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Notes to Accounts of Procter & Gamble Hygiene & Healthcare Ltd.

Jun 30, 2015

1. (a) Contingent Liabilities :

(i) In respect of Income Tax demands for which the company has preferred appeals with appropriate authorities - Rs. 6 820 Lakhs (Previous year : Rs. 5 014 Lakhs). The liability is mainly on account of various disallowances by the Income Tax authorities on which assessee has preferred an appeal. These are on account of various grounds - primarily on account of advertisement expenses, tax holiday, etc.

(ii) In respect of Sales Tax matters for which the company has preferred appeals with appropriate authorities - Rs. 3 206 Lakhs (Previous year: Rs. 2 991 Lakhs). The liability is in respect to matters related to non-submission of "C" Forms / "F" Forms Rs. 2 074 Lakhs (Previous year: Rs. 2 022 Lakhs), Incomplete accounts books Rs. 227 Lakhs (Previous year : Rs. 227 Lakhs), Classification issues Rs. 58 Lakhs (Previous year : Rs. 59 Lakhs), Product valuation issues Rs. 527 Lakhs (Previous year: Rs. 527 Lakhs), and other miscellaneous issues Rs. 320 Lakhs (Previous year: Rs. 156 Lakhs).

(iii) In respect of Excise and Service Tax matters for which the company has preferred appeals with appropriate authorities Rs. 1 332 Lakhs (Previous year : Rs. 1 332 Lakhs). The liability is in respect to: classification matters Rs. 9 Lakhs (Previous year: Rs. 9 Lakhs), valuation matters Rs. 95 Lakhs (Previous year: Rs. 95 Lakhs) and applicability of service tax matters Rs. 1 226 Lakhs (Previous year : Rs. 1 226 Lakhs) and others Rs. 2 Lakhs (Previous year : Rs. 2 Lakhs).

(iv) In respect of counter guarantees given to banks against guarantees given by banks : Rs. 9 108 Lakhs (Previous year: Rs. 3 365 Lakhs). At the request of the Company, its bankers have issued guarantees to third parties for performance obligation under various commercial agreements. The Company has issued counter guarantees to the banks in respect of these guarantees.

(v) In respect of other claims - Rs. 46 Lakhs (Previous Year : Rs. 41 Lakhs). The Company is a party to various legal proceedings in the normal course of business.

Future cash flow in respect of the above, if any, is determinable only on receipt of judgments / decisions pending with the relevant authorities. The Company does not expect the outcome of matters stated above to have a material adverse effect on the Company's financial condition, results of operations or cash flows.

(b) Commitments :

Estimated amount of contracts remaining to be executed on capital account (net of advances) - Rs. 65 Lakhs (Previous year : Rs. 188 Lakhs).

2. Employee Benefits

The Company has classified the various benefits provided to employees as under :

I. Defined Contribution Plans

a. Provident Fund

b. Superannuation Fund

c. State Defined Contribution Plans: Employer's Contribution to Employees' State Insurance

II. Defined Benefit Plans

a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act, 1972 or Company's scheme whichever is more beneficial. Benefits would be paid at the time of separation based on the) last drawn base salary.

b. Post Retirement Medical Benefits (PRMB) (Unfunded Scheme): Under this 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.

c. Compensated Absences (Unfunded Scheme): The Company provides for leave encashment on termination / retirement of service or leave with pay subject to rules. The employees are entitled to accumulate leave subject to limits for future encashment / availment. The Company makes provision for Compensated Absences based on an actuarial valuation carried out at the end of the year.

The disclosures as required under AS-15 are as under.

3. (a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)

The Procter and Gamble Company, USA has an "International Stock Ownership Plan" (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). Such contribution is charged to staff cost.

The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2015, Rs. 3 267.28 (Previous year: Rs. 3 147.78) shares were purchased by employees at weighted average fair value of Rs. 5 239.36 (Previous year Rs. 4 904.91) per share.

The Company's contribution during the year on such purchase of shares amounting to Rs. 51 Lakhs (Previous year Rs. 41 Lakhs) has been charged under Employee Benefits Expense (Refer Note 22).

(b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)

The Procter and Gamble Company, USA has an "Employee Stock Option Plan" whereby specified employees of its subsidiaries 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 shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.

