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Notes to Accounts of Godfrey Philips India Ltd.

Mar 31, 2016

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. Corporate Social Responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, healthcare and woman economic empowerment, providing disaster relief and undertaking rural development projects.

Gross amount required to be spent by the Company during the year is Rs.496.00 lacs (Previous year Rs.499.00 lacs) and the details of amount spent are as under:

2 (a). The following are the particulars of dues on account of sales tax, value added tax, excise duty and income-tax as at March 31, 2016 that have been disputed by the Company in appeals pending before the appellate authorities:

Further, there are no dues of customs duty which have not been deposited on account of any disputes. Further, as per information available with the Company, the concerned authority is in appeal against favourable orders received by the Company in respect of the following matters:

2. (b) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the requirements of the Companies Act.

3. The Company and its contract manufacturers have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

4. a) The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.2239.24 lacs (previous year- Rs.7767.74 lacs).

b) The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term contracts including derivative contracts for which there will be any material foreseeable losses.

5. The amount due to micro, small and medium enterprises as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006" ("MSMED") has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to the micro, small and medium enterprises as at March 31, 2016 are as under.

6. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year - Rs.820.49 lacs (previous year - Rs.1176.50 lacs).

(ii) for periods between later than one year and less than five years - Rs.307.13 lacs (previous year - Rs.5337.10 lacs).

(iii) For period later than five years- Rs. Nil (previous year Rs.1814.78 lacs).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 22.

7. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited

Godfrey Phillips Middle East DMCC (company incorporated in Dubai)

Flavors And More, Inc. (company incorporated in USA)

(b) Subsidiaries through the subsidiary companies:

Friendly Reality Projects Limited

(Formerly Kashyap Metal and Allied Industries Limited)

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Friendly Reality Projects Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc., of which the Company is an associate.

K K Modi Investment & Financial Service Private Limited, of which the Company is an associate. Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company.

(d) Key management personnel and their relatives:

Mr. K.K.Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director (upto 28th May,2015) and a relative of

Mr.K.K.Modi, Mrs. Bina Modi and Mr.Samir Kumar Modi

Mrs. Bina Modi Ordinary Director and a relative of Mr. K.K. Modi,

Mr. Lalit Kumar Modi and Mr. Samir Kumar Modi

Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Beacon Travels Private Limited

Indofil Industries Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

8. Employee Benefits

The Company has classified the various benefits provided to employees as under -

I. Defined contribution plans and amounts recognized in the statement of profit and loss

II. Other long term employee benefits (based on actuarial valuation)

- Compensated absences - amount recognized in the statement of profit and loss- Rs.1435.89 lacs (previous year Rs.1760.77 lacs).

III. Defined benefit plans (based on actuarial valuation)

- Gratuity

In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined benefit plan and details of the same are given below:

9. Previous year''s figures have been regrouped/reclassified, wherever considered necessary to confirm to the current year''s classification/disclosure.


Mar 31, 2015

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. The exceptional item in the previous year represents compensation paid to unionized staff and workmen attached to the Company's plant at Andheri, Mumbai, pursuant to the voluntary retirement schemes announced by the Company under the terms of settlement memorandum executed by it with the workers' union.

2. The face value of equity share of the Company has been split from Rs.10 to Rs. 2 per share w.e.f. December 1, 2014. Accordingly, all shares and per share information in these financial statements reflect the effect of split retrospectively for the previous year.

3. Corporate Social Responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, healthcare and woman economic empowerment, providing disaster relief and undertaking rural development projects.

4. Contingent Liabilities not provided for As at As at 31.3.2015 31.3.2014

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 3679.74* 3592.66*

b) Uncalled liability on shares partly paid 79.24 79.24

c) Guarantee given to a bank on behalf of subsidiary company – International Tobacco Company Limited 81.18 76.99

* includes Rs. 1809.72 lacs (previous year Rs.1812.19 lacs) relating to demands received by the subsidiary company – International Tobacco Company Limited. @ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

5. a) The following are the particulars of dues on account of sales tax, value added tax, excise duty and income-tax as at March 31, 2015 that have been disputed by the Company in appeals pending before the appellate authorities:

6. The Company and its contract manufacturers have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

7. a) The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.7767.74 lacs (previous year- Rs.4661.44 lacs).

b) The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term contracts including derivative contracts for which there will be any material foreseeable losses.

8. The amount due to micro, small and medium enterprises as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006" ("MSMED") has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to the micro, small and medium enterprises as at March 31, 2015 are as under.

9. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year – Rs.1176.50 lacs (previous year – Rs.254.74 lacs).

