Annual Report 2013-2014 - NDDB Dairy Services AR 2013-14 English.pdfMaahi MPC on an average procured...

Annual Report

2013-2014

Board of DirectorsShri Deepak Tikku Chairman

Shri S. Parthasarathy Shri Dilip RathIAS (Retd.) MD, NDDB

Smt. Shyamala Gopinath Prof. M.S. SriramEx Deputy Governor, RBI Visiting Faculty, IIM Bangalore

Shri Sangram Chaudhary Shri S. NagarajanED, NDDB MD, MDFVPL

Shri A.S. Parmar * Shri A.K. KhoslaCOO, NDDB Dairy Services ED, NDDB Dairy Services

(* Since May 2013)

ContentsProducer Companies 5

Guidelines for Setting Up Milk Producer Companies 8

Setting Up Milk Producer Companies 11

Assistance to Producer Companies 14

Training & Capacity Building 15

Information & Communication Technology 18

Quality Assurance 18

Standard Operating Procedures 19

Productivity Services 21

International Cooperation 23

Accounts 25

Directors’ Report 46

The Staff 48

NDDB Dairy Services, a not-for-profit company

under Section 25 of the Companies Act,

is a wholly-owned subsidiary of the

National Dairy Development Board (NDDB).

AnnuAl RepoRt 2013-2014 I 5

A Producer Company combines the institutional and

ideological strengths of cooperatives – ownership

limited to users; limited interest on shares; no trading

of shares; patronage not capital-based – with the

flexibility and autonomy available under company law.

Producer comPanies

Historically, cooperatives in India, with a few exceptions, have evolved as social

organisations and as vehicles for carrying out welfare programmes – not as professionally-

managed businesses. State cooperative regulations in India restrict the flexibility and

autonomy required by cooperatives to compete in the prevalent market economy.

Economic liberalisation opened up Indian markets to competition. Liberalisation and

globalisation assumed that competitors are more or less equally endowed with resources,

opportunities and skills – but these conditions are often absent in rural India. Therefore

producer-owned enterprises provide a powerful countervailing force against any possible

exploitation of smallholder producers by

investor-owned corporations.

Cooperatives in developed countries

are professionally-managed business

enterprises. Incorporated, they generally

operate under laws that also govern

companies and corporations, with the

exception that their ownership features

are recognised and respected.

Based on the recommendations of the High Powered

Committee appointed by the Government of India,

the Companies Act 1956 was amended in the year

2002 incorporating Part IX A – which provides for

incorporation of Producer Companies. It also provides

voluntary conversion of cooperatives which have

extended any of its objects to more than one state

into Producer Companies. This amendment came into

effect from February 2003.

A Producer Company combines the institutional and

ideological strengths of cooperatives – ownership

limited to users; limited interest on shares; no trading

of shares; patronage not capital-based – with the

flexibility and autonomy available under company

law. A Producer Company is a business enterprise

registered under provisions of Part IX A of the

Companies Act but is run on the basis of principles

that are by and large the same as those adopted by

the International Cooperative Alliance.

6 I NDDB DAIRY SERVICES

About 50% of the milk produced in the country is retained

for local consumption. Of the remaining 50% – or the

marketable surplus – cooperatives procure about 17% of the

milk produced from around 20% of rural milk-producing

households in 23% of the country’s villages. There is

therefore a need for many more cooperatives and producer

companies.

Why Producer Companies in the Dairy Sector?

About 50% of the milk produced in the country is retained for local consumption. Of

the remaining 50% – or the marketable surplus – cooperatives procure about 17% of

the milk produced from around 20% of rural milk-producing households in 23% of the

country’s villages.

Meanwhile, the organised private sector unlike the cooperative sector, barring some

exceptions, is rapidly expanding its operations. While the organised private sector will

grow, it is important – in the interest of livelihoods and inclusiveness – that cooperatives

and producer companies continue to handle at least 50 per cent of the milk procured

by the organised sector.

A substantial part of the marketable surplus

continues to be handled by traders and

vendors. To ensure that consumers get

good quality milk and milk products

processed under hygienic conditions, it

is necessary that cooperatives continue

to be strengthened, and that more

Producer Companies are incorporated and

operationalised.


Producer Companies vis-à-vis Cooperatives

A Producer Company is a private limited company to which provisions contained in Part

IX A of the Companies Act 1956, apply. A Producer Company is a business enterprise

run on the basis of ‘Mutual Assistance Principles’ – which are broadly similar to the

Cooperative Principles adopted by the International Cooperative Alliance for cooperatives.

There are however a few key enabling features in a Producer Company’s legal framework

which differentiate it from cooperatives:

Producer Company vis-à-vis Cooperatives

Producer Company (Act) Cooperative Act

Legal framework Central Act, enabling in nature State Act, restrictive in nature

Area of operation Not restricted Restricted

ShareholdersOnly user members can hold shares

Non-users can also hold shares

Voting rights One member, one vote. Members of Producer Company having only Producer Institutions as its members shall have patronage-based voting rights.

One member, one vote

Audit Regular audit by a Chartered Accountant as per provisions of the Companies Act

Audit by the Cooperative Audit Department, or in some states, by an auditor from a panel of auditors approved by Government

Producer Company vis-à-vis Other Companies

Even though a Producer Company is a private limited company, there are certain distinct

features which differentiate it from other companies:

Producer Company vis-à-vis Other Companies

Producer Company Other Companies

Only producers can be members/shareholders Anyone can be a shareholder

Owned by user members Owned by investors

One member, one vote or patronage-based voting Voting rights based on shareholding

No trading of shares is permitted. However transfer of shares among members is permitted.

Trading of shares is permitted

Limited dividend No limit on dividend

Patronage-based returns Capital-based returns


• Documentation of first subscribers and Directors

• Applying for name for Milk Producer Company

• Preparation of MoA and AoA

• Submission of application for incorporation along with fee

• First Board Meeting

• Member enrolment

• Fulfilling statutory requirements

• Engaging manpower

• First Annual General Meeting

• Commencing business operations

• Capacity building

• Identification of potential location

• Preparation of Business Plan

• Pre-launch consultations with stakeholders

• Identification of first subscribers

• Orientation of first subscribers

1Pre-Incorporation

2Incorporation

3Post-Incorporation

Guidelines for settinG uP milk Producer comPanies

NDDB Dairy Services (NDS) has readied a handbook for individuals or organisations

who wish to assist milk producers in setting up a Milk Producer Company (MPC). The

handbook, drawing on the expertise and experience of NDS staff, details the various

processes involved in setting up an MPC – namely, Pre-Incorporation, Incorporation,

and Post-Incorporation of the Company.


Identification & Orientation of First Subscribers of a Milk Producer Company

• Are supportive of the concept of a Producer Company

• Agree to the concept of ‘share capital contribution by producer members’

• Are good listeners

• Can communicate his/her ideas in a coherent manner

• Willing to take initiative

• Can read and write

• Identification of potential milk producers

• Validation and screening, based on educational qualifications and social profile

Personal interviews with the shortlisted

potential milk producers to assess

their interest in taking initiative

in forming a Milk Producer Company

Identification of Potential Milk

Producers

Identification of First Subscribers

Assessing Interest of First

Subscribers

Incorporation & Operationalisation of a Milk Producer Company

1. Id

entifi

catio

n of F

irst Subscrib

ers

2. O

rienta

tion o

f First

Subscribers and Identifi cation of First Directors

3. In

co

rpora

tion of the Milk Producer Company

4. F

irst B

oard

Meeting

5. F

ield S

taff Training for Membership Drive

6. M

embe

r Enrolment Drive

7. F

irst A

nnual General MeetingOperationalisation of the MPC


settinG uP milk Producer comPanies

NDDB Dairy Services is assisting producers in some states to establish Milk Producer

Companies. While Producer Companies have been incorporated and operationalised in

Rajasthan and Gujarat, work is in progress in Andhra Pradesh, Punjab and Uttar Pradesh.

