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Notes to Accounts of Emami Ltd.

Mar 31, 2017

1. Company Overview

Emami Limited ("the Company") is one of India’s leading FMCG Companies engaged in manufacturing & marketing of personal care & healthcare products with an enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Kesh King, Zandu Pancharishta, Mentho Plus Balm and others. The Company is a public limited company domiciled in India and is primarily listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registered office of the Company is located at 687,Anandapur, E.M. Bypass, Kolkata, West Bengal.

2.1 First-Time Adoption of Ind-AS

These standalone financial statements of Emami Limited for the year ended March 31, 2017 have been prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101-First Time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date and IGAAP as the previous GAAP

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting policies and principles. The accounting policies set out in Note 1 have been applied in preparing the standalone financial statements for the year ended March 31, 2017 and the comparative information. An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s Balance Sheet, Statement of Profit and Loss, is set out in note 2.2.1 and 2.2.2. Exemptions on first time adoption of Ind AS availed in accordance with Ind AS 101 have been set out in note 2.1.1 .

2.1.1 Exemptions availed on first time adoption of Ind-AS 101

Ind-AS 101 allows first-time adopters certain exemptions from thereto respective application of certain requirements under Ind AS. The Company has accordingly applied the following exemptions:

(a) Business Combination

In accordance with Ind AS 101, the Company has elected not to restate business combinations that occurred before the date of transition i.e 1st April 2015. In view of the same, the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognised under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS.

(b) Property Plant and Equipment, Intangible Assets and Investment Properties

In accordance with Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of Property, Plant and Equipment. The same election has been made in respect of intangible assets and investment property also.

(c) Designation of previously recognised financial instruments

Ind AS 101 permits an entity to designate particular equity investments (other than equity investments in subsidiaries, associates and joint arrangements) as at fair value through other comprehensive income (FVOCI) based on facts and circumstances at the date of transition to Ind AS (rather than at initial recognition). Other equity investments are classified at fair value through profit or loss (FVPL).

The Company has opted to avail this exemption to designate certain equity investments as FVOCI on the date of transition.

(d) Investment in Subsidiaries

Under previous GAAP, investment in subsidiaries were stated at cost and provisions made to recognise decline, other than temporary. Under Ind AS, the company has elected to regard such carrying amount as at 31st March 2015, as deemed cost at the date of transition.

2.2 Reconciliation

The following reconciliation provides the effect of transition to Ind AS from IGAAP in accordance with Ind AS 101

1. Equity as at April 1, 2015 and March 31, 2016

2. Net profit for the year ended March 31, 2016

Explanations for reconciliation of Balance Sheet as previously reported under IGAAP to IND AS

a. In accordance with Ind AS 40, the company has reclassified land & buildings to investment property. Under previous GAAP, this was disclosed as a part of Property, Plant & Equipment.

b. In accordance with Ind AS 103, acquisition cost capitalised under previous GAAP has been expensed out.

c. Under previous GAAP, non- current investments were stated at cost. Where applicable, provision was made to recognise a decline, other than temporary, in valuation of such investments. Under Ind AS, financial assets in equity instruments other than investment in subsidiaries have been classified as Fair Value Through Other Comprehensive Income (FVTOCI) through an irrevocable election at the date of transition.

d. Under previous GAAP, current investments were stated at lower of cost and fair value, under Ind AS, these financial assets have been classified as fair value through profit or loss on the date of transition and fair value changes after the date of transition has been recognised in profit or loss.

e. Under previous GAAP, the premium or discount on derivative instruments were expensed over the period of the contract. Under Ind AS, the net mark to market loss/gain on fair valuation of such instruments are recognised in Statement of Profit & Loss.

f. Under previous GAAP, dividend payable is recognised as a liability in the period to which it relates. Under Ind AS, dividends to shareholders are recognised when declared by the members in a general meeting.

g. Under previous GAAP, Grant or Subsidy relating to assets were shown as part of capital reserve. Under Ind AS, such grants are treated as deferred income and are recognized as other income in the Statement of Profit & Loss on a systematic and rational basis over the useful life of the asset.

h. Adjustments to retained earnings, other comprehensive income and deferred tax has been made in accordance with Ind AS, for the above mentioned line items. In addition, as per Ind-AS 19, actuarial gains and losses are recognized in other comprehensive income as compared to being recognized in the statement of profit and loss under IGAAP

Explanations for Reconciliation of Profit and Loss as previously reported under IGAAP to IND AS

a. Under Ind AS, revenue from sales of goods is inclusive of excise duty and are net of sales tax, discounts and secondary trade promotions. Under previous GAAP, sales included sales tax but was shown net of excise duty. Secondary promotions linked to sales was disclosed as part of advertisement & promotion under other expenses. Field Force expenses has been shown as part of employee benefit expenses.

b. Under Ind AS, Grants/Subsidy earlier treated as reserve now considered as deferred income and amortized to income based on the useful life of assets against which the same was received.

c. Under Ind AS, Mutual Funds, Forward & Option Contracts have been measured at Fair Valued Through Profit or Loss (FVTPL). Under Ind AS, financial assets in equity instruments other than investment in subsidiaries have been classified as Fair Value Through Other Comprehensive Income (FVTOCI) through an irrevocable election at the date of transition.

d. Under Ind AS, Actuarial Gain/Loss on Gratuity routed through Other Comprehensive Income instead of profit or loss.

e. Acquisition related costs expensed off instead of being capitalized with intangible assets.

