MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Consolidated Financial Information, which is included in this Draft Red Herring Prospectus. Unless the context requires otherwise, the following discussion and analysis of our financial condition and results of operations are derived from our Restated Consolidated Financial Information, including the related notes, which are based on our audited financial statements which are prepared under Ind AS, in accordance with requirements of the Companies Act, and restated in accordance with the SEBI ICDR Regulations and the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the ICAI, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries, and our assessment of the factors that may affect our prospects and performance in future periods. Accordingly, the degree to which our Restated Consolidated Financial Information will provide meaningful information to a prospective investor in countries other than India is dependent on the readers level of familiarity with Ind AS. This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward-Looking Statements" on pages 33 and 31, respectively.
Unless otherwise indicated or the context requires otherwise, the financial information included herein is derived from our Restated Consolidated Financial Information as at and for Fiscals 2025, 2024 and 2023, included in this Draft Red Herring Prospectus. For further information, see "Financial Information " beginning on page 233. Our fiscal year ends on March 31 of each year, and references to a particular Fiscal are to the twelve months ended March 31 of that year.
Unless otherwise indicated, industry and market data used in this section have been derivedfrom the report titled "Industry Report on Packaged Food Market in India " dated June 6, 2025 (the "Technopak Report") prepared and released by Technopak Advisors Private Limited and exclusively commissioned and paid for by us in connection with the Offer, pursuant to an engagement letter dated December 10, 2024. A copy of the Technopak Report is available on the website of our Company at www.orklaindia.com. The data included herein includes excerpts from the Technopak Report and may have been re-ordered by us for the purposes ofpresentation. There are no parts, data or information (which may be relevant for the proposed Offer) that have been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derived from the Technopak Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factors — Internal Risks -40. Certain sections of this Draft Red Herring Prospectus disclose information from the Technopak Report which has been prepared exclusively for the Offer and commissioned and paid for by us exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks." on page 59.
Overview
We are a multi-category Indian food company with a legacy spanning several decades, offering a diverse range of products that cater to every meal occasion, from breakfast and lunch to dinner, snacks and beverages and desserts. According to the Technopak Report, in Fiscal 2024, we were one of the top four companies in terms of revenue from operations among select leading spices and convenience food peers. Our products, under our brands MTR and Eastern, are crafted with authenticity and tradition, and are deeply rooted in the South Indian culinary heritage. The key product categories we offer are Spices (comprising blended and pure spices), and Convenience Foods (comprising RTC, RTE foods and Vermicelli, among others).
In Spices, our key products include: (a) Sambar Masala, Chicken Masala, Puliogare Masala, Rasam Masala and Meat Masala, among others, in blended spices; and (b) Chilli, Kashmiri Chilli, Turmeric, Coriander and Cumin, among others, in pure spices. Our Convenience Foods products simplify the cooking process and enable quick meal preparation through products such as Gulab Jamun mix, Rava Idli mix, 3 -Minute Poha and Dosa mix. Our portfolio comprises over 400 products across these categories, as of March 31, 2025, and we sold approximately 2.3 million units on average every day in Fiscal 2025. For further details on our product portfolio, see " Our Business - Product Portfolio" on page 171.
Significant Factors Affecting our Financial Condition and Results of Operations
Availability and cost of raw materials and packing materials
We require raw materials for the production of both Spices and Convenience Foods products. Our key raw materials include chilli, coriander, wheat products, and turmeric. The prices and availability of these raw materials and packing materials are subject to significant volatility due to a range of external factors. These include commodity price fluctuations both within India and globally, adverse weather conditions, crop failures, changes in supply and demand dynamics, logistics and transportation costs, inflation, and changes in governmental regulations and policies.
These factors can lead to both upward and downward movements in input costs. For instance, while periods of commodity price inflation or supply disruptions can increase procurement costs, there are also opportunities to benefit from favourable market conditions. When commodity prices stabilize or decrease, or when procurement efficiencies are realized, we are able to optimize our cost structure, which can positively impact our margins and profitability.
The cost of raw materials and packing materials consumed represents a significant portion of our revenue from finished goods, accounting for 55.8% in Fiscal 2025, 59.2% in Fiscal 2024, and 58.5% in Fiscal 2023. Furthermore, any increase in the cost of raw materials which results in an increase in prices of our products, may reduce demand for our products and thereby affect our margins and profitability.
We have various strategies in place to optimize our supply chain and procurement processes. For instance, our manufacturing facilities are located in proximity to key raw material sourcing regions, particularly within South India, including states such as Karnataka, Andhra Pradesh, Kerala and Tamil Nadu. Additionally, our diversified supplier base and ongoing efforts to enhance procurement strategies enable us to mitigate risks associated with price volatility and supply constraints. However, if we are unable to manage costs in relation to raw materials and packing materials or to increase the prices of our products to offset these increased costs, our margins, cash flows and overall profitability may be adversely affected.
Distribution network and market penetration
Our distribution network is a critical driver of our market penetration, revenue growth, and overall financial performance. As of March 31, 2025, our distribution network comprised 843 distributors and 1,800 subdistributors, spanning 28 states and five union territories across India. This network is further complemented by direct relationships with 31 modern trade retail chains and six e-commerce and quick commerce platforms, as well as an international distribution presence in over 40 countries. The breadth and depth of our distribution network enable us to reach a wide spectrum of retail outlets and consumer segments, particularly in our core markets of Karnataka, Kerala, Andhra Pradesh, and Telangana.
According to the Technopak Report, our brands, MTR and Eastern, are the most widely distributed brands in Karnataka and Kerala for spices. Out of the universe of approximately 300,000 retail outlets selling blended spices in Karnataka and 74,500 in Kerala, our brands have a presence in 67.5% and 70.4% of the outlets respectively versus an industry average of 30-40%, according to the Technopak Report. This high level of market penetration ensures strong brand visibility and accessibility, which translates into higher household reach and purchase frequency. According to the Technopak Report, in combination with significant marketing investments over the years and extensive distribution, MTR and Eastern have reached nine out of 10 households through at least one of our products in Karnataka and Kerala respectively (for January 2024-December 2024, based on the share of households consuming at least one of our products at least once a year). Broad market access and high household penetration drive higher sales volumes and support consistent revenue growth.
Additionally, we have a diversified distribution spread which includes general trade, modern trade, and e- commerce and quick commerce platforms. Set out below are details of our revenues from general trade, modern trade and e-commerce/quick commerce platforms.
Distribution channel |
Fiscal |
|||||
2025 |
2024 |
2023 |
||||
| Amount (Rs. million) | % growth/ (decline) | Amount % | growth (Rs. million) | Amount % | growth (Rs. million) | |
General trade |
14,839.8 | (4.8)% | 15,585.2 | 3.9% | 14,995.2 | - |
Modern trade |
2,479.0 | 10.2% | 2,250.3 | 13.5% | 1,982.0 | - |
E-commerce and quick commerce |
1,402.7 | 46.5% | 957.3 | 36.8% | 700.0 | - |
The increasing share of modern trade and e-commerce and quick commerce channels not only broadens our consumer base but also mitigates risks associated with over-reliance on any single channel. This diversification supports revenue stability and positions us to capture emerging consumption trends, such as the growing trend of online shopping. Additionally, modern trade, e-commerce and quick commerce channels play a key role in delivering our value-added portfolio, such as blended spices and RTC and RTE foods, to consumer segments that are less price sensitive than those typically served by general trade channels.
We intend to continue further strengthening our distribution network, including by onboarding new distributors in existing and untapped geographies and continuing to enhance our presence in high-growth channels such as modern trade, e-commerce, and quick commerce.
Competition and other macroeconomic market conditions
The industry in which we operate is characterized by intense competition and is sensitive to broader macroeconomic market conditions. We face significant competitive pressures from both established domestic and multinational companies. Competition in our business is based on various factors including pricing, relationships with customers, product quality, customization and innovation. Our competitors may possess broader product portfolios and stronger brand recognition in certain regions. This competitive environment may require us to reduce our price points, increase marketing and advertising spend, or offer more favourable terms to distributors and retailers, all of which could adversely impact our profit margins and market share. Further, the competitive landscape encourages continuous improvement and provides opportunities to differentiate our brands through targeted marketing, product development, and customer engagement initiatives.
In addition to competitive dynamics, our business is influenced by broader macroeconomic factors. Economic cycles, consumer spending patterns, and food inflation can impact demand for packaged foods. Any prolonged periods of subdued private consumption or inflationary pressures may impact our business, cash flows and results of operations.
