Home  »  Company  »  Marico Ltd.  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Marico Ltd.

Mar 31, 2014

1. The Company and nature of its operations:

Marico Limited (''Marico'' or ''the Company''), headquartered in Mumbai, Maharashtra, India, carries on business in branded consumer products. Marico manufactures and markets products under brands such as Parachute, Nihar, Saffola, Hair & Care, Revive, Mediker, Livon and Set–wet etc. Marico''s products reach its consumers through retail outlets serviced by Marico''s distribution network comprising regional offices, carrying & forwarding agents, redistribution centers and distributors spread all over India.


Mar 31, 2013

1. The Company and nature of its operations:

Marico Limited (''Marico'' or ''the Company''), headquartered in Mumbai, Maharashtra, India, carries on business in branded consumer products. Marico manufactures and markets products under brands such as Parachute, Nihar, Saffola, Hair & Care, Revive,Mediker, Livon and Set-wet. Marico''s products reach its consumers through retail outlets serviced by Marico''s distribution network comprising regional offices, carrying & forwarding agents, redistribution centers and distributors spread all over India.

2 Contingent liabilities:

As at March 31,

2013 2012 Rs. Crore Rs. Crore

Disputed tax demands / claims :

Sales tax 24.99 13.32

Income tax 0.77 4.14

Customs duty 0.40 0.40

Agricultural produce marketing cess 9.58 8.84

Employees state insurance corporation 0.18 0.13

Excise duty on subcontractors 0.41 0.35

Service Tax 0.17 -

Excise duty on CNO dispatches (Refer note (a) below) 364.09 278.92

Claims against the Company not acknowledged as debts. 0.42 0.28

Total 401.01 306.38

(a) The contingent liability pertains to a possible excise duty obligation in respect of pure coconut oil packs up to 200 ml. This claim has been contested and a legal opinion in the matter has been obtained. Based on the legal opinion and in its assessment, the management believes that the probability of success in the matter is more likely than not and accordingly, the possible excise obligation has been treated as a contingent liability in accordance with requirements of Accounting Standard (AS) 29 "Provisions, Contingent Liability and Contingent Asset". The possible excise duty obligation of Rs. 242.32 Crore (Rs. 157.15 Crore) for the clearances made after June 3, 2009 (i.e. the date of issue of Board circular) till March 31, 2013 and Rs. 121.77 Crore (Rs. 121.77 Crore) for clearances made prior to June 3, 2009 has been disclosed as contingent liability to the extent of the time horizon covered by show cause notices issued by the excise department within the normal period of one year (from the date of clearance) as per the excise laws.

The Company will continue to review this matter during the coming accounting periods based on the developments on the outcome in the pending cases and the legal advice, that it may receive from time to time.

3. Research and Development expenses aggregating Rs. 5.95 Crore (Rs. 6.37 Crore) have been included under the relevant heads in the Statement of Profit and Loss.

4. On May 29, 2012, the Company concluded the effective acquisition of the personal care business of Paras Pharmaceuticals Limited ("PPL") for a consideration of Rs. 745.60 Crores. The acquisition was effected through Marico Consumer Care Limited ("MCCL"), a wholly owned subsidiary of the Company. MCCL was incorporated on April 20, 2012 and it acquired 100 % equity stake in Halite Personal Care India Private Limited ("Halite") from Halite''s erstwhile owners. The personal care business had been demerged from PPL into Halite effective March 1, 2012 under a Scheme of amalgamation and arrangements approved by the High Court of Punjab and Haryana.

The shareholders of the Company, at their meeting held on May 2, 2012, approved issue of equity shares on preferential allotment basis aggregating Rs. 500 Crores at a price of Rs. 170 per equity share to two overseas investors for funding a part of the Halite acquisition. Subsequently, the Company allotted 29,411,764 equity shares of face value Re. 1 each at a share premium of Rs. 169 each to these investors on May 16, 2012. This resulted in increase of Equity share capital by Rs. 2.94 Crores and Securities premium reserve by Rs. 497.06 Crores. The proceeds of the issue together with internal accruals were infused by Marico as equity investment in MCCL. MCCL utilized the equity proceeds for acquiring 100% equity stake in Halite on May 29, 2012.

