Further, the remuneration
to key managerial personnel does not include employee stock compensation expense.

Annual Report 2018 131

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 43: RELATED PARTY DISCLOSURES (Contd.)
Details of balances outstanding at the year end
(` in million)
As at As at As at
Particulars 31 March, 2018 31 March, 2017 April 01, 2016
Amount Payable to
Devendra Shah 1.90 2.41 0.48
Pritam Shah 8.22 1.48 0.73
Bharat Trading Company 3.55 1.62 1.98
Non Convertible debenture
Devendra Shah - 30.00 30.00
Pritam Shah - 150.00 150.00
Personal guarantee issued by
Devendra Shah, Pritam Shah, Parag Shah, Prakash Shah, 5,215.86 4,792.88 4,679.52
Netra Shah, and Priti Shah
Receivable/((Payble)
Bhagyalaxmi Dairy Farms Private Limited (162.62) 44.97 67.27
Advance received from
Bhagyalaxmi Dairy Farms Private Limited - - -
Corporate Guarantee issued to
Bhagyalaxmi Dairy Farms Private Limited - 300.00 300.00

NOTE 44: OPERATING LEASES :

The company has entered into commercial leases for taking office spaces on lease. These leases have an average term of three to five
years with renewal option and escalation clauses included in the agreements. There are no restrictions placed upon the Company by
entering into these leases. The Company has not given any sub lease during the year. Some of the lease arrangements also include
a non-cancellable period. Lease rental debited to Statement of Profit and Loss for the period is ` 156.11 million (31 March, 2017:
` 87.08 millions).
Disclosure for minimum lease rentals payable under non-cancellable lease agreements are as below:

(` in million)
Year Ended Year Ended
Particulars 31 March, 2018 31 March, 2017
Lease rentals due
Not later than one year 11.39 18.14
Later than one year and not later than five years 3.88 15.27
Later than five years - -

NOTE 45 : DISCLOSURE UNDER MICRO, SMALL, AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 :
(` in million)
Particulars 2017-2018 2016-2017
a) Principal amount due to suppliers under MSMED Act, 2006 17.92 22.42
b) Interest accrued, due to suppliers under MSMED Act on the above amount, 0.99 2.34
and unpaid
c) Payment made to suppliers (other than interest) beyond the appointed day 43.43 167.54
during the year
d) Interest paid to suppliers under MSMED Act (Section 16) - -
e) Interest due and payable towards suppliers under MSMED Act for payments 0.99 2.34
already made
f) Interest accrued and remaining unpaid at the end of the year to suppliers 0.99 2.34
under MSMED Act (including interest mentioned in (e) above)
Note: The above information is given to the extent available with the Company and relied upon by the auditor.

132 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 46: EARNINGS PER SHARE
(` in million)
Particulars 2017-2018 2016-2017
Profit/(Loss) attributable to Equity shareholders (` in million)(A) 784.80 (17.63)
Weighted average number of Equity shares for basic EPS (B) 83,887,582 82,359,563
Effect of Dilution :
Weighted average number of Treasury shares held through ESOP Trust 227,000 227,000
Weighted average number of Equity shares adjusted for the effect of dilution 84,114,582 82,586,563
Basic EPS (Amount in `) (A/B) 9.36 (0.21)
Diluted EPS*(Amount in `) (A/C) 9.33 (0.21)
Basic: Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the
weighted average number of equity shares outstanding during the year, excluding equity shares held as treasury shares.

Diluted: Diluted earnings per share is calculated by adjusting the weighted average number of equity shares outstanding during the
year for assumed conversion of all dilutive potential equity shares. Employee share options are dilutive potential equity
shares for the Company.

NOTE 47: SEGMENT REPORTING

The Managing Director of the Company acts as the chief operating decision maker (CODM) of the Company in accordance
with Operating Segment (AS 108), for purpose of assessing the financial performance and position of the Company, and make
strategic decisions. The Company’s business activities are mainly related to processing of milk and manufacturing of milk related
products, which are primarily assessed as a single reportable operating segment in accordance with Ind AS 108 by the CODM.
The information based on geographical areas in relation to revenue and non-current assets are as below:
(a) Revenue from operations
(` in million)
Year Ended Year Ended
Particulars 31 March, 2018 31 March, 2017
Within India 18,584.75 16,442.63
Outside India 596.43 568.22
Total 19,181.18 17,010.85
(b) Non-current operating assets
All non –current assets other than financial instruments, deferred tax assets of the company are located in India
(c) The Company does not have revenues from transactions with a single external customer amount to 10 per cent or more
of the total revenues.

NOTE 48: DISCLOSURE ON CSR EXPENSE

(` in million)
Year Ended Year Ended
Particulars 31 March, 2018 31 March, 2017
a) Gross amount required to be spent by the Company during the period. 7.69 7.99
b) Amount spent during the year on:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
In Cash 8.05 12.36
Yet To be Paid in Cash - 0.02

Annual Report 2018 133

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 49: EMPLOYEE STOCK OPTION SCHEME:
The Board of Directors constituted the equity settled Employee Stock Option Scheme (“ESOS 2015”) vide its resolutions dated 27
February, 2015 and 21 April, 2015 for issue of 696,339 stock options to the key employees of the Company, which has been further
approved in the Company’s Extra ordinary General meeting dated 3 April, 2015 and 16 May, 2015.
Pursuant to the above scheme, the Board of Directors vide its circular resolution dated September 3, 2015, approved grant of 227,000
stock options to its employees on September 4, 2015.
According to ESOP 2015, the employee selected will be entitled to stock options, subject to satisfaction of the prescribed vesting
conditions in the scheme. The contractual life (comprising the vesting period and the exercise period) of options granted is 3 years.
The other relevant terms of the grant are as below
Vesting Period 1 years
Exercise Period 2 Years
Expected Life 3 Years
Exercise Price ` 250.00
Fair value using Black Scholes model on grant date ` 73.86
Date of grant September 03, 2015
The details of activity under ESOS 2015 are summarised below:
(All figures are in ` million, unless otherwise stated)
Year ended on Year ended on 3
31 March, 2018 1 March, 2017
No. of No. of
Particulars options WAEP (`) options WAEP (`)
Outstanding at the beginning of the year - - 227,000 250
Granted during the year - - - -
Forfeited during the year - - 100,073 250
Exercised during the year - -
Exercisable/ Vested during the year - - 126,927 250
Outstanding at the end of the year - - - -

(All figures are in ` million, unless otherwise stated)

Particulars Year Ended Year Ended
31 March, 2018 31 March, 2017
Dividend yield (%)
Expected volatility 41.71% 41.71%
Risk-free interest rate 7.54% 7.54%
Weighted average share price 250 250
Exercise price (`) 250 250
Expected life of options granted in years 3 3
Life of option remaining in months 5 17

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily be the actual outcome
Expenses Arising from share based payment transactions
Total expenses arising from share-based payment transactions recognised in profit or loss as part of employee benefit expense were
as follows:
(All figures are in ` million, unless otherwise stated)
Year Ended Year Ended
Particulars 31 March, 2018 31 March, 2017
Employee option Plans - 7.17

134 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 50: STATEMENT OF IPO PROCEEDS
(All figures are in ` million, unless otherwise stated)
Amount as per
Particulars prospectus Amount to be utilised
Gross proceeds of the fresh issue 3,000.00 3,000.00
Less: Fresh issue expenses 212.00 159.83
Net proceeds of the fresh issue 2,788.00 2,840.17

Amount utilised up Amount utilised up

Particulars 31 March, 2018 Pending utilisation 31 March, 2017 Pending utilisation
Expansion and modernisation of 1,153.27 323.74 730.48 746.53
Plant
Investment in subsidiary for 10.45 12.54 4.56 18.43
financing the capital expenditure
requirements in relation to
expansion and modernisation of
Bhagyalaxmi Dairy Farms
Partial repayment of working 1,000.00 - 1,000.00 -
capital consortium loan
General corporate purposes 340.17 - 284.05 -
Total 2,503.89 336.28 2,019.09 764.96

NOTE 51: TRANSITION TO IND AS

These financial statements are the separate financial statements of the Company (also called standalone
financial statements) prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under Section
133 of the Companies Act, 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015.
For all periods up to and including the year ended 31 March, 2017, the Company had prepared its financial statements in accordance
with Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies
(Accounts) Rules, 2014 (‘Previous GAAP’). Detailed explanation on how the transition from previous GAAP to Ind AS has affected the
Company’s Balance Sheet, financial performance and cash flows is given as under.
Optional exemptions availed and mandatory exemptions
In preparing these financial statements the Company has applied the below mentioned optional exemptions and mandatory
exemptions.
A Optional exemptions availed

1 Property, plant and equipment and intangible assets:

IND AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant a equipment
as recognised in the financial statements as at the date of transition. This exemption can also be used for intangible assets
covered by Ind AS 38.
Accordingly, the group has elected to measure all of its property, plant and equipment and intangible assets.

2 Investment in subsidiary
The Company has elected to measure investments in subsidiary as per the statement of financial position prepared in
accordance with previous GAAP as a deemed cost at the date of transition as per exemption available under Ind AS 101.
Interest in the subsidiary through fair valuation of financial guarantees at initial recognition on transition date had been
accounted as investments in accordance with Ind AS 109. The Company has accounted such fair valuation of financial
guarantees on transition date to the retained earnings.

Annual Report 2018 135

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 51: TRANSITION TO IND AS (Contd.)

3 Long Term Foreign Currency Monetary Items

A first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation
of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately
before the beginning of the first Ind AS financial reporting period as per the previous GAAP. The Company has chosed to
continue this option provided under para D13AA of Ind AS 101.

4 Employee stock option

Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that
vested before April 1, 2016 in accordance with the option provided under para D2 and D3 of Ind AS 101.

5 Fair Value Measurement of Financial assets of Financial Liabilities of Indian region

The Group has elected to apply the requirements of Ind AS 109 “Financial Instruments” relating to accounting of day one
gains or losses prospectively to transactions occurring on or after the date of transition for the financial instruments where
there is no active market as provided under para D20 of Ind AS 101. Accordingly, 0% Non-Convertible Debentures issued to
promoters of the Company in earlier years, have not been fair valued as on transition date and continued at carrying value.
B Mandatory exceptions
1 Estimates:
An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made
for the same date in accordance with previous GAAP (after adjustments to reflect any difference accounting policies),
unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2016 are consistent with the estimates as the same date made in conformity with previous
GAAP, unless if those estimates were not required to be made under previous GAAP. :
2 Derecognition of financial assets and liabilities:
As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, Financials Instruments, prospectively
for transaction occurring on or after date of transition to Ind AS. However, an entity may apply the derecognition requirements
retrospectively from the date choosen by it if the information needed to apply Ind AS 109 to financial assets and financial
liabilities derecognised as a result of past transaction was obtained at the time initially accounting for those transactions.
The Company has elected to apply the derecognition principal of Ind AS 109 retrospectively as reliable information was
available at the time of initally accounting for these transactions.
3 Classification of financial assets:
As per the requirements of Ind AS 101 the Company has assessed classification of financial assets on the basis of the facts
and circumstances that existed at the date of transition to Ind AS.

NOTE 52: FIRST-TIME ADOPTION OF IND AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for comparable periods. The following
tables represent the reconciliations from previous GAAP to Ind AS.
I Reconciliation of equity as at date of transition (1 April, 2016)
(` in million)
Notes to first-
Particulars time adoption Previous GAAP * Adjustments Ind AS
ASSETS
Non-current assets
Property, plant and equipment 2,950.49 - 2,950.49
Capital Work in progress 232.67 - 232.67
Other intangible assets 2.43 - 2.43
Intangible assets under development 45.06 - 45.06
Investment in subsidiary a 577.64 45.00 622.64
Financial assets
Investments 0.06 - 0.06
Other financial assets 91.28 - 91.28
Other non-current assets 70.95 - 70.95
Total non-current assets 3,970.58 45.00 4,015.58

136 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 52: FIRST-TIME ADOPTION OF IND AS (Contd.)
(` in million)
Notes to first-
Particulars time adoption Previous GAAP * Adjustments Ind AS
Current assets
Inventories 2,710.51 - 2,710.51
Financial assets
Trade receivables b 2,330.65 (200.00) 2,130.65
Cash and cash equivalents 45.92 0.01 45.93
Other bank balances 24.65 - 24.65
Other financial assets - - -
Other current assets h&i 844.76 (142.01) 702.75
Total current assets 5,956.49 (342.00) 5,614.49
Total assets 9,927.07 (297.00) 9,630.07
EQUITY AND LIABILITIES
Equity
Equity share capital 704.16 (2.27) 701.89
Other equity a to d, i & j 3,072.70 (245.79) 2,826.91
Total equity 3,776.86 (248.06) 3,528.80
LIABILITIES
Non-current liabilities
Financial liabilities
Borrowings c 1,192.64 (10.49) 1,182.15
Other financial liabilities - - -
Provisions 5.71 - 5.71
Deferred tax liabilities (Net) d 74.55 (62.48) 12.07
Other non-currnent liability 120.00 - 120.00
Total non-current liabilities 1,392.90 (72.97) 1,319.93
Current liabilities
Financial liabilities
Borrowings 2,357.01 - 2,357.01
Trade payables 1,621.18 - 1,621.18
Other financial liabilities a 527.44 24.03 551.47
Other current liabilities 209.96 - 209.96
Provisions 3.58 - 3.58
Current tax liabilities (Net) 38.14 - 38.14
Total current liabilities 4,757.31 24.03 4,781.34
Total equity and liabilities 9,927.07 (297.00) 9,630.07
* The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note
II Reconciliation of equity as at date March 31,2017

(` in million)
Notes to first-
Particulars time adoption Previous GAAP * Adjustments Ind AS
ASSETS
Non-current assets
Property, plant and equipment 3,063.32 - 3,063.32
Capital Work in progress 164.25 - 164.25
Other intangible assets 4.22 - 4.22
Intangible assets under development 41.85 - 41.85
Investment in subsidiary a 577.64 45.00 622.64
Financial assets
Investments 0.06 - 0.06
Other financial assets g 133.45 (1.76) 131.69
Deferred tax assets (Net) 83.63 83.63
Other non-current assets 479.02 - 479.02
Total non-current assets 4,463.81 126.87 4,590.68

Annual Report 2018 137

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 52: FIRST-TIME ADOPTION OF IND AS (Contd.)
(` in million)
Notes to first-
Particulars time adoption Previous GAAP * Adjustments Ind AS
Current assets
Inventories 4,267.21 - 4,267.21
Financial assets
Trade receivables b 2,113.25 (400.00) 1,713.25
Cash and cash equivalents 402.92 0.01 402.93
Other bank balances 597.21 - 597.21
Other financial assets - - -
Current tax Assets (Net) 110.08 110.08
Other current assets h&i 1,304.28 (55.06) 1,249.22
Total current assets 8,794.95 (455.05) 8,339.90
Total assets 13,258.76 (328.18) 12,930.58
EQUITY AND LIABILITIES
Equity
Equity share capital 841.15 (2.27) 838.88
Other equity a to d, i 5,819.97 (278.21) 5,541.76
Total equity 6,661.12 (280.48) 6,380.64
LIABILITIES
Non-current liabilities
Financial liabilities
Borrowings c 713.25 (10.18) 703.07
Other financial liabilities - - -
Provisions 14.58 - 14.58
Deferred tax liabilities (Net) d 42.72 (42.72) -
Other non-current liabilities 120.00 - 120.00
Total non-current liabilities 890.55 (52.90) 837.65
Current liabilities
Financial liabilities
Borrowings 1,440.88 - 1,440.88
Trade payables 3,058.25 - 3,058.25
Other financial liabilities a 708.18 5.20 713.38
Other current liabilities 484.68 - 484.68
Provisions 15.10 - 15.10
Current tax liabilities (Net) - - -
Total current liabilities 5,707.09 5.20 5,712.29
Total equity and liabilities 13,258.76 (328.18) 12,930.58
* The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note
III Reconciliation of total comprehensive income for the year ended 31 March, 2017
(` in million)
Notes to first-
Particulars time adoption Previous GAAP * Adjustments Ind AS
Continuing operations
Revenue from operations 17,010.85 - 17,010.85
Other income a&g 67.25 19.03 86.28
Total income 17,078.10 19.03 17,097.13
Expenses
Cost of materials consumed 13,353.91 13,353.91
Purchases of stock-in-trade 734.41 734.41
Change in inventories of work-in- (1,551.23) (1,551.23)
progress and finished goods
Employee benefit expenses e&f 616.83 (3.53) 613.30
Finance costs c 289.24 0.31 289.55
Depreciation and amortisation expense 472.63 472.63
Other expenses b&h 2,884.72 200.26 3,084.98
Total expenses 16,800.51 197.04 16,997.55

138 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 52: FIRST-TIME ADOPTION OF IND AS (Contd.)
(` in million)
Notes to first-
Particulars time adoption Previous GAAP * Adjustments Ind AS
Profit before exceptional items and tax 277.58 (178.00) 99.58
Exceptional items (193.84) - (193.84)
Profit/(Loss) before tax 83.74 (178.00) (94.26)
Income tax expense
Current tax 25.66 - 25.66
Deferred tax d (42.12) (60.17) (102.29)
Total tax expense (16.46) (60.17) (76.63)
Profit for the year 100.20 (117.83) (17.63)
Other comprehensive income
Items that will not be reclassified to
profit or loss
Remeasurement of Defined Benefit f - (10.71) (10.71)
scheme
Income tax relating to items that will not d 0.00 3.71 3.71
be reclassified to profit or loss
Total Other comprehensive income 0.00 (7.00) (7.00)
Total comprehensive income 100.20 (124.83) (24.63)
IV Impact of Ind AS adoption on the statements of cash flows for the year ended 31 March, 2017
(` in million)
Particulars Notes Previous GAAP Adjustments Ind AS
Net cash flow from operating activities 574.59 (827.37) (252.78)
Net cash flow from investing activities (1,433.91) 566.54 (867.37)
Net cash flow from financing activities 1,216.30 260.85 1,477.15
Net increase/(decrease) in cash and 356.98 0.02 357.00
cash equivalents
Cash and cash equivalents 45.93 - 45.93
as at 1 April, 2016
Effects of exchange rate changes on
cash and cash equivalents
Cash and cash equivalents 402.91 0.02 402.93
as at 31 March, 2017
There were no material differences between the Statement of Cash Flows presented under Ind AS and the Previous GAAP.
Notes to reconciliation

a. Financial Guarantees contract:

Under Ind AS, the Company has recognised fair value of financial guarantee provided to its subsidiary company. The fair value
of such guarantee as at April 01, 2016 has been recognised as additional capital investment in its subsidiary Company and is
amortised over tenure of the guarantee. The impact of amortisation of such fair value of guarantee has been recognised in the
statement of profit and loss as interest income for the year ended 31 March, 2017. Under I-GAAP financial guarantee given was
disclosed as contingent liabilities.

b. Trade receivable: ECL provision

Under Indian GAAP, the Company has created provision for impairment of receivables which consists only in respect of specific
amount for probable losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL)
model. Due to ECL model, the Company impaired its trade receivable by ` 130.78 million (net of related deferred tax) on April 1,
2016 which has been eliminated against other equity and ` 130.78 million (net of deferred tax) during the year ended 31 March,
2017 which has been charged to the statement of profit and loss.

Annual Report 2018 139

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 52: FIRST-TIME ADOPTION OF IND AS (Contd.)
c. Borrowings: Transaction cost
Under Previous GAAP, the Company had recognised transaction costs incurred in respect of borrowings in the Statement of
Profit and Loss in the year in which costs were incurred. Under Ind AS 109, such transaction costs are adjusted against carrying
value of borrowing and are amortised using effective interest rate method over the tenure of the loan. Accordingly loan were
debited and corresponding credit was given to retained earnings on date of transition. Under Ind AS, finance cost has been
charged to statement of profit and loss for amortisation of such transaction cost during the year ended 31 March, 2017.

d. Deferred tax assets

Indian 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 accounting for deferred taxes using the balance sheet
approach, which focuses on temporary difference 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 Indian GAAP. In addition, the various transitional adjustments lead to temporary differences
and the Company has accounted for such differences. Deferred tax adjustment are recognised in correlation to the underlying
transaction either in retained earnings or a separate component in equity.
MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on ‘Accounting for Credit
available in respect of MAT under the Income Tax Act, 1961’ issued by ICAI. However, as per Ind AS, MAT credit entitlement
is generally recognised as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss.
Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets.

e. Share based payments

Under Indian GAAP, the Company recognised only the intrinsic value for employee stock option plan as an expense. Under
Ind AS, the Company is required to determine the fair value of share options using an appropriate model at grant date and
recognised over the vesting period. Accordingly, the same has been recognised as a separate component of equity in Employee
Stock Option outstanding (ESOP) as at April 1, 2016 and as an expense has also been recognised for the same during the year
ended 31 March, 2017. Adjustment has been done to take additional charge arising due to change from intrinsic value to fair
value of ESOSs outstanding.

f. Remeasure of defined benefit plan

Under Ind AS, remeasurement i.e. acturial gain and losses and the return on plan assets, excluding amounts included in the
interest expenses on the net defined liability are recognised in other comprehensive income instead of statement of Profit and
Loss. Under the previous IGAAP, these reimbursements were forming part of the profit and loss for the year. There is no impact
on total equity as at 31 March, 2017 on account of this.
Under Ind AS, all items of income and expense recognised in a period should be included in the Statement of Profit and Loss for
the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or
loss but are shown in the Statement of Profit and Loss as ‘other comprehensive income’ includes remeasurements of defined
benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

g. Interest free security deposits

Under the previous GAAP, interest free security deposits are recorded at their transaction value. Under Ind AS, all financial assets
are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS.
Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.

h. Look through approach for employee welfare trust

Employee welfare trust, financed through interest free loan by the Company and warehousing the shares which have not vested
yet, for distribution to employees of the Company, has been consolidated on line by line basis by reducing from equity share
capital and security premium of the Company for such treasury shares held by the trust.

i. IPO related expenses:

Under the previous GAAP, expenses incurred by the Company aggregating to ` 85.25 million in connection with filing of Draft Red
Herring Prospectus and other related expenses were shown under Other current assets. Under Ind AS the same is considered as
incremental costs directly attributable to the equity transaction and hence the same has been adjusted against other equity.

140 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS (Contd.)
NOTE 53: EXCEPTIONAL ITEM
Exceptional items during the year ended 31 March, 2017 represent VAT tax liability for previous years and interest thereon in respect
of inspection conducted by VAT authorities during the year, wherein certain transactions were identified which were to be considered
as local sales instead of interstate transfer.

NOTE 54:
The Company has acquired the Danone Foods and Beverages India Pvt Ltd.’s manufacturing facility of Curd, Yogurt and other related
products at Rai, Sonipat, Haryana near Delhi through agreement to sell dated April 18, 2018 for ` 141 Mn.

NOTE 55:
Previous period/year figures have been regrouped/reclassified wherever necessary to correspond with the current period/year
classification / disclosure.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

Annual Report 2018 141

Independent Auditor’s Report
To the Members of provisions of the Act, the accounting and auditing standards
Parag Milk Foods Limited and matters which are required to be included in the audit
report under the provisions of the Act and the Rules made
REPORT ON THE CONSOLIDATED IND AS FINANCIAL thereunder.
STATEMENTS
We conducted our audit in accordance with the Standards
We have audited the accompanying Consolidated Ind AS on Auditing specified under Section 143(10) of the Act. Those
Financial Statements of Parag Milk Foods Limited (hereinafter Standards require that we comply with ethical requirements
referred to as “the Holding Company”) and its subsidiary (the and plan and perform the audit to obtain reasonable assurance
Holding Company and its subsidiary together referred to as about whether the Consolidated Ind AS Financial Statements
“the Group”), comprising of the Consolidated Balance Sheet are free from material misstatement.
as at March 31, 2018, the Consolidated Statement of Profit
An audit involves performing procedures to obtain audit
and Loss, the Consolidated Statement of Cash Flows and the
evidence about the amounts and disclosures in the
Consolidated Statement of Changes in Equity for the year then
Consolidated Ind AS Financial Statements. The procedures
ended, and a summary of the significant accounting policies
selected depend on the auditor’s judgment, including the
and other explanatory information (hereinafter referred to as
assessment of the risks of material misstatement of the
“the Consolidated Ind AS Financial Statements”).
Consolidated Ind AS Financial Statements, whether due to
fraud or error. In making those risk assessments, the auditor
MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED
considers internal financial control relevant to the Holding
IND AS FINANCIAL STATEMENTS
Company’s preparation of the Consolidated Ind AS Financial
The Holding Company’s Board of Directors is responsible
Statements that give a true and fair view in order to design
for the preparation of these Consolidated Ind AS Financial
audit procedures that are appropriate in the circumstances.
Statements in terms of the requirements of the Companies Act,
An audit also includes evaluating the appropriateness of
2013 (hereinafter referred to as “the Act”) that give a true and
accounting policies used and the reasonableness of the
fair view of the consolidated financial position, consolidated
accounting estimates made by the Holding Company’s Board
financial performance including other comprehensive income,
of Directors, as well as evaluating the overall presentation of
consolidated cash flows and consolidated changes in equity
the Consolidated Ind AS Financial Statements.
of the Group in accordance with the accounting principles
generally accepted in India, including the Indian Accounting OPINION
Standards (Ind AS) specified under Section 133 of the Act,
In our opinion and to the best of our information and according
read with relevant rules issued thereunder. The respective
to the explanations given to us, the aforesaid Consolidated Ind
Board of Directors of the companies included in the Group
AS Financial Statements give the information required by the
are responsible for maintenance of adequate accounting
Act in the manner so required and give a true and fair view in
records in accordance with the provisions of the Act for
conformity with the accounting principles generally accepted
safeguarding the assets of the Group and for preventing and
in India including the Ind AS, of the consolidated state of affairs
detecting frauds and other irregularities; the selection and
of the Group as at March 31, 2018, their consolidated profit,
application of appropriate accounting policies; making
their consolidated cash flows and consolidated changes in
judgements and estimates that are reasonable and prudent;
equity for the year ended on that date.
and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
ensuring the accuracy and completeness of the accounting
As required by Section 143(3) of the Act, we report, to the
records, relevant to the preparation and presentation of the
extent applicable, that:
Consolidated Ind AS Financial Statements that give a true and
fair view and are free from material misstatement, whether a. We have sought and obtained all the information and
due to fraud or error, which have been used for the purpose of explanations which to the best of our knowledge and
preparation of the Consolidated Ind AS Financial Statements belief were necessary for the purposes of our audit of the
by the Directors of the Holding Company, as aforesaid. aforesaid Consolidated Ind AS Financial Statements;
b. In our opinion, proper books of account as required by
AUDITORS’ RESPONSIBILITY law relating to preparation of the aforesaid Consolidated
Our responsibility is to express an opinion on these Ind AS Financial Statements have been kept by the Group,
Consolidated Ind AS Financial Statements based on our audit. so far as it appears from our examination of those books
While conducting the audit, we have taken into account the and the report of the other auditor;

142 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Independent Auditor’s Report (Contd.)

c. The Consolidated Balance Sheet, the Consolidated g. With respect to the other matters to be included in
Statement of Profit and Loss, the Consolidated Statement the Auditor’s Report in accordance with Rule 11 of the
of Cash Flows and the Consolidated Statement of Changes Companies (Audit and Auditors) Rules, 2014, in our
in Equity dealt with by this Report are in agreement with opinion and to the best of our information and according
the relevant books of account maintained for the purpose to the explanations given to us:
of preparation of the Consolidated Ind AS Financial
i) The Consolidated Ind AS Financial Statements
Statements;
disclose the impact of pending litigations on the
d. In our opinion, the aforesaid Consolidated Ind AS consolidated financial position of the Group -
Financial Statements comply with the Indian Accounting Refer Note 41 to the Consolidated Ind AS Financial
Standards specified under Section 133 of the Act read Statements;
with relevant rules issued thereunder;
(ii) The Group did not have any material foreseeable
e. On the basis of written representations received from
losses on long term contracts including derivative
the directors of the Holding Company as on March 31,
contracts. Hence the question of any material
2018 and taken on record by the Board of Directors of
foreseeable losses do not arise; and
the Holding Company, none of the directors of the Group
companies is disqualified as on March 31, 2018 from (iii) There were no amounts which were required to be
being appointed as a director in terms of Section 164 (2) transferred to the Investor Education and Protection
of the Act; Fund by the Group.

f. With respect to the adequacy of the internal financial

controls over financial reporting of the Group and the For Haribhakti & Co. LLP
operating effectiveness of such controls, we give our Chartered Accountants
separate Report in the “Annexure”. ICAI Firm Registration No.103523W/W100048
_________________
Anup Mundhra
Partner
Membership No.: 061083
Place: Mumbai
Date: May 9, 2018

Annual Report 2018 143

Independent Auditor’s Report (Contd.)
ANNEXURE TO THE INDEPENDENT AUDITOR’S REPORT Our audit involves performing procedures to obtain audit
[Referred to under ‘Report on Other Legal and Regulatory evidence about the adequacy of the internal financial
Requirements’ in the Independent Auditor’s Report of even controls system over financial reporting and their operating
date to the members of Parag Milk Foods Limited on the effectiveness. Our audit of internal financial controls over
Consolidated Ind AS Financial Statements for the year ended financial reporting included obtaining an understanding of
March 31, 2018] internal financial controls over financial reporting, assessing
the risk that a material weakness exists, and testing and
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER evaluating the design and operating effectiveness of internal
CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE control based on the assessed risk. The procedures selected
COMPANIES ACT, 2013 (“THE ACT”) depend on the auditor’s judgement, including the assessment
In conjunction with our audit of the Consolidated Ind AS of the risks of material misstatement of the financial
Financial Statements of the Group as of and for the year statements, whether due to fraud or error.
ended March 31, 2018, we have audited the internal financial We believe that the audit evidence we have obtained is
controls over financial reporting of the Holding Company and sufficient and appropriate to provide a basis for our audit
its subsidiary, which are companies incorporated in India, as opinion on the internal financial controls system over financial
of that date. reporting of the Holding Company and its subsidiary.

MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL

MEANING OF INTERNAL FINANCIAL CONTROLS OVER
CONTROLS
FINANCIAL REPORTING
The respective Board of Directors of the Holding Company and
its subsidiary, which are companies incorporated in India, are A company’s internal financial control over financial reporting
responsible for establishing and maintaining internal financial is a process designed to provide reasonable assurance
controls based on the internal control over financial reporting regarding the reliability of financial reporting and the
criteria established by the respective companies considering preparation of financial statements for external purposes in
the essential components of internal control stated in the accordance with generally accepted accounting principles. A
Guidance Note on Audit of Internal Financial Controls Over company’s internal financial control over financial reporting
Financial Reporting issued by the Institute of Chartered includes those policies and procedures that (1) pertain to the
Accountants of India (ICAI). These responsibilities include maintenance of records that, in reasonable detail, accurately
the design, implementation and maintenance of adequate and fairly reflect the transactions and dispositions of the
internal financial controls that were operating effectively for assets of the company; (2) provide reasonable assurance that
ensuring the orderly and efficient conduct of its business, transactions are recorded as necessary to permit preparation
including adherence to the respective company’s policies, of financial statements in accordance with generally accepted
the safeguarding of its assets, the prevention and detection accounting principles, and that receipts and expenditures
of frauds and errors, the accuracy and completeness of the of the company are being made only in accordance with
accounting records, and the timely preparation of reliable authorisations of management and directors of the company;
financial information, as required under the Companies Act, and (3) provide reasonable assurance regarding prevention
2013. or timely detection of unauthorised acquisition, use, or
disposition of the company’s assets that could have a material
AUDITOR’S RESPONSIBILITY effect on the financial statements.
Our responsibility is to express an opinion on the internal
financial controls over financial reporting of the Holding
INHERENT LIMITATIONS OF INTERNAL FINANCIAL
Company and its subsidiary based on our audit. We conducted
CONTROLS OVER FINANCIAL REPORTING
our audit in accordance with the Guidance Note on Audit
of Internal Financial Controls Over Financial Reporting (the Because of the inherent limitations of internal financial
“Guidance Note”) and the Standards on Auditing specified controls over financial reporting, including the possibility
under section 143(10) of the Act, to the extent applicable to of collusion or improper management override of controls,
an audit of internal financial controls, both issued by the material misstatements due to error or fraud may occur and
ICAI. Those Standards and the Guidance Note require that not be detected. Also, projections of any evaluation of the
we comply with ethical requirements and plan and perform internal financial controls over financial reporting to future
the audit to obtain reasonable assurance about whether periods are subject to the risk that the internal financial control
adequate internal financial controls over financial reporting over financial reporting may become inadequate because of
was established and maintained and if such controls operated changes in conditions, or that the degree of compliance with
effectively in all material respects. the policies or procedures may deteriorate.

144 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Independent Auditor’s Report (Contd.)

OPINION
In our opinion, the Holding Company and its subsidiary over financial reporting criteria established by the respective
have, in all material respects, an adequate internal financial companies considering the essential components of internal
controls system over financial reporting and such internal control stated in the Guidance Note on Audit of Internal
financial controls over financial reporting were operating Financial Controls Over Financial Reporting issued by the
effectively as at March 31, 2018, based on the internal control ICAI.

For Haribhakti & Co. LLP

Chartered Accountants
ICAI Firm Registration No.103523W/W100048
_________________
Anup Mundhra
Partner
Membership No.: 061083
Place: Mumbai
Date: May 9, 2018

Annual Report 2018 145

Consolidated Balance Sheet
AS AT 31 MARCH, 2018
(All figures are in ` million unless otherwise stated)
Particulars Notes 31 March, 2018 31 March, 2017 31 March, 2016
ASSETS
Non-current assets
Property, plant and equipment 4 3,922.66 3,330.93 3,211.96
Capital work-in-progress 203.99 164.25 232.67
Other intangible assets 5 47.46 4.99 3.42
Intangible assets under development - 42.27 45.48
Biological Assets other than bearer plants 6 290.87 251.93 232.01
Financial assets
Investments 7 5.05 0.06 0.06
Loans 8 3.50 3.19 2.66
Other financial assets 9 95.57 132.29 91.38
Deferred tax assets (Net) 36 75.22 91.90 13.90
Other non-current assets 10 119.69 479.02 74.11
Total 4,764.01 4,500.83 3,907.65
Current assets
Inventories 11 4,379.34 4,285.18 2,724.26
Financial assets
Trade receivables 12 2,517.20 1,750.20 2,159.92
Cash and cash equivalents 13 310.01 411.19 51.62
Other bank balances 14 186.00 597.31 25.21
Current tax Assets (Net) 15 - 111.76 1.54
Other current assets 16 1,658.71 1,213.28 647.51
Total 9,051.26 8,368.92 5,610.06
Total assets 13,815.27 12,869.75 9,517.71
EQUITY AND LIABILITIES
Equity
Equity share capital 17 838.88 838.88 701.89
Other equity 18 6,282.75 5,409.75 2,630.05
Total 7,121.63 6,248.63 3,331.94
LIABILITIES
Non-current liabilities
Financial Liabilities
Borrowings 19 635.15 703.07 1,187.86
Provisions 20 A 35.46 15.59 6.11
Other non current Liabilities 21 58.20 120.00 120.00
Total 728.81 838.66 1,313.97
Current liabilities
Financial liabilities
Borrowings 22 2,001.48 1,440.88 2,357.01
Trade payables 23 3,032.55 3,118.71 1,678.31
Other financial liabilities 24 742.50 722.25 584.37
Other current liabilities 25 113.02 485.28 210.33
Provisions 20 B 13.76 15.34 3.64
Current Tax Liabilities (Net) 26 61.52 - 38.14
Total 5,964.83 5,782.46 4,871.80
Total liabilities 6,693.64 6,621.12 6,185.77
Total equity and liabilities 13,815.27 12,869.75 9,517.71
Significant accounting policies 3
The accompanying notes form an integral part of these Financial Statements.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

146 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Consolidated Statement of Profit and Loss

FOR THE YEAR ENDED 31 MARCH, 2018
(All figures are in ` million unless otherwise stated)
Year ended Year ended
Particulars Notes 31 March, 2018 31 March, 2017
REVENUE
Revenue from operations 27 19,545.06 17,307.39
Other income 28 119.98 128.90
Total 19,665.04 17,436.29
EXPENSES
Cost of materials consumed 29 13,042.24 13,405.89
Purchases of stock-in-trade 30 688.18 734.41
Changes in inventories of work-in-progress and finished goods 31 (51.53) (1,552.04)
Employee benefit expense 32 686.19 668.87
Finance costs 33 357.33 333.07
Depreciation and amortisation expense 34 505.95 489.64
Other expenses 35 3,247.10 3,173.83
Total 18,475.46 17,253.67
Profit before exceptional items and tax 1,189.58 182.62
Exceptional items 55 - (193.84)
Profit/(Loss) before tax 1,189.58 (11.22)
Tax expense 36
Current tax 300.73 25.66
Deferred tax 18.29 (84.44)
Profit/(Loss) after tax 870.56 47.56
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of the defined benefit plans (4.66) (11.20)
Income Tax effect 1.61 3.86
Other comprehensive income for the year, net of tax (3.05) (7.34)
Total comprehensive income for the year 867.51 40.22
Earnings per equity share of face value of ` 10/- each:
Basic earnings per share (in `) 39 10.38 0.58
Diluted earnings per share (in `) 39 10.35 0.58
Significant accounting policies 3
The accompanying notes form an integral part of these Consolidated Financial Statements.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

Annual Report 2018 147

Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 MARCH, 2018
EQUITY SHARE CAPITAL (REFER NOTE 17) (All amounts are in ` million unless otherwise stated)
Particulars Amount
Balance at the beginning of 1 April, 2016 159.70
Add: Issued during the year- face value per share at ` 10/- 544.46
Less: Shares Held by ESOP Trust ( Treasury Shares) (2.27)
Balance at the end of 31 March, 2016 701.89
Add: Issued during the year- face value per share at ` 10/- 136.99
Balance at the end of March 31, 2017 838.88
Add: Change during the year -
Balance at the end of March 31, 2018 838.88

Other equity (refer note 18)

Reserves and Surplus
Employee
Stock Other
Securities Debeture Options Compre-
Premium General redemption Outstand- Retained hensive
Particulars Reserve Reserve reserve ing Earnings Income Total
Balance as at April 1, 2016 1,647.18 20.00 18.00 9.60 935.35 (0.08) 2,630.05
Profit after tax for the year - - - - 47.56 - 47.56
Other comprehensive income for the year - - - - - (7.34) (7.34)
Deferred Employee Compensation Expense - 7.39 - (0.23) - - 7.16
Creation of Debenture Redemption Reserve - - 4.50 - (4.50) - -
Securities premium credited on share issue 2,863.01 - - - - - 2,863.01
Securities premium debited on IPO expense (130.69) - - - - - (130.69)
Balance as at March 31, 2017 4,379.50 27.39 22.50 9.37 978.41 (7.42) 5,409.75
Profit after tax for the year - - - - 870.56 - 870.56
Other comprehensive income for the year - - - - - (3.05) (3.05)
Deferred Employee Compensation Expense - 1.67 - (1.67) - - -
Transfer of Debenture Redemption Reserve on - 22.50 (22.50) - - - -
redemption
Securities premium credited for unutilised IPO 56.11 - - - - - 56.11
expense provision
Dividend paid - - - - (42.06) - (42.06)
Tax on dividend - - - - (8.56) - (8.56)
Balance as at March 31, 2018 4,435.61 51.56 - 7.70 1,798.35 (10.47) 6,282.75
Significant accounting policies 3
The accompanying notes form an integral part of these Consolidated Financial Statements.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

148 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Consolidated Statement of Cash Flow

FOR THE YEAR ENDED 31 MARCH, 2018
(All amounts are in ` million unless otherwise stated)
Year ended Year ended
Particulars March 31, 2018 March 31, 2017
A. Cash flow from operating activities
Net Profit before taxation 1,189.58 (11.22)
Add :
Depreciation/amortisation 505.95 489.64
Provision for doubtful debts 160.00 300.17
Loss on sale of fixed assets - 0.18
Unrealised forex (gain)/loss 10.83 -
Fair valuation loss - mutual fund 0.08 -
Interest expense 357.33 333.07
Bad debts 14.82 1.72
Loss on sale or death of livestock 32.56 40.16
Less :
Other comprehensive income (3.05) (7.34)
Fair value change of livestock (80.00) (73.63)
Profit on sale of Property, Plant and Equipment - (0.04)
Reversal of provision for doubtful debts (4.82) -
Interest income (37.41) (60.31)
Operating profit before working capital changes 2,145.87 1012.40
Adjustments for :
(Increase) / decrease in inventories (94.17) (1,560.92)
(Increase) / decrease in trade receivables (937.00) 107.84
(Increase) / decrease in non-current and current financial assets 36.42 (41.44)
(Increase) / decrease other non-current and current assets (393.83) (685.56)
(Increase) / decrease other bank balances 411.31 (572.10)
Increase / (decrease) in non-current and current financial liabilities 217.03 5.16
Increase / (decrease) in other non-current and current liabilities (434.06) 274.95
Increase / (decrease) in trade payables (86.15) 1,440.40
Increase / (decrease) in provisions 18.28 21.18
Cash generated from operations 883.70 1.91
Direct taxes paid (net of refunds) (129.06) (167.58)
Net cash flow from operating activities 754.64 (165.67)
B. Cash Flow from Investing Activities
Purchase of property plant and equipment (770.26) (944.12)
Purchase of intangible assets (10.44) (0.46)
Sale of livestock 8.50 13.55
Sale of fixed assets 2.40 0.97
Investment in fixed deposits/mutual funds (5.07) -
Interest received 41.92 56.56
Net cash used in investing activities (732.95) (873.50)
C. Cash Flow from Financing Activities
Proceeds from long term borrowings 210.00 3.01
Proceeds from issue of shares (net of issue expenses) - 3,000.00
Proceeds / (repayment) short term borrowings (net) 560.60 (916.13)
Proceeds / (repayment) unsecured loan (net) - (180.00)

Annual Report 2018 149

Consolidated Statement of Cash Flow (Contd.)
FOR THE YEAR ENDED 31 MARCH, 2018
(All amounts are in ` million unless otherwise stated)
Year ended Year ended
Particulars March 31, 2018 March 31, 2017
Repayment of long term borrowings (483.58) (168.25)
Payment of dividend (50.62) -
Interest paid (359.27) (339.89)
Net cash flow from financing activities (122.87) 1,398.74
Net increase in cash and cash equivalents (A+B+C) (101.18) 359.57
Cash and cash equivalents at the beginning of the year [Refer Note 13] 411.19 51.62
Cash and cash equivalents at the end of the year [Refer Note 13] 310.01 411.19

In part A of Statement of Cash Flows, amounts in bracket indicate deductions made from net profit for deriving net cash flow from
operating activities and in part B & C amounts in bracket indicate outflows.
The above Statement of Cash Flows has been prepared under the Indirect-Method as set out in Ind AS 7- Statement of Cash Flows.
Non cash movement in borrowings include addition/deletion on account of unrealised foreign exchange loss/(gain) of ` 1.99 million
( March 31, 2017: ` (18.05) million) in respect of Foreign Currency Loan.
Significant accounting policies 3
The accompanying notes form an integral part of these Consolidated Financial Statements.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018

150 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
1. CORPORATE INFORMATION Accounting Standards (Ind AS), Ind AS 101, First-time
The consolidated financial statements comprises Adoption of Indian Accounting Standards has been
financial statements of Parag Milk Foods Limited (“the applied. An explanation of how the transition to Ind AS
parent”) and its subsidiary Bhagyalaxmi Dairy Farms Pvt has affected the previously reported financial position,
Ltd (collectively “the Group”). financial performance is provided in Note 54.

The parent is a public listed company incorporated under The consolidated financial statements were authorised
the provisions of the Companies Act, 1956 and its equity for issue by the Parent’s Board of Directors on May 9,
shares are listed on the National Stock Exchange (NSE) 2018.
and Bombay Stock Exchange (BSE) in India. Details of the Group’s accounting policies are included in
The Group is engaged in the business of production and Note 3.
procurement of cow milk mainly in western and southern C. Functional and presentation currency
region, undertakes processing of milk and manufacture
These consolidated financial statements are presented in
of various value added products namely cheese, butter,
Indian Rupees (`), which is also the Groups’s functional
ghee, fresh cream, milk, milk powder, flavoured milk,
currency. All amounts have been rounded-off to two
lassi, curd etc. which are marketed under its registered
decimal places to the nearest millions, unless otherwise
brand name “Gowardhan”, “Go”, “Pride of Cows” and
indicated.
“Topp up”.
D. Basis of measurement
2. BASIS OF PREPARATION The consolidated financial statements have been
A. Consolidated Financial Statements prepared on the historical cost basis except for the
following items:
The consolidated financial statements incorporate
the financial statements of the company and all its Items Measurement Basis
subsidiaries, being the entities that it controls. Control is Certain financial assets Fair value
evidenced where the group has power over the investee and liabilities
or is exposed, or has rights to variable returns from its Shared-based payments Fair value
involvement with the investee and has the ability to
Biological Assets Fair Value
affect those returns through its power over the investee.
Power is demonstrated through existing rights that give Net defined benefit (asset)/ Present value of defined
liability benefit obligation less Fair
the ability to direct relevant activities, which significantly
value of plan assets
affect the entity returns. The financial statements of
subsidiaries are prepared for the same reporting year E. Current / non-current classification of assets/
as the parent company. Where necessary, adjustments liabilities
are made to the financial statements of subsidiaries The Group has classified all its assets/liabilities into
to align the accounting policies of the group. For non current/non-current portion based on the time frame
wholly owned subsidiaries. A share of the profit/loss for of 12 months from the date of the financial statements.
the financial year and net assets is contributed to the Accordingly, assets/liabilities expected to be realised
non-controlling interests as shown in the consolidated /settled within 12 months from the date of financial
statement of profit and loss statements are classified as current and other assets/
B. Statement of compliance liabilities are classified as non-current

The financial statements of the Group have been prepared F. Use of estimates and judgements
in accordance with Indian Accounting Standards (Ind AS) In the preparation of the financial statements, the Group
as per the Companies (Indian Accounting Standards) makes judgements, estimates and assumptions about
Rules, 2015 notified under Section 133 of Companies Act, the carrying amount of assets and liabilities that are
2013, (the ‘Act’) and other relevant provisions of the Act. not readily apparent from other sources. The estimates
The financial statements up to and for the year ended and associated assumptions are based on historical
31 March 2017 were prepared in accordance with the experience and other factors that are considered to be
Companies (Accounting Standards) Rules, 2006, notified relevant. Actual results may differ from these estimates.
under Section 133 of the Act and other relevant provisions Estimates and underlying assumptions are reviewed
of the Act. on an ongoing basis. Revisions to accounting estimates
As these are the Groups’s first consolidated financial are recognised prospectively. Information about
statements prepared in accordance with Indian assumptions, judgements and estimation uncertainties

Annual Report 2018 151

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
that have a significant risk of resulting in a material Cost of an item of property, plant and equipment
adjustment in the year ending 31 March 2018 are as includes its purchase price, duties, taxes, after
below and also been discussed in detail in the relevant deducting trade discounts and rebates, any directly
section of accounting policies. attributable cost of bringing the item to its working
  Measurement of defined benefit obligations: key condition for its intended use and estimated costs
of dismantling and removing the item and restoring
actuarial assumptions;
the site on which it is located.
  Useful life of property, plant and equipment
The cost of a self-constructed item of property,
  Fair value measurement of financial instruments
plant and equipment comprises the cost of
  Fair value measurement of biological assets materials, direct labour and any other costs
  Impairment of financial assets. directly attributable to bringing the item to its
intended working condition and estimated costs
G. Measurement of fair values
of dismantling, removing and restoring the site
Certain accounting policies and disclosures of the Group on which it is located, wherever applicable. If
require the measurement of fair values, for both financial significant parts of an item of property, plant
and non financial assets and liabilities. and equipment have different useful lives, then
Fair values are categorised into different levels in a fair they are accounted for as separate items (major
value hierarchy based on the inputs used in the valuation components) of property, plant and equipment.
techniques as follows: Any gain or loss on disposal of an item of property,
  Level 1: quoted prices (unadjusted) in active plant and equipment is recognised in statement of
markets for identical assets or liabilities. profit or loss.

  Level 2: inputs other than quoted prices included in ii. Transition to Ind AS
Level 1 that are observable for the asset or liability, On transition to Ind AS, the Group has elected
either directly (i.e. as prices) or indirectly (i.e. to continue with the carrying value of all of its
derived from prices). property, plant and equipment recognised as on 1
  Level 3: inputs for the asset or liability that are not April 2016, measured as per the previous GAAP, and
use that carrying value as the deemed cost of such
based on observable market data (unobservable
property, plant and equipment (refer note 55).
inputs).
iii. Subsequent expenditure
When measuring the fair value of an asset or a liability,
the Group uses observable market data as far as possible. Subsequent expenditure is capitalised only if it
If the inputs used to measure the fair value of an asset is probable that the future economic benefits
or a liability fall into a different levels of the fair value associated with the expenditure will flow to the
hierarchy, then the fair value measurement is categorised Group.
in its entirety in the same level of the fair value hierarchy iv. Depreciation
as the lowest level input that is significant to the entire Depreciation on cost of fixed assets is provided on
measurement. straight line method at estimated useful life, which
Further information about the assumptions made in the is in line with the estimated useful life as specified
in Schedule II of the Companies Act, 2013, except for
measuring fair values is included in the following notes:
Second hand machineries which are depreciated
  Share-based payments
over an estimated useful life of 10 years based on
  Financial instruments. management estimate.
  Fair valuation of biological assets Depreciation on additions is provided on a prorata
basis from the date of ready to use and in case
3. SIGNIFICANT ACCOUNTING POLICIES of Projects from the date of commencement
a) Property, plant and equipment of commercial production. Depreciation on
deductions/disposals is provided on a pro-rata
i. Recognition and measurement basis upto the month proceeding the month of
Items of property, plant and equipment, are deduction/disposal.
measured at cost (which includes capitalised The residual values, useful lives and methods of
borrowing costs, if any) less accumulated depreciation of property, plant and equipment are
depreciation and accumulated impairment losses, reviewed at each financial year-end and adjusted
if any. prospectively, if appropriate.

152 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
v. Reclassification to investment property d) Impairment
When the use of a property changes from owner- i. Financial assets
occupied to investment property, the property is The Group recognises loss allowances using the
reclassified as investment property at its carrying expected credit loss (ECL) model for the financial
amount on the date of classification. assets which are not fair valued through profit or
vi. Capital work-in-progress includes cost of property, loss. Loss allowance for trade receivables with no
plant and equipment under installation / under significant financing component is measured at
development as at the balance sheet date. an amount equal to lifetime ECL with simplified
b) Intangible assets approach. For all other financial assets, expected
credit losses are measured at an amount equal to the
i. Recognition and measurement 12-month ECL, unless there has been a significant
Intangible assets that are acquired by the Group, increase in credit risk from initial recognition in
which have finite useful lives, are measured at cost which case those are measured at lifetime ECL.
less accumulated amortisation and accumulated The amount of expected credit losses (or reversal)
impairment losses. that is required to adjust the loss allowance at the
Cost includes expenditures that are directly reporting date to the amount that is required to be
attributable to the acquisition of the intangible recognised is recognised as an impairment gain or
asset. loss in statement of profit or loss.

ii. Subsequent expenditure ii. Non -financial assets

Subsequent expenditure is capitalised only when Intangible assets and property, plant and equipment
it increase the future economic benefits embodied Intangible assets and property, plant and
in the specific assets to which it relates. All other equipment are evaluated for recoverability
expenditure are recognised in profit or loss as whenever events or changes in circumstances
incurred. indicate that their carrying amounts may not be
recoverable. For the purpose of impairment testing,
iii. Amortisation
the recoverable amount (i.e. the higher of the
Amortisation is recognised in profit or loss on a fair value less cost to sell and the value-in-use) is
straight line basis over the estimated useful lives determined on an individual asset basis unless the
of the intangible assets from the date that they are asset does not generate cash flows that are largely
available for use. The estimated useful lives are as independent of those from other assets. In such
follows: cases, the recoverable amount is determined for
Assets Useful life (years) the CGU to which the asset belongs. If such assets
are considered to be impaired, the impairment
Trade Marks 10
to be recognised in the Statement of Profit and
Website Development 3
Loss is measured by the amount by which the
Computer Software 3 carrying value of the assets exceeds the estimated
Amortisation method, useful lives and residual recoverable amount of the asset. An impairment
values are reviewed at the end of each financial year loss is reversed in the statement of profit and loss
and adjusted if appropriate. if there has been a change in the estimates used to
determine the recoverable amount. The carrying
iv. Transition to Ind AS amount of the asset is increased to its revised
On transition to Ind AS, the Group has elected recoverable amount, provided that this amount
to continue with the carrying value of all of its does not exceed the carrying amount that would
intangible assets recognised as at 1 April 2016, have been determined (net of any accumulated
measured as per the previous GAAP, and use that amortisation or depreciation) had no impairment
carrying value as the deemed cost of such intangible loss been recognised for the asset in prior years.
assets (Refer note 55).
e) Leases
c) Biological Asset The determination of whether an arrangement is
Biological Assets i.e. livestock (cows) are measured at (or contains) a lease is based on the substance of
fair value less costs to sell, with any change therein the arrangement at the inception of the lease. The
recognised in statement of profit and loss. arrangement is, or contains, a lease if fulfilment of the

Annual Report 2018 153

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
arrangement is dependent on the use of a specific asset Work-in-progress is valued at input material cost plus
or assets and the arrangement conveys a right to use the conversion cost as applicable.
asset or assets, even if that right is not explicitly specified Stock-in-trade and finished goods are valued at the lower
in an arrangement. For arrangements entered into prior of net realisable value and cost (including prime cost and
to 1 April 2016, the date of inception is deemed to be other overheads incurred in bringing the inventories to
1 April 2016 in accordance with Ind-AS 101 First-time their present location and condition), computed on a first
Adoption of Indian Accounting Standard. in first out basis.
For arrangements entered into prior to 1 April 2016,
g) Financial instruments
the Group has determined whether the arrangement
contains lease on the basis of facts and circumstances i. Recognition and initial measurement
existing on the date of transition. The Group initially recognises financial assets and
As a lessee financial liabilities when it becomes a party to
the contractual provisions of the instrument. All
Leases in which a significant portion of the risks and
financial assets and liabilities are measured at fair
rewards of ownership are not transferred to the Group
value on initial recognition. Transaction costs that
as lessee are classified as operating leases. Payments
are directly attributable to the acquisition or issue
made under operating leases (net of any incentives
of financial assets and financial liabilities that are
received from the lessor) are charged to profit or loss on a
not at fair value through profit or loss are added
straight-line basis over the period of the lease unless the
to the fair value on initial recognition. Regular way
payments are structured to increase in line with expected
purchase and sale of financial assets are accounted
general inflation to compensate for the lessor’s expected
inflationary cost increases. for at trade date.

