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Notes to Accounts of Nestle India Ltd.
Mar 31, 2026
C PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions for Contingencies / Contingent liabilities are recognised/disclosed after evaluation of facts and legal
aspects of the matter involved, in line with Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets
and Ind AS 12 - Income Taxes. Provisions are recognised when the Company has a present obligation (legal/
constructive) and on management judgement 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. Provisions are measured at
the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may,
but probably will not require an outflow of resources. When there is a possible obligation or a present obligation
in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are not recognised in the financial statements since this may result in the recognition of
income that may never be accrued / realised.
D BORROWING COSTS
Borrowing costs directly attributable to acquisition or construction of qualifying assets (i.e. assets which take
substantial period of time to get ready for their intended use) are capitalised as part of the cost of that asset. All
other borrowing costs are recognized as an expense in the Statement of Profit and Loss in the period in which
they are incurred.
E EARNINGS PER SHARE
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders
by the weighted average number of equity shares outstanding during the period. For the purpose of calculating
diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted
average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity
shares, if any.
The Company had allotted 964.2 million equity shares of face value of Hi each as fully paid-up bonus equity
shares, in the ratio 1:1, i.e., one (1) fully paid-up equity share of face value of Hi (Rupee one only) each for every
one (1) existing fully paid-up equity share of face value of Hi (Rupee one only) each, to those eligible members of
the Company whose name appeared in the Register of Members / Beneficial Owners as on the Record Date i.e.,
8th August 2025.In accordance with the ''Ind AS 33 - Earnings per Share'', the figures of Earnings per Share for
previous periods presented have been restated to give effect to the allotment of the equity bonus shares.
F EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
All material events occurring after the Balance Sheet date up to the date of approval of financial statements by
the Board of Directors on 21st April 2026, have been considered, disclosed and adjusted, wherever applicable, as
per the requirements of Ind AS 10 - Events after the Reporting Period.
3 RECENT ACCOUNTING PRONOUNCEMENTS
The Ministry of Corporate Affairs (MCA) has notified amendments to the Companies (Indian Accounting
Standards) Rules, 2015, vide notification number G.S.R. 291 (E) dated 7th May, 2025 and G.S.R. 549(E) dated 13th
August, 2025. These amendments are applicable for reporting periods beginning on or after April 1, 2025 but do
not have material impact on the financial statements of the Company.
4 EXCEPTIONAL ITEMS
Exceptional items refer to items of income or expense, within the statement of profit and loss from ordinary
activities which are of such size, nature or incidence that their separate disclosure is considered necessary to
explain the performance of the Company.
Exceptional items of (H1,207.8 million) in the financial year ended 31st March 2026 comprise of the following:
a) Pursuant to closure of income tax matters related litigation for certain earlier years, provisions amounting to
H3,120.4 million made in earlier years have been written back. Out of this amount, H1,097.2 million is classified
under tax expense (refer Note 36(a) on tax expense) and balance H2,023.2 million under exceptional items.
b) Restructuring cost charge of H401.0 million, comprising of provisions for severance compensation for
employees (refer Note 28 on employee benefits expense)
c) The Government of India has consolidated multiple existing labour legislations into a unified framework
comprising of four Labour Codes, collectively referred to as the ''New Labour Codes'' and notified with
effect from 21st November 2025. Based on the analysis of the information available so far and actuarial
valuation, the Company has recognised an incremental financial impact of H414.4 million as past service
cost on post-employment defined benefits for its employees (refer Note 28 on employee benefits expense
and Note 32 on employee benefit plans). Considering that this impact is driven by a regulatory change and
is non-recurring in nature, it is classified under exceptional items. The Company continues to monitor the
developments relating to the implementation of the New Labour Codes and will review the estimates as
further clarifications and Rules are notified.
Exceptional items of H2,908.2 million for the previous financial year ended 31st March 2025 comprised of
gain on slump sale of the following businesses:
- Nutraceutical Business ("NHSc") to Dr. Reddy''s and Nestle Health Science Limited.
- Nestle Business Services (''NBS'') division to Nestle Business Services India Private Limited (Formerly
known as Purina PetCare India Private Limited).
5 BUSINESS COMBINATION
A. Business Combination under Common Control
In the previous financial year ended, the Company had executed slump sale of Nestle Business Services
(''NBS'') Division to Nestle Business Services India Private Limited (Formerly known as Purina PetCare India
Private Limited) on 1st July 2024, which is a related party, being a 100% subsidiary of Nestle S.A. for a net
consideration of H765.8 million.
B. Business Combination - Others
In the previous financial year ended, the Company had made an investment for 49% stake in Dr. Reddy''s and
Nestle Health Science Limited ("Associate Company") for development of Nutraceutical business. Pursuant
to this, the investee entity had become an associate of the Company with effect from 24th July 2024. As
part of this transaction, Nutraceuticals Business (''NHSc Business'') of the Company was transferred to the
associate Company for a net consideration of H2,231.0 million with effect from 1st August 2024.
Dr. Reddy''s Laboratories Limited (Dr. Reddy''s) holds 51% and the Company holds 49% in the Associate
Company with proportionate shareholder rights to voting, dividend distribution, and other economic rights
as enshrined in the agreement. Nestle India will have a call option to increase shareholding up to 60% after
six years at a fair market value. Dr Reddy''s shall continue to hold at least 40% of the shareholding after the
Company exercises its call option.
Items of property, plant & equipment are stated at historical cost less accumulated depreciation and accumulated
impairment losses, if any. Cost is inclusive of freight, duties, taxes or levies (net of recoverable taxes) and any
directly attributable cost of bringing the assets to their working condition for intended use.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed
as "Capital work-in-progress" and stated at cost less accumulated impairment loss, if any.
Profit or loss on disposal / scrapping / write off / retirement from active use of an item of property, plant and
equipment is recognised in the statement of profit and loss.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date
is classified as capital advances under "Other Non-Current Assets".
Depreciation / Amortization
The Company has assessed the useful lives of property, plant and equipment as required by Schedule II to the Companies
Act, 2013. Accordingly, depreciation has been computed on useful lives based on technical evaluation of relevant
class of assets including components thereof. Useful lives and residual values are reviewed annually. Depreciation is
provided as per the straight line method computed basis useful lives of property, plant and equipment as follows:
Impairment of Property, Plant and Equipment
At each Balance Sheet date, the company reviews whether there is any indication that an item of property, plant
and equipment including capital work in progress, right of use assets or intangible assets (asset / cash generating
unit) may be impaired. For the purpose of assessing impairment, assets are grouped at the levels for which there
are separately identifiable cash flows (cash generating unit). If any impairment indicator exists, estimate of the
recoverable amount of the property, plant and equipment / cash generating unit to which the asset belongs is
made. An impairment loss is recognised in the statement of Profit and Loss whenever the carrying amount of
an asset/ cash generating unit exceeds its recoverable amount. The recoverable amount is the greater of the fair
value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value based on an appropriate discount rate.
Reversal of impairment losses recognised in earlier years is recorded when there is an indication that the
impairment losses recognised for the asset / cash generating unit no longer exist or have decreased. However,
the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it
does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment
loss been recognised for that asset / cash generating unit in earlier years.
The company''s leases mainly comprises of land, buildings, plant & machinery and vehicles. The company leases
land and buildings primarily for offices, manufacturing facilities and warehouses.
The Company assesses whether a contract is or 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.
At the date of commencement of the lease, the Company recognises a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements in which it is a lessee.
The right-of-use assets are initially recognised 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, if any. Right-of-use assets are depreciated from the commencement date on a straight-line
basis over the shorter of the lease term or useful life of the underlying asset.
The lease liability is initially measured 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. The lease liability is subsequently remeasured by increasing the carrying amount to reflect
interest on the lease liability, reducing the carrying amount to reflect the lease payments made. A lease liability is
remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate
used to determine lease payments with a corresponding adjustment to the carrying value of Right-of-use assets.
Lease liability and Right-of-use assets are separately presented in the Balance Sheet and lease payments are
classified as financing cash flows in the Cash Flow Statement.
12 INVENTORIES
Inventories are stated at cost or net realisable value, whichever is lower. However, raw materials, packing materials
and other supplies held for use in the production of inventories are not written down below cost if the finished
goods in which they will be included are expected to be sold at or above cost.
Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs
incurred in bringing the inventories to their present location and condition. The net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and estimated
costs necessary to make the sale.
* Effective 11th August, 2025, the paid-up share capital of the Company stands increased from H964.2 million,
divided into 964.2 million equity shares of face value of H1/- each, to H1,928.3 million divided into 1,928.3
million equity shares of face value of H1/- each, following the allotment of 964.2 million equity shares of face
value of H1 each as fully paid-up bonus equity shares, in the ratio 1:1, i.e., one (1) fully paid-up equity share
of face value of H1 (Rupee one only) each for every one (1) existing fully paid-up equity share of face value of
H1 (Rupee one only) each, to those eligible members of the Company whose name appeared in the Register
of Members / Beneficial Owners as on the Record Date i.e., 8th August 2025.
As approved by the shareholders of the Company at the Extraordinary General Meeting held on 24th July
2025, the Authorised Share Capital of the Company was increased from H1,000 million divided into 1,000
million equity shares of H1/- each to H2,000 million by creation of an additional 1,000 million equity shares
of H1/- each. These bonus equity shares were issued by capitalising H964.2 million from retained earnings
of the Company.
These bonus equity shares were issued by capitalising H964.2 million from retained earnings of the Company,
out of the H8,374.3 million that was reclassified from the General Reserve and credited to the Retained
Earnings during the financial year ended 31st March 2024, in accordance with the Scheme of Arrangement
("Scheme") sanctioned by National Company Law Tribunal, Delhi Bench (Hon''ble NCLT), vide its Order
dated 15th September 2023 and which became effective from 19th October 2023 ("Hon''ble NCLT Order").
In terms of the Scheme, the aforesaid amount reclassified to Retained Earnings represents accumulated
profits of the Company and is available for distribution to the members, from time to time, at the discretion
of the Board of Directors, in such manner, quantum and at such time as the Board may decide, subject to
applicable regulatory, fiscal and other relevant considerations, including payment of applicable taxes. A
copy of the NCLT Order and the Scheme is available on the Company''s website at:https://www.nestle.in/
investors/stockandfinancials/scheme-arrangement
In accordance with the ''Ind AS 33 - Earnings per Share'', the figures of Earnings per Share for previous
periods presented have been restated to give effect to the allotment of the equity bonus shares.
b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares with face value of H 1 each, ranking pari passu.
Nature and description of reserve:
(i) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less
dividend (including dividend distribution tax) and other distributions made to the shareholders.
(ii) Capital Reserve - Capital Reserve is a reserve arising on business combination under common control
due to difference between carrying amount of net assets acquired and consideration paid (as adjusted for
amount recognized in retained earnings). The amount is not available for distribution to shareholders.
(iii) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated
with foreign currency transactions relating to firm commitments and highly probable forecast transactions.
This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash
Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying
forecasted transactions.
The Company has a supplier financing program with external financial institutions in respect of approved
trade payables. Under these arrangements, participating suppliers may, at their discretion, elect to
receive early payment on approved invoices from the finance providers, subject to the suppliers'' separate
agreements with such financial institutions. The Company''s payment obligation to settle the full invoice
amount with the finance providers arises on the contractual maturity date of the invoice. The supplier
finance arrangements do not modify the contractual payment terms between the Company and its suppliers
or result in an extension of payment terms, hence there is no effect on the Company''s obligation to pay
amounts due under the supplier contracts. The Company does not provide any collateral, guarantees, or
other forms of security in connection with these arrangements.
24 REVENUE FROM OPERATIONS
a) Sale of products
Revenue from sale of goods is recognised on transfer of control of goods to the buyer. Revenue is measured
at the price charged to the customer and are recorded net of returns (if any), trade discounts, rebates, other
pricing allowances to trade/consumer, when it is probable that the associated economic benefits will flow
to the Company. Accumulated experience is used to estimate and provide for sales return, trade discounts
and other allowances.
The Performance obligation in contracts is considered as fulfilled in accordance with the terms agreed with
the respective customers, which is mainly upon arrival at the customer place. The payment terms include
advance payment and credit given to certain customers.
b) Other Operating Revenue
Government Grants in relation to revenue and expenses are recognized when there is reasonable assurance
that the entity will comply with the attached conditions and that the grant will be received. Such grants are
recognized in Other operating revenues on a systematic basis.
Government grant in relation to property, plant and equipment is treated as deferred income and is
recognised in the statement of profit and loss over the useful life of the asset.
32 EMPLOYEE BENEFIT PLANS
(i) Defined contribution plans: The Company makes contributions to Provident Fund, Employee State Insurance,
National Pension System etc. for eligible employees and these contributions are charged to statement of
profit and loss on accrual basis. Under these plans, the Company is required to contribute a specified
percentage of payroll costs. The Company has recognised H1,173.7 million (previous financial year H1,165.2
million) as expense in the statement of profit and loss during the year towards contribution to these funds.
(ii) Short-term employee benefits: Short-term employee benefits such as salaries, wages, performance
incentives, etc. payable wholly within twelve months of rendering the service are charged to standalone
statement of profit and loss on an undiscounted, accrual basis during the period of service rendered by the
employees in the financial year.
(iii) Termination benefits are recognised in the standalone statement of profit and loss at the earlier of the
following dates:
(a) when the Company can no longer withdraw the offer of those benefits; or
(b) when the Company recognises costs for a related restructuring that is within the scope of Ind AS 37:
Provisions, Contingent Liabilities and Contingent Assets, involving payment of termination benefits.
(iv) Post-employment defined benefit Pension and Gratuity Plans: The Company provides pension and gratuity
benefits to eligible employees under post-employment defined benefit plans. Defined benefit pension plans
are discretionary and consist of an unfunded defined benefit pension plan and a funded defined benefit
pension plan (known as ''Future ready plan''). The unfunded defined benefit plan exposes the Company to
risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while
in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of
service. The Company makes contributions to the Nestle India Limited Employees'' Gratuity Trust Fund. The
Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance
of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions
prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with
the rules prescribed by the Government of India. The Company aims to keep annual contributions to the
trust relatively stable at a level such that no significant gap arises between plan assets and liabilities.
Liability for defined benefit plans i.e. gratuity and ''unfunded pension plan'' is determined based on the
actuarial valuation carried out by an independent actuary as at the year-end. As these liabilities are relatively
long-term in nature, the actuarial assumptions take into account the requirements of the relevant Ind AS
coupled with a long-term view of the underlying variables / trends, wherever required.
Service cost and net interest cost on the defined benefit liabilities/assets are recognized in the statement
of profit and loss as employee benefit expense and finance costs respectively. Gains and losses on
remeasurement of defined benefits liabilities/plan assets arising from changes in actuarial assumptions and
experience adjustments are recognised in the other comprehensive income and are included in retained
earnings in the Balance Sheet.
The Government of India has consolidated multiple existing labour legislations into a unified framework
comprising of four Labour Codes, collectively referred to as the ''New Labour Codes'' and notified with effect
from 21st November 2025. Based on the analysis of the information available so far and actuarial valuation,
the Company has recognised an incremental financial impact of H414.4 million as past service cost on
post-employment defined benefits for its employees. Considering that this impact is driven by a regulatory
change and is non-recurring in nature, it is classified under exceptional items in these financial results. The
Company continues to monitor the developments relating to the implementation of the New Labour Codes
and will review the estimates as further clarifications and Rules are notified.
For funded defined benefit pension plan (Future ready plan), the liability amount determined in 2021 to cover
the plan obligations based on actuarial valuation carried out by an independent actuary for past periods, was
invested in an appropriate Investment product of an Insurance company and recognized as ''reimbursement
rights'' as per Ind AS 19 Employee Benefits. This investment earns interest and the corresponding defined
benefit liability increases with this interest amount. The amount and timing of the defined benefits payable
under the Future ready plan match with the amounts recoverable from the Investment product. The amount
recoverable from the investment product is utilized for payment of the defined benefits payable to the
employees including purchase of pension annuities from the insurance company as per the Future ready
plan. The plan exposes the Company to risks such as credit risk etc.
(v) Other long-term employee benefits such as compensated absences and long service awards are charged to
statement of profit and loss on the basis of an actuarial valuation carried out by an independent actuary as
at the year-end. Actuarial gains and losses are recognised in full in the statement of profit and loss during
the year in which they occur.
33 RESTRICTED STOCK UNIT (RSU) / PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU) / Performance Share Unit (PSU) Plan of Nestle
S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash
equivalent. Restricted Stock Units (RSU) / Performance Share Units (PSU) granted to employees vest, subject to
certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free
of charge or cash equivalent to the value of shares, is to be transferred to the employee. The fair value of these
units is charged to the statement of profit and loss over the vesting period. The Company has to pay Nestle S.A.
an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
34 NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of H731.6 million (previous year H759.0 million) for various
contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties
requiring management judgement. The Company has also reversed/utilised contingency provision of H3,626.9
million (previous financial year H263.9 million) due to the settlement of certain litigations and obligations for
which provision is no longer required.