Preliminary work for setting up a Producer Company has also been initiated in the

backward regions of Maharashtra, namely, Vidarbha and Marathwada, following the

signing of an MoU between NDDB and the Government of Maharashtra.

Two Milk Producer Companies Show the Way

Paayas MPC in Rajasthan and Maahi in Gujarat were both incorporated in mid-2012 with

the active guidance of NDDB Dairy Services. By 2013-14, Paayas was on an average

procuring about 3.25 lakh kg of milk a day, its turnover touching about Rs.450 crores

with a profit of about Rs.1.75 crores. In the same year, the Maahi MPC on an average

procured about 6.0 lakh kg of milk a day and achieved a turnover of about Rs.900

crores with a profit of around Rs.3.0 crores. The frontrunners have clearly proved their

ability and viability.

Paayas Milk Producer Company Maahi Milk Producer Company


39,000 members

contributed a share capital

of about Rs.9 crores

With a turnover

of Rs.450 crores, Paayas MPC on an average procured about 3.25 lakh kg of milk per

day

Paayas Milk Producer Company

As on 31st March 2014, about 39,000 members contributed a share capital of about

Rs.9 crores to their Producer Company. The milch animal-holding profile of the

members is:

Number of Milch Animals Owned

Members %

1 10%

2 to 3 42%

4 to 6 31%

7 to 10 13%

Above 10 4%

The distribution of members across different classes of shareholding is:

Class Annual Milk Quantity (in lt)

Members %

A >= 6,000 11%

B >= 2,000 to <6,000 19%

C 500 to <2,000 70%

Paayas MPC markets polypack milk and ghee besides

making bulk supplies to institutions. It makes available

cattle feed under the brand name ‘Mudrika’ and area-specific

mineral mixture to its producer members.


With a turnover

of Rs.900 crores, Maahi MPC on an average procured about 6.0 lakh kg

of milk per day

71,000 members

contributed a share capital of

about Rs.23 crores

Maahi Milk Producer Company

As on 31st March 2014, about 71,000 members contributed a share capital of about

Rs.23 crores to their Producer Company. The milch animal-holding profile of the

members is:

Number of Milch Animals Owned

Members %

1 14%

2 to 3 50%

4 to 6 23%

7 to 10 7%

Above 10 6%

The distribution of members across different classes of shareholding is:

Class Annual Milk Quantity (in lt)

Members %

A >= 6000 10%

B >= 2000 to <6000 32%

C 500 to <2000 58%

Maahi MPC markets polypack milk, ghee, curd and buttermilk

besides making bulk supplies to institutions. It makes available

cattle feed under the brand name ‘Rajdan’ and area-specific mineral

mixture to its producer members.


assistance to Producer comPanies

The professional team at NDDB Dairy Services assisted the Producer Companies in

Training & Capacity Building, Information & Communication Technology, Quality

Assurance, and developing Standard Operating Procedures (SOPs).


Training & Capacity Building

Key to the success of any business venture are the people responsible for its governance

and the professionals who manage the day-to-day business. A Producer Company has

a range of stakeholders who require orientation or training:

Board Members and Senior ProfessionalsA business orientation programme for the Board of

Directors was organised at Maahi and Paayas Milk

Producer Companies (MPCs), followed by a two-day

interface workshop for both Board members and senior

professionals. The workshop enabled participants to

re-visit the company’s Values, Vision and Mission, and

re-look at the priority areas of the company. Further,

the workshop focussed on providing clarity with regard

to the roles and responsibilities of the Board members

and that of the Chief Executive.

Producer MembersEducation programmes for MPC members were

conducted through organisations (including NGOs),

located at the regional level. NDS has designed modules

on producer awareness, women awareness, and clean

milk production. The organisations have been trained

to take these education programmes to milk producers,

in their respective languages.

Strengthening Member RelationsThe MPCs have created informal groups for members

at two levels. One, at the milk route level (or a Bulk

Milk Cooling Centre level) for every 10 to 12 villages

called the ‘Member Relations Group’; second, at the

village Milk Pooling Point level, called the ‘Village

Contact Group’.

Such informal groups help strengthen the relationship

and bonding between the members and their company,

and promote an effective two-way communication.

These groups also provide members the opportunity

for speedy redressal of problems by their company.


Skills DevelopmentVarious orientation programmes were organised for

field personnel of Maahi and Paayas Milk Producer

Companies to enable them appreciate their role

in making the companies strong, member-owned,

producer-centric, and inclusive. The topics covered

included the rationale of the formation of an MPC,

its salient features and benefits of being a member,

importance of dairying in India and importance of

institution building.

Various training modules were developed for

Village Contact Groups/Member Relations Groups,

Sahayaks, Milk Chilling Centre staff, rural youth,

rural schoolchildren, and others. With a view to

develop the capacity of identified trainers in the Milk

Producer Companies to take up such programmes on

a regular basis, the NDS team also conducted training

programmes and field demos for these trainers.

NDS also conducted programmes on skill and

competency development for MPC staff, covering

subjects such as team-building, communications,

motivation, and leadership.

Training in Quality Assurance formed an important

part of the programme, not only for QA officers and

assistants but also facilitators and area officers.

Sahayak Training Programme.

Trainer’s Training for the Producer Institution-building team.

Programme for rural schoolchildren.

Rural Youth Programme.


Extension & CommunicationNDDB Dairy Services has also developed and supplied

communication materials like awareness posters,

information booklets, pamphlets and video manuals

on various themes to MPCs for use

in their training programmes and

extension activities.


Information & Communication Technology

To ensure timely, secure and seamless flow of requisite data, NDS assisted the Milk

Producer Companies to formulate and implement their information and communication

strategies.

NDS supported the Producer Companies in establishing and training their staff in

IT-related infrastructure and software application for various systems such as:

• Centralised Milk Procurement Data for

milk procured at village pooling points/

chilling centres;

• KYP (Know Your Producer);

• Quality Assurance at milk chilling centres;

• Financial Management;

• Sales Management; and

• Asset Maintenance at village pooling

points/chilling centres.

Quality Assurance

To ensure that the Producer Companies meet the standards laid down by the Food

Safety and Standards Authority of India (FSSAI), it is important that they put in place

quality and food safety systems. NDS assisted the Producer Companies in developing

and implementing quality and food safety systems.

NDS has also developed training modules for use of the staff of the Producer Companies

in implementation of the Quality

Assurance systems, some of

which are:

•CleanMilkProduction;

•Hygiene and sanitation at

village milk pooling points

and chilling centres;

•Testing for milk quality

parameters at the chilling

centres;

•Regulatorycompliance;

•E-qualityMISreporting;and

•Processingfacilityassessment

prior to commissioning.


Standard Operating Procedures

For clarity and consistency in how to ensure best practices in various applications

especially repetitive ones, Standard Operating Procedures (SOPs) play an important role.

