NOTES TO THE FINANCIAL FOR THE YEAR ENDED MARCH 31, 2016 1. Company Information Dabur India Limited (the 'Company') is a domestic public limited Company and is listed on the Bombay Stock Exchange Ltd. [BSE], National Stock Exchange of India Ltd. [NSE] and Metropolitan Stock Exchange of India Ltd. [MSEI]. The Company is one of the leading FMCG players dealing in consumer care and food products. The Company has manufacturing facilities across the length & breadth of the country and Research and Development center in U.P. (Sahibabad), selling arrangements being primarily in India through Independent distributors except for institutional sales which are handled directly by the Company. 2. 2.1. Significant Accounting Policies 2.1.1 Basis for brparation of accounts The accounts have been brpared in accordance with the historical cost convention under accrual basis of accounting as per Indian GAAP. Accounts and Disclosures thereon comply with the Accounting Standards specified in Companies (Accounting Standard) Rules 2006 which continue to apply under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014, other pronouncement of ICAI, provisions of the Companies Act and guidelines issued by SEBI as applicable. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. 2.1.2 Use of Estimates Indian GAAP enjoins Management to make estimates and assumptions that affect reported amount of assets, liabilities, revenue, expenses and contingent liabilities pertaining to years, the financial statement relate to. Actual result could differ from such estimates. Any revision in accounting estimates is recognized prospectively from current year and material revision, including its impact on financial statement, is reported in notes to accounts in the year of incorporation of revision. 2.2. Recognition of Income and Expenses a. Sales and purchases are accounted for on the basis of passing of title to the goods. b. Sales comprise of sale price of goods including excise duty but exclude trade discount and Sales Tax/Vat. c. Income/ loss from future trading of commodities, forming part of inputs, is Statements (All amounts in Rs. crores, unless otherwise stated) recognized at the closing point of the contract. For open contracts loss, if any, accrues on balance sheet date is recognized. However profit, if any, accruing on open contracts on balance sheet date is ignored. d. All the other incomes have been accounted for on accrual basis except for those entailing recognition on realization basis under AS 9 on the ground of uncertainty factor. e. All expenses are provided on accrual basis unless stated otherwise. 2.3. Fixed Assets a. Fixed assets are stated at carrying amount i.e. cost less accumulated debrciation. b. Cost includes freight, duties, taxes and other expenses incidental to acquisition and installation. c. Debrciation on Fixed Assets has been provided on straight line method in terms of life span of assets specified in Schedule II of the Companies Act, 2013 except for Moulds which are debrciated in four years on straight line method based on technical advice. d. Components relevant to fixed assets, where significant, are separately debrciated in terms of their life span assessed by technical evaluation. e. Patents and trademarks are being amortized over the period of ten years on straight line basis. f. Software's are being amortized over the period of five years on straight line basis. g. For New Projects, all direct expenses and direct overheads (excluding services provided by employees in Company's regular payroll) are capitalized. h. Capital Subsidy received against fixed capital outlay is deducted from gross value of individual fixed assets, forming part of subsidy scheme granted, by way of proportionate allocation of subsidy amount thereon. Debrciation is charged on net fixed assets after deduction of subsidy amount. i. During sale of fixed assets, any profit earned towards excess of sale value over gross block of assets (i.e. balancing charge) is transferred from profit & loss account to capital reserve. j. Leasehold Land is to be amortized over the period of lease. 2.4. Impairment / Discarding of Assets a. The Company identifies impairable fixed assets based on cash generating unit concept for tangible fixed assets and asset specific concept for intangible fixed assets at the year end in terms of Clause 5 to 13 of AS-28 and Clause 83 of AS-26 respectively for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets. Impairment loss, when crystallizes is charged against revenue of that year. b. Apart from test of impairment within the meaning of AS-28, individual tangible fixed assets of various Cash Generating Units (CGUs) are identified for writing down/discarding on the ground of obsolescence, damage, redundancy & un-usability at the year end. c. Further the Company has assessed recoverable value of each CGUs and each intangible asset based on value-in-use method. Such assessment indicated the value in use of corresponding assets higher than corresponding carrying cost of assets thereby ruling out the cause of further arriving at their net-selling-price and exigency of provision against impairment loss. d. CGUs include Narenderpur plant, Sahibabad plant, each of plants situated at Nashik, Baddi, Jammu, Rudrapur, Silvasa, Pitampur, Kanpur, Alwar, Newai and Jalpaiguri. e. Annual discount rate considered for arriving at value-in-use of assets of each CGU is 11.50% i.e. the average interest rate of external borrowing plus risk factor @ 2.00 % per annum. 2.5. Investment Investments that are readily realizable and are intended to be held for not more than one year at the point of acquisition are classified as "Current Investments". All other investments are classified as "Non-Current Investments" Current investments are stated at the lower of cost and fair value. Long term investments are stated at cost. A provision for diminution is made to recognize a decline other than temporary, if any, in the value of Non-Current Investments. Investments in subsidiaries, Joint Ventures and Associates are held for long term and valued at cost reduced by diminution of permanent nature therein, if any. No profit or losses of subsidiaries are accounted for. 2.6. Research and Development Expenditure Revenue expenditure on research & development is expensed as incurred including contribution towards scientific research expenses. (All amounts in Rs. crores, unless otherwise stated) 2.7. Inventories Inventories are valued at the lower of cost or net realizable value. Basis of determination of cost remains as follows: a. Raw material, Packing Material, Stores & Spares: Moving Weighted Average basis b. Work-in-progress : Cost of Input plus overhead upto the stage of completion c. Finished Goods : Cost of input plus appropriate overhead 2.8. Deferred Entitlement on Leave Travel Concession In terms of opinion of the Expert Advisory Committee of the ICAI, the Company has provided liability accruing on account of deferred entitlement towards Leave Travel Concession in the year in which the employees concerned render their services. 