(ii) for periods between later than one year and less than five years – Rs.5337.10 lacs (previous year – Rs.473.90 lacs).

(iii) For period later than five years- Rs. 1814.78 lacs (previous year Rs. Nil).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 22.

10. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited

Chase Investments Limited

(b) Subsidiaries through the subsidiary companies:

Kashyap Metal and Allied Industries Limited

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc., of which the Company is an associate.

K K Modi Investment & Financial Service Private Limited, of which the Company is an associate.

Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company.

(d) Key management personnel and their relatives:

Mr. K.K. Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director and a relative of Mr. K.K. Modi,

Mrs. Bina Modi and Mr. Samir Kumar Modi

Mrs. Bina Modi Ordinary Director and a relative of Mr. K.K. Modi,

Mr. Lalit Kumar Modi and Mr.Samir Kumar Modi

Mr. R. Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Beacon Travels Private Limited

Indofl Industries Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

11. As per the requirements of the Companies Act, 2013, the Company has computed depreciation with reference to the useful life of respective assets specified in and in the manner prescribed 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 open- ing balance of retained earnings and an additional depreciation 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, depreciation has been charged as per the provisions of said Schedule II.

12. Previous year's figures have been regrouped/reclassified, wherever considered necessary to conform to the current year's classification/disclosure.


Mar 31, 2014

I. The exceptional item represents compensation paid to unionized staff and workmen attached to the Company''s plant at Andheri, Mumbai, pursuant to the voluntary retirement schemes announced by the Company under the terms of settlement memorandum executed by it with the workers'' union.

II. Contingent Liabilities not provided for As at As at 31.3.2014 31.3.2013

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 3592.66* 2873.54*

b) Uncalled liability on shares partly paid 79.24 79.24

c) Guarantee given to a bank on behalf of subsidiary company - International Tobacco Company Limited 76.99 54.29

* includes Rs. 1812.19 lacs (previous year Rs.1730.18 lacs) relating to demands received by the subsidiary company - International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

III. The Company and its contract manufacturers have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

IV. The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.4661.44 lacs (previous year- Rs.5449.58 lacs).

The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

V. Amount due to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Act, 2006" has been disclosed to the extent such parties having been identified from the available information. The Company has not received any claim for interest from any party covered under the said Act.

VI. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year - Rs.254.74 lacs (previous year - Rs.165.96 lacs).

(ii) for periods between later than one year and less than five years - Rs.473.90 lacs (previous year - Rs.386.79 lacs).

(iii) For period later than five years- Rs. Nil (previous year Rs. Nil).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 21.

VII. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited

(b) Subsidiaries of the subsidiary companies:

Kashyap Metal and Allied Industries Limited

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc., of which the Company is an associate.

K K Modi Investment & Financial Service Private Limited, of which the Company is an associate. Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company

(d) Key management personnel and their relatives:

Mr. K.K. Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director and a relative of Mr. K.K. Modi and Mr. Samir Kumar Modi

Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Beacon Travels Private Limited

Indofil Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in Note 1, the accounting policies in relation to segment accounting are as under:

VIII Segment revenue and expenses:

Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from inter-corporate deposits and loans given, dividend income, profit or loss on sale of investments, provision for diminution in value of investments, finance cost, donations and provision for taxation (current and deferred tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

a) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, inter-corporate deposits and loans given, bank balances for unclaimed dividend and fixed deposits'' unclaimed interest, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current and deferred tax).


Mar 31, 2013

1. CONTINGENT LIABILITIES NOT PROVIDED FOR

As at As at 31.3.2013 31.3.2012

a) Demands from excise'' income tax'' sales tax and other authorities disputed by the Company @ 2873.54* 2459.27*

b) Uncalled liability on shares partly paid 79.24 79.24

c) Guarantee given to a bank on behalf of subsidiary company – International Tobacco Company Limited 54.29 54.29

*includes Rs.1730.18 lacs (previous year Rs.1784.86 lacs) relating to demands received by the subsidiary company – International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company'' these are not expected to have material effect on the fnancial results of the Company when ultimately concluded.

2. The Company and its contract manufacturer have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required'' the Company does not consider these to constitute a liability of any kind.

3. The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.5449.58 lacs (previous year- Rs.5642.29 lacs).

The Company has other commitments'' for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefts including union agreements'' in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts'' which might have material impact on the fnancial statements.

4. Amount due to micro and small enterprises covered under "The Micro'' Small and Medium Enterprises Act'' 2006" has been disclosed to the extent such parties having been identifed from the available information. The Company has not received any claim for interest from any party covered under the said Act.

