p. Provisions and Contingent Liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
q. Government Grants
The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them shall be complied with and the grants will be received. Grants related to assets are treated as deferred income and are recognized as other operating income in the Statement of profit & loss on a systematic and rational basis over the useful life of the asset. Grants related to income are recognized on a systematic basis over the periods necessary to match them with the related costs which they are intended to compensate and are deducted from the expense in the statement of profit & loss.
When the Company receives grants of nonmonetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset i.e. by equal annual instalments.
Exports entitlements are recognised when the right to receive credit as per the terms of the schemes is established in respect of the exports made by the Company and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
r. Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
s. Current and non-current classification
Based on the time involved between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has identified twelve months as its operating cycle for determining current and non-current classification of assets and liabilities in the balance sheet.
t. Dividend
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
u. Measurement of EBITDA
The Company presents Earnings before Interest expense, Tax, Depreciation and Amortisation (EBITDA) in the statement of profit or loss; this is not specifically required by Ind AS 1. The terms EBITDA are not defined in Ind AS. Ind AS complaint Schedule III allows companies to present Line items, sub-line items and sub-totals shall be presented as an addition or substitution on the face of the Financial Statements when such presentation is relevant
to an understanding of the company's financial position or performance or to cater to industry/ sector-specific disclosure requirements or when required for compliance with the amendments to the Companies Act or under the Indian Accounting Standards.
Accordingly, the Company has elected to present earnings before interest expense, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the Statement of Profit and Loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include depreciation and amortization expense, finance costs and tax expense, but includes other income.
v. Rounding of amounts
All amounts disclosed in the standalone Financial Statements and notes have been rounded off to the nearest Lakhs (with two places of decimal) as per the requirement of Schedule III, unless otherwise stated.
w. New and amendments standards
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated March 31, 2023 to amend the following Ind AS which are effective for annual periods beginning on or after April 01, 2023. The Company applied for the first-time these amendments:
Definition of Accounting Estimates -Amendments to Ind AS 8
The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.
The amendments had no impact on the Company's standalone financial statements.
Disclosure of Accounting Policies -Amendments to Ind AS 1
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their 'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments have had an impact on the Company's disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company's financial statements.
Deferred tax related to Assets and Liabilities arising from a Single Transaction -Amendments to Ind AS 12
The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.
The Company previously recognised for deferred tax on leases on a net basis. As a result of these amendments, the Group has recognised a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12, there is no impact in the balance sheet. There was also no impact on the opening retained earnings as at April 01, 2022.
x. Standards notified but not yet effective
There are no standards that are notified and not yet effective as on the date.
Note:
(a) Refer Note No. 3.46 for determination of fair value
(b) As at March 31, 2023, the Company had investments in equity shares of Brillare Science Private Limited (""Brillare"") aggregating to H2,156.49 lacs (shareholding of 82.92%). Further, the Company also had right to acquire the remaining stake in Brillare.
During the current year, the Company has converted its loan receivable (including interest) amounting to H674.27 lacs into 67,22,944 equity shares. The Company has also accounted for loss on Impairment of Investment in subsidiary amounting to H337.28 lacs upon conversion of loan receivable (including interest) into equity shares basis the fair value of the company derived by an independent valuer. Further, the Company has acquired the remaining 4,29,009 equity shares for a consideration of H43.03 lacs and consequently, it became wholly-owned subsidiary of the Company.
During the year, the Company has further given loan to Brillare which, being in the nature of equity has been classified under the head equity investment in subsidiary aggregating H942.90 lacs (including interest), as the loan (including interest) is convertible into fixed number of equity shares."
(c) During the year, the Company has acquired 26% stake in each of 'Axiom Ayurveda Private Limited ("AAPL"), Axiom Food & Beverages Private Limited ("AFBPL") and Axiom Packwell Private Limited ("APPL")' and consequently, these Companies have become associates of the Company from the date of such acquisition. Loan amounting to H1,500 lacs given to AAPL during the year has been utilised for acquisition of equity shares as per the terms of the loan agreement.