As a lessor ii. Classification and subsequent measurement

Financial Assets
Lease income from operating leases where the Group is
a lessor is recognised in income on a straight-line basis Financial assets carried at amortised cost
over the lease term unless the receipts are structured A debt instrument is subsequently measured at
to increase in line with expected general inflation to amortised cost if it is held within a business model
compensate for the expected inflation. whose objective is to hold the asset in order to
f) Inventories collect contractual cash flows and the contractual
terms of the financial asset give rise on specified
Inventories are valued at the lower of cost (including
dates to cash flows that are solely payments of
prime cost, excise duty and other overheads incurred
principal and interest on the principal amount
in bringing the inventories to their present location
outstanding.
and condition) and estimated net realisable value, after
providing for obsolescence, where appropriate. The Financial assets at fair value through other
comparison of cost and net realisable value is made comprehensive income
on an item-by-item basis. The net realisable value of A debt instrument is subsequently measured at fair
materials in process is determined with reference to the value through other comprehensive income if it is
selling prices of related finished goods. Raw materials, held within a business model whose objective is
packing materials and other supplies held for use in achieved by both collecting contractual cash flows
production of inventories are not written down below and selling financial assets and the contractual
cost except in cases where material prices have declined, terms of the financial asset give rise on specified
and it is estimated that the cost of the finished products dates to cash flows that are solely payments of
will exceed their net realisable value. principal and interest on the principal amount
The provision for inventory obsolescence is assessed outstanding.
regularly based on estimated usage and shelf life of In case, the Group’s management has made an
products. irrevocable election at the time of initial recognition
Raw materials, packing materials and stores and spares to account for the equity investment (Other than
are valued at cost computed on first in first out basis. The Investments in equity instruments of Subsidiary) fair
cost includes purchase price, inward freight and other value through other comprehensive income. This
incidental expenses net of refundable duties, levies and election is not permitted if the equity investment is
taxes, where applicable. held for trading. The classification is made on initial
recognition and is irrevocable.

154 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Investment in subsidiary h) Revenue recognition
Investment in subsidiary is carried at cost in the Revenue is recognised when it is probable that the
standalone financial statements of the Parent economic benefits associated with a transaction flow
to the company in the ordinary course of its activities
Financial assets at fair value through profit or loss
and the amount of revenue can be measured reliably.
A financial asset which is not classified in any of
Revenue is measured at the fair value of the consideration
the above categories are subsequently fair valued
received or receivable, net of returns, trade discounts and
through profit or loss.
volume rebates allowed by the Group.
Financial liabilities Revenue includes only the gross inflows of economic
Financial liabilities are subsequently carried at benefits, including excise duty, received or receivable by
amortised cost using the effective interest method. the company, on its own account. Amount collected on
For trade and other payables maturing within one behalf of third parties such as sales tax, value added tax
year from the balance sheet date, the carrying and goods and services tax are excluded from revenue.
amounts approximate fair value due to the short
Processing charges is recognised as per the terms of the
maturity of these instruments.
contract when the related services are rendered.
iii. Derecognition Dividend income is recognised when the Group’s right
Financial assets to receive the payment is established, which is generally
The Group derecognises a financial asset when the when shareholders approve the dividend.
contractual rights to the cash flows from the financial Interest income is recognised using the effective interest
asset expire, or it transfers the right to receive the method.
contractual cash flows in a transaction in which
i) Foreign currencies
substantially all of the risks and rewards of ownership
of the financial assets are transferred or in which the Initial Recognition
Group neither transfers nor retains substantially all On initial recognition, transaction in foreign currencies
of the risks and rewards of ownership and does not entered into by the Group are recorded in the functional
retain control of the financial asset. currency (INR), by applying to the foreign currency
If the Group enters into transactions whereby it amount, the spot exchange rate between the functional
transfers assets recognised on its balance sheet, but currency and the foreign currency at the date of the
retains either all or substantially all of the risks and transaction. Exchange differences arising on foreign
rewards of the transferred assets, the transferred exchange transactions settled during the year are
assets are not derecognised. recognised in the Statement of Profit & Loss.
Financial liabilities Measurement of foreign currency items at reporting date
The Group derecognises a financial liability when its Foreign currency monetary items of the Group are
contractual obligations are discharged or cancelled, translated at the closing exchange rates. Non monetary
or expire. items that are measured at historical cost in foreign
The Group also derecognises a financial liability currency are translated using the exchange rates at
when its terms are modified and the cash flows the date of the transaction. Non monetary items that
under the modified terms are substantially are measured at fair value in a foreign currency, are
different. In this case, a new financial liability based translated using the exchange rates at the date when the
on the modified terms is recognised at fair value. fair value is measured.
The difference between the carrying amount of the Exchange differences arising out of these translations
financial liability extinguished and a new financial are recognised in the Statement of Profit & Loss except
liability with modified terms is recognised in the exchange differences on long term foreign currency
statement of profit and loss. monetary items related to acquisition of fixed assets
iv. Offsetting prior to transition to Ind AS, which are included in the
Financial assets and financial liabilities are offset cost of fixed assets.
and the net amount presented in the balance sheet j) Government grants
when, and only when, the Group currently has a
Government grants are recognised where there is
legally enforceable right to set off the amounts and it
reasonable assurance that the grant will be received and
intends either to settle them on a net basis or realise
all attached conditions will be complied with. When the
the asset and settle the liability simultaneously.
grant relates to revenue, it is recognised in the statement

Annual Report 2018 155

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
of profit and loss on a systematic basis over the periods realised or the liability is settled, based on the laws
to which they relate. When the grant relates to an asset, that have been enacted or substantively enacted by
it is treated as deferred income and recognised in the the reporting date.
statement of profit and loss on a systematic basis over The measurement of deferred tax reflects the tax
the useful life of the asset. consequences that would follow from the manner
k) Income tax in which the Group expects, at the reporting date,
Income tax comprises current and deferred tax. It is to recover or settle the carrying amount of its assets
recognised in profit or loss except to the extent that and liabilities.
it relates to a business combination or to an item The Group offsets, the current tax assets and
recognised directly in equity or in other comprehensive liabilities (on a year on year basis) and deferred
income. tax assets and liabilities, where it has a legally
enforceable right and where it intends to settle such
i. Current tax
assets and liabilities on a net basis.
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year Presentation of current and deferred tax
and any adjustment to the tax payable or receivable Current and deferred tax are recognised as income
in respect of previous years. The amount of current or an expense in the Statement of Profit & Loss,
tax reflects the best estimate of the tax amount except when they relate to items that are recognised
expected to be paid or received after considering in Other Comprehensive Income, in which case,
the uncertainty, if any related to income taxes. It is the current and deferred tax income/ expense are
measured using tax rates (and tax laws) enacted or recognised in Other Comprehensive Income.
substantively enacted by the reporting date. The Group offsets current tax assets and current tax
ii. Deferred tax liabilities, where it has legally enforceable right to
set off the recognised amounts and where it intends
Deferred tax is recognised in respect of temporary
either to settle on a net basis, or to realize the asset
differences between the carrying amounts of assets
and settle the liability simultaneously. In case of
and liabilities for financial reporting purposes
deferred tax assets and deferred tax liabilities, the
and the corresponding amounts used for taxation
same are offset if the Group has legally enforceable
purposes. Deferred tax is also recognised in respect
right to set off corresponding current tax assets
of carried forward tax losses and tax credits.
against current tax liabilities and the deferred tax
Deferred tax is not recognised for:
assets and deferred tax liabilities relate to income
 temporary differences arising on the initial
taxes levied by the same tax authority on the Group.
recognition of assets or liabilities in a
MAT Credits are in the form of unused tax credits
transaction that is not a business combination
that are carried forward by the Group for a specified
and that affects neither accounting nor taxable
period of time, hence it is grouped with Deferred Tax
profit or loss at the time of transaction.
Asset/Net of Deferred tax liabilities.
 temporary differences related to investments
in subsidiaries, associates and interests in joint l) Borrowing costs
ventures, when the timing of the reversal of the Borrowing costs directly attributable to the acquisition
temporary differences can be controlled and it or construction of those property, plant and equipment
is probable that the temporary differences will which necessarily takes a substantial period of time to
not reverse in the foreseeable future. get ready for their intended use are capitalised. All other
Deferred tax assets are recognised to the extent borrowing costs are expensed in the period in which they
that it is probable that future taxable profits will be incur in the statement of profit and loss.
available against which they can be used. m) Provisions, contingent liabilities and contingent
Deferred tax assets recognised or unrecognised are assets
reviewed at each reporting date and are recognised The Group recognizes the provisions when a present
/ reduced to the extent that it is probable / no longer obligation (legal or constructive) as a result of past event
probable respectively that the related tax benefit exists and it is probable that an outflow of resources
will be realised. embodying economic benefits will be required to settle
Deferred tax is measured at the tax rates that are such obligation and the amount of such obligation can be
expected to apply to the period when the asset is reliably estimated.

156 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
If the effect of time value of money is material, provisions determined based on actuarial valuation or discounted
are discounted using a current pre-tax rate that reflects present value method carried out at each balance sheet
when appropriate, the risk specific to the liability. When date. The expected cost of accumulating compensated
discounting is used, the increase in provision due to absences is determined by actuarial valuation performed
passage of time is recognised as a finance cost. by an independent actuary as at every year end using
A disclosure for a contingent liability is made when there projected unit credit method on the additional amount
is possible obligation or a present obligation that may, expected to be paid / availed as a result of the unused
but probably will not require an outflow of resources entitlement that has accumulated at the balance sheet
embodying the economic benefits or the amount of such date. Expense on non-accumulating compensated
obligation cannot be measured reliably. When there is absences is recognised in the period in which the
possible obligation or a present obligation in respect of absences occur.
which likelihood of outflow of resources embodying the o) Share-based payments
economic benefits is remote, no provision or disclosure is The cost of equity-settled transactions is determined by
made. the fair value at the date when the grant is made using
Contingent assets are not recognised. However, when the an appropriate valuation model. That cost is recognised,
realisation of income is virtually certain, then the related together with a corresponding increase in share-based
asset is no longer a contingent asset, and is recognised as payment (SBP) reserves in equity, over the period in
an asset. which the performance and/or service conditions are
fulfilled in employee benefits expense. The dilutive effect
n) Employee benefits
of outstanding options is reflected as additional share
Short-term employee benefits dilution in the computation of diluted earnings per share.
All employee benefits falling due wholly within twelve p) Cash and cash equivalents
months of rendering the services are classified as short-
Cash and cash equivalents includes cash on hand,
term employee benefits, which include benefits like
demand deposits with banks, other short-term highly
salaries, wages, short-term compensated absences and
liquid investments with original maturities of three
performance incentives and are recognised as expenses
months or less.
in the period in which the employee renders the related
service. q) Earnings per share
Basic Earnings Per Share (‘EPS’) is computed by dividing
Post-employment benefits
the net profit attributable to the equity shareholders
Contributions to defined contribution schemes such by the weighted average number of equity shares
as Provident Fund, Employees State Insurance., are outstanding during the year. Diluted earnings per share
recognised as expenses in the period in which the is computed by dividing the net profit by the weighted
employee renders the related service. The Group has no average number of equity shares considered for deriving
further obligations beyond its monthly contributions. basic earnings per share and also the weighted average
The Group also provides for post-employment defined number of equity shares that could have been issued
benefit in the form of gratuity. The cost of providing upon conversion of all dilutive potential equity shares.
benefit is determined using the projected unit credit Dilutive potential equity shares are deemed converted
method, with actuarial valuation being carried out at as of the beginning of the year, unless issued at a later
each balance sheet date. Remeasurement of the net date. In computing diluted earnings per share, only
benefit liability, which comprise actuarial gains and potential equity shares that are dilutive and that either
losses, the return on plan assets (excluding interests) and reduces earnings per share or increases loss per share are
the effect of the assets ceiling (if any, excluding interest) included. The number of shares and potentially dilutive
are recognised in other comprehensive income. The equity shares are adjusted retrospectively for all periods
effect of any plan amendments are recognised in net presented for the share splits.
profit in the Statement of Profit and Loss.
r) Cash flow statement
Other long-term employee benefits Cash flows are reported using indirect method, whereby
All employee benefits (other than post-employment net profits before tax is adjusted for the effects of
benefits and termination benefits) which do not fall due transactions of a non-cash nature and any deferrals or
wholly within twelve months after the end of the period accruals of past or future cash receipts or payments and
in which the employees render the related services are items of income or expenses associated with investing or

Annual Report 2018 157

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
financing cash flows. The cash flows from regular revenue Based on the preliminary assessment performed
generating (operating activities), investing and financing by the Group, the impact of application of the
activities of the Group are segregated. Standards is not expected to be material.
s) Segment Reporting ii. Appendix B to Ind AS 21, Foreign currency
Operating segments are reported in a manner transactions and advance consideration:
consistent with the internal reporting provided to the The Appendix clarifies that the date of the
Chief Operating Decision Maker (CODM) of the Group. transaction for the purpose of determining the
The CODM is responsible for allocating resources and exchange rate to use on initial recognition of assets,
assessing performance of the operating segments of the expense or income (or part of it) is the date on which
company the entity initially recognises the non-monetary
t) Recent accounting pronouncements/ Standards asset or non monetary liability arising from the
issued but not yet effective: payment or receipt of advance consideration
towards such assets, expenses or income. If there
In March 2018, the Ministry of Corporate Affairs (MCA)
are multiple payments or receipt in advance, then
issued the Companies (Indian Accounting Standards)
an entity must determine transaction date for each
Amendment Rules, 2018, notifying Ind AS 115, Revenue
from Contract with Customers, Appendix B to Ind AS 21, payment or receipts of advance consideration.
Foreign currency transactions and advance consideration The impact of the appendix on the financial
and amendments to certain other standards. These statements, as assessed by the Group, is expected
amendments are in line with recent amendments to be not material.
made by International Accounting Standards Board
iii. Ind AS 12 - Income taxes
(IASB). These amendments are applicable to the Group
In March 2018, the Ministry of Corporate Affairs issued
from 1st April, 2018. The Company will be adopting the
the Companies (Indian Accounting Standards)
amendments from their effective date.
(Amendments) Rules, 2018, notifying amendments
i. Ind AS 115 Revenue from Contract with Customers: to Ind AS 12, ‘Income taxes’. The amendments are
Ind AS 115 supersedes Ind AS 11, Construction applicable to the Company from April 01, 2018. The
Contracts and Ind AS 18, Revenue. Ind AS 115 requires amendments explain how to apply the recognition
an entity to report information regarding nature, and measurement requirements in Ind AS 12 Income
amount, timing and uncertainty of revenue and taxes when there is uncertainity over income tax
cash flows arising from a contract with customers. treatment. The amendments considers that:
The principle of Ind AS 115 is that an entity should
- Tax law determines which deductions are
recognize revenue that demonstrates the transfer
offset against taxable income in determining
of promised goods and services to customers at an
taxable profits
amount that reflects the consideration to which the
- No deferred tax asset is recognised if the
entity expects to be entitled in exchange for those
goods or services. The standard can be applied reversal of the deductible temporary
either retrospectively to each prior reporting period difference will not lead to tax deductions.
presented or can be applied retrospectively with The Group is evaluating the impact of this
recognition of cumulative effect of contracts that amendment on its financial statements. However,
are not completed contracts at the date of initial based on preliminary assessment, there will not be
application of the standard. any material impact on the financial position and
performance of the Group.

158 Parag Milk Foods Limited

 NOTE 4: PROPERTY, PLANT AND EQUIPMENT (All amounts are in ` million unless otherwise stated)
Leasehold Furniture Office
Freehold building Plant and and equip-
Particulars land Improvements Buildings Machinery Fixtures Vehicles ment Computer Total
Year ended March 31, 2017
Notes
Gross carrying amount
Deemed cost as at April 1, 2016 67.30 6.48 677.42 2,420.44 12.85 16.40 7.65 3.42 3,211.96
Additions during the year 4.72 31.39 9.51 520.89 10.22 8.80 3.44 18.69 607.66
Disposals during the year - - - (0.18) - (0.97) - - (1.15)
Closing gross carrying amount as at March 31, 2017 72.02 37.87 686.93 2,941.15 23.07 24.23 11.09 22.11 3,818.47
Accumulated depreciation
Depreciation charge during the year - 3.90 31.92 439.68 2.09 5.13 2.68 2.14 487.54
Closing accumulated depreciation as at March 31, 2017 - 3.90 31.92 439.68 2.09 5.13 2.68 2.14 487.54
Net carrying amount as at March 31, 2017 72.02 33.97 655.01 2,501.47 20.98 19.10 8.41 19.97 3,330.93
Year ended March 31, 2018
Gross carrying amount
Opening gross carrying amount 72.02 37.87 686.93 2,941.15 23.07 24.23 11.09 22.11 3,818.47
Regrouping / other adjustments 0.01 - (0.01) (0.12) 0.01 0.02 (0.09) 0.10 (0.08)
Additions during the year - 0.21 138.54 937.44 2.21 0.16 1.41 9.95 1,089.92
Disposals during the year - - - (2.53) - - - - (2.53)
Closing gross carrying amount as at March 31, 2018 72.03 38.08 825.46 3,875.94 25.29 24.41 12.41 32.16 4,905.78
Accumulated depreciation
Opening accumulated depreciation - 3.90 31.92 439.68 2.09 5.13 2.68 2.14 487.54
Depreciation charge during the year - 14.26 34.07 429.85 2.69 3.53 2.47 8.84 495.71
Disposals during the year - - - (0.13) - - - - (0.13)
Closing accumulated depreciation as at March 31, 2018 - 18.16 65.99 869.40 4.78 8.66 5.15 10.98 983.12
Net carrying amount as at March 31, 2018 72.03 19.92 759.47 3,006.54 20.51 15.75 7.26 21.18 3,922.66
Under the Indian GAAP, Group was following the accounting treatment as per paragraph 46/ 46A of AS 11 'The Effects of Changes in Foreign Exchange Rates', with respect to exchange
differences arising on restatement of long term foreign currency monetary items. Exchange differences on account of depreciable assets was added/ deducted from the cost of the
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

depreciable asset, which was depeciated over the balance life of the asset. Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting
treatment in respect of the long-term foreign currency monetary items recognised in the Financial Statements for the period ending immediately before the beginning of the first Ind AS
financial reporting period. The Group has opted to apply this exemption and accordingly the Company has adjusted foreign exchange loss of ` 0.40 million for the year ended March 31,
2018 (March 31, 2017: Gain of ` 15.75 million) arising on reporting of long term foreign currency monetary item against the historical cost of fixed assets.
For property, plant and equipment existing as at April 1, 2016, i.e. date of transition to Ind AS, the Group has used Indian GAAP carrying values as deemed cost as permitted by Ind AS
101 - First time adoption. Accordingly, the net carrying value as per previous GAAP as at April 1, 2016 has been considered as deemed cost under Ind AS.
For details of assets given as security against borrowings, Refer Note 19 and Note 22.
Amount of contractual commitments for the acquisition of PPE, Refer Note 42

Annual Report 2018 159

Corporate overview Statutory Reports Financial statements
Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 5: OTHER INTANGIBLE ASSETS
(All figures are in ` million unless otherwise stated)
Computer Website Brands / Trade
Particulars software Development Marks Total
Year ended March 31, 2017
Gross carrying amount
Deemed cost as at April 1, 2016 3.11 0.13 0.18 3.42
Additions during the year 3.67 - - 3.67
Closing gross carrying amount as at March 31, 2017 6.78 0.13 0.18 7.09
Accumulated amortisation
Amortisation charge for the year 1.92 0.12 0.06 2.10
Closing accumulated amortisation as at March 31, 2017 1.92 0.12 0.06 2.10
Closing net carrying amount as at March 31, 2017 4.86 0.01 0.12 4.99
Year ended March 31, 2018
Gross carrying amount
Opening gross carrying amount as at 1 April 2017 6.78 0.13 0.18 7.09
Regrouping / other adjustment - (0.01) - (0.01)
Additions during the year 52.72 - - 52.72
Closing gross carrying amount as at March 31, 2018 59.50 0.12 0.18 59.80
Accumulated amortisation
Opening accumulated amortisation 1.92 0.12 0.06 2.10
Amortisation charge for the year 10.16 - 0.08 10.24
Closing accumulated amortisation as at March 31, 2018 12.08 0.12 0.14 12.34
Closing net carrying amount as at March 31, 2018 47.42 - 0.04 47.46
There are no contractual commitments for the acquisition of intangible assets.
For intangible assets existing as at April 1, 2016, i.e. date of transition to Ind AS, the group has used Indian GAAP carrying values as
deemed cost as permitted by Ind AS 101 - First time adoption. Accordingly, the net carrying value as per previous GAAP as at April 1,
2016 has been considered as deemed cost under Ind AS.

NOTE 6 : BIOLOGICAL ASSET OTHER THAN BEARER PLANT - LIVESTOCK (COWS)

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Balance beginning of the year 251.93 232.01 225.66
Less: Decrease due to sale/disposal (41.06) (53.71) (40.30)
Add/(Less): Change in fair value less cost to sell # 80.00 73.63 46.65
Fair Value as at the end of the period 290.87 251.93 232.01
# Represents change in price as well as changes on account of biological transformation. There have been no new purchase/
acquisitions of biological assets.

160 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 7: INVESTMENTS
(All figures are in ` million unless otherwise stated)
31 March, 2018 31 March, 2017 01 April, 2016
Quantity Quantity Quantity
Particulars (Nos) Value (Nos) Value (Nos) Value
Unquoted
Investment in equity instruments (fully paid-up)
Investment in other entities (fair value through Profit and Loss)
OPGS Power Gujarat Private Limited 218,000 0.07 - - - -
Other Investments
Investment in other entities (fair value through Profit and Loss)
Rupee Co-Operative Bank Ltd. 3,800 0.04 3,800 0.04 3,800 0.04
Sharad Sahakari Bank Ltd. 318 0.02 318 0.02 318 0.02
Investment in mutual fund (fair value through Profit and Loss)
UBI Mutual Fund 499,990 4.92 - - - -
Total 5.05 0.06 0.06

Total non-current investments 5.05 0.06 0.06

Aggregate amount of quoted investments and market value thereof - - -
Aggregate amount of unquoted investments 5.05 0.06 0.06
Aggregate amount of impairment in the value of investments - - -

NOTE 8: LOANS - NON CURRENT

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Unsecured considered good
Security Deposits 3.50 3.19 2.66
Total 3.50 3.19 2.66

NOTE 9: OTHER FINANCIAL ASSETS

(All figures are in ` million unless otherwise stated)

Particulars March 31, 2018 March 31, 2017 April 1, 2016

Unsecured, considered good
Fixed deposits having original maturity of more than one year 2.72 15.86 8.87
Interest Receivable 0.34 2.89 2.23
Deposits 92.51 113.54 80.28
Total 95.57 132.29 91.38

NOTE 10: OTHER NON-CURRENT ASSETS

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Unsecured, considered good
Capital advances 119.69 479.02 74.11
Total 119.69 479.02 74.11

Annual Report 2018 161

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 11 : INVENTORIES (AT LOWER OF COST AND NET REALISABLE VALUE)
(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Raw materials 31.33 43.42 35.70
Work-in-progress 2,212.34 2,010.08 1,371.23
Finished goods 1,900.03 2,050.76 1,137.57
Packing material 104.77 76.26 91.64
Stores and spares 130.87 104.66 88.12
Total 4,379.34 4,285.18 2,724.26
For Inventories pledged as securities against borrowings, see note 19 and note 22.

The above includes goods in transit as below:

Particulars March 31, 2018 March 31, 2017 April 1, 2016

Stock in transit - finished goods - 4.18 1.44
The cost of inventories recognised as an expense includes ` 13.91 million (March 31, 2017: ` 10.50 million) in respect of write down of
inventories to net realizable value. Further, a sum of ` 10.50 million (March 31, 2017: Nil) in respect of reversal of such write downs.
Previous write downs have been reversed as a result of appreciation in market price of such inventories.

NOTE 12: TRADE RECEIVABLES

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Unsecured, Considered good 2,517.20 1,750.20 2,159.92
Unsecured, Considered doubtful 814.96 659.78 370.85
Less: Allowance for doubtful debts (814.96) (659.78) (370.85)
Total 2,517.20 1,750.20 2,159.92
No trade receivables are due from directors or other officers of the Group either severally or jointly with any other person. Nor any
trade and other receivables are due from firms or private companies respectively in which any directors is a partner, a director or a
member.
The Group’s exposure to credit and currency risk related to trade receivables are disclosed in Note 38 A and Note 38 C.

NOTE 13: CASH AND CASH EQUIVALENTS

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Balances with banks
- in current accounts 64.02 52.20 39.61
Fixed deposits with original maturity of less than three months 236.08 336.61 2.14
Cash on hand 9.91 22.38 9.87
Total 310.01 411.19 51.62

NOTE 14: OTHER BANK BALANCES

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Fixed deposits (having original maturity of more than three months 186.00 597.31 25.21
but less than twelve months)
Total 186.00 597.31 25.21

NOTE 15: CURRENT TAX ASSETS (NET)

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Advance income tax (Net of Provisions) - 111.76 1.54
Total - 111.76 1.54

162 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 16: OTHER CURRENT ASSETS
(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Advances other than Capital advances
Unsecured, considered good:
Prepaid Expenses 11.26 8.36 6.03
Advances & other recoverables 945.67 715.84 295.12
Sub-Total 956.93 724.20 301.15
Recoverable from statutory and government authorities
Unsecured, considered good:
Electricity duty receivable 23.11 23.11 18.86
PSI incentive & export subsidy receivable 626.45 439.11 292.74
VAT & Sales tax receivable 52.22 17.86 27.13
Unsecured, considered doubtful 17.21 17.21 17.21
Less: Provision for doubtful advances (17.21) (17.21) (17.21)
Sub-Total 701.78 480.08 338.73
Unsecured, considered good:
Deposits - 3.29 2.53
Interest receivable - 4.51 0.77
Others - 1.20 4.33
Sub-Total - 9.00 7.63
Grand Total 1,658.71 1,213.28 647.51

NOTE 17: EQUITY SHARE CAPITAL

Authorised equity share capital (All figures are in ` million unless otherwise stated)
Particulars Number of shares (Nos.) Face Value Amount
As at April 1, 2016 100,000,000 10.00 1,000.00
Change during the year - - -
As at March 31, 2017 100,000,000 10.00 1,000.00
Change during the year - - -
As at March 31, 2018 100,000,000 10.00 1,000.00

Issued, subscribed and fully paid up share capital

Particulars Number of shares (Nos.) Face Value Amount
As at April 1, 2016 * 70,188,887 10.00 701.89
Issued during the year 13,698,695 10.00 136.99
As at March 31, 2017 83,887,582 838.88
Issued during the year - - -
As at March 31, 2018 83,887,582 10.00 838.88
* excluding shares issued to ESOP trust

Terms and rights attached to equity shares

The Holding Company has only one class of shares referred to as equity shares having a par value of ` 10/- per share. Each holders
of equity shares carry one vote per share without restrictions and are entitled to dividend, as and when declared. In the event 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 amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

Annual Report 2018 163

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Details of shareholders holding more than 5% shares
31 March, 2018 31 March, 2017 01 April, 2016
Number Number Number
of shares % of shares % of shares %
Particulars (Nos.) holding (Nos.) holding (Nos.) holding
Mr. Devendra Prakash Shah 15,006,400 17.89% 14,570,832 17.37% 14,570,832 20.76%
Mr. Pritam Prakash Shah 9,159,888 10.92% 9,159,888 10.92% 9,159,888 13.05%
Mrs. Netra Pritam Shah 8,867,027 10.57% 8,268,149 9.85% 10,272,782 14.63%
IDFC Trustee Co. Ltd A/C IDFC Infrastructure Fund 5,074,234 6.05% 5,074,234 6.05% 14,134,162 20.13%
India Business Excellence Fund - - 442,511 0.53% 4,359,749 6.21%

As per records of the holding Company, including its register of shareholders/members, the above shareholding represents legal
ownerships of shares. The above percentage have been computed after excluding 227,000 no’s of equity shares issued to ESOP Trust.
Information on equity shares (Nos.) allotted without receipt of cash or allotted as bonus shares or shares bought back

March 31, March 31 March 31 March 31 March

2018 31,2017 2016 2015 2014
Equity shares allotted as fully paid-up pursuant to contracts - - 12,084,385 - -
for consideration other than cash, by way of conversion of
compulsorily convertible debentures
Equity shares allotted as fully paid bonus shares by capitalization - - 42,135,038 - -
of securities premium and surplus balance.

