201420142014201420142014

(Formerly Known as : Kwality Dairy (India) Ltd.)

PERFORMANCE ACCELERATED.TRUST & QUALITY DELIVERED

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KWALITY LIMITED

In this annual report, we have disclosed forward looking information, to enable investors, to

comprehend our prospects and take informed investment decisions. This report and other

statements - both written and oral that we periodically make, may contain forward looking

statements that set out anticipated result based on the managements plans and

assumptions.

We cannot guarantee that these forward looking statements will be realized. Although we

believe we have been prudent in our assumptions, the achievements of results are subject to

risk, uncertainties and even inaccurate assumption. We undertake no obligation to publicly

update any forward looking statements, whether as a result of new information, future

events or otherwise.

DISCLAIMER

CORPORATE OVERVIEW & STATUTORY REPORTS

Letter from CMD

Corporate Identity

Corporate Information

Key Trends (FY 2010-2014)

Plant & Operation

Wholly Owned Subsidiary Company

Product Portfolio

New Launches

Dealers & Distributor's Meet

Marketing Initiatives

Notice

Director Reports

Annexure to The Directors' Report

Report on Corporate Governance

Auditor's Report & Balance Sheet (Standalone)

Auditor's Report & Balance Sheet (consolidated)

Statement pursuant to Section 212(8) of the Companies Act,

1956 relating to Subsidiary Company. TA

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Letter from CMDDear Shareholders,

It gives me tremendous pleasure to write to you at the end of another successful year for Kwality Limited. It’s the matter of great pride to be associated with such sector where we are directly providing livelihoods to millions of small farmers. Due to the continuous efforts of these farmers, India became the largest milk producing country in the world. Milk has become the second largest agricultural commodity produced in our country next only to rice and its being a matter of pride to be part of it. Over the last five years, India’s milk production has increased by about 25 million tonnes as compared to an increase of about 6.6million tonnes in US and other countries.

To take the benefits, your company has also increased focus on procurement and processing capabilities which is reflected in our growth. It has recorded a net profit of 126.63 Crore as against 96.53crores in Financial Year 2012-2013. It has also enhanced the procurement /distribution network to ensure the widespread availability of products across the country and to meet the increasing demands for milk and its products. It continue to invest strongly behind the procurement, processing, brands and value chain.

The demand for milk and its products is increasing worldwide. As we know 7% of total milk production is traded in the world. However, our country is not a major player in the international market. The future outlook for export of Indian Dairy Products is rather positive as indigenous milk products are becoming popular with ethnic population spread all over the world and there is a strong likelihood that the export demand for these products will grow. Your Company continues to identify attractive and significant growth opportunities both in India and around the world and have huge potentials to expand its business in the global market and to capture the overseas market and during the year revenue from export of products of the Company is Rs. 183.45 Crores. We export to more than 28 countries at present and plan to tap more international markets.

Your Company has to-date taken conscious steps towards raising the quality & hygiene of raw milk obtained and also to improve the health and life style of the farmer community. Your Company besides its commercial operations is also committed to the upliftment of the rural community of milk producers. Some of the activities that have built faith of the farmers in the Company includes: productivity enhancement programme, clean milk production campaign , dairy animal health management, financial inclusion initiative, “Go Green” initiative and capacity building programme. Our reach was expanded to 4000 villages situated across the states of Rajasthan, Haryana, Punjab and Uttar Pradesh. With the support of our team, State Bank of India and Punjab National Bank have sanctioned the loan of Rs. 50 lacs to each purchase of 50 dairy animals. The Loan sanctioned is interest free and repayment period is of 5 years.

We are grateful to Central and State Governments and Financial Institutions, Consumers, business partners, Vendors, Farmers, Society at and to specially shareholders of the Company for their trust and support. It is the support of stakeholders that has helped the Company to become leader in the dairy industry in India.

Sanjay DhingraChairman & Managing Director

To become the fastest growing

profitable Dairy Company

while maintaining

the highest standards of

quality & ethics.

MISVISSION

Board of Directors

Mr. Sanjay Dhingra (Chairman & Managing Director)

Mr. Sidhant Gupta (Executive Director)

Dr. Rattan Sagar Khanna (Independent Non Executive Director)

Mr. Arun Srivastava (Independent Non Executive Director)

Company Secretary

Ms. Deepa Kapoor

Statutory Auditors

M/s. P.P. Mukherjee and Associates

Secretarial Auditors

M/s Mukun Vivek & Co.

Internal Auditor

M/s Mohan Gupta & Company

Registered & Corporate Office

KDIL House, F-82,

Shivaji Place, Rajouri Garden,

New Delhi – 110027

CIN : L74899DL1992PLC255519

Registrars & Transfer Agents

Beetal Financial & Computer Services (P) Ltd.

Beetal House, 3rd Floor, 99 Madangir,

Behind Local Shopping Centre,

Near Data Harsukhdas Mandir, New Delhi-110062

Plant Locations:

Village Softa, Palwal, Haryana

Bakra Mandi, Ajmer, Rajasthan.

Village: Kumarherha, NH-73, Sharanpur, UP

Village: Mumrejpur, Dibai, Bulandsahar, UP

Listing Detail

Bombay Stock Exchange Limited

National Stock Exchange of India Limited

Depositories Detail

National Securities Depositary Limited

Central Depositary Securities (India) Limited

Bankers

Andhra Bank

Allahabad Bank

Bank of Baroda

Bank of India

IDBI Bank Ltd.

Syndicate Bank

Canara Bank

Corporation Bank

Central Bank of India

Dhanlaxmi Bank Ltd.

CORPORATE INFORMATION

KEY TRENDS(FY 2010­2014)

INR in Crores* Equity Shares of Face value of INR 1/- each*

** Equity Shares of Face value of INR 10/- each

Revenue Net ProfitEBITDA EPS( )

2014

2013

2012

2011

2010

4578.04

3692.29

2394.63

1608.04

1054.12

126.63

96.53

90.99

45.94

17.95

214.04

165.26

99.73

50.23

6.23*

4.75*

4.48*

2.26*

0.99*

276.03

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WHOLLY OWNED SUBSIDIARY COMPANY IN DUBAI To increase its international presence and cater to the new markets, Kwality Limited has established its wholly-owned

subsidiary, Kwality Dairy Products FZE in free trade zone of UAE. The subsidiary is mainly involved in the trading of

various milk products and imports skimmed and whole milk powder and various derivatives of milk, ghee, butter & other

dairy products. The products are sold both domestically and export to other countries.

The Revenue from sale as on 31.03.2014 is 278,168,956 AED as compared to 165,717,194 AED in the previous year.

Profit After Tax (PAT) for financial year stood at 11,011,346 AED as against 6,204,305 AED in the previous year.

DELIVERING ON OUR PROMISE OF

ONE STOP SOLUTION FOR DAIRY PRODUCTS

OUR PRODUCT PORTFOLIO

MILK IN POUCHES Dairy Best Nutrified Milk is enriched with more vital minerals and vitamins. Compared to normal milk, Dairy Best Nutrified Milk has more Calcium and Vitamins A & D. It also contains Vitamin B2 for releasing the body's energy and Vitamin B12 for blood formation and healthy growth. It thus promises stronger bone development in the formative years, better muscle strength and a tougher immune system, in short a strong foundation for life, for your child.

Dairy Best Nutrified Milk is available in 3 variants:Dairy Best Full Cream Milk (Both in 1 ltr & Half ltr)Dairy Best Toned Milk (Both in 1 ltr & Half ltr)Dairy Best Double Toned Milk (Half ltr)

CURD We launched our variety of Curd to give customers greater choice. As curd is a staple and popular food of every Indian household, we are capturing the imagination of consumers with our 100% pure and high quality pasteurized toned cow's milk. It has all the goodness of natural calcium, is thick, consistent, delicious and easy to digest.

Available in different packaging like: Matka - 1 kg, 2kg, 5kg & 15kgPouch - 500gm, 1kgCup - 80gm, 200gm & 400gm

DAIRY BEST TETRA PACK MILKWe've taken the tetra pack route to give our customers more choice and convenience. This Grade A fluid requires no refrigeration until the package is opened thanks to ultra pasteurization and the special shelf safe carton. The milk is enriched with Vitamin B2 that releases the body’s energy and Vitamin B12 for blood formation and healthy growth. Dairy Best Tetra Pack Milk contains:• Vitamin B2 and Vitamin 12 • 1.5 times more Calcium • 2 times more Vitamin A • 2.5 times more Vitamin DThe milk therefore promises stronger bone development in the formative years, better muscle strength and a tougher immune system, in short a strong foundation for life, for your child. Dairy Best Tetra Pack is available in 4 variants:• Dairy Best Skimmed Milk • Dairy Best Standarised Milk • Dairy Best Toned Milk • Dairy Best Double Toned Milk

DAIRY BEST CHAACHWe had entered the fray in this product segment with our own version of Chaach. Available in salted & masala flavours, our healthy and refreshing drink is the perfect thirst quencher for all ages. It ranks high on the health meter as it contains live probiotic bacteria which helps in digestion and improves immunity. It is manufactured using natural ingredients and a special culture that gives it a smooth, mildly acidic taste. The product is available widely all across India in various size packs. Available in: 500 ml Salted Chaach Pack Size 200 ml Masala Chaach Pack Size

SWEET LASSILassi, the refreshing and healthy milk based natural drink now gets a delicious twist from Dairy Best. We have introduced a range of mouthwatering flavours to enrich this traditional drink. So what you now get is the goodness of nature blended with a refreshingly exquisite taste. This new product is available in various package sizes, one can therefore enjoy it directly on the move (small pack) or at home, parties, picnics etc. (family pack). So be it summer or winter, India can now enjoy its favourite drink in the flavour of one's choice. Available in: 200 ml Pack Size

LOW CHOLESTEROL GHEE - LIVLITEIn its endeavor to produce nutritious and innovative products, Kwality Limited launched India's first Low Cholesterol Pure Ghee, Dairy Best Livlite.The first-of-its-kind, Livlite has been developed and patented by National Dairy Research Institute (NDRI) Karnal, of ICAR and licensed by National Research and Development Corporation (NRDC), which is a Government of India body. It is the only pure ghee available with 85% Less Cholesterol. A product of many years of research, Livlite keeps the traditional form, color, aroma, consistency, texture and flavor of ghee intact and has a shelf life of twelve months.Available in: RT Packs - 194 ml, 400 ml, 800 ml & 970 ml packTin- 400ml, 800ml & 1ltr

PURE GHEE Dairy Best Desi Ghee is produced from directly supplied fresh milk of the highest quality. The ghee is manufactured under the most hygienic conditions, using the most modern equipment and is completely untouched by hand. The combined factors ensure that it is tasty, has a traditional granular texture and gives off a rich and mouth-watering aroma, and is healthy too. It contains plenty of antioxidants, easily absorbs vitamins and minerals from other foods and helps strengthen the body's immune system, and has high concentrations of butyric acid that inhibits the growth of cancerous tumours. Our Pure Ghee has been awarded the “AGMARK” certification by the Ministry of Agriculture, Government of India. Available in:RT - 194ml, 400ml, 485 ml, 800ml & 970 ml,Poly Pack - 480 ml, 970 ml, 1.940 ltr, and 4.850 ltrTin containers – 400 ml, 485 ml, 800 ml, 975 ml, 1.94 ltr, 4.85 ltr & 15 kgJars - 194 ml, 480 ml, 970 ml, 1.940 ltr. and 4.850 ltr

100% PURE COW GHEEKwality's 100% Pure Cow Ghee is another high value product manufactured exclusively from fresh cow's milk. Such is its quality that it has come to set the standard in the perceptive and ghee appreciating hinterland of Delhi, Punjab, Rajasthan and Haryana. The 100% Pure Cow Ghee is totally automated and machine manufactured. It is untouched by human hand and thus is hygienic. Its pale perfect yellow has a pleasant look and gives off a rich appetizing aroma. The texture of the ghee is granular in the manner of traditional home-made ghee. This is highly appreciated by our customers.Available in:RT - 194ml, 400ml, 485 ml, 800ml & 970 ml,Poly Pack - 480 ml, 970 ml, 1.940 ltr, and 4.850 ltrTin containers – 400 ml, 485 ml, 800 ml, 975 ml, 1.94 ltr, 4.85 ltr & 15 kgJars - 194 ml, 480 ml, 970 ml, 1.940 ltr. and 4.850 ltr

SKIMMED MILK POWDERSkimmed Milk Powder is made from fresh milk and is completely free from artificial flavors and colors. It can be used for making milk, tea, coffee, curd, lassi, mishti doi, milk shake, ice cream, pudding and sweets. It has less than 1.5 % fat content and has no added colours.Available in: 500 gm and 1 kg laminated pack

WAKE UP - INSTANT DAIRY CREMERContains milk solids, milk fat sucrose, and emulsifiers.It is appropriate for making milk, tea, coffee, curd, lassi, mishthi doi, milk shake, ice cream, pudding and sweets. It is granular, free flowing, lump free and is white in color.Available in:5 gm - specially designed for railways, flight catering, and hotels etc.25 and 50 gm - pouch pack200 gm and 500 gm - poly jar1kg – laminated pouch

PANEER This traditional milk product is an absolute favourite in households all over the country and consumed in different forms, raw or cooked. In line with our commitment to quality, we have ensured that the paneer we produce is totally pure and the softest our customers have ever tasted. Paneer is known to be a very valuable source of protein and we ensure that our product maintains all the healthy nutrients and conforms to the strictest testing and quality standards. Available in:Masala variety and in 200gm packs. 400gm, 1kg & 5kg Brick to be launched.

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” A “Mega Credit Camp” was organised at MCC Durgapur (Sultanpur) on July 21, 2014 by Baroda Uttar Pradesh Grameen Bank in collaboration with Kwality Limited and NABARD to promote self-employment through dairying in the region in which total 453 milk producers participated. A loan of Rs. 53.26 Crores was approved for 3530 beneficiaries during the camp. A credit of Rs.30.43 Crores was disbursed, out of which Rs. 67 Lakhs was disbursed to 67 milk producer members associated with Kwality Limited. Remaining portion of the loan was disbursed for other agriculture allied activities and SHGs promoted by NABARD.

Shri K.R.Kanojia, Chairman, Baroda Uttar Pradesh Grameen Bank in his keynote address, emphasized on the role of dairying as a sustainable source of livelihood in the rural areas and asked the farmers to avail dairy related schemes run by the Govt. /NABARD etc. and pave the way for development of the region. He also appreciated the efforts of Kwality Limited in ensuring better price realization of milk and establishing a fair and transparent milk procurement system at the village level.

Dr. R.S.Khanna, Director, Kwality Limited chaired the programme. In his remarks, he reiterated the company’s commitment towards betterment of the milk producers of the region. Kwality Limited envisages to establish 1 more milk chilling centre (MCC) and reaching out to 20,000 families in 500 villages during the current financial year. He also spoke about the various initiatives of the company like human health camps, farmer insurance, animal health camps, animal insurance, SHG formation, supply of cattle feed & medicines etc.

The programme ended with vote of thanks from Shri O.P.Tiwari, Deputy Regional Manager, Baroda Uttar Pradesh Grameen Bank. Shri Rajendra Singh, Shri Rajeev Agrawal, Shri B.K.Sinha, Shri Alok Singh, Smt. Pushplata Tripathi were present in the programme.

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Notice is hereby given that the Twenty Second Annual General Meeting of the Members of KWALITY LIMITED will be held on Wednesday, the 24th day of September, 2014 at 9.30 A.M. at Lavanya, G.T. Karnal Road, Palla Bakhtavarpur Mord, Alipur, New Delhi - 110036, to transact the following business: -

ORDINARY BUSINESS:1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2014 and Profit & Loss Account and cash flow statement for the year ended on that date, together with the reports of the Directors and Auditors thereon.

2. To declare dividend for the financial year 2013-14.

3. To appoint a Director in place of Mr. Sanjay Dhingra (DIN: 00025376), who retires by rotation and being eligible, offers himself for re-appointment (subject to the alteration of Article of Association).

4. To consider and if thought fit, to pass the following resolution with or without modification(s) as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 139 of the Companies Act, 2013 (“Act”), and other applicable provisions of the Act, if any and the rules made there under, as amended from time to time, and subject to the approval of shareholders, M/s. P.P. Mukerjee & Associates, Chartered Accountants (ICAI Firm Registration No. 023276N), retiring Auditors of the company be and is hereby re-appointed as Statutory Auditors of the Company, to hold the office from the conclusion of this Annual General Meeting till the conclusion of the Annual General Meeting of the Company to be held in the year 2019 (subject to ratification of their appointment at every AGM) at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Auditors”.

SPECIAL BUSINESS5. ALTERATION OF ARTICLE OF ASSOCIATION

To consider and if thought fit, to pass the following resolution with or without modification(s) as Special Resolution:

“RESOLVED THAT Pursuant to Section 14 and other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder, the Article of Association of the Company be and is hereby altered by substitution of regulation 104 and 127 of the Article of Association of the Company with the following new regulation:

104. At each Annual General Meeting of the Company one third of such of the Directors for the time being as are liable to retire by rotation or if their number is not three or a multiple of three, then the number nearest to one third shall retire from office.

127 (i) Directors liable to retire by rotation shall be determined on the basis of seniority i.e. those who have been longest in office since their last appointment and in case of Directors appointed on same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot.

127 (ii) Subject to the provisions of Section 203 of the Companies Act, 2013 and the rules made thereunder an individual may be appointed as the Chairperson as well as the Managing Director or Chief Executive Officer of the Company at the same time.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to file the necessary e-forms with the Registrar of Companies, Delhi & Haryana in relation to the aforesaid amendment to the Articles of Association and further to do all such acts, deeds, matters and things as may be deemed necessary to give effect to the above resolution.”

6. APPOINTMENT OF MR. ARUN SRIVASTAVA AS AN INDEPENDENT DIRECTOR

To consider and if thought fit, to pass the following resolution with or without modification(s) as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of the Companies Act, 2013 (Act) and the Companies (Appointment and Qualifications of Directors) Rules 2014, read with Schedule IV to the Act, Mr. Arun Srivastava (DIN: 01121929), who has submitted a declaration that he meets the criteria for independence as provided in Section 149(6) of the Act, and who is eligible for appointment, be and is hereby appointed as Non-Executive Independent Director of the Company with effect from 12.08.2014 up to 11.08.2019.”

7. APPOINTMENT OF DR. RATTAN SAGAR KHANNA AS AN INDEPENDENT DIRECTOR

To consider and if thought fit, to pass the following resolution with or without modification(s) as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of the Companies Act, 2013 (Act) and the Companies (Appointment and Qualifications of Directors) Rules 2014, read with Schedule IV to the Act, Dr. Rattan Sagar Khanna (DIN: 03073914), who has submitted a declaration that he meets the criteria for independence as provided in Section 149(6) of the Act, and who is eligible for appointment, be and is hereby appointed as Non-Executive Independent Director of the Company with effect from 12.08.2014 up to 11.08.2019.”

8. AUTHORISATION TO BORROW MONEY UNDER SECTION 180(1)(c) OF THE COMPANIES ACT, 2013

To consider and if thought fit, to pass the following resolution with or without modification(s) as Special Resolution:

“RESOLVED THAT in supersession of resolution passed earlier and subject to the provisions of Section 180(1)(c), Section 186 of the Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 ,if any, and the rules made there under and subject

NOTICE FOR TWENTY SECOND ANNUAL GENERAL MEETING

to the provisions of the Articles of Association of the Company, consent of the members be and is hereby accorded to the Board of Directors of the Company for and on behalf of company, severally and/or jointly to borrow any sum or sums of money, give and/or receive the corporate guarantee, from time to time as the Board of Directors may think fit, for the purpose of business of the Company on such terms and conditions and with or without security from financial institutions and/or Banks and/or depositors and/or other parties by way of rupee loans and/or loans in any currency or currencies and/or deposits and/or credit facilities and/ or deferred payment facilities and/or non-fund based limit and/or issue of debentures, as the Board of Directors may in its absolute discretion think fit, notwithstanding that the money or monies to be borrowed together with the monies already borrowed by the Company including the corporate guarantee on behalf of the Company (apart from the temporary loans obtained from the company’s Banker in the ordinary course of business) may exceed the aggregate paid up share capital of the company and its free reserve (i.e. reserve not set apart for any specific purpose) provided, however, that the total borrowings outstanding at any one time including the monies already borrowed shall not exceed a sum of Rs. 3,000 Crores (Rupees Three Thousand Crores Only).

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to file the necessary e-forms with the Registrar of Companies, Delhi & Haryana and other concerned authorities and to take all such steps and to give all such directions and to do all such acts, deeds, matters and things as may be necessary and/or expedient to give effect of the above resolution.”

9. AUTHORISATION TO ISSUE SHARES ON PREFERENTIAL BASIS

To consider and if thought fit, to pass the following resolution with or without modification(s) as Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 42 and Sections 62(1)(c) and all other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder (including any modification(s) or re-enactment(s) thereof, for the time being in force) and other applicable laws, rules, regulations, notifications and circulars and in accordance with the Memorandum and Articles of Association of the Company and Listing Agreements between the Company and the Stock Exchanges where the shares of the Company are listed and subject to such approvals, permissions and sanctions as may be necessary from the Government of India, Reserve Bank of India (“RBI”), Securities and Exchange Board of India (“SEBI”), Registrar of Companies, NCT of Delhi & Haryana and/or any other regulatory authorities, any other competent authorities, institutions or bodies, within or outside India and subject to such conditions, alterations and modifications as may be prescribed by such concerned authorities while granting such approvals, permissions and sanctions, which the Board of Directors (hereinafter referred to as the “Board” which term shall be deemed to include any committee(s) duly constituted/ to be constituted by the Board to exercise its powers including the powers conferred by this resolution) is hereby authorized at its discretion to accept, consent of the Company be and is hereby accorded to offer, issue and allot (including with provisions for reservations on firm and /or competitive basis, of such part of issue and for such categories of person including employees of the Company as may be permitted) by way of rights issue and/or public issue and/or offer for sale and/or private placement and/or by issuing compulsory convertible debenture (CCD)/compulsory convertible preference shares (CCPS) and/or Qualified Institutional Placements/Institutational Placement Programmes under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and/or against subscription in foreign/ Indian Currency, through prospectus and/or offering circular/offer letter/ term sheet, equity shares of the Company (which shall rank pari-passu to the existing equity shares of the Company) (the “shares”), and/or non-convertible and partly convertible debentures, with or without warrants, and/or Global Depository Receipts/Global Depository Shares (“GDRs/GDSs”) and/or American Depository Receipts/American Depository Shares (“ADRs/ADSs)”) against the issue of underlying shares and/or foreign currency convertible bonds (“FCCBs”) convertible into equity shares, which shall rank pari passu with the then existing (hereinafter referred to as “securities”), whether to remain unlisted or to be listed on any stock exchanges in India or any other international stock exchange outside India, to resident of India or persons resident outside India including Foreign Institutional Investors/ Qualified institutional Buyers (“QIBs”)/ Companies/ Individuals in India or abroad, with or without an overallotment/ Green Shoe Option, as may be permitted under applicable laws, rules & regulations and policy whether or not they are members of the Company in such form and terms, including as to pricing, the ratio in which such securities may be offered, issued and allotted to the existing shareholders, the number of securities to be issued, face value of the securities, rate of interest, premium, number of equity shares to be allotted on conversion, exercise of rights attached with warrants, ratio of exchange of shares and/or warrants and/or any other financial instruments, period of conversion/redemption/fixing of record date or book closure, adjustment conditions for corporate actions and other related or incidental matters as may be decided and deemed appropriate by the Board up to a sum of Rupees 10,000 million (inclusive of premium as may be determined by the Board) (or an equivalent amount in any foreign currency) in one or more tranches, at such price or prices, at a premium or discount to market price or prices and in such manner and on such terms and conditions as the Board may in its absolute discretion think fit, in consultation with lead managers and/or underwriters and/or advisers as may be appointed by the Board, whether with or without an option to subscribe for additional securities.”

RESOLVED FURTHER THAT without prejudice to the generality of the above and subject to all applicable laws, the aforesaid issue of securities may have all or any terms or combination of terms in accordance with Indian laws and/or international practices and regulations including, but not limited to, conditions in relation to payment of interest, additional interest, premium on redemption, prepayment and other debt service payments whatsoever, and all such terms are provided in issue of securities of this nature internationally and/or domestically including terms for issue of shares upon conversion of securities or variation of conversion price of the securities during the term of securities as the Board deems fit and appropriate and the Board is also entitled to enter into and execute all such arrangements/agreements, as the case may be, with any lead managers, underwriters, registrar, advisors, guarantors, trustees, agents, depositories, custodians and all such agencies as may be involved or concerned in such offering of securities and to remunerate all such agencies including the payment of commissions, brokerage, fees or the like and also to seek the listing of such securities or securities representing the same in one or more stock exchanges within and/or outside India.”

RESOLVED FURTHER THAT the Board may enter into any agreement with any agency or body for issue and allotment of securities in such form(s) with such features and attributes as are prevalent in domestic as well as international capital markets for instruments of that nature and to provide for the tradability or free transferability thereof as per the domestic as well as international practices and regulations and under the norms and practices prevalent in the international markets and the securities issued in foreign market and/or Indian markets shall be deemed to have been made abroad and/or in the international market and/or at the place of issue of the securities in the international market and/or Indian market and may be governed by applicable Indian laws and/or foreign laws, as the case may be.”

RESOLVED FURTHER THAT in the event of issue of securities by way of a qualified institutional placement to QIB’s on Private Placement basis shall be in accordance with SEBI (Issue of Capital & Disclosure Requirement) Regulations 2009, the relevant date on the basis of which price of the resultant shares shall be determined as specified under the SEBI (Issue of Capital & Disclosure Requirement) Regulations 2009 shall be the date of the meeting in which the board or the committee of the directors duly authorized by the board, decide to open the proposed issue of securities.”

RESOLVED FURTHER THAT in the event the securities are proposed to be issued through FCCBs/ADRs/GDRs, the relevant date for the purpose of pricing the securities is the date of the meeting at which the Board decides to open the proposed issue, as specified in the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depositary Receipt Mechanism), Scheme 1993.”

RESOLVED FURTHER THAT the Board be and is hereby authorized to finalize and approve the offering circular/ prospectus/ placement document/ term sheets/ agreements, in respect of the proposed issue of the securities and to authorize any director or directors of the Company or any other officer or officers of the Company to sign the above documents for and behalf of the Company together with the authority to amend, vary or modify the same and to give such declarations, affidavits, certificates, consents as may be required from time to time, and to arrange for the submission of the offering circular/ prospectus/ placement document/ term sheets agreements, and any amendments and supplements thereto, with any applicable stock exchanges, government and regulatory authorities, institutions, as may be required.”

RESOLVED FURTHER THAT in case securities are offered through rights issue, the shareholders shall have right to renounce all or any the shares offered in favor of any person or persons who are Indian residents subject to the right of the Board to refuse allotment to a person, not being a shareholder of the company without assigning any reason. The members can apply for additional shares and they may be entitled to allotment of additional shares at the discretion of the Board and in consultation with the stock exchanges. The renouncees may also apply for additional shares and they may be entitled to allotment of additional shares at the discretion of the Board and in consultation with the stock exchanges.”

RESOLVED FURTHER THAT in case of any over subscription of the issue, the Board be and is hereby authorized to retain such of the amount, and issue and allot such securities as may be permitted in accordance with applicable laws, rules & provisions in consultation with concerned authorities including stock exchanges.”

RESOLVED FURTHER THAT the Board be and is hereby entitled to vary, modify, alter any of the foregoing terms and conditions at their discretion and in conformity with those as may be approved by the SEBI, RBI or any other appropriate authority and/or department.”