2.2.1 Cash flow statement

There were no significant reconciliation items between cash flows prepared under IGAAP and those prepared under Ind AS.

Sensitivity Analysis :-

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

There is no change in the method of valuation for the prior period.

Effect of Plan on Entity’s Future Cash Flows

a) Funding arrangements and Funding Policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

For Leave, the Scheme is partly managed on funded basis.

b) Expected Contribution during the next annual reporting period

c) Maturity Profile of Defined Benefit Obligation

Liability sesitivity analysis

Significant actuarial assumptions for the detemination of the guarantee liability are interest rate gaurantee and discount rate.

The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below: 3.36

The Company has made a provision of Rs. 126.48 Lacs (P.Y.- 105.89 Lacs) towards Indirect Taxes resulting mainly from issues, which are under litigation/dispute as shown below :

3.1

There were no dues outstanding for more than 45 days to any Micro, Small and Medium Enterprises Creditor. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such communication has been received from the respective parties by the company.

3.2

Long Term Loans & Advances include Security Deposit of Rs. 5.75 Lacs (P.Y.-Rs. 5.85 Lacs) due from Directors of the Company against tenancies. (Maximum amount outstanding during the year - Rs. 5.85 Lacs (P.Y.-Rs. 7.04 Lacs).

3.3 Contingent Liabilities & Commitments I) Contingent Liabilities:

Note: Contingent Liability disclosed above represent possible obligations where the possibility of cash outflow to settle the obligation is remote and is exclusive of interest and penalty. (if any)

In addition, the company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the company’s results of operations and financial condition.

3.4 DISCLOSURE ON SPECIFIED BANK NOTES (SBN’S)

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December, 30 2016, the denomination wise SBNs and other notes as per the notification is given below :

3.5 FAIR VALUE HIERACHY

Level 1 - Quoted prices (unadjusted ) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The operating lease arrangements, are renewable on a periodic basis and for most of the leases extend upto a maximum of ten years from their respective dates of inception and relates to rented premises. Some of these lease agreements have price escalation clauses.

3.6 FINANCIAL RISK MANAGEMENT Financial risk factors

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures.

Market risk Foreign Currency risk

The Company operates both in domestic market and internationally and a major portion of the business is transacted in foreign currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas countries, and purchases from overseas suppliers in foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.

For the year ended March 31, 2017 and March 31, 2016, every percentage appreciation in the exchange rate between the Indian rupee and U.S. dollar, has affected the Company’s Profit before tax by approx Rs. 24.53 Lacs.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution.

Credit Risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 3413.19 Lacs and Rs. 5063.28 Lacs as of March 31, 2017 and March 31, 2016, respectively. Trade receivables includes both secured and unsecured receivables and are derived from revenue earned from domestic and overseas customers. Credit risk has always been managed by the group through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business.

Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, certificates of deposit which are funds deposited at a bank for a specified time period.

Liquidity Risk

The company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations as well as investment in mutual funds. The company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

As of March 31, 2017, the Company had a working capital of Rs. 7255.24 Lacs (PY. Rs. 2747.67 Lacs).

3.7

The underspend in the CSR activities in financial year 2016-17 amounting Rs. 191.63 Lacs was mainly due to extraneous factors and also due to better planning and negotiations which resulted in savings despite carrying the activities as envisaged . Besides, some projects are multiyear projects and so expenditure can be done stages/ year wise which may result in lower expenditure in a particular year.

3.8

Commercial production of the Company’s Newly setup plant in Pacharia, Dolapathar, Kamrup, Assam has commenced from 23rd February 2017.

3.9

On 12th June 2015, the Company acquired Hair & Scalp Care business under the "Kesh King" and allied Brands at Rs 1,68,400 Lacs (Including duties & taxes). Intangible Assets viz. Brands/Trademarks including Goodwill has been valued based on valuation report of an expert. In accordance with the provisions of Ind AS 38- Intangible Assets, the management has estimated useful life of various intangible assets at 5 to 10 years, except Goodwill of Rs 1,050 Lacs which has been charged to the statement of profit & loss. For the year ended 31st March 2017, amortisation of acquired Trade Marks/ Brands includes Rs 23,996.68 Lacs (P Y Rs 19,517 lacs) respectively provided on intangible assets of ‘Kesh king’ business on pro-rata basis.

3.10

Previous year’s figures have been rearranged/regrouped wherever necessary


Mar 31, 2014

1.1 CONTINGENT LIABILITIES & COMMITMENTS

Rs.in Lacs

Particulars 31st March, 2014 31st March, 2013

i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debt (Net of Advances) :

i) Excise Duty demands 254.04 516.78

ii) Sales Tax demands under appeal 885.04 833.62

iii) Entry Tax 133.51 11.28

iv) Others 45.47 45.47

Note : Contingent Liability disclosed above represent possible obligations where the possibility of cash outflow to settle the obligation is remote and is exclusive of interest and penalty (if any).