Provisions are reviewed at each Balance Sheet date and adjusted in accordance with applicable accounting
standards to reflect the current best estimate of the outflow of resources that would be required to settle
the obligation.
(e) At Nestle India, under CSR we focus our efforts in society on the overarching ambitions that make an impact
in the area of nutrition awareness, water, sanitation, education, enhancing livelihood, rural development
projects, ensuring environment sustainability, feeding support and disaster management including relief.
(f) Above does not include any related party transactions.
(g) The Company does not propose to avail any set-off, against the excess amount spent in FY 2025-26 for
succeeding financial year(s).
111 FY 2024-25 includes excess spent in previous financial year (FY 2023-24) and were available for set off in FY 2024-25 amounting
to H88.2 million.
121 Includes amount paid for acquisition/ construction of assets Nil (previous financial year Nil).
*The expenditure incurred during the financial year includes allocation of H42.4 million (previous year H38.3 million) from Employee
Benefits expenses towards Corporate Social Responsibility expense (refer note 28 on employee benefits expenses).
36 (a) TAX EXPENSE
Income tax expense comprises of current tax and deferred tax. Income tax expense is recognised in the
statement of profit and loss, except when it relates to items recognised in the other comprehensive income
or items recognised directly in the equity. In such cases, the income tax expense is also recognised in
the other comprehensive income or directly in the equity as applicable. The current income tax charge is
calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.
Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation or under dispute with authorities and establishes
provisions where appropriate.
Provision for current tax for the year comprises of:
(i) estimated tax expense which has accrued on the profit for the period 1st April 2025 to 31st March 2026
(ii) the residual tax expense for the period 1st April 2024 to 31st March 2025 arising out of the finalisation of
fiscal accounts (Assessment Year 2025-2026), under the provisions of the Indian Income tax Act, 1961 and
(iii) tax expense adjustment in respect of prior years.
Deferred taxes are recognised basis the Balance Sheet approach on temporary differences, being the
difference between the carrying amount of assets and liabilities in the Balance Sheet and its corresponding
tax base, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
asset is realised or the liability is settled, based on tax laws that have been enacted or substantively enacted
by the end of the reporting period. Deferred tax assets are recognised only to the extent it is probable that
future taxable profits will be available against which such assets can be utilized. Deferred tax assets are
reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on net basis, or to realize the asset and settle the liability simultaneously. Deferred
tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority.
(c) The Government of India enacted the Income Tax Act, 2025, which came into effect from 1st April 2026,
replacing the erstwhile Income Tax Act, 1961. Basis preliminary analysis of the provisions, as of now, the
company does not foresee any material impact of the changes on company''s financial performance.
The Company will continue to monitor further notifications, amendments, and judicial developments
under the new law.
37 FINANCIAL INSTRUMENTS
a) RECOGNITION AND INITIAL MEASUREMENT
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual
provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition
except trade receivables which are initially recognised at transaction price as they do not contain a significant
financing component. Transaction costs in relation to financial assets and financial liabilities, other than
those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition.
Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through
profit or loss (FVTPL), are charged to the statement of profit and loss.
b) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS
For the purpose of subsequent measurement, financial assets are classified as follows:
Amortised cost - Financial assets that are held with a business model whose objective is to hold the asset
in order to collect contractual cash flows that are solely payments of principal and interest are subsequently
measured at amortised cost less impairment, if any. Interest income calculated using effective interest rate
(EIR) method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held with a business
model whose objective is achieved by both holding the asset in order to collect contractual cash flows
that are solely payments of principal and interest and by selling the financial assets, are subsequently
measured at fair value through other comprehensive income. Changes in fair value are recognized in the
other comprehensive income (OCI) and on derecognition, cumulative gain or loss previously recognised
in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and
impairment loss, if any are recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above
categories are subsequently measured at fair valued through profit or loss. Changes in fair value and income
on these assets are recognised in the statement of profit and loss.
c) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortised cost - Financial liabilities are classified as financial liabilities at amortised cost by default. Interest
expense calculated using EIR method is recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading,
or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities
are recognised in the statement of profit and loss.
d) DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and
rewards of ownership.
A financial liability is derecognised when the obligation under the liability is discharged or expires.
e) IMPAIRMENT OF FINANCIAL ASSETS
Financial assets that are carried at amortised cost and fair value through other comprehensive income (FVOCI)
are assessed for possible impairments basis expected credit losses taking into account the past history of
recovery, risk of default of the counterparty, existing market conditions etc. The impairment methodology
applied depends on whether there has been a significant increase in credit risk since initial recognition.
For Trade receivables, the Company provides for expected credit losses based on a simplified approach as
per Ind AS 109 - Financial Instruments. Under this approach, expected credit losses are computed basis the
probability of defaults over the lifetime of the asset.
f) DERIVATIVES AND HEDGE ACCOUNTING
Derivative instruments used by the company include forward contracts. The Company formally establishes
a hedge relationship between such forward contracts (''hedging instrument'') and recognized financial asset/
liabilities (''hedged item'') through a formal documentation at the inception of the hedge. Forward contracts
are designated as hedging instruments against changes in fair value of recognised assets and liabilities (fair
value hedges) and against highly probable forecast transactions (cash flow hedges). The effectiveness of
hedge instruments is assessed at the inception and on an ongoing basis.
Derivatives instruments such as forward contracts are initially measured at fair value. When a forward
contract is designated as a cash flow hedge, the effective portion of change in the fair value of the contract
is recognised in the other comprehensive income and accumulated in other equity under "effective portion
of cash flow hedges". Amount recognised in other equity is subsequently reclassified to the statement of
profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the change
in the fair value of the contract is recognised immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognised in the statement of
profit and loss.
g) FAIR VALUE MEASUREMENT
Fair value of financial assets and liabilities is normally determined by references to the transaction price
or market price. If the fair value is not reliably determinable, the company determines the fair value using
valuation techniques that are appropriate in the circumstances and for which sufficient data are available,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis
of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using
valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations
using inputs that are not based on observable market data (unobservable inputs). Fair value of investment
in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels in financial year 2025-26 and in the
previous financial year 2024-25.
j) FINANCIAL RISK MANAGEMENT
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit
risk and market risk. This note presents the Company''s objectives, policies and processes for managing its
financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations
associated with financial liabilities that are settled in cash or other financial assets. The Company
regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing
basis to meet operational needs. The Company manages the liquidity risk by planning the investments
in a manner such that the desired quantum of funds could be made available to meet any of the
business requirements within a reasonable period of time. In addition, the Company also maintains
flexibility in arranging the funds by maintaining committed credit lines with various banks to meet
the obligations.
Maturities of financial liabilities:
The following table shows the maturity analysis of the Company''s financial liabilities based on
contractually agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
(ii) Credit risk
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet
its contractual obligations. The Company has following categories of financial assets that are subject
to credit risk evaluation:
Investments
Company invests in bank deposits, liquid mutual funds, tax free long term bonds, treasury bills etc. Funds
are invested in accordance with the Company''s established Investment policy that includes parameters of
safety, liquidity and post tax returns. Company avoids the concentration of credit risk by spreading them
over several counterparties with good credit rating profile and sound financial position. The Company''s
exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical
experience and credit profiles of counterparties, the company does not expect any significant risk of default.
Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Company''s established
policy with regard to credit limits, control and approval procedures. The Company provides for
expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under
this approach, expected credit losses are computed basis the probability of defaults over the lifetime of
the asset. This allowance is measured taking into account credit profile of the customer, geographical
spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Other financial assets
Other financial assets include employee loans, security deposits etc. Based on historical experience
and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Company''s maximum exposure to credit risk for each of the above categories of financial assets is
their carrying values as at the reporting dates.
(iii) Market Risk
Interest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may
fluctuate because of changes in market interest rates. The Company is not exposed to any significant
interest rate risk as its surplus funds are predominantly invested in fixed-rate instruments. Furthermore,
any borrowings, when undertaken, are short-term in nature and carry a pre-agreed interest rate.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change
in the market price. The Company is not exposed to the significant price risk as there are no equity
investments other than investment in associate which are measured at cost (refer Note 7).
Foreign currency risk
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate
due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising
out of transactions in foreign currency. Foreign exchange risks are managed in accordance with
Company''s established policy for foreign exchange management. The Company enters into forward
contracts as per the hedging policy to hedge against its foreign currency exposures.
38 CAPITAL MANAGEMENT
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long
term business growth and optimise returns to shareholders. Capital includes equity share capital and other equity.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through
dividend is monitored as per the laid down dividend distribution policy.
42 SEGMENT REPORTING
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity
falls within a single operating segment, namely Food. The food business incorporates product groups viz. Milk
Products and Nutrition, Prepared Dishes and Cooking Aids, Powdered and Liquid Beverages and Confectionery
(refer Note 24 on revenue from operations).
Note - On and from the Record date of 5th January 2024, the equity shares of the Company have been sub¬
divided such that 1(one) equity share having face value H10/- each, fully paid-up stands subdivided into 10 (ten)
equity shares having face value of H1/- each, fully paid-up.
b) Proposed Final Dividend
The Board of Directors have recommended a final dividend of H5.00 per equity share (Face Value of Hi per
share) amounting to H9,641.6 million for the financial year 2025-26 after the Balance Sheet date. The same
is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and
therefore proposed final dividend has not been recognised as a liability as at the Balance Sheet date in line
with Ind AS 10 on ''Events after the Reporting Period''.
44 DISCLOSURE UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro Small
Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the
Company, the following are the details:
47 OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property under Prohibition of Benami Property Transactions
Act, 1988 and rules made thereunder.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial
year and previous financial year.
(iv) The Company does not have any such transactions which has not been recorded in the books of accounts
but has been surrendered or disclosed as income during the year in the tax assessments under the Income
Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(v) The Company has not been declared as wilful defaulter by any bank, financial institution or other lender.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including
foreign entities (Intermediaries) with the understanding that the Intermediary shall (a) directly or indirectly
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (ultimate beneficiaries), or (b) provide any guarantee, security or the like to or on behalf of the
ultimate beneficiaries.
The Company has not received funds from any person(s) or entity(ies), including foreign entities, with the
understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, (a)
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding
Party, or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) Quarterly returns or statements of current assets filed by the Company with the banks in connection with
the working capital limit sanctioned are in agreement with the books of accounts.
(viii) The title deeds of all the immovable properties (other than properties where the Company is the lessee and
the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.
48 AUDIT TRAIL
Proviso to Rule 3 (1) of the Companies (Accounts) Rules, 2014 has become applicable to the Company with
effect from April 1, 2024. Accordingly, it is mandatory for the company to use only such accounting software
for maintaining its books of accounts which has a feature of recording audit trail of each and every transaction,
creating an edit log of each change made in books of accounts along with the date when such changes were
made and ensure that the audit trail cannot be disabled. The Company has migrated to upgraded version of
ERP (SAP S4 HANA) from legacy version of ERP (SAP ECC) during the year. The Company has used accounting
software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the
same has operated throughout the year for all relevant transactions recorded in both the legacy and the migrated
ERP. Further, there were no instance of audit trail feature being tampered with, in respect of both version of the
accounting software.
Additionally, the audit trail has been preserved by the Company as per the statutory requirements for record
retention to the extent it was enabled in prior year.
As per our report of even date attached For and on behalf of the Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
Firm''s Registration No. - 301003E/E300005
PANKAJ CHADHA MANISH TIWARY EDOUARD DOMINIQUE JEAN MAC NAB
Partner Chairman and Managing Director Executive Director - Finance & Control and CFO
Membership No. - 091813 (DIN-02572830) (DIN-11511070)
PRAMOD KUMAR RAI
Company Secretary
Membership No. - FCS 4676
PAN-ABVPR5131P
21st April 2026 21st April 2026
Gurugram Gurugram
Mar 31, 2025
12 INVENTORIES
Inventories are stated at cost or net realisable value, whichever is lower. However, raw materials, packing materials and other supplies held for use in the production of inventories are not written down below cost if the finished goods in which they will be included are expected to be sold at or above cost.
Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Cash and cash equivalents include bank balances, cheques and drafts on hand including remittances in transit, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of Statement of Cash flows.
*On and from the Record Date of 5th January 2024, the equity shares of the Company have been sub-divided, such that 1 (one) equity share having face value of H10/- (H ten only) each, fully paid-up, stands sub-divided into 10 (ten) equity shares having face value of Hi/- (H one only) each, fully paid-up, ranking pari-passu in all respects. The Earnings per share for the prior periods have been restated considering the face value of Hi/- each in accordance with Ind AS 33 -"Earnings per shareâ.
b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares with face value of Hi each, ranking pari-passu.
Nature and description of reserve
(i) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less dividend (including dividend distribution tax) and other distributions made to the shareholders.
(ii) Capital Reserve - Capital Reserve is a reserve arising on business combination under common control due to difference between carrying amount of net assets acquired and consideration paid (as adjusted for amount recognized in retained earnings). The amount is not available for distribution to shareholders.
(iii) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated with foreign currency transactions relating to firm commitments and highly probable forecast transactions. This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying
24 REVENUE FROM OPERATIONS a) Sale of products
Revenue from sale of goods is recognised on transfer of control of goods to the buyer. Revenue is measured at the price charged to the customer and are recorded net of returns (if any), trade discounts, rebates, other pricing allowances to trade/consumer, when it is probable that the associated economic benefits will flow to the Company. Accumulated experience is used to estimate and provide for sales return, trade discounts and other allowances.
The Performance obligation in contracts is considered as fulfilled in accordance with the terms agreed with the respective customers, which is mainly upon arrival at the customer place. The payment terms include advance payment and credit given to certain customers.
Government Grants in relation to revenue and expenses are recognized when there is reasonable assurance that the entity will comply with the attached conditions and that the grant will be received. Such grants are recognized in Other operating revenues on a systematic basis.
Government grant in relation to property, plant and equipment is treated as deferred income and is recognised in the statement of profit and loss over the useful life of the asset.
(i) The Company makes contributions to Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees and these contributions are charged to statement of profit and loss on accrual basis. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognised H1,155.6 million (Previous year H1,363.1 million) as expense in the statement of profit and loss during the year towards contribution to these funds.
Out of the total contribution made for Provident Fund in the previous financial year, H78.9 million (current financial year HNil) was made to the Nestle India Limited Employees Provident Fund Trust. Effective 01st February 2023, Nestle India Limited Employees Provident Fund Trust was surrendered to the Regional Provident Fund and members balances including interest up to 31st January 2023 as per the audited financial statements of the said trust amounting to H5,477.8 million were transferred to Regional Provident Fund. All Provident Fund contributions effective 01st February 2023 onwards are made with the Regional Provident Fund.
During the period of operation of Trust, Trustees of Nestle India Limited Employees Provident Fund Trust were responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Trust was in accordance with the rules prescribed by the Government of India.
(ii) Other Employee Benefits: Short term employee benefits including performance incentives, are charged to statement of profit and loss on an undiscounted, accrual basis during the period of employment.
(iii) Pension and Gratuity Plans: The Company provides pension and gratuity to eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service. The Company makes contributions to the Nestle India Limited Employees'' Gratuity Trust Fund. The Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with the rules prescribed by the Government of India. The Company aims to keep annual contributions to the trust relatively stable at a level such that no significant gap arises between plan assets and liabilities.
Defined benefit pension plans are discretionary and consist of an unfunded defined benefit pension plan and a funded defined benefit pension plan (known as ''Future Ready plan''). The unfunded defined benefit plan exposes the Company to risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
Liability for defined benefit plans i.e. gratuity and ''unfunded pension plan'' is determined based on the actuarial valuation carried out by an independent actuary as at the year-end. As these liabilities are relatively long term in nature, the actuarial assumptions take into account the requirements of the relevant Ind AS coupled with a long-term view of the underlying variables / trends, wherever required.
For funded defined benefit pension plan, the Company has made investments in appropriate Investment product of an Insurance company to cover the obligations. The amount and timing of the defined benefits payable under the Future Ready plan match with the amounts recoverable from the Investment product. The accumulated investment balance shall be utilised to purchase pension annuities from the Insurance company for the employees as per the ''Future Ready Plan''. The plan exposes the Company to risks such as credit risk etc. Also, refer note 4 to the financial statements for description of pension plan amendment and settlement.
Liability for funded defined benefit pension plan (Future ready plan) has been determined in 2021 based on actuarial valuation carried out by an independent actuary for past period of services and frozen. The obligation so determined is invested in an appropriate investment product of an Insurance company and is recognized as having ''reimbursement rights'' as per Ind AS 19 Employee Benefits. This investment will
earn interest and the corresponding defined benefit liability will be increased with this interest amount. The amount recoverable from the investment product would be utilized for payment of the defined benefits payable under the Future Ready plan. Also refer to note 4 of the financial statements.
Service cost and net interest cost on the defined benefit liabilities/assets are recognized in the statement of profit and loss as employee benefit expense and finance costs respectively. Gains and losses on remeasurement of defined benefits liabilities/plan assets arising from changes in actuarial assumptions and experience adjustments are recognised in the other comprehensive income and are included in retained earnings in the balance sheet.