5 a) Additional information on assets taken on lease:

The Company''s significant leasing arrangements are in respect of residential flats, office premises, warehouses, vehicles etc taken on lease. The arrangements range between 11 months to 3 years and are generally renewable by mutual consent or mutually agreeable terms. Under these arrangements refundable interest-free deposits have been given.

a. Effective January 1, 2013, the Company has retrospectively changed its method of providing depreciation on Factory Building and Plant & Machinery from the ''Written Down Value Method'' to ''Straight Line Method'' at the rates prescribed in Schedule XIV to the Companies Act, 1956. This change results in a more appropriate presentation and will give a systematic basis of depreciation charge, representative of the time pattern in which the economic benefits flow to the Company. Accordingly, the Company has recognised the surplus of Rs. 37.45 Crores arising from this retrospective change.

Had the previous method of depreciation been followed, depreciation charge for the quarter and year ended March 31, 2013 would have been higher by Rs. 2.96 Crores and the profit before tax for the current quarter and year ended March 31, 2013 would have been lower by an equivalent amount.

b. During the year ended March 31, 2011, the Company had recognised an impairment loss of Rs. 13.88 Crores towards brand "Fiancee". During the current year, the Company has reassessed the value in use and accordingly reversed an impairment loss of Rs. 9.05 Crores. The management has considered a pre-tax discount rate of 17.40% for determining value in use during the year.

Excludes Loans payable of Rs. 293.1 1 Crore [USD 54,000,000] (Rs. 293.81 Crore [USD 57,750,000]) assigned to hedging relationship against highly probable forecast sales. The Cash flows are expected to occur and impact the Statement of Profit and Loss within the period of 1 to 4 years (1 to 5 years).

c) Pursuant to the Announcement of the Institute of Chartered Accountants of India''s (ICAI) "Accounting for Derivatives" on encouraging the early adoption of Accounting Standard (AS) 30, "Financial Instruments: Recognition and Measurement", the Company had, during the year ended March 31, 2009, decided an early adoption of AS 30 to the extent it does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company Law and other regulatory requirements. Accordingly, the net unrealised gain/(loss) of Rs.(52.49) Crore [Rs. (33.92) Crore] in respect of outstanding derivative instruments and foreign currency loans at the year end which qualify for hedge accounting, is standing in the ''Hedge Reserve'', which would be recognised in the Statement of Profit and Loss when the underlying transaction or forecast revenue arises.

6. Segment Information

The Company has only one reportable segment in terms of Accounting Standard 17 (AS 17) ''Segment Reporting'' mandated by Rule 3 of the Companies (Accounting Standard) Rules 2006, which is manufacturing and sale of consumer products and geographical segments are insignificant.

Middle East FZE (MME) at their meeting held on March 18, 2013 approved the disinvestment of 100% stake in Kaya Middle East FZE (KME) to Derma Rx International Aesthetics Pte. Ltd (DIAL) for a consideration of 55,050,000 UAE Dirhams. The disinvestment was effected through a share purchase agreement between MME and DIAL dated February 7, 2013 and executed on March 25, 2013, subject to approval from Hamriyah Free Zone Authority (HFZA). Post approval it will become a subsidiary of Derma Rx International Aesthetics Pte. Ltd (DIAL).

b) The Board of Directors of the Company at their meeting held on March 15, 2013, approved Marico Limited becoming a member of Marico Innovation Foundation ("MIF"), a company incorporated under Section 25 of the Companies Act, 1956 (being a private company limited by guarantee not having share capital) primarily with an objective of fuelling and promoting innovation in India and MIF became a wholly owned subsidiary of the Company with effect from the said date. Marico Limited controls the composition of the Board of MIF and has accordingly appointed two directors as its nominees.

ii) Subsidiary firm :

Wind Company. (Through MEL Consumer Care SAE)

iii) Key management personnel (KMP) :

Harsh Mariwala, Chairman and Managing Director

iv) Relatives of Key management personnel :

Rishabh Mariwala, son of Harsh Mariwala

v) Others - Entities in which KMP has significant influence :

The Bombay Oil Private Limited

7 a) The Corporate Governance Committee has granted Stock Appreciation Rights ("STAR") to certain eligible employees pursuant to the Company''s Employee Stock Appreciation Rights Plan, 2011 ("Plan"). The grant price is determined based on a formula as defined in the Plan. There are three schemes under the Plan with different vesting period. Under the Plan, the respective employees are entitled to receive a Star Value which is the excess of the maturity price over the grant price subject to fulfilment of certain conditions. The Plan is administered by Corporate Governance Committee comprising independent directors.