NOTE 18: OTHER EQUITY

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Securities Premium Reserve 4,435.61 4,379.50 1,647.18
General Reserve 51.56 27.39 20.00
Debeture redemption reserve - 22.50 18.00
Retained Earnings 1,798.35 978.41 935.35
Employee Stock Options Outstanding 7.70 9.37 9.60
Other Comprehensive Income (10.47) (7.42) (0.08)
Total 6,282.75 5,409.75 2,630.05

Movement in Reserves
Particulars March 31, 2018 March 31, 2017
Securities Premium Reserve
Opening Balance 4,379.50 1,647.18
Add: Securities premium credited on share issue - 2,863.01
Less: Securities premium debited on IPO expense 56.11 (130.69)
Closing Balance 4,435.61 4,379.50
General Reserves
Opening Balance 27.39 20.00
Add: Transfer from Surplus - 7.39
Add: Transfer from Employee Stock Options Outstanding 1.67 -
Add: Transfer from Debenture redemption reserve 22.50 -
Closing Balance 51.56 27.39
Debenture redemption reserve
Opening Balance 22.50 18.00
Add: Transfer from Surplus - 4.50
Less: Transfer to General Reserve (22.50) -
Closing Balance - 22.50

164 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Particulars March 31, 2018 March 31, 2017
Retained earnings
Opening Balance 978.41 935.35
Add: Profit after tax for the year 870.56 47.56
Less: Transfer to debenture redemption reserve - (4.50)
Less: Dividends (42.06) -
Less: Dividend distribution tax (8.56) -
Closing Balance 1,798.35 978.41
Employee Stock Options Outstanding
Opening Balance 9.37 9.60
Add: Deferred Employee Compensation Expense - (0.23)
Less: Transfer to General reserve (1.67) -
Closing Balance 7.70 9.37
Other Comprehensive Income
Opening Balance (7.42) (0.08)
Add: For the year (3.05) (7.34)
Closing Balance (10.47) (7.42)
Closing balance 6,282.75 5,409.75

Securities premium reserve represents premium received on equity shares issued, which can be utilised only in accordance with the
provisions of the Companies Act, 2013 (the Act) for specified purposes.
General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as
dividend payout, bonus issue, etc
Debenture redemption reserve represents reserve created out of profit / retained earnings at specified value of debentures to be
redeemed by the Holding Company. The Holding Company has transferred the balance to general reserve as the debentures have
been redeemed during the year.
Retained earnings represents surplus/ accumulated earnings of the Group and are available for distribution to shareholders.
The shares option outstanding account is used to recognise the grant date fair value of options issued to employees under the
Employee Stock Grant Scheme which are invested as on the reporting date and is net of the deferred employee compensation
expense.

Distribution made and proposed to be made

Particulars March 31, 2018 March 31, 2017

Cash dividends on equity shares declared and paid :
Final dividend
For the year ended on March 31, 2017: : ` 0.50 per share (March 31, 2016 : Nil) 42.06 -
DDT on final dividend 8.56 -
Proposed dividend on equity shares :
Final equity dividend
For the year ended on March 31, 2018: `0.75 per share (March 31, 2017 : `0.50 per share) 62.92 42.06
DDT on proposed dividend 12.93 8.56

Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognised as a liability
(including DDT thereon) as at March 31, 2018.

Annual Report 2018 165

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 19: BORROWINGS - NON-CURRENT
(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Secured
Term loans
From banks
Rupee currency loan 164.12 64.53 186.35
Foreign currency loan 461.50 616.66 791.36
Vehicle loan 0.43 1.58 2.63
From other parties
Vehicle loan 9.10 20.30 27.52
Unsecured
0% Non-Convertible Debentures (payable to promoters) - - 180.00
Total 635.15 703.07 1,187.86

Indian rupee loans taken by the Holding Company from a bank of ` 164.12 million (March 31, 2017 : ` 64.53 million, April 1, 2016 :
` 180.64 million) carry interest @ 10.50%-13.00%. The loans are repayable over 38-59 monthly instalments starting from Feb 2013,
November 2013 and March 2018 along with interest. The loan is secured by pari passu charge on fixed assets and second pari passu
charge on current assets of the Company and personal guarantee of Promoter Directors.
Indian rupee loan taken by the subsidiary company from a bank of ` Nil million (March 31, 2017 : ` Nil million, April 1, 2016 : ` 5.71
million) carries interest @ 13.25%. The loan is to be repaid in 66 equal monthly installments starting from March 2012. The loan is
secured by existing fixed assets of the subsidiary, mortgage of land owned by Promoter Directors and corporate guarantee given by
the holding Company.
Foreign currency loan taken by the Holding Company from a financial institution of ` 461.50 million (March 31, 2017 : ` 616.66
million, April 1, 2016 : ` 791.36 million) carries interest @ 5.15%-5.92%. The loans are repayable in 12 semi annual instalments along
with interest starting from June, 2016. The loan is secured by first pari passu charge on movable and immovable fixed property of
the holding Company and second pari passu charge of entire current assets of the Company along with other banks and personal
guarantees of Directors and their relatives.
Hire purchase loan taken by the Holding Company from banks of ` 0.43 million (March 31, 2017 : ` 1.58 million, April 1, 2016 : ` 2.63
million) carries interest @ 9.38% to 11.24 % p.a. The loans are repayable in 36 to 60 monthly instalments starting from the respective
date of finance. The loan is secured by specific assets financed (vehicle).
Indian rupee loans taken by the Holding Company from financial institutions of ` 9.10 million (March 31, 2017 : ` 20.26 million, April 1,
2016 : ` 27.52 represents loan secured by hypothecation of equipments and vehicles. The loans are repayable over 36 - 78 instalments
and carry interest in the range of 9.75 - 12.98%.
The Holding Company had made an issue of 18,000,000 Nos of Non Convertible Debentures of nominal value of ` 10 each aggregating
` 180.00 million at 0% interest to the Promoters. The life of such debentures is 10 years from the issue date, i.e., March 2013 or any
time to be redeemed on demand after the Comany’s IPO. During the year 2017-18, all debenture have been redeemed based on
demand made by promoters.

NOTE 20 A: PROVISIONS - NON-CURRENT

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Provision for compensated absences 12.45 8.61 5.76
Provision for gratuity (net) (Refer note No. 40) 23.01 6.98 0.35
Total 35.46 15.59 6.11

NOTE 20 B: PROVISIONS - CURRENT

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Provision for compensated absences 3.27 3.88 1.11
Provision for gratuity (net) (Refer note No. 40) 10.49 11.46 2.53
Total 13.76 15.34 3.64

166 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 21: OTHER NON-CURRENT LIABILITIES
(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Deposit from customers 58.20 120.00 120.00
Total 58.20 120.00 120.00

NOTE 22: BORROWINGS - CURRENT

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Secured
Loans repayable on demand
From banks- Cash Credit 2,001.48 1,440.88 2,357.01
Total 2,001.48 1,440.88 2,357.01

Cash credit availed from banks by Holding Company is secured by first pari passu charge on all current assets and second pari
passu charge on fixed assets of the Holding Company, personal guarantee of Promoter Directors and their relative. The cash credit is
repayable on demand and carries interest @ 12.40% p.a. to 15.00% p.a.

NOTE 23: TRADE PAYABLES - CURRENT (ALSO REFER NOTE 36B, 36C & 45)
(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Due to micro and small enterprises (refer note 45) 18.91 24.76 42.43
Others 3,013.64 3,093.95 1,635.88
Total 3,032.55 3,118.71 1,678.31

NOTE 24: OTHER CURRENT FINANCIAL LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Current maturities of long-term debt (refer note 19)* 274.90 469.72 330.17
Interest accrued but not due on borrowings 15.06 16.99 23.81
Deposits 160.10 73.83 60.78
Employee related Liabilities 56.11 67.88 62.68
Creditor for Capital Goods 226.21 84.74 90.68
Finance Guarantee Obligation - 5.20 15.03
Directors remuneration payable 10.12 3.89 1.22
Total 742.50 722.25 584.37
* includes NCD issued to promoters (refer note 43)

NOTE 25: OTHER CURRENT LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Statutory tax payables 69.91 212.84 45.33
Advances from customers 43.11 272.44 165.00
Total 113.02 485.28 210.33

NOTE 26: CURRENT TAX LIABILITIES

(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Current Tax Liability (Net of advance) 61.52 - 38.14
Total 61.52 - 38.14

Annual Report 2018 167

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 27 : REVENUE FROM OPERATIONS
(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Sale of products 19,021.11 16,827.64
Other operating revenue 523.95 479.75
Total 19,545.06 17,307.39

NOTE 28: OTHER INCOME

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Interest income
Bank deposits 36.34 60.10
Others 0.73 -
Foreign exchange fluctuation (Net) - 5.52
Profit on sale of property, plant and equipments - 0.04
Gain arrising on changes in fair value of livestock 80.00 42.00
Recoupment of financial guarantee contract 5.20 9.83
Interest income on security deposit 0.34 0.21
Reversal of provision for doubtful debts 4.82 -
Miscellaneous income (7.45) 11.20
Total 119.98 128.90

NOTE 29: COST OF MATERIALS CONSUMED

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Raw material consumed
Inventory at the beginning of the year 43.42 35.70
Add: Purchases 11,552.61 12,148.12
Add: Purchase of fodder/ generation of raw manure 193.74 179.97
Add: Conversion charges - -
Less: Inventory at the end of the year (31.33) (43.42)
11,758.44 12,320.37
Packing material, stores spares & consumables consumed
Inventory at the beginning of the year 180.92 179.75
Add: Purchases 1,338.52 1,086.69
Less: Inventory at the end of the year (235.64) (180.92)
1,283.80 1,085.52
Total 13,042.24 13,405.89

NOTE 30: PURCHASE OF STOCK IN TRADE

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Milk products 688.18 734.41
Total 688.18 734.41

168 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 31: CHANGES IN INVENTORIES OF WORK-IN-PROGRESS AND FINISHED GOODS
(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Inventories at the beginning of the year
Finished goods 2,050.76 1,137.57
Work-in progress 2,010.08 1,371.23
Total 4,060.84 2,508.80
Inventories at the end of the year
Finished goods 1,900.03 2,050.76
Work-in progress 2,212.34 2,010.08
Total 4,112.37 4,060.84
Changes in inventories of work-in-progress and finished goods (51.53) (1,552.04)

NOTE 32: EMPLOYEE BENEFIT EXPENSE

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Salaries and wages 597.81 589.96
Contributions to provident and other funds 31.93 24.53
Staff welfare expenses 45.05 42.70
Gratuity (refer note 40) 11.40 4.51
Expenses on Employees Stock Options Scheme (refer note 50) - 7.17
Total 686.19 668.87

NOTE 33: FINANCE COSTS

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Interest on debts and borrowings 303.45 282.02
Other Borrowing Cost 53.88 51.05
Total 357.33 333.07

NOTE 34: DEPRECIATION AND AMORTISATION EXPENSE

(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Depreciation of property, plant and equipment 495.71 487.54
Amortisation of intangible assets 10.24 2.10
Total 505.95 489.64

Annual Report 2018 169

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 35: OTHER EXPENSES
(All figures are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Transport, octroi & freight 46.69 40.33
Power and fuel 513.00 473.69
Rent, rates & taxes 235.37 291.19
Insurance 15.63 14.74
Repairs to Plant and machinery 75.18 123.30
Repairs to Building 10.12 14.80
Repairs to Others 30.67 32.04
Other factory expenses 95.47 103.29
labour charges 246.54 155.34
Office Expense 16.95 23.53
Exchange fluctuation (net) 10.83 -
Hire charges 2.37 1.76
Security charges 19.32 18.70
Travelling & conveyance 62.48 68.51
Communication costs 12.15 11.93
Printing and stationery 5.00 6.87
Legal & professional fees (refer note 43) 97.25 36.45
Director's remuneration 48.00 41.70
Auditor's remuneration # 4.69 4.53
Advertisements and marketing expenses 123.70 251.62
Sales promotion expenses 403.87 264.66
Commission on sales 57.76 53.83
Agency charges for export 7.70 9.26
Carriage outward 729.29 725.50
Loss on sale of assets - 0.18
Donations 1.11 0.78
CSR expenses (Refer Note 49) 8.05 12.38
Expected Credit Loss Provisioning 160.00 300.17
Miscellaneous expenses 127.15 31.02
Selling and distribution expenses 33.38 19.85
Bad debts 14.82 1.72
[adjusted with provision for bad debts ` Nil (March 31, 2017: ` 11.24 million)]
Loss on sale or death of livestock 32.56 40.16
Total 3,247.10 3,173.83

# Details of payments to auditors

For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Payment to auditors
Audit fee 4.56 4.46
Re-imbursement of expenses 0.13 0.07
Total 4.69 4.53

170 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 36: INCOME TAX

a) The major components of recognised deferred tax assets/(liabilities) arising on account of temporary differences are as
follows:
For the year ended March 31, 2018 (All amounts are in ` million unless otherwise stated)
Net balance Recognised Recognised Net balance
April 1, in profit or Recognised in Balance- March 31,
Particulars 2017 loss in OCI Sheet 2018
Deferred tax liabilities
Property, plant and equipment & Intangible assets 235.94 95.55 - - 331.49
Fair value of livestock - 14.12 - - 14.12
Others 12.08 2.41 - - 14.49
Sub-Total 248.02 112.08 - - 360.10
Deferred tax assets
Expected loss on financial assets 229.76 58.28 - - 288.04
Expenses allowed on payment basis 18.72 (3.08) 1.61 - 17.25
Unabsorbed losses 27.20 (8.94) - - 18.26
Sub-Total 275.68 46.26 1.61 - 323.55
Minimum Alternate Tax (MAT) credit
Recognised 64.24 47.53 - - 111.77
Sub-Total 64.24 47.53 - - 111.77
Net Deferred tax assets/(liabilities) 91.90 (18.29) 1.61 - 75.22

For the year ended March 31, 2017 (All amounts are in ` million unless otherwise stated)
Net balance Recognised Recognised Net balance
April 1, in profit or Recognised in Balance- March 31,
Particulars 2017 loss in OCI Sheet 2017
Deferred tax liabilities
Property, plant and equipment & Intangible assets 230.61 5.33 - - 235.94
Others 9.51 2.57 - - 12.08
Sub-Total 240.12 7.90 - - 248.02
Deferred tax assets
Expected credit loss on financial assets 133.60 96.16 - - 229.76
Expenses allowed on payment basis 7.88 6.98 3.86 - 18.72
Unabsorbed losses 48.77 (21.57) - - 27.20
Sub-Total 190.25 81.57 3.86 - 275.68
Minimum Alternate Tax (MAT) credit
Recognised 63.77 10.77 - (10.30) 64.24
Sub-Total 63.77 10.77 - (10.30) 64.24
Net Deferred tax assets/(liabilities) 13.90 84.44 3.86 (10.30) 91.90

Annual Report 2018 171

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
b) Unrecognised deferred tax assets
Deferred tax asset has not been recognised in respect of the following items, because it is not probable that future taxable profit
will be available against which the subsidiary company can use the benefits therefrom. The tax losses expire as follows:
(All amounts are in ` million unless otherwise stated)
March 31, March 31, April 01,
Assessment year 2018 2017 2016 Expiry AY
Business losses
2012-13 - 11.58 - 2020-21
2015-16 - - 4.75 2023-24
Unabsorbed depreciation
2008-09 - 2.61 - NA
2011-12 - 5.03 - NA
2012-13 - 44.88 - NA
2015-16 - - 25.31 NA
Total - 64.10 30.07
Statutory income tax rate 27.55% 30.90% 30.90%
Potential tax benefit - 19.81 9.29

c) Income tax expense (All amounts are in ` million unless otherwise stated)
For the year Ended For the year Ended
Particulars March 31, 2018 March 31, 2017
Current tax
Current tax on profits for the year 298.21 34.40
Adjustments for current tax of prior periods 2.52 (8.74)
Total 300.73 25.66
Deferred tax
Deferred tax charge/(credit) 65.81 (73.67)
MAT Credit entitlement (47.53) (10.77)
Total 18.29 (84.44)
Income tax expense 319.02 (58.78)

d) Reconciliation of effective tax rate: (All amounts are in ` million unless otherwise stated)
Particulars 2017-2018 2016-2017
Profit before income tax expense 1,189.58 (11.22)
Indian statutory income tax rate 34.61% 34.61%
Expected income tax expense 411.69 (3.88)
Tax effect of adjustments to reconcile expected income tax expense to reported income
tax expense:
Effect of non deductible expenses 3.17 51.79
Effect of additional allowances for tax purpose (deduction under section 32AC) - (24.45)
Effect of tax exempt income (exemption under section 80IB) (110.38) (67.18)
Effect of tax adjustment in respect of earlier years 2.52 (8.74)
Effect of tax deduction (under section 80G) - (1.99)
Effect of income charged at lower rate of tax - (1.04)
Effect of change in tax rate 0.79 -
Recognition of deferred tax assets on previous year losses (net) (11.00) (8.58)
Effect of different tax rates (8.00) (3.08)
Others 30.22 8.36
Income tax expense 319.02 (58.78)
Effective tax rate 26.82% 523.84%

172 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
e) Amounts recognised in Other comprehensive income (All amounts are in ` million unless otherwise stated)
2017-2018 2016-2017
Tax exp. Tax exp.
Particulars Before tax (benefit) Net of tax Before tax (benefit) Net of tax
Items that will not be reclassified to profit or loss
Remeasurement of the defined benefit plans (4.66) 1.61 (3.04) (11.20) 3.86 (7.34)

NOTE 37: FAIR VALUE MEASUREMENTS

A. Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels
in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at
fair value if the carrying amount is a reasonable approximation of fair value.
B. Measurement of fair value
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities,
short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term
maturities of these instruments.
C. Fair Value Hierarchy
The fair value of financial instruments as referred to above have been classified into three categories depending on the inputs
used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments,
traded bonds and mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock
exchanges is valued using the closing price as at the reporting period.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques
which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant
inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This
is the case for unlisted equity securities included in level 3.

Carrying value Fair value hierarchy Fair Value

Financial Assets and March March April 1, March March April 1, March March April 1,
Liabilities 31, 2018 31, 2017 2016 Measurement 31, 2018 31, 2017 2016 31, 2018 31, 2017 2016
Financial Assets
Investments - 4.92 - - Fair Value through Level 1 - - 4.92 - -
mutual fund Profit and Loss
Investments - Others 0.13 0.06 0.06 Fair Value through Level 3 Level 3 Level 3 0.13 0.06 0.06
Profit and Loss
Loans 3.50 3.19 2.66 Amortised cost Level 3 Level 3 Level 3 3.50 3.19 2.66
Trade receivable 2,517.20 1,750.20 2,159.92 Amortised cost Level 3 Level 3 Level 3 2,517.20 1,750.20 2,159.92
Cash and 310.01 411.19 51.62 Amortised cost Level 3 Level 3 Level 3 310.01 411.19 51.62
Cash quivalents
Other Bank Balance 186.00 597.31 25.21 Amortised cost Level 3 Level 3 Level 3 186.00 597.31 25.21
Other Financial 95.57 132.29 91.38 Amortised cost Level 3 Level 3 Level 3 95.57 132.29 91.38
Assets
Total 3,117.33 2,894.24 2,330.85 3,117.33 2,894.24 2,330.85

Annual Report 2018 173

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Carrying value Fair value hierarchy Fair Value
Financial Assets and March March April 1, March March April 1, March March April 1,
Liabilities 31, 2018 31, 2017 2016 Measurement 31, 2018 31, 2017 2016 31, 2018 31, 2017 2016
Financial Liabilities
Borrowings - 635.15 703.07 1,187.86 Amortised cost Level 3 Level 3 Level 3 635.15 703.07 1,187.86
non-current
Borrowings - current 2,001.48 1,440.88 2,357.01 Amortised cost Level 3 Level 3 Level 3 2,001.48 1,440.88 2,357.01
Trade Payables 3,032.55 3,118.71 1,678.31 Amortised cost Level 3 Level 3 Level 3 3,032.55 3,118.71 1,678.31
Other Financial 742.50 722.25 584.37 Amortised cost Level 3 Level 3 Level 3 742.50 722.25 584.37
Liabilities
Total 6,411.68 5,984.91 5,807.55 6,411.68 5,984.91 5,807.55

NOTE 38: FINANCIAL RISK MANAGEMENT

Risk management framework
The Group has in place a mechanism to inform the Board about the risk assessment and minimization procedures and periodical
review to ensure that management controls risk through means of a properly defined framework. The Group has formulated and
adopted Risk Management Policy to prescribe risk assessment, management, reporting and disclosure requirements of the Group.
The audit committee of the holding company also oversees how management monitors compliance with the Group’s risk management
policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The
audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk
management controls and procedures, the results of which are reported to the audit committee.
The Group’s activities expose it to market risk, liquidity risk and credit risk. The Group’s primary focus is to foresee the unpredictability
of financial markets and seek to minimize potential adverse effects on its financial performance.
This note explains the sources of risk to which the Group is exposed to and how the entity manages the risk.
(A) Credit risk
Trade and Other receivables
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s trade and other receivables. The carrying amounts of financial
assets represent the maximum credit risk exposure.
Trade receivables are typically unsecured and are derived from revenue earned from customers located in India. Credit risk has
always been managed by the Group through credit approvals, establishing credit limits and continuously monitoring the credit
worthiness of customers to which the Group grants credit terms in the normal course of business. In monitoring customer credit
risk, customers are Grouped according to their credit characteristics, including whether they are General trade, Modern trade,
Institutional and Horeca customers. Outstanding customers are regularly monitored.
On account of adoption of Ind AS 109, the Group uses expected credit loss model to assess the impairment loss. The Group
computes the expected credit loss allowance as per simplified approch for trade receivables based on available external and
internal credit risk factors such as the ageing of its dues, market information about the customer and the Group’s historical
experience for customers. The Group has used a practical expedient by computing the expected credit loss allowance for trade
receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is based
on the ageing of the receivable days and the rates as given in the provision matrix.
The movement in the loss allowance in respect of trade and other receivables during the year was as follows
Loss allowance on trade receivables Amount
Balance as at April 1, 2016 370.85
Less: Utilised during the year (11.24)
Add: Provision during the year 300.17
Balance as at March 31, 2017 659.78
Less: Utilised during the year (14.82)
Add: Provision during the year 170.00
Balance as at March 31, 2018 814.96

174 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
(B) Liquidity risk

Liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The group’s approach to managing liquidity is to ensure, as far as
possible, that it will have sufficient liquidity to meet its liabilities when they are due. Management monitors rolling forecasts
of the group’s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of
expected cash flows. The group’s objective is to maintain a balance between continuity of funding and flexibility through the use
of bank overdraft/ cash credit facility. The group also monitors the level of expected cash inflows on trade receivables together
with expected cash outflows on trade payables and other financial liabilities. The group has access to a sufficient sources of
short term funding with existing lenders that could be arrange upon should there be need.

(i) Maturities of financial liabilities

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross
and undiscounted.

Carrying 1 year or 1-2 2- 5

Contractual maturities of financial liabilities value less years years Total
March 31, 2018
Non-derivatives financial liabilities
Borrowings - non-current 635.15 - 231.44 462.82 694.26
Borrowings - current 2,001.48 2,001.48 - - 2,001.48
Trade payables 3,032.55 3,032.55 - - 3,032.55
Other financial liabilities 742.50 742.50 - - 742.50
Total 6,411.68 5,776.53 231.44 462.82 6,470.79

Carrying 1 year or 1-2 2- 5

Contractual maturities of financial liabilities value less years years Total
March 31, 2017
Non-derivatives financial liabilities
Borrowings - non-current 703.07 - 241.33 498.17 739.50
Borrowings - current 1,440.88 1,440.88 - - 1,440.88
Trade payables 3,118.71 3,118.71 - - 3,118.71
Other financial liabilities 722.25 722.25 - - 722.25
Total 5,984.90 5,281.84 241.33 498.17 6,021.34

Carrying 1 year or 1-2 2- 5

Contractual maturities of financial liabilities value less years years Total
April 1, 2016
Non-derivatives financial liabilities
Borrowings - non-current 1,187.86 - 501.73 759.98 1,261.71
Borrowings - current 2,357.01 2,357.01 - - 2,357.01
Trade payables 1,678.31 1,678.31 - - 1,678.31
Other financial liabilities 584.37 584.37 - - 584.37
Total 5,807.55 4,619.69 501.73 759.98 5,881.40

Annual Report 2018 175

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
(C) Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market
rates and prices (such as interest rates and foreign currency exchange rates) or in the price of market risk-sensitive instruments
as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial
instruments, all foreign currency receivables and payables and all short-term and long-term debt. The group is exposed to
market risk primarily related to foreign exchange rate risk and interest rate risk.

(i) Foreign currency risk

The group is subject to risk of changes in foreign currency values that impact costs of imported raw material and import
of equipment for expansion of plants, primarily with respect to USD and EURO. The group’s business model incorporates
assumptions on currency risks and ensures any exposure is covered through the normal business operations.

The group has not entered into any derivative transactions during the year and there were no derivative transactions
outstanding as on March 31, 2018, March 31, 2017 and 1st April 2016.