(b) Guarantees and counter guarantees given 5,913.32 5,300.56

1.2 The Company has entered into a Put Option Contract Agreement with ICICI Bank and Emami Paper Mills Limited in connection with the External Commercial Borrowings facilities availed of by Emami Paper Mills Limited from ICICI Bank for a sum of USD 20.62 lacs equivalent to H1,239.56 lacs (P.Y. USD 48.10 lacs equivalent to H2,616.13 lacs)

1.3 The Company has opted to follow the extension for accounting the exchange differences arising on long term foreign currency monetary items in line with Companies (Accounting Standard) Amendment Rules, 2009 on Accounting Standard 11 relating to "The Effects of Changes in Foreign Exchange Rates" notified by Government of India on March 31, 2009 and as amended by Notification No. G.S.R 378(E), dated 11th May, 2011 & G.S.R 913(E), dated 29th December, 2011.

As per the above notification,Foreign exchange loss of Rs. Nil (P.Y. Rs.54.57 lacs) has been charged to the Statement of Profit & Loss and Rs.664.82 lacs (PY H490.70 lacs) has been capitalised as cost of capital assets.

1.4 Miscellaneous Receipt includes EPCG benefits amounting to Rs. Nil (P.Y.- Rs. 536.49 lacs)

1.5 Miscellaneous Expenses includes contribution to Bharatiya Janata Party amounting to Rs.2.00 Lacs (P.Y. Rs. Nil)

1.6 Exchange differences on the principal amount of the foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs as mandated by paragraph 4(e) of Accounting Standard 16 have been disclosed under note " Finance Cost". Such exchange differences on principal amount of foreign borrowing are not interest on the foreign borrowing.

1.7 The company has reviewed the useful lives of all the tangible assets on which depreciation was provided on straight line basis as stated in accounting policy Note 1(iv). Consequent to this,the charge of depreciation for the year is higher by Rs.1,100.77 lacs and the net block of fixed assets and reserves and surplus are lower by Rs1,100.77 lacs.

1.8 RELATED PARTY TRANSACTIONS

B. Other Related Parties with whom transactions have taken place during the year

i) Key Management Personnel

1 Shri R. S. Agarwal

2 Shri R. S. Goenka

3 Shri Sushil Kr. Goenka

ii) Relatives of Key Management Personnel

1 Smt. Usha Agarwal

2 Smt. Saroj Goenka

3 Smt. Priti. A Sureka

4 Smt. Indu Goenka

5 Smt. Rachna Bagaria

6 Smt. Laxmi Devi Bajoria

7 Shri Suresh Kr. Goenka

8 Shri Raj Kr. Goenka

9 Shri Mohan Goenka

10 Shri A. V. Agarwal

11 Shri Manish Goenka

12 Shri H. V. Agarwal

13 Shri Jayant Goenka

14 Shri Sachin Goenka

15 Shri Madan Lal Agarwal

iii) Entities where Key Management Personnel and their relatives have significant influence

1 Suntrack Commerce Private Limited

2 Bhanu Vyapaar Private Limited

3 Diwakar Viniyog Private Limited

4 Suraj Viniyog Private Limited

5 Emami Paper Mills Limited

6 Aviro Vyapar Private Limited

7 Emami High Rise Private Limited

8 Emami Enclave Makers Private Limited

9 Emami Foundation

10 Aradhana Trust

11 Bansilal Jankidevi Agarwal Trust

1.9 Previous year''s figures have been rearranged/regrouped wherever necessary.


Mar 31, 2013

1.1 Denvative Instruments:

The Company uses Forward Exchange Contracts and Options to hedge its risk associated with fluctuations in foreign currency and interest rates relating to foreign currency liabilities and some forecasted transactions related to foreign currency trade. The use of forward contracts and options is governed by company''s overall strategy. The company does not use forward contract and options for speculative purposes.

There were no dues outstanding for more than 45 days to any Micro, Small and Medium Enterprises Creditor. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such communication has been received from the respective parties by the company. This has been relied upon by the Auditors.

Long Term Loans & Advances include Security Deposit of H 9.15 Lacs (P.Y.-H 15.67 Lacs) due from Directors of the Company against tenancies. {Maximum amount outstanding during the year - H 15.67 Lacs (P.Y.-H 15.77 Lacs)}.

The Company has entered into a Put Option Contract Agreement with ICICI Bank and Emami Paper Mills Limited in connection with the External Commercial Borrowings facilities availed of by Emami Paper Mills Limited from ICICI Bank for a sum of USD 4.81 million.

The Company has opted to follow the extension for accounting the exchange differences arising on long term foreign currency monetary items in line with Companies (Accounting Standard) Amendment Rules 2009 on Accounting Standard 11 relating to "The Effects of Changes in Foreign Exchange Rates" notified by Government of India on March 31, 2009 and as amended by Notification No. G.S.R 378(E), dated 11th May, 2011 & G.S.R 913(E), dated 29th, December, 2011.

