Jun 30, 2023
1 Corporate information
Procter & Gamble Hygiene and Health Care Limited (''the Company'') is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956 having CIN L24239MH1964PLC012971. Its ordinary shares (Equity) are listed on two recognised stock exchanges in India. The registered office of the Company is located at P&G Plaza, Cardinal Gracias Road, Chakala, Andheri (E), Mumbai - 400099.
The Company is engaged in manufacturing and selling of branded packaged fast moving consumer goods in the femcare and healthcare businesses. The Company''s products are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores. The Company has its manufacturing locations at Goa and Baddi in Himachal Pradesh, apart from third party manufacturing locations spread across India.
2 Significant accounting policies2.1 Statement of compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (''the Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
2.2 Basis of preparation and measurement
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
The financial statements have been prepared on the historical cost basis except for certain items that are measured at fair values at the end of the reporting period, as explained in accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurement that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2.
In addition, for the financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Summary of Significant accounting policies
a. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured on the basis of contracted price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government such as Goods and Services Tax, etc. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks. Revenue is reduced for rebates and other similar allowances. Accumulated experience is used to estimate and accrue for the discounts and rebates considering the terms of the underlying schemes and arrangements with customers.
The specific recognition criteria described below must also be met before revenue is recognised. Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed and there are no longer unfulfilled obligations, at which time all the following conditions are satisfied:
a. the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c. the amount of revenue can be measured reliably at contract price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government such as Goods and Services Tax (GST), etc. Accumulated experience is used to estimate the provision for such discounts and rebates;
d. it is probable that the economic benefits associated with the transaction will flow to the Company; and
e. the costs incurred or to be incurred in respect of the transaction can be measured reliably. Interest income
Interest income is recorded using the Effective Interest Rate (EIR). Interest income is included in Other Income in the Statement of Profit and Loss.
b. Leasing
The Company as a lessee
The Companyâs lease assets classes primarily consist of leases for land, buildings and equipments. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) The contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain Lease arrangements includes the options to extend or terminate the Lease before the end of the Lease term. ROU assets and Lease Liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the Lease Liability adjusted for any Lease payments made at or prior to the commencement date of the Lease plus any initial direct costs Less any Lease incentives. They are subsequently measured at cost Less accumulated depreciation and impairment Losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the Lease term and useful Life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value Less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are Largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The Lease Liability is initially measured at amortized cost at the present value of the future Lease payments. The Lease payments are discounted using the interest rate implicit in the Lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these Leases. Lease Liabilities are re-measured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease Liability and ROU asset have been separately presented in the Balance Sheet and Lease payments have been classified as financing cash flows.
c. Foreign currencies
The financial statements are presented in Indian Rupees ('' in Lakhs), which is also the Company''s functional currency.
Transactions in currencies other than the Company''s functional currency i.e. (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the Balance Sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value is determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on such translations are recognised in the Statement of Profit and Loss in the period which they arise.
d. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
ALL other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
e. Employee benefits
(i) Short term employee benefits - Short term employee benefits including salaries and performance incentives, are charged to the Statement of Profit and Loss on an undiscounted, accrual basis during the period of employment.
ii) Post-employment Benefits
a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment benefits charged to the Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund Commissioner;
- Superannuation Fund as per Company policy administered by Company managed trust; and
- State Defined Contribution Plans: Employer''s Contribution to Employees'' State Insurance.
b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of Post Retirement Medical Benefits (PRMB) and Compensated Absences (plant technicians) as per its policy.
Liability for the above defined benefit plans is provided on the basis of valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to Retained Earnings through Other Comprehensive Income in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
Past service costs are recognised in the Statement of Profit and Loss on the earlier of:
? The date of the plan amendment or curtailment, and
? The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate at the beginning of the year to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:
? Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
? Net interest expense or income
(iii) Liability for Compensated Absences, Bonus, Leave Travel Allowance etc. which are in the nature of short term benefits is provided for as per Company rules based on the undiscounted amount of benefits expected to be paid in exchange of services rendered.
(iv) Termination benefits and long service awards in terms of Company policy are recognised as an expense as and when incurred.
(iv) Long Service Awards are payable to employees on completion of specified years of service.
f. Share-based payment arrangements
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The Procter and Gamble Company, USA has an "Employee Stock Option Plan (ESOP)" whereby the specified employees covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. - The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed period of time. The difference between the market price and grant price on the exercise of the stock options issued by the Ultimate Holding Company to the employees of the Company is charged in the year of exercise by the employees. Parent Company will recharge an amount equal to spread as on date of exercise of options.
The cost of equity-settled transactions is recognised in employee benefits expense, together with a corresponding increase in equity (other reserves) over the period in which the service and performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companyâs best estimate of the number of equity instruments that will ultimately vest. Recharge to parent company to the extent of fair value of options will be debited in equity reserves and any excess recharge above the fair value of options will be recognised as equity distribution from the Company.
Employee share purchase plan
The Procter and Gamble Company, USA has an âInternational Stock Ownership Plan (ISOP)â (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employeeâs contribution (restricted to 2.5% of his base salary) and charged to employee benefits expense. The expenses related ISOP are recognised immediately in the Statement of Profit and Loss statement since there are no vesting conditions attached to the scheme.
The expense in the Statement of Profit and Loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through the Statement of Profit and Loss.
g. Taxation
Income tax expense represents the sum of the current tax and deferred tax.
Current tax
Provision for current tax for the Company''s financial year ended on June 30 is based on the results of the period July 1 to March 31 (later part of the fiscal year ended March 31) and for the balance and for the period April 1 to June 30 (beginning of the next fiscal year) as per the provisions of the Income Tax Act, 1961 and other applicable tax laws. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and Liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
h. Property, plant and equipment
Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at acquisition cost less accumulated depreciation and accumulated impairment losses,if any. Freehold land is not depreciated. Subsequent costs are included in the assets'' carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Cost of Property, plant and equipment which are not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. All other repairs and maintenance cost are charged to the Statement of Profit and Loss during the period in which they are incurred.
Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values over their useful life, using straight-line method. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The management''s estimate of useful lives are in accordance with Schedule II to the Companies Act, 2013 other than certain assets which are based on Company''s expected usage pattern supported by technical assessment.
The estimated useful Life of certain property, plant and equipment of the Company are as follows:
Asset Class |
Useful lives |
Buildings |
09-30 years |
Plant & machinery |
1-15 years |
Furniture and fixtures |
1-15 years |
Office equipment |
1-15 years |
Vehicles |
3-8 years |
Moulds & Dies |
1-8 years |
The residual values of the Company fixed assets are assumed to be equal to zero on the premise that the assets are used for their entire productive life, and have no value, on the secondary market or elsewhere, at the end of the life.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item if property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
i. Impairment of property, plant and equipment
At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its own carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal is recognised immediately in the Statement of Profit and Loss.
j. Inventories
Inventories consist of raw and packing materials, stores and spares, work in progress, stock-in-trade and finished goods. Inventories are valued at lower of cost and net realisable value after providing for obsolescence and other losses where considered necessary. Cost of Inventories is determined on weighted average basis. Cost of manufactured finished goods and work-in-progress includes material cost determined on weighted average basis and also includes an appropriate portion of allocable overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
k. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (Legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects its present value, that reflects the current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed in the Notes to the Financial Statements. Contingent liabilities are disclosed for (i) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
The Company has ongoing disputes with Income Tax Authorities on various matters which are pending before appellate authorities. In this regard, the management evaluates whether it has any uncertain tax position requiring adjustments to provision for Income tax. Depending on probability of success in the matter before the Appellate Authorities, a provision is created or a Contingent liability is disclosed.
Contingent assets are not recognised in the financial statements as this may result in the recognition of income that may never be there.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial asset and financial liabilities (other than financial asset and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial asset or financial liabilities, as appropriate, on initial recognition. Transactions costs directly attributable to the acquisition of financial asset and financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.
All recognised financial assets (except trade receivables) are subsequently measured at either amortised cost or fair value through profit or loss or fair value through other comprehensive income, depending on the classification of the financial assets. Financial assets are not reclassified subsequent to their recognition, except during the period the Company changes its business model for managing financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
a) The asset is held within a business model whose objective is to hold assets in order or collect contractual cash flows; and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that does not meet the above conditions are subsequently measured at fair value. Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). A financial asset not classified as either amortised cost or Fair Value through OCI, is classified as Fair Value through Profit or loss.
The effective interest is a method calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount in initial recognition.
Income is recognised on an effective interest basis for debt instruments. Interest income is recognised in Statement of Profit and Loss and is included in the "Other income" line item.
Impairment of financial assets
The Company applies expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, trade receivables and other contractual rights to receive cash or other financial asset.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
For trade receivables or any contractual right to receive cash, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience with adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all of the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all of the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in the Statement of Profit and Loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety, the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in the Statement of Profit and Loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost, the exchange differences are recognised in Statement of Profit and Loss.
n. Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liability or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company is recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
All financial liabilities are subsequently measured at amortised cost using the effective interest method.
Financial liabilities at initial recognition are classified as financial liabilities at fair value through profit or loss, loans, borrowings and trade payables, as appropriate.
Financial liabilities that are not held-for-trading and are not designated as at fair value through profit or loss are measured at amortised cost at the end of the subsequent accounting period. The carrying amount of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the "Finance costs" in the Statement of Profit and loss.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, (where appropriate), a shorter period, to the net carrying amount at initial recognition.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instrument and are recognised in Statement of Profit and Loss.
The Company derecognises a financial Liability when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
o. Segment Reporting
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 is responsible for allocating resources and assessing performance of the operating segments of the Company.
p. Cash and Cash Equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments.
q. Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the year after tax attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Claims against the Company not acknowledged as debts are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.
s. Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as âheld for saleâ if it is highly probable that they will be recovered primarily through sales rather than through continuing use. Subsequently, such non-current assets and disposal groups classified as held for sale are measured at lower of its carrying value and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit and loss. Non-current assets held for sale are not depreciated or amortised.
t. Recent accounting pronouncements Standards issued but not yet effective
Ministry of Corporate Affairs (MCA), vide notification dated 31st March, 2023, has made the following amendments to Ind AS which are effective 1st July, 2023 to the Company:
a) Ind AS 1, Presentation of Financial Statements where the companies are now required to disclose material accounting policies rather than their significant accounting policies.
b) Ind AS 8, Accounting policies, Changes in Accounting Estimates and Errors where the definition of âchange in account estimateâ has been replaced by revised definition of âaccounting estimateâ.
c) Ind AS 12, Income Taxes where the scope of Initial Recognition Exemption (IRE) has been narrowed down.
