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, 2017

Back ground and 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 the brands such as Parachute, Parachute Advansed, Nihar, Nihar Naturals, Saffola, Hair & Care, Revive, Mediker, Livon, 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 & distributors spread all over India.

1 Investment Properties

(i) Amounts recognised in profit or loss for investment properties

(ii) Leasing arrangements

Investment properties are leased to tenants under long-term operating leases with rentals payable monthly. Minimum lease payments receivable under non-cancellable operating leases of investment properties are as follows:

(iii) Fair value

Estimation of fair value

The Company obtains independent valuations for its investment properties at least annually. The best evidence of fair value is current prices in an active market for similar properties.

(iv) The fair values of investment properties have been determined by independent valuer who holds recognised and relevant professional qualification . The main inputs used are rental growth rates, expected vacancy rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.

(v) During the year 2015-16 building appearing as asset held for disposal having a net carrying value of Rs.12.74 Crore (Deemed cost of Rs. 12.96 Crore less depreciation of Rs. 0.22 Crore) has been reclassified as Investment property.

During the year ended 31st March, 2007 the Company carried out financial restructuring scheme (‘Scheme’) under the relevant provisions of the Companies Act, 1956 which was approved by the shareholders on 8th February, 2007 and subsequently by the Hon’ble High Court vide its order dated 23rd March, 2007. In terms of the Scheme, the Company adjusted the carrying value of Rs. 448.15 Crore of intangible assets such as trademarks, copyrights, business and commercial rights as on 31st January, 2007 and related deferred tax adjustment of Rs. 139.06 Crore (net adjustment of Rs. 309.09 Crore) against the balance in Securities Premium Reserve of Rs. 129.09 Crore and Capital Redemption Reserve of Rs. 180 Crore.

2 Assets Classified as Held for Sale

Non-recurring fair value measurements

Fair value of Building classified as held for sale was Rs. 40.69 Crore as at 31st March, 2017, Rs. 39.12 Crore as at 31st March, 2016 and Rs. 47.45 Crore as on 1st April, 2015. Building classified as held for sale during the reporting period was measured at the lower of its carrying amount and fair value less costs to sell at the time of the reclassification. The fair values of these assets have been determined by independent valuer who holds recognised and relevant professional qualification. The main inputs include details obtained from “The Ready Reckoner”, location factor and physical verification of the property. All resulting fair value estimates for asset held for sale are included in level 3.

The company decided to sell land and building which was classified as asset held for sale as on 31st March, 2015. The assets situated at Goa were sold during the year ended 31st March, 2016, and the gain of Rs. 9.23 Crore was included in net gain on disposal of Property, Plant and Equipment in Note 19. The other asset was reclassified to investment property during the year ended 31st March, 2016. The delay in respect of the remaining asset (building) which the company has committed to sell is caused by certain event and circumstances which are beyond the entity’s control.

3(a) Equity Share Capital

(i) Movements in equity share capital

(ii) Rights, preferences and restrictions attached to equity 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.

(iii) Shares reserved for issue under options

Information relating to Marico ESOS 2007, Marico ESOS 2014, MD CEO ESOP Plan 2014 and including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in note 33.

(iv) Details of shareholders holding more than 5% shares in the company

(v) During the year ended 31st March, 2016, the Company has issued 645,085,599 fully paid-up bonus equity shares of face value Re. 1 each in the ratio of 1:1 with record date of 24th December, 2015. As a result EPS has been adjusted for reporting as well as for all the comparative periods.

3(b) Other reserves Hedge reserve

Nature and purpose of reserves Securities premium account

Securities premium account is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

General Reserve

The General Reserve account is used from time to time to record transfer of profit from retained earnings, for appropriation purposes. As General Reserve is created by transfer from one component of equity to another and it is not an item of other comprehensive income, item included in the General Reserve will not be reclassified subsequently to Profit or Loss.

Share based option outstanding account

The share based option outstanding account is used to recognise the grant date fair value of options as on the grant date, issued to employees under Company’s employee stock option schemes.

WEOMA reserve and Treasury shares

Profit on sale of treasury shares by WEOMA trust is recognised in WEOMA reserve. (refer note 35)

Hedge Reserve

The Company uses forward and options contracts to hedge its risks associated with foreign currency transactions relating to certain firm commitments and forecasted transactions. The Company also uses Interest rates swap contracts to hedge its interest rate risk exposure. The Company designates these as cash flow hedges. These contracts are marked to market as at the year end and resultant exchange differences, to the extent they represent effective portion of the hedge, are recognized directly in hedge reserve. The ineffective portion of the same is recognized immediately in the Statement of Profit and Loss.

Exchange differences taken to hedge reserve account are recognized in the Statement of Profit and Loss upon crystallization of firm commitments or occurrence of forecasted transactions or upon discontinuation of hedge accounting resulting from expiry / sale / termination of hedge instrument or upon hedge becoming ineffective.

Note:-

(i) Cash Credit, Pre-shipment Credit in Foreign Currency, Working Capital Demand Loan and Export Packing Credit is secured by hypothecation of Inventory and Debtors, value of Rs. 1,310.57 Crore as at 31st March, 2017,Rs. 959.66 Crore as at 31st March, 2016 and Rs. 922.14 Crore as at 1st April, 2015.

(ii) ECB Loan was secured by (i) Pledge of shares of Marico South East Asia Corporation (a Subsidiary company, formerly known as International Consumer Products Corporation), carrying value of Rs. 254.98 Crore as at 1st April, 2015, 31st March, 2016 and 2017 (ii) First ranking pari passu charge over all current and future plant and machinery, carrying value of Rs. 188.57 Crore as at 1st April, 2015, Rs. 175.37 Crore as at 31st March, 2016 and the said loan has been repaid during the year and (iii) Mortgage on land and building situated at Andheri, Mumbai (Mortgage was only till previous year ended 31st March, 2015), carrying value of Rs. 44.08 Crore as at 1st April, 2015.

4 Provisions

(a) Provision for disputed indirect taxes mainly pertains to Entry tax dispute in the state of Himachal Pradesh and West Bengal where company has filed a writ petition in both the states before the honourable high court and the matter is sub judice. It is not practicable to state the timing of the judgement and final outcome. Management has assessed that unfavourable outcome of the matter is more than probable and therefore has created provisions for necessary amounts.

(b) Movement in provisions

Notes:-

(i) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employee’s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is funded through gratuity trust.

(ii) Provident fund

Contributions are made to a trust administered by the Company. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of the year and any shortfall in the fund balance maintained by the Trust set up by the Company is additionally provided for. There is no shortfall as at 31st March, 2017, 31st March, 2016 and 1st April, 2015.

(iii) Leave Encashment/Compensated absences.

The Company provides for the encashment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment / availment. The liability is provided based on the number of days of unutilized leave at each Balance Sheet date on the basis of an independent actuarial valuation. The company encourages its employees to plan and avail their leave within a year, hence the company has classified leave encashment provision amount as current.

(iv) Super annuation

The Company makes contribution to the Superannuation Scheme, a defined contribution scheme, administered by Insurance companies. The company has no obligation to the scheme beyond its monthly contributions.

(v) Share-appreciation rights

In respect of Employee Stock Appreciation Rights (STAR) granted pursuant to the Company’s Employee Stock Appreciation Rights Plan, 2011, the liability shall be measured, initially and at the end of each reporting period until settled, at the fair value of the share appreciation rights, by applying an option pricing model, (excess of fair value as at the period end over the Grant price) and is recognized as employee compensation cost over the vesting period (refer note 33).

