Notes to Accounts of Procter & Gamble Hygiene & Healthcare Ltd.
Jun 30, 2023
(a) Non current assets held for sale
In the year ended June 30, 2018, certain Property, Plant and Equipment (PPE) had been impaired as the company intended to dispose off the said assets and the carrying value of the assets amounting to '' 3 411 lakhs was brought down to its fair value as at June 30, 2018 and an impairment loss of '' 1 259 lakhs was recognised in that year. A further impairment loss amounting to '' 1 388 lakhs was recognized in the year ended June 30, 2020, to bring the assets down to their fair value as at June 30, 2020, based on certain quotes obtained. In the year ended June 30, 2021, these assets have been fully impaired on a conservative basis and an impairment loss amounting to '' 764 lakhs has been recognized in the Statement of Profit and Loss for the year ended June 30, 2021. These assets continue to be classified as held for sale as at June 30, 2023, since the management intends to dispose off these assets and is actively working on completion of requisite regulatory requirments.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as per the provision matrix.
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.
The Company has only one class of equity shares having par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of Liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
No shares are bought back by the Company during the period of 5 years immediately preceding the Balance Sheet date.
No shares are alloted as fully paid up by way of bonus shares during the period of 5 years immediately preceding the Balance Sheet date.
No shares are reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment.
No shares are alloted as fully paid up pursuant to contracts without being payment received in cash during the period of 5 years immediately preceding the Balance Sheet date.
This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
In December 2022, final dividend of '' 65 per share (total dividend including tax thereon '' 21 099 lakhs) for the year ended June 30, 2022 was paid to holders of fully paid equity shares. In December 2021, the final dividend paid was '' 80 per share (total dividend including tax thereon '' 25 969 lakhs) for the year ended June 30, 2021.
In February 2022, an interim dividend of '' 95 per share (total dividend including tax thereon '' 30 837 lakhs was paid to holders of fully paid equity shares.
In February 2023, an interim dividend of '' 80 per share (total dividend including tax thereon '' 25 969 lakhs was paid to holders of fully paid equity shares.
28 Segment information28.1 Products from which reportable segments derive their revenues
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods delivered or provided. The directors of the Company have chosen to organise the Company around differences in products and services.
Specifically, the Company''s operating segments under Ind AS 108 - Operating Segments are as follows:
- Health care products - Comprising of Ointment and creams, Cough Drops and Tablets.
- Hygiene products - Comprising of Feminine Hygiene products and other skin care hygiene products.
For financial statements presentation purposes, these individual operating segments have been aggregated into a single primary reportable segment i.e. manufacturing, trading and marketing of Health and Hygiene Products under Ind AS 108 taking into the account the following factors:
- these operating segments have similar economic characteristics;
- these operating segments have similar long-term gross profit margins;
- the nature of the products and production processes are similar; and
- the methods used to distribute the products to the customers are the same.
30 Employee benefit plans30.1 Defined contribution plans
The Company operates defined contribution provident fund, superannuation fund and employees'' state insurance plan for all qualifying employees of the Company. Where employees leave the plan, the contributions payable by the Company is reduced by the amount of forfeited contributions.
The employees of the Company are members of a state-managed employer''s contribution to employees'' state insurance plan, provident fund operated by the government and superannuation fund which is administered through a trust that is legally separated from the Company. The assets of the plan are held separately from those of the Company in funds under the control of trustees. The Company is required to contribute a specific percentage of payroll costs to the contribution schemes to fund the benefit. The only obligation of the Company with respect to the contribution plan is to make the specified contributions.
The total expense recognised in the statement of profit and loss of '' 1 411 lakhs (for the year ended June 30, 2022: '' 1 286 lakhs) for provident fund, '' 113 lakhs (for the year ended June 30, 2022: '' 110 lakhs) for superannuation fund represent contributions payable to these plans by the Company at rates specified in the rules of the plans. As at June 30, 2023, contributions of '' 9 lakhs (as at June 30, 2022: '' 9 lakhs) due in respect of 2022 - 2023 (2021 - 2022) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting periods.
30.2 Defined benefit and other long term employee benefits plan
a) Gratuity Plan (Funded)
The Company sponsors funded defined benefit gratuity plan for all eligible employees of the Company. The Companyâs defined benefit gratuity plan is a final salary plan for India employees, which requires contributions to be made to a separately administered trust. The gratuity plan is governed by the Payment of Gratuity Act, 1972 and Company policy. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service, designation and salary at retirement age. The gratuity plan is administered by a separate trust that is legally separated from the Company. The board of the trust is composed of representatives from both employer and employees. The board of the trust is required by law and by its articles of association to act in the interest of the trust and of all relevant stakeholders in the scheme, i.e. active employees, inactive employees, retirees, employer. The board of the trust is responsible for the investment policy with regard to the assets of the trust.
b) Post Retirement Medical Benefit (PRMB) (Unfunded)
The Company provides certain post-employment medical benefits to employees. Under the scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade at the time of retirement. Employees separated from the Company as part of early separation scheme are also covered under the scheme. The liability for post retirement medical scheme is based on an independent actuarial valuation.
c) Compensated absences for Plant technicians (Unfunded)
The Company also provides for compensated absences for plant technicians which allows for encashment of leave on termination/retirement of service or leave with pay subject to certain rules.
Significant actuarial assumptions of the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
Gratuity Plan (Funded)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 445 lakhs (increase by '' 480 lakhs) (as at June 30, 2022: decrease by '' 362 lakhs (increase by '' 391 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 458 lakhs (decrease by '' 431 lakhs) (as at June 30, 2022: increase by '' 370 lakhs (decrease by '' 348 lakhs)).
Compensated absence plan (Unfunded)
If the discount rate is 50 basis points higher (lower), the other benefit obligation would decrease by '' 30 lakhs (increase by '' 33 lakhs) (as at June 30, 2022: decrease by '' 24 lakhs (increase by '' 26 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the other benefit obligation would increase by '' 32 lakhs (decrease by '' 30 lakhs) (as at June 30, 2022: increase by '' 25 lakhs (decrease by '' 23 lakhs)).
Post retirement medical benefit (PRMB)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 14 lakhs (increase by '' 15 lakhs) (as at June 30, 2022: decrease by '' 18 lakhs (increase by '' 19 lakhs)).
If the expected medical inflation rate increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 13 lakhs (decrease by '' 12 lakhs) (as at June 30, 2022: increase by '' 16 lakhs (decrease by '' 15 lakhs)).
If the expected life expectancy increases (decreases) by 1 year, the defined benefit obligation would increase by '' 10 lakhs (decrease by '' 10 lakhs) (as at June 30, 2022: increase by '' 12 lakhs (decrease by '' 12 lakhs)).
The sensitivity analysis presented above may not be representative of the actual change of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method as the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
31 Financial instruments 31.1 Capital management
The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the equity balance. Equity share capital and other equity are considered for the purpose of group''s capital management.
The Company is not subject to any externally imposed capital requirements.
The Company''s risk management committee manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return on capital to shareholders or issue new shares.
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31.4.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currencies stated above.
The following table details impact to profit or loss of the Company by sensitivity analysis of a 10% increase and decrease in the respective currencies against the functional currency of the Company. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change on foreign currency rates.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company performs ongoing credit evaluation of the counterpartyâs financial position as a means of mitigating the risk of financial loss arising from defaults. The Company only grants credit to creditworthy counterparties.
The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics as disclosed in Note 10 to the financial statements.
31.6 Interest rate risk management
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have interest bearing borrowings, it is not exposed to risk of changes in market interest rates. The Company has not used any interest rate derivatives.
31.7 Other price risk management
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. The Company is not exposed to pricing risk as the Company does not have any investments in equity instruments and bonds.
31.8 Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Company maintains adequate highly liquid assets in the form of cash to ensure necessary liquidity.
The table below analyse financial liabilities of the Company into relevant maturity groupings based on the reporting period from the reporting date to the contractual maturity date:
The carrying amount of financial assets and financial Liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an âInternational Stock Ownership Planâ (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary). Such contribution is charged under employee benefits expense.
The shares of The Procter and Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2023: 7074.59 (June 30, 2022: 5 930.17) shares excluding dividend were purchased by employees at weighted average fair value of '' 11 751.68 (June 30, 2022: '' 11 382.82) per share. The Company''s contribution during the year on such purchase of shares amounts to '' 225 Lakhs (June 30, 2022: '' 188 Lakhs).
b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an âEmployee Stock Option Planâ whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed year of time. The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
38 (a) Reimbursement / (recovery) of expenses cross charged to related parties include payments / recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter & Gamble Home Products Private Limited and Gillette India Limited. (Refer note 39).
38 (b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross
charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.
39 (a) Employee Benefits Expense excludes expenses in respect of Managerial personnel of '' 91 Lakhs
(Previous Year: '' 276 Lakhs) cross charged to Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 38).
39 (b) Employee Benefits Expense includes expenses in respect of Managerial personnel of '' 105 Lakhs (Previous Year: '' 91 Lakhs) cross charged from Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 38).
43 As per the MCA notification dated August 5, 2022, and the Companies (Accounts) Fourth Amendment Rules, 2022, the Company is required to maintain backups of books of account on servers physically located in India on a daily basis. The Company has maintained periodic backups of its books of accounts and other relevant books and papers maintained in electronic mode on servers physically located in India. This is in addition to regular backups on the group''s global servers outside India. The Company has identified compliant technical solution(s) and is in process of implementing the same to perform daily backups to comply with the requirements of the above-mentioned Rules.
44 Approval of financial statements
The financial statements were approved for issue by the Board of Directors on August 28, 2023.
Jun 30, 2022
(a) Non-current Loans to related parties includes Loan to key managerial personnel '' 4 Lakhs (June 30, 2021: '' 5 Lakhs).
(b) Current loans to related parties includes loan to key managerial personnel '' 1 Lakhs (June 30, 2021: '' 1 Lakhs).
(c) Loans given to employees / key managerial personnel as per the Companyâs policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
(d) There are no Loans or advances in the nature of Loans granted to Promoters, Directors, KMPs and their related parties (as defined under Companies Act, 2013), either severaLLy or jointLy with any other person, that are:
(i) repayable on demand; or
(ii) without specifying any terms or period of repayment
(a) Includes amounts deposited with Excise, Sales Tax and other authorities pending resolution of disputes.
(b) Advances given to employees as per the Companyâs policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
8 (a) Non current assets held for sale
In the year ended June 30, 2018, certain Property, Plant and Equipment (PPE) had been impaired as the company intended to dispose off the said assets and the carrying value of the assets amounting to '' 3 411 lakhs was brought down to its fair value as at June 30, 2018 and an impairment loss of '' 1 259 lakhs was recognised in that year. A further impairment loss amounting to '' 1 388 lakhs was recognized in the year ended June 30, 2020, to bring the assets down to their fair value as at June 30, 2020, based on certain quotes obtained. In the previous year ened June 30, 2021, these assets have been fully impaired on a conservative basis and an impairment loss amounting to '' 764 lakhs has been recognized in the Statement of Profit and Loss for the year ended June 30, 2021. These assets continue to be classified as held for sale as at June 30, 2022, since the management intends to dispose off these assets and is actively pursuing the said matter.
The Company has used a practical expedient by computing the expected credit Loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as per the provision matrix.
The Company has only one class of equity shares having par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of Liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
No shares are bought back by the Company during the period of 5 years immediately preceding the Balance Sheet date.
No shares are alloted as fully paid up by way of bonus shares during the period of 5 years immediately preceding the Balance Sheet date.
No shares are reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment.
No shares are alloted as fully paid up pursuant to contracts without being payment received in cash during the period of 5 years immediately preceding the Balance Sheet date.
This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
In December 2021, final dividend of '' 80 per share (total dividend including tax thereon '' 25 969 Lakhs) for the year ended June 30, 2021 was paid to holders of fully paid equity shares. In December 2020, the final dividend paid was '' 105 per share (total dividend including tax thereon '' 34 084 lakhs) for the year ended June 30, 2020.
In February 2022, an interim dividend of '' 95 per share (total dividend including tax thereon '' 30 806 lakhs was paid to holders of fully paid equity shares. In February 2021, an interim dividend of '' 85 per share (total dividend including tax thereon '' 27 592 lakhs was paid to holders of fully paid equity shares. In May 2021, a special interim dividend of '' 150 per share (total dividend including tax thereon '' 48 691 lakhs was paid to holders of fully paid equity shares.
28 Segment information28.1 Products from which reportable segments derive their revenues
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods delivered or provided. The directors of the Company have chosen to organise the Company around differences in products and services.
Specifically, the Company''s operating segments under Ind AS 108 - Operating Segments are as follows:
- Health care products - Comprising of Ointment and creams, Cough Drops and Tablets.
- Hygiene products - Comprising of Feminine Hygiene products and other skin care hygiene products.
For financial statements presentation purposes, these individual operating segments have been aggregated into a single primary reportable segment i.e. manufacturing, trading and marketing of Health and Hygiene Products under Ind AS 108 taking into the account the following factors:
- these operating segments have similar economic characteristics;
- these operating segments have similar long-term gross profit margins;
- the nature of the products and production processes are similar; and
- the methods used to distribute the products to the customers are the same.
The accounting policies of the reportable segments are the same as the Company''s accounting policies described in note 2.3(o). Segment profit represents the profit before tax earned by each operating segment, other income as well as finance costs. This is the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.
30 Employee benefit plans30.1 Defined contribution plans
The Company operates defined contribution provident fund, superannuation fund and employees'' state insurance plan for all qualifying employees of the Company. Where employees leave the plan, the contributions payable by the Company is reduced by the amount of forfeited contributions.