c) The Company has formed "Welfare of Mariconians Trust" (The Trust) for the implementation of the schemes that are notified or may be notified from time to time by the Company under the Plan. The Company has advanced Rs. 76.44 Crore (Rs. 19.92 Crore) to the Trust for purchase of the Company''s shares under the Plan, of which Rs. 35.73 Crore is included under "Long term loans and advances" (Refer Note 15) and balance under "Short term loans and advances" (Refer Note 21). As per the Trust Deed and Trust Rules, upon maturity, the Trust shall sell the Company''s shares and hand over the proceeds to the Company. The Company, after adjusting the loan advanced, shall utilize the proceeds towards meeting its STAR Value obligation.

d) The difference between the market price of the Company''s shares as at the year end and the grant price after adjusting for the difference between the amounts due from the Trust and the loan advanced to the Trust is recognised as an expense over the vesting period and accordingly an amount of Rs. 2.37 Crore (Rs. 5.30 Crore) is charged in the Statement of Profit and Loss. The total provision of Rs 7.68 Crore (Rs. 5.32 Crore) as at March 31, 2013 which relates to STAR Scheme I maturing on September 30, 2013 has been disclosed under Short Term provision (Refer Note 11)

e) As on March 31, 2013, the market price of the Company''s shares on the stock exchanges was lower than the average price at which the Trust had bought the shares under one of the STAR schemes. This has resulted in diminution in the recoverable value of loan advanced to the Trust. Accordingly, the Company has charged an amount of Rs. 0.81 Crore (Nil) to the Statement of Profit and Loss (Refer note 15).

f) The Securities and Exchange Board of India (SEBI) in January 2013 amended the SEBI (ESOS and ESPS) Guidelines 1999, vide which it mandated that no ESOS/ESPS schemes shall involve acquisition of securities of the Company from the secondary market. The Company had approached SEBI for a clarification whether the amendment also covered non-ESOS employee welfare trust such as WEOMA trust. SEBI had clarified that the clarification corrected secondary market purchases by the WEOMA Trust. Many companies, including Marico Limited, had made a representation to SEBI requesting SEBI to allow the employee trusts to continue holding the shares. After hearing the representations of these companies in a joint meeting convened by SEBI, SEBI had indicated that it will come out with a clarification in this matter. The Company awaits further guidance from SEBI.

C. Defined contribution plan :

The Company has recognised Rs. 6.32 Crore (Rs. 5.20 Crore) towards contribution to provident fund, Rs. 0.41 Crore (Rs. 0.45 Crore) towards contribution to superannuation fund and Rs. 0.39 Crore (Rs. 0.35 Crore) towards employee state insurance plan in the Statement of Profit and Loss.

The informatoin in respect of Provident Fund is provided to the extent of available with the Company.

8 a) On January 7, 2013, the Board of Directors'' of Marico Limited approved a Scheme of Arrangement (the Scheme) for demerger of the business undertaking of Kaya ("Kaya Business") with effect from appointed date, April 1, 2013 (''the Scheme'') subject to all regulatory and statutory approvals. The Scheme envisages the de-merger of Kaya Business into a new company, "Marico Kaya Enterprises Limited (''MaKE'')", which was incorporated on January 19, 2013 for the purpose. As a consideration, the shareholders of Marico Limited as on the record date shall be issued 1 share of MaKE with a face value of Rs. 10 each for every 50 shares of Marico with a face value of Re. 1 each, fully paid-up. Consequently, the share holding structure of MaKE will mirror the share holding structure of Marico Limited.

The management of the Company believes that the proposed de-merger will enable value creation for both the FMCG and Kaya businesses through focus and flexibility.

As on March 31, 2013, Marico Ltd is the sole shareholder of MaKE. Upon the Scheme becoming effective and upon issue of shares by MaKE to the shareholders of Marico Limited, all the shares held by Marico Ltd shall stand cancelled without any payment.

In view of the above, the investments and loans and advances pertaining to Kaya business have been considered as current / short-term in nature.

d) The Board of Directors of Kaya Ltd, at their meeting held on March 1, 2013 approved the conversion of the entire loan due to Marico Limited as on February 28, 2013, aggregating to Rs. 108.84 Crore, into equity capital. In consideration of the conversion of the outstanding loan, Kaya Ltd issued 3,348,975 Equity Shares of face value of Rs. 10 each at a premium of Rs. 315 per share on a rights basis to Marico Ltd vide a board resolution passed on March 18, 2013.