4. The Company has taken on lease guesthouses for accommodation of employees with an option of renewal at the end of the lease term and escalation clause in some of the cases. Leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements with the lessor. Lease payments amounting to Rs. 805 Lakhs (Previous Year : Rs. 448 Lakhs) have been charged to the Statement of Profit and Loss for the year.

5. (a) Reimbursement/(Recovery) of expenses cross charged to related parties include payments/recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter and Gamble Home Products Private Limited and Gillette India Limited (Refer Note 36).

(b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.

6. Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs. 955 Lakhs (Previous Year: Rs. 532 Lakhs) cross charged to Gillette India Limited and Procter and Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 35).

Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs. 159 Lakhs (Previous Year: Rs. 20 Lakhs) cross charged from Gillette India Limited and Procter and Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 35).


Jun 30, 2014

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.

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.

In 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.

Tangible fixed assets

Notes:

1. Figures in brackets pertains to previous year.

2. Opening accumulated depreciation includes impairment on Land-Leasehold Rs. 91 Lakhs; on Buildings Rs. 7 50 Lakhs; on Plant and Machinery Rs. 2 05 Lakhs and on Office Equipment Rs. 0.30 Lakhs in 2002-03.

3. Land - Freehold includes Rs. 6 67 Lakhs (Previous year Rs. 6 67 Lakhs) being the company''s share (90%) of assets jointly owned with other parties.

Contingent Liabilities :

(i) I n respect of Income Tax demands for which the company has preferred appeals with appropriate authorities- Rs. 5 014 Lakhs (Previous year : Rs. 2 836 Lakhs). The liability is mainly on account of various disallowances by the Income Tax authorities on which assessee has preferred an appeal. These are on account of various grounds - primarily on account of advertisement expenses, tax holiday, etc.

(ii) I n respect of Sales Tax matters for which the company has preferred appeals with appropriate authorities - Rs. 2 991 Lakhs (Previous year : Rs. 1 910 Lakhs). The liability is in respect to matters related to non-submission of ''''C" Forms / "F" Forms Rs. 2 022 Lakhs (Previous year : Rs. 1 023 Lakhs), Incomplete accounts books Rs. 227 Lakhs (Previous year : Rs. 227 Lakhs), Classification issues Rs. 59 Lakhs (Previous year : Rs. 59 Lakhs), Product valuation issues Rs. 527 Lakhs (Previous year : Rs.516 Lakhs), and other miscellaneous issues Rs. 156 Lakhs (Previous year : Rs. 85 Lakhs).

(iii) I n respect of Excise and Service Tax matters for which the company has preferred appeals with appropriate authorities Rs. 1 332 Lakhs (Previous year : Rs. 1 262 Lakhs). The liability is in respect to: classification matters Rs. 9 Lakhs (Previous year : Rs. 9 Lakhs), valuation matters Rs. 95 Lakhs (Previous year : Rs. 95 Lakhs) and applicability of service tax matters Rs. 1 226 Lakhs (Previous year : Rs. 1 156 Lakhs) and others Rs. 2 Lakhs (Previous year : Rs. 2 Lakhs).

(iv) I n respect of counter guarantees given to bank against guarantees given by bank : Rs. 3 365 Lakhs (Previous year : Rs. 3 371 Lakhs). At the request of the Company, its bankers have issued guarantees to third parties for performance obligation under various commercial agreements. The Company has issued counter guarantees to the banks in respect of these guarantees.

(v) I n respect of other claims - Rs. 41 Lakhs (Previous year : Rs. 41 Lakhs). The Company is a party to various legal proceedings in the normal course of business.

Future cash flow in respect of the above, if any, is determinable only on receipt of judgments / decisions pendingwith the relevant authorities. The Company does not expect the outcome of matters stated above to have amaterial adverse effect on the Company''s financial condition, results of operations or cash flows.

Defined Benefit Plans

a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act, 1972 or Company''s scheme whichever is more beneficial. Benefits would be paid at the time of separation based on the last drawn base salary.

b. Post Retirement Medical Benefits (PRMB) (Unfunded Scheme): Under this 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.

c. Leave Benefits (LB) (Unfunded Scheme): The Company provides for leave enchasment on termination / retirement of service or leave with pay subject to rules. The employees are entitled to accumulate leave subject to limits for future encashment / availment. The Company makes provision for leave benefits based on an actuarial valuation carried out at the end of the year.

(a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)The Procter and Gamble Company, USA has an "International Stock Ownership Plan" (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). Such contribution is charged to staff cost.