Based on preliminary assessment, the Company does not expect these amendments to have any significant impact on its financial statements.
3 Critical accounting judgments and key sources of estimation uncertainty3.1 Critical judgments in applying accounting policies
In the application of the Company''s accounting policies, which are described in Note 2, the directors of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods of the revision if it affects both current and future periods.
3.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a. Useful lives of property, plant and equipment
As described at 2.3 (h) above, the Company reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period.
b. Fair value measurements and valuation processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. The Management of the Company determines the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The Management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities is disclosed in Note 31.
c. Defined benefit obligation
The costs of providing pensions and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 âEmployee benefitsâ over the period during which benefit is derived from the employeesâ services. The costs are assessed on the basis of assumptions selected by the Management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 24, âEmployee benefits expenseâ.
The Companyâs tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions (refer note 27).
e. Measurement and likelihood of occurrence of provisions and contingencies - As disclosed in Note 15 and Note 36, Management has estimated and measured the likelihood of the litigations and accounted the provision and contingencies as appropriate.
Jun 30, 2022
1 Corporate information
Procter & Gamble Hygiene and Health Care Limited (''the Company'') is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956 having CIN L24239MH1964PLC012971. Its ordinary shares (Equity) are listed on two recognised stock exchanges in India. The registered office of the Company is located at P&G Plaza, Cardinal Gracias Road, Chakala, Andheri (E), Mumbai - 400099.
The Company is engaged in manufacturing and selling of branded packaged fast moving consumer goods in the femcare and healthcare businesses. The Company''s products are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores. The Company has its manufacturing locations at Goa and Baddi in Himachal Pradesh, apart from third party manufacturing locations spread across India.
2 Significant accounting policies2.1 Statement of compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (''the Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
2.2 Basis of preparation and measurement
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
The financial statements have been prepared on the historical cost basis except for certain items that are measured at fair values at the end of the reporting period, as explained in accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurement that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2.
In addition, for the financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Summary of Significant accounting policies
a. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks. Revenue is reduced for rebates and other similar allowances. Accumulated experience is used to estimate and accrue for the discounts and rebates considering the terms of the underlying schemes and arrangements with customers.
Goods and Services Tax (GST) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the Government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognised. Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed and there are no longer unfulfilled obligations, at which time all the following conditions are satisfied:
a. the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c. the amount of revenue can be measured reliably at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government such as Goods and Services Tax, etc. Accumulated experience is used to estimate the provision for such discounts and rebates;
d. it is probable that the economic benefits associated with the transaction will flow to the Company; and
e. the costs incurred or to be incurred in respect of the transaction can be measured reliably. Interest income
Interest income is recorded using the Effective Interest Rate (EIR). Interest income is included in Other Income in the Statement of Profit and Loss.
b. Leasing
The Company as a lessee
The Companyâs lease assets classes primarily consist of leases for land, buildings and equipments. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) The contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (âROUâ)
and a corresponding Lease Liability for all Lease arrangements in which it is a Lessee, except for Leases with a term of twelve months or Less (short-term Leases) and Low value Leases. For these short-term and Low value Leases, the Company recognizes the Lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain Lease arrangements includes the options to extend or terminate the Lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease LiabiLity adjusted for any Lease payments made at or prior to the commencement date of the Lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-Line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverabiLity whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair vaLue Less cost to seLL and the vaLue-in-use) is determined on an individuaL asset basis unLess the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
c. Foreign currencies
The financial statements are presented in Indian Rupees ('' in lakhs), which is also the Company''s functional currency.
Transactions in currencies other than the Company''s functional currency i.e. (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the Balance Sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value is determined. Non-monetary items that are measured in terms of historicaL cost in a foreign currency are not retranslated.
Exchange differences on such translations are recognised in the Statement of Profit and Loss in the period which they arise.
d. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
i) Short term employee benefits - Short term employee benefits including salaries and performance incentives, are charged to the Statement of Profit and Loss on an undiscounted, accrual basis during the period of employment.
ii) Post-employment Benefits
a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment benefits charged to the Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund Commissioner;
- Superannuation Fund as per Company policy administered by Company managed trust; and
- State Defined Contribution Plans: Employer''s Contribution to Employees'' State Insurance.
b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of Post Retirement Medical Benefits (PRMB) and Compensated Absences (plant technicians) as per its policy.
Liability for the above defined benefit plans is provided on the basis of valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to Retained Earnings through Other Comprehensive Income in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
Past service costs are recognised in the Statement of Profit and Loss on the earlier of:
? The date of the plan amendment or curtailment, and
? The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate at the beginning of the year to the net defined benefit liability or asset. The company recognises the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:
? Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
? Net interest expense or income
iii) Liability for Compensated Absences, Bonus, Leave Travel Allowance etc. which are in the nature of short term benefits is provided for as per Company rules based on the undiscounted amount of benefits expected to be paid in exchange of services rendered.
iv) Termination benefits and long service awards in terms of Company policy are recognised as an expense as and when incurred.
f. Share-based payment arrangements
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The Procter and Gamble Company, USA has an "Employee Stock Option Plan (ESOP)" whereby the specified employees covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. - The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed period of time. The difference between the market price and grant price on the exercise of the stock options issued by the Ultimate Holding Company to the employees of the Company is charged in the year of exercise by the employees. Parent Company will recharge an amount equal to spread as on date of exercise of options.
The cost of equity-settled transactions is recognised in employee benefits expense, together with a corresponding increase in equity (other reserves) over the period in which the service and performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companyâs best estimate of the number of equity instruments that will ultimately vest. Recharge to parent company to the extent of fair value of options will be debited in equity reserves and any excess recharge above the fair value of options will be recognised as equity distribution from the company.
Employee share purchase plan
The Procter and Gamble Company, USA has an âInternational Stock Ownership Plan (ISOP)â (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employeeâs contribution (restricted to 2.5% of his base salary) and charged to employee benefits expense. The expenses related ISOP are recognised immediately in the Statement of Profit and Loss statement since there are no vesting conditions attached to the scheme.
The expense in the Statement of Profit and Loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through the Statement of Profit and Loss.
g. Taxation
Income tax expense represents the sum of the current tax and deferred tax.
Current tax
Provision for current tax for the Company''s financial year ended on June 30 is based on the results of the period July 1 to March 31 (later part of the fiscal year ended March 31) and for the balance and for the period April 1 to June 30 (beginning of the next fiscal year) as per the provisions of the Income Tax Act, 1961 and other applicable tax laws. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and Liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax Liabilities and assets are measured at the tax rates that are expected to apply in the period in which the Liability is settled or the asset is realised, based on tax rates (and tax Laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
h. Property, plant and equipment
Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at acquisition cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated. Subsequent costs are included in the assets'' carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Cost of Property, plant and equipment which are not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. All other repairs and maintenance cost are charged to the Statement of Profit and Loss during the period in which they are incurred.
Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values over their useful life, using straight-line method. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The management''s estimate of useful lives are in accordance with Schedule II to the Companies Act, 2013 other than certain assets which are based on Company''s expected usage pattern supported by technical assessment.
The estimated useful Life of certain property, plant and equipment of the Company are as follows:
Asset Class |
Useful lives |
Buildings |
20-30 years |
Plant & machinery |
10-15 years |
Furniture and fixtures |
3-15 years |
Office equipment |
3-15 years |
Moulds & Dies |
3-15 years |
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item if property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
i. Impairment of property, plant and equipment
At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its own carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal is recognised immediately in the Statement of Profit and Loss.
j. Inventories
Inventories consist of raw and packing materials, stores and spares, work in progress, stock-in-trade and finished goods. Inventories are valued at lower of cost and net realisable value after providing for obsolescence and other losses where considered necessary. Cost of Inventories is determined on weighted average basis. Cost of manufactured finished goods and work-in-progress includes material cost determined on weighted average basis and also includes an appropriate portion of allocable overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
k. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects its present value, that reflects the current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed in the Notes to the Financial Statements. Contingent liabilities are disclosed for (i) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised in the financial statements as this may result in the recognition of income that may never be there.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial asset and financial liabilities (other than financial asset and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial asset or financial liabilities, as appropriate, on initial recognition. Transactions costs directly attributable to the acquisition of financial asset and financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.
All recognised financial assets are subsequently measured at either amortised cost or fair value through profit or loss or fair value through other comprehensive income, depending on the classification of the financial assets. Financial assets are not reclassified subsequent to their recognition, except during the period the Company changes its business model for managing financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
a) The asset is held within a business model whose objective is to hold assets in order or collect contractual cash flows; and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that does not meet the above conditions are subsequently measured at fair value. Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). A financial asset not classified as either amortised cost or Fair Value through OCI, is classified as Fair Value through Profit or loss.
The effective interest is a method calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected Life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount in initial recognition.
Income is recognised on an effective interest basis for debt instruments. Interest income is recognised in Statement of Profit and Loss and is included in the "Other income" line item.
Impairment of financial assets
The Company applies expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, trade receivables and other contractual rights to receive cash or other financial asset.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
For trade receivables or any contractual right to receive cash, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring Lifetime expected credit Loss aLLowance for trade receivabLes, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience with adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all of the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all of the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in the Statement of Profit and Loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety, the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no Longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or Loss allocated to it that had been recognised in other comprehensive income is recognised in the Statement of Profit and Loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost, the exchange differences are recognised in Statement of Profit and Loss.
n. Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liability or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company is recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
All financial liabilities are subsequently measured at amortised cost using the effective interest method.
Financial liabilities at initial recognition are classified as financial liabilities at fair value through profit or loss, loans, borrowings and trade payables, as appropriate.
Financial liabilities that are not held-for-trading and are not designated as at fair value through profit or loss are measured at amortised cost at the end of the subsequent accounting period. The carrying amount of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the "Finance costs" in the Statement of Profit and loss.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, (where appropriate), a shorter period, to the net carrying amount at initial recognition.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instrument and are recognised in Statement of Profit and Loss.