Brand image and sales and promotion expenses
Advertising and sales promotion are integral to building and sustaining the brand image of our key brands, MTR and Eastern. In Fiscal 2025, 2024 and 2023, our advertising and sales promotion expenses amounted to Rs.1,424.5 million, Rs.1,338.2 million and ^1,157.5 million, respectively, which represented 5.9%, 5.7% and 5.3% of our total revenue from operations. This increase in advertising and sales promotion expenses highlights our focus on brand development and market presence.
Our approach to advertising and promotion is multifaceted, encompassing localized and regional campaigns, digital media initiatives, and on-ground activations. We invest in culturally relevant content and regional language campaigns to deepen our connection with local consumers, while also expanding our digital footprint through targeted social media campaigns and partnerships with e-commerce and quick-commerce platforms. Additionally, we curate and sponsor brand events that showcase our culinary expertise and reinforce our association with authentic local flavours, and we offer sales incentives and trade promotions to drive performance across our distribution network. These sustained investments are fundamental to enhancing brand recall, supporting new product launches, and expanding our reach across both traditional and emerging sales channels. Accordingly, we may continue to incur significant expenses towards advertising and sales promotion expenses in the future.
Key Components of our Statement of Profit and Loss
The following descriptions set forth information with respect to the key components of our profit and loss statement.
Income
Total income consists of revenue from operations and other income.
Revenue from Operations
Revenue from operations primarily accounts for the sale of products, comprising (i) sale of finished goods; and (ii) stock-in-trade, which pertain to traded goods such as asafoetida and vermicelli, among others, and comprise of products manufactured by third-party contract manufacturers, and (iii) other operating revenue including revenues from government grants, scrap sales, export incentives, sale of energy from windmills, and other miscellaneous revenue.
Other income
Other income primarily includes profit on sale of investment in units of mutual funds, interest income from bank deposits, fair value gain on financial instruments at FVTPL, liabilities written back and gain on foreign exchange fluctuations, among others.
Cost of raw materials and packing materials consumed
Cost of raw and packing materials consumed primarily includes cost of raw materials for our products, such as chilli, coriander, wheat products, turmeric, cumin, among others and packing materials such as laminates, corrugated boxes, metal containers, and woven sacks.
Purchases of Stock-in-Trade
Purchases of stock-in-trade primarily consist of cost of procuring products from our contract manufacturers.
Increase/(decrease) in inventories of finished goods, work-in-progress and stock-in-trade
Increase/(decrease) in inventories of finished goods, work-in-progress and stock-in-trade reflects the difference between our inventories at the start of the year and the end of the year.
Employee benefits expense
Employee benefits expense primarily consists of salaries, wages and bonus, staff welfare expenses, contribution to provident and other funds, gratuity expense and share based payment.
Finance costs
Finance costs primarily consist of interest expense on lease liabilities, bank charges, interest expense on payments to MSME suppliers and interest on income tax, among others.
Depreciation and amortisation expense
Depreciation and amortisation expense primarily relates to depreciation of our property, plant and equipment, amortisation of intangible assets and depreciation of right-of-use-assets.
Other expenses
Other expenses primarily consist of advertising and sales promotion, manpower supply, repairs and maintenance, power and fuel charges, legal and professional fees and miscellaneous expenses, among others.
Results of Operations
The following table sets forth certain information with respect to our results of operations for the years ended March 31, 2025, 2024 and 2023:
Fiscal |
||||||
2025 |
2024 |
2023 |
||||
| (Rs. million) | % of total income | (Rs. million) | % of total income | (Rs. million) | % of total income | |
Income |
||||||
Revenue from operations |
23,947.1 | 97.5% | 23,560.1 | 98.7% | 21,724.8 | 98.7% |
Other income |
605.3 | 2.5% | 319.8 | 1.3% | 289.6 | 1.3% |
Total income |
24,552.4 | 100.0% | 23,879.9 | 100.0% | 22,014.4 | 100.0% |
Expenses |
||||||
Cost of raw materials and packing materials consumed |
11,741.3 | 47.8% | 13,100.5 | 54.9% | 11,940.1 | 54.2% |
Purchase of stock-in-trade |
1,439.7 | 5.9% | 680.5 | 2.8% | 592.8 | 2.7% |
(Increase)/decrease in inventories of finished goods, work-inprogress and stock-in-trade |
27.4 | 0.1% | (143.6) | (0.6)% | 145.2 | 0.7% |
Employee benefits expense |
2,461.9 | 10.0% | 2,323.5 | 9.7% | 2,239.6 | 10.2% |
Finance costs |
65.5 | 0.3% | 66.4 | 0.3% | 270.8 | 1.2% |
Depreciation and amortisation expense |
617.3 | 2.5% | 621.2 | 2.6% | 554.1 | 2.5% |
Other expenses |
4,308.4 | 17.5% | 4,185.2 | 17.5% | 3,694.6 | 16.8% |
Total expenses |
20,661.5 | 84.2% | 20,833.7 | 87.2% | 19,437.2 | 88.3% |
Restated profit before share of profit/ (loss) of associate and joint venture, exceptional items and tax |
3,890.9 | 15.8% | 3,046.2 | 12.8% | 2,577.2 | 11.7% |
Exceptional items (net) |
(336.4) | (1.4)% | - |
- |
(20.0) | (0.1)% |
Restated profit before tax and share of profit/(loss) of associate and joint venture |
3,554.5 | 14.5% | 3,046.2 | 12.8% | 2,557.2 | 11.6% |
Share of profit/(loss) from associate and joint venture |
(4.0) | - | 22.1 | 0.1% | 11.9 | 0.1% |
Restated profit before tax |
3,550.5 | 14.5% | 3,068.3 | 12.8% | 2,569.1 | 11.7% |
Tax expense |
||||||
Current tax |
870.6 | 3.5% | 635.1 | 2.7% | 60.9 | 0.3% |
Adjustment of tax relating to earlier periods |
(13.4) | (0.1)% | 8.2 | - | (1.0) | - |
Deferred tax charge/ (credit) |
136.6 | 0.6% | 161.7 | 0.7% | (882.1) | (4.0)% |
Total tax expenses |
993.6 | 4.0% | 805.0 | 3.4% | (822.2) | (3.7)% |
Restated profit for the year |
2,556.9 | 10.4% | 2,263.3 | 9.5% | 3,391.3 | 15.4% |
Restated total other comprehensive income/ (loss) for the year, net of tax |
(35.6) | (0.1)% | 67.3 | 0.3% | (14.7) | (0.1)% |
Restated total comprehensive income for the year, net of tax |
2,521.3 | 10.3% | 2,330.6 | 9.8% | 3,376.6 | 15.3% |
Fiscal 2025 compared to Fiscal 2024
Total Income. Our total income increased by 2.8% to Rs.24,552.4 million in Fiscal 2025 from Rs.23,879.9 million in Fiscal 2024, primarily due to an increase in our revenue from operations and other income, for the reasons set out below.
Revenue from operations. Our total revenue from operations increased by 1.6% to Rs.23,947.1 million in Fiscal 2025 from Rs.23,560.1 million in Fiscal 2024 primarily due to:
(a) Sale of products: Sale of products increased by 1.5% to Rs.23,583.2 million in Fiscal 2025 from Rs.23,223.9 million in Fiscal 2024 driven by an increase in sale of stock-in-trade by 134.0% to Rs.2,553.2 million in Fiscal 2025 compared to Rs.1,091.3 million in Fiscal 2024, primarily due to an increase in outsourcing of manufacturing to third party contract manufacturers in relation to certain products in the Spices category such as chilli and turmeric. Correspondingly, revenues from sale of finished goods decreased by 5.0% to Rs.21,030.0 million in Fiscal 2025 compared to Rs.22,132.6 million in Fiscal 2024.
Further, our revenue from customers within India decreased by 0.4% to Rs.18,721.5 million in Fiscal 2025 from Rs.. 18,792.8 million in Fiscal 2024, primarily due to a reduction in prices of products in the Spices category, as a result of deflation of raw material costs. However, our revenue from customers outside India, increased by 9.7% to Rs.4,861.7 million from Rs.4,431.1 million primarily on account of our distribution expansion in international markets as well as an increased focus on key markets that contribute to a significant part of our international revenues. Further, we had an increase in volume of products sold by 3.5% to 97,780 MT in Fiscal 2025 from 94,473 MT in Fiscal 2024.
