Notes to Accounts of Kaya Ltd.

Mar 31, 2018

1. Financial Risk Management Financial risk

In the course of its business, the Company is exposed to a number of financial risks: credit risk, liquidity risk and market risk . This note presents the Company''s objectives, policies and processes for managing its financial risk and capital. The key risks and mitigating actions are also placed before the Board of Directors of the Company. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.

The Company manages the risk through the finance department that ensures that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The activities are designed to:

- protect the Company''s financial results and position from financial risks

- maintain market risks within acceptable parameters, while optimizing returns; and

- protect the Company''s financial investments, while maximizing returns.

(A) Credit Risk

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

In respect of its investments the Company aims to minimize its financial credit risk through the application of risk management policies.

Trade receivables are subject to credit limits, controls and approval processes. Basis the historical experience, the risk of default in case of trade receivable is low. Provision is made for doubtful receivables on individual basis depending on the customer ageing, customer category, specific credit circumstances and the historical experience of the Company.

The gross carrying amount of trade receivables is Rs, 414.44 as at 31 March 2018, Rs, 238.00 lakhs as at 31 March

2017 and Rs, 210.06 lakhs as at 1 April 2016.

The Company has majorly trade receivables outstanding from India amounting to Rs, 369.78 lakhs as at 31 March

2018 (31 March 2017 - Rs, 205.17 lakhs; 1 April 2016 - Rs, 176.88 lakhs) except amount receivable from related party amounting to Rs, 44.66 as at 31 March 2018 (31 March 2017 - Rs, 32.83 lakhs; 1 April 2016 - Rs, 33.18 lakhs). There are no significant amounts due by more than 180 days and not provided for. Management believes that these are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk.

The Company maintains exposure in cash and cash equivalents, term deposits with banks, Loans, Security deposits and other financial assets.

Security deposits are interest free deposits given by the Company for properties taken on lease. Provision is taken on a case to case basis depending on circumstances with respect to non recoverability of the amount. The gross carrying amount of Security deposits is Rs, 1,411.62 lakhs as at 31 March 2018, Rs, 1,389.86 lakhs as at

31 March 2017 and Rs, 1,356.55 lakhs as at 1 April 2016.

Advances are given to subsidiaries and joint venture for various operational requirements. Provision is taken on a case to case basis depending on circumstances with respect to non recoverability of the amount. The gross carrying amount of loans and advances is Rs, 142.14 lakhs as at 31 March 2018, Rs, 339.50 lakhs as at 31 March

2017 and Rs, 122.96 lakhs as at 1 April 2016.

The Company has given inter-corporate deposits (ICD) only to entities authorised by the Board of Directors amounting to Rs, Nil as at 31 March 2018, Rs, 3,202.62 lakhs as at 31 March 2017 and Rs, 3,209. 79 as at 1 April 2016 including interest respectively.

(B) LIQUIDITY RISK

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

The current ratio of the Company as at 31 March 2018 is 1.01 (As at 31 March 2017 is 1.58; As at 1 April 2016 is 2.01) whereas the liquid ratio of the company as at 31 March 2018 is 0.54 (As at 31 March 2017 is 1.18; As at 1 April 2016 is 1.58)

(C) Market Risk

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

(i) Foreign currency risk

The Company is exposed to foreign exchange risk arising from various currency exposures on account of procurement of goods and services, primarily with respect to US Dollar, Singapore Dollar, EURO and AED. The Company''s management regularly reviews the currency risk. However, at this stage the Company has not entered into any forward exchange contracts or other arrangements to cover this risk as the risk is not material.

2. Capital Management

The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimize returns to its shareholders.

The capital structure of the Company is based on management''s judgment of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. It considers the amount of capital in proportion to risk and manage the capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets.

The Company''s policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

3. Share based payments

a) Kaya ESOP 2014:

The Board of Directors of the Company had granted 135,771 stock options to certain eligible employees pursuant to the Kaya Limited Employee Stock Option Scheme 2014 and Kaya Limited Employee Stock Option Scheme

2014 (Kaya Middle East FZC) (together referred as ‘Kaya ESOP 2014''). One stock option is represented by one equity share of Kaya Limited. The vesting date for Kaya Limited Employee Stock Option Scheme 2014 and Kaya Limited Employee Stock Option Scheme 2014 (Kaya Middle East FZC) was 31 March, 2016 and 31 March 2017, respectively. The Exercise Period is of one year from the vesting date. The Scheme is administered by the Board of Kaya Limited.

b) Kaya ESOP 2016:

During the previous year, the Board of Directors of the Company has granted 253,893 stock options at '' 732 per option, to certain eligible employees of the Company and Kaya Middle East FZC (subsidiary company), pursuant to the Kaya ESOP 2016 - Scheme I. One stock option is represented by one equity share of Kaya Limited. The Options granted under Kaya ESOP 2016 - Scheme I shall vest over 3 years from the Grant Date in the following manner:

- 20% of the Options granted will be vested at the end of first year from the grant date;

- 30% of the options will be vested at end of second year from the grant date;

- 50% of the options will be vested at the end of third year from the grant date.