Derecognition
The Company derecognises a financial liability when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new Liability. Similarly, a substantial modification of the terms of an existing financial Liability is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
o. Segment Reporting
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 is responsible for allocating resources and assessing performance of the operating segments of the Company.
p. Cash and Cash Equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments.
q. Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the year after tax attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Claims against the Company not acknowledged as debts are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.
s. Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as âheld for saleâ if it is highly probable that they will be recovered primarily through sales rather than through continuing use. Subsequently, such non-current assets and disposal groups classified as held for sale are measured at lower of its carrying value and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit and loss. Non-current assets held for sale are not depreciated or amortised.
t. Recent accounting pronouncements Standards issued but not yet effective
Ministry of Corporate Affairs (MCA), vide notification dated 23rd March, 2022, has made the following amendments to Ind AS which are effective July 1, 2022:
a) Ind AS 109: Annual Improvements to Ind AS (2021)
b) Ind AS 103: Reference to Conceptual Framework
c) Ind AS 37: Onerous Contracts - Costs of Fulfilling a Contract
d) Ind AS 16: Proceeds before intended use
Based on preliminary assessment, the Company does not expect these amendments to have any significant impact on its financial statements.
3 Critical accounting judgments and key sources of estimation uncertainty3.1 Critical judgments in applying accounting policies
In the application of the Company''s accounting policies, which are described in Note 2, the directors of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods of the revision if it affects both current and future periods.
3.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a. Useful lives of property, plant and equipment
As described at 2.3 (h) above, the Company reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period.
b. Fair value measurements and valuation processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. The Management of the Company determines the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of an asset or a Liability, the Company uses market-observable data to the extent it is available. Where level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The Management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities is disclosed in Note 31.
c. Defined benefit obligation
The costs of providing pensions and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 âEmployee benefitsâ over the period during which benefit is derived from the employeesâ services. The costs are assessed on the basis of assumptions selected by the Management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 24, âEmployee benefits expenseâ.
d. Income taxes
The Companyâs tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions (refer note 27).
e. Measurement and likelihood of occurrence of provisions and contingencies - As disclosed in Note 15 and Note 36, Management has estimated and measured the likelihood of the litigations and accounted the provision and contingencies as appropriate.
Jun 30, 2018
1. Corporate information
Procter & Gamble Hygiene and Health Care Limited (''the Company'') is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its ordinary shares (Equity) are listed on two recognized stock exchanges in India. The registered office of the Company is located at P&G Plaza, Cardinal Gracias Road, Chakala, Andheri (E), Mumbai - 400099.
The Company is engaged in manufacturing and selling of branded packaged fast moving consumer goods in the femcare and healthcare businesses. The Company''s products are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores. The Company has its manufacturing locations at Goa and Baddi in Himachal Pradesh, apart from third party manufacturing locations spread across India.
2. Significant accounting policies
2.1 Statement of compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standard (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 ("the Act") and other relevant provisions of the Act.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain items that are measured at fair values at the end of the reporting period, as explained in accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and / or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurement that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2.
I n addition, for the financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Summary of Significant accounting policies
a. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks. Revenue is reduced for rebates and other similar allowances.
The Company''s revenue till June 30, 2017 includes recovery of excise duty flows to the Company on its own account. This is for the reason that it is the liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the Company on its own account, revenue includes excise duty.
However, sales tax / value added tax (VAT) / Goods and Services Tax (GST) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods
Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
a. the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c. the amount of revenue can be measured reliably;
d. It is probable that the economic benefits associated with the transaction will flow to the Company; and
e. the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income
Interest income is recorded using the Effective Interest Rate (EIR). Interest income is included in other income in the Statement of Profit and Loss.
b. Leasing
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company as a lessee
Assets held under finance leases are initially recognized at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the less or is included in the balance sheet as a financial lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs (refer note 2.3(d)).
Rental expenses from operating leases is generally recognized on a straight-line basis over the lease term of the relevant lease. Where the rentals are structured solely to increase in line with the expected general inflation to compensate for the lessor''s expected inflationary cost increase, such increases are recognized in the year in which such benefits accrue. Contingent rental arising under operating leases are recognized as an expense in the period in which they are incurred.
I n the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
c. Foreign currencies
The financial statements are presented in Indian Rupees ('' in lakhs), which is also the Company''s functional currency.
transaction and balances
Transactions in currencies other than the Company''s functional currency i.e. (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value is determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period which they arise.
d. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.
e. Employee benefits
i) Post-employment Benefits
a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment benefits charged to the Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund Commissioner;
- Superannuation Fund as per Company policy administered by Company managed trust; and
- State Defined Contribution Plans: Employer''s Contribution to Employees'' State Insurance.
b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of Post Retirement Medical Benefits (PRMB) and Compensated Absences (plant technicians) as per its policy.
Liability for the above defined benefit plans is provided on the basis of valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
Past service costs are recognized in the Statement of Profit and Loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate at the beginning of the year to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income
ii) Liability for Compensated Absences and Leave Travel Allowance which are in the nature of short term benefits is provided for as per Company rules based on the undiscounted amount of benefits expected to be paid in exchange of services rendered.
iii) Termination benefits and long service awards in terms of company policy are recognized as an expense as and when incurred.
f. Share-based payment arrangements
Employees (including senior executives) of the company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The Procter & Gamble Company, USA has an "Employee Stock Option Plan (ESOP)" whereby the specified employees covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. - The Procter & Gamble Company, USA at a fixed price (grant price) for a fixed period of time. The difference between the market price and grant price on the exercise of the stock options issued by the Ultimate Holding Company to the employees of the Company is charged in the year of exercise by the employees. Parent Company will recharge an amount equal to spread as on date of exercise of options.
The cost of equity-settled transactions is recognized in employee benefits expense (refer note 2.3(e)), together with a corresponding increase in equity (other reserves) over the period in which the service and performance conditions are fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. Recharge to parent company to the extent of fair value of options will be debited in equity reserves and any excess recharge above the fair value of options will be recognized as equity distribution from the Company.
Employee share purchase plan
The Procter & Gamble Company, USA has an "International Stock Ownership Plan (ISOP)" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (up to 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary) and charged to employee benefits expense. The expenses related ISOP are recognized immediately in the Statement of Profit and Loss since there are no vesting conditions attached to the scheme.
The expense in the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.
When the terms of an equity-settled award are modified, the minimum expense recognized is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through the Statement of Profit and Loss.
g. taxation
Income tax expense represents the sum of the current tax and deferred tax.
Current tax
Provision for current tax for the Company''s financial year ended on June 30 is based on the results of the period July 1 to March 31 (later part of the fiscal year ended March 31) and for the balance and for the period April 1 to June 30 (beginning of the next fiscal year) as per the provisions of the Income Tax Act, 1961 and other applicable tax laws. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
h. Property, plant and equipment
Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at acquisition cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated. Subsequent costs are included in the assets'' carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Cost of Property, plant and equipment which are not ready for intended use, as on the Balance Sheet date, is shown as capital work-in-progress.
Depreciation is recognized so as to write off the cost of assets (other than freehold land) less their residual values over their useful life, using straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The management''s estimate of useful lives are in accordance with Schedule II to the Companies Act, 2013 other than certain assets which are based on Company''s expected usage pattern supported by technical assessment.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item if property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
i. Impairment of property, plant and equipment
At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
I f the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its own carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal is recognized immediately in the Statement of Profit and Loss.
j. Inventories
Inventories consist of raw and packing materials, stores and spares, work-in-progress, stock-in-trade and finished goods. Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses were considered necessary. Cost of Inventories is determined on weighted average basis. Cost of manufactured finished goods and work-in-progress includes material cost determined on weighted average basis and also includes an appropriate portion of allocable overheads.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
k. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.
I f the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are disclosed in the Notes. Contingent liabilities are disclosed for (1) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (2) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized in the financial statements as this may result in the recognition of income that may never be there.
l. Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial asset and financial liabilities (other than financial asset and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial asset or financial liabilities, as appropriate, on initial recognition. Transactions costs directly attributable to the acquisition of financial asset and financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
m. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.
All recognized financial assets are subsequently measured at either amortized cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost:
a) The asset is held within a business model whose objective is to hold assets in order or collect contractual cash flows; and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that does not meet the above conditions are subsequently measured at fair value.
effective interest method
The effective interest is a method calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount in initial recognition.
I ncome is recognized on an effective interest basis for debt instruments. Interest income is recognized in Statement of Profit and Loss and is included in the "Other income" line item.
Impairment of financial assets
The Company applies expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, trade receivables and other contractual rights to receive cash or other financial asset.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
For trade receivables or any contractual right to receive cash, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience with adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all of the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all of the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in the Statement of Profit and Loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety, the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in the Statement of Profit and Loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortized cost, the exchange differences are recognized in Statement of Profit and Loss.
n. Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liability or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company is recognized at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate.
Financial liabilities that are not held-for-trading and are not designated as at fair value through profit or loss are measured at amortized cost at the end of the subsequent accounting period. The carrying amount of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the "Finance costs" line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, (where appropriate), a shorter period, to the net carrying amount at initial recognition.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instrument and are recognized in Statement of Profit and Loss.
Derecognition
The Company derecognises a financial liability when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
o. Segment Reporting
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 is responsible for allocating resources and assessing performance of the operating segments of the Company.
p. Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments.
q. earnings Per Share
Basic earnings per share is computed by dividing the profit for the year after tax attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
r. Claims
Claims against the Company not acknowledged as debts are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.
s. Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' if it is highly probable that they will be recovered primarily through sales rather than through continuing use. Subsequently, such non-current assets and disposal groups classified as held for sale are measured at lower of its carrying value and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognized in profit and loss. Non-current assets held for sale are not depreciated or amortized.
t. Recent accounting pronouncements Standards issued but not yet effective Ind AS 115: Revenue from Contracts with Customers
I n March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendment) Rules, 2017, notifying Ind AS 115, ''Revenue from Contracts with Customers''. The Standard is applicable to the Company with effect from 1st July, 2018.
This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supercede the current revenue recognition standards Ind AS 18 Revenue and Ind AS 11 Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer. The Company has completed its preliminary evaluation of the possible impact of Ind AS 115 based on which no significant impact is expected, other than additional disclosures as required by the new standard.
3. Critical accounting judgments and key sources of estimation uncertainty
3.1 Critical judgments in applying accounting policies
In the application of the Company''s accounting policies, which are described in note 2, the directors of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods of the revision affects both current and future periods.