The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2014,3 147.78 (Previous year: 3 166.10) shares were purchased by employees at weighted average fair value of Rs. 4 904.91 (Previous year Rs. 3 977.38) per share.

The Company''s contribution during the year on such purchase of shares amounting to Rs. 41 Lakhs (Previous year Rs. 50 Lakhs) has been charged under Employee Benefit Expenses.

(b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)The Procter and Gamble Company, USA has an "Employee Stock Option Plan" whereby specified employees of its subsidiaries 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 year of time. The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.

Stock compensation expense of Rs. 1 118 Lakhs (Previous years Rs. 1 377 Lakhs) has been charged under Employee Benefit Expenses.

Fair Value of shares at Grant date 13-Sep-13 $ 79.05

28-Feb-14 $ 78.66

14-Sep-12 $ 69.16

28-Feb-13 $ 76.18

The Company has taken on lease guesthouses for accommodation of employees with an option of renewal at the end of the lease term and escalation clause in some of the cases. Leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements with the lessor. Lease payments amounting to '' 293 Lakhs (Previous Year : Rs. 315 Lakhs) have been charged to the Statement of Profit and Loss for the year.

Common service expenses paid/recovered include payments/recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter and Gamble Home Products Limited and Gillette India Limited.

Employee Benefit Expenses include expenses in respect of Managerial personnel of Rs. 532 Lakhs (Previous Year : Rs. 574 Lakhs) cross charged to Gillette India Limited and Procter and Gamble Home Products Limited in terms of the common service agreement (Refer Note 35).

Employee Benefit Expenses include expenses in respect of Managerial personnel of Rs. 20 Lakhs (Previous Year : Rs. 13 Lakhs) cross charged from Gillette India Limited and Procter and Gamble Home Products Limited in terms of the common service agreement.


Jun 30, 2013

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 Kundaim - Goa and Baddi - Himachal Pradesh, apart from third party manufacturing locations spread across India.

2. (a) Contingent Liabilities :

(i) In respect of Income Tax demands for which the company has preferred appeals with appropriate authorities - Rs. 2 836 Lakhs (Previous year : Rs. 2 855 Lakhs). The liability is mainly on account of various disallowances by the Income Tax authorities on which assessee has preferred an appeal. These are on account of various grounds - primarily on account of advertisement expenses, tax holiday, etc.

(ii) In respect of Sales Tax matters for which the company has preferred appeals with appropriate authorities - Rs. 1 910 Lakhs (Previous year : Rs. 2 266 Lakhs). The liability is in respect to matters related to non-submission of "C" Forms / "F" Forms Rs. 1 023 Lakhs (Previous year : Rs. 1 403 Lakhs), Incomplete accounts books Rs. 227 Lakhs (Previous year : Rs. 181 Lakhs), Classification issues Rs. 59 Lakhs (Previous year : Rs. 59 Lakhs), Product valuation issues Rs. 516 Lakhs (Previous year : Rs. 538 Lakhs), and other miscellaneous issues Rs. 85 Lakhs (Previous year : Rs. 85 Lakhs).

(iii) In respect of Excise and Service Tax matters for which the company has preferred appeals with appropriate authorities Rs. 1 262 Lakhs (Previous year : Rs. 108 Lakhs). The liability is in respect to: classification matters Rs. 9 Lakhs (Previous year : Rs. 9 Lakhs), valuation matters Rs. 95 Lakhs (Previous year : Rs. 95 Lakhs) and applicability of service tax matters Rs. 1 156 Lakhs (Previous year : Rs. 2 Lakhs) and others Rs. 2 Lakhs (Previous year : Rs. 2 Lakhs).

(iv) In respect of counter guarantees given to bank against guarantees given by bank : Rs. 3 371 Lakhs (Previous year : Rs. 4 484 Lakhs) At the request of the Company, its bankers have issued guarantees to third parties for performance obligation under various commercial agreements. The Company has issued counter guarantees to the banks in respect of these guarantees.

(v) In respect of other claims - Rs. 41 Lakhs (Previous Year : Rs. 77 Lakhs). The Company is a party to various legal proceedings in the normal course of business.

(vi) Custom duty liability for probable non fulfillment of export obligation Rs. Nil (Previous year Rs. 448 Lakhs).