RESOLVED FURTHER THAT for giving effect to this resolution, the Board be and is hereby authorized to do all such acts, deeds and things as the Board may at its absolute discretion, consider necessary, usual and expedient, including without limitation the utilization of issue proceeds, entering into of underwriting, memorandum of understanding, marketing and depository arrangements, and with power on behalf of the Company to settle any question, remove any difficulty or doubt that may arise from time to time in relation to the offer, issue, allotment and utilization of the issue proceeds of the securities for the Company’s projects/ expansions/ modernizations/ acquisitions/ direct investments in the subsidiary companies/ joint ventures/ repayment of debts/ other corporate needs, as they may deem fit.”

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board/ committee be and is hereby authorized to do all such acts, deeds and things as the Board may at its absolute discretion deem necessary, proper or desirable and to settle any question, difficulty or doubt that may arise with regard to the offer/ issue, allotment and utilization of the issue proceeds including but without limitation to the making of listing applications, creation of such mortgage/ charge, if necessary, under applicable provisions of the Companies Act, 2013, in respect of the aforesaid securities either on pari-passu basis or otherwise, giving or authorizing the giving by concerned persons of such declarations, affidavits, certificates, consents and authorities as may be required from time to time, without being required to seek any further consent or approval of the members and the members shall be deemed to have given their approval thereto expressly by the authority of this resolution.”

RESOLVED FURTHER THAT in case of any debt instrument including but without limitation to any debentures, bonds, the members shall be deemed to have given their approval expressly by the authority of this resolution.”

RESOLVED FURTHER THAT the Board, be and is hereby authorized to delegate all the above powers and authorities to any person or persons or committee of the Board, in connection with the issue of securities, and to give effect to the above resolutions.”

By Order of the Board

Sd/ Place: New Delhi (Deepa Kapoor)

Date: August 12, 2014 (Company Secretary & Compliance Officer)

1. A MEMBER OF THE COMPANY ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES, IN ORDER TO BE EFFECTIVE MUST BE RECEIVED, DULY FILLED AND AUTHENTICATED AT REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS (FORTY-EIGHT HOURS) BEFORE THE SCHEDULED TIME OF THE MEETING.

2. The relevant Explanatory Statement pursuant to Section 102 (1) of the Companies Act, 2013 setting out material facts relating to the business at item no. 5 to item no. 9 of the Notice as set out above, is annexed hereto.

3. Member/Proxies should bring the Attendance Slip in the Meeting duly filed in, for attending the meeting.

4. Statutory Registers under the Companies Act, 2013 is available for the inspection at the registered Office of the Company during business hours.

5. Corporate Members are requested to send a duly certified copy of the Board Resolution, pursuant to Section 113 of the Companies Act, 2013, authorizing their representative to attend and vote at the Annual General Meeting.

6. Members are requested to bring their admission slips along with copy of the report & accounts to the Annual General Meeting.

7. Members who wish to obtain information on the Company or view the accounts for the financial year ended 31st March, 2014, may visit the Company’s website www.kdil.in.

8. The dividend as recommended by the Board of Directors, if declared at this Annual General Meeting, will be paid within 30 days after the date of declaration:

• To those shareholders whose names appear on the Company’s Register of Members after giving effect to all valid share transfers in physical form lodged with the Registrar and Transfer Agents (R&T Agents) of the Company on or before Tuesday, 16th September 2014.

• In respect of shares held in electronic form (demat mode), dividend will be paid to those “deemed members” whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at the close of business hours on Tuesday, 16th September 2014.

• Physical shares – Payment of dividend through NECS: Members holding shares in physical form are advised to submit particulars of their bank account, viz. name and address of the branch of the bank, MICR Code of the branch, type of account and account number at the earliest to our Registrar and Share Transfer Agent, M/s Beetal Financial & Computer Services Private Limited.

9. This may be taken as notice of declaration of dividend for the financial year 2013-14 in accordance with Article 138 of the Article of Association of the Company in respect of dividend for that year when declared.

10. The Registered of Members and Transfer Books of the Company will remain closed from 17th September, 2014 to 24th September, 2014 (both days inclusive) for the purpose of ascertaining eligibility to dividend, if declared.

11. Members are requested to intimate the Registrar and Share Transfer Agent of the Company - M/s Beetal Financial & Computer Services Private Limited, 99, Beetal House, Madangir, New Delhi – 110062, immediately of any change in their address in respect of equity shares held in physical mode and to their DPs in respect of equity shares in dematerialized form.

12. Members may avail nomination facility as provided under Section 72 of the Companies Act, 2013.

13. Members who hold shares in electronic form are requested to write their Client ID and DP ID numbers and those who hold shares in physical form are requested to write their Folio number in the attendance slip for attending the meeting to facilitate identification of membership at the meeting.

14. Across the world, there is an increasing focus on doing our share to help save our environment from further degradation. Recognizing this trend, the Ministry of corporate Affairs (vide circular nos. 17/2011 dated 21.04.2011 and 18/2011 dated 29.04.2011 respectively), has undertaken a “Green Initiative in Corporate Governance” and allowed Companies to share documents/notices (including notice calling Annual General Meeting, Audited Financial Statements, Directors’ Report, Auditors’ Report, etc) with its shareholders through an electronic mode. The move of the Ministry allows public at large to contribute to the green movement.

To support this green initiative of the Government in full measure, shareholders who have not registered their e-mail addresses so far are requested to register their e-mail addresses. Shareholders holding shares in physical form can avail the said facility by filling in the E-Communication Registration Form available on Company’s website (www.kdil.in) or as attached to this Annual Report and forward the same to Company’s Registrar i.e. Beetal Financial & Computer Services Private Limited. Shareholders holding shares in electronic form can also avail said facility by registering/changing the E-mail address with the Depository through their concerned Depository Participants (DP) or by filling in the E-Communication Registration Form as attached to this Annual Report and forward the same to the Company’s Registrar i.e. Beetal Financial & Computer Services Private Limited.

15. The Company hereby gives an opportunity to all the members, who have not get their e-mail id recorded, to get it registered to avail the facility to receive any communication through electronic mode.

16. Members are hereby informed that Dividend which remains unclaimed / un-encashed over a period of seven years, has to be transferred as per the provisions of Section 124 of the Companies Act, 2013 by the Company to “The Investor Education & Protection Fund” constituted by the Central Government under Section 125 of the Companies Act, 2013. It may please be noted that once unclaimed / un-encashed dividend is transferred to Investor Education & Protection Fund” as above, no claims shall lie in respect of such amount by the shareholder.

17. In compliance with the provisions of Section 108 of the Companies Act, 2013 and the Rules framed thereunder and listing agreement, the Members are provided with the facility to cast their vote electronically, through the e-voting services provided by CDSL, on all resolutions set forth in this Notice.

18. Detail of Directors seeking appointment/re-appointment at the forthcoming Annual General Meeting

NOTES:

Name of the Director Mr. Arun Srivastava Dr. Rattan Sagar Khanna Mr. Sanjay Dhingra

Date of Birth

Relationship with other Directors Inter-se

None None None

03rd April, 1968 12th April, 1945 12th October, 1970

Instructions for members for voting electronically are as under:-

(A) In case of members receiving e-mail:

(i) Log on to the e-voting website www.evotingindia.com.

(ii) Click on “Shareholders” tab to cast your votes.

(iii) Now, select the Electronic Voting Sequence Number - “EVSN” along with “KWALITY LIMITED” from the drop down menu and click on “SUBMIT”

(iv) If you are holding shares in Demat form and have already voted earlier on www.evotingindia.com for a voting of any Company, then your existing login id and password are to be used. If you are a first time user follow the steps given below.

(v) Now, fill up the following details in the appropriate boxes:

For Members holding shares in Demat Form For Members holding shares in Physical Form

For NSDL: 8 Character DP ID followed by 8 Digits Client IDFor CDSL: 16 digits beneficiary ID

Folio Number registered with the Company

PAN*

DOB#

Dividend BankDetails#

Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department when prompted by the system while e-voting (applicable for both demat shareholders as well as physical shareholders)

Enter the Date of Birth as recorded in your demat account or in the company records for the said demat account or folio in dd/mm/yyyy format.

Enter the Dividend Bank Details as recorded in your demat account or in the company records for the said demat account or folio.

Expertise in specific functional area

Dairy, Farming and in Agricultre Sector

Vast experience in dairybusiness

Expertise in Financial Modeling & Resource Moblisation

Directorship held in otherCompanies as on date.

NIL Kwality Dairy InvestmentsPvt. Ltd.

DELTA AGROTECH PRIVATE LIMITED

NIL

NIL

NIL

NIL

NIL

152,154,714

Chairman/Member of the committee of the Director of the other companies in which he is a director as on 31 March 2014

Number of Shares held in the Company

Chairman/Member of the committee of the Board of Directors of the Company as on 31 March 2014

• Chairman of Audit Committee• Member of Remuneration, Compensation & Nomination Committee• Member of Stakeholders Relationship Committee• Member of Share Transfer Committee

• Member of Audit Committee• Member of Remuneration, Compensation & Nomination Committee• Member of Stakeholders Relationship Committee• Member of Share Transfer Committee• Member of Corporate Social Responsibility Committee

• Member of Remuneration, Compensation & Nomination Committee• Member of Management Committee• Member of Corporate Social Responsibility Committee

Qualification

Date of Appointment

Graduate GraduateM.Sc. (Hons) from Punjab Agri University, Diploma in Semen Freezing Gynecology & Andrology from Royal Veterinary and Agriculture University, Copenhagen and Diploma in Farm & Science Journalism form Institute of Farm & Science Journalism, New Delhi

25th June, 2003 18th May, 2010 18th June, 2003

*Members who have not updated their PAN with the Company/Depository Participant are requested to use the default number: <ABCDE1234F> in the PAN field.

# Please enter any one of the details in order to login. In case either of the details are not recorded with the depository please enter the value <No. of shares> in the Dividend Bank details field.

(vi) After entering these details appropriately, click on “SUBMIT” tab.

(vii) Members holding shares in physical form will then reach directly the EVSN selection screen. However, members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Kindly note that this changed password is to be also used by the Demat holders for voting for resolutions for the Company or any other Company on which they are eligible to vote, provided that Company opts for e-voting through CDSL platform.

(viii) For members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this notice.

(ix) Click on the relevant EVSN on which you choose to vote.

(x) On the voting page, you will see Resolution Description and against the same the option “YES/NO” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

(xi) Click on the “Resolutions File Link” if you wish to view the entire Resolutions.

(xii) After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

(xiii) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

(xiv) You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting page.

(xv) If Demat account holder has forgotten the changed password then Enter the User ID and Captcha Code click on Forgot password & enter the details as promoted by the system.

(xvi) Institutional shareholders (i.e other than Individuals, HUF, NRI etc) are required to log on to https://www.evotingindia.co.in and register themselves as Corporates. After receiving the login details they have to link the account(s) which they wish to vote on and then cast their vote. They should upload a scanned copy of the Board resolution and Power of Attorney (POA) which they have missed in favour of the Custodian, if any, in PDF format in the system for the scrutinizer to verify the same.

(B) In case of members receiving the physical copy of Notice of Annual General Meeting [for members whose e-mail IDs are not registered with the company/depository participant(s) or requesting physical copy]:

Please follow all steps from sl. no. (i) to sl. no. (xvi) above, to cast vote.

(C) The e-voting period begins on 18.09.2014 at 10:00 AM and ends on 20.09.2014 at 6:00 PM. During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date, may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter. Once the vote on a resolution is cast by the shareholder, the shareholder shall not be allowed to change it subsequently.

(D) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.com under help section or write an email to helpdesk.evoting@cdslindia.com.

19. Mr. Mukun Arora of M/s Mukun Vivek & Company, Company Secretaries, has been appointed as the Scrutinizer to scrutinize the e-voting process in a fair and transparent manner.

20. The notice is being dispatched/emailed to all the members whose names appear on the register of members/list of beneficial owners as received from the National Securities Depository Ltd. (NSDL)/Central Depository Services (India) Ltd. (CSDL) on 22 August 2014 and voting rights shall be reckoned on the paid-up value of the shares registered in the name of the shareholders as on the same date.

21. The Scrutinizer shall, within a period not exceeding three working days from the conclusion of the e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the Company and make a Scrutinizer’s Report of the votes cast in favour or against, if any, forthwith to the Chairman of the Company.

22. The results declared along with the Scrutinizer’s Report shall be placed on the Company’s website www.kdil.in within two days of the passing of the resolutions at the Annual General Meeting of the Company and communicate to Stock Exchanges, where the shares of the Company are listed.

EXPLANATORY STATEMENT PURSUANT TO SECTION 102(1) OF THE COMPANIES ACT, 2013ITEM NO. 5

In terms of Section 152 of the Companies Act, 2013 atleast two third of the Directors of the Company shall be persons whose period of office is liable to retire by rotation and out of which atleast one third shall retire at each Annual General Meeting of the Company.

Currently the Company has two Independent Directors which are not liable to retire by rotation as per Section 152 of the Companies Act, 2013 and as per Articles of Association of the Company Managing Director and Whole Time Directors are not liable to retire by rotation.

Therefore the Company in order to comply with the provisions of Section 152 and Section 203 needs to alter its Article of Association by substitution of regulation 104 and regulation 127 in such way that the office of Managing Director and Whole Time Directors are also come under the preview of retirement by rotation and an individual may be appointed as Chairman and Managing Director of the Company at the same time.

Except Mr. Sanjay Dhingra, Chairman & Managing Director and Mr. Sidhant Gupta, Director of the Company, none of the Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, in the resolution.

ITEM NO. 6-7

Pursuant to the provisions of Section 149 of the Companies Act, 2013, every listed public company is required to have at least one-third of the total number of directors as independent directors, who are not liable to retire by rotation.

The MCA has clarified wide its General Circular No. 18/2014 dated 11.06.2014 that the Companies are required to make fresh appointment of Independent Directors as per the provisions of Companies Act, 2013 and any tenure of an Independent Directors on the date of commencement of the Act shall not be counted for his appointment/holding office of director under the Act. In view of the transitional period of one year provided under Section 149(5), it is hereby clarified that it would be neccessary that if it is intended to appoint existing Independent Directors under the new Act, such appointment shall be made expressly under section 149(10)/(11) read with Schedule IV of the Act within one year from 1st April, 2014 subject to compliance with eligibility and other prescribed conditions.

In view of the above the Board recommended the appointment of Mr. Arun Srivastava and Dr. Rattan Sagar Khanna as Non-Executive Independent Directors from 12.08.2014 up to 11.08.2019.

In the opinion of the Board, Mr. Arun Srivastava and Dr. Rattan Sagar Khanna fulfils the criteria as mentioned in Section 149(6) of the Companies Act, 2013 and recommend the appointment of these as Non-Executive Independent Directors and received a declaration from them as specified in the above mentioned Section.

In compliance with the provisions of Section 149 read with Schedule IV of the Companies Act, 2013, the appointment of these directors as Non-Executive Independent Directors is now being placed before the Members for their approval.

The Company and Non-Executive Independent Directors shall abide by the provisions specified in Schedule IV of the Companies Act, 2013.

The terms and conditions of appointment of the above Directors shall be open for inspection by the Members at the Registered Office of the Company during normal business hours on any working day, excluding Saturday.

Dr. Rattan Sagar Khanna

Dr. Rattan Sagar Khanna did his M.Sc. (Hons) from Punjab Agri University. He is Diploma holder in Semen Freezing Gynecology & Anthology from Royal Veterinary and Agriculture University, Copenhagen, Diploma in Farm & Science Journalism from Institute of Farm & Science Journalism, New Delhi. Over 35 years, he worked at senior positions in Dairy, Farming and in Agriculture Sector in the areas of manufacturing, consulting and marketing.

He has been providing his valuable inputs on major initiatives taken by the Company as well as the technologies introduced in the Company. He is actively involved in introduction and launch of our anchor Brand “Dairy Best - Livlite”. Dr. Khanna has also extended his expertise in implementation and establishment of collection centres and MCC's of the Company.

As an investor protection activist and proponent of good corporate governance, Dr. Khanna has been the guiding force in company's CSR initiatives. An old war horse in Dairy Business, his experience has been a valuable asset for the company.

Arun Srivastava

Shri Arun Srivastava has been serving on various committees of Board and helps the Company in its smooth operations. He brings in corporate finance and transaction experience to the Company and with consulting and liasoning background he remains the trouble shooter for the Company vis-à-vis clients and lenders and ensure smooth execution of mandated deals.

Mr. Arun Srivastava and Dr. Rattan Sagar Khanna, are concerned or interested in the Resolutions of the accompanying Notice relating to their own appointment.

ITEM NO. 8

Upon the commencement of new Companies Act, 2013, the Ministry of Corporate Affairs (MCA) vide its general circular no. 04 /2014 dated March 25, 2014 has clarified the resolutions passed under Section 293(1)(d) of the Companies Act, 1956 prior to commencement of Section 180 of the Companies Act, 2013 which is to be valid upto one year from the date of notification of Section 180 of the Companies Act, 2013 and thus fresh approval of shareholders is required to be obtained at the general meeting of the shareholders.

Therefore in order to comply with the provisions of Section 180(1)(c), Section 186 and other applicable provisions of the Companies Act, 2013, the Company needs to obtain the fresh approval of shareholders by way of Special Resolution to authorized the Board to borrow money including the corporate guarantee on behalf of the Company upto a sum of Rs. 3000 Crores (Rupees Three Thousand Crores Only).

Further to meet the working capital demand of the growing business of the Company, the Board is also authorized to give and/or receive the corporate guarantee on behalf of the Company under Section 186 of the Companies Act, 2013 and the rules made there under.

None of the Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, in the resolution.

ITEM NO. 9

The Company has taken up and intends to take up in future several growth initiatives like expansions, modernizations, strengthening of procurement mechanism, establishment of milk chilling centers, overseas direct investment in subsidiary companies/joint venture etc. and therefore, there is need to strengthen its financial position by augmenting long term resources. The Company plans to achieve this by issue of securities in international markets and/or in domestic market.

Several modes are available for raising capital – by way of Public Issue, Right Issue, Offer for Sale, Private Placement, Compulsory Convertible Debenture(s) (CCDs)/Compulsory Convertible Preference Share(s) (CCPS), QIP, Institutional Placement Programmes under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, Private Placement, Global Depositary Receipt, American Depositary Receipt, Foreign Currency Convertible Bonds or other equity related instruments in the domestic and in the international market.

The Company consulting various investment bankers for raising capital through one or more such manner or such instruments up to a sum of Rupee 10,000 million in one or more trenches, whether with or without an option to subscribe for additional securities.

The Company intends to use the funds so raised towards capital expenditure for strengthening of procurements mechanism, establishment of milk chilling centers, expansions, modernization, new projects, overseas direct investment in subsidiary companies/joint ventures, any other use which may be required in the normal business and as permitted under applicable law from time to time.

The detailed terms and conditions for the offer and the rights and privileges of the holders of equity related instruments, with or without warrant, non-convertible/partly convertible debentures with or without warrant and/or Global Depositary Receipts/ Shares (GDRs/GDSs) and/or American Depositary Receipts/shares (ADRs/ADSs) against the issue of underlying shares and/or Foreign Currency Convertible Bonds (FCCBs) convertible at the option of the holders into equity shares (herein referred to as the “Securities”) to resident of India or persons resident outside India including Foreign Institutional Investor, Qualified Institutional Buyers (QIB) will be determined in consultation with investment banker, advisors and underwriters to be appointed by the Company considering the prevailing market conditions and other relevant factors. The resolution seeks to afford discretions to the Board of Directors (including a committee thereof) to finalize these terms in consultation with the agencies aforesaid in accordance with applicable India Laws and/or International Laws. The Securities would be issued at a price determined in accordance with SEBI Regulations, FEMA Regulations and other applicable Laws. The conversion of any of the securities into equity shares at a later stage, if any, shall not be less than the minimum price as calculated as per SEBI Regulations and/or any other authority concerned.

In view of the above, consent of the shareholders is being sought, by way of a special resolution, pursuant to the provisions of Section 42, Section 62(1)(c), and other applicable provisions, if any, of the Companies Act, 2013 and other applicable Laws, rules and regulations and in accordance with the Memorandum and Article of Association of the Company and Listing Agreement between the Company and Stock Exchanges where the shares of the Company are listed. The Equity Shares arising out of issue of securities pursuant to this resolution shall rank pari - passu in all aspects with the existing Equity Shares of the Company.

In view of the reasons aforesaid, an enabling resolution is proposed for consideration of the shareholders to give adequate flexibility and discretion to the Board to finalize the terms of the issue of Securities. The board recommends the resolution for the approval of the members of the Company.

None of the Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, in the resolution.

By Order of the Board

Sd/

Place: New Delhi (Deepa Kapoor)

Date: August 12, 2014 (Company Secretary & Compliance Officer)

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

Affix 1Rupees

Revenue Stamp

KWALITY LIMITEDRegd. Office: KDIL House, F-82, Shivaji Place, Rajouri Garden, New Delhi- 110027

CIN : L74899DL1992PLC255519

ATTENDANCE SLIP

ANNUAL GENERAL MEETING

Wednesday, 24th September, 2014 at 9.30 a.m.VENUE: Lavanya, G.T. Karnal Road, Palla Bakhatavarpur Mord, Alipur, Delhi-110036

DP Id:................................................................................ Folio No:.....................................................................

Client ID:........................................................................ No. of Shares held:.....................................................

Member's Name:..................................................................................................................................................

Complete Address:...............................................................................................................................................

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

I hereby record my presence at the Annual General Meeting of the Company to be held on 24th September, 2014 at 9.30 a.m. at Lavanya, G.T. Karnal Road, Palla Bakhatavarpur Mord, Alipur, Delhi-110036

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

Member's Signature

If proxy attended Instead of Member:

Proxy Name:................................................................................... Proxy's Signature:........................................

Note: Members / Proxy holders wishing to attend the meeting must bring their duly filled and signed Attendance Slip with them. NO GIFT/COUPON WILL BE DISTRIBUTED AT THE ANNUAL GENERAL MEETING.

Form No. MGT-11PROXY FORM

[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies(Management and Administration) Rules, 2014]

CIN: L74899DL1992PLC255519Name of Company : Kwality LimitedRegistered office : KDIL House, F-82, Shivaji Place, Rajouri Garden, New Delhi-110027

Name of Member (s) : ..................................................... E-mail Id : ................................................................

Folio No/Client Id : .......................................................... DP ID : .....................................................................

Registered address : ...........................................................................................................................................

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

I/We, being the member (s) of ..................... shares of above named company, hereby appoint

1. Name : ........................................................................ E-mail Id : ..............................................................

Address :Signature : ...................................., or failing him

2. Name : ........................................................................ E-mail Id : ..............................................................

Address :Signature : ...................................., or failing him

as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 22nd Annual General Meeting of the company, to be held on the 24th day of September, 2014 at 9:30 a.m./p.m. at Lavanya, G.T. Karnal Road, Palla Bakhtavarpur Mord, Alipur, Delhi-110036 and at any adjournment thereof in respect of such resolutions as are indicated below :

ResolutionNo.

Resolutions Votes

For Against

1

2

Adoption of Balance Sheet and Profit & Loss Account together with the reports of the Directors and Auditors thereon

Approval of dividend for the financial year 2013-14

3 Appoint Mr. Sanjay Dhingra, who retires by rotation and being eligible, offers himself for re-appointment (subject to the alteration of Article of Association).

4 Appointment of M/s. P.P. Mukerjee & Associates as Statutory Auditor of the Company

5 Approval for alteration of article of association of the Company

6 Appoint Mr. Arun Srivastava as an independent director

7 Appoint Dr. Rattan Sagar Khanna as an independent director

9 Authorization to issue shares on preferential basis

8 Authorize the Board of Directors to borrow money under section 180(1)(c) of the companies act, 2013

Signed this ............. day of .................. 2014

Signature of shareholder

Signature of Proxy holder(s)Note: This form of proxy 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.

Affix

Revenue

Stamp

DIR

EC

TOR

'S R

EP

OR

TDear shareholders,

Your Directors have pleasure in presenting their Twenty Second Annual Report together with Audited Accounts of the Company for the financial year ended 31st March 2014.

1. Financial Highlights

2. COMPANY PERFORMANCEYour Company achieved a turnover of Rs. 4578.05 crores for the year ended on March 31, 2014, registering a growth of 23.99% over the last year turnover of Rs. 3692.29 crores.Profit before Tax at Rs. 150.51 crores is 38.75% higher than that of last year of Rs. 108.48 Crores. Profit after Tax for the Financial Year 2013-2014 stood at Rs. 126.63 crores as compared to Rs. 96.53 crores in the previous year a growth of 31.18%.

3. THE COMPANIES ACT, 2013The Ministry of Corporate Affairs (MCA) vide its Circular dated April 4, 2014 has clarified that the financial statements and documents annexed thereto, auditor’s report and board’s report in respect of financial year that have commenced earlier than April 1, 2014 shall be governed by the provisions of the Companies Act, 1956.With respect to other provisions of the Act, appropriate references have been made in this report to the extent these provisions have become applicable from April 1, 2014.

4. DIVIDENDBased on the performance of your Company, the Directors are pleased to recommend a final dividend of Rs. 0.10 per equity share of Rs. 1 each, which will be paid after your approval at the ensuing Annual General Meeting. The final dividend, if approved by the members of the Company would involve a cash outflow of Rs. 2.03 Crores (excluding dividend tax of Rs. 0.35 crores).

The dividend will be paid to members whose names appear on the company's register of members after giving effect to all valid share transfers in physical form lodged with the Registrar and Transfer Agents (RTA) of the company on or before 16th September, 2014, in respect of shares held in electronic form (demat mode), dividend will be paid to those “deemed members” whose names appear in the statement of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) at the close of business hours on 16th September, 2014.

5. TRANSFER TO RESERVEThe Board of Directors of the Company have recommended a final dividend of Rs. 0.10 per equity share of Rs. 1 each for the financial year 2013-14. As the dividend is up to 10% of the paid up capital, there is no requirement to transfer any amount to the reserve under Companies (Transfer of Profit to Reserve) Rules, 1975.

6. SIGNIFICANT DEVELOPMENTSYour company has during the year enhanced its manufacturing capabilities. The Company has acquired a plant situated at Village Mumrejpur, Tehsil Dibai, District Bulandshahar, Uttar Pradesh. Your company has also taken initiatives to increase the production capacities of the newly acquired plant as well as that of the plant situated at Softa to meet the growing demand of its products in the market. The expanssion programme is under implementation.

The Company is also under process of launching new value added products like variants of flavored milk, UHT milk, Table butter in tubs, Cream in tetra packs, variants of cheeses and yogurts etc. Some of the products are in production test stage and your Company is confident of launching these products in the market in near future.

7. CORPORATE SOCIAL RESPONSIBILITYYour Company defines Corporate Social Responsibility above the philanthropic activities and encompasses all related concepts such as corporate sustainability, business responsibility and corporate citizenship as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value. The Company is in Dairy sector, which is an important primary source of livelihood for Indian rural families. Its main objective is to provide rural employment and income generating opportunity particularly for small, marginal farmers and landless labour (men & women).

The Company shall continue to have among its objectives the promotion and growth of community residing in the vicinity of its plants, MCCs etc where it seeks to actively assist to uplift the social economy, standard of living and making this community self-reliant as community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.

DetailsYear ended 31.03.2014

INR in croresYear ended 31.03.2013

INR in crores

Turnover

Profit before Interest, Depreciation,

Extraordinary Items & Tax

Interest & Finance Charge

Depreciation

Profit Before Extraordinary Item & Tax

Extraordinary Items

Profit before Tax

Tax Expense

Profit after Tax

3692.29

214.04

92.28

10.29

111.48

3.00

108.48

11.95

96.53

4578.05

276.03

112.61

12.91

150.51

----

150.51

23.88

126.63

The Company has outsourced facilities to support the milk producers, who are directly linked in our commercial milk procurement activities. In order to help such farmers to increase the productivity of their cattle and buffaloes, Kwality Limited has provided, on a principal of no-profit-no-loss, good quality feed. Our Company is also providing such other technical inputs as vaccinations, artificial insemination, and free advice on prevention and cure of common diseases.