3.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a. useful lives of property, plant and equipment
As described at 2.3 (h) above, the Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period.
b. Fair value measurements and valuation processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. The management of the Company determines the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where level 1 inputs are not available, the Company engages third party qualified values to perform the valuation. The management works closely with the qualified external values to establish the appropriate valuation techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities is disclosed in note 30.
c. defined benefit obligation
The costs of providing pensions and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 ''Employee benefits'' over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 23, ''Employee benefits expense''.
d. Income taxes
The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions (refer note 26).
4.1 impairment losses recognized
Certain Property, Plant and Equipment have been tested for impairment and a loss amounting to '' 1 259 lakhs has been recognized in the Statement of Profit and Loss. These were rendered redundant due to Company moving its manufacturing facility from one location to another. The said assets are now being classified as ''Held for sale'' in note 10(a).
The impairment losses on non-financial assets have been included in the Statement of Profit and Loss as "Impairment losses" line item.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as per the provision matrix.
The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.
Jun 30, 2017
1. Corporate information
Procter & Gamble Hygiene and Health Care Limited (''the Company'') is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 1956. Its ordinary shares (Equity) are listed on two recognized stock exchanges in India. The registered office of the Company is located at P&G Plaza, Cardinal Gracias Road, Chakala, Andheri (E), Mumbai - 400099.
The Company is engaged in manufacturing and selling of branded packaged fast moving consumer goods in the femcare and healthcare businesses. The Company''s products are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores. The Company has its manufacturing locations at Goa and Baddi in Himachal Pradesh, apart from third party manufacturing locations spread across India.
2. Significant accounting policies
2.1 Statement of compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standard (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 ("the Act") and other relevant provisions of the Act.
Upto the year ended June 30, 2016, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standard) Rules, 2006 notified under Section 133 of the Act and other relevant provisions of the Act. These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is July 1, 2015. Refer Note 2.4 for the details of first-time adoption exemptions availed by the Company.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain items that are measured at fair values at the end of the reporting period, as explained in accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurement that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2.
In addition, for the financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Summary of Significant accounting policies
a. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured
at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks. Revenue is reduced for rebates and other similar allowances.
The Company''s revenue includes recovery of excise duty flows to the Company on its own account. This is for the reason that it is the liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the company on its own account, revenue includes excise duty.
However, sales tax/value added tax (VAT) is not received by the company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods
Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
a. the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c. the amount of revenue can be measured reliably;
d. it is probable that the economic benefits associated with the transaction will flow to the Company; and
e. the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income
Interest income is recorded using the Effective Interest Rate (EIR). Interest income is included in other income in the Statement of Profit and Loss.
b. Leasing
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to July 1, 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
The Company as a lessee
Assets held under finance leases are initially recognized at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the less or is included in the balance sheet as a financial lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs (refer note 2.3(d)).
Rental expenses from operating leases is generally recognized on a straight-line basis over the lease term of the relevant lease. Where the rentals are structured solely to increase in line with the expected general inflation to compensate for the less orâs expected inflationary cost increase, such increases are recognized in the year in which such benefits accrue. Contingent rental arising under operating leases are recognized as an expense in the period in which they are incurred.
I n the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
c. Foreign currencies
The financial statements are presented in Indian Rupees ('' in lakhs), which is also the Company''s functional currency.
Transaction and balances
Transactions in currencies other than the Company''s functional currency i.e. (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value is determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period which they arise.
d. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily takes a substantial period of time to get ready for its intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.
e. Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment benefits charged to the Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund Commissioner;
- Superannuation Fund as per Company policy administered by Company managed trust; and
- State Defined Contribution Plans: Employer''s Contribution to Employees'' State Insurance.
(b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of Post Retirement Medical Benefits (PRMB) and Compensated Absences (plant technicians) as per its policy.
Liability for the above defined benefit plans is provided on the basis of valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
Past service costs are recognized in the Statement of Profit and Loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the company recognizes related restructuring costs
Net interest is calculated by applying the discount rate at the beginning of the year to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income
(ii) Liability for Compensated Absences and Leave Travel Allowance which are in the nature of short term benefits is provided for as per company rules based on the undiscounted amount of benefits expected to be paid in exchange of services rendered.
(iii) Termination benefits and long service awards in terms of Company policy are recognized as an expense as and when incurred.
f. Share-based payment arrangements
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The Procter & Gamble Company, USA has an "Employee Stock Option Plan (ESOP)" whereby the specified employees covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. - The Procter & Gamble Company, USA at a fixed price (grant price) for a fixed period of time. The difference between the market price and grant price on the exercise of the stock options issued by the Ultimate Holding Company to the employees of the Company is charged in the year of exercise by the employees. Parent Company will recharge an amount equal to spread as on date of exercise of options.
The cost of equity-settled transactions is recognized in employee benefits expense (refer note 2.3(e)), together with a corresponding increase in equity (other reserves) over the period in which the service and performance conditions are fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. Recharge to parent company to the extent of fair value of options will be debited in equity reserves and any excess recharge above the fair value of options will be recognized as equity distribution from the company. However in respect of options granted and fully vested prior to the IND AS transition date i.e. July 1, 2015, the Company would continue to account for the same in the Statement of Profit and Loss in the period when the employee exercises and the same is re-charged by the Parent to the Company.
Employee share purchase plan
The Procter & Gamble Company, USA has an "International Stock Ownership Plan (ISOP)" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter & Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary) and charged to employee benefits expense. The expenses related to ISOP are recognized immediately in the Statement of Profit and Loss since there are no vesting conditions attached to the scheme.
The expense in the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.
When the terms of an equity-settled award are modified, the minimum expense recognized is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through the Statement of Profit and Loss.
g. Taxation
Income tax expense represents the sum of the current tax and deferred tax.
Current tax
Provision for current tax for the Company''s financial year ended on June 30 is based on the results of the period July 1 to March 31 (later part of the fiscal year ended March 31) and for the balance period April 1 to June 30 (beginning of the next fiscal year) as per the provisions of the Income Tax Act, 1961 and other applicable tax laws. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
h. Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Fixtures and equipments are stated at cost less accumulated depreciation and accumulated impairment losses.
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work-in-progress.
Depreciation is recognized so as to write off the cost of assets (other than freehold land) less their residual values over their useful life, using straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The management''s estimate of useful lives are in accordance with Schedule II to the Companies Act, 2013 other than certain assets which are based on Company''s expected usage pattern supported by technical assessment.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
i. impairment of property, plant and equipment
At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
I f the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its own carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal is recognized immediately in the Statement of Profit and Loss.
j. inventories
Inventories consist of raw and packing materials, stores and spares, work-in-progress, stock-in-trade and finished goods. Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses were considered necessary. Cost of Inventories is determined on weighted average basis. Cost of manufactured finished goods and work-in-progress includes material cost determined on weighted average basis and also includes an appropriate portion of allocable overheads.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
k. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are disclosed in the Notes. Contingent liabilities are disclosed for (1) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (2) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized in the financial statements as this may result in the recognition of income that may never be there.
l. Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transactions costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
m. Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.
All recognized financial assets are subsequently measured at either amortized cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost:
(a) The asset is held within a business model whose objective is to hold assets in order or collect contractual cash flows; and
(b) The contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that does not meet the above conditions are subsequently measured at fair value.
effective interest method
The effective interest is a method calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount in initial recognition.
Income is recognized on an effective interest basis for debt instruments. Interest income is recognized in Statement of Profit and Loss and is included in the "Other income" line item.
impairment of financial assets
The Company applies expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, trade receivables and other contractual rights to receive cash or other financial asset.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
For trade receivables or any contractual right to receive cash, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience with adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all of the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all of the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in the Statement of Profit and Loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety, the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to
it that had been recognized in other comprehensive income is recognized in the Statement of Profit and Loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortized cost, the exchange differences are recognized in Statement of Profit and Loss.
n. Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liability or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company is recognized at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate.
Financial liabilities that are not held-for-trading and are not designated as at fair value through profit or loss are measured at amortized cost at the end of the subsequent accounting period. The carrying amount of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the "Finance costs" line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, (where appropriate), a shorter period, to the net carrying amount at initial recognition.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instrument and are recognized in Statement of Profit and Loss.
Derecognition
The Company derecognizes a financial liability when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
o. Segment Reporting
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 is responsible for allocating resources and assessing performance of the operating segments of the Company.
p. Cash and Cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments.
q. earnings Per Share
Basic earnings per share is computed by dividing the net profit for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
r. Claims
Claims against the Company not acknowledged as debts are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.
s. Recent accounting pronouncements Standards issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendment to Ind AS 7, ''Statement of cash flows''. This amendment is in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows''. The amendment is applicable to the Company from July 1, 2017.
Amendments to Ind AS 7
The amendments to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendments to Ind AS 102
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
The Company is currently not having any cash-settled share-based payments. No impact is currently foreseen.
2.4 First-time adoption â mandatory exceptions, optional exemptions
a. Overall principle
The Company has prepared the opening balance sheet as per Ind AS as of July 1, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.
b. deemed cost for property, plant and equipment
The Company has elected to continue with the carrying value of all its property, plant and equipment recognized as of July 1, 2015 (transition date) measured as per the previous GAAP and use the carrying value as its deemed cost as of the transition date.
c. determining whether an arrangement contains a lease
The Company has applied Appendix C to Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existed at the transition date.
3. Critical accounting judgments and key sources of estimation uncertainty
3.1 Critical judgments in applying accounting policies
In the application of the Company''s accounting policies, which are described in note 2, the directors of the Company are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods of the revision affects both current and future periods.
3.2 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a. useful lives of property, plant and equipment
As described at 2.3 (h) above, the Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period.
b. Fair value measurements and valuation processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. The management of the Company determines the appropriate valuation techniques and inputs for fair value measurements.
I n estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities is disclosed in note 30.
c. defined benefit obligation
The costs of providing pensions and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 ''Employee benefits'' over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 23, ''Employee benefits expense''.
d. income taxes
The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (refer note 26).
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as per the provision matrix.
The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.
Notes:
(a) Non-current loans to related parties includes loan to key managerial personnel Rs, 19 lakhs (June 30, 2016: Rs, 23 lakhs; July 1, 2015: Rs, Nil lakhs).
(b) Current loans to related parties includes:
(i) Loan to fellow subsidiaries of the Ultimate Holding Company Rs, 9 000 lakhs (June 30, 2016: Rs, 20 000 lakhs; July 1, 2015: Rs, 41 300 lakhs).