The employees of the Company are members of a state-managed employer''s contribution to employees'' state insurance plan, provident fund operated by the government and superannuation fund which is administered through a trust that is legally separated from the Company. The assets of the plan are held separately from those of the Company in funds under the control of trustees. The Company is required to contribute a specific percentage of payroll costs to the contribution schemes to fund the benefit. The only obligation of the Company with respect to the contribution plan is to make the specified contributions.
The total expense recognised in the statement of profit and loss of '' 1 286 lakhs (for the year ended June 30, 2021: '' 1 184 lakhs) for provident fund, '' 110 lakhs (for the year ended June 30, 2021: '' 101 lakhs) for superannuation fund represent contributions payable to these plans by the Company at rates specified in the rules of the plans. As at June 30, 2022, contributions of '' 9 lakhs (as at June 30, 2021: '' 9 lakhs) due in respect of 2021 - 2022 (2020 - 2021) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting periods.
a) Gratuity Plan (Funded)
The Company sponsors funded defined benefit gratuity plan for all eligible employees of the Company. The Companyâs defined benefit gratuity plan is a final salary plan for India employees, which requires contributions to be made to a separately administered trust. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The gratuity plan is administered by a separate trust that is legally separated from the Company. The board of the trust is composed of representatives from both employer and employees. The board of the trust is required by law and by its articles of association to act in the interest of the trust and of all relevant stakeholders in the scheme, i.e. active employees, inactive employees, retirees, employer. The board of the trust is responsible for the investment policy with regard to the assets of the trust.
b) Post Retirement Medical Benefit (PRMB) (Unfunded)
The Company provides certain post-employment medical benefits to employees. Under the scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade at the time of retirement. Employees separated from the Company as part of early separation scheme are also covered under the scheme. The liability for post retirement medical scheme is based on an independent actuarial valuation.
c) Compensated absences for Plant technicians (Unfunded)
The Company also provides for compensated absences for plant technicians which allows for encashment of leave on termination/retirement of service or leave with pay subject to certain rules.
The employees are entitled to accumulate Leave subject to certain Limits for future encashment / availment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year.
These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity risk and salary risk.
Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
Interest risk A decrease in the bond interest rate will increase the plan liability; however, this
will be partially offset by an increase in the return on the plan investments.
Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality rate of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans liability.
Salary risk The present value of the defined benefit plan liability is calculated by reference
to the future salaries of plan participants. As such, an increase on the salary of plan participants will increase the plans liability.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at June 30, 2022. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
Significant actuarial assumptions of the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
Gratuity Plan (Funded)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 362 lakhs (increase by '' 391 lakhs) (as at June 30, 2021: decrease by '' 358 lakhs (increase by '' 418 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 370 lakhs (decrease by '' 348 lakhs) (as at June 30, 2021: increase by '' 395 lakhs (decrease by '' 370 lakhs)).
Compensated absence plan (Unfunded)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 24 lakhs (increase by '' 26 lakhs) (as at June 30, 2021: decrease by '' 31 lakhs (increase by '' 35 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 25 lakhs (decrease by '' 23 lakhs) (as at June 30, 2021: increase by '' 33 lakhs (decrease by '' 30 lakhs)).
Post retirement medical benefit (PRMB)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 18 lakhs (increase by '' 19 lakhs) (as at June 30, 2021: decrease by '' 23 lakhs (increase by '' 25 lakhs)).
If the expected medical inflation rate increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 16 lakhs (decrease by '' 15 lakhs) (as at June 30, 2021: increase by '' 21 lakhs (decrease by '' 20 lakhs)).
The sensitivity analysis presented above may not be representative of the actual change of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method as the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
31 Financial instruments 31.1 Capital management
The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the equity balance. Equity share capital and other equity are considered for the purpose of group''s capital management.
The Company is not subject to any externally imposed capital requirements.
The Company''s risk management committee manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return on capital to shareholders or issue new shares.
31.4.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currencies stated above.
The following table details impact to profit or loss of the Company by sensitivity analysis of a 10% increase and decrease in the respective currencies against the functional currency of the Company. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change on foreign currency rates.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company performs ongoing credit evaluation of the counterpartyâs financial position as a means of mitigating the risk of financial loss arising from defaults. The Company only grants credit to creditworthy counterparties.
The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics as disclosed in Note 10 to the financial statements.
31.6 Interest rate risk management
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have interest bearing borrowings, it is not exposed to risk of changes in market interest rates. The Company has not used any interest rate derivatives.
31.7 Other price risk management
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. The Company is not exposed to pricing risk as the Company does not have any investments in equity instruments and bonds.
31.8 Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Company maintains adequate highly liquid assets in the form of cash to ensure necessary liquidity.
The carrying amount of financial assets and financial Liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an âInternational Stock Ownership Planâ (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary). Such contribution is charged under employee benefits expense.
The shares of The Procter and Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2022: 5 930.17 (June 30, 2021: 5 523.92) shares excluding dividend were purchased by employees at weighted average fair value of '' 11 382.82 (June 30, 2021: '' 9 992.92) per share. The Company''s contribution during the year on such purchase of shares amounts to '' 188 Lakhs (June 30, 2021: '' 156 Lakhs).
b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an âEmployee Stock Option Planâ whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed year of time. The shares of The Procter and Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.
The Company has taken on Lease certain guesthouses, office premises and warehouses with an option of renewal at the end of the lease term and escalation clause in some of the cases. These leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements. The cost of lease for the guesthouses, office premises and warehouses are disclosed under rent expense.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
38 (a) Reimbursement / (recovery) of expenses cross charged to related parties include payments / recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter & Gamble Home Products Private Limited and Gillette India Limited. (Refer note 39).
38 (b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross
charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.
39 (a) Employee Benefits Expense excludes expenses in respect of Managerial personnel of '' 276 Lakhs
(Previous Year: '' 92 Lakhs) cross charged to Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 38).
39 (b) Employee Benefits Expense includes expenses in respect of Managerial personnel of '' 91 Lakhs (Previous Year: '' 157 Lakhs) cross charged from Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 38).
43 Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.
44 Approval of financial statements
The financial statements were approved for issue by the board of directors on August 23, 2022.
Jun 30, 2021
(a) Non-current Loans to related parties includes Loan to key managerial personnel '' 5 Lakhs (June 30, 2020: '' 6 Lakhs).
(b) Current loans to related parties includes loan to key managerial personnel '' 1 Lakhs (June 30, 2020: '' 1 Lakhs).
(c) Loans given to employees / key managerial personnel as per the Companyâs policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
Includes amounts deposited with Excise, Sales Tax and other authorities pending resolution of disputes.
Advances given to employees as per the Companyâs policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
In the year ended June 30, 2018, certain Property, Plant and Equipment (PPE) had been impaired as the company intended to dispose off the said assets and the carrying value of the assets amounting to '' 3 411 lakhs was brought down to its fair value as at June 30, 2018 and an impairment loss of '' 1 259 lakhs was recognised in that year. A further impairment loss amounting to '' 1 388 lakhs was recognized in the year ended June 30, 2020, to bring the assets down to their fair value as at June 30, 2020, based on certain quotes obtained. In the current year, these assets have been fully impaired on a conservative basis and an impairment loss amounting to '' 764 lakhs has been recognized in the Statement of Profit and Loss for the year ended June 30, 2021. These assets continue to be classified as held for sale as at June 30, 2021, since the management intends to dispose off these assets and is actively pursuing the said matter.
The Company has used a practical expedient by computing the expected credit Loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as per the provision matrix.
The Company has only one class of equity shares having par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
No shares are bought back by the Company during the period of 5 years immediately preceding the Balance Sheet date.
No shares are alloted as fully paid up by way of bonus shares during the period of 5 years immediately preceding the Balance Sheet date.
No shares are reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment.
No shares are alloted as fully paid up pursuant to contracts without being payment received in cash during the period of 5 years immediately preceding the Balance Sheet date.
This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
In December 2020, final dividend of '' 105 per share (total dividend including tax thereon '' 34 084 lakhs) for the year ended June 30, 2020 was paid to holders of fully paid equity shares. In December 2019, the final dividend paid was '' 48 per share (total dividend including tax thereon '' 18 784 lakhs) for the year ended June 30, 2019.
In February 2021, an interim dividend of '' 85 per share (total dividend including tax thereon '' 27 592 lakhs was paid to holders of fully paid equity shares. In May 2021, a special interim dividend of '' 150 per share (total dividend including tax thereon '' 48 691 lakhs was paid to holders of fully paid equity shares.
27 Segment information27.1 Products from which reportable segments derive their revenues
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods delivered or provided. The directors of the Company have chosen to organise the Company around differences in products and services.
Specifically, the Company''s operating segments under Ind AS 108 are as follows:
- Health care products - Comprising of Ointment and creams, Cough Drops and Tablets.
- Hygiene products - Comprising of Feminine Hygiene products and other skin care hygiene products.
For financial statements presentation purposes, these individual operating segments have been aggregated into a single primary reportable segment i.e. manufacturing, trading and marketing of Health and Hygiene Products under Ind AS 108 taking into the account the following factors:
- these operating segments have similar economic characteristics;
- these operating segments have similar long-term gross profit margins;
- the nature of the products and production processes are similar; and
- the methods used to distribute the products to the customers are the same.
29 Employee benefit plans29.1 Defined contribution plans
The Company operates defined contribution provident fund, superannuation fund and employees'' state insurance plan for all qualifying employees of the Company. Where employees leave the plan, the contributions payable by the Company is reduced by the amount of forfeited contributions.
The employees of the Company are members of a state-managed employer''s contribution to employees'' state insurance plan, provident fund operated by the government and superannuation fund which is administered through a trust that is legally separated from the Company. The assets of the plan is held separately from those of the Company in funds under the control of trustees. The Company is required to contribute a specific percentage of payroll costs to the contribution schemes to fund the benefit. The only obligation of the Company with respect to the contribution plan is to make the specified contributions.
The total expense recognised in the statement of profit and Loss of '' 1 184 Lakhs (for the year ended June 30, 2020: '' 1 069 Lakhs) for provident fund, '' 101 lakhs (for the year ended June 30, 2020: '' 122 Lakhs) for superannuation fund represent contributions payable to these plans by the Company at rates specified in the rules of the plans. As at June 30, 2021, contributions of '' 9 lakhs (as at June 30, 2020: '' 10 lakhs) due in respect of 2020 - 2021 (2019 - 2020) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting periods.
a) Gratuity Plan (Funded)
The Company sponsors funded defined benefit gratuity plan for all eligible employees of the Company. The Companyâs defined benefit gratuity plan is a final salary plan for India employees, which requires contributions to be made to a separately administered trust. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The gratuity plan is administered by a separate trust that is legally separated from the Company. The board of the trust is composed of representatives from both employer and employees. The board of the trust is required by law and by its articles of association to act in the interest of the trust and of all relevant stakeholders in the scheme, i.e. active employees, inactive employees, retirees, employer. The board of the trust is responsible for the investment policy with regard to the assets of the trust.
b) Post Retirement Medical Benefit (PRMB) (Unfunded)
The Company provides certain post-employment medical benefits to employees. Under the scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade at the time of retirement. Employees separated from the Company as part of early separation scheme are also covered under the scheme. The liability for post retirement medical scheme is based on an independent actuarial valuation.
c) Compensated absences for Plant technicians (Unfunded)
The Company also provides for compensated absences for plant technicians which allows for encashment of leave on termination/retirement of service or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year.
These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity risk and salary risk.
Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yieLds at the end of the reporting period on government bonds.
Interest risk A decrease in the bond interest rate wiLL increase the pLan LiabiLity; however, this
will be partially offset by an increase in the return on the plan investments. Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality rate of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans liability.
Salary risk The present value of the defined benefit plan liability is calculated by reference
to the future salaries of plan participants. As such, an increase on the salary of plan participants will increase the plans liability.
In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at June 30, 2021. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
If the discount rate is 50 basis points higher (Lower), the defined benefit obligation would decrease by '' 358 lakhs (increase by '' 418 lakhs) (as at June 30, 2020: decrease by '' 497 lakhs (increase by '' 546 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 395 Lakhs (decrease by '' 370 lakhs) (as at June 30, 2020: increase by '' 520 Lakhs (decrease by '' 479 lakhs)).
Compensated absence plan (Unfunded)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 31 Lakhs (increase by '' 35 lakhs) (as at June 30, 2020: decrease by '' 20 Lakhs (increase by '' 23 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by '' 33 Lakhs (decrease by '' 30 lakhs) (as at June 30, 2020: increase by '' 22 Lakhs (decrease by '' 20 lakhs)).
Post retirement medical benefit (PRMB)
If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by '' 23 Lakhs (increase by '' 25 lakhs) (as at June 30, 2020: decrease by '' 18 lakhs (increase by '' 19 lakhs)).
If the expected medical inflation rate increases (decreases) by 0.5%, the defined benefit obligation wouLd increase by '' 21 Lakhs (decrease by '' 20 lakhs) (as at June 30, 2020: increase by '' 16 Lakhs (decrease by '' 15 lakhs)).
The sensitivity analysis presented above may not be representative of the actual change of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method as the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
30 Financial instruments 30.1 Capital management
The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the equity balance. Equity share capital and other equity are considered for the purpose of group''s capital management.
The Company is not subject to any externally imposed capital requirements.
The Company''s risk management committee manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return on capital to shareholders or issue new shares.
30.3 Financial risk management objectives
The Companyâs overall policy with respect to managing risks associated with financial instruments is to minimise potential adverse effects of financial performance of the Company. The policies for managing specific risks are summarised below.
30.4 Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters.
The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
30.4.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the currencies stated above.
The following table details impact to profit or loss of the Company by sensitivity analysis of a 10% increase and decrease in the respective currencies against the functional currency of the Company. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change on foreign currency rates.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial Loss to the Company. The Company performs ongoing credit evaluation of the counterpartyâs financial position as a means of mitigating the risk of financial loss arising from defaults. The Company only grants credit to creditworthy counterparties.