*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.)

Sensitivity Analysis

The sensitivity of the defined benefit obligations to the changes in the weighted principal assumptions is as under:

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

*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) Privileged leave (Compensated absences for employees):

Amount recognized in the Balance Sheet and movements in net liability:

The privileged leave liability is not funded.

(d) Superannuation fund

The Company has recognised Rs. Nil for the year ended 31st March, 2017, Rs. 0.15 Crore for the year ended 31st March, 2016 and Rs. 0.22 Crore for the year ended 31st March, 2015 towards contribution to superannuation fund in the Statement of Profit and Loss.

The Company has recognised Rs.0.12 Crore for the year ended 31st March, 2017, Rs. 0.05 Crore for the year ended 31st March, 2016, Rs. 0.08 Crore for the year ended 31st March, 2015 towards employee state insurance plan in the Statement of Profit and Loss.

Risk exposure (For Gratuity and Provident Fund)

The Company is exposed to below risks, pertaining to its defined benefit plans.

Asset volatility : The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan assets has investments in insurance/equity managed fund, fixed income securities with high grades, public/private sector units and government securities. Hence assets are considered to be secured.

Changes in bond yields : A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

The Trust ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the group’s ALM objective is to match assets to the obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due.

Defined benefit liability and employer contributions

The weighted average duration of the Gratuity is 6 years as at 31st March, 2017, as at 31st March, 2016 and as at 31st March, 2015.

5 Other Expenses

(a) Net loss on foreign currency transactions and translation is other than as considered in finance cost.

(b) Miscellaneous expenses include :

(c) Corporate social responsibility expenditure

(d) Research and Development expenses aggregating to Rs. 6.70 Crore for food and edible items and Rs. 23.15 Crore for others have been included under the relevant heads in the Statement of Profit and Loss. (Previous year ended 31st March, 2016 aggregating Rs. 25.04 Crore). Further Capital expenditure pertaining to this of Rs. 0.59 Crore for food and edible items and Rs. 2.11 Crore for others have been incurred during the year (Previous year ended 31st March, 2016 aggregating Rs. 2.43 Crore).

6 Fair Value Measurements

(a) Financial Instruments by category

Fair value hierarchy

(b) This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels in accordance with the applicable Accounting Standard. An explanation of each level follows underneath the table.

The fair value of financial instruments as referred to in note above has been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurement) and lowest priority to unobservable inputs (level 3 measurements). The categories used are as follows:

Level 1: Financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds, mutual funds, bonds and debentures, that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is considered here.For example, the fair value of forward exchange contracts, currency swaps and interest rate swaps is determined by discounting estimated future cash flows using a risk-free interest rate. The mutual funds are valued using the closing NAV pubhlished by mutual fund

Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). When the fair value of unquoted instruments cannot be measured with sufficient reliability, the company carries such instruments at cost less impairment, if applicable.

The Company policy is to recognize transfers into and transfer out of fair value hierarchy levels as at the end of the reporting period.

The carrying amounts of trade receivables, trade payables, capital creditors, loans and advances, security deposit, fixed deposit, insurance claim receivable, other financial liabilities and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.

7 Financial Risk Management Financial Risks

In the course of its business, the Company is exposed to a number of financial risks: credit risk, liquidity risk, market risk (including foreign currency risk and interest rate risk, commodity price risk and equity price risk). This note presents the Company’s objectives, policies and processes for managing its financial risk and capital.

Board of Directors of the Company has approved Risk Management Framework through policies regarding Investment, Borrowing and Foreign Exchange Management policy. Treasury Management Guidelines define,determine and classify risk,by category of transaction, specific approval, execution and monitoring procedures.

In accordance with the aforementioned policies, the company only enters into plain vanilla derivative transactions relating to assets, liabilities or anticipated future transactions.

(A) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. Credit risk arises on liquid assets, financial assets, derivative assets, trade and other receivables.

In respect of its investments the company aims to minimize its financial credit risk through the application of risk management policies. Credit limits are set based on a counterparty value . The methodology used to set the list of counterparty limits includes, counterparty Credit Ratings (CR) and sector exposure. Evolution of counterparties is monitored regularly, taking into consideration CR and sector exposure evolution. As a result of this review, changes on credit limits and risk allocation are carried out. The Company avoids the concentration of credit risk on its liquid assets by spreading them over several asset management companies and monitoring of underlying sector exposure.

Trade receivables are subject to credit limits, controls and approval processes. Due to large geographical base and number of customers, the Company is not exposed to material concentration of credit risk. Basis the historical experience, the risk of default in case of trade receivable is low. Provision is made for doubtful receivables on individual basis depending on the customer ageing, customer category, specific credit circumstances and the historical experience of the Company.

The gross carrying amount of trade receivables is Rs. 227.61 Crore as at 31st March, 2017, Rs. 192.10 Crore as at 31st March, 2016 and Rs. 130.55 Crore as at 1st April, 2015.

Security deposits are interest free deposits given by the Company for properties taken on lease. Provision is taken on a case to case basis depending on circumstances with respect to non recoverability of the amount. The gross carrying amount of Security deposit is Rs. 15.04 Crore as at 31st March, 2017, Rs. 12.55 Crore as at 31st March, 2016 and Rs. 11.79 Crore as at 1st April, 2015.

Advances are given to subsidiaries andjoint venture for various operational requirements. Provision is taken on a case to case basis depending on circumstances with respect to non recoverability of the amount. The gross carrying amount of loans and advances is Rs. 37.59 Crore as at 31st March, 2017, Rs. 36.74 Crore as at 31st March, 2016 and Rs. 35.66 Crore as at 1st April, 2015

(B) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The current ratio of the company as at 31st March, 2017 is 2.52 (as at 31st March, 2016 is 1.87, as at 1st April, 2015 is 1.97) whereas the liquid ratio of the company as at 31st March, 2017 is 1.42 (as at 31st March, 2016 is 1.15, as at 1st April, 2015 is 1.01).

(C) Market Risk

The Company is exposed to risk from movements in foreign currency exchange rates, interest rates and market prices that affect its assets, liabilities and future transactions.

(i) Foreign currency risk

The Company is exposed to foreign currency risk from transactions and translation.

Transactional exposures arise from transactions in foreign currency. They are managed within a prudent and systematic hedging policy in accordance with the Company’s specific business needs through the use of currency forwards and options.

Excludes Loans payable of Rs. 178.87 Crore [USD 27,000,000] (Rs. 262.49 Crore [USD 42,000,000]) 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 year (Previous year: 2 years).

ii) Interest rate risk

The Company is exposed primarily to fluctuation in USD interest rates. Interest rate risk on financial debt is managed through interest rate swaps.

The Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Under these swaps, the Company agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Financial assets are classified at amortized cost have fixed interest rate. Hence, the Company is not subject to interest rate risk on such financial assets.

Sensitivity

The sensitivity analysis below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year.

iii) Price risk

Mutual fund Net Asset Values ( NAVs) are impacted by a number of factors like interest rate risk, credit risk, liquidity risk, market risk in addition to other factors. A movement of 1% in NAV on either side can lead to a gain/loss of Rs. 3.91 Crore, Rs. 3.59 Crore and Rs. 2.13 Crore, on the overall portfolio as at 31st March, 2017, 31st March, 2016 and 1st April, 2015 respectively.

Impact of hedging activities

Derivate Asset and Liabilites through Hedge Accounting Derivative financial instruments

The Company’s derivatives mainly consist of currency forwards and options ; interest rate swaps. Derivatives are mainly used to manage exposures to foreign exchange, interest rate and commodity price risk as described in section Market risk.