Future cash flow in respect of the above, if any, is determinable only on receipt of judgments / decisions pending with the relevant authorities. The Company does not expect the outcome of matters stated above to have a material adverse effect on the Company''s financial condition, results of operations or cash flows.

(b) Estimated amount of contracts remaining to be executed on capital account (net of advances) - Rs. 86 Lakhs (Previous year : Rs. 290 Lakhs).

3. Employee Benefits

The Company has classified the various benefits provided to employees as under : I. Defined Contribution Plans

a. Provident Fund

b. Superannuation Fund

c. State Defined Contribution Plans: Employer''s Contribution to Employees'' State Insurance

II. Defined Benefit Plans

a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act, 1972 or Company''s scheme whichever is more beneficial. Benefits would be paid at the time of separation based on the last drawn base salary.

b. Post Retirement Medical Benefits (PRMB) (Non-funded Scheme): Under this 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.

4. (a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)

The Procter and Gamble Company, USA has an "International Stock Ownership Plan" (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). Such contribution is charged to staff cost.

The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2013, 3 166.10 (Previous year: 4 517.96) shares were purchased by employees at weighted average fair value of f 3 977.38 (Previous year Rs. 3 208.38) per share.

The Company''s contribution during the year on such purchase of shares amounting to Rs. 50 Lakhs (Previous year Rs. 42 Lakhs) has been charged under Employee Benefit Expenses.

(b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)

The Procter and Gamble Company, USA has an "Employee Stock Option Plan" whereby specified employees of its subsidiaries 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 year of time. The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.

5. The Company has taken on lease guesthouses for accommodation of employees and godowns for storage of inventories, with an option of renewal at the end of the lease term and escalation clause in some of the cases. Leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements with the lessor. Lease payments amounting to Rs. 703 Lakhs (Previous Year : Rs. 445 Lakhs) have been charged to the Statement of Profit and Loss for the year.

6. Common service expenses paid/recovered include payments/recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter and Gamble Home Products Limited and Gillette India Limited.

7. Employee Benefit Expenses includes expenses in respect of Managerial personnel of Rs. 574 Lakhs (Previous Year : Rs. 420 Lakhs) cross charged to Gillette India Limited and Procter and Gamble Home Products Limited in terms of the common service agreement (Refer Note 35).

Employee Benefit Expenses includes expenses in respect of Managerial personnel of Rs. 13 Lakhs (Previous Year : Rs. 13 Lakhs) cross charged from Gillette India Limited in terms of the common service agreement (Refer Note 35).

8. Related Party Disclosures:

The Group Companies of The Procter & Gamble Company USA include, among others, Procter & Gamble India Procter & Gamble Luxembourg Global Procter & Gamble Canada Holding BV Holdings BV SARL

Procter & Gamble Iron Horse Procter & Gamble International SARL Procter & Gamble Overseas Canada, BV.

Holding BV

Procter & Gamble Eastern Europe Procter & Gamble India Holdings Inc. Procter & Gamble Overseas India BV LLC

Procter & Gamble Nordic LLC Procter & Gamble International Procter & Gamble Asia Holding BV.

Operations, SA

Procter & Gamble Global Holdings Gillette Group (Europe) Holdings, BV Rosemount BV. Limited

(a) Parties where control exists:

The Procter and Gamble Company, USA - Ultimate Holding Company Procter and Gamble Asia Holding BV - Holding Company

The Members of the Company at their 48th Annual General Meeting held on December 6, 2012 have approved the said re-appointment of Mr. Khosla as the Managing Director of the Company with effect from June 1, 2012 for a period of five years on such terms and conditions as the Board may consider appropriate, provided, that the terms of remuneration of Mr. Khosla shall not exceed the ceilings as set out in schedule XIII of the Companies Act, 1956 as amended from time to time and such other guidelines as may be issued hereafter in this behalf.

Further, the members at the said meeting also ratified the remuneration paid to Mr. Khosla in respect of the previous year subsequent to the date of his re-appointment on June 1, 2012 amounting to Rs. 33 Lakhs.

9. The Company operates in a single reportable business segment i.e. Manufacturing and Marketing of Health and Hygiene Products and one reportable Geographical segment i.e. within India.

10. Excise duty deducted from turnover represents amount of excise duty collected by the company on sale of goods. Excise duty shown under note 24 - Operating and other expenses represents difference in amount of excise duty on closing stock and opening stock of finished goods.