The following table sets forth the contribution by product category to our revenue from sale of products for the years indicated:
Particulars |
Fiscal 2025 |
Fiscal 2024 |
||
| (Rs. million) | % of sale of products | (Rs. million) | % of sale of products | |
Spices |
15,712.5 | 66.6 | 15,912.9 | 68.5 |
Convenience Foods |
7,870.7 | 33.4 | 7,311.0 | 31.5 |
Total |
23,583.2 | 100.0 | 23,223.9 | 100.0 |
Sale of products in the Spices category decreased by 1.3% in Fiscal 2025, primarily due to the price reductions linked to lower raw material costs, while sales in the Convenience Foods category increased by 7.6%, in line with the increased demand for convenience food products.
(b) Other operating revenue: Other operating revenue increased by 8.2% to Rs.363.9 million from Rs.336.2 million, primarily on account of receipt of commission on consignment sales of Rs.25.4 million in Orkla IMEA, our subsidiary.
Other income. Other income increased by 89.3% to Rs.605.3 million in Fiscal 2025 from ^319.8 million in Fiscal 2024 primarily due to an increase in interest income from bank deposits to Rs.135.8 million from Rs.83.6 million driven by an increase in average surplus funds invested in bank term deposits and an increase in profit on sale of investments in units of mutual funds to Rs.300.4 million from Rs.104.8 million.
Expenses. Total expenses decreased by 0.8% to Rs.20,661.5 million in Fiscal 2025 from Rs.20,833.7 million in Fiscal 2024 primarily due to a decrease in cost of raw materials and packing materials consumed, consisting of raw ingredients we use to make our products and the materials we consume in packing our products.
Cost of raw materials and packing materials consumed. Cost of raw materials and packing materials consumed decreased by 10.4% to ^11,741.3 million in Fiscal 2025 from Rs.13,100.5 million in Fiscal 2024, primarily due to a reduction in the cost of key raw materials such as chilli, other spices and skimmed milk powder which led to a decline in the cost of raw materials consumed. An increase in the outsourcing of manufacturing to third party contract manufacturers of certain products in the spices category, such as chilli and turmeric, also contributed to lower cost of raw materials consumed in Fiscal 2025.
Purchase of stock-in-trade. Purchase of stock-in-trade increased by 111.6% to Rs.1,439.7 million in Fiscal 2025 from Rs.680.5 million in Fiscal 2024, primarily due to an increase in the outsourcing of manufacturing to third party contract manufacturers of certain products in the spices category, such as chilli and turmeric.
(Increase)/decrease in inventories of finished goods, work-in-progress and stock-in-trade. (Increase)/decrease in inventories of finished goods, work-in-progress and stock-in-trade increased by 119.1% to Rs.27.4 million in Fiscal 2025 from Rs.(143.6) million in Fiscal 2024, primarily due to a decrease in closing stock in Fiscal 2025.
Employee benefits expense. Our employee benefits expense increased by 6.0% to Rs.2,461.9 million in Fiscal 2025 from Rs.2,323.5 million in Fiscal 2024 primarily on account of an increase in salaries, wages and bonus, which increased by 7.1% to Rs.2,109.0 million in Fiscal 2025 from Rs.1,970.0 million in Fiscal 2024; this was primarily due to annual salary increases and severance costs paid to employees following the closure of two of our factories in Theni and Pune amounting to Rs.60.1 million.
Finance costs. Our finance costs decreased by 1.4% to Rs.65.5 million in Fiscal 2025 from Rs.66.4 million in Fiscal 2024. This was primarily due to a decrease in interest expense on lease liabilities to Rs.54.4 million in Fiscal 2025 from Rs.55.6 million in Fiscal 2024.
Depreciation and amortisation expense. Depreciation and amortisation decreased by 0.6% to Rs.617.3 million in Fiscal 2025 from Rs.621.2 million in Fiscal 2024.
Other expenses.
Our other expenses increased by 2.9% to Rs.4,308.4 million in Fiscal 2025 from Rs.4,185.2 million in Fiscal 2024 primarily due to increases in the following expenses:
• Advertising and sales promotion, which increased by 6.5% to Rs.1,424.5 million in Fiscal 2025 from Rs.1,338.2 million in Fiscal 2024, primarily on account of increased spending in the international markets and higher spending on the modern trade and e-commerce and quick commerce channels.
• Manpower supply, which increased by 20.9% to Rs.569.3 million in Fiscal 2025 from Rs.471.0 million in Fiscal 2024, primarily on account of off-rolling of certain sales and manufacturing personnel and additional manpower deployed in certain plants to cater to increased volumes.
• Freight andforwarding charges, which increased by 10.9% to Rs.527.5 million in Fiscal 2025 from Rs.475.7 million in Fiscal 2024, primarily due to higher shipping freight led by higher sales in export markets.
Exceptional items (net). In Fiscal 2025, we had exceptional items (net) of Rs.336.4 million. The exceptional items related to a compensation received from the erstwhile promoters of ECPL, for an insurance claim related to a fire, which was recognized as income in Fiscal 2025. Accordingly, we wrote off the insurance receivable that had previously been recognised from the insurance company. Additionally, as part of the settlement of tax litigations per the share purchase agreement in relation to the acquisition of ECPL, we refunded amounts to the erstwhile promoters of ECPL after favourable tax rulings and set aside a provision for other ongoing cases.
Restated profit before tax. For the reasons discussed above, our restated profit before tax increased by 15.7% to Rs.3,550.5 million in Fiscal 2025 compared to Rs.3,068.3 million in Fiscal 2024.
Total tax expenses. Our total tax expense was Rs.993.6 million in Fiscal 2025 compared to Rs.805.0 million in Fiscal 2024.
Restated profit for the year. For the reasons discussed above, our restated profit for the year increased by 13.0% to Rs.2,556.9 million in Fiscal 2025 compared to Rs.2,263.3 million in Fiscal 2024.
Fiscal 2024 compared to Fiscal 2023
Total Income. Our total income increased by 8.5% to Rs.23,879.9 million in Fiscal 2024 from Rs.22,014.4 million in Fiscal 2023, primarily due to an increase in our revenue from operations and other income.
Revenue from operations. Our total revenue from operations increased by 8.4% to Rs.23,560.1 million in Fiscal 2024 from Rs.21,724.8 million in Fiscal 2023 primarily due to the reasons indicated below.
(a) Sale of products: Sale of products increased by 8.6% to Rs.23,223.9 million in Fiscal 2024 from Rs.21,377.3 million in Fiscal 2023 driven by (i) an increase in revenues from sale of finished goods by 8.4% to Rs.22,132.6 million in Fiscal 2024 from Rs.20,411.3 million, consistent with the overall growth in sales of our products; and (ii) an increase in revenues from stock-in-trade by 13.0% to Rs.1,091.3 million in Fiscal 2024 from Rs.966.0 million in Fiscal 2023 due to increased sales of certain products which were outsourced to contract manufacturers including products such as asafoetida and vermicelli.
Further, our revenue from customers within India increased by 6.3% to Rs.18,792.8 million in Fiscal 2024 from Rs.17, 677.2 million in Fiscal 2023. Our revenue from customers outside India, increased by 19.8% to Rs.4,431.1 million in Fiscal 2024 from Rs.3,700.1 million in Fiscal 2023. This increase was attributable to the expansion in our distribution network as well as our ability to partially pass on price increases on account of inflation of our raw materials, to consumers.
The following table sets forth the contribution by product category to our revenue from operations for the years indicated:
Particulars |
Fiscal 2024 |
Fiscal 2023 |
||
| (Rs. million) | % of sale of products | (Rs. million) | % of sale of products | |
Spices |
15,912.9 | 68.5 | 14,388.1 | 67.3 |
Convenience Foods |
7,311.0 | 31.5 | 6,989.2 | 32.7 |
Total |
23,223.9 | 100.0 | 21,377.3 | 100.0 |
Additionally, the revenue from the sale of products from the Spices category increased by 10.6% in Fiscal 2024, while revenue from the sale of products from the Convenience Foods category increased by 4.6%. Further, we had an increase in volume of products sold by 1.5% to 94,473 MT in Fiscal 2024 from 93,108 MT in Fiscal 2023.
(b) Other operating revenue decreased by 3.3% to Rs.336.2 million in Fiscal 2024 from Rs.347.5 million in Fiscal 2023 primarily due to lower production linked incentives in Fiscal 2024. In Fiscal 2023, our Company recorded two years of PLI incentives (for Fiscal 2022 and Fiscal 2023), since the requisite approvals were received in Fiscal 2023.