Long term employee benefits such as compensated absences and long service awards are charged to statement of profit and loss on the basis of an actuarial valuation carried out by an independent actuary as at the year end. Actuarial gains and losses are recognised in full in the statement of profit and loss during the year in which they occur.
33 RESTRICTED STOCK UNIT (RSU) / PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU) / Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU) / Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The fair value of these units is charged to the statement of profit and loss over the vesting period. The Company has to pay Nestle S.A. an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
34 NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of H759.0 million (Previous year H1,010.2 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The Company has also reversed/utilised contingency provision of H263.9 million (Previous year H2,026.1 million) due to the settlement of certain litigations and settlement of obligations for which provision is no longer required.
(1) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Excise Duty, Service Tax, Entry tax, Income Tax, Labour Laws, Value Added Tax, Sales and Purchase Tax, Goods and Service Tax etc.). This includes positions taken on matters under dispute involving judgements and assumptions to determine the possible outcome. The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(2) Others - represents estimates for other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
(f) At Nestle India, under CSR we focus our efforts in society on the overarching ambitions that make an impact in the area of nutrition awareness, water, sanitation, education, enhancing livelihood, rural development projects, ensuring environment sustainability, feeding support and disaster management including relief.
(g) Above does not include any related party transactions.
(h) The Company did not wish to carry forward any excess amount spent during the financial year ending March 2025.
(1) FY 2024-25 includes amount of H88.2 million excess spent in previous financial year availed for set off in current financial year.
(2) Includes amount paid for acquisition/ construction of assets Nil (Previous Year Nil).
36 (a) TAX EXPENSE
Income tax expense comprises of current tax and deferred tax. Income tax expense is recognised in the statement of profit and loss, except when it relates to items recognised in the other comprehensive income or items recognised directly in the equity. In such cases, the income tax expense is also recognised in the other comprehensive income or directly in the equity as applicable. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation or under dispute with authorities and establishes provisions where appropriate.
Provision for current tax for the period comprises of:
(a) estimated tax expense which has accrued on the profit for the period 1st April 2024 to 31st March 2025 and,
(b) the residual tax expense for the period 1st April 2023 to 31st March 2024 arising out of the finalisation of fiscal accounts (Assessment Year 2024-25), under the provisions of the Indian Income tax Act, 1961.
Deferred taxes are recognised basis the balance sheet approach on temporary differences, being the difference between the carrying amount of assets and liabilities in the Balance Sheet and its corresponding tax base, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which such assets can be utilized.
a) RECOGNITION AND INITIAL MEASUREMENT
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition except trade receivables which are initially recognised at transaction price as they do not contain a significant financing component. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
b) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS
For the purpose of subsequent measurement, financial assets are classified as follows:
Amortised cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortised cost less impairment, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on derecognition, cumulative gain or loss previously recognised in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair value through profit or loss. Changes in fair value and income on these assets are recognised in the statement of profit and loss.
c) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortised cost - Financial liabilities are classified as financial liabilities at amortised cost by default. Interest expense calculated using EIR method is recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognised in the statement of profit and loss.
d) DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership. A financial liability is derecognised when the obligation under the liability is discharged or expires.
e) IMPAIRMENT OF FINANCIAL ASSETS
Financial assets (debt instruments) that are carried at amortised cost and fair value through other comprehensive income (FVOCI) are assessed for possible impairments basis expected credit losses taking into account the past history of recovery, risk of default of the counterparty, existing market conditions etc. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition.
For Trade receivables, the Company provides for expected credit losses based on a simplified approach as per Ind AS 109 - Financial Instruments. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset.
f) DERIVATIVES AND HEDGE ACCOUNTING
Derivative instruments used by the company include forward contracts. The Company formally establishes a hedge relationship between such forward contracts (''hedging instrument'') and recognized financial asset/ liabilities (''hedged item'') through a formal documentation at the inception of the hedge. Forward contracts are designated as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges) and against highly probable forecast transactions (cash flow hedges). The effectiveness of hedge instruments is assessed at the inception and on an ongoing basis.
Derivatives instruments such as forward contracts are initially measured at fair value. When a forward contract is designated as a cash flow hedge, the effective portion of change in the fair value of the contract is recognised in the other comprehensive income and accumulated in other equity under "effective portion of cash flow hedges". Amount recognised in other equity is subsequently reclassified to the statement of profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the change in the fair value of the contract is recognised immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognised in the statement of profit and loss.
g) FAIR VALUE MEASUREMENT
Fair value of financial assets and liabilities is normally determined by references to the transaction price or market price. If the fair value is not reliably determinable, the company determines the fair value using valuation techniques that are appropriate in the circumstances and for which sufficient data are available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). Fair value of investment in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels in financial year 2024-25 and in the previous financial year ended 31st March, 2024.
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit risk and market risk. This note presents the Company''s objectives, policies and processes for managing its financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with various banks to meet the obligations.
(ii) Credit risk
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation:
Company invests in liquid mutual funds, tax free long term bonds, treasury bills, deposit with banks etc. Funds are invested in accordance with the Company''s established Investment policy that includes parameters of safety, liquidity and post tax returns. Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company''s exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the company does not expect any significant risk of default.
Credit risk arising from trade receivables is managed in accordance with the Company''s established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset. This allowance is measured taking into account credit profile of the customer, geographical spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Company''s maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market RiskInterest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as borrowings are taken for a short term period at an agreed interest rate.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is not exposed to the significant price risk as there are no equity investments other than investment in associate which are measured at cost (Refer note 7).
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Company''s established policy for foreign exchange management. The Company enters into forward contracts as per the hedging policy to hedge against its foreign currency exposures.
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
|
40 CONTINGENT LIABILITIES AND COMMITMENTS |
(J in million) |
|
|
Particulars |
As at 31st March, 2025 |
As at 31st March, 2024 |
|
(i) Contingent liabilities |
||
|
Claims against the Company not acknowledged as debts: Indirect Taxes |
40.8 |
38.7 |
|
(ii) Capital commitments |
||
|
Capital expenditure commitments remaining to be executed and not provided for [net of advances H255.5 million (previous year H1,586.9 million)] |
4,968.6 |
13,100.4 |
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity falls within a single operating segment, namely Food. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking Aids, Powdered and Liquid Beverages and Confectionery
The Board of Directors have recommended a final dividend of H10.00 per equity share (Face Value of Hi per share) amounting to H9,641.6 million for the financial year 2024-25 after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend has not been recognised as a liability as at the balance sheet date in line with Ind AS 10 on ''Events after the Reporting Period''.
On and from the Record Date of 5th January 2024, the equity shares of the Company have been sub- divided, such that 1 (one) equity share having face value of H10/- (H ten only) each, fully paid-up, stands sub-divided into 10 (ten) equity shares having face value of H1/- (H one only) each, fully paid-up, ranking pari-passu in all respects.
47 OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and previous financial year.
(iv) The Company does not have any such transactions which has not been recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(v) The Company has not been declared as wilful defaulter by any bank of financial institution or other lender.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (ultimate beneficiaries), or (b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
The Company has not received funds from any person(s) or entity(ies), including foreign entities, with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, (a) lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party, or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) Quarterly returns or statements of current assets filed by the Company with the banks in connection with the working capital limit sanctioned are in agreement with the books of accounts.
(viii) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.
Proviso to Rule 3 (1) of the Companies (Accounts) Rules, 2014 has become applicable to the Company with effect from April 1, 2024. Accordingly, it is mandatory for the company to use only such accounting software for maintaining its books of accounts which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of accounts along with the date when such changes were made and ensure that the audit trail cannot be disabled. Company uses SAP Enterprise Resource Planning (ERP) software to maintain its books of account. SAP ensures an audit trail (edit log) functionality and the same has been operational throughout the financial year for all relevant transactions recorded in the application layer of the software. At the database level the audit trail feature was enabled with effect from 18th March 2025. Further no instance of audit trail feature being tampered with was noted during the year in respect of accounting software where the audit trail has been enabled.
Mar 31, 2024
INVENTORIES
Inventories are stated at cost or net realisable value, whichever is lower. However, raw materials, packing materials and other supplies held for use in the production of inventories are not written down below cost if the finished goods in which they will be included are expected to be sold at or above cost.
Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
There are no unbilled receivables as at 31 March 2024 and 31 December 2022.
There are no debts due by directors or other officers of the Company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include bank balances, cheques and drafts on hand including remittances in transit, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of Statement of Cash flows.
*On and from the Record Date of 5th January 2024, the equity shares of the Company have been sub- divided, such that 1 (one) equity share having face value of H10/- (H ten only) each, fully paid-up, stands sub-divided into 10 (ten) equity shares having face value of H 1/- (H one only) each, fully paid-up, ranking pari-passu in all respects. The Earnings per share for the prior periods have been restated considering the face value of H 1/- each in accordance with Ind AS 33 -''''Earnings per shareâ.
Nature and description of reserve
(i) General Reserve - General reserve are free reserves of the Company which are kept aside out of Company''s profits to meet the future requirements as and when they arise. The Company had transferred a portion of the profit after tax (PAT) to general reserve pursuant to the earlier provisions of the erstwhile Companies Act, 1956. It is not mandatory to transfer the profit to reserve under the provisions of the Companies Act, 2013 ("Act").
The Shareholders of the Company had, at the Court Convened Meeting held on 25th July 2022, approved the Scheme of Arrangement (''Scheme'') which envisages transfer of the entire balance of H 8,374.3 million standing to the credit of the General Reserves to Retained Earnings. The Company had accordingly filed a petition for sanction of the Scheme with the Hon''ble National Company Law Tribunal, New Delhi Bench (''Hon''ble NCLT''). The Hon''ble NCLT, vide its order dated 15th September 2023 (''Order''), had sanctioned the Scheme. The Appointed Date as fixed in the Scheme is 1st January 2022 and the Scheme became effective from 19th October, 2023, the date on which certified copy of the order filed with the concerned Registrar of Companies.
(ii) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less transfer to general reserves, dividend (including dividend distribution tax) and other distributions made to the shareholders.
(iii) Capital Reserve - Capital Reserve is a reserve arising on business combination under common control due to difference between carrying amount of net assets acquired and consideration paid (as adjusted for amount recognized in retained earnings). The amount is not available for distribution to shareholders.
(iv) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated with foreign currency transactions relating to firm commitments and highly probable forecast transactions. This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying forecasted transactions.
Represents Interest free loan from the state of Karnataka (repayable after 7 years from the date of disbursement in 10 equal installments commencing from the year 2021) and Interest free loan from the state of Himchal Pradesh (repayable after 8 years from the year of deferment commencing from year 2021).
a) Sale of products
Revenue from sale of goods is recognised on transfer of control of goods to the buyer. Revenue is measured at the price charged to the customer and are recorded net of returns (if any), trade discounts, rebates, other pricing allowances to trade/consumer, when it is probable that the associated economic benefits will flow to the Company. Accumulated experience is used to estimate the accruals and provisions for discounts and rebates.
Government Grants in relation to revenue and expenses are recognized when there is reasonable assurance that the entity will comply with the attached conditions and that the grant will be received. Such grants are recognized in Other operating revenues on a systematic basis.
Government grant in relation to property, plant and equipment is treated as deferred income and is recognised in the statement of profit and loss over the useful life of the asset.
(i) The Company makes contributions to Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees and these contributions are charged to statement of profit and loss on accrual basis. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognised H1,363.1 million (Previous year H 988.7 million) as expense in the statement of profit and loss during the fifteen months towards contribution to these funds.
Out of the total contribution made for Provident Fund, H 78.9 million (Previous year H 350.8 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return. Effective 01st February 2023, Nestle India Limited Employees Provident Fund Trust was surrendered to the Regional Provident Fund and members balances including interest upto 31st January 2023 as per the audited financial statements of the said trust amounting to H 5,477.8 million (Previous year H 5,186.4 million) were transferred to Regional Provident Fund. All Provident Fund contributions effective 01st February 2023 onwards are made with the Regional Provident Fund.
During the period of operation of Trust, Trustees of Nestle India Limited Employees Provident Fund Trust were responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Trust was in accordance with the rules prescribed by the Government of India.
(ii) Other Employee Benefits: Short term employee benefits including performance incentives, are charged to statement of profit and loss on an undiscounted, accrual basis during the period of employment.
(iii) Pension and Gratuity Plans: The Company provides pension and gratuity to eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service. The Company makes contributions to the Nestle India Limited Employees'' Gratuity Trust Fund. The Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with the rules prescribed by the Government of India. The Company aims to keep annual contributions to the trust relatively stable at a level such that no significant gap arises between plan assets and liabilities.
Defined benefit pension plans are discretionary and consist of an unfunded defined benefit pension plan and a funded defined benefit pension plan (known as ''Future Ready Plan''). The unfunded defined benefit plan exposes the Company to risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
Liability for defined benefit plans i.e. gratuity and ''unfunded pension plan'' is determined based on the actuarial valuation carried out by an independent actuary as at the year-end. As these liabilities are relatively long term in nature, the actuarial assumptions take into account the requirements of the relevant Ind AS coupled with a long-term view of the underlying variables / trends, wherever required.
For funded defined benefit pension plan, the Company has made investments in appropriate Investment product of an Insurance Company to cover the obligations. The amount and timing of the defined benefits payable under the Future Ready Plan match with the amounts recoverable from the Investment product. The accumulated investment balance shall be utilised to purchase pension annuities from the Insurance Company for the employees as per the ''Future Ready Plan''. The plan exposes the Company to risks such as credit risk etc. Also, refer note 4 to the financial statements for description of pension plan amendment and settlement.
Liability for funded defined benefit pension plan (Future Ready Plan) has been determined in 2021 based on actuarial valuation carried out by an independent actuary for past period of services and frozen. The obligation so determined is invested in an appropriate investment product of an Insurance Company and is recognized as having ''reimbursement rights'' as per Ind AS 19 Employee Benefits. This investment will earn interest and the corresponding defined benefit liability will be increased with this interest amount. The amount recoverable from the investment product would be utilized for payment of the defined benefits payable under the Future Ready Plan. Also refer to Note 4 of the financial statements.
Service cost and net interest cost on the defined benefit liabilities/assets are recognized in the statement of profit and loss as employee benefit expense and finance costs respectively. Gains and losses on remeasurement of defined benefits liabilities/plan assets arising from changes in actuarial assumptions and experience adjustments are recognised in the other comprehensive income and are included in retained earnings in the balance sheet.
Long term employee benefits such as compensated absences and long service awards are charged to statement of profit and loss on the basis of an actuarial valuation carried out by an independent actuary as at the year-end. Actuarial gains and losses are recognised in full in the statement of profit and loss during the year in which they occur.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
As defined benefits obligations are of relatively long term in nature, the actuarial assumptions take in account the requirements of the relevant Ind AS coupled with a long term view of the underlying variables / trends, wherever required.
33. RESTRICTED STOCK UNIT (RSU) / PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU) / Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU) / Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The fair value of these units is charged to the statement of profit and loss over the vesting period. The Company has to pay Nestle S.A. an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
34. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of H 1,010.2 million (Previous year H 1,309.4 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The Company has also reversed/utilised contingency provision of H 2,026.1 million (Previous year H 156.9 million) due to the settlement of certain litigations and settlement of obligations for which provision is no longer required.
(1) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Excise Duty, Service Tax, Entry tax, Income Tax, Labour Laws, Value Added Tax, Sales and Purchase Tax, Goods and Service Tax etc.). This includes positions taken on matters under dispute involving judgements and assumptions to determine the possible outcome. The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities
(2) Others - represents estimates for other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
(f) At Nestle India, under CSR we focus our efforts in society on the overarching ambitions that make an impact in the area of nutrition awareness, water, sanitation, education, enhancing livelihood, rural development projects, ensuring environment sustainability and disaster management including relief, covid.
(g) Above does not include any related party transactions.
(h) The Company did not wish to carry forward any excess amount spent during the previous financial year ending Dec 2022.
includes amount paid for acquisition/ construction of assets : Nil (Previous Year : Nil)
Income tax expense comprises of current tax and deferred tax. Income tax expense is recognised in the statement of profit and loss, except when it relates to items recognised in the other comprehensive income or items recognised directly in the equity. In such cases, the income tax expense is also recognised in the other comprehensive income or directly in the equity as applicable. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation or under dispute with authorities and establishes provisions where appropriate.
Provision for current tax for the period comprises of:
(a) estimated tax expense which has accrued on the profit for the period 1 January 2023 to 31 March 2024 and,
(b) the residual tax expense for the period 1 April 2022 to 31 March 2023 arising out of the finalisation of fiscal accounts (Assessment Year 2023-2024), under the provisions of the Indian Income tax Act, 1961.
Deferred taxes are recognised basis the balance sheet approach on temporary differences, being the difference between the carrying amount of assets and liabilities in the Balance Sheet and its corresponding tax base, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which such assets can be utilized.