(a) The group unhedged exposure to foreign currency risk are as follows

March 31, 2018 March 31, 2017 April 1, 2016

Sr Foreign Foreign Foreign
no Particulars Currency INR currency INR currency INR currency
A Financial assets
(i) Trade receivables USD 74.36 1.15 1.01 0.02 19.65 0.30
B Financial liabilities
(i) Foreign currency loan
Bank loan USD 628.76 9.67 783.47 12.08 961.83 14.50
Interest Payable USD 12.69 0.20 13.19 0.20 15.24 0.23
(ii) Trade payables USD 0.47 0.01 80.97 1.25 - -
EURO 19.82 0.25 13.89 0.20 2.88 0.04
GBP 0.01 0.01 0.01 0.01
AUD 4.62 0.09 - -
CHF 0.38 0.01 0.08 0.01 - -

(b) Sensitivity
A reasonably possible strengthening (weakening) of the Indian Rupee against various currency mentioned in the
table below as at March 31 would have affected the measurement of financial instruments denominated in foreign
currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
Profit / (loss) before tax gain / (loss) Equity, gross of tax
Strengthening Weakening Increased (Decreased)
Mar-18
Effect in INR
1 % movement
USD 5.68 (5.68) 5.68 (5.68)
EUR 0.20 (0.20) 0.20 (0.20)
AUD 0.05 (0.05) 0.05 (0.05)
CHF 0.00 (0.00) 0.00 (0.00)
Mar-17
Effect in INR
1 % movement
USD 8.77 (8.77) 8.77 (8.77)
EUR 0.14 (0.14) 0.14 (0.14)
GBP 0.00 (0.00) 0.00 (0.00)
CHF 0.00 (0.00) 0.00 (0.00)

176 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
(ii) Cash flow and fair value interest rate risk
Interest rate risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes
in market interest rates. The group main interest rate risk arises from long-term borrowings with variable rates, which
expose the group to cash flow interest rate risk.
The group’s borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS
107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(a) Interest rate risk exposure

The exposure of the group’s borrowing to interest rate changes at the end of the reporting period are as follows:

Particulars March 31, 2018 March 31, 2017 April 1, 2016

Variable rate borrowings 2,901.36 2,575.19 3,791.92
Fixed rate borrowings 10.17 38.49 83.11
Total borrowings 2,911.53 2,613.68 3,875.03

(b) Cash flow sensitivity analysis for variable-rate instruments

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting
period. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end
of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease is used when
reporting interest rate risk internally to key management personnel and represents Management’s assessment of
the reasonably possible change in interest rates. This analysis assumes that all other variables, in particular foreign
currency exchange rates, remain constant.

Impact on profit /(loss) - Increase /

(Decrease) in profit
Particulars March 31, 2018 March 31, 2017
Interest rates – increase by 100 basis points * (29.01) (25.75)
Interest rates – decrease by 100 basis points * 29.01 25.75
* Holding all other variables constant

NOTE 39: CAPITAL MANAGEMENT

For the purpose of the Group’s capital management, capital includes issued equity capital and all other equity reserves attributable
to the equity holders of the Company. The primary objective of the Group’s capital management is to safeguard the Company’s ability
to remain as a going concern and maximise the shareholder value.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating plans,
long term and other strategic plans and the requirements of the financial covenants. To maintain or adjust the capital structure, the
Company may adjust its dividend payment (refer note 18) ratio to shareholders, return capital to shareholders or issue fresh shares.
The Group monitors capital using a ratio of ‘adjusted net debt’ to ‘equity’. For this purpose, adjusted net debt is defined as liabilities,
comprising interest-bearing loans and borrowings less cash and cash equivalents. Equity comprises all components of equity
including share premium and all other equity reserves attributable to the equity share holders.
The Group’s adjusted net debt to equity ratio at March 31, 2018 was as follows.
(All figures are in ` million unless otherwise stated)
Particulars March 31, 2018 March 31, 2017 April 1, 2016
Borrowings
Long term and Short term borrowings 2,636.63 2,143.95 3,544.87
Current maturities of Long term borrowings 274.90 469.72 330.17
Less: cash and cash equivalents (310.01) (411.19) (51.62)
Adjusted net debt 2,601.52 2,202.49 3,823.42
Total Equity 7,121.63 6,248.63 3,331.94
Adjusted net equity 7,121.63 6,248.63 3,331.94
Adjusted net debt to adjusted equity ratio 0.37 0.18 1.01

Annual Report 2018 177

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have
been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital of the Group during the current and previous year.

NOTE 40: EMPLOYEE BENEFITS

A. Defined Benefit Plan- Gratuity
The holding company and its Indian subsidiary has an obligation towards gratuity, a defined benefit obligation. Every employee
who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary (last
drawn salary) for each completed year of service. The holding Company gratuity plan is funded with an Insurance company,
whereas that of subsidiary is unfunded.
The actuarial valuation of the defined benefit obligation was carried out at the balance sheet date. The present value of the
defined benefit obligations and the related current service cost and past service cost were measured using the Projected Unit
Credit Method.
These plans typically expose the Group to actuarial risks such as: investment risk, inherent interest rate risk, longevity risk and
salary risk.
Investment Risk The present value of the defined benefit plan liability (denominated in Indian Rupee) is calculated
using a discount rate which is determined by reference to market yields at the end of the reporting
period on government bonds. Currently for the plan in India, it has relatively balanced mix of
investments in government securities, and other debt instruments.
Interest Rate Risk The defined benefit obligation calculated uses a discount rate based in government bonds. If bond
yield fall, the defined benefit obligation will tend to increase.
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.
Salary Risk Higher than expected increases in salary will increase the defined benefit obligation.

Based on the actuarial valuation obtained in respect of gratuity, the following table sets out the details of the employee benefit
obligation as at balance sheet date:
For the year ended For the year ended
Defined benefit plans March 31, 2018 March 31, 2017
I Expenses recognised in statement of profit and loss during the year:
Current Service Cost 7.75 4.31
Past Service Cost 2.37 -
Interest cost on benefit obligation 2.38 1.37
Expected return on plan assets (1.10) (1.17)
Total Expenses 11.40 4.51
II Expenses recognised in OCI
Actuarial (Gain) / Losses due to Financial Assumption changes in DBO (1.24) 2.09
Actuarial (Gain)/ Losses due to Experience on DBO 6.34 7.94
Return on Plan Assets (Greater) / Less than Disount rate (0.44) 1.17
Total Expenses 4.66 11.20
III Net Asset /(Liability) recognised as at balance sheet date:
Present value of defined benefit obligation (50.86) (35.31)
Fair Value of Plan Assets 17.36 16.87
Funded status [Surplus/(Deficit)] (33.50) (18.44)
IV Movements in present value of defined benefit obligation
Present value of defined benefit obligation at the beginning of the year 35.31 19.74
Current Service Cost 7.75 4.31
Past service cost 2.37 -
Interest Cost 2.45 1.37
Actuarial (Gain)/Loss 5.10 10.03
Benefits paid (2.12) (0.14)
Present value of defined benefit obligation at the end of the year 50.86 35.31

178 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
For the year ended For the year ended
Defined benefit plans March 31, 2018 March 31, 2017
V Movements in fair value of the plan assets
Opening fair value of plan assets 16.87 16.87
Expected returns on Plan Assets 1.17 1.17
Actuarial (Gain)/Loss on Plan assets 0.44 (1.17)
Contribution from Employer 1.00 0.14
Benefits paid (2.12) (0.14)
Closing fair value of the plan asset 17.36 16.87
VI Maturity profile of defined benefit obligation
Within the next 12 months (next annual reporting period) 10.00 5.39
Between 1 to 5 years 26.70 15.07
Between 5 to 10 years 14.17 9.72
Over 10 years - 5.13
VII Quantitative sensitivity analysis for significant assumptions is as
below:
Increase/(decrease) on present value of defined benefit obligation at the
end of the year
(i) +100 basis points increase in discount rate (1.13) (1.22)
(i) -100 basis points decrease in discount rate 3.73 3.23
(iii) +100 basis points increase in rate of salary increase 3.71 2.89
(iv) -100 basis points decrease in rate of salary increase (1.17) (0.95)
2 Sensitivity analysis method
Sensitivity analysisis performed by varying a single parameter while keeping all the other parameters unchanged.
Sensitivity analysis fails to focus on the interrelationship between underlying parameters. Hence, the results may
vary if two or more variables are changed simultaneously. The method used does not indicate anything about the
likelihood of change in any parameter and the extent of the change if any.
VIII Actuarial Assumptions: (Parag) As at March 31, 2018 As at March 31, 2017
1 Discount rate 7.45%-7.50% 6.95% - 7.00%
2 Expected return on assets 7.45% 6.95%
3 Expected rate of salary increase 6.00% - 7% p.a 6.00% - 7% p.a
4 Withdrawal rate 12.00% - 14.00% 12.00% - 14.00%
5 Mortality Indian Assured Lives Indian Assured Lives
Mortality (2006-08) Mortality (2006-08)
Ultimate Ultimate

(a) The rate used to discount post-employment benefit obligations is determined by reference to market yields at the end of
the reporting period on government bonds.
(b) The estimates of future salary increases considered in the actuarial valuation take account of inflation, seniority, promotion
and other relevant factors, such as supply and demand in the employment market.
(c) The gratuity fund of holding Company is managed by life insurance company, details of fund invested by insurer are not
available with company.
(d) The Company expects to make a contribution of ` 9.83 million to the defined benefit plans (gratuity - funded) during the
next financial year.

Annual Report 2018 179

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
B. Defined contribution plan
The Group has recognised an amount of ` 31.93 million as expenses under the Defined Contribution Plans in the Statement of
Profit & Loss as below:
(All figures are in ` million unless otherwise stated)

Benefit/Contribution to As at March 31, 2018 As at March 31, 2017

Provident Fund 27.47 21.97
National Pension Scheme 0.97 0.50
Employees State Insurance 3.45 2.03
Labour Welfare Fund 0.03 0.03
Total 31.92 24.53

NOTE 41: CONTINGENT LIABILITIES

(All figures are in ` million unless otherwise stated)
Sr
no Particulars March 31, 2018 March 31, 2017 April 1, 2016
a) Guarantees given by banks on behalf of the Group 5.62 50.10 9.72
b) Sales tax matter under litigation in respect of Company for FY.2006-07, 76.32 67.35 83.32
FY 2009-10 and F.Y. 2010-11 for pending F forms and lower allowance
on account of Central Quantum Benefit, against which appeal has
been filed.
c) Claim against the Company not acknowledge as debt in relation to 70.68 70.68 70.68
claim made by France International Trade, Rennes, vide Special Civil
Suit No. 692/2012 dated March 07, 2012 in the Court of Honourable
Civil Judge, Senior Division, Pune for damaged goods supplied by the
holding Company. The amount includes interest of ` 20.37 million
d) Income tax matter under litigation for the AY 2012-13 to AY 2016-17 282.12 135.33 56.55
e) Duty Liability under advance license scheme 12.91 135.68 62.75
f) Income tax matter under litigation of the subsidiary company 0.47 0.47 20.51

i. The amounts shown above represent the best possible estimates of pending litigations/disputes arrived at on the basis of
available information. The above do not include potential risks/demands, if any, for ongoing issues where no claims have been
made against the Group.
ii. Pending resolution of the respective proceedings, it is not practicable for the Group to estimate the timings of cash outflows,
if any, in respect of the above as it is determinable only on receipt of judgements/ decisions pending with various forums/
authorities.

NOTE 42: COMMITMENTS

Capital commitments
Capital expenditure contracted for at the end of the reporting period net of capital advance amounting ` 192.42 million (March 31,
2017: ` 288.52 million and April 1, 2016: 170.06 million) but not recognised as liabilities.
Other commitments
For commitments in respect of non-cancellable leases refer Note 44

180 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 43: RELATED PARTY DISCLOSURES
Related party transactions for the period April 1, 2017 to March 31, 2018
Details of related parties:
Description of relationship Name of the related parties
Key Management Personnel (KMP) of Holding Company Mr. Devendra Shah – Chairman
Mr. Pritam Shah – Director
Mr. Vimal Agarwal - CFO (w.e.f. Dec 21, 2017)
Mr. Bharat Kedia – CFO (till July 11 2017)
Mr. Nitin R. Dhavalikar - Director
Mr. Radhika Pereira - Director
Mr. Narendra Ambwani - Director
Mr. Ramesh Chandak - Director
Mr. B. M. Vyas - Director
Mr. Sunil Goyal - Director
Relative of Key Management Personnel Late Mr. Parag Shah
Mr. Prakash Shah
Miss. Akshali Shah
Mrs. Priti Shah
Mrs. Netra Shah
Mrs. Prity Kedia (till July 11, 2017)
Entity in which KMP can exercise significant influence Bharat Trading Company
SBM Advisors LLP

Details of related party transactions for the year ended on March 31, 2018:

Particulars March 31, 2018 March 31, 2017

Purchase of Goods
Bharat Trading Company 13.53 10.14
Devendra Shah 0.78 0.58
Sale of Goods
Devendra Shah 0.09 0.06
Remuneration to Key Management Personnel and their relatives *
Devendra Shah 24.00 21.00
Pritam Shah 24.00 20.70
Vimal Agarwal 2.76 -
Bharat kedia 6.34 8.94
Akshali Shah 2.66 1.86

Annual Report 2018 181

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Particulars March 31, 2018 March 31, 2017
Rent Payment
Devendra Shah 3.39 3.39
Pritam Shah 0.45 0.45
Priti Shah 0.39 0.39
Netra Shah 0.39 0.39
Prity kedia - 0.96
Interest expense
Devendra Shah 1.43 -
Pritam Shah 7.08 -
Consultancy Charges
Parag Shah - 1.80
B.M. Vyas 9.80 9.61
SBM Advisors LLP 2.83 -
Reimbursment of expenses KMP
Devendra Shah 2.57 2.79
Pritam Shah 0.48 0.14
Director sitting fees
Nitin R. Dhavalikar 1.10 1.00
Radhika Pereira 0.80 0.70
Narendra Ambwani 1.00 0.50
Ramesh Chandak 0.90 0.30
Repayment of Non convertible debenture
Devendra Shah 30.00 -
Pritam Shah 150.00 -
Loan taken from
Devendra Shah 30.00 -
Pritam Shah 150.00 -
Loan repaid to
Devendra Shah 30.00 -
Pritam Shah 150.00 -

The remuneration to the key managerial personnel comprises of only short term benefits and does not include the provisions made
for gratuity and leave benefits, as they are determined on an actuarial basis at an entity level. Further, the remuneration to key
managerial personnel does not include employee stock compensation expense.

Details of balances outstanding as at March 31, 2018 for related party transactions
(All figures are in ` million unless otherwise stated)

Particulars As at March 31, 2018 As at March 31, 2017 As at April 1, 2016

Amount Payable to
Devendra Shah 1.90 2.43 0.50
Pritam Shah 8.22 1.48 0.73
Bharat Trading Company 3.55 1.64 1.98

182 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
(All figures are in ` million unless otherwise stated)
Particulars As at March 31, 2018 As at March 31, 2017 As at April 1, 2016
Parag Shah 0.26 0.26 -
Non Convertible debenture
Devendra Shah - 30.00 30.00
Pritam Shah - 150.00 150.00
Personal guarantee issued by
Devendra Shah, Pritam Shah, Parag Shah, 5,215.86 4,792.88 4,679.52
Prakash Shah, Netra Shah and Priti Shah

NOTE 44: OPERATING LEASES :

The Group has entered into commercial leases for taking office spaces on lease. These leases have an average term of three to five
years with renewal option and escalation clauses included in the agreements. There are no restrictions placed upon the Company by
entering into these leases. The Company has not given any sub lease during the year. Some of the lease arrangements also include
a non-cancellable period. Lease rental debited to Statement of Profit and Loss for the period is ` 161.15 million (March 31, 2017:
` 90.69 millions).
Disclosure for minimum lease rentals payable under non-cancellable lease agreements are as below:
(All figures are in ` million unless otherwise stated)
Particulars Year Ended March 31, 2018 Year Ended March 31, 2017
Lease rentals due
Not later than one year 11.39 18.85
Later than one year and not later than five years 3.88 15.27
Later than five years - -

NOTE 45 : DISCLOSURE UNDER MICRO, SMALL, AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 :
(All figures are in ` million unless otherwise stated)
Particulars 2017-2018 2016-2017
a) Principal amount due to suppliers under MSMED Act, 2006 17.92 22.42
b) Interest accrued, due to suppliers under MSMED Act on the above amount, and unpaid 0.99 2.34
c) Payment made to suppliers (other than interest) beyond the appointed day during the year 43.43 167.54
d) Interest paid to suppliers under MSMED Act (Section 16) - -
e) Interest due and payable towards suppliers under MSMED Act for payments already made 0.99 2.34
f) Interest accrued and remaining unpaid at the end of the year to suppliers under MSMED 0.99 2.34
Act (including interest mentioned in (e) above)

Note: The above information is given to the extent available with the Group and relied upon by the auditor.

NOTE 46: EARNINGS PER SHARE

(All figures are in ` million unless otherwise stated)
For the year ended For the year ended
Particulars March 31, 2018 March 31, 2017
Profit/(Loss) attributable to Equity shareholders (` in million)(A) 870.56 47.56
Weighted average number of Equity shares (Nos) for basic EPS (B) 83,887,582 82,359,563
Effect of Dilution :
Weighted average number of Treasury shares held through ESOP Trust 227,000 227,000
Weighted average number of Equity shares (Nos) adjusted for the effect of dilution ( C ) 84,114,582 82,586,563
Basic EPS (Amount in `) (A/B) (`) 10.38 0.58
Diluted EPS*(Amount in `) (A/C) (`) 10.35 0.58

Annual Report 2018 183

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Basic: Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted
average number of equity shares outstanding during the year, excluding equity shares held as treasury shares.
Diluted: Diluted earnings per share is calculated by adjusting the weighted average number of equity shares outstanding during the
year for assumed conversion of all dilutive potential equity shares. Employee share options are dilutive potential equity shares for
the Company.

NOTE 47: SEGMENT REPORTING

The Managing Director of the holding Company acts as the chief operating decision maker (CODM) of the Group Companies in
accordance with Operating Segment (Ind AS 108), for purpose of assessing the financial performance and position of the group, and
make strategic decisions. The group’s business activities are mainly related to processing of milk and manufacturing of milk related
products, which are primarily assessed as a single reportable operating segment in accordance with Ind AS 108 by the CODM.
The information based on geographical areas in relation to revenue and non-current assets are as below:
Revenue from operations
(All figures are in ` million unless otherwise stated)
For the year ended For the year ended
Particulars March 31, 2018 March 31, 2017
Within India 18,948.63 16,739.17
Outside India 596.43 568.22
Total 19,545.06 17,307.39

Non-current operating assets

All non –current assets other than financial instruments, deferred tax assets of the group are located in India
The group does not have revenues from transactions with a single external customer amount to 10 percent or more of the total
revenues.

NOTE 48 : BIOLOGICAL ASSETS

A Nature of Activities
The subsidiary Company’s biological assets comprises of livestock (dairy cows).
Livestock is measured at fair value less costs to sell, with any resulting gain or loss recognized in the statement of profit and loss.
The subsidiary Company’s livestock comprises of both mature and immature livestock.
Immature livestock comprises dairy cows that are intended to be reared to maturity. These cows are held to produce milk or
offspring, but have not yet produced their first calf and begun milk production.
Mature livestock includes dairy cows that have produced their first calf and begun milk production.
Other livestock comprises of cows that are going through the dry phase of their life cycle.

Year Ended Year Ended Year Ended

March 31, 2018 March 31, 2017 March 31, 2016
Particulars (Heads) (Heads) (Heads)
Immature cows 670 818 942
Mature cows 1119 1010 1023
Other cows 249 218 331
Total 2038 2046 2296
Total milk production(In Ltrs) 6,982,478 6,788,934 6,497,728

The subsidiary Company is exposed to fair value risks arising from changes in price of raw milk. The Company does not anticipate
that the price of the raw milk will further decline significantly in the foreseeable future and the Company is of the view that there
is no available derivative or other contracts which the Company can enter into to manage the risk of a decline in the price of the
raw milk.

184 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
B FAIR VALUE MEASUREMENTS
Fair Value Hierchy

Particulars Year Ended March 31, 2018 Year Ended March 31, 2017 Year Ended April 1, 2016 Fair Value Hierchy

Livestock (Cow) 290.87 251.93 232.01 Level 3

Valuation Technique used in the Fair Value Measurement

Inter-relationship between significant

Significant unobservable inputs and fair value
Particulars Valuation Technique unobersvable input measurements
Livestock (Milking cows) The fair values of dairy • Estimated feeding • Estimated feeding cost/ milking cow
cows is determined by cost/ milking cow increase by 1% would reduce the fair
using the multi-period • Estimated milk valuation by 8.09 and 7.37 as of March
excess earnings method, yield/ milking cow 31, 2018 and 2017.
which is based on the • Estimated milk yield/ milking cow
• Estimated weighted
discounted future cash increase by 1% would increase the
average selling
flows to be generated by fair valuation by 13.18 and 6.91 as of
price of milk / Litre
such dairy cows. March 31, 2018 and 2017.
• Discount rate
• Estimated weighted average selling
price of milk / Litre increase by ` 1/
litre would increase the fair valuation
by 22.68 and 21.53 as of March 31,
2018 and 2017.
• Discount rate increase by 1 % would
reduce the fair valuation by 8.22 and
5.70 as of March 31, 2018 and 2017.

The Group is exposed to a number of risks relating to its agricultural activities:

• Regulatory and environmental
The Group is subject to various local laws and regulations, and it has established policies and procedures aimed at ensuring
compliance with the same.
• Supply and demand
The Group is exposed to the risk arising from fluctuations in milk prices. The Company does not anticipate that the price of
the raw milk will decline significantly in the foreseeable future. Further, there are no available derivatives or other contracts
available in the market for managing such risk.
• Climate and other risks
The subsidiary Company’s livestock is exposed to risk of adverse climatic conditions and diseases etc. The Company has
extensive processes in place to address the risk by having an in-house veterinary doctor and dispensary, regular health
checkups of livestock cattle. The Company also has taken an insurance cover for its livestock.

NOTE 49: DISCLOSURE ON CSR EXPENSES

(All figures are in ` million unless otherwise stated)
For the year ended For the year ended
Particulars March 31, 2018 March 31, 2017
a) Gross amount required to be spent by the Group during the period. 7.91 7.99
b) Amount spent during the year on:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
In Cash 8.05 12.36
Yet To be Paid in Cash - 0.02

Annual Report 2018 185

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
NOTE 50: EMPLOYEE STOCK OPTION SCHEME:
The Board of Directors constituted the equity settled Employee Stock Option Scheme (“ESOS 2015”) vide its resolutions dated
February 27, 2015 and April 21, 2015 for issue of 696,339 stock options to the key employees of the holding Company, which has been
further approved in the Company’s Extra ordinary General meeting dated April 3, 2015 and May 16, 2015.
Pursuant to the above scheme, the Board of Directors vide its circular resolution dated September 3, 2015, approved grant of 227,000
stock options to its employees on September 4, 2015.
According to ESOP 2015, the employee selected will be entitled to stock options, subject to satisfaction of the prescribed vesting
conditions in the scheme. The contractual life (comprising the vesting period and the exercise period) of options granted is 3 years.
The other relevant terms of the grant are as below
Vesting Period 1 years
Exercise Period 2 Years
Expected Life 3 Years
Exercise Price ` 250.00
Fair value using Black Scholes model on grant date ` 73.86
Date of grant 3-Sep-15

The details of activity under ESOS 2015 are summarized below:

Year ended March 31, 2018 Year ended March 31, 2017
Particulars No. of options WAEP (`) No. of options WAEP (`)
Outstanding at the beginning of the year - - 227,000 250
Granted during the year - - - -
Forfeited during the year - - 100,073 250
Exercised during the year - -
Exercisable/ Vested during the year - - 126,927 250
Outstanding at the end of the year - - - -

Particulars Year Ended March 31, 2018 Year Ended March 31, 2017
Dividend yield (%)
Expected volatility 41.71% 41.71%
Risk-free interest rate 7.54% 7.54%
Weighted average share price 250 250
Exercise price (`) 250 250
Expected life of options granted in years 3 3
Life of option remaining in months 5 17
The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily be the actual outcome.

Expenses Arising from share based payment transactions

Total expenses arising from share-based payment transactions recognised in profit or loss as part of employee benefit expense were
as follows:
Particulars Year Ended March 31, 2018 Year Ended March 31, 2017
Employee option Plans - 7.17

NOTE 51: STATEMENT OF IPO PROCEEDS

Particulars Amount as per prospectus Amount to be utilised
Gross proceeds of the fresh issue 3,000.00 3,000.00
Less: Fresh issue expenses 212.00 159.83
Net proceeds of the fresh issue 2,788.00 2,840.17

186 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Amount utilised Pending Amount utilised Pending
Particulars up March 31, 2018 utilisation up March 31, 2017 utilisation
Expansion and modernisation of Plant 1,153.27 323.74 730.48 746.53
Investment in subsidiary for financing the capital expenditure 10.45 12.54 4.56 18.43
requirements in relation to expansion and modernisation of
Bhagyalaxmi Dairy Farms
Partial repayment of working capital consortium loan 1,000.00 - 1,000.00 -
General corporate purposes 340.17 - 284.05 -
Total 2,503.89 336.28 2,019.09 764.96

NOTE 52 : STATEMENT OF NET ASSETS AND PROFIT OR LOSS ATTRIBUTABLE TO OWNERS AND NON CONTROLLING INTEREST
Net assets i.e. total Share in other Share in total
assets minus total Share in profit or comprehensive comprehensive
liabilities loss income/(loss) income
As % of As % of As % of As % of
consoli- consoli- consoli- consoli-
dated Amount dated Amount dated Amount dated Amount
Name of Entity net assets net assets net assets net assets
holding
Parag Milk Foods Ltd 100.65% 7,167.90 90.15% 784.80 99.36% (3.03) 90.11% 781.77
Sub-total 100.65% 7,167.90 90.15% 784.80 99.36% (3.03) 90.11% 781.77
Subsidiary (Indian)
Bhagyalaxmi Dairy Farm Private Limited -0.65% (46.25) 9.85% 85.78 0.64% (0.02) 9.89% 85.76
Sub-total -0.65% (46.25) 9.85% 85.78 0.64% (0.02) 9.89% 85.76
Total 100.00% 7,121.55 100.00% 870.58 100.00% (3.05) 100.00% 867.53

NOTE 53: TRANSITION TO IND AS

These financial statements are the separate financial statements of the Company (also called standalone financial statements)
prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under Section 133 of the Companies Act, 2013, read
together with the Companies (Indian Accounting Standards) Rules, 2015.
For all periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance
with Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies
(Accounts) Rules, 2014 (‘Previous GAAP’). Detailed explanation on how the transition from previous GAAP to Ind AS has affected the
Company’s Balance Sheet, financial performance and cash flows is given as under.
Optional exemptions availed and mandatory exemptions
In preparing these financial statements the Company has applied the below mentioned optional exemptions and mandatory
exemptions.
A Optional exemptions availed
1 Property, plant and equipment and intangible assets:
IND AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant a equipment as
recognised in the financial statements as at the date of transition to Ind AS measured as per the previous GAAP and use that as
its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38.
Accordingly, the group has elected to measure all of its property, plant and equipment and intangible assets.
2 Long Term Foreign Currency Monetary Items
A first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation
of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately
before the beginning of the first Ind AS financial reporting period as per the previous GAAP. The Company has chosen to
continue this option provided under para D13AA of Ind AS 101.
3 Employee stock option
Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that
vested before April 1, 2016 in accordance with the option provided under para D2 and D3 of Ind AS 101.