Other income. Other income increased by 10.4% to ^319.8 million in Fiscal 2024 from Rs.289.6 million in Fiscal 2023 primarily due to an increase in interest income from bank deposits to Rs.83.6 million in Fiscal 2024 from Rs.4.4 million in Fiscal 2023 by an increase in average surplus funds invested in bank term deposits, partially offset by decline in profit on sale of investments in units of mutual funds in Fiscal 2024 to Rs.104.8 million from Rs.132.5 million in Fiscal 2023.
Expenses. Total expenses increased by 7.2% to Rs.20,833.7 million in Fiscal 2024 from Rs.19,437.2 million in Fiscal 2023 primarily due to an increase in cost of raw materials and packing materials consumed, for the reasons set out below.
Cost of raw materials and packing materials consumed. Cost of raw materials and packing materials consumed increased by 9.7% to Rs.13,100.5 million in Fiscal 2024 from ^ 11,940.1 million in Fiscal 2023, primarily due to inflation in prices of raw materials such as chilli, cumin, skimmed milk powder among others.
Purchase of stock-in-trade. Purchase of stock-in-trade increased by 14.8% to Rs.680.5 million in Fiscal 2024 from Rs.592.8 million in Fiscal 2023, consistent with the growth in sales of stock-in-trade.
(Increase)/decrease in inventories of finished goods, work-in-progress and stock-in-trade. (Increase)/decrease in inventories of finished goods, work-in-progress and stock-in-trade decreased by 198.9% to Rs.(143.6) million in Fiscal 2024 from Rs.145.2 million in Fiscal 2023, primarily due an increase in closing stock of inventories (specifically work in progress and finished goods) in Fiscal 2024 compared with a reduction in closing stock (specifically finished goods) when compared to opening stock in Fiscal 2023.
Employee benefits expense. Our employee benefits expense increased by 3.7% to Rs.2,323.5 million in Fiscal 2024 from Rs.2,239.6 million in Fiscal 2023 primarily on account of an increase in salaries, wages and bonus, which increased by 3.2% to Rs.1,970.0 million in Fiscal 2024 from Rs.1,908.9 million in Fiscal 2023. This increase was primarily on account of annual salary increases.
Finance costs. Our finance costs decreased by 75.5% to Rs.66.4 million in Fiscal 2024 from Rs.270.8 million in Fiscal 2023. This was primarily due to the decrease in finance cost on account of unwinding of discount on forward commitment liability to nil from Rs.169.6 million in Fiscal 2023, with respect to a forward commitment to the promoters of ECPL, in the event of non-completion of the proposed merger of ECPL with our Company. Further to the merger approval received from the NCLT on 24 August 2023, liability with the promoters of ECPL was settled.
Depreciation and amortisation expense. Depreciation and amortisation increased by 12.1% to Rs.621.2 million in Fiscal 2024 from Rs.554.1 million in Fiscal 2023 primarily due to an increase of depreciation of property, plant and equipment, on account of investments made in plant and machinery under the Production Linked Incentive Scheme.
Other expenses.
Our other expenses increased by 13.3% to Rs.4,185.2 million in Fiscal 2024 from Rs.3,694.6 million in Fiscal 2023 primarily due to increases in the following expenses:
• Legal and professional fees, which increased by 22.0% to Rs.343.1 million in Fiscal 2024 from Rs.281.2 million in Fiscal 2023, primarily on account of certain professional fees incurred with respect to the merger of ECPL with the Company.
• Advertising and promotion, which increased by 15.6% to Rs.1,338.2 million in Fiscal 2024 from Rs.1,157.5 million in Fiscal 2023, primarily on account of the centenary celebrations of MTR and higher spending in the international markets.
• Manpower supply, which increased by 103.9% to Rs.471.0 million in Fiscal 2024 from Rs.231.0 million in Fiscal 2023, primarily on account of off rolling of some sales representatives and manufacturing personnel.
Restated Profit before tax. For the reasons discussed above, our restated profit before tax increased by 19.4% to Rs.3,068.3 million in Fiscal 2024 compared to Rs.2,569.1 million in Fiscal 2023.
Total tax expenses. Our total tax expense was Rs.805.0 million in Fiscal 2024. In Fiscal 2023 on receiving the approval for the merger of ECPL with the Company, the Company took into account certain impacts from depreciation on intangible assets which resulted in deferred tax credit of Rs. 1,151.1 million and reversal of current tax provisions of Rs.383.6 million pertaining to Fiscal 2022. Consequently, the tax expense for Fiscal 2023 was a reversal of Rs.822.2 million.
Restated Profit for the year. For the reasons discussed above, our restated profit for the year decreased by 33.3% to Rs.2,263.3 million in Fiscal 2024 compared to ^3,391.3 million in Fiscal 2023.
Liquidity and Capital Resources
Historically, our primary liquidity requirements have been to finance our capital expenditure and working capital needs for our operations. We have met these requirements primarily through cash flows from operations. As of March 31, 2025, we had Rs.812.8 million in cash and cash equivalents and Rs.1,094.3 million in other bank balances other than cash and cash equivalents. We believe that, after taking into account the expected cash to be generated from operations and our borrowings, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure and working capital for the next 12 months.
Cash Flows
The following table sets forth our cash flows for the years indicated:
Particulars |
Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| (Rs. million) | |||
Net cash flow from operating activities |
3,916.7 | 2,963.8 | 1,904.2 |
Net cash flow from/ (used in) investing activities |
2,629.4 | (2,365.3) | (1,650.7) |
Net cash flow used in financing activities |
(6,129.1) | (448.8) | (151.4) |
Net increase in cash and cash equivalents |
417.0 | 149.7 | 102.1 |
Cash and cash equivalents at the end of the year |
812.8 | 395.8 | 246.1 |
Operating Activities
Net cash flow from operating activities was Rs.3,916.7 million in Fiscal 2025. Our restated profit before tax was Rs.3,550.5 million in Fiscal 2025, which was primarily adjusted for depreciation of property, plant and equipment of Rs.410.7 million, amortisation of intangible assets of Rs.124.2 million, depreciation on right-of-use assets of Rs.82.4 million, among others resulting in an operating profit before working capital adjustments of Rs.4,040.1 million. Further, in Fiscal 2025, working capital adjustments were made to arrive at the net cash flow from operating activities, which primarily included an increase in trade payables of Rs.395.2 million and increase in financial liabilities and other liabilities of Rs.726.3 million. Cash generated from operations amounted to Rs.4,946.0 million in Fiscal 2025. After the income taxes paid (net of refunds) of Rs.1,029.3 million, the net cash flow from operating activities was Rs.3,916.7 million in Fiscal 2025.
Net cash flow from operating activities was Rs.2,963.8 million in Fiscal 2024. Our restated profit before tax was Rs.3,068.3 million in Fiscal 2024, which was primarily adjusted for depreciation of property, plant and equipment of Rs.422.5 million, amortisation of intangible assets of ^114.5 million, and depreciation on right-of-use assets of Rs.84.2 million, among others resulting in an operating profit before working capital adjustments of Rs.3,477.9 million. Further, in Fiscal 2024, working capital adjustments were made to arrive at the net cash flow from operating activities, which primarily included an increase in trade payables of Rs.498.3 million and a decrease in inventories of Rs.531.7 million. Cash generated from operations amounted to Rs.3,775.5 million in Fiscal 2024. After income tax paid (net of refund) of ^811.7 million, the net cash flow from operating activities was Rs.2,963.8 million, in Fiscal 2024.
Net cash flow from operating activities was Rs.1,904.2 million in Fiscal 2023. Our restated profit before tax was Rs.2,569.1 million in Fiscal 2023, which was primarily adjusted for depreciation of property, plant and equipment of Rs.371.0 million, amortisation of intangible assets of Rs.103.7 million, and interest expense - others of Rs.204.3 million, among others resulting in an operating profit before working capital adjustments of Rs.3,225.1 million. Further, in Fiscal 2023, working capital adjustments were made to arrive at the net cash flow from operating activities, which primarily included an increase in inventories of Rs.399.6 million and an increase in financial liabilities and other liabilities of Rs.744.5 million. Cash generated from operations amounted to Rs.2,657.1 million in Fiscal 2023. After the income taxes paid (net of refunds) of Rs.752.9 million net cash flow from operating activities was Rs.1,904.2 million in Fiscal 2023.