(d) During the year, the Company has invested in 10,165 Compulsory Convertible Preference Shares (CCPS) of Cannis Lupus Services India Private Limited (CLSIPL) amounting to H644.98 lacs (fair value as on
3.5 INVESTMENTS (Contd.)
March 31, 2024 - H687.27 lacs) under shareholder agreement. As per terms of the CCPS, the Company is entitled to convert such CCPS into fully paid up equity share during FY 2024-25, at a conversion rate to be determined based on the formula stipulated in the Agreement. As on March 31, 2024, the Company holds 30% stake in the equity shares of CLSIPL.
(e) Equity instruments designated at fair value through OCI include investment in equity shares of Emami Paper Mill Limited. The Company holds non-controlling interest in Emami Paper Mill Limited. This investment was irrevocably designated at fair value through OCI as the Company considers this investment to be strategic in nature.
(b) Terms and Rights attached to equity shares
The Company has only one class of equity shares having a par value of H1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares & pays dividend 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 and is accounted for in the year in which it is approved by the shareholders in the 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.
(d) Equity shares movement during 5 years preceding March 31, 2024
Equity shares extinguished on buy-back
The Company bought back 46,50,000 equity shares for an aggregate amount of H22,909.70 lacs being 1.05% of the pre-buyback total paid up equity share capital at H491.68 average cost per equity share. The Buyback commenced on April 13, 2023 and got completed on July 06, 2023.
The Company bought back 33,63,740 equity shares for an aggregate amount of H16,121.45 lacs being 0.76% of the pre-buyback total paid up equity share capital at H479.27 average cost per equity share. The Buyback commenced on February 09, 2022 and got completed on March 21, 2022.
The Company bought back 94,21,498 equity shares for an aggregate amount of H19,198.73 lacs being 2.08% of the pre-buyback total paid up equity share capital at H203.78 average cost per equity share. The Buyback commenced on March 29, 2020 and got completed on July 09, 2020.
Nature and purpose of reserves
General Reserve
Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. However, the amount previously transferred to the general reserve can be utilised only in accordance with the specific requirements of Companies Act, 2013.
Capital Reserve
Capital Reserve has been primarily created on amalgamation in earlier years.
3.19 OTHER EQUITY (Contd.)
Retained Earnings
Retained earnings are the profits/(loss) that the Company has earned/incurred till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings include remeasurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.
Equity Instrument through Other Comprehensive Income
This Reserve represents the cumulative gains (net of losses) arising on the revaluation of Equity Instruments measured at Fair Value through Other Comprehensive Income, net of amounts reclassified, if any, to Retained Earnings when those instruments are disposed of.
Capital Redemption Reserve (CRR)
Represents the nominal value of Equity shares bought back pursuant to Buyback in accordance with Section 69 of the Companies Act, 2013.
3.38 DEFINED BENEFIT PLAN (GRATUITY) : (Contd.)
The sensitivity analysis presented above may not be representative of the actual change in 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.
(vi) Effect of Plan on Entity's Future Cash Flows a) Funding arrangements and Funding Policy
The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.
(vii) Description of Risk Exposures
Valuations are performed on certain basic set of pre determined assumptions and other regulatory frame work which may vary over time. Thus, the Company is exposed to various risks in providing the above gratuity benefit which are as follows:
Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Liquidity Risk: This is the risk that the Company is not able to meet the short-term gratuity pay outs. This may arise due to non availability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability.
3.38 DEFINED BENEFIT PLAN (GRATUITY) : (Contd.)
Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumptions considered for the valuation.
Regulatory Risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). The Company is exposed to any changes to the regulations.
Asset Liability Mismatching or Market Risk: The duration of the liability is longer compared to duration of assets, exposing the Company to market risk for volatilities/fall in interest rate.
Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
3.39 DEFINED BENEFIT PLAN (PROVIDENT FUND):
(i) In respect of certain employees, provident fund contributions are made to a Trust administered by the Company.