37. FINANCIAL INSTRUMENTS
a) RECOGNITION AND INITIAL MEASUREMENT
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
b) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS
For the purpose of subsequent measurement, financial assets in the nature of debt instruments are classified as follows:
Amortised cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortised cost less impairments, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on derecognition, cumulative gain or loss previously recognised in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair value through profit or loss. Changes in fair value and income on these assets are recognised in the statement of profit and loss.
c) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortised cost - Financial liabilities are classified as financial liabilities at amortised cost by default. Interest expense calculated using EIR method is recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognised in the statement of profit and loss.
d) DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership.
A financial liability is derecognised when the obligation under the liability is discharged or expires.
e) IMPAIRMENT OF FINANCIAL ASSETS
Financial assets (debt instruments) that are carried at amortised cost and fair value through other comprehensive income (FVOCI) are assessed for possible impairments basis expected credit losses taking into account the past history of recovery, risk of default of the counterparty, existing market conditions etc. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition.
For Trade receivables, the Company provides for expected credit losses based on a simplified approach as per Ind AS 109 - Financial Instruments. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset.
f) DERIVATIVES AND HEDGE ACCOUNTING
Derivative instruments used by the Company include forward contracts. The Company formally establishes a hedge relationship between such forward contracts (''hedging instrument'') and recognized financial asset/ liabilities (''hedged item'') through a formal documentation at the inception of the hedge. Forward contracts are designated as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges) and against highly probable forecast transactions (cash flow hedges). The effectiveness of hedge instruments is assessed at the inception and on an ongoing basis.
Derivatives instruments such as forward contracts are initially measured at fair value. When a forward contract is designated as a cash flow hedge, the effective portion of change in the fair value of the contract is recognised in the other comprehensive income and accumulated in other equity under "effective portion of cash flow hedges". Amount recognised in other equity is subsequently reclassified to the statement of profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the change in the fair value of the contract is recognised immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognised in the statement of profit and loss.
g) FAIR VALUE MEASUREMENT
Fair value of financial assets and liabilities is normally determined by references to the transaction price or market price. If the fair value is not reliably determinable, the Company determines the fair value using valuation techniques that are appropriate in the circumstances and for which sufficient data are available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 7:The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). Fair value of investment in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels in fifteen months 2023-24 and in the financial year 2022.
j) FINANCIAL RISK MANAGEMENT
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit risk and market risk. This note presents the Company''s objectives, policies and processes for managing its financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with various banks to meet the obligations.
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation:
The Company has made investments in tax free long term bonds, treasury bills, deposit with banks etc. Funds are invested in accordance with the Company''s established Investment policy that includes parameters of safety, liquidity and post tax returns. The Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company''s exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
Credit risk arising from trade receivables is managed in accordance with the Company''s established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset. This allowance is measured taking into account credit profile of the customer, geographical spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Company''s maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market RiskInterest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as its investments are primarily in fixed rate instruments. Also, there are no significant borrowings as at the balance sheet date.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is exposed to the price risk mainly from investment in equity instruments. However, equity investments are not significant as at the balance sheet date.
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Company''s established policy for foreign exchange management. The Company enters into forward contracts as per the hedging policy to hedge against its foreign currency exposures.
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
|
40. CONTINGENT LIABILITIES AND COMMITMENTS (i) Contingent liabilities Claims against the Company not acknowledged as debts: |
As at 31 March 2024 |
(J in million) As at 31 December 2022 36.1 |
|
|
(ii) |
Indirect Taxes Capital Commitments Capital expenditure commitments remaining to be executed |
||
|
and not provided for [net of advances H 1,586.9 million (previous year H 815.2 million)] |
13,100.4 |
7,865.7 |
|
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity falls within a single operating segment, namely Food. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery (Refer Note 25).
The Board of Directors have recommended a final dividend of H 8.50 per equity share (Face Value of H 1 per share) amounting to H 8,195.3 million for the year 2023-24 after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend has not been recognised as a liability as at the balance sheet date in line with Ind AS 10 on ''Events after the Reporting Period''.
On and from the Record Date of 5th January 2024, the equity shares of the Company have been sub- divided, such that 1 (one) equity share having face value of H10/- (H ten only) each, fully paid-up, stands sub-divided into 10 (ten) equity shares having face value of H1/- (H one only) each, fully paid-up, ranking pari-passu in all respects.
47 OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and previous financial year.
(iv) The Company does not have any such transactions which has not been recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(v) The Company has not been declared as wilful defaulter by any bank of financial institution or other lender.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (ultimate beneficiaries), or (b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
The Company has not received funds from any person(s) or entity(ies), including foreign entities, with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, (a) lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party, or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) Quarterly returns or statements of current assets filed by the Company with the banks in connection with the working capital limited sanctioned are in agreement with the books of accounts.
(viii) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.
48 NEW LABOUR CODES
The Indian Parliament has passed and approved the Code on Social Security 2020. While the effective date of the code and complete clarity on the rules/interpretations are still awaited, as a consequence, the impact of the same will be assessed and accounted for post notification of the relevant provisions. The Company has been taking cognizance of the changes and salary structures have been suitably designed to be compliant and accordingly, there are no material impacts foreseen on the financial statements of the Company.
49 REGROUPING / RECLASSIFICATION
Previous year''s figures have been regrouped / reclassified, where necessary, to conform to the current year''s classification.
Dec 31, 2022
Property, Plant and Equipment - Owned
Items of property, plant & equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Cost is inclusive of freight, duties, taxes or levies (net of recoverable taxes) and any directly attributable cost of bringing the assets to their working condition for intended use.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progress".
Profit or loss on disposal / scrapping / write off / retirement from active use of an item of property, plant and equipment is recognised in the statement of profit and loss.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under âOther Non-Current Assets".
Depreciation / Amortisation
The Company has assessed the useful lives of property, plant and equipment as required by Schedule II to the Companies Act, 2013. Accordingly, depreciation has been computed on useful lives based on technical evaluation of relevant class of assets including components thereof. Useful lives and residual values are reviewed annually. Depreciation is provided as per the straight line method computed basis useful lives of property, plant and equipment as follows:
|
Useful Life |
|
|
Leased Assets |
Lower of lease term or useful life |
|
Buildings |
25 - 40 years |
|
Plant & Equipments |
5 - 25 years |
|
Office Equipments |
5 years |
|
Furniture and fixtures |
5 years |
|
Vehicles |
5 years |
|
Information Technology (IT) equipment Freehold land is not depreciated. |
3 - 5 years |
Impairment of Property, Plant and Equipment
At each balance sheet date, the Company reviews whether there is any indication that an item of property, plant and equipment including capital work in progress, right of use assets or intangible assets (asset / cash generating unit) may be impaired. For the purpose of assessing impairment, assets are grouped at the levels for which there are separately identifiable cash flows (cash generating unit). If any impairment indicator exists, estimate of the recoverable amount of the property, plant and equipment /cash generating unit to which the asset belongs is made. An impairment loss is recognised in the statement of Profit and Loss whenever the carrying amount of an asset/ cash generating unit exceeds its recoverable amount. The recoverable amount is the greater of the fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount rate.
Reversal of impairment losses recognised in earlier years is recorded when there is an indication that the impairment losses recognised for the asset/cash generating unit no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset/cash generating unit in earlier years.
Property, Plant and Equipment - Right of Use Assets
The Company''s leases mainly comprises of land, buildings, plant & machinery and vehicles. The Company leases land and buildings primarily for offices, manufacturing facilities and warehouses.
The Company assesses whether a contract is or 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.
At the date of commencement of the lease, the Company recognises a Right of Use asset (âROU") and a corresponding lease liability for all lease arrangements in which it is a lessee.
The Right of Use assets are initially recognised 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, if any. Right of Use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term or useful life of the underlying asset.
The lease liability is initially measured 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. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made. A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments with a corresponding adjustment to the carrying value of Right of Use assets.
Inventories are stated at cost or net realisable value, whichever is lower. However, raw materials, packing materials and other supplies held for use in the production of inventories are not written down below cost if the finished goods in which they will be included are expected to be sold at or above cost.
Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Nature and description of reserve
(i) General Reserve - General reserve are free reserves of the company which are kept aside out of company''s profits to meet the future requirements as and when they arise. The Company had transferred a portion of the profit after tax (PAT) to general reserve pursuant to the earlier provisions of the erstwhile Companies Act, 1956. It is not mandatory to transfer the profit to reserve under the provisions of the Companies Act, 2013 (âAct").
The Board of Directors at their meeting held on 28th July 2021, had approved a Scheme of Arrangement between the Company and its Members under Sections 230 to 232 of the Act, as amended, read with other applicable provisions of the Act and rules thereunder, which inter alia envisages the transfer of the entire balance of '' 8,374.3 million standing to the credit of the General Reserves to Retained Earnings (âthe Scheme") upon sanction by the Hon''ble National Company Law Tribunal, New Delhi (NCLT). In terms of the Orders of the Hon''ble NCLT, the Scheme was approved by the Members of the Company with requisite majority at the NCLT convened meeting held on 25th July 2022. Meeting of the un-secured creditors was dispensed with by the Hon''ble NCLT. The Scheme was admitted by the Hon''ble NCLT in August 2022. Subsequently, the proceedings took place at Hon''ble NCLT and the matter is listed on 21st February 2023 for its consideration.
(ii) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less transfer to general reserves, dividend (including dividend distribution tax) and other distributions made to the shareholders.
(iii) Capital Reserve - Capital Reserve is a reserve arising on business combination under common control due to difference between carrying amount of net assets acquired and consideration paid (as adjusted for amount recognized in retained earnings). The amount is not available for distribution to shareholders.
(iv) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated with foreign currency transactions relating to firm commitments and highly probable forecasted transactions. This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying forecasted transactions.
(v) Equity instruments through other comprehensive income - This represents the cumulative gains and losses arising on fair valuation of equity instruments measured at fair value through other comprehensive income under an irrevocable option. These are reclassified to Retained Earnings on sale of underlying investments.
26. REVENUE FROM OPERATIONS a) Sale of products
Revenue from sale of goods is recognised on transfer of control of goods to the buyer. Revenue is measured at the price charged to the customer and are recorded net of returns (if any), trade discounts, rebates, other pricing allowances to trade/consumer, when it is probable that the associated economic benefits will flow to the Company. Accumulated experience is used to estimate the accruals and provisions for discounts and rebates.
Government Grants in relation to revenue and expenses are recognized when there is reasonable assurance that the Company will comply with the attached conditions and that the grant will be received. Such grants are recognized in Other operating revenues on a systematic basis.
27. OTHER INCOME
Interest income is recognised using effective interest rate (EIR) method. Dividend income on investments is recognized when the right to receive the payment is established.
(i) The Company makes contributions to Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees and these contributions are charged to statement of profit and loss on accrual basis. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognised '' 988.7 million (Previous year '' 730.4 million) as expense in the statement of profit and loss during the year towards contribution to these funds.
Out of the total contribution made for Provident Fund, '' 310.6 million (Previous year '' 300.8 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return. The Trustees of Nestle India Limited Employees Provident Fund Trust are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Trust is in accordance with the rules prescribed by the Government of India.
The total plan liabilities under the Nestle India Limited Employees Provident Fund Trust as at 31 December 2022 as per the unaudited financial statements are '' 5,562.5 million (Previous year '' 5,029.1 million) as against total plan assets of '' 5,490.0 million (Previous year '' 4,949.9 million). The funds of the Trust have been invested under various securities in accordance with the rules prescribed by the Government of India. The market value of quoted investments included in plan assets is '' 5,352.8 million (Previous year '' 4,971.9 million) having a net book value of '' 5,147.3 million (Previous year '' 4,616.3 million)
(ii) Other Employee Benefits: Short term employee benefits including performance incentives, are charged to statement of profit and loss on an undiscounted, accrual basis during the period of employment.
(iii) Pension and Gratuity Plans: The Company provides pension and gratuity to eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service. The Company makes contributions to the Nestle India Limited Employees'' Gratuity Trust Fund. The Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with the rules prescribed by the Government of India. The Company aims to keep annual contributions to the trust relatively stable at a level such that no significant gap arises between plan assets and liabilities.
Defined benefit pension plans are discretionary and consist of an unfunded defined benefit pension plan and a funded defined benefit pension plan (known as ''Future Ready Plan''). The unfunded defined benefit plan exposes the Company to risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
Liability for defined benefit plans i.e. gratuity and ''unfunded pension plan'' is determined based on the actuarial valuation carried out by an independent actuary as at the year-end. As these liabilities are relatively long term in nature, the actuarial assumptions take into account the requirements of the relevant Ind AS coupled with a long-term view of the underlying variables / trends, wherever required.
For funded defined benefit pension plan, the Company has made investments in appropriate Investment product of an Insurance company to cover the obligations. The amount and timing of the defined benefits payable under the ''Future Ready Plan'' match with the amounts recoverable from the Investment product. The accumulated investment balance shall be utilised to purchase pension annuities from the Insurance company for the employees as per the ''Future Ready Plan''. The plan exposes the Company to risks such as credit risk etc. Also, refer Note 4 to the financial statements for description of pension plan amendment and settlement.
Liability for funded defined benefit pension plan (''Future Ready Plan'') has been determined in 2021 based on actuarial valuation carried out by an independent actuary for past period of services and frozen. The obligation so determined is invested in an appropriate investment product of an Insurance company and is recognized as having ''reimbursement rights'' as per Ind AS 19 Employee Benefits. This investment will earn interest and the corresponding defined benefit liability will be increased with this interest amount. The amount recoverable from the investment product would be utilized for payment of the defined benefits payable under the Future Ready Plan. Also refer to Note 4 of the financial statements.
Service cost and net interest cost on the defined benefit liabilities/assets are recognized in the statement of profit and loss as employee benefit expense and finance costs respectively. Gains and losses on remeasurement of defined benefits liabilities/plan assets arising from changes in actuarial assumptions and experience adjustments are recognised in the other comprehensive income and are included in retained earnings in the balance sheet.
Long term employee benefits such as compensated absences and long service awards are charged to statement of profit and loss on the basis of an actuarial valuation carried out by an independent actuary as at the year-end. Actuarial gains and losses are recognised in full in the statement of profit and loss during the year in which they occur.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
As defined benefits obligations are of relatively long term in nature, the actuarial assumptions take in account the requirements of the relevant Ind AS coupled with a long term view of the underlying variables / trends, wherever required.
34. RESTRICTED STOCK UNIT (RSU) / PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU) / Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU) / Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The fair value of these units is charged to the statement of profit and loss over the vesting period. The Company has to pay Nestle S.A. an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
35. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of '' 1,309.4 million (Previous year '' 907.5 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The Company has also reversed/utilised contingency provision of '' 156.9 million (Previous year '' 749.8 million) due to the settlement of certain litigations and settlement of obligations for which provision is no longer required.
(i) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Excise Duty, Service Tax, Entry tax, Income Tax, Labour Laws, Value Added Tax, Sales and Purchase Tax, Goods and Service Tax etc.). This includes positions taken on matters under dispute involving judgements and assumptions to determine the possible outcome. The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(ii) Others - includes estimates made for products sold by the Company which are covered under free replacement warranty on crossing the best before date for consumption and other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
37. (a) TAX EXPENSE
Income tax expense comprises of current tax and deferred tax. Income tax expense is recognised in the statement of profit and loss, except when it relates to items recognised in the other comprehensive income or items recognised directly in the equity. In such cases, the income tax expense is also recognised in the other comprehensive income or directly in the equity as applicable. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation or under dispute with authorities and establishes provisions where appropriate.
Provision for current tax for the period comprises of:
a) estimated tax expense which has accrued on the profit for the period 1 January 2022 to 31 December 2022 and,
b) the residual tax expense for the period 1 April 2021 to 31 March 2022 arising out of the finalisation of fiscal accounts (Assessment Year 2022-2023), under the provisions of the Indian Income tax Act, 1961.
Deferred taxes are recognised basis the balance sheet approach on temporary differences, being the difference between the carrying amount of assets and liabilities in the Balance Sheet and its corresponding tax base, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which such assets can be utilized.
(a) RECOGNITION AND INITIAL MEASUREMENT
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
(b) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS
(i) Debt Instruments
For the purpose of subsequent measurement, financial assets in the nature of debt instruments are classified as follows:
Amortised cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortised cost less impairments, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on derecognition, cumulative gain or loss previously recognised in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Changes in fair value and income on these assets are recognised in the statement of profit and loss.
(ii) Equity Instruments
The Company has made investment in equity instruments that are initially measured at fair value. The company has elected irrevocable option to measure such investments at FVOCI. The Company makes such election on an instrument-by-instrument basis. Pursuant to such irrevocable option, changes in fair value are recognised in the OCI and is subsequently not reclassified to the statement of profit and loss.
(c) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortised cost - Financial liabilities are classified as financial liabilities at amortised cost by default. Interest expense calculated using EIR method is recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognised in the statement of profit and loss.
(d) DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership.
A financial liability is derecognised when the obligation under the liability is discharged or expires.