The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics as disclosed in Note 10 to the financial statements.
30.6 Interest rate risk management
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have interest bearing borrowings, it is not exposed to risk of changes in market interest rates. The Company has not used any interest rate derivatives.
30.7 Other price risk management
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. The Company is not exposed to pricing risk as the Company does not have any investments in equity instruments and bonds.
30.8 Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Company maintains adequate highly liquid assets in the form of cash to ensure necessary liquidity.
The table below analyse financial liabilities of the Company into relevant maturity groupings based on the reporting period from the reporting date to the contractual maturity date:
The carrying amount of financial assets and financial Liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an âInternational Stock Ownership Planâ (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary). Such contribution is charged under employee benefits expense.
The shares of The Procter and Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2021: 5 523.92 (June 30, 2020: 5 208.85) shares excluding dividend were purchased by employees at weighted average fair value of '' 9 992.92 (June 30, 2020: '' 8 572.37) per share. The Company''s contribution during the year on such purchase of shares amounts to '' 156 Lakhs (June 30, 2020: '' 125 Lakhs).
b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an âEmployee Stock Option Planâ whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed year of time. The shares of The Procter and Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.
The Company has taken on Lease certain guesthouses, office premises and warehouses with an option of renewal at the end of the lease term and escalation clause in some of the cases. These leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements. Further, in the previous year the Company had entered into certain processing arrangements which fell under the Appendix C to the erstwhile IND AS 17 âDetermining whether an arrangement contains a leaseâ and the payments for the lease were bifurcated from payments for other elements in the arrangement. The said leases and processing arrangements (renewed on modified terms w.e.f. July 1, 2019) have been assessed as not falling under the new standard IND AS 116 âLeasesâ which was made applicable effective July 1, 2019. The processing arrangement cost is discLosed under processing charges and the cost for the other Leases viz. for guesthouses, office premises and warehouses continue to be disclosed under rent expense.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
37 (a) Reimbursement / (recovery) of expenses cross charged to related parties include payments / recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter & Gamble Home Products Private Limited and Gillette India Limited. (Refer note 38).
37 (b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross
charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.
38 (a) Employee Benefits Expense excludes expenses in respect of Managerial personnel of '' 92 Lakhs
(Previous Year: '' 78 Lakhs) cross charged to Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 37).
38 (b) Employee Benefits Expense includes expenses in respect of Managerial personnel of '' 157 Lakhs (Previous Year: '' 178 Lakhs) cross charged from Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 37).
Proposed Dividend:
The Board of Directors at its meeting held on August 25, 2021 have recommended a payment of final dividend of '' 80 per equity share of face value of '' 10 each for the financial year ended June 30, 2021 resulting in a dividend payout of '' 25 969 lakhs.
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.
40 Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.
41 Approval of financial statements
The financial statements were approved for issue by the board of directors on August 25, 2021.
Jun 30, 2018
Notes:
(a) Non-current loans to related parties includes loan to key managerial personnel Nil lakhs (June 30, 2017: Rs, 19 lakhs).
(b) Current loans to related parties includes:
(i) Loan to fellow subsidiaries of the Ultimate Holding Company Rs, 9 000 lakhs (June 30, 2017: Rs, 9 000 lakhs).
(ii) Loan to key management personnel Nil lakhs (June 30, 2017: Rs, 4 lakhs).
(c) Loans given to employees / key managerial personnel as per the Company''s policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
(a) Includes amounts deposited with Excise, Sales Tax and other authorities as demanded, pending resolution of disputes.
(b) Advances given to employees as per the Company''s policy are not considered for the purposes of disclosure under Section 186 (4) of the Companies Act, 2013.
(a) Certain Property, Plant and Equipment (PPE) has been rendered redundant due to the Company moving its manufacturing facility from one location to another. The Company intends to dispose off the said PPE and is actively engaged in identifying a prospective buyer. The sale is expected to be completed in the next 12 months. These assets have been classified as held for sale as at June 30, 2018.
(b) Further, the carrying value of assets amounting to Rs, 3 411 lakhs have been brought down to its fair value and an impairment loss of Rs, 1 259 lakhs has been recognized in the Statement of Profit and Loss.
The Company has only one class of equity shares having par value of Rs, 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
No shares are bought back by the Company during the period of 5 years immediately preceding the Balance Sheet date.
No shares are alloted as fully paid up by way of bonus shares during the period of 5 years immediately preceeding the Balance Sheet date.
No shares are reserved for issue under options and contracts / commitments for the sale of shares / disinvestment.
No shares are alloted as fully paid up pursuant to contracts without being payment received in cash during the period of 5 years immediately preceeding the Balance Sheet date.
This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilised in accordance with the provisions of the Companies Act, 2013.
I n November 2017, dividend of Rs, 27 per share (total dividend including tax thereon Rs, 10 548 lakhs) was paid to holders of fully paid equity shares. In November 2016, the final dividend paid was Rs, 36 per share (total dividend including tax thereon Rs, 14 065 lakhs).
I n June, 2017, an interim dividend of Rs, 362 per share (total dividend including tax thereon Rs, 1 41 433 lakhs) was paid to holders of fully paid equity shares.
# There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
The provision for employee benefits includes post retirement medical benefits (PRMB), compensated absences and gratuity. The increase / decrease in the carrying amount of the provision for the current year results from benefits being paid in the current year. For other disclosures refer note 29.
1. Segment information
2. Products from which reportable segments derive their revenues
Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the types of goods delivered or provided. The directors of the Company have chosen to organise the Company around differences in products and services.
Specifically, the Company''s operating segments under Ind AS 108 are as follows:
- Health care products - Comprising of Ointment and creams, Cough Drops and Tablets.
- Hygiene products - Comprising of Feminine Hygiene products and other skin care hygiene products.
For financial statements presentation purposes, these individual operating segments have been aggregated into a single primary reportable segment i.e. manufacturing, trading and marketing of Health and Hygiene Products under Ind AS 108 taking into the account the following factors:
- these operating segments have similar economic characteristics;
- these operating segments have similar long-term gross profit margins;
- the nature of the products and production processes are similar; and
- the methods used to distribute the products to the customers are the same.
Segment revenue reported above represents revenue generated from external customers.
The accounting policies of the reportable segments are the same as the Company''s accounting policies described in note 2.3(o). Segment profit represents the profit before tax earned by each operating segment, other income as well as finance costs. This is the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.
3. Employee benefit plans
4. Defined contribution plans
The Company operates defined contribution provident fund, superannuation fund and employees'' state insurance plan for all qualifying employees of the Company. Where employees leave the plan, the contributions payable by the Company is reduced by the amount of forfeited contributions.
The employees of the Company are members of a state-managed employer''s contribution to employees'' state insurance plan, provident fund operated by the government and superannuation fund which is administered through a trust that is legally separated from the Company. The assets of the plan is held separately from those of the Company in funds under the control of trustees. The Company is required to contribute a specific percentage of payroll costs to the contribution schemes to fund the benefit. The only obligation of the Company with respect to the contribution plan is to make the specified contributions.
The total expense recognized in the statement of profit and loss of Rs, 843 lakhs (for the year ended June 30, 2017: Rs, 786 lakhs) for provident fund, Rs, 136 lakhs (for the year ended June 30, 2017: Rs, 153 lakhs) for superannuation fund represent contributions payable to these plans by the Company at rates specified in the rules of the plans. As at June 30, 2018, contributions of Rs, 12 lakhs (as at June 30, 2017: Rs, 13 lakhs) due in respect of 2017-2018 (20162017) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting periods.
5. Defined benefit plans
a) Gratuity Plan (Funded)
The Company sponsors funded defined benefit gratuity plan for all eligible employees of the Company. The Company''s defined benefit gratuity plan is a final salary plan for India employees, which requires contributions to be made to a separately administered trust. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member''s length of service and salary at retirement age. The gratuity plan is administered by a separate trust that is legally separated from the Company. The board of the trust is composed of representatives from both employer and employees. The board of the trust is required by law and by its articles of association to act in the interest of the trust and of all relevant stakeholders in the scheme, i.e. active employees, inactive employees, retirees, employer. The board of the trust is responsible for the investment policy with regard to the assets of the trust.
b) Post Retirement Medical Benefit (PRMB) (Unfunded)
The Company provides certain post-employment medical benefits to employees. Under the scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade at the time of retirement. Employees separated from the Company as part of early separation scheme are also covered under the scheme. The liability for post retirement medical scheme is based on an independent actuarial valuation.
c) Compensated absences for Plant technicians (Unfunded)
The Company also provides for compensated absences for plant technicians which allows for encashment of leave on termination / retirement of service or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / a ailment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year.
These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity risk and salary risk.
I n respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at June 30, 2018. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.
Gratuity Plan (Funded)
I f the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 309 lakhs (increase by Rs, 336 lakhs) (as at June 30, 2017: decrease by Rs, 343 lakhs (increase by Rs, 375 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs, 331 lakhs (decrease by Rs, 307 lakhs) (as at June 30, 2017: increase by Rs, 367 lakhs (decrease by Rs, 339 lakhs)).
Compensated absence plan (Unfunded)
I f the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 10 lakhs (increase by Rs, 11 lakhs) (as at June 30, 2017: decrease by Rs, 10 lakhs (increase by Rs, 12 lakhs)).
If the expected salary growth increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs, 11 lakhs (decrease by Rs, 10 lakhs) (as at June 30, 2017: increase by Rs, 11 lakhs (decrease by Rs, 10 lakhs)).
Post retirement medical benefit (PRMB)
I f the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by Rs, 13 lakhs (increase by Rs, 14 lakhs) (as at June 30, 2017: decrease by Rs, 25 lakhs (increase by Rs, 29 lakhs)).
I f the expected medical inflation rate increases (decreases) by 0.5%, the defined benefit obligation would increase by Rs, 12 lakhs (decrease by Rs, 11 lakhs) (as at June 30, 2017: increase by Rs, 25 lakhs (decrease by Rs, 22 lakhs)).
The sensitivity analysis presented above may not be representative of the actual change of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method as the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the Balance Sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
6. Financial instruments
7. Capital management
The Company manages its capital to ensure that it will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the equity balance. Equity share capital and other equity are considered for the purpose of group''s capital management.
The Company is not subject to any externally imposed capital requirements.
The Company''s risk management committee manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return on capital to shareholders or issue new shares.
8. Financial risk management objectives
The Company''s overall policy with respect to managing risks associated with financial instruments is to minimize potential adverse effects of financial performance of the Company. The policies for managing specific risks are summarized below.
9. Foreign currency sensitivity analysis
The Company is mainly exposed to the currencies stated above.
The following table details impact to profit or loss of the Company by sensitivity analysis of a 10% increase and decrease in the respective currencies against the functional currency of the Company. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change on foreign currency rates.
10. Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company performs ongoing credit evaluation of the counterparty''s financial position as a means of mitigating the risk of financial loss arising from defaults. The Company only grants credit to creditworthy counterparties.
The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics as disclosed in Note 5 to the financial statements.
11. Interest rate risk management
I nterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company does not have interest bearing borrowings, it is not exposed to risk of changes in market interest rates. The Company has not used any interest rate derivatives.
12. Other price risk management
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. The Company is not exposed to pricing risk as the Company does not have any investments in equity instruments and bonds.
13. Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Company maintains adequate highly liquid assets in the form of cash to ensure necessary liquidity.
The table below analyse financial liabilities of the Company into relevant maturity groupings based on the reporting period from the reporting date to the contractual maturity date:
14. Fair value measurements
The carrying amount of financial assets and financial liabilities measured at amortized cost in the financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
15. Share-based payments
a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an "International Stock Ownership Plan" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (up to 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary). Such contribution is charged under employee benefits expense.
The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2018, 6 656.66 (June 30, 2017: 4 651.17) shares were purchased by employees at weighted average fair value of Rs, 5 482.49 (June 30, 2017: Rs, 5 253.08) per share. The CompanyRs,s contribution during the year on such purchase of shares amounting to Rs, 97 Lakhs (June 30, 2017: Rs, 71 Lakhs) has been charged under employee benefits expense under Note 23.
b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an "Employee Stock Option Plan" whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of the Ultimate Holding Company
i.e. The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed year of time. The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5 / 10 years life cycle.
There were no cancellations or modifications to the awards in June 30, 2018 or June 30, 2017.
Movements during the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year (excluding SARs):
The weighted average share price at the date of exercise of these options was $ 87.70 (June 30, 2017: $ 88.48).
The weighted average remaining contractual life for the share options outstanding as at June 30, 2018 was 5.99 years (June 30, 2017: 5.24 years).
The weighted average fair value of options granted during the year was Rs, 1 206 (June 30, 2017: Rs, 1 073).
These fair values for share options granted during the year were calculated using binomial lattice-based model. The following tables list the inputs to the models used for the plans for the years ended June 30, 2018 and June 30, 2017, respectively:
16. Related party disclosures:
The Group Companies of The Procter & Gamble Company USA include, among others,
Procter & Gamble India Holdings BV Procter & Gamble Luxembourg Global SARL
Procter & Gamble Iron Horse Holding BV Procter & Gamble International SARL
Procter & Gamble Eastern Europe LLC Procter & Gamble India Holdings Inc.
Procter & Gamble Nordic LLC Procter & Gamble International Operations, SA
Procter & Gamble Global Holdings Limited Gillette Group (Europe) Holdings, BV
Procter & Gamble Canada Holding BV Procter & Gamble Overseas India BV
Procter & Gamble Overseas Canada, BV Procter & Gamble Asia Holding BV Rosemount BV
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions.
Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. The Company has not recorded any impairment of receivables relating to amounts owed by related parties in the current year or prior years. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
17. Operating lease arrangements
Company as a lessee
18. Leasing arrangements
The Company has taken on lease guesthouses for accommodation of employees and office premises and warehouses with an option of renewal at the end of the lease term and escalation clause in some of the cases. These leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements. The Company has also entered into an arrangement which in substance falls under the Appendix C to IND AS 17 "Determining whether an arrangement contains a lease" and the payments for the lease have been bifurcated from payments for other elements in the arrangement. The lease payments under the above mentioned leasing arrangement have been disclosed in note 33.2.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
19. (a) Reimbursement / (recovery) of expenses cross charged to related parties include payments / recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter & Gamble Home Products Private Limited and Gillette India Limited. (Refer note 38).
(b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.
20. (a) Employee Benefits Expense excludes expenses in respect of Managerial personnel of Rs, 588 Lakhs (Previous Year: Rs, 806 Lakhs) cross charged to Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 37).
(b) Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs, 150 Lakhs (Previous Year: Rs, 175 Lakhs) cross charged from Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 37).
Proposed Dividend:
The Board of Directors at its meeting held on August 22, 2018 have recommended a payment of final dividend of Rs, 40 per equity share of face value of Rs, 10 each for the financial year ended June 30, 2018. The same amounts to Rs, 15 654 lakhs including dividend distribution tax of Rs, 2 670 lakhs.
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.
21. Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.
22. Approval of financial statements
The financial statements were approved for issue by the Board of Directors on August 22, 2018.
Jun 30, 2017
1. Share-based payments
a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)
The Procter & Gamble Company, USA has an "International Stock Ownership Plan" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter & Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (up to 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary). Such contribution is charged under employee benefits expense.
The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2017, 4 651.17 (June 30, 2016: 4 390.24) shares were purchased by employees at weighted average fair value of Rs, 5 253.08 (June 30, 2016: Rs, 5 226.93) per share. The CompanyRs,s contribution during the year on such purchase of shares amounting to Rs, 71 lakhs (June 30, 2016: Rs, 63 lakhs) has been charged under employee benefits expense under Note 23.
b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)
The Procter & Gamble Company, USA has an "Employee Stock Option Plan" whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. The Procter & Gamble Company, USA at a fixed price (grant price) for a fixed year of time. The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.
2. Related party disclosures:
The Group Companies of The Procter & Gamble Company USA include, among others,
Procter & Gamble India Holdings BV Procter & Gamble Luxembourg Global SARL
Procter & Gamble Iron Horse Holding BV Procter & Gamble International SARL
Procter & Gamble Eastern Europe LLC Procter & Gamble India Holdings Inc.
Procter & Gamble Nordic LLC Procter & Gamble International Operations, SA
Procter & Gamble Global Holdings Limited Gillette Group (Europe) Holdings, BV
Procter & Gamble Canada Holding BV Procter & Gamble Overseas India BV
Procter & Gamble Overseas Canada, BV Procter & Gamble Asia Holding BV Rosemount BV
(a) Related party where control exists:
Relationship__Name of the Company_
Ultimate Holding Company__The Procter & Gamble Company, USA_
Holding Company__Procter & Gamble Asia Holding B.V, The Netherlands (upto March 30, 2017)
__Procter & Gamble Overseas India BV, The Netherlands (w.e.f March 31, 2017)
Procter & Gamble Asia Holding B.V, The Netherlands has been merged into Procter & Gamble Overseas India BV, The Netherlands with effect from March 31, 2017.
3. (a) Reimbursement / (recovery) of expenses cross charged to related parties include payments / recoveries on account of
finance, personnel, secretarial, administration and planning services rendered under common services agreements with Procter & Gamble Home Products Private Limited and Gillette India Limited. (Refer note 38).
(b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.
4. (a) Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs, 806 lakhs (Previous Year:
Rs, 515 lakhs) cross charged to Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 37).
(b) Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs, 175 lakhs (Previous Year: Rs, 170 lakhs) cross charged from Gillette India Limited and Procter & Gamble Home Products Private Limited in terms of the common services agreement (Refer Note 37).
Proposed Dividend:
The Board of Directors at its meeting held on August 23, 2017 have recommended a payment of final dividend of Rs, 27 per equity share of face value of Rs, 10 each for the financial year ended June 30, 2017. The same amounts to Rs, 10 549 lakhs including dividend distribution tax of Rs, 1 785 lakhs.
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.
For the purpose of this clause, the term "Specified Bank Note" shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance Department of Economic Affairs No. S.O. 3407 (E), dated the November 8, 2016.
5. Approval of financial statements
The financial statements were approved for issue by the Board of Directors on August 23, 2017.
6. Effect of Ind AS adoption on the Statement of Cash Flows for the year ended June 30, 2016
There are no material adjustments to the Statement of Cash Flows as reported under the previous GAAP.
Notes to the reconciliations: a. Property, plant and equipment:
I n the financial statements prepared under previous GAAP, Leasehold land was disclosed as a part of fixed assets and measured at the total lease payment made at the time of lease agreement and the same was amortised over the period of lease on a yearly basis. Under Ind AS, the leasehold land is treated as prepaid expenses for lease rentals and the prepayment forms a part of other current and non-current assets. Accordingly, the prepaid expense as at July 1, 2015 is Rs, 20 lakhs, current portion is Rs, 2 lakhs and non current is Rs, 18 lakhs and as at June 30, 2016 is Rs, 18 lakhs, current portion is Rs, 2 lakhs and non current is Rs, 16 lakhs. Additionally the amortisation on leasehold land is treated as rent expense and Rs, 2 lakhs for the year ended June 30, 2016 is transferred from depreciation expense to other expenses.
Under Ind AS, the Company has identified agreements which in substance fall under the category of Finance Leases. Accordingly Finance lease obligation payable has been created in the books as at July 1, 2015 (Rs, 189 lakhs) and as at June 30, 2016 (Rs, 189 lakhs) and corresponding Freehold Land as at July 1, 2015 (Rs, 75 lakhs) and as at June 30, 2016 (Rs, 75 lakhs). The effect of this change is an decrease in total equity as at July 1, 2015 (Rs, 114 lakhs) and as at June 30, 2016 (Rs, 114 lakhs), but does not affect profit before tax and total profit for the year ended June 30, 2016.
b. Proposed Dividend:
I n the financial statements prepared under previous GAAP, dividend on equity shares recommended by the Board of Directors after the end of reporting period but before the financial statements were approved for issue, was recognized as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognized in the reporting period in which the same is approved by the members in a general meeting.
On the date of transition, the above change in accounting treatment of proposed dividend has resulted in increase in Equity with a corresponding decrease in Provisions by Rs, 14 065 lakhs as at June 30, 2016. The above change has also resulted in an increase in Equity with a corresponding decrease in provision by Rs, 11 818 lakhs as at July 1, 2015.
c. Revenue from operations:
In the financial statements prepared under previous GAAP, revenue from sale of products was presented net of excise duty. However, under Ind AS, revenue from sale of products includes excise duty. Excise duty expense amounting to Rs, 7 104 lakhs is presented separately on the face of the Statement of Profit and Loss for the year ended June 30, 2016.
I n the financial statements prepared under previous GAAP, sales incentive scheme expenses were shown as a part of other expenses. However, under Ind AS, such discounts and sales promotional expenses amounting to Rs, 20 622 lakhs for the year ended June 30, 2016, are reduced from revenue from sale of products.
I n light of the above, revenue from sale of products under Ind AS has decreased by Rs, 13 518 lakhs (Rs, 20 622 lakhs less Rs, 7 104 lakhs) with an corresponding increase in excise duty by Rs, 7 104 lakhs and decrease in other expenses by Rs, 20 622 lakhs in the Statement of Profit and Loss for the year ended June 30, 2016.
The above changes do not affect equity as at date of transition to Ind AS, profit after tax for the year ended June 30, 2016 and Equity as at June 30, 2016.
d. Remeasurement benefit of defined benefit plans:
In the financial statements prepared under previous GAAP, remeasurement benefit of defined plans, arising primarily due to change in actuarial assumptions was recognized as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognized in OCI as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.
For the year ended June 30, 2016, remeasurement of gratuity liability and PRMB resulted in a net benefit of Rs, 202 lakhs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in OCI.
Under Previous GAAP, the interest cost on defined benefit liability was recognized as employee benefit expenses in the Statement of Profit and Loss. Under Ind AS, the Company has recognized the net interest cost on defined benefit plans amounting to Rs, 225 lakhs for the year ended June 30, 2016 as finance cost.
This has resulted in decrease in employee benefits expense by Rs, 427 lakhs (Rs, 202 lakhs and Rs, 225 lakhs) and gain in OCI by Rs, 202 lakhs and finance cost by Rs, 225 lakhs for the year ended June 30, 2016. Consequently, tax effect of the same amounting to Rs, 70 lakhs is also recognized separately in OCI.
The above changes do not affect Equity as at date of transition to Ind AS and as at June 30, 2016. However, Profit before tax and profit for the year ended June 30, 2016 decreased by Rs, 202 lakhs and Rs, 132 lakhs respectively.
e. Employee stock option plan:
In the financial statement prepared under previous GAAP, the cost of equity-settled employee share-based payments was recognized at the time of exercise of the stock options. Under Ind AS, the cost of equity-settled employee share-based payments is recognized based on the fair value of the options as on the grant date. On transitioning to Ind AS, fair value of partially vested share-based payment plans has been recognized in equity of Rs, 48 lakhs as at July 1, 2015 and Rs, 306 lakhs for the year ended June 30, 2016.
The above change has resulted in decrease in profit after tax for the year ended June 30, 2016 by Rs, 306 lakhs increase in deferred tax asset as at June 30, 2016 by Rs, 106 lakhs and increase in equity as at June 30, 2016 by Rs, 106 lakhs.
f. Embedded lease:
Under Ind AS, the Company has identified arrangements which in substance fall under the Appendix C to IND AS 17 Determining whether an arrangement contains a lease and the payments for the lease have been bifurcated from payments for other elements in the arrangement. Accordingly, the payment for the lease is treated as rent expense and Rs, 2 965 lakhs for the year ended June 30, 2016 is transferred from Cost of raw and packing materials consumed to other expenses. The above changes do not affect profit after tax for the year ended June 30, 2016 and Equity as at June 30, 2016.
Jun 30, 2016
Notes:
1. Figures in brackets pertain to previous year.
2. Opening accumulated depreciation includes impairment on Land-Leasehold Rs, 91 Lakhs; on Buildings Rs, 750 Lakhs; on Plant and Machinery Rs, 205 Lakhs and on Office Equipment Rs, 0.30 Lakhs in 2002-03.
3. Land - Freehold includes Rs, 677 Lakhs (Previous year : Rs, 677 Lakhs) being the company''s share (90%) of assets jointly owned with other parties.
4. In accordance with the requirements of Companies Act, 2013 (the Act) , the company has, effective July 1, 2014, reviewed and revised the estimated useful lives of its fixed assets in accordance with the provisions of Schedule II of the Act (Refer Note 2.04). Consequently in respect of assets, whose useful life is exhausted as at July 1, 2014, the related carrying amount aggregating to Rs, Nil Lakhs (Previous year : Rs, 218 Lakhs (net of tax of Rs, Nil Lakhs {Previous year : Rs, 112 Lakhs}) was adjusted against the opening surplus balance in the Statement of Profit and Loss in the previous year.
Notes: a) Loans and Advances given to employees as per the Company''s policy are not considered for the purposes of disclosure under Section 186(4) of the Companies Act, 2013. b) I ncludes amounts deposited with Excise, Sales Tax and other authorities as demanded, pending resolution of disputes.
(b) Miscellaneous expenses includes expenditure incurred and paid on Corporate Social Responsibility (CSR) under sections 135 of the Companies Act, 2013 of Rs, 845 Lakhs (Previous year : Rs, 652 Lakhs).
5. (a) Contingent Liabilities :
(i) In respect of Income Tax demands for which the company has preferred appeals with appropriate authorities -Rs, 7 529 Lakhs (Previous year : Rs, 6 820 Lakhs). The liability is mainly on account of various disallowances by the Income Tax authorities on which assessee has preferred an appeal. These are on account of various grounds - primarily on account of advertisement expenses, tax holiday, etc.
(ii) I n respect of Sales Tax matters for which the company has preferred appeals with appropriate authorities -Rs, 3 971 Lakhs (Previous year : Rs, 3 206 Lakhs). The liability is in respect to matters related to non-submission of "C" Forms / "F" Forms Rs, 2 641 Lakhs (Previous year : Rs, 2 074 Lakhs), Incomplete accounts books Rs, 227 Lakhs (Previous year : Rs, 227 Lakhs), Classification issues Rs, 38 Lakhs (Previous year : Rs, 58 Lakhs), Product valuation issues Rs, 66 Lakhs (Previous year : Rs, 66 Lakhs), and other miscellaneous issues Rs, 999 Lakhs (Previous year : Rs, 781 Lakhs).
(iii) I n respect of Excise and Service Tax matters and Customs Duty for which the company has preferred appeals with appropriate authorities Rs, 1 351 Lakhs (Previous year : Rs, 1 332 Lakhs). The liability is in respect to: classification matters Rs, 9 Lakhs (Previous year : Rs, 9 Lakhs), valuation matters Rs, 95 Lakhs (Previous year : Rs, 95 Lakhs), applicability of service tax matters Rs,Rs,1 226 Lakhs (Previous year : Rs, 1 226 Lakhs) others Rs, 2 Lakhs (Previous year : Rs, 2 Lakhs) and customs duty Rs, 19 Lakhs (Previous year : Rs, Nil Lakhs) .
(iv) I n respect of counter guarantees given to banks against guarantees given by banks : Rs, 9 417 Lakhs (Previous year : Rs, 9 108 Lakhs) At the request of the Company, its bankers have issued guarantees to third parties for performance obligation under various commercial agreements. The Company has issued counter guarantees to the banks in respect of these guarantees.
(v) I n respect of other claims - Rs, 46 Lakhs (Previous year : Rs, 46 Lakhs). The Company is a party to various legal proceedings in the normal course of business.