As per the above notification,Foreign exchange loss of H 54.57 lacs has been charged to the Statement of Profit & Loss.

Miscellaneous Receipt includes EPCG benefits amounting to H 536.49 lacs (P.Y.- H 1,502.67 lacs)

Miscellaneous Expenses includes contribution to Assam Pradesh Congress Committee amounting to Nil (P.Y.- H 10 lacs) Amount due and outstanding to be credited to Investor Education and Protection Fund - Nil (P.Y. - Nil)

Exchange differences on the principal amount of the foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs as mandated by paragraph 4(e) of Accounting Standard 16 have been disclosed under note " Finance Cost". Such exchange differences on principal amount of foreign borrowing are not interest on the foreign borrowing.

1.2 Re1ated Party Transactions :

A. Parties where Control exists :

B. Other Related Parties with whom transactions have taken place during the year

i) Key Management Personnel

1. Shri R. S. Agarwal

2. Shri R. S. Goenka

3. Shri Sushil Kr. Goenka

ii) Relatives of Key Management Personnel

1. Smt. Usha Agarwal

2. Smt. Saroj Goenka

3. Shri Suresh Kr. Goenka

4. Shri Raj Kr. Goenka

5. Shri Mohan Goenka

6. Shri A. V. Agarwal

7. Shri Manish Goenka

8. Shri H. V. Agarwal

9. Smt. Priti Sureka

iii) Entities where Key Management Personnel and their relatives have significant influence

1. Diwakar Viniyog Private Limited

2. Suntrack Commerce Private Limited

3. Emami Paper Mills Limited

4. Emami Foundation

5. Aradhana Trust

6. Emami Infrastructure Limited

7. Emami Realty Limited

8. Zandu Realty Limited

9. Aviro Vyapar Private Limited

10. K.D.Goenka & Sons HUF (Ceased w.e.f. 16.11.2012)

11. R.S.Agarwal HUF (Ceased w.e.f. 16.11.2012)

2 Previous year''s figures have been rearranged/regrouped wherever necessary.


Mar 31, 2012

1.0 a. Business Segment

As the Company's business activity falls within a single primary business segment,viz."Personal and Healthcare", the disclosure requirements of Accounting Standard-17 "Segment Reporting", notified in the companies Accounting Standard Rules, 2006 are not applicable.

2. Derivative Instruments:

The Company uses Forward Exchange Contracts and Options to hedge its risk associated with fluctuations in foreign currency and interest rates relating to foreign currency liabilities and some forecasted transactions related to foreign currency trade. The use of forward contracts and options is governed by companies overall strategy. The company does not use forward contract and options for speculative purposes.

3. There were no dues outstanding for more than 45 days to any Micro, Small and Medium Enterprises Creditor. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such communication has been received from the respective parties by the company. This has been relied upon by the Auditors.

4. Long Term Loans & Advances include Security Deposit of Rs. 15.67 Lacs (P.Y. Rs. 15.77 Lacs) due from Directors of the Company against tenancies. (Maximum amount outstanding during the year - Rs. 15.77 Lacs) (P.Y. Rs. 16.82 Lacs).

5.Contingent Liabilities & Commitments

i) Contingent Liabilities 31.03.2012 31.03.2011

a) Claims against the Company not acknowledged as debt:

i) Excise Duty demands 502.35 833.88

ii) Service Tax 44.45 35.91

iii) Sales Tax demands under appeal (Net of Advances) 664.19 643.89

iv) Income Tax 32.08 5.22

v) Other Taxes (Net of Advances) 9.28 9.28

vi) Claims against Company not acknowledged as Debts 66.64 58.93

Note : Contingent Liability disclosed above represent possible obligations where the possibility of cash outflow to settle the obligation is remote.

b) Guarantees and counter guarantees given 182.90 10,203.94

6. The Company has entered into a Put Option Contract Agreement with ICICI Bank and Emami Paper Mills Limited in connection with the External Commercial Borrowings facilities availed of by Emami Paper Mills Limited from ICICI Bank for a sum of USD 7.56 million.

7. The Company has opted to follow the extension for accounting the exchange differences arising on long term foreign currency monetary items in line with Companies (Accounting Standard) Amendment Rules 2009 on Accounting Standard 11 relating to “The Effects of Changes in Foreign Exchange Rates” notified by Government of India on March 31, 2009 and as amended by Notification No. G.S.R 378(E), dated 11th May, 2011 & G.S.R 913(E), dated 29th December, 2011.

As per the above Notifications, foreign exchange loss of Rs. 54.57 Lacs chargeable to Statement of Profit & Loss has been transferred to “Foreign Currency Monetary Item Translation Difference Account” to be amortised in subsequent periods, but not beyond 31st March, 2020.