Derivatives are initially recognised at fair value. They are subsequently remeasured at fair value on a regular basis and at each reporting date as a minimum, with all their gains and losses, realised and unrealised, recognised in the Profit and Loss statement unless they are in a qualifying hedging relationship.

Hedge Accounting

The Company designates and documents certain derivatives and other financial assets or financial liabilities as hedging instruments against changes in fair values of recognised assets and liabilities (fair value hedges) and highly probable forecast transactions (cash flow hedges).The effectiveness of such hedges is assessed at inception and verified at regular intervals.

Fair value hedges

The Company uses fair value hedges to mitigate foreign currency and interest rate risks of its recognised assets and liabilities.

Changes in fair values of hedging instruments designated as fair value hedges and the adjustments for the risks being hedged in the carrying amounts of the underlying transactions are recognised in the Statement of Profit and Loss.

The Company uses cash flow hedges to mitigate a particular risk associated with a recognised asset or liability or highly probable forecast transactions, such as anticipated future export sales, purchases of equipment and raw materials.

The effective part of the changes in fair value of hedging instruments is recognised in other comprehensive income, while any ineffective part is recognised immediately in the Statement of Profit and Loss.

8 Capital Management

(a) Risk Management

Capital management is driven by Company’s policy to maintain a sound capital base to support the continued development of its business. The Board of Directors seeks to maintain a prudent balance between different components of the Company’s capital. The Management monitors the capital structure and the net financial debt at individual currency level. Net financial debt is defined as current and non-current financial liabilities less cash and cash equivalents and short term investments. The debt equity ratio highlights the ability of a business to repay its debts. Refer below for Debt equity ratio as on 31st March, 2017, 31st March, 2016 and 1st April, 2015.

9 Segment Information

(i) Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”) of the company. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director and CEO of the Company. The Company operates only in one business segment i.e. manufacturing and sale of consumer products within India, hence does not have any reportable segment as per Indian Accounting Standard 108 “operating segments” in Standalone. The company while presenting the consolidated financial statements has disclosed the segment information as required under Indian Accounting Standard 108 “operating segments”.

(ii) The amount of the Company’s revenue from external customers broken down by each product and service is shown in the table below.

(iiii) Revenue from external customer outside India and assets located outside India are not material. Further, the Company does not have revenue more than 10% of total revenue from single customer.

10 Related Party Transactions

Name of related parties and nature of relationship:

a) Subsidiary Companies:

The 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, is a wholly owned subsidiary of the Company with effect from 15th March, 2013.

During the year ended 31st March, 2016, Marico South East Asia Corporation (formerly known as International Consumer Product Corporation) a subsidiary of the Company divested its entire stake in Beaute Cosmetique Societe Par Actions (BCS) on 14th May, 2015.

Thuan Phat Food stuff Joint Stock company has been merged with Marico South East Asia Corporation (formerly known as International Consumer Product Corporation) w.e.f 1st December, 2016.

b) Subsidiary firm:

MEL Consumer Care & Partners - Wind (Through MELCC)

c) Joint venture:

Bellezimo Professionale Products Private Limited (During the year ended 31st March, 2016, the Company has acquired 45% stake on 21st October, 2015)

Zed Lifestyle Private Limited (During the year ended 31st March, 2017, the Company has acquired 35.43% stake on 17th March, 2017)

d) Key management personnel (KMP):

Mr. Saugata Gupta, Managing Director and CEO

Mr. Harsh Mariwala, Chairman and Non Executive Director

Mr. Rajeev Bakshi, Independent Director

Mr. Atul Choksey, Independent Director

Mr. Nikhil Khattau, Independent Director

Mr. Anand Kripalu, Independent Director

Mr. Rajen Mariwala, Non executive Director

Mr. B.S. Nagesh, Independent Director

Ms. Hema Ravichandar, Independent Director

e) Individual holding directly / indirectly an interest in voting power and their relatives (where transactions have taken place) - Significant Influence:

Mr. Harsh Mariwala, Chairman and Non Executive Director Mr. Rishabh Mariwala, son of Mr. Harsh Mariwala

f) Post employment benefit controlled trust Marico Limited Employees Provident Fund Marico Limited Employees Gratuity Fund

g) Others - Entities in which above (e) has significant influence and transactions have taken place:

Marico Kaya Enterprises Limited (upto 18th April, 2015)

Kaya Limited Kaya Middle East FZE

II Transactions with related parties

The following transactions occurred with related parties:

Key management personnel compensation

The above remuneration to Key management personnel compensation does not include contribution to gratuity fund, as this contribution is a lump sum amount for all relevant employees based on actuarial valuation.

Contribution to post employment benefit controlled trust : refer note 15.

11 Contingent Liabilities and Contingent Assets

(a) Contingent liabilities

The Company had contingent liabilities in respect of :

It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above contingent liabilities pending resolution of the respective proceedings.

Note:

This contingent liability pertained to a possible obligation in respect of pure coconut oil packs up to 200 ml. This claim had been contested by the excise department. Based on the various judicial pronouncements, management believed that the probability of success in the matter was more likely than not and accordingly, the possible excise obligation was treated as a contingent liability in accordance with requirements of Indian Accounting Standard (Ind AS) 37 “Provisions, Contingent Liabilities and Contingent Assets”. The possible obligation of Rs. 563.73 Crores as at 31st March, 2016 (Rs. 443.85 Crores as at April 1, 2015) for the clearances made after June 3, 2009 (i.e. the date of issue of Board circular) till March 31, 2016 and Rs. 121.77 Crores as at March 31, 2016 (Rs. 121.77 Crores as at April 1, 2015) for clearances made prior to June 3, 2009 was 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 aforementioned amount has not been considered under contingent liability as on 31st March 2017 as the matter has now been settled by orders of different adjudication authorities in the current financial year holding that clearance of pure coconut oil packs up to 200ml merits classification under chapter 15 and not under chapter 33 as contemplated by the excise department and accordingly the excise department has also withdrawn its circular dated June 3,2009 .

Consequently pending show cause notices issued by the excise authorities will not survive and therefore the contingent liability has been deleted from current financial year.

12 Share-Based Payments

(a) Employee stock option plan

The Corporate Governance Committee of the Board of Directors of Marico Limited had granted stock options to certain eligible employees of the Company and it’s subsidiaries pursuant to the Marico Employees Stock Options Scheme 2007 (“the Scheme”). Each option represents 1 equity share in the Company. The vesting period and the exercise period under the Scheme was not less than one year and not more than 5 years. The Scheme was administered by the Corporate Governance Committee of the Board comprising Independent Directors. All stock options granted under the Scheme were exercised on 10th June, 2015.

During the year ended 31st March, 2015, the Company implemented the Marico Employee Stock Option Scheme 2014 (“Marico ESOS 2014”). Marico ESOS 2014 was approved by the shareholders of the Company at the Extra Ordinary General Meeting held on March 25, 2014 enabling the grant of 300,000 stock options to the Chief Executive Officer of the Company (Currently designated as Managing Director & CEO).

Pursuant to the said approval, on 1st April, 2014 the Company granted 300,000 stock options to the Managing Director & CEO of the Company, at an exercise price of Re.1 per stock option. Each option represents 1 equity share in the Company. The vesting period is 2 years from the date of grant and the exercise period is 18 months from the date of vesting. As at 31st March, 2016, the aforesaid 300,000 stock options have increased to 600,000 on account of issue of bonus equity shares by the Company in the ratio of 1:1.