Future cash flow in respect of the above, if any, is determinable only on receipt of judgments / decisions pending with the relevant authorities. The Company does not expect the outcome of matters stated above to have a material adverse effect on the Company''s financial condition, results of operations or cash flows.
(b) Commitments :
Estimated amount of contracts remaining to be executed on capital account (net of advances) - Rs, 357 Lakhs (Previous year : Rs, 65 Lakhs).
6. Employee Benefits
The Company has classified the various benefits provided to employees as under :
I. Defined Contribution Plans
a. Provident Fund
b. Superannuation Fund
c. State Defined Contribution Plans: Employer''s Contribution to Employees'' State Insurance
The above amounts are included in Contribution to Provident and other Funds under Employee Benefits Expense
(Refer Note 21)
II. Defined Benefit Plans
a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act, 1972 or Company''s scheme whichever is more beneficial. Benefits would be paid at the time of separation based on the last drawn base salary.
b. Post Retirement Medical Benefits (PRMB) (Unfunded Scheme): Under this scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade at the time of retirement. Employees separated from the Company as part of early separation scheme are also covered under the scheme.
c. Compensated Absences (Unfunded Scheme): The Company provides for leave encashment on termination / retirement of service or leave with pay subject to rules. The employees are entitled to accumulate leave subject to limits for future encashment / a ailment. The Company makes provision for Compensated Absences based on an actuarial valuation carried out at the end of the year.
The disclosures as required under AS-15 are as under.
(G) Actuarial Assumptions
In respect of the aforesaid defined benefit plans, the management has estimated the liability based on actuarial valuation and is based on following assumptions:
Mortality rates considered are as per the published rates in Indian Assured Lives Mortality (2006-08).
The estimates of future salary increases, considered in the actuarial valuation, take account of inflation, security, promotion and other relevant factors such as supply and demand in the employment market.
7. (a) International Stock Ownership Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an "International Stock Ownership Plan" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA. Every employee who opts for the scheme contributes by way of payroll deduction up to a specified percentage (upto 15%) of base salary towards purchase of shares on a monthly basis. The Company contributes 50% of employee''s contribution (restricted to 2.5% of his base salary). Such contribution is charged to staff cost.
The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange and are purchased on behalf of the employees at market price on the date of purchase. During the year ended June 30, 2016, 4390.24 (Previous year : 3 267.28) shares were purchased by employees at weighted average fair value of Rs, 5226.93 (Previous year : Rs, 5 239.36) per share.
The CompanyRs,s contribution during the year on such purchase of shares amounting to Rs, 63 Lakhs (Previous year : Rs, 51 Lakhs) has been charged under Employee Benefits Expense (Refer Note 21).
(b) Employees Stock Options Plan (Stocks of the Ultimate Holding Company)
The Procter and Gamble Company, USA has an "Employee Stock Option Plan" whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of the Ultimate Holding Company i.e. The Procter and Gamble Company, USA at a fixed price (grant price) for a fixed period of time. The shares of The Procter & Gamble Company, USA are listed with New York Stock Exchange. The Options Exercise price equal to the market price of the underlying shares on the date of the grant. The Grants issued are vested after 3 years and have a 5/10 years life cycle.
Stock compensation expense of Rs, 1 864 Lakhs (Previous year : Rs, 1 122 Lakhs) has been charged under Employee Benefits Expense (Refer Note 21).
The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
8. The Company has taken on lease guesthouses for accommodation of employees with an option of renewal at the end of the lease term and escalation clause in some of the cases. Leases can be terminated with a prior notice as per terms and conditions of the respective lease agreements with the lessor. Lease payments amounting to Rs, 782 Lakhs (Previous year : Rs, 805 Lakhs) have been charged to the Statement of Profit and Loss for the year.
9. (a) Reimbursement / (Recovery) of expenses cross charged to related parties include payments / recoveries on account of finance, personnel, secretarial, administration and planning services rendered under common cost sharing agreements with Procter and Gamble Home Products Private Limited and Gillette India Limited (Refer Note 35).
(b) Certain expenses in the nature of employee costs, relocation costs and other expenses are cross charged by the Company to its fellow subsidiaries at actual. Similar expenses incurred by fellow subsidiaries are cross charged to the Company at actual.
10. Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs, 177 Lakhs (Previous year : Rs, 955 Lakhs) cross charged to Gillette India Limited and Procter and Gamble Home Products Private Limited in terms of the common cost sharing agreement (Refer Note 34).
Employee Benefits Expense includes expenses in respect of Managerial personnel of Rs, 170 Lakhs (Previous year : Rs, 159 Lakhs) cross charged from Gillette India Limited and Procter and Gamble Home Products Private Limited in terms of the common cost sharing agreement (Refer Note 34).
11. There are no outstanding derivative instruments as at year end.
Foreign currency exposures that have not been hedged by the company by a derivative instrument or otherwise are given below:
12. Related Party Disclosures:
The Group Companies of The Procter & Gamble Company USA include, among others,
Procter & Gamble India Procter & Gamble Luxembourg Global Procter & Gamble Canada
Holdings BV SARL Holding BV
Procter & Gamble Iron Procter & Gamble International Procter & Gamble Overseas
Horse Holding BV SARL Canada, BV
Procter & Gamble Eastern Procter & Gamble India Procter & Gamble Overseas
Europe LLC Holdings Inc. India BV
Procter & Gamble Procter & Gamble International Procter & Gamble Asia
Nordic LLC Operations, SA Holding BV
Procter & Gamble Global Gillette Group (Europe) Rosemount BV
Holdings Limited Holdings, BV
(a) Enterprises where control exists:
The Procter and Gamble Company, USA - Ultimate Holding Company Procter & Gamble Asia Holding BV, The Netherlands - Holding Company
(b) Other related parties with whom the Company had transactions during the year
(i) Fellow Subsidiaries:
Fameccanica Data S.P.A. Procter & Gamble Gulf FZE Procter & Gamble Mataro S.L.U.
Fameccanica Machinery (Shanghai) Procter & Gamble Home Products Procter & Gamble Product Supply
Co. Ltd. Private Limited (Erstwhile Procter & (U.K.) Limited
Gamble Home Products Limited)
Gillette Diversified Operations Procter & Gamble Hong Kong Procter & Gamble Technical
Pvt. Ltd. Limited Centers Ltd.
Gillette India Limited Procter & Gamble International Procter & Gamble Technology
Operations Pte. Ltd. (Beijing) Co. Ltd.
P&G K.K. Procter & Gamble International Procter & Gamble Trading
Operations Sa (Thailand) Ltd.
Procter & Gamble (Guangzhou) Ltd. Procter & Gamble International Procter & Gamble UK
Operations Sa Singapore Branch
Procter & Gamble (Singapore) Procter & Gamble International Pt. Procter & Gamble Home
Pte. Ltd. Operations Sa-ROHQ Products Indonesia
Procter & Gamble Australia Procter & Gamble Japan K.K. Pt. Procter & Gamble Operations
Pty. Ltd. Indonesia
Procter & Gamble Bangladesh Procter & Gamble Korea S&D, Co. The Procter & Gamble Company Private Limited
Procter & Gamble Distributing Procter & Gamble Korea, Inc. The Procter & Gamble
(Philippines), Inc. Distributing LLC
Procter & Gamble Europe Sa Procter & Gamble Malaysia Sdn The Procter & Gamble
Bhd Manufacturing Company
Procter & Gamble Europe Sa Procter & Gamble Manufacturing The Procter & Gamble US Business
Singapore Branch (Thailand) Ltd. Services Co.
Procter & Gamble Manufacturing Wella India Hair Cosmetics
Gmbh Pvt. Ltd.
(ii) Key Management Personnel of the Company
Mr Al Rajwani (Managing Director with effect from August 29, 2015)
Note : Related parties have been identified by the management.
13. The Company operates in a single segment i.e. Manufacturing, Trading and Marketing of Health and Hygiene Products.
14. Earnings per share (EPS)
Jun 30, 2015
1. (a) Contingent Liabilities :
(i) In respect of Income Tax demands for which the company has
preferred appeals with appropriate authorities - Rs. 6 820 Lakhs
(Previous year : Rs. 5 014 Lakhs). The liability is mainly on account
of various disallowances by the Income Tax authorities on which
assessee has preferred an appeal. These are on account of various
grounds - primarily on account of advertisement expenses, tax holiday,
etc.
(ii) In respect of Sales Tax matters for which the company has
preferred appeals with appropriate authorities - Rs. 3 206 Lakhs
(Previous year: Rs. 2 991 Lakhs). The liability is in respect to
matters related to non-submission of "C" Forms / "F" Forms Rs. 2 074
Lakhs (Previous year: Rs. 2 022 Lakhs), Incomplete accounts books Rs.
227 Lakhs (Previous year : Rs. 227 Lakhs), Classification issues Rs. 58
Lakhs (Previous year : Rs. 59 Lakhs), Product valuation issues Rs. 527
Lakhs (Previous year: Rs. 527 Lakhs), and other miscellaneous issues
Rs. 320 Lakhs (Previous year: Rs. 156 Lakhs).
(iii) In respect of Excise and Service Tax matters for which the
company has preferred appeals with appropriate authorities Rs. 1 332
Lakhs (Previous year : Rs. 1 332 Lakhs). The liability is in respect
to: classification matters Rs. 9 Lakhs (Previous year: Rs. 9 Lakhs),
valuation matters Rs. 95 Lakhs (Previous year: Rs. 95 Lakhs) and
applicability of service tax matters Rs. 1 226 Lakhs (Previous year :
Rs. 1 226 Lakhs) and others Rs. 2 Lakhs (Previous year : Rs. 2 Lakhs).
(iv) In respect of counter guarantees given to banks against guarantees
given by banks : Rs. 9 108 Lakhs (Previous year: Rs. 3 365 Lakhs). At
the request of the Company, its bankers have issued guarantees to third
parties for performance obligation under various commercial agreements.
The Company has issued counter guarantees to the banks in respect of
these guarantees.
(v) In respect of other claims - Rs. 46 Lakhs (Previous Year : Rs. 41
Lakhs). The Company is a party to various legal proceedings in the
normal course of business.
Future cash flow in respect of the above, if any, is determinable only
on receipt of judgments / decisions pending with the relevant
authorities. The Company does not expect the outcome of matters stated
above to have a material adverse effect on the Company's financial
condition, results of operations or cash flows.
(b) Commitments :
Estimated amount of contracts remaining to be executed on capital
account (net of advances) - Rs. 65 Lakhs (Previous year : Rs. 188
Lakhs).
2. Employee Benefits
The Company has classified the various benefits provided to employees
as under :
I. Defined Contribution Plans
a. Provident Fund
b. Superannuation Fund
c. State Defined Contribution Plans: Employer's Contribution to
Employees' State Insurance
II. Defined Benefit Plans
a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and resignation in terms of the provisions of the Payment
of Gratuity Act, 1972 or Company's scheme whichever is more beneficial.
Benefits would be paid at the time of separation based on the) last
drawn base salary.
b. Post Retirement Medical Benefits (PRMB) (Unfunded Scheme): Under
this scheme, employees get medical benefits subject to certain limits
of amount, periods after retirement and types of benefits, depending on
their grade at the time of retirement. Employees separated from the
Company as part of early separation scheme are also covered under the
scheme.
c. Compensated Absences (Unfunded Scheme): The Company provides for
leave encashment on termination / retirement of service or leave with
pay subject to rules. The employees are entitled to accumulate leave
subject to limits for future encashment / availment. The Company makes
provision for Compensated Absences based on an actuarial valuation
carried out at the end of the year.
The disclosures as required under AS-15 are as under.
3. (a) International Stock Ownership Plan (Stocks of the Ultimate
Holding Company)
The Procter and Gamble Company, USA has an "International Stock
Ownership Plan" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Ultimate Holding Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee's contribution (restricted to 2.5% of his
base salary). Such contribution is charged to staff cost.
The shares of The Procter & Gamble Company, USA are listed with New
York Stock Exchange and are purchased on behalf of the employees at
market price on the date of purchase. During the year ended June 30,
2015, Rs. 3 267.28 (Previous year: Rs. 3 147.78) shares were purchased
by employees at weighted average fair value of Rs. 5 239.36 (Previous
year Rs. 4 904.91) per share.
The Company's contribution during the year on such purchase of shares
amounting to Rs. 51 Lakhs (Previous year Rs. 41 Lakhs) has been charged
under Employee Benefits Expense (Refer Note 22).
(b) Employees Stock Options Plan (Stocks of the Ultimate Holding
Company)
The Procter and Gamble Company, USA has an "Employee Stock Option Plan"
whereby specified employees of its subsidiaries covered by the plan are
granted an option to purchase shares of the Ultimate Holding Company
i.e. The Procter and Gamble Company, USA at a fixed price (grant
price) for a fixed period of time. The shares of The Procter & Gamble
Company, USA are listed with New York Stock Exchange. The Options
Exercise price equal to the market price of the underlying shares on
the date of the grant. The Grants issued are vested after 3 years and
have a 5/10 years life cycle.
4. The Company has taken on lease guesthouses for accommodation of
employees with an option of renewal at the end of the lease term and
escalation clause in some of the cases. Leases can be terminated with a
prior notice as per terms and conditions of the respective lease
agreements with the lessor. Lease payments amounting to Rs. 805 Lakhs
(Previous Year : Rs. 448 Lakhs) have been charged to the Statement of
Profit and Loss for the year.
5. (a) Reimbursement/(Recovery) of expenses cross charged to related
parties include payments/recoveries on account of finance, personnel,
secretarial, administration and planning services rendered under common
services agreements with Procter and Gamble Home Products Private
Limited and Gillette India Limited (Refer Note 36).