(ii) Loan to key managerial personnel Rs, 4 lakhs (June 30, 2016: Rs, 4 lakhs; July 1, 2015: Rs, Nil lakhs).
(c) Loans given to employees/key managerial personnel as per the Company''s policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
The company has only one class of equity shares having par value of Rs, 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
# Procter & Gamble Asia Holding B.V, The Netherlands has been merged into Procter & Gamble Overseas India BV, The Netherlands with effect from March 31, 2017. Further, promoter shareholder Rosemount LLC has transferred 10 88 137 equity shares held in the Company to Procter & Gamble Overseas India BV, The Netherlands on April 1, 2017.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to the Statement of Profit and Loss.
This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
I n December 2016, final dividend of Rs, 36 per share (total dividend including tax thereon Rs, 14 065 lakhs) was paid to holders of fully paid equity shares. In November 2015, the final dividend paid was Rs, 30.25 per share (total dividend including tax thereon Rs, 11 818 lakhs).
I n June 2017, an interim dividend of Rs, 362 per share (total dividend including tax thereon Rs, 1 41 433 lakhs) was paid to holders of fully paid equity shares.
29. Employee benefit plans
29.1 Defined contribution plans
The Company operates defined contribution provident fund, superannuation fund and employeesRs, state insurance plan for all qualifying employees of the Company. Where employees leave the plan, the contributions payable by the Company is reduced by the amount of forfeited contributions.
The employees of the Company are members of a state-managed employer''s contribution to employees'' state insurance plan, provident fund operated by the government and superannuation fund which is administered through a trust that is legally separated from the Company. The assets of the plan is held separately from those of the Company in funds under the control of trustees. The Company is required to contribute a specific percentage of payroll costs to the contribution schemes to fund the benefit. The only obligation of the Company with respect to the contribution plan is to make the specified contributions.
The total expense recognized in the statement of profit and loss of Rs, 786 lakhs (for the year ended June 30, 2016: Rs, 665 lakhs) for provident fund, Rs, 153 lakhs (for the year ended June 30, 2016: Rs, 171 lakhs) for superannuation fund represent contributions payable to these plans by the Company at rates specified in the rules of the plans. As at June 30, 2017, contributions of Rs, 13 lakhs (as at June 30, 2016: Rs, 27 lakhs) due in respect of 2016-2017 (2015-2016) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting periods.
29.2 Defined benefit plans
a) Gratuity Plan (Funded)
The Company sponsors funded defined benefit gratuity plan for all eligible employees of the Company. The Company''s defined benefit gratuity plan is a final salary plan for India employees, which requires contributions to be made to a separately administered trust. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. The gratuity plan is administered by a separate trust that is legally separated from the Company. The board of the trust is composed of representatives from both employer and employees. The board of the trust is required by law and by its articles of association to act in the interest of the trust and of all relevant stakeholders in the scheme, i.e. active employees, inactive employees, retirees, employer. The board of the trust is responsible for the investment policy with regard to the assets of the trust.
b) Post Retirement Medical Benefit (PRMB) (Unfunded)
The Company provides certain post-employment medical benefits to employees. Under the scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade at the time of retirement. Employees separated from the Company as part of early separation scheme are also covered under the scheme. The liability for post retirement medical scheme is based on an independent actuarial valuation.
c) Compensated absences for Plant technicians (Unfunded)
The Company also provides for compensated absences for plant technicians which allows for encashment of leave on termination/retirement of service or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment/a ailment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year.
These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity risk and salary risk.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at June 30, 2017. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
The fair values of the above equity and debt instruments are determined based on quoted market prices in active markets.
The actual return on plan assets was Rs, 80 lakhs (for the year ended June 30, 2016: Rs, 101 lakhs)
Significant actuarial assumptions of the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
Gratuity Plan (Funded)
I f the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 343 lakhs (increase by Rs, 375 lakhs) (as at June 30, 2016: decrease by Rs, 228 lakhs (increase by Rs, 248 lakhs)).
I f the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs, 367 lakhs (decrease by Rs, 339 lakhs) (as at June 30, 2016: increase by Rs, 246 lakhs (decrease by Rs, 228 lakhs)).
Compensated absence plan (Unfunded)
I f the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 10 lakhs (increase by Rs, 12 lakhs) (as at June 30, 2016: decrease by Rs, 7 lakhs (increase by Rs, 6 lakhs)).
I f the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs, 11 lakhs (decrease by Rs, 10 lakhs) (as at June 30, 2016: increase by Rs, 6 lakhs (decrease by Rs, 7 lakhs)).
Post retirement medical benefit (PRMB) (Unfunded)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 25 lakhs (increase by Rs, 29 lakhs) (as at June 30, 2016: decrease by Rs, 20 lakhs (increase by Rs, 22 lakhs)).
I f the expected medical inflation rate increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs, 25 lakhs (decrease by Rs, 22 lakhs) (as at June 30, 2016: increase by Rs, 19 lakhs (decrease by Rs, 17 lakhs)).
The sensitivity analysis presented above may not be representative of the actual change of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method as the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
30. Financial instruments
30.1 Capital management
The Company manages its capital to ensure that it will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the equity balance.
The Company is not subject to any externally imposed capital requirements.
The Company''s risk management committee manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return on capital to shareholders or issue new shares.
30.3 Financial risk management objectives
The Company''s overall policy with respect to managing risks associated with financial instruments is to minimize potential adverse effects of financial performance of the Company. The policies for managing specific risks are summarized below.
30.4.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currencies stated above.
The following table details impact to profit or loss of the Company by sensitivity analysis of a 10% increase and decrease in the respective currencies against the functional currency of the Company. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change on foreign currency rates.
I f the relevant foreign currency strengthens/weakens by 10% against the functional currency of the Company, profit or loss will increase (decrease) by:
30.5 Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company performs ongoing credit evaluation of the counterparty''s financial position as a means of mitigating the risk of financial loss arising from defaults. The Company only grants credit to creditworthy counterparties.
The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics as disclosed in Note 5 to the financial statements.
30.6 Interest rate risk management
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have interest bearing borrowings, it is not exposed to risk of changes in market interest rates. The Company has not used any interest rate derivatives.
30.7 Other price risk management
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. The Company is not exposed to pricing risk as the Company does not have any investments in equity instruments and bonds.
30.8 Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Company maintains adequate highly liquid assets in the form of cash to ensure necessary liquidity.
The table below analyse financial liabilities of the Company into relevant maturity groupings based on the reporting period from the reporting date to the contractual maturity date:
30.9 Fair value measurements
The carrying amount of financial assets and financial liabilities measured at amortized cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
Jun 30, 2016
1. CORPORATE INFORMATION
Procter & Gamble Hygiene and Health Care Limited (the Company) is a public company incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the manufacturing and selling of branded packaged fast moving consumer goods in the female and healthcare businesses. The Company''s products are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores. The Company has its manufacturing locations at Goa and Baddi - Himachal Pradesh, apart from third party manufacturing locations spread across India.
2. SIGNIFICANT ACCOUNTING POLICIES
2.01 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) and comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.02 Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
2.03 Revenue Recognition
Sale of products is recognized when risk and rewards of ownership of the products are passed on to the customers, which is generally on the dispatch of goods. Sales exclude trade discounts and rebate. Sales include excise duty but exclude sales tax and value added tax.
Interest income is accounted on accrual basis.
2.04 Tangible fixed assets and depreciation & amortization
Fixed assets are stated at cost of acquisition less accumulated depreciation / amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such assets beyond its previously assessed standard of performance.
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses.
Depreciation is calculated on straight-line method over the estimated useful life of the fixed assets. These lives are in accordance with Schedule II of the Companies Act, 2013.
Leasehold land is amortized over the period of lease.
2.05 Impairment of Assets
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.
2.06 Inventories
Inventories consist of raw and packing materials, stores and spares, work in progress and finished goods. Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses were considered necessary. Cost of Inventories is determined on weighted average basis. Cost of manufactured finished goods and work-in-progress includes material cost determined on weighted average basis and also includes an appropriate portion of allocable overheads.
2.07 Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction or at rates that closely approximate the rate at the date of the transaction. Monetary items in foreign currencies are stated at the closing exchange rates. In the case of monetary items covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortized as expense or income over the life of the contract and the difference between the yearend rate and rate on the date of the contract is recognized as exchange difference in the Statement of Profit and Loss. Gains / Losses on conversion / translation have been recognized in the Statement of Profit and Loss.
2.08 Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment benefits, charged to Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund Commissioner;
- Superannuation Fund as per Company policy administered by Company managed trust and
- State Defined Contribution Plans : Employer''s Contribution to Employees'' State Insurance.
(b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of
- Post Retirement Medical Benefits (PRMB) as per its policy
- Compensated Absences (Plant Technicians) as per its policy
Liability for the above defined benefit plans is provided on the basis of valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method.
(ii) Liability for Compensated Absences and Leave Travel Allowance which are in the nature of short term benefits is provided for as per company rules on an accrual basis.
(iii) Termination benefits and long service awards in terms of Company policy are recognized as an expense as and when incurred.
(iv) The Actuarial gains and losses arising during the year are recognized in Statement of Profit and Loss for the year.
(v) The Procter and Gamble Company, USA has an "International Stock Ownership Plan (ISOP)" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary) and charged to Employee Benefits Expense.
(vi) The Procter & Gamble Company, USA has an "Employee Stock Option Plan (ESOP)" whereby specified employees covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. The Procter & Gamble Company, USA at a fixed price (grant price) for a fixed period of time. The difference between the market price and grant price on the exercise of the stock options issued by the Ultimate Holding Company to the employees of the Company is charged in the year of exercise by the employees. Such costs are charged under Employee Benefits Expense.
2.09 Research and Development
Capital expenditure on Research and Development is capitalized as Fixed Assets. All revenue expenditure on Research and Development is charged off to the respective heads in Statement of Profit and Loss in the year in which it is incurred.
2.10 Taxes on Income
Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the Income-tax laws) and deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year). Provision for taxation for the Company''s financial year ended on June 30 is based on the results of the period July 1 to March 31 (later part of the fiscal year ended March 31) and for the balance and for the period April 1 to June 30 (beginning of the next fiscal year) as per the provisions of Income Tax Act, 1961 and other applicable tax laws. The deferred tax charge or credit and the corresponding deferred tax liabilities and / or assets are recognized using the applicable tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets in respect of unabsorbed depreciation, carry forward of losses and items relating to capital losses are recognized only if there is virtual certainty supporting to convincing evidence that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are recognized for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their readability.