The defined benefit obligation arises from the possibility that during any time period in the future, the scheme may earn insufficient investment income to meet the guaranteed interest rate declared by government/EPFO/relevant authorities.
The net defined benefit obligation as at the valuation date, thus, represents the excess of accrued account value plus interest rate guaranteed liability over the fair value of plan assets.
(b) EPCG Commitments : The Company had procured capital goods under the Export Promotion Capital Goods Scheme of the Government of India, at a concessional rate of customs duty / excise on an undertaking to fulfil quantified export obligation within the specified periods, failing which, the Company has to make payment to the Government of India equivalent to the duty benefit enjoyed along with interest. Related export obligation to be met is H129.27 lacs (March 31, 2023 - H28.34 lacs). In addition, the Company needs to maintain the average annual export turnover of H8,292.65 lacs to meet the above export obligation. The Company is confident that the above export obligation will be met during the specified period.
(c) Other Commitments : The Company has ongoing commitment to extend financial support to its wholly-owned subsidiary Emami Lanka (Pvt) Ltd., Srilanka & Brillare Science Pvt. limited and Step-down subsidiary Pharma Derm SAE Co, Egypt. The future cash flow in respect of the above cannot be ascertained at this stage.
3.47 FAIR VALUE HIERARCHY
Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
Company as a Lessor
The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the present value of the minimum lease payments not amounting to substantially all of the fair value of the commercial property, that it retains substantially all the risks and rewards incidental to ownership of these properties and accounts for the contracts as operating leases.
The Company is not having any minimum rental receivables under non-cancellable operating lease as on March 31, 2024 and March 31, 2023 respectively.
3.51 CAPITAL MANAGEMENT
For the purpose of the Company's capital management, capital includes issued equity capital, securities premium and all other equity reserves. The primary objective of the Company's capital management is to maximise the shareholder value.
The Company 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 capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company's policy is to keep the gearing ratio upto 15%. Net debt is defined as current and noncurrent borrowings (including current maturity of long term debt and interest accrued and excluding lease liabilities) less cash and cash equivalents.
3.51 CAPITAL MANAGEMENT(Contd)
There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2024 and March 31, 2023.
3.52 FINANCIAL RISK MANAGEMENT Financial Risk Factors
The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk include loans and borrowings, deposits, debt and equity investments and derivative financial instruments.
Interest Rate Risk
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. In order to balance the Company's position with regards to interest income and interest expense and to manage the interest rate risk, treasury performs comprehensive interest rate risk management. The Company is not exposed to significant interest rate risk as at the respective reporting dates.
Foreign Currency Risk
The Company operates both in domestic market and internationally and consequently the Company is exposed to foreign exchange risk through its sales in overseas countries, and purchases from overseas suppliers in foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
Derivative financial instruments
The Company holds derivative financial instruments such as foreign currency forward to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution.
Commodity Price Risk
The Company is affected by the price volatility of its key raw materials. Its operating activities requires a continuous supply of key material for manufacturing of hair oil, talc, balm and other products. The Company's procurement department continuously monitor the fluctuation in price and take necessary action to minimise its price risk exposure.
Security Price Risk
Securities price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded prices.
The Company invests its surplus funds in various mutual funds, debt instruments and equity instruments. These comprise of mainly liquid schemes of mutual funds, short term debt funds & income funds (duration investments) and certain quoted equity instruments. To manage its price risk arising from investments
3.52 FINANCIAL RISK MANAGEMENT(Contd)
in mutual funds and equity instruments, the Company diversifies its portfolio. Mutual fund and equity investments are susceptible to market price risk, mainly arising from changes in the interest rates or market yields which may impact the return and value of such investments.
The Company's exposure to securities price risk arises from investments in mutual funds and equity investments held by the Company and classified in the Balance Sheet as fair value through profit or loss / fair value through other comprehensive income is disclosed under Note No.3.5 & 3.11
Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to H28,304.84 lacs and H25,969.71 lacs as at March 31, 2024 and March 31, 2023, respectively. Trade receivables includes both secured and unsecured receivables and are derived from revenue earned from domestic and overseas customers . Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. An impairment analysis is performed at each reporting date on an individual basis based on historical data of credit losses.