8. Miscellaneous Receipt includes EPCG benefits amounting to Rs. 1,502.67 lacs (P.Y.- NIL)

9. Miscellaneous Expenses includes contribution to Assam Pradesh Congress Committee amounting to Rs. 10.00 lacs (P.Y.- NIL)

10. Amount due and outstanding to be credited to Investor Education and Protection Fund - Nil (P.Y. - Nil)

11. Exchange differences on the principal amount of the foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs as mandated by paragraph 4(e) of Accounting Standard 16 have been disclosed under note “Finance Cost”. Such exchange differences on principal amount of foreign borrowing are not interest on the foreign borrowing.

B. Other Related Parties with whom transactions have taken place during the year

i) Key Management Personnel

1) Shri R. S. Agarwal

2) Shri R. S. Goenka

3) Shri Sushil Kr. Goenka

ii) Relatives of Key Management Personnel

1) Smt. Usha Agarwal

2) Smt. Saroj Goenka

3) Shri Mohan Goenka

4) Shri A. V. Agarwal

5) Shri Manish Goenka

6) Shri H. V. Agarwal

7) Smt. Priti Sureka

iii) Entities where Key Management Personnel and their relatives have significant influence

1) Diwakar Viniyog Private Limited

2) Suntrack Commerce Private Limited

3) Emami Paper Mills Limited

4) Emami Foundation

5) Aradhana Trust

6) Emami Infrastructure Limited

7) Emami Realty Limited

8) Zandu Realty Limited

9) K.D.Goenka & Sons HUF

10) R.S.Agarwal HUF

11) Himani Ayurveda Science Foundation

12) Aviro Vyapar Private Limited

12 Previous year's figures have been rearranged/regrouped wherever necessary.


Mar 31, 2011

1 a. Business Segment

As the Company's business activity falls within a single primary business segment,viz."Personal and Healthcare", the disclosure requirements of Accounting Standard-17 "Segment Reporting", notified in the companies Accounting Standard Rules, 2006 are not applicable.

2. Derivative Instruments:

The Company uses Forward Exchange Contracts and Options to hedge its risk associated with fluctuations in foreign currency and interest rates relating to foreign currency liabilities and some forecasted transactions related to foreign currency trade. The use of forward contracts and options is governed by companies overall strategy. The company does not use forward contract and options for speculative purposes.

3. Taxes on Sales is net of Rs. 1087.70 Lacs being reversal of excess provisions / payments made in earlier years

4. The assets of the company have been assessed for impairment in accordance with Accounting Standard 28 ''Impairment of Assets", consequently, during the year an impairment reversal of Rs. 181.47 Lacs was recognised (P.Y. impairment charge of Rs. 181.47 Lacs).

5. There were no dues outstanding for more than 45 days to any Micro, Small and Medium Enterprises Creditor. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such communication has been received from the respective parties by the company. This has been relied upon by the Auditors.

6. Security for Term Loan from Banks of Rs. 4465.00 Lacs is yet to be created.

7. Loans & Advances include Security Deposit of Rs. 14.72 Lacs (Previous Year- Rs. 14.82 Lacs) due from Directors of the Company against tenancies. (Maximum amount outstanding during the year - Rs. 14.82 Lacs) (Previous Year -Rs. 15.01 Lacs).

8. The Company has incurred a sum of Rs. 134.52 Lacs (Previous Year - Rs. 168.64 Lacs) on Research & Development which is charged to the Profit and Loss account under Miscellaneous Expenses.

9. a) Contingent Liabilities not provided for in respect of :

(Rs. in lacs)

March 31, 2011 March 31, 2010

i) Excise Duty demands 833.88 668.51

ii) Service Tax 35.91 35.91

iii) Sales Tax demands under appeal (Net of Advances) 643.89 500.92

iv) Income Tax 5.22 --

v) Other Taxes 9.28 9.28

vi) Claims against Company not acknowledged as Debts 58.93 57.20

Note : Contingent Liability disclosed above represent possible obligations where the possibility of cash outflow to settle the obligation is remote.

10. The Company has entered into a Put Option Contract Agreement with ICICI Bank and Emami Paper Mills Limited in connection with the External Commercial Borrowings facilities availed of by Emami Paper Mills Limited from ICICI Bank for a sum of USD 16.50 million.

11. The company had opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 on Accounting Standard 11 notified by Government of India on March 31, 2009.

As per the above notification foreign exchange translation reserve of Rs. 141.16 Lacs has been credited to Profit & Loss Account.

12. Amount due and outstanding to be credited to Investor Education and Protection Fund - Nil (Previous Year - Nil)

13. a. The Ministry of Corporate Affairs, Government of India vide its General Notification No. S.O.301(E) dated 8th February 2011 issued under Section 211(3) of the Companies Act, 1956 has exempted certain classes of companies from disclosing certain information in their profit & loss account. The company being an manufacturing & trading company is entitled to the exemption. Accordingly, disclosures mandated by paragraphs 3(i)(a), 3(ii)(a) and 3(ii)(b) of Part-II, Schedule VI to the Companies Act, 1956 have not been provided.

b. The Ministry of Corporate Affairs, Government of India vide its General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidaries has been included in the Consolidated Financial Statements.