During the year, the Board of Directors of the Company has granted 27,400 stock options at '' 1063.80 per option and 14,700 stock options at '' 1063.80 per option, to certain employees of the Company and Kaya Middle East FZC (subsidiary company), pursuant to the Kaya ESOP 2016 - Scheme II & Scheme III, respectively. One stock option is represented by one equity share of Kaya Limited.

4. Leases

The Company has entered into several operating lease arrangements for its office premises and Skin clinics for a period ranging from 3 to 9 years and, is renewable on a periodic basis at the option of the lessor and / or lessee. Under these arrangements, generally refundable interest free deposits have been given.

* Including Contingent Rent Rs, 10.67 lakhs (31 March 2017 - Rs, 19.40 lakhs; 1 April 2016 - Rs, 16.05 lakhs)

5. Segment information

Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief operating decision maker (“CODM”) of the Company. The CODM who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Chairman and Managing Director of the Company.

The Company operates only in one business segment i.e. “ Sale of skin care and hair care products and services” which is reviewed by CODM and all the activities incidental thereto are within India, hence Company does not have any reportable segments as per Ind AS 108 “Operating Segments”. Further, no single customer contributes to more than 10% of the Company''s revenue.

6. Post retirement benefit plans

I. Defined contribution plan:

The Company has defined contribution plan. Contributions are made to prescribed funds for employees at the specified rates as per respective regulations. The contributions are made to funds administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual or constructive obligation. The expense recognized during the year under defined contribution plan is as under:

II. Defined benefit plan:

Gratuity:

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972, Employees who are in continuous service for a period of 5 years or more are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contribution to recognized funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

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

H. Risk exposure

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

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

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

* Since the earnings/(loss) per share computation based on dilutive weighted average number of shares is anti-dilutive, the basic and diluted earnings/(loss) per share is the same.

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated 8 November, 2016.

The disclosures in the financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2018. However amounts as appearing in the audited Standalone Ind AS financial statements for the period ended 31 March 2017 have been disclosed.

7. The Company in light of losses incurred in the past years is not required to spend any amount towards Corporate Social Responsibility for the year 2017-2018.

8. Figures for the previous year have been audited by a firm of chartered accountants other than B S R & Co. LLP.

9. Disclosure as per Section 186 of the Companies Act, 2013 and SEBI regulations

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 and as per Regulation 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations are as follows:

---

Mar 31, 2017

@The Company had issued 12,897,100 equity shares of Rs. 10 each, fully paid-up, of the Company to the holders of equity shares of Marico Kaya Enterprises Limited (MAKE) pursuant to Scheme of Arrangement for Amalgamation of MAKE with the Company having appointed date April 1, 2014.

(c) Rights, preferences and restrictions attached to equity shares -

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company.

(e) Shares reserved for issue under options :

Kaya ESOP 2014:

The Board of Directors of the Company had granted 135,771 stock options to certain eligible employees pursuant to the Kaya Limited Employee Stock Option Scheme 2014 and Kaya Limited Employee Stock Option Scheme 2014 (Kaya Middle East FZE) (together referred as ‘Kaya ESOP 2014''). One stock option is represented by one equity share of Kaya Limited. The vesting date for Kaya Limited Employee Stock Option Scheme 2014 and Kaya Limited Employee Stock Option Scheme 2014 (Kaya Middle East FZE) was March 31, 2016 and March 31, 2017, respectively. The Exercise Period is of one year from the vesting date. The Scheme is administered by the Board of Kaya Limited.

During the year, the Board of Directors of the Company has granted 253,893 stock options at Rs. 732 per option, to certain eligible employees of the Company and Kaya Middle East FZE (subsidiary company), pursuant to the Kaya ESOP 2016 - Scheme I. One stock option is represented by one equity share of Kaya Limited. The Options granted under Kaya ESOP 2016 - Scheme I shall vest over 3 years from the Grant Date in the following manner:

- 20% of the Options granted will be vested at the end of first year from the grant date;

- 30% of the options will be vested at end of second year from the grant date;

- 50% of the options will be vested at the end of third year from the grant date.