NDS assisted the Producer Companies in implementation of SOPs that it has developed.

Some of these are:

•Activitiestobeundertakenpriortocommencementofmilkprocurement;

•Milkhandling,qualitytesting,datamanagement,dispatchatvillagepoolingpoints

and chilling centres;

• Rationbalancingprogramme;

• AIdeliverysystem;

•Memberenrolment;and

•Milktransportsystem.

NDS has also assisted the Producer Companies in conducting an audit of the various

operations, so as to check compliance/non-compliance with SOPs, and to take corrective

action if required.

1 On-call AI service through trained technician

4 Post-AI advice

2 Ear tagging & animal registration

6 Calf birth

3 Doorstep AI delivery following SOPs using superior genetics

5 Pregnancy diagnosis

SOPs for AI Delivery System

All transactions captured directly in INAPH (Information Network for Animal Productivity & Health) application by AI technician


Productivity services

Enhancing Semen Production

Increasing the productivity of our milch animals to meet rapidly growing demand

requires a special thrust to genetic improvement of our animals, and feeding them

balanced rations. Genetic improvement can be achieved through the use of quality

semen from bulls of high genetic merit and increased coverage of milch animals by

Artificial Insemination (AI).

NDDB Dairy Services currently manages the two largest semen stations in the country –

Sabarmati Ashram Gaushala in Bidaj (Gujarat), and the Animal Breeding Centre in Salon,

Rae Bareli (UP), which together produced over 18 million Frozen Semen Doses (FSDs)

in 2013-14. Both semen stations have world-class facilities where semen produced is

processed, stored and supplied.

Sabarmati Ashram Gaushala, BidajProducing 11.9 million semen doses in

2013-14, the Sabarmati Ashram Gaushala

maintained its top position in the country.

The sale of semen touched 12.5 million

doses, attaining a growth of 11% over the

previous year.

Animal Breeding Centre, SalonThe Animal Breeding Centre (ABC) is the

second largest semen-producing station in the

country. In 2013-14, it produced 6.5 million

semen doses and sold 6.6 million doses, an

11% increase over the previous year.

New Semen StationsNDDB Dairy Services has initiated work on

setting up two new semen stations in Tamil

Nadu and Maharashtra, each with a capacity

to produce about 10 million FSDs annually.

NDDB Dairy Services will also be setting

up a semen station in Odisha State. Land

has already been allotted by the State

Government and the MOU is expected to

be signed shortly.

Sabarmati Ashram Gaushala, Bidaj

Animal Breeding Centre, Salon


AI Delivery Services

Artificial Insemination ensures a more rapid

pace for the genetic improvement of the

bovine population. NDS supports Producer

Companies and coops in providing AI services

to farmers at their doorstep.

NDS facilitated training of 300 AI technicians

to provide AI services to producers of the

Paayas and Maahi Milk Producer Companies.

Further, NDS signed an MoU with the West

Assam Milk Union to provide technical and

management support in implementing a

World Bank-funded AI project in six districts

of Assam.

Ration Balancing

Breed-improvement programmes need to be supported by feeding milch animals a

balanced diet to enable them produce milk commensurate with their genetic potential.

Normally, the diet comprises locally-available feed, grasses and crop residues – often

leading to imbalanced feeding with protein, energy, mineral and vitamins being either

in excess or deficient. This impacts the milk yield and the cost of milk production.

NDDB has developed a

Ration Balancing Programme

to balance the diet of milch

animals for different milk

production levels, using a

simple software with linear

programming. Its use will result

in optimising the cost of milk

production and producers’

income on a sustainable basis.

NDS has facilitated the training

of about 300 Local Resource

Persons from villages to advise

small producers on ration

balancing.


international cooPeration

Visitors from CARE, Bangladesh...A seven-member team from CARE-Bangladesh visited

the Maahi Milk Producer Company to observe the

infrastructure facilities for milk collection, weighing,

testing and data recording at the village level. They

also discussed the process of incorporation and

operationalisation of the company.

...& from Land O’ Lakes, USAThe participants of a workshop on Cooperative

Development organised by the Institute of Rural

Management Anand (IRMA) and Land O’ Lakes,

USA, visited Maahi in Gujarat to share information

on best practices, and operationalisation of a milk

producer company as an innovative example of a

producer-owned enterprise in India.

Exposure to US CoopsA team of senior executives from

NDDB Dairy Services, NDDB, and

Milk Producer Companies

participated in the 2013 Graduate

Institute of Cooperative Leadership

Conference at the University of

Missouri, conducted by Prof.

Michael Cook, a renowned expert

on cooperatives.

The team also visited cooperatives

and institutions in USA – Land O’

Lakes and Dairy Farmers of America.


Deloitte Haskins & Sells Chartered Accountants7th Floor, Building 10, Tower BDLF Cyber City Complex DLF City Phase-llGurgaon - 122 002, HaryanaIndiaTel 3+ 91 (124) 679 2000Fax I + 91 (I24) 679 2012

I N D E P E N D E N T A U D I T O R S R E P O R T

TO THE MEMBERS OF NDDB Dairy Services

Report on the Financial StatementsWe have audited the accompanying financials statements of NDDB Dairy Services (‘the Company’) which comprise the Balance Sheet as at 31 March, 2014, the Income and Expenditure Account and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility on the Financial StatementsThe Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Deloitte Haskins & Sells

Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in

India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Income and Expenditure Account , of the Excess of Income over Expenditure of the Company for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As the Company is registered under section 25 of the Act, it is not required to enclose a statement

on the matters specified in paragraphs 4 and 5 of the Companies (Auditor’s Report) Order, 2003

(CARO) issued by the Central Government of India in terms of Section 227(4A) of the Companies

Act, 1956.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge

and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company

so far as it appears from our examination of those books

(c) The Balance Sheet, the Income and Expenditure Account, and the Cash Flow Statement

dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Income and Expenditure Account, and the Cash Flow

Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on 31st March,

2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st

March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

For DELOITTE HASKINS & SELLS Chartered Accountants (Firm Registration No. O15125N)

Jitendra Agarwal Partner GURGAON, 20 May, 2014 (Membership No. 87104)


NDDB Dairy ServiceS

B A L A N c E S H E E T A S A T 3 1 M A R c H , 2 0 1 4

Particulars Note No. As at 31 March, 2014 As at 31 March, 2013Rupees Rupees

I EQUITY AND LIABILITIES

1 Shareholder’s funds 3 2,000,000,000 2,000,000,000(a) Share capital 4 29,553,940 10,943,091(b) Reserves and surplus 2,029,553,940 20,10,943,091

2 Non-current liabilities

(a) Long-term borrowings 5 123,710,000 -(b) Long-term provisions 6 5,967,300 3,610,268

129,677,300 3,610,2683 Current liabilities

(a) Trade payables 7 14,500,717 12,118,946(b) Other current liabilities 8 83,027,053 20,477,296(c) Short-term provisions 9 576,123 221,538

98,103,893 32,817,780Total 2,257,335,133 2,047,371,139

II ASSETS1 Non-current assets

(a) Fixed Assets 10i. Tangible assets 10,844,950 5,732,804ii. Intangible assets 1,953,206 1,442,291iii. Capital work-in-progress 62,387,807 -

(b) Long-term loans and advances 11 155,840,788 44,636,307231,026,751 51,811,402

2 Current assets(a) Cash and bank balances 12 2,007,057,573 1,929,362,549(b) Short-term loans and advances 13 2,061,283 2,053,437(c) Other current assets 14 17,189,526 30,263,164(d) Assets held for sale 15 - 33,880,587

2,026,308,382 1,995,559,737

Total 2,257,335,133 2,047,371,139

See accompanying notes forming part of the financial statementsIn terms of our report attached

For Deloitte Haskins & Sells For and on behalf of the Board of DirectorsChartered Accountants

Jitendra Agarwal Deepak Tikku Ajit Singh Parmar Partner Chairman Chief Operating Officer & Director Place: GurgaonDate: May 20, 2014 K.S. Mehta Tapash Chakravarty Head Legal & Company Secretary Practice Head Finance & Accounts

Place: New Delhi Date: May 20, 2014


NDDB Dairy ServiceS

I N c O M E & E x P E N D I T U R E A c c O U N T f O R T H E y E A R E N D E D 3 1 M A R c H , 2 0 1 4

Particulars Note No.