14. Related Party Transactions :

A. Parties where Control exists :

Subsidiaries % of Holding

i) Emami UK Limited 100.00%

ii) Emami Bangladesh Limited 100.00%

iii) Emami- International FZE 100.00%

iv) Emami Overseas FZE - Subsidiary of Emami International FZE (w.e.f. 25/11/2010) 100.00%

v) Pharma Derm SAE Co.- Subsidiary of Emami Overseas FZE (w.e.f. 04/12/2010) 90.60%

B. Other Related Parties with whom transactions have taken place during the year i) Key Management Personnel

1 Shri R. S. Agarwal

2 Shri R. S. Goenka

3 Shri Sushil Kr. Goenka

ii) Relatives of Key Management Personnel

1 Smt. Usha Agarwal

2 Smt. Saroj Goenka

3 Shri Mohan Goenka

4 Shri A. V. Agarwal

5 Shri Manish Goenka

6 Shri H. V. Agarwal

7 Smt. Priti Sureka

iii) Entities where Key Management Personnel and their relatives have significant influence

1 Diwakar Viniyog Private Limited

2 Suntrack Commerce Private Limited

3 Bhanu Vyapaar Private Limited

4 Emami Paper Mills Limited

5 Emami Foundation

6 Bansilal Jankidevi Agarwal Trust

7 Keshardeo Ratnidevi Goenka Trust

8 Zandu Foundation Health Care

9 Emami Infrastructure Limited

10 Emami Realty Limited

11 Zandu Realty Limited

12 K.D. Goenka & Sons HUF

13 R.S. Agarwal HUF

14 Himani Ayurveda Science Foundation

15 Aviro Vyapar Private Limited

15. Previous year's figures have been rearranged/regrouped wherever necessary


Mar 31, 2010

1 a. Business Segment

As the Companys business activity falls within a single primary business segment, viz. "Personal and Healthcare", the disclosure requirements of Accounting Standard-17 "Segment Reporting", notified in the companies Accounting Standard Rules, 2006 are not applicable.

2 Derivative Instruments:

The Company uses Forward Exchange Contracts and Options to hedge its risk associated with fluctuations in foreign currency and interest rates relating to foreign currency liabilities and some forecasted transactions related to foreign currency trade. The use of forward contracts and options is governed by companies overall strategy. The company does not use forward contract and options for speculative purposes.

3 On July 6, 2009 Company has allotted 1,00,00,000 Equity shares of Rs. 2/- each at a price of Rs.310/- per share to Qualified Institutional buyers (QIBs) through QIP route. The fund has been used for Repayment of borrowings and Share issue expenses.

4 The assets of the Company have been assessed for Impairment in accordance with Accounting Standard 28 "Impairment of Assets". Consequently, impairment of Rs. 181.47 Lacs (Previous Year : Rs. Nil) in Pondicherry units has been provided in the accounts during the year.

5 VRS compensation of Rs. 725.98 Lacs is after adjusting Rs. 600.00 Lacs received from Zandu Realty Limited.

6 There were no dues outstanding for more than 45 days to any Micro, Small and Medium Enterprises Creditor. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such communication has been received from the respective parties by the company. This has been relied upon by the Auditors.

7 Loans & Advances include Security Deposit of Rs. 14.82 Lacs (Previous Year- Rs. 15.01 Lacs) due from Directors of the Company against tenancies. (Maximum amount outstanding during the year - Rs. 15.01 Lacs) (Previous year -Rs. 15.01 Lacs).

8 The Company has incurred a sum of Rs. 168.64 Lacs (Previous Year - Rs. 231.72 Lacs) on Research & Development which is charged to the Profit and loss account under Miscellaneous Expenses.

9 a) Contingent Liabilities not provided for in respect of :

(Rs. in lacs)

March 31, 2010 March 31, 2009

i) Excise Duty demands 545.59 89.82

ii) Service Tax 158.83 -

iii) Sales Tax demands under appeal (Net of Advances) 500.92 834.23

iv) Other Taxes 9.28 34.22

v) Claims against Company not acknowledged as Debts 57.20 166.74



Note : Contingent Liability disclosed above represent possible obligations where the possibility of cash outflow to settle the obligation is remote.

10 The Company has entered into a Put Option Contract Agreement with ICICI Bank and Emami Paper Mills Limited in connection with the External Commercial Borrowings facilities availed of by Emami Paper Mills Limited from ICICI Bank for a sum of USD 16.50 million.

11 The company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 on Accounting Standard 11 notified by Government of India on March 31, 2009.

Foreign exchange gain of Rs. 33.87 Lacs was credited to Profit & Loss Account in Financial Year 2007-08. As per the above notification, the same was Credited to Fixed Assets under respective heads and the effect of the same was debited to General Reserve in FY. 2008-09.

As per the above notification foreign exchange gain of Rs. 271.16 Lacs for the year has been amortised over the period of the loan. Therefore, a sum of Rs. 130 Lacs has been credited to Profit & Loss Account and the balance of Rs. 141.16 Lacs has been transferred to Foreign Currency Monetary Item Translation Difference Account to be amortised in subsequent periods, but not beyond March 31, 2011.