2.11 Borrowing cost
Borrowing costs directly attributable to acquisition or construction of qualifying assets (i.e. those fixed assets which necessarily take a substantial period of time to get ready for their intended use) are capitalized. Other borrowing costs are recognized as an expense in the period in which they are incurred.
2.12 Leases
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the less or are classified as operating lease. Lease payments under operating leases are recognized in the Statement of Profit and Loss on a straight line basis over the lease term.
2.13 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent liabilities are disclosed for (1) possible obligations which will be confirmed only by future events not wholly within the control of the Company or (2) present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent assets are not recognized in the financial statements as this may result in the recognition of income that may never be there.
2.14 Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
2.15 Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
2.16 Claims
The claims against the Company not acknowledged as debt are disclosed after careful evaluation of the facts and legal aspects of the matter involved.
Rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs, 10 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders
Jun 30, 2015
1. CORPORATE INFORMATION
Procter & Gamble Hygiene and Health Care Limited (the Company) is a
public company incorporated under the provisions of the Companies Act,
1956. The company is engaged in the manufacturing and selling of
branded packaged fast moving consumer goods in the femcare and
healthcare businesses. The company's products are sold through retail
operations including mass merchandisers, grocery stores, membership
club stores, drug stores, department stores, and high frequency stores.
The Company has its manufacturing locations at Goa and Baddi - Himachal
Pradesh, apart from third party manufacturing locations spread across
India.
2.01 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) and comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014. The financial statements have been
prepared on accrual basis under the historical cost convention. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
2.02 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
2.03 Revenue Recognition
Sale of products is recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
dispatch of goods. Sales exclude trade discounts and rebate. Sales
include excise duty but exclude sales tax and value added tax.
Interest income is accounted on accrual basis.
2.04 Tangible fixed assets and depreciation & amortization
Fixed assets are stated at cost of acquisition less accumulated
depreciation/ amortisation and impairment losses, if any. The cost of
fixed assets comprises its purchase price net of any trade discounts
and rebates, any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready for its intended
use, other incidental expenses and interest on borrowings attributable
to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Subsequent expenditure relating to fixed
assets is capitalised only if such expenditure results in an increase
in the future benefits from such assets beyond its previously assessed
standard of performance.
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses.
Depreciation is calculated on straight-line method over the estimated
useful life of the fixed assets. These lives are in accordance with
Schedule II of the Companies Act, 2013.
Leasehold land is amortised over the period of lease.
2.05 Impairment of Assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of
impairment exists, the recoverable amount of such assets is estimated
and impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
2.06 Inventories
Inventories consist of raw and packing materials, stores and spares,
work in progress and finished goods. Inventories are valued at lower
of cost and net realisable value after providing for obsolescence and
other losses where considered necessary. Cost of Inventories is
determined on weighted average basis. Cost of manufactured finished
goods and work-in-progress includes material cost determined on
weighted average basis and also includes an appropriate portion of
allocable overheads.
2.07 Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction or at rates that closely
approximate the rate at the date of the transaction. Monetary items in
foreign currencies are stated at the closing exchange rates. In the
case of monetary items covered by forward exchange contracts, the
premium or discount arising at the inception of such a forward exchange
contract is amortised as expense or income over the life of the
contract and the difference between the year end rate and rate on the
date of the contract is recognised as exchange difference in the
Statement of Profit and Loss. Gains / Losses on conversion /
translation have been recognised in the Statement of Profit and Loss.
2.08 Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment
benefits, charged to Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund
Commissioner;
- Superannuation Fund as per Company policy administered by Company
managed trust and
- State Defined Contribution Plans : Employer's Contribution to
Employees' State Insurance.
(b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment
benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the
form of
- Post Retirement Medical Benefits (PRMB) as per its policy
- Compensated Absences (Plant Technicians) as per its policy
Liability for the above defined benefit plans is provided on the basis
of valuation, as at the Balance Sheet date, carried out by independent
actuary. The actuarial method used for measuring the liability is the
Projected Unit Credit method.
(ii) Liability for Compensated Absences and Leave Travel Allowance
which are in the nature of short term benefits is provided for as per
company rules on an accrual basis.
(iii) Termination benefits and long service awards in terms of Company
policy are recognized as an expense as and when incurred.
(iv) The Actuarial gains and losses arising during the year are
recognized in Statement of Profit and Loss for the year.
(v) The Procter and Gamble Company, USA has an "International Stock
Ownership Plan (ISOP)" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Ultimate Holding Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee's contribution (restricted to 2.5% of his
base salary) and charged to Employee Benefits Expense.
(vi) The Procter & Gamble Company, USA has an "Employee Stock Option
Plan (ESOP)" whereby specified employees covered by the plan are
granted an option to purchase shares of the Ultimate Holding Company
i.e. The Procter & Gamble Company, USA at a fixed price (grant price)
for a fixed period of time. The difference between the market price and
grant price on the exercise of the stock options issued by the Ultimate
Holding Company to the employees of the Company is charged in the year
of exercise by the employees. Such costs are charged under Employee
Benefits Expense.
2.09 Research and Development
Capital expenditure on Research and Development is capitalized as Fixed
Assets. All revenue expenditure on Research and Development is charged
off to the respective heads in Statement of Profit and Loss in the year
in which it is incurred.
2.10 Taxes on Income
Income-tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the Income-tax laws) and deferred
tax charge or credit (reflecting the tax effect of timing differences
between accounting income and taxable income for the year). Provision
for taxation for the Company's financial year ended on June 30 is based
on the results of the period July 1 to March 31 (later part of the
fiscal year ended March 31) and for the balance for the period April 1
to June 30 (beginning of the next fiscal year) as per the provisions of
Income Tax Act, 1961 and other applicable tax laws. The deferred tax
charge or credit and the corresponding deferred tax liabilities and /
or assets are recognised using the applicable tax rates that have been
enacted or substantively enacted by the Balance Sheet date. Deferred
tax assets are recognized only to the extent there is reasonable
certainty that the assets can be realised in future.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation, carry forward of losses
and items relating to capital losses are recognised only if there is
virtual certainty supporting to convincing evidence that there will be
sufficient future taxable income available to realise such assets.
Deferred tax assets are recognised for timing differences of other
items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
readability.
2.11 Borrowing cost
Borrowing costs directly attributable to acquisition or construction of
qualifying assets (i.e. those fixed assets which necessarily take a
substantial period of time to get ready for their intended use) are
capitalised. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
2.12 Leases
Assets taken on lease under which all risks and rewards of ownership
are effectively retained by the lessor are classified as operating
lease. Lease payments under operating leases are recognised in the
Statement of Profit and Loss on a straight line basis over the lease
term.
2.13 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions are determined based on the
best estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates. Contingent liabilities are
disclosed in the Notes. Contingent liabilities are disclosed for (1)
possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
assets are not recognised in the financial statements as this may
result in the recognition of income that may never be there.
2.14 Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for each period
presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits / reverse share splits and bonus
shares, as appropriate,
2.15 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that the amount recoverable
can be measured reliably and it is reasonable to expect ultimate
collection.
2.16 Claims
The claims against the Company not acknowledged as debt are disclosed
after careful evaluation of the facts and legal aspects of the matter
involved.
Jun 30, 2014
01. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies Act, 1956 ("the 1956 Act") (which continue to be
applicable in respect of Section 133 of the Companies Act, 2013 ("the
2013 Act") in terms of General Circular 15/2013 dated September 13,
2013 of the Ministry of Corporate Affairs) and the relevant provisions
of the 1956 Act / 2013 Act, as applicable. The financial statements
have been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the preparation of the
financial statements are consistent with those followed in the previous
year.
02.Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
03.Revenue Recognition
Sale of products is recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
dispatch of goods. Sales exclude trade discounts and rebate. Sales
include excise duty but exclude sales tax and value added tax.
License fee is accounted based on terms of the contract. Interest
income is accounted on accrual basis.
04.Tangible fixed assets and depreciation & amortization
Fixed assets are stated at cost of acquisition less accumulated
depreciation / amortisation and impairment losses, if any. The cost of
fixed assets comprises its purchase price net of any trade discounts
and rebates, any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready for its intended
use, other incidental expenses and interest on borrowings attributable
to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Subsequent expenditure relating to fixed
assets is capitalised only if such expenditure results in an increase
in the future benefits from such asset beyond its previously assessed
standard of performance.
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses.
Depreciation is charged using straight-line method based on the useful
lives of the fixed assets as estimated by the management as specified
below, or the rates specified in accordance with the provisions of
Schedule XIV of the Companies Act, 1956, whichever is higher.
Years
Leasehold land Over the remaining period of
the lease/or management estimate
Whichever is lower
Buildings 19 - 21
Plant, Machinery and Equipment 3 - 15
Furniture and Fixtures 3 - 15
Office equipment 3 - 6
Moulds and Dies 3 - 6
Vehicles including Forklifts 8 - 14
Depreciation is charged on a pro-rata basis for assets purchased / sold
during the year. Individual fixed assets costing less than Rs. 5 000
are depreciated in full, in the year of purchase. Accelerated
depreciation is charged on certain assets based on periodic review of
useful life.
05 Impairment of Assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of
impairment exists, the recoverable amount of such assets is estimated
and impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
06 Inventories
Inventories consist of raw and packing materials, stores and spares,
work in progress and finished goods. Inventories are valued at lower
of cost and net realisable value after providing for obsolescence and
other losses where considered necessary. Cost of Inventories is
determined on weighted average basis. Cost of manufactured finished
goods and work-in-progress includes material cost determined on
weighted average basis and also includes an appropriate portion of
allocable overheads.
07 Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction or at rates that closely
approximate the rate at the date of the transaction. Monetary items in
foreign currencies are stated at the closing exchange rates. In the
case of monetary items covered by forward exchange contracts, the
premium or discount arising at the inception of such a forward exchange
contract is amortised as expense or income over the life of the
contract and the difference between the year end rate and rate on the
date of the contract is recognised as exchange difference in the
Statement of Profit and Loss. Gains / Losses on conversion /
translation have been recognised in the Statement of Profit and Loss.
08 Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment
benefits, charged to Statement of Profit and Loss, in the form of
* Provident Fund administered by the Regional Provident Fund
Commissioner;
* Superannuation Fund as per Company policy administered by Company
managed trust and
* State Defined Contribution Plans : Employer''s Contribution to
Employees'' State Insurance.