Investing Activities
Net cash flow from investing activities was Rs.2,629.4 million in Fiscal 2025, primarily on account of proceeds from sale of units of mutual funds of Rs.14,452.0 million, which was offset by purchase of units of mutual funds of Rs.12,615.2 million, and purchase of property, plant and equipment and intangible assets (including capital work in progress and capital advances) of Rs.208.1 million.
Net cash flow used in investing activities was Rs.2,365.3 million in Fiscal 2024, primarily on account of purchase of units of mutual funds of Rs.7,659.9 million, which was offset by proceeds from sale of units of mutual funds of Rs.7,186.6 million, and purchase of property, plant and equipment and intangible assets (including capital work in progress and capital advances) of Rs.391.2 million.
Net cash flow used in investing activities was Rs.1,650.7 million in Fiscal 2023, primarily on account of purchase of units of mutual funds of Rs.6,135.4 million and purchase of property, plant and equipment and intangible assets (including capital work in progress and capital advances) of Rs.793.2 million, respectively, which was offset by proceeds from sale of units of mutual funds of Rs.5,781.1 million.
Financing Activities
Net cash flow used in financing activities was Rs.6,129.1 million in Fiscal 2025 on account of dividend paid of Rs.6,000.1 million and payment of principal portion of lease liabilities of Rs.74.6 million.
Net cash flow used in financing activities was Rs.448.8 million in Fiscal 2024 primarily on account of repayment of short-term borrowings of Rs.310.0 million and payment of principal portion of lease liabilities of Rs.70.6 million.
Net cash flow used in financing activities was Rs.151.4 million in Fiscal 2023 on account of repayment of shortterm borrowings of Rs.250.0 million and payment of principal portion of lease liabilities of Rs.60.2 million. This was partially offset by proceeds from short-term borrowings of Rs.310.0 million.
Capital Expenditures
Our capital expenditures primarily comprised expenditures relating to routine capital expenditure. The following table sets forth details of the purchase of property, plant and equipment and intangible assets (including capital work-in progress and capital advances) for the years indicated:
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| (Rs. million) | |||
Purchase of property, plant and equipment and intangible assets (including capital work in progress and capital advances) |
208.1 | 391.2 | 793.2 |
Indebtedness
As of March 31, 2025, we had no borrowings.
Contractual Obligations and Contingent Liabilities
Contractual Obligations
We have continuing payment obligations under trade payable, lease liabilities and other financial liabilities. The following table sets forth our contractual obligations as of March 31, 2025:
| Less than one year | 1-5 years | More than five years | Total | |
(Rs. million) |
||||
Contractual maturities of lease liabilities on undiscounted basis |
129.0 | 372.3 | 349.7 | 851.0 |
Trade payables |
2,698.3 | - |
- |
2,698.3 |
Other financial liabilities |
1,662.5 | 140.2 | - | 1,802.7 |
Total |
4,489.8 | 512.5 | 349.7 | 5,352.0 |
Contingent Liabilities
Our contingent liabilities (as per Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets) derived from our Restated Consolidated Financial Information as at the dates indicated, were as follows:
Particulars |
As at March 31, | ||
| 2025 | 2024 | 2023 | |
| (Rs. million) | |||
Litigations |
|||
Indirect taxation |
1,243.4 | 770.0 | 614.5 |
Other litigations |
26.0 | 26.0 | - |
(i) In the prior years, we had received claims from the Value Added Tax (VAT) authorities for payment of higher VAT for certain products. Accordingly, as a matter of prudence, we had made a pro-vision amounting to T 114.2 million in our books of account towards such differential taxes. As at March 31, 2025, March 31, 2024 and March 31, 2023, we carry a pro-vision of T114.2 million in this regard. In the year endedMarch 31, 2013, the Honourable High Court of Karnataka had adjudicated the matter in our favour. The VAT authorities have filed a Special Leave Petition (SLP) in the Supreme Court which has been admitted by the Supreme Court. Accordingly, management continues to carry the provision as a matter ofprudence pending final adjudication ofthe matter of law before the Supreme Court.
(ii) We have ongoing litigation under service tax amounting to T81.6 million (March 31, 2024; T84.3 million, March 31, 2023: T84.3 million). In the prior years, we had received demand order under section 73(2), of Finance Act 1994from the Principal Commissioner of Central Tax and Central Excise. The dispute mainly relates to the applicability of service tax on amounts reimbursed by us to our branch office located outside India for the period from April 2010 to June 2017. We have filed an appeal with the Central Excise and Service Tax Appellate Tribunal (CESTAT) and the management, including our tax advisors, believe that our position will likely be upheld in the forums where these are contested.
(iii) We have ongoing disputes with Sales Tax/VAT authorities amounting to T 104.2 million (March 31, 2024: T118.8 million, March 31, 2023: T443.1 million). The outstanding disputes mainly include disputes on account of levy ofpurchase tax, denial of concessional rate oftax etc. During the year, we settled the dispute amounting to T 13.2 million based on the final assessment order and received favourable order in a case amounting to 1.4 million. For the pending matters, we are contesting the demands before the appellate authorities and our management, including our tax advisors, believe that its position will likely be upheld in the forums where these are contested.
(iv) We have ongoing litigations under the Goods and Services Tax (GST) law amounting to T996.3 million (March 31, 2024: T498.6 million, March 31, 2023: T6.4 million). The disputes mainly involve payment of RCM on import of services, availment of Input Tax Credit (ITC) on common services, ITC availed in excess of amounts reflected in GSTR-2A, Input availed on blocked credits etc. We are contesting the demands before the appellate authorities and our management, including our tax advisors, believe that our position will likely be upheld in the forums where these are contested.
(v) On May 6, 2019, we received a show cause notice (SCN) from the Directorate General of Goods and Service Tax Intelligence, Surat zonal unit, for the financial period April 01, 2014 to June 30, 2017 whereby it has been alleged that ready to cook spice mixes (except sambar mix, missal rasa mix and pav bhaji mix ) should be classified as mixed condiments and mixed seasoning and chargeable to excise duty claiming T59.2 million plus interest and penalty. Further benefits of SSI exemption notification was denied to the Group on clearance of sambar mix, missal rasa mix and pav bhaji mix during the above period. We have filed a response to the SCN rejecting all the charges and has submitted that the aforesaid SCN should be quashed. We are confident that no liability will arise on us and we have strong defence on the matter. No adjustment has been made in the consolidated financial statements.
(vi) Others indirect tax matters of 2.1 million (March 31, 2024: 9.1 million) relate to ongoing excise duty cases relating to concessional rate of tax availed by us in the manufacture and sale of certain products. During the current year, in the matter of one case relating to Ready-to-eat food products classification which is pending before the Honourable Supreme Court, we have provided for the demand amounting to 7.0 million as a matter of prudence. For the pending matter, we are contesting the demands before the appellate authorities and our management, including our tax advisors, believe that our position will likely be upheld in the forums where these are contested.
(vii) Other litigations includes amount payable to workmen terminated by us in prior years on account of professional misconduct. The workmen have filed a case in the Labour Court and we have filed an appeal. We are contesting the demand and our management, including our legal advisors, believe that our position will likely be upheld in the forums where these are contested.
(viii) We have received multiple notices alleging non-compliance with food safety regulations under the Food Safety and Standards Authority of India (FSSAl) Act, with proceedings initiated before relevant statutory forums. The allegations primarily pertain to the presence of pesticide residues exceeding permissible limits in certain batches of finished goods. We are contesting the aforesaid matters at various levels of adjudication. Our management, including our legal advisors, believe that our position will likely be upheld in the forums where these are contested. Accordingly, our management has assessed that these cases do not have a material impact on the consolidated financial statements.
Non-GAAP Measures
Certain measures included in this Draft Red Herring Prospectus, for instance EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, EBIT, Adjusted EBIT, Adjusted EBIT Margin, PAT Margin, Return on Capital Employed, Return on Net Worth, Net Asset Value per Equity Share and Total Debt and other non-GAAP measures, (together, "Non-GAAP Measures"), presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, such Non-GAAP Measures are not standardised terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance. Also see "Risk Factors - 50. We have in this Draft Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to our operations and financial performance that may vary from any standard methodology that is applicable across the industry in which we operate." on page 63.
For a reconciliation of the non-GAAP financial measures, see "Other Financial Information - Reconciliation of Non-GAAP measures" on page 322.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that we believe to have or are reasonably likely to have a current or future material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Related Party Transactions
We enter into various transactions with related parties in the ordinary course of business. These transactions principally include purchases of stock-in-trade, reimbursement of expenses, share based payments, receipt of services, sale of goods, interest on loans and management services provided, among other. For further information relating to our related party transactions, see "Other Financial Information - Related Party Transactions" on page 323.