During the year ended 31st March, 2015, the Company implemented the Marico MD CEO Employee Stock Option Plan 2014 (“MD CEO ESOP Plan 2014” or “the Plan”). The MD CEO ESOP Plan 2014 was approved by the shareholders at the 26th Annual General Meeting held on July 30, 2014 enabling grant of stock options not exceeding in the aggregate 0.5% of the number of issued equity shares of the Company, from time to time, through notification of one more Scheme(s) under the Plan. Each stock option represents 1 equity share in the Company. The vesting period and the exercise period under the Plan is not less than one year and not more than 5 years.

Pursuant to the aforesaid approval, on 5th January, 2015, the Company notified Scheme I under the Plan and granted 46,600 stock options to the Managing Director & CEO of the Company, at an exercise price of Re.1 per stock option. The vesting date for stock options granted under the Scheme I is 31st March, 2017. Further, the exercise period is one year from the date of vesting. As at 31st March, 2016, the said 46,600 stock options have increased to 93,200 on account of issue of bonus equity shares by the Company in the ratio of 1:1. In view of the implementation of Marico Employee Stock Option Plan, 2016, as explained below, no further grant of stock options is envisaged under this Plan.

During the current year ended 31st March, 2017, the Company implemented Marico Employee Stock Option Plan, 2016 (“Marico ESOP 2016” or “the Plan”). The Marico ESOP 2016 was approved by the shareholders at the 28th Annual General Meeting held on 5th August, 2016, enabling grant of stock options to the eligible employees of the Company and its subsidiaries not exceeding in the aggregate 0.6% of the issued share equity share capital of the Company as on the commencement date of the Plan i.e. 5th August, 2016. Further, the stock options to any single employee under the Plan shall not exceed 0.15% of the issued equity share capital of the Company as on the commencement date (mentioned above). The Marico ESOP 2016 envisages to grant stock options to eligible employees of the Company and it’s subsidiaries on an annual basis through one or more Scheme(s) notified under the Plan. Each option represents 1 equity share in the Company. The vesting period and the exercise period under the Plan is not be less than one year and not more than five years. Pursuant to the said approval, the Company notified below schemes under the Plan:

(b) Share appreciation rights

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 formulae as defined in the Plan. There are schemes under each Plan with different vesting periods. Scheme I, II, III and IV have matured on their respective vesting dates. Under the Plan, the specified eligible employees are entitled to receive a Star Value which is the excess of the maturity price over the grant price subject to certain conditions. The Plan is administered by Corporate Governance Committee comprising independent directors.

Information concerning the classification of securities

(i) Share Options

Options granted to Employees under Marico ESOS 2014,MD CEO ESOP Plan 2014 and Marico Employee Stock Option Plan 2016 are considered to be potential equity shares. They have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share. Details relating to the options are set out in note 33.

(ii) Treasury shares

The weighted average number of shares takes into account the weighted average effect of changes in treasury share transactions during the year.

13 First time adoption of Ind AS Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31st March, 2017, the comparative information presented in these financial statements for the year ended 31st March, 2016 and in the preparation of an opening Ind AS Balance Sheet at 1st April, 2015 (the Company’s date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected the company’s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions

A.1.1 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

The Company has applied same exemption for investment in subsidiaries and joint ventures.

A.1.2 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 -Intangible Assets and investment property covered by Ind AS 40 - Investment Properties.

Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous GAAP carrying value.

A.1.3 Share-based payment transactions

Ind AS 102 deals with the accounting and disclosure requirements related to share-based payment transactions. The standard addresses three types of share-based payment transactions: equity-settled, cash-settled, and with cash-alternatives. A first-time adopter is encouraged, but is not required, to apply Ind AS 102 to:

(i) equity instruments that vested before the date of transition to Ind AS,

(ii) liabilities arising from share-based payment transactions that were settled before the date of transition to Ind AS.

The Company has availed this exemption and has not applied fair value to the equity instruments and liabilities that were vested and settled before the date of transition to Ind AS.

A.1.4 Investments in subsidiaries

When an entity prepares separate financial statements, Ind AS 27 requires it to account for its investments in subsidiaries, joint ventures and associates either at cost; or in accordance with Ind AS 109.

If a first-time adopter measures such an investment at cost in accordance with Ind AS 27, it shall measure that investment at one of the following amounts in its separate opening Ind AS Balance Sheet:

(a) cost determined in accordance with Ind AS 27; or

(b) deemed cost. The deemed cost of such an investment shall be its:

(i) fair value at the entity’s date of transition to Ind ASs in its separate financial statements; or

(ii) previous GAAP carrying amount at that date.

A first-time adopter may choose either (i) or (ii) above to measure its investment in each subsidiary, joint venture or associate that it elects to measure using a deemed cost.

The Company has availed the exemption and has measured its investment in subsidiaries at deemed cost being the previous GAAP carrying amount at that date.

A.2 Ind AS mandatory exceptions

A.2.1 Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation can not be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of 1st April, 2015 are reflected as hedges in the company’s result under Ind AS.

The Company had designated various hedging relationships as cash flow hedges under the previous GAAP. On date of transition to Ind AS, the entity had assessed that all the designated hedging relationship qualifies for hedge accounting as per Ind AS 109. Consequently, the company continues to apply hedge accounting on and after the date of transition to Ind AS.

A.2.2 Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1st April, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for Investment in equity instruments carried at FVPL in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

A.2.3 De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirement provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS .

A.2.4 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Ind AS 101 requires the company to reconcile equity, total comprehensive income, and cash flow for prior periods. The following reconciliations provide the explanantions and quantification of the differences arising from the transition from previous GAAP to Ind AS in accordance with Ind AS 101:

(A) Reconciliation of Equity as at 1st April, 2015 and as at 31st March, 2016

(B) Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2016 and

(C) The impact on cash flows from operating, investing and financing activities for the year ended 31st March, 2016.

C: Notes on First-time adoption

1 Consolidation of the Trust

The company has formed Welfare of Mariconions Trust (WEOMA trust) for implementation of the schemes that are notified or may be notified from time to time by the Company under the plan, providing share based payment to its employees. WEOMA purchases shares of the Company out of funds borrowed from the Company. The Company treats WEOMA as its extension and shares held by WEOMA are treated as treasury shares.

The Consolidation of the WEOMA trust financials statements with that of the Company does not in any manner affect the independence of the trustees where the rights and obligations are regulated by the trust deed.

Own equity instruments (treasury shares) are recognised at cost and deducted from equity. Profit on sale of treasury shares by WEOMA trust is recognised in WEOMA reserve.

Other items adjusted owing to the Trust consolidation include :

(a) Treasury shares

Upon consolidation, the investment in the Company’s equity shares made by WEOMA Trust is debited to the Company’s equity as treasury shares amounting to Rs. 68.37 Crore as at 31st March, 2016 (Rs. 28.29 Crore as at 1st April, 2015).

(b) WEOMA reserve

The income of the Trust till date comprising of profit on sale of Marico shares, forms a part of WEOMA reserve amounting to Rs. 20.18 Crore as at 31st March, 2016 (Rs. 2.66 Crore as at 1st April, 2015).

(c) Other Non Current Financial Assets and other income

Loan advanced to the Trust is eliminated on consolidation amounting to Rs. 50.59 Crore as at 31st March, 2016 (Rs. 8.40 Crore as at 1st April, 2015) forming a part of non current loans and Rs. 15.97 Crore (Rs. 19.76 Crore as at 1st April, 2015) being current loans in previous GAAP Accordingly, interest on above loan is also eliminated amounting to Rs. 2.12 Crore.