The “Sahayogi Foundation has been set up (‘the foundation’)” as a non-profit trust in July 2014. The Foundation will work closely with the Board of Directors the CSR Committee in implementation of various CSR activities. The Foundation will also assist in reporting progress of deployed initiatives and in making appropriate disclosures periodically.

MILK PRODUCER CENTRIC PROCUREMENT SYSTEM Your Company is committed to the upliftment of the rural community by implementing a milk producer centric approach to procure milk and enhance milk productivity. The approach is being operationalized by forming Village Level Collection Centres (VLCs). We have established a fair and transparent system through Automatic Milk Collection Units (AMCUs) comprising of Electronic Weighing Scale, Eko Milk Analyser, Data Processing Unit, printer & display to determine the rate of milk on the basis of quality to the milk producer. Milk is tested for quality parameters of fat & SNF, quantity is weighed through the Electronic machine, the rate payable is displayed and a payment slip generated by the computer is handed over to the milk producer. Milk payment is made on every tenth day and is transferred to the joint account, operated by the Village Service Provider (VSP) and representative of the milk producers.

We have been able to reach out to around 4000 villages situated across the states of Rajasthan, Haryana, Punjab and Uttar Pradesh through more than 2,70,000 farmers.

a) Productivity Enhancement Programme

Long inter-calving period is one of the greatest impediments in achieving sustainable dairying as the cost of the feed and forages are on the rise. Nutritional deficiency across the project area is a limiting factor which attributes to infertility in dairy animals. In order to provide good and balanced quality feed, Kwality Limited has outsourced animal feed processing under the brand of “DAIRY BEST”. Feed formulation is provided by the company with an optimal mix of grains and mineral mixture as the ingredient. Feed is processed under the supervision of the competent company representative to ensure the use of formulation ingredients during the processing.

b) Clean Milk Production Campaign

To ensure the procurement of good quality of raw milk and to create awareness among the milk producers, the Company had organised a campaign on “Clean Milk Production” across the milk shed area covering more than 30,000 farmers across various villages.

c) Dairy Animal Health Management

Preventive and curative health management training programs related to dairy animals digestive system, reproductive system and mastitis control were carried out in collaboration with Ayurvet Limited. About 50 Village Service Providers (VSPs) have been identified as “KISSAN MITRAS” and were imparted elementary training at Ayurvet Training Centre. These supvisors are working under experienced veterinarians to provide preventive treatment to dairy animals.

d) Financial Inclusion Initiative

Your Company has signed a MoUs with Allahabad Bank to assist milk producers to get access to bank credit for the purchase of dairy animals. Similar arrangement has also been worked out with Central Bank of Indian and Bank of India. SBI and PNB has sanctioned interest free loan of 50 lacs for purchase of 50 dairy animals to two of our VSPs under Kamdhanu Scheme through our assistance.

e) “Go Green” Initiative

In the pursuit of the fulfillment of the environmental commitment of harnessing solar energy and saving fossil fuel, your Company has provided 75 solar panels at the VLC level which provide power to operate the AMCUs and lights.

f) Capacity Building

Your Company recognizes the need to have quality and trained manpower in order to achieve competitive advantage. With a view to unleash the potential and sharpen the skills of the employees, a series of in-house and outbound training programs were organised. In accordance with the skill and competency requirements of the various groups, training programmes on effective communication, team building, milk chilling centre management, quality of milk testing, dairy animal health management were conducted.

Details of the programmes are as under:

S. No. Training Programme No. of programmes No. of participants

1. Effective communication 4 74

2. Teambuilding 2 20

3. Dairy animal health management 2 40

8. CREDIT RATING BWR has assigned Long-Term rating of BWRA with Stable Outlook and BWR A1 as short term rating to Kwality Limited overall fund based Working Capital facilities.

9. FUTURE OUTLOOKOver the past decade, significant transformation took place in the Indian demographic space which led to heightened consumer interest in value added products. This shift in the dynamics of the industry proved beneficial for the manufacturers since value added products have higher margins as compared to liquid milk segment. Considering the higher rate of profit margin expected from the value added Products, your Company has shifted focus to add new products in its existing product line. To increase procurement of milk through Producer Based Village Centres. Your Company would be hiring more Milk Chilling Centers (MCC) and also setting up its own large MCCs with capacities of more than 50,000 LPD at different locations in North India.

Future Objectives :

Milk Procurement

Kwality Limited has developed its own comprehensive milk procurement strategy to increase the procurement of high quality milk directly from the farmers

Setting up Company owned Milk Chilling Centre with a capacity more than 50,000 LPD.

A basis for payment for milk has been devised ensuring the supply of standardised milk by the farmers and preventing adulteration

Farmers are provided with veterinary doctors to look after animal health and artificial insemination need, subsidised animal feed and annual FMD vaccination so as to provide incentive to farmers to be associated to us and thus increase the number of farmers under each VCC

New Products & Consumer Brands

After the launch of the Low Cholesterol Pure Ghee, ‘Livlite’, the Company plans to launch various new products catering to the increasing health needs of the Indian Consumers

Launch of variants of flavored milk for retail consumers

Setting up manufacturing facilities for products like variant of cheese, drinking yogurt, butter in tubs, cream in tetra packs etc.

Overseas Expansion

Kwality FZE (100% subsidiary of your Company in dubai) plans to increase its import of SMP, WMP , other Dairy Products and derivatives , and then reprocess, pack and sell these products under its brands, in Dubai and export to other countries.

10. EXPORTWith the removal of ban on the export of skimmed milk powder in June, 2012 and whole milk powder & dairy whitener in November, 2012. Your Company started export of Dairy products and achieved the export turnover of Rs. 183.45 crores as compared to Rs. 71.74 crores in the FY 2012-13. In the next fiscal year the Company has estimated an increase in export sales based upon the rising demand of dairy products in the international market and the acceptance of our products from our existing and prospective buyers. The strategy to develop new products and target new export regions would continue, so that we have a broad based direction of exports.

However the export may be affected during the current year as the Government has withdrawn the VKYUG scheme on SMP.

11. SUBSIDIARY COMPANY & CONSOLIDATED FINANCIAL STATEMENTSYour Company has a wholly owned subsidiary under the name and style of “Kwality Dairy Products – FZE” in free trade zone of United Arab Emirates to increase its global foot print and to develop and cater to the new markets.

Your Company has prepared Consolidated Financial Statements in accordance with Accounting Standard 21 and 23 of Companies (Accounting Standards) Rules 2006. The Consolidated Statements reflect the results of the Company and those of its subsidiary. As required by Clause 32 of the Listing Agreement with the Stock Exchanges, the Audited Consolidated Financial Statements together with the Independent Auditor’s Report thereon are annexed and form part of this Annual Report. These consolidated financial statements provide all relevant financial information about the Company.

12. CASH FLOW STATEMENTIn conformity with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 31st March, 2014 is attached as a part of the Annual Accounts of the Company.

13. MANAGEMENT DISCUSSION AND ANALYSISThe management discussion and analysis of the Company for the year under review, as required under Clause 49 of the listing agreement with the stock exchanges, is given as a separate Section in Annual Report.

14. KEY MANAGERIAL PERSONNELS (KMP):The Companies Act, 2013 introduced the new concept of Key Managerial Personnel (KMP) which includes the Managing Director, Chief Executive Officer or Manager, Whole Time Director, Company Secretary and Chief Financial Officer. The Key Managerial Personnel would guide the Boards to achieve their defined objectives and purposes by adhering to good Corporate Governance practices. KMP would also be looked upon by the Regulators for the non-compliances.

The new Companies Act, 2013 cast a significant duty on the KMPs in successful management of the company. It clearly specifies that whole time KMP cannot hold office in more than one company except in its subsidiary at same time.

As per Section 203 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 if any, and the rules made thereunder, Board of Directors of the Company has appointed Mr. Sunit Shangle as a Chief Financial Officer of the Company with effect from 12th August, 2014 under the preview of Key Managerial Personnel.

The Key Managerial Persons of the Company are:

Name DesignationMr. Sanjay Dhingra Managing DirectorMr. Sidhant Gupta DirectorMr. Sunit Shangle Chief Financial Officer (CFO)Ms. Deepa Kapoor Company Secretary

15. DIRECTORS’The Board of your Company is constituted of four Directors comprising of Mr. Sanjay Dhingra, Chairman & Managing Director, Mr. Sidhant Gupta, Executive Director, Mr. Arun Srivastava, Non-Executive Independent Director and Dr. Rattan Sagar Khanna, Non-Executive Independent Director.

In terms of Section 203 of the Companies Act, 2013 an individual may be appointed as the Chairperson as well as the Managing Director of the Company at the same if it is provided in the Article of Association of the Company or the Company carries multiple businesses.

Therefore the Company in order to comply with the provisions of Section 203 proposes to alter its Article of Association in the ensuing Annual General Meeting in such way that an individual may be appointed as Chairman and Managing Director at the same time.

As per the Companies Act, 2013 Mr. Sanjay Dhingra, Chairman & Managing Director of Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board recommends his appointment/re-appointment.

A resolution seeking your approval on this item is included in the Notice convening the Annual General Meeting together with a brief profile of the Director being re-appointed.

16. DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Director Responsibility statement, and based on the representation received from operating management, the Directors hereby confirm:

a) That in the preparation of the annual accounts for the period ended on March 31, 2014, the applicable accounting standards have been followed and there are no material departure.

b) That the directors had selected appropriate accounting policies and 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 March 31, 2014 and the profit of the company for that period.

c) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

d) That the directors had prepared the annual accounts for the period ended on 31st March, 2014 as on going concern basis.

17. FIXED DEPOSITSYour company has not raised any public deposit during the period under review. There was no public deposit outstanding at the beginning or at the end of the period.

18. HUMAN RESOURCE DEVELOPMENTDevelopment of Human Resource is essential for any organization for its growth. Organizations can sustain in the dynamic changing environment only through the efforts and competencies of their Human Resources.

Your Company recognizes human resource as its most valuable asset and believes that participation of employees in management can foster a sense of importance amongst them, and motivates them in establishing harmonious relations so as to enhance operational efficiency industrial peace and harmony, leading to higher productivity.

Your Company makes efforts to ensure that best talent is recruited, trained and retained. During the year, your Company has put emphasis on performance driven work culture and appropriate HR tools and processes have been deployed to ensure clear linkage with rewards. Strong recognition platforms have been created to encourage people to deliver stretched goals. There has been emphasis on training and development and career development opportunities.

To retain leadership position, the Company continuously innovates and customizes its human resource (HR) strategy to meet changing employee needs.

19. SUPPLY CHAIN AND DISTRIBUTOR’S NETWORKYour Company’s supply chain agenda remained focused on to maximize customer value and achieve a sustainable competitive advantage and to manage this efficiently, improving performance on service, quality and cost. This was delivered with speed and agility in a Supply Chain set-up, with the highest standards of safety and positive environmental impact. Your Company distributor’s network is as:

To tap emerging demand from small towns and interior markets, your Company had appointed super stockiest and distributors who service in small markets through their network. Your Company has more than 50super stockiest and approx. 900 distributors the country for all the product ranges under Brand Name of “Dairy Best”, “Kream Kountry” & “Livlite”.

20. INTERNAL AUDIT & CONTROL SYSTEMThe Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition, and that the transactions are authorized, recorded and reported correctly. These internal controls are supplemented by an extensive programme of internal audit carried out by reputed firms of Chartered Accountants. Your Company has an Audit Committee consisting of three Directors; The Audit Committee, Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee, Board of Directors reviews the adequacy and effectiveness of internal control system and suggest improvement(s) if any. The Company has a robust Management Information System which is an integral part of the control mechanism.

21. BRANDSYour Company has kept up the pace of innovation by working and investing aggressively behind new consumer understanding, new technologies and capability programs. Consistent with this objective your Company launched several products i.e. milk, curd, ghee, butter, paneer, lassi, chaach and ice-cream etc. under the brand name of ‘Dairy Best’, Kream Kountry & Livlite.

Your Company continues to invest significantly in its structured innovation process, which is reflected in the launch of varied and differentiated offering to strengthen the business. Your Company has also initiated the process for breakthrough innovations through interactions with reputed institutions, which is expected to help build a strong platform for sustained and significant business leadership.

Processing Plant

C&F Agents Institutions Depots

Retailers Distributors Retailers Institutions Distributors

22. QUALITY STANDARDS‘Quality’ being the most powerful factor to capture, retain and enlarge customer base in the modern business scenario, your Company concentrates on the quality standards of its products for food safety and public health, standards of milk quality and quality control of milk and dairy products. To produce high-quality international standard milk and dairy products, quality standards for Food Safety is based on Codex Standards for Hazard Analysis and Critical Control Points (HACCP) to ensure safe and quality products for consumers. These control programs are aimed at avoiding abnormal and unsafe milk and dairy products entering into food channels for human consumption.

Your Company continuously works on raising the delivered quality of its products and processes. The culture of continuous improvement is being created through deploying various initiatives like Total Productive Maintenance (TPM) and Total Quality Management (TQM) and every new Kwality Limited product must pass through a full test to evaluate its life/yield, and overall performance under a wide range of environmental conditions.

Your Company review its quality standards and makes them stringent and updated on regular basis. To compete in International market for export of milk & milk products, it has become necessary to produce the dairy products with internationally acceptable quality and food safety standards. It is an indicator of the Company’s commitment for quality, food safety and maintaining environmental standards.

23. MANUFACTURING OPERATIONYour Company has made continuous improvement in its manufacturing operations in order to facilitates its processing activities and increase its operational efficiency. In that context, capacities were created at relevant locations to meet the growing demand by the consumers. These manufacturing operations are compatible with the health & safety standards and environment friendly.

These improved manufacturing operations increases the production capacities and capabilities both in your Company’s manufacturing units and delivers the products at relevant locations to meet the growing demand of the products by the consumers. All these have helped in creating the right capacity with superior technology to better serve the market.

Many of the key tasks in this industry are performed by dairy process workers. In the dairy industry, dairy process workers will operate a range of specialized equipment, often from sophisticated control room, to produce the variety of dairy products.

24. INFORMATION TECHNOLOGYInformation Technology has become a vital and integral part of every business and every company need to invest to improve its existing technology or acquire updated technology for creating differentiating products and services to stay ahead in a competitive and challenging environment.

Your Company continues to invest in Information Technology (IT) to improve operational efficiencies and enhance productivity. Advances in new manufacturing process technology may allow the use of mostly dairy ingredients and small amount of fresh milk in the manufacture of dairy product.

Your Company continuously focuses to build powerful IT capabilities for marketing. Your Company will also be implementing analytics in procurement to enable its procurement team to gain greater visibility and better forecast commodity price trends.

Your Company is in the process of implementation of ERP Solution which will not only help in standardization of the processes but also ensure timely corrective actions and remedial measure as the basis of MIS and information available on the real time basis.

25. ENVIRONMENT, HEALTH AND SAFETYYour Company is sensitized to the need for responsible action that helps to sustain the environment and natural resources. At all the factories, efficiency and controlling cost extends beyond the commercial and includes the objectives of minimizing consumption of natural resources. During the past year, they continued to follow the two-fold approach to achieve this. On the one hand they continuously increased efficiencies in areas within their control and have been a forerunner in conserving water, saving energy, recycling waste and reducing pollution. On the other hand, as partners in growth, they enabled people in the community to be more aware and responsible towards the environment and its resources.

Your Company has an environmental policy for implementing an Environmental Management System (EMS) for meeting the content & purpose of organization’s Environmental Policy & Objectives which take into account governmental policies, environmental laws and regulations, and adheres to strict internal ‘Kwality Environmental Management System’ norms and information about significant environmental aspects. It aims at use of processes, practices and techniques to avoid, reduce or control the creation, emission or discharge of pollutant or waste, in order to reduce adverse environmental impacts.

To maintain sustainable environmental stride, your Company took initiative for waste minimization of all its resources. With the objective to provide a healthy and safe environment, your Company has undertaken several safety measures at all its manufacturing units that include:

• Communicating the EHS Policy to all stakeholders.

• Assessing and identifying unsafe conditions at work place.

• Conducting Hazard and Risk Study at units.

• Documenting and implementing Safe Operational Control Procedures at units.

• Training people on good safety practices on the shop floor and elsewhere in the factory.

Your company has emphasized and worked towards sustainable use of natural and non-renewable resources. Within the factories there are continuous efforts to improve operational efficiencies, minimizing consumption of natural resources and reducing CO2 emission while maximizing production volumes. Your Company actively makes efforts to increase awareness about the need to sustain the environment and within the factories it constantly evaluates new initiatives that could reduce waste and emissions.

26. RISK MANAGEMENTThe risk management process is continuously improved and adapted to the changing global risk scenario. The agility of the risk management process is monitored and reviewed for appropriateness with the changing risk landscape. This includes risk assessment and mitigation at the company level, business / functional unit level, relationship level and project level.

27. AUDITORSThe Board proposes the re-appointment of M/s P.P. Mukerjee & Associates, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuing Annual General Meeting till the

conclusion of the Annual General Meeting of the Company to be held in the year 2019 (subject to ratification of their appointment at every AGM). The Company has received a letter from them that their appointment, if made, would be in accordance with Section 139 of the Companies Act, 2013 and that, they are not disqualified for such appointment within the meaning of Section 141 of the Companies Act, 2013.

28. LISTINGThe equity shares of the Company continue to be listed on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The annual listing fees for the current year have been paid to the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

29. PARTICULARS OF EMPLOYEESThe information required under Section 217 (2A) of the Companies Act, 1956 and the rules made thereunder, in respect of the employees of the Company has been excluded in terms of Section 219 (1)(b)(iv) of the Companies Act, 1956. The annual report excluding the aforesaid information is being sent to all the members of the company and others entitled thereto. Any member interested in obtaining a copy of such particulars may write to the Company at the registered office of the Company.

30. KWALITY EMPLOYEE STOCK OPTION PLAN 2014 (ESOP 2014)The Company appreciates the critical role played by the people in the organizational growth. It strongly feels that the value created by its people should be shared with them. Keeping in view this objective and to promote the culture of employee ownership in the Company, it introduced Employee Stock Options to the employees of the Company under an Employee Stock Option Plan. Accordingly, a Plan namely the "Kwality Employee Stock Option Plan 2014" ("ESOP 2014") has been drafted. Shareholders' approval is sought as per Section 62(1)(b) of the Companies Act, 2013 and Clause 6 of the SEBI ESOP Guidelines through Postal Ballot, result of which was declared on July 07, 2014.

However till date no ESOP’s have been granted to any employee.

31. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.Information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure on particulars in the report of the Board of Directors) Rules, 1988 is set out in an Annexure to this report.

32. CORPORATE GOVERNANCE A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement(s) with the Stock Exchange(s) form part of this Annual Report.

33. APPRECIATIONWe would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Kwality Limited. To them goes the credit for the Company’s achievements.

We are very grateful to National Dairy Research Institute (NDRI) for providing us with invaluable support. National Dairy Research Institute (NDRI) had played a significant role in our growth and development.

Our Bankers, Insurers, Suppliers and Transport Contractors have been of great help to us in managing our growth and are our partners in success.

We acknowledge their contributions and commit ourselves to continue and strengthen this fruitful alliance in all times to come.

Your Directors take this opportunity to express their deep sense of gratitude to the Central and State Governments, customers, vendors and the society at large for their continues support.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For & on behalf of the Board of Directors

Sd/-

Place: New Delhi Sanjay Dhingra

Date: 12th August, 2014 Chairman & Managing Director

DIN: 00025376

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INFORMATION AS PER SECTION 217(1)(e) READ WITH COMPANIES (DISCLOSURE

OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND

FORMING PART OF THE DIRECTOR’S REPORT FOR THE YEAR ENDED MARCH 31,

2014

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

EARNINGS AND OUTGO

CONSERVATION OF ENERGYPower & Fuel Consumption

(a) Electricity 2013-14 2012-13

Purchased

Units 59,36,645 31,86,389

Total Amount (Rs.) 4,67,81,559 2,07,95,923

Rate Per Unit (Rs.) 7.88 6.53

(b) Fuels

(Diesel, FO, Burada,

Husks & Turi)

Quantity (ltrs/Kgs) 1,64,99,774 1,26,84,245

Total Amount (Rs.) 14,03,41,352 12,27,53,817.80

Rate per Unit (Rs.) 8.51 9.68

TECHNOLOGY ABSORPTIONR &D / PRODUCT DEVELOPMENT

The Company has an in-house R & D / Product Development Laboratory to develop pure, hygienic, and nutritious products adhering to best Quality Standards. Continuous efforts are made to ensure qualitative improvement and safety of products and optimum efficiency in operations.

Specific Areas in which R & D / Product Development have been undertaken:• Processing of Fresh Raw Milk.• Nutrification of milk with appropriate nutrients.• Improvement of Shelf life of Dairy products.• Tamper Proof Packaging of Products.• Development of desi ghee “LivLite” brand containing 85% less cholesterol as compared to the normal ghee marketed across the world.• Consumer acceptance of new Dairy products.

Benefit Derived• Enhanced shelf Life of the Products.• Nutritious and Superior Products have allowed Company to expand its market share.• Creation of a niche market for low cholesterol ghee.

Future plan of action• Invent and develop new present age nutritionally-balanced healthy products. • Foraying in the nutraceuticals market.

Total Foreign Exchange 2013-14 2012-13

Earned And Used:

(i) Earnings 183.45 34.18

(ii) Expenditure* 73.46 9.09

*Foreign Exchange Expenditure incurred on capital goods, raw material, professional fees, capital investments in subsidiary, loan to subsidiary, foreign tour and travel and miscellaneous expenses.

For & on behalf of the Board of Directors Sd/-Place: New Delhi Sanjay DhingraDate: 12th August, 2014 Chairman & Managing Director DIN: 00025376

FOREIGN EXCHANGE EARNINGS & OUTGO:INR in crores

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TManagement Discussion & Analysis

Management Discussion and Analysis detailing the company‘s objectives and expectations is a “forward looking statement “within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or impaired depending upon global and Indian demand, supply conditions, changes in government regulations, tax regimes, economic developments within India and overseas.

Outlook-Structure & Development of Indian Dairy

The dairy industry in India has been on a steady path of progression since Indian independence. Today, India is one of the largest milk producing countries in the world. This solid progress is primarily attributable to structural changes in the Indian dairy industry brought about by the advent of dairy cooperatives.

India is the world’s largest milk producer, accounting for around 17% of the global milk production. Besides, it is one of the largest producers as well as consumers of dairy products. Due to their rich nutritional qualities, the consumption of dairy products has been growing exponentially in the country.

Despite being the world’s largest producer, the dairy sector is by and large in the primitive stage of development and modernization. The sector is plagued with various other impediments like shortage of fodder, its poor quality, dismal transportation facilities and a poorly developed cold chain infrastructure. As a result, the supply side lacks in elasticity that is expected of it.

In India, the dairy sector plays an important role in the country’s socio-economic development, and constitutes an important segment of the rural economy. Dairy industry provides livelihood to millions of homes in villages, ensuring supply of quality milk and milk products to people in both urban and rural areas. With a view to keeping pace with the country’s increasing demand for milk and milk products, the industry has been growing rapidly.

Milk Production and Per Capita Availability in Indian scenerio from 1960 to 2012 is as :

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Quality & Food Safety policy

The company is being an ISO 22000:2005, HACCP-IS: 15000 and Agmark approved company. To produce high-quality international standard milk and dairy products, quality standards for Food Safety is based on Codex Standards for Hazard Analysis and Critical Control Points (HACCP) to ensure safe and quality products for consumers. These control programs are aimed at avoiding abnormal and unsafe milk and dairy products entering into food channels for human consumption.

140

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1960-61 1970-71 1980-81 1991-92 2000-01 2005-06 2007-08 2008-09 2009-10 2010-11 2011-12

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020 22 32

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81

97108 112 116 122

128

Production (million tonnes) Per capita availability grams/day

Trends in Milk Production and Per Capita Availability : 1960 to 2012

Your Company review its quality standards and makes them stringent and updated on regular basis. To compete in International market for export of milk & milk products, it has become necessary to produce the dairy products with internationally acceptable quality and food safety standards. It is an indicator of the Company’s commitment for quality, food safety and maintaining environmental standards.

Segment Wise /product Wise Reporting

The Company is engaged in the dairy business with a wide range of milk products. The details of company’s product segment is as:

Segment Snapshot

Business Description

Product Portfolio1. Fat Based Products (Fat/Butter/Cream/Ghee)

1.1 Pure Ghee

Dairy Best Pure Ghee is produced from fresh milk under hygienic conditions, using modern automated process

Dairy Best Pure Ghee has the “AGMARK” certification from the Ministry of Agriculture, Government of India

The ghee is sold through multiple sales channels to both retail and institutional customers

1.2 Pure Cow Ghee

Kwality’s 100% Pure Cow Ghee is a high value product manufactured exclusively from fresh cow’s milk

The texture of the ghee is granular and is similar to the traditional home-made ghee

Cow Ghee is sold under Dairy Best brand and sold to retail customers

1.3 Low Cholesterol Ghee

The Company recently launched a Low Cholesterol Pure Ghee, Livlite, which contains 85% less cholesterol

‘Livlite’ has been licensed by National Research and Development Corporation (NRDC) to the Company for 10 years (5 years exclusive)

Shelf life of 12 months

The Company has launched aggressive marketing campaigns to position Livlite as a premium FMCG product

2. Milk Powders

Manufactures Whole Milk Powder (‘WMP’), Skimmed Milk Powder (‘SMP’), Dairy Creamer (‘DC’), Dairy Whitener (‘DW’) by segregating the SNF (Solids, Not Fat) from the liquid milk

These products are used for making biscuits, ice creams, sweets and other milk based products

Mainly sold to institutional customers under multiple brands like Good-Health, Kream-Kountry and Dairy Best

3. Curd

Manufactures both set curd and pouched curd

Sold to both dealers/ distributors and retailers

The product is marketed in 1kg, 2kg, 5kg & 15kg matkas, 500gm, 1kg pouches and 80gm, 200gm & 400gm cups.

4. Milk

Derives 74.24% of its revenues by selling milk in various forms – full cream milk, Skimmed Milk, Toned Milk, Double Toned Pasteurized Milk

After extracting the fat content from the full fat milk to produce pure ghee, the Company either manufactures Skimmed Milk Powder from the remaining skimmed milk or sells the skimmed milk as it is depending on market demand

As milk is a perishable product, the sale of skimmed milk is significantly dependent on the immediate market demand for both skimmed milk and Skimmed Milk Powder

Risk and concerns

The major risk and concerns attributed to the performance of the company are:

a) Although the export sales are less in comparison to domestic sales, fluctuation in the foreign rates, international prices of dairy products and withdrawal of export benefits may influence the performance of the company.

b) Increase in input costs, change in tax structure ,change in interest rates ,change in Government polices /laws of land , development and stability of Indian economy against the negative external and internal forces may also impacts the overall performance of the company.

c) Profitability may be affected on account of competition from existing and prospective manufacturers of the company’s products.

d) Dairy business is primarily influenced by monsoon. Unfavorable monsoon may affect the milk availability.

e) Spread of animal disease may effect the production of milk.

