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1. the Company and Nature of Its Operations: 2. Summary Of Making a diff erence for 25 years Notes To Financial Statements for the year ended March 31, 2016 1. The Company and nature of its operations: to make estimates and assumptions that aff ect Marico Limited (‘Marico’ or ‘the Company’), headquartered the reported balances of assets and liabilities in Mumbai, Maharashtra, India, carries on business in and disclosures relating to contingent assets and branded consumer products. Marico manufactures and liabilities as at the date of the fi nancial statements markets products under brands such as Parachute, and reported amounts of income and expenses Parachute Advansed, Nihar, Nihar Naturals, Saff ola, during the period. Examples of such estimates Hair & Care, Revive, Mediker, Livon, Set-wet and Code include provisions for doubtful debts, future 10 etc. Marico’s products reach its consumers through obligations under employee retirement benefi t retail outlets serviced by Marico’s distribution network plans, income taxes, the useful lives and provision comprising regional offi ces, carrying & forwarding agents, for impairment of fi xed assets and intangible redistribution centers and distributors spread all over assets. India. Management believes that the estimates used in 2. Summary of signifi cant accounting policies: the preparation of fi nancial statements are prudent and reasonable. Future results could diff er from (a) Basis of preparation of fi nancial statements these estimates. These fi nancial statements have been prepared in (c) Tangible assets, intangible assets and capital accordance with the Generally Accepted Accounting work-in-progress Principles (‘GAAP’) in India under the historical Tangible assets and intangible assets are stated at cost convention on accrual basis. Pursuant to cost of acquisition, less accumulated depreciation/ Section 133 of Companies Act, 2013 read with amortisation and impairments, if any. Cost includes Rule 7 of the Companies (Accounts) Rules, 2014 taxes, duties, freight and other incidental expenses till the standards of accounting or any addendum related to acquisition and installation. Borrowing thereto are prescribed by the Central Government costs attributable to acquisition, construction of in consultation and recommendation of the qualifying asset are capitalized until such time as National Financial Reporting Authority, the existing the assets are substantially ready for their intended Accounting Standards notifi ed under the Companies use. Other pre-operative expenses for major Act, 1956 shall continue to apply. Consequently, projects are also capitalised, where appropriate. these fi nancial statements have been prepared to comply in all material aspects with the accounting Items of fi xed assets that have been retired from standards notifi ed under Section 211(3C) of the active use and are held for disposal are stated Companies Act, 1956 [Companies (Accounting at lower of their net book value or net realizable Standards) Rules, 2006, as amended] and other value and are shown separately in the fi nancial relevant provisions of the Companies Act, 2013. statements. Any expected loss is recognized immediately in the Statement of Profi t and Loss. All assets and liabilities have been classifi ed as current or non-current as per the Company’s normal Capital work-in-progress comprises cost of fi xed operating cycle and other criteria set out in the assets that are not yet ready for their intended use Revised Schedule III to the Companies Act, 2013. at the year end. Based on the nature of the product and the time between the acquisition of assets for processing (d) Depreciation and amortisation and their realisation in cash and cash equivalents, I. Tangible assets the Company has ascertained its operating cycle (i) Depreciation is provided on a straight as 12 months for the purpose of current or non- line basis, based on useful life of the current classifi cation of assets and liabilities. assets prescribed in Schedule II to the Companies Act, 2013. (b) Use of estimates However based on the technical The preparation of the fi nancial statements in evaluation, the useful life considered for conformity with GAAP requires the Management 204 MARICO LIMITED | ANNUAL REPORT 201516 STRATEGIC REPORT 0240 STATUTORY REPORTS 42137 FINANCIAL STATEMENTS 139249 Notes To Financial Statements for the year ended March 31, 2016 the following items is lower than the life (f) Assets given on lease stipulated in Schedule II to the Companies In respect of Plant and equipment and Investment Act, 2013: property given on operating lease basis, lease Assets Useful Life rentals are accounted on accrual basis in accordance (Years) with the respective lease agreements. Motor Vehicle – Motor Car, Bus and Lorries, Motor 5 (g) Investments Cycle, Scooter Offi ce equipment - Mobile and Communication tools 2 (i) Long term investments are valued at cost. Provision for diminution, if any, in the value of Computer – Server and Network 3 investments is made to recognise a decline in Plant & Machinery – Moulds 3 to 5 value, other than