11. No borrowing costs were capitalised during the year.

12. Salaries and Wages includes Rs. 463 Lakhs (Previous year: Rs. Nil) towards expenditure on Voluntary Retirement Scheme.

13. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Jun 30, 2010

1. (a) Contingent Liabilities :

(i) In respect of Income Tax demands for which the Company has preferred appeals with appropriate authorities - Rs.37 25 30 147 (Previous year : Rs.25 80 42 721). The liability is mainly on account of various disallowances by the Income Tax authorities on which assessee has preferred an appeal. These are on account of various grounds - primarily on account of advertisement expenses, tax holiday, etc.

(ii) In respect of Sales tax matters for which the Company has preferred appeals with appropriate authorities - Rs.18 18 02 208 (Previous year : Rs.10 06 72 419). The liability is in respect to matters related to: non-submission of "C" Forms/"F" Forms Rs.6 37 05 567 (Previous year : Rs.1 25 577), Incomplete accounts books Rs. 1 79 53 096 (Previous year : Rs. 1 05 62 077), Classification issues Rs.56 89 172 (Previous year : Rs.76 07 120), Product valuation issues Rs.8 96 70 537 (Previous year : Rs.8 19 74 831), and other miscellaneous issues Rs.47 83 836 (Previous year : Rs.4 02 814).

(iii) In respect of Excise, Customs and Service Tax matters for which the Company has preferred appeals with appropriate authorities Rs.3 09 55 483 (Previous year : Rs.5 77 55 812). The liability is in respect to: classification matters Rs.8 74 000 (Previous year : Rs.23 50 490), valuation matters Rs.97 40 805 (Previous year : Rs.3 80 06 429), applicability of service tax on testing charges Rs. 1 64 678 (Previous year : Rs.1 64 678) and others Rs.2 34 215 (Previous year : Rs.2 34 215). Contingent liability for customs duty is towards the old advance licence matters which are under dispute.

(iv) In respect of counter guarantees given to bank against guarantees given by bank : Rs.20 80 05 094 (Previous year : Rs. 11 28 94 773). At the request of the Company, its bankers have issued guarantees to third parties for performance obligation under various commercial agreements. The Company has issued counter guarantees to the banks in respect of these guarantees.

(v) In respect of other claims - Rs.5 00 000 (Previous year : Rs.22 22 829). The Company is a party to various legal proceedings in the normal course of business. The Company does not expect the outcome of these proceedings to have a material adverse effect on the Companys financial conditions, results of operations or cash flows.

(vi) Custom duty liability for probable non fulfillment of export obligation Rs. 1 95 50 000 (Previous year : Nil).

(b) Estimated amount of contracts remaining to be executed on capital account (net of advances) - Rs.3 31 51 397 (Previous year : Rs.13 18 83 576).

2. The Company has classified the various benefits provided to employees as under:

I. Defined Contribution Plans

a. Provident Fund (Previous Year from April 01, 2009)

b. Superannuation Fund

c. State Defined Contribution Plans: Employers Contribution to Employees State Insurance

II. Denned Benefit Plans

a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act, 1972 or Companys scheme whichever is more beneficial. Benefits would be paid at the time of separation based on the last drawn base salary.

b. Provident Fund (Funded Scheme): With effect from January 1, 2008 till March 31, 2009 the Company had managed Provident Fund plan through Companys own Provident Fund trust alongwith one other group Company for its employees. The plan envisaged contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund authority. The contribution by employer and employee together with interest are payable at the time of separation from service or retirement whichever is earlier. The benefit under this plan vests immediately on rendering of service. The Entity had re-commenced contribution of Provident Fund dues with Regional Provident Fund Commissioner (RPFC) w.e.f. April 01, 2009.

c. Post Retirement Medical Benefit (PRMB) (Non-funded Scheme): Under this 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 disclosures as required under AS-15 are as under:

The contribution expected to be made by the Company during financial year ending June 30, 2011 has not been ascertained.

Note : The Companys Provident Fund was administered by Companys own trust fund till March 31, 2009. Accordingly, the disclosures relating to Provident Fund as required in accordance with AS-15, has been given for the previous period from July 1, 2008 to March 31, 2009. The entity has moved to the Provident Fund Contribution to Regional Provident Fund Office w.e.f. April 01,2009.