(d) Investments

The fair value of investments held by the Trust consolidated as per Ind AS amounts to Rs 1.47 Crore as at 31st March, 2016 (Rs. 4.52 Crore as at 1st April, 2015). The profit for the year ended 31st March, 2016 decreased by Rs. 3.05 Crore.

2 Employee Stock Option Liability

Under the previous GAAP, the cost of equity-settled employee share-based plan were recognised using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date. Consequently, the amount recognised in share based option outstanding account decreased by Rs. 0.64 Crore as at 31st March, 2016 (1st April, 2015 - Rs. 0.31 Crore). The profit for the year ended 31st March, 2016 increased by Rs. 0.33 Crore. There is no impact on total equity.

3 STAR

Under the previous GAAP, the cost of cash-settled employee share-based plan were recognised using the intrinsic value of the rights (excess of market value as at period end over the Grant price) over the vesting period after adjusting amount recoverable from WEOMA trust. As per Ind AS 102, the Share appreciation rights liability shall be measured, initially and at the end of each reporting period until settled, at the fair value of the share appreciation rights, by applying an option pricing model, taking into account the terms and conditions on which the share appreciation rights were granted, and the extent to which the employees have rendered service to date. There is an increase in liability by Rs. 14.61 Crore whereby Rs. 0.83 Crore (Rs. 4.69 Crore as at 1st April, 2015) is long term and Rs. 13.78 Crore (Rs. 11.39 Crore as at 1st April, 2015) is short term. The profit for the year ended 31st March, 2016 decreased by Rs. 13.99 Crore. Equity has decreased by Rs. 30.10 Crore as at 31st March, 2016 (1st April, 2015 - Rs. 16.08 Crore)

4 Retained Earnings

Retained earnings as at 1st April, 2015 has been adjusted consequent to the above Ind AS transition adjustments

5 Time Value reclassified to OCI

Under previous GAAP, the company recognised movements in time value of options and forward element of forward contracts and Interest rate swaps contract in profit or loss in the period in which they arose. Under Ind AS, these movements are reclassified to OCI and thereby decreasing hedge reserve balance by Rs. 2.15 Crore as at 31st March, 2016 (1st April, 2015 Rs. 0.47 Crore). The profit for the year ended 31st March, 2016 is decreased by Rs 1.68 Crore. There is no impact on total equity.

6 Borrowings

Under previous GAAP, transaction costs incurred towards origination of borrowings were charged to profit or loss as and when incurred. Ind AS 109 requires these transaction costs to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Accordingly, borrowings as at 31st March, 2016 have been reduced by Rs. 0.35 Crore (1st April, 2015 Rs. 0.73 Crore) with a corresponding adjustment to retained earnings. The total equity increased by an equivalent amount. The profit for the year ended 31st March, 2016 reduced by Rs. 0.38 Crore as a result of the additional interest expense.

7 Other Intangible assets

In previous GAAP, there was a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. As per Ind AS 38, Intangible Assets having an indefinite life are not amortised and tested annually for impairment. The amortisation charged on copyrights and trademarks is reversed thereby increasing the value of intangible assets, retained earning and profit by Rs. 5.43 Crore as at 31st March, 2016.

8 Fair valuation of investments

Under the previous GAAP, investments in equity instruments and mutual funds were classified as non current investments or current investments based on the intended holding period and realisability. Non current investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March, 2016. This increased the retained earnings by Rs. 7.09 Crore as at 31st March, 2016 (1st April, 2015 - Rs. 2.89 Crore). The profit for the year ended 31st March, 2016 increased by Rs. 4.20 Crore.

9 Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent. Consequent to this change, the amount of security deposits decreased by Rs. 1.18 Crore as at 31st March, 2016 (1st April, 2015 - Rs. 1.49 Crore). The prepaid rent increased by Rs. 1.12 Crore as at 31st March, 2016 (1st April, 2015 - Rs. 1.40 Crore). Total equity decreased by Rs. 0.06 Crore as on 1st April, 2015. The profit for the year and total equity as at 31st March, 2016 decreased by Rs. 0.02 Crore due to amortisation of the prepaid rent of Rs. 0.53 Crore which is partially off-set by the notional interest income of Rs 0.55 Crore recognised on security deposits.

10 Deferred tax has been recognised on adjustments made on transition to Ind AS.

Revenue from operations

11 Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31st March, 2016 by Rs. 7.13 Crore. There is no impact on the total equity and profit.

12 Revenue, Advertisement and Sales Promotion (ASP) and other expense

The Company will recognise revenue at the fair value of consideration received or receivable. Any sales incentive, discounts or rebates in any form, including cash discounts given to customers will be considered as selling price reductions and accounted as reduction from revenue. Under IGAAP, some of these costs were included in ‘advertising and sales promotion’ expenses. Accordingly, Rs. 60.78 Crore has been reclassified from Advertisement and Sales Promotion to Sales, Rs. 7.12 Crore has been reclassified from Advertisement and Sales Promotion to Cost of Goods Sold and Rs. 25.73 Crore from other expense to Sales.

Employee benefits expense

13 Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended 31st March, 2016 increased by Rs. 2.83 Crore. There is no impact on the total equity as at 31st March, 2016.

14 Investment property and Asset held for sale

Under the previous GAAP, investment properties were presented as part of non-current investments. Under Ind AS, investment properties are required to be separately presented on the face of the Balance Sheet. There is no impact on the total equity or profit as a result of this adjustment.

Under the previous GAAP, asset held for sale were presented as part of other current assets. Under Ind AS, asset held for sale are required to be separately presented on the face of the Balance Sheet. There is no impact on the total equity or profit as a result of this adjustment.

15 Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss includes remeasurements of defined benefit plans, effective portion of gains and losses on cash flow hedging instruments. The concept of other comprehensive income did not exist under previous GAAP.

14 Event occuring after Balance sheet date

As at 2nd May, 2017, the date of approval for issue of the standalone financial statement by the Board of Directors, the Company has no subsequent event which either warrant a modification in value of assets and liabilities or any other disclosure.


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.


Mar 31, 2011

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.

2) a) Contingent liabilities not provided for in respect of:

(i) Disputed tax demands/ claims: Rs. Crore

March 31, 2011 March 31, 2010

Sales tax 17.24 6.08

Customs duty 0.40 0.40

Agricultural Produce Marketing cess 8.14 7.93

Employees State Insurance Corporation 0.13 0.13

Excise duty on Subcontractors 0.29 0.24

(ii) Excise duty on CNO dispatches Rs. 210.74 Crore (Rs.131.57 Crore) (Refer note 25 below)

(iii) Claims against the Company not acknowledged as debts Rs. 0.27 Crore (Rs.0.22 Crore)

(iv) Possible indemnification obligations under the Deed of Assignment for assignment of "Sweekar" brand, in the event the Company is unable to reinstate the trademark registration number in the records of the trademark registry within a period of six months from the date of execution of the deed - Rs. 4.00 Crore (Refer note 24 below).

b) (i) Corporate guarantees given to banks on behalf of subsidiaries for credit and other facilities granted by banks Rs. 137.44 Crore (Rs.41.40 Crore) . The credit and other facilities availedby the subsidiaries as at the year end is Rs. 59.04 Crore (Rs.7.02 Crore)

(ii) Stand by Letter of Credit given to banks on behalf of subsidiaries for credit and other facilities granted by banks Rs.108.47 Crore (Rs.76.45 Crore). The credit and other facilities availed by the subsidiaries as at the year end is Rs. 96.65 Crore (Rs. 54.14 Crore)

(iii) Bank guarantees given to statutory authorities Rs. 12.26 Crore (Rs.7.08 Crore)

c) Amount outstanding towards Letters of Credit Rs. Nil (Rs. 2.81 Crore)

4) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 54.48 Crore (Rs. 21.22 Crore) net of advances.