(b) Certain expenses in the nature of employee costs, relocation costs
and other expenses are cross charged by the Company to its fellow
subsidiaries at actual. Similar expenses incurred by fellow
subsidiaries are cross charged to the Company at actual.
6. Employee Benefits Expense includes expenses in respect of
Managerial personnel of Rs. 955 Lakhs (Previous Year: Rs. 532 Lakhs)
cross charged to Gillette India Limited and Procter and Gamble Home
Products Private Limited in terms of the common services agreement
(Refer Note 35).
Employee Benefits Expense includes expenses in respect of Managerial
personnel of Rs. 159 Lakhs (Previous Year: Rs. 20 Lakhs) cross charged
from Gillette India Limited and Procter and Gamble Home Products
Private Limited in terms of the common services agreement (Refer Note
35).
Jun 30, 2014
CORPORATE INFORMATION
Procter & Gamble Hygiene and Health Care Limited (the Company) is a
public company incorporated under the provisions of the Companies Act,
1956. The company is engaged in the manufacturing and selling of
branded packaged fast moving consumer goods in the femcare and
healthcare businesses. The company''s products are sold through retail
operations including mass merchandisers, grocery stores, membership
club stores, drug stores, department stores, and high frequency stores.
The Company has its manufacturing locations at Goa and Baddi - Himachal
Pradesh, apart from third party manufacturing locations spread across
India.
Rights attached to Equity Shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity share is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to approval
of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Tangible fixed assets
Notes:
1. Figures in brackets pertains to previous year.
2. Opening accumulated depreciation includes impairment on
Land-Leasehold Rs. 91 Lakhs; on Buildings Rs. 7 50 Lakhs; on Plant and
Machinery Rs. 2 05 Lakhs and on Office Equipment Rs. 0.30 Lakhs in
2002-03.
3. Land - Freehold includes Rs. 6 67 Lakhs (Previous year Rs. 6 67
Lakhs) being the company''s share (90%) of assets jointly owned with
other parties.
Contingent Liabilities :
(i) I n respect of Income Tax demands for which the company has
preferred appeals with appropriate authorities- Rs. 5 014 Lakhs
(Previous year : Rs. 2 836 Lakhs). The liability is mainly on account
of various disallowances by the Income Tax authorities on which
assessee has preferred an appeal. These are on account of various
grounds - primarily on account of advertisement expenses, tax holiday,
etc.
(ii) I n respect of Sales Tax matters for which the company has
preferred appeals with appropriate authorities - Rs. 2 991 Lakhs
(Previous year : Rs. 1 910 Lakhs). The liability is in respect to
matters related to non-submission of ''''C" Forms / "F" Forms Rs. 2 022
Lakhs (Previous year : Rs. 1 023 Lakhs), Incomplete accounts books Rs.
227 Lakhs (Previous year : Rs. 227 Lakhs), Classification issues Rs. 59
Lakhs (Previous year : Rs. 59 Lakhs), Product valuation issues Rs. 527
Lakhs (Previous year : Rs.516 Lakhs), and other miscellaneous issues
Rs. 156 Lakhs (Previous year : Rs. 85 Lakhs).
(iii) I n respect of Excise and Service Tax matters for which the
company has preferred appeals with appropriate authorities Rs. 1 332
Lakhs (Previous year : Rs. 1 262 Lakhs). The liability is in respect
to: classification matters Rs. 9 Lakhs (Previous year : Rs. 9 Lakhs),
valuation matters Rs. 95 Lakhs (Previous year : Rs. 95 Lakhs) and
applicability of service tax matters Rs. 1 226 Lakhs (Previous year :
Rs. 1 156 Lakhs) and others Rs. 2 Lakhs (Previous year : Rs. 2 Lakhs).
(iv) I n respect of counter guarantees given to bank against guarantees
given by bank : Rs. 3 365 Lakhs (Previous year : Rs. 3 371 Lakhs). At
the request of the Company, its bankers have issued guarantees to third
parties for performance obligation under various commercial agreements.
The Company has issued counter guarantees to the banks in respect of
these guarantees.
(v) I n respect of other claims - Rs. 41 Lakhs (Previous year : Rs. 41
Lakhs). The Company is a party to various legal proceedings in the
normal course of business.
Future cash flow in respect of the above, if any, is determinable only
on receipt of judgments / decisions pendingwith the relevant
authorities. The Company does not expect the outcome of matters stated
above to have amaterial adverse effect on the Company''s financial
condition, results of operations or cash flows.
Defined Benefit Plans
a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and resignation in terms of the provisions of the Payment
of Gratuity Act, 1972 or Company''s scheme whichever is more beneficial.
Benefits would be paid at the time of separation based on the last
drawn base salary.
b. Post Retirement Medical Benefits (PRMB) (Unfunded Scheme): Under
this scheme, employees get medical benefits subject to certain limits
of amount, periods after retirement and types of benefits, depending on
their grade at the time of retirement. Employees separated from the
Company as part of early separation scheme are also covered under the
scheme.
c. Leave Benefits (LB) (Unfunded Scheme): The Company provides for
leave enchasment on termination / retirement of service or leave with
pay subject to rules. The employees are entitled to accumulate leave
subject to limits for future encashment / availment. The Company makes
provision for leave benefits based on an actuarial valuation carried
out at the end of the year.
(a) International Stock Ownership Plan (Stocks of the Ultimate Holding
Company)The Procter and Gamble Company, USA has an "International Stock
Ownership Plan" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Ultimate Holding Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee''s contribution (restricted to 2.5% of his
base salary). Such contribution is charged to staff cost.
The shares of The Procter & Gamble Company, USA are listed with New
York Stock Exchange and are purchased on behalf of the employees at
market price on the date of purchase. During the year ended June 30,
2014,3 147.78 (Previous year: 3 166.10) shares were purchased by
employees at weighted average fair value of Rs. 4 904.91 (Previous year
Rs. 3 977.38) per share.
The Company''s contribution during the year on such purchase of shares
amounting to Rs. 41 Lakhs (Previous year Rs. 50 Lakhs) has been charged
under Employee Benefit Expenses.
(b) Employees Stock Options Plan (Stocks of the Ultimate Holding
Company)The Procter and Gamble Company, USA has an "Employee Stock
Option Plan" whereby specified employees of its subsidiaries covered by
the plan are granted an option to purchase shares of the Ultimate
Holding Company i.e. The Procter and Gamble Company, USA at a fixed
price (grant price) for a fixed year of time. The shares of The Procter
& Gamble Company, USA are listed with New York Stock Exchange. The
Options Exercise price equal to the market price of the underlying
shares on the date of the grant. The Grants issued are vested after 3
years and have a 5/10 years life cycle.
Stock compensation expense of Rs. 1 118 Lakhs (Previous years Rs. 1 377
Lakhs) has been charged under Employee Benefit Expenses.
Fair Value of shares at Grant date 13-Sep-13 $ 79.05
28-Feb-14 $ 78.66
14-Sep-12 $ 69.16
28-Feb-13 $ 76.18
The Company has taken on lease guesthouses for accommodation of
employees with an option of renewal at the end of the lease term and
escalation clause in some of the cases. Leases can be terminated with a
prior notice as per terms and conditions of the respective lease
agreements with the lessor. Lease payments amounting to '' 293 Lakhs
(Previous Year : Rs. 315 Lakhs) have been charged to the Statement of
Profit and Loss for the year.
Common service expenses paid/recovered include payments/recoveries on
account of finance, personnel, secretarial, administration and planning
services rendered under common services agreements with Procter and
Gamble Home Products Limited and Gillette India Limited.
Employee Benefit Expenses include expenses in respect of Managerial
personnel of Rs. 532 Lakhs (Previous Year : Rs. 574 Lakhs) cross
charged to Gillette India Limited and Procter and Gamble Home Products
Limited in terms of the common service agreement (Refer Note 35).
Employee Benefit Expenses include expenses in respect of Managerial
personnel of Rs. 20 Lakhs (Previous Year : Rs. 13 Lakhs) cross charged
from Gillette India Limited and Procter and Gamble Home Products
Limited in terms of the common service agreement.
Jun 30, 2013
1. CORPORATE INFORMATION
Procter & Gamble Hygiene and Health Care Limited (the Company) is a
public company incorporated under the provisions of the Companies Act,
1956. The company is engaged in the manufacturing and selling of
branded packaged fast moving consumer goods in the femcare and
healthcare businesses. The company''s products are sold through retail
operations including mass merchandisers, grocery stores, membership
club stores, drug stores, department stores, and high frequency stores.
The Company has its manufacturing locations at Kundaim - Goa and Baddi
- Himachal Pradesh, apart from third party manufacturing locations
spread across India.
2. (a) Contingent Liabilities :
(i) In respect of Income Tax demands for which the company has
preferred appeals with appropriate authorities - Rs. 2 836 Lakhs
(Previous year : Rs. 2 855 Lakhs). The liability is mainly on account of
various disallowances by the Income Tax authorities on which assessee
has preferred an appeal. These are on account of various grounds -
primarily on account of advertisement expenses, tax holiday, etc.
(ii) In respect of Sales Tax matters for which the company has
preferred appeals with appropriate authorities - Rs. 1 910 Lakhs
(Previous year : Rs. 2 266 Lakhs). The liability is in respect to matters
related to non-submission of "C" Forms / "F" Forms Rs. 1 023 Lakhs
(Previous year : Rs. 1 403 Lakhs), Incomplete accounts books Rs. 227 Lakhs
(Previous year : Rs. 181 Lakhs), Classification issues Rs. 59 Lakhs
(Previous year : Rs. 59 Lakhs), Product valuation issues Rs. 516 Lakhs
(Previous year : Rs. 538 Lakhs), and other miscellaneous issues Rs. 85
Lakhs (Previous year : Rs. 85 Lakhs).
(iii) In respect of Excise and Service Tax matters for which the
company has preferred appeals with appropriate authorities Rs. 1 262
Lakhs (Previous year : Rs. 108 Lakhs). The liability is in respect to:
classification matters Rs. 9 Lakhs (Previous year : Rs. 9 Lakhs), valuation
matters Rs. 95 Lakhs (Previous year : Rs. 95 Lakhs) and applicability of
service tax matters Rs. 1 156 Lakhs (Previous year : Rs. 2 Lakhs) and
others Rs. 2 Lakhs (Previous year : Rs. 2 Lakhs).
(iv) In respect of counter guarantees given to bank against guarantees
given by bank : Rs. 3 371 Lakhs (Previous year : Rs. 4 484 Lakhs) At the
request of the Company, its bankers have issued guarantees to third
parties for performance obligation under various commercial agreements.
The Company has issued counter guarantees to the banks in respect of
these guarantees.
(v) In respect of other claims - Rs. 41 Lakhs (Previous Year : Rs. 77
Lakhs). The Company is a party to various legal proceedings in the
normal course of business.
(vi) Custom duty liability for probable non fulfillment of export
obligation Rs. Nil (Previous year Rs. 448 Lakhs).
Future cash flow in respect of the above, if any, is determinable only
on receipt of judgments / decisions pending with the relevant
authorities. The Company does not expect the outcome of matters stated
above to have a material adverse effect on the Company''s financial
condition, results of operations or cash flows.
(b) Estimated amount of contracts remaining to be executed on capital
account (net of advances) - Rs. 86 Lakhs (Previous year : Rs. 290 Lakhs).
3. Employee Benefits
The Company has classified the various benefits provided to employees
as under : I. Defined Contribution Plans
a. Provident Fund
b. Superannuation Fund
c. State Defined Contribution Plans: Employer''s Contribution to
Employees'' State Insurance
II. Defined Benefit Plans
a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and resignation in terms of the provisions of the Payment
of Gratuity Act, 1972 or Company''s scheme whichever is more beneficial.
Benefits would be paid at the time of separation based on the last
drawn base salary.
b. Post Retirement Medical Benefits (PRMB) (Non-funded Scheme): Under
this scheme, employees get medical benefits subject to certain limits
of amount, periods after retirement and types of benefits, depending on
their grade at the time of retirement. Employees separated from the
Company as part of early separation scheme are also covered under the
scheme.
4. (a) International Stock Ownership Plan (Stocks of the Ultimate
Holding Company)
The Procter and Gamble Company, USA has an "International Stock
Ownership Plan" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Ultimate Holding Company i.e. The Procter and Gamble
Company, USA. Every employee who opts for the scheme contributes by way
of payroll deduction up to a specified percentage (upto 15%) of base
salary towards purchase of shares on a monthly basis. The Company
contributes 50% of employee''s contribution (restricted to 2.5% of his
base salary). Such contribution is charged to staff cost.
The shares of The Procter & Gamble Company, USA are listed with New
York Stock Exchange and are purchased on behalf of the employees at
market price on the date of purchase. During the year ended June 30,
2013, 3 166.10 (Previous year: 4 517.96) shares were purchased by
employees at weighted average fair value of f 3 977.38 (Previous year Rs.
3 208.38) per share.
The Company''s contribution during the year on such purchase of shares
amounting to Rs. 50 Lakhs (Previous year Rs. 42 Lakhs) has been charged
under Employee Benefit Expenses.
(b) Employees Stock Options Plan (Stocks of the Ultimate Holding
Company)
The Procter and Gamble Company, USA has an "Employee Stock Option Plan"
whereby specified employees of its subsidiaries covered by the plan are
granted an option to purchase shares of the Ultimate Holding Company
i.e. The Procter and Gamble Company, USA at a fixed price (grant price)
for a fixed year of time. The shares of The Procter & Gamble Company,
USA are listed with New York Stock Exchange. The Options Exercise price
equal to the market price of the underlying shares on the date of the
grant. The Grants issued are vested after 3 years and have a 5/10 years
life cycle.
5. The Company has taken on lease guesthouses for accommodation of
employees and godowns for storage of inventories, with an option of
renewal at the end of the lease term and escalation clause in some of
the cases. Leases can be terminated with a prior notice as per terms
and conditions of the respective lease agreements with the lessor.