Growth Factors

The Company has to take care of those factors that helps it to grow its business operations. Some of them are as follows:

Adequacy of Internal Control System

The company believes in sound internal control systems as a necessary prerequisite of good governance in which management authority should be exercised within a framework of appropriate checks and balances. The internal control system of the Company are commensurate with its size and nature of operations They have been designed to provide reasonable assurance with regard to recording and providing reliable financial information, complying with applicable statutes, safeguarding of assets from unauthorized user or losses, authorization of transactions and adherence to corporate policies.

The internal controls are duly checked for their adequacy by carrying out regular and exhaustive internal audits. The Company has appointed firm of Chartered Accountants to carry out the internal audit of the Company various Divisions. The audit is carried out through an internal audit plan, which is reviewed each year in consultation with the Audit Committee which reviews of adequacy of internal control checks in the system and covers all significant areas of Company operations.

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1. Corporate Governance :Effective Corporate Governance practices constitute a strong foundation on which successful commercial enterprises are built to last.

Your Company’s philosophy on the Corporate Governance is based on fairness, accountability, disclosure, transparency, value and ethics. Sound and effective Corporate Governance practices enabled it to achieve the sustainable growth and meet the expectations of the stakeholders.

Your Company is committed to follow the best Corporate Governance Practices in all its pursuits and is constantly striving to better them and adopt emerging best practices. Comprehensive disclosures, structured accountability in exercise of powers, adhering to best practices and commitment to compliance with regulations have enabled your Company to enhance shareholder value. In fact, this has become an integral part of the way the business is done. The governance practices followed by your Company are continuously reviewed and the same are benchmarked with the best governed companies. The Company is in compliance with the requirements stipulated under clause 49 of the Listing Agreement entered into with Stock Exchange with regard to Corporate Governance.

2. Board of Directors:-The Board of Directors is the governing body of the Company and holds the ultimate responsibility for the success or failure of the Company. The Board formulate the strategies to be followed to be successful in achieving the goals and objectives of the Company.

The composition of the Board is to have an appropriate mix of Executive and Non- executive Independent Directors to maintain the independence of the Board and to separate its functions of governance and management.

The Board of Directors possess the requisite qualification, knowledge and experience which enables them to provide effective leadership to the business. The Board is at the core of the corporate governance practice and overseas how the management serves and protects the long term interest of all the stakeholders.

Composition of the Board:

The Composition of Board of Directors is in conformity with clause 49 of the Listing Agreement, which stipulates that atleast 50% of the Board shall consist of Independent Directors, if the chairman of the Board is an Executive Director.

As on 31st March, 2014 the Board comprised of 4 (four) Directors. Out of these, two are Executive Director, including the Chairman & Managing Director and two are Non- Executive & Independent Directors.

All the Directors possess the requisite qualification and experience in Management, finance, banking and other allied fields enabling them to contribute effectively in their capacity as Directors of the Company.

The name and categories of the directors on the Board, their attendance at the board meeting held during the year, attendance at the last Annual General Meeting of the members of the company, the number of directorship and committee chairmanship/membership held by them in other companies is given below:

I Composition and categories of Board of Directors as on 31st March, 2014

Name of the Director Category Designation

Mr. Sanjay Dhingra Executive Director Chairman & Managing Director

Mr. Sidhant Gupta Executive Director Executive Director

Mr. Arun Srivastava Non-Executive-Independent Director

Non-Executive-Independent Director

Director

DirectorDr. Rattan Sagar Khanna

None of the Directors on the Board is a member of more than 10 Committees and Chairman of more than 5 Committees as specified in Clause 49 of the Listing Agreement, across all the companies in which he is a director. The Directors have made the necessary disclosures regarding Committee positions.

II. Attendance of Each Director at the Board Meetings and the Previous Annual General Meeting

Name of the DirectorNo. of Board Meeting Attendance at the previous

AGM held on 30.09.2013

Mr. Sanjay Dhingra Yes

Mr. Sidhant Gupta Yes

Mr. Arun Srivastava

Yes

Yes

Dr. Rattan Sagar Khanna

Held Attended

10 10

10 10

10

1010

10

III. Number of Board/Committees of which a Director is a member or chairman as on 31st March, 2014

IV. Date of the Meetings of the Board of Directors

During the Financial Year 2013-14 the Board met ten times. The dates of the meetings are as under:

Date of Board Meetings

17.05.2013 05.07.2013 14.08.2013 23.09.2013

10.11.2013 30.12.2013 25.01.2014 14.02.2014

13.03.2014 24.03.2014

Director's ProfileSanjay Dhingra (DIN : 00025376)

Kwality Limited is managed by a Board of Directors headed by Shri Sanjay Dhingra. He has rich experience over two decades in diversified activities such as Manufacturing, Trading & International Marketing in the FMCG sector. He has led the group's activities from the front. It is his visionary attributes that has manifested in the expansion of the business and enlargement of the value chain both in upstream and downstream sectors.

His business acumen combined with his grass root level exposure in the FMCG Industry has been instrumental in making Kwality limited one of the fastest growing companies in the Dairy Sector. Under his able leadership the company has successfully established itself as a dominant player in the dairy industry in the country. The company has crossed a remarkable figure of Rs. 4578 Crs. of turnover for financial year 2013-2014.

Shri Dhingra was felicitated by Hon'ble Union Finance Minister Mr. Pranab Mukherjee (currently our Hon'ble President) for being a successful, self-made industrialist and for his immense contribution to the Dairy sector.

Sidhant Gupta (DIN : 00555513)

Shri Sidhant Gupta was appointed on the Board of Directors of the Company on April 18, 2011. He is responsible for growth and strategic planning for the Company. A Management Graduate in Finance from one of the reputed college Shri Venkateswara College, University of Delhi, India.

Shri Sidhant Gupta has been instrumental in bringing about technological and managerial excellence in the Company's operations. His rich experience, expertise in business management and foresightedness has been instrumental in elevating Kwality Limited to its current position wherein the Company has seen fresh growth perspectives including the initiative to incorporate foreign subsidiary, expand the company's global footprint and tap various international markets with tremendous growth in terms of both top-line and bottom-line.

He brought about radical changes, implemented business strategies, removed lacunas of internal system and enhanced the group's value by launching new dairy products. A person of strong will and focused mind, he has been instrumental in bringing about coherency in operation matters leading to better efficiencies all around including optimum fund building and utilization.

Dr. Rattan Sagar Khanna (DIN : 03073914)

Dr. Rattan Sagar Khanna did his M.Sc. (Hons) from Punjab Agri University. He is Diploma holder in Semen Freezing Gynecology & Andrology from Royal Veterinary and Agriculture University, Copenhagen, Diploma in Farm & Science Journalism from Institute of Farm & Science Journalism, New Delhi. Over 35 years, he has worked at senior positions in Dairy, Farming and in Agriculture Sector in the areas of manufacturing, consulting and marketing. He has joined the Board of Kwality Limited in May 2010.

Dr. Khanna is presently the trustee of M/s Ganesh Scientific Research Foundation New Delhi, Consultant of Namastey India Foods, Kanpur, Council Member and Consultant of Gerson Lehrman Group, New York, USA, Vice Chairman & Consultant of Centre for Institute of Animal Husbandry and Dairy Development, Noida, Member, Research Advisory Council, World Buffalo Trust, Noida.

In the past, Dr. Rattan Sagar Khanna has served, among others, as a Member & Chairman of various Dairy Associations including Consultant of Department of Animal Husbandry, Fisheries & Veterinary Services, Chief Executive Officer Animal Feeds Business in Dabur Ayurved Limited., Advisor to the GCMMF, General Manager in Gujrat Co-operative Milk Marketing Federation, New Delhi, Managing Director of Rajasthan Cooperative Dairy Federation, Jaipur, Resident Representative (Northern Region) of National Dairy Development Board, New Delhi, and Head (Projects) of Indian Dairy Corporation, Baroda.

He has been providing his valuable inputs on major initiatives taken by the Company as well as the technologies introduced in the Company. He is actively involved in introduction and launch of our anchor Brand “Dairy Best - Livlite”. Dr. Khanna has also extended his expertise in implementation and establishment of collection centres and MCC's of the Company.

As an investor protection activist and proponent of good corporate governance, Dr. Khanna has been the guiding force in company's CSR initiatives. An old war horse in Dairy Business, his experience has been a valuable asset for the company.

Arun Srivastava (DIN : 01121929)

Shri Arun Srivastava joined the Board of Kwality Limited on 25th June 2003. He brings to the Board an extensive experience of Financial

Name of the DirectorNo. of Directorship held

in other CompaniesNumber of Committee Memberships

held in other public companies

Mr. Sanjay Dhingra Nil2

Mr. Sidhant Gupta NilNil

Mr. Arun Srivastava Nil1

NilNilDr. Rattan Sagar Khanna

Modeling and Resource Mobilisation. A commerce graduate by profession, Shri Arun's endeavors, valuable inputs and consultation to the Board helps in managing complex banking products required in the international trade to ensure the safety of the material and the cash register of the Company.

He has been serving on various committees of Board and helping the Company in its smooth operations. He brings in corporate finance and transaction experience to the Company and with consulting and liasoning background he remains the trouble shooter for the Company vis-à-vis clients and lenders and ensure smooth execution of mandated deals.

None of the Non-Executive Directors of the Company has any material pecuniary relationship or transaction with the company.

The Board meets at regular intervals and a detailed agenda is send to each director prior to the Board and committee meetings. During the Financial Year 2013-2014, ten Board meeting were held and the gap between two meetings did not exceed four months.

3. Board Committee’sTo enable better and more focused attention on the affairs of the Company, the board delegates particular powers to committees of the directors set up for the purpose.

Currently, the Board has 6 (Six) Committees i.e. Audit Committee, Remuneration, Compensation & Nomination Committee, Share Transfer Committee, Stakeholders Relationship Committee, Management Committee and Corporate Social Responsibility Committee. The quorum for meetings is either two members or one-third of the members of the committee, whichever is higher. The composition, scope of work, numbers of the total meetings held during the financial year 2013-14 are as under:

1. Audit Committee:

The Audit Committee covers the areas as contemplated under Clause 49 of the Listing Agreement, Section 177 of the Companies Act, 2013 and Section 292A of the Companies Act 1956, besides other terms as may be referred by the Board of Directors. Statutory Auditors and Internal Auditors were regular invitees to the committees meeting.

I. Composition of Audit Committee:

The Audit Committee comprised of 3 (three) Directors. Out of these, two are Non-Executive & Independent Director and one Executive Director. All of whom are financially literate and they have accounting or related financial management expertise.

The Company Secretary acts as Secretary of the Committee.

II. Scope/term of reference of Audit Committee:

The terms of reference/power of the Audit Committee has been specified by the Board of Directors in consonance with Section 177 of the Companies Act, 2013 and Section 292A of the Companies Act 1956 and Clause 49 of the Listing Agreement, which inter alia includes.

1) Oversight of Company's financial reporting process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

2) Reviewing with the management the quarterly and annual financial statements before submission to the Board of Directors focusing primarily on:

I) Any changes in accounting policies and practices.

ii) Major accounting entries based on exercise of judgment by management.

iii) Significant adjustments arising out of audit.

iv) Compliances with Stock Exchanges and legal requirements concerning financial statements.

v) Any related party transaction i.e. transaction of the Company of material nature, that may have potential conflict with the interest of the company at large.

3) Reviewing with the management, statutory and internal auditors, the adequacy of internal control system.

4) Recommending the appointment and removal of statutory auditors, and terms of remuneration.

5) Discussing with the internal auditors any significant findings and follow-up thereon.

6) Discuss with the statutory auditors before the audit commences, about the nature and scope of audit as well as post audit discussion for area of concern.

7) Reviewing the company's financial and risk management policies.

8) Carrying out such other function as may be specifically referred to the committee, by the Board of Directors.

Minutes of Meeting of Audit Committee are circulated in the Board meeting.

III. Dates of Audit Committee Meetings are as follows:

During the Financial Year 2013-14 the audit committee met 10 (Ten) time. The date on which meeting of the Audit Committee held are as under:

Name of Director Category

No. of Meeting Attended

Mr. Arun Srivastava Non-Executive-Independent Director

Mr. Sidhant Gupta Executive Director

Dr. Rattan Sagar Khanna

No. of Meeting Held

10

10

10

10

10

10

Non-Executive-Independent Director

17.05.2013 05.07.2013 14.08.2013 23.09.2013 10.11.2013

30.12.2013 25.01.2014 24.03.201412.03.201414.02.2014

2. Remuneration, Compensation and Nomination Committee

The Board has constituted a Remuneration, Compensation & Nomination Committee in terms of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement to make recommendation on Directors' appointment to the Board, appointment to the Management Committee and the senior most level of executive management below the Executive Director, review and approve the annual salaries, commission, service agreement and other employment conditions for Executive Directors.

The Remuneration, Compensation & Nomination Committee has been constituted to formulate the criteria for determining qualifications and independence of Directors and to recommend/review the remuneration of Managing Directos/Whole Time Director and employees of the Company. The remuneration policy is directed towards rewarding performance base on review of achievements on a peridical basis. The remuneration policy is in consonance with industry practice.

The Remuneration policy of the Company for employees is based on the performance of the individual and performance of the Company. The policy aims at attracting and retaining high calibre talent and ensures equity, fairness and consistency inrewarding the employees.

The annual variable pay of senior managers is linked to the Company's performance in general and the performance of their functions/business units for the relevant year and is measured against specific major performance areas which are closely aligned to the Company's objectives.

The Committee is also responsible to formulate the ESOP Scheme and to discharge all the function of the compensation committee under Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

I. Composition of Remuneration, Compensation and Nomination Committee

3. Management/ Executive Committee

The Management Committee was constituted on November 10, 2011 by the Board to manage the day to day business and operations of the company and to improve the efficiency. The terms of reference of the Management Committee is to consider and dispose of any day to day matters, with a view to ensure smooth operation and timely action/compliances. The Committee meets at frequent intervals and disposes matters which are of routine and day to day operations.

I. Composition and numbers of meeting held of Management Committee:

The Management committee comprised with four members, Mr. Sanjay Dhingra (Managing Director), Mr. Sidhant Gupta (Executive Director), Mr. Rajesh Verma (Vice President International Trade) and Mr. Manjeet Singh Dahiya (Vice President Technical).

Name of the Director Category No. of Meeting Held

Mr. Sanjay Dhingra 13 13

13 11

13 11

13 13

Chairman & Managing Director

Mr. Sidhant Gupta Executive Director

Mr. Rajesh Verma VP-International Trade

VP-TechnicalMr. Manjeet Singh Dahiya

No. of Meeting Attended

08.04.2013 06.05.2013 12.06.2013 05.07.2013

03.08.2013 03.09.2013 04.10.2013 04.11.2013 05.12.2013

13.03.2014

10.01.2014 15.01.2014 13.02.2014

II. During the year, thirteen meetings of the committee were held:

The Details of Remuneration during the year ended 31st March, 2014 as follows:-

Gross Remuneration Sitting Fees TotalName

Mr. Sanjay Dhingra (Managing Director)

1,30,20,000 1,30,20,000

Mr. Sidhant Gupta (Executive Director) 1,00,00,000 1,00,00,000

-

-

During the Financial Year 2013-14 the committee met 1 (one) time on 11.7.2013 at which all the members of the committee were present.

Name of Director Category

Mr. Arun Srivastava

Mr. Sanjay Dhingra Chairman & Managing Director

Mr. Sidhant Gupta Executive Director

Non-Executive-Independent Director

Dr. Rattan Sagar Khanna Non-Executive-Independent Director

II. The Terms of Reference of The Stakeholders Relationship Committee are as under:

• Review complaints of shareholders and action taken thereon.

• Look into all securities filing every quarter.

• Monitor implementation and compliances of company's Code of Conduct.

• As the Securities and Exchange Board of India has introduced a new system for the registration & redressal of investors complaints online popularly known as SCORES (SEBI Complaints Redress System). The committee periodically review the complaints registered in SCORES.

III. Details of meeting held and attended by members for financial year 2013-2014 are given below:

Name of the Director Categories Chairman/Member

Dr. Rattan Sagar Khanna Member

Member

Member

Non-Executive-Independent Director

Non-Executive-Independent Director

Mr. Sidhant Gupta Executive Director

Mr. Arun Srivastava

4. Stakeholders Relationship Committee

The Board has constituted a Stakeholders Relationship Committee to specifically look into redressal of shareholder's and investor's grievances such as transfer, dividend, demat and related matters.

The Stakeholders Relationship Committee has been constituted as per the provisions of Section 178 of the Companies Act, 2013 and Listing Agreement. The Company Secretary acts as Compliance Officer for the purpose of Stakeholders Relationship Committee.

I. Composition of the Stakeholders Relationship Committee

Name of the Director

Dr. Rattan Sagar Khanna

No. of Meeting Held No. of Meeting Attended

4

4

4

4

4

Mr. Sidhant Gupta 4

Mr. Arun Srivastava

IV. Date of the Meetings

17.05.2013 14.08.2013 10.11.2013 13.03.2014 V. Status Report of investor's complaint/ request for the year ended 31st March, 2014

• Number of Complaint/request Received- 12

• Number of Complaint/request Resolved- 11

• Number of Complaint/request Pending - 01

5. Share Transfer Committee

Share Transfer Committee was constituted as per the requirement of listing agreement and agreement with RTA for approval and registration of transfer. The terms of reference of the Share transfer Committee is to approve transfer and transmission of shares and to approve Sub-division, Consolidation and issue of new/duplicate share certificates, whenever requested for by the shareholders of the company.

The committee consists of Dr. Rattan Sagar Khanna, Mr. Arun Srivastava and Mr. Sidhant Gupta. The Share Transfer Committee meets on fortnightly basis and review, monitor the responsibility of Share Transfer Agents and review all the matters connected with shares. All valid requests for share transfer received during the year have been acted upon and no such transfer is pending.

I. Composition of the Committee

Name of the Director Category No. of Meeting Held

Dr. Rattan Sagar Khana 36 36

36 33

36 36

Mr. Sidhant Gupta Executive Director

Mr. Arun SrivastavaNon-Executive-

Independent Director

Non-Executive-Independent Director

No. of Meeting Attended

II. Date of the Committee Meetings:During the financial year 2013-14 the members of the committee met 36 (Thirty Six) times. The detail of the same is as under:

Role of Corporate Social Responsibility Committee is as follows:

1) Medical and health welfare facilities for the villagers including their animals

2) Initiative in education specially for girl children including contributions for schools, scholarships or grants for higher education etc.

3) Empowerment of the women of the village by forming of Women Self Help Group and taking steps in providing them training in vocational activities, carrying out micro business activities etc. including educating them on women and child welfare, cleaniness and financial inclusion.

4) Helping the villagers in getting loans for animals, vehicles or even construction of pucca loan by tying up with banks.

5) Covering insurances of the villagers including medical, personal accident and animal insurance

6) Acting as an agent for villagers to help them in getting the benefits in the form of subsidiaries etc. from State and Central Government.

7) Other activities for the upliftment, providing education and employment and welfare of the villagers.

Name, Designation and Address of Compliance Officer:

Ms. Deepa Kapoor

Compliance Officer

KDIL House

F-82, Shivaji Place, Rajouri Garden,

New Delhi-110027

Ph: 011-47006500 (100 lines)

7. Code of Business Conduct and Ethics for Directors and Senior Management:

Your Company has adopted a comprehensive code of conduct for its Board Members and Senior Management Personnel of the Company as per the requirement of Clause 49(1) (D) of the Listing Agreement. The Board Members and Senior Management Personnel have affirmed their compliance with the said code of conduct. The code of conduct has been posted on the website of the Company. The declaration to this effect signed by Mr. Sanjay Dhingra, Chairman & Managing Director of the Company forms part of the report.

8. Annual General Meetings: The Last three Annual General Meeting of the company were held as under

08.04.2013 20.04.2013 30.04.2013 07.05.2013 21.05.2013 30.05.2013

05.06.2013 14.06.2013 29.06.2013 08.07.2013 20.07.2013 29.07.2013

10.08.2013 14.08.2013 21.08.2013 02.09.2013 20.09.2013 30.09.2013

09.10.2013 21.10.2013 30.10.2013 09.11.2013 20.11.2013 30.11.2013

07.12.2013 14.12.2013 27.12.2013 10.01.2014 23.01.2014 31.01.2014

07.02.2014 18.02.2014 28.02.2014 04.03.2014 14.03.2014 28.03.2014

6. CSR Committee

The Board has constituted Corporate Social Responsibility Committee to formulate and recommend the Corporate Social Responsibility Policy and to undertake the CSR activities.

Composition of the Corporate Social Responsibility Committee is as follows:

Name of the Director Category No. of Meeting Held

Mr. Sanjay Dhingra

Dr. Saraswat

Mr. Rajinder Singh

Mr. Sunit Shangle

Mr. Sidhant Gupta Executive Director

Dr. Rattan Sagar KhannaNon-Executive

Independent DirectorHead procurement-New Business Development

Head Procurement-U.P.

V.P. Finance

Executive Director 2

2

2

2

2

2

2

2

2

2

2

2

2

2

No. of Meeting Attended

Year Date Time Location Lavanya, G.T. Karnal Road,

Palla Bakhtavarpor Mord, Alipur, Delhi-110036

Village Softa, Tehsil & District Palwal, Faridabad, Haryana

Village Softa, Tehsil & District Palwal, Faridabad, Haryana

2012-2013

2011-2102

30.09.2013

28.09.2012

9:30 A.M.

10 A.M

2010-2011 26.09.2011 11 A.M

Mrs. Pushplata TripathiManager - Training and Development

10. Postal Ballot:

The Company has sought approval of the Members, through Postal Ballot as per Section 110 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 for the following resolutions:

(I) Grant of Employee Stock Options to the employees of the Company under “Kwality Employee Stock Option Plan 2014".

(ii) Grant of Employee Stock Options to the employees of the Subsidiary Companies of the Company under “Kwality Employee Stock Option Plan 2014".

(iii) Approval for extension of job work already executed with M/s Pashupati Dairies Private Limited and approval for taking land, building, plant & machinery including godown on lease from M/s Pashupati Dairies Private Limited.

Mr. Mukun Arora of M/s Mukun Vivek & Company, Company Secretaries in practice, was appointed as the Scrutinizer for conducting the Postal Ballot process. Based on the Scrutinizer’s Report the Result of Postal Ballot was declared on July 7, 2014 at the Registered Office of the Company, as follows:

Date Time Location

12.06.2013 9 A.M. Village Softa, Tehsil & District Palwal, Faridabad, Haryana-121004

Following Special Resolutions were passed at AGM held in 2010-2011:

• Appointment of Executive Director for five years pursuant to Section 269, 198, 309, 310 & Schedule XIII of the Companies Act 1956, on the remuneration as approved by remuneration committee

• In pursuant to Section 269, 198, 309, 310 & Schedule XIII of the Companies Act 1956, the remuneration of Managing Director has been increased with prior approval of the members at the meeting.

• Issuance of ADRs / ADs / GDs / FCCBs / QIBs or any other securities

9. Extra-Ordinary General Meeting (EGM):

An extra ordinary General Meeting of the members of the company was held on 12th day of June, 2013 to transact the following businesses:

I. To fill casual vacancy caused due to resignation of M/s Walker Chandiok & Co.

II. To increase the borrowing power of the Company from 1500 cr. to 3000 cr.

III. To Change the name of the Company

Resolutions No. of validvotes polled

231

Votes in favour of the Resolution

15,23,22,984

Votes in against of the Resolution

17,834

Result (%)

99.98

225 1,41,526 12,038 84.56

Procedure for the Postal Ballot Process:

After receiving the approval of the Board of Directors, notice of the Postal Ballot, text of the resolution and explanatory statement, relevant documents, Postal Ballot Form and self-addressed postage pre-paid envelopes are sent to the shareholders to enable them to consider and vote for or against the proposal within a period of 30 days from the date of dispatch. Members are also given an option to vote in electronic form using e-voting facilities provided by Central Depository Services Limited (CDSL). The calendar of events containing the activity chart was filed with the Registrar of Companies within 7 days of the passing of the Resolution by the Board of Directors of the Company.

After the last date for receipt of the ballots, the Scrutinizer after due verification, submitted his report to the Chairman of the Board of Directors of the Company. Thereafter, the Chairman declares the result of the Postal Ballot. The same is published in the Newspapers and displayed on the website and the Notice Board at the registered office of the Company.

11. DISCLOSURE

(I) Disclosure on materially significant Related Party Transactions:

In terms of Accounting Standards 18, details of transactions with related parties transactions have been reported in the Notes to Accounts, which form part of this Annual Report.

None of the transactions of Company of material nature, with its promoters and their relatives, the directors or the management and their relatives or any other related parties were in conflict with the interest of the Company.

(ii) Disclosure on non-compliance on any matter related to capital markets during the last three years:

A Settlement fees of Rs. 3 Crore has been paid to SEBI for obtaining permission authorizing listing of shares allotted to erstwhile promoters in the year 2000.

Special Resolution for approval of ESOP Plan under Section 62(1)(b) read with the applicable rules of the Companies Act, 2013 and SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999

Special Resolution under Section 188 read with the applicable rules of the Companies Act, 2013 authorizing the Board to extend the Job Work Agreement for further period of 2 months with M/s Pashupati Dairies Private Limited and further to enter into Lease Agreement with M/s Pashupati Dairies Private Limited

(iii) Disclosure of Accounting Treatment

There has not been any significant change in the accounting policies during the year.

(iv) Board disclosures- Risk Management

As the Company operate in extremely complex and dynamic environment, which exposes your Company to various internal and external risks. Risk identification, assessment and mitigation assume paramount importance for the efficient & uninterrupted operations of the Company. The Company has put in place Risk Management Policy and Procedures for assessing, timely responding and mitigating these risks on continuous basis.

12. THE COMPANY HAS COMPLIED WITH ALL MANDATORY REQUIREMENTS AND HAS ADOPTED NON-MANDATORY REQUIREMENTS AS PER DETAIL GIVEN BELOW:

(i) Shareholder Rights

Quarterly and Annual Financial Results of the company are published in leading newspapers and also displayed on website of the company i.e. www.kdil.in. The results are not separately circulated to the shareholders.

(ii) Training to Board Members

At Present the company does not have such a training programme for the Board members..

(iii) Mechanism for evaluating non-executive Board members

The company has not adopted any mechanism for evaluating Non-Executive Directors.

(iv) Whistle blower policy

The Company has adopted a whistle blower policy to provide a formal mechanism to the employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The policy provides for adequate safeguards against victimisation of employees who avails of the mechanism and also provides for direct access to the chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

13. MEANS OF COMMUNICATION

a) Stock Exchange Intimation: The unaudited quarterly financial statements are announced within forty-five days of the end of each quarter and the audited annual results are announced within 60 days from the end of the last quarter. The aforesaid financial statements after being taken on record by the Audit Committee and Board of Directors, are communicated to the Stock Exchanges where the shares of the Company are listed

b) Newspapers: The financial results of the company (Quarterly & Annual) are published in leading newspapers viz The Financial Express, Jan Satta, Business Standard and Economic Times in the format prescribed under Clause 41 of the Listing agreement with the stock exchanges where the shares of the Company are listed.

c) Website: The financial results are also posted on the Company’s Website www.kdil.in to inform and service the Shareholders allowing them to access information at their convenience.

Management Discussion and Analysis report has been attached to the Director's Report and forms part of this Annual Report.

General Shareholder Information 1) 22nd Annual General Meeting : Date: 24th September, 2014 Time: 9:30 a.m. Venue: Lavanya, G.T. Karnal Road, Palla Bakhatavarpur Mord, Alipur, Delhi-1100362) Financial Calendar The Financial year covers the period from 1st April to 31st March. Key financial Reporting Dates for the Financial Year 2014-20153) Date of Book Closure

The Register of Members and Shares Transfer Register of the Company shall be closed from 17th September 2014 to 24th September 2014 (both days inclusive).

