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Notes to Accounts of Emami Ltd.

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, 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.

 
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