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Notes to Accounts of Godrej Consumer Products Ltd.

Mar 31, 2017

1. CORPORATE INFORMATION

Godrej Consumer Products Limited (the Company) was incorporated on November 29, 2000, to take over as a going concern the consumer products business of Godrej Soaps Limited (subsequently renamed as Godrej Industries Limited), pursuant to a Scheme of Arrangement as approved by the High Court, Mumbai,

The Company is a fast moving consumer goods company, manufacturing and marketing Household and Personal Care products, The Company is a public company limited by shares, incorporated and domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), The Company’s registered office is at 4th Floor, Godrej One, Pirojshanagar, Eastern Express Highway, Vikhroli (east), Mumbai -400 079,

2. BASIS OF PREPARATION, MEASUREMENTAND SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation and measurement

a) Basis of Preparation

The financial statements have been prepared in accordance with Indian Accounting Standards (“Ind AS”) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘Act’) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016 and other relevant provisions of the Act,

The financial statements up to year ended March 31, 2016 were prepared in accordance with the accounting standards notified under the Companies (Accounting Standard) Rules 2006 and other relevant provisions of the Act, considered as the “Previous GAAP”,

These financial statements are the Company’s first Ind AS financial statements and are covered by Ind AS 101, First-time adoption of Indian Accounting Standards, An explanation of how the transition to Ind AS has affected the Company’s equity, financial position, financial performance and its cash flows is provided in Note 51,

Current versus non-current classification

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013, Based on the nature of products and the time taken between acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle as twelve months for the purpose of the classification of assets and liabilities into current and noncurrent,

b) Basis of Measurement

These financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:

- Certain financial assets and liabilities (including derivative instruments) measured at fair value (refer accounting policy regarding financial instruments),

- Defined benefit plans - plan assets and share-based payments measured at fair value

- Assets held for sale -measured at lower of carrying value or fair value less cost to sell

2.2 Key estimates and assumptions

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, Actual results may differ from these estimates,

The areas involving critical estimates or judgements are:

i, Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalized; (Note 2,5 (a))

ii, Determination of the estimated useful lives of intangible assets and determining intangible assets having an indefinite useful life; (Note 2,5 (b))

iii, Recognition and measurement of defined benefit obligations, key actuarial assumptions; (Note 44)

iv. Recognition and measurement of provisions and contingencies, key assumptions about the likelihood and magnitude of an outflow of resources; (Note 2.5 (h))

v. Fair valuation of employee share options, Key assumptions made with respect to expected volatility; (Note 2.5 (j)(ii))

vi. Rebates and sales incentives accruals

vii. Fair value of financial instruments (Note 2.3)

2.3 Measurement of fair values

The Company’s accounting policies and disclosures require financial instruments to be measured at fair values,

The Company has an established control framework with respect to the measurement of fair values, The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs,

The management regularly reviews significant unobservable inputs and valuation adjustments,

If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified,

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows,

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities,

Level 2: inputs other than quoted prices included in 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 asset or liability that are not based on observable market data (unobservable inputs),

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement,

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred,

2.4 Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of Cash Flows’ and Ind AS 102, ‘Share-based payment.’ The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement, Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes,

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity settled awards,

The amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification, Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement,

The Company is currently evaluating the effect of the above amendments,

a) During the year, the Company has issued 66,993 equity shares (previous year 86,922) under the Employee Stock Grant Scheme,

b) 31,124 Right Issue equity shares (previous year 31,124 equity shares) are kept in abeyance due to various suits filed in courts / forums by third parties for which final order is awaited,

c) The reconciliation of number of equity shares outstanding and the amount of share capital at the beginning and at the end of the reporting period:

d) Terms / rights attached to equity shares

The Company has issued only one class of equity shares having a par value of Rs.1 each. Each equity shareholder is entitled to one vote per share,

During the year ended March 31, 2017 the amount of per share dividend recognised as distribution to equity shareholders was Rs.5.75 (previous year Rs.5.50).

e) Shares held by Holding Company and Subsidiary of Holding Company and details of shareholders holding more than 5% shares in the Company:

*Godrej & Boyce Manufacturing Company has ceased to be the holding company with effect from March 30, 2017 owing to reorganisation of shareholding within promoter group

f) Shares Reserved for issue under options

The Company has 128,895 (previous year 141,096) equity shares reserved for issue under Employee Stock Grant Scheme as at March 31, 2017. (As detailed in Note 45)

g) Information regarding aggregate number of equity shares during the five years immediately preceding the date of Balance Sheet:

The Company has not issued any bonus shares or shares for consideration other than cash and has not bought back any shares during the past five years,

The Company has not allotted any shares pursuant to contract without payment being received in cash,

h) There are no calls unpaid on equity shares, other than shares kept in abeyance as mentioned in Note (b) above,

i) No equity shares have been forfeited,

j) Capital Management

The primary objective of the Company’s capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios to support its business and maximize shareholder value. The Company makes adjustments to its capital structure based on economic conditions or its business requirements. To maintain / adjust the capital structure the Company may make adjustments to dividend paid to its shareholders or issue new shares,

The Company monitors capital using the metric of Net Debt to Equity. Net Debt is defined as borrowings less cash and cash equivalents, fixed Deposits and readily redeemable investments,

Nature and purpose of reserves

1) Securities premium reserve

The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve, The reserve is utilised in accordance with the provisions of the Companies Act,

2) General reserve

The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of Companies Act 1956, Mandatory transfer to general reserve is not required under the Companies Act 2013,

3) Capital Investment Subsidy Reserve

Capital Investment Subsidy Reserve represents subsidy received from the government for commissioning of Malanpur plant in the nature of capital investment,

4) Capital redemption reserve

Capital Redemption reserve represents amount set aside by the company for future redemption of capital,

5) Debenture Redemption Reserve

The Company had issued debentures in India and as per the provisions of the Companies Act, 2013, is required to create debenture redemption reserve out of the profits of the Company available for the payment of dividend. The debenture redemption reserve has been transferred to retained earning during the year ended March 31, 2016 on redemption of the debentures,

6) Employee Stock Options Outstanding

The shares option outstanding account is used to recognise the grant date fair value of options issued to employees under the Employee Stock Grant Scheme which are unvested as on the reporting date and is net of the deferred employee compensation expense, Refer note 45 for details on ESGS Plans,

7) Effective portion of Cash Flow Hedges

The cash flow hedging reserve represents the cumulative portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow reserve will be reclassified to Statement of Profit and Loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non financial hedged item,

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets, The recoverability of deferred income tax assets is based on estimates of taxable income in which the relevant entity operates and the period over which deferred income tax assets will be recovered,

As on March 31, 2017 the tax liability with respect to the dividends proposed is Rs.83,21 crores (31-Mar-16 : Rs.19,06 crores, 1-Apr-15 : Rs.17,33 crores)

During the year, the Company has not accounted for tax credits in respect of Minimum Alternative Tax (MAT credit) of Rs.77,98 crores (31-Mar-16 : Rs.83,65 crores, 1-Apr-15 : Rs.94,72 crores ), The Company is not reasonably certain of availing the said MAT credit in future years against the normal tax expected to be paid in those years and accordingly has not recognised a deferred tax asset for the same,

NOTES:

a) Cash Credit from Banks are secured by hypothecation of Inventories and Book debts repayable on demand,

b) The packing credit is granted by banks for a maximum tenure of 180 days at Bank’s base rate less interest subvention of 3% per annum as per Interest Equalisation Scheme of Government of India,

c) Commercial Paper carries an average interest rate of 6,49% and are repayable at maturity dates in May 2017,

d) The Company does not have any default as on the Balance Sheet date in the repayment of any loan or interest,

a) Current Maturities of Long term Debt as on April 1, 2015 include 2,500 zero-coupon, unsecured, redeemable, non-convertible debentures having a face value of Rs.10 lac each, redeemable at a premium, which will yield 9.35% p.a. at maturity. These debentures have been redeemed on December 18, 2015,

b) There are no amounts due to be credited to Investor Education and Protection Fund in accordance with Section 125 of the Companies Act, 2013 as at the year end,

Sales Returns:

When a customer has a right to return the product within a given period, the Company recognises a provision for sales return. This is measured on the basis of average past trend of sales return as a percentage of sales. Revenue is adjusted for the expected value of the returns and cost of sales are adjusted for the value of the corresponding goods to be returned,

Legal Claims:

The provisions for indirect taxes and legal matters comprises of numerous separate cases that arise in the ordinary course of business. A provision is recognised for legal cases; if company assesses that it is probable that an outflow of economic resources will be required. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilisation and cash outflows, if any, pending resolution,

NOTE :

Miscellaneous non-operating income includes Rs.0.61 crore (Previous Year Rs.0.60 crore), recovered from the GCPL ESOP Trust towards loan repayment, which was earlier written off against reserves under a Scheme of Amalgamation approved by the Hon’ble High Court of Bombay

a) During the year, the Company has netted off the rental income in respect of corporate office premises amounting to Rs.9,12 crore for the year ended on March 31, 2017 (Previous Year Rs.7,99 crore) with rental expenses amounting to Rs.9,12 crore for the year ended on March 31, 2017 (Previous Year Rs.7,99 crore) in respect of similar premises in the same building,

b) Miscellaneous Expenses include the Company’s share of various expenses incurred by group companies for sharing of services and use of common facilities,

c) During the current year, the Company has paid Rs.0,03 crore as donation to Armed Forces Flag Day included under Donations above,

d) During the previous year, the Company had paid Rs.0,10 crore for an advertisement in the commemorative souvenir on Pandit Jawaharlal Nehru published by the All India Congress Committee included under Advertising and Publicity above,

NOTE 3 : COMMITMENTS

Estimated value of contracts remaining to be executed on capital account to the extent not provided for : Rs.46.72 crore (31-Mar-16 Rs.34.40 crore; 01-Apr-15 Rs.39.43 crore), net of advances there against of Rs.15.80 crore (31-Mar-16 Rs.3.40 crore; 01-Apr-15 Rs.20.30 crore),

NOTE 4 : DIVIDEND

The Board has declared a fourth interim dividend for the year 2016-17 on May 9, 2017 at the rate of Rs.12 per share (1200% of the face value of Rs.1 each) amounting to Rs.408.68 crore. The dividend distribution tax on the said dividend is Rs.83.20 crore,

NOTE 5 : RELATED PARTY DISCLOSURES A) Related Parties and their Relationship

a) Holding Company:

Godrej & Boyce Mfg. Co. Limited (upto March 29, 2017)

b) Subsidiaries:

Notes:

Pursuant to a Deed of Merger ("the Scheme"), sanctioned by a Dutch court, vide its order effective March 31, 2016, Godrej Argentina Dutch Cooperatief UA has merged into Godrej Consumer Products Dutch Cooperatief UA, Godrej Netherlands Argentina BV has merged into Godrej Consumer Holding (Netherlands) BV and Godrej Netherlands Argentina Holding BV merged into Godrej Consumer Products (Netherlands) BV with effect from April 1, 2015. As per the Scheme, all investments made by Godrej Netherlands Argentina BV and Godrej Netherlands Argentina Holding BV in Laboratoria Cuenca S.A, Issue Brazil, Consell S.A, Argencos S.A and Panamar Producciones S.A have been respectively transferred to Godrej Consumer Holding (Netherlands) BV and Godrej Consumer Products (Netherlands) BV

c) Fellow Subsidiaries with whom transactions have taken place during the year:

i) Godrej Industries Limited

ii) Godrej Agrovet Limited

iii) Godrej Tyson Foods Limited

iv) Godrej Properties Limited

v) Natures Basket Limited

vi) Godrej Vikhroli Properties LLP

vii) Godrej Infotech Limited

viii) Godrej Projects Development Private Limited

ix) Godrej Anandan

x) Godrej One Premises Management Private Limited

xi) Godrej Seeds & Genetics Limited

xii) Godrej Seaview Properties Private Limited

d) Joint Venture:

e) Associate Company:

f) Investing Entity in which the reporting entity is an Associate (w.e.f. March 30,2017)

i) Godrej Industries Limited

ii) Godrej Seeds & Genetics Limited

g) Companies under common Control with whom transactions have taken place during the year (w.e.f March 30, 2017)

i) Godrej & Boyce Mfg, Co, Limited

ii) Godrej Agrovet Limited

iii) Godrej Tyson Foods Limited

iv) Godrej Properties Limited

v) Natures Basket Limited

vi) Godrej Vikhroli Properties LLP

vii) Godrej Infotech Limited

viii) Godrej Projects Development Private Limited

ix) Godrej Anandan

x) Godrej One Premises Management Private Limited

xi) Godrej Seaview Properties Private Limited

h) Key Management Personnel and Relatives

i) Mr, Adi Godrej Chairman

ii) Ms, Nisaba Godrej Executive Director / Daughter of Mr, Adi Godre]

iii) Mr, Vivek Gambhir Managing Director & CEO

iv) Mr, V. Srinivasan Chief Financial Officer and Company Secretary

v) Ms, Parmeshwar Godrej Wife of Mr, Adi Godrej (Deceased on October 10, 2016)

vi) Mr, Pirojsha Godrej Son of Mr, Adi Godrej

vii) Mr, Nadir Godrej Non-Executive Director/ Brother of Mr, Adi Godrej

viii) Ms, Tanya Dubash Non-Executive Director/ Daughter of Mr, Adi Godrej

ix) Mr, Jamshyd Godrej Non-Executive Director

x) Mr, D Shivakumar Independent Director

xi) Mr, Aman Mehta Independent Director

xii) Mr, Omkar Goswami Independent Director

xiii) Ms, Ireena Vittal Independent Director

xiv) Mr, Bharat Doshi Independent Director

xv) Mr, Narendra Ambvani Independent Director

xvi) Mr, Burjis Godrej Son of Mr, Nadir Godrej

xvii) Ms, Rati Godrej Wife of Mr, Nadir Godrej

xviii) Mr, Sohrab Godrej Son of Mr, Nadir Godrej

xix) Mr, Hormazd Godrej Son of Mr, Nadir Godrej

xx) Mr,Navroze Godrej Son of Mr, Jamshyd Godrej

xxi) Mr, Arvind Dubash Husband of Ms, Tanya Dubash

i) Trust where the reporting entity excercises significant influence

i) Godrej Consumer Products Limited Employees’ Stock Option Trust

j) Post employment Benefit Trust where the reporting entity exercises significant influence

i) Godrej Consumer Products Employees’ Provident Fund

NOTE 6 : LEASES

The Company’s significant leasing agreements are in respect of operating lease for Computers and Premises (office, godown, etc.) and the aggregate lease rentals payable are charged as rent. The Total lease payments accounted for the year ended March 31, 2017 is Rs.14.22 crore (previous year Rs.15.41 crore).

