diff --git a/erpnext/setup/doctype/item_group/item_group.py b/erpnext/setup/doctype/item_group/item_group.py
index 39172d7d11..bb1910720d 100644
--- a/erpnext/setup/doctype/item_group/item_group.py
+++ b/erpnext/setup/doctype/item_group/item_group.py
@@ -9,6 +9,7 @@ from frappe.utils.nestedset import NestedSet
 from frappe.website.website_generator import WebsiteGenerator
 from frappe.website.render import clear_cache
 from frappe.website.doctype.website_slideshow.website_slideshow import get_slideshow
+from erpnext.utilities.product import get_qty_in_stock
 
 
 class ItemGroup(NestedSet, WebsiteGenerator):
@@ -83,7 +84,8 @@ def get_product_list_for_group(product_group=None, start=0, limit=10, search=Non
 	# base query
 	query = """select I.name, I.item_name, I.item_code, I.route, I.image, I.website_image, I.thumbnail, I.item_group,
 			I.description, I.web_long_description as website_description, I.is_stock_item,
-			case when (S.actual_qty - S.reserved_qty) > 0 then 1 else 0 end as in_stock
+			case when (S.actual_qty - S.reserved_qty) > 0 then 1 else 0 end as in_stock, I.website_warehouse,
+			I.has_batch_no
 		from `tabItem` I
 		left join tabBin S on I.item_code = S.item_code and I.website_warehouse = S.warehouse
 		where I.show_in_website = 1
@@ -104,8 +106,26 @@ def get_product_list_for_group(product_group=None, start=0, limit=10, search=Non
 
 	data = frappe.db.sql(query, {"product_group": product_group,"search": search, "today": nowdate()}, as_dict=1)
 
+	data = adjust_for_expired_items(data)
+
 	return [get_item_for_list_in_html(r) for r in data]
 
+
+def adjust_for_expired_items(data):
+	adjusted_data = []
+
+	for item in data:
+		if item.get('has_batch_no') and item.get('website_warehouse'):
+			stock_qty_dict = get_qty_in_stock(
+				item.get('name'), 'website_warehouse', item.get('website_warehouse'))
+			qty = stock_qty_dict.stock_qty[0][0]
+			item['in_stock'] = 1 if qty else 0
+		adjusted_data.append(item)
+
+	return adjusted_data
+
+
+
 def get_child_groups(item_group_name):
 	item_group = frappe.get_doc("Item Group", item_group_name)
 	return frappe.db.sql("""select name
diff --git a/erpnext/utilities/product.py b/erpnext/utilities/product.py
index 9d5c056ba7..f088e3267d 100644
--- a/erpnext/utilities/product.py
+++ b/erpnext/utilities/product.py
@@ -4,14 +4,17 @@
 from __future__ import unicode_literals
 
 import frappe
-from frappe.utils import cint, fmt_money, flt
+from frappe.utils import cint, fmt_money, flt, nowdate, getdate
 from erpnext.accounts.doctype.pricing_rule.pricing_rule import get_pricing_rule_for_item
+from erpnext.stock.doctype.batch.batch import get_batch_qty
 
-def get_qty_in_stock(item_code, item_warehouse_field):
+def get_qty_in_stock(item_code, item_warehouse_field, warehouse=None):
 	in_stock, stock_qty = 0, ''
 	template_item_code, is_stock_item = frappe.db.get_value("Item", item_code, ["variant_of", "is_stock_item"])
 
-	warehouse = frappe.db.get_value("Item", item_code, item_warehouse_field)
+	if not warehouse:
+		warehouse = frappe.db.get_value("Item", item_code, item_warehouse_field)
+
 	if not warehouse and template_item_code and template_item_code != item_code:
 		warehouse = frappe.db.get_value("Item", template_item_code, item_warehouse_field)
 
@@ -21,8 +24,49 @@ def get_qty_in_stock(item_code, item_warehouse_field):
 		if stock_qty:
 			in_stock = stock_qty[0][0] > 0 and 1 or 0
 
+	if stock_qty[0][0]:
+		stock_qty = adjust_for_expired_items(item_code, stock_qty, warehouse)
+
+	if stock_qty[0][0]:
+		in_stock = stock_qty[0][0] > 0 and 1 or 0
+
 	return frappe._dict({"in_stock": in_stock, "stock_qty": stock_qty, "is_stock_item": is_stock_item})
 
+
+def adjust_for_expired_items(item_code, stock_qty, warehouse):
+	batches = frappe.get_list('Batch', filters=[{'item': item_code}], fields=['expiry_date', 'name'])
+	expired_batches = get_expired_batches(batches)
+	stock_qty = [list(item) for item in stock_qty]
+	
+	if expired_batches:
+		for batch in expired_batches:
+			if warehouse:
+				stock_qty[0][0] = max(0, stock_qty[0][0] - get_batch_qty(batch, warehouse))
+			else:
+				stock_qty[0][0] = max(0, stock_qty[0][0] - qty_from_all_warehouses(get_batch_qty(batch)))
+
+			if not stock_qty[0][0]:
+				break
+	return stock_qty
+
+
+def get_expired_batches(batches):
+	"""
+	:param batches: A list of dict in the form [{'expiry_date': datetime.date(20XX, 1, 1), 'name': 'batch_id'}, ...]
+	"""
+	return [b.name for b in batches if b.expiry_date and b.expiry_date <= getdate(nowdate())]
+
+
+def qty_from_all_warehouses(batch_info):
+	"""
+	:param batch_info: A list of dict in the form [{u'warehouse': u'Stores - I', u'qty': 0.8}, ...]
+	"""
+	qty = 0
+	for batch in batch_info:
+		qty = qty + batch.qty
+
+	return qty
+
 def get_price(item_code, price_list, customer_group, company, qty=1):
 	template_item_code = frappe.db.get_value("Item", item_code, "variant_of")