Changes in Accounting Policies in the last three Fiscals
There have been no changes in the accounting policies of our Company during the last three financial years.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk, credit risk and liquidity risk. Our senior management oversees the management of these risks. We ensure that our financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with our policies and risk objectives. There has been no change to our exposure to the financial risks or the manner in which it manages and measures the risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
Credit Risk
Credit risk is the risk of financial loss to us if a customer or counterparty to a financial instrument will not meet its contractual obligations under a financial instrument or customer contract, leading to a financial loss. We are exposed to credit risk from our operating activities (primarily trade receivables) and from our investing/financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
Customer credit risk is managed subject to our established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a credit evaluation before entering into an arrangement. Outstanding customer receivables are regularly monitored.
We follow a ‘simplified approach for recognition of impairment loss allowance on trade receivable. Under the simplified approach, we do not track changes in credit risk. Rather, we recognize impairment loss allowance based on lifetime ECLs at each reporting date, right from initial recognition.
We use a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision rates are based on days past due for groupings of customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating, and coverage by letters of credit). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. We do not hold collateral as security. We consider receivables from a company within our group to be fully recoverable and hence not subject to risk of impairment.
We have evaluated credit risk for customers. Any customer related specific information has been factored over and above the probability of default. We use provision matrix to determine impairment loss allowance on the portfolio of receivables. The provision matrix takes into account historical credit loss experience over the expected life of the trade receivables and is adjusted for forward-looking estimates/ information.
Liquidity Risk
Liquidity risk is the risk that we will encounter difficulty in meeting our obligations associated with our financial liabilities that are settled by delivering cash or other financial assets. Our approach to managing liquidity is to ensure, as far as possible, that we will have sufficient liquidity to meet our liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation.
Market Risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect our income or the value of our holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and borrowings.
Currency Risk
We are exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and our functional currency (INR). Our exposure to the risk of changes in foreign exchange rates relates primarily to the foreign currency import of service, exports of finished goods and borrowing in foreign currency. The currency in which these transactions are primarily denominated as USD, GBP, NOK, among others.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate because of changes in market interest rates. We do not have any long term debt obligations with floating interest rates, hence, are not exposed to any significant interest rate risk.
Price risk
We invest in mutual fund schemes of leading fund houses. Such investments are susceptible to market price risks. However, given the short tenure of the underlying portfolio of the mutual fund schemes in which we have invested, such price risk is not significant.
Material Accounting Policies
Basis of consolidation
a. Subsidiaries
The Restated Consolidated Financial Information comprise the financial statements of us and our associate and joint venture. Control is achieved when we are exposed, or has rights, to variable returns from our involvement with the investee and has the ability to affect those returns through our power over the investee. Specifically, we control an investee if and only if we have:
• Power over the investee (i.e., existing rights that give us the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from our involvement with the investee
• The ability to use our power over the investee to affect our returns.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption, and when we have less than a majority of the voting or similar rights of an investee, we consider all relevant facts and circumstances in assessing whether we have power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• Our voting rights and potential voting rights
• The size of our holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders.
We re-assess whether or not we control an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when we obtain control over the subsidiary and ceases when we lose control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the Restated Consolidated Financial Information from the date we gain control until the date we cease to control the subsidiary.
Restated Consolidated Financial Information are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of us uses accounting policies other than those adopted in the Restated Consolidated Financial Information for like transactions and events in similar circumstances, appropriate adjustments are made to that members financial statements in preparing the Restated Consolidated Financial Information to ensure conformity with our accounting policies.
The financial statements of all entities used for the purpose of consolidation are drawn up to same reporting date as that of the parent company, i.e., year ended on 31 March. When the end of the reporting period of the parent is different from that of a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial information as of the same date as the financial statements of the parent to enable the parent to consolidate the financial information of the subsidiary, unless it is impracticable to do so.
Consolidation procedure:
a. Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of our subsidiaries.
b. Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill.
c. Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between our entities (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the Restated Consolidated Financial Information. Ind
AS 12 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions.
Profit or loss, and each component of other comprehensive income (OCI), are attributed to the equity holders of the parent of us and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with our accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of us are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If we lose control over a subsidiary, we:
• Derecognise the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost
• Derecognise the carrying amount of any non-controlling interests
• Derecognise the cumulative translation differences recorded in equity
• Recognise the fair value of the consideration received
• Recognise the fair value of any investment retained
• Recognise any surplus or deficit in profit or loss
• Reclassify the parents share of components previously recognised in OCI to profit or loss or transferred directly to retained earnings, if required by other Ind ASs as would be required if we had directly disposed of the related assets or liabilities.
b. Associate and joint venture
An associate is an entity over which we have significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The considerations made in determining whether significant influence or joint control are similar to those necessary to determine control over the subsidiaries.
Our investments in our associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in our share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment individually.
The Restated Summary Statement of profit and loss reflects our share of the results of operations of the associate and joint venture. Any change in OCI of those investees is presented as part of our OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, we recognise our share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between us and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
If an entitys share of losses of an associate or a joint venture equals or exceeds its interest in the associate or joint venture (which includes any long-term interest that, in substance, forms part of our net investment in the associate or joint venture), the entity discontinues recognising its share of further losses. Additional losses are recognised only to the extent that we have incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. If the associate or joint venture subsequently reports profits, the entity resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
The aggregate of our share of profit or loss of an associate and a joint venture is shown on the face of the restated summary statement of profit and loss outside operating profit.
The financial statements of the associate or joint venture are prepared for the same reporting period as us. When necessary, adjustments are made to bring the accounting policies in line with those of us.
After application of the equity method, we determine whether it is necessary to recognise an impairment loss on its investment in our associate or joint venture. At each reporting date, we determine whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, we calculate the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and then recognises the loss as ‘ Share of profit of an associate and a joint venture in the restated summary statement of profit and loss.
Upon loss of significant influence over the associate or joint control over the joint venture, we measure and recognise any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.
Summary of material accounting policies
(a) Current versus non-current classification
We present assets and liabilities in the Restated Summary Statement of Assets and Liabilities based on current/non-current classification. An asset is treated as current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within 12 months after the reporting period
• Cash and cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within 12 months after the reporting period
• There is no conditional right to defer settlement of the liability for at least 12 months after the reporting period.
All other liabilities as non-current.
The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. We have identified 12 months as its operating cycle.
(b) Foreign currency translation
The Restated Consolidated Financial Information are presented in Indian Rupees Millions, which is also the parent companys functional currency. For each entity, we determine the functional currency and items included in the financial statements of each entity that are measured using that functional currency. We use the direct method of
consolidation and, on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.
Transactions and balances
Transactions in foreign currencies are initially recorded by our entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. However, for practical reasons, we use average rate if the average approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of the following:
• Exchange differences arising on monetary items that forms part of a reporting entitys net investment in a foreign operation are recognised in profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, as appropriate. In the financial statements that include the foreign operation and the reporting entity (e.g., consolidated financial statements when the foreign operation is a subsidiary), such exchange differences are recognised initially in OCI. These exchange differences are reclassified from equity to profit or loss on disposal of the net investment.
• Exchange differences arising on monetary items that are designated as part of the hedge of our net investment of a foreign operation. These are recognised in OCI until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss.
• Tax charges and credits attributable to exchange differences on those monetary items are also recorded in OCI.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI, or profit or loss are also recognised in OCI or profit or loss, respectively).
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which we initially recognise the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, we determine the transaction date for each payment or receipt of advance consideration.
Our companies
On consolidation, the assets and liabilities of foreign operations are translated into Indian Rupees at the rate of exchange prevailing at the reporting date and their statements of profit and loss are translated at exchange rates prevailing at the dates of the transactions. For practical reasons, the group uses an average rate to translate income and expense items, if the average rate approximates the exchange rates at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit and loss.
(c) Fair value measurement
We measure financial instruments such as derivative instruments and investments (other than investment in subsidiaries and associates) at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by us.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
We use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Restated Consolidated Financial Information are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) Level 1 - inputs are quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date
(ii) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
(iii) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the Restated Consolidated Financial Information on a recurring basis, we determine whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(d) Revenue recognition
Revenue from contract with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We have generally concluded that we are the principal in our revenue arrangements because we typically control the goods or services before transferring them to the customer.