Annual Report 2018 187

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
4 Fair value measurement of financial assets or financial liabilities at initial recognition
The Group has elected to apply the requirements of Ind AS 109 “Financial Instruments” relating to accounting of day one
gains or losses prospectively to transactions occurring on or after the date of transition for the financial instruments where
there is no active market as provided under para D20 of Ind AS 101. Accordingly, 0% Non-Convertible Debentures issued to
promoters of the Company in earlier years, have not been fair valued as on transition date and continued at carrying value.
B Mandatory exemptions
1 Estimates:
An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made
for the same date in accordance with previous GAAP (after adjustments to reflect any difference accounting policies),
unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2016 are consistent with the estimates as the same date made in conformity with previous
GAAP, unless if those estimates were not required to be made under previous GAAP.
2 Derecognition of financial assets and liabilities:
As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, Financials Instruments, prospectively
for transaction occurring on or after date of transition to Ind AS. However, an entity may apply the derecognition requirements
retrospectively from the date choosen by it if the information needed to apply Ind AS 109 to financial assets and financial
liabilities derecognised as a result of past transaction was obtained at the time initially accounting for those transactions.
The Group has elected to apply the derecognition principal of Ind AS 109 retrospectively as reliable information was
available at the time of initally accounting for these transactions.
3 Classification of financial assets:
As per the requirements of Ind AS 101 the Company has assessed classification of financial assets on the basis of the facts
and circumstances that existed at the date of transition to Ind AS.

NOTE 54: TRANSITION TO IND AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for comparative periods. The following
tables represent the reconciliations from previous GAAP to Ind AS.
I Reconciliation of equity as at date of transition (April 1, 2016)
Particulars Notes to first-time adoption Previous GAAP * Adjustments Ind AS
ASSETS
Non-current assets
Property, plant and equipment 3,211.96 - 3,211.96
Capital Work in progress 232.67 - 232.67
Other intangible assets 3.42 - 3.42
Intangible assets under development 45.48 - 45.48
Biological Asset 232.01 - 232.01
Investment in subsidiary
Financial assets
Loans 2.66 - 2.66
Investments 0.06 - 0.06
Other financial assets 91.38 - 91.38
Deferred tax assets (Net) 13.90 - 13.90
Other non-current assets 74.11 - 74.11
Total non-current assets 3,907.65 - 3,907.65
Current assets
Inventories 2,724.26 - 2,724.26
Financial assets
Trade receivables a. 2,359.92 (200.00) 2,159.92
Cash and cash equivalents 51.61 0.01 51.62
Other bank balances 25.21 - 25.21
Other current assets I&h 789.52 (142.01) 647.51
Current Tax Asset 1.54 - 1.54
Total current assets 5,952.06 (342.00) 5,610.06
Total assets 9,859.71 (342.00) 9,517.71

188 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Particulars Notes to first-time adoption Previous GAAP * Adjustments Ind AS
EQUITY AND LIABILITIES
Equity
Equity share capital 704.16 (2.27) 701.89
Other equity a to g, i to j 2,903.54 (273.49) 2,630.05
Total equity 3,607.70 (275.76) 3,331.94
LIABILITIES
Non-current liabilities
Financial liabilities
Borrowings g. 1,198.35 (10.49) 1,187.86
Other Liabilities 120.00 - 120.00
Provisions 6.11 - 6.11
Deferred tax liabilities (Net) c. 70.79 (70.79) -
Total non-current liabilities 1,395.25 (81.28) 1,313.97
Current liabilities
Financial liabilities
Borrowings 2,357.01 - 2,357.01
Trade payables 1,678.31 - 1,678.31
Other financial liabilities f. 569.34 15.03 584.37
Other current liabilities 210.33 - 210.33
Provisions 3.64 - 3.64
Current tax liabilities (Net) 38.14 - 38.14
Total current liabilities 4,856.77 15.03 4,871.80
Total equity and liabilities 9,859.71 (342.00) 9,517.71
* The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note
II Reconciliation of equity as at date March 31, 2017
Particulars Notes to first-time adoption Previous GAAP * Adjustments Ind AS
ASSETS
Non-current assets
Property, plant and equipment 3,330.93 - 3,330.93
Capital Work in progress 164.25 - 164.25
Other intangible assets 4.99 - 4.99
Intangible assets under development 42.27 - 42.27
Biological Asset 251.93 - 251.93
Financial assets
Loans 3.19 3.19
Investments 0.06 - 0.06
Other financial assets g. 134.05 (1.76) 132.29
Deferred tax assets (Net) 91.90 91.90
Other non-current assets 479.02 - 479.02
Total non-current assets 4,502.59 (1.76) 4,500.83
Current assets
Inventories 4,285.18 - 4,285.18
Financial assets
Trade receivables a. 2,150.20 (400.00) 1,750.20
Cash and cash equivalents h. 411.18 0.01 411.19
Other bank balances 597.31 - 597.31
Other current assets 1,268.34 (55.06) 1,213.28
Current Tax Asset 111.76 - 111.76
Total current assets 8,823.97 (455.05) 8,368.92
Total assets 13,326.56 (456.81) 12,869.75

Annual Report 2018 189

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
EQUITY AND LIABILITIES
Equity
Equity share capital 841.15 (2.27) 838.88
Other equity a to g, i to j 5,722.58 (312.83) 5,409.75
Total equity 6,563.73 (315.10) 6,248.63
LIABILITIES
Non-current liabilities
Financial liabilities
Borrowings b. 713.25 (10.18) 703.07
Other Liabilities 120.00 - 120.00
Provisions 15.59 - 15.59
Deferred tax liabilities (Net) c. 136.73 (136.73) -
Total non-current liabilities 985.57 (146.91) 838.66
Current liabilities
Financial liabilities
Borrowings 1,440.88 - 1,440.88
Trade payables 3,118.71 - 3,118.71
Other financial liabilities f. 717.05 5.20 722.25
Other current liabilities 485.28 - 485.28
Provisions 15.34 - 15.34
Total current liabilities 5,777.26 5.20 5,782.46
Total equity and liabilities 13,326.56 (456.81) 12,869.75
* The previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purposes of this note
III Reconciliation of total comprehensive income for the year ended March 31, 2017
Notes to
first- time Previous
Particulars adoption GAAP * Adjustments Ind AS
Continuing operations
Revenue from operations 17,307.39 - 17,307.39
Other income f. & g. 109.87 19.03 128.90
Total income 17,417.26 19.03 17,436.29
Expenses
Cost of materials consumed 13,405.90 (0.01) 13,405.89
Purchases of stock-in-trade 734.41 - 734.41
Change in inventories of work-in-progress and finished goods (1,552.04) - (1,552.04)
Employee benefit expense d. & e. 672.90 (4.03) 668.87
Finance costs b. 332.76 0.31 333.07
Depreciation and amortisation expense 489.64 489.64
Other expenses a. & g. 2,973.57 200.26 3,173.83
Total expenses 17,057.14 196.53 17,253.67
Profit before exceptional items and tax 360.12 (177.50) 182.62
Exceptional items (193.84) - (193.84)
Profit/(Loss) before tax 166.28 (177.50) (11.22)
Income tax expense
Current tax 14.91 10.75 25.66
Deferred tax c. (10.89) (73.55) (84.44)
Total tax expense 4.02 (62.80) (58.78)
Profit for the year 162.26 (114.70) 47.56

190 Parag Milk Foods Limited

 Corporate overview Statutory Reports Financial statements

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
Notes to
first- time Previous
Particulars adoption GAAP * Adjustments Ind AS
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of Defined Benefit scheme e. - (11.20) (11.20)
Income tax relating to items that will not be reclassified to profit or loss c. - 3.86 3.86
Total Other comprehensive income - (7.34) (7.34)
Total comprehensive income 162.26 (122.04) 40.22

IV Impact of Ind AS adoption on the statements of cash flows for the year ended March 31, 2017

Particulars Notes Previous Adjustments Ind AS

GAAP
Net cash flow from operating activities 682.69 (848.36) (165.67)
Net cash flow from investing activities (1,532.87) 659.37 (873.50)
Net cash flow from financing activities 1,209.75 189.00 1,398.74
Net increase/(decrease) in cash and cash equivalents 359.56 0.01 359.57
Cash and cash equivalents as at April 1, 2016 51.62 0.00 51.62
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents as at March 31, 2017 411.18 0.01 411.19
There were no material differences between the Statement of Cash Flows presented under Ind AS and the Previous GAAP.
Notes to reconciliation
a. Trade receivable: ECL provision
Under Indian GAAP, the Company has created provision for impairment of receivables which consists only in respect of specific
amount for probable losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL)
model. Due to ECL model, the Company impaired its trade receivable by ` 130.78 million (net of related deferred tax) on April 1,
2016 which has been eliminated against other equity and ` 130.78 million (net of deferred tax) during the year ended March 31,
2017 which has been charged to the statement of profit and loss.
b. Borrowings: Transaction cost
Under Previous GAAP, the Company had recognised transaction costs incurred in respect of borrowings in the Statement of Profi
t and Loss in the year in which costs were incurred. Under Ind AS 109, such transaction costs are adjusted against carrying value
of borrowing and are amortised using effective interest rate method over the tenure of the loan. Accordingly loan were debited
and corresponding credit was given to retained earnings on date of transition. Under Ind AS, finance cost has been charged to
statement of profi t and loss for amortisation of such transaction cost during the year ended March 31, 2017.
c. Deferred tax assets
Indian 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 accounting for deferred taxes using the balance sheet
approach, which focuses on temporary difference 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 Indian GAAP. In addition, the various transitional adjustments lead to temporary differences
and the Company has accounted for such differences. Deferred tax adjustment are recognized in correlation to the underlying
transaction either in retained earnings or a separate component in equity.
MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on ‘Accounting for Credit
available in respect of MAT under the Income Tax Act, 1961’ issued by ICAI. However, as per Ind AS, MAT credit entitlement
is generally recognized as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss.
Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets.
d. Share based payments
Under Indian GAAP, the Company recognized only the intrinsic value for employee stock option plan as an expense. Under
Ind AS, the Company is required to determine the fair value of share options using an appropriate model at grant date and
recognized over the vesting period. Accordingly, the same has been recognized as a separate component of equity in Employee
Stock Option outstanding (ESOP) as at April 1, 2016 and as an expense has also been recognized for the same during the year
ended March 31, 2017. Adjustment has been done to take additional charge arising due to change from intrinsic value to fair
value of ESOSs outstanding.

Annual Report 2018 191

Notes
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS (Contd.)
e. Remeasure of actuarial gains/ (losses)
Under Ind AS, remeasurement i.e. acturial gain and losses and the return on plan assets, excluding amounts included in the
interest expenses on the net defined liabiity are recognised in other comprehensive income instead of statement of Profit and
Loss. Under the previous IGAAP, these reimbursments were forming part of the profit and loss for the year. There is no impact on
total equity as at March 31, 2017 on account of this.
Under Ind AS, all items of income and expense recognised in a period should be included in the Statement of Profit and Loss for
the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or
loss but are shown in the Statement of Profit and Loss as ‘other comprehensive income’ includes remeasurements of defined
benefit plans. The concept of other comprehensive income did not exist under previous GAAP.
f. Financial Guarantees contract:
Under Ind AS, the Company has recognised fair value of financial guarantee provided to its subsidiary company. The fair value
of such guarantee as at April 01, 2016 has been recognised as additional capital investment in its subsidiary Company and is
amortised over tenure of the guarantee. The impact of amortisation of such fair value of guarantee has been recognised in the
statement of profit and loss as interest income for the year ended March 31, 2017. Under I-GAAP financial guarantee given was
disclosed as contingent liabilities.
g. Interest free security deposits
Under the previous GAAP, interest free security deposits are recorded at their transaction value. Under Ind AS, all financial assets
are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS.
Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.
h. Look through approach for employee welfare trust
Employee welfare trust, financed through interest free loan by the Company and warehousing the shares which have not vested
yet, for distribution to employees of the Company, has been consolidated on line by line basis by reducing from equity share
capital and security premium of the Company for such treasury shares held by the trust.
i. IPO related expenses:
Under the previous GAAP, expenses incurred by the Company aggregating to ` 85.25 million in connection with filing of Draft Red
Herring Prospectus and other related expenses were shown under Other current assets. Under Ind AS the same is considered as
incremental costs directly attributable to the equity transaction and hence the same has been adjusted against other equity.
j. Fair Valuation of Livestock:
Ind AS 41 - Biological Asset requires all the Livestock to be recorded at fair value. The Biological assets are recorded at fair value
on 1st, April 2016 (i.e. transition date) and March 31, 2017.
k. Other comprehensive income
Under Ind AS, all items of income and expense recognised in a period should be included in the Statement of Profit and Loss for
the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or
loss but are shown in the Statement of Profit and Loss as ‘other comprehensive income’ includes remeasurements of defined
benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

NOTE 55: EXCEPTIONAL ITEM

Exceptional items during the year ended March 31, 2017 represent VAT tax liability for previous years and interest thereon in respect
of inspection conducted by VAT authorities during the year, wherein certain transactions were identified which were to be considered
as local sales instead of interstate transfer.
NOTE 56:
The holding company has acquired the Danone Foods and Beverages India Pvt Ltd.’s manufacturing facility of Curd, Yogurt and other
related products at Rai, Sonipat, Haryana near Delhi through agreement to sell dated April 18, 2018 for ` 141 Mn.
NOTE 57:
Previous period/year figures have been regrouped/reclassified wherever necessary to correspond with the current period/year
classification / disclosure.

As per our report of even date attached For and on behalf of the Board of Directors
For Haribhakti & Co. LLP Devendra Shah Pritam Shah
Chartered Accountants Chairman Managing Director
ICAI Firm Registration No. 103523W/ W100048 DIN: 01127319 DIN: 01127247
Anup Mundhra Vimal Agarwal Rachana Sanganeria
Partner Chief Financial Officer Company Secretary & Compliance Officer
Membership No. 061083
Place: Mumbai Place: Mumbai
Date: 09 May, 2018 Date: 09 May, 2018
192 Parag Milk Foods Limited
 NOTICE

PARAG MILK FOODS LIMITED

CIN: L15204PN1992PLC070209
Regd. Office: Flat No.1, Plot No-19, Nav Rajasthan CHS. Shivaji Nagar, Pune – 411 016
Website: www.paragmilkfoods.com, Email- [email protected]
Tel. No.: +91 7276470001, Fax No. 022 - 43005580

NOTICE

NOTICE is hereby given that the Twenty Sixth Annual General appropriate, provided that such increase, as the case may be,
Meeting (“AGM”) of the Members of Parag Milk Foods Limited is within the overall limits as specified under Section 197 read
(the “Company”) will be held on Wednesday, 19 September, with Schedule V of the Companies Act, 2013 (including any
2018 at 11.30 A.M. at Mahratta Chamber of Commerce statutory modification(s) or re-enactment(s) thereof, for the
Industries and Agriculture, MCCIA Trade Tower, A Wing, 5th time being in force) and/ or applicable provisions.
Floor, Navalmal Firodia Seminar Hall, Senapati Bapat Road,
RESOLVED FURTHER THAT in the event of no profits or
Pune 411016, to transact the following business: -
inadequacy of profits, in any financial year, during the
ORDINARY BUSINESS: currency of term of the Managing Director, the Company shall
1. To receive, consider and adopt the Audited Financial pay to the Managing Director such minimum remuneration not
Statements (including the Audited Consolidated Financial exceeding the limit laid down in Schedule V to the Companies
Statements) of the Company for the financial year ended Act, 2013, as applicable to the Company or such other limits,
31 March, 2018, together with the Reports of the Board of as may be prescribed by the Central Government from time to
Directors and the Auditors thereon. time, which shall be approved by the Board of Directors.
2. To declare Final Dividend on equity shares at the rate of RESOLVED FURTHER THAT for the purpose of giving effect
₹ 0.75/- per equity share for the financial year ended 31 to this resolution, any of the Directors and/or any of the Key
March, 2018. Managerial Personnel of the Company for the time being, be
and are hereby jointly or severally authorised to do all such
3. To appoint a Director in place of Mr. B. M. Vyas (DIN:
acts, deeds, matters and things and take such steps which are
00043804), who retires by rotation and being eligible,
necessary, expedient or incidental in this regard.”
offers himself for re-appointment.
5. To re-appoint Mr. Devendra Shah (DIN: 01127319) as
SPECIAL BUSINESS:
Whole- Time Director and Key Managerial Personnel
4. To re-appoint Mr. Pritam Shah (DIN: 01127247) as
(KMP) of the Company.
the Managing Director and Key Managerial Personnel
(KMP) of the Company. To consider, and if thought fit, to pass the following
resolution as a Special Resolution.
To consider, and, if thought fit, to pass the following
resolution as a Special Resolution “RESOLVED THAT pursuant to the provisions of Sections 196,
197 and 203 read with Schedule V and any other applicable
“RESOLVED THAT pursuant to the provisions of Sections 196,
provisions, if any, of the Companies Act, 2013 and the Rules
197 and 203 read with Schedule V and any other applicable
made there under (including any amendment, statutory
provisions, if any, of the Companies Act, 2013 and the Rules
modification(s), variation or re-enactment thereof for the time
made thereunder (including any amendment, statutory
being in force), and the Articles of Association of the Company,
modification(s), variation or re-enactment thereof for the
and in terms of the recommendation of the Nomination and
time being in force), and the Articles of Association of the
Remuneration Committee and as approved by the Board of
Company, and in terms of recommendation of the Nomination
Directors of the Company and subject to approval from any
and Remuneration Committee and as approved by the
regulators, if required, consent of the Members of the Company
Board of Directors of the Company and subject to approval
be and is hereby accorded, to re-appoint Mr. Devendra Shah (DIN:
from any regulators, if required, consent of the Members be
01127319) as Whole-time Director and Key Managerial Personnel
and is hereby accorded, to re-appoint Mr. Pritam Shah (DIN:
of the Company for a further term of 5 (Five) years with effect from
01127247) as Managing Director and Key Managerial Personnel
01 April, 2018 till 31 March, 2023, on the terms and conditions
of the Company for a further term of 5 (Five) years with effect
as set-out in the Explanatory Statement annexed to this Notice
from 01 April, 2018 till 31 March, 2023 on the terms and
(including the remuneration payable by way of salary, perquisites
conditions as set-out in the Explanatory Statement annexed
and allowances, which is within the limits prescribed under
to this Notice (including the remuneration payable by way of
Section 197 of the Companies Act, 2013).
salary, perquisites and allowances, which is within the limits
prescribed under Section 197 of the Companies Act, 2013) and RESOLVED FURTHER THAT the Board of Directors (which
he shall not be liable to retire by rotation. term shall always be deemed to include any Committee as
constituted or to be constituted by the Board to exercise its
RESOLVED FURTHER THAT the Board of Directors (which
powers including the powers conferred under this resolution)
term shall always be deemed to include any Committee as
be and, are hereby authorised to alter the terms and conditions
constituted or to be constituted by the Board to exercise its
of appointment and/or increase the remuneration from
powers including the powers conferred under this resolution)
time to time to the extent the Board of Directors may deem
be and are hereby authorised to alter the terms and conditions
appropriate, provided that such increase, as the case may be,
of appointment and/or increase the remuneration from
is within the overall limits as specified under Section 197 read
time to time to the extent the Board of Directors may deem
with Schedule V of the Companies Act, 2013 (including any

1 Parag Milk Foods Limited 1

statutory modification(s) or re-enactment(s) thereof, for the such conditions and modifications as may be prescribed or
time being in force) and/ or applicable provisions . imposed while granting such approvals, consents, permissions
and sanctions, “Parag Milk Foods Limited - Employee Stock
RESOLVED FURTHER THAT in the event of no profits or
Option Scheme 2015” (ESOS 2015) formulated and approved
inadequacy of profits, in any financial year, during the
prior to the Initial Public Offering (“IPO”) of the Company, be
currency of term of the Whole time Director, the Company shall
and is hereby, ratified and the consent of the shareholders
pay the Whole- time Director such minimum remuneration not
be and is hereby accorded to the Board of Directors of the
exceeding the limit laid down in Schedule V to the Companies
Company (hereinafter referred to as the “Board” which term
Act, 2013, as applicable to the Company or such other limits,
shall be deemed to include Compensation Committee already
as may be prescribed by the Central Government from time to
constituted by the Board under Section 178 of the Companies
time, which shall be approved by the Board of Directors.
Act, 2013 nomenclature as the Nomination & Remuneration
RESOLVED FURTHER THAT for the purpose of giving effect Committee, to exercise its powers, including the powers,
to this resolution, any of the Directors and/or any of the Key conferred by this resolution), to create, offer, issue and grant at
Managerial Personnel of the Company for the time being, be any time, directly or through a trust, to the eligible permanent
and are hereby jointly or severally authorised to do all such employees, existing & future, the directors (including whole-
acts, deeds, matters and things and take such steps which are time directors and non-executive directors but excluding
necessary, expedient or incidental in this regard.” independent directors) of the Company, whether working in
or outside India, as may be decided by the Board, under the
6. To ratify the remuneration of Cost Auditors for the
ESOS 2015, up to a maximum of 227,000 options, each option
financial year ending 31 March, 2019
convertible into one fully paid-up equity share of ` 10/- each
To consider and, if thought fit, to pass the following of the Company, on payment of the requisite exercise price to
Resolution as an Ordinary Resolution: the Company, in one or more tranches and on such terms and
“RESOLVED THAT pursuant to the provisions of Section 148(3) conditions as may be fixed or determined by the Board and/or
and other applicable provisions, if any, of the Companies Act, the Nomination and Remuneration Committee in accordance
2013 and Rules framed thereunder (including any statutory with the ESOS 2015.
modification(s) or re-enactment(s) thereof for the time RESOLVED FURTHER THAT the Board and/or the Nomination
being in force), the Company hereby ratifies and confirms and Remuneration Committee, be and is hereby authorised
the remuneration not exceeding ` 90,000 (Rupees Ninety to do all such acts, as it may in its absolute discretion deem
Thousand Only) and reimbursement of actual out of pocket necessary to bring the ESOS 2015 into effect, including to incur
expenses, as may be incurred by them, in connection with the any expenses, if any, in relation thereto.
audit of cost records of the Company, payable to M/s. Harshad
S. Deshpande & Associates, Pune, Cost Accountants (Firm RESOLVED FURTHER THAT subject to applicable laws and any
Registration No.00378), who were appointed by the Board of approvals, consents, permissions and sanctions, as may be
Directors as the Cost Auditors of the Company to conduct audit required, the options may be granted to the eligible employees
of cost records maintained by the Company for the financial either directly or through a trust constituted/to be constituted by
year ending on 31 March, 2019. the Board and/or the Nomination & Remuneration Committee.

RESOLVED FURTHER THAT the Board of Directors of the RESOLVED FURTHER THAT the equity shares, if any, issued/
Company (including any Committee thereof) and/or Company allotted upon exercise of options from time to time in
Secretary, be and are hereby authorised to do all such acts, accordance with the ESOS 2015, shall rank pari-passu in all
deeds, matters and things as may be considered necessary, respects with the then existing equity shares of the Company.
desirable or expedient to give effect to this resolution.” RESOLVED FURTHER THAT for the purpose of giving effect
7. To ratify Parag Milk Foods Limited “Employee Stock to any creation, offer, issue, allotment or listing of the shares,
Option Scheme 2015” (ESOS 2015) on behalf of the Company, the Board and/or the Nomination
& Remuneration Committee be and is hereby authorised to
To consider, and if thought fit, to pass the following make any modifications, changes, variations, alterations or
resolution as a Special Resolution revisions in the ESOS 2015 from time to time or to suspend,
“RESOLVED THAT in furtherance of and supplementing to withdraw or revive the ESOS 2015, from time to time, as may
the Special Resolution passed by the Shareholders in the be specified by any statutory authority or otherwise and to do
Extra-Ordinary General Meeting of the Company, held on all such acts, deeds, matters and things as it may in its absolute
16 May, 2015, and in pursuance to Clause 12 and other discretion deem fit or necessary or desirable for such purpose
applicable provisions, if any, of the Securities and Exchange in conformity with the Companies Act, 2013, the Memorandum
Board of India (Share Based Employee Benefits) Regulations, and Articles of Association of the Company, the SEBI ESOP
2014 (including any statutory modification(s) or re-enactment Regulations as amended from time to time and any other
thereof for the time being in force) (“SEBI ESOP Regulations”), applicable laws and with power on behalf of the Company, to
and provisions of Section 62 and other applicable provisions, settle any questions, difficulties or doubts that may arise in
if any, of the Companies Act, 2013 (including any statutory this regard without requiring the Board and/or the Nomination
modification(s) or re-enactment thereof for the time being & Remuneration Committee to secure any further consent or
in force), the Memorandum and Articles of Association of the approval of the shareholders”
Company, and subject to such other approvals, consents, 8. To approve increase in remuneration of Ms. Akshali Shah
permissions and sanctions, as may be applicable, including VP-Strategy (Sales and Marketing) appointed to an office

2 Parag Milk Foods Limited

 NOTICE

or place of profit meeting may also attend the meeting but shall not be
entitled to cast their vote again.
To consider, and if thought fit, to pass the following
resolution as an Ordinary Resolution. (b) In the case of equal votes, the Chairman shall have a
casting vote in addition to the vote or votes to which he
“RESOLVED THAT pursuant to the provisions of Section 188(1) may be entitled as a Shareholder.
(f) and other applicable provisions, if any, of the Companies
(c) The scrutiniser shall, immediately after the conclusion of
Act, 2013 read with Rule 15 3 of the Companies (Meeting of
voting at the General Meeting, first count the votes cast at
Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI
the meeting, thereafter unblock the votes cast through
(Listing Obligations and Disclosure Requirements) Regulations,
remote e-voting in the presence of at least two witnesses
2015, (including any statutory modification(s) or re-enactment
not in the employment of the Company and make, not later
thereof for the time being in force) and applicable Articles of
than three days of conclusion of the meeting, a consolidated
Association of the Company, the approval of the Members be
scrutiniser’s report of the total votes cast in favour or against,
and is hereby accorded to enhance the remuneration payable
if any, to the Chairman or a person authorised by him in
with effect from 1 July, 2018 to Ms. Akshali Shah, relative of
writing who shall countersign the same.
Mr. Devendra Shah, Chairman of the Company, holding an
office or place of profit within the meaning of Section 188(1) (d) No document purporting to be a report of the
(f) of the Companies Act, 2013 read with Explanation thereto, proceedings of any General Meeting of the Company
as VP- Strategy (Sales and Marketing) of the Company, in the shall be circulated or advertised at the expense of the
manner as set out in the Explanatory Statement annexed to Company unless it includes the matters required by
the Notice convening this Meeting, as approved by the Board these Articles or Section 118 of the Act to be contained in
of Directors upon recommendation made by the Nomination the Minutes of the proceedings of such meeting.
and Remuneration Committee as per the Remuneration Policy (e) The Shareholders will do nothing to prevent the taking of
of the Company and also approved by the Audit Committee in any action by the Company or act contrary to or with the
accordance with the Policy of the Company on Related Party intent to evade or defeat the terms as contained in these
Transactions” Articles.”
“RESOLVED FURTHER THAT the Board of Directors or B. Existing Article 36 (VI) be and is hereby substituted with the
Nomination and Remuneration Committee of the Board be following new Clause:
and are hereby authorised to change/alter/increase/decrease “36. E-VOTING
the terms and conditions/remuneration of Ms. Akshali Shah
(VI) the facility of remote e-voting shall remain open for not
from time to time subject to such approvals as may be required
less than three days and shall close at 5.00 p.m. on the date
under the provisions of the Companies Act, 2013”.
preceding the date of the General Meeting”.
“RESOLVED FURTHER THAT any of the Directors or Company C. Existing Article 49 be and is hereby substituted with the
Secretary of the Company, be and are hereby severally authorized following new Clause:
to file requisite forms with the Registrar of Companies and to do
all acts, deeds and things in this connection.” “49. ONE-THIRD OF DIRECTORS TO RETIRE EVERY YEAR
At every Annual General Meeting of the Company, one third of
9. Alteration of Articles of Association
such of the Directors for the time being as are liable to retire by
To consider and, if thought fit, to pass the following Resolution as a rotation, or, if their number is not three or a multiple of three,
Special Resolution. the number nearest to one- third shall retire from office, and
“RESOLVED THAT pursuant to the provisions of Section 14 and other they will be eligible for re-election. The Managing Director, the
applicable provisions, if any, of the Companies Act, 2013 read with Nominee Director (s) and the Debenture Director(s), if any, shall
the Companies (Incorporation) Rules, 2014 (including any statutory not be counted in determining the number of Directors liable
modification(s) or re-enactment(s) thereof, for the time being in force) to retire by rotation, subject to compliance of the Act and the
approval of the Members be and is hereby accorded for alteration of Rules made thereunder or any other applicable provisions of
the Articles of Association of the Company in the following manner Law”
and the Articles be renumbered accordingly, if needed.” D. Existing Article 59(a) be and is hereby substituted with the
A. Existing Article 32 be and is hereby substituted with the following new Clause:
following new Clause: “59. PROCEEDINGS OF THE BOARD OF DIRECTORS
“32. QUESTIONS AT GENERAL MEETING HOW DECIDED (a) There shall be at least 4 (four) Board Meetings in every
(a) The Chairman shall, at the General Meeting, at the year and there should not be a gap of more than 120 (one
end of discussion on the resolutions on which voting hundred twenty) days between two consecutive Board
is to be held, allow voting, as provided in Rule 21 of the Meetings. Meetings shall be held in Mumbai, or such a
Companies (Management and Administration) Rules, place as may be decided by the Board.”
2014, as applicable, with the assistance of scrutiniser, by E. Existing Article 60(a) be and is hereby substituted with the
use of ballot or polling paper or by using an electronic following new Clause:
voting system for all those Members who are present
“60. QUORUM FOR BOARD MEETING
at the General Meeting but have not cast their votes
by availing the remote e-voting facility. The Members (a) Quorum for Board Meetings:
who have cast their vote by remote-voting prior to the Subject to the provisions of Section 174 of the Act, the