The Exercise Period is of one year from the vesting date. The Scheme is administered by the Board of Kaya Limited

The Company has applied the intrinsic value based method of accounting for determining compensation cost for its stock based compensation plan and has accordingly accounted Rs. 200,245 (Previous Year Rs. 6,173,409) as compensation cost under the ‘intrinsic value'' method (Refer note 26). Had the Company considered ‘fair value'' method for accounting of compensation cost, the Company''s net income and Basic and Diluted earnings per share as reported would have reduced to the pro-forma amounts as indicated:

The Company uses various leased premises. A provision for site restoration cost is recognized for the estimates made for probable liability towards the restoration of these premises at the end of lease period. Provision written back during the previous year represents site restoration cost written back due to revision in estimated probable liability towards restoration of leased premises.

Cash credit facility from a bank is secured by first and exclusive hypothecation charge on all existing and future receivables and current assets and second pari passu hypothecation charge on all existing and future moveable fixed assets of the Company. This cash credit facility carries interest rate at 6 month MCLR plus 1.95%.

20(b)The Company has been sanctioned cash credit and letter of credit facilities of Rs. 200,000,000 (Rs. 200,000,000) by a bank. This facility is secured by first and exclusive charge on all existing and future receivable and current assets and second pari passu charge on moveable fixed assets of the Company. Amount outstanding towards these facilities on account of letter of credit as at year end is Rs. 728,727 (Previous year Rs. 743,712).

1. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD 15 - EMPLOYEE BENEFITS

a) Brief descriptions of the plans:

The Company has various schemes for long-term benefits such as provident fund and gratuity. The Company''s contribution to provident fund is defined contribution plan, as the Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include gratuity. The employees of the Company are also entitled to leave entitlement as per the Company''s policy.

b) Defined contribution plan:

The Company has recognized following amount as expenses (Refer note 26)

d) Compensated Absences:

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

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

The amount of the provision of Rs. 17,210,339 (Previous Year - Rs. 15,081,112) is presented as current liability, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

2. SEGMENT REPORTING:

Primary Segment:

In accordance with Accounting Standard 17 - “Segment Reporting”, the Company has determined its business segment as ‘Skin Care''. Since, 100% of the Company''s business is from providing specialized skin care services and other related products, there are no other primary reportable segments. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for depreciation during the year is reflected in the Financial Statements.

Secondary Segment:

The Company''s operations are such that all activities are confined only to India and hence, there is no secondary reportable segment relating to the Company''s business.

3. DISCLOSURES AS PER AS - 18 ‘RELATED PARTY DISCLOSURES’

a) Names of the related parties and nature of relationship:

d) Disclosure for loans and advances in terms of Securities & Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015.

Loans and Advances in the nature of loans to subsidiaries:

4. OPERATING LEASES:

The Company has entered into several operating lease arrangements for its office premises and Skin clinics for a period ranging from 3 to 9 years and, is renewable on a periodic basis at the option of the lessor and / or lessee. Under these arrangements, generally refundable interest free deposits have been given.

Disclosure in respect of assets taken on non-cancellable operating lease:

38. There are no deferred tax liabilities as at the year end. Deferred tax assets has not been recognized on carried forward business loss, unabsorbed depreciation and other item of deferred tax assets, as there is no virtual certainty of its realization on account of the losses incurred by the Company.

5 (a) DERIVATIVE TRANSACTIONS:

The Company has not entered into derivative transactions during the year. Net foreign currency exposure not hedged as at the year end were as under: -

b) Financial Risk Management

The Company''s activities expose it to market risk. In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts is used to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

Risk management is predominately controlled by the finance department of the Company under policies approved by the Board of Directors. The finance department identifies, evaluates and hedges financial risks. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risks, use of derivative financial instruments and non-derivative financial instruments.

The note explains the Company''s exposure to financial risks and how these risks could affect the Company''s future financial performance.

During the year; based on the evaluation of financial risks by the Board of Directors, no hedging was undertaken by the Company.

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8th November, 2016.

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

---

Mar 31, 2016

Notes:

1. The above cash flow statement has been prepared under the ''Indirect
Method'' as set out in the Accounting Standard – 3 on Cash Flow
Statements.

2. For non-cash transactions relating to investing and financing
activities pursuant to the Scheme - refer Note 1B.

3. Previous year figures have been regrouped where necessary.

4. The notes are an integral part of these standalone financial
statements.

(a) Rights, preferences and restrictions attached to equity shares -

The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each shareholder is eligible for one vote per share
held. The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion
to their shareholding.

