|1. Company Information
Dabur India Limited (the 'Company') is a domestic public limited
Company and is listed on the Bombay Stock Exchange Ltd. [BSE], National
Stock Exchange of India Ltd. [NSE] and Metropolitan Stock Exchange of
India Ltd. [MSEI]. The Company is one of the leading FMCG players
dealing in consumer care and food products. The Company has
manufacturing facilities across the length & breadth of the country and
Research and Development center in U.P. (Sahibabad), selling
arrangements being primarily in India through Independent distributors
except for institutional sales which are handled directly by the
2.1.1 Basis for preparation of accounts
The accounts have been prepared in accordance with the historical cost
convention under accrual basis of accounting as per Indian GAAP.
Accounts and Disclosures thereon comply with the Accounting Standards
specified in Companies (Accounting Standard) Rules 2006 which continue
to apply under Section 133 of the Companies Act, 2013 read with Rule 7
of the Companies (Accounts) Rules 2014, other pronouncement of ICAI,
provisions of the Companies Act and guidelines issued by SEBI as
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in Schedule III to the Companies Act, 2013.
2.1.2 Use of Estimates
Indian GAAP enjoins Management to make estimates and assumptions that
affect reported amount of assets, liabilities, revenue, expenses and
contingent liabilities pertaining to years, the financial statement
relate to. Actual result could differ from such estimates. Any revision
in accounting estimates is recognized prospectively from current year
and material revision, including its impact on financial statement, is
reported in notes to accounts in the year of incorporation of revision.
2.2. Recognition of Income and Expenses
a. Sales and purchases are accounted for on the basis of passing of
title to the goods.
b. Sales comprise of sale price of goods including excise duty but
exclude trade discount and Sales Tax/Vat.
c. Income/ loss from future trading of commodities, forming part of
(All amounts in Rs, crores, unless otherwise stated)
recognized at the closing point of the contract. For open contracts
loss, if any, accrues on balance sheet date is recognized. However
profit, if any, accruing on open contracts on balance sheet date is
d. All the other incomes have been accounted for on accrual basis
except for those entailing recognition on realization basis under AS 9
on the ground of uncertainty factor.
e. All expenses are provided on accrual basis unless stated otherwise.
2.3. Fixed Assets
a. Fixed assets are stated at carrying amount i.e. cost less
b. Cost includes freight, duties, taxes and other expenses incidental
to acquisition and installation.
c. Depreciation on Fixed Assets has been provided on straight line
method in terms of life span of assets specified in Schedule II of the
Companies Act, 2013 except for Moulds which are depreciated in four
years on straight line method based on technical advice.
d. Components relevant to fixed assets, where significant, are
separately depreciated in terms of their life span assessed by
e. Patents and trademarks are being amortized over the period of ten
years on straight line basis.
f. Software's are being amortized over the period of five years on
straight line basis.
g. For New Projects, all direct expenses and direct overheads
(excluding services provided by employees in Company's regular payroll)
h. Capital Subsidy received against fixed capital outlay is deducted
from gross value of individual fixed assets, forming part of subsidy
scheme granted, by way of proportionate allocation of subsidy amount
thereon. Depreciation is charged on net fixed assets after deduction
of subsidy amount.
i. During sale of fixed assets, any profit earned towards excess of
sale value over gross block of assets (i.e. balancing charge) is
transferred from profit & loss account to capital reserve.
j. Leasehold Land is to be amortized over the period of lease.
2.4. Impairment / Discarding of Assets
a. The Company identifies impair able fixed assets based on cash
generating unit concept for tangible fixed assets and asset specific
concept for intangible fixed assets at the yearend in terms of Clause 5
to 13 of AS-28 and Clause 83 of AS-26 respectively for the purpose of
arriving at impairment loss thereon, if any, being the difference
between the book value and recoverable value of relevant assets.
Impairment loss, when crystallizes is charged against revenue of that
b. Apart from test of impairment within the meaning of AS-28,
individual tangible fixed assets of various Cash Generating Units
(CGUs) are identified for writing down/discarding on the ground of
obsolescence, damage, redundancy & un-usability at the year end.
c. Further the Company has assessed recoverable value of each CGUs and
each intangible asset based on value-in-use method. Such assessment
indicated the value in use of corresponding assets higher than
corresponding carrying cost of assets thereby ruling out the cause of
further arriving at their net-selling-price and exigency of provision
against impairment loss.
d. CGUs include Narenderpur plant, Sahibabad plant, each of plants
situated at Nashik, Baddi, Jammu, Rudrapur, Silvasa, Pitampur, Kanpur,
Alwar, Newai and Jalpaiguri.
e. Annual discount rate considered for arriving at value-in-use of
assets of each CGU is 11.50% i.e. the average interest rate of
external borrowing plus risk factor @ 2.00 % per annum.
Investments that are readily realizable and are intended to be held for
not more than one year at the point of acquisition are classified as
"Current Investments". All other investments are classified as
Current investments are stated at the lower of cost and fair value.
Long term investments are stated at cost. A provision for diminution is
made to recognize a decline other than temporary, if any, in the value
of Non-Current Investments.