1st Quarter ending on 30-06-2014

2nd Quarter ending on 30-09-2014

3rd Quarter ending on 31-12-2014

4th Quarter ending on 31-03-2015

On or before August 15, 2014

On or before November 15, 2014

On or before February 15, 2015

On or before May 15, 2015 or if audited on or before May 30, 2015

4) Dividend payment Date

The dividend as recommended by the Board of Directors, if declared at this Annual General Meeting will be paid within 30 days of declaration

5) Listing on Stock Exchange

Equity share of the Company are currently listed on Bombay Stock Exchange Limited & National Stock Exchange of India Limited. The Company has paid the annual listing fees for the year 2014-15.The Company is listed with the Symbol KWALITY and the

ISIN –INE775B01025.

6) Script Code

BSE- 531882

NSE- INE775B01025

Behind Local Shopping Centre, Near Data

Harsukhdas Mandir,

New Delhi-110062

Phone no.: 91-11-29961281-83

Fax: 91-11-29961284

Email: beetal@beetalfinancial.com

9) Share Transfer System

With a view to expedite the process of share transfers, Share Transfer Committee was constituted as per the requirement of listing agreement and enter into an agreement with RTA for approval of transfer. The Share in physical mode received for transfer is transferred expeditiously subject to completion of appropriate regulatory formalities. Confirmation in respect of the request for Dematerialization of the shares is expeditiously sent to the respective depositories i.e. NSDL and CDSL.

10) Unclaimed Dividend

Dividend which remains unclaimed or unpaid for a period of 7 years for the date of declaration shall be transferred to the Investor Education and Protection Fund (IEPF) in terms of Section 124 of the Companies Act, 2013 and the rules made thereunder. However the Company declares dividend from the financial year 2008-09, no dividend remains unpaid or unclaimed for a period of 7 year from the date of declaration of dividend and thus the Company is not required to transfer any amount to the Investor Education and Protection Fund.

11) Distribution of Shareholding as on 31st March 2014.

7) Market Price Data and Performance In Comparison to Index

The High & Low of Share Price of the Company during each month in last financial year at BSE were as under:

(Face value of each share is Re. 1)

8) Registrar and Share Transfer Agents

Beetal Financial & Computer Services (p) Ltd.

Beetal house, 3rd Floor, 99 Madangir,

Month High (Rs) Low (Rs)

April 2013

May 2013

June 2013

July 2013

August 2013

September 2013

October 2013

November 2013

December 2013

January 2014

February 2014

March 2014

32.00 26.00

36.65 27.50

29.50 23.75

29.00 23.05

25.65 23.25

30.60 23.65

29.95 18.00

29.05 25.00

31.20 26.60

35.80 28.50

40.25 32.05

34.60 29.25

Volume (No.)

8,08,349

21,08,595

11,20,670

16,74,723

15,25,958

14,72,819

24,40,422

17,49,139

19,80,200

26,01,110

21,48,224

11,63,655

No. of Shares

No. of Shareholders

No. of Equity Shares

Total

% of ShareHolder

Total

% of Share Capital

1-5000 6.03071,22,53,51996.0718,871

5001-10000 1.456529,59,4642.29449

10001-20000 1.005720,43,4270.72142

20001-30000 0.666013,53,1760.2754

40001-50000 0.48729,89,9610.1122

50001-100000 1.203124,44,5910.1632

100001 & above 88.796218,04,21,8530.2651

30001-40000 0.35467,20,4430.1121

12) Shareholding Pattern

The Shareholding pattern as on 31 March, 2014:

Category No. of Share held Percentage of shareholding

A

1

A

B

C

D

E

2

A Individual(NRI/Foreign Individual)

B

C

D

B

1

a

Foreign Institution Investors

Central Govt./ State Govt. d

Venture Capital Fund e

Insurance Company f

Foreign Venture Capital Investor g

Any Other (Trust) h

Sub Total 8,52,132 0.42

Non – Institutional Investor

Body Corporate 94,06,254 4.63a

Individual 3,99,55,383 19.66

Any Other(Specify)

1. NRI 2,37,097 0.12

2. Foreign National

3. Hindu Undivided Family 3,84,263 0.19

4. OCB

5. Clearing Members 1,95,591 0.10

6. Trust

Sub Total 5,01,79,588

Total 5,10,31,720

Grand Total 20,31,86,434

Shareholding of Promoter & Promoter Group

Indian

Individual/HUF

Central Govt./ State Govt.

Bodies Corporate

Financial Institutions/ Banks

Any Other

Sub Total

Foreign

Bodies Corporate

Institutions

Any Other

Total

Public Shareholding

Institutions

Mutual Funds/UTI

15,21,54,714

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

1000

15,21,54,714

15,21,54,714

74.88

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

74.88

74.88

75,759 0.04Financial Institution /Banks b

c

24.70

25.12

100.00

2

b

c

7,76,373 0.38

13) Detail of Directors seeking appointment/re-appointment at the forthcoming Annual General Meeting

14) Dematerialization of Equity Shares and Liquidity

The trading of shares of the company are in compulsory demat and are available for trading in the both depositary system, i.e. NSDL and CDSL. As on 31st March 2014¸ 96.43% of the Company's total listed capital representing 19,59,26,730 share were held in dematerlizated form and the balance 3.57% comprising 72,59,704 shares were held in physical form.

Under the depositary system, the International Securities Identification Number (ISIN) allotted to the company is INE775B01025.

15) Outstanding ADR's/GDR's /Warrants/ Convertible Instruments

Not Applicable

16) Registered Office 17) Plant Location (Owned)

Kwality Limited Village Softa, Tesil & Distt. Palwal,

KDIL House, F-82, Shivaji Place Faridabad, Haryana-121004

Rajouri Garden Bakra Mandi, Ajmer, Rajasthan, Village

New Delhi - 110027 Kumarherha, NH-73, Saharanpur, U.P.

CIN : L74899DL1992PLC255519 Village Mumrejpur, Dibai, Bulandsaher, U.P.

18) Address for correspondence 19) Any Shareholder complaint/queries may be addressed to:

The Company Secretary Beetal Financial & Computer Services Private Limited

Kwality Limited, Beetal house, 3rd Floor, 99 Madangir,

KDIL House, F-82, Shivaji Place, Behind Local Shopping Centre, Near Data

Rajouri Garden, Harsukhdas Mandir, New Delhi-110062

New Delhi-110027. Phone no.: 91-11-29961281-83,

Tel No: 011-47006500 Fax: 91-11-29961284,

Fax No: 011-25191800, Email: beetal@beetalfinancial.com

E-Mail: Investor@kdil.in,

Website: www.kdil.in

Name of the Directors Mr. Arun Srivastava Dr. Rattan Sagar Khanna Mr. Sanjay Dhingra

Date of Birth

Relationship with other Directors Inter-se

None None None

03rd April, 1968 12th April, 1945 12th October, 1970

Qualification

Date of Appointment

Expertise in specific functional area

Dairy, Farming and in Agricultre Sector

Vast experience in dairybusiness

Graduate GraduateM.Sc. (Hons) from Punjab Agri University, Diploma in Semen Freezing Gynecology & Andrology from Royal Veterinary and Agriculture University, Copenhagen and Diploma in Farm & Science Journalism form Institute of Farm & Science Journalism, New Delhi

25th June, 2003 18th May, 2010 18th June, 2003

Expertise in Financial Modeling & Resource Moblisation

Directorship held in otherCompanies as on date.

NIL Kwality Dairy InvestmentsPvt. Ltd.

DELTA AGROTECH PRIVATE LIMITED

NIL

NIL

NIL

NIL

NIL

152,154,714

Chairman/Member of the committee of the Director of the other companies in which he is a director as on 31 March 2014

Number of Shares held in the Company

Chairman/Member of the committee of the Board of Directors of the Company as on 31 March 2014

• Chairman of Audit Committee• Member of Remuneration, Compensation & Nomination Committee• Member of Stakeholders Relationship Committee• Member of Share Transfer Committee

• Member of Audit Committee• Member of Remuneration, Compensation & Nomination Committee• Member of Stakeholders Relationship Committee• Member of Share Transfer Committee• Member of Corporate Social Responsibility Committee

• Member of Remuneration, Compensation & Nomination Committee• Member of Management Committee• Member of Corporate Social Responsibility Committee

Certificate by the Chief Executive Officer on compliance with the condition of Corporate

Governance under Clause 49 of the Listing Agreement

The Board of Directors

Kwality Limited

We hereby certify that for the Financial Year 2013-14

1 We have reviewed the financial statements and the cash flow statement and that to the best of our knowledge and belief :

a. These statement 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 law and regulations.

2. There are no transactions entered into by the Company during the year which are fraudulent, illegal or violate the Company’s code of conduct to the best of our knowledge and belief.

3. We accept responsibility for establishing and maintaining internal controls for the financial reporting and that we have evaluated the effectiveness of internal control system of the Company and we have disclosed to the auditors and the audit committee those deficiencies, of which we are aware, in the design or operation of the internal control systems and that we have taken the required steps to rectify these deficiencies.

4. We further certify that:-

a. There have been no significant changes in internal control during this year.

b. There have been no significant changes in accounting policies during this year.

c. There have been no instances of significant fraud of which we have become aware and the involvement therein of management or an employee having a significant role in the Company’s internal control system.

Sd/-

Place: New Delhi Sanjay Dhingra

Date: 14.07.2014 Chairman & Managing Director

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENT

As per the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company has laid down a code of conduct for its Board of Directors and Senior Management.

Mr. Sanjay Dhingra, Managing Director of the Company confirm the compliance of this code of conduct by myself and other members of the Board of Directors and Senior Managerial Personnel affirmed by them individually, for the year ended 31st March, 2014.

Sd/-

Place: New Delhi Sanjay Dhingra

Date: 14.07.2014 Chairman & Managing Director

AUDITOR’S CERTIFICATE UNDER CLAUSE 49 OF THE LISTING AGREEMENTS

COMPLIANCE CERTIFICATE

To The Members,

Kwality Limited

We have examined the compliance of conditions of Corporate Governance by Kwality Limited for the year ended on 31st March, 2014 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

The Compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementations thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It 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 given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

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 P.P Mukerjee & Associates

Chartered Accountants

Sd/-

Place: New Delhi P.P. Mukerjee

Date: 14th July, 2014 Proprietor

Membership No.089854

IND

EP

EN

DE

NT

AU

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OR

'S R

EP

OR

TTo the Members of

KWALITY LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of M/s Kwality Limited, which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company’s management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 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.

Auditor’s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and 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 internal control 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, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 March 31, 2014;

(b) in the case of the statement of Profit and Loss , of the profit for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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 purpose of our audit;

b. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books including all the branches audited by us.

c. The Balance Sheet, the Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account including all the branches audited by us.

d. In our opinion, the balance sheet, the Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For P.P Mukerjee & Associates

Chartered Accountants

Firm's Registration Number 023276N

Sd/-

Place: New Delhi P.P. Mukerjee

Dated: 30.05.2014 Proprietor

Membership No.089854

INDEPENDENT AUDITOR’S REPORT

IND

EP

EN

DE

NT

AU

DIT

OR

'S R

EP

OR

T

1. In respect of Fixed Assets :

1.a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

1.b) The company has a regular programme of verification of its fixed assets in a phased manner. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancy was noticed on such verification. In our opinion, physically verification is reasonable having regard to the size of the Company and the nature of its assets.

1c) During the year, the Company has not disposed off a substantial part of the fixed assets. Based on the information and explanation given by the management and on the basis of audit procedures performed by us, we are of the opinion that the sale of the fixed assets, if any, has not affected the going concern status of the Company.

2. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

2.a) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

2.b) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. In respect of Loans, Secured or Unsecured, granted or taken by the Company to/ from companies, firms or other parties covered in register maintained under section 301 of the Companies Act, 1956 :

3.a) The Company has not given any loan to companies, firms or other parties covered in register maintained under section 301 of the Companies Act, 1956.

3.b) The Company has taken unsecured loans from one company covered in the register maintained under section 301 of the Companies Act 1956. The maximum amount outstanding at any time during the year was Rs.7500.00 lacs (Previous year 7500 lacs) and year end balance is Rs. 7500.00 lacs (Previous Year 7500 lacs).

3.c) The rate of interest on loan is nil and other terms and conditions of such loans taken are, in our opinion, prima facie not prejudicial to the interests of the Company

3.d) In respect of the loan taken by the Company, the terms of repayment of principal amount and interest thereon are regular.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control systems.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956.

5.a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

5.b) According to information and explanations given to us, the transactions made in pursuance of contracts/arrangements entered in the Register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 Lac in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits covered by the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 and hence the provisions of clause 4 (vi) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the company pursuant to the Companies ( Cost Accounting Records ) Rules , 2011 prescribed by the Central Government under Section 209 (1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained . We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. In respect of Statutory dues :

9 a). According to the records of the Company examined by us, the Company has been generally regular in depositing with appropriate authorities undisputed statutory dues including, investor educations protection fund, employees’ state insurance, sales tax ,Vat, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues with appropriate authorities except an undisputed Advance Income Tax liability of Rs. 1418.07 Lacs (Previous Year Rs. 951.89Lacs) is outstanding as at the last day of the financial year for a period exceeding six months from the date they became payable.

9 b). According to the records of the Company examined by us and according to the information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute, except as under:-

ANNEXURE TO THE AUDITOR’S REPORT OF M/S KWALITY LIMITED FORTHE YEAR ENDED 31ST MARCH 2014

10. The company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given by the management, We are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks . The company has not issued any debenture.

12 As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities the provisions of clause 4 (xii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

13 In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society, hence the provisions of clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

14. According to the information and explanation given to us, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor’s Report) order 2003 (as amended) are not applicable to the Company.

15. The Company has given guarantees for loans taken by its subsidiary company from banks and financial institutions. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

16 In our opinion and according to the information and explanations furnished to us, the term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. As the Company has not issued any debentures the provisions of clause 4 (xix) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

20 As the Company has not raised any money by public issue the provisions relating to end use thereof as per clause 4 (xx) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

21. In our opinion and according to the information and explanation given to us , no material fraud on or by the Company has been noticed or reported during the year.

For P.P Mukerjee & Associates

Chartered Accountants

Firm's Registration Number 023276N

Sd/-

Place: New Delhi P.P. Mukerjee

Dated: 30.05.2014 Proprietor

Membership No.089854

Nature of Statute Nature of DuesAmount unpaid

(In Lacs Rs.)

Year to which the amount

relates

Forum where pending

Haryana Livestock Development

Board, GurgaonMilk cess

194.63 (131.96 deposited against

326.59 under protest)2002-2014

Supreme Court of India

–--Do–--

Punjab VAT Act

Kerala VAT Act

UP VAT Act

Interest on ?Milk Cess

VAT

VAT

VAT

866.44

22.04

1.40

152.27

2002-2014

2013-14

2013-14

2013-14

Supreme Court of India

Excise and Taxation Comm.(Appeal)

High Court(Kerala)

Add. Comm.(Appeal) Ghaziabad

Balance Sheet as at 31 March, 2014

Note

No.

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

(INR In Lacs)

A EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share capital 2 2,031.86 2,031.86

(b) Reserves and surplus 3 37,777.33 25,352.03

39,809.19 27,383.89

2 Non-current liabilities

(a) Long-term borrowings 4 9,711.71 10,755.17

(b) Long-term provisions 5

74.99 55.67 9,786.70 10,810.84

3 Current liabilities

(a) Short-term borrowings 6 89,671.85 75,527.88 (b) Trade payables 7 10,930.89 4,839.13 (c) Other current liabilities 8 4,534.83 2,778.80

(d) Short-term provisions 9 3,429.71 2,448.90

1,08,567.28 85,594.71

TOTAL 1,58,163.17 123,789.45

B ASSETS

1 Non-current assets

(a) Fixed assets

(i) Tangible assets 10.A

(ii) Intangible assets 10.B

(iii) Capital work-in-progress 10.C

(b) Non-current investments 11

(c) Long-term loans and advances 12

2 Current assets

(a) Inventories 14

(b) Trade receivables 15

(c) Cash and cash equivalents 16

(d) Short-term loans and advances 17

(e) Other current assets 18

TOTAL

0.86

Particulars

In terms of our report attached. For and on behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES Chartered Accountants

Firm's Registration No.023276N

sd/-

CA P.P. Mukerjee

Proprietor

(Sanjay Dhingra) (Sidhant Gupta)

Membership No.:089854Managing Director Executive Director

sd/-

Place : New Delhi (Deepa Kapoor)Company Secretary Date : 30.05.2014

sd/- sd/-

(d) Other Non Current Assets

(e) Deffered Tax Assets (Net)13

25.2

9,769.69

142.272,200.33

12,112.30 626.56

4,010.42

76.34

79.27

16,747.97

1,19,998.82

1,272.35

3,041.68 197.45

1,41,258.28

1,58,163.17

16,904.89

7,166.21

126.96 860.92

8,154.09 564.62

2,916.67

182.96

116.25

9,866.08

93,090.45

3,059.36

5,813.93 25.03

1,11,854.85

1,23,789.45

11,934.60

Notes forming part of the financial statements 1-25

(INR In Lacs)

Kwality Limited

Kwality LimitedStatement of Profit and Loss for the year ended 31 March, 2014

Note

No.

For the year ended

31 March, 2014

For the year ended

31 March, 2013

(INR In Lacs) (INR In Lacs)

1 Revenue from operations 19

2 Other income 20

3 Total revenue (1+2)

4 Expenses

(a) Cost of materials consumed 21.a

(b) Purchases of stock-in-trade 21.b

(c) Changes in inventories of finished goods, work-in-progress and

stock-in-trade

21.c

(d) Employee benefits expense 22

(e) Finance costs 23

(f) Depreciation and amortisation expense 10

(g) Other expenses 24

Total expenses

5 Profit / (Loss) before Extraordinary & Exceptional Items (3-4)

6 Extraordinary / Exceptional Items

7 Profit / (Loss) Before Tax (5-6)

8 Tax expense:

(a) Tax expense for current year

(b) (Less): MAT credit related to current year

(c) Net current tax expense

(d) Tax expense relating to prior years

(e) Deferred tax

9 Profit from operations (7-8)

10 Earnings per share (of INR 1/- each):

(a) Basic

(b) Diluted

Notes forming part of the financial statements 1-25

Particulars

In terms of our report attached. For and on behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES

Chartered Accountants

Firm's Registration No.023276N

CA P.P. MukerjeeMembership No.:089854Proprietor

Sd/-(Sanjay Dhingra)

Managing Director

Sd/-(Sidhant Gupta)

Executive Director

Sd/-(Deepa Kapoor)

Company Secretary

Place : New DelhiDate : 30.05.2014

4,57,804.78

395.09

4,58,199.87

3,75,035.45

49,473.01

(6,512.89)

1,794.74

11,261.33

1,290.73

10,806.48

4,43,148.85

15,051.03

—

15,051.03

3,155.91

(1,123.32)

6.23

6.23

369,228.67

71.70

369,300.37

332,489.65

4,681.92

187.54

1,347.68

9,227.88

1,028.88

9,189.25

3,58,152.79

11,147.58

300.00

10,847.58

2,230.70

- 941.97

4.75

4.75

Sd/-

2,032.59

318.44

36.97

2,388.01

12,663.02

1,288.73

69.63

-163.57

1,194.79

9,652.79

Total Tax expense:

Cash Flow Statement for the year ended 31 March, 2014

(INR In Lacs)

For the year ended

31 March, 2014

For the year ended

31 March, 2013

Particulars

15051.03

-5273.04 -3158.33

11147.58

2370.76

CA P.P. MukerjeeProprietorMembership No.:089854

Sd/-(Sanjay Dhingra)

Managing Director

Sd/-(Sidhant Gupta)

Executive Director

Place : New DelhiDate : 30.05.2014

Sd/-(Deepa Kapoor)

Company Secretary

In terms of our report attached. For and on behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES

Chartered Accountants

Firm's Registration No.023276N

Notes forming part of the financial statements (1-25)

(INR In Lacs) (INR In Lacs) (INR In Lacs)

Sd/-

Kwality Limited

A. Cash flow from operating activities

Net Profit / (Loss) before extraordinary items and tax

Adjustments for:

Depreciation and amortisation

Amortisation of Expenses

(Profit) / loss on sale on assets

Finance costs

Interest income

Liablity no longer payable

Provision for Doubtful debts

Bad Debts & Other Balances W/off

Unrealised Exchange Fluctuation

Security Forfeited

Other non-cash charges

Operating profit / (loss) before working capital changes

Changes in working capital:

Adjustments for (increase) / decrease in operating assets/Liablities:

Inventories

Trade receivables

Short-term loans and advances

Other Current Assets

Other than Cash and Cash Equivalents

Long-term loans and advances

Long-term provision

Trade payables

Other current liabilities

Cash Generated from Operations

Cash flow from extra ordinary Items

Net income tax (paid) / refunds

Net cash flow from / (used in) operating activities (A)

B. Cash flow from investing activities

Capital expenditure on fixed assets, including capital advances

Proceeds from sale of fixed assets

Purchase of long-term investments- Subsidiaries

Interest received

Net cash flow from / (used in) investing activities (B)

C. Cash flow from financing activities

Proceeds from long-term borrowings

Repayment of long-term borrowings

Net increase / (decrease) in working capital borrowings

Finance cost

Dividends paid

Tax on dividend

Net cash flow from / (used in) financing activities (C)

Net increase / (decrease) in Cash and cash equivalents (A+B+C)

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Reconciliation of Cash and cash equivalents with the Balance Sheet:

Cash and cash equivalents as per Balance Sheet (Refer Note 16)

Less: Bank balances not considered as Cash and cash equivalents

as defined in AS 3 Cash Flow Statements (give details)

Net Cash and cash equivalents (as defined in AS 3 CFS)

Cash and cash equivalents at the end of the year *

* Comprises:

(a) Cash on hand

(b) Balances with banks ( In Current Accounts)

1290.73

3.84

-0.39

11261.33

-37.44

-66.84

0.00

16.56

37.13

-216.66

4.14

1028.88

5.90

0.35

9227.88

-31.84

-1.62

296.13

3.06

-30.16

0.00

28.46

-6881.89

-27025.05

2772.25

-174.78

168.47

78.27

19.32

6156.75

1976.34

8.31

-27466.08

-1970.23

0.00

-698.20

-10.60

24.81

2777.55

216.57-22910.32

4433.10

0.00

-2547.95

1885.15

-27117.86

-5443.27

-300.00

-1394.81

-7138.08

-5251.27

2.73

-61.94

37.44

-2828.70

3.61

-365.08

31.84

897.08

-1879.36

14143.97

-11261.33

-203.19

-32.96

4583.07

-3834.76

20664.64

-9227.88

-203.19

-33.29

1664.21

-1723.68

2370.76

647.08

11948.60

1652.20

718.56

2370.76

1347.10

-700.02

3239.26

-868.50

6.62

640.46

60.64

2310.12

647.08

647.08

2370.76

2370.76

647.08

12292.39

27343.42

10527.01

21674.59

1) SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation of AccountsThe financial statements are prepared under historical cost convention on an accrual basis of accounting and in accordance with the generally accepted accounting principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956, (“the Act”) as adopted consistently by the Company.

(b) Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

(c)Revenue recognitionSale of GoodsSale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, rebates, trade discounts and price differences.Income from ServicesRevenue from Milk Processing services are recognized as and when services are rendered, and are accounted on an accrual basis. Interest Income Interest income is recognised on time proportion basis taken into account the amount outstanding and the rate applicable.Exports benefits are recognised in the statement of profit and loss when the reasonable right to receive and the same is established.Other Income & ExpenditureOther Income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

(d) Fixed AssetsTangible AssetsTangible Assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets. In respect of new projects, all cost including borrowing cost incurred upto the date of commencement of commercial production or when related asset is put to use are capitalised.Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss.Intangible AssetsAcquired computer software are capitalised at cost of acquisition and disclosed as intangible assets (e) Depreciation: Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in Schedule xiv of the Companies Act, 1956. Assets individually costing Rs. 5000/- or less are depreciated fully in the year when the assets are ready to use.

(f) EMPLOYEE BENEFITSShort Term Employee Benefits : Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post Employment Benefits Defined Contribution Plans:Company's contribution to state governed Provident Fund Scheme, Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.Defined benefit plans:The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method .Actuarial gains and losses arising on such valuation are recognized immediately.Other Defined Plans:Other long term benefits (leave entitlement) are recognized in a manner similar to defined benefit plans: Termination Benefits are recognized as an expense in the year in which they are incurred.

Kwality Limited

(g) Inventories :Raw Material, components, stores and spares are valued at lower of cost and net realisable value.Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour and related production overheads in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

(h) InvestmentsInvestments which are readily realizable and intended to be held for not more than a year from the date on which the investment made are classified as current investment. All other investment are classified as long term investment.Current investments are stated at lower of cost or fair value. Long-term investments are stated at cost however provision for diminution in their value is made to recognise a decline, other than temporary value of the investment.

(i) Provision for Current and Deferred Tax Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timing difference " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in the future.

(j) Impairment of Assets “The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. Where there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased, the Company books a reversal of the impairment loss not exceeding the carryingamount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting periods."

(k) Foreign Exchange TransactionsInitial Recognition On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Subsequent Recognition All monetary assets and liabilities in foreign currency are restated using the exchange rate prevailing at reporting date.Exchange Differences The Company has opted to avail the choice provided under paragraph 46A of AS-11 "The Effect of Changes in Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of depreciable capital asset added to or deducted from the cost of the asset and depreciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "long-term foreign currency monetary item", if it has a term of 12 months or more at the date of its origination.All other exchange differences are recognised as income or expenses in the period in which they arise.

(l) Government GrantsGovernment grants are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received.Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.Other government grants are recognised as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

(m) Borrowing Costs Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(n) Business Segments The Company is engaged mainly in trading, processing, manufacturing of milk and dairy poducts. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (Accounting Standards) Rules 2006, are considered to constitute one single primary segment. Hence Segment reporting is not required.

Kwality Limited

(o) Provisions, Contingent Liabilities and Contingent AssetsProvisions: Provisions are recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.Contingent Assets : Contingent assets are neither recognised nor disclosed.

(p) Leases(i) Finance LeaseAssets acquired under finance lease are recognised at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment are apportioned between the finance charge and the outstanding liability.The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.(ii) Operating LeaseLeases other than finance lease are operating and leased assets are not recognised in the company Balance sheet. Payment under operating leases are recognised in the Statement of Profit and Loss on a straight line over the lease term.

(q) Earnings per shareBasic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by theweighted average number of equity shares outstanding during the yearFor the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity sharholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where results would be anti-dilutive.

Kwality Limited

Notes forming part of the financial statements

Note 2 Share capital

Refer Notes (i) to (v) below

Particulars As at 31 March, 2014

( INR In Lacs) ( INR In Lacs)

(a) Authorised Capital100,00,00,000 equity shares of INR 1/- each(March 31, 2013 : 100,00,00,000 equity share of INR 1/- each)

(b) Issued ,Subscribed and fully paid up20,31,86,434 Equity Shares of INR1/- each fully paidup(March 31,2013 : 20,31,86,434 Equity Shares of INR1/- each fully paidup)

10,000.00 10,000.00

10,000.00 10,000.00

2,031.86 2,031.86

Total 2,031.86 2,031.86

As at 31 March, 2013

(i) Reconciliation of the number of shares outstanding and amount of share capital:

Particulars As at 31 March, 2014

No. of Shares Amount (INR in Lac) No. of Shares

Equity Shares at the beginning of the year

Add: Shares issued during the year

Equity Shares at the end of the year

20,31,86,434 -

20,31,86,434

2,031.86 -

2,031.86

2,031.86 -

2,031.86

As at 31 March, 2013

(ii) Right, preference and restriction attached to the equity shares : - The Company has only one class of equity shares having a par value of INR 1/-per share. Each shareholder is eligible for one vote per

share held - The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval

of the shareholders in ensuing Annual General Meeting. - During the year ended 31 March 2014 , the amount of per share dividend recognised as distributions to equity shareholders is INR 0.10

(previous year INR 0.10) - In the event of liquidation of the company, the equity share holders will be entitled to receive remaining assets of the Company, after

distribution of all preferential amounts, in proportion of their shareholding.