(e) IMPAIRMENT OF FINANCIAL ASSETS
Financial assets (debt instruments) that are carried at amortised cost and fair value through other comprehensive income (FVOCI) are assessed for possible impairments basis expected credit losses taking into account the past history of recovery, risk of default of the counterparty, existing market conditions etc. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition.
For Trade receivables, the Company provides for expected credit losses based on a simplified approach as per Ind AS 109 - Financial Instruments. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset.
(f) DERIVATIVES AND HEDGE ACCOUNTING
Derivative instruments used by the Company include forward contracts. The Company formally establishes a hedge relationship between such forward contracts (''hedging instrument'') and recognized financial asset/liabilities (''hedged item'') through a formal documentation at the inception of the hedge. Forward contracts are designated as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges) and against highly probable forecast transactions (cash flow hedges). The effectiveness of hedge instruments is assessed at the inception and on an ongoing basis.
Derivatives instruments such as forward contracts are initially measured at fair value. When a forward contract is designated as a cash flow hedge, the effective portion of change in the fair value of the contract is recognised in the other comprehensive income and accumulated in other equity under âeffective portion of cash flow hedges". Amount recognised in other equity is subsequently reclassified to the statement of profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the change in the fair value of the contract is recognised immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognised in the statement of profit and loss.
(g) FAIR VALUE MEASUREMENT
Fair value of financial assets and liabilities is normally determined by references to the transaction price or market price. If the fair value is not reliably determinable, the company determines the fair value using valuation techniques that are appropriate in the circumstances and for which sufficient data are available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of Company specific valuations using inputs that are not based on observable market data (unobservable inputs). Fair value of investment in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels.
(j) FINANCIAL RISK MANAGEMENT
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit risk and market risk. This Note presents the Company''s objectives, policies and processes for managing its financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with various banks to meet the obligations.
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation:
Investments
The Company has made investments in tax free long term bonds, treasury bills, deposit with banks etc. Funds are invested in accordance with the Company''s established Investment policy that includes parameters of safety, liquidity and post tax returns. The Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company''s exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the company does not expect any significant risk of default.
Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Company''s established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset. This allowance is measured taking into account credit profile of the customer, geographical spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Other financial assets
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Company''s maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market Risk
Interest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as its investments are primarily in fixed rate instruments. Also, there are no significant borrowings as at the balance sheet date.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is exposed to the price risk mainly from investment in equity instruments. However, equity investments are not significant as at the balance sheet date.
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Company''s established policy for foreign exchange management. The Company enters into forward contracts as per the hedging policy to hedge against its foreign currency exposures.
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity falls within a single operating segment, namely Food. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery (Refer Note 26).
Revenue from major customers
There is no single customer that accounts for more than 10% of the Company''s revenue for the year ended 31 December 2022 and 31 December 2021. The other disclosure requirements of Ind AS 108 are not applicable.
The Board of Directors have recommended a final dividend of '' 75.00 per equity share amounting to '' 7,231.2 million for the year 2022 after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend has not been recognised as a liability as at the balance sheet date in line with Ind AS 10 on ''Events after the Reporting Period''.
48. OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and previous financial year.
(iv) The Company does not have any such transactions which has not been recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(v) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (ultimate beneficiaries), or (b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
The Company has not received funds from any person(s) or entity(ies), including foreign entities, with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, (a) lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party, or (b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(vii) Quarterly returns or statements of current assets filed by the Company with the banks in connection with the working capital limit sanctioned are in agreement with the books of accounts.
(viii) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.
49. NEW LABOUR CODES
The Indian Parliament has passed and approved the Code on Social Security 2020. While the effective date of the code and complete clarity on the rules/interpretations are still awaited, as a consequence, the impact of the same will be assessed and accounted for post notification of the relevant provisions. The Company has been taking cognizance of the changes and salary structures have been suitably designed to be compliant and accordingly, there are no material impacts foreseen on the financial statements of the Company.
50. REGROUPING / RECLASSIFICATION
Previous year''s figures have been regrouped / reclassified, where necessary, to conform to the current year''s classification. Please also refer to Note 5 on Business Combination under Common Control.
Dec 31, 2018
1 - CORPORATE INFORMATION
Nestle India Limited (âthe Companyâ) is a company domiciled in India, with its registered office situated at 100/101, World Trade Centre, Barakhamba Lane, New Delhi - 110 001. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the BSE Limited in India. The Company is primarily involved in Food business which incorporates product groups viz. Milk Products and Nutrition, Prepared dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.
2 - RECENT ACCOUNTING PRONOUNCEMENTS
IND AS 115: Revenue from Contracts with Customers
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115, âRevenue from Contracts with Customersâ. The Standard is applicable to the Company with effect from 1 January 2019.
Revenue from Contracts with Customers Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligation in contract
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer. The Company has evaluated Ind AS 115 and does not anticipate any significant impact.
3 - Impact of implementation of Goods and Services Tax (GST) on the financial statements
In accordance with Ind AS 18 on âRevenueâ and Schedule III to the Companies Act, 2013, Sales for the period 1 January to 30 June 2017 in the previous year were reported gross of Excise Duty and net of Value Added Tax (VAT)/ Sales Tax. Excise duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/Sales Tax, Excise duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sales as per the requirements of Ind AS 18. This has resulted in lower reported sales in the current year in comparison to the sales reported in the previous year under the pre-GST structure of indirect taxes. With the change in structure of indirect taxes, expenses are also being reported net of taxes. Accordingly, financial results for the year ended 31 December 2018 and in particular Sales, absolute expenses and ratios in percentage of Sales are not comparable with the previous year.
During the year, an amount of Rs. 520.5 million (net of reversals) [2017: Rs. 460.8 million] was charged to the statement of profit and loss on account of obsolete, damage and slow moving inventories.
(1) 2017: Includes an amount of Rs.150.0 million [representing 1,498,518 units of ICICI Prudential Liquid Plan - Daily Dividend] for which Company had placed the redemption on 29 December 2017 and was pending for execution till 31 December 2017. This has been subsequently realised on 1 January 2018.
Nature and description of reserve
(i) General Reserve - General reserve are free reserves of the company which are kept aside out of companyâs profits to meet the future requirements as and when they arise. The Company had transferred a portion of the profit after tax (PAT) to general reserve pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
(ii) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less transfer to general reserves, dividend (including dividend distribution tax) and other distributions made to the shareholders.
(iii) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated with foreign currency transactions relating to firm commitments and highly probable forecast transactions. This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying forecasted transactions.
(iv) Equity instruments through other comprehensive income - This represents the cumulative gains and losses arising on fair valuation of equity instruments measured at fair value through other comprehensive income under an irrevocable option.
4. Employee Benefit Plans
(i) The Company makes contributions to the Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognised Rs. 421.4 million (Previous year Rs. 368.0 million) as expense in the statement of profit and loss during the year towards contribution to these funds.
Out of the total contribution made for Provident Fund, Rs. 169.5 million (Previous year Rs. 144.6 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The shortfall, if any, is made good by the Company in the year in which it arises. The Trustees of Nestle India Limited Employees Provident Fund Trust are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Trust is in accordance with the rules prescribed by the Government of India.
The total plan liabilities under the Nestle India Limited Employees Provident Fund Trust as at 31 December 2018 as per the unaudited financial statements are Rs. 3531.4 million (Previous year Rs. 3,316.3 million) as against total plan assets of Rs. 3,532.2 million (Previous year Rs. 3,326.4 million). The funds of the Trust have been invested under various securities in accordance with the rules prescribed by the Government of India.
(ii) Pension and Gratuity Plans: The Company provides pension and gratuity to eligible employees under defined benefit plans. The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service.
The Company makes contributions to the Nestle India Limited Employeesâ Gratuity Trust Fund. The Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with the rules prescribed by the Government of India. The Company aims to keep annual contributions to the trust relatively stable at a level such that no significant gap arises between plan assets and liabilities. Defined benefit pension is a discretionary, unfunded plan. These benefit plans expose the Company to risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
As defined benefits obligations are of relatively long term in nature, the actuarial assumptions take in account the requirements of the relevant Ind AS coupled with a long term view of the underlying variables / trends, wherever required.
5. Restricted Stock Unit (RSU)/ Performance Share Unit (PSU) Plan
The Company participates in the Nestle Restricted Stock Unit (RSU)/ Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU)/ Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The Company has to pay Nestle S.A. an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
6. Total impairment loss on property, plant and equipment for the year ended 31 December 2018 is Rs. 110.8 million (Previous Year Rs. 371.8 million). Impairment loss relates to various items of plant and machinery and building that have been brought down to their recoverable values upon evaluation of future economic benefits from their use.
7. Net provision for contingencies
The Company has created a contingency provision of Rs. 1,242.5 million (Previous year Rs. 1,136.5 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The Company has also reversed, utilised/settled contingency provision of Rs. 205.6 million (Previous year Rs. 260.0 million) due to the satisfactory settlement of certain litigations and settlement of obligations under free replacement warranty for which provision is no longer required.
Notes:
(i) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Income Tax, Excise Duty, Service Tax, Entry Tax, Value Added Tax, Sales and Purchase Tax, etc.). The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(ii) Others - includes estimates made for products sold by the Company which are covered under free replacement warranty on crossing the best before date for consumption and other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). Fair value of investment in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels in 2017 and 2018.
(c) Financial Risk Management
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit risk, market risk. This note presents the Companyâs objectives, policies and processes for managing its financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with various banks to meet the obligations.
(ii) Credit risk
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation:
Investments
The Company has made investments in tax free long term bonds, treasury bills, certificate of deposits, commercial papers, short term bonds, deposit with banks, mutual funds etc. Funds are invested in accordance with the Companyâs established Investment policy that includes parameters of safety, liquidity and post tax returns. Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Companyâs exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the company does not expect any significant risk of default.
Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Companyâs established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset. This allowance is measured taking into account credit profile of the customer, geographical spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Movement in expected credit loss allowance on trade receivables:
Other financial assets
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Companyâs maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market Risk
Interest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as its investments are primarily in fixed rate instruments. Also, there are no significant borrowings as at the balance sheet date.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is exposed to the price risk mainly from investment in mutual funds and investment in equity instruments. Investment in mutual funds are made primarily in units of liquid funds and are not exposed to significant price risk. Further, Equity investment is strategic in nature and held on a long-term basis.
Foreign currency risk
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Companyâs established policy for foreign exchange management. The Company enters into forward contracts as per the hedging policy to hedge against its foreign currency exposures. The impact of strengthening/weakening of foreign currencies on the outstanding exposure remaining unhedged at the year-end is not significant.
(d) Derivative financial instruments
Derivative instruments used by the Company include forward contracts. All the forward contracts entered into are for the purpose of hedging foreign currency exposures relating to the underlying transactions and firm commitments or highly probable forecast transactions.
8. Capital Management
The Companyâs capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Companyâs operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
9. The Company had reviewed the General License Agreements in 2013, the Board of Directors of the Company negotiated and Nestle S.A. accepted an increase in royalty from 3.5% to 4.5% of domestic sales in a staggered manner by making an increase of 0.20% per annum over five years effective 1 January 2014. The royalty rate on exports is aligned to 4.5% of sales.
10. Operating Leases
The Companyâs significant leasing arrangements are primarily in respect of operating leases for premises (office, residential, warehouses etc.) and vehicles. The aggregate lease rentals charged to the statement of profit and loss account under different revenue accounts are Rs. 661.4 million (Previous year Rs. 718.8 million).
Note:
Other transactions with Key Managerial Personnel:
- Remuneration includes lease rentals paid at market rates Rs. 3.6 million (previous year Rs. 3.6 million).
(1) As the liabilities for defined benefit obligations are provided based on actuarial valuation for the company as a whole, the amount pertaining to Key management personnel has not been included.
11. Segment reporting
Based on the guiding principles given in Ind AS 108 on âOperating Segmentsâ, the Companyâs business activity falls within a single operating segment, namely Food. Accordingly, the disclosure requirements of Ind AS 108 are not applicable. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.
12. Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:
(ii) Proposed Final Dividend
The Board of Directors have recommended a final dividend of Rs. 25.0 per equity share amounting to Rs. 2410.4 million for the year 2018 (Previous Year: Rs. 23.0 per equity share amounting to Rs. 2,217.6 million) after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend (including dividend distribution tax) has not been recognised as a liability as at the balance sheet date in line with Ind AS 10 on âEvents after the Reporting Periodâ.
Dec 31, 2017
1. Capital Management
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
2. The Company had reviewed the General License Agreement in 2013, the Board of Directors of the Company negotiated and Nestle S.A. accepted an increase in royalty from 3.5% to 4.5% of domestic sales in a staggered manner by making an increase of 0.20% per annum over five years effective 1 January 2014. The royalty rate on exports is aligned to 4.5% of sales.
4. Operating Leases
The Company''s significant leasing arrangements are primarily in respect of operating leases for premises (office, residential, warehouses etc.) and vehicles. The aggregate lease rentals charged to the statement of profit and loss account under different revenue accounts are '' 718.8 million (Previous year '' 709.7 million).
5. Related party disclosures under Ind AS 24
(a) Related party and their relationship
(i) Holding Companies
Nestle S.A (Ultimate holding Company)
Maggi Enterprises Limited
(ii) Fellow subsidiaries with whom the company had transactions
CPW Middle East FZCO Nestle Panama S.A.
Nestec S.A. Nestle Philippines, Inc.
Nestec York Ltd. Nestle Product Technology Centre
Nestle (China) Ltd. Nestle Products (Mauritius) Ltd.
Nestle (PNG) Ltd Nestle Products Sdn Bhd
Nestle (South Africa) (Pty) Ltd Nestle R&D Center, Inc.
Nestle (Thai) Ltd. Nestle R&D Centre (Pte) Ltd.
Nestle Adriatic S DOO Nestle R&D Centre India Private Ltd.
Nestle Asean (Malaysia) Sdn. Bhd. Nestle ROH (Thailand) Ltd.
Nestle Australia Ltd. Nestle Romania SRL
Nestle Bangladesh Ltd. Nestle Servicios Corporativos, S.A.
Nestle Brasil Ltda Nestle Shanghai Ltd.
Nestle Bulgaria AD Nestle Shuangcheng Ltd
Nestle Canada Inc. Nestle Singapore (Pte) Ltd.
Nestle Caribbean Inc. Nestle South Africa Pty Ltd.
Nestle Cote D''Ivoire Nestle Suisse S.A.
Nestle Deutschland AG Nestle Taiwan Ltd.
Nestle Dubai Manufacturing LLC Nestle Thailand Ltd.
Nestle Equatorial African Region Nestle Tianjin Ltd.
Nestle France S.A.S. Nestle Trinidad And Tobago Ltd.
Nestle Ghana Ltd. Nestle Turkiye Gida Sanayi A.S.
Nestle Hong Kong Ltd Nestle UK Ltd.
Nestle Hungaria Kft. Nestle USA Inc
Nestle Iran Nestle Vietnam Ltd.
Nestle Japan Ltd. Nestle Waters Management & Technology
Nestle Kenya Ltd. Nestle Waters Marketing & distibution S.A.S
Nestle Korea Ltd. Nestle Waters North America Inc
Nestle Lanka PLC Nestrade S.A.
Nestle Manufacturing (Malaysia) Sdn Bhd PJSC âLviv Confectionery Factory svitoch"
Nestle Mexico S.A. de C.V. PT Nestle Indonesia
Nestle Middle East FZE Purina Petcare India Pvt. Ltd.
Nestle Middle East Manufacturing Quality Coffee Products Ltd.
Nestle Nederland B.V. Servcom S.A.
Nestle Nigeria Plc SMA Nutrition India Private Ltd.
Nestle Operational Services Worldwide S.A. Societe des Produits Nestle S.A.
Nestle Pakistan Ltd.
(iii) Key Management Personnel Executive Directors
Suresh Narayanan, Chairman and Managing Director Shobinder Duggal, Director - Finance & Control and CFO
Aristides Protonotarios , Director - Technical (Director - Technical upto 31 March 2017)
Martin Roemkens , Director - Technical (Director - Technical w.e.f. 1 April 2017)
Non-Executive Directors Ashok Kumar Mahindra
Rama Bijapurkar (Non-Executive Director w.e.f. 1 May 2017)
Rakesh Mohan
Ravinder Narain (Non-Executive Director upto 1 May 2017)
R.V. Kanoria Swati A.Piramal
(iv) Employees benefit trusts where control exists Nestle India Limited Employees Provident Fund Trust Nestle India Limited Employees'' Gratuity Trust Fund
(b) Nature of transactions
The transactions with the related parties have been entered in the ordinary course of business and are at arm''s length.
Note:
Other transactions with Key Managerial Personnel:
- Remuneration includes lease rentals paid at market rates '' 3.6 million (previous year '' 3.3 million).
(1) As the liabilities for defined benefit obligations are provided based on actuarial valuation for the company as a whole, the amount pertaining to Key management personnel has not been included.
