CORPORATE INFORMATION Godfrey Phillips India Limited ('the Company') is a public limited company and listed on the Bombay Stock Exchange and the National Stock Exchange. The Company is engaged in manufacturing of cigarettes and chewing products and in trading of tobacco products, tea and other retail products. 1. Significant Accounting Policies (i) Basis of Accounting The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 201 3 ("the 201 3 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. (ii) Use of estimates The brparation of the financial statements requires the Management of the Company to make estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to contingent liabilities. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results may differ from these estimates. Any revision to the accounting estimates or difference between the estimates and the actual results are recognised in the periods in which the results are known/materialise or the estimates are revised. (iii) Inventories Inventories are valued at lower of cost and net realisable value except stores and spare parts which are valued at cost or under. The cost of raw materials, stores and spares and traded goods is determined on moving weighted average cost basis. The cost of finished goods and work-in-process is determined on standard absorption cost basis which approximates actual costs. Absorption cost comprises raw materials cost, direct wages, appropriate share of production overheads and applicable excise duty paid/payable thereon. (iv) Cash and cash equivalents Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. (v) Cash flow statement Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. (vi) Revenue recognition Sale of goods Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the customer, which generally coincides with point of dispatch of goods to them. Sales include excise duty but exclude sales tax and value added tax. Income from services Revenue from service contracts priced on a time basis is recognised when services are rendered and related costs are incurred. (vii) Other income Income from investments and interest income is accounted for on accrual basis. Dividend income is accounted for when the right to receive it is established. (viii) Fixed assets Fixed assets are stated at cost of acquisition or construction less accumulated debrciation and include interest on loans attributable to the acquisition of qualifying assets upto the date they are ready for their intended use. Capital work in progress Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest, if any. (ix) Debrciation and amortisation Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 201 3 except in respect of the Plant and Machinery pertaining to retail business, in which case the life of the assets has been assessed as 5 years, taking into account their nature, their estimated usage, their operating conditions, past history of their replacement and maintenance support, etc. No amortization is done in respect of leasehold land in view of the lease being perpetual. Intangible assets are amortised over their estimated useful life on straight line method as follows: Computer software - 5 years (x) Foreign currency transactions Transactions in foreign currency are recorded at the exchange rates brvailing at the time of transactions. Gains/losses on settlement of the transactions are taken to the statement of profit and loss. The monetary items are translated at the year end rates and the gains/losses are taken to the statement of profit and loss. The difference between the forward rate and the exchange rate at the date of the forward contract transaction is recognised as income or expense over the life of the contract in the statement of profit and loss. The exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception of the contract/the last reporting date, is recognised as income or expense for the period. (xi) Investments Long-term investments are carried individually at cost less provision for diminution, if any, other than temporary. Current investments are carried individually at the lower of cost and fair value. (xii) Employee benefits Defined contribution plan Provident fund, Superannuation fund and Employee's State Insurance are the defined contribution schemes offered by the Company. The contributions to these schemes are charged to the statement of profit and loss of the year in which contribution to such schemes becomes due. Defined benefit plan and Long term Employee benefits Gratuity liability and long term employee benefits are provided on the basis of an actuarial valuation made at the end of each financial year as per projected unit credit method. Actuarial gains or losses arising from such valuation are charged to revenue in the year in which they arise. (xiii) Earnings per share Basic earnings per share is computed by dividing the profit/(loss) after tax by the weighted average number of equity shares outstanding during the year. (xiv) Taxes on income Provision for current tax for the period is based on taxable income computed in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence, on timing differences between taxable income and accounting income and is measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets on unabsorbed debrciation and carry forward of losses are not recognised unless there is virtual certainty that there will be sufficient future taxable income available to realize such assets. (xv) Research and development expenditure Research and development expenditure is charged to revenue under the natural heads of account in the year in which it is incurred. Fixed assets utilised for research and development are capitalised and debrciated in accordance with the policies stated for fixed assets and debrciation. (xvi) Impairment of assets The management periodically assesses whether there is any indication that an asset may have been impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of the useful life. Impairment losses recognized in prior years are reversed when there is an indication that the impairment losses recognized earlier no longer exist or have decreased. Such reversals are recognized as an increase in the carrying amount of the asset to the extent that does not exceed the carrying amounts that would have been determined (net of amortization or debrciation) had no impairment loss been recognized in prior years. (xvii) Proposed dividends Dividends proposed by the directors as appropriation of profits are provided for in the books of account, pending approval of shareholders at the annual general meeting. (xviii) Operating cycle Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. 1. As per the requirements of the Companies Act, 2013, the Company has computed debrciation with reference to the useful life of respective assets specified in and in the manner brscribed in Schedule II to the Act. Accordingly, an amount of Rs. 410.27 lacs (net of deferred tax of Rs.217.12 lacs) on account of assets whose useful life has already exhausted as on 1st April, 2014, has been charged to opening balance of retained earnings and an additional debrciation amounting to Rs.1526 lacs has been charged to the Statement of Profit and Loss for the year ended March 31, 2015 based on the residual life of the remaining assets. In relation to the assets added after 1st April, 2014, debrciation has been charged as per the provisions of said Schedule II. 2. Previous year's figures have been regrouped/reclassified, wherever considered necessary to conform to the current year's classification/disclosure. For and on behalf of the Board of Directors NITA KAPOOR COO - Domestic R. RAMAMURTHY Whole-time Director R.A. SHAH Chairman K.K. MODI BHISHAM WADHERA COO - International SAMIR KUMAR MODI Executive Director President & Managing Director Directors BINA MODI DR. LALIT BHASIN ANUP N. KOTHARI SUNIL AGRAWAL Chief Financial Officer SANJAY GUPTA Company Secretary Place : New Delhi Date : May 30, 2015 |