temporary. (ii) Extra shi depreciation is provided on (ii) Current investments are valued at lower of “Plant” basis. cost and fair value, computed individually for each investment. In case of investments in (iii) Assets individually costing R 25,000 or mutual funds which are unquoted, net asset less are depreciated fully in the year of value is taken as fair value. acquisition. (iv) Leasehold land is amortized over the (iii) Investment property: Investment in buildings primary period of the lease. that are not intended to be occupied (v) Fixtures in leasehold premises are substantially for use by, or in the operations amortized over the primary period of the of the Company, is classifi ed as investment lease. property. Investment properties are carried (vi) Depreciation on additions / deletions at cost less accumulated amortization and during the year is provided from the impairment loss, if any. month in which the asset is capitalized / up to the month in which the asset is (h) Inventories disposed off . (i) Raw materials, packing materials, stores and II. Intangible assets spares are valued at lower of cost and net Intangible assets are amortized on a straight realizable value. However, these items are line basis over the estimated useful lives of not written down below cost if the fi nished respective assets, but not exceeding the products in which they will be used are useful lives given here under: expected to be sold at or above cost. Assets Useful Life (ii) Work-in-progress, fi nished goods and stock- (Years) in-trade (traded goods) are valued at lower of Trademarks, copyrights and business and 10 cost and net realizable value. commercial rights (iii) By-products and unserviceable / damaged Computer so ware 3 fi nished goods are valued at estimated net A rebuttable presumption that the useful life realizable value. of an intangible asset will not exceed ten years (iv) Cost is ascertained on weighted average from the date when the asset is available for use method and in case of work-in-progress, it is considered by the Management. includes appropriate production overheads (e) Assets taken on lease and in case of fi nished goods, it includes appropriate production overheads and excise Operating lease payments are recognized as duty, wherever applicable. expenditure in the Statement of Profi t and Loss as per the terms of the respective lease agreements. 205 Making a diff erence for 25 years Notes To Financial Statements for the year ended March 31, 2016 (v) Net realizable value is the estimated selling valuation at each Balance Sheet date using the price in the ordinary course of business, less Projected Unit Credit method and contributed estimated cost of completion and estimated to Employees Gratuity Fund. Actuarial gains cost necessary to make the sale. and losses arising from changes in actuarial assumptions are recognized in the Statement (i) Research and development of Profi t and Loss in the period in which they Capital expenditure on research and development arise. is capitalised and depreciated as per the accounting (ii) Superannuation policy mentioned in para 2(c) and 2(d) above. Revenue expenditure is charged off in the year in The Company makes contribution to the which it is incurred. Superannuation Scheme, a defi ned contribution scheme, administered by insurance companies. (j) Revenue recognition The Company has no obligation to the scheme Revenue is recognized to the extent that it is beyond its monthly contributions. probable that the economic benefi ts will fl ow to (iii) Leave encashment / Compensated absences the company and the revenue can be reliably measured. The following specifi c criteria must also The Company provides for the encashment be met before revenue is recognized: of leave with pay subject to certain rules. The employees are entitled to accumulate leave (i) Domestic sales are recognized at the point of subject to certain limits, for future encashment dispatch of goods to the customers, which / availment. The liability is provided based is when substantial risks and rewards of on the number of days of unutilized leave at ownership are passed to the customers, and each Balance Sheet date on the basis of an are stated net of trade discounts, rebates, independent actuarial valuation. sales tax, value added tax and excise duty. (iv) Provident fund (ii) Export sales are recognized based on the date of bill of lading, except sales to Nepal, Provident fund contributions are made to which are recognized when the goods cross a trust administered by the Company. The the Indian Territory, which is when substantial Company’s liability is actuarially determined risks and rewards of ownership are passed to (using the Projected Unit Credit method) at the customers. the end of the year and any shortfall in the fund balance maintained by the Trust set up (iii) Revenue from services is recognized on by the Company is additionally provided for. rendering of services. Actuarial losses and gains are recognized in (iv) Interest and other income are recognized on the Statement of Profi t and Loss in the year in accrual basis.
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