50. Segment reporting
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity falls within a single operating segment, namely Food. Accordingly, the disclosure requirements of Ind AS 108 are not applicable. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.
(ii) The Company has business operations only in India and does not hold any assets outside India. Revenue from major customers
There is no single customer that accounts for more than 10% of the Company''s revenue.
(ii) Proposed Final Dividend
The Board of Directors have recommended a final dividend of '' 23.00 per equity share amounting to '' 2,217.6 million for the year 2017 (Previous Year: '' 23.0 per equity share amounting to '' 2,217.6 million) after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend (including dividend distribution tax) has not been recognized as a liability as at the balance sheet date in line with Ind AS 10 on ''Events after the Reporting Period''.
6. The Company did not have any holding or dealing in Specified Bank Notes and other denomination notes during the period 8 November, 2016 to 30 December, 2016 and hence disclosure requirements as per the notification G.S.R. 308(E) dated 31 March, 2017 are not applicable to the Company. For the purpose of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8 November, 2016.
7. First Time adoption of Ind AS
The Company has adopted Ind AS w.e.f 1 January 2017 with a transition date of 1 January 2016. Accordingly, financial statements for the year ended 31 December 2017 together with the comparative information for the year ended 31 December2016 and opening Ind AS balance sheet as at 1 January 2016 have been prepared in accordance with accounting policies as set out in Note 2 - âSignificant accounting policies".
The Company has prepared its opening Ind AS balance sheet as at 1 January 2016 by recognising assets and liabilities whose recognition is required by Ind AS, derecognising assets and liabilities which are not permitted by Ind AS, reclassifying assets and liabilities as required by Ind AS, and applying Ind AS measurement principles, subject to certain optional exemptions and mandatory exceptions. The resulting difference between the carrying values of the assets and liabilities as at the transition date under Ind AS and Previous GAAP have been adjusted directly against âOther Equity".
The effect of the transition to Ind AS on Company''s financial position, financial performance and cash flows is set out below.
(a) Optional exemptions and mandatory exceptions
The Company has availed the following optional exemptions and mandatory exceptions on first time adoption of Ind AS as per Ind AS 101.
(i) Optional exemptions
Deemed cost for property, plant and equipment
The Company has opted to continue with the carrying value as per the Previous GAAP for all items of its property, plant and equipment as its deemed cost on the date of transition.
Leases
The Company has opted to determine, whether a contract or arrangement existing at the date of transition contains a lease on the basis of facts and circumstances existing at the date of transition rather than at the inception of the arrangement.
Designation of investment in equity instruments
The Company has opted to designate equity investments as at fair value through other comprehensive income (FVOCI) based on the facts and circumstances existing at the date of transition to Ind AS rather than at initial recognition.
(ii) Mandatory exceptions
Classification and measurement of financial assets
The Company has determined the classification and measurement of financial assets on the basis of the facts and circumstances existing at the date of transition.
Estimates
The Company''s estimates under Ind AS as at 1 January 2016 are consistent with the estimates as at the same date made in conformity with the Previous GAAP. However, estimates that were not required under Previous GAAP but now required under Ind AS have been made basis facts and conditions as at the date of transition.
Footnotes:
I. Current Investments:
(a) Investments in mutual funds: Under Previous GAAP, investments in mutual funds were measured at cost or market value, whichever is lower. Under Ind AS, these investments have been classified as âmeasured at fair value through profit or loss (FVTPL)". Changes in fair value are recognized in the statement of profit and loss.
(b) Investments in treasury bills, certificate of deposits, commercial papers etc.: Under Previous GAAP, investments in treasury bills, certificate of deposits and commercial papers etc. were measured at cost or market value, whichever is lower. Under Ind AS, these investments have been classified as âmeasured at amortized cost". Interest income calculated using the effective interest rate (EIR) method is recognized in the statement of profit and loss.
II. Forward Contracts
Under Previous GAAP, the premium paid on forward contracts was recognized as expense or income over the life of the contract. Difference between the exchange rate on the date of inception and as at the settlement date of the forward contract was recognized as exchange difference. Further in case of forward contracts for highly probable forecasted transactions, net mark to market losses were recognized in the statement of profit and loss, and net gains, if any, were ignored.
Under Ind AS, derivative instruments such as forward contracts are measured at fair value. Forward contracts are designated as hedging instruments against changes in fair value of recognized assets and liabilities (fair value hedges) and against highly probable forecast transactions (cash flow hedges). When a forward contract is designated as a cash flow hedge, the effective portion of changes in the fair value of the contract is recognized in the other comprehensive income and is transferred to the statement of profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the changes in the fair value of the contract is recognized immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognized in the income statement.
III. Deferred Taxes
Under Previous GAAP, deferred taxes were accounted basis the income statement approach which required creation of deferred tax asset/liability on temporary differences between taxable income and accounting income. Under Ind AS, deferred taxes are accounted basis the balance sheet approach which requires creation of deferred tax asset/liability on temporary differences between the carrying amount of an asset/liability in the Balance Sheet and its corresponding tax base.
Application of Ind AS has also resulted in recognition of deferred taxes on new temporary differences arising due to adjustments made on transition to Ind AS.
IV. Proposed dividend
Under Previous GAAP, dividend proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements was considered as an adjusting event. Accordingly, provision for proposed dividend (including dividend distribution tax) was recognized as a liability in the same year to which it pertained. Under Ind AS, proposed dividend is recognized when the same is approved by the shareholders in the Annual General Meeting.
V. Government Grants
Under Previous GAAP, government grants in relation to fixed assets were reduced from the cost of the related asset. Under Ind AS, such grants have been treated as deferred income and is recognized in the statement of profit and loss on a systematic basis over the useful life of the asset.
Under Previous GAAP, Government grants in relation to investment outlay were recognized as part of capital reserves. Under Ind AS, these grants have been recognized in the statement of profit and loss on fulfillment of the underlying attached conditions.
VI. Sales
(a) Excise duty: Under Previous GAAP, Sales were presented net of Excise Duty. Under Ind AS, Sales are reported gross of excise duty. Excise duty is presented as a separate expense line item in the statement of profit and loss. (Also refer Note 4)
(b) Marketing and Selling Incentives: Under Previous GAAP, certain marketing and selling incentives to trade were reported as advertisement/ selling and distribution expenses in the statement of profit and loss. Under Ind AS, these have been netted off from sales.
VII. Re-measurement of defined benefit plans
Under Previous GAAP, re-measurement of retrial defined benefit plans i.e. actuarial gains/ (losses) arising due to experience adjustments and change in assumptions were recognized in the statement of profit and loss. Under Ind AS, remeasurement of retrial defined benefit plans is recognized in the âOther Comprehensive Income".
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
VIII. Investments in equity instruments
Under Previous GAAP, investments in equity instruments were carried at cost less provision for other than temporary diminution in the value of such investments. Under Ind AS, these investments have been classified as âmeasured at fair value through other comprehensive income (FVOCI)" through an irrevocable election. Changes in fair value are recognized directly in the âOther Comprehensive Income".
IX. Cash and Cash equivalents
Under Previous GAAP, bank overdrafts were presented as part of âCash flows from financing activities" in the statement of cash flows. Under Ind AS, bank overdrafts are included as a component of cash and cash equivalents in the statement of cash flows.
Dec 31, 2016
1. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of '' 1,813.6 million (Previous year '' 794.6 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The current yearâs provision has been impacted due to completion of certain procedures relating to litigation / disputed matter for more number of years in the current year as compared to only one year in the previous year. The Company has also reversed, utilised/settled contingency provision of '' 128.9 million (Previous year '' 160.0 million) due to the satisfactory settlement of certain litigations and settlement of obligations under free replacement warranty for which provision is no longer required.
*out of this, '' 418.0 million (Previous year '' 333.1 million) has been recognised as contingencies from operations and balance amount of '' 1,266.7 million (Previous year '' 301.5 million) as others.
Notes:
(a) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Income Tax, Excise Duty, Service Tax, Entry tax, Value Added Tax, Sales and Purchase Tax, etc.). The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company which are covered under free replacement warranty on crossing the best before date for consumption and other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
2. EMPLOYEE BENEFIT PLANS
(a) Defined contribution plans
The Company makes contributions to the Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company during the year has recognised '' 324.1 million (Previous year '' 292.8 million) as expense in the statement of profit and loss during the year.
Out of the total contribution made for Provident Fund, Rs, 128.9 million (Previous year Rs, 118.6 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The shortfall, if any, is made good by the Company in the year in which it arises.
The total plan liabilities under the Nestle India Limited Employees Provident Fund Trust as at December 31, 2016 as per the unaudited financial statements for the year then ended is Rs, 2,969.7 million (Previous year Rs, 2,668.7 million) as against total plan assets of Rs, 2,982.8 million (Previous year Rs, 2,689.8 million). The funds of the Trust have been invested under various securities as prescribed under the rules of the Trust.
(b) Defined benefit plans
The company provides gratuity and defined benefit pension to eligible employees. The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service. The Company makes contributions to the Nestle India Limited Employeesâ Gratuity Trust Fund. Defined benefit pension is a discretionary, unfunded plan.
Total employee benefits expense due to passage of time charged in statement of profit and loss is Rs, 874.0 million (Previous year Rs, 753.2 million). This includes Rs, 814.1 million (Previous year Rs, 699.5 million) towards pension and gratuity and Rs, 59.9 million (Previous year Rs, 53.7 million) towards compensated absences and long service awards.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.
(1) Financial results for the previous year ended 31st December, 2015 had been impacted by the MAGGI Noodles issue. The trust of its consumers and the safety and quality of its products is Nestleâs foremost priority. Unfortunately, developments and growing concerns about the product had led to an environment of confusion for the consumers to such an extent that the Company, on 5th June, 2015, decided to take the products temporarily off the shelves, despite the product being safe. This was done to reassure the consumers that their trust has always been of utmost importance for the Company and to maintain their continued patronage for Companyâs products. The Food Safety and Standards Authority of India (FSSAI) issued a ban order later on the same day i.e. 5th June, 2015 mainly alleging higher than permissible limits of lead and asking the Company to recall MAGGI Noodles, stop further manufacture and comply with other directions. In line with the instructions from the authorities and in keeping with environmental considerations, the withdrawn products including stocks with the Company were sent for high temperature thermal destruction and the Company suspended further manufacturing of MAGGI Noodles. The Company had conducted extensive additional tests, of over 3500 samples representing over 200 million packs of MAGGI Noodles, in both national and international accredited laboratories. All results confirmed levels of lead were well below the permissible limits. Furthermore, several other countries had found MAGGI Noodles safe after testing samples of the product exported from India. With a view to resolving the issue, the Company approached the Honâble Bombay High Court raising issues of interpretation of the Food Safety and Standards Act 2011, whilst seeking judicial review of the order dated 5th June, 2015 passed by FSSAI and order dated 6th June, 2015 passed by the Commissioner of Food Safety, Maharashtra (FDA). The Honâble Bombay High Court vide its Judgment dated 13th August, 2015 read along with Order dated 4th September, 2015 revoked the ban order passed by FSSAI and FDA and directed fresh testing of MAGGI Noodles for lead at three NABL (National Accreditation Board for Testing and Calibration Laboratories) accredited laboratories notified by FSSAI for testing of food products under Food Safety and Standards Act. Results from these laboratories were received by 16th October, 2015. 100% of the samples tested were clear with lead much below the permissible limits. In compliance with the directions of the Honâble Bombay High Court, the Company thereafter started manufacture of MAGGI Masala Noodles. Samples from the fresh manufacture of MAGGI Masala Noodles were sent to the same three laboratories to test for lead. Results from these laboratories were received by 4th November, 2015. 100% of the samples tested were clear with lead much below the permissible limits. The Company, after successfully passing the two levels of testing directed by the Honâble Bombay High Court, re-launched MAGGI Masala Noodles on 9th November, 2015. In December, 2015 the FSSAI filed a Special Leave Petition in the Honâble Supreme Court, challenging the Judgment of the Honâble Bombay High Court, which is currently pending before the Honâble Supreme Court.
Net Sales worth '' 3,034.0 million (about 23,650 tons) had been reversed during the previous year ended 31st December, 2015 in relation to MAGGI Noodles stock withdrawn from trade partners and market. The exceptional item relates to loss on account of stocks withdrawn including incidental costs thereto and estimates of other related costs incurred exclusively in the ordinary course of Companyâs business, dealt in line with the Accounting Standard AS 2 on âValuation of Inventoriesâ and Accounting Standard AS 5 on âNet Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policiesâ.
The exceptional item comprises of cost of finished goods, obsolete raw and packaging material, contractual commitments, destruction expenses and other related costs, including administrative costs, which had been incurred /reclassified from the expenses reported under the regular heads in the Statement of Profit and Loss (Refer note - 21).
Previous yearâs figures are indicated in brackets.
1. Includes product manufactured by contract manufacturers on conversion basis.
2. Sales quantity include company products withdrawn for sales promotion but exclude company products which have crossed the best before date for consumption and/or damaged in transit/ market which are destroyed.
3. Excludes stock of MAGGI Noodles destroyed (about 34,650 tons) - [Refer Note - 30].
3. RESTRICTED STOCK UNIT (RSU)/ PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU)/ Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU)/ Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The Company has to pay Nestle S.A an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
4. The Company had reviewed the General License Agreement in 2013, the Board of Directors of the Company negotiated and Nestle S.A. accepted an increase in royalty from 3.5% to 4.5% of domestic sales in a staggered manner by making an increase of 0.20% per annum over five years effective January 1, 2014. The royalty rate on exports is aligned to 4.5% of sales.
5. OPERATING LEASES
The Companyâs significant leasing arrangements are primarily in respect of operating leases for premises (office, residential, warehouses etc.) and vehicles. The aggregate lease rentals charged to the statement of profit and loss account under different revenue accounts are Rs, 709.7 million (Previous year Rs, 720.9 million).
Future minimum lease rentals payable as at 31st December, 2016 as per the lease agreements:
The Company also has other commitments for purchase /sales of goods and services for which orders are issued after considering requirements as per the operating cycle of the business.
6. RELATED PARTY DISCLOSURES UNDER ACCOUNTING STANDARD 18
(a) Related party and their relationship
(i) Holding Companies
Nestle S.A
Maggi Enterprises Limited
(ii) Fellow subsidiaries with whom the company had transactions
Nestec S.A. Nestle Purina Petcare Company
Nestec York Ltd Nestle R&D Center (Pte) Ltd
Nestle (China) Ltd. Nestle R&D Center, Inc.
Nestle (PNG) Ltd Nestle R&D Centre India Private Ltd
Nestle (South Africa) (Pty) Ltd Nestle ROH (Thailand) Ltd.
Nestle (Thai) Ltd. Nestle Romania SRL
Nestle Adriatic S DOO Nestle Servicios Corporativos, S.A. de C.V
Nestle Asean (Malaysia) Sdn Bhd Nestle Shanghai Ltd.
Nestle Australia Ltd Nestle Shuangcheng Ltd
Nestle Bangladesh Ltd Nestle Singapore (Pte) Ltd
Nestle Brasil Ltda Nestle Suisse S.A.
Nestle Bulgaria A.D Nestle Taiwan Ltd
Nestle Canada Inc Nestle Tianjin Ltd.
Nestle Central And West Africa Nestle Turkiye Gida Sanayi A.S.
Nestle Chile S.A. Nestle UK Ltd
Nestle Cote DâIvoire Nestle USA Inc
Nestle Deutschland AG Nestle Vietnam Ltd
Nestle Dubai Manufacturing LLC Nestle Waters (Suisse) SA
Nestle Egypt S.A.E. Nestle Waters Management & Technology S.A.S
Nestle Equatorial African Region Nestle Waters Marketing & distribution S.A.S
Nestle Espana, S.A. Nestle Waters North America Inc
Nestle Food Kazakhstan LLP Nestle Zimbabwe (Private) Ltd
Nestle France S.A.S Nestrade S.A.
Nestle Ghana Ltd Osem Investments Ltd.
Nestle Hong Kong Ltd PJSC âLviv Confectionery Factory svitochâ
Nestle Hungaria Kft. PT Nestle Indonesia
Nestle International Travel Retail Quality Coffee Products Ltd.
Nestle Iran Sanpellegrino S.p.A.
Nestle Japan Ltd. Servcom S.A.
Nestle Korea Ltd SMA Nutrition India Private Ltd
Nestle Lanka PLC Societe des Produits Nestle S.A
Nestle Manufacturing (Malaysia) Sdn Bhd Wyeth Nutritionals Ireland Ltd
Nestle Mexico S.A. de C.V.
Nestle Middle East FZE Nestle Middle East Manufacturing Nestle Nederland B.V.
Nestle Nigeria Plc
Nestle Operational Services Worldwide S.A Nestle Pakistan Ltd.
Nestle Panama S.A.
Nestle Philippines, Inc.
Nestle Products (Mauritius) Ltd Nestle Polska S.A.