Lease payments amounting to Rs. 703 Lakhs (Previous Year : Rs. 445 Lakhs)
have been charged to the Statement of Profit and Loss for the year.
6. Common service expenses paid/recovered include payments/recoveries
on account of finance, personnel, secretarial, administration and
planning services rendered under common services agreements with
Procter and Gamble Home Products Limited and Gillette India Limited.
7. Employee Benefit Expenses includes expenses in respect of
Managerial personnel of Rs. 574 Lakhs (Previous Year : Rs. 420 Lakhs) cross
charged to Gillette India Limited and Procter and Gamble Home Products
Limited in terms of the common service agreement (Refer Note 35).
Employee Benefit Expenses includes expenses in respect of Managerial
personnel of Rs. 13 Lakhs (Previous Year : Rs. 13 Lakhs) cross charged from
Gillette India Limited in terms of the common service agreement (Refer
Note 35).
8. Related Party Disclosures:
The Group Companies of The Procter & Gamble Company USA include, among
others, Procter & Gamble India Procter & Gamble Luxembourg Global
Procter & Gamble Canada Holding BV Holdings BV SARL
Procter & Gamble Iron Horse Procter & Gamble International SARL Procter
& Gamble Overseas Canada, BV.
Holding BV
Procter & Gamble Eastern Europe Procter & Gamble India Holdings Inc.
Procter & Gamble Overseas India BV LLC
Procter & Gamble Nordic LLC Procter & Gamble International Procter &
Gamble Asia Holding BV.
Operations, SA
Procter & Gamble Global Holdings Gillette Group (Europe) Holdings, BV
Rosemount BV. Limited
(a) Parties where control exists:
The Procter and Gamble Company, USA - Ultimate Holding Company Procter
and Gamble Asia Holding BV - Holding Company
The Members of the Company at their 48th Annual General Meeting held on
December 6, 2012 have approved the said re-appointment of Mr. Khosla as
the Managing Director of the Company with effect from June 1, 2012 for
a period of five years on such terms and conditions as the Board may
consider appropriate, provided, that the terms of remuneration of Mr.
Khosla shall not exceed the ceilings as set out in schedule XIII of the
Companies Act, 1956 as amended from time to time and such other
guidelines as may be issued hereafter in this behalf.
Further, the members at the said meeting also ratified the remuneration
paid to Mr. Khosla in respect of the previous year subsequent to the
date of his re-appointment on June 1, 2012 amounting to Rs. 33 Lakhs.
9. The Company operates in a single reportable business segment i.e.
Manufacturing and Marketing of Health and Hygiene Products and one
reportable Geographical segment i.e. within India.
10. Excise duty deducted from turnover represents amount of excise
duty collected by the company on sale of goods. Excise duty shown under
note 24 - Operating and other expenses represents difference in amount
of excise duty on closing stock and opening stock of finished goods.
11. No borrowing costs were capitalised during the year.
12. Salaries and Wages includes Rs. 463 Lakhs (Previous year: Rs. Nil)
towards expenditure on Voluntary Retirement Scheme.
13. Previous year''s figures have been regrouped / reclassified
wherever necessary to correspond with the current year''s classification
/ disclosure.
Jun 30, 2012
1. CORPORATE INFORMATION
Procter & Gamble Hygiene and Health Care Limited (the Company) is a
public company incorporated under the provisions of the Companies Act,
1956. The company is engaged in the manufacturing and selling of
branded packaged fast moving consumer goods in the femcare and
healthcare businesses. The company's products are sold through retail
operations including mass merchandisers, grocery stores, membership
club stores, drug stores, department stores, and high frequency stores.
The Company has its manufacturing locations at Goa and Baddi Ã
Himachal Pradesh, apart from third party manufacturing locations spread
across India.
Rights attached to Equity Shares
The Company has only one class of equity shares having a par value of
Rs.10 per share. Each holder of equity share is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
Dividend proposed by the Board of Directors is subject to approval of
the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of The Company, the holders of equity
shares will be entitled to receive remaining assets of The Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
2. (a) ContingentLiabilities:
(i) In respect of Income Tax demands for which the company has
preferred appeals with appropriate authorities - Rs.28 55 21 351
(Previous year : Rs.39 44 92 098). The liability is mainly on account of
various disallowances by the Income Tax authorities on which assessee
has preferred an appeal. These are on account of various grounds -
primarily on account of advertisement expenses, tax holiday, etc.
(ii) In respect of Sales Tax matters for which the company has
preferred appeals with appropriate authorities - Rs.22 66 02 526
(Previous year : Rs.13 25 41 268). The liability is in respect to matters
related to non-submission of 'C' Forms / 'F' Forms Rs.14 02 44
311 (Previous year : Rs.9 90 02 084), Incomplete accounts books Rs.1 81 31
079 (Previous year : Rs.1 79 53 096), Classification issues Rs.58 72 828
(Previous year : Rs.58 21 917), Product valuation issues Rs.5 38 37 377
(Previous year : Rs.49 31 862), and other miscellaneous issues Rs.85 16 931
(Previous year : Rs.48 32 309).
(iii) In respect of Excise, Customs and Service Tax matters for which
the company has preferred appeals with appropriate authorities Rs.1 07 79
483 (Previous year : Rs.3 32 79 483). The liability is in respect to:
classification matters Rs.8 74 000 (Previous year : Rs.8 74 000), valuation
matters Rs.95 06 590 (Previous year : Rs.95 06 590) and applicability of
service tax on testing charges Rs.1 64 678 (Previous year : Rs.1 64 678)
and others Rs.2 34 215 (Previous year : Rs.2 34 215). Contingent liability
for customs duty is towards the old advance license matters which are
under dispute.
(iv) In respect of counter guarantees given to bank against guarantees
given by bank : Rs.44 84 20 098 (Previous year : Rs.33 61 54 658) At the
request of the Company, its bankers have issued guarantees to third
parties for performance obligation under various commercial agreements.
The Company has issued counter guarantees to the banks in respect of
these guarantees.
(v) In respect of other claims - Rs.77 00 000 (Previous year : Rs.13 14
000). The Company is a party to various legal proceedings in the normal
course of business.
(vi) Custom duty liability for probable non fulfillment of export
obligation Rs.4 48 48 900 (Previous year : Rs.6 44 64 860).
Future cash flow in respect of the above, if any, is determinable only
on receipt of judgments / decisions pending with the relevant
authorities. The Company does not expect the outcome of matters stated
above to have a material adverse effect on the Company's financial
condition, results of operations or cash flows.
(b) Estimated amount of contracts remaining to be executed on capital
account (net of advances) - Rs.2 89 59 804 (Previous year : Rs.28 19 284).
3. I. Defined Contribution Plans
a. Provident Fund
b. Superannuation Fund
c. State Defined Contribution Plans: Employer's Contribution to
Employees' State Insurance
The Company has recognized the following amounts in Statement of Profit
and Loss:
The above amounts are included in Contribution to Provident and other
Funds under Employee Benefits Expenses (Refer Note 22)
II. Defined Benefit Plans
a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and resignation in terms of the provisions of the Payment
of Gratuity Act, 1972 or Company's scheme whichever is more
beneficial. Benefits would be paid at the time of separation based on
the last drawn base salary.
b. Post Retirement Medical Benefit (PRMB) (Non-funded Scheme): Under
this scheme, employees get medical benefits subject to certain limits
of amount, periods after retirement and types of benefits, depending on
their grade at the time of retirement. Employees separated from the
Company as part of early separation scheme are also covered under the
scheme.
4. (a) International Stock Ownership Plan (Stocks of the Parent
Company)
The Procter and Gamble Company, USA has an "International Stock
Ownership Plan" (employee share purchase plan) whereby specified
employees of its subsidiaries have been given a right to purchase
shares of the Parent Company i.e. The Procter and Gamble Company, USA.
Every employee who opts for the scheme contributes by way of payroll
deduction up to a specified percentage (upto 15%) of base salary
towards purchase of shares on a monthly basis. The Company contributes
50% of employee's contribution (restricted to 2.5% of his base
salary). Such contribution is charged to staff cost.
The shares of The Procter & Gamble Company, USA are listed with New
York Stock Exchange and are purchased on behalf of the employees at
market price on the date of purchase. During the year ended June 30,
2012, 4 517.96 (Previous year : 5 058.34) shares were purchased by
employees at weighted average fair value of Rs.3 208.38 (Previous year :
Rs.2 839) per share.
The Company's contribution during the year on such purchase of shares
amounting to Rs.41 15 583 (Previous year : Rs.37 89 582) has been charged
under Employee Benefit Expenses.
(b) Employees Stock Options Plan (Stocks of the Parent Company)
The Procter and Gamble Company, USA has an "Employee Stock Option
Plan" whereby specified employees of its subsidiaries covered by the
plan are granted an option to purchase shares of the Parent Company
i.e. The Procter and Gamble Company, USA at a fixed price (grant price)
for a fixed year of time. The shares of The Procter & Gamble Company,
USA are listed with New York Stock Exchange. The Options Exercise price
equal to the market price of the underlying shares on the date of the
grant. The Grants issued are vested after 3 years and have a 10 years
life cycle.
5. Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) No payments were due and outstanding to suppliers covered under the
Micro Small and Medium Enterprises Development Act, 2006 as at the end
of the current and previous accounting year on account of Principal and
Interest respectively.
(b) No interest was paid in the current and the previous accounting
year.
(c) No interest was payable at the end of the current and previous
accounting year other than interest under Micro, Small and Medium
Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
current and previous accounting year.
The above information regarding Micro, Small and Medium Enterprises has
been determined to the extent such parties have been identified on the
basis of information available with the Company. This has been relied
upon by the auditors.
6. The Company has taken on lease guesthouses, accommodation for
employees and godowns for storage of inventories, with an option of
renewal at the end of the lease term and escalation clause in some of
the cases. These leases can be terminated with a prior notice as per
terms and conditions of the respective leave and license agreements
with the lessor. Lease payments amounting to Rs. 4 45 37 027 (Previous
Year : Rs. 4 88 39 305) have been charged to the Statement of Profit and
Loss for the year.
7. Common service expenses paid / recovered include
payments/recoveries on account of finance, personnel, secretarial,
administration and planning services rendered under common services
agreements with Procter and Gamble Home Products Limited and Gillette
India Limited.
8. The Managing Director of the Company Mr. Shantanu Khosla, has been
re-appointed as the Managing Director of the Company on completion of
his five year term, for a period of five years with effect from June 1,
2012 by the Board of Directors at their meeting held on April 30, 2012.
The said re-appointment is subject to the approval of the Members at
the ensuing Annual General Meeting of the Company. The said approval
for re-appointment shall also include either payment of remuneration to
Mr. Khosla directly and/or the same may be reimbursed /cross charged
to/from any other Company of which Mr. Khosla is also the Managing
Director, as enumerated in the Explanatory Statement annexed pursuant
to Section 173 of the Act, provided however that the remuneration
payable to Mr. Khosla or the reimbursement as aforesaid shall not
exceed the maximum limits for payment of managerial remuneration
specified in Schedule XIII to the Companies Act, 1956 or any amendments
thereto as may be made from time to time. The Board of Directors of the
Company has at the said meeting approved/ratified the payment towards
the remuneration of Mr. Khosla either being made directly to Mr. Khosla
or by way of re-imbursement to any other Company of which Mr. Khosla is
also the Managing Director from June 1, 2012 till the date of the
Annual General Meeting. Where in any Financial Year during the tenure
of office of Mr. Khosla, the Company has no profits or its profits are
inadequate, the Company shall pay remuneration, benefits and amenities
to Mr. Khosla as specified in the said explanatory statement, subject
to the approval of the Central Government, if and to the extent
necessary. Mr. Shantanu Khosla is not liable to retire by rotation.
The re-appointment of Mr. Khosla as the Managing Director of the
Company is notwithstanding the fact that he has been re-appointed as
the Managing Director of Procter & Gamble Home Products Limited and
Gillette India Limited (subject to approval of the Members and the
Central Government) for a period of five years. Employee Benefit
Expenses includes remuneration paid to the Managing Director,
subsequent to the date of re-appointment i.e. June 01, 2012 amounting
to Rs. 33 12 159 which is subject to approval of the members of the
Company at the ensuing Annual General Meeting of the Company.
9. During the year, the Company has advanced a Car Loan to the
Managing Director amounting to Rs. 47 01 027 (Previous year Rs. Nil)
pursuant to approval received in respect of the same from the Ministry
of Corporate Affairs vide its letter no. 6/52/2011-CL.VI dated July 22,
2011.
10. The Company operates in a single reportable business segment i.e.
Manufacturing and Marketing of Health and Hygiene Products and one
reportable Geographical segment i.e. within India.
11. Excise duty deducted from turnover represents amount of excise
duty collected by the company on sale of goods. Excise duty shown under
note 24 - Operating and other expenses represents difference in amount
of excise duty on closing stock and opening stock of finished goods.
12. No borrowing costs were capitalised during the year.
13. Salaries and wages includes Rs. Nil (Previous year: Rs. 55 68 000)
towards expenditure on Voluntary Retirement Scheme.
14. Professional fees in Note 24 Operating and other expenses includes
an amount of Rs. 5 61 800 (Previous year : Rs. 1 10 300) on account of fees
to cost auditors.
15. The Revised Schedule VI has become effective for period commencing
on or after 1 April 2011 for the preparation of financial statements.
This has significantly impacted the disclosure and presentation made in
the financial statements. Previous year's figures have been regrouped
/ reclassified wherever necessary to correspond with the current
year's classification / disclosure.
Jun 30, 2010
1. (a) Contingent Liabilities :
(i) In respect of Income Tax demands for which the Company has
preferred appeals with appropriate authorities - Rs.37 25 30 147
(Previous year : Rs.25 80 42 721). The liability is mainly on account of
various disallowances by the Income Tax authorities on which assessee
has preferred an appeal. These are on account of various grounds -
primarily on account of advertisement expenses, tax holiday, etc.