The future minimum lease payments outstanding under non-cancellable operating leases are as follows:

The Company has entered into an agreement to give one of its office building on operating lease effective May 2015, Total lease rentals earned during the year ended March 31, 2017 amounting to Rs.9.12 crore have been netted off against rent expense of Rs.9.12 crore in Note 36 for similar premises in the same building,

NOTE 7 : HEDGING CONTRACTS

The Company uses forward exchange contracts to hedge its foreign exchange exposure relating to the underlying transactions and firm commitment in accordance with its forex policy as determined by its Forex Committee. The Company does not use foreign exchange forward contracts for trading or speculation purposes,

Forward/ Spot Contracts outstanding are as follows:

a) DEFINED CONTRIBUTION PLAN Provident Fund:

The contributions to the Provident Fund of certain employees (including some employees of the erstwhile Godrej Household Products Ltd) are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. The Superannuation Fund constitutes an insured benefit, which is classified as a defined contribution plan as the Company contributes to an Insurance Company and has no further obligation beyond making payment to the insurance company,

b) DEFINED BENEFIT PLAN Gratuity:

The Company participates in the Employees’ Group Gratuity-cum-Life Assurance Scheme of HDFC Standard Life Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997, or as per the Company’s scheme whichever is more beneficial to the employees,

The Gratuity scheme of the erstwhile Godrej Household Products Ltd., which was obtained pursuant to the Scheme of Amalgamation, is funded through Unit Linked Gratuity Plan with HDFC Standard Life Insurance Company Limited,

The liability for the Defined Benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary,

The Company has a gratuity trust. However, the Company funds its gratuity payouts from its cash flows. Accordingly, the Company creates adequate provision in its books every year based on actuarial valuation,

These benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and investment risk,

Provident Fund:

The Company manages the Provident Fund plan through a Provident Fund Trust for its employees which is permitted under The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and is actuarially valued. The plan envisages contribution by the employer and employees and guarantees interest at the rate notified by the Provident Fund authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier,

c) Amounts Recognised as Expense:

i) Defined Contribution Plan

Employer’s Contribution to Provident Fund including contribution to Family Pension Fund amounting to Rs.9.93 crore (previous year Rs.8.80 crore) has been included under Contribution to Provident and Other Funds,

ii) Defined Benefit Plan

Gratuity cost amounting to Rs.4.52 crore (previous year Rs.3.07 crore) has been included in Note 33 under Contribution to Provident and Other Funds,

xi) Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below,

NOTE 8 : EMPLOYEE STOCK BENEFIT PLANS

I. EMPLOYEE STOCK OPTION PLAN OF ERSTWHILE GODREJ HOUSEHOLD PRODUCTS LTD

a. Under the Scheme of Amalgamation, the Company has obtained the ‘Godrej Sara Lee Limited Employees Stock Option Plan’ set up for eligible employees of the erstwhile Godrej Household Products Limited. The equity shares of Godrej Industries Limited (GIL) are the underlying equity shares for the stock option plan. The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited. The independent ESOP Trust has purchased shares of GIL from the market against which the options have been granted. The purchases have been financed by loans from the erstwhile Godrej Household Products Limited, which together with interest amounted to Rs.1.35 crore as at beginning of the year. The ESOP Trust has made a net repayment of the loan amounting to Rs.0.61 crore during the year and the Company has made a further contribution of Rs.0.11 crore during the year. The total amount of loans outstanding together with interest thereon as at March 31, 2017 amounts to Rs.0.96 crore which had been fully adjusted against the reserves in accordance with the scheme of amalgamation duly approved by the Hon’ble High Court of Judicature at Bombay in FY 2010-11. The repayment of the loans granted to the ESOP Trust and interest thereon is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period,

a) The Company set up the Employees Stock Grant Scheme 2011 (ESGS) pursuant to the approval by the Shareholders on March 18, 2011,

b) The ESGS Scheme is effective from April 1, 2011, (the Effective Date) and shall continue to be in force until (i) its termination by the Board or (ii) the date on which all of the shares to be vested under Employee Stock Grant Scheme 2011 have been vested in the Eligible Employees and all restrictions on such Stock Grants awarded under the terms of ESGS Scheme, if any, have lapsed, whichever is earlier,

c) The Scheme applies to the Eligible Employees of the Company or its Subsidiaries, The entitlement of each employee will be decided by the Compensation Committee of the Company based on the employee’s performance, level, grade, etc,

d) The total number of Stock Grants to be awarded under the ESGS Scheme are restricted to 2,500,000 (Twenty Five Lac) fully paid up equity shares of the Company. Not more than 500,000 (Five Lac) fully paid up equity shares or 1% of the issued equity share capital at the time of awarding the Stock Grant, whichever is lower, can be awarded to any one employee in any one year.

e) The Stock Grants shall vest in the Eligible Employees pursuant to the ESGS Scheme in the proportion of 1/3rd at the end of each year or as may be decided by the Compensation Committee from the date on which the Stock Grants are awarded for a period of three consecutive years subject to the condition that the Eligible Employee continues to be in employment of the Company or the Subsidiary company as the case may be,

f) The Eligible Employee shall exercise her / his right to acquire the shares vested in her / him all at one time within 1 month from the date on which the shares vested in her / him or such other period as may be determined by the Compensation Committee,

g) The Exercise Price of the shares has been fixed at Rs.1 per share. The fair value value is treated as Employee Compensation Expenses and charged to the Statement of Profit and Loss. The value of the options is treated as a part of employee compensation in the financial statements and is amortised over the vesting period,

NOTE 9 : CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE

Expenditure related to CSR as per section 135 of the Companies Act, 2013 read with Schedule VII thereof, against the mandatory spend of Rs.16.38 crore (previous year Rs.14.22 crore):

NOTE 10 : SPECIFIED BANK NOTES

During the year, the Company had Specified Bank Notes (SBNs) or Other Denomination Notes as defined in the MCA Notification No. GSR 308E dated 30th March 2017. The details of SBN and other notes held and transacted during the period from November 8, 2016 to December 30, 2016 as per the notification is given below:

The term Specified Bank Notes shall have the same meaning provided in the notifications of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E ), dated 8th November, 2016,

NOTE 11 : FINANCIAL INSTRUMENTS A. Accounting classification and fair values

Carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy, are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

NOTE 12 : FINANCIAL RISK MANAGEMENT

The activities of the Company exposes it to a number of financial risks namely market risk, credit risk and liquidity risk. The Company seeks to minimize the potential impact of unpredictability of the financial markets on its financial performance. The Company has constituted a Risk Management Committee and risk management policies which are approved by the Board to identify and analyze the risks faced by the Company and to set and monitor appropriate risk limits and controls for mitigation of the risks,

A. MANAGEMENT OF MARKET RISK:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of three types of risks: interest rate risk, price risk and currency rate risk. Financial instruments affected by market risk includes borrowings, investments and derivative financial instruments. The Company has international trade operations and is exposed to a variety of market risks, including currency and interest rate risks,

(i) Management of interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not have any exposure to interest rate risks since its borrowings and investments are all in fixed rate instruments,

(ii) Management of price risk:

The Company invests its surplus funds in various debt instruments including liquid and short term schemes of debt mutual funds, deposits with banks and financial institutions and non-convertible debentures (NCD’s). Investments in mutual funds and NCD’s are susceptible to market price risk, arising from changes in interest rates or market yields which may impact the return and value of the investments. This risk is mitigated by the Company by investing the funds in various tenors depending on the liquidity needs of the Company,

(iii) Management of currency risk:

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk. The Company mitigates the foreign exchange risk by setting appropriate exposure limits, periodic monitoring of the exposures and hedging exposures using derivative financial instruments like foreign exchange forward contracts. The exchange rates have been volatile in the recent years and may continue to be volatile in the future. Hence the operating results and financials of the Company may be impacted due to volatility of the rupee against foreign currencies,

Sensitivity analysis

A reasonably possible 5% strengthening (weakening) of the Indian Rupee against GBP/USD/EURO/AED at March 31 would have affected the measurement of financial instruments denominated in GBP/USD/EURO/AED and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases,

B. MANAGEMENT OF CREDIT RISK:

Credit risk refers to the risk of default on its obligations by a counterparty to the Company resulting in a financial loss to the Company. The Company is exposed to credit risk from its operating activities (trade receivables) and from its financing activities including investments in mutual funds, deposits with banks and financial institutions and NCD’s, foreign exchange transactions and financial instruments.

Credit risk from trade receivables is managed through the Company’s policies, procedures and controls relating to customer credit risk management by establishing credit limits, credit approvals and monitoring creditworthiness of the customers to which the Company extends credit in the normal course of business. Outstanding customer receivables are regularly monitored. The Company has no concentration of credit risk as the customer base is widely distributed.

Credit risk from investments of surplus funds is managed by the Company’s treasury in accordance with the Board approved policy and limits. Investments of surplus funds are made only with those counterparties who meet the minimum threshold requirements prescribed by the Board. The Company monitors the credit ratings and financial strength of its counter parties and adjusts its exposure accordingly.

At March 31, 2017, the ageing for the financial assets as mentioned in the note below & that were not impaired (not provided for) was as follows, Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they are available,

C. MANAGEMENT OF LIQUIDITY RISK:

Liquidity risk is the risk that the Company may not be able to meet its present and future cash obligations without incurring unacceptable losses. The Company’s objective is to maintain at all times, optimum levels of liquidity to meet its obligations. The Company closely monitors its liquidity position and has a robust cash management system. The Company maintains adequate sources of financing including debt and overdraft from domestic and international banks and financial markets at optimized cost.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments,

NOTE 13 : HEDGE ACCOUNTING

The objective of hedge accounting is to represent, in the Company’s financial statements, the effect of the Company’s use of financial instruments to manage exposures arising from particular risks that could affect profit or loss. As part of its risk management strategy, the Company makes use of financial derivative instruments, including foreign exchange forward contracts, for hedging the risk embedded in some of its highly probable forecast investment,

For derivative contracts designated as hedge, the Company documents, at inception, the economic relationship between the hedging instrument and the hedged item, the hedge ratio, the risk management objective for undertaking the hedge and the methods used to assess the hedge effectiveness. The derivative contracts have been taken to hedge foreign currency risk on our highly probable forecast investment. The tenor of hedging instrument may be less than or equal to the tenor of underlying highly probable forecast investment,

Financial contracts designated as hedges are accounted for in accordance with the requirements of Ind AS 109 depending upon the type of hedge. The Company applies cash flow hedge accounting to hedge the variability in the future cash flows on the overseas remittance to its subsidiaries subject to foreign exchange risk,

The Company has a Board approved policy on assessment, measurement and monitoring of hedge effectiveness which provides a guideline for the evaluation of hedge effectiveness, treatment and monitoring of the hedge effective position from an accounting and risk monitoring perspective. Hedge effectiveness is ascertained at the time of inception of the hedge and periodically thereafter. The Company assesses hedge effectiveness on prospective basis. The prospective hedge effectiveness test is a forward looking evaluation of whether or not the changes in the fair value or cash flows of the hedging position are expected to be highly effective in offsetting the changes in the fair value or cash flows of the hedged position over the term of the relationship,

Hedge effectiveness is assessed through the application of critical terms match method & dollar off-set method. Any ineffectiveness in a hedging relationship is accounted for in the statement of profit and loss,

The table below enumerates the Company’s hedging strategy, typical composition of the Company’s hedge portfolio, the instruments used to hedge risk exposures and the type of hedging relationship:

NOTE 14 : FIRST TIME ADOPTION TO IND AS

As stated in Note 2, the Company’s financial statements for the year ended March 31, 2017 are the first annual financial statements prepared in compliance with Ind AS. The adoption of Ind AS was carried out in accordance with Ind AS 101, using April 1, 2015 as the transition date. Ind AS 101 requires that all Ind AS standards that are effective for the first Ind AS financial statements for the year ended March 31, 2017, be applied consistently and retrospectively for all fiscal years presented,

All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the financial statements under both Ind AS and Previous GAAP as of the transition date have been recognized directly in equity at the transition date,

In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101 as explained below:

a) Optional Exemptions from retrospective application availed:

(i) Business combination exemption: The Company has applied the exemption as provided in Ind AS 101 on nonapplication of Ind AS 103, “Business Combinations” to business combinations consummated prior to the date of transition (April 1, 2015). Pursuant to this exemption, goodwill arising from business combination has been stated at the carrying amount under Previous GAAP IND AS 103 will be applied prospectively to business combinations occurring after its transition date,

(ii) Share-based payment exemption: The Company has elected not to apply Ind AS 102, “Share Based Payment”, to grants that vested prior to the date of transition i.e. April 1, 2015

(iii) Property, plant and equipment exemption: The Company has elected to apply the exemption available under Ind AS 101 to continue the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (April 1, 2015),

(iv) Investment in subsidiaries and associates: The Company has elected to apply the exemption available under Ind AS 101 to continue the carrying value for its investments in subsidiaries and associates property as recognised in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP as at the date of transition (April 1, 2015).

b) Mandatory exceptions from retrospective application

(i) Estimates: On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date,

(ii) Classification and measurement of financial assets: The Company has classified and measured the financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS,

(iii) Derecognition of financial assets and financial liabilities: The Company has opted to apply the exemption available under Ind AS 101 to apply the derecognition criteria of Ind AS 109 prospectively for the transactions occurring on or after the date of transition to Ind AS,

c) Transition to Ind AS Reconciliations:

The following reconciliations provide the explanations and quantifications of the differences arising from the transition from previous GAAP to Ind AS in accordance with Ind AS 101:

I. Reconciliation of Total Equity as at March 31, 2016 and April 1, 2015

II. Reconciliation of Comprehensive income for the year ended March 31, 2016

III. Adjustments to Statement of Cash Flows for the year ended March 31, 2016

** Other IND AS adjustments include provision for sales return, reversal of purchased goodwill amortised under Indian GAAP, etc

iii) Adjustment to the Statement of Cash Flows for the year ended 31st March, 2016

There were no material differences between the Statement of Cash Flows presented under Ind AS and previous GAAP

Note:

Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with Financial Statments prepared under Ind AS

Notes to the reconciliation:

1 Reversal of amortisation of brands and goodwill under IGAAP:

Under Indian GAAP, brands and goodwill were amortized on a straight line basis considering a finite useful life, the amortisation of Goodknight and Hit brands was being debited to reserves under HIgh Court Order. However, under Ind AS, an intangible asset shall be regarded by the entity as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. Hence, intangible assets are assessed as having indefinite useful life and are not amortised but are tested for impairment at least annually.

2 Deferred tax on Ind AS adjustments

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of the balance sheet approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP

3 Interim dividend recognised on approval

Under Indian GAAP, interim dividends are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, interim dividends are recorded as a liability on the date of declaration by the Company’s Board of Directors,

4 Fair value gains on financial instruments

Under Indian GAAP, the Company accounted for current investments at lower of cost or fair value. Under Ind AS, the Company has classified the mutual funds as subsequently measured at FVTPL. Such instruments are fair valued at each reporting date and the changes in fair value are recorded through profit and loss account. At the date of transition to Ind AS, difference between the instruments’ fair value and Indian GAAP carrying amount has been recognised in retained earnings,

5 Redemption premium on debentures

Under Indian GAAP, redemption premium on debentures and bonds was debited to securities premium account i.e. through equity. However under Ind AS, debentures are a financial liability carried at amortised cost. Accordingly, the same are measured using effective interest rate method. Such finance cost related to a financial liability has to be recorded through profit and loss account instead of equity,

6 Notional income from corporate guarantees in favour of subsidiaries

The Company has given financial guarantees on behalf of subsidiaries which were disclosed as contingent liabilities under Indian GAAP. Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured initially at fair value. Subsequently, the guarantee income is recognised over the period of the guarantee on a straight line basis,

7 Other comprehensive income

Both under Indian GAAP and Ind AS the Company recognised costs related to post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, actuarial gains and losses are charged to profit or loss, however in Ind AS the actuarial gains and losses are recognised through other comprehensive income,

NOTE 15 : DISCLOSURE U/S 186 (4) OF THE COMPANIES ACT, 2013

Details of Investments made are disclosed under Note 5 and details of corporate guarantees given to banks on behalf of other body corporates are disclosed under Note 40,

NOTE 16 : SUBSEQUENT EVENTS

There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date,

NOTE 54 :

The financial statements were authorised for issue by the Board of Directors on May 9, 2017,

NOTE 17 : GENERAL

All amounts disclosed in the financial statements and notes have been rounded off to the nearest crore as per the requirements of Schedule III, unless otherwise stated,


Mar 31, 2015

NOTE 1 : COMPANY OVERVIEW

Godrej Consumer Products Limited (the Company) was incorporated on November 29, 2000, to take over as a going concern the consumer products business of Godrej Soaps Limited (subsequently renamed as Godrej Industries Limited), pursuant to a Scheme of Arrangement as approved by the High Court, Mumbai. The Company is a focused fast moving consumer goods company, manufacturing and marketing Household and Personal Care products. The Company is domiciled in India and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

NOTE 2 : COMMITMENTS

Estimated value of contracts remaining to be executed on capital account to the extent not provided for : Rs. 39.43 crore (previous year Rs. 39.72 crore), net of advances there against of Rs. 20.30 crore (previous year Rs. 3.46 crore).