(iii) Details of shares held by each shareholder holding more than 5% of the aggregate shares in the Company:

(iv) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, by way of bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:

(a) The Company has not issued any shares pursuant to contract(s) without payment being received in cash.(b) The Bonus issue is made by capitalisation of profit. The detail of bonus issues in preceding 5 years are given below

(c) The Company has not undertaken any buy back of shares.

(v) No shares have been reserved for any purpose like esop, share warrant and for conversion.

Amount (INR in Lac)

Particulars No. of SharesEquity shares with voting rights

Fully paid up by way of bonus sharesYear 2013-14Year 2012-13Year 2011-12Year 2010-11Year 2009-10

---

21186434-

20,31,86,434 -

20,31,86,434

152154714 74.88 9966071452494000

Class of shares / Name of shareholder As at 31 March, 2014 As at 31 March, 2013

% holding of shares % holding of shares

Equity shares with voting rights

Sanjay DhingraKanika Dhingra

49.0525.84

Number of shares held

Number of shares held

Kwality Limited

Notes forming part of the financial statements

Particulars As at 31 March, 2014 As at 31 March, 2013( INR In Lacs) ( INR In Lacs)

(a) Surplus in Statement of Profit and Loss

15,935.38 9,652.79

25,588.17

25,352.03 12,663.02 38,015.05

Less: Appropriations: Proposed Dividends on equity share (INR 0.10 per share) Dividend distribution tax

203.19 203.19

34.53 32.96

Balance as at the end of the year 37,777.33 25,352.03

Total 37,777.33 25,352.03

Note 3 Reserves and surplus

Note 4 Long-term borrowings

Notes:

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

Total

(1) Secured

(a) Term loans from Banks (refer note 1)

(b) Term loans from Other Parties (refer note -2)

(2) Unsecured

(a) Term loans From Bank (refer Note-3 below)

(b) Term loans From Other Parties (refer Note-4 below)

(c) Loans and advances from related parties (refer Note-5 below)

(d) Deferred payment liabilities

1). Term loans was taken from various banks which are secured by hypothecation of assets ( Vehicles ). Rate of Interest is ranging b/w 8.67% to 13.5 %. Period of maturity for loans is ranging b/w 3 year to 5 year and No.of repayment installments is ranging b/w 36 to 60 months. Maturity profile of loans are as set out below:-

Particulars

Particulars

2014-15

2014-15

2015-16

2015-16

2016-17

2016-17

Beyond 2016-17

Beyond 2016-17

a) Term Loans from Banks

a) Term Loans from others

93.2493.24

11.4311.43

80.0580.05

12.7512.75

64.4964.49

14.0714.07

13.97 13.97

26.37 26.37

( INR In Lacs) ( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

Kwality Limited

Balance as at the begining of the year Add: Profit for the year

177.25

0.00

94.31

0.00

177.25

2,000.00

1,077.92

7,500.00

0.00

10577.92

10,755.17

94.31

250.00

1,441.56

0.00

2.21

1693.77

1,788.07

158.52

53.19

93.24

11.43

211.71

2,000.00

0.00

7,500.00

0.00

9500.00

9,711.71

104.67

666.67

1,077.92

0.00

0.00

1744.58

1,849.25

Non Current CurrentCurrentNon Current

2). Term loans from others are secured by hypothecation of assets ( Vehicles ) . Rate of Interest is ranging b/w 8.67% to 13.5 %. Period of maturity is ranging b/w 3 year to 5 year and No.of repayment installments is ranging b/w 36 to 60 months. Maturity profile of loans are as set out below:-

3). Term Loan was taken from IDBI Bank. The loans is secured by way of exclusive charge on Immovable property held in the name of Director & Other party situated at Golden Park, Rampura Road, Basai Darapur, New Delhi and the land / properties held in the name of JTPL Townships Pvt Ltd. situated at JTPL City, Sector-115 Mohali (Punjab) . The loan is further secured by personal / Corporate guarantee of Sh. Sanjay Dhingra, Managing Director of Company & Smt. Kanika Dhingra wife of Mr. Sanjay Dhingra and Property owners. Present rate of Interest on loan is 12 % . Maturity profile loans are as set out below:-

Particulars 2014-15 2015-16 2016-17 Beyond 2016-17

a) IDBI Bank Ltd 666.67666.67

666.67666.67

666.67666.67

666.67666.67

( INR In Lacs) ( INR In Lacs) ( INR In Lacs) ( INR In Lacs)

Notes forming part of the financial statements

4) Term Loans from Other party are from Tata Capital Ltd INR 714.28 Lacs ( 1428.56 lacs) and from L & T Finance Ltd INR 363.64 Lacs (1090.90 lacs).

4.a) Loan from Tata Capital Limited is secured by way of first mortgage/ charge on the immovable property in the name of JTPL Townships Pvt Ltd. situated in Mohali (Punjab) and further secured by personal guarantee of Sh. Sanjay Dhingra , Managing Director of company and Corporate Guarantee of JTPL Townships Pvt Ltd. The present rate of Interest on loan is 14.25%. Maturity profile of loans are as set out below.

4.b) Loan from L & T is secured by way of pledge of shares of Kwality Limited held in the name of Mr. Sanjay Dhingra (Director). Pledge value of the shares (1crore shares) was INR 3155 lacs as on 31.03.2014 and further secured by first mortgage/charge on the immovable property located at Mohali in the name of JTPL Townships Pvt Ltd. & personal guarantee Sh. Sanjay Dhingra, Managing Director of Co. and Corporate Guarantee of JTPL Townships Pvt Ltd. Rate of interest on loan is 12.75%. Maturity profile of loans are as set out below.

Particulars 2014-15 2015-16 2016-17 Beyond 2016-17

a) Tata Capital Limitedb) L& T Finance Ltd

714.28363.64

1077.92

0.000.00

0.000.00

0.000.00

( INR In Lacs) ( INR In Lacs) ( INR In Lacs) ( INR In Lacs)

Kwality Limited

0.00 0.000.00Total Long Term Loans

5) The Loan from related party is unsecured and there is no interest payable on the loan .The loan will be payable in 3 to 5 year.

Note 5 Long-term provisions

Particulars

a) Provision for employee benefits: (i) Provision for compensated absences (net) (Refer Note 25.9)(ii) Provision for gratuity (net) (Refer Note 25.9)

27.7047.29

22.16 33.52

( INR In Lacs) ( INR In Lacs)

74.99 55.67

Note 6 Short-term borrowings

Particulars As at 31 March, 2014

As at 31 March, 2014

As at 31 March, 2013

As at 31 March, 2013

(1) Secured(a) Loans From Banks Cash Credit Facilities ( Refer Note 1 below)

89,671.85 75,527.88

89,671.85 75,527.88

( INR In Lacs) ( INR In Lacs)

Total

Total

Note.-1Cash Credit facilities are secured by way of :-a) First pari passu charge on the entire current assets of the company.b) 1st paripassu charge on entire movable and immovable fixed assets including Eq.mortgage of factory land and building of the company situated at village Softa, Palwal (Haryana) and at Village Mumrejpur , Tehsil Dibai, District- Bulandsahar (U.P.).c) 1st paripassu charge on entire fixed assets of M/s Pashupati Dairies Pvt. Ltd. including Equitable mortgage of Land and Building situated at village Kumarhera, Saharanpur (UP). d) Corporate guarantee of M/s Pashupati Dairies Pvt Ltd.e) Negative lien for non disposal/ non transfer of 51 % of equity share held by Mr. Sanjay Dhingra.f) Personal guarantee of Sh. Sanjay Dhingra, Managing Director of the Company and Mrs. Kanika Dhingra, Wife of Mr. Sanjay Dhingra.

Note 7 Trade payables

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

Trade payables / Acceptances- For Goods- For Services

10,559.53 371.36

4,596.27 242.86

10,930.89 4,839.13

( INR In Lacs) ( INR In Lacs)

Total

Notes forming part of the financial statementsKwality Limited

Note 8 Other current liabilities

Particulars

(a) Current maturities of long-term debt (Refer Note (4))(b) Interest accrued and due on borrowings(c) Interest accrued but not due on borrowings(d) Unclaimed dividends(e) Other payables (i) Statutory payments (ii) Contractually reimbursement expenses to Employee (iii) Payables for capital goods (iv) Trade / security deposits received (v) Advances from customers (vi) Expenses Payable

1,849.25 101.64

8.65 30.07

73.85 18.23

412.86 478.65

1,281.62 280.03

1,788.07 27.65

0.0025.70

67.30 15.74

141.51 382.86

91.93 238.04

( INR In Lacs) ( INR In Lacs)

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

Total 4,534.83 2,778.80

Note 9 Short-term provisions

Particulars

(a) Provision for employee benefits: (i) Provision for bonus (ii) Provision for compensated absences (net) (Refer Note 25.9) (iii) Provision for gratuity (net) (Refer Note 25.9)

(b) Provision - Others: (i) Provision for Income tax ( Net of TDS INR 3.96 lacs) (ii) Provision for proposed equity dividend (iii) Provision for tax on proposed dividends (iv) Provision for Wealth Tax

33.52 3.93 2.59

40.05

3,150.80 203.19

34.53 1.14

3,389.66

31.36 2.86 1.70

35.91

2,176.08 203.19

32.96 0.76

2,412.98

( INR In Lacs) ( INR In Lacs)

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

Total 3,429.71 2,448.90

Note 10 Fixed Assets

DESCRIPTION GROSS BLOCK DEPRECIATION

Opening Additions Deduction/ Closing Opening For the Adjustment Closing WDV As On WDV As On

As at During the Adjustment during As at As at Year on account of As at 31.3.2014 31.3.2013

01.04.13 Year the year 31.03.2014 01.04.13 31.03.2014 sales/transfer 31.03.2014

Tangible Assets

Land 397.98 648.12 - 1,046.10 - - - - 1,046.10 397.98

Computer 103.06 36.11 - 139.17 69.83 18.79 - 88.61 50.55 33.23

Building 646.63 708.29 - 1,354.92 331.78 50.46 - 382.24 972.68 314.85

Plant & Machinery 8,924.95 2,292.67 1.75 11,215.87 2,902.92 1,100.87 0.49 4,003.30 7,212.57 6,022.02

Furniture & Fixture 31.58 11.44 - 43.02 11.28 4.65 - 15.94 27.09 20.30

Vehicles & Motor Cars 597.60 196.21 3.32 790.50 219.77 112.27 2.25 329.79 460.71 377.83

Tangible Assets Subtotal ( A) 10,701.80 3,892.85 5.07 14,589.58 3,535.59 1,287.03 2.74 4,819.88 9,769.69 7,166.21

Intangible Assets

Computer Software 129.01 19.00 - 148.01 2.05 3.69 - 5.74 142.27 126.96

Subtotal ( B) 129.01 19.00 - 148.01 2.05 3.69 - 5.74 142.27 126.96

Work in Progress 860.92 1,339.41 - 2,200.33 - - - - 2,200.33 860.92

Total Subtotal ( C) 860.92 1,339.41 - 2,200.33 - - - - 2,200.33 860.92

Figures for the Current Year 11,691.73 5,251.27 5.07 16,937.92 3,537.64 1,290.73 2.74 4,825.62 12,112.30 8,154.09

Figures for the Previous Year 8,922.96 2,788.31 19.54 11,691.73 2,513.28 1,028.88 4.52 3,537.64 8,154.09 6,409.68

Notes forming part of the financial statementsKwality Limited

Note 11 Non-current investments

Particulars

Investments (At cost): A. Trade Unquoted(a) Investment in equity instruments (i) of Wholly Owned subsidiaries 1 Share (As at 31 March, 2013: 1 Share) of AED1 Million each fully paid up in Kwality Dairy Products FZE, Dubai(b) Share Application Money in Kwality Dairy Products FZE,Dubai of Wholly Owned subsidiaries

143.20

483.36

626.56

626.56

564.62

564.62

143.20

421.42

( INR In Lacs) ( INR In Lacs)

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

Total - Trade (A)

Aggregate amount of unquoted investments 626.56 564.62

Note 12 Long-term loans and advances

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

Unsecured considered good (a) Capital advances (b) Security deposits (c) Mat Credit entitlement

130.04 29.91

3,850.47

209.28 28.94

2,678.45

4,010.42 2,916.67

( INR In Lacs) ( INR In Lacs)

Total

Note 13 Other Non Current Assets

Note 14 Inventories

Particulars

Particulars

As at 31 March, 2014

As at 31 March, 2014

As at 31 March, 2013

As at 31 March, 2013

Unsecured considered good (a) Balance with Banks ( Refer note below 1) (b) Unamortised Expenses (i) Deferred Licences Fee

(a) Raw materials(b) Work-in-progress (Refer Note below)(c) Finished goods (other than those acquired for trading)(d) Stock-in-trade (acquired for trading)(e) Stores and spares (f) Packing Material

74.75

1.59

298.83 4,412.66

11,592.30 11.4686.22

346.51

179.90

3.06

93.77 2,298.48 6,972.42

232.6340.35

228.43

76.34

16,747.97

182.96

9,866.08

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

Total

Total

(1) Represent bank deposits not due for realisations within 12 month of balance sheet date. Further refer note no.16.

Notes forming part of the financial statementsKwality Limited

Note 15 Trade receivables

Particulars

Trade receivables outstanding for a period exceeding six months from the date they become due for payment Unsecured, considered good

Less: Provision for doubtful trade receivables

Other Trade receivablesUnsecured, considered good

Less: Provision for doubtful trade receivables

369.39 369.39 296.13 73.26

1,19,925.56 1,19,925.56

0.00 1,19,925.56

384.86 384.86 296.13 88.73

93,001.71 93,001.71

0.00 93,001.71

( INR In Lacs) ( INR In Lacs)

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

Total 1,19,925.56 93,090.45

Note 16 Cash and Bank Balance

Particulars

Cash and Cash Equivalents :(a) Cash in hand(b) Balances with banks (i) In current accounts

Other Bank Balances(a) In deposit accounts held against bank guarantee / letter of credit

(b) In earmarked accounts - Unpaid dividend accounts

Less: Deposit having maturity more than 12 month from balance sheet date are shown under note no.13

6.62

640.46

669.95

30.07 1,347.10

74.75

60.64

2,310.12

842.80

25.70 3,239.26

179.90

( INR In Lacs) ( INR In Lacs)

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

Total 1,272.35 3,059.36

Note 17 Short-term loans and advances

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

(a) Security deposits (b) Loans and advances to employees (c ) Advance Recoverable in cash or kind or for value to be received(d) Prepaid Expenses(e) Balances / Deposits with government authorities *

193.13 4.97

2,645.15 25.67

172.77

35.61 6.10

5,595.75 40.54

135.93

3,041.68 5,813.93

( INR In Lacs) ( INR In Lacs)

Total

Unsecured considered good

* Includes INR 131.96 lacs ( 98.06 lacs) with Haryana Livestock Development Board against demand and disputed before Supreme Court of India. Further refer note 25.1.

Note 18 Other current assets

Particulars

(a) Unamortised expenses

(i) Deferred Licences Fee

(b) Accruals

(i) Interest accrued on Fixed deposits

(ii) Incomes Receivables

3.36

12.97

181.12

5.72

19.31

0.00

( INR In Lacs) ( INR In Lacs)

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

Total 197.45 25.03

Notes forming part of the financial statementsKwality Limited

Note 19 Revenue from operations

Particulars

Sale of products (Refer Note (i) below)

Other Operating Income (Refer Note (ii) below )

4,56,988.76

816.03

3,69,162.28

66.38

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 4,57,804.78 3,69,228.67

(a)

(b)

Particulars

Sale of products comprises :

Manufactured goods

Fat/Butter/Cream/Ghee

SMP/WMP/DW/DC/SNF

Milk/Toned Milk/Double Toned Milk

Curd

72,082.09

68,566.34

2,26,577.73

39,191.56

832.81

7,509.10

41,947.29

278.64

3.19

50,571.02

4,56,988.76

71,597.57

62,472.23

2,00,110.49

30,473.23

1,686.78

2,611.21

0.00

210.76

0.00

4,508.75

3,69,162.28

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

810.26 5.76 0.00

60.176.040.18

1)

2)

Total - Sale of manufactured goods

Total - Other Operating Income

Total - Sale of traded goodsTotal - Sale of products

Traded goods

Fat/Butter/Cream/Ghee

SMP/WMP/DW/DC/SNF

Milk

Cattle Feed & Suppliments

Other

Other Operating Income comprises :

Income From Export incentive

Sale of Scrap

Other

4,06,417.73

816.03

3,64,653.53

66.38

Note 20 Other income

Particulars

Interest income (Refer Note (a) below)

Net gain on foreign currency transactions and translation

(other than considered as finance cost)

Other non-operating income (net of expenses directly attributable to

such income) (Refer Note (ii) below)

37.44

0.00

357.65

31.84

30.16

9.70

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 395.09 71.70

a)

b)

c)

Particulars

Interest income comprises:

Interest from banks on deposits 37.44 31.84

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total - Interest income 37.44 31.84

(i)

Notes forming part of the financial statementsKwality Limited

Particulars

Other non-operating income comprises:

Profit on sale of fixed assets

Miscellaneous income

Claims recovered

Security Forfeited

Liability no longer payable

Prior Period Items (Net off Expenses) ( Refer note 24.1)

0.39

21.99

42.85

216.66

66.84

8.92

0.00

8.07

0.00

0.00

1.62

0.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total - Other non-operating income

(ii)

357.65 9.70

Note 21.a Cost of materials consumed

Particulars

Opening stockAdd: Purchases

Less: Closing stock

Material consumed comprises:Milk

Butter fat/Ghee

Others

93.77 3,75,240.51 3,75,334.28

298.83 3,75,035.45

3,37,814.80

13,281.22

23,939.44

69.35 3,32,514.07 3,32,583.42

93.77 3,32,489.65

3,05,131.83

12,681.77

14,676.05

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2014

For the year ended 31 March, 2014

For the year ended 31 March, 2013

For the year ended 31 March, 2013

For the year ended 31 March, 2013

Total 3,75,035.45 3,32,489.65

Cost of material consumed

Note 21.b Purchase of traded goods

Particulars

Milk

Fat/Butter/Cream/Ghee

SMP/WMP/DW/DC/SNF

Cattle Feed & Suppliments

41,246.55

794.35

7,153.31

278.80

0.00

1,687.41

2,792.70

201.81

( INR In Lacs) ( INR In Lacs)

Total 49,473.01 4,681.92

Note 21.c Changes in inventories of finished goods, work-in-progress and stock-in-trade

Particulars

Inventories at the end of the year:Finished goodsWork-in-progress

11,603.76 4,412.66

7,205.05 2,298.48

7,205.05 2,298.48

7,478.09 2,212.98

( INR In Lacs) ( INR In Lacs)

Net (increase) / decrease

16,016.42 9,503.53

Inventories at the beginning of the year:Finished goodsWork-in-progress

9,503.53 9,691.07

-6,512.89 187.54

Notes forming part of the financial statementsKwality Limited

Note 22 Employee benefits expense

Particulars

Salaries and wages Contributions to provident and other funds Gratuity & Leave Encashment (Refer Note 25.9)Recruitment ExpensesStaff welfare expenses

1701.7739.5322.08

2.0229.33

1229.5233.9730.80

1.5351.86

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 1794.74 1347.68

Note 23 Finance costs

Particulars

Interest expense on BorrowingsOther Borrowings CostExchange Fluctuations

11013.98165.35

82.00

9043.64184.23

0.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 11,261.33 9,227.88

Note 24 Other expenses

Particulars

Advertisement & Sales PromotionBad- Debts & Balances W/offBank ChargesCommission & BrokerageCommunication ExpensesConsumption of Packing MaterialsConsumption of Stores and Spare PartsDonations and ContributionsExport ExpensesInsuranceLegal and Professional Loss on Fixed Assets Sold Miscellaneous Expenses Payments To Auditors (Refer Note (25.5)Payments To Cost Auditors Power and FuelPrinting and StationeryPrior Period Items ( Refer note 24.1)Processing Charges Of MilkProvision For Bad DebtsRates and TaxesRebate & DiscountRent Repairs and Maintenance - BuildingsRepairs and Maintenance - MachineryTransportation ChargesTravelling and Conveyance Vehicle Running Expenses

497.7416.56

112.78116.2944.92

2203.26163.12

3.55223.96

30.5777.87

0.00277.30

7.530.50

1871.2318.95

0.001796.08

0.0054.73

5.97180.01

76.1685.26

2643.74226.38

72.00

317.233.06

61.42139.60

36.742160.08

90.462.46

79.7217.22

133.710.35

204.197.500.00

1420.7713.4730.34

1519.35296.13

19.4622.81

109.2059.57

223.022003.71

173.9543.71

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 10806.48 9189.25

Note 24.1) Detail of Prior period Items

Particulars

Prior Period ExpensesPrior Period Incomes

16.0825.00

30.340.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total -8.92 30.34

Notes forming part of the financial statementsKwality Limited

25.1).Contingent Liabilities and other Commitments:

25.2). The deferred tax liability comprise of the following :

Particulars

Particulars

Contingent liabilty (to the extent not provided for)Claim against the company not acknowledged as debtsMilk cess disputed by the company relating to issue of applicability against which the company has preferred an SLP against the order of Punjab & Haryana High Court before Hon'ble Supreme Court of India. A liablity of Cess principal amounting Rs. 326.59 lacs (from which a sum of Rs. 131.96 lacs ( pre. Yr Rs. 98.06 lacs) deposited under protest ) and a sum of Rs. 866.44 lacs on account of interest liability raised by Semen Bank officer, of Haryana Livestock Development Board for which the matter is already before Hon'ble Supreme Court.

A civil recovery suit has been filed by M/s S.M. Milkose Ltd. regarding dispute in supply of material which is disputed by the Co. & is pending before The Hon'ble High Court of Delhi.

Deferred Tax Assets

Related to Fixed Assets

Due to Disallowance under the Income Tax Act, 1961

Sales Tax Matters in Appeallate Authorities

Contingent Liability for Bills Discounted

Contingent Liability under Bank Guarantee

Contingent Liability under Letter of Credit

Contingent Liability under EPCG Licence

Corporate Gurantee given on behalf of wholly owned subsidiary

CommitmentsEstimated amount of Contracts remaining to be executed oncapital account and not provided for

175.72

0.00

922.18

315.42

99.58

16,226.95

965.56

1,193.03

79.27

-

116.25

-

156.97

0.00

67.97

511.07

3,597.54

0.00

5,438.93

1,114.43

1,166.03

156.97

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

As At 31 March, 2014

As At 31 March, 2014

As At 31 March, 2013

As At 31 March, 2013

79.27 116.25

25.3).The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

Notes forming part of the financial statementsKwality Limited

25.4).Foreign Exchange Transactions

Particulars

a) Value of imports on CIF basis Plant & Machinery Purchase of Traded Goods Consumables

b) Imported and Indigenous raw material, componenets and consumable consumed

(i) Raw material consumed - Imported Amount Percentage - Indigenous Amount PercentageTotal

(ii) Purchase of Traded Goods - Imported Amount Percentage - Indigenous Amount PercentageTotal

(iii) Consumables - Imported Amount Percentage - Indigenous Amount PercentageTotal

c) Expenditure in Foreign Exchange (on accrual basis) Capital Transaction Capital Investment in Subsidiary Capital Advance Capital Goods

Revenue TransactionRaw Material & Purchase Traded GoodsConsumable GoodsTour and TravellingOther

d) Earnings in Foreign Exchange (on accrual basis) - Value of Exports on FOB basis

e) Particulars of unhedged foreign currency as on reporting date Import trade payable Export trade receivable Trade Advance paid Trade advance received Packing Credit in Foreign Credit (PCFC) Export Earner in Foreign Credit (EEFC)

211.447,182.01

0.00

0.000.00

3,75,035.45100.00

3,75,035.45

7,182.0114.52

42,291.0085.48

49,473.01

0.000.00

163.12100.00163.12

61.940.00

86.05

7,182.010.00

11.65 4.46

7,346.11

18,344.62

3,170.235,851.18

0.001,093.19

385.390.17

0.001,651.80

3.77

0.000.00

3,32,489.65100.00

3,32,489.65

1,651.8035.28

3,030.1264.72

4,681.92

3.774.16

86.7095.8490.46

365.08116.08

0.00

410.063.77

14.520.00

909.51

3,417.73

1,249.87754.77116.08

0.00589.88

0.00

( INR In Lacs) ( INR In Lacs)

As At 31 March, 2014

As At 31 March, 2013

Notes forming part of the financial statementsKwality Limited

25.5). Payment to Auditors :

Particulars

Audit Fees

Tax Audit Fees

Other Charges

6.50

1.00

0.03

6.50

1.00

0.00

( INR In Lacs) ( INR In Lacs)

7.53 7.50

25.6). Managerial Remuneration

Particulars

Salaries and Allowances 228.43 225.00

( INR In Lacs) ( INR In Lacs)

25.7). Statement of Earning Per Share

Particulars

Net Profit attributable to Equity Shareholders (INR In lacs)

Weighted Average Number of Equity Shares i) used as denominator for calculating EPS

ii) Nominal value per share (in INR)

iii) Basic/Diluted Earning Per Share (in INR)

12,663.02

20,31,86,434

1.00

6.23

9,652.79

20,31,86,434

1.00

4.75

( INR In Lacs) ( INR In Lacs)

25.8) . RELATED PARTY DISCLOSURES

As per Accounting Standard 18 disclosures of transactions with the related parties are given below:

Relationships

1

2

3

4

Subsidiary Company

Key managerial personnel (KMP)

Enterprises on which Key Managerialperson having significant influence

Relative of Key Managarial Person

Kwality Dairy Products FZE

Sh. Sanjay DhingraSh. Sidhant Gupta

JTPL Townships Pvt LtdPashupati Dairies Pvt LtdKwality Dairy Investments Pvt Ltd.

Ms. Kanika DhingraDr Ved Parkash Gupta

As At 31 March, 2014

As At 31 March, 2014

As At 31 March, 2014

As At 31 March, 2013

As At 31 March, 2013

As At 31 March, 2013

Notes forming part of the financial statementsKwality Limited

Related Party

143.20 483.36

16,226.95 156.71

71.020.00

7,500.00 0.00

7,500.00

7,500.00 1,15,055.00

3,155.00

3,000.0087,500.00

1,500.00

143.20421.42

5,438.93 0.00

0.00211.60

7,500.00 4.05

4,500.00

7,500.00 85,000.00

2,970.00

3,000.00 85,000.00

1,500.00

( INR In Lacs) ( INR In Lacs)

Nature of Transactions

Investment in SubsidiaryShare Application MoneyCorporate GuranteeAmount Recoverable

Amount Payable in respect of Services rcd.Amount RecoverableAmount Payable in respect of Loans Amount Payable in Respect of Royality

Collateral Security/guarantee

Guarantee for Long Term LoansGuarantee taken for Financial Limits Shares Pledge for Loan

Guarantee for Long Term LoansGuarantee taken for Financial Limits

Collateral Security/guarantee

Kwality Dairy Products FZE

Pashupati Dairies Pvt Ltd

JTPL Townships Pvt Ltd

Sh. Sanjay Dhingra

Ms Kanika Dhingra

Sh. Sidhant Gupta

Disclosures in respect of material transactions with related parties

Related Party

61.9410788.02

2670.78

0.00719.34

9.00

3,000.00

30,055.000.00

128.43 152.15

2,500.00 0.000.00

0.00 100.00

365.085438.93

65.55

1700.00785.44

9.00

0.00

85,000.003,000.00

125.00 99.66

0.003,000.00

52.49

1500.00 100.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Nature of Transactions

-Share Application Money-Corporate Gurantee-Sales

-Inter Corporate Loans received-Services Received-Royality

-Collateral Security/guarantee

-Guarantee taken for Financial Limits -Guarantee for Long Term Loans-Mangerial Remunation-Dividend Paid

-Guarantee taken for Financial Limits -Guarantee for Long Term Loans-Dividend Paid

-Collateral Security/guarantee -Mangerial Remunation

Kwality Dairy Products FZE

Pashupati Dairies Pvt Ltd

JTPL Townships Pvt Ltd

Sanjay Dhingra

Kanika Dhingra

Sidhant Gupta

25.9) .EMPLOYEE BENEFITS :

The Company has made provisions for employee benefits in accordance with the Accounting Standard (AS) 15 "Employee Benefits". During the year, the Company has recognised the following amounts in its financialstatements based on actuarial valuation done as per Projected Unit Credit Method.