9 Previous year figures

a) Previous year figures have been re-grouped and reclassified wherever necessary to conform to this year''s classification

b) The figures in brackets represent those of the previous year.


Mar 31, 2012

1. The Company and nature of its operations :

Marico Limited ('Marico' or 'the Company'), headquartered in Mumbai, Maharashtra, India, carries on business in branded consumer products. Marico manufactures and markets products under brands such as Parachute, Nihar, Saffola, Hair & Care, Revive, Shanti, Oil of Malabar, Mediker and Manjal. Marico's products reach its consumers through retail outlets serviced by Marico's distribution network comprising regional offices, carrying & forwarding agents, redistribution centers and distributors spread all over India.

a Rights, preferences and restrictions attached to shares :

Equity Shares: The Company has one class of equity shares having a par value of Re.1 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The Corporate Governance Committee of the Board of Directors of Marico Limited has granted Stock Options to certain eligible employees pursuant to the Marico 'Employees Stock Options Scheme 2007' ("Scheme"). Each option represents 1 equity share in the Company. The Vesting period and the Exercise Period both range from 1 year to 5 years.

The Scheme is administered by a Corporate Governance Committee comprising of independent Directors. The weighted average share price of options excerised during the year was Rs. 56.98 (Rs. 55.57).The Scheme lapses on February 1, 2013. The options outstanding as on the Balance Sheet date correspond to about 0.13% (0.39%) of the current paid-up equity share capital of the Company,

The Company has applied the intrinsic value based method of accounting for determining compensation cost for its stock based compensation plan and has accordingly accounted Rs. (0.04) Crore (Rs. 0.04 Crore) as compensation cost under the 'intrinsic value' method (Refer note 25). Had the Company considered 'fair value' method for accounting of compensation cost, the Company's net income and Basic and Diluted earnings per share as reported would have reduced to the pro-forma amounts as indicated:

The Company has advanced long term loans to its wholly owned subsidiary, Marico South Africa Consumer Care (pty) Limited, which is outstanding as at the year end. The operations of the said subsidiary are classified as 'Non - integral foreign operations'. Accordingly, as per the requirements of Accounting Standard 11 'The effect of changes in Foreign Exchange Rates', exchange gain of Rs. 6.04 Crore (Rs. 5.74 Crore) arising on revaluation of the said loan is accumulated in 'Foreign Currency Translation Reserve', to be recognised as income or expenses in the Statement of Profit and Loss upon disposal of the net investment in said subsidiary.

a The Corporate Governance Committee has granted Stock Appreciation Rights ("STAR") to certain eligible employees pursuant to the Company's Employee Stock Appreciation Rights Plan, 2011 ("Plan"). The grant price is determined based on a formula as defined in the Plan. There are two schemes under the Plan with different vesting period. Under the Plan, the respective employees are entitled to receive excess of the maturity price over the grant price subject to fulfilment of certain conditions. The difference between the market price of Company's shares as at the year end and the grant price is recognised over the vesting period and accordingly an amount of Rs. 5.30 Crore (Rs. 0.02 Crore) is charged in the Statement of Profit and Loss. The Plan is administered by Corporate Governance Committee comprising of independent directors.

b The Company has formed "Welfare of Mariconians Trust" (The trust) for the implementation and admistration of Schemes that are notified or may be notified from time to time by the Company under the Plan as at March 31, 2012. The Company has advanced Rs. 19.92 Crore (Nil) to the Trust for purchase of shares under the Plan, which are included under "Long term loans and advances" (refer note 14).

a Buyers credit arrangements are loans taken in foreign currency for a term of twelve months and carry interest rate of LIBOR plus applicable spread ranging from 0.05% to 1.5% per annum.

b Pre-shipment credit in foreign currency arrangements are for a term of six months and carry interest rate of LIBOR plus applicable spread ranging from 1.30% to 2% per annum.

c Other term loans availed in the current year are in foreign currency for a term of 12 months and carries interest rate of 3 months LIBOR spread of 2.3% per annum. (previous year amount borrowed in Indian Rupees carried interest rate of 8% per annum).

d Commercial papers were borrowed for a term of 12 months and carried interest rate ranging from 7% to 10% per annum.

a The Company had issued 300 8.25% Rated Taxable Secured Redeemable Non - Convertible Debentures of Face Value Rs. 10 lakhs each on May 8, 2009 which were secured against first pari passu charge over Land and Building situated in Andheri (East) Mumbai, aggregating to Rs. 30 Crore and same were redeemable at par after 3 years. As per the terms of the issue Put / Call option was available with the Investors / Company at the end of 2 years. Investors exercised the option and debentures were repaid during the year. These debentures were listed on the National Stock Exchange.

a Provison for income tax is net off advance tax and other tax payments for various years of Rs. 310.01 Crore (Rs. 233.17 Crore)

b Provision for disputed taxes (other than Income tax) / claims represents claims against the Company not acknowledged as debts, where management has assessed that unfavourable outcome of the matter is more than probable.