To recognise revenues, we apply the following five-step approach:
• Identify the contract with a customer;
• Identify the performance obligation in the contract;
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contract; and
• Recognise revenues when a performance obligation is satisfied.
(i) Sale of goods
Revenue is measured at the transaction price that we receive or expect to receive as consideration for goods supplied and services rendered, net of returns and estimates of variable consideration such as discounts to customers.
We consider whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated, if any. In determining the transaction price for the sale of goods, we consider the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any).
Goods and Services Tax (GST) is not received by us in our own account. Rather, it is collected on value added to commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
• Variable consideration:
If the consideration in a contract includes a variable amount, we estimate the amount of consideration to which we will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. The contracts for the sale of goods provide the customers with a right to return, cash discounts, and volume rebates/trade incentives. The rights of return, cash discount and volume rebates/trade incentives give rise to variable consideration.
• Volume rebates
We give volume rebates/trade incentives to customers once the quantity of products purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. We apply the most likely amount method or the expected value method to estimate the variable consideration in the contract. The selected method that best predicts the amount of variable consideration is primarily driven by the number of volume thresholds contained in the contract. The most likely amount is used for those contracts with a single volume threshold, while the expected value method is used for those with more than one volume threshold. We then apply the requirements on constraining estimates in order to determine the amount of variable consideration that can be included in the transaction price and recognised as revenue. A refund liability for the expected future rebates (i.e., the amount not included in the transaction price).
(ii) Contract balances Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If we perform by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration.
Trade receivables
A receivable represents our right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section 2.3(o) Financial instruments - initial recognition and subsequent measurement.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which we have received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before we transfer goods or services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when we perform under the contract.
(iii) Refund liabilities
A refund liability is recognised for the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount we ultimately expect it will have to return to the customer. We update our estimate of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period. Refer to above accounting policy on variable consideration.
(iv) Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the Effective Interest Rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating EIR, we estimate the expected cash flows by considering all the contractual terms of the financial instrument but do not consider the expected credit losses. Interest income is included in other income in the Restated summary statement of profit and loss.
(v) Dividend Income
Revenue is recognised when our right to receive the payment is established, which is generally when shareholders approve the dividend.
(vi) Export incentives income
Export incentives under various schemes notified by government are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
(vii) Government grant
We may receive government grants that require compliance with certain conditions related to our operating activities or are provided to us by way of financial assistance on the basis of certain qualifying criteria.
Accordingly, government grants:
(a) related to or used for assets, are deducted from the carrying amount of the asset.
(b) related to incurring specific expenditures are taken to the Statement of Profit and Loss on the same basis
and in the same periods as the expenditures are incurred.
(c) by way of financial assistance on the basis of certain qualifying criteria are recognised as they become receivable.
Government grants are recognised when there is reasonable assurance that the grant will be received upon us complying with the conditions attached to the grant. Income from such grants is recognised on a systematic basis over the periods to which they relate. In the unlikely event that a grant previously recognised is ultimately not received, it is treated as a change in estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss.
(e) Income-tax
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where we operate and generate taxable income.
Current income tax relating to items recognised outside profit or loss is recognised either in other comprehensive income or in equity, in correlation to the underlying transaction. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• In respect of taxable temporary differences associated with the investments in subsidiaries, associates and interests in joint venture, when the timing of the reversal of the temporary differences can be controlled and if it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss.
• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable income will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised either in other comprehensive income or in equity, in correlation to the underlying transaction.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. Acquired deferred tax benefits recognised within the measurement period reduce goodwill related to that acquisition if they result from new information obtained about facts and circumstances existing at the acquisition date.
We offset deferred tax assets and deferred tax liabilities if and only if we have a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
Goods and Services Tax (GST) paid on acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the amount of GST paid, except:
i) When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
ii) When receivables and payables are stated with the amount of tax included.
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
(f) Property, plant and equipment
On transition to Ind AS, we have elected to continue with the carrying value of all our property, plant and equipment recognised as at 1 April 2019 measured as per the Indian GAAP and use that carrying value as deemed cost of property, plant and equipment.
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Capital work in progress is stated at cost, net of accumulated impairment loss, if any. The cost comprises purchase price, taxes, duties, freight and other incidental expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the amount of tax credit availed wherever applicable. When significant parts of plant and equipment are required to be replaced at intervals, we depreciate them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in statement of profit and loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Freehold land is carried at historical cost. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
We identify and determine the cost of each component/part of the asset separately, if the component/part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gains or losses arising from derecognition of the assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
The assets residual values, useful lives and depreciation methods are reviewed and adjusted prospectively if appropriate, at the end of each reporting period.
Depreciation on property, plant and equipment is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management, except in case of leasehold improvements.
Particulars |
Useful life used by the management (in years) |
Plant and machinery |
2-15 |
Office equipment/Computers |
3-6 |
Factory buildings |
30 |
Electrical fittings |
10 |
Furniture and fixtures |
10 |
Vehicles |
4-8 |
Windmills |
22 |
Leasehold improvements are depreciated over the primary period of the lease, or useful life, whichever is lower, on a straight-line basis.
In respect of assets acquired which have been previously used by another party, depreciation is provided over the remaining useful lives of such assets determined within their overall useful lives as stated above.
We, based on technical assessment made by technical expert and management estimate, depreciate certain items of property, plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
(g) Non-current assets held for sale
We classify non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. Actions required to complete the sale/distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification. For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale classification is regarded as met only when the assets are available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets, its sale is highly probable; and it will genuinely be sold, not abandoned. We treat sale of the asset to be highly probable when:
• The appropriate level of management is committed to a plan to sell the asset,
• An active programme to locate a buyer and complete the plan has been initiated (if applicable),
• The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
• The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Property, plant and equipment and intangible are not depreciated, or amortised assets once classified as held for sale. Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
(h) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
A summary of amortisation policies applied to our intangible assets is as below:
Assets |
Useful life (in years) |
Software |
3 years |
Trademarks |
Indefinite |
Distribution network |
4 years |
Recipes |
10 years |
(i) Business combination and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, we elect whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquirees identifiable net assets. Acquisition-related costs are recognised in Restated Consolidated Financial Information of Profit and Loss as incurred.
At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their acquisition date fair values. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition fair values irrespective of the fact that outflow of resources embodying economic benefits is not probable. However, certain assets and liabilities, i.e., deferred tax assets or liabilities, assets or liabilities related to employee benefit arrangements, liabilities or equity instruments related to share-based payment arrangements and assets or disposal groups that are classified as held for sale, acquired or assumed in a business combination are measured as per the applicable Ind AS.
When we acquire a business, we assess the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 Financial Instruments, is measured at fair value with changes in fair value recognised in profit or loss in accordance with Ind AS 109. If the contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS and shall be recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and subsequent its settlement is accounted for within equity.
If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss or OCI, as appropriate.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, we re-assess whether we have correctly identified all of the assets acquired and all of the liabilities assumed and review the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in OCI and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognises the gain directly in equity as capital reserve, without routing the same through OCI.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of our cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. These adjustments are called as measurement period adjustments. The measurement period does not exceed one year from the acquisition date.
(j) Leases
We assess at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Us as a lessee
We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognise lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
We recognise right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, and lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Category of assets |
Estimated useful life |
Building |
2 to 25 years |
If ownership of the leased asset transfers to us at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.
Lease liabilities
At the commencement date of the lease, we recognise lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by us and payments of penalties for terminating the lease, if the lease term reflects our exercising of the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, we use our incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets
We have elected not to recognise right-of-use assets and liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. We recognise the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The standard provides specific transition requirements and practical expedients, which have been applied by us as follows:
• Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application
• Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.
(k) Inventories
Raw materials, packing materials and stores, spares and consumables |
Lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis. Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories. |
Work-in-progress & finished goods including traded goods |
Lower of cost and net realisable value. Cost of Work in progress and finished goods includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of traded goods includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on a weighted average basis. |
Inventories are valued as follows:
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(l) Impairment of non-financial assets
We asses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, we estimate the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
We base our impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of our CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, we extrapolate cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in which the asset is used.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, we estimate the assets or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
(m) Provisions and contingent liabilities
Provisions are recognised when we have 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. When we expect some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax 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
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of us or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. We do not recognise a contingent liability but discloses our existence in the financial statements.
Contingent liabilities recognised in a business combination
A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognised in accordance with the requirements for provisions above or the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the requirements for revenue recognition.