Nestle Product Technology Centre Nestle Products Sdn Bhd
(iii) Key Management Personnel
Suresh Narayanan, Chairman and Managing Director Aristides Protonotarios, Director - Technical
(Managing Director w.e.f. 01st August, 2015) Shobinder Duggal, Director - Finance & Control and CFO
(Chairman and Managing Director w.e.f. 29th October, 2015)
Etienne Benet - Managing Director (Managing Director up to 25th July, 2015)
(iv) Employees benefit trusts where control exists
Nestle India Limited Employees Provident Fund Trust Nestle India Limited Employeesâ Gratuity Trust Fund
7. SEGMENT REPORTING
Based on the guiding principles given in Accounting Standard on âSegment Reportingâ (AS-17), the Companyâs primary business segment is Food. The food business incorporates product groups viz. Milk Products and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates and Confectionery, which mainly have similar risks and returns. As the Companyâs business activity falls within a single primary business segment the disclosure requirements of AS -17 in this regard are not applicable.
8. DISCLOSURE UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro Small Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:
Dec 31, 2014
1. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of Rs. 734.8 millions
(Previous year Rs. 736.4 millions) for various contingencies resulting
mainly from matters, which are under litigation / related disputes and
other uncertainties requiring management judgement. The Company has
also reversed, utilised/settled contingency provision of Rs. 121.0
millions (Previous year Rs. 115.9 millions) due to the satisfactory
settlement of certain litigations and settlement of obligations under
free replacement warranty for which provision is no longer required.
Notes:
(a) Litigations and related disputes - represents estimates made mainly
for probable claims arising out of litigations / disputes pending with
authorities under various statutes (i.e. Income Tax, Excise Duty,
Service Tax, Entry tax, Sales and Purchase Tax, etc.). The probability
and the timing of the outflow with regard to these matters depend on
the ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company
which are covered under free replacement warranty on becoming unfit for
human consumption during the prescribed shelf life. The timing and
probability of outflow with regard to these matters will depend on the
external environment and the consequent decision/ conclusion by the
Management.
2. CONTINGENT LIABILITIES AND COMMITMENTS
Contingent liabilities
Claims against the Company not acknowledged
as debts: (Rs. in (Rs. in
millions) millions)
Indirect Taxes 195.4 127.6
Capital Commitments
Capital expenditure commitments remaining
to be executed and not 201.3 599.2
provided for [net of advances Rs. 19.3
millions (Previous year Rs. 25.6 millions)]
Corporate social responsibility expense
commitments 38.6 -
The Company also has other commitments for purchase /sales of goods and
services for which orders are issued after considering requirements as
per the operating cycle of the business.
3. SEGMENT REPORTING
Based on the guiding principles given in Accounting Standard 17 on
''Segment Reporting'' (AS-17), the Company''s primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
Company''s business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
4. DISCLOSURE UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006
On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the Company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs. 24.1 millions
(Previous year Rs. 51.6 millions). Further, no interest during the year
has been paid or payable under the terms of the MSMED Act, 2006.
5. EMPLOYEE BENEFIT PLANS
(a) Defined contribution plans
The Company makes contributions to the Provident Fund, Employee State
Insurance, National Pension System etc. for eligible employees. Under
these plans, the Company is required to contribute a specified
percentage of payroll costs. The Company during the year has recognised
Rs. 258.2 millions (Previous year Rs. 221.3 millions) as expense in the
statement of profit and loss during the year.
Out of the total contribution made for Provident Fund, Rs. 114.3
millions (Previous year Rs. 112.4 millions) is made to the Nestle India
Limited Employees Provident Fund Trust while the remainder contribution
is made to Provident Fund Plans operated by the Regional Provident Fund
Commissioners. The members of the Provident Fund Trust are entitled to
the rate of interest declared by the Central Government under the
Employees Provident Funds and Miscellaneous Provisions Act, 1952. The
shortfall, if any, is made good by the Company in the year in which it
arises.
The total plan liabilities under the Nestle India Limited Employees
Provident Fund Trust as at December 31, 2014 as per the unaudited
financial statements for the year then ended is Rs. 2,319.4 millions
(Previous year Rs. 1,981.9 millions) as against total plan assets of
Rs. 2,332.0 millions (Previous year Rs. 1,995.5 millions). The funds of
the Trust have been invested under various securities as prescribed
under the rules of the Trust.
(b) Defined Benefit plans
The company provides gratuity and defined benefit pension to eligible
employees. The gratuity plan provides for a lump sum payment to vested
employees at retirement, death while in employment or on termination of
employment. Gratuity vesting occurs upon completion of five years of
service. The Company makes contributions to the Nestle India Limited
Employees'' Gratuity Trust Fund. Defined benefit pension is a
discretionary, unfunded plan.
6. RESTRICTED STOCK UNIT (RSU)/ PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU)/
Performance Share Unit (PSU) Plan of Nestle S.A., whereby select
employees are granted non-tradable units with the right to obtain
Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU)/
Performance Share Units (PSU) granted to employees vest, subject to
certain conditions, after completion of three years. Upon vesting
Nestle S.A. determines, whether shares, free of charge or cash
equivalent to the value of shares, is to be transferred to the
employees. The Company has to pay Nestle S.A. an amount equivalent to
the value of Nestle S.A. shares on the date of vesting, delivered to
the employees.
7. OPERATING LEASES
The Company''s significant leasing arrangements are primarily in respect
of operating leases for premises (office, residential, warehouses etc.)
and vehicles. The aggregate lease rentals charged to the statement of
profit and loss account are Rs. 681.6 millions (Previous year Rs. 607.3
millions).
8. EXTERNAL COMMERCIAL BORROWINGS
The Company had drawn US Dollars 192 millions in the year 2011 and 2012
from Nestle S.A. for 5 years for the purpose of capital expenditure
under the External Commercial Borrowings (ECB) approval from Reserve
Bank of India. During the current year, Company has repaid the entire
ECB of US Dollars 192 millions.
9. The Company has reviewed the General License Agreement in 2013, the
Board of Directors of the Company negotiated and Nestle S.A. accepted
an increase in royalty from 3.5% to 4.5% of domestic sales in a
staggered manner by making an increase of 0.20% per annum over five
years effective January 1, 2014. The royalty rate on exports will now
be aligned to 4.5% of sales.
10. During the year, the Company has incurred Rs. 85.1 millions
towards corporate social responsibility activities in accordance with
section 135 of the Companies Act, 2013. The Company also has
outstanding commitments of Rs. 38.6 millions as on 31st December, 2014
towards corporate social responsibility projects. This includes
expenditure on projects which are relatively long term in nature and
costs spread over several months.
Dec 31, 2013
1. Net provision for contingencies
The Company has created a contingency provision of Rs. 736.4 millions
(Previous year Rs. 556.4 millions) for various contingencies resulting
mainly from matters, which are under litigation / related disputes and
other uncertainties requiring management judgment. The Company has
also reversed, utilised/settled contingency provision of Rs. 115.9
millions (Previous year Rs. 298.0 millions) due to the satisfactory
settlement of certain litigations for which provision is no longer
required.
(a) Litigations and related disputes - represents estimates made mainly
for probable claims arising out of litigations / disputes pending with
authorities under various statutes (i.e. Income Tax, Excise Duty,
Service Tax, Entry tax, Sales and Purchase Tax etc.). The probability
and the timing of the outflow with regard to these matters depend on the
ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company
which are covered under free replacement warranty on becoming unft for
human consumption during the prescribed shelf life. The timing and
probability of outflow with regard to these matters will depend on the
external environment and the consequent decision/ conclusion by the
Management
2. Contingent liabilities and commitments
Contingent liabilities
Claims against the Company not
acknowledged as debts:
Indirect Taxes 127.6 117.0
Capital Commitments
Capital expenditure commitments remaining to
be executed and not 599.2 921.6
provided for [net of advances Rs. 25.6
millions (Previous year Rs. 59.7
millions)]
3. Segment reporting
Based on the guiding principles given in Accounting Standard on
''Segment Reporting'' (AS-17), the Company''s primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
Company''s business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
4. Disclosure under the Micro, Small and Medium Enterprises
Development Act, 2006
On the basis of confirmation obtained from suppliers who have registered
themselves under the Micro Small and Medium Enterprises Development
Act, 2006 (MSMED Act, 2006) and based on the information available with
the Company, the balance due to Micro & Small Enterprises as defend
under the MSMED Act, 2006 is Rs. 51.6 millions (Previous year Rs. 12.6
millions). Further, no interest during the year has been paid or
payable under the terms of the MSMED Act, 2006.
5. Employee Plans
(a) Defned contribution plans
The Company makes contributions to the Provident Fund, Employee State
Insurance, National Pension System etc. for eligible employees. Under
these plans, the Company is required to contribute a specified
percentage of payroll costs. The Company during the year has recognised
Rs. 221.3 millions (Previous year Rs. 221.7 millions) as expense in the
statement of profit and loss during the year.
Out of the total contribution made for Provident Fund, Rs. 112.4 millions
(Previous year Rs. 104.2 millions) is made to the Nestli India Limited
Employees Provident Fund Trust while the remainder contribution is made
to Provident Fund Plans operated by the Regional Provident Fund
Commissioners. The members of the Provident Fund Trust are entitled to
the rate of interest declared by the Central Government under the
Employees Provident Funds and Miscellaneous Provisions Act, 1952. The
shortfall, if any, is made good by the Company in the year in which it
arises.
The total plan liabilities under the Nestli India Limited Employees
Provident Fund Trust as at December 31, 2013 as per the unaudited
financial statements for the year then ended is Rs. 1,981.9 millions
(Previous year Rs. 1,658.2 millions) as against total plan assets of Rs.
1,995.5 millions (Previous year Rs. 1,667.4 millions). The funds of the
Trust have been invested under various securities as prescribed under
the rules of the Trust.
(b) Defend Benefit plans
The company provides gratuity and defend benefit pension to eligible
employees. The gratuity plan provides for a lump sum payment to vested
employees at retirement, death while in employment or on termination of
employment. Gratuity vesting occurs upon completion of five years of
service. The Company makes contributions to the Nestli India Limited
Employees'' Gratuity Trust Fund. Defend benefit pension is a
discretionary, unfunded plan.
The estimates of future salary increases considered in actuarial
valuation, take account of inflation, performance, promotion and other
relevant factors such as demand and supply in the employment market.
The expected return on plan assets is determined considering several
applicable factors mainly the composition of the plan assets held,
assessed risks of assets management, historical results of return on
plan assets and the policy for plan assets management.
6. Restricted Stock Unit ( RSU ) Plan
The Company participates in the Nestli Restricted Stock Unit ( RSU )
Plan of Nestli S.A., whereby select employees are granted non-tradable
Restricted Stock Units with the right to obtain Nestli S.A. shares or
cash equivalent. Restricted Stock Units granted to employees vest,
subject to certain conditions, after completion of three years. Upon
vesting Nestli S.A. determines, whether shares, free of charge or cash
equivalent to the value of shares, is to be transferred to the
employee. The Company has to pay Nestli S.A. an amount equivalent to
the value of Nestli S.A. shares on the date of vesting, delivered to
the employee.
7. Operating Leases
The Company''s significant leasing arrangements are primarily in respect
of operating leases for premises (office, residential, warehouses etc.)
and vehicles. The aggregate lease rentals charged to the statement of
profit and loss are Rs. 607.3 millions (Previous year Rs. 512.8 millions).
8. External Commercial Borrowings
The Company had drawn US Dollars 192 millions in the year 2011 and 2012
from Nestli S.A. for 5 years for the purpose of capital expenditure
under the External Commercial Borrowings (ECB) approval from Reserve
Bank of India. Total loan outstanding as at 31st December 2013 stood at
Rs. 11,871.4 millions (Previous year Rs. 10,499.5 millions).
Dec 31, 2012
1. Net provision for contingencies
The Company has created a contingency provision of Rs. 481.4 millions
(Previous year Rs. 492.6 millions) for various contingencies resulting
mainly from matters, which are under litigation / related disputes and
other uncertainties requiring management judgment. The Company has
also reversed contingency provision of Rs. 223.0 millions (Previous year
Rs. 23.6 millions) due to the satisfactory settlement of certain
litigations for which provision is no longer required.
Provisions for Contingencies for the year ended 31.12.2012 is not
comparable with the same period of 2011 due to timing difference of
certain provisions arising from change in regulatory procedures.
Notes:
(a) Litigations and related disputes - represents estimates made mainly
for probable claims arising out of litigations / disputes pending with
authorities under various statutes (i.e. Income Tax, Excise Duty,
Service Tax, Sales and Purchase Tax etc.). The probability and the
timing of the outflow with regard to these matters depend on the
ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company
which are covered under free replacement warranty on becoming unfit for
human consumption during the prescribed shelf life. The timing and
probability of outflow with regard to these matters will depend on the
external environment and the consequent decision/ conclusion by the
Management.
2012 2011
(Rs. in
millions) (Rs. in
millions)
2. Contingent liabilities and
commitments. Contingent liabilities
Claims against the company not
acknoledged as debts:
VAT matters 117.0 -
Capital commitments
Capital expenditure commitments
remaining to be executed and not
provided for
(net of advance Rs. 59.7 millions
(Previous year Rs. 468.6 millions) 921.6 4,618.7
3. Segment reporting
Based on the guiding principles given in Accounting Standard on Segment
Reporting'' (AS-17), the Company''s primary business segment is Food. The
food business incorporates product groups viz. Milk Products and
Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates and
Confectionery, which mainly have similar risks and returns. As the
Company''s business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
iii) Key Management Personnel
Antonio Helio Waszyk - Chairman & Managing Director
Shobinder Duggal, Director - Finance & Control Christian Schmid,
Director - Technical
iv) Employees benefit trusts where control exists Nestlé India Limited
Employees'' Provident Fund Trust Nestlé India Limited Employees''
Gratuity Trust Fund
4. Disclosure under the Micro, Small and Medium Enterprises
Development Act, 2006
On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the Company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs. 12.6 millions
(Previous year Rs. 44.8 millions). Further, no interest during the year
has been paid or payable under the terms of the MSMED Act, 2006.
5. Employee Plans
a) The Company makes contribution towards employees'' provident fund and
employees'' state insurance plan scheme. Under the rules of these
schemes, the Company is required to contribute a specified percentage
of payroll costs. The Company during the year recognised Rs. 221.7
millions (Previous year Rs. 193.0 millions) as expense towards
contributions to these plans.
Out of the total contribution made for Employees'' Provident Fund, Rs.
104.2 millions (Previous year Rs. 89.2 millions) is made to the Nestle
India Limited Employees Provident Fund Trust while the remainder
contribution is made to Provident Fund Plan operated by the Regional
Provident Fund Commissioner.
The total plan liabilities under the Nestle India Limited Employees
Provident Fund Trust as at December 31, 2012 as per the unaudited
financial statements for the year then ended is Rs. 1,658.2 millions
(Previous year Rs. 1,426.4 millions) as against total plan assets of Rs.
1,667.4 millions (Previous year Rs. 1,416.2 millions). The funds of the
Trust have been invested under various securities as prescribed under
the rules of the Trust.
b) Gratuity scheme - This is a funded defined benefit plan for
qualifying employees. The Company makes contributions to the Nestle
India Limited Employees'' Gratuity Trust Fund. The scheme provides for a
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Vesting occurs upon
completion of five years of service.
c) Pension scheme - The Company has a discretionary unfunded defined
pension benefit scheme for its qualifying employees.
6. Restricted Stock Unit ( RSU ) Plan
The Company participates in the Nestlé Restricted Stock Unit ( RSU )
Plan of Nestlé S.A., whereby select employees are granted non- tradable
Restricted Stock Units with the right to obtain Nestlé S.A. shares or
cash equivalent. Restricted Stock Units granted to employees vest,
subject to certain conditions, after completion of three years. Upon
vesting Nestlé S.A. determines, whether shares, free of charge or cash
equivalent to the value of shares, is to be transferred to the
employee. The Company has to pay Nestlé S.A. an amount equivalent to
the value of Nestlé S.A. shares on the date of vesting, delivered to
the employee.
7. Operating Leases
The Company''s significant leasing arrangements are primarily in respect
of operating leases for premises (office, residential, warehouses etc.)
and vehicles. The aggregate lease rentals charged to the statement of
profit and loss account are Rs. 512.8 millions (Previous year Rs. 440.6
millions).
8. External Commercial Borrowings
During first half of 2012, the Company had drawn US Dollars 56 millions
(Previous year US dollars 136 millions) from Nestlé S.A. for 5 years
for the purpose of capital expenditure under the External Commercial
Borrowings (ECB) approval from Reserve Bank of India. Total amount of
loan outstanding as at 31st December 2012 is Rs. 10,499.5 millions
(Previous year Rs. 7,249.5 millions). Total cost of this borrowing,
including interest (net of earnings from temporarily surplus
liquidities) and exchange differences, during 2012 is Rs. 693.7 millions
(Previous year Rs. 1,129.2 millions) which is either treated as capital
expenditure or charged to statement of profit and loss as per the
accounting policy details of which are as follow:
9. Buyer''s Credit
During January 2012, the Company had drawn US Dollars 6.7 millions
(Previous year US dollars 46 millions) as Buyer''s Credit from various
commercial banks for a period up to one year. Total loan amount has been
paid during the year and outstanding as at 31st December 2012 is Nil
(Previous year Rs. 2,450.8 millions). Total cost of this borrowing,
including interest and exchange differences, during 2012 is Rs. 112.9
millions (Previous year Rs. 19.5 millions) which is either treated as
capital expenditure or charged to statement of profit and loss as per
the accounting policy details of which are as follow:
10. The Company''s borrowing facilities, comprising fund based and non
fund based limits from various bankers, are secured by way of a first
pari passu charge on all movable assets (excluding plant and
machinery), finished goods (including stock-in-trade),
work-in-progress, raw materials and book debts.
b) All the forward contracts are for hedging foreign exchange exposures
relating to the underlying transactions and firm commitments or highly
probable forecast transaction.