5. The Company has entered into various operating lease agreements for premises (residential'' offces'' godowns'' etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally'' or longer'' and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year – Rs.165.96 lacs (previous year – Rs.207.85 lacs).

(ii) for periods between later than one year and less than fve years – Rs.386.79 lacs (previous year

– Rs.460.52 lacs). (iii) For period later than fve years- Rs. Nil (previous year Rs.80.73 lacs).

The Company has let out and sub-let part of its owned and rented offce premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 21.

6. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited

(b) Subsidiaries of the subsidiary companies:

Kashyap Metal and Allied Industries Limited

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied

Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc.'' of which the Company is an associate. Success Principles India Limited'' an associate of the Company. IPM India Wholesale Trading Private Limited'' an associate of the Company. KKM Management Centre Private Limited'' an associate of the Company

(d) Key management personnel and their relatives:

Mr. K.K.Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director and a relative of

Mr.K.K.Modi and Mr.Samir

Kumar Modi Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise signifcant infuence:

Modicare Limited

Beacon Travels Private Limited

Indofl Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

7. Previous year’s figures have been regrouped/reclassified'' wherever considered necessary to conform to the current year’s classifcation/disclosure.


Mar 31, 2012

(i) There has been no movement in the equity shares in the current and previous year.

(ii) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

(iii) Shares held by each shareholder holding more than 5%:

1. CONTINGENT LIABILITIES NOT PROVIDED FOR As at As at 31.3.2012 31.3.2011

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 2459.27* 2524.93

b) Uncalled liability on shares partly paid 79.24 148.99

c) Surety given to U.P. Trade Tax Authority on behalf of subsidiary company- international Tobacco Company Limited - 15.66

d) Guarantee given to a bank on behalf of subsidiary company - International Tobacco Company Limited 54.29 46.79

*includes Rs.1784.86 lacs (previous year Rs.1702.65 lacs) relating to demands received by the subsidiary company - International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

Further, there are no dues of wealth tax, customs duty and service tax which have not been deposited on account of any disputes.

Further, as per information available with the Company, the concerned authority is in appeal against favourable orders received by the Company in respect of the following matters:

2. The Company and its contract manufacturer have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

3. The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.5642.29 lacs (previous year- Rs.19369.47 lacs).

The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

4. Amount due to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Act, 2006" has been disclosed to the extent such parties having been identified from the available information. The Company has not received any claim for interest from any party covered under the said Act.

5. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods ofcertain operating leases are as under:

(i) for periods not later than one year - Rs.207.85 lacs (previous year - Rs.118.22 lacs)

(ii) for periods between later than one year and less than five years - Rs.406.52 lacs (previous year - Rs.216.65 lacs).

(iii) For period later than five years- Rs.80.73 Lacs (previous year Rs. Nil).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 21.

6. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited

Chase Investments Limited

Manhattan Credits and Finance Limited (merged with Chase Investments Limited in current year)

City Leasing and Finance Company Limited (merged with Chase Investments Limited in current year)

(b) Subsidiaries of the subsidiary companies:

Kashyap Metal and Allied Industries Limited Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc. (Formerly Philip Morris International Finance Corporation), which the Company is an associate.

Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company .

(d) Key management personnel and their relatives:

Mr. K.K. Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Executive Director (upto July 31, 2010) and Ordinary Director thereafter and a relative of Mr. K.K.Modi and Mr.Samir Kumar Modi

Mr. R. Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Modern Homecare Products Limited

Beacon Travels Private Limited

Indofil Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

7. Segment reporting disclosures under Accounting Standard 17

(A) Business segments:

Based on the guiding principles given in Accounting Standard-17 "Segment Reporting", the Company's primary business segments are (a) Cigarette and tobacco products; and (b) Tea and other retail products.

(B) Geographical segments:

Since the Company's activities/operations are primarily within the country and considering the nature of products it deals in, the risks and returns are same and as such there is only one geographical segment.

Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in Note 1, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from inter-corporate deposits and loans given, dividend income, profit or loss on sale of investments, provision for diminution in value of investments, finance cost, donations and provision for taxation (current and deferred tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

b) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, inter-corporate deposits and loans given, bank balances for unclaimed dividend and fixed deposits' unclaimed interest, real estate stock, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current and deferred tax).

II. Other long term employee benefits (based on actuarial valuation)

* Compensated absences - amount recognized in the statement of profit and loss - Rs.842.57 lacs; previous year Rs.737.23 lacs.

III. Defined benefit plans (based on actuarial valuation)

* Gratuity

In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined benefit plan and details of the same are given below:

8. The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/reclassified, wherever considered necessary to conform to the current year's classification/disclosure.

 
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