No customer individually accounted for more than 10% of the revenues from external customers during the year ended March 31, 2024 and March 31, 2023.
Terms and conditions of transactions with related parties
The sales 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.
Refer Note No. 3.5 (d) for terms & conditions pertaining to investment in Compulsorily Convertible Preference Shares of Cannis Lupus Services India Pvt. Ltd.
Loan given to related parties are made on terms equivalent to those that prevail in arm's length transactions and have following terms:
a) Loan receivable (including interest) from Brillare amounting to H942.90 lacs, being in the nature of equity has been classified under the head equity investment in subsidiary, as the loan (including interest) is convertible into fixed number of equity shares.
b) Loan given to Emami Lanka (Pvt) Ltd. carries interest and Loan receivable aggregating to H23.02 lacs (March 31, 2023 H259.10 lacs) , net of provision H481.23 lacs (March 31, 2023 H238.00 lacs) is payable in FY 2026-27 as per the renewed/ revised agreement.
Note 1 - The Company has investments, trade receivables and guarantees given with respect to its wholly owned subsidiary viz. Emami International FZE (Emami FZE). During the previous year, the Company had performed an impairment assessment in connection with the total exposure in Emami FZE by examining its financial position and recorded liability towards financial guarantee aggregating H5,336.71 lacs. Such provisions are adjusted based on the profit earned / loss incurred by the subsidiary on periodic basis. Accordingly, during the year ended March 31, 2024, there has been an decrease by H2,091.19 lacs on the basis of performance of the subsidiary in the current year.
Note 2 - The Company has investments, loans, trade receivables and guarantees given with respect to its wholly owned subsidiary viz. Emami Lanka (Pvt) Limited. During the current year, the Company had performed an impairment assessment in connection with the total exposure in Emami Lanka (Pvt) Limited by examining its financial position and impaired its Loan receivable aggregating H481.23 lacs which is equivalent to negative net worth of Emami Lanka (Pvt) Limited.
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. These estimates and associated assumptions are based on historical experience and management's best knowledge of current events and actions the Company may take in future.
Information about critical estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities are included in the following notes:
Judgements
i) Estimation of defined benefit obligations
The liabilities of the Company arising from employee benefit obligations and the related current service cost, are determined on an actuarial basis using various assumptions Refer Note No. 3.38 and 3.39 for significant assumption used.
ii) Estimation of tax expenses, assets and payable
Deferred tax assets are recognised for unused tax credit and on unused losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The ultimate realisation of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities and the projected future taxable income in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the Company will realise the benefits of those deductible differences. The amount of the deferred income tax assets considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry forward periods are reduced. Refer Note No. 3.8 and 3.48.
iii) Estimation of provisions and contingencies
Provisions are liabilities of uncertain amount or timing recognised where a legal or constructive obligation exists at the balance sheet date, as a result of a past event, where the amount of the obligation can be reliably estimated and where the outflow of economic benefit is probable. Contingent liabilities are possible obligations that may arise from past event whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events which are not fully within the control of the company. The Company exercises judgement in recognizing the provisions and assessing the exposure to contingent liabilities relating to pending litigations. Judgement is necessary in assessing the likelihood of the success of the pending claim and to quantify the possible range of financial settlement. Due to this inherent uncertainty in the evaluation process, actual losses may be different from originally estimated provision. Refer Note No. 3.22, 3.29, 3.40 and 3.43.
iv) Estimation of expected useful lives and residual values of property, plants and equipment and intangible assets.
Property, plant and equipment and intangible assets are depreciated/ amortized at historical cost using straight-line method based on the estimated useful life, taking into account residual value. The asset's residual value and useful life are based on the Company's best estimates and reviewed, and adjusted if required, at each Balance Sheet date. Refer Note No. 3.1, 3.2, 3.3 & 3.4.