3. (a) Managerial Remuneration under Section 198 of the Companies Act, 1956

(b) The above Managerial Remuneration includes Rs.3 56 88 847 (Previous year : Rs.3 38 95 131) cross charged to Gillette India Limited and Procter and Gamble Home Products Limited in terms of the common service agreement referred to in Note B.17 below.

(c) The above Managerial Remuneration excludes Rs.27 52 204 (Previous year : Rs.26 00 528) cross charged from Gillette India Limited in terms of the common service agreement referred to in Note B. 17 below.

Notes :

1. The installed capacities as at the year-end are as certified by the management.

2. Actual production includes production under manufacturing arrangement with third parties.

4. Excise duty deducted from turnover represents amount of excise duty collected by the Company on sale of goods. Excise duty shown under Schedule 15 - Operating and other expenses represents difference in amount of excise duty on closing stock and opening stock of finished goods.

5. There are no outstanding derivative instruments as at June 30, 2010.

Foreign currency exposures that have not been hedged by the Company by a derivative instrument or otherwise are given below:

6. The Company has taken on lease guesthouses, accommodation for employees and godowns for storage of inventories, with an option of renewal at the end of the lease term and escalation clause in some of the cases. These leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements with the lessor. Lease payments amounting to Rs. 5 13 85 433 (Previous year : Rs. 3 88 58 655) have been charged to the Profit and Loss Account for the year. There are no "non cancellable" lease agreements.

7. Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006:

(a) No payments were due and outstanding to suppliers covered under the Micro Small and Medium Enterprises Development Act, 2006 as at the end of the current and previous accounting year on account of Principal and Interest respectively.

(b) No interest was paid in the current and the previous accounting year.

(c) No interest was payable at the end of the current and previous accounting year other than interest under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the current and previous accounting year.

The above information and that given in Schedule 10 "Current Liabilities" regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

(b) Loans and Advances includes

Car Loan to a Director amounting to ^ 15 33 049 (Previous year : ^17 80 001) which was approved by the Ministry of Corporate Affairs vide its letter no. 6/17/2007-CL.VI dated November 1, 2007. The maximum balance outstanding during the year amounted to Rs. 17 80 001 (Previous year : Rs.18 80 760).

8. Related Party Disclosures:

The Group Companies of The Procter & Gamble Company, USA include, among others, Procter & Gamble India Holdings BV; Procter & Gamble Iron Horse Holding BV; Procter & Gamble Eastern Europe LLC; Procter & Gamble Nordic LLC; Procter & Gamble Global Holdings Limited; Procter & Gamble Luxembourg Global SARL; Procter & Gamble International SARL; Procter & Gamble India Holdings Inc.; Procter & Gamble International Operations SA; Gillette Group (Europe) Holdings BV; Procter & Gamble Canada Holding BV; Procter & Gamble Overseas Canada BV; Procter & Gamble Overseas India BV; Procter & Gamble Asia Holding BV; Rosemount LLC.

(a) Parties where control exists :

The Procter and Gamble Company, USA - Ultimate Holding Company Procter and Gamble Asia Holding BV, The Netherlands - Holding Company

(b) Other related parties with whom transactions have taken place during the year

(i) Fellow Subsidiaries:

Procter & Gamble Home Products Ltd.

Procter & Gamble Malaysia Sdn. Bhd.

Procter & Gamble Manufacturing (Thailand) Ltd.

Procter & Gamble Lanka Pvt. Ltd.

Procter & Gamble (Changdu) Ltd.

Procter & Gamble Asia Pte. Ltd.

Procter & Gamble Australia Pty. Ltd.

Procter & Gamble US Business Services Company

Procter & Gamble International Operations Pte. Ltd.

Procter & Gamble Northeast Asia Pte. Ltd.

Procter & Gamble International Operations SA

Gillette India Ltd.

Procter & Gamble Singapore Pte. Ltd.

Gillette Diversified Operations Private Limited

Procter & Gamble Distributing (Philippines) Inc.

Procter & Gamble Panda Detergent Ltd., Beijing

Procter & Gamble Tuketim Mallari Sanayl

Procter & Gamble (Guangzhou) Ltd.

Procter & Gamble UK

Procter & Gamble Product Supply (UK) Ltd.

Procter & Gamble Technology (Beijing) Co.

Procter & Gamble Vietnam Ltd.

Procter & Gamble Asia Pte. Ltd. (MROH)

Procter & Gamble Kabushiki Kaisha

Procter & Gamble Far East. Inc.

Procter & Gamble Korea Inc.