For the Year ended 31 March, 2014


Rupees Rupees

1. Other Income 16 185,304,911 189,426,182

2. Total revenue 185,304,911 189,426,182

3. Expenses

a) Employee benefit expense 17 74,359,629 57,388,592

b) Depreciation and amortisation expense 10 1,926,746 4,954,200

c) Other expense 18 90,407,687 105,535,218

Total Expenses 166,694,062 167,878,010

4. Excess of income over expenditure Before tax (2-3)

18,610,849 21,548,172

5. Tax expense:

a) Current tax expense - -

6. Excess of income over expenditure (4-5) 18,610,849 21,548,172

7. Surplus per equity share: (Face value - Rs. 10 per share)

19

a) Basic 0.09 0.11

b) Diluted 0.09 0.11

See accompanying notes forming part of the financial statementsIn terms of our report attached


Jitendra Agarwal Deepak Tikku Ajit Singh Parmar Partner Chairman Chief Operating Officer & DirectorPlace: GurgaonDate: May 20, 2014 K.S. Mehta Tapash Chakravarty Head Legal & Company Secretary Practice Head Finance & Accounts



NDDB Dairy ServiceS

c A S H f L O w S T A T E M E N T f O R T H E y E A R E N D E D 3 1 M A R c H , 2 0 1 4

For the Year ended

31 March, 2014

For the Year ended

31 March, 2013

Rupees Rupees

A. CASH FLOW FROM OPERATING ACTIVITIES

Net surplus before tax 18,610,849 21,548,172

Adjustments for:

Depreciation and amortisation expense 1,926,746 4,954,200

Interest income (185,291,969) (187,404,563)

Provision for employee benefits 2,711,617 575,545

Loss/(Profit) on sale of fixed assets (net) (12,942) -

Operating surplus/(deficit) before working capital changes (162,055,699) (160,326,646)

Changes in working capital:

Adjustment for (increase)/decrease in operating assets:

Short term loans and advances (7,845) (477,819)

Long term loans and advances (2,500) -

Adjustment for increase/(decrease) in operating liabilities:

Trade payables 2,381,771 3,735,291

Other current liabilities 35,289,528 (88,096,674)

Cash generated from/(used in) operations (124,394,745) (245,165,848)

Net Income tax (paid)/ refund (net) (12,862,288) (18,848,433)

Net cash flow from/(used in) operating activities [A] (137,257,033) (264,014,281)

B. CASH FLOW FROM INVESTING ACTIVITIES

Bank deposits not considered as cash and cash equivalents (78,715,670) 40,892,694

Capital expenditure on fixed assets including capital advances (141,096,409) (2,420,007)

Proceeds from sales of fixed assets 33,972,859 -

Interest received 198,365,607 180,847,257

Net cash from/(used in) investing activities [B] 12,526,387 219,319,944

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceedings of long-term borrowings 123,710,000 -

Net cash from/(used in) financing activities [C] 123,710,000 -

Net increase /(decrease) in cash and cash equivalents [A+B+C] (1,020,646) (44,694,337)

Cash and Cash equivalents in the beginning of the year 28,317,092 73,011,429

Cash and Cash equivalents at the end of the year 27,296,446 28,317,092


For the Year ended

31 March , 2014

For the Year ended

31 March, 2013

Rupees Rupees

Components of Cash and Cash equivalents

a) Cheques in Hand - 600,000

b) Balances with scheduled banks:

- In current accounts 4,296,446 17,217,092

- In deposit accounts (maturity less than 3 months)

23,000,000 10,500,000

Cash and Cash equivalents as per Cash Flow Statement 27,296,446 28,317,092

c) Other Bank balances

- In deposit accounts (maturity more than three months)

1,979,200,000 1,900,642,551

- Deposits under lien 561,127 402,906

Cash and bank balances as per Balance Sheet 2,007,057,573 1,929,362,549

Note:1 The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard-3 on Cash flow Statement prescribed by the Companies (Accounting Standards) Rules, 2006.

In terms of our report attached


Jitendra Agarwal Deepak Tikku Ajit Singh Parmar Partner Chairman Chief Operating Officer & Director

Place: GurgaonDate: May 20, 2014 K.S. Mehta Tapash Chakravarty Head Legal & Practice Head Company Secretary Finance & Accounts



N O T E S f O R M I N g P A R T O f T H E f I N A N c I A L S T A T E M E N T S

1. Corporate Information NDDB Dairy Services (‘the Company’) was incorporated on 12 October, 2009 as a wholly owned subsidiary of National

Dairy Development Board (NDDB), a body corporate formed under the National Dairy Development Act, 1987. Thereafter, the Company obtained license under Section 25 of the Companies Act, 1956 on 10 March, 2010.

The Company has been set up to promote operations related to enhancement of livestock production and productivity, to promote cooperative strategy by carrying out facilities relating to milk procurement, processing, transportation, marketing and quality assurance by itself and through dairy and other cooperatives, producer companies (new generation cooperatives) and other entities by providing technical, managerial and financial support.

2. Significant Accounting Policies The significant accounting policies are as follows:

a. Basis of accounting The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting

Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention.

b. Use of estimates The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and

assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the period in which results are known/materialize.

c. Cash and cash equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with

an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

d. Cash flow statement Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted

for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

e. Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the

revenue can be reliable measured and there is no material uncertainty as to its ultimate recovery.

Revenue from services are recognized when services are rendered and related costs are incurred.

Interest on Investments/deposits and Income from rent and hire charges is recognized on accrual basis.

f. Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and impairment losses, if any.

All costs related to the acquisition and installation of fixed assets are capitalized and includes interest on borrowings attributable to construction or acquisition of fixed assets, up to the date the asset is ready for its intended use. The cost of fixed assets includes other incidental expenses incurred up to the date the asset is ready for use.

Capital work in progress - Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.


g. Depreciation Depreciation is provided on straight line method at the rates specified in Schedule XIV to the Companies Act 1956 or

based on the useful life of the assets. Whichever is higher.

The depreciation rates used are as follows:

Description Depreciation per annum (%)

Plant and Machinery 9.50

Office equipment 4.75

Computers 20.00

Software 16.21

Furniture and Fixtures 10.00

Mobile Phones 33.33

Trademarks 25.00

Vehicles 9.50

Depreciation is provided pro-rata from the date of addition.