2 Contingent liabilities :

As at March 31, 2012 2011 Rs. Crore Rs.Crore

Disputed tax demands / claims :

Sales tax 13.32 17.24

Income tax 4.14 -

Customs duty 0.40 0.40

Agricultural produce marketing cess 8.84 8.14

Employees state insurance corporation 0.13 0.13

Excise duty on subcontractors 0.35 0.29

Excise duty on CNO dispatches (Refer note 46) 278.92 210.74

Claims against the Company not acknowledged as debts. 0.28 0.27

Possible indemnification obligations under the Deed of Assignment for - 4.00 assignment of "Sweekar" brand.

Total 306.38 241.21

3 Research and Development expenses aggregating Rs. 6.37 Crore (Rs. 7.53 Crore) have been included under the relevant heads in the Statement of Profit and Loss.

4 During the year, the Company signed definitive agreements to acquire the personal care business of Paras Pharmaceuticals Limited (PPL), a 100% subsidiary of Reckitt Benckiser Investments India Private Limited for a consideration of Rs. 740 Crore. The acquisition transaction is expected to be concluded in May 2012. The Company intends to fund the requirements with a mix of proceeds from an issuance of equity shares and internal accruals. The shareholders, at their meeting held on May 2, 2012 have approved issue of equity shares on preferential allotment basis aggregating Rs. 500.00 Crore at a price of Rs. 170 per equity share (face value Re. 1 and share premium Rs. 169) to two overseas investors.

In terms of the agreement, the Company had deposited Rs. 25.00 Crore in an Escrow deposit account maintained with a bank which is appointed by the parties for operating the account. The balance in Escrow account would be released to the seller in the event the said transaction could not be completed due to reasons attributable to the Company. The said balance is reflected as 'non - current assets' in the balance sheet having regards to the capital nature of the transaction.

*Converted into the exchange rate at the year end.

**Out of the forward contracts outstanding as on March 31, 2012, USD 18,825,189 (USD 11,000,000), AUD Nil

(AUD 297,898), having fair value of Rs. 97.37 Crore (Rs. 52.01 Crore) and all outstanding option contracts as on

March 31, 2012, USD 8,100,000 (Rs. Nil) having fair value of Rs. 0.89 Crore (Rs. Nil) have been designated as Cash flow hedges.

- The Company has entered into interest rate swap for hedging its interest rate exposure on borrowings in foreign currency of USD 30,750,000 (USD 8,750,000), which has a fair value of Rs. 1.55 Crore (Rs. 0.34 Crore).

- The Cash flows are expected to occur and impact the Statement of Profit and Loss within the period of 1 year except interest rate swap, in respect of which Cash flows are expected to occur and impact the Statement of Profit and Loss within the period of 1 to 5 years (1 to 2 years).

- All the derivative contracts entered by the Company were for hedging purpose and not for any speculative purpose.

Excludes Loans payable of Rs. 293.81 Crore [USD 57,750,000] (Rs. 279.77 Crore [USD 62,750,000]) assigned to hedging relationship against highly probable forecast sales. The Cash flows are expected to occur and impact the Statement of Profit and Loss within the period of 1 to 5 years (1 to 6 years).

c) Pursuant to the Announcement of the Institute of Chartered Accountants of India's (ICAI) "Accounting for Derivatives" on encouraging the early adoption of Accounting Standard (AS) 30, "Financial Instruments: Recognition and Measurement", the Company had, during the year ended March 31, 2009, decided an early adoption of AS 30 to the extent it does not conflict with existing mandatory accounting standards and other authoritative pronouncements, Company Law and other regulatory requirements. Accordingly, the net unrealised gain/(loss) of Rs. (33.92) Crore [Rs. 4.99 Crore] in respect of outstanding derivative instruments and foreign currency loans at the year end which qualify for hedge accounting, is standing in the 'Hedge Reserve', which would be recognised in the Statement of Profit and Loss when the underlying transaction or forecast revenue arises.