Procter & Gamble S.A., Chile

P&G (East Africa) Ltd.

PT P&G Home Products, Indonesia

P&G Ceemea - A Division of P&G International Operations SA

Fameccanica Machinery (Shanghai) Co.

Procter & Gamble Korea S&D Co.

Procter & Gamble Philippines Inc.

Procter & Gamble Technical Centers Ltd.

Procter & Gamble Trading (Thailand) Ltd.

Procter & Gamble Bangladesh Pvt. Ltd.

Procter & Gamble Manufacturing Company

Procter & Gamble Europe N.V.

Wella India Hair Cosmetics Pvt. Ltd.

Procter & Gamble Eastern Europe LLC

Procter & Gamble (Manufacturing) Ireland Ltd.

The P&G Distributing LLC

Procter & Gamble Taiwan Ltd.

Rosemount LLC

Procter & Gamble Hair Care LLC

(ii) Key Managerial Personnel of the Company No. of shares held

Mr. Shantanu Khosla, Managing Director 67 (Previous year : 67)

All the employees of the Company including its managing directors are given the right to purchase shares of the ultimate holding Company - The Procter and Gamble Company, USA under its Employee Stock Option Plan.

Under the above plan Mr. Shantanu Khosla has been granted the right to purchase 100 shares (Previous year : NIL) during the year.

10. The Company operates in a single reportable business segment i.e. Manufacturing and Marketing of Health and Hygiene Products and one reportable Geographical segment i.e. within India.

11. (a) International Stock Ownership Plan (Stocks of the Parent Company)

The Procter and Gamble Company, USA has an "International Stock Ownership Plan" (employee share purchase plan) whereby all permanent employees of the Company have been given a right to purchase shares of the Company. Every employee who opts for the scheme contributes up to a specified percentage (upto 15%) of his base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employees contribution (restricted to 2.5% of his base salary). Such contribution is charged to staff cost.

The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase.

During the year ended June 30, 2010, 5558.35 shares (Previous year : 4154.25 shares) were purchased by employees at weighted average fair value of Rs.2 799 (Previous year : Rs.2 845) per share.

The Companys contribution during the year on such purchase of shares amounting to Rs.31 88 450 (Previous year : Rs.32 06 498) has been charged to the Profit and Loss Account.

(b) Employees Stock Options Plan (Stocks of the Parent Company)

The Procter and Gamble Company, USA has a "Employee Stock Option Plan" whereby the 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 shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The options Exercise price is equal to the market price of the underlying shares on the date of the grant. Accordingly no stock compensation expenses have been incurred by the Company during the year. The Grants issued are vested after 3 years and have a 10 years life cycle.

12. In terms of rules applicable to the employees whose services have been seconded to Procter & Gamble subsidiaries abroad, Rs.2 96 875 (Previous year : Rs.33 01 008) has been contributed to Provident Fund/Superannuation trusts in respect of Mr. P. Agarwal.

Also in terms of rules applicable to the employees retiring after the age of 50, Rs.Nil (Previous year : Rs.9 755) was paid as reimbursement of medical expenses to Mr. B. V. Patel, who was a director of the Company till March 31, 2009.

As these payments have been made in the capacity of a seconded employee/retired employee and not related to their directorship, provisions of Sections 198, 309, 310 and 314 of the Companies Act, 1956 are not applicable. Legal opinion confirms this position. Thus the same has not been considered as managerial remuneration.

13. Common service expenses paid/recovered include payments/recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter and Gamble Home Products Limited and Gillette India Limited.

14. Salaries, wages and bonus under Schedule 15 include Rs.2 38 61 880 (Previous year : Rs.3 13 90 800) towards expenditure on Voluntary Retirement Scheme.

15. The Malabar Company - a Delaware Corporation, an Overseas Corporate Body (OCB) has merged with Rosemount LLC, a P&G group Company with effect from August 20, 2009.

As a result the overall shareholding of The Procter and Gamble Company, USA (the ultimate holding company) in the Company stands increased from 2 23 10 090 shares (68.73%) to 2 29 29 773 shares (70.64%).

16. Professional fees in Schedule 15 Operating and other expenses includes an amount of Rs.71 695 (Previous year : Rs.71 695) on account of fees to cost auditors.

17. No borrowing costs were capitalised during the year.

18. Previous years figures have been regrouped/rearranged wherever considered necessary.

 
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