5) Borrowing costs capitalized during the year amount to Rs. 0.42 Crore (Rs. 2.83 Crore).

6) Miscellaneous income includes lease income Rs. 0.39 Crore (Rs.0.43 Crore), profit on sale / disposal of assets (net) Rs. 0.08 Crore (Rs.0.09 Crore), royalty from subsidiaries Rs. 6.84 Crore (Rs. 6.56 Crore) and export subsidy Rs. 3.54 Crore (Rs.1.00 Crore).

7) Miscellaneous expenses include labour charges Rs. 4.53 Crore (Rs. 2.06 Crore), training and seminar expenses Rs. 4.62 Crore (Rs. 3.47 Crore), outside services Rs. 2.22 Crore (Rs. 2.21 Crore) and professional charges Rs. 18.34 Crore (Rs. 13.42 Crore),donations Rs. 0.04 Crore (Rs. 0.43 Crore) and capital advance written off Rs. 1.00 Crore and are net of excess provisions no longer required written back Rs. 1.96 Crore ( Rs. 7.54 Crore) [including Impairment provision of Rs. 1.03 Crore (Rs.1.20 Crore)].

8) Research and Development expenses aggregating Rs. 7.53 Crore (Rs. 7.54 Crore) have been included under the relevant heads in the Profit and Loss account.

10) Additional information on assets taken on lease:

The companys 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.

11) Additional information on assets given on operating lease:

The Company has given on lease certain plant & machinery for a lease period ranging between 1 to 3 years. These arrangements are in the nature of cancelable lease and are generally renewable by mutual consent or mutual agreeable terms.

*Converted into the exchange rate at the year end.

**Out of the forward contracts outstanding as on March 31, 2011, USD 11,000,000 (USD 6,307,775), AUD 297,898 (AUD 600,000), having fair value of Rs. 52.01 Crore (Rs. 31.19 Crore) and all outstanding option contracts as on March 31, 2011, having fair value of Rs. Nil (Rs. 1.01 Crore ) have been designated as Cash Flow hedges.

- The Company has entered into Interest rate swap of USD 8,750,000 (USD 4,583,333), for hedging its interest rate exposure on borrowings in foreign currency which has a fair value of Rs. 0.34 Crore (Rs. 0.63 Crore).

- The Cash flows are expected to occur and impact the Profit and Loss account within the period of 1 year except interest rate swap, in respect of which Cash Flows are expected to occur and impact the Profit and Loss account within the period of 1 to 2 years (1 to 3 years).

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

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. 4.99 Crore [P.Y Rs. 2.81 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 Account’, which would be recognised in the Profit and Loss account when the underlying transaction or forecast revenue arises.

16) 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.

17) a) Employee Stock Option Scheme 2007

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’. Each option represents 1 equity share in the Company. The Vesting period and the Exercise Period both range from 1 year to 5 years. Pursuant to exercise of 5,073,850 (325,700) options during the year, the issued and subscribed share capital has increased by Rs. 0.51 Crore (Rs.0.03 Crore) to Rs. 61.44 Crore (Rs. 60.93 Crore) and Securities Premium account has increased by Rs. 28.20 Crore (Rs. 1.80 Crore) to Rs. 43.50 Crore (Rs. 15.30 Crore). The options outstanding as on the Balance sheet date correspond to about 0.39% (1.28%) of the current paid up equity capital of the Company.

b) The Corporate Governance Committee has granted stock appreciation rights to certain eligible employees pursuant to the Company’s Employee Stock Appreciation Rights Scheme, 2011("Scheme") . The vesting period under the Scheme is from March 28, 2011 to September 30, 2013. Under the Scheme, the respective employees are entitled to receive excess of the maturity price over the grant price subject to fulfillment of certain conditions. The stock appreciation rights equivalent to 2,874,000 shares were granted to employees which were outstanding as at the year end and difference between the market price of Company’s shares as at the year end and the grant price is recognized over the vesting period amounting to Rs. 0.02 Crore in the Profit and Loss account.

1. The above remuneration to Chairman and Managing Director does not include contribution to Gratuity Fund and provision for Leave encashment, as these are lump sum amounts for all relevant employees based on actuarial valuation.

2. Since no commission is payable during the year, computation of net profits for the year under section 198 of the Companies Act, 1956 has not been given.

20) The Following table sets forth the funded status of the plan and the amounts relating to gratuity and leave encashment recognized in the Company’s Financials:

*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.

B. Privileged leave (Compensated Absence for Employees):

The Company permits encashment of privileged leave accumulated by its employees on retirement and separation. The liability for unexpired leave is determined and provided on the basis of actuarial valuation at the Balance Sheet date. The privileged leave liability is not funded.

C. Defined contribution plan :

The Company has recognised Rs. 5.11 Crore (Rs. 5.03 Crore) towards contribution to provident fund, Rs 0.56 Crore (Rs. 0.64 Crore) towards contribution to superannuation fund and Rs. 0.23 Crore (Rs. 0.18 Crore) towards employee state insurance plan in Profit and Loss account.

21) 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. Pending the issuance of the guidance note from the Actuarial Society of India, the Company’s actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly, the Company has accounted for the same as a defined contribution plan. However, as permitted by the circular number 2009/104919 issued by the Employees’ Provident Fund Organization, the interest shortfall can be adjusted against the Reserve available with the trust. Based on the unaudited financial statements of the fund as at March 31, 2011, the Reserve available with the fund are adequate to cover interest shortfalls arising till the said date. Hence no provision for liability is required to be created on such interest shortfall as on March 31, 2011.

This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

23) a) Secured Debentures represent 300 8.25% Rated Taxable Redeemable Non- convertible Debentures of Face Value Rs. 10 lakhs each, aggregating to Rs. 30.00 Crore which were issued on May 8, 2009 and are redeemable at par after 3 years. As per the terms of the issue Put / Call option is available with the Investor / Company at the end of 2 years. These debentures are listed on the National Stock Exchange.

b) During the year, on March 30, 2011, The Company has issued 500 10.05% Rated Taxable Unsecured Redeemable Non-convertible debentures of face value of Rs. 10 lakhs each aggregating to Rs. 50.00 Crore which are redeemable at par after 30 months. These debentures have been listed on the National Stock Exchange after the Balance Sheet date.

24) During the year, on March 25, 2011, the Company divested its edible oil brand "Sweekar" to Cargill India Private Limited for a consideration of Rs. 50.00 Crore The divestment comprised assignment of trademark, designs, copyrights as also a non-compete agreement and limited period licensing for some of the intellectual rights. The profit arising from this divestment aggregating Rs. 50 Crore has been reflected as part of "Exceptional Items" in the Profit and Loss account (Refer Note 13 above).

