Home  »  Company  »  Godrej Consumer Prod  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Godrej Consumer Products Ltd.

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, 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.

 
Subscribe now to get personal finance updates in your inbox!