All assets costing Rs. 5,000 or less individually are fully depreciated in the year of acquisition.

h. Employee Benefits Employee benefits include provident fund, gratuity and compensated absences. Employee benefits are accrued in

accordance with Accounting Standard — 15 (Revised) “Employee Benefits”

i. Defined-contribution plans The Company’s contributions to provident fund are considered as defined contribution plan. The Company’s contribution

to the Employee’s Provident Fund is deposited with the Regional Provident Fund Commissioner (RPFC). These are charged to the Income and Expenditure Account, when the contribution to RPFC is due.

ii. Defined Benefit Plans Gratuity is considered as defined benefit plan. Gratuity is provided based on actuarial valuation carried out at the balance

sheet date. The incremental liability based on an actuarial valuation as per the ‘Projected Unit Credit’ method, as at the reporting date, is charged to the Income and Expenditure Account. Actuarial gains and losses are recognized in the Income and Expenditure Account.

iii. Short Term Employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered

by employees are recognised during the year when the employees render the services.

iv. Long Term Employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the

employee renders the related services are valued and provided on the basis of actuarial valuation.

i. Foreign currency transactions and translations Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the

transaction. Monetary items denominated in foreign currency and outstanding at the balance sheet date are translated at the exchange rate ruling on that date.

Exchange differences arising on translation of monetary assets and liabilities and realised gains and losses on settlement of foreign currency transactions are recognised in the Income and Expenditure Account.

j. Earnings per share The Company reports basic and diluted surplus per share in accordance with Accounting Standard 20 on ‘Earnings

per Share’ prescribed by the Companies (Accounting Standards) Rules, 2006. Basic surplus per share are computed by dividing the Excess of Income over Expenditure for the year by weighted average number of equity shares outstanding during the year. Diluted surplus per share is computed by dividing the Excess of Income over Expenditure for the year by the weighted average number of equity shares outstanding during the year as adjusted to the effects of all dilutive potential equity shares, except where results are anti dilutive.


k. Taxes on Income Income tax comprises current tax and deferred tax. Current tax is the amount expected to be paid for the year as

determined in accordance with the provisions of Income Tax Act, 1961. Deferred tax assets and liabilities are recognized for future tax consequences of timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods, subject to the consideration of prudence. Deferred tax assets and liabilities are measured using the tax rate enacted or substantively enacted by the balance sheet date. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets. Tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legal enforceable right for such set off.

l. Impairment At each balance sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there is

any indication that those assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an assets net selling price and value in use. In assessing value in use the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.

Reversal of impairment loss is recognized as income in the Income and Expenditure Account.

m. Borrowing costs Borrowing costs include interest and amortisation of ancillary costs incurred. Costs in connection with the borrowing

of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

n. Material Events Material events occurring after the Balance Sheet date are taken into cognizance.

o. Provisions and Contingent Liabilities: A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow

of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent Assets are neither recognized nor disclosed in the financial statements. Contingent liabilities are disclosed by way of notes.

p. Operating cycle Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their

realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.



Particulars As at March 31, 2014 As at March 31, 2013

Number of Shares

Amount Rupees

Number of Shares

Amount Rupees

Note No. 3 - Share CapitalAuthorised share capitalEquity Shares of Rs. 10 each

200,000,000 2,000,000,000 200,000,000 2,000,000,000

Issued, Subscribed and Paid up capitalEquity Shares of Rs. 10 each fully paid up

200,000,000 2,000,000,000 200,000,000 2,000,000,000

(i) Reconciliation of number of shares and amount outstanding at the beginning and at the end of the year:


Number of Shares

Amount Rupees

Number of Shares

Amount Rupees

Shares outstanding at the beginning of the year

200,000,000 2,000,000,000 200,000,000 2,000,000,000

Shares issued during the year - - - -

Shares outstanding at the end of the year 200,000,000 2,000,000,000 200,000,000 2,000,000,000

(ii) Rights, preferences and restrictions attached to shares

The Company has issued one class of equity shares having face value of Rs. 10 each. Each shareholder is entitled to one vote per share. As per the license issued by Ministry of Corporate Affairs under Section 25 of Companies Act, 1956, no portion of income derived shall be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise by way of profit, to person who at any time are or have been members of the company. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts. in proportion to their shareholding

(iii) Shares held by holding company, ultimate holding company, their subsidiaries and associates


Number of Shares

Amount Rupees

Number of Shares

Amount Rupees

National Dairy Development Board, the Holding entity and its nominees

200,000,000 2,000,000,000 200,000,000 2,000,000,000

200,000,000 2,000,000,000 200,000,000 2,000,000,000

(iv) Shareholders holding more than 5 percent shares:


Number of Shares held

% of Holding Number of Shares held

% of Holding

National Dairy Development Board and its nominees

200,000,000 100 200,000,000 100



Particulars As at 31 March, 2014 As at 31 March, 2013

Rupees Rupees

Note No. 4 - Reserves and Surplusa. Surplus/ (Deficit) in Income and Expenditure Account

(i) Opening balance 10,943,091 (10,605,081)

(ii) Add: Surplus for the year 18,610,849 21,548,172

29,553,940 10,943,091

Note No. 5 - Long-term borrowingsSecured

a. Term loan from holding entity 123,710,000 -

123,710,000 -

Notes:(i) Term loan from National Dairy Development Board (NDDB) is obtained for the purpose of setting up a large frozen semen sta-

tion at Alamadhi, Tamil Nadu. Term loan is secured against first charge on all movable assets present and future created under semen station i.e. machinery, inventories, spares, tools and accessories.

(ii) I nterest and terms of repayment:

Total Loans sanctioned is Rs. 773,692,000/-

Loans Disbursed till March 31, 2014 is Rs. 123,710,000/-

Term loan from NDDB is free of interest. However, any income earned on unutilised balance of loan is to be repaid to NDDB.

Term loan is to be repaid in the period of 10 years in 16 equal half yearly instalments after the end of the initial moratorium period of 2 years from the date of sanction on 3 January, 2014.

Note No. 6 - Long-term provisionsa. Provisions for employee benefits

(i) For compensated absences 3,543,971 2,633,670

(ii) For gratuity 2,423,329 976,598

5,967,300 3,610,268




Rupees Rupees

Note No: 7 - Trade payablesa. Trade Payables (Other than acceptances) (Refer Note 21)

14,500,717 12,118,946

14,500,717 12,118,946

Note No. 8 - Other Current Liabilitiesa. Payables on purchase of fixed assets 27,610,357 350,128

b. Earnest money deposit - 650,000

c. Statutory dues 4,365,942 2,217,645

d. Security deposits received 55,000 55,000

e. Due to related parties ( Refer note 25) 50,995,754 17,204,523

83,027,053 20,477,296

Note No. 9 - Short-term Provisionsa. Provisions for employee benefits (i) For compensated absences 576,123 221,538

576,123 221,538


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Rupees Rupees

Note No. 11 - Long-term loans and advances a. Capital advances

(i) Secured, considered good 82,720,000 -

(ii) Unsecured, considered good 15,619,693 -

b. Security deposits (Unsecured, considered good) 37,500 35,000

c. Advance income tax (net of provisions Rs. Nil) (Unsecured, considered good)

57,463,595 44,601,307

155,840,788 44,636,307

Note No: 12 - Cash and bank balancesa. Cash and cash equivalents

(i) Cheques in Hand - 600,000

(ii) Balances with banks

- In current accounts 4,296,446 17,217,092

- In deposit accounts (Original maturity less than 3 months)

23,000,000 10,500,000

27,296,446 28,317,092

b. Other bank balances

(i) In deposit accounts (Original maturity more than 3 months)

1,979,200,000 1,900,642,551

(ii) Balances held as margin money 561,127 402,906

2,007,057,573 1,929,362,549

Of the above, balances that meet the definition of cash and cash equivalents as per Accounting Standard 3 Cash Flow Statement

27,296,446 28,317,092

Notes:(i) Balances with banks include deposits amounting to Rs. 1,425,650,602 (previous year Rs. 1,901,038,151) which have an original

maturity of more than 12 months.(ii) Balances with banks include deposits amounting to Rs. 575,650,602 (previous year Rs. 699,000,000) which have maturity of

more than 12 months from the balance sheet date.