3
 quorum for each Board Meeting shall be one third of its forgoing by the Members, his/ their right to receive the
total strength or three Directors, whichever is higher, and dividend (interim or final) by him/them under this Article
the participation of the directors by video conferencing or shall be irrevocable immediately after the record date/
by other audio visual means shall also be counted for the book closure date fixed for determining the names of
purposes of quorum under this sub-section. Members entitled for dividend. The Company shall not
If any duly convened Board Meeting cannot be held be entitled to declare or pay and shall not declare or pay
for want of a quorum, then such a meeting shall dividend on equity shares to such Members who have
automatically stand adjourned for 7 (seven) days after waived/forgone his/their right to receive the dividend
the original meeting at the same time and place, or if that (interim or final) by him/ them under this Article.
day is a national holiday, on the succeeding day which is b. The Company may in general meeting, declare a dividend
not a public holiday to the same time and place. Provided to be paid to the Members, other than the Members
however, the adjourned meeting may be held on such who have waived/foregone their right of receiving any
other date and such other place as may be unanimously dividend (including any interim dividend) declared /
agreed to by all the Directors in accordance with the to be declared by the Company for any financial year
provisions of the Act.” in accordance with the Rules as may be framed by the
F. Existing Article 69 be and is hereby substituted with the Board and as amended from time to time, according to
following new Clause: their respective rights and interests in the profits and
subject to the provisions of the Act, may fix time for
“69. SEAL payment of the same”
(a) The Board shall provide for the safe custody of the seal. H. Existing Article 81 be and is hereby substituted with the
(b) The seal of the company shall not be affixed to any following new Clause:
instrument except by the authority of a resolution of the
“81. INSPECTION BY SHAREHOLDERS
Board or of a committee of the Board authorised by it in that
behalf, and except in the presence of at least one director The register of charges, register of investments, register
or the secretary or such other person as the Board may of Shareholders and the minutes of the meetings of the
appoint for the purpose; and the director or the secretary or Shareholders shall be kept at the Office of the Company and
other person aforesaid shall sign every instrument to which shall be open, during Business hours, for such periods not being
the seal of the company is so affixed in their presence.” less in the aggregate than two hours in each day as the Board
determines, for the inspection of any Shareholder without
G. New Article 70A be inserted after the existing Article 70:
charge. In the event such Shareholder conducting inspection
“70A OPEN TO THE MEMBERS TO WAIVE/FORGO HIS/ of the above mentioned documents requires extracts of the
THEIR RIGHT TO RECEIVE THE DIVIDEND same, the Company may charge a fee which shall not exceed
a. Notwithstanding anything contained in this Articles of the Rupees ten per page or such other limit as may be prescribed
Company, but subject to the provisions of the Companies under the Act or other applicable provisions of Law.”
Act, 2013 and all other applicable rules of the statutory “RESOLVED FURTHER THAT the Board of Directors or Company
authorities and the Rules framed by the Board of Directors Secretary of the company be and is hereby authorized to take
of the Company in this behalf as amended from time to all such steps and actions for the purpose of making all such
time by the Board, it shall be open for the Members of the filings and registrations as may be required in relation to the
Company who hold the equity shares in the Company aforesaid amendment to the Articles of Association and further
to waive/forgo his/their right to receive the dividend to do all such acts and deeds, matters and things as may be
(interim or final) by him/them for any financial year deemed necessary to give effect to this resolution.”
which may be declared or recommended respectively By Order of the Board of Directors
by the Board of Directors of the Company. The waiver/
Rachana Sanganeria
Place: Mumbai Company Secretary and
Date: 06 August, 2018 Compliance Officer
Registered Office:
Flat No.1, Plot No. 19,
Nav Rajasthan Co. Op. Hsg. Soc,
Behind Ratna Memorial Hospital,
S.B. Road, Shivaji Nagar,
Pune – 411 016 -Maharashtra

4 Parag Milk Foods Limited

 NOTICE

NOTES:
1. A Member entitled to attend and vote at the Annual Register of Members on the Record Date, in respect
General Meeting (AGM) is entitled to appoint a proxy to of the shares held in dematerialised mode, the
attend and vote instead of himself and the proxy need dividend will be paid to Members whose names are
not be a Member of the Company. The instrument furnished by National Securities Depository Limited
appointing the proxy, in order to be effective, must (NSDL and Central Depository Services (India)
be deposited at the Company’s Registered Office, duly Limited (CDSL) as beneficial owners as on that date.
completed and signed, not less than 48 hours before
7. The Company’s Registrar & Transfer Agent (‘R&TA’) for its
the commencement of the AGM. Proxies submitted on
share registry (both, physical as well as electronic) is
behalf of companies, societies etc., must be supported
Karvy Computershare Private Limited (“Karvy”) having its
by appropriate resolutions / authority, as applicable.
office at Karvy Selenium Tower B, Plot 31-32, Gachibowli,
A person can act as proxy on behalf of Members not
Financial District, Nanakramguda, Hyderabad 500032
exceeding 50 (Fifty) and holding in the aggregate not
(Unit: Parag Milk Foods Limited).
more than 10% of the total share capital of the Company
carrying voting rights. In case a proxy is proposed to be 8. Pursuant to Section 91 of the Act, Register of Members and
appointed by a Member holding more than 10% of the Share Transfer Books of the Company will remain closed
total share capital of the Company carrying voting rights, from Thursday, 13 September, 2018 to Wednesday, 19
then such proxy shall not act as a proxy for any other September, 2018, (both days inclusive) for the purpose of
person or shareholder. the AGM.

2. Corporate Members intending to send their authorised 9. The Register of Directors and Key Managerial Personnel
representative(s) to attend the AGM are requested to and their shareholdings, maintained under Section 170 of
send to the Company a certified true copy of the relevant the Act and the Register of Contracts or Arrangements in
Board Resolution together with the specimen signature(s) which Directors are interested maintained under Section
of the representative(s) authorised under the said Board 189 of the Act, will be made available for inspection by
Resolution to attend and vote on their behalf at the AGM. the Members at the AGM.

3. The Explanatory Statement pursuant to Section 102(1) of 10. Members holding shares in electronic mode may note
the Companies Act, 2013 (“Act”) relating to the special that bank particulars registered against their respective
business to be transacted at the AGM is annexed hereto. depository accounts will be used by the Company for
All relevant documents referred to in the accompanying payment of dividend. The Company or Karvy cannot
Notice and the Explanatory Statement shall be open act on any request received directly from the Members
for inspection at the Registered Office of the Company holding shares in electronic form for any change of bank
during business hours except on Saturday, Sundays or particulars or bank mandates. Such changes are to be
holidays, up to and including the date of the AGM. advised only to the Depository Participant (DP) by the
Members.
4. The relevant details of Directors retiring by rotation /
seeking re-appointment at the ensuing AGM are provided 11. Members holding shares in electronic mode are requested
in the “Annexure” to the Notice pursuant to the provisions to intimate any change in their address or bank mandates
of (i) the Securities and Exchange Board of India (Listing to their DPs with whom they are maintaining their demat
Obligations and Disclosure Requirements) Regulations, accounts. Members holding shares in physical mode are
2015 (the “Listing Regulations”) and (ii) Secretarial requested to advise any change in their address or bank
Standard on General Meetings (“SS-2”), issued by the mandates to the Company / Karvy.
Institute of Company Secretaries of India.
12. Members / proxies / authorised representatives are
5. In case of joint holders attending the AGM, the Member requested to bring to the Meeting the necessary details of
whose name appears as the first holder in the order of their shareholding, attendance slip (s), identity proof and
names as per the register of Members of the Company copy(ies) of the Annual Report.
will be entitled to vote.
13. The Securities and Exchange Board of India (“SEBI”)
6. (a) The Company has fixed Wednesday, 12 has mandated the submission of Permanent Account
September, 2018 as the “Record Date” for Number (PAN) by every participant in the securities
determining entitlement of Members to dividend market. Members holding shares in electronic form are,
for the financial year ended 31 March, 2018. therefore, requested to submit the PAN to their depository
participant(s) with whom they are maintaining their
(b) The final dividend on equity shares, recommended
demat account(s). Members holding shares in physical
by the Board, if declared at the AGM, will be paid
form can submit their PAN details to Karvy (R&TA).
on or before Thursday , 18 October, 2018, to those
Members whose names appear on the Company’s 14. Members who hold shares in physical mode in multiple
folios in identical names or joint holding in the same order

5
 of names are requested to send the share certificates to Rules, 2014, as amended, and Regulation 44 of
Karvy, for consolidation into a single folio. the SEBI Listing Regulations, and the Secretarial
Standard on General meetings(“SS-2”) issued
15. Members who have not registered / updated their e-mail
by the Institute of Companies Secretaries
addresses with Karvy, if shares are held in physical
of India, the Members are provided with
mode or with their DPs, if shares are held in electronic
the facility to cast their vote electronically,
mode, are requested to do so for receiving all future
(“e-voting”) on all the resolutions set forth in this
communications from the Company including Annual
Notice. The Members may cast their vote(s) using an
Reports, Notices, Circulars, etc., electronically.
electronic voting system from a place other than the
16. Electronic copy of the Annual Report for FY 2017-18 and the venue of the Meeting (‘remote e-voting’).
Notice of 26th Annual General Meeting (“AGM”) along with
ii. The facility for voting through electronic voting
Attendance Slip and Proxy Form are being sent to all the
system (‘Insta Poll’) or ballot paper shall also be
Members whose e-mail addresses are registered with the
made available at the AGM. Members attending the
Company/Depository Participant(s) for communication
Meeting who have not cast their vote(s) by remote
purposes, unless any Member has requested for a
e-voting shall be able to exercise their right to vote
physical copy of the same. For Members who have not
at the AGM.
registered their e-mail addresses, physical copies of the
Annual Report for FY 2017-18 and the Notice along with iii. The Members who have cast their vote(s) by remote
Attendance Slip and Proxy Form are being sent by the e-voting may also attend the Meeting but shall not
permitted mode. To support the ‘Green Initiative’, the be entitled to cast their vote(s) again.
Members who have not registered their e-mail addresses
iv. A Member can opt for only single mode of voting,
are requested to register the same with the Company’s
that is, through remote e-voting or voting at the
Registrar and Share Transfer Agent/Depositories.
AGM. If a Member casts vote(s) by both modes, then
Members may note that the Notice of the AGM of the
voting done through remote e-voting shall prevail
Company and the Annual Report for will also be available
and vote(s) cast at the AGM shall be treated as
on the website of the Company www.paragmilkfoods.
“INVALID”.
com and on the website of Karvy Computershare Private
Limited (“Karvy”) www.evoting.karvy.com v. The Company has engaged the services of Karvy
Computershare Private Limited (‘Karvy’) as the
17. Members are requested to note that as per Section 124
Agency to provide e-voting facility.
of the Companies Act, 2013, dividends not encashed/
claimed within seven years from the date of declaration vi. The Board of Directors of the Company has
will be transferred to the Investor Education and appointed Mr. Chaitanya Udgirkar, Associate
Protection Fund (IEPF). No claims in this respect shall lie Company Secretary, Legasis Services (Membership
against the Company. Number 49740 and PCS No. 18161), as Scrutiniser
to scrutinise the remote e-voting and Insta Poll
18. The Members may note that M/s Haribhakti & Co, LLP,
process in a fair and transparent manner.
Chartered Accountants, Pune (Firm Registration No.
103523W / W100048), were appointed as Statutory vii. Voting rights shall be reckoned on the paid-up value of
Auditors of the Company, for a period of 5 years i.e. upto shares registered in the name of the Member / beneficial
the conclusion of the Annual General Meeting to be owner (in case of electronic shareholding) as on the cut-
held for the FY 2019-2020, to be held for the adoption of off date, that is, Wednesday, 12 September, 2018.
accounts for the financial year ending 31 March, 2019. As
viii. A person, whose name is recorded in the register
per the provisions of the Act and rules framed thereunder,
of Members or in the register of beneficial owners
the said appointment of the Statutory Auditors was
maintained by the depositories as on the cut-off
required to be ratified at every Annual General Meeting.
date only shall be entitled to avail the facility of
However, the Ministry of Corporate Affairs by way of the
remote e-voting / Insta Poll. A person who is not
Companies (Amendment) Act, 2017, has omitted the first
a Member as on the cut-off date, should treat this
proviso to Section 139 of the Act, requiring ratification of
Notice for information purpose only.
appointment of Statutory Auditors. The said amendment
was made effective on 7 May, 2018. Accordingly, agenda ix. Any person who becomes a Member of the Company
for ratification of appointment of Statutory Auditors is after despatch of the Notice of the Meeting and
not included in this Notice of AGM. holding shares as on the cut-off date may obtain the
User ID and password from Karvy in the manner as
19. A route map giving directions to reach the venue of the
mentioned below:
AGM is given at the end of the Notice.
a. If the mobile number of the Member is
20. Voting:
registered against Folio No. / DP ID Client ID,
i. In compliance with the provisions of Section 108 the Member may send SMS.
and other applicable provisions, if any, of the
b. MYEPWD<space> E-Voting Event Number Folio
Companies Act, 2013 read with Rule 20 of the
No. or DP ID Client ID to 9212993399
Companies (Management and Administration)

6 Parag Milk Foods Limited

 NOTICE

Example for NSDL: of the Company as listed. The Results shall also be
displayed on the Notice Board at the Registered
MYEPWD <SPACE> IN12345612345678
Office of the Company.
Example for CDSL:
xii. Subject to receipt of requisite number of votes,
MYEPWD <SPACE> 1402345612345678 the Resolutions proposed in the Notice shall be
deemed to be passed on the date of the AGM, that
Example for Physical:
is, Wednesday, 19 September, 2018.
MYEPWD <SPACE> XXXX1234567890
xiii. Information and instructions relating to remote
b. If e-mail address or mobile number of the e-voting:
Member is registered against Folio No. / DP
1. A. In case a Member receives an e-mail from
ID Client ID, then on the home page of www.
Karvy [for Members whose e-mail addresses
evoting.karvy.com, the Member may click
are registered with the Company / Depository
“Forgot Password” and enter Folio No. or DP
Participant(s)]:
ID Client ID and PAN to generate a password.
(a) Launch internet browser by typing the
c. Member may call on Karvy’s toll-free number:
URL: www.evoting.karvy.com
1800-3454-001 (from 9.00 a.m. to 6.00 p.m.).
(b) Enter the login credentials (that is, User
d. Member may send an e-mail request for e-voting ID and Password) which are printed and
at [email protected]/mohsin.mohd@karvy. available in the communication with
com. respect to voting by electronic means
If the Member is already registered with Karvy enclosed with the Notice and forms an
e-voting platform, then he can use his existing User integral part of it.
ID and password for casting the vote(s) through The E-Voting Event Number+Folio No.
remote e-voting. or DP ID Client ID will be your User ID.
x. The remote e-voting facility will be available during However, if you are already registered
the following period: with Karvy for e-voting, you can use
your existing User ID and password for
• Commencement of remote e-voting: From 9:00 casting your vote(s). If required, please
a.m. (IST) on Saturday, 15 September, 2018 visit www.evoting.karvy.com or contact
• End of remote e-voting: Up to 5:00 p.m. (IST) on toll-free number 1800-3454-001 (from
Tuesday, 18 September, 2018. 9.00 a.m. to 6.00 p.m.) for your existing
password.
The remote e-voting will not be allowed beyond the
aforesaid date and time and the remote e-voting (c) After entering these details appropriately,
module shall be disabled by Karvy upon expiry of click on “LOGIN”.
the aforesaid period. (d) You will now reach Password Change
The Company has opted to provide the same Menu wherein you are required to
electronic voting system at the AGM, as used mandatorily change your password. The
during remote e-voting and the said facility shall be new password shall comprise minimum
operational till all the resolutions proposed in the 8 characters with at least one upper case
Notice are considered and voted upon at the AGM (A-Z), one lower case (az), one numeric
and may be used for voting only by the Members (0-9) and a special character (@,#,$,etc.).
holding shares as on the cut-off date who are The system will prompt you to change
attending the AGM and who have not already cast your password and update your contact
their vote(s) through remote e-voting. details like mobile number, e-mail
address, etc. on first login. You may also
xi The Scrutiniser will, after the conclusion of e-voting enter a secret question and answer of
at the AGM, scrutinise the votes cast at the Meeting your choice to retrieve your password
(Insta Poll) and votes cast through remote e-voting, in case you forget it, It is strongly
make a consolidated Scrutiniser’s Report and recommended that you do not share
submit the same to the Chairman. The results your password with any other person
will be declared within 48 hours after the AGM. and that you take utmost care to keep
The result declared along with the consolidated your password confidential.
Scrutiniser’s Report will be placed on the website
of the Company: www.paragmilkfoods.com and on (e) You need to login again with the new
the website of Karvy at: www.evoting.karvy.com. credentials.
The result will simultaneously be communicated (f ) On successful login, the system will
to the stock exchanges, BSE Limited and National prompt you to select the E-Voting Event
Stock Exchange of India Limited where the shares Number for Parag Milk Foods Limited.

7
 (g) On the voting page, enter the number of Depository Participant(s)]:
shares (which represents the number of a) User ID and initial password - Initial password
votes) as on the cut-off date under either is provided in the below given format in the
“FOR” or “AGAINST” or alternatively, communication with respect to voting by
you may partially enter any number electronic means enclosed with the Notice
under “FOR” /“AGAINST”, but the total and forms integral part of it:
number under “FOR” / ’’AGAINST” taken
together should not exceed your total EVEN (E-voting User ID password
shareholding as on the cut-off date. You Event Number)
may also choose the option “ABSTAIN”
and the shares held will not be counted
under either head.
b) Please follow all steps from Sr. No. (a) to (m) as
(h) Members holding shares under multiple mentioned in (A) above, to cast your vote.
folios / demat accounts shall choose the
2. You can also update your mobile number
voting process separately for each of the
and e-mail id in the user profile details of
folios / demat accounts.
the folio which may be used for sending
(i) Voting has to be done for each item of further communication(s).
the Notice separately. In case you do not
3. During the voting period, Members can
desire to cast your vote on any specific
login to Karvy’s e-voting platform any
item, it will be treated as “ABSTAINED”.
number of times till they have voted on
(j) You may then cast your vote by selecting all the Resolutions. Once the vote on a
an appropriate option and click on resolution is cast by a Member, whether
“SUBMIT”. partially or otherwise, the Member shall
not be allowed to change it subsequently
(k) A confirmation box will be displayed.
or cast the vote again.
Click “OK” to confirm, else “CANCEL” to
modify. 4. In case of any query pertaining to
e-voting, Members may refer to the “Help”
(l) Once you confirm, you will not be allowed
and “FAQs” sections / E-voting user
to modify your vote.
manual available at the “Downloads”
(m) Corporate / Institutional Members (that is, section of Karvy’s website for e-voting:
other than Individuals, HUF, NRI, etc.) are www.evoting.karvy.com or contact Karvy
also required to send scanned certified true as per the details given under point no. 5.
copy (PDF Format) of the Board Resolution
5. The Members are requested to note the
/ Power of Attorney / Authority Letter,
following contact details for addressing
etc., together with attested specimen
e-voting grievances:
signature(s) of the duly authorised
representative(s), to the Scrutiniser at Shri Mohd Mohsin Uddin-Senior Manager
e-mail id: [email protected] with a Karvy Computershare Private Limited
copy marked to [email protected]. They Karvy Selenium Tower B, Plot 31-32,
may also upload the same in the e-voting Gachibowli, Financial District,
module in their login. The scanned image Nanakramguda, Hyderabad 500 032
of the above mentioned documents
Toll-free No.: 1800-3454-001
should be in the naming format “Corporate
Name_EVENT NO.” Phone:(040) 67161562/67161583
E-mail: evoting.parag @karvy.com/ mohsin.
B. In case a Member receives physical copy of [email protected]
the Notice by Post [for Members whose e-mail
addresses are not registered with the Company /

By Order of the Board of Directors

Rachana Sanganeria
Place: Mumbai Company Secretary and Compliance Officer
Date: 06 August, 2018
Registered Office:
Flat No.1, Plot No. 19,
Nav Rajasthan Co. Op. Hsg. Soc,
Behind Ratna Memorial Hospital,
S.B. Road, Shivaji Nagar,
Pune – 411 016 -Maharashtra
8 Parag Milk Foods Limited
 NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 (“the Act”)
The following Statements sets out all material facts relating to (iii) The Managing Director shall adhere to the
the Special Business mentioned in the Notice. Company’s Code of Conduct.