12 Amount due and outstanding to be credited to Investor Education and Protection Fund - Nil (Previous Year - Nil).

13 Pursuant to to experts report, the management has reviewed the useful life of the various intangible assets embedded in the goodwill, which was accounted for in financial year 2008-09, consequent to the scheme of arrangement with Zandu from 20 years to 5 years. Due to this change there is excess amortisation of goodwill of a sum of Rs.7814.29 Lacs for the year and simultaneous increase in transfer from General Reserve to Profit and Loss Account by equivalent amount.

14 Related Party Transactions :

A. Parties where Control exists :

Subsidiaries % of Holding

i) Emami UK Limited 100.00%

ii) Emami Bangladesh Limited 100.00%

iii) Emami- International FZE 100.00%

B. Other Related Parties with whom transactions are taken place during the year i) Key Management Personnel

1 Shri R. S. Agarwal

2 Shri R. S. Goenka

3 Shri Sushil Kr. Goenka

ii) Relatives of Key Management Personnel

1 Smt. Usha Agarwal

2 Smt. Saroj Goenka

3 Shri Mohan Goenka

4 Shri A. V. Agarwal

5 Shri Manish Goenka

6 Shri H. V. Agarwal

7 Smt. Priti Sureka

iii) Entities where Key Management Personnel and their relatives have significant influence

1 Diwakar Viniyog Private Limited

2 Suntrack Commerce Private Limited

3 Bhanu Vyapaar Private Limited

4 Emami Paper Mills Limited

5 Emami Foundation

6 Bansilal Jankidevi Agarwal Trust

7 Keshardeo Ratnidevi Goenka Trust

8 Zandu Foundation Health Care

9 Emami Infrastructure Limited

10 Emami Realty Limited

11 Zandu Realty Limited

12 K.D. Goenka & Sons HUF

13 R.S. Agarwal HUF

15 In terms of the Scheme of Arrangement, pursuant to provisions of sections 391 to 394 of the Companies Act, 1956, Zandu FMCG undertaking of The Zandu Pharmaceutical Works Limited was demerged into Emami with effect from the appointed date i.e. November 5, 2008, as a result of which previous years figures are not comparable.

16 Previous years figures have been rearranged/regrouped wherever necessary.


Mar 31, 2009

1 A. Business Segment

As the Companys business activity falls within a single primary business segment,viz."Personal and Healthcare", the disclosure requirements of Accounting Standard-17 "Segment Reporting", notified in Companies (Accounting Standards) Rules, 2006 are not applicable.

2 Derivative Instruments:

The Company uses Forward Exchange Contracts and Options to hedge its risk associated with fluctuations in foreign currency and interest rates relating to foreign currency liabilities and some forecasted transactions related to foreign currency trade. The use of forward contracts and options is governed by Companys overall strategy. The Company does not use forward contract and options for speculative purposes. Rs. in lacs

3 Since external and internal sources of information do not provide for any indication for impairment of fixed assets based on cash generating unit concept, no further impairment is required during the year.

4 There were no dues outstanding for more than 45 days to any Micro, Small and Medium Enterprises Creditor. The above information regarding Micro, Small and Medium Enterprise has been determined to the extent such communication has been received from the respective parties by the Company. This has been relied upon by the Auditors.

5 Loans & Advances include Security Deposit of Rs. 15.01 lacs (Previous Year - Rs. 15.01 lacs) due from Directors of the Company against tenancies. (Maximum amount outstanding during the year - Rs. 15.01 lacs) (Previous year - Rs. 15.01 lacs).

6 The Company has incurred a sum of Rs. 231.72 lacs (Previous Year - Rs. 81.14 lacs) on Research & Development which is charged to the Profit and loss account under Miscellaneous Expenses.

7 Against an order of Income Tax Appelate Tribunal in favour of the Company, the Income Tax Department has filed an appeal before the Honorable Kolkata High Court against a demand of Rs. 438.87 lacs for the A.Y.2000-01. The Company has been legally advised that no adverse order is likely to come against the same.

8 The Company has entered into a Put Option Contract Agreement with ICICI Bank and Emami Paper Mills Limited in connection with the External Commercial Borrowings facilities availed of by Emami Paper Mills Limited from ICICI Bank for a sum of USD 16.50 million.

9 The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 on Accounting Standard 11 notified by Government of India on March 31, 2009.

Foreign exchange gain of Rs. 33.87 lacs was credited to Profit & Loss Account in Financial Year 2007-08. As per the above notification, the same has now been Credited to Fixed Assets under respective heads and the effect of the same has been debited to General Reserve. Due to the above, depreciation has been reduced by Rs. 1.46 lacs for the year.

As per the above notification foreign exchange loss of Rs. 341.10 lacs chargeable to Profit & Loss Account has been amortised over the period of the loan. Therefore, a sum of Rs. 27.34 lacs has been charged to Profit & Loss Account and balance of Rs. 313.76 lacs has been transferred to Foreign Currency Monetary Item Translation Difference Account to be amortised in subsequent periods,but not beyond March 31, 2011.