(b) Shares held by the holding company: Refer Note 1(B)

# reflects number of shares that were issued pursuant to the scheme.

(c) Shares reserved for issue under options :

The Board of Directors of the Company had granted 135,771 stock options
to certain eligible employees pursuant to the Kaya Limited Employee
Stock Option Scheme 2014 and Kaya Limited Employee Stock Option Scheme
2014 (Kaya Middle East FZE) (together referred as ''Kaya ESOP''). One
stock option is represented by one equity share of Kaya Limited. The
vesting date for Kaya Limited Employee Stock Option Scheme 2014 and
Kaya Limited Employee Stock Option Scheme 2014 (Kaya Middle East FZE)
is March 31, 2016 and March 31, 2017, respectively. The Exercise Period
is of one year from the vesting date. The Scheme is administered by the
Board of Kaya Limited.

The Company has applied the intrinsic value based method of accounting
for determining compensation cost for its stock based compensation plan
and has accordingly accounted Rs. 6,173,409 (Previous Year Rs.
3,265,515) as compensation cost under the ''intrinsic value'' method
(Refer note 25). Had the Company
The Company uses various leased premises. A provision for site
restoration cost is recognized for the estimates made for probable
liability towards the restoration of these premises at the end of lease
period. Provision written back during the year represents site
restoration cost written back due to revision in estimated probable
liability towards restoration of leased premises.
In respect of above, future cash outflows is determinable only on
receipt of judgments pending at various forums / authorities.

19 (b) The Company has been sanctioned cash credit and letter of credit
facilities of Rs. 200,000,000 (Rs. 150,000,000) by a bank. This
facility is secured by first and exclusive charge on all existing and
future receivable and current assets and second pari passu charge on
moveable fixed assets of the Company. Amount outstanding towards these
facilities on account of letter of credit as at year end is Rs. 743,712
(Previous year Rs. 1,257,692).

1. DISCLOSURE PURSUANT TO ACCOUNTING STANDARD 15 - EMPLOYEE BENEFITS

a) Brief descriptions of the plans:

The Company has various schemes for long-term Benefits such as
provident fund and gratuity. The Company''s contribution to provident
fund is defined contribution plan, as the Company has no further
obligation beyond making the contributions. The Company''s defined
benefit plans include gratuity. The employees of the Company are also
entitled to leave entitlement as per the Company''s policy.

b) Defined contribution plan:

The Company has recognized following amount as expenses (Refer Note 25)

2. SEGMENT REPORTING:

Primary Segment:

In accordance with Accounting Standard 17 - "Segment Reporting", the
Company has determined its business segment as ''Skin Care''. Since, 100%
of the Company''s business is from providing specialized skin care
services and other related products, there are no other primary
reportable segments. Thus, the segment revenue, segment results, total
carrying amount of segment assets, total carrying amount of segment
liabilities, total cost incurred to acquire segment assets, total
amount of charge for depreciation during the year is reflected in the
Financial Statements.

Secondary Segment:

The Company''s operations are such that all activities are confined only
to India and hence, there is no secondary reportable segment relating
to the Company''s business.

3. DISCLOSURES AS PER AS - 18 ''RELATED PARTY DISCLOSURES'' a) Names of
the related parties and nature of relationship:

(i) Subsidiaries: KME Holding Pte Ltd.

DIPL Singapore Pte Limited (Erstwhile known as DRx Investments

Pte. Ltd.) (up to January 19, 2016)

Kaya Middle East FZE

Kaya Middle East DMCC (with effect from May 9, 2015)

Iris Medical Centre LLC (with effect from January 18, 2016)

(ii) Joint Venture of a subsidiary: Kaya - Al Beda JV (with effect from
January 28, 2016)

(iii) Key managerial personnel: Mr. Harsh Mariwala - Chairman and
Managing Director

(iv) Enterprises over which KMP or their Marico Limited relative have
significant influence Soap Opera and transactions have taken place:

4. OPERATING LEASES:

The Company has entered into several operating lease arrangements for
its Office premises and Skin clinics for a period ranging from 3 to 9
years and, is renewable on a periodic basis at the option of the less
or and / or lessee. Under these arrangements, generally refundable
interest free deposits have been given.

* Since the earnings/ (loss) per share computation based on diluted
weighted average number of shares is anti- dilutive, the basic and
diluted earnings/(loss) per share is the same.

# For the purpose of calculating equity shares outstanding and the
weighted average number of equity shares for the year ended March 31,
2015, the equity shares issued pursuant to the Scheme (Refer note 1B)
have been considered effective April 1, 2014, being the appointed date
for the Scheme.