NOTE 3 : CONTINGENT LIABILITIES Rs. Crore

Current Previous Year Year a) CLAIMS FOR EXCISE DUTIES, TAXES AND OTHER MATTERS i) Excise duty demands aggregating Rs. 69.70 crore (previous year Rs. 33.09 crore) against which the Company has preferred appeals 46.01 21.84 (net of tax).

ii) Sales tax demands aggregating Rs. 62.46 crore (previous year 41.23 41.53 Rs. 62.92 crore) against which the Company has preferred appeals (net of tax). 16.01 12.37 iii) Income-tax matters Demand notices issued by Income-tax Authorities.

iv) Other matters : Rs. 3.00 crore 1.98 1.98 (previous year Rs. 3.00 crore) (net of tax).

b) GUARANTEES GIVEN ON BEHALF OF SUBSIDIARIES

i) Guarantee amounting to Nil (previous year USD 78.8 million) given by the Company against - 471.83 loan provided by banks to Godrej Consumer Products Holding (Mauritius) Ltd.

ii) Guarantee amounting to Nil - 593.16 (previous year USD 99.0 million) given by the Company to DBS Bank, Singapore against loan provided to Godrej Mauritius Africa Holdings Ltd.

iii) Guarantee amounting to GBP 30.0 million (previous year GBP 30.0 277.41 299.30 million) given by the Company to HSBC, Hongkong against loan provided to Godrej Netherlands BV.

iv) Guarantee amounting to USD 84.0 million (previous year USD 84.0 525.00 503.29 million) given by the Company to HSBC, Hongkong & SCB Mauritius Limited against loan provided to Godrej East Africa Holdings Limited.

v) Guarantee amounting to GBP 4.95 million (previous year GBP 9.9 45.77 98.77 million)given by the Company to HSBC, Hongkong against loan provided to Godrej Netherlands BV.

vi) Guarantee of AED Nil (previous year AED 1.4 million) given by the Company to secure credit facilities - 2.28 extended by HSBC Bank Middle East Ltd. to Godrej Global Mid East FZE.

vii) Guarantee given by the Company to secure credit facilities extended 2.96 2.96 by Citibank Sri Lanka and Citibank Bangladesh to Godrej Household Products (Lanka) Private Limited and Godrej Household Products (Bangladesh) Private Limited respectively.

viii) Guarantee amounting to Nil (previous - 59.92 year USD 10.0 million) given by the Company to HSBC, Hongkong towards interest rate swap/derivafive facilities provided to Godrej Consumer Products Holding (Mauritius) Ltd.

ix) Guarantee amounting to Nil (previous - - year BDT 245.0 million) given by the Company to HSBC Bangladesh towards credit facilities provided by the Bank to Godrej Household Products (Bangladesh) Pvt. Ltd.

x) Guarantee amounting to USD 5.0 million (previous year USD 5.0 million) given by the Company to HSBC Hongkong towards interest rate swap/ derivative facilities 31.25 29.96 provided to Godrej Netherlands BV.

xi) Guarantee amounting to Nil (previous year USD 5.0 million) given by the Company to HSBC Hongkong towards interest rate swap/derivafive facilities provided to - 29.96 Godrei East Africa Holdings Limited.

c) OTHER GUARANTEES

i) Guarantees issued by banks [secured by bank deposits under lien with the bank 7.35 8.19 Rs.2.10 crore (previous year Rs. 5.44 crore)]

ii) Guarantee given by the Company to Yes Bank for credit facilities extended to 0.80 - M/s. Broadcast Audience Research Council

d) CLAIMS AGAINST THE COMPANY NOT ACKNOWLEDGED AS DEBT

i) Claims by various parties on account of 32.22 32.22 unauthorized, illegal and fraudulent acts by an employee.

ii) Others 0.28 0.28

NOTE 4 : RELATED PARTY DISCLOSURES A) Related Parties and their Relationship

a) Holding Company:

Godrej & Boyce Mfg. Co. Ltd.

b) Subsidiaries:

i) Godrej Household Products Lanka (Private) Limited

ii) Godrej Household Products (Bangladesh) Private Limited

iii) Godrej Consumer Products Bangladesh Limited

iv) Godrej South Africa (Proprietary) Limited

v) Godrej Netherlands B.V.

Godrej UK Limited

Godrej Consumer Products (UK) Limited Inecto Manufacturing Limited Godrej Consumer Investments (Chile) Spa Godrej Holdings (Chile) Limitada Cosmetica Nacional Plasticos Nacional

vi) Godrej Consumer Products Mauritius Limited

Godrej Nigeria Limited

Godrej Argentina Dutch Cooperatief U.A.

Godrej Netherlands Argentina Holding B.V.

Godrej Netherlands Argentina B.V.

Issue Group Brazil Limited Laboratoria Cuenca S.A Deciral S.A Consell S.A Argencos S.A Panamar Producciones S.A

Godrej Consumer Investments Holdings Limited (merged with Godrej Africa Holdings Limited w.e.f. March 31, 2015) Godrej Easy IP Holding Ltd (w.e.f. October 16, 2014)

vii) Godrej Consumer Products Holding (Mauritius) Limited

Indovest Capital Limited Godrej Global Mid East FZE

Godrej Indonesia IP Holdings Limited (w.e.f. March 17, 2015)

Godrej Megasari Holdings Limited (w.e.f. March 18, 2015)

Godrej Consumer Products Dutch Cooperatief U.A.

Godrej Consumer Products (Netherlands) B.V.

Godrej Consumer Holdings (Netherlands) B.V.

PT Indomas Susemi Jaya PT Intrasari Raya PT Megasari Makmur PT Ekamas Sarijaya PT Sarico Indah

viii) Godrej Mauritius Africa Holdings Limited

Darling Trading Company Mauritius Limited (w.e.f. January 22, 2015)

Godrej Africa Holdings Limited (w.e.f. January 19, 2015)

Godrej Weave Holdings Limited (merged with Godrej Africa Holdings Limited w.e.f. March 31, 2015) DGH Mauritius Pvt. Ltd. (merged with Godrej Africa Holdings Limited w.e.f. March 31, 2015) Weave Business Holding Mauritius Pvt. Limited

(merged with Godrej Africa Holdings Limited w.e.f. March 31, 2015)

DGH Phase Three Mauritius (merged with Godrej Africa Holdings Limited w.e.f. March 31, 2015)

Frika Weave (Pty) Ltd. (w.e.f. March 1, 2015)

Kinky Group (Proprietary) Limited

Lorna Nigeria Limited

Weave Ghana Limited (w.e.f. October 1, 2014)

Godrej West Africa Holdings Limited

Subinite Pty Limited

Weave IP Holding Mauritius Pvt. Limited

Weave Mozambique Limitada

Weave Trading Mauritius Pvt. Limited

Hair Trading (Offshore) S.A.L.

xi) Godrej East Africa Holdings Limited

DGH Phase Two Mauritius Pvt. Limited

Style Industries Limited

x) Godrej Tanzania Holdings Limited

DGH Tanzania Limited

Sigma Hair Ind Limited

c) Fellow Subsidiaries with whom transactions have taken place during the year:

i) Godrej Industries Limited

ii) Godrej Agrovet Limited

iii) Godrej Tyson Foods Limited

iv) Godrej Properties Limited

v) Natures Basket Limited

vi) Godrej Vikhroli Properties LLP

vii) Godrej Infotech Limited

viii) Godrej Projects Development Private Limited

ix) Godrej Anandan

d) Associate Company:

i) Bhabhani Blunt Hairdressing Private Limited

e) Key Management Personnel and Relatives

i) Mr. Adi Godrej Chairman

ii) Ms. Nisaba Godrej Executive Director / Daughter of Mr. Adi Godrej

iii) Mr. Vivek Gambhir Managing Director (from July 1,2013)

iv) Mr. A. Mahendran Managing Director(upto June 30,2013)

v) Mr. P. Ganesh Chief Financial Officer and Company Secretary (upto March 31, 2015)

vi) Ms. Parmeshwar Godrej Wife of Mr. Adi Godrej

vii) Mr. Pirojsha Godrej Son of Mr. Adi Godrej

viii) Mr. Nadir Godrej Brother of Mr. Adi Godrej

ix) Ms. Tanya Dubash Daughter of Mr. Adi Godrej

x) Ms. Mythili Mahendran Wife of Mr. A. Mahendran (Related party upto June 30, 2013)

The Company's significant leasing agreements are in respect of operating lease for Computers and Premises (office, godown, etc.) and the aggregate lease rentals payable are charged as rent. The Total lease payments accounted for the year ended March 31, 2015 is Rs. 3.10 crore (previous year Rs. 1.83 crore).

The amount carried forward in notional bank after distribution of PLVR for the financial year 2014-15 is Rs. 0.42 crore as on March 31, 2015 (previous year Rs. 0.79 crore). The said amount is not provided for in the books of account and is payable in future, if performance so warrants.

NOTE 5 : EMPLOYEE BENEFITS

a) DEFINED CONTRIBUTION PLAN Provident Fund:

The contributions to the Provident Fund of certain employees (including some employees of the erstwhile Godrej Household Products Ltd.) are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. The Superannuation Fund constitutes an insured benefit, which is classified as a defined contribution plan as the Company contributes to an Insurance Company and has no further obligation beyond making payment to the insurance company.

b) DEFINED BENEFIT PLAN

Gratuity:

The Company participates in the Employees' Group Gratuity- cum- Life Assurance Scheme of HDFC Standard Life Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997, or as per the Company's scheme whichever is more beneficial to the employees.

The Gratuity scheme of the erstwhile Godrej Household Products Ltd., which was obtained pursuant to the Scheme of Amalgamation, is funded through Unit Linked Gratuity Plan with HDFC Standard Life Insurance Company Limited.

The liability for the Defined Benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary.

Provident Fund:

The Company manages the Provident Fund plan through a Provident Fund Trust for its employees which is permitted under The Employees' Provident Fund and Miscellaneous Provisions Act, 1952 and is actuarially valued. The plan envisages contribution by the employer and employees and guarantees interest at the rate notified by the Provident Fund authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier.

c) Amounts Recognised as Expense:

i) Defined Contribution Plan

Employer's Contribution to Provident Fund amounting to Rs. 5.70 crore (previous year Rs. 6.00 crore) has been included in Note 26 under Contribution to Provident and Other Funds.

ii) Defined Benefit Plan

Gratuity cost amounting to Rs. 7.88 crore (previous year Rs. 2.67 crore) has been included in Note 26 under Contribution to Provident and Other Funds.

NOTE 6 : EMPLOYEE STOCK BENEFIT PLAN I. EMPLOYEE STOCK OPTION / PURCHASE PLAN

a) The shareholders of the Company have approved the setting up of the Godrej Consumer Products Ltd. Employee Stock Option Plan (GCPL ESOP) for the benefit of its eligible employees whereby the Company can grant 4,500,000 Stock Options convertible into 4,500,000 equity shares of the nominal value Rs. 1 each to the eligible employees / Directors of the Company and of the Company's subsidiaries.

b) The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited which acquires by subscription / purchase or otherwise, the Company's shares equivalent to the number of Options proposed to be granted by the participating companies, as approved by the Compensation Committee.

c) The ESOPs authorised for issue are as under:

i) 2,000,000 Options in the Extra-ordinary General Meeting on March 14, 2007.

ii) 2,500,000 Options in the Extra-ordinary General Meeting on April 28, 2008.

d) The Options granted shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee, which period shall not be less than one year and may extend up to three years from the date of grant of the Option. Vesting may occur in tranches subject to the terms and conditions of vesting. The Option is exercisable within two years after vesting.

e) All unvested Options shall vest in the employees on the date of retirement or at an earlier date as may be decided by the Compensation Committee, subject to the requirement of minimum vesting period and all vested Options should be exercised by the Option Grantee immediately on retirement, but in no event later than six months from the date of such Option Grantee's retirement.

t) The price at which the Option Grantee would convert Options granted into GCPL Shares (i.e. the exercise price) shall be the market price prevailing on the day prior to the day of grant plus interest at such rate not being less than the bank rate then prevailing compoundable on an annual basis for the period commencing from the date of granting of the Option and ending on the date of intimating exercise of the Option to the Company.

g) The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognised since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore is Nil.

h) The Board of Directors at its meeting held on January 22, 2011, had approved an Employee Stock Purchase Plan (GCPL ESPP) which is administered by the GCPL ESOP Trust. Under the plan, the Company provides loans to the GCPL ESOP Trust at an interest rate which is not less than the bank rate, to enable the Trust to acquire up to 1,000,000 shares of the Company from the secondary market. The HR and Compensation Committee had resolved that the surplus shares held by the GCPL ESOP Trust at any point of time for grant of Options under GCPL ESOP be utilized for grant of shares to the employees under the GCPL ESPP within the maximum of 1,000,000 equity shares. Under the plan, entire 1,000,000 shares have been granted, vested and exercised till March 31, 2014.

II. EMPLOYEE STOCK OPTION PLAN OF ERSTWHILE GODREJ HOUSEHOLD PRODUCTS LTD.

a) Under the Scheme of Amalgamation, the Company has obtained the 'Godrej Sara Lee Limited Employees Stock Option Plan' set up for eligible employees of the erstwhile Godrej Household Products Limited. The equity shares of Godrej Industries Limited (GIL) are the underlying equity shares for the stock option plan. The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited. The independent ESOP Trust has purchased shares of GIL from the market against which the options have been granted. The purchases have been financed by loans from the erstwhile Godrej Household Products Limited, which together with interest amounted to Rs. 27.21 crore as at beginning of the year. The ESOP Trust has made a net repayment of the loan amounting to Rs. 25.26 crore during the year. The total amount of loans outstanding together with interest thereon as at March 31, 2015 amounts to Rs. 1.95 crore which has been fully adjusted against the reserves in accordance with the scheme of amalgamation duly approved by the Hon'ble High Court of Judicature at Bombay during FY 2010-11. The repayment of the loans granted to the ESOP Trust and interest thereon is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period.