As a result of this change in accounting for exchange differences, profit before tax for the year ended is higher by Rs. 315.22 lacs.

10 Amount due and outstanding to be credited to Investor Education and Protection Fund - Nil (Previous Year - Nil)

11 a) In terms of the Scheme of Arrangement (hereinafter referred as “the Scheme”) pursuant to provisions of sections 391 to 394 of the Companies Act, 1956, between the Company (Emami), its subsidiary company, The Zandu Pharmaceutical Works Limited (Zandu) and Emami Infrastructure Limited (EIL) and their respective share holders, as approved by the shareholders of the respective Companies in the Court convened meeting held on September 11, 2009 and sanctioned by the Honourable High Court, Kolkata vide its order dated November 17, 2009. Zandu FMCG undertaking of Zandu is demerged into Emami and simultaneously Realty Undertaking of Emami, including Emami Realty Limited and Emamis interest in Zandus Noncore Business including Real Estate, is demerged into EIL with effect from the appointed date i.e. November 05, 2008. The aforesaid scheme is effective from December 02, 2009, being the date of filing of the certified copy of the Order of the High Court, with the Registrar of Companies, West Bengal. The scheme has accordingly been given effect to in these financial statements.

b) i Pursuant to the Scheme, Zandu FMCG undertaking with all the asset and liablities pertaining to this division is

demerged into the Company and transferred to and is vested in the Company on a going concern basis.

ii In terms of the Scheme, out of the carrying value of investment in the equity shares of Zandu in the books of Emami a sum representing the proportion of the net book value of the assets of Zandu FMCG undertaking to the networth of Zandu is treated as the cost of acquisition of the shares of Zandu FMCG undertaking and the carrying value that remains after reducing such Zandu FMCG cost is treated as the cost of aquisition of Zandu Non Core Undertaking.

iii In terms of the Scheme, the excess of Zandu FMCG cost over book value of net assets of Zandu FMCG undertaking transferred to and vested in Emami, after reckoning the par value of shares to be issued by Emami to the shareholders of Zandu, is considered as goodwill amounting to Rs. 47,899.11 lacs.

iv In terms of the Scheme, Emami has to issue Equity shares of the Company to the shareholders of Zandu in proportion to 14 new Equity shares of the Company of Rs. 2/- each fully paid up for every one equity share of Zandu of Rs. 100/- each fully paid up aggregating to 35,10,696 equity shares amounting to Rs. 70.21 lacs. Pending allotment of these shares the aggregate paid up value thereof is credited to share capital suspense account.

v Accounts of Zandu FMCG undertaking with effect from the appointed date to March 31, 2009 have been accounted for in the books of the Company as certified and audited by the statutory auditors of Zandu. The same have been relied upon by the auditors of the Company.

c) i Emami Realty undertaking with all its assets and liabilities pertaining to this division is demerged from the Company on a going concern basis into EIL in terms of above scheme.

ii In terms of the Scheme, the book value of the net assets of Emami Realty undertaking are transferred to EIL by adjusting Amalgamation Reserve of Rs. 268.38 lacs and General Reserve of Rs. 2,555.08 lacs.

iii The Company has carried on the business and activities of the Demerged Emami Realty undertaking from the appointed date onwards till the effective date and has held and possessed all the assets and properties of the Emami Realty undertaking for and on account of and in trust of EIL. All profit or income accruing or arising to the Company or expenditure or losses arising or incurred by it relating to Emami Realty undertaking are for all purposes, treated and deemed to be accrued as the profit or income or expenditure or losses, as the case may be, of EIL. After the "Effective Date", EIL will take necessary steps for transfer of all the assets and properties of Emami Realty undertaking in its name.

d) Order of the Honourable High Court of Kolkata confirming the reduction in the Capital Redemption Reserve account of Zandu pursuant to clause 12.3 of the scheme has not yet been passed.

e) In terms of the Scheme of arrangement, a sum of Rs. 964.54 lacs equivalent to the amount of Goodwill amortisation has been transferred from General Reserve to Profit and Loss Account.

12 There is a change in accounting policy for accounting for Government Grants related to acquisition of Fixed Asset which were earlier credited to Capital Reserve & now credited to Fixed Asset. However due to the above change in accounting policy there is no impact on profits since no capital subsidy has been accounted for during the year.

B. Other Related Parties with whom transactions are taken place during the year

i) Key Management Personnel

1 Shri R S Agarwal

2 Shri R S Goenka

3 Shri Sushil Kr. Goenka

ii) Relatives of Key Management Personnel

1 Smt. Usha Agarwal

2 Smt. Saroj Goenka

3 Shri Mohan Goenka

4 Shri A V Agarwal

5 Shri Manish Goenka

6 Shri H V Agarwal

7 Smt. Priti Sureka

iii) Entities where Key Management Personnel and their relatives have significant influence

1 Diwakar Viniyog Private Limited

2 Suntrack Commerce Private Limited

3 Bhanu Vyapaar Private Limited

4 Emami Paper Mills Limited

5 Emami Foundation

13 Previous years figures have been rearranged/regrouped wherever necessary.

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