Employee Benefits

Defined Contribution Plan

Employer's contribution to Provident Fund Employer's contribution to Employee State Insurance Fund

10.21 21.19

6.20 16.73

22.92

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

31.41 Total

As At 31 March, 2014

As At 31 March, 2013

Balances with related parties

Notes forming part of the financial statementsKwality Limited

The estimates of future salary increases, inflation, seniority, promotion and other relevant factors, considered in actuarial valuation such as supply and demand in the employment market. The rate used to discount post employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds should be consistent with the currency and estimated term of the post employment benefit obligations.

An amount of Rs.22.08 Lacs /-(PY. - Rs. 30.80 Lacs) as contribution towards defined contribution plan is recognized as expense in the Profit & Loss Statement

Defined Benefit Plan

Change in Benefit Obligation Gratuity Gratuity

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Liability at the beginning of the year Interest CostCurrent service costBenefit PaidActuarial (gain)/loss on obligation Liability at the end of year-recognized in the Balance Sheet

Expenses recognized in the Income StatementInterest cost on benefit obligationCurrent service costExpected return on plan assetsNet actuarial( gain)/loss recognized in the yearExpenses recognised in Profit and Loss statement

35.21 3.17

19.29 -0.40 -7.38 49.89

3.17 19.29

0.00 -7.38 15.07

20.84 1.71

14.75 -2.08 -0.01 35.21

1.71 14.75

0.00 -0.01 16.45

Defined Benefit Plan

Change in Benefit Obligation Leave Encashment Leave Encashment

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Liability at the beginning of the year Interest CostCurrent service costBenefit PaidActuarial (gain)/loss on obligation Liability at the end of year-recognized in the Balance Sheet

25.012.25

13.75-0.39-9.0031.63

2.25 13.75

0.00 -9.00 7.00

12.511.03

11.58-1.841.74

25.01

1.03 11.58

0.00 1.74

14.35

Expenses recognized in the Income Statement

Interest cost on benefit obligationCurrent service costExpected return on plan assetsNet actuarial( gain)/loss recognized in the yearExpenses recognised in Profit and Loss statement

8.75% per annum5% per annum

LIC 94-96 Ultimate2% per annum

8.75% per annum5% per annum

LIC 94-96 Ultimate2% per annum

Discount rate currentSalary escalation currentMortalityWithdrawal rate 18 to 58 Years

Notes forming part of the financial statementsKwality Limited

Particulars

( INR In Lacs) ( INR In Lacs)

As At 31 March, 2014 As At 31 March, 2013

During the year Company has paid a sum of Nil (Rs. 300 lacs) to SEBI for obtaning permission authorising listing of shares alloted to erstwhile promoters in the year 2000.

0.00 300.00

25.10).Other Notes

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

a) Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Name of the party

Kwality Dairy Products FZE Dubai- Investment(Maximum amount outstanding during the year INR 626.56 lacs (INR 564.62)

Subsidiary 626.56 (564.62)

Relationship Amount outstanding as at 31 March, 2014

(INR in Lacs)

b) Previous year figure have been regrouped/reclassified wherever necessary to correspond with the current year classification/disclosure.

c) Extraordinary/Exceptional Item

As per our Report of even date On behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES Chartered Accountants

Firm's Registration No.023276N

CA P.P. Mukerjee

Proprietor Membership No.:089854

Place : New Delhi Date : 30.05.2014

sd/-(Sanjay Dhingra) (Sidhant Gupta)Managing Director Executive Director

sd/-(Deepa Kapoor)Company Secretary

sd/- sd/-

Report on the Financial Statements

We have audited the accompanying Consolidated Financial Statements of M/s Kwality Limited (‘’the Company’’) and its subsidiary, which comprise the Consolidated Balance Sheet as at March 31, 2014, and the Consolidated Statement of Profit and Loss and Consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these Consolidated 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 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 Consolidated Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Consolidated 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 Consolidated Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the Consolidated Financial Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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 Consolidated Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) In the case of the Consolidated statement of Profit and Loss , of the profit for the year ended on that date; and

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

For P. P. Mukerjee & Associates

Chartered Accountants

Firm’s Registration Number 023276N

Sd/-

P. P. Mukerjee

Place : New Delhi Proprietor

Date : 30.05.2014 Membership Number 089854

Independent Auditor’s ReportTo the Members of KWALITY LIMITED

AU

DIT

OR

'S R

EP

OR

T &

BA

LAN

CE

SH

EE

T (C

ON

SO

LID

ATE

D)

Consolidated Balance Sheet as at 31 March, 2014

Note

No.

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

(INR In Lacs)

A EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share capital 2 2,031.86 2,031.86

(b) Reserves and surplus 3 40,810.36 26,420.95

42,842.22 28,452.81

2 Non-current liabilities

(a) Long-term borrowings 4 10,920.11 11,281.22

(b) Long-term provisions 5

74.99 55.67 10,995.10 11,336.89

3 Current liabilities

(a) Short-term borrowings 6 96,806.26 83,124.95 (b) Trade payables 7 16,628.32 9,175.14 (c) Other current liabilities 8 4,651.27 2,788.62

(d) Short-term provisions 9 3,429.71 2,448.90

1,21,515.55 97,537.61

TOTAL 1,75,352.88 1,37,327.32

B ASSETS

1 Non-current assets

(a) Fixed assets

(i) Tangible assets 10.A

(ii) Intangible assets 10.B

(iii) Capital work-in-progress 10.C

11

12

2 Current assets

(a) Inventories 13

(b) Trade receivables 14

(c) Cash and cash equivalents 15

(d) Short-term loans and advances 16

(e) Other current assets 17

TOTAL

0.86

Particulars

In terms of our report attached. For and on behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES Chartered Accountants

Firm's Registration No.023276N

sd/-

CA P.P. Mukerjee

Proprietor

(Sanjay Dhingra) (Sidhant Gupta)

Membership No.:089854Managing Director Executive Director

sd/-

Place : New Delhi (Deepa Kapoor)Company Secretary Date : 30.05.2014

sd/- sd/-

(c) Long-term loans and advances

(d) Other Non Current Assets

(e) Deffered Tax Assets (Net) 24.2

10,435.01

142.272,200.33

12,777.624,010.42

76.34

79.27

18,739.48

1,33,115.26

3,146.77

3,210.27197.45

1,58,409.23

1,75,352.88

16,943.65

7,182.97

126.96 860.92

8,170.852,926.36

182.96

116.25

10,328.83

1,00,910.04

8,629.98

6,035.2526.79

1,25,930.90

1,37,327.32

11,396.42

Notes forming part of the financial statements 1-24

(INR In Lacs)

Kwality Limited

Kwality LimitedConsolidated Statement of Profit and Loss for the year ended 31 March, 2014

Note

No.

For the year ended

31 March, 2014

For the year ended

31 March, 2013

(INR In Lacs) (INR In Lacs)

1 Revenue from operations 18

2 Other income 19

3 Total revenue (1+2)

4 Expenses

(a) Cost of materials consumed 20.a

(b) Purchases of stock-in-trade 20.b

(c) Changes in inventories of finished goods, work-in-progress and

stock-in-trade

20.c

(d) Employee benefits expense 21

(e) Finance costs 22

(f) Depreciation and amortisation expense 10

(g) Other expenses 23

Total expenses

5 Profit / (Loss) before Extraordinary & Exceptional Items (3-4)

6 Extraordinary / Exceptional Items

7 Profit / (Loss) Before Tax (5-6)

8 Tax expense:

(a) Tax expense for current year

(b) (Less): MAT credit related to current year

(c) Net current tax expense

(d) Tax expense relating to prior years

(e) Deferred tax

9 Profit from operations (7-8)

10 Earnings per share (of INR 1/- each):

(a) Basic

(b) Diluted

Notes forming part of the financial statements 1-24

Particulars

In terms of our report attached. For and on behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES

Chartered Accountants

Firm's Registration No.023276N

CA P.P. MukerjeeMembership No.:089854Proprietor

Sd/-(Sanjay Dhingra)

Managing Director

Sd/-(Sidhant Gupta)

Executive Director

Sd/-(Deepa Kapoor)

Company Secretary

Place : New DelhiDate : 30.05.2014

5,01,095.45

402.87

5,01,498.32

3,75,035.45

91,700.56

(8,041.64)

1,859.08

11,557.87

1,299.21

11,206.61

4,84,617.13

16,881.19

—

16,881.19

3,155.91

(1,123.32)

7.13

7.13

3,92,967.66

73.42

3,93,041.08

3,32,489.65

27,455.39

(143.91)

1,379.18

9,307.03

1,029.94

9,468.24

3,80,985.50

12,055.57

300.00

11,755.57

2,230.70

-941.97

5.20

5.20

Sd/-

2,032.59

318.44

36.97

2,388.01

14,493.18

1,288.73

69.63

-163.57

1,194.79

10,560.79

Total Tax expense:

Cash Flow Statement for the year ended 31 March, 2014

(INR In Lacs)

For the year ended

31 March, 2014

For the year ended

31 March, 2013

Particulars

17,015.13

-5,860.37 -2,806.11

12,055.57

7,237.32

CA P.P. MukerjeeProprietorMembership No.:089854

Sd/-(Sanjay Dhingra)

Managing Director

Sd/-(Sidhant Gupta)

Executive Director

Place : New DelhiDate : 30.05.2014

Sd/-(Deepa Kapoor)

Company Secretary

In terms of our report attached. For and on behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES

Chartered Accountants

Firm's Registration No.023276N

Notes forming part of the financial statements (1-25)

(INR In Lacs) (INR In Lacs) (INR In Lacs)

Sd/-

A. Cash flow from operating activities

Net Profit / (Loss) before extraordinary items and tax

Adjustments for:

Depreciation and amortisation

Amortisation of Expenses

(Profit) / loss on sale on assets

Finance costs

Interest income

Liablity no longer payable

Provision for Doubtful debts

Bad Debts & Other Balances W/off

Unrealised Exchange Fluctuation

Security Forfeited

Other non-cash charges

Operating profit / (loss) before working capital changes

Changes in working capital:

Adjustments for (increase) / decrease in operating assets/Liablities:

Inventories

Trade receivables

Short-term loans and advances

Other Current Assets

Other than Cash and Cash Equivalents

Long-term loans and advances

Long-term provision

Trade payables

Other current liabilities

Cash Generated from Operations

Cash flow from extra ordinary Items

Net income tax (paid) / refunds

Net cash flow from / (used in) operating activities (A)

B. Cash flow from investing activities

Capital expenditure on fixed assets, including capital advances

Proceeds from sale of fixed assets

Purchase of long-term investments- Subsidiaries

Interest received

Net cash flow from / (used in) investing activities (B)

C. Cash flow from financing activities

Proceeds from long-term borrowings

Repayment of long-term borrowings

Net increase / (decrease) in working capital borrowings

Finance cost

Dividends paid

Tax on dividend

Net cash flow from / (used in) financing activities (C)

Net increase / (decrease) in Cash and cash equivalents (A+B+C)

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Reconciliation of Cash and cash equivalents with the Balance Sheet:

Cash and cash equivalents as per Balance Sheet (Refer Note 15)

Less: Bank balances not considered as Cash and cash equivalents

as defined in AS 3 Cash Flow Statements (give details)

Net Cash and cash equivalents (as defined in AS 3 CFS)

Cash and cash equivalents at the end of the year *

* Comprises:

(a) Cash on hand

(b) Balances with banks ( In Current Accounts)

1,299.21

3.84

-0.39

11,557.87

-45.22

-66.84

-

16.56

37.13

-216.66

4.14

1,029.94

5.90

0.35

9,307.03

-33.56

-1.62

296.13

3.06

-30.16

28.46

-8,410.65

-32,321.90

2,824.98

-173.02

-26.17

87.96

19.32

7,518.17

2,064.00

-323.14

-34,889.42

-2,191.55

-

-1,400.99

-15.39

24.81

6,633.49

225.70-28,417.32

1,187.46

0.00

-2,547.95

-1,360.49

-31,936.50

-9,275.42

-300.00

-1,394.81

-10,970.23

-5,908.59

3.00

0.00

45.22

-2,845.13

3.61

1.85

33.56

1,598.39

-1,879.36

13,681.31

-11,557.87

-203.19

-32.96

5,137.20

-3,834.76

28,116.72

-9,307.03

-203.19

-33.29

1,606.33

-5,614.54

7,237.32

1,622.78

19,875.66

6,099.32

1,138.01

7,237.32

3,221.52

-1,598.74

8,809.88

-1,572.56

27.56

1,595.22

64.86

7,172.46

1,622.78

1,622.78

7,237.32

7,237.32

1,622.78

12,589.64

29,604.78

10,605.51

22,661.0822,661.08

Kwality Limited

Notes Forming Part of Financial Statements

1) SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation of Accounts(i) The consolidated financial statements have been prepared on a going concen basis to comply with the requirements of clause 32 of the listing agreement and in accordance with Accounting Standard (AS) 21 on "Consolidated Financial Statements " and Accounting Standard (AS) 3 "Cash Flow Statements". (ii) The consolidated financial statements comprise the financial statements of Kwality Limited (Holding Company ) incorporated in India and its 100% subsidiary, incorporated in Dubai, namely Kwality Dairy Products FZE. (iii) The financial statement of subsidiary used in consolidation is drawn upto the same reporting date as that of parent company.(iv) The financial statement of the subsidiary are prepared by them on the basis of generally accepted accounting principles, local laws and regulation as prevelant its respective country and such financial statement are considered for consolidation.(v) The consolidated financial statements have been prepared based on a line-by-line consolidation. The effect of inter company transactions are eliminated in consolidation.(vi) The excess of the cost to the parent company of its investment in subsidiary, on the acquisition date, is recognized in the financial statements as Goodwill.

Name of Company Country of Incorporation Ownership Voting Rights

1) Kwality Dairy Products FZE United Arab Emirates (Dubai) 100% 100%

These consolidated financial statements have been prepared by consolidation of the financial statements of the Company and its subsidiaries on a line-by-line basis after fully eliminating the inter-company transactions and amount arises on account of converting foreign currency in consolidation procedures are recognise in Foreign Currency Fluctuation Reserve.

(b) Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

(c) Revenue recognition

Sale of GoodsSale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, rebates, trade discounts and price differences

Income from ServicesRevenue from Milk Processing services are recognized as and when services are rendered, and are accounted on an accrual basis.

Interest Income Interest income is recognised on time proportion basis taken into account the amount outstanding and the rate applicable.

Exports benefits are recognised in the statement of profit and loss when the reasonable right to receive and the same is established.

Other Income & Expenditure Other Income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

(d) Fixed Assets

Tangible AssetsTangible Assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets. In respect of new projects, all cost including borrowing cost incurred upto the date of commencement of commercial production or when related asset is put to use are capitalised.Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss.

Kwality Limited

Notes Forming Part of Financial Statements

Intangible AssetsAcquired computer software are capitalised at cost of acquisition and disclosed as intangible assets

(e) Depreciation: Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in Schedule xiv of the Companies Act, 1956. Assets individually costing Rs. 5000/- or less are depreciated fully in the year when the assets are ready to use.

(f) EMPLOYEE BENEFITS

Short Term Employee Benefits : Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post Employment Benefits

Defined Contribution Plans: Company's contribution to state governed Provident Fund Scheme , Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans:The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method.Actuarial gains and losses arising on such valuation are recognized immediately .

Other Defined Plans:Other long term benefits (leave entitlement) are recognized in a manner similar to defined benefit plans: Termination Benefits are recognized as an expense in the year in which they are incurred.

(g) Inventories :Raw Material, components, stores and spares are valued at lower of cost and net realisable value.Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour and related production overheads in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

(h) InvestmentsInvestments which are readily realizable and intended to be held for not more than a year from the date on which the investment made are classified as current investment. All other investment are classified as long term investment.Current investments are stated at lower of cost or fair value. Long-term investments are stated at cost however provision for diminution in their value is made to recognise a decline, other than temporary value of the investment.

(i) Provision for Current and Deferred Tax Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timing difference " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in the future.

(j) Impairment of Assets "The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. Where there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased, the Company books a reversal of the impairment loss not exceeding the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting periods."

(k) Foreign Exchange Transactions

Initial Recognition On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Kwality Limited

Notes Forming Part of Financial Statements

Subsequent Recognition All monetary assets and liabilities in foreign currency are restated using the exchange rate prevailing at reporting date.Exchange Differences The Company has opted to avail the choice provided under paragraph 46A of AS-11 "The Effect of Changes in Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of depreciable capital asset added to or deducted from the cost of the asset and depreciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "long-term foreign currency monetary item", if it has a term of 12 months or more at the date of its origination.All other exchange differences are recognised as income or expenses in the period in which they arise.

The financial statements of consolidated foreign subsidiaries are translated into Indian Rupees, which is the functional currency of the Company, as follows:- Assets and liabilities at rates of exchange ruling at year end.- Income and expense items at the average rate for the year.Exchange rate differences arising on the translation of consolidated foreign subsidiaries are transferred to the foreign currency translation reserve.

(l) Government GrantsGovernment grants are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received.Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.Other government grants are recognised as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

(m) Borrowing Costs Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(n) Business Segments The Company is engaged mainly in trading, processing , manufacturing of milk and dairy poducts . These, in the context of Accounting Standard 17 on Segment reporting , as specified in the Companies (Accounting Standards) Rules 2006, are considered to constitute one single primary segment. Hence Segment reporting is not required.

(o) Provisions, Contingent Liabilities and Contingent AssetsProvisions: Provisions are recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.Contingent Assets : Contingent assets are neither recognised nor disclosed.

(p) Leases

(i) Finance Lease

Assets acquired under finance lease are recognised at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment are apportioned between the finance charge and the outstanding liability.The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operating and leased assets are not recognised in the company Balance sheet. Payment under operating leases are recognised in the Statement of Profit and Loss on a straight line over the lease term.

(q) Earnings per shareBasic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by theweighted average number of equity shares outstanding during the yearFor the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity sharholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where results would be anti-dilutive.

Kwality Limited

Note 2 Share capital

Refer Notes (i) to (v) below

Particulars As at 31 March, 2014

( INR In Lacs) ( INR In Lacs)

(a) Authorised Capital100,00,00,000 equity shares of INR 1/- each(March 31, 2013 : 100,00,00,000 equity share of INR 1/- each)

(b) Issued, Subscribed and fully paid up20,31,86,434 Equity Shares of INR1/- each fully paidup(March 31,2013 : 20,31,86,434 Equity Shares of INR1/- each fully paidup)

10,000.00 10,000.00

10,000.00 10,000.00

2,031.86 2,031.86

Total 2,031.86 2,031.86

As at 31 March, 2013

(i) Reconciliation of the number of shares outstanding and amount of share capital:

Particulars As at 31 March, 2014

No. of Shares Amount (INR in Lac) No. of Shares

Equity Shares at the beginning of the year

Add: Shares issued during the year

Equity Shares at the end of the year

20,31,86,434 -

20,31,86,434

2,031.86 -

2,031.86

2,031.86 -

2,031.86

As at 31 March, 2013

(ii) Right, preference and restriction attached to the equity shares : - The Company has only one class of equity shares having a par value of INR 1/-per share. Each shareholder is eligible for one vote per

share held - The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the

shareholders in ensuing Annual General Meeting. - During the year ended 31 March 2014 , the amount of per share dividend recognised as distributions to equity shareholders is INR 0.10

(previous year INR 0.10) - In the event of liquidation of the company, the equity share holders will be entitled to receive remaining assets of the Company, after

distribution of all preferential amounts, in proportion of their shareholding.

(iii) Details of shares held by each shareholder holding more than 5% of the aggregate shares in the Company:

(iv) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, by way of bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:

(a) The Company has not issued any shares pursuant to contract(s) without payment being received in cash.(b) The Bonus issue is made by capitalisation of profit. The detail of bonus issues in preceding 5 years are given below

(c) The Company has not undertaken any buy back of shares.

(v) No shares have been reserved for any purpose like esop, share warrant and for conversion.

Amount (INR in Lac)

Particulars No. of SharesEquity shares with voting rights

Fully paid up by way of bonus sharesYear 2013-14Year 2012-13Year 2011-12Year 2010-11Year 2009-10

---

21186434-

20,31,86,434 -

20,31,86,434

152154714 74.88 9966071452494000

Class of shares / Name of shareholder As at 31 March, 2014 As at 31 March, 2013

% holding of shares % holding of shares

Equity shares with voting rights

Sanjay DhingraKanika Dhingra

49.0525.84

Number of shares held

Number of shares held

Kwality Limited

Notes forming part of the Consolidated financial statements

Notes forming part of the Consolidated financial statements

Particulars As at 31 March, 2014 As at 31 March, 2013( INR In Lacs) ( INR In Lacs)

(a) Foreign Currency translation reserve (On Consolidation) #

24.98 24.98

16,071.33 10,560.79 26,632.12

203.19 32.96

133.95 133.95

26,420.95 14,493.18 40,914.13

203.1934.53

Balance as at the end of the year

Total 40,810.36

40,676.41

26,420.95

26,395.97

Note 3 Reserves and surplus

Note 4 Long-term borrowings

Notes:

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

Total

(1) Secured

(a) Term loans from Banks (refer note 1)

(b) Term loans from Other Parties (refer note -2)

(2) Unsecured

(a) Term loans From Bank (refer Note-3 below)

(b) Term loans From Other Parties (refer Note-4 below)

(c) Loans and advances from related parties (refer Note-5 below) (d) Loans and advances from other parties (refer Note-6 below) (e) Deferred payment liabilities

1). Term loans was taken from various banks which are secured by hypothecation of assets ( Vehicles ) . Rate of Interest is ranging b/w 8.67% to 13.5 %. Period of maturity for loans is ranging b/w 3 year to 5 year and No.of repayment installments is ranging b/w 36 to 60 months. Maturity profile of loans are as set out below:-

Particulars

Particulars

2014-15

2014-15

2015-16

2015-16

2016-17

2016-17

Beyond 2016-17

Beyond 2016-17

a) Term Loans from Banks

a) Term Loans from others

93.2493.24

11.4311.43

80.0580.05

12.7512.75

64.4964.49

14.0714.07

13.97 13.97

26.37 26.37

( INR In Lacs) ( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

Kwality Limited

Foreign Currency Transaction Reserve

183.02

0.00

96.23

0.00

183.02

2,000.00

1,077.92

520.28 7,500.00

0.00

11098.20

11,281.22

96.23

250.00 1,441.56

0.000.00

2.21

1693.77

1,790.00

423.40

53.19

114.13

11.43

476.59

2,000.00

0.00

7,500.00 943.52

0.00

10443.52

10,920.11

125.55

666.67 1,077.92

0.000.00

0.00

1744.58

1,870.14

Non Current CurrentCurrentNon Current

2). Term loans from others are secured by hypothecation of assets ( Vehicles ) . Rate of Interest is ranging b/w 8.67% to 13.5 %. Period of maturity for lease obligations is ranging b/w 3 year to 5 year and No.of repayment installments of loans is ranging b/w 36 to 60 months. Maturity profile of loans are as set out below:-

3). Term Loan was taken from IDBI Bank. The loans is secured by way of exclusive charge on Immovable property held in the name of Director & Other party situated at Golden Park, Rampura Road, Basai Darapur, New Delhi and the land/properties held in the name of JTPL Townships Pvt Ltd situated at JTPL City, Sector-115 Mohali (Punjab). The loan is further secured by personal / Corporate guarantee of Sh. Sanjay Dhingra, Managing Director of Company & Smt. Kanika Dhingra wife of Mr. Sanjay Dhingra and Property owners. Rate of Interest on loan is 12 % . Maturity profile of loans are as set out below:-

Particulars 2014-15 2015-16 2016-17 Beyond 2016-17

a) IDBI Bank Ltd 666.67666.67

666.67666.67

666.67666.67

666.67666.67

( INR In Lacs) ( INR In Lacs) ( INR In Lacs) ( INR In Lacs)

(b) Surplus in Statement of Profit and Loss

Balance as at the begining of the year Add: Profit for the year

Less: Appropriations: Proposed Dividends on equity share (INR 0.10 per share) Dividend distribution tax

# Translation reserve represent conversion of balance in functional currency of foreign subsidiaries.

Notes forming part of the Consolidated financial statements

4) Term Loans from Other party are from Tata Capital Ltd INR 714.28 Lacs ( 1428.56 lacs) and from L & T Finance Ltd INR 363.64 Lacs (1090.90 lacs).

4.a) Loan from Tata Capital Limited is secured by way of first mortgage/ charge on the immovable property in the name of JTPL Townships Pvt Ltd. situated in Mohali (Punjab) and further secured by personal guarantee of Sh. Sanjay Dhingra , Managing Director of company and Corporate Guarantee of JTPL Townships Pvt Ltd. The present rate of Interest on loan is 14.25%. Maturity profile of loans are as set out below.

4.b) Loan from L & T is secured by way of pledge of shares of Kwality Limited held in the name of Mr. Sanjay Dhingra (Director). Pledge value of the shares (1crore shares ) was INR 3155 lacs as on 31.03.2014 and further secured by first mortgage/charge on the immovable property located at Mohali in the name of JTPL Townships Pvt Ltd. & personal guarantee Sh. Sanjay Dhingra, Managing Director of Co. and Corporate Guarantee of JTPL Townships Pvt Ltd. Rate of interest on loan is 12.75%. Maturity profile of loans are as set out below.

Particulars 2014-15 2015-16 2016-17 Beyond 2016-17

a) Tata Capital Limitedb) L& T Finance Ltd

714.28363.64

1077.92

0.000.00

0.000.00

0.000.00

( INR In Lacs) ( INR In Lacs) ( INR In Lacs) ( INR In Lacs)

Kwality Limited

0.00 0.000.00Total Long Term Loans

5) The Loan from related party is unsecured and there is no interest payable on the loan .The loan will be payable in 3 to 5 year. 6) The Loan from other party is unsecured and there is no interest payable on the loan .The loan will be payable in 3 to 5 year. 7) Term loans from Banks includes loan of INR 285.78 lacs ( INR 76.96 lacs) Lacs taken by Kwality Dairy Products FZE 'the Subsidiary', and are secured by mortgage of Property and Vehicle ( Assets ). Loans against property is payable in 15 years and rate of interest has been fixed @4.99% for first two year and EBOR plus 3% thereafter. Loan against vehicle is payable in next 3 years.