III. EMPLOYEE STOCK GRANT SCHEME

a) The Company set up the Employees Stock Grant Scheme 2011 (ESGS) pursuant to the approval by the Shareholders on March 18, 2011.

b) The ESGS Scheme is effective from April 1, 2011, (the "Effective Date") and shall continue to be in force until (i) its termination by the Board or (ii) the date on which all of the shares to be vested under Employee Stock Grant Scheme 2011 have been vested in the Eligible Employees and all restrictions on such Stock Grants awarded under the terms of ESGS Scheme, if any, have lapsed, whichever is earlier.

c) The Scheme applies to the Eligible Employees of the Company or its Subsidiaries. The entitlement of each employee will be decided by the Compensation Committee of the Company based on the employee's performance, level, grade, etc.

d) The total number of Stock Grants to be awarded under the ESGS Scheme are restricted to 2,500,000 (Twenty Five Lac) fully paid up equity shares of the Company. Not more than 500,000 (Five Lac) fully paid up equity shares or 1% of the issued equity share capital at the time of awarding the Stock Grant, whichever is lower, can be awarded to any one employee in any one year.

e) The Stock Grants shall vest in the Eligible Employees pursuant to the ESGS Scheme in the proportion of 1/3rd at the end of each year or as may be decided by the Compensation Committee from the date on which the Stock Grants are awarded for a period of three consecutive years subject to the condition that the Eligible Employee continues to be in employment of the Company or the Subsidiary company as the case may be.

t) The Eligible Employee shall exercise her / his right to acquire the shares vested in her / him all at one time within 1 month from the date on which the shares vested in her / him or such other period as may be determined by the Compensation Committee, g) The Exercise Price of the shares has been fixed at Rs. 1 per share. The intrinsic value, being the difference between market price and exercise price is treated as Employee Compensation Expenses and charged to the Statement of Profit and Loss. The value of the options is treated as a part of employee compensation in the financial statements and is amortised over the vesting period.

IV. Pursuant to SEBI notification dated January 17, 2013, no further securities of the Company will be purchased from the open market.

V. Had the fair value method of accounting been used, the employee compensation cost for the year ended March 31, 2015 would have been lower by Rs. 11.68 crore (previous year lower by Rs. 0.51 crore).

NOTE 47 : DISCLOSURE U/S 186 (4) OF THE COMPANIES ACT, 2013

Details of Investments made are disclosed under Note 13 and details of corporate guarantees given to banks on behalf of other body corporates are disclosed under Note 32.

NOTE 7 : GENERAL

a) Other information required by Schedule III to the Companies Act, 2013, has been given only to the extent applicable.

b) Figures for the previous year have been regrouped / restated wherever necessary to conform to current year's presentation.


Mar 31, 2013

NOTE 1 : COMPANY OVERVIEW

Godrej Consumer Products Limited (the Company) was incorporated on November 29, 2000, to take over as a going concern the consumer products business of Godrej Soaps Limited (subsequently renamed as Godrej Industries Limited), pursuant to a Scheme of Arrangement as approved by the High Court, Mumbai. The Company is a focused fast moving consumer goods company, manufacturing and marketing toilet soaps, hair colour, household insecticides, liquid detergents, toiletries and other products.

NOTE 2 : COMMITMENTS

Estimated value of contracts remaining to be executed on capital account to the extent not provided for: Rs. 35.19 crore (previous year Rs. 139.29 crore), net of advances amounting to Rs. 30.34 crore (previous year Rs. 86.65 crore).

NOTE 3 : RELATED PARTY DISCLOSURES

A) Related Parties and their Relationship

a) Enterprise having control over reporting enterprise:

Godrej & Boyce Mfg. Co. Ltd.

b) Subsidiaries:

i) Godrej Household Products Lanka (Private) Limited

ii) Godrej Household Products (Bangladesh) Private Limited

iii) Godrej Consumer Products Bangladesh Limited

iv) Godrej South Africa (Proprietary) Limited (Earlier Rapidol (Proprietary) Limited)

v) Godrej Global Mid East FZE

vi) Godrej Hygiene Products Limited

vii) Godrej Consumer Products Nepal Pvt. Ltd.

viii) Godrej Netherlands B.V.

Godrej Consumer Products (UK) Limited Keyline Brands Limited

Inecto Manufacturing Limited Godrej Consumer Investments (Chile) Spa Godrej Holdings (Chile) Limitada Cosmetica Nacional Plasticos Nacional

ix) Godrej Consumer Products Mauritius Limited

Godrej Kinky Holdings Limited

Kinky Group (Proprietary) Limited Godrej Nigeria Holdings Limited (Merged with Godrej Consumer Products Mauritius Limited w.e.f. April 1, 2012) Godrej Nigeria Limited Godrej Argentina Dutch Cooperatief U.A

Godrej Netherlands Argentina Holding B.V.

Godrej Netherlands Argentina B.V.

Laboratoria Cuenca S.A

Deciral S.A

Issue Group Uruguay S.A Issue Group Brazil Limited Consell S.A Argencos S.A Panamar Producciones S.A

x) Godrej Consumer Products Holding (Mauritius) Limited

Indovest Capital Limited

Godrej Consumer Products Dutch Cooperatief U.A.

Godrej Indonesia Netherlands Holding B.V.

Godrej Consumer Products (Netherlands) B.V.

Godrej Consumer Holdings (Netherlands) B.V.

PT Simba Indosnack Makmur (upto March 21, 2013)

PT Indomas Susemi Jaya PT Intrasari Raya PT Megasari Makmur PT Ekamas Sarijaya PT Sarico Indah

xi) Godrej Mauritius Africa Holdings Limited

Godrej Weave Holdings Limited DGH Mauritius Pvt. Ltd.

Weave Business Holding Mauritius Pvt. Ltd.

Subinite Pty Ltd.

Lorna Nigeria Ltd.

Weave IP Holding Mauritius Pvt. Ltd.

Weave Mozambique Limitada Weave Trading Mauritius Pvt. Ltd.

Hair Trading (Offshore) S.A.L.

xii) Godrej East Africa Holdings Limited (w.e.f. July 20, 2012)

DGH Phase Two Mauritius Pvt. Ltd.

Style Industries Limited

xiii) Godrej Tanzania Holdings Ltd. (w.e.f. November30, 2012)

DGH Tanzania Ltd.

Sigma Hair Ind Limited

c) Enterprises under common control with whom transactions have taken place during the year:

i) Godrej Industries Limited

ii) Godrej Agrovet Limited

iii) Godrej Tyson Foods Ltd.

iv) Godrej Infotech Limited

v) Godrej Properties Limited

vi) Godrej Oil Palm Limited (upto April 27, 2012)

vii) Natures Basket Limited

viii) Godrej Vikhroli Properties LLP

d) Enterprise over which Key Management Personnel exercise significant influence:

i) Godrej Hershey Limited (upto September 27, 2012)

ii) Godrej Investments Private Limited

iii) Great Lakes Institute of Management

NOTE 4 : LEASES

The Company''s significant leasing agreements are in respect of operating lease for Computers and Premises (office, godown, etc.) and the aggregate lease rentals payable are charged as rent.

NOTE 5 : HEDGING CONTRACTS

The Company uses forward exchange contracts to hedge its foreign exchange exposure relating to the underlying transactions and firm commitment in accordance with its forex policy as determined by its Forex Committee. The Company does not use foreign exchange forward contracts or commodity futures contracts for trading or speculation purposes.

NOTE 6 : INCENTIVE PLAN

The amount carried forward in notional bank after distribution of PLVR for the financial year 2012-13 is Rs. 1.68 crore as on March 31, 2013 (previous year Rs. 3.49 crore). The said amount is not provided for in the books of account and is payable in future, if performance so warrants.

NOTE 7 : EMPLOYEE BENEFITS

a) DEFINED CONTRIBUTION PLAN

Provident Fund:

The post-employment benefits of the erstwhile Godrej Household Products Ltd., which were acquired pursuant to the Scheme of Amalgamation, include contributions to the Provident Fund and Superannuation Fund. The contributions to the Provident Fund are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. The Superannuation Fund constitutes an insured benefit, which is classified as a defined contribution plan as the Company contributes to an Insurance Company and has no further obligation beyond making payment to the insurance company.

b) DEFINED BENEFIT PLAN

Gratuity:

The Company participates in the Employees'' Group Gratuity-cum-Life Assurance Scheme of HDFC Standard Life Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997, or as per the Company''s scheme whichever is more beneficial to the employees.

The gratuity scheme of the erstwhile Godrej Household Products Ltd., which was obtained pursuant to the Scheme of Amalgamation, is funded through a Unit Linked Gratuity Plus Scheme with Life Insurance Corporation of India (''LIC'') and HDFC Standard Life Insurance Company Limited.

The liability for the Defined Benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary.

Provident Fund:

The Company manages the Provident Fund plan through a Provident Fund Trust for its employees which is permitted under The Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 and is actuarially valued. The plan envisages contribution by the employer and employees and guarantees interest at the rate notified by the Provident Fund authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier.

c) Basis Used to Determine Expected Rate of Return on Assets:

An expected return of 8.25% on plan assets has been considered based on the current investment pattern in Government securities.

d) Amounts Recognised as Expense:

i) Defined Contribution Plan

Employer''s Contribution to Provident Fund amounting to Rs. 5.21 crore (previous year Rs. 4.52 crore) has been included in Note 27 under Contribution to Provident and Other Funds.

ii) Defined Benefit Plan

Gratuity cost amounting to Rs. 5.92 crore (previous year Rs. 2.14 crore) has been included in Note 27 under Contribution to Provident and Other Funds.

NOTE 8 : EMPLOYEE STOCK BENEFIT PLANS

I. EMPLOYEE STOCK OPTION / PURCHASE PLAN

a) The shareholders of the Company have approved the setting up of the Godrej Consumer Products Ltd. Employee Stock Option Plan (GCPL ESOP) for the benefit of its eligible employees whereby the Company can grant 4,500,000 Stock Options convertible into 4,500,000 equity shares of the nominal value Rs. 1 each to the eligible employees / Directors of the Company and of the Company''s subsidiaries.

b) The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited which acquires by subscription / purchase or otherwise, the Company''s shares equivalent to the number of Options proposed to be granted by the participating companies, as approved by the Compensation Committee.

c) The ESOPs authorised for issue are as under:

i) 2,000,000 Options in the Extra-ordinary General Meeting on March 14, 2007.

ii) 2,500,000 Options in the Extra-ordinary General Meeting on April 28, 2008.

d) The Options granted shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee, which period shall not be less than one year and may extend up to three years from the date of grant of the Option. Vesting may occur in tranches subject to the terms and conditions of vesting. The Option is exercisable within two years after vesting.

e) All unvested Options shall vest in the employees on the date of retirement or at an earlier date as may be decided by the Compensation Committee, subject to the requirement of minimum vesting period and all vested Options should be exercised by the Option Grantee immediately on retirement, but in no event later than six months from the date of such Option Grantee''s retirement.

f) The price at which the Option Grantee would convert Options granted into GCPL Shares (i.e. the exercise price) shall be the market price prevailing on the day prior to the day of grant plus interest at such rate not being less than the bank rate then prevailing compoundable on an annual basis for the period commencing from the date of granting of the Option and ending on the date of intimating exercise of the Option to the Company.

g) The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognised since the market price of the underlying share at the grant date is the same/less than the exercise price of the option, the intrinsic value therefore is Nil.

h) The Board of Directors at its meeting held on January 22, 2011, had approved an Employee Stock Purchase Plan (GCPL ESPL) which is administered by the GCPL ESOP Trust. Under the plan, the Company provides loans to the GCPL ESOP Trust at an interest rate which is not less than the bank rate, to enable the Trust to acquire up to 1,000,000 shares of the Company from the secondary market. The HR and Compensation Committee had resolved that the surplus shares held by the GCPL ESOP Trust at any point of time for grant of Options under GCPL ESOP be utilized for grant of shares to the employees under the GCPL ESPL within the maximum of 1,000,000 equity shares. Under the plan, entire 1,000,000 shares have been granted and vested till March 31, 2013. These shares have to be compulsorily acquired from the GCPL ESOP Trust within the exercise period of two years. The exercise price shall be the market price on the day prior to the date of grant plus interest at a rate not less than the bank rate till the date of exercise.

II. EMPLOYEE STOCK OPTION PLAN OF ERSTWHILE GODREJ HOUSEHOLD PRODUCTS LTD.

a) Under the Scheme of Amalgamation, the Company has obtained the ''Godrej Sara Lee Limited Employees Stock Option Plan'' set up for eligible employees of the erstwhile Godrej Household Products Limited. The equity shares of Godrej Industries Limited (GIL) are the underlying equity shares for the stock option plan. The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited. The independent ESOP Trust has purchased shares of GIL from the market against which the options have been granted. The purchases have been financed by loans from the erstwhile Godrej Household Products Limited, which together with interest amounted to Rs. 77.43 crore as at beginning of the year. The ESOP Trust has made a net repayment of the loan and interest amounting to Rs. 26.43 crore during the year. The total amount of loans given together with interest thereon as at March 31, 2013 amounts to Rs. 51.00 crore. The repayment of the loans granted to the ESOP Trust and interest thereon is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period.

III. EMPLOYEE STOCK GRANT SCHEME

a) The Company set up the Employees Stock Grant Scheme 2011 (ESGS) pursuant to the approval by the Shareholders on March 18, 2011.

b) The ESGS Scheme is effective from April 1, 2011, (the "Effective Date") and shall continue to be in force until (i) its termination by the Board or (ii) the date on which all of the shares to be vested under Employee Stock Grant Scheme 2011 have been vested in the Eligible Employees and all restrictions on such Stock Grants awarded under the terms of ESGS Scheme, if any, have lapsed, whichever is earlier.

c) The Scheme applies to the Eligible Employees of the Company or its Subsidiaries. The entitlement of each employee will be decided by the Compensation Committee based on the employee''s performance, level, grade, etc.

d) The total number of Stock Grants to be awarded under the ESGS Scheme are restricted to 2,500,000 (Twenty Five Lac) fully paid up equity shares of the Company. Not more than 500,000 (Five Lac) fully paid up equity shares or 1% of the issued equity share capital at the time of awarding the Stock Grant, whichever is lower, can be awarded to any one employee in any one year.

e) The Stock Grants shall vest in the Eligible Employees pursuant to the ESGS Scheme in the proportion of 1/3rd at the end of each year or as may be decided by the Compensation Committee from the date on which the Stock Grants are awarded for a period of three consecutive years subject to the condition that the Eligible Employee continues to be in employment of the Company or the Subsidiary Company as the case may be.

f) The Eligible Employee shall exercise her / his right to acquire the shares vested in her / him all at one time within 1 month from the date on which the shares vested in her / him or such other period as may be determined by the Compensation Committee.

g) The Exercise Price of the shares has been fixed at Rs. 1 per share. The intrinsic value, being the difference between market price and exercise price is treated as employee compensation cost and charged to the Statement of Profit and Loss. The value of the options is treated as a part of employee compensation in the financial statements and is amortised over the vesting period.

IV. Pursuant to SEBI notification dated January 17, 2013, no further securities of the Company will be purchased from the open market.

V. Had the fair value method of accounting been used, the employee compensation cost for the year ended March 31, 2013 would have been lower by Rs. 1.13 crore (previous year higher by Rs. 0.67 crore).

NOTE 9 : GENERAL

a) Other information required by Schedule VI (Revised) to the Companies Act, 1956, has been given only to the extent applicable.

b) Figures for the previous year have been regrouped / restated wherever necessary to conform to current year''s presentation.


Mar 31, 2012

NOTE 1 : COMPANY OVERVIEW

Godrej Consumer Products Limited (the Company) was incorporated on November 29, 2000, to take over as a going concern the consumer products business of Godrej Soaps Limited (subsequently renamed as Godrej Industries Limited), pursuant to a Scheme of Arrangement as approved by the High Court, Mumbai. The Company is a focused fast moving consumer goods company, manufacturing and marketing toilet soaps, hair colour, household insecticides, liquid detergents, toiletries and others. Notes:

a) During the year, the Company issued 16,707,317 equity shares of Rs. 1 each at a premium of Rs. 409 per equity share to Baytree Investments (Mauritius) Pte. Ltd. on preferential basis. The issue proceeds aggregating to Rs. 684.99 Crore have been utilized to retire debt and for general corporate purpose.

b) 31,124 Right Issue Shares (i.e. difference in Issued capital and Paid-up capital) are kept in abeyance due to various suits filed in courts / forums by third parties for which final order is awaited.

c) Terms / rights attached to equity shares

The Company has issued only one class of equity shares having a par value of Rs. 1 each. Each equity shareholder is entitled to one vote per share.