25) During the year ended March 31, 2010, the Company had made a provision of Rs. 29.35 Crore towards 75% of possible excise duty obligation which may arise in the event of unfavorable outcome of the matter in respect of coconut oil packed in container size up to 200ml and cleared on and after June 3, 2009, which is being contested by the Company. Based on the facts of the case and the legal opinion obtained in this regard, the Company had made an assessment that the probability of success in the matter is more likely than not. In terms of Accounting Standard (AS) 29 "Provisions, Contingent Liabilities and Contingent Assets", the possible obligation on this account could be in the nature of contingent liabilities, which need not be provided for in the accounts. Pending outcome of the matter, the Company had made the aforesaid provision in the accounts for the year ended March 31, 2010. The Management had, while finalizing financial results for the quarters ended June 30, 2010, September 30, 2010 and December 31, 2010, continued to make provision on the said basis and had provided Rs. 26.61 Crore for the first nine months ended December 31, 2010.

The Auditors had qualified their audit report for the year ended March 31, 2010 and the limited review reports for the said quarter to the effect that the said provisioning was not in accordance with the requirements of AS 29.

As at March 31, 2011, the Company has reviewed the matter again and has taken a legal opinion, which has reaffirmed the earlier assessment that the probability of success in the matter is more likely than not. Considering the continued strength of the Company’s case, the Company has, during the year, reversed the entire provision of Rs. 29.35 Crore and Rs. 26.61 Crore made during the year ended March 31, 2010 and during the nine months ended December 31, 2010 respectively, having regard to the fact that the said provision was not in accordance with the requirements of AS 29. The reversal of the provision pertaining to the year ended March 31, 2010 aggregating to Rs. 29.35 Crore has been included under the head "Exceptional Items" in the Profit and Loss account. Further, deferred tax asset of Rs. 9.75 Crore created during the year ended March 31, 2010 has been reversed and included in Deferred Tax charge for the year in the Profit and Loss account. Provisions of Rs. 26.61 Crore made in the first nine months ended December 31, 2010 were reversed in the quarter ended March 31, 2011, which has no impact for the results of the full year ended March 31, 2011.

Consequentially, the possible excise duty obligation of Rs. 88.97 Crore for clearances made after June 03, 2009 till March 31, 2011 and Rs. 121.77 Crore for clearances made prior to June 03, 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) under the excise laws.

Had the Company continued to make provisions on the same basis as in the previous year, the Profit before tax and Exceptional Items for the year would have been lower by Rs.37.38 Crore. Further, balances as at March 31, 2011 in Deferred Tax Asset and Provisions would have been higher by Rs. 21.65 Crore and Rs. 66.73 Crore respectively and balance in Reserve and Surplus would have been lower by Rs. 45.08 Crore.

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.

26) During the year, the Company has recognized impairment of intangible assets comprising of Trademark relating to Fiancée brand, which is used by Egyptian American Investment & Industrial Development Company. The Company charges royalty from the said subsidiary for the use of Trademark. Having regard to the impairment indicators such as losses incurred in the Fiancée business due to multiple factors like shifting consumer habits, trade issues, weakening brand strength, etc , the Company has recognized a provision of Rs. 13.88 Crore towards Impairment of Fiancée Trademark, which is included in "Exceptional Items" in the Profit and Loss account. The Company has considered pre-tax discount rate of 19 % for determining value in use.

27) As at March 31, 2011, 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 loans to Kaya of Rs. 112.92 Crore (Rs. 79.97 Crore). As per the latest audited financial statements, Kaya has negative net-worth as at March 31, 2011. 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, focus on same store growth, expansion of Kaya’s range of services and product offerings, savings resulting from cost management initiatives and 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, and based on the fundamentals of Kaya and its future business plans, 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.

28) The Company has advanced long term loan to its wholly owned subsidiary Marico South Africa Consumer Care (Pty) Limited which is outstanding at the year ended March 31, 2011. 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. 5.74 Crore (Rs. 3.23 Crore) arising on revaluation of the said loan is accumulated in ‘Foreign Currency Translation Reserve’, to be recognized as income or expenses in the Profit and Loss account upon disposal of the net investment in said subsidiary.

30) (a) The figures in brackets represent those of the previous year

(b) The figures for the previous year have been restated / regrouped where necessary to conform to current period’s classification.


Mar 31, 2010

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 and its extensions, Nihar, Saffola, Sweekar, Hair & Care, Revive, Shanti, Oil of Malabar, Mediker and Manjal. Maricos products reach its consumers through retail outlets serviced by Maricos distribution network comprising regional offices, carrying & forwarding agents, consignment agent, redistribution centers and distributors spread all over India.

2) a) Contingent liabilities not provided for in respect of:

(i) Disputed tax demands/ claims:

Rs. Crore March 31,2010 March 31,2009

Sales tax 6.08 4.88

Customs duty 0.40 2.86

Agricultural Produce Marketing Committee cess 7.93 7.81

Employees State Insurance Corporation 0.13 0.18

Excise duty on Subcontractors 0.24 Nil

(ii) Excise duty on CNO dispatches Rs. 131.57 Crore (Rs. Nil) (Refer note 24 below)

(iii) Claims against the Company not acknowledged as debts. Rs. 0.22 Crore (Rs. 0.21 Crore)

b) (i) Counter guarantees given to banks on behalf of subsidiaries Rs, 41.40 Crore (Rs. 46.05 Crore)

(ii) Stand by Letter of Credit given to banks on behalf of subsidiaries Rs. 76.45 Crore (Rs. 80.15 Crore)

c) Amount outstanding towards Letters of Credit Rs. 2.81 Crore (Rs. 18.07 Crore)

3) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 21.22 Crore (Rs. 10.38 Crore) net of advances.

4) Borrowing costs capitalized during the year amount to. Rs. 2.83 Crore (Rs. 3.55 Crore).

5) Miscellaneous income includes lease income Rs. 0.43 crore (Rs. 0.41 Crore), profit on sale / disposal of assets (net) Rs. 0.09 Crore (Rs.Nil) and royalty from subsidiaries Rs. 6.56 Crore (Rs. 4.39 Crore).

6) Miscellaneous expenses include labour charges Rs. 2.06 Crore (Rs. 1.91 Crore), training & seminar expenses Rs. 3.47 Crore (Rs. 2.42 Crore), outside services Rs. 2.21 Crore (Rs. 2.37 Crore), professional charges Rs. 13.42 Crore (Rs. 9.61 Crore), donations Rs. 0.43 Crore (Rs. 1.19 Crore), leakage and damage expenses of Rs. 7.84 Crore (10.65 Crore), loss on sale / disposal of assets (net) Rs. Nil (Rs. 0.14 Crore) and are net of reversal of excess provisions no longer required written back Rs.7.54 Crore (Rs. 5.14 Crore) [including Impairment provision of Rs. 1.20 Crore (Rs. 0.86 Crore)]

7) Research and development expenses aggregating Rs. 7.54 Crore (Rs. 5.73 Crore) have been included under the relevant heads in the Profit and Loss account.

8) Additional information on assets taken on lease:

The Companys 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.

9) Additional information on assets given on operating lease:

The Company has given on lease certain plant & machinery for a lease period ranging between 1 to 3 years. These arrangements are in the nature of cancelable lease and are generally renewable by mutual consent or mutual agreeable terms.

10) During the year, upon completion of necessary compliances under FEMA regulations, the Company divested its stake in Sundari LLC (Sundari) on June 8,2009. Sundari ceased to be subsidiary of the Company from the said date. The resultant effect of the said transaction is reflected as exceptional item in the Profit and Loss account as under.

11) 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.