Note 5 Long-term provisions

Particulars

a) Provision for employee benefits: (i) Provision for compensated absences (net) (Refer Note 25.9)(ii) Provision for gratuity (net) (Refer Note 25.9)

27.7047.29

22.16 33.52

( INR In Lacs) ( INR In Lacs)

74.99

74.99

55.67

55.67

Note 6 Short-term borrowings

Particulars As at 31 March, 2014

As at 31 March, 2014

As at 31 March, 2013

As at 31 March, 2013

(1) Secured(a) Loans From Banks Cash Credit Facilities ( Refer Note 1 below)

96,806.26 83,124.95

96,806.26 83,124.95

( INR In Lacs) ( INR In Lacs)

Total

Total

Note.-1Cash Credit facilities of Kwality Limited 'the Company' are secured by way of :-a) First pari passu charge on the entire current assets of the company.b) 1st paripassu charge on entire movable and immovable fixed assets including Eq. mortgage of factory land and building of the company situated at village Softa ,Palwal ( Haryana) and at Village Mumrejpur, Tehsil Dibai, District- Bulandsahar ( U.P).c) 1st paripassu charges on entire fixed assets of M/s Pashupati Dairies Pvt. Ltd. including Equitable mortage of Land and Building situated at village Kumarhera, Saharanpur (UP). d) Corporate guarantee of M/s Pashupati Dairies Pvt Ltd.e) Negative lien for non disposal/ non transfer of 51 % of equity share held by Mr. Sanjay Dhingra.f) Personal guarantee of Sh. Sanjay Dhingra, Managing Director of the Company and Mrs. Kanika Dhingra, Wife of Mr. Sanjay Dhingra.

2) Loans from banks includes INR 7137.41 Lacs (INR 7597.07 lacs ) working capital loan avail by Kwality Dairy Products FZE, Dubai, and are secured by way of Corporate guarantee given by Kwality Limited ' the Company' and personal guarantee of Mr. Sanjay Dhingra and Mrs. Kanika Dhingra wife of Sh Sanjay Dhingra, promoter director of Kwality limited. The limit also secured by way of assignment of receivable and pledged of assets.

Note 7 Trade payables

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

Trade payables / Acceptances- For Goods- For Services

16,256.96 371.36

8,932.28 242.86

16,628.32 9,175.14

( INR In Lacs) ( INR In Lacs)

Total

Notes forming part of the Consolidated financial statementsKwality Limited

Note 8 Other current liabilities

Particulars

(a) Current maturities of long-term debt (Refer Note (4))(b) Interest accrued and due on borrowings(c) Interest accrued but not due on borrowings(d) Unclaimed dividends(e) Other payables (i) Statutory payments (ii) Contractually reimbursement expenses to Employee (iii) Payables for capital goods (iv) Trade / security deposits received (v) Advances from customers (vi) Expenses Payable

1,870.14 101.64

8.65 30.07

73.85 18.23

412.86 478.65

1,356.62 300.58

1,790.00 27.65

0.0025.70

67.30 15.74

141.51 382.86

91.93 245.93

( INR In Lacs) ( INR In Lacs)

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

Total 4,651.27 2,788.62

Note 9 Short-term provisions

Particulars

(a) Provision for employee benefits: (i) Provision for bonus (ii) Provision for compensated absences (net) (Refer Note 24.9) (iii) Provision for gratuity (net) (Refer Note 24.9)

(b) Provision - Others: (i) Provision for Income tax ( Net of TDS INR 3.96 lacs) (ii) Provision for proposed equity dividend (iii) Provision for tax on proposed dividends (iv) Provision for Wealth Tax

33.52 3.93 2.59

40.05

3,150.80 203.19

34.53 1.14

3,389.66

31.36 2.86 1.70

35.91

2,176.08 203.19

32.96 0.76

2,412.98

( INR In Lacs) ( INR In Lacs)

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

Total 3,429.71 2,448.90

Note 10 Fixed Assets

DESCRIPTION GROSS BLOCK DEPRECIATION

Opening Additions Deduction/ Closing Opening For the Adjustment Closing WDV As On WDV As On

As at During the Adjustment during As at As at Year on account of As at 31.3.2014 31.3.2013

01.04.13 Year the year 31.03.2014 01.04.13 31.03.2014 sales/transfer 31.03.2014

Tangible Assets

Land 397.98 648.12 - 1,046.10 - - - - 1,046.10 397.98

Computer 103.59 36.16 - 139.75 70.05 18.91 0.09 88.87 50.88 33.54

Building 646.63 1,349.87 - 1,996.49 331.78 53.02 - 384.81 1,611.69 314.85

Plant & Machinery 8,925.90 2,291.72 1.75 11,215.87 2,903.01 1,100.87 0.57 4,003.30 7,212.57 6,022.89

Furniture & Fixture 34.14 26.66 0.37 60.43 11.65 7.40 (0.14) 19.19 41.24 22.50

Vehicles & Motor Cars 611.44 197.64 3.32 805.76 220.23 115.32 2.32 333.23 472.53 391.21

Tangible Assets Subtotal ( A) 10,719.69 4,550.18 5.45 15,264.42 3,536.72 1,295.52 2.83 4,829.40 10,435.01 7,182.97

Intangible Assets

Computer Software 129.01 19.00 - 148.01 2.05 3.69 - 5.74 142.27 126.96

Subtotal ( B) 129.01 19.00 - 148.01 2.05 3.69 - 5.74 142.27 126.96

Work in Progress 860.92 1,339.41 - 2,200.33 - - - - 2,200.33 860.92

Total Subtotal ( C) 860.92 1,339.41 - 2,200.33 - - - - 2,200.33 860.92

Figures for the Current Year 11,709.61 5,908.59 5.45 17,612.76 3,538.76 1,299.21 2.83 4,835.14 12,777.62 8,170.85

Figures for the Previous Year 8,924.55 2,804.74 19.54 11,709.61 2,513.35 1,029.94 4.52 3,538.76 8,170.85 6,411.20

Notes forming part of the Consolidated financial statementsKwality Limited

Note 11 Long-term loans and advances

Note 12 Other Non Current Assets

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

Unsecured considered good (a) Balance with Banks ( Refer note below 1) (b) Unamortised Expenses (i) Deferred Licences Fee

74.75

1.59

179.90

3.06

76.34 182.96

( INR In Lacs) ( INR In Lacs)

Total

Note 13 Inventories

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

(a) Raw materials

(b) Work-in-progress (Refer Note below)

(c) Finished goods (other than those acquired for trading)

(d) Stock-in-trade (acquired for trading)

(e) Stores and spares

(f) Packing Material

298.83

4,412.66

11,592.30

2,002.96

86.22

346.51

93.77

2,298.48

6,972.42

695.38

40.35

228.43

18,739.48 10,328.83

( INR In Lacs) ( INR In Lacs)

Total

(1) Represent bank deposits not due for realisations within 12 month of balance sheet date. Further refer note no.16.

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

Unsecured considered good (a) Capital advances (b) Security deposits (c) Mat Credit entitlement

130.04 29.91

3,850.47

209.28 38.63

2,678.45

4,010.42 2,926.36

( INR In Lacs) ( INR In Lacs)

Total

Note 14 Trade receivables

Particulars

Trade receivables outstanding for a period exceeding six months from the date they become due for payment Unsecured, considered good

Less: Provision for doubtful trade receivables

Other Trade receivablesUnsecured, considered good

Less: Provision for doubtful trade receivables

369.39 369.39 296.13 73.26

1,33,042.00 1,33,042.00

0.00 1,33,042.00

384.86 384.86 296.13 88.73

1,00,821.31 1,00,821.31

0.00 1,00,821.31

( INR In Lacs) ( INR In Lacs)

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

Total 1,33,115.26 1,00,910.04

Notes forming part of the Consolidated financial statementsKwality Limited

Note 15 Cash and Bank Balance

Particulars

Cash and Cash Equivalents :(a) Cash in hand(b) Balances with banks (i) In current accounts

Other Bank Balances(a) In deposit accounts held against bank guarantee / letter of credit

(b) In earmarked accounts - Unpaid dividend accounts

Less: Deposit having maturity more than 12 month from balance sheet date are shown under note no.13

27.56

1,595.22

1,568.67

30.07 3,221.52

74.75

64.86

7,172.46

1,546.87

25.70 8,809.88

179.90

( INR In Lacs) ( INR In Lacs)

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

Total 3,146.77 8,629.98

Note 16 Short-term loans and advances

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

(a) Security deposits (b) Loans and advances to employees (c ) Advance Recoverable in cash or kind or for value to be received(d) Prepaid Expenses(e) Balances / Deposits with government authorities *

193.13 4.97

2,801.43 37.98

172.77

35.61 6.10

5,810.56 47.05

135.93

3,210.27 6,035.25

( INR In Lacs) ( INR In Lacs)

Total

Unsecured considered good

* Includes INR 131.96 lacs ( 98.06 lacs) with Haryana Livestock Development Board against demand and disputed before Supreme Court of India. Further refer note 24.1.

Note 17 Other current assets

Particulars

(a) Unamortised expenses

(i) Deferred Licences Fee

(b) Accruals

(i) Interest accrued on Fixed deposits

(ii) Incomes Receivables

3.36

12.97

181.12

5.72

21.07

0.00

( INR In Lacs) ( INR In Lacs)

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

Total 197.45 26.79

Note 18 Revenue from operations

Particulars

Sale of products (Refer Note (i) below)

Other Operating Income (Refer Note (ii) below )

5,00,279.43

816.03

3,92,901.27

66.38

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 5,01,095.45 3,92,967.66

(a)

(b)

Notes forming part of the Consolidated financial statementsKwality Limited

Particulars

Sale of products comprises :

Manufactured goods

Fat/Butter/Cream/Ghee

SMP/WMP/DW/DC/SNF

Milk/Toned Milk/Double Toned Milk

Curd

72,082.09

68,566.34

2,26,577.73

39,191.56

2,409.93

49,222.65

41,947.29

278.64

3.19

93,861.69

5,00,279.43

71,597.57

62,472.23

2,00,110.49

30,473.23

5,222.60

22,814.38

0.00

210.76

0.00

28,247.74

3,92,901.27

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

810.26 5.76 0.00

60.176.040.18

1)

2)

Total - Sale of manufactured goods

Total - Other Operating Income

Total - Sale of traded goodsTotal - Sale of products

Traded goods

Fat/Butter/Cream/Ghee

SMP/WMP/DW/DC/SNF

Milk

Cattle Feed & Suppliments

Other

Other Operating Income comprises :

Income From Export incentive

Sale of Scrap

Other

4,06,417.73

816.03

3,64,653.53

66.38

Note 19 Other income

Particulars

Interest income (Refer Note (a) below)

Net gain on foreign currency transactions and translation (other than considered as finance cost)

Other non-operating income (net of expenses directly attributable to such income) (Refer Note (ii) below)

45.22

0.00

357.65

33.56

30.16

9.70

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 402.87 73.42

a)

b)

c)

Particulars

Interest income comprises:

Interest from banks on deposits 45.22 33.56

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total - Interest income 45.22 33.56

(1)

Particulars

Other non-operating income comprises:

Profit on sale of fixed assets

Miscellaneous income

Claims recovered

Security Forfeited

Liability no longer payable

Prior Period Items (Net off Expenses) ( Refer note 23.1)

0.39

21.99

42.85

216.66

66.84

8.92

0.00

8.07

0.00

0.00

1.62

0.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total - Other non-operating income

(2)

357.65 9.70

Notes forming part of the Consolidated financial statementsKwality Limited

Note 20.a Cost of materials consumed

Particulars

Opening stockAdd: Purchases

Less: Closing stock

Material consumed comprises:Milk

Butter fat/Ghee

Others

93.77 3,75,240.51 3,75,334.28

298.83 3,75,035.45

3,37,814.80

13,281.22

23,939.44

69.35 3,32,514.07 3,32,583.42

93.77 3,32,489.65

3,05,131.83

12,681.77

14,676.05

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2014

For the year ended 31 March, 2014

For the year ended 31 March, 2013

For the year ended 31 March, 2013

For the year ended 31 March, 2013

Total 3,75,035.45 3,32,489.65

Cost of material consumed

Note 20.b Purchase of traded goods

Particulars

Milk

Fat/Butter/Cream/Ghee

SMP/WMP/DW/DC/SNF

Cattle Feed & Suppliments

41,246.55

2,573.77

47,601.44

278.80

0.00

5,056.27

22,197.30

201.81

( INR In Lacs) ( INR In Lacs)

Total 91,700.56 27,455.39

Note 20.c Changes in inventories of finished goods, work-in-progress and stock-in-trade

Particulars

Inventories at the end of the year:Finished goodsWork-in-progress

13,595.26 4,412.66

7,667.80 2,298.48

7,667.80 2,298.48

7,609.39 2,212.98

( INR In Lacs) ( INR In Lacs)

Net (increase) / decrease

18,007.92 9,966.28

Inventories at the beginning of the year:Finished goodsWork-in-progress

9,966.28 9,822.37

-8,041.64 -143.91

Note 21 Employee benefits expense

Particulars

Salaries and wages Contributions to provident and other funds Gratuity & Leave Encashment (Refer Note 24.9)Recruitment ExpensesStaff welfare expenses

1766.1239.5322.08

2.0229.33

1261.0233.9730.80

1.5351.86

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 1859.08 1379.18

Notes forming part of the Consolidated financial statementsKwality Limited

Note 22 Finance costs

Particulars

Interest expense on BorrowingsOther Borrowings CostExchange Fluctuations

11310.52165.35

82.00

9122.79184.23

0.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 11,557.87 9,307.03

Note 23 Other expenses

Particulars

Advertisement & Sales PromotionBad- Debts & Balances W/offBank ChargesCommission & BrokerageCommunication ExpensesConsumption of Packing MaterialsConsumption of Stores and Spare PartsDonations and ContributionsExport ExpensesInsuranceLegal and Professional Loss on Fixed Assets Sold Miscellaneous Expenses Payments To Auditors (Refer Note (24.5)Payments To Cost Auditors Power and FuelPrinting and StationeryPrior Period Items ( Refer note 23.1)Processing Charges Of MilkProvision For Bad DebtsRates and TaxesRebate & DiscountRent Repairs and Maintenance - BuildingsRepairs and Maintenance - MachineryTransportation ChargesTravelling and Conveyance Vehicle Running Expenses

640.3016.56

112.78237.48

50.102203.26

163.123.55

223.9634.28

151.540.00

279.337.530.50

1871.2319.27

0.001796.08

0.0054.73

5.97229.65

76.1685.26

2643.74228.20

72.00

352.813.06

61.42295.07

39.252160.08

90.462.46

79.7218.18

154.160.35

212.277.500.00

1420.7714.0130.34

1519.35296.13

19.4622.81

149.3159.57

223.022017.37

175.6143.71

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total 11206.61 9468.24

Note 24.1) Detail of Prior period Items

Particulars

Prior Period ExpensesPrior Period Incomes

16.0825.00

30.340.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Total -8.92 30.34

Kwality Limited

24.1).Contingent Liabilities and other Commitments:

24.2). The deferred tax liability comprise of the following :

Particulars

Particulars

Contingent liabilty (to the extent not provided for)Claim against the company not acknowledged as debtsMilk cess disputed by the company relating to issue of applicability against which the company has preferred an SLP against the order of Punjab & Haryana High Court before Hon'ble Supreme Court of India. A liablity of Cess principal amounting Rs. 326.59 lacs ( from which a sum of Rs. 131.96 lacs ( pre. Yr Rs. 98.06 lacs) deposited under protest ) and a sum of Rs. 866.44 lacs on account of interest liability raised by Semen Bank officer, of Haryana Livestock Development Board for which the matter is already before Hon'ble Supreme Court.

A civil recovery suit has been filed by M/s S.M. Milkose Ltd. regarding dispute in supply of material which is disputed by the Co. & is pending before The Hon'ble High Court of Delhi.

Deferred Tax Assets

Related to Fixed Assets

Due to Disallowance under the Income Tax Act, 1961

Sales Tax Matters in Appeallate Authorities

Contingent Liability for Bills Discounted

Contingent Liability under Bank Guarantee

Contingent Liability under Letter of Credit

Contingent Liability under EPCG Licence

Corporate Gurantee to wholly owned subsidiary

CommitmentsEstimated amount of Contracts remaining to be executed oncapital account and not provided for

175.72

0.00

922.18

315.42

99.58

16,226.95

965.56

1,193.03

79.27

-

116.25

-

156.97

0.00

67.97

511.07

3,597.54

0.00

5,438.93

1,114.43

1,166.03

156.97

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

( INR In Lacs)

As At 31 March, 2014

As At 31 March, 2014

As At 31 March, 2013

As At 31 March, 2013

79.27 116.25

24.3). The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act have not been given.

Notes forming part of the Consolidated financial statements

Kwality Limited

24.4).Foreign Exchange Transactions

Particulars

a) Value of imports on CIF basis Plant & Machinery Purchase of Traded Goods Consumables

b) Imported and Indigenous raw material, componenets and consumable consumed

(i) Raw material consumed - Imported Amount Percentage - Indigenous Amount PercentageTotal

(ii) Purchase of Traded Goods - Imported Amount Percentage - Indigenous Amount PercentageTotal

(iii) Consumables - Imported Amount Percentage - Indigenous Amount PercentageTotal

c) Expenditure in Foreign Exchange (on accrual basis) Capital Transaction Capital Investment in Subsidiary Capital Advance Capital Goods

Revenue TransactionRaw Material & Purchase Traded GoodsConsumable GoodsTour and TravellingOther

d) Earnings in Foreign Exchange (on accrual basis) - Value of Exports on FOB basis

e) Particulars of unhedged foreign currency as on reporting date Import trade payable Export trade receivable Trade Advance paid Trade advance received Packing Credit in Foreign Credit (PCFC) Export Earner in Foreign Credit (EEFC)

211.447,182.01

0.00

0.000.00

3,75,035.45100.00

3,75,035.45

7,182.017.83

84,518.5592.17

91,700.56

0.00

0.000.00

163.12100.00163.12

61.940.00

86.05

7,182.010.00

11.65 4.46

7,346.11

18,344.62

3,170.235,851.18

0.001,093.19

385.390.17

0.001,651.80

3.77

0.000.00

3,32,489.65100.00

3,32,489.65

1,651.806.02

25,803.5993.98

27,455.39

3.774.16

86.7095.8490.46

365.08116.08

0.00

410.063.77

14.520.00

909.51

3,417.73

1,249.87754.77116.08

0.00589.88

0.00

( INR In Lacs) ( INR In Lacs)

As At 31 March, 2014

As At 31 March, 2013

Notes forming part of the Consolidated financial statements

Kwality Limited

24.5). Payment to Auditors :

Particulars

Audit Fees

Tax Audit Fees

Other Charges

6.50

1.00

0.03

6.50

1.00

0.00

( INR In Lacs) ( INR In Lacs)

7.53 7.50

24.6). Managerial Remuneration

Particulars

Salaries and Allowances 228.43 225.00

( INR In Lacs) ( INR In Lacs)

24.7). Statement of Earning Per Share

Particulars

Net Profit attributable to Equity Shareholders (INR In lacs)

Weighted Average Number of Equity Shares i) used as denominator for calculating EPS

ii) Nominal value per share (in INR)

iii) Basic/Diluted Earning Per Share (in INR)

14,493.18

20,31,86,434

1.00

7.13

10,560.79

20,31,86,434

1.00

5.20

( INR In Lacs) ( INR In Lacs)

24.8) RELATED PARTY DISCLOSURES

As per Accounting Standard 18 disclosures of transactions with the related parties are given below:

Relationships

1

2

3

4

5

Subsidiary Company

Key managerial personnel (KMP)

Significant Influence

Enterprises on which Key Managerialperson having significant influence

Relative of Key Managarial Person

Kwality Dairy Products FZE

Sh. Sanjay DhingraSh. Sidhant Gupta

Ms Kanika Dhingra

JTPL Townships Pvt LtdPashupati Dairies Pvt LtdKwality Dairy Investments Pvt Ltd.

Ms. Kanika DhingraDr Ved Parkash Gupta

As At 31 March, 2014

As At 31 March, 2014

As At 31 March, 2014

As At 31 March, 2013

As At 31 March, 2013

As At 31 March, 2013

Notes forming part of the Consolidated financial statements

Kwality Limited

Related Party

143.20 483.36

16,226.95 156.71

71.020.00

7,500.00 0.00

7,500.00

7,500.00 1,15,055.00

3,155.00

3,000.0087,500.00

1,500.00

143.20421.42

5,438.93 0.00

0.00211.60

7,500.00 4.05

4,500.00

7,500.00 85,000.00

2,970.00

3,000.00 85,000.00

1,500.00

( INR In Lacs) ( INR In Lacs)

Nature of Transactions

Investment in SubsidiaryShare Application MoneyCorporate GuranteeAmount Recoverable

Amount Payable in respect of Services recd.Amount RecoverableAmount Payable in respect of Loans Amount Payable in Respect of Royality

Collateral Security/guarantee

Guarantee for Long Term LoansGuarantee taken for Financial Limits Shares Pledge for Loan

Guarantee for Long Term LoansGuarantee taken for Financial Limits

Collateral Security/guarantee

Kwality Dairy Products FZE

Pashupati Dairies Pvt Ltd

JTPL Townships Pvt Ltd

Sh. Sanjay Dhingra

Ms Kanika Dhingra

Sh. Sidhant Gupta

Disclosures in respect of material transactions with related parties

Related Party

61.9410788.02

2670.78

0.00719.34

9.00

3,000.00

40,843.020.00

128.43 152.15

13,288.02 0.000.00

0.00 100.00

365.085438.93

65.55

1700.00785.44

9.00

0.00

90,438.933,000.00

125.00 99.66

5,438.933,000.00

52.49

1500.00 100.00

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Nature of Transactions

-Share Application Money-Corporate Gurantee-Sales

-Inter Corporate Loans received-Services Received-Royality

-Collateral Security/guarantee

-Guarantee taken for Financial Limits -Guarantee for Long Term Loans-Mangerial Remunation-Dividend Paid

-Guarantee taken for Financial Limits -Guarantee for Long Term Loans-Dividend Paid

-Collateral Security/guarantee -Mangerial Remunation

Kwality Dairy Products FZE

Pashupati Dairies Pvt Ltd

JTPL Townships Pvt Ltd

Sanjay Dhingra

Kanika Dhingra

Sidhant Gupta

24.9). EMPLOYEE BENEFITS :

The Company has made provisions for employee benefits in accordance with the Accounting Standard (AS) 15 "Employee Benefits". During the year, the Company has recognised the following amounts in its financial statements based on actuarial valuation done as per Projected Unit Credit Method.

Employee Benefits

Defined Contribution Plan

Employer's contribution to Provident Fund Employer's contribution to Employee State Insurance Fund

10.21 21.19

6.20 16.73

22.92

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

31.41 Total

As At 31 March, 2014

As At 31 March, 2013

Notes forming part of the Consolidated financial statements

Kwality Limited

The estimates of future salary increases, inflation, seniority, promotion and other relevant factors, considered in actuarial valuation such as supply and demand in the employment market. The rate used to discount post employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds should be consistent with the currency and estimated term of the post employment benefit obligations.

An amount of Rs. 22.08 Lacs /- (PY. - Rs. 30.80 Lacs) as contribution towards defined contribution plan is recognized as expense in the Profit & Loss Statement

Defined Benefit Plan

Change in Benefit Obligation Gratuity Gratuity

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Liability at the beginning of the year Interest CostCurrent service costBenefit PaidActuarial (gain)/loss on obligation Liability at the end of year-recognized in the Balance Sheet

Expenses recognized in the Income StatementInterest cost on benefit obligationCurrent service costExpected return on plan assetsNet actuarial( gain)/loss recognized in the yearExpenses recognised in Profit and Loss statement

35.21 3.17

19.29 -0.40 -7.38 49.89

3.17 19.29

0.00 -7.38 15.07

20.84 1.71

14.75 -2.08 -0.01 35.21

1.71 14.75

0.00 -0.01 16.45

Defined Benefit Plan

Change in Benefit Obligation Leave Encashment Leave Encashment

( INR In Lacs) ( INR In Lacs)

For the year ended 31 March, 2014

For the year ended 31 March, 2013

Liability at the beginning of the year Interest CostCurrent service costBenefit PaidActuarial (gain)/loss on obligation Liability at the end of year-recognized in the Balance Sheet

25.012.25

13.75-0.39-9.0031.63

2.25 13.75

0.00 -9.00 7.00

12.511.03

11.58-1.841.74

25.01

1.03 11.58

0.00 1.74

14.35

Expenses recognized in the Income Statement

Interest cost on benefit obligationCurrent service costExpected return on plan assetsNet actuarial( gain)/loss recognized in the yearExpenses recognised in Profit and Loss statement

8.75% per annum5% per annum

LIC 94-96 Ultimate2% per annum

8.25% per annum5% per annum

LIC 94-96 Ultimate2% per annum

Discount rate currentSalary escalation currentMortalityWithdrawal rate 18 to 58 Years

Notes forming part of the Consolidated financial statements

Kwality Limited

Particulars

( INR In Lacs) ( INR In Lacs)

As At 31 March, 2014 As At 31 March, 2013

During the year Company has paid a sum of Nil (Rs. 300 lacs) to SEBI for obtaning permission authorising listing of shares allotted to erstwhile promoters in the year 2000.

0.00 300.00

24.10). Other Notes

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

a) Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Name of the party

Kwality Dairy Products FZE Dubai- Investment(Maximum amount outstanding during the year INR 626.56 lacs (INR 564.62)

Subsidiary #REF! (564.62)

Relationship Amount outstanding as at 31 March, 2014

(INR in Lacs)

b) Previous year figure have been regrouped/reclassified wherever necessary to correspond with the current year classification/disclosure.

c) Extraordinary/Exceptional Item

As per our Report of even date On behalf of the Board of Directors

FOR P.P. MUKERJEE & ASSOCIATES Chartered Accountants

Firm's Registration No.023276N

CA P.P. Mukerjee

Proprietor Membership No.:089854

Place : New Delhi Date : 30.05.2014

sd/-(Sanjay Dhingra) (Sidhant Gupta)Managing Director Executive Director

sd/-(Deepa Kapoor)Company Secretary

sd/- sd/-

Notes forming part of the Consolidated financial statements

Kwality Limited

Statement pursuant to Section 212(8) of the Companies Act, 1956 relating to Subsidiary Company.

In accordance with the General Circular No. 2/2011, issued by the Ministry of Company Affairs, Government of India, the Balance Sheet, the Statement of Profit & Loss and other documents of the subsidiary are not being attached with the Annual Accounts of the Company. This Annual Report contains Consolidated Financial Statements of the company and its Subsidiary prepared in accordance with the relevant Accounting Standards and the same has been duly audited by the statutory auditors. The Annual Accounts of the following subsidiary Company and the related information will be made available to the shareholders of the Company and its Subsidiary Company on request and will also be kept open for inspection by the shareholders at the Registered Office of the Company and the Subsidiary Company.

STA

TEM

EN

T

Name of Subsidiary Company: Kwality Dairy Products FZE (Amount in INR)

Reporting INR

Exchange Rate (Closing Rate) 16.325

Exchange Rate(Average Rate) 15.563

Capital 1,43,20,000.00

Reserves 30,33,02,876.49

Total Assets 1,78,16,26,952.39

Total Liabilities excluding Shareholders funds 1,46,40,04,075.90

Investments other than Investments in Subsidiaries Nil

Turnover 4,32,90,66,965.77

Profit before Tax 18,30,15,995.64

Provision for Nil

Profit after Tax 18,30,15,995.64

Proposed Dividend Nil

Country United Arab Emirates

KWALITY LIMITEDCorporate & Registered Office: Kwality House, F-82, Shivaji Place, Rajouri Garden, New Delhi - 110027.

Ph.: +91-11-47006500 (100 lines) • Toll Free: 1800 103 5345 • E: info@kdil.in W: www.kdil.in