(Contd.)
v) Impairment of non financial assets / investment in subsidiaries and associates
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The carrying amounts of the Company's non-financial assets /investment in subsidiaries and associates are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the recoverable amounts of cash-generating units have been determined based on value in use calculations. These calculations require the use of estimates such as discount rates and growth rates.
vi) Fair Value Measurements
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques which involve various judgements and assumptions that may differ from actual developments in the future. For further details refer Note No. 3.47
vii) Lease Accounting
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
The Company has considered leases with term up to 12 (Twelve) months as short-term leases. Such short term leases are accordingly excluded from the scope for the purpose of Ind AS 116 reporting. Refer Note No. 3.4, 3.20, 3.25 & 3.50.
viii) Revenue recognition - Estimating variable consideration for returns and rebates
The Company estimates variable considerations to be included in the transaction price for the sale of goods with rights of return and volume rebates.
The Company developed a statistical model for forecasting sales returns, damage returns and rebates. The model used the historical return data to come up with expected return percentages. These percentages are applied to determine the expected value of the variable consideration.
The Company updates its assessment of expected returns and rebates quarterly and the refund liabilities are adjusted accordingly. Estimates of expected returns and rebates are sensitive to changes in circumstances and the Company's past experience regarding returns and rebate entitlements may not be representative of customers' actual returns and rebate entitlements in the future. Refer Note No. 3.29, 3.31, 3.61 & 3.62.
3.56 The Board of Directors of the Company, at its meeting held on March 24, 2023 approved Buyback of the Company's fully paid-up equity shares of face value of H1 each from the eligible equity shareholders of the Company other than promoters, promoter group and persons who are in control of the company, at a price not exceeding H450 per equity share (Maximum Buyback price), for an aggregate amount not exceeding H18,600 lacs (Maximum Buyback size), payable in cash from the open market route through the stock exchange mechanism under the Companies Act, 2013 and SEBI Buyback Regulations 2018 . The Maximum Buyback Size was 9.94% of aggregate of the Company's paid up equity capital and free reserves based on the audited financial statements of the Company as at March 31, 2022 in compliance with the maximum permissible limit of 10% of the total paid up equity share capital and free reserves in accordance with Section 68(2) of Companies Act, 2013 and SEBI Buy Back Regulations 2018. The buyback commenced on April 13, 2023 and got completed on July 06, 2023.
The Company bought back 46,50,000 equity shares in total cash consideration of H23,009.04 lacs (including H162.70 lacs towards transaction costs of Buyback and H4,316.14 lacs towards Buyback distribution tax). These equity shares were extinguished as per the records of the depositories. In line with the requirement of Companies Act, 2013, an amount of H22,863.20 lacs have been utilised from General Reserve for the Buyback. Further, capital redemption reserve of H46.50 lacs, representing the nominal value of shares bought back, has been created out of general reserve in accordance with Section 69 of the Companies Act, 2013.
During the previous year, subsequent to the approval of the Board of Directors, the Buyback had not been commenced till March 31, 2023. The Company had incurred H99.34 lacs towards transaction cost and taxes, which were utilised from General Reserve.
3.57 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and postemployment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
3.59 The Company has disclosed geographical segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108 'Operating Segments', no disclosures related to segments are presented in this standalone financial statements. The Chief Operating Decision Maker ("CODM") evaluates the Company's performance and allocates resources based on an analysis of various performance indicators considering a single business segment. The CODM reviews revenue and profit from operations as the performance indicator considering a single business segment. The CEO & CFO and Managing Director are the CODM of the Company.
3.60During the year, pursuant to Voluntary Retirement Scheme for Dongari manufacturing unit, the Company has accounted for a compensation of H589.54 lacs payable to its workers, which has been disclosed as an exceptional item.
3.65During the year ended March 31, 2023, a foreign subsidiary had declared dividend which was subsequently cancelled in Extraordinary General Meeting of its shareholders, due to inability to repatriate the dividend to India on account of ongoing foreign currency crisis in the country in which it is domiciled. Accordingly, the Company has not accounted for income in current year.