5 Segment Information :

The Company has only one reportable segment in terms of Accounting Standard 17 (AS 17) 'Segment Reporting' mandated by Rule 3 of the Companies (Accounting Standard) Rules 2006, which is manufacturing and sale of consumer products and geographical segments are insignificant.

*The expected rate of return on plan assets is based on expectation of the average long term rate of return expected on investment of the fund during the estimated term of the obligations.

**The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion, and other relevant factors such as supply and demand factors in the employment market. The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario.

C. Defined contribution plan :

The Company has recognised Rs. 5.20 Crore (Rs. 5.11 Crore) towards contribution to provident fund, Rs 0.45 Crore (Rs. 0.56 Crore) towards contribution to superannuation fund and Rs. 0.35 Crore (Rs. 0.23 Crore) towards employee state insurance plan in the Statement of Profit and Loss.

6 The Guidance Note on implementing AS 15, Employee benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefits involving employer-established provident funds, which require interest shortfalls to be recompensed, are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities during the year. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at March 31, 2012.

There are no previous year figures as the actuarial valuation has been done for the first time in the current year,

7 During the year ended March 31, 2010, the Company had made provisions towards 75% of possible excise duty obligations in respect of the coconut oil packs up to 200 ml, which is being contested by the Company. Based on facts of the case and the legal opinion obtained, the Company had made an assessment that the probability of success in the matter is more likely than not and the liability was in the nature of contingent liability. As the said provisioning of contingent liability was not in accordance with the requirement of Accounting Standard (AS) 29 "Provisions, Contingent Liability and Contingent Assets", the Company reviewed the matter and reversed the provision of Rs. 29.35 Crores made upto March 31, 2010 during the year ended March 31, 2011 (Refer Note 38 above) and the same was included under the "Exceptional items" in the Statement of Profit and Loss. Further, deferred tax asset of Rs. 9.75 Crores recognised during the year ended March 31, 2010 was reversed and included in deferred tax charge for the year in the Statement of Profit and Loss for the said year.

The possible excise duty obligation of Rs. 157.15 Crores (Rs. 88.97 Crores) for clearences made after June 3, 2009 (i.e. the date of issue of relevant excise circular) till March 31, 2012 and Rs. 121.77 Crores (Rs. 121.77 Crores) for clearences made prior to June 3, 2009 has been disclosed as contingent liability to the extent of the time horizon covered by show cause notice issued by the excise department with in the normal period of one year (from the date of clearance) under the excise laws.

The Company will continue to review this matter during the coming accounting periods based on the developments on the outcomes in the pending cases and the legal advice that it may receive from time to time.

8 As at March 31, 2012, Marico Limited ("Marico") holds 100 % of the Equity Capital of Kaya Limited ("Kaya") at a cost of Rs.73.00 Crore (Rs.73.00 Crore). The Company has also advanced long term loans to Kaya of Rs. 103.00 Crore (Rs. 112.92 Crore). As per the latest audited financial statements, Kaya has negative net-worth as at March 31, 2012. The management believes that these losses are not reflective of future trends and operations of the Company and the Kaya business model continues to be robust and offers significant long term growth opportunities. Further, the operations of Kaya are expected to improve significantly due to positive changes in the economic environment, maturity of new clinics, renewed focus on reducing the time to scale up revenues in new clinics, improve capacity utilization of clinics, expansion of Kaya's range of services and product offerings, rationalization of costs and other restructuring measures under consideration, including leveraging the synergies from the acquisition of Derma Rx business in Singapore (by its wholly owned subsidiary) and by increasing the share of product sales in the total business. Having regard to the above factors, based on the fundamentals of Kaya and its future business plans and improved performance in the current year, the management is of the opinion that it is strategically desirable for Marico to continue to support Kaya through funding (equity / debt infusion), through either fresh funds or conversion of existing loans into equity. Accordingly, the management perceives that the erosion in the value of investments in Kaya is not other than temporary. Hence, no provision for diminution in value is considered necessary in respect of the Company's investments in Kaya or of the loans and advances given to Kaya.

9 Previous year figures :

a) The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

b) The figures in brackets represent those of the previous year.

 
Subscribe now to get personal finance updates in your inbox!