During the year ended March 31, 2012, the amount of per share dividend recognised as distribution to equity shareholders was Rs. 4.75 (previous year: Rs. 4.50).

Notes:

a) Deferred sales tax loan is interest free and will be paid in balance 28 monthly installments. It is secured by Bank Guarantee in favour of Sales Tax authorities.

b) During the year, the Company had issued 2,250 zero-coupon, unsecured, redeemable, non-convertible debentures on private placement basis, redeemable at a premium, which will yield 10.75% p.a. at maturity. These debentures are redeemable on November 14, 2014 with call options on November 14, 2012 at a call option premium of 0.25% and November 14, 2013 without any call option premium.

c) The Company does not have any continuing default as on the Balance Sheet date in repayment of loans and interest.

Notes:

a) Trademarks and Brands amounting to Rs. 0.13 crore have been acquired pursuant to the Scheme of Amalgamation of Essence Consumer Care Products Ltd. (ECCPL) and Naturesse Consumer Care Products Ltd. (NCCPL).

b) Trademarks and Brands acquired pursuant to the Scheme of the Amalgamation of the erstwhile Godrej Household Products Limited (GHPL) with the Company are amortised over a period of 20 years. The major influencing factors behind amortising these brands over a period of 20 years are that Goodknight has been in existence since the last twenty seven years and been growing at a fast pace.

c) In accordance with the Scheme of Amalgamation of the erstwhile Godrej Household Products Limited with the Company which was sanctioned by the High Court of Judicature at Bombay, an amount of Rs. 52.75 crore for the year (previous year Rs. 52.75 crore), equivalent to the amortisation of the Goodknight and HIT Brands is charged to the General Reserve.

Notes:

a) During the year, the Company has completed the acquisition of 51% stake in Darling Group operations in South Africa, Nigeria and Mozambique through its subsidiary Godrej Mauritius Africa Holdings Ltd. The Darling Group is a market leader in hair extension products in the African continent.

b) Essence Consumer Care Products Ltd. (ECCPL) and Naturesse Consumer Care Products Ltd. (NCCPL) have been amalgamated with the Company pursuant to scheme sanctioned by Hon'ble High Court effective May 18, 2011

NOTE 2 : CONTINGENT LIABILITIES Rs. Crore

Current Year Previous Year

a) Claims for Excise duties, taxes and other matters

i) Excise duty demands aggregating Rs. 3.95 crore (previous year Rs. 1.85 crore) against which the Company has preferred appeals (net of tax). 2.67 1.23

ii) Customs Duty claims in respect of Classification 3.87 -

iii) Excise duty claims in respect of non-payment of education cess for the period January 2005 to March 2008 at the Guwahati Factory amounting to Rs.1.18 crore (previous yearRs. 1.18 crore) (net of tax). 0.80 0.79

iv) Sales tax demands aggregating Rs. 28.07 crore (previous year Rs. 20.80 crore) against which the Company has preferred appeals (net of tax). 18.96 13.89

v) Income-tax matters

Demand notices issued by Income- tax Authorities. 7.83 8.37

vi) Other matters - Rs.3.00 crore (previous year Rs.3.00 crore) (net of tax). 2.03 2.00

b) Guarantees

i) Guarantees issued by banks [secured by bank deposits under lien with the bank Rs.7.32 crore (previous year Rs.5.58 crore)] 10.21 8.65

ii) Guarantees amounting to USD Nil (previous year USD 95 million) given by the Company towards loans provided by HSBC, Hongkong to Godrej Consumer Products Mauritius Ltd. - 430.21

iii) Guarantee amounting to USD 297 million (previous year USD 365 million) given by the Company towards loan provided by banks to Godrej Consumer Products Holding (Mauritius) Ltd. 1511.15 1641.60

iv) Guarantee of AED 1.4 million (previous year AED 1.4 million) given by the Company to guarantee principal amount of credit facilities extended by HSBC Bank Middle East Ltd. to Godrej Global Mideast FZE. 1.94 1.73

v) Guarantee given by the Company to guarantee principal amount of credit facilities extended by the Royal Bank of Scotland to Godrej Hygiene Products Limited. 5.00 5.00

vi) Guarantee given by the Company to guarantee principal amount of credit facilities extended by Citibank Sri Lanka and Citibank Bangladesh to Godrej Household Products (Lanka) Private Limited and Godrej Household Products (Bangladesh) Private Limited respectively. 7.56 7.56

vii) Guarantee amounting to USD 10 million (previous year Nil) given by the Company to HSBC, Hongkong towards swap /derivative facilities provided to Godrej Consumer Products Holding (Mauritius) Ltd. 50.88 -

viii)Guarantee amounting to USD 121 million (previous year Nil) given by the Company to DBS Bank, Singapore towards loan provided to Godrej Mauritius Africa Holdings Ltd for acquisition of 51% stake in Darling Group operations at South Africa, Nigeria and Mozambique 615.59 -

ix) Guarantee given by the Company to HSBC Bangladesh towards credit facilities provided by the Bank to Godrej Household Products (Bangladesh) Pvt. Ltd. 4.76 -

c) Claims against the company not acknowledged as debt:

i) Claims by various parties on account of unauthorized, illegal and fraudulent acts by an employee. 24.24 24.24

ii) Claims pertaining to litigations filed against the erstwhile Godrej Household Products Limited. 0.25 0.25

NOTE 3 : COMMITMENTS

Estimated value of contracts remaining to be executed on capital account to the extent not provided for - Rs. 139.29 crore (previous year Rs. 7.25 crore), net of advances amounting to Rs. 86.65 crore (previous year Rs. 6.71 crore).

Notes:

a) Pursuant to the 'Kiwi Manufacturing and Distribution License (excluding Sri Lanka) - Confirmation and Amendment Agreement dated May 28, 2010, entered into between Kiwi European Holdings B.V., Saralee Household & Body Care International B.V. and Godrej Household Products Limited (formerly known as Godrej Sara Lee Limited), and further pursuant to the letters dated February 9, 2011 and March 24, 2011, the 'Kiwi Manufacturing and Distribution License (excluding Sri Lanka) Agreement has been terminated effective April 3, 2011 and termination compensation of Rs. 156.19 crore has been received which is disclosed as an "Exceptional Item" in the Statement of Profit and Loss.

b) The Brylcreem Manufacturing and Distribution license for the use of Brylcreem Brand in India and Sri Lanka to the erstwhile Godrej Household Products Ltd and its subsidiary by Sara Lee Corporation USA, subsequently assigned to Unilever Home & Personal Care Int. BV, has been terminated with effect from March 31, 2012 and termination compensation of Rs. 24.76 crore has been received which is disclosed as an "Exceptional Item" in the Statement of Profit and Loss.

NOTE 4 : LEASES

The Company's significant leasing agreements are in respect of operating lease for Computers and Premises (office, godown, etc.) and the aggregate lease rentals payable, are charged as rent.

NOTE 5 : HEDGING CONTRACTS

The Company uses forward exchange contracts to hedge its foreign exchange exposure relating to the underlying transactions and firm commitment in accordance with its forex policy as determined by a Forex Committee. The Company does not use foreign exchange forward contracts or commodity futures contracts for trading or speculation purposes.

NOTE 6 : INCENTIVE PLAN

The amount carried forward in notional bank after distribution of PLVR for the financial year 2011-12 is Rs. 3.49 crore as on March 31, 2012 (previous year Rs. 6.67crore). The said amount is not provided in the books of account and is payable in future, if performance so warrants.

NOTE 7 : EMPLOYEE BENEFITS

a) DEFINED CONTRIBUTION PLAN Provident Fund:

The post-employment benefits of the erstwhile Godrej Household Products Ltd., which was obtained pursuant to the Scheme of Amalgamation, include contributions to the Provident Fund and Superannuation Fund. The contributions to the Provident Fund are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. The Superannuation Fund constitutes an insured benefit, which is classified as a defined contribution plan as the Company contributes to an Insurance Company and has no further obligation beyond making payment to the insurance company.

Upto the previous year all provident fund contributions, whether made to the Regional Provident Fund Office or to the Provident Fund Trust administered by the Company were considered as Defined Contribution Plans.

b) DEFINED BENEFIT PLAN Gratuity:

The Company participates in the Employees' Group Gratuity-cum-Life Assurance Scheme of HDFC Standard Life Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997, or as per the Company's scheme whichever is more beneficial to the employees.

The gratuity scheme of the erstwhile Godrej Household Products Ltd., which was obtained pursuant to the Scheme of Amalgamation, is funded through a Unit Linked Gratuity Plus Scheme with Life Insurance Corporation of India ('LIC') and HDFC Standard Life Insurance Company Limited. The liability for the Defined Benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary.

Provident Fund:

The Company manages the Provident Fund plan through a Provident Fund Trust for its employees which is permitted under The Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by the employer and employees and guarantees interest at the rate notified by the Provident Fund authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier.

c) Basis Used to Determine Expected Rate of Return on Assets:

The expected return on plan assets of 8.50% has been considered based on the current investment pattern in Government securities.

d) Amounts Recognised as Expense:

i) Defined Contribution Plan

Employer's Contribution to Provident Fund amounting to Rs. 4.52 crore (previous year Rs. 5.34 crore) has been included in Note 27 under Contribution to Provident Fund and Other Funds.

ii) Defined Benefit Plan

Gratuity cost amounting to Rs. 2.14 crore (previous year Rs. 2.15 crore) has been included in Note 27 under Contribution to Provident and Other Funds.

NOTE 8 : EMPLOYEE STOCK BENEFITS PLANS

I. EMPLOYEE STOCK OPTION / PURCHASE PLAN

a) The shareholders of the Company have approved the setting up of the Godrej Consumer Products Ltd. Employee Stock Option Plan (GCPL ESOP) for the benefit of its eligible employees where by the Company can grant 4,500,000 Stock Options convertible into 4,500,000 equity shares of the nominal value Rs. 1 each to the eligible employees / Directors of the Company and of the Company's subsidiaries.

b) The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited which acquires by subscription / purchase or otherwise, the Company's shares equivalent to the number of Options proposed to be granted by the participating companies, as approved by the Compensation Committee.

c) The ESOPS authorised for issue are as under:

i) 2,000,000 Options in the Extra-ordinary General Meeting on March 14, 2007.

ii) 2,500,000 Options in the Extra-ordinary General Meeting on April 28, 2008.

d) The Options granted shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee, which period shall not be less than one year and may extend up to three years from the date of grant of the Option. Vesting may occur in tranches subject to the terms and conditions of vesting. The Option is exercisable within two years after vesting.

e) All unvested Options shall vest in the employees on the date of retirement or at an earlier date as may be decided by the Compensation Committee, subject to the requirement of minimum vesting period and all vested Options should be exercised by the Option Grantee immediately on retirement, but in no event later than six months from the date of such Options Grantee's retirement.

f) The price at which the Option Grantee would convert Options granted into GCPL Shares (i.e. the exercise price) shall be the market price prevailing on the day prior to the day of grant plus interest at such rate not being less than the bank rate then prevailing compoundable on an annual basis for the period commencing from the date of granting of the Option and ending on the date of intimating exercise of the Option to the Company.

g) The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognised since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore is Nil.

h) The Board of Directors in its meeting held on January 22, 2011, had approved an Employee Stock Purchase Plan (GCPL ESPL) which is administered by the GCPL ESOP Trust. Under the plan, the Company provides loans to the GCPL ESOP Trust at an interest rate which is not less than the bank rate, to enable the Trust to acquire up to 1,000,000 shares of the Company from the secondary market. The HR and Compensation Committee had resolved that the surplus shares held by the GCPL ESOP Trust at any point of time for grant of Options under GCPL ESOP be utilised for grant of shares to the employees under the GCPL ESPL within the maximum of 1,000,000 equity shares. Under the plan, entire 1,000,000 shares have been granted and vested till March 31, 2012. These shares have to be compulsorily acquired from the GCPL ESOP Trust within the exercise period of two years. The exercise price shall be the market price on the day prior to the date of grant plus interest at a rate not less than the bank rate till the date of exercise.

II. EMPLOYEE STOCK OPTION PLAN OF ERSTWHILE GODREJ HOUSEHOLD PRODUCTS LTD.

a) Under the Scheme of Amalgamation, the Company has obtained the 'Godrej Sara Lee Limited Employees Stock Option Plan' set up for eligible employees of the erstwhile Godrej Household Products Limited. The equity shares of Godrej Industries Limited (GIL) are the underlying equity shares for the stock option plan. The ESOP Scheme is administered by an independent ESOP Trust created with IL&FS Trust Company Limited. The independent ESOP Trust has purchased shares of GIL from the market against which the options have been granted. The purchases have been financed by loans from the erstwhile Godrej Household Products Limited, which together with interest amounted to Rs. 70.69 crore as at beginning of the year. The Company has given a further loan of Rs. 0.50 crore during the year. The total amount of loans given together with interest thereon as at March 31, 2012 amounts to Rs. 77.43 crore . The repayment of the loans granted to the ESOP Trust and interest thereon is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period.

III. EMPLOYEE STOCK GRANT SCHEME

a) During the year the Company set up the Employees Stock Grant Scheme 2011 (ESGS) pursuant to the approval by the Shareholders at their Meeting held on March 18, 2011.

b) The ESGS Scheme is effective from April 1, 2011, (the "Effective Date") and shall continue to be in force until (i) its termination by the Board or (ii) the date on which all of the shares to be vested under Employee Stock Grant Scheme 2011 have been vested in the Eligible Employees and all restrictions on such Stock Grants awarded under the terms of ESGS Scheme, if any, have lapsed, whichever is earlier.

c) The Scheme applies to the Eligible Employees of the Company or its Subsidiary Company. The entitlement of each employee would be decided by the Compensation Committee of the Company based on the employee's performance, level, grade, etc.

d) The total number of Stock Grants to be awarded under the ESGS Scheme are restricted to 25,00,000 (Twenty Five Lac) fully paid-up equity shares of the Company. Not more than 5,00,000 (Five Lac) fully paid-up equity shares or 1% of the issued equity share capital at the time of awarding the Stock Grant, whichever is lower, can be awarded to any one employee in any one year.

e) The Stock Grants shall vest in the Eligible Employees pursuant to the ESGS Scheme in the proportion of 1/3rd at the end of each year from the date on which the Stock Grants are awarded for a period of three consecutive years subject to the condition that the Eligible Employee continues to be in employment of the Company or the Subsidiary company as the case may be.

f) The Eligible Employee shall exercise her / his right to acquire the shares vested in her / him all at one time within 1 month from the date on which the shares vested in her / him or such other period as may be determined by the Compensation Committee.

g) The Exercise Price of the shares has been fixed at Rs. 1 per share. The intrinsic value, being the difference between market price and exercise price is treated as Employee Compensation Expenses and charged to the Statement of Profit and Loss. The value of the options is treated as a part of employee compensation in the financial statements and is amortised over the vesting period.