(ii) In respect of Sales tax matters for which the Company has
preferred appeals with appropriate authorities - Rs.18 18 02 208
(Previous year : Rs.10 06 72 419). The liability is in respect to matters
related to: non-submission of "C" Forms/"F" Forms Rs.6 37 05 567
(Previous year : Rs.1 25 577), Incomplete accounts books Rs. 1 79 53 096
(Previous year : Rs. 1 05 62 077), Classification issues Rs.56 89 172
(Previous year : Rs.76 07 120), Product valuation issues Rs.8 96 70 537
(Previous year : Rs.8 19 74 831), and other miscellaneous issues Rs.47 83
836 (Previous year : Rs.4 02 814).
(iii) In respect of Excise, Customs and Service Tax matters for which
the Company has preferred appeals with appropriate authorities Rs.3 09 55
483 (Previous year : Rs.5 77 55 812). The liability is in respect to:
classification matters Rs.8 74 000 (Previous year : Rs.23 50 490),
valuation matters Rs.97 40 805 (Previous year : Rs.3 80 06 429),
applicability of service tax on testing charges Rs. 1 64 678 (Previous
year : Rs.1 64 678) and others Rs.2 34 215 (Previous year : Rs.2 34 215).
Contingent liability for customs duty is towards the old advance
licence matters which are under dispute.
(iv) In respect of counter guarantees given to bank against guarantees
given by bank : Rs.20 80 05 094 (Previous year : Rs. 11 28 94 773). At the
request of the Company, its bankers have issued guarantees to third
parties for performance obligation under various commercial agreements.
The Company has issued counter guarantees to the banks in respect of
these guarantees.
(v) In respect of other claims - Rs.5 00 000 (Previous year : Rs.22 22
829). The Company is a party to various legal proceedings in the normal
course of business. The Company does not expect the outcome of these
proceedings to have a material adverse effect on the Companys
financial conditions, results of operations or cash flows.
(vi) Custom duty liability for probable non fulfillment of export
obligation Rs. 1 95 50 000 (Previous year : Nil).
(b) Estimated amount of contracts remaining to be executed on capital
account (net of advances) - Rs.3 31 51 397 (Previous year : Rs.13 18 83
576).
2. The Company has classified the various benefits provided to
employees as under:
I. Defined Contribution Plans
a. Provident Fund (Previous Year from April 01, 2009)
b. Superannuation Fund
c. State Defined Contribution Plans: Employers Contribution to
Employees State Insurance
II. Denned Benefit Plans
a. Gratuity Fund (Funded Scheme): Gratuity is payable to all eligible
employees of the Company on superannuation, death, permanent
disablement and resignation in terms of the provisions of the Payment
of Gratuity Act, 1972 or Companys scheme whichever is more beneficial.
Benefits would be paid at the time of separation based on the last
drawn base salary.
b. Provident Fund (Funded Scheme): With effect from January 1, 2008
till March 31, 2009 the Company had managed Provident Fund plan through
Companys own Provident Fund trust alongwith one other group Company
for its employees. The plan envisaged contribution by employer and
employees and guarantees interest at the rate notified by the Provident
Fund authority. The contribution by employer and employee together with
interest are payable at the time of separation from service or
retirement whichever is earlier. The benefit under this plan vests
immediately on rendering of service. The Entity had re-commenced
contribution of Provident Fund dues with Regional Provident Fund
Commissioner (RPFC) w.e.f. April 01, 2009.
c. Post Retirement Medical Benefit (PRMB) (Non-funded Scheme): Under
this scheme, employees get medical benefits subject to certain limits
of amount, periods after retirement and types of benefits, depending on
their grade at the time of retirement. Employees separated from the
Company as part of early separation scheme are also covered under the
scheme.
The disclosures as required under AS-15 are as under:
The contribution expected to be made by the Company during financial
year ending June 30, 2011 has not been ascertained.
Note : The Companys Provident Fund was administered by Companys own
trust fund till March 31, 2009. Accordingly, the disclosures relating
to Provident Fund as required in accordance with AS-15, has been given
for the previous period from July 1, 2008 to March 31, 2009. The entity
has moved to the Provident Fund Contribution to Regional Provident Fund
Office w.e.f. April 01,2009.
3. (a) Managerial Remuneration under Section 198 of the Companies Act,
1956
(b) The above Managerial Remuneration includes Rs.3 56 88 847 (Previous
year : Rs.3 38 95 131) cross charged to Gillette India Limited and
Procter and Gamble Home Products Limited in terms of the common service
agreement referred to in Note B.17 below.
(c) The above Managerial Remuneration excludes Rs.27 52 204 (Previous
year : Rs.26 00 528) cross charged from Gillette India Limited in terms
of the common service agreement referred to in Note B. 17 below.
Notes :
1. The installed capacities as at the year-end are as certified by the
management.
2. Actual production includes production under manufacturing
arrangement with third parties.
4. Excise duty deducted from turnover represents amount of excise duty
collected by the Company on sale of goods. Excise duty shown under
Schedule 15 - Operating and other expenses represents difference in
amount of excise duty on closing stock and opening stock of finished
goods.
5. There are no outstanding derivative instruments as at June 30,
2010.
Foreign currency exposures that have not been hedged by the Company by
a derivative instrument or otherwise are given below:
6. The Company has taken on lease guesthouses, accommodation for
employees and godowns for storage of inventories, with an option of
renewal at the end of the lease term and escalation clause in some of
the cases. These leases can be terminated with a prior notice as per
terms and conditions of the respective lease agreements with the
lessor. Lease payments amounting to Rs. 5 13 85 433 (Previous year : Rs. 3
88 58 655) have been charged to the Profit and Loss Account for the
year. There are no "non cancellable" lease agreements.
7. Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) No payments were due and outstanding to suppliers covered under the
Micro Small and Medium Enterprises Development Act, 2006 as at the end
of the current and previous accounting year on account of Principal and
Interest respectively.
(b) No interest was paid in the current and the previous accounting
year.
(c) No interest was payable at the end of the current and previous
accounting year other than interest under Micro, Small and Medium
Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
current and previous accounting year.
The above information and that given in Schedule 10 "Current
Liabilities" regarding Micro, Small and Medium Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the Company. This has been relied upon by
the auditors.
(b) Loans and Advances includes
Car Loan to a Director amounting to ^ 15 33 049 (Previous year : ^17 80
001) which was approved by the Ministry of Corporate Affairs vide its
letter no. 6/17/2007-CL.VI dated November 1, 2007. The maximum balance
outstanding during the year amounted to Rs. 17 80 001 (Previous year :
Rs.18 80 760).
8. Related Party Disclosures:
The Group Companies of The Procter & Gamble Company, USA include, among
others, Procter & Gamble India Holdings BV; Procter & Gamble Iron Horse
Holding BV; Procter & Gamble Eastern Europe LLC; Procter & Gamble
Nordic LLC; Procter & Gamble Global Holdings Limited; Procter & Gamble
Luxembourg Global SARL; Procter & Gamble International SARL; Procter &
Gamble India Holdings Inc.; Procter & Gamble International Operations
SA; Gillette Group (Europe) Holdings BV; Procter & Gamble Canada
Holding BV; Procter & Gamble Overseas Canada BV; Procter & Gamble
Overseas India BV; Procter & Gamble Asia Holding BV; Rosemount LLC.
(a) Parties where control exists :
The Procter and Gamble Company, USA - Ultimate Holding Company Procter
and Gamble Asia Holding BV, The Netherlands - Holding Company
(b) Other related parties with whom transactions have taken place
during the year
(i) Fellow Subsidiaries:
Procter & Gamble Home Products Ltd.
Procter & Gamble Malaysia Sdn. Bhd.
Procter & Gamble Manufacturing (Thailand) Ltd.
Procter & Gamble Lanka Pvt. Ltd.
Procter & Gamble (Changdu) Ltd.
Procter & Gamble Asia Pte. Ltd.
Procter & Gamble Australia Pty. Ltd.
Procter & Gamble US Business Services Company
Procter & Gamble International Operations Pte. Ltd.
Procter & Gamble Northeast Asia Pte. Ltd.
Procter & Gamble International Operations SA
Gillette India Ltd.
Procter & Gamble Singapore Pte. Ltd.
Gillette Diversified Operations Private Limited
Procter & Gamble Distributing (Philippines) Inc.
Procter & Gamble Panda Detergent Ltd., Beijing
Procter & Gamble Tuketim Mallari Sanayl
Procter & Gamble (Guangzhou) Ltd.
Procter & Gamble UK
Procter & Gamble Product Supply (UK) Ltd.
Procter & Gamble Technology (Beijing) Co.
Procter & Gamble Vietnam Ltd.
Procter & Gamble Asia Pte. Ltd. (MROH)
Procter & Gamble Kabushiki Kaisha
Procter & Gamble Far East. Inc.
Procter & Gamble Korea Inc.
Procter & Gamble S.A., Chile
P&G (East Africa) Ltd.
PT P&G Home Products, Indonesia
P&G Ceemea - A Division of P&G International Operations SA
Fameccanica Machinery (Shanghai) Co.
Procter & Gamble Korea S&D Co.
Procter & Gamble Philippines Inc.
Procter & Gamble Technical Centers Ltd.
Procter & Gamble Trading (Thailand) Ltd.
Procter & Gamble Bangladesh Pvt. Ltd.
Procter & Gamble Manufacturing Company
Procter & Gamble Europe N.V.
Wella India Hair Cosmetics Pvt. Ltd.
Procter & Gamble Eastern Europe LLC
Procter & Gamble (Manufacturing) Ireland Ltd.
The P&G Distributing LLC
Procter & Gamble Taiwan Ltd.
Rosemount LLC
Procter & Gamble Hair Care LLC
(ii) Key Managerial Personnel of the Company No. of shares held
Mr. Shantanu Khosla, Managing Director 67 (Previous year : 67)
All the employees of the Company including its managing directors are
given the right to purchase shares of the ultimate holding Company -
The Procter and Gamble Company, USA under its Employee Stock Option
Plan.
Under the above plan Mr. Shantanu Khosla has been granted the right to
purchase 100 shares (Previous year : NIL) during the year.
10. The Company operates in a single reportable business segment i.e.
Manufacturing and Marketing of Health and Hygiene Products and one
reportable Geographical segment i.e. within India.
11. (a) International Stock Ownership Plan (Stocks of the Parent
Company)
The Procter and Gamble Company, USA has an "International Stock
Ownership Plan" (employee share purchase plan) whereby all permanent
employees of the Company have been given a right to purchase shares of
the Company. Every employee who opts for the scheme contributes up to a
specified percentage (upto 15%) of his base salary towards purchase of
shares on a monthly basis. The Company contributes 50% of employees
contribution (restricted to 2.5% of his base salary). Such contribution
is charged to staff cost.
The shares of The Procter & Gamble Company, USA are listed with New
York Stock Exchange and are purchased on behalf of the employees at
market price on the date of purchase.
During the year ended June 30, 2010, 5558.35 shares (Previous year :
4154.25 shares) were purchased by employees at weighted average fair
value of Rs.2 799 (Previous year : Rs.2 845) per share.
The Companys contribution during the year on such purchase of shares
amounting to Rs.31 88 450 (Previous year : Rs.32 06 498) has been
charged to the Profit and Loss Account.
(b) Employees Stock Options Plan (Stocks of the Parent Company)
The Procter and Gamble Company, USA has a "Employee Stock Option Plan"
whereby the employees covered by the plan are granted an option to
purchase shares of the ultimate holding company i.e. - The Procter and
Gamble Company, USA at a fixed price (grant price) for a fixed period
of time. The shares of The Procter & Gamble Company, USA are listed
with New York Stock Exchange. The options Exercise price is equal to
the market price of the underlying shares on the date of the grant.
Accordingly no stock compensation expenses have been incurred by the
Company during the year. The Grants issued are vested after 3 years and
have a 10 years life cycle.
12. In terms of rules applicable to the employees whose services have
been seconded to Procter & Gamble subsidiaries abroad, Rs.2 96 875
(Previous year : Rs.33 01 008) has been contributed to Provident
Fund/Superannuation trusts in respect of Mr. P. Agarwal.
Also in terms of rules applicable to the employees retiring after the
age of 50, Rs.Nil (Previous year : Rs.9 755) was paid as reimbursement of
medical expenses to Mr. B. V. Patel, who was a director of the Company
till March 31, 2009.
As these payments have been made in the capacity of a seconded
employee/retired employee and not related to their directorship,
provisions of Sections 198, 309, 310 and 314 of the Companies Act, 1956
are not applicable. Legal opinion confirms this position. Thus the
same has not been considered as managerial remuneration.
13. Common service expenses paid/recovered include payments/recoveries
on account of finance, personnel, secretarial, administration and
planning services rendered under common services agreements with
Procter and Gamble Home Products Limited and Gillette India Limited.
14. Salaries, wages and bonus under Schedule 15 include Rs.2 38 61 880
(Previous year : Rs.3 13 90 800) towards expenditure on Voluntary
Retirement Scheme.
15. The Malabar Company - a Delaware Corporation, an Overseas
Corporate Body (OCB) has merged with Rosemount LLC, a P&G group Company
with effect from August 20, 2009.
As a result the overall shareholding of The Procter and Gamble Company,
USA (the ultimate holding company) in the Company stands increased from
2 23 10 090 shares (68.73%) to 2 29 29 773 shares (70.64%).
16. Professional fees in Schedule 15 Operating and other expenses
includes an amount of Rs.71 695 (Previous year : Rs.71 695) on account of
fees to cost auditors.
17. No borrowing costs were capitalised during the year.
18. Previous years figures have been regrouped/rearranged wherever
considered necessary.
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