12) Employee Stock Option Scheme 2007

The Corporate Governance Committee of the Board of Directors of the Company has granted Stock Options to certain eligible employees pursuant to the Marico Employees Stock Options Scheme 2007. Each option represents 1 equity share in the Company. The Vesting Period and the Exercise Period both range from 1 year to 5 years. Pursuant to exercise of 325,700 (Nil) options during the year, the issued and subscribed share capital has increased by Rs. 0.03 (Rs. Nil) to Rs. 60.93 Crore and Securities Premium account has increased by Rs. 1.80 Crore to Rs. 15.30 Crore. The options outstanding as on the Balance Sheet date correspond to about 1.28% (1.37%) of the current paid up equity capital of the Company.

13) The Following table sets forth the funded status of the plan and the amounts relating to gratuity and leave encashment recognized in the Companys financials:

14) 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. Pending the issuance of the guidance note from the Actuarial Society of India, the Companys actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly, the Company has accounted for the same as a defined contribution plan. However, as per the information provided by trustees, there is no interest shortfall as at the year end.

15) There are no Micro and Small Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2010 (Rs. Nil), This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

16) During the year, on May 08, 2009, the Company issued 300 8.25% Rated Taxable Secured Redeemable Non-convertible Debentures of Face Value Rs. 10 lakhs each, aggregating to Rs. 30.00 Crore which are redeemable at par after 3 years. As per the terms of the issue Put/Call option is available with the investor and Company at the end of 2 years.

17) The Company manufactures and markets pure coconut oil (CNO) under the brands Parachute, Nihar and Oil of Malabar. Such CNO is a 100 % natural product and meets all standards of edible oil as given in the Prevention of Food Adulteration Act. For the purpose of Excise, CNO is classified as a vegetable oil under Chapter 15 and attracts excise at nil rate. Although in the past the Central Excise Department (Department) has attempted to classify CNO as hair oil by issuing show cause notices to some of the Companys job workers, the Companys stand has been vindicated by the decisions of Appellate Tribunal benches ("the Tribunal"), confirming that CNO is not hair oil but a vegetable oil. Some of these decisions are being contested by the Excise Department in the Hon. Supreme Court.

On June 3,2009, however, the Central Board of Excise & Customs (CBEC) issued a circular under which it classified coconut oil packed in container size up to 200 ml as hair oil, chargeable to excise duty. The Department has, at some locations, asked the Company / some of its job workers to clear coconut oil packs up to 200 ml. on or after June 3, 2009, only on payment of excise duty and issued show cause notices (including for periods prior to June 3,2009) As the Circular and consequent actions by the Department are contrary to the classification under excise tariff and Appellate Tribunal decisions, the Company / its job workers filed writ petitions with the Hon. High Courts of Mumbai (Goa bench) and Keraia challenging the validity of the Departments actions. The Honorable High Court of Mumbai has, in the interim, allowed dispatches of coconut oil in packs up to 200 ml without payment of excise duty based on the security of bank guarantees / surety bonds as applicable. The petition, filed with the Honorable High Court of Mumbai is pending final disposal. The Honorable Kerala High Court has disposed of the petition with a direction that the excise authorities cannot call upon the Company to pay excise duty on clearances of coconut oil packs up to 200 ml. till the disposal of the appeals filed by the Department before the Supreme Court.

While passing this judgment, the High Court has also held that the Department cannot take the stand that they are entitled to depart from the stand taken by the Appellate Tribunal.

The Management had, while finalizing financial results for the quarter ended June 30,2009, September 30, 2009 and December 31, 2009, based on then available facts had assessed the probable obligation in respect of clearance after the date of the circular dated June 3, 2009 and had made a provision of Rs 28.20 Crore for the period from 3rd June, 2009 to 31 st December, 2009 on account of excise duty on clearances after the date of circular.

At the year ended March 31, 2010, the Management reviewed the matter particularly in the light of decision of Kerala High Court and has also obtained legal opinion in this regard in accordance with which the Company has a strong case even for clearances after the date of the circular. Having regard to the said facts and legal advice obtained, the Management has made an assessment that the probability of success in the matter is more likely than not. In terms of Accounting Standard (AS) 29, Provisions, Contingent liability and Contingent assets, the possible obligation on this account could be in the nature of contingent liabilities, which need not be provided in the accounts. However, as a matter of abundant caution and financial prudence, the Company has, pending outcome of the matter, made a provision at 75% of the excise duty that may have to be paid on the dispatches of coconut oil on packs up to 200 ml after June 3, 2009 in the event the matter is decided against the Company. Accordingly a provision of Rs. 29.35 Crore has been made for the year ended March 31, 2010 and recognized in the Profit and Loss account. The balance amount of Rs. 9.83 Crore and a possible obligation of Rs. 121.74 Crore for the period prior to June 3, 2009 arising out of show-cause notices received in the past has been disclosed as contingent liability to the extent the time horizon covered by such notice is within the normal period of one year under the excise laws.

The Company will continue to review this matter in 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.

Had the Company treated the entire possible obligation towards the above matter as a contingent liability, the profit before tax for the year would have been higher by Rs. 29.35 Crore profit after tax for year and balance in the Reserves & Surplus at the year end would have been higher by Rs. 19.60 Crore and the contingent liabilities at the year end would have been higher by Rs. 29.35 Crore.

18) As at March 31, 2010, the Company 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 loans to Kaya of Rs. 79.97 Crore (Rs. 54.71 Crore). As per the latest audited financial statements, Kaya has negative net-worth as at March 31, 2010.

Since the incorporation of Kaya during 2002-03, its business has been under development. It has also moved from time to time in expansion phases. Encouraged by the consumer response to Kayas pioneering offerings in products andservices, it has focused on building the brand "Kaya" through setting up of a large number of Clinics at several locations. In the process Kaya has invested significant set up costs including advertisement and sales promotion cost, leading to losses. The operations of Kaya had shown significant improvement till the year ended March 31, 2009.

During the year, Kaya incurred significant losses due to combined effect of tough economic environment, opening of 31 new clinics in last two years which in normal course would have required 3-4 years to achieve profitability and provision of significant one time costs resulting from strategic decision to close down Kaya Life centers by April 30,2010 and 7 Skin Clinics by June 30, 2010. This has resulted in net worth of Kaya turning negative as on March 31, 2010.

Kaya is a fairly young business - only 7 years since its inception. The business has been able to ramp up its presence to 87 clinics in India across 27 cities and a large customer base with significant long term growth potential. The Management believes that the losses during FY10 are not reflective of future trends and the Kaya business model continuous 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 economic environment, maturity of new clinics, renewed focus on reducing the time to scale up revenues in new clinics, improve capacity utilizations in existing ones and add to Kayas range of service and product offerings and anticipated savings resulting from restructuring of operations.

Having regard to the above factors, and based on the fundamentals of Kaya and its future business plans, 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. Having regard to this, the Management perceives the erosion in the value of investment in Kaya, is not other than temporary. Hence, no provision for diminution in value is considered necessary in respect of the Companys investment in Kaya or of the loans and advances given to Kaya.

19) The Company has advanced long term loan to its wholly owned subsidiary Marico South Africa Consumer Care (Pty) Limited which is outstanding at the year ended March 31, 2010. 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/ (loss) of Rs. 3.23 Crore [(Rs. 1.72 Crore)] arising on revaluation of the said loan is accumulated in Foreign Currency Translation Reserve, to be recognized as income or expenses in the Profit and Loss account upon disposal of the net investment in said subsidiary.

20) There are no dues payable to the Investor Education and Protection Fund as at March 31, 2010.

21) (a) The figures in brackets represent those of the previous year.

(b) The figures for the previous year have been regrouped where necessary to conform to current periods classification.

Find IFSC