5. There are no deferred tax liabilities as at the year end. Deferred
tax assets has not been recognized on carried forward business loss,
unabsorbed depreciation and other item of deferred tax assets, as there
is no virtual certainty of its realization on account of the losses
incurred by the Company.

---

Mar 31, 2015

1a. GENERAL INFORMATION

Kaya Limited (''Kaya'' or the ''Company''), headquartered in Mumbai, India, carries on skin care business through Kaya Skin Clinics. The clinics offer skin care solutions using scientific dermatological procedures and products. (Refer note 1B below)

1b. SCHEME OF ARRANGEMENT:

a. On September 29, 2014 the Board of Directors of Marico Kaya Enterprises Limited (''MaKE''), the holding company and the company, have approved the Scheme of Arrangement (''the Scheme'') for Amalgamation of MaKE with the Company with effect from appointed date April 1, 2014. The Hon''ble High Court of Bombay has approved the Scheme vide its order dated April 18, 2015, and thereafter fled with Registrar of Companies on May 13, 2015.

b. In terms of the Scheme, all assets, liabilities and reserves of MaKE have been vested with the Company with effect from April 1, 2014 and have been recorded at their respective book values in accordance with the Scheme, under the pooling of interest method as per AS 14 – Accounting for Amalgamation.

c. All the inter-company balances between the Company and MaKE as at April 1, 2014 stand cancelled.

d. The Company will issue 12,897,100 equity shares of Rs. 10/- each, fully paid-up, of the Company to the holders of Equity shares of Marico Kaya Enterprises Limited whose names will be registered in the register of members on the record date, without payment being received in cash, in the ratio of 1 (one) fully paid-up equity shares of Rs. 10/- each of the Company for every 1 (one) fully paid-up equity shares of Rs. 1 held in Marico Kaya Enterprises Limited. Pending issue of such shares as at March 31, 2015, the face value of shares to be issued has been accounted under Share Capital Suspense Account (Refer notes 3(a) & 3(b))

e. Further, in terms of the Scheme, the existing share capital of the Company of Rs. 178,489,750 was reduced upon the Scheme becoming effective i.e. on May 13, 2015, with corresponding adjustment with securities premium.

2 (a) CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debts

– Income tax matters 1,467,397,145 128,531,797

– Sales tax matters 53,034,531 28,563,023

– Service tax matters 22,138,889 172,919,306

- Other matters 3,820,000 3,750,000

Total 1,546,390,565 333,764,126

In respect of above, future cash outflows is determinable only on receipt of judgments pending at various forums / authorities.

2 (b)The Company has been sanctioned cash credit and letter of credit facilities of Rs. 150,000,000 (Rs. 80,000,000) by a bank. This facility is secured by first and exclusive charge on all existing and future receivable and current assets and second pari passu charge on moveable fixed assets of the Company. Amount outstanding towards these facilities on account of letter of credit as at year end is Rs. 1,257,692 (Previous year Rs. 1,898,903).

3. CAPITAL AND OTHER COMMITMENTS

(a) Capital Commitments

Estimated value of contracts in capital account remaining 8,425,292 1,249,188 to be executed (net of capital advances)

(b) Other Commitments

Lease termination cost – representing lock-in-period rental 109,384,484 145,106,817

under rental agreements

d) Leave Encashment:

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

4. SEGMENT REPORTING:

Primary Segment:

In accordance with Accounting Standard 17 – "Segment Reporting", the Company has determined its business segment as ''Skin Care''. Since, 100% of the Company''s business is from providing specialized skin care services and other related products, there are no other primary reportable segments. Thus, the segment revenue, segment results, total carrying amount of segment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, total amount of charge for depreciation during the year is refected in the Financials Statements.

Secondary Segment:

The Company''s operations are such that all activities are confned only to India and hence, there is no secondary reportable segment relating to the Company''s business.

5. OPERATING LEASES:

The Company has entered into several operating lease arrangements for its office premises and skin clinics for a period ranging from 3 to 9 years and, is renewable on a periodic basis at the option of the lessor and / or lessee. Under these arrangements, generally refundable interest free deposits have been given.

6. In view of significant unabsorbed depreciation and carry forward losses under tax laws, resulting in absence of virtual certainty, the Company has not recognised any deferred tax assets. The Company does not have any Deferred Tax Liabilities.

7. Research and Development expenses aggregating Rs. 3,124,090 (Previous year Rs. 2,699,358) have been included under the relevant heads in the Statement of Profit and Loss.

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