Dec 31, 2010
1. There is no impairment loss on fixed assets during the year ended
December 31, 2010. For the previous year impairment loss on fixed
assets (gross -Rs 103,168 thousands, net of deferred taxes - Rs. 68,101
thousands) relates to various items of plant and machinery that have
been brought down to their recoverable values upon evaluation of future
economic benefits from their use.
2. Segment reporting
Based on the guiding principles given in Accounting Standard on
Segment Reporting (AS-17), the Companys primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
Companys business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
3. Related party disclosures under Accounting Standard 18
Holding companies: Nestle S.A. and Maggi Enterprises Limited
Fellow subsidiaries are disclosed to comply with para 3 (a) of
Accounting Standard -18 on "Related Party Disclosures" albeit these do
not control or exercise significant influence on Nestle India Limited:
Belte Schweiz AG, Nestec S.A., Nestec York Limited, Nestle (China)
Limited, Nestle (PNG) Limited, Nestle (South Africa) (Pty) Limited,
Nestle (Thai) Limited, Nestle Australia Limited, Nestle Bangladesh
Limited, Nestle Central And West Africa Ltd., Nestle Deutschland AG,
Nestle Egypt S.A.E., Nestle Hong Kong Limited, Nestle Foods Kenya Ltd.,
Nestle France S.A.S., Nestle Ghana Ltd., Nestle Hungaria Kft., Nestle
Iran (Private Joint Stock Company), Nestle Japan Ltd., Nestle Korea
Ltd., Nestle Kuban LLC, Nestle Lanka PLC, Nestle Manufacturing
(Malaysia) Sdn. Bhd, Nestle Middle East FZE, Nestle Nederland B.V.,
Nestle Pakistan Ltd., Nestle Philippines, Inc., Nestle Product
Technology Centre Lebensmittelforschung GMBH, Nestle Products Sdn.
Bhd., Nestle R&D Centre (Pte) Limited, Nestle Romania S.R.L., Nestle
Shanghai Limited, Nestle Singapore (PTE) Limited, Nestle Suisse S.A.,
Nestle Taiwan Limited, Nestle Tianjin Limited, Nestle Turkiye Gida
Sanayi A.S., Nestle UK Ltd., Nestle USA Inc, Nestle Vietnam Limited,
Nestrade-Nestle World Trade Corporation, Osem Food Industries Limited,
Osem Uk Limited, PT Nestle Indonesia, Servcom SA, Societe des Produits
Nestle S.A., Nestle R&D Centre India Private Limited, Nestle Canada
Inc., Nestle Waters France S.A.S, Nestle R&D Center Shanghai Limited,
Nestle Italiana S.p.A, Nestle Maroc S.A, Nestle New Zealand Limited,
Nestle Shuangcheng Limited, Nestle Mexico S.A.de C.V, Nestle Business
Services S.A., Nestle Equatorial Africa Region (EPZ) Limited, Nestle
Cesko s.r.o., Nestle Product Technology Centre, Nestle Asean (Malaysia)
Sdn. Bhd., Societe Pour LExportation Des Produits Nestle S.A., Al
Manhal Water Factory Co. Ltd., Nestle Manufacturing Ltd., Nestle Waters
Product Technology Centre, Nestle Polska S.A., Nestle Chile S.A.,
Nestle Brasil Ltda., Nestle Zimbabwe (Pvt) Ltd., Nestle Dubai
Manufacturing LLC, Quality Coffee Products Ltd., Nestle Belgilux S.A.,
Nestle Cote dIvoire, Nestle Syria Ltd., Nestle Dongguan Limited,
Nestle Capital Advisers S.A., Osem Investments Ltd., Nestle Nigeria
PLC, Nestle Purina PetCare France S.A.S, Saudi Food Industries Co.
Ltd., Nestle R&D Centre Beijing Ltd., Sanpellegrino S.p.A., Nestle
(Ireland) Ltd., Nestle Purina Petcare Company, Nestle Nespresso S.A.,
Nestle Espana S.A.
Whole time directors: Antonio Helio Waszyk, Chairman & Managing
Director, Martial G Rolland, Chairman & Managing Director (upto
September 30, 2009), Shobinder Duggal, Director - Finance & Control,
Christian Schmid, Director - Technical (From August 02, 2010).
4. On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs. 52,451
thousands (previous year Rs. 16,396 thousands). Further, no interest
during the year has been paid or payable under the terms of the MSMED
Act, 2006.
5. Employee Plans
a) The Company makes contribution towards employees provident fund and
employees state insurance plan scheme. Under the rules of these
schemes, the Company is required to contribute a specified percentage
of payroll costs. The Company during the year recognised Rs. 156,180
thousands (previous year Rs. 126,811 thousands) as expense towards
contributions to these plans.
Out of the total contribution, made for employees provident fund, Rs.
77,540 thousands (previous year Rs. 67,262 thousands) is made to the
Nestle India Limited Employees Provident Fund Trust while the remainder
contribution is made to provident fund plan operated by the Regional
Provident Fund Commissioner. The outstanding balance payable as at
December 31, 2010 to the Trust is Rs. 14,078 thousands (previous year
Rs. 11,986 thousands) on account of companys and employees
contribution for the month of December 2010. The same has since been
paid on 05.01.2011.
The total plan liabilities under the Nestle India Limited Employees
Provident Fund Trust as at December 31, 2010 as per the unaudited
financial statements for the year then ended is Rs. 1,202,164 thousands
(previous year Rs. 1,007,533 thousands) as against total plan assets of
Rs. 1,198,580 thousands (previous year Rs. 1,004,449 thousands). The
funds of the Trust have been invested under various securities as
prescribed under the rules of the Trust.
b) Gratuity scheme - This is a funded defined benefit plan for
qualifying employees. The Company makes contributions to the Nestle
India Limited Employees Gratuity Trust Fund. The scheme provides for a
lumpsum payment to vested employees at retirement, death while in
employment or on termination of employment. Vesting occurs upon
completion of five years of service.
c) Pension scheme - The Company operates a non funded pension defined
benefit scheme for its employees that qualify under the scheme. The
scheme is discretionary in nature.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors such as demand and supply in the employment market.
The expected return on plan assets is determined considering several
applicable factors mainly the composition of the plan assets held,
assessed risks of assets management, historical results of return on
plan assets and the policy for plan assets management.
6. The Companys significant leasing arrangements are primarily in
respect of operating leases for premises (office, residential,
warehouses etc.) and vehicles. These leasing arrangements which are not
non-cancellable are usually renewable on mutually agreeable terms. The
aggregate lease rentals charged to the profit and loss account are Rs
395,851 thousands (previous year Rs. 332,706 thousands).
7. The Companys borrowing facilities, comprising fund based and non
fund based limits from various bankers, are secured by way of a first
pari passu charge on all movable assets (excluding plant and
machinery), finished goods, work in progress, raw materials and book
debts.
8. Previous year figures have been regrouped/reclassified wherever
necessary, to make them comparable.
Dec 31, 2009
1. During the year ended December 31, 2009, impairment loss on fixed
assets (gross - Rs. 103,168 thousands, net of deferred taxes - Rs.
68,101 thousands) relates to various items of plant and machinery that
have been brought down to their recoverable values upon evaluation of
future economic benefits from their use.
2. Segment reporting
Based on the guiding principles given in Accounting Standard on
ÃSegment Reportingà (AS-17), the CompanyÃs primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
CompanyÃs business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
3. Related party disclosures under Accounting Standard 18
Holding companies: Nestlé S.A. and Maggi Enterprises Limited
Fellow subsidiaries are disclosed to comply with para 3 (a) of
Accounting Standard -18 on ÃRelated party Disclosuresà albeit these do
not control or exercise significant influence on Nestlé India Limited:
Belte Schweiz AG, Limited., Nestec S.A., Nestec York Limited, Nestlé
(Fiji) Limited, Nestlé (China) Limited., Nestlé (PNG) Limited, Nestlé
(South Africa) (Pty) Limited, Nestlé (Thai) Limited, Nestlé Australia
Limited, Nestlé Bangladesh Limited, Nestlé Brazil Ltda, Nestlé Central
And West Africa Ltd, Nestlé Deutschland AG, Nestlé Egypt S.A.E., Nestlé
Foods Kenya Ltd, Nestlé France S.A.S., Nestlé Ghana Ltd, Nestlé Hong
Kong Limited, Nestlé Hungaria Kft., Nestlé Iran (Private Joint Stock
Company), Nestlé Japan Ltd, Nestlé Korea Ltd, Nestlé Kuban LLC, Nestlé
Lanka PLC, Nestlé Manufacturing (Malaysia) Sdn. Bhd, Nestlé Middle East
FZE, Nestlé Nederland B.V., Nestlé Pakistan Ltd, Nestlé Philippines,
Inc., Nestlé Polska S.A., Nestlé Product Technology Centre
Lebensmittelforschung GMBH, Nestlé Products Sdn..Bhd., Nestlé R&D
Centre (Pte) Limited, Nestlé Romania S.R.L., Nestlé Shanghai Limited.,
Nestlé Singapore (PTE) Limited, Nestlé Suisse S.A., Nestlé Taiwan
Limited, Nestlé Tianjin Limited., Nestlé Trading (Fiji) Limited, Nestlé
Turkiye Gida Sanayi A.S., Nestlé UK Ltd, Nestlé USA Inc, Nestlé Vietnam
Limited., Nestlé Waters Supply Est, Nestrade-Nestlé World Trade
Corporation, Osem Food Industries Limited, Osem Uk Limited, PT Nestlé
Indonesia, Servcom SA, Société des Produits Nestlé S.A., Nestlé R&D
Centre India Private Limited (formerly Speciality Foods India Pvt
Limited), Nestlé Canada Inc, Nestlé Bolivia S.A., Nestlé Waters France
S.A.S, Nestlé R&D Center Shanghai Limited, Nestlé Italiana S.p.A,
Nestlé Maroc S.A, Nestlé Portugal S.A, Nestlé Panama S.A, Nestlé
Senegal, Nestlé Adriatic doo, Nestlé New Zealand Limited, Nestlé
Shuangcheng Limited, Nestlé Mexico S.A.de C.V, Nestlés Products
(Mauritius) Limited, Nestlé Business Services S.A., Nestlé Dongguan
Limited, Nestlé Equatorial Africa Region (EPZ) Limited, Nestlé Cesko
s.r.o., Nestlé Product Technology Centre, Nestlé Asean (Malaysia) Sdn.
Bhd., Societe Pour LÃExportation Des Produits Nestlé S.A., Al Manhal
Water Factory Co. Ltd., Nestlé Syria Ltd., Nestlé Manufacturing Ltd.,
Nestlé Waters Product Technology Centre, Nestlé (Ireland) Ltd.
Whole time directors: Antonio Helio Waszyk, Chairman & Managing
Director (w.e.f. October 22, 2009), Martial G Rolland, Chairman &
Managing Director (upto September 30, 2009), Shobinder Duggal, Director
- Finance & Control.
4. On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs.16,396 thousands
(previous year Rs. 15,917 thousands). Further, no interest during the
year has been paid or payable under the terms of the MSMED Act, 2006.
5. Employee Plans
a) The company makes contribution towards employeesà provident fund and
employeesà state insurance plan scheme. Under the rules of these
schemes, the Company is required to contribute a specified percentage
of payroll costs. The Company during the year recognised Rs. 126,811
thousands (previous year Rs. 102,088 thousands) as expense towards
contributions to these plans.
Out of the total contribution, made for employeesà provident fund, Rs.
67,262 thousands (previous year Rs. 50,793 thousands) is made to the
Nestlé India Limited Employees Provident Fund Trust while the remainder
contribution is made to provident fund plan operated by the Regional
Provident Fund Commissioner. The outstanding balance payable as at
December 31, 2009 to the Trust is Rs. 11,986 thousands (previous year
Rs. 10,741 thousands) on account of companyÃs and employees
contribution for the month of December 2009.
The total plan liabilities under the Nestlé India Limited Employees
Provident Fund Trust as at December 31, 2009 as per the unaudited
financial statements for the year then ended is Rs. 1,007,533 thousands
(previous year Rs. 877,873 thousands) as against total plan assets of
Rs. 1,004,449 thousands (previous year Rs. 878,195 thousands). The
funds of the Trust have been invested under various securities as
prescribed under the rules of the Trust.
b) Gratuity scheme - This is a funded defined benefit plan for
qualifying employees. The company makes contributions to the Nestlé
India Limited Employeesà Gratuity Trust Fund. The scheme provides for a
lumpsum payment to vested employees at retirement, death while in
employment or on termination of employment. Vesting occurs upon
completion of five years of service.
c) Pension scheme - The company operates a non funded pension defined
benefit scheme for its employees that qualify under the scheme. The
scheme is discretionary in nature.
6. The Company participates in the Nestlé Restricted Stock Unit (RSU)
Plan of Nestlé S.A., whereby select employees are granted non-
tradeable Restricted Stock Units with the right to obtain Nestlé S.A.
shares or cash equivalent. Restricted Stock Units granted to employees
vest, subject to certain conditions, after completion of three years.
Upon vesting Nestlé S.A. determines, whether shares, free of charge or
cash equivalent to the value of shares, is to be transferred to the
employee. The Company has to pay Nestlé S.A. an amount equivalent to
the value of Nestlé S.A. shares on the date of vesting, delivered to
the employee. Provisions are made based on estimates including Nestlé
S.A. share price over the vesting period.
7. The CompanyÃs significant leasing arrangements are primarily in
respect of operating leases for premises (office, residential,
warehouses etc.) and vehicles. These leasing arrangements which are not
non-cancellable are usually renewable on mutually agreeable terms. The
aggregate lease rentals charged to the profit and loss account are Rs.
332,706 thousands (previous year Rs. 271,157 thousands).
8. The Companys borrowing facilities, comprising fund based and non
fund based limits from various bankers, are secured by way of a first
pari passu charge on all movable assets (excluding plant and
machinery), finished goods, work in progress, raw materials and book
debts.
9. During the calendar year 2007, the Company had sought approval of
the HonÃble Delhi High Court under Sections 391 to 394 of the Companies
Act, 1956 for a Scheme of Arrangement (ÃSchemeÃ) between the Company
and its shareholders and creditors. The Scheme envisaged utilisation of
following amounts for payment to the shareholders, subject to
applicable taxes :
i) An amount of Rs. 432,363 thousands as lying in the Share Premium
Account of the Company; and
ii) An amount of Rs. 430,857 thousands from the General Reserve Account
of the Company, which was voluntarily transferred by the Company in
excess of the prescribed 10% of the profits of the Company in
accordance with the provisions of the Companies (Transfer of Profits to
Reserves) Rules, 1975 during the financial years 1981 to 1996.
The equity shareholders supported the Scheme at a meeting held on May
3, 2007 as per directions of the HonÃble Delhi High Court.
Subsequently, the Honourable Delhi High Court vide its Order dated
September 30, 2008 sanctioned the aforesaid Scheme and the Scheme
became effective from October 31, 2008 after filing the certified copy
of the aforesaid Order with the Registrar of Companies, NCT of Delhi
and Haryana. Thereafter as per the Scheme, after deducting applicable
corporate dividend tax from the aggregate amount of Rs. 863,220
thousands credited to the Profit and Loss Account, a Special Dividend
of Rs.7.50 (Rupees seven and paise fifty only) per share calculated by
dividing the net amount by the outstanding 96,415,716 equity shares of
face value of Rs. 10/- each and rounding it off to the nearest half
Rupee, was paid on November 26, 2008 to those shareholders whose name
appeared in the Register of Members/ Beneficial Owners on November 17,
2008.
10. The Company has entered into the Business Purchase Agreement dated
18th December, 2009 with Nestlé R&D Centre India Private Limited
(formerly Speciality Foods India Private Limited) [SFIPL], a wholly
owned subsidiary of Nestlé SA for the purchase of Healthcare Nutrition
Business, with effect from 1st January, 2010 alongwith identified
assets and liablities. The total consideration net of liabilities,
determined for the acquisition is Rs. 67,005 thousands. Accordingly,
with effect from 1st January, 2010, the Company has acquired the
Healthcare Nutrition Business from SFIPL.
11. Previous year figures have been regrouped/reclassified wherever
necessary, to make them comparable.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
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