NOTE 9 : SCHEME OF AMALGAMATION

a) The Hon'ble High Court of Judicature at Bombay has vide order dated April 26, 2011, sanctioned a Scheme of Amalgamation of the wholly owned subsidiaries of the Company viz. Naturesse Consumer Care Products Limited (NCCPL) and Essence Consumer Care Products Limited (ECCPL), with Godrej Consumer Products Limited (GCPL). The Appointed Date as per the Scheme is December 3, 2010 and the Effective Date is May 18, 2011. Accordingly, the standalone results of the Company for the year ended March 31, 2012, includes the results of the erstwhile ECCPL and NCCPL for the period April 1, 2011, up to May 18, 2011.

b) In accordance with the Scheme of Amalgamation, all the assets and liabilities of ECCPL and NCCPL have been taken over at their respective book values as on December 3, 2010. The difference between book value of assets and liabilities taken over amounting to Rs. 37.66 crore, after giving effect to the adjustments proposed in the Scheme, has been debited to General Reserve in accordance with the Scheme of Amalgamation.

c) Since the entire issued, subscribed and paid-up share capitals of NCCPL and ECCPL were held by the Company, upon the Scheme of Amalgamation becoming effective, no shares of the Company have been allotted in lieu or exchange of its holding in NCCPL and ECCPL, and the share capitals of NCCPL and ECCPL stand cancelled.

d) Since the aforesaid Scheme of Amalgamation, which is effective from December 3, 2010, has been given effect to in these accounts, the figures for the current year, to that extent, are not comparable with those of the previous year.

NOTE 10 : GENERAL

The Revised Schedule VI has become effective from the current year for the presentation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. However, it does not impact recognition & measurement principles followed for preparation of financial statements. Figures of the previous years have been regrouped / restated wherever necessary to confirm to current year's presentation.


Mar 31, 2011

1. BACKGROUND

Godrej Consumer Products Limited (the Company) was incorporated on November 29, 2000, to take over as a going concern the consumer products business of Godrej Soaps Limited (subsequently renamed as Godrej Industries Limited), pursuant to a scheme of arrangement as approved by the High Court, Mumbai. The Company is a focused fast moving consumer goods company, manufacturing and marketing toilet soaps, hair colour, household insecticides, liquid detergents, toiletries and others.

2. SCHEME OF AMALGAMATION

a) A Scheme of Amalgamation ("the Scheme"), for the amalgamation of Godrej Household Products Ltd. (GHPL) (a wholly owned subsidiary of Godrej Consumer Products Ltd. (GCPL) called "the Transferor Company" with Godrej Consumer Products Limited (the Transferee Company) with effect from April 1, 2010, ("the Appointed Date"), was sanctioned by the Honble High Court of Judicature at Bombay ("the Court"), vide its Order dated February 28, 2011 and certifed copies of the Order of the Court sanctioning the Scheme were fled with the Registrar of Companies, Maharashtra on March 31, 2011 (the "Effective Date"). Accordingly, the standalone results of the Company for the year ended March 31, 2011, include the results of the erstwhile GHPL for the financial year ended March 31, 2011.

b) The amalgamation has been accounted for under the "pooling of interests" method as prescribed by Accounting Standard AS 14 - Accounting for Amalgamations and the specifc provisions of the Scheme. Accordingly, the Scheme has been given effect to in these accounts and all assets and liabilities of the Transferor Company stands transferred to and vested in the Transferee Company with effect from the Appointed Date. In accordance with the Scheme of Amalgamation, the assets and liabilities of GHPL have been taken over and recorded at their fair values as on April 1, 2010, as determined by the Board of Directors of GCPL.

d) In arriving at the fair value of the net assets of GHPL taken over by the Company: i) Loans and Advances have been reduced by Rs. 3776.83 lac on account of:

a) Restatement of loans given by the erstwhile GHPL to the GHPL ESOP Trust for acquiring shares of Godrej Industries Limited (GIL) granted under an ESOP Scheme to the employees of GHPL. The loans have been restated at the market value of the underlying GIL shares as on April 1, 2010, resulting in a reduction of Loans and Advances by Rs. 2955.14 lac and

b) Reduction in the excise duty refund receivable by GHPL by Rs. 821.69 lac on account of uncertainty of recoverability.

ii) Trademarks have increased by Rs. 105500.00 lac on account of fair valuation of the Goodknight and Hit brands of the erstwhile GHPL as on April 1, 2010. Amortisation of these brands for the year amounting to Rs. 5275.00 lac has been charged directly to General Reserves as per the Scheme.

e) Costs and expenses of amalgamation amounting to Rs. 614.42 lac have been directly debited to General Reserves.

g) At the end of each financial year an amount equivalent to Rs. 5275.00 lac being the amortization of brands (recorded pursuant to the amalgamation), is to be directly debited to General Reserves.

h) Since the entire issued, subscribed and paid-up share capital of GHPL was held by the Company, upon the Scheme of Amalgamation becoming effective, no shares of the Company have been allotted in lieu or exchange of its holding in GHPL and the share capital of GHPL stands cancelled.

i) Had the Scheme not prescribed the above accounting treatment, the balance in Goodwill would have been higher by Rs. 105500.00 lac Trademarks would have been lower by Rs. 105500.00 lac, expenses and provisions would have been higher by Rs. 4391.25 lac Depreciation would have been higher by Rs. 5275.00 lac General Reserve would have been higher by Rs. 9666.25 lac and proft for the year would have been lower by Rs. 9666.25 lac.

j) Since the aforesaid Scheme of amalgamation of GHPL with the Company, which is effective from April 1, 2010, has been given effect to in these accounts, the fgures for the current year to that extent are not comparable with those of the previous year.

k) Fair valuation of Trademarks - Goodknight & HIT, ESOP Loan and Excise Receivable has been done to refect the true and fair value of these assets. Since the amortisation of trademark is on account of fair valuation, hence it has been charged to General Reserve. Since the amalgamation expenses are not incurred in the normal course of business and incurred only on account of amalgamation, hence charged to General Reserve.

3. CONTINGENT LIABILITIES

Current Year Previous Year Rs. Lac Rs. Lac

a) Claims for excise duties, taxes and other matters:

i) Excise duty demands aggregating Rs. 184.56 lac (previous year Rs. 93.08 lac) against which the Company has preferred appeals (net of tax). 123.26 61.44

ii) Excise duty claims in respect of non-payment of education cess for the period January 2005 to March 2008 at the Guwahati Factory amounting to Rs. 118.26 lac (previous year Rs. 118.26 lac) (net of tax). 78.98 78.07

iii) Special Value Addition Rate application for excise purpose at Guwahati claimed at a rate higher than the normal rate as per new notifcation is yet to be granted. The excess special value addition claimed over and above the normal rate amounting to Rs. Nil (previous year Rs. 830.86 lac) has been accounted as recoverable and the same is contingent on the higher rate being granted (net of tax). - 548.45

iv) Sales tax demands aggregating Rs. 2079.93 lac (previous year Rs. 168.59 lac) against which the Company has preferred appeals (net of tax). 1389.03 111.29

v) Income-tax matters:

Demand notices issued by Income-tax Authorities. 837.43 2162.96

vi) Other matters - Rs. 300.05 lac (previous year Rs. 6.62 lac) (net of tax). 200.38 4.37

b) Guarantees issued by banks (secured by bank deposits under lien with the bank Rs. 106.95 lac (previous year – Rs. 106.95 lac). 865.02 262.74

c) Guarantees amounting to $ 95 million given by the Company towards loans provided by HSBC, to Godrej Consumer Products Mauritius Ltd. 43021.13 -

d) Guarantee amounting to $ 365 million given by the Company towards loan provided by Banks to Godrej Consumer Products Holding (Mauritius) Ltd. 164159.57 -

e) Guarantee of AED 1.4 million (previous year AED 1.4 million) given by the Company to guarantee principal amount of credit facilities extended by HSBC Bank Middle East Ltd. to Godrej Global Mideast FZE – a wholly owned subsidiary of the Company. 172.59 171.69

f) Guarantee given by the Company to guarantee principal amount of credit facilities extended by the Royal Bank of Scotland to Godrej Hygiene Products Limited – a wholly owned subsidiary of the Company. 500.00 300.00

g) Guarantees of GBP Nil (previous year GBP 3 million) given by the Company for securing loan availed by Godrej Netherlands B.V., a wholly owned subsidiary of the Company. - 2036.05

h) Guarantee given by the Company to guarantee principal amount of credit facilities extended by Citibank Sri Lanka and Citibank Bangladesh to Godrej Household Products (Lanka) Private Limited and Godrej Household Products (Bangladesh) Private Limited respectively - wholly owned subsidiaries of the Company. 756.36 -

i) Claims against the Company not acknowledged as debt:

Claims by various parties on account of unauthorised, illegal and fraudulent acts by an employee. 2424.19 2424.19

Claims pertaining to litigations fled against the erstwhile Godrej Household Products Limited. 25.02 -

5. CAPITAL COMMITMENTS

Estimated value of contracts remaining to be executed on capital account to the extent not provided for – Rs. 725.47 lac (previous year Rs. 42.57 lac), net of advances amounting to Rs. 670.61 lac (previous year Rs. 28.52 lac).

6. SHARE CAPITAL

During the year, the Company issued 15,400,100 equity shares of face value Rs. 1 each at a premium of Rs. 344 per equity share to Qualifed Institutional Buyers. The pricing was equal to the foor price of Rs. 345 per equity share calculated in accordance with SEBI guidelines. The issue proceeds aggregating to Rs. 53130.35 lac has been utilized to retire debt and for general corporate purpose.

7. SECURED LOANS

a) The Sales Tax Deferment Loan is secured by: i) Malanpur location:

(a) a frst charge by way of equitable mortgage of the immovable properties at Malanpur factory, and

(b) hypothecation of movable assets at Malanpur factory, save and except, book debts and subject to charges already created by the Company in favour of the banks for working capital facilities.

ii) Baddi Location:

Bank guarantee in favour of the sales tax authorities.

b) Bank cash credit, working capital demand loans and guarantees issued by banks are secured by hypothecation of stocks and book debts.

8. UNSECURED LOANS

a) During the year, the Company had issued 11000 and redeemed 9000 zero coupon, unsecured, redeemable, non-convertible debentures on private placement basis. The debentures were redeemed at a premium of Rs. 2013.00 lac at maturity.

b) Unsecured Loans include 2,000 zero coupon, unsecured, redeemable, non-convertible debentures having a face value of Rs. 10 lac each, aggregating to Rs. 20000.00 lac, issued on a Private Placement basis, redeemable in two tranches at a premium, which will yield 10.50% p.a. at maturity. Debentures amounting to Rs. 4500.00 lac are redeemable in December 2011 and the balance, amounting to Rs. 15500.00 lac are redeemable in January 2012.

9. INVESTMENTS

a) During the year the Company completed the acquisition of PT Megasari Makmur Group in Indonesia with effect from May 17, 2010 and also incorporated Godrej Indonesia Netherlands Holding BV, Netherlands with effect from May 7, 2010 under Godrej Consumer Products Dutch Cooperatief U.A., Netherlands.

b) During the year, the Company completed the acquisition of the balance 51% stake in Godrej Sara Lee Ltd. (subsequently renamed as Godrej Household Products Ltd.). Consequently Godrej Household Products Ltd. became a wholly owned subsidiary of Godrej Consumer Products Limited (GCPL) with effect from May 28, 2010. Subsequently, pursuant to a Scheme of Amalgamation sanctioned by the Honble High Court of Judicature at Bombay, Godrej Household Products Ltd. was amalgamated with Godrej Consumer Products Ltd. on March 31, 2011 (the "Effective Date") with effect from April 1, 2010, ("the Appointed Date").

Godrej Household Products (Lanka) Private Limited and Godrej Household Products (Bangladesh) Private Limited, subsidiaries of the erstwhile Godrej Household Products Ltd., have consequently become subsidiaries of GCPL.

c) During the year the Company acquired 100% stake in Laboratoria Cuenca, Consell SA, Issue Uruguay and Issue Brazil (collectively referred to as ‘Issue Group) with effect from June 1, 2010 and acquired a 100% stake in Argencos, a mid-sized Argentine hair care company & Panamar Produccioness Srl with effect from July

8, 2010 through its newly incorporated subsidiaries Godrej Netherlands Argentina Holding B.V., Netherlands and Godrej Netherlands Argentina B.V., Netherlands which were incorporated under Godrej Argentina Dutch Cooperatief UA, Netherlands.

d) The Company completed the acquisition of the worldwide rights of Tura from the Tura Group, Nigeria with effect from June 16, 2010.

e) During the year, the Company acquired a 100% stake in Naturesse Consumer Care Products Limited (NCCPL) and Essence Consumer Care Products Limited (ECCPL) which own the "Swastik" and "Genteel" brand respectively. The Board of Directors of the Company has approved a Scheme of Amalgamation of these Companies with GCPL subject to the consent of the Honble High Court of Judicature at Bombay and such other necessary approvals and consents. The Appointed Date for the amalgamation is December 3, 2010. NCCPL and ECCPL have fled separate petitions with the Honble High Court of Judicature at Bombay for sanction of the said Scheme. The approval of the Honble High Court is awaited.

As the Appointed Date for the said Scheme is December 3, 2010, on receipt of the approval of the Honble High Court and fling of the same with the Registrar of Companies, the financial statements of GCPL for the year ended March 31, 2011, would be impacted. Fixed Assets (net of depreciation) will increase by Rs. 15.00 lac representing the book value of "Swastik" and "Genteel" brands, the Net Current Assets will increase by Rs. 172.00 lac. The General Reserve will reduce by Rs. 3766.00 lac being the difference between book value of assets and liabilities taken over after giving effect to the adjustments proposed in the said scheme of Amalgamation.

f) During the year the Company incorporated Godrej Mauritius Africa Holdings Limited (w.e.f. March 14, 2011) as its 100% subsidiary which in turn acquired Godrej Weave Holdings Limited on March 14, 2011, as its 100% subsidiary.

b) The Company has granted a loan amounting to Rs. 5223.56 lac (previous year Rs. 4430.84 lac) (being the maximum amount of loan outstanding during the year) to The Godrej Consumer Products Limited ESOP Trust, set up for administering the Employee Stock Option Plan of the Company for the employees/ directors of the Company and/or of the Companys subsidiaries. Out of the above loans, loans aggregating Rs. 2923.56 lac for ESOP is repayable at the end of fve years from the date of the loan agreement viz. fve years

from March 21, 2008. The repayment of the loan by the Trust is dependant on the exercise of options by the employees and/or the market price of the underlying equity shares of the unexercised options at the end of the exercise period.

In respect of the balance loans amounting to Rs. 2300.00 lac which have been granted for for the Employee Stcok Purchase Plan (GCPL ESPL), the repayment will commence from the date on which the employee exercises the stock grant or after 2 years from the date of vesting whichever is earlier. In the event the price of the underlying GCPL shares fall below the exercise price during/on conclusion of the exercise period, the employee shall compulsorily exercise the shares at cost plus interest.

Under the Scheme of Amalgamation, the Company has obtained a new employees stock option scheme viz. ‘Godrej Sara Lee Limited stock option plan to eligible employees of the merged Company. on the terms and conditions as specifed in the scheme. The equity shares of ‘Godrej Industries Limited are the underlying equity shares for the stock option scheme. In order to execute the Scheme, an independent trust has been created with ILFS Trust Company Limited and the erstwhile GHPL has given an interest bearing loan which together with interest amount to Rs. 5940.00 lac to the trust to execute the scheme. Based on Market conditions the same has been fair valued at Rs. 2984.86 lac shown under the head "loans and advances". The impaired amount of Rs. 2955.14 lac has been adjusted to general reserve.