(b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment
benefits in the form of
* Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the
form of
* Post Retirement Medical Benefits (PRMB) as per its policy.
* Compensated Absences (Plant Technicians) as per its policy
Liability for the above defined benefit plans is provided on the basis
of valuation, as at the Balance Sheet date, carried out by independent
actuary. The actuarial method used for measuring the liability is the
Projected Unit Credit method.
(ii) Liability for Compensated Absences and Leave Travel Allowance
which are in the nature of short term benefits is provided for as per
company rules on an accrual basis.
(iii) Termination benefits and long service awards in terms of Company
policy are recognized as an expense as and when incurred.
(iv) The Actuarial gains and losses arising during the year are
recognized in Statement of Profit and Loss for the year.
(v) The Procter and Gamble Company, USA has an "International Stock
Ownership Plan (ISOP)" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Ultimate Holding Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee''s contribution (restricted to 2.5% of his
base salary) and charged to Employee Benefit Expenses.
(vi) The Procter & Gamble Company, USA has an "Employee Stock Option
Plan (ESOP)" whereby specified employees covered by the plan are
granted an option to purchase shares of the Ultimate Holding
Companyi.e. The Procter & Gamble Company, USA at a fixed price (grant
price) for a fixed period of time. The difference between the market
price and grant price on the exercise of the stock options issued by
the Ultimate Holding Company to the employees of the Company is charged
in the year of exercise by the employees. Such costs are charged under
Employee Benefit Expenses.
09 Research and Development
Capital expenditure on Research and Development is capitalized as Fixed
Assets. All revenue expenditure on Research and Development is charged
off to the respective heads in Statement of Profit and Loss in the year
in which it is incurred.
10 Taxes on Income
Income-tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the Income - tax laws) and deferred
tax charge or credit (reflecting the tax effect of timing differences
between accounting income and taxable income for the year). Provision
for taxation for the Company''s financial year ended on June 30 is based
on the results of the period July 1 to March 31 (later part of the
fiscal year ended March 31) and for the balance and for the period
April 1 to June 30 (beginning of the next fiscal year) as per the
provisions of Income Tax Act, 1961. The deferred tax charge or credit
and the corresponding deferred tax liabilities and / or assets are
recognised using the tax rates that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realised in future.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
readability.
11 Borrowing cost
Borrowing costs directly attributable to acquisition or construction of
qualifying assets (i.e. those fixed assets which necessarily take a
substantial period of time to get ready for their intended use) are
capitalised. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
12 Leases
Assets taken on lease under which all risks and rewards of ownership
are effectively retained by the lessor are classified as operating
lease. Lease payments under operating leases are recognised in the
Statement of Profit and Loss on a straight line basis in accordance
with the respective lease agreements.
13 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions are determined based on the
best estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates. Contingent liabilities are
disclosed in the Notes. Contingent liabilities are disclosed for (1)
possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
assets are not recognised in the financial statements as this may
result in the recognition of income that may never be there.
14 Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for each period
presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits / reverse share splits and bonus
shares, as appropriate.
15 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that the amount recoverable
can be measured reliably and it is reasonable to expect ultimate
collection.
Jun 30, 2013
1.01 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
1.02 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
1.03 Revenue Recognition
Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
dispatch of goods. Sales excludes trade discounts and rebate. Sales
include excise duty but exclude sales tax and value added tax. License
fee is accounted based on terms of the contract. Interest income is
accounted on accrual basis.
1.04 Tangible fixed assets and depreciation / amortisation
Fixed assets are stated at cost of acquisition less accumulated
depreciation / amortisation and impairment losses, if any. The cost of
fixed assets comprises its purchase price net of any trade discounts
and rebates, any import duties and other taxes (other than those
subsequently recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready for its intended
use, other incidental expenses and interest on borrowings attributable
to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use. Subsequent expenditure relating to fixed
assets is capitalised only if such expenditure results in an increase
in the future benefits from such asset beyond its previously assessed
standard of performance.
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses.
Depreciation is charged using straight-line method based on the useful
lives of the fixed assets as estimated by the management as specified
below, or the rates specified in accordance with the provisions of
Schedule XIV of the Companies Act, 1956, whichever is higher.
Years Leasehold land Over the remaining period of the lease/or
management estimate whichever
is lower Buildings 20 - 30
Plant, Machinery and Equipment 5-18
Furniture and Fixtures 10-15
Office equipment 1 - 5
Moulds and Dies 1 - 3
Vehicles - Forklifts 4 - 8
Depreciation is charged on a pro-rata basis for assets purchased / sold
during the year. Individual fixed assets costing less than Rs. 5 000 are
depreciated in full, in the year of purchase. Accelerated depreciation
is charged on certain assets based on periodic review of useful life.
1.05 Impairment of Assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on and appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
1.06 Inventories
Inventories consist of raw and packing materials, stores and spares,
work in progress and finished goods. Inventories are valued at lower of
cost and net realisable value after providing for obsolescence and
other losses where considered necessary. Cost of Inventories is
determined on weighted average basis. Cost of manufactured finished
goods and work- in-progress includes material cost determined on
weighted average basis and also includes an appropriate portion of
allocable overheads.
1.07 Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction or at rates that closely
approximate the rate at the date of the transaction. Monetary items in
foreign currencies are stated at the closing exchange rates. In the
case of monetary items covered by forward exchange contracts, the
premium or discount arising at the inception of such a forward exchange
contract is amortised as expense or income over the life of the
contract and the difference between the year end rate and rate on the
date of the contract is recognised as exchange difference in the
Statement of Profit and Loss. Gains / Losses on conversion /
translation have been recognised in the Statement of Profit and Loss.
1.08 Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment
benefits, charged to Statement of Profit and Loss, in the form of
- Provident Fund administered by the Regional Provident Fund
Commissioner;
- Superannuation Fund as per Company policy administered by Company
managed trust and
- State Defined Contribution Plans : Employer''s Contribution to
Employees'' State Insurance.
(b) Defined Benefit Plans:
Funded Plan : The Company has Defined Benefit Plan for post employment
benefits in the form of
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the
form of
- Post Retirement Medical Benefits (PRMB) as per its policy.
Liability for the above defined benefit plans is provided on the basis
of valuation, as at the Balance Sheet date, carried out by independent
actuary. The actuarial method used for measuring the liability is the
Projected Unit Credit method.
(ii) Liability for Compensated Absences and Leave Travel
Allowance""which are in the nature of short term benefits is provided
for as per company rules on an accrual basis.
(iii) Termination benefits and long service awards in terms of Company
policy are recognized as an expense as and when incurred.
(iv) The Actuarial gains and losses arising during the year are
recognized in Statement of Profit and Loss for the year.
(v) The Procter and Gamble Company, USA has an "International Stock
Ownership Plan (ISOP)" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Ultimate Holding Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee''s contribution (restricted to 2.5% of his
base salary) and charged to Employee Benefit Expenses.
(vi) The Procter & Gamble Company, USA has an "Employee Stock Option
Plan (ESOP)" whereby specified employees covered by the plan are
granted an option to purchase shares of the ultimate holding company
i.e. The Procter & Gamble Company, USA at a fixed price (grant price)
for a fixed period of time. The difference between the market price and
grant price on the exercise of the stock options issued by the Ultimate
Holding Company to the employees of the Company is charged in the year
of exercise by the employees. Such costs are charged under Employee
Benefit Expenses.
1.09 Research and Development
Capital expenditure on Research and Development is capitalized as Fixed
Assets. All revenue expenditure on Research and Development is charged
off to the respective heads in Statement of Profit and Loss in the year
in which it is incurred.
1.10 Taxes on Income
Income-tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the Income - tax laws) and deferred
tax charge or credit (reflecting the tax effect of timing differences
between accounting income and taxable income for the year). Provision
for taxation for the Company''s financial year ended on June 30, 2013 is
based on the results of the 9 months ended March 31, 2013 (Assessment
year 2013-14) and for the 3 months ended June 30, 2013 (Assessment year
2014-15) as per the provisions of Income Tax Act, 1961. The deferred
tax charge or credit and the corresponding deferred tax liabilities and
/ or assets are recognised using the tax rates that have been enacted
or substantively enacted by the Balance Sheet date. Deferred tax assets
are recognized only to the extent there is reasonable certainty that
the assets can be realised in future.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if
such items relate to taxes on income levied by the same governing tax
laws and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability.
1.11 Borrowing cost
Borrowing costs directly attributable to acquisition or construction of
qualifying assets (i.e. those fixed assets which necessarily take a
substantial period of time to get ready for their intended use) are
capitalised. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
1.12 Leases
Assets taken on lease under which all risks and rewards of ownership
are effectively retained by the lessor are classified as operating
lease. Lease payments under operating leases are recognised in the
Statement of Profit and Loss on a straight line basis in accordance
with the respective lease agreements.
1.13 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions are determined based on the
best estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates. Contingent liabilities are
disclosed in the Notes. Contingent liabilities are disclosed for (1)
possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
assets are not recognised in the financial statements as this may
result in the recognition of income that may never be there.
1.14 Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
1.15 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
Jun 30, 2012
1.01 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
1.02 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
1.03 Revenue Recognition
Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
dispatch of goods. Sales excludes trade discounts and rebate. Sales
include excise duty but exclude sales tax and value added tax. License
fee is accounted based on terms of the contract. Interest income is
accounted on accrual basis.
1.04 Tangible fixed assets and depreciation / amortization
Fixed assets are stated at cost of acquisition less accumulated
depreciation and impairment losses, if any. Cost of fixed assets is
inclusive of freight, duties, taxes and other directly attributable
costs incurred to bring the assets to their working condition for
intended use.
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest in respect
of qualifying assets.
Depreciation is charged using straight-line method based on the useful
lives of the fixed assets as estimated by the management as specified
below, or the rates specified in accordance with the provisions of
Schedule XIV of the Companies Act, 1956, whichever is higher.
Depreciation is charged on a pro-rata basis for assets purchased / sold
during the year. Individual fixed assets costing less than Rs.5 000 are
depreciated in full, in the year of purchase. Accelerated depreciation
is charged on certain assets based on periodic review of useful life.