3.66 The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled for direct changes to data for users with certain privileged access rights to the application and the underlying HANA database. Further no instance of audit trail feature being tampered with was noted in respect of software.
3.67 During the current year, due to unfavourable business environment, the Company has extended the loan given to its wholly owned subsidiary amounting to H504.25 lacs to settle the existing loan which had fallen due during the year.
3.68 IMPAIRMENT ASSESSMENT OF INVESTMENT IN CERTAIN SUBSIDIARIES
a) Helios Lifestyle Private Limited (Refer Note 3.5)
The Company treats Helios Lifestyle Private Limited as one cash generating unit. The carrying amount of investment is reviewed annually to determine whether there is any indication of impairment. This testing is done by computing the value in use by using cash flow projections based on approved budget for financial year 2023-24 (Previous Year: 2022-23) and financial forecast for the years FY 2025-30 (Previous Year: 2024-33). The projected Average annual increase in Revenue from operation during the forecast period is 21.46% (March 31, 2023: 16.77%). The growth rate used for extrapolation of cash flows beyond the forecast period is 5% (March 31, 2023: 3%). The rate used to discount the forecasted cash flows is 18% (March 31, 2023: 18%). Basis the assessment, there is no impairment in investment that needs to be recognised in current financial year.
b) Brillare Science Private Limited (Refer Note 3.5)
The Company treats Brillare Science Private Limited as one cash generating unit. The carrying amount of investment is reviewed annually to determine whether there is any indication of impairment. This testing is done by computing the value in use by using cash flow projections based on approved budget for financial year 2023-24 (Previous Year: 2022-23) and financial forecast for the years FY 2025-30 (Previous Year: 2024-29). The projected Average annual increase in Revenue from operation during the forecast period is 28.99% (March 31, 2023: 33.26%). The growth rate used for extrapolation of cash flows beyond the forecast period is 4% (March 31, 2023: 5%). The rate used to discount the forecasted cash flows is 19% (March 31, 2023: 19%). Based on such assessment in financial year 2022-23, the Company had accounted for an impairment loss amounting to H3,188.64 lacs and no impairment is required to be recognised in current financial year.
3.69 OTHER STATUTORY INFORMATIONS
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company is not a Core Investment Company as defined in the regulations made by Reserve Bank of India. The Company has total two Core Investment companies as part of the Group.
(iii) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iv) During the year, the Company has acquired 26% stake in each of 'Axiom Ayurveda Private Limited ("AAPL"), Axiom Food & Beverages Private Limited ("AFBPL") and Axiom Packwell Private Limited ("APPL")', for a total purchase consideration of H10,956.14 lacs and consequently, these Companies have become associates of the Company. AAPL has further invested H3,140.28 lacs and H624.11 lacs in its subsidiaries i.e., AFBPL and APPL respectively for the purpose of setting up new plants for capacity expansion, as planned.
(vi) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
(vii) The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
(viii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017
(ix) There are no events or transactions after the reporting period which is required to be disclosed under Ind AS 10.
(x) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(xi) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
The accompanying notes are an integral part of these standalone financial statements.
As per our report of even date attached
For and on behalf of Board of Directors of Emami Limited
For S. R. BATLIBOI & Co. LLP CIN : L63993WB1983PLC036030
Chartered Accountants
Firm Registration No: 301003E/E300005
R S Goenka H V Agarwal Mohan Goenka
Chairman Vice-Chairman & Vice-Chairman &
DIN: 00152880 Managing Director Whole Time Director
DIN:00150089 DIN:00150034
per Sanjay Kumar Agarwal N H Bhansali Sandeep Kumar Sultania
Partner CEO -Finance, Strategy & Company Secretary, Compliance Officer
Membership No: 060352 Business Development and CFO & VP - Sales Commercial
FCA No: 055211 FCS No: A13546
Kolkata
May 29, 2024
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