Note 1 : General Information
The Company was incorporated under the Companies Act, 1956 on March 7,
1988 under the name of Gujarat - Godrej Innovative Chemicals Limited.
The Company is engaged in the businesses of manufacture and marketing
of oleo-chemicals, their precursors and derivatives, bulk edible oils,
estate management and investment activities. The business and
undertaking of the erstwhile Godrej Soaps Limited was transferred to
the Company under a Scheme of Amalgamation with effect from April 1,
1994 and the Company''s name was changed to Godrej Soaps Limited.
Subsequently, under a Scheme of Arrangement the Consumer Products
division of the Company was demerged with effect from April 1, 2001
into a separate company, Godrej Consumer Products Limited (GCPL).
The Company''s name was changed to Godrej Industries Limited on April 2,
2001. The Vegetable Oils and Processed Foods Manufacturing business of
Godrej Foods Limited was transferred to the Company with effect from
June 30, 2001. The Foods division (except Wadala factory) was then sold
to Godrej Hershey Limited, on March 31, 2006. Swadeshi Detergents
Limited, 100% subsidiary of the Company, was amalgamated with the
Company effective from April 1, 2013. Wadala Commodities Limited was
amalgamated with the Company effective from April 1, 2014.
2.1 Accounting Convention
The financial statements are prepared under the historical cost
convention, on accrual basis, in accordance with the generally accepted
accounting principles in India, the applicable Accounting Standards as
prescribed under Section 133 of the Companies Act, 2013, read with Rule
7 of the Companies (Accounts) Rules, 2014.
2.2 Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as on the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from the estimates.
2.3 Fixed Assets
Fixed Assets are stated at cost of acquisition or construction, less
accumulated depreciation and impairment, if any. Cost includes expenses
related to acquisition and any directly attributable cost of bringing
the assets to it''s intended working condition and excludes any duties /
taxes recoverable. Subsequent expenditure incurred on existing fixed
assets is expensed out except where such expenditure increases the
future economic benefits from the existing assets.
Borrowing costs that are directly attributable to the acquisition /
construction of the qualifying asset are capitalised as part of the
cost of such asset, upto the date of acquisition / completion of
Fixed assets acquired under finance lease are capitalised at lower of
their fair value and the present value of the minimum lease payments.
2.4 Asset Impairment
The Company reviews the carrying amounts of tangible and intangible
assets for any possible impairment at each balance sheet date. An
impairment loss is recognised when the carrying amount of an asset
exceeds its recoverable amount. Impairment loss, if any, is recognised
in the period in which impairment takes place.
2.5 Operating Leases
Leases of assets under which all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Lease payments under operating leases are recognised as an expense on a
straight line basis over the lease term.
Investments are classified into Current and Non Current investments.
Investments intended to be held for a period less than twelve months or
those maturing within twelve months from the balance sheet date are
classified as ''Current Investments''. Current Investments are stated at
lower of cost and fair value.
Investments other than Current Investments are classified as ''Non
Current Investments''. Non Current Investments are carried at cost of
acquisition which includes all costs directly incurred on the
acquisition of the investment. Provision for diminution, if any, in
the value of each Non Current investments is made to recognize a
decline, other than of a temporary nature. The fair value of Non
Current investment is ascertained with reference to its market value,
the investee''s assets and results and the expected cash flows from the
Inventories are valued at lower of cost and net realisable value. Cost
is computed on weighted average basis and is net of cenvat. Finished
goods and work in progress includes cost of conversion and other costs
incurred in bringing the inventories to their present location and
condition. Finished goods valuation also includes excise duty, wherever
applicable. Provision is made for the cost of obsolescence and other
anticipated losses, wherever considered necessary.
2.8 Provisions and Contingent Liabilities
Provisions are recognised when the Company has a present obligation 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 when a reliable estimate of the amount of the obligation can be
No Provision is recognised for:
(i) Any possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company; or
(ii) Any present obligation that arises from past events but is not
recognised because :
(a) It is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or
(b) A reliable estimate of the amount of obligation cannot be made.
Such obligations are recorded as Contingent Liabilities.
Contingent Assets are not recognised in the financial statements since
this may result in the recognition of income that may never be
2.9 Revenue Recognition
Sales are recognised when goods are supplied and significant risks and
rewards of ownership in the goods are transferred to the buyer. Sales
are recorded net of returns, trade discounts, rebates, sales taxes and
Income from processing operations is recognised on completion of
production / dispatch of the goods, as per the terms of contract.