1.05 Impairment of Assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
1.06 Inventories
Inventories consist of raw and packing materials, stores and spares,
work in progress and finished goods. Inventories are valued at lower of
cost and net realisable value after providing for obsolescence and
other losses where considered necessary. Cost of Inventories is
determined on weighted average basis. Cost of manufactured finished
goods and work-in-progress includes material cost determined on
weighted average basis and also includes an appropriate portion of
allocable overheads.
1.07 Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction or at rates that closely
approximate the rate at the date of the transaction. Monetary items in
foreign currencies are stated at the closing exchange rates. In the
case of monetary items covered by forward exchange contracts, the
premium or discount arising at the inception of such a forward exchange
contract is amortised as expense or income over the life of the
contract and the difference between the year end rate and rate on the
date of the contract is recognised as exchange difference in the
Statement of Profit and Loss. Gains / Losses on conversion /
translation have been recognised in the Statement of Profit and Loss.
1.08 Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment
benefits, charged to Statement of Profit and Loss, in the form of:
- Provident Fund administered by the Regional Provident Fund
Commissioner;
- Superannuation Fund as per Company policy administered by Company
managed trust and
- State Defined Contribution Plans : Employer's Contribution to
Employees' State Insurance.
(b) Defined Benefit Plans:
Funded Plan : The Company has Defined Benefit Plan for post employment
benefits in the form of:
- Gratuity for all employees administered through trust.
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the
form of:
- Post Retirement Medical Benefits (PRMB) as per its policy.
Liability for the above defined benefit plans is provided on the basis
of valuation, as at the Balance Sheet date, carried out by independent
actuary. The actuarial method used for measuring the liability is the
Projected Unit Credit method.
(ii) Liability for Compensated Absences and Leave Travel Allowance
which are in the nature of short term benefits is provided for as per
company rules on an accrual basis.
(iii) Termination benefits and long service awards in terms of Company
policy are recognized as an expense as and when incurred.
(iv) The Actuarial gains and losses arising during the year are
recognized in Statement of Profit and Loss for the year.
(v) The Procter and Gamble Company, USA has an "International Stock
Ownership Plan (ISOP)" (employee share purchase plan) whereby
specified employees of its subsidiaries have been given a right to
purchase shares of the Parent Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee's contribution (restricted to 2.5% of his
base salary).
(vi) The Procter & Gamble Company, USA has a "Employee Stock Option
Plan (ESOP)" whereby specified employees covered by the plan are
granted an option to purchase shares of the ultimate holding company
i.e. Ã The Procter & Gamble Company, USA at a fixed price (grant
price) for a fixed period of time. The difference between the market
price and grant price on the exercise of the stock options issued by
the Ultimate Holding Company to the employees of the Company is charged
in the year of exercise by the employees.
1.09 Research and Development
Capital expenditure on Research and Development is capitalized as Fixed
Assets. All revenue expenditure on Research and Development is charged
off to the respective heads in Statement of Profit and Loss in the year
in which it is incurred.
1.10 Taxes on Income
Income-tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the Income à tax laws) and
deferred tax charge or credit (reflecting the tax effect of timing
differences between accounting income and taxable income for the year).
Provision for taxation for the Company's financial year ended on June
30, 2012 is based on the results of the 9 months ended March 31, 2012
(Assessment year 2012-13) and for the 3 months ended June 30, 2012
(Assessment year 2013-14) as per the provisions of Income Tax Act,
1961. The deferred tax charge or credit and the corresponding deferred
tax liabilities and /or assets are recognised using the tax rates that
have been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realised in future.
However, where there is unabsorbed depreciation or carry forward losses
under taxation laws, deferred tax assets are recognized only if there
is virtual certainty of realisation of such assets. Deferred tax assets
are reviewed as at each Balance Sheet date and are written down or
written up to reflect the amount that is reasonably / virtually certain
(as the case may be) to be realised.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability.
1.11 Borrowing cost
Borrowing costs directly attributable to acquisition or construction of
qualifying assets (i.e. those fixed assets which necessarily take a
substantial period of time to get ready for their intended use) are
capitalised. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
1.12 Leases
Assets taken on lease under which all risks and rewards of ownership
are effectively retained by the lessor are classified as operating
lease. Lease payments under operating leases are recognised in the
Statement of Profit and Loss on a straight line basis in accordance
with the respective lease agreements.
1.13 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions are determined based on the
best estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates. Contingent liabilities are
disclosed in the Notes. Contingent liabilities are disclosed for (1)
possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (2) present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of the obligation cannot be made. Contingent
assets are not recognised in the financial statements as this may
result in the recognition of income that may never be there.
1.14 Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits /reverse share splits and bonus shares, as
appropriate.
1.15 Insurance claims
Insurance claims are accounted for on the basis of claims admitted
/expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
Jun 30, 2010
Accounting Convention
The financial statements are prepared under the historical cost
convention, on an accrual basis, in accordance with the Generally
Accepted Accounting Principles and applicable accounting standards as
notified under the Companies (Accounting Standards) Rules 2006.
Use of estimates
The preparation and presentation of financial statements in conformity
with Generally Accepted Accounting Principles requires making of
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting year. Differences between
the actual result and estimates are recognised in the year in which the
results are known/materialised.
Revenue Recognition
Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
despatch of goods. Sales are exclusive of sales tax. Licence fee is
accounted based on terms of the contract. Interest income is recognized
on time proportion basis.
Fixed Assets and Depreciation/Amortization
Fixed assets are stated at cost of acquisition less accumulated
depreciation and impairment, if any. Cost is inclusive of freight,
duties, taxes and other directly attributable costs incurred to bring
the assets to their working condition for intended use. Depreciation is
charged using straight-line method based on the useful lives of the
fixed assets as estimated by the management as specified below, or the
rates specified in accordance with the provisions of Schedule XIV of
the Companies Act, 1956, whichever is higher.
Years
Buildings 20 - 30
Plant and machinery 5 - 18
Furniture and Fixtures 10 - 15
Office equipment 1 - 5
Moulds and Dies 1 - 3
Vehicles 4 - 8
Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year. Individual fixed assets costing less than Rs.5000 are
depreciated in full, in the year of purchase. Cost of leasehold land is
amortised over the period of the lease or management estimate whichever
is lower.
Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction in the carrying amount is treated as an
impairment loss and is recognised in the Profit and Loss Account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
Inventories
Inventories consist of raw and packing materials, stores and spares,
work in progress and finished goods. Inventories are valued at lower of
cost and net realisable value. Cost of Inventories is determined on
weighted average basis.
Employee benefits
(i) Post-employment Benefits
(a) Defined Contribution Plans:
The Company has Defined Contribution Plans for post employment
benefits, charged to Profit and Loss account, in the form of
- Provident Fund administered by the Regional Provident Fund
Commissioner (upto December 31, 2007 and from April 1, 2009)
- Superannuation Fund as per Company policy administered by Company
managed trust and
- State Defined Contribution Plans: Employers Contribution to
Employees State Insurance.
(b) Defined Benefit Plans:
Funded Plan: The Company has Defined Benefit Plan for post employment
benefits in the form of
- Gratuity for all employees administered through trust.
- Provident Fund administered by Companys own trust (w.e.f. January 1,
2008 and till March 31, 2009).
Unfunded Plan: The Company has unfunded Defined Benefit Plans in the
form of
- Post Retirement Medical Benefits (PRMB) as per its policy.
- Liability for the above defined benefit plans is provided on the
basis of valuation, as at the Balance Sheet date, carried out by
independent actuary. The actuarial method used for measuring the
liability is the Projected Unit Credit method.
(ii) Liability for Compensated Absences and Leave Travel Allowance
which are in the nature of short term benefits is provided for as per
company rules on an accrual basis (iii) Termination benefits and long
service awards in terms of Company policy are recognized as an expense
as and when incurred (iv) The Actuarial gains and losses arising during
the year are recognized in the Profit and Loss Account for the year.
Research and Development
Capital expenditure on Research and Development is capitalized as Fixed
Assets. All revenue expenditure on Research and Development is charged
off to the respective heads in the Profit and Loss account in the year
in which it is incurred.
Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of transaction. Monetary items denominated in
foreign currencies are stated at the closing exchange rate. In the case
of Monetary items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract
is amortised as expense or income over the life of the contract and the
difference between the year end rate and rate on the date of the
contract is recognised as exchange difference in the Profit and Loss
Account. Gains/Losses on conversion/ translation have been recognised
in the Profit and Loss Account.
Taxation
Income-tax expense comprises current tax, fringe benefit tax (i.e.
amount of tax for the year determined in accordance with the income-tax
laws) and deferred tax charge or credit (reflecting the tax effect of
timing differences between accounting income and taxable income for the
year). Provision for taxation for the Companys financial year ended on
June 30, 2010 is based on the results of the 9 months ended March 31,
2010 (Assessment year 2010-11) and for the 3 months ended June 30, 2010
(Assessment year 2011-12). The ultimate liability for the Assessment
year 2010-11 is determined on the total income of the Company for the
year ending on March 31, 2010. The deferred tax charge or credit and
the corresponding deferred tax liabilities and/or assets are recognised
using the tax rates that have been enacted or substantively enacted by
the Balance Sheet date. Deferred tax assets are recognized only to the
extent there is reasonable certainty that the assets can be realised in
future. However, where there is unabsorbed depreciation or carry
forward losses under taxation laws, deferred tax assets are recognized
only if there is virtual certainty of realisation of such assets.
Deferred tax assets are reviewed as at each Balance Sheet date and are
written down or written up to reflect the amount that is
reasonably/virtually certain (as the case may be) to be realised.
The Fringe Benefit Tax has been calculated and accounted for in
accordance with the provisions of the Income tax Act, 1961 and the
guidance note on Accounting for Fringe Benefits Tax issued by the
Institute of Chartered Accountants of India. Pursuant to enactment of
Finance Act, 2009, Fringe Benefit tax stands abolished w.e.f. April 01,
2009.
Borrowing cost
Borrowing costs directly attributable to acquisition or construction of
qualifying assets (i.e. those fixed assets which necessarily take a
substantial period of time to get ready for their intended use) are
capitalised. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
Leases
Lease payments under operating lease are recognised as an expense in
the Profit and Loss Account on a straight line basis over the lease
term with the lessor.
Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a legal and constructive
obligation as a result of a past event, for which it is probable that a
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. Contingent Liabilities are disclosed when
the Company has a possible obligation or a present obligation and it is
probable that a cash outflow will not be required to settle the
obligation.
Contingent Assets are not recognized in financial statements as they
may never be realized.