Rupees Rupees

Note No. 13 - Short-term loans and advances (Unsecured, considered good)

a. Loans and advances to related parties 56,324 318,195

b. Loan and advances to employees 48,690 -

c. Prepaid expenses 414,723 413,522

d. Balances with government authorities

(i) VAT credit receivable 25,000 1,046,804

e. Advances to vendors 1,516,546 274,916

2,061,283 2,053,437

Note No. 14 - Other current assetsa. Accruals

(i) Interest accrued on bank deposits 17,189,526 30,263,164

17,189,526 30,263,164

Note No. 15 - Assets held for salea. Assets held for sale

(i) Plant and equipment - 33,880,587

- 33,880,587

Note No. 16 - Other incomea. Interest income

- Bank deposits 185,291,969 187,404,563

b. Lease rent - 2,017,577

c. Miscellaneous income 12,942 4,042

185,304,911 189,426,182

Note No. 17 - Employee benefits expensesa. Salaries and wages 68,807,386 53,775,780

b. Gratuity 1,446,731 -

c. Contribution to provident and other funds (Refer Note 24) 3,646,086 3,312,696

d. Staff welfare expenses 459,426 300,116

74,359,629 57,388,592



Particulars For the Year ended 31 March , 2014


Rupees Rupees

Note No. 18 - Other Expensesa. Financial support to New Generation Co-operatives (Refer Note 22) 47,795,263 63,203,204

b. Power and fuel 1,916,642 1,864,010

c. Security expenses 1,843,853 1,659,083

d. Recruitment expenses 705,048 1,248,993

e. Retainership and contractual expenses 3,019,065 2,862,825

f. Rent, Rates and taxes 11,248 20,986

g. Repairs and maintenance:

- Building 679,817 1,847,469

- Others 1,408,517 1,213,159

h. Meeting and conference expenses 1,441,617 330,139

i. Communication expenses 2,319,663 2,613,682

j. Travelling and conveyance 18,199,119 11,140,796

k. Auditors remuneration (refer note below) 1,963,125 1,298,252

l. Legal and professional charges 3,511,410 9,639,768

m. Bank charges 31,521 7,129

n. Printing and stationery 410,831 512,227

o. Insurance expenses 605,281 355,907

p. Training, awareness and incentives to milk producers 3,869,931 5,291,137

q. Miscellaneous expenses 675,736 426,452

90,407,687 105,535,218

Note:

(i) Auditors remuneration comprises:

Statutory audit fee 350,000 300,000

Tax audit fee 75,000 75,000

Taxation matters 1,275,000 775,000

Reimbursement of expenses 47,174 5,440

Service tax on above 215,951 142,812

1,963,125 1,298,252



Note No. 19 - Surplus Per Equity ShareParticulars Unit 31 March, 2014 31 March, 2013

Excess of Income over expenditure Rupees 18,610,849 21,548,172

Weighted average number of equity shares outstanding during the year

Numbers 200,000,000 200,000,000

Nominal Value of Equity Shares Rupees 10.00 10.00

Basic surplus/(deficit) per share Rupees 0.09 0.11

Equity shares used to compute diluted surplus per share Numbers 2,00,000,000 2,00,000,000

Diluted surplus/(deficit) per share Rupees 0.09 0.11

Note No. 20 - Contingent Liabilities and Commitments (to the extent not provided for)


Rupees Rupees

a. Contingent Liabilities

(i) Outstanding bank guarantees 561,127 402,906

(ii) Income Tax Demand for the Assessment year 2011-12 28,151,835 -

b. Commitments

(i) Estimated amount of contracts remaining to be executed on capital 273,815,372 706,212

account (net of advances of Rs. 98,339,693)

Note No. 21 - MSMED disclosureAccording to the records available with the Company, there were no dues payable to entities that are classified as Micro and Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Hence disclosures, if any, relating to amounts unpaid as at the period end together with the interest paid / payable as required under the said Act have not been given.

Note No. 22 - Financial support to New Generation Co-operativesThe Company has provided financial support to New Generation Co-operatives, Producer Institutions and Producer Companies, to facilitate the operations of village level functionaries i.e. ‘Sahayak’ in the form of remuneration to Sahayak through Mother Dairy Fruit and Vegetable Private Limited on the basis of eligibility criteria.

Note No: 23 - Expenditure in foreign currency

Particulars Year ended 31 March , 2014

Year ended 31 March, 2013

Rupees Rupees

a. Conference Fees 732,381 -

b. Travelling expenses 1,982,398 1,265,147

2,714,779 1,265,147



Note No. 24 - Employee Benefit Obligation

i. Defined-contribution plans The Company’s Provident Fund Scheme is a defined contribution plan. The contributions paid/payable to the defined contribu-

tion plans are reported as expenses in the period in which the employees render the related service. The Company has recog-nised Rs. 3,646,086 (previous year Rs. 3,312,696) for Provident Fund contributions in Income and Expenditure Account.

ii. Defined benefit plans The Company’s Gratuity Scheme is a defined benefit plan. The Company‘s net obligation is calculated by estimating the present

value of the amount of future benefit that the employees have earned in return for their service in the current and prior years. The present value of the obligation under such benefit plan is determined on the basis of actuarial valuation using the Projected Unit Credit method which recognises each period of service that gives rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at present values of estimated future cash flows. The discounting rates used for determining the present values are based on the market yields on Government securities as at the balance sheet date.

Disclosure as required under Accounting standard - 15 on “Employee Benefits” for Gratuity is as under.

Particulars 31 March, 2014 31 March, 2013

Rupees Rupees

I Change in present valuation of obligation

Present value of obligation at the beginning of the year 976,598 1,018,282

Interest cost 86,429 79,935

Current Service cost 1,255,064 613,281

Actuarial (gain)/ loss on obligation 105,238 (734,900)

Present value of obligation at the end of the year 2,423,329 976,598

Note: The Company’s obligation are unfunded

II Expense recognised in the Income and Expenditure Account

Current Service cost 1,255,064 613,281

Interest Cost 86,429 79,935

Net Actuarial (gain)/ loss recognized 105,238 (734,900)

Expenses/ (Income) recognized in the Income and Expenditure Account 1,446,731 (41,684)

III Liability recognised in the Balance Sheet

Present value of obligation at the end of the year 2,423,329 976,598

Funded status - -

Net asset/ (liability) recognised in balance sheet 2,423,329 976,598

IV Balance Sheet Reconciliation

Present Value of obligation at the beginning of the year 976,598 1,018,282

Expense/ (Income) as above 1,446,731 (41,684)

Benefits paid - -

Amount recognised in the balance sheet 2,423,329 976,598


The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions, which if changed, would affect the defined benefit commitment’s size, funding requirements and expense.