ITEM NO. 4 : RE-APPOINTMENT OF MR. PRITAM SHAH Mr. Pritam Shah, aged 47 years is the promoter of
(DIN: 01127247) AS THE MANAGING DIRECTOR AND KEY the Company, appointed as Director on the Board on
MANAGERIAL PERSONNEL 29 December, 1992 since incorporation of the Company
The Board of Directors of the Company (“the Board”) at its and has rich and varied experience in the industry and
Meeting held on 26 April, 2018 has, subject to approval of has been involved in the business, management and the
the Members, re-appointed Mr. Pritam Shah (DIN: 01127247) operations of the Company. It would be in the interest
as Managing Director of the Company, designated as Key of the Company to continue to avail of his considerable
Managerial (KMP) for a further period of 5 (five) years from expertise and to re-appoint Mr. Pritam Shah as Managing
the expiry of his present term, that is 31 March, 2018, on Director. Accordingly, approval of the Members is sought
the existing terms and conditions including remuneration, for passing a Special Resolution for re-appointment of
as recommended by the Nomination and Remuneration Mr. Pritam Shah as a Managing Director, as set out in
Committee of the Board (NRC). Part-I of Schedule V to the Act as also under sub-section
It is proposed to seek Members’ approval for the re- (3) of Section 196 of the Act.
appointment of and remuneration payable to Mr. Pritam Mr. Pritam Shah satisfies all the conditions set out in
Shah as Managing Director, designated as KMP, in terms of the Part-I of Schedule V to the Act as also conditions set out
applicable provisions of the Act. under sub-section (3) of Section 196 of the Act for being
Broad particulars of the terms of re-appointment of and eligible for his re-appointment. He is not disqualified
remuneration payable to Mr. Pritam Shah are as under. from being appointed as Director in terms of Section 164
a. Term of appointment: Five years with effect from 01 April, of the Act.
2018 to 31 March, 2023 The above may be treated as a written memorandum
b. Remuneration of ` 2.40 crores p.a.( Rupees Two crores setting out the terms of re-appointment of Mr. Pritam
forty lakhs only) all-inclusive of Salary, perquisites Shah under Section 190 of the Act.
and allowances, i.e. Salary: ` 20,00,000/- per month.
Details of Mr. Pritam Shah are provided in “Annexure” to
The annual increment will be decided by the Board of
the Notice pursuant to the provisions of (i) the Securities
Directors of the Company.
and Exchange Board of India (Listing Obligations and
c. Reimbursement of Expenses: Disclosure Requirements) Regulations, 2015 and (ii)
Expenses incurred for travelling, boarding and lodging Secretarial Standard on General Meetings (“SS-2”), issued
for business trips for Mr. Pritam Shah including by the Institute of Company Secretaries of India.
communication expenses at residence, shall be
Except Mr. Pritam Shah (the appointee) and Mr. Devendra
reimbursed at actual and not considered as perquisites.
Shah (being relative of the appointee) none of the other
The overall remuneration payable every year to the Directors and Key Managerial Personnel of the Company
Managing Director and the Whole-time Directors by way or their relatives are, in any way, concerned or interested,
of salary, perquisites and allowances, incentive / bonus financially or otherwise, in the aforementioned resolution.
/ performance linked incentive, remuneration based on
net profits, etc., as the case may be, shall not exceed in The Board recommends the Special Resolution set out at
the aggregate 10% (Ten percent) of the net profits of the Item No. 4 of the Notice for approval by the Members .
Company as per Section 197 of the Act as computed in ITEM NO. 5 : RE-APPOINTMENT OF MR. DEVENDRA SHAH
the manner laid down in Section 198 of the Act or any (DIN: 01127319) AS WHOLE-TIME DIRECTOR AND KEY
statutory modification(s) or re-enactment(s) thereof. MANAGERIAL PERSONNEL
The Board of Directors of the Company (“the Board”) at its
d. General
Meeting held on 09 May, 2018 has, subject to the approval
(i) The Managing Director will perform his duties as
of the Members, re-appointed Mr. Devendra Shah (DIN:
such with regard to all work of the Company and
01127319) as Whole-time Director of the Company, designated
will manage and attend to such business and carry
as Key Managerial (KMP) on the existing terms and conditions
out the orders and comply with all such directions
including remuneration as recommended by the Nomination
and regulations as may from time to time be given and Remuneration Committee of the Board (NRC)
and made by the Board.
It is proposed to seek Members’ approval for the re-
(ii) The Managing Director shall act in accordance with appointment of and remuneration payable to Mr. Devendra
the Articles of Association of the Company and shall Shah as Whole-time Director, designated as KMP, in terms of
abide by the provisions contained in Section 166 of the applicable provisions of the Act.
the Act with regard to duties of the Directors.
9
Broad particulars of the terms of re-appointment of and The above may be treated as a written memorandum
remuneration payable to Mr. Devendra Shah are as under. setting out the terms of re-appointment of Mr. Devendra
Shah under Section 190 of the Act.
a. Term of appointment: Five years with effect from 01 April,
2018 to 31 March, 2023. Details of Mr. Devendra Shah are provided in
“Annexure” to the Notice pursuant to the provisions of
b. Remuneration of ` 2.40 crores p.a. (Rupees Two crores
(i) the Securities and Exchange Board of India (Listing
forty lakhs only) all-inclusive of Salary, perquisites and
Obligations and Disclosure Requirements) Regulations,
allowances. Salary: ` 20,00,000/- per month. The annual
2015 and (ii) Secretarial Standard on General Meetings
increment will be decided by the Board of Directors of the
(“SS-2”), issued by the Institute of Company Secretaries
Company.
of India.
c. Reimbursement of Expenses:
Mr. Devendra Shah is interested in the resolution set out
Expenses incurred for travelling, boarding and lodging at Item No. 5 of the Notice.
for business trips for Mr. Devendra Shah including
Except Mr. Devendra Shah (the appointee), Mr. Pritam
communication expenses at residence, shall be
Shah (being relative of the appointee) none of the other
reimbursed at actual and not considered as perquisites.
Directors or Key Managerial Personnel of the Company or
The overall remuneration payable every year to the their relatives are, in any way, concerned or interested,
Managing Director and the Whole-time Directors by way financially or otherwise, in the above resolution
of salary, perquisites and allowances, incentive / bonus
The Board commends the Special Resolution set out at
/ performance linked incentive, remuneration based on
Item No. 5 of the Notice for approval by the Members
net profits, etc., as the case may be, shall not exceed in
the aggregate 10% (Ten percent) of the net profits of the ITEM NO. 6 : RATIFICATION OF COST AUDITORS REMUNERATION.
Company as per Section 197 of the Act as computed in The Board in its Meeting held on 09 May, 2018, on the
the manner laid down in Section 198 of the Act or any recommendation of the Audit Committee, has approved
statutory modification(s) or re-enactment(s) thereof. the appointment of M/s Harshad S. Deshpande &
Associates, Cost Accountants as the Cost Auditors, to
d. General conduct the audit of the cost records of the Company
(i) The Whole-time Director will perform his duties as for the financial year 2018-2019 at a remuneration of
such with regard to all work of the Company and ` 90,000/- per annum (Rupees Ninety Thousand Only)
will manage and attend to such business and carry plus Goods and Services tax as applicable and re-
out the orders and directions and conform to and reimbursement out of pocket expenses, if any. M/s.
comply with all such directions and regulations as Harshad S. Deshpande & Associates, Cost Accountants,
may from time to time be given and made by the have furnished a certificate regarding their eligibility
Board / Managing Director and the functions of for appointment as Cost Auditors of the Company and
the Whole-time Director will be under the overall confirmed that they are not disqualified under the
authority of the Managing Director. provisions of Sections 148(5).
(ii) The Whole-time Director shall act in accordance In accordance with the provisions of Section 148 of the
with the Articles of Association of the Company and Act read with the Companies (Audit and Auditors) Rules,
shall abide by the provisions contained in Section 2014, the remuneration payable to the Cost Auditors has
166 of the Act with regard to duties of Directors. to be ratified by the Members of the Company.
(iii) The Whole-time Director shall adhere to the The Board recommends resolution set forth in Item
Company’s Code of Conduct. No. 6 for the approval of the Members as an Ordinary
Resolution.
Mr. Devendra Shah, aged 53 years is the promoter of
the Company and was appointed on the Board on 29 None of the Directors or Key Managerial Personnel or
December, 1992, since incorporation of the Company their relatives, are in any way concerned or interested
and has over 25 years of rich experience in the industry. financially or otherwise in passing the Resolution set out
It would be in the interest of the Company to continue at Item No. 6 of the Notice.
to avail of his considerable expertise and to re-appoint
ITEM NO. 7 : RATIFICATION OF ‘PARAG MILK FOODS LIMITED
Mr. Devendra Shah as Whole-time Director. Accordingly,
-EMPLOYEE STOCK OPTION SCHEME 2015’ (ESOS 2015)
approval of the Members is sought for passing a Special
Company had instituted the “Parag Milk Foods Limited
Resolution for re-appointment of Mr. Devendra Shah as a
-Employee Stock Option Scheme 2015” (ESOS 2015)
Whole-time Director, as set out in Part-I of Schedule V to
pursuant to resolutions dated 27 February, 2015 and 21
the Act as also under sub-section (3) of Section 196 of the
April, 2015 passed by the Board and resolutions dated
Act.
03 April, 2015 and 16 May, 2015 passed by the shareholders
Mr. Devendra Shah satisfies all the conditions set out in of the Company. The ESOS 2015 is in compliant with the
Part-I of Schedule V to the Act as also conditions set out Securities and Exchange Board of India (Share Based
under sub-section (3) of Section 196 of the Act for being Employee Benefits) Regulations, 2014 (“SEBI ESOP
eligible for his re-appointment. He is not disqualified Regulations”).
from being appointed as Director in terms of Section 164
The total number of options that can be granted under
of the Act.
ESOS 2015 is 6,96,339, convertible to Equity Shares. The

10 Parag Milk Foods Limited

 NOTICE

ESOS 2015 is administered by the ESOP Trust, 2,27,000 Benefits) Regulations, 2014 (“SEBI ESOP Regulations”),
Equity Shares were allotted to the ESOP Trust on no company shall make any fresh grant which involves
03 September, 2015. allotment or transfer of shares to its employees under
any schemes formulated prior to its Initial Public Offering
Details of grants, vesting, exercise and lapsing of options
(“IPO”) and prior to the listing of its equity shares (‘‘Pre-
as on 31 March, 2018 are as follows:
IPO Scheme’’) unless: (i) such Pre-IPO Scheme is in
Particulars Share/Options conformity with the SEBI ESOP Regulations; and (ii) Such
Shares allotted to ESOP Trust 227,000 Pre-IPO Scheme is ratified by its Members subsequent to
Options forfeited /lapsed 122,701 the IPO. Further, as per proviso to Regulation 12(1) of the
SEBI ESOP Regulations, the ratification under clause (ii)
Options granted 199,200
may be done any time prior to grant of new options under
Options vested 126,927
such Pre-IPO Scheme. ESOS 2015 is compliant with the
Options exercised Nil SEBI ESOP Regulations. In terms of Regulation 12(1) of
Options outstanding 104,299 the SEBI ESOP Regulations, the Company cannot make
In terms of Regulation 12(1) of the Securities and any fresh grant under ESOS 2015, unless ESOS 2015 is
Exchange Board of India (Share Based Employee ratified by the Members of the Company.

The Directors recommends the resolution set forth in item no. 7 for ratification by the Members.
None of the Directors or Key Managerial Personnel of the Company or their relatives are concerned or interested financially or
otherwise in this resolution

Disclosures relating to Employee Stock Option Scheme 2015 (ESOS 2015) as required under the SEBI ESOP Regulations, 2014 are as
under:

Particulars Description
Brief Description of the scheme The purpose of the Employee Stock Option Scheme 2015’
(ESOS 2015) is to provide the employees with an additional incentive
in the form of Options to receive the Equity Shares of the Company
at a future date. The ESOP is aimed to reward its employees for their
continuous hard work, dedication and support. The main objective
of the ESOP Scheme is to recognise employees who are performing
well, a certain minimum opportunity to gain from the Company’s
performance thereby acting as a retention tool and to attract best
talent available in the market.
Total Number of options, shares or benefits, as the case may A total number of options equal to 696,339 of the Equity Shares
be to be granted would be available for being granted to eligible employees of the
Company under ESOS 2015. Each option when exercised would
be converted into one Equity share of ` 10/- each fully paid-up.
Presently 2,27,000 equity shares of ` 10/- each fully paid up allotted
to ESOP Trust for grant of ESOP options as per the ESOS 2015.
Identification of classes of employees entitled to participate Present as well as future employees and Director(s) other than
and the beneficiaries in the scheme Independent Directors of the Company as determined by the
Company or a Committee thereof.
Requirements of vesting and period of vesting The Options granted shall vest so long as the employee continues to
be in the employment of the Company, as the case may be. The Board
may, at its discretion, lay down certain performance metrics on the
achievement of which the granted options would vest, the detailed
terms and conditions relating to such performance-based vesting,
and the proportion in which options granted would vest (subject to
the minimum and maximum vesting period as specified below). The
vesting period of options granted shall vest in not less than one year
and not more than three years from the date of grant of such options.
The exact proportion in which and the exact period over which the
options would vest would be determined by the Board, subject to the
minimum vesting period of one year from the date of grant of options.
Maximum period within which the options, shares or benefits The options granted shall vest in not more than three years from the
shall be vested date of grant of such options. Vested options that lapse due to non-
exercise or unvested options that get cancelled due to resignation/
separation of the employees from the Company or otherwise, would
be available for being re-granted at a future date

11
Particulars Description
Exercise Price/Pricing formula The exercise price is equal to FMV of the Shares on the date of grant,
as determined by the Independent Valuer.
The value of price per share to be charged for the purpose of
exercising the options from the employees will be at ` 250 per share
being exercise price of shares.
Lock-in period The shares issued pursuant to exercise of options shall not be
subject to any lock-in period.
Exercise period and process of exercise From the date of vesting of the options, the employees shall be entitled
to exercise the options from time to time within such period as may be
prescribed by Board or a Committee thereof, which period shall not
exceed three years from the date of the respective grants. The options
would be exercisable by the said employees by the payment of the
consideration amount and submitting the requisite application form
after which the shares would be allotted. The Board or the Committee
thereof, may at its discretion, do all such acts deeds, matter and things
as may be necessary /desirable to facilitate exercise of options by the
employee under full cash mode or otherwise.
The appraisal process for determining the eligibility of The appraisal process for determining the eligibility of the employee
employees for the scheme will be specified by the Board /Committee and will be based on criteria
such as role / designation of the employee, length of service with the
Company, past performance record, future potential of the employee
and/or such other criteria that may be determined by the Board at its
sole discretion.
Whether the scheme(s) is to be implemented and administered The Scheme is administered through an ESOP Trust.
directly by the Company or through a trust
Acquisition of shares by the Trust Company has issued and allotted new shares to the ESOP Trust as
per Board and shareholders resolution passed .
A statement to the effect that the Company shall conform to It is hereby confirmed that the Company does conform to the
the accounting policies specified in regulation 15 accounting policies specified in Regulation 15 of the SEBI (Share
Based Employee Benefits) Regulations, 2015.
The method which the Company shall use to value its options The Company use intrinsic value method for accounting the cost of
share based employee benefits.
In case the Company opts for expensing of share based employee It is hereby confirmed that the details as required herein will be
benefits using the intrinsic value, the difference between the disclosed in the Directors` Report.
employee compensation cost so computed and the employee
compensation cost that shall have been recognised if it had used
the fair value, shall be disclosed in the Directors` report and the
impact of this difference on profits and on earnings per share (EPS)
of The Company shall also be disclosed in the Directors` Report
ITEM NO. 8 : APPROVAL UNDER SECTION 188(1)(f) OF THE COMPANIES ACT, 2013 FOR INCREASE IN PAYMENT OF REMUNERATION TO MS.
AKSHALI SHAH VP – STRATEGY (SALES & MARKETING) FOR HOLDING/CONTINUE TO HOLD OFFICE OR PLACE OF PROFIT IN THE COMPANY.
In terms of the first proviso to clause(f) Sub Section (1) of Section 188 of the Companies Act, 2013, read with Rule 15(3) (b) of the Companies
(Meeting of Board and its Powers) Rules, 2014, appointment of a related party to any office or place of profit in the Company at a
monthly remuneration exceeding 2.50 lacs requires prior approval from Members by means of an Ordinary Resolution.
Since Ms. Akshali Shah is a related party within the meaning of Sec. 2 (76) of the Act as well as Regulation 2 (zb) of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the Audit Committee of the Board, at their Meeting held on 09 May,
2018, has recommended the revision in the remuneration of Ms. Akshali Shah, pursuant to Section 188 of the Companies Act, 2013
read with Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014, in accordance with Company’s Policy on Related
Party Transaction and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Based on the recommendations of the Audit Committee, as aforesaid, the Board of Directors at their Meeting held on 09 May, 2018,
approved the revision in the terms of appointment of Ms. Akshali Shah with effect from 1 July, 2018 subject to approval by the
Members of the Company by an Ordinary Resolution, at a remuneration to be paid to her as approved by the Nomination and
Remuneration Committee in accordance with the Remuneration Policy of the Company. Brief profile of Ms. Akshali Shah – VP Strategy
(Sales & Marketing) is as below:

12 Parag Milk Foods Limited

 NOTICE

Name of Related Party Ms. Akshali Shah

Designation VP-Strategy (Sales & Marketing)
Name of the Director/Key Managerial Personnel who is 1. Mr. Devendra Shah- Executive Chairman
related
Nature of Relationship Daughter of Mr. Devendra shah- Executive Chairman
Nature, Material terms, Monetary value and particulars of 1. Employment Contract
the contract or arrangement 2. At a remuneration of ` 37,00,000/- (Rupees Thirty-Seven Lakhs) per
annum
3. Either parties to the contract of service shall be entitled to change
the terms and conditions of contract with mutual consent.
Expertise in specific functional areas Ms. Akshali Shah, 27 years, holds an MBA degree in Family Managed
Business from S. P. Jain Institute of Management and Research,
Mumbai and brings in strategic thinking with exceptional marketing
management skills and has a pragmatic and collaborative style of
working. She has played a key role in revamping the corporate
identity of the company and has brought in new innovation in
branding, public image, marketing & advertising strategy, sales
campaigns and marketing metrics. Her expertise in Information
Technology & Digital Marketing has helped Parag Milk Foods Ltd.
enhance their overall brand visibility on social media and build a
strong digital presence
As VP- Strategy (Sales & Marketing), she has been instrumental in
the journey of transformation from being a Dairy to a leading FMCG
company with product innovation focusing on health & nutrition.
Shareholding in the Company NIL

Considering the time and effort devoted by Ms. Akshali Shah towards the growth of the Company, the management of the Company
has proposed to increase the payment of remuneration payable to her from ` 28,80,000/- (Rupees Twenty-Eight Lakhs Eighty
Thousand only) per annum to ` 37,00,000/- (Rupees Thirty-Seven Lakhs) per annum.
In view of this, your Directors, recommend adoption of the proposed ordinary resolution for seeking your consent for enhancement
in the remuneration payable to Ms. Akshali Shah in the manner aforesaid.
None of the Directors, Key Managerial Personnel or their relatives, other than Mr. Devendra Shah, Executive Chairman and are
concerned or interested in the proposed Ordinary Resolution set out at Item No. 8 of the Notice for approval by the Members.

ITEM NO. 9: ALTERATION OF ARTICLES OF ASSOCIATION OF facility to its Members. Existing Article 60 specifies that
THE COMPANY the quorum for Board Meeting shall be atleast 3 Directors
As per Provisions of Section 14 of the Companies Act 2013, but does not include the requirement of atleast one third
Alteration of Articles of Association requires shareholders’ of the total number of Directors to be present and Article
approval. Board has at their meeting held on 06 August, 2018 81 allows inspection of the Minutes of the Board Meeting
approved the amendments to the Articles of Association of the and Books of Accounts by the Shareholders which is not
Company and recommends the proposal, subject to approval permitted under the Act and Revised Secretarial Standards
of Members in the Annual General Meeting in the special on Board Meetings (SS-1).
resolutions as follows: Since these requirements are not as per the Companies
1. The Company intends to bring the provisions of Article Act, 2013 it is proposed to amend the same.
36(VI) with respect to E-Voting, Article 49 with respect to 2. Further, in view of Companies (Amendment) Act, 2015
Directors liable to retire by rotation, Article 59(a) with (“Amendment Act”) which was passed on 25 May, 2015 the
respect to proceedings of Board of Directors, Article 32 with words ‘and a common seal’ appearing under Section 9 of
respect to voting at General Meeting, Article 60 pertaining the Companies Act have been omitted which means it shall
to quorum for Board Meeting and Article 81 pertaining not be mandatory for a company to have a common seal.
to inspection by shareholders in line with the provisions However, it is noticed that few Banks/Financial Institutions
of Companies Act, 2013. Existing Article 36(VI) specifies still request for affixing of Common Seal on documents
that the e-voting shall remain open for not less than to be submitted to them. In view of the same and since
one day and not more than three days and such voting the Company already has a Common Seal it is proposed
period shall be completed three days prior to the date amend Article 69 to align the requirements of the number
of the general meeting. The existing provisions of Article of Directors in the presence of whom the Common Seal be
number 49 specify that the Managing Director and Whole- affixed as provided in the Companies Act, 2013.
Time Director shall not be liable to retire by rotation and 3. The Board of Directors at their Meeting held on 06 August,
59(a) require the Company to hold a Board Meeting once 2018 have proposed to alter the Articles of Association
in every 3 Months. The existing provisions in Article 32 (AOA) of your Company by inserting a new Article 70A to
pertain to voting by Show of hands and demand for poll, enable the Members of the Company including Promoters
which is not applicable as the Company, provides e-voting & Promoters Group, who hold the equity shares in the

13
 Company to waive/forgo his/their right to receive the (interim or final) for any financial year, such Member
dividend, interim or final, by him/them for any financial shall continue to receive the dividend as usual as may be
year which may be declared or recommended respectively declared by the Company.
by the Board of Directors of the Company or Members of With respect to above mentioned changes the Board of Directors
the Company. of the Company have recommended altering the Articles of
Shareholder(s) can waive/forgo his/their right to receive the Association of the Company by substituting the Article numbers
dividend (interim or final) for any financial year any time 32, 36(VI),49, 59(a), 60, 69 and 81 and by insertion of New article
before the record date/book closure fixed for determining 70A in the Articles of Association of the Company in the manner
the names of Members entitled for dividend. In case as set out in the Special Resolution at Item No. 9 of the Notice.
the Shareholder(s) has/have conveyed his/their waiver/ Copy of the Articles of Association of the Company incorporating
forgoing his/their right to receive the dividend (interim or the proposed new substituted Articles is available for inspection
final) for any financial year any time and subsequently sold by Members at the registered office of the Company.
the relevant shares before the record date / book closure
Approval of the Members is sought to the alteration of Articles of
fixed for determining the names of Members entitled for
Association of the Company by passing a Special Resolution as
dividend, the earlier Shareholder(s) waiver/forgoing would
set out at Item No. 9 of the Notice.
be invalid since the earlier Shareholder(s) who has/have
sold the relevant shares is/are not the Member(s) on the None of the Directors / Key Managerial Personnel of the
record date / book closure date fixed for determining the Company / their relatives are, in any way, concerned or
names of Members entitled for dividend. interested, financially or otherwise, in the resolution set out at
Item No. 9 of the Notice.
The waiver / forgoing of the dividend for any year by a
Member will be purely voluntary on his/their part. In The Board recommends the Special Resolution set out at Item
the absence of any communication from the Members No. 9 of the Notice for approval by the Members.
waiving/forgoing his/their right to receive the dividend

By Order of the Board of Directors

Rachana Sanganeria
Place: Mumbai Company Secretary and Compliance Officer
Date: 06 August, 2018
Registered Office:
Flat No.1, Plot No. 19,
Nav Rajasthan Co. Op. Hsg. Soc,
Behind Ratna Memorial Hospital,
S.B. Road, Shivaji Nagar,
Pune – 411 016 -Maharashtra

14 Parag Milk Foods Limited

 NOTICE

ANNEXURE1
Details of Director (s) seeking appointment/ re-appointment/ continuation in directorship in the Twenty Sixth Annual General
Meeting Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Clause 1.2.5 of Secretarial
Standards on General Meetings are as follows:

Name of the Director Mr. B. M. Vyas Mr. Devendra Shah Mr. Pritam Shah
Director Identification Number 00043804 01127319 01127247
(DIN)
Age 68 years 53 years 47 years
Date of first appointment on the 22 July, 2010 29 December, 1992 29 December, 1992
Board
Relationship with Directors and None Brother of Mr. Pritam Shah – Brother of Mr. Devendra Shah –
Key Managerial Personnel Managing Director Chairman
Expertise in specific functional He has an experience of more Entrepreneur, visionary who Entrepreneur, promoter of
area than 45 years in the dairy has conceptualised, Parag Milk Foods Limited
industry and has associated launched, an established the He is actively involved in
with GCMMFL (Amul) for Company Parag Milk Foods business management and the
majority of his career. He is Limited and promoted it to operational activities of the
currently an independent new heights. He has more than Company. He has more than
dairy consultant. 25 year of rich experience in 25 year of rich experience in
Dairy Industry. Dairy Industry.
He is actively involved
in agricultural activities
and elevation of farming
community.
Board Membership of other listed Manpasand Beverages Limited N.A. N.A.
companies on 31 March, 2018
Number of Board Meetings of the 3/5 5/5 5/5
Company attended
Membership/ Chairmanship of Nomination and - -
Committees of other Board Remuneration Committee

Manpasand Beverages Limited

(Member)
Number of shares held in the Nil 1,50,06,400 equity shares 91,59,888 equity shares
Company as on 31 March, 2018

Terms and conditions of As per Nomination and As per Nomination and As per Nomination and
appointment or re-appointment Remuneration Policy of the Remuneration Policy of the Remuneration Policy of the
Company as displayed on the Company as displayed on the Company as displayed on the
Company’s website at Company’s website at Company’s website at
www.paragmilkfoods.com. www.paragmilkfoods.com. www.paragmilkfoods.com.

He is a Non-Executive Director He is an Executive Director He is an Executive Director not

liable to retire by rotation. liable to retire by rotation. liable to retire by rotation.

15
 The route map of the AGM venue is given below:
Venue : Mahratta Chamber of Commerce Industries and Agriculture, MCCIA Trade Tower, A Wing, 5th Floor, Navalmal Firodia
Seminar Hall, Senapati Bapat Road, Pune 411016

Landmark: Distance from Pune Railway Station: around 7 km

16 Parag Milk Foods Limited

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NOTICE

PARAG MILK FOODS LIMITED

CIN: L15204PN1992PLC070209
Regd. Office: Flat No.1, Plot No-19, Nav Rajasthan CHS. Shivaji Nagar, Pune – 411 016
Website: www.paragmilkfoods.com, Email- [email protected]
Tel. No.: +91 7276470001 Fax No. 022 43005580

FORM NO.MGT-11
PROXY FORM
(Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014)
Name of the Member(s) :
Registered address :
E-mail ID :
Folio No./Client ID :
DP ID :
I/We, being the Member(s) of shares of the above named Company, hereby appoint

1. Name :
Address :
E-mail ID :
Signature :
or failing him/her :

2. Name :
Address :
E-mail ID :
Signature :
or failing him/her :

3. Name :
Address :
E-mail ID :
Signature :
or failing him/her :
as my/our proxy to attend and vote for me/us and on my/our behalf at the Twenty Sixth Annual General Meeting of the Company to be held on Wednesday,
19 September, 2018, at 11.30 a.m., at Mahratta Chamber of Commerce Industries and Agriculture, MCCIA Trade Tower, A Wing, 5th Floor,Navalmal Firodia
Seminar Hall,Senapati Bapat Road, Pune 411016, and at any adjournment thereof in respect of the Resolutions as are indicated below:

ORDINARY BUSINESS
1. Adoption of the Audited Standalone Financial Statements (including the Audited Consolidated Financial Statements) and the Reports of the
Board of Directors and the Auditors thereon for the financial year ended 31 March, 2018.
2. Declaration of Dividend on equity shares for the financial year ended 31 March, 2018.
3. Re-appointment of Mr. B. M. Vyas (DIN: 00043804), Director, who retires by rotation and being eligible, offers himself for re-appointment.
SPECIAL BUSINESS
4. Re-appointment of Mr. Pritam Shah (DIN: 01127247) as Managing Director of the Company.
5. Re-appointment of Mr. Devendra Shah (DIN: 01127319) as Whole-Time Director of the Company.
6. Ratification of Remuneration of M/s. Harshad S. Deshpande & Associates, Cost Auditors. (Firm Registration No.00378)
7. Ratification of “Employee Stock Option Scheme” (ESOS 2015)
8. Approval for increase in payment of remuneration to Ms. Akshali Shah- VP – Strategy (Sales & Marketing) for holding/continue to hold office or
place of profit in the Company
9. Alteration of Article of Association of the Company.
Signed this ..................................................................................................................................................... day of ............................, 2018
Affix
Signature of Shareholder ................................................................... Signature of Proxy holder(s) .............................................................
Revenue
Stamp
Notes:
1. The Proxy Form in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the
commencement of the Meeting.
2. The Proxy Form shall be signed by the appointer or his attorney duly authorised in writing, or if the appointer is a body corporate, be under its seal or be signed
by an officer or an attorney duly authorised by it.
3. The Proxy Form is valid only if it is properly stamped and such stamp is cancelled.
4. Blank, incomplete or undated proxy form shall not be considered valid.
5. The proxy-holder shall prove his/her identity at the time of attending the Meeting.

1
2 Parag Milk Foods Limited
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NOTICE

PARAG MILK FOODS LIMITED

CIN: L15204PN1992PLC070209
Regd. Office: Flat No.1, Plot No-19, Nav Rajasthan CHS. Shivaji Nagar, Pune – 411 016
Website: www.paragmilkfoods.com, Email- [email protected]
Tel. No.: +91 7276470001 Fax No. 022 43005580

ATTENDANCE SLIP
PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING
Joint shareholder(s) may obtain additional Attendance Slip(s) at the venue of the meeting

*DP.ID @Folio No.

*Client ID No. of share(s) held

Name and address of the shareholder .............................................................................................................................................................

I hereby record my presence at the Twenty Sixth Annual General Meeting of Parag Milk Foods Limited to be held on Wednesday, 19
September, 2018 at 11.30 a.m. at Mahratta Chamber of Commerce Industries and Agriculture, MCCIA Trade Tower, A Wing, 5th Floor,
Navalmal Firodia Seminar Hall, Senapati Bapat Road, Pune 411016.

..............................................
Signature of Member/Proxy

* Applicable for Members holding shares in dematerialised form

@ Applicable for Members holding shares in physical form

.............................................................

Notes:

1. Electronic copy of the Annual Report for 2017-2018 and Notice of the Annual General Meeting along with Attendance Slip and Proxy
Form is being sent to all the Members whose email address is registered with the Company/Depository Participant unless any
Member has requested for a hard copy of the same. Members receiving electronic copy and attending the Annual General Meeting
can print copy of this Attendance Slip.

2. Physical copy of the Annual Report for 2017-2018 and Notice of the Annual General Meeting along with Attendance Slip and Proxy
Form is sent in the permitted mode(s) to all Members whose email IDs are not registered with the Company or have requested for a
hard copy.

3. The electronic voting particulars are set out below:

ELECTRONIC VOTING PARTICULARS

EVEN (Electronic Voting Event Number) User ID Password

Please refer the attached AGM Notice for instructions on E -Voting.

E- Voting facility is available during the following voting period:

Commencement of E-Voting End of E-Voting

Annual Report 2018 3

4 Parag Milk Foods Limited