Investments in subsidiaries, Joint Ventures and Associates are held for
long term and valued at cost reduced by diminution of permanent nature
therein, if any.
No Profit or losses of subsidiaries are accounted for.
2.6. Research and Development Expenditure
Revenue expenditure on research & development is expensed as incurred
including contribution towards scientific research expenses.
(All amounts in Rs, crores, unless otherwise stated)
Inventories are valued at the lower of cost or net realizable value.
Basis of determination of cost remains as follows:
a. Raw material, Packing Material, Stores & Spares: Moving Weighted
b. Work-in-progress : Cost of Input plus overhead up to the stage of
c. Finished Goods : Cost of input plus appropriate overhead
2.8. Deferred Entitlement on Leave Travel Concession
In terms of opinion of the Expert Advisory Committee of the ICAI, the
Company has provided liability accruing on account of deferred
entitlement towards Leave Travel Concession in the year in which the
employees concerned render their services.
2.9. Retirement Benefits
Liabilities in respect of retirement benefits to employees are provided
for as follows:
a. Defend Benefit Plans:
i. Leave Salary of employees on the basis of actuarial valuation as per
ii. Post separation benefits of Directors on the basis of actuarial
valuation as per AS 15.
iii. Gratuity Liability on the basis of actuarial valuation as per AS
iv. Company contributes its share of contribution to Employees
Provident Fund Scheme administered by a separate trust with its
obligation to make good the shortfall, if any, in trust fund arising on
account of difference between the return on investments of the trust
and the interest rate on provident fund dues notified periodically by
b. Defend Contribution Plans:
i. Liability for superannuation fund on the basis of the premium paid
to insurance company in respect of employees covered under
Superannuation Fund Policy.
ii. ESI on the basis of actual liability accrued and paid to authority.
2.10. Income Tax and Deferred Tax
The liability of company on account of income tax is estimated
considering the provisions of the Income Tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences being the difference between taxable income and
accounting income that originate in one year and capable of reversal in
one or more subsequent years.
2.11. Contingent Liabilities
Disputed liabilities and claims against the Company including claims
raised by fiscal authorities (e.g. Sales Tax , Income Tax, Excise
etc.), pending in appeal/court for which no reliable estimate can be
made of the amount of the obligation or which are remotely poised for
crystallization are not provided for in accounts but disclosed in notes
However, present obligation as a result of past event with possibility
of outflow of resources, when reliably estimable, is recognized in
2.12. Foreign Currency Translation
a. Transactions in foreign currencies are recognized at rate of
overseas currency ruling on the date of transactions. Gain / Loss
arising on account of rise or fall in overseas currencies vis-a-vis
reporting currency between the date of transaction and that of payment
is charged to Statement of Profit & Loss.
b. Receivables/payables (excluding for fixed assets) in foreign
currencies are translated at the exchange rate ruling at the yearend
date and the resultant gain or loss, is accounted for in the Statement
of Profit & Loss.
c. Increase / decrease in foreign currency loan on account of exchange
fluctuation are debited / credited to Statement of profit and loss.
d. Impact of exchange fluctuation is separately disclosed in notes to
2.13. Employee Stock Option Purchase (ESOP)
Aggregate of quantum of option granted under the scheme in monetary
term (net of consideration of issue to be paid in cash) in terms of
fair value has been shown as Employees Stock Option Scheme outstanding
in Reserve and Surplus head of the Balance Sheet with corresponding
debit in deferred Employee Compensation under ESOP appearing as a
negative item as part of shareholder's fund as per guidelines to the
effect issued by SEBI.
a. With the exercise of option and consequent issue of equity share,
corresponding ESOP outstanding is transferred to share premium account.
b. Employees' contribution for the nominal value of share in respect
to option granted to employees of subsidiary Company is being
reimbursed by subsidiary companies to holding Company.
c. Entitlement of option rises proportionately with the issuance of
bonus. Nominal value of
(All amounts in Rs, crores, unless otherwise stated)
shares against enhanced options is financed by the Company at the point
of exercise of such option by employees against utilization of general
d. Deferred employees compensation under ESOP is amortized on straight
line method over the vesting period.
Merger / Amalgamation (of the nature of merger) of other company / body
corporate with the Company are accounted for on the basis of purchase
method, the assets / liabilities being incorporated in terms of values
of assets and liabilities appearing in the books of transferor entity
on the date of such merger / amalgamation for the purpose of arriving
at the figure of goodwill or amalgamation reserve.
2.15. Segment Reporting
The Company identifies primary segments based on the pre-dominant
sources of risk effects and returns depending on organization and of
the Management and internal financial reporting system. The operating
segments are the segments for which separate financial information are
available and operating profit/loss there from are evaluated regularly
by the Management for allocation of resources and assessment of
Revenue, expenses assets and liabilities which relate to the Company as
a whole which are not allocable to segments on direct and/or reasonable
basis have been included under "unallocated revenue/
2.16. Operating Leases
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Expenses and income from lease rentals in respect of operating
leases are recognized in statement of profit & loss on accrual basis in
accordance with the respective lease agreements.
2.17. Earnings Per Share
Basic Earnings per share is calculated by dividing the net profit for
the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.