2.9. Retirement Benefits Liabilities in respect of retirement benefits to employees are provided for as follows: a. Defined Benefit Plans: i. Leave Salary of employees on the basis of actuarial valuation as per AS 15. ii. Post separation benefits of Directors on the basis of actuarial valuation as per AS 15. iii. Gratuity Liability on the basis of actuarial valuation as per AS 15. iv. Company contributes its share of contribution to Employees Provident Fund Scheme administered by a separate trust with its obligation to make good the shortfall, if any, in trust fund arising on account of difference between the return on investments of the trust and the interest rate on provident fund dues notified periodically by Central Government. b. Defined Contribution Plans: i. Liability for superannuation fund on the basis of the brmium paid to insurance company in respect of employees covered under Superannuation Fund Policy. ii. ESI on the basis of actual liability accrued and paid to authority. 2.10. Income Tax and Deferred Tax The liability of company on account of income tax is estimated considering the provisions of the Income Tax Act, 1961. Deferred tax is recognized, subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one year and capable of reversal in one or more subsequent years. 2.11. Contingent Liabilities Disputed liabilities and claims against the Company including claims raised by fiscal authorities (e.g. Sales Tax , Income Tax, Excise etc.), pending in appeal/court for which no reliable estimate can be made of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in notes to accounts. However, brsent obligation as a result of past event with possibility of outflow of resources, when reliably estimable, is recognized in accounts. 2.12. Foreign Currency Translation a. Transactions in foreign currencies are recognized at rate of overseas currency ruling on the date of transactions. Gain / Loss arising on account of rise or fall in overseas currencies vis-a-vis reporting currency between the date of transaction and that of payment is charged to Statement of Profit & Loss. b. Receivables/payables (excluding for fixed assets) in foreign currencies are translated at the exchange rate ruling at the year end date and the resultant gain or loss, is accounted for in the Statement of Profit & Loss. c. Increase / decrease in foreign currency loan on account of exchange fluctuation are debited / credited to Statement of profit and loss. d. Impact of exchange fluctuation is separately disclosed in notes to accounts. 2.13. Employee Stock Option Purchase (ESOP) Aggregate of quantum of option granted under the scheme in monetary term (net of consideration of issue to be paid in cash) in terms of fair value has been shown as Employees Stock Option Scheme outstanding in Reserve and Surplus head of the Balance Sheet with corresponding debit in deferred Employee Compensation under ESOP appearing as a negative item as part of shareholder's fund as per guidelines to the effect issued by SEBI. a. With the exercise of option and consequent issue of equity share, corresponding ESOP outstanding is transferred to share brmium account. b. Employees' contribution for the nominal value of share in respect to option granted to employees of subsidiary Company is being reimbursed by subsidiary companies to holding Company. c. Entitlement of option rises proportionately with the issuance of bonus. Nominal value of (All amounts in Rs. crores, unless otherwise stated) shares against enhanced options is financed by the Company at the point of exercise of such option by employees against utilization of general reserve/security brmium. d. Deferred employees compensation under ESOP is amortised on straight line method over the vesting period. 2.14. Mergers/Amalgamation Merger / Amalgamation (of the nature of merger) of other company / body corporate with the Company are accounted for on the basis of purchase method, the assets / liabilities being incorporated in terms of values of assets and liabilities appearing in the books of transferor entity on the date of such merger / amalgamation for the purpose of arriving at the figure of goodwill or amalgamation reserve. 2.15. Segment Reporting The Company identifies primary segments based on the br-dominant sources of risk effects and returns depending on organization and of the Management and internal financial reporting system. The operating segments are the segments for which separate financial information are available and operating profit/loss there from are evaluated regularly by the Management for allocation of resources and assessment of performance. Revenue, expenses assets and liabilities which relate to the Company as a whole which are not allocable to segments on direct and/or reasonable basis have been included under "unallocated revenue/ expenses/assets/liabilities". Operating Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Expenses and income from lease rentals in respect of operating leases are recognized in statement of profit & loss on accrual basis in accordance with the respective lease agreements. 2.17. Earnings Per Share Basic Earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares. a) Figures for the brvious year have been rearranged/ regrouped as and when necessary in terms of current year's grouping. b) Figures are rounded off to nearest Rs. in crores. As per our report of even date attached For DABUR INDIA LIMITED For G. BASU & CO. Chartered Accountants Firm Regn. No. 301174E DR. ANAND C BURMAN Chairman DIN: 00056216 P D NARANG Whole Time Director DIN: 00021581 SUNIL DUGGAL Whole Time Director DIN: 00041825 Partner Membership No. 51717 A K JAIN VP (Finance) and Company Secretary LALIT MALIK Chief Financial Officer Place : New Delhi Date : April 28, 2016 |