(n) Retirement and other employee benefits Defined contribution plan:
Retirement benefit in the form of provident fund is a defined contribution scheme. We have no obligation, other than the contribution payable to the provident fund. We recognise contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Defined benefit plan:
We operate a defined benefit gratuity plan in India. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
Remeasurements, comprising actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in the statement of profit and loss on the earlier of:
• The date of the plan amendment or curtailment, and
• The date that we recognise related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. We recognise the following changes in the net defined benefit obligation as an employee benefits expense in the statement of profit and loss:
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
• Interest expense and Income.
Leave Encashment/compensated absences:
Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. We measure the expected cost of such absences as the additional amount that we expect to pay as a result of the unused entitlement that has accumulated at the reporting date.
We treat accumulated leave expected to be carried forward beyond 12 months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gain/loss are immediately taken to the statement of profit and loss and are not deferred.
We present the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
(o) Share based payments
Employees of us receive remuneration in the form of share-based payments, whereby employees render services as consideration for cash payments based on equity instruments (equity settled transactions) of the ultimate holding company.
We classify a share-based payment transaction as equity settled when we receive goods or services as consideration for our own equity instruments or receives goods or services but has no obligation to settle the transaction with the supplier.
Further, we classify a share-based payment transaction as cash settled if we acquire the goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or services for amounts that are based on the price of our own equity instruments or that of another group entity.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The cost is recognised together with a corresponding increase in share-based payment reserves in equity or capital contribution from the parent depending on which entity is settling the transaction. The costs are recognised over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and our best estimate of the number of equity instruments that will ultimately vest.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
(p) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets include Investments, Trade Receivables, Advances, Security Deposits, Cash and Cash equivalents. Such assets are initially recognised at fair value or transaction price, as applicable, when we become party to contractual obligations. The transaction price includes transaction costs unless the asset is being valued through Statement of Profit and Loss.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost
• Debt instruments at fair value through other comprehensive income (FVTOCI)
• Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)
• Equity instruments measured at fair value through other comprehensive income (FVTOCI).
Debt instrument at FVTOCI
A ‘debt instrument is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assets contractual cash flows represent solely payments of principal and interest (SPPI).
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, we recognise interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss (P&L). On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instruments at amortised cost
A ‘debt instrument is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
This category is the most relevant to us. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Equity investments
All equity investments other than investment in subsidiaries, associates and joint ventures in scope of Ind AS 109 are measured at fair value Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, we may make an irrevocable election to present in OCI subsequent changes in the fair value. We make such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If we decide to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, we may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from our balance sheet) when:
• The rights to receive cash flows from the asset have expired, or
• We have transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through arrangement; and either (a) we have transferred substantially all the risks and rewards of the asset, or (b) we have neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When we have transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, we continue to recognise the transferred asset to the extent of our continuing involvement. In that case, we also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that we have retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that we could be required to repay.
Impairment of financial assets
We apply the expected credit loss (ECL) model for measurement and recognition of impairment loss on the financial assets measured at amortised cost.
We follow ‘simplified approach for recognition of impairment loss allowance on trade receivables and other receivables. The application of simplified approach does not require us to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, we determine that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) is recognised as income/expense in the statement of profit and loss. This amount is reflected under the heading ‘other expenses in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
• Financial assets measured as at amortised cost, trade and other receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, we do not reduce impairment allowance from the gross carrying amount.
• Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e., as a liability.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, and payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Our financial liabilities include trade and other payables, including payable to employees and borrowings.
Subsequent measurement
All financial liabilities are subsequently measured at amortised cost using the effective interest rate (EIR). The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. EIR is the rate that exactly discounts the estimated future cash payments over the expected life of the financial liability or a shorter period, where appropriate, to the net carrying amount on initial recognition.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Reclassification of financial assets
We determine classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. Our senior management determines change in the business model as a result of external or internal changes which are significant to our operations. Such changes are evident to external parties. A change in the business model occurs when we either begin or cease to perform an activity that is significant to its operations. If we reclassify financial assets, we apply the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. We do not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
The following table shows various reclassification and how they are accounted for:
Original classification |
Revised classification |
Accounting treatment |
Amortised Cost |
FVTPL |
Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in P&L. |
FVTPL |
Amortised Cost |
Fair value at reclassification date becomes its new gross carrying amount. EIR is calculated based on the new gross carrying amount. |
Amortised Cost |
FVTOCI |
Fair value is measured at the reclassification date. Difference between previous amortised cost and fair value is recognised in OCI. No change in EIR due to reclassification. |
FVOCI |
Amortised Cost |
Fair value at reclassification date becomes its new amortised cost carrying amount. However cumulative gain or loss in OCI is adjusted against fair value. Consequently, the asset is measured as if it had always been measured at amortised cost. |
FVTPL |
FVTOCI |
Fair value at reclassification date becomes its new carrying amount. No other adjustment is required. |
FVTOCI |
FVTPL |
Assets continue to be measured at fair value. Cumulative gain or loss previously recognised in OCI is reclassified to P&L at the reclassification date. |
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(q) Derivative financial instruments
We use derivative financial instruments, such as forward currency contracts, to hedge our foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of profit and loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to the statement of profit and loss when the hedge item affects the statement of profit and loss or treated as basis adjustment, if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability.
(r) Segment accounting policies Identification of segments:
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Chief Executive Officer (CEO) is the Chief Operating Decision Maker (CODM) who makes strategic decisions and is responsible for allocating resources and assessing performance of the operating segments.
Inter-segment transfer:
We generally account for inter-segment sales at arms length basis in a manner similar to transactions with third parties.
Segment policies:
We prepare our segment information in conformity with the accounting policies adopted for preparing and presenting the Restated Consolidated Financial Information of us as a whole.
(s) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss attributable to equity holders of parent company (after deducting preference dividends and attributable taxes) 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 or loss for the period attributable to equity shareholders of the parent company and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(t) Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet and for the purpose of the statement of cash flows comprise cash on hand and cash at bank including fixed deposits with original maturity period of three months.
For the purpose of the Restated Consolidated Financial Information of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of our cash management.
(u) Cash dividend
We recognise a liability to pay dividend to equity holders of the parent when the distribution is authorised, and the distribution is no longer at the discretion of us. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
(v) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Unusual or Infrequent Events or Transactions
Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".
Known Trends or Uncertainties
Our business has been subject to, and we expect it to continue to be subject, to significant economic changes. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have had or are expected to have a material adverse impact on income from our continuing operations. For further information regarding trends and uncertainties, please see "- Significant Factors Affecting Our Financial Condition and Results of Operations" on page 325 and "Risk Factors on page 33.
New Products or Business Segments
Except as disclosed in this Draft Red Herring Prospectus, we have not publicly announced any new products or business segments. For more information regarding new products, please see "Our Business" on page 159.
Segment Reporting
We have only one reportable business segment, i.e., sale of products.
Future Relationship between Cost and Income
Except as disclosed in this Draft Red Herring Prospectus, there are no known factors that will have a material adverse impact on our operations and finances. For more information, see "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 33, 159 and 324, respectively.
Seasonality of Business
There is no material seasonal variation in our operations.
Significant Dependence on a Single or Few Customers or Suppliers
We are dependent on certain suppliers for a portion of our raw materials. In Fiscals 2025, 2024 and 2023, our top 10 suppliers accounted for 33.7%, 39.1% and 41.8%, respectively, of our total purchases. For further information, see "Risk Factors - We are dependent on our suppliers (our top ten suppliers contributed to 33.7% of total purchases in Fiscal 2025) for raw materials and packing materials. Any loss of suppliers or interruptions in the timely delivery of supplies could have an adverse impact on our business, financial condition, cash flows and results of operations. " on page 35.
Significant Economic Changes
Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations. See "RiskFactors" and "—Significant Factors Affecting Our Financial Condition and Results of Operations."
Competitive Conditions
We expect competition in our industry from existing and potential competitors to intensify. See "Risk Factors-Competition in the industry in which we operate could result in a reduction in our market share or require us to reduce our price points or incur substantial expenditure on advertising and marketing, all of which could adversely affect our business, financial condition, cash flows and results of operations. " on page 41.
Significant Developments subsequent to March 31, 2025
Except as disclosed elsewhere in this Draft Red Herring Prospectus, no circumstances have arisen since the date of the last financial statements as disclosed in this Draft Red Herring Prospectus which materially or adversely affect or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months.
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