Assumptions 31 March, 2014 31 March, 2013

Discount Rate 8.85% 7.85%

Salary Growth rate 10.00% 10.00%

Mortality IAL 2006-08Ultimate

IAL 2006-08Ultimate

Withdrawal rate 5.00% 5.00%

Notes:1. The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the

estimated term of obligations.2. The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant

factors.3. Actuarial assumptions used to measure liability for compensated absences are same as above.



Note No. 25 - Related party disclosuresDisclosures as required by the Accounting Standard (AS) 18 – “Related Party Disclosures” are as below:

A. Name of the related parties and nature of relationship (With whom the Company has transactions during the year):

Nature of Relationship Name of Entity

Holding Entity National Dairy Development Board (NDDB)

Fellow Subsidiaries IDMC Limited (IDMC) Indian Immunologicals Limited (IIL) Mother Dairy Fruit and Vegetable Private Limited (MDFVL)

Key Management Personnel Shri Deepak Tikku (Chairman) Mr Ajit Singh Parmar (Chief Operating Officer & Director) Mr. Ajay Khosla (Executive Director)

B. Details of balances and transactions during the year with related partiesAmount in Rupees

Particulars Holding Company

Fellow Subsidiaries Key Managerial Personnel

Total

MDFVPL IDMC IIL

Transactions during the Year

Rental income --

-(1,921,385)

--

--

--

-(1,921,385)

Reimbursement of the expenses by the Company

1,512,630(403,588)

55,091(786,743)

63,790-

132,181-

--

1,763,692(1,190,331)

Reimbursement of the expenses to the Company

221,369-

2,024,696-

--

14,050-

--

2,260,115-

Professional fees(Included in capital work-in-progress)

4,044,960-

--

--

--

--

4,044,960-

Purchase of fixed assets 206,402-

4,562,245-

--

--

--

4,768,647-

Financial support for new generation co-operatives

--

47,795,263(63,203,204)

--

--

--

47,795,263(63,203,204)

Long-term borrowing taken 123,710,000-

--

--

--

--

123,710,000-

Managerial remuneration --

--

--

--

9,351,383(13,808,131)

9,351,383(13,808,131)

Balance Outstanding at the end of the year

Other current liabilities 5,225,186-

45,770,566(17,204,523)

--

--

--

50,995,752(17,204,523)

Long-term borrowings 123,710,000-

--

--

--

--

123,710,000-

Short-term advances -(236,486)

--

-(19,732)

56,324(61,977)

--

56,324(318,195)

Note: Figures in brackets represents previous year’s comparatives




Note No. 26The Company is registered under Section 12A of the Income Tax Act and has also complied with all required provisions of Section 12A, accordingly the Company’s income is exempt from Income tax in terms of the said section. Therefore, no provision for current tax is required.The Company will continue to claim exemption under Section 12A and expects no future tax liability, accordingly no provision for Deferred Tax Asset or Deferred tax liability is created.

Note No. 27Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification /disclosure.


Jitendra Agarwal Deepak Tikku Ajit Singh Parmar Partner Chairman Chief Operating Officer & Director

Place: GurgaonDate: May 20, 2014 K.S. Mehta Tapash Chakravarty Head Legal & Practice Head Company Secretary Finance & Accounts



The Directors are pleased to present their Fifth Annual Report on the operations of the Company along with the Audited Accounts for the year ended 31st March, 2014.

The Company is a wholly owned subsidiary of National Dairy Development Board (NDDB). Its main objects are to facilitate setting up of Producer Companies for Procurement, Processing and marketing of milk and to undertake operations for productivity enhancement and extension.

1. O P E R AT I O N SDuring the year under review, the company facilitated the following activities in the Milk Producing Companies (MPCs):

1. Assisted the Paayas Milk Producer Company Limited, Jaipur and Maahi Milk Producer Company Limited, Rajkot in increasing the members equity. The equity now stands at Rs.9.3 crores and Rs.22.9 crores respectively in these Companies.

2. Training & Developmenta. Member Relations Group (MRG) and VCG (Village Contact Groups) were constituted and trained in both MPCs.b. Producer awareness programmes were carried out in both the MPCs.c. Children and Youth awareness programmes were carried out in Paayas MPC.d. Sahayaks, facilitators, QA executives, PIB executives MCCs in-charge, Chemists, and Operations & Maintenance executives

were trained in their respective domains in both the MPCs.e. Senior Management of both MPCs were trained in Leadership & Behavioural programmes.f. A two-day workshop on Good Manufacturing Practices (GMP) was organized for Quality and Manufacturing personnel of

both the MPCs.3. Assisted in preparation and approval of Sub Project Plans under the National Dairy Plan of both the Milk Producer Companies.4. Assisted both the Milk Producer Companies in initiation of the Production Enhancement Activities. Activities included supply

of cattle feed/mineral mixture, fodder demonstration plots, infertility camps, Al services etc.5. Assisted both the Milk Producer Companies in their IT strategy implementation.6. Assisted both the Milk Producer Companies in preparation of Quality Assurance SOP’s and Manuals.

Preliminary work for promoting Milk Producer Companies in the states of Punjab and Andhra Pradesh (AP) were carried out during the year. The names of the company and draft MoA and AoA are being finalized. Initial share capital collected from the initial subscribers and other formalities required before incorporation are being carried out. Orientation Programmes for initial subscribers were carried out and a list of proposed producer directors was made.

New Semen Stations: Construction work commenced at Alamadhi Semen Station on 3rd January, 2014 and the progress is as per the project schedule. The MoU for Rahuri Semen Station was signed on 28th February, 2014 and the survey, land demarcation and possession of the land carried out.

The company became the managing agent for Sabarmati Ashram Gaushala (SAG) and Animal Breeding Centre (ABC) semen stations during the year and has conducted periodic review of their progress.

The company signed an MoU with West Assam Milk Producers Union Ltd (WAMUL) to provide project management support to implement World Bank funded AI delivery project in six districts of Assam. The company facilitated development of Assam Dairy Development Plan (ADDP) for WAMUL which was approved by Government of Assam.

An MoU was signed between Maharashtra Government and NDDB under which the NDDB DS shall facilitate the setting up of a Greenfield Milk Producer Company. The DPR of the project has been completed.

1.1 F I N A N C I A L R E S U LTSDuring the year under review, the Company earned total income of Rs.1,853.04 lakhs, mainly from interest earned on Fixed Deposits with Scheduled Banks. The total Expenditure incurred was Rs.1,666.94 lakhs. This resulted in surplus of Rs.215.48 lakhs. The expenditure includes Financial Support provided to New Generation Cooperatives amounting to Rs.477.95 lakhs. The surplus of Rs.186.11 lakhs after adding the surplus amounting to Rs.109.43 of the last year totalling Rs.295.53 lakhs is proposed to be carried forward as surplus in Income & Expenditure Account in the Balance Sheet.

The summarized Financial Results are as under:(Rs. in lacs)

Item 2013-14 2012-13

Other Income 1,853.04 1,894.26

Expenditure 1,666.94 1,678.78

Surplus/(Deficit) before tax 186.10 215.48

Provision for tax/Deferred Tax Nil Nil

Surplus (Deficit) after tax 186.10 215.48

(Surplus/Deficit) brought forward from last year 109.43 (106.05)

Total Surplus (Deficit) carried forward to Balance Sheet 295.53 109.43

Directors’ report to the shareholDers


2. WAY F O R WA R DDuring the current year, the company shall be assisting in the setting up of four Milk Producer Companies in the States of Punjab, AP, UP and Maharashtra (Greenfield MPC).