12. RIGHTS ISSUE PROCEEDS

Out of the funds raised from the rights issue in 2008-09 amounting to Rs. 39645.75 lac, the Company has, as of March 31, 2011, utilised the entire proceeds towards the objects mentioned in the Rights Offer letter (as amended till date).

13. LIABILITIES

a) There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at the balance sheet date. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identifed on the basis of information available with the Company. This has been relied upon by the auditors.

c) The Company has acquired assets under non cancellable operating leases arising out of Scheme of Amalgamation of the Company with erstwhile Godrej Household Products Limited. The liability for minimum lease payment is secured by hypothecation of the assets acquired under the lease. The future minimum lease payments outstanding as on March 31, 2011, in respect of assets leased are as under:

d) The Companys signifcant leasing agreements are in respect of operating lease for premises (offce godown) Computers and the aggregate lease rentals payable, are charged as rent.

e) Sundry Creditors / Provision for Liabilities – Raw materials include overseas supplier credit amounting to Rs. 7743.49 lac (previous year Rs. 8231.47 lac).

14. HEDGING CONTRACTS

The Company uses forward exchange contracts to hedge its foreign exchange exposure relating to the underlying transactions and frm commitment in accordance with its forex policy as determined by a Forex Committee. The Company does not use foreign exchange forward contracts or commodity futures contracts for trading or speculation purpose. As at March 31, 2011, the Company had 6 (previous year 15) outstanding forward exchange contracts to purchase foreign currency aggregating, to US Dollars 66.10 lac (previous year US Dollars 112.12 lac) at an average rate of Rs. 45.91 per US Dollar (previous year Rs. 46.44 per US Dollar). Pursuant to the Scheme of Amalgamation the Company has obtained 3 outstanding forward exchange contracts to sell foreign currency aggregating to US Dollar 0.5 lac at an average rate of Rs. 45.28 per US Dollar and EURO 9.25 lac at an average rate of Rs. 63.84 per EURO. The uncovered foreign exchange exposure as at March 31, 2011, is as under:

15. PROFIT AND LOSS ACCOUNT

a) Exchange differences (net) recognised in the Proft and Loss Account for the year amounted to a gain of Rs. 118.05 lac (previous year Rs. 102.53 lac). The premium in respect of forward exchange contracts to be recognised in subsequent accounting periods is Rs. 35.16 lac (previous year Rs. 38.26 lac).

b) Research and Development Expenditure of revenue nature charged to the Proft and Loss Account amounts to Rs. 793.96 lac (previous year Rs. 474.76 lac).

c) Establishment expenses represent the Companys share of various expenses incurred by Godrej Industries Ltd. and other companies under the same management for sharing of services and use of common facilities.

16. EXCEPTIONAL ITEMS

a) Pursuant to Ambipur Manufacturing and Distribution License Termination and Amendment Agreement dated May 28, 2010, entered into between Kiwi European Holdings B.V., Saralee Household & Body Care International B.V. and Godrej Household Products Limited (formerly known as Godrej Sara Lee Limited), the erstwhile Godrej Household Products Ltd. received termination compensation of Euro 7,000,000 (equivalent to Rs. 4030.99 lac) disclosed as an "Exceptional Item" in the Proft and Loss Account.

b) Pursuant to the ‘Kiwi Manufacturing and Distribution License (excluding Sri Lanka) – Confrmation and Amendment Agreement dated May 28, 2010, entered into between Kiwi European Holdings B.V., Saralee Household & Body Care International B.V. and Godrej Household Products Limited (formerly known as Godrej Sara Lee Limited), and further pursuant to the letters dated February 9, 2011 and March 24, 2011, the ‘Kiwi Manufacturing and Distribution License (excluding Sri Lanka) Agreement has been terminated effective April 3, 2011 and termination compensation of Rs. 15619.38 lac has been received subsequent to the year end.

17. EMPLOYEE STOCK OPTION PLAN

a) The shareholders of the Company have approved the setting up of the Godrej Consumer Products Ltd. Employee Stock Option Plan (GCPL ESOP) for the benefit of its eligible employees whereby the Company can grant 45,00,000 stock options convertible into 45,00,000 equity shares of the nominal value Rs. 1 each to the eligible employees/Directors of the Company and of the Companys subsidiaries.

b) The ESOP Scheme is administered by an independent ESOP trust created with IL&FS Trust Company Limited which acquires by subscription/purchase or otherwise, the Companys shares equivalent to the number of options proposed to be granted by the participating companies, as approved by the Compensation Committee.

c) The ESOPS authorised for issue are as under:

i) 2,000,000 options in the Extra-ordinary General Meeting on March 14, 2007. ii) 2,500,000 options in the Extra-ordinary General Meeting on April 28, 2008.

d) The options granted shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee, which period shall not be less than one year and may extend up to three years from the date of grant of the option. Vesting may occur in tranches subject to the terms and conditions of vesting. The option is exercisable within two years after vesting.

e) All unvested Options shall vest in the employees on the date of retirement or at an earlier date as may be decided by the Compensation Committee, subject to the requirement of minimum vesting period and all vested Options should be exercised by the Option Grantee immediately on retirement, but in no event later than six months from the date of such Options Grantees retirement.

f) The price at which the Option Grantee would convert Options granted into GCPL Shares (i.e. the exercise price) shall be the market price prevailing on the day prior to the day of grant plus interest at such rate not being less than the bank rate then prevailing compoundable on an annual basis for the period commencing from the date of granting of the Option and ending on the date of intimating exercise of the Option to the Company.

g) The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same/less than the exercise price of the option, the intrinsic value therefore is Nil.

Had the fair value method of accounting been used, the employee compensation cost would have been higher by Rs. 1132.64 lac (previous year Rs. 442.75 lac).

h) The Board of Directors at its meeting held on January 22, 2011 has approved an Employee Stock Purchase Plan (GCPL ESPL) which is administered by the GCPL ESOP Trust. Under the plan, the Company provides loan to the GCPL ESOP Trust at an interest rate which is not less than the bank rate, to enable the GCPL ESOP trust to acquire upto 1,000,000 shares of the Company from the secondary market.

The HR & Compensation committee had resolved that the surplus shares held by GCPL ESOP Trust at any point of time for grant of options under GCPL ESOP be utilised for grant of shares to the employees under the GCPL ESPL within the maximum of 10,00,000 equity shares.

Under the plan, 9,80,000 shares have been granted till March 31, 2011.

The shares granted shall vest on March 30, 2012. Thereafter within the exercise period of two years, these shares shall have to be compulsorily acquired from the GCPL ESOP Trust. The exercise price shall be the market price on the day prior to the date of grant plus interest at a rate not less than the bank rate till the date of exercise.

j) Under the Scheme of Amalgamation, the Company has obtained ‘Godrej Sara Lee Limited Employees Stock Option Plan set up for eligible employees of the erstwhile Godrej Household Products Limited. The equity shares of Godrej Industries Limited (GIL) are the underlying equity shares for the stock option plan. The ESOP Scheme is administered by an independent ESOP trust created with IL&FS Trust Company Limited. The independent ESOP trust has purchased shares of GIL from the market against which options have been granted. The purchases have been fnanced by loans from the erstwhile Godrej Household Products Limited which together with interest amounts to Rs. 5940.00 lac. The repayment of the loans granted to the ESOP trust and the interest thereon is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period.

18. INCENTIVE PLANS

The amount carried forward in notional bank after distribution of PLVR for the financial year 2010-11 is Rs. 667.18 lac as on March 31, 2011 (previous year Rs. 525.00 lac). The said amount is not provided in the books of account and is payable in future, if performance so warrants.

Note:

a) The above provision has come in the books pursuant to the Scheme of Amalgamation with GHPL.

b) The above provision represents estimates made for probable liabilities arising out of pending disputes / litigation with the Sales Tax / Service Tax Authorities. The outfow with regard to the said matters depends on exhaustion of remedies available to the Unit under the law and hence, the Unit is not able to reasonably ascertain the timing of the outfow.

20. EMPLOYEE BENEFITS

a) DEFINED CONTRIBUTION PLAN

Provident Fund:

The Company manages the Provident Fund plan through a Provident Fund Trust for its employees which is permitted under The Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by the employer and employees and guarantees interest at the rate notifed by the Provident Fund authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier.

The post employment benefits of the erstwhile Godrej Household Products Ltd., which was acquired pursuant to the Scheme of Amalgamation, include contributions to the Provident Fund and Superannuation Fund. The contributions to the Provident Fund are made to a Government administered Provident Fund and there are no further obligations beyond making such contribution. The Superannuation Fund constitutes an insured benefit, which is classifed as a defned contribution plan as the Company contributes to an Insurance Company and has no further obligation beyond making payment to the insurance company.

b) Defned benefit Plan

Gratuity:

The Company participates in the Employees Group Gratuity-cum-Life Assurance Scheme of HDFC Standard Life Insurance Co. Ltd., a funded defned benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997, or as per the Companys scheme whichever is more benefcial to the employees.

The gratuity scheme of the erstwhile Godrej Household Products Ltd., which was acquired pursuant to the Scheme of Amalgamation, is funded through a Unit Linked Gratuity Plus Scheme with Life Insurance Corporation of India (‘LIC) and HDFC Standard Life Insurance Company Limited. The liability for the Defned benefit Plan is provided on the basis of a valuation, using the Projected Unit Credit Method, as at the Balance Sheet date, carried out by an independent actuary.

c) Basis Used to Determine Expected Rate of Return on Assets:

The expected return on plan assets of 8.25% has been considered based on the current investment pattern in Government securities.

d) Amounts Recognised as Expense:

i) Defned Contribution Plan

Employers Contribution to Provident Fund amounting to Rs. 533.73 lac (previous year Rs. 262.70 lac) has been included in Schedule 12 under Contribution to Provident and Other Funds.

ii) Defned benefit Plan

Gratuity cost amounting to Rs. 215.20 lac (previous year Rs. 195.89 lac) has been included in Schedule 12 under Contribution to provident and Other Funds. The Company had made a short provision amounting to Rs. 0.43 lac in the current year and Rs. 4.34 lac in the previous year for which no adjustment entries have been passed in the books of account.

35. Related Party Disclosures

A) Related Parties and their Relationship

a) Enterprise having control over reporting enterprise:

i) Godrej & Boyce Mfg. Co. Ltd.

b) Subsidiaries:

i) Godrej Netherlands B.V.

Godrej Consumer Products (UK) Limited Keyline Brands Limited

Inecto Manufacturing Limited ii) Rapidol (Proprietary) Limited iii) Godrej Global Mid East FZE iv) Godrej Hygiene Products Limited v) Godrej Consumer Products Mauritius Limited Godrej Kinky Holdings Limited

Kinky Group (Proprietary) Limited

Godrej Nigeria Holdings Ltd.

Godrej Nigeria Limited Godrej Argentina Dutch Cooperatief U.A

Godrej Netherlands Argentina Holding B.V Godrej Netherlands Argentina B.V Laboratoria Cuenca S.A Deciral S.A

Issue Group Uruguay S.A Issue Group Brazil Limited Consell S.A Argencos S.A Panamar Produccioness Srl vi) Godrej Consumer Products Holding (Mauritius) Limited Indovest Capital Limited, Labuan Godrej Consumer Products Dutch Cooperatief U.A. Godrej Indonesia Netherlands Holding B.V Godrej Consumer Products (Netherlands) B.V. Godrej Consumer Holdings (Netherlands) B.V. PT Simba Indosnack Makmur PT Indomas Susemi Jaya PT Intrasari Raya PT Megasari Makmur PT Ekamas Sarijaya PT Sarico Indah vii) Godrej Household Products (Lanka) Private Limited viii) Godrej Household Products (Bangladesh) Private Limited ix) Godrej Consumer Products Bangladesh Limited x) Essence Consumer Care Products Private Limited xi) Naturesse Consumer Care Products Private Limited xii) Godrej Mauritius Africa Holdings Limited xiii) Godrej Weave Holdings Limited

c) Joint Ventures:

i) Godrej Household Products Ltd. (Formerly Godrej Sara Lee Limited)

(Joint Venture from June 1, 2009 up to May 27, 2010. Became a subsidiary of the Company on May 28, 2010 and subsequently was pursuant to the Scheme of Amalgamation with effect from April 1, 2010)

d) Enterprises under common control with whom transactions have taken place during the year:

i) Godrej Industries Limited ii) Godrej Agrovet Limited iii) Godrej Hershey Limited iv) Godrej Infotech Limited v) Godrej Properties Limited vi) Godrej International Limited vii) Wadala Commodities Ltd. viii) Godrej Oil Palm Limited ix) Natures Basket Limited

e) Enterprise over which Key Management Personnel exercise signifcant infuence:

i) Godrej Investments Private Limited

f) Key Management Personnel and Relatives:

i) Mr. Adi Godrej Chairman

ii) Mr. Hoshedar Press Vice-Chairman (retired w.e.f. close of April 30, 2010)

iii) Mr. Dalip Sehgal Managing Director (up to June 30, 2010)

iv) Mrs. Parmeshwar Godrej Wife of Mr. Adi Godrej

v) Mr. A. Mahendran Managing Director (w.e.f. from July 1, 2010)

vi) Mrs. Mythili Mahendran Wife of Mr. A. Mahendran

vii) Mrs. Tanya Dubhash Daughter of Mr. Adi Godrej

viii) Ms. Nisaba Godrej Daughter of Mr. Adi Godrej

ix) Mr. Pirojsha Godrej Son of Mr. Adi Godrej

x) Mr. Nadir Godrej Brother of Mr. Adi Godrej

xi) Mrs. Rati Godrej Wife of Mr. Nadir Godrej

xii) Mr. Burjis Godrej Son of Mr. Nadir Godrej

xiii) Mr. Sohrab Godrej Son of Mr. Nadir Godrej

(xiv) Mr. Hormazd Godrej Son of Mr. Nadir Godrej


Mar 31, 2010

1. BACKGROUND

Godrej Consumer Products Limited (the Company) was incorporated on NovemPer 29, 2000, to take over as a going concern the consumer products business of Godrej Soaps Limited (subsequently renamed as Godrej Industries Limited), pursuant to a scheme of arrangement as approved by the High Court, Mumbai. The Company is a focused fast moving consumer goods company, manufacturing and marketing toilet soaps, hair colour, liquid detergents and other toiletries.