The Company shall support Producer Companies for activities related to Animal Breeding, Nutrition, and Ration Balancing advisory services.

The Company has taken over the management of Sabarmati Ashram Gaushala (SAG) at Bidaj and Animal Breeding Centre (ABC), Salon. Two hundred lakh doses of frozen semen would be produced at these stations during the current year.

The project progress of both Alamadhi and Rahuri Semen stations will be closely monitored to ensure timely commissioning to meet the growing demand of semen doses.

NDDB Dairy Services would continue to monitor and assist the Producer Companies with regard to the activities to be undertaken under the National Dairy Plan (NDP) and would also assist them in achieving physical and financial parameters under the NDP.

3. D I R E C TO R SShri Dilip Rath, Shri Ajay Kumar Khosla and Shri Sangramsinh Raysangbhai Chaudhary retire by rotation and being eligible offer themselves for re-appointment.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 274 of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000.

4. CO N S E R VAT I O N O F E N E R G Y, T E C H N O LO G Y A B S O R P T I O N A N D F O R E I G N E xC H A N G E E A R N I N G S A N D O U TG OParticulars required to be furnished pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988: i. Part A and B of the Rules pertaining to Conservation of energy and Technology absorption are presently not applicable to the

Company. ii. Foreign Exchange earnings and outgo: Earnings — Nil (Previous year — Nil); Outgo — Rs.27.50 lakhs (Previous year —

Rs.12.65 lakhs).

5. PA R T I C U L A R S O F E M P LOYE E SIn accordance with provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, no employee was in receipt of remuneration of Rs.60 lakhs or more, if employed throughout the year or Rs.5 lakhs or more per month, if employed for the part of the year.

6. D I R E C TO R S’ R E S P O N S I B I L I T Y S TAT E M E N TIn accordance with section 217 (2AA) the Board of Directors of the Company informs the members that: a) in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation

relating to material departures; b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that

are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year and of the excess of income over expenditure for that period;

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors have prepared the annual accounts on a going concern basis.

7. AU D I TO R SM/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Company has received a certificate from the auditors to the effect that their re-appointment if made, would be in accordance with the relevant provisions of the Companies Act, 2013.

You are requested to appoint auditors and fix their remuneration.

8. AC K N O W L E D G E M E N TThe Board acknowledges the support provided by the National Dairy Development Board and the Mother Dairy Fruit & Vegetable Pvt Ltd to the Company.

For and on behalf of the Board

New Delhi Deepak Tikku 20 May 2014 Chairman


Chairman Deepak Tikku

Chief Operating Officer Ajit Singh Parmar

Executive Director Ajay Khosla

cOMPANy SEcRETARy, LEgAL & ADMINISTRATIONK.S. Mehta, Practice Head BCom, CS

Harmeet Kaur, Analyst BCom, LLB, CS

PRODUcER INSTITUTION BUILDINgSriram Singh, Practice Head BTech, PGDRM, CFA

R. Mariappan, Senior Associate BSc (Agriculture)

Brajesh Narain Singh, Senior Associate BA (Hons), DCM

Alok Kumar Gupta, Associate BSc, MBA

Rachana Deodhar Goel, Analyst BSc, PGDRM

Gargi Pragya Vaicaknavi, Analyst BBA, PGDM

Ravi Ranjan, Analyst BCom, PGDM

Yashwanth Kumar Srinagula, Management Trainee BTech, MA (Social Work)

PRODUcTIvITy ENHANcEMENT SERvIcESDr. C.P. Devanand, Practice Head MVSc

Dr. Ashis Roy Burman, Specialist BVSc & AH

Dr. K. Durairaj, Specialist MVSc

Dr. Raghu Mallegowda, Senior Associate MVSc

Dr. Manvir Singh, Associate MVSc

Dr. Rajesh Roshan, Analyst BVSc & AH, MBA-RM

Dr. Prafull Verma, Analyst BVSc & AH, EPBM

L Ilamurugun, Senior Analyst BE (Civil)

DAIRy vALUE cHAINVinod Kaushik, Practice Head BSc (Hons), PGDRM

Ashok Jawa, Specialist BSc (Dairy Technology), PGDM (Agriculture)

Basant Choudhary, Associate BSc (Dairy Technology), PGDCA, MBA (Marketing)

Cijo Joseph, Analyst MVSc, PGDRM

Digvijay Bisht, Analyst BTech, MBA

Lokesh Lalwani, Analyst BCom, PGDM

Debashree Adhikary, Analyst BA (Hons), MBA (Marketing)

Anshumani Pandey, Management Trainee BSc (Agriculture), PGDM-RM

Mukesh Pratap Singh, Management Trainee MTech (Dairy Technology)

Mitali Singh, Management Trainee BTech (Biotech), MBA

QUALITy ASSURANcE M.D. Mustafa, Practice Head MSc (Food Science), PGDM (Operations)

Ashwani Sharma, Analyst BSc, PG (Food Technology)

Neeraj Kumar Mongia, Analyst BTech (Dairy Technology), MBA (Agriculture)

Priti Choudhary, Management Trainee MSc (Dairy Chemistry)

Sari T.P., Management Trainee MTech (Dairy Chemistry)

INfORMATION TEcHNOLOgyJai Narain, Practice Head BA, BCom, GNIIT

Rohit Rajput, Associate BE (Computer Science), MBA

Sachin Jain, Senior Analyst BE (Electronics & Communication), MBA

Ashish Gupta, Analyst BSc, MCA

BUSINESS ExcELLENcERajeev Krishnan, Senior Associate MV Sc, PGP-ABM

Amit Kumar Makkar, Analyst BTech (Mechanical), PGDBA

Nishant Aggarwal, Analyst Dip. (Mechanical), PGDBA

fARM SERvIcESDr. C.S. Thomas, Senior Associate MSc, PhD (Animal Science)

fINANcE & AccOUNTSAmit Budhiraja, Practice Head BCom, CS, CA

Surya Prakash Gupta, Associate BCom, CS, CA

Sunil Mittal, Analyst BCom, CA

Rajeev Ranjan Pathak, Management Trainee BTech (Chemistry), MBA

HUMAN RESOURcESAnuradha Sapra, Practice Head BA, PGHRM, MSc (Organisational Development)

Shwet Awasthi, Associate BCom, PGDBM

Anjali Bhardwaj, Senior Analyst BSc (Maths), MCA

Nishit Lal, Analyst BTech (Mechanical), PGDM

Abhimanyu Singh, Management Trainee BA (Hons), LLB, MBA-IB

PURcHASEB. Dutta Biswas, Specialist BE (Chemical), ME (High Polymer Engineering)

Hari Ome Choudhary, Analyst MTech, MBA

Kumar Saurabh, Management Trainee BTech (Mechanical), PGDM (Finance)

the staff

AcknowledgementNational Dairy Development Board, anand

Mother Dairy Fruit & vegetable Pvt Ltd, Delhi

Edite

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inte

d by

IMAG

INE

NDDB House, Safdarjung enclave New Delhi 110 029

iNDia

Phone: (011) 49883000, 49883088

email: [email protected]

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