2. SCHEME OF AMALGAMATION

a) A Scheme of Amalgamation ("the Scheme") for the amalgamation of Godrej ConsumerBiz Ltd. (GCBL) (a 100% subsidiary of Godrej & Boyce Manufacturing Company Ltd. (G&B)) and Godrej Hygiene Care Ltd. (GHCL) (a 100% subsidiary of Godrej Industries Limited (GIL)) together called "the Transferor Companies", with Godrej Consumer Products Limited (the Transferee Company), with effect from June 1, 2009, ("the Appointed Date") was sanctioned by the Honble High Court of Judicature at Bombay ("the Court"), vide its Order dated October 8, 2009 and certified copies of the Order of the Court sanctioning the Scheme were filed with the Registrar of Companies, Maharashtra on October 15, 2009 (the "Effective Date").

b) The amalgamation has been accounted for under the "pooling of interests" method as prescribed by Accounting Standard AS 14 - Accounting for Amalgamations and the specific provisions of the Scheme. Accordingly, the Scheme has been given effect to in these accounts and all assets and liabilities of the Transferor Companies stand transferred to and vested in the Transferee Company with effect from the Appointed Date and are recorded by the Transferee Company at their book values as appearing in the books of the Transferor Companies.

d) GCBL and GHCL held 29% and 20% respectively in Godrej Sara Lee Ltd., which is a 49:51 unlisted joint venture company between the Godrej Group and Saralee Corporation, USA. As a result of the amalgamation, Godrej Sara Lee Limited has become a Joint Venture between the Company and Sara Lee Corporation USA.

e) In accordance with the Scheme of Amalgamation, the Company has issued and allotted 30,296,727 equity shares having a face value of Re. 1 each to G&B and 20,939,409 equity shares having a face value of Re. 1 each to GIL, being 10 equity shares in the Transferee Company for every 11 equity shares held by them in GCBL and GHCL respectively, as consideration for the transfer. Consequently, the issued, subscribed and paid up equity share capital of the Company stands increased to 308,190,044 equity shares having a face value of Re. 1 each aggregating Rs. 3,081.90 lac.

f) The excess of book value of the net assets of the Transferor Companies taken over, amounting to Rs. 18,455.25 lac, after adjusting the expenses and cost of the Scheme which amounted to Rs. 731.15 lac, over the face value of shares issued as consideration to the Members of the Transferor Companies has been credited to the General Reserve as per the Scheme.

g) Had the Scheme not prescribed the above treatment, the balance in Security Premium Account would have been higher by Rs. 19,165.65 lac, Investments would have been higher by Rs. 731.15 lac, Capital Reserve would have been higher by Rs. 51.24 lac, the Profit and Loss Account and the General Reserve would have been lower by Rs. 30.50 lac and 18,455.25 lac respectively.

h) Since the aforesaid Scheme of amalgamation of GCBL and GHCL with the Company, which is effective from June 1, 2009, has been given effect to in these accounts, the figures for the current year to that extent are not comparable with those of the previous year.

3. CONTINGENT LIABILITIES

Current Year Previous Year Rs. in Lac Rs. in Lac

a) Claims for excise duties, taxes and other matters:

i) Excise duty demands aggregating Rs. 93.08 lac (previous year Rs. 78.07 lac) against which the Company has preferred appeals (net of tax). 61.44 51.54

ii) Excise duty claims in respect of non-payment of education cess for the period January 2005 to March 2008 at the Guwahati Factory amounting to Rs. 118.27 lac (previous year Rs. 118.27 lac) (net of tax). 78.07 78.07

iii) Special Value Addition Rate application for excise purpose at Guwahati claimed at a rate higher than the normal rate as per new notification is yet to be granted. The excess special value addition claimed over and above the normal rate amounting to Rs. 830.86 lac (previous year Rs. 453.65 lac) has been accounted as recoverable and the same is contingent on the higher rate being granted (net of tax). 548.45 299.45

iv) Sales tax demands aggregating Rs. 168.59 lac (previous year Rs. 135.33 lac) against which the Company has preferred appeals (net of tax). 111.29 89.33

v) Income-tax matters:

Demand notices issued by Income-tax Authorities. 2162.96 1755.36

vi) Other matters - Rs. 6.62 lac (previous year Rs. 6.62 lac) (net of tax). 4.37 4.37

vii) Entry tax demand by the Government of Assam on materials received at the Guwahati factory for the period December 2006 to May 2008 which is being disputed by the Company. During the previous year, the amount was not quantified. During the current year, the Company has made a provision for the same in the books of account. - -

b) Guarantees issued by banks (secured by bank deposits under lien with the bank Rs. 106.95 lac (previous year - Rs. 105.00 lac)

262.75 234.75

c) Guarantees of GBP 3 million (previous year GBP 3 million) given by the Company for securing loan availed by Godrej Netherlands B.V., a wholly owned subsidiary of the Company. 2036.06 2174.70

d) Guarantee of USD Nil (previous year USD 40 million) given by the Company for securing loan given by the Hong Kong and Shanghai Banking Corporation to Godrej Consumer Products Mauritius Limited - a wholly owned subsidiary of the Company. - 20288.00

e) Guarantee of AED 1.4 million (previous year AED 1.4 million) given by the Company to guarantee principal amount of credit facilities extended by HSBC Bank Middle East Ltd. to Godrej Global Mideast FZE - a wholly owned subsidiary of the Company. 171.69 193.48

f) Guarantee given by the Company to guarantee principal amount of credit facilities extended by the Royal Bank of Scotland to Godrej Hygiene Products Limited - a wholly owned subsidiary of the Company. 300.00

g) Claims against the Company not acknowledged as debt:

Claims by various parties on account of unauthorized, illegal and fraudulent acts by an employee. 2424.19

4. CAPITAL COMMITMENTS

Estimated value of contracts remaining to be executed on capital account to the extent not provided for Rs. 42.57 lac (previous year Rs. 88.92 lac)

5. SECURED LOANS

a) The Sales Tax Deferment Loan is secured by : i) Malanpur location:

(a) a first charge by way of equitable mortgage of the immovable properties at Malanpur factory, and

(b) hypothecation of movable assets at Malanpur factory, save and except, book debts and subject to charges already created by the Company in favour of the banks for working capital facilities.

ii) Baddi Location:

Bank guarantee in favour of the sales tax authorities.

b) Bank cash credit, working capital demand loans and guarantees issued by banks are secured by hypothecation of stocks and book debts.

6. INVESTMENTS

a) During the year the Company has acquired a 49% stake in Godrej Sara Lee Limited which is a 49:51 unlisted joint venture company between the Godrej Group and Sara Lee Corporation, USA. through the amalgamation of Godrej ConsumerBiz Ltd. (GCBL) and Godrej Hygiene Care Ltd. (GHCL).

b) During the year the Company completed the acquisition of the balance 50% stake in Godrej SCA Hygiene Ltd. (subsequently renamed Godrej Hygiene Products Ltd.) from SCA Hygiene Products AB, Sweden, in terms of the Share Purchase Agreement between the Company, SCA Hygiene Products AB, Sweden and Godrej SCA Hygiene Ltd. Godrej Hygiene Products Ltd. has become a wholly owned subsidiary of the Company with effect from April 1, 2009.

c) During the year, the Company has set up Godrej Consumer Products Holding (Mauritius) Limited as a wholly owned subsidiary. Godrej Consumer Products Holding (Mauritius) Limited, in turn has set up Godrej Consumer

Products Dutch Cooperatief UA (Netherlands), Godrej Consumer Products (Netherlands) B.V. and Godrej Consumer Holdings (Netherlands) B.V. as further downstream subsidiaries. Subsequent to the year end, the Company has entered into an agreement to acquire P. T. Megasari Makmur Group and its distribution company in Indonesia through Godrej Consumer Products Holding (Mauritius) Limited and its subsidiaries.

d) The Company has also set up Godrej Nigeria Holdings Limited and its subsidiary Godrej Nigeria Limited as subsidiaries of its 100% subsidiary Godrej Consumer Products Mauritius Limited (Mauritius). The Company has entered into an agreement to acquire worldwide rights of Tura Brand from the Tura Group in Nigeria through the Companys 100% subsidiary Godrej Nigeria Holdings Limited, Mauritius.

7. RIGHTS ISSUE PROCEEDS

Out of the funds raised from the rights issue in the previous year amounting to Rs. 39,645.75 lac, the Company has as of March 31, 2010, utilised an amount of Rs. 23,245.75 lac for part of the objects mentioned in the Rights Offer letter (as amended till date). The balance unutilized funds amounting to Rs. 16,400.00 lac have been temporarily invested in fixed deposits with banks pending their utilization.

8. LIABILITIES

a) There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at the balance sheet date. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

9. PROFIT AND LOSS ACCOUNT

a) Exchange differences (net) recognised in the Profit and Loss Account for the year amounted to a gain of Rs. 102.53 lac (previous year Rs. 114.02 lac loss). The premium in respect of forward exchange contracts to Pe recognised in suPsequent accounting periods is Rs. 38.26 lac (previous year Rs. 25.26 lac).

P) Research and Development Expenditure of revenue nature charged to the Profit and Loss Account amounts to Rs. 474.76 lac (previous year Rs. 248.98 lac).

c) Establishment expenses represent the Companys share of various expenses incurred by Godrej Industries Ltd. and other companies under the same management for sharing of services and use of common facilities.

d) Net borrowing cost capitalised under fixed assets amounts to Rs. Nil (previous year Rs. 21.78 lac).

e) Entry tax demands by the Government of Assam on materials received at the Guwahati factory for the period December 2006 to May 2008 amounting to Rs. 100.00 lac has been accounted for during the year and charged to revenue.

10. EMPLOYEE STOCK OPTION PLAN

a) The shareholders of the Company have approved the setting up of the Godrej Consumer Products Ltd. Employee Stock Option Plan (GCPL ESOP) for the benefit of its eligible employees where by the Company can grant 45,00,000 stock options convertible into 45,00,000 equity shares of the nominal value Re. 1 each to the eligible employees / Directors of the Company and of the Companys subsidiaries.

b) The ESOP Scheme is administered by an independent ESOP trust created with IL&FS Trust Company Limited which acquires by subscription / purchase or otherwise, the Companys shares equivalent to the number of options proposed to be granted by the participating companies, as approved by the Compensation Committee.

c) The limit for ESOPS approved by the shareholders were as under:

i) 2,000,000 options in the Extra-ordinary General Meeting on March 14, 2007. ii) 2,500,000 options in the Extra-ordinary General Meeting on April 28, 2008.

d) The options granted shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee, which period shall not be less than one year and may extend up to three years from the date of grant of the option. Vesting may occur in tranches subject to the terms and conditions of vesting. The option is exercisable within two years after vesting.

e) Up to the previous year, the ESOP Scheme provided that in the case of retiring employees, all Vested Options should be exercised by the Option Grantee immediately after, but in no event later than six months from the date of such Option Grantees Retirement and all Unvested Options will lapse as on the date of such retirement, unless otherwise determined by the Compensation Committee, which determination will be final and binding.

During this year, the Scheme has been modified to provide that all Unvested Options shall vest in the employee on the date of retirement or at an earlier date as may be decided by the Compensation Committee, subject to the requirement of minimum vesting period and all Vested Options should be exercised by the Option Grantee immediately on retirement, but in no event later than six months from the date of such Option Grantees Retirement.

f) The price at which the Option Grantee would convert Options Granted into GCPL Shares (i.e. the exercise price) shall be the market price prevaling on the day prior to the day of grant plus interest at such rate not being less than the Bank Rate then prevailing compoundable on an annual basis for the period commencing from the date of Granting of the Option and ending on the date of intimating Exercise of the Option to the Company.

h) The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore is Nil.

Had the fair value method of accounting been used, the employee compensation cost would have been higher by Rs. 442.75 lac (previous year Rs. 384.26 lac).

11. INCENTIVE PLANS

The amount carried forward in notional bank after distribution of PLVR for the financial year 2009-10 is Rs. 525.00 lac as on March 31, 2010 (previous year Rs. 819.38 lac). The said amount is not provided in the books of account and is payable in future, if performance so warrants.

12. EMPLOYEE BENEFITS

a) DEFINED CONTRIBUTION PLAN

i) Provident Fund:

The Company manages the Provident Fund plan through a Provident Fund Trust for its employees which is permitted under The Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan envisages contribution by the employer and employees and guarantees interest at the rate notified by the Provident Fund authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier.

b) DEFINED BENEFIT PLAN

i) Gratuity:

The Company participates in the Employees Group Gratuity-cum-Life Assurance Scheme of HDFC Standard Life Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation / termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997, or as per the Companys scheme whichever is more beneficial to the employees.

c) Basis Used to Determine Expected Rate of Return on Assets:

The expected return on plan assets of 8.25% has been considered based on the current investment pattern in Government securities.

d) Amounts Recognised as Expense:

i) Defined Contribution Plan

Employers Contribution to Provident Fund amounting to Rs. 262.70 lac (previous year Rs. 228.85 lac) has been included in Schedule 12 under Contribution to Provident and Other Funds.

ii) Defined Benefit Plan

Gratuity cost amounting to Rs. 195.89 lac (previous year Rs. 130.00 lac) has been included in Schedule 12 under Contribution to Provident and Other Funds. The Company had made a short provision amounting to Rs. 4.34 lac in the current year and Rs. 1.90 lac in the previous year for which no adjustment entries have been passed in the books of account.

13. RELATED PARTY TRANSACTIONS A) List of Related Parties

a) Enterprise having control over reporting enterprise:

i) Godrej & Boyce Mfg. Co. Ltd.

b) Subsidiaries:

i) Godrej Netherlands B.V.

Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited)

ii) Rapidol (Proprietary) Limited

iii) Godrej Global Mid East FZE

iv) Godrej Hygiene Products Limited (from April 1, 2009)

v) Godrej Consumer Products Mauritius Limited

Godrej Kinky Holdings Limited (a subsidiary of Godrej Consumer Products Mauritius Limited)

Kinky Group (Proprietary) Limited SA (a subsidiary of Godrej Kinky Holdings Limited)

Godrej Nigeria Holdings Ltd. (a subsidiary of Godrej Consumer Products Mauritius Ltd. from February 24, 2010)

Godrej Nigeria Limited (a subsidiary of Godrej Nigeria Holdings Limited from March 26, 2010)

vi) Godrej Consumer Products Holding (Mauritius) Limited (from February 23, 2010)

Godrej Consumer Products Dutch Cooperatief U.A. (Netherlands)

(a subsidiary of Godrej Consumer Products Holding (Mauritius) Limited from March 24, 2010)

Godrej Consumer Products (Netherlands) B.V. (Netherlands)

(a subsidiary of Godrej Consumer Products Dutch Cooperatief U.A. (Netherlands) from March 31, 2010)

Godrej Consumer Holdings (Netherlands) B.V. (Netherlands)

(a subsidiary of Godrej Consumer Products Dutch Cooperatief U.A. (Netherlands) from March 31, 2010)

c) Joint Venture:

i) Godrej Sara Lee Limited (from June 1, 2009)

ii) Godrej Hygiene Products Ltd. (Formerly Godrej SCA Hygiene Limited) (up to March 31, 2009)

d) Enterprises under common control with whom transactions have taken place during the year:

i) Godrej Industries Limited ii) Godrej Agrovet Limited iii) Godrej Hershey Limited iv) Godrej Infotech Limited

e) Enterprise over which Key Management Personnel exercise significant influence:

i) Godrej Investments Private Limited

ii) Godrej Sara Lee Limited (up to May 31, 2009)

f) Key Management Personnel and Relatives:

i) Mr. Adi B. Godrej Chairman

ii) Mr. Hoshedar K. Press Vice-Chairman

iii) Mr. Dalip Sehgal Managing Director

iv) Mrs. Parmeshwar A. Godrej Wife of Mr. Adi B. Godrej

14. INTEREST IN JOINT VENTURE

The Companys interest, as a venturer, in jointly controlled entities is as under: Current Year:

a) Name of Company: Godrej Sara Lee Ltd. (with effect from June 1, 2009)

b) Country of Incorporation: India

c) Principal Activities: Manufacture of Personal and Household Care Products.

d) Percentage of Ownership Interest as at the year end: 49%

Previous Year:

a) Name of Company: Godrej SCA Hygiene Ltd. (up to March 31, 2009)

b) Country of Incorporation: India

c) Principal Activities: Manufacture of Sanitary Napkins and Baby Diapers

d) Percentage of Ownership Interest as at the year end: 50%

The Companys interest in jointly controlled entities is reported as Long-Term Investments in Schedule 7 and stated at cost less provision, if any, for permanent dimunition in value of such investments.

15. GENERAL

a) Other information required by Schedule VI to the Companies Act, 1956, has been given only to the extent applicable.

b) Figures for the previous year have been regrouped / restated wherever necessary to conform to current years presentation.

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