Dividend income is recognised when the right to receive the same is
Interest income is recognised on a time proportion basis.
Income on assets given on operating lease is recognised on a straight
line basis over the lease term.
2.10 Research and Development Expenditure
Revenue expenditure on Research & Development is charged to the
Statement of Profit and Loss of the year in which it is incurred.
Capital expenditure incurred during the year on Research & Development
is included under additions to fixed assets.
2.11 Borrowing Costs
Borrowing costs that are directly attriPutable to the acquisition of an
asset that necessarily takes a substantial period of time to get ready
for its intended use are capitalised as part of the cost of that asset
till the date it is put to use. Other borrowing costs are recognised as
an expense in the period in which they are incurred.
2.12 Foreign Exchange Transactions
(i) Transactions in foreign currency are recorded at exchange rates
prevailing on the day of the transaction. Monetary assets and
liabilities denominated in foreign currency, remaining unsettled at the
period end are translated at closing rates. The difference in
translation of monetary assets and liabilities and realised gains and
losses on foreign currency transactions are recognised in the Statement
of Profit and Loss.
(ii) Forward exchange contracts other than those entered into to hedge
foreign currency risk of firm commitments or highly probable forecast
transactions are translated at period end exchange rates. Premium or
discount on such forward exchange contracts is amortised as income or
expense over the life of the contract.
(iii) Realised gain or losses on cancellation of forward exchange
contracts are recognised in the Statement of Profit and Loss of the
period in which they are cancelled.
(iv) Exchange differences in respect of other unexpired foreign
currency derivative contracts, which have been entered into to hedge
foreign currency risks are marked to market and losses, if any, are
recognised in the Statement of Profit and Loss.
(v) Exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the year in so far as they relate to the
acquisition of a depreciable capital asset, are added to or deducted
from the cost of the asset and are depreciated over the balance life of
the asset, and in other cases, are accumulated in a Foreign Currency
Monetary Item Translation Difference Account and amortised over the
balance period of such long term asset or liability, by recognising as
income or expense in each such period.
The Company uses forward exchange contracts to hedge it''s foreign
exchange exposures and commodity futures contracts to hedge the
exposure to oil price risks. Gains or losses on settled contracts is
recognised in the Statement of Profit and Loss. Futures contracts not
settled as on the Balance Sheet date are marked to market and losses,
if any, are recognised in the Statement of Profit and Loss, whereas,
the unrealised profit is ignored. Gains or losses on the commodity
futures contracts is recorded in the Statement of Profit and Loss under
cost of materials consumed.
2.14 Employee Benefits
(i) Short-Term Employee Benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, performance incentives, etc., are recognised as an
expense at the undiscounted amount in the Statement of Profit and Loss
of the year in which the employee renders the related service.
The Company has a scheme of Performance Linked Variable Remuneration
(PLVR) which rewards its employees based on either Economic Value Added
(EVA) or Profit Before Tax (PBT). The PLVR amount is related to actual
improvement made in either EVA or PBT over the previous year when
compared with expected improvements.
(ii) Post Employment Benefits
(a) Defined Contribution Plans
Payments made to a defined contribution plan such as Provident Fund and
Family Pension maintained with Regional Provident Fund Office are
charged as an expense in the Statement of Profit and Loss as they fall
(b) Defined Benefit Plans
The Company''s liability towards gratuity to past employees is
determined using the Projected Unit Credit Method which considers each
period of service as giving rise to an additional unit of benefit
entitlement and measures each unit separately to build up the final
obligation. Past services are recognised on a straight line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the Statement of Profit
and Loss as income or expense. Obligation is measured at the present
value of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the Balance Sheet date on
Government Securities where the currency and terms of the Government
Securities are consistent with the currency and estimate terms of the
defined benefit obligations.
Provident Fund Contributions other than those made to the Regional
Provident Fund Office of the Government which are made to the Trust
administered by the Company are considered as Defined Benefit Plans.
The interest rate payable to the members of the Trust shall not be
lower than the statutory rate of interest declared by the Central
Government under the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 and shortfall, if any, shall be made good by the
Pension plan for eligible employees are considered as defined benefit
obligations and are provided for on the basis of an actuarial
valuation, using the Projected Unit Credit Method, as at the date of
the Balance Sheet.
(iii) Other Long-Term Employee Benefits
Long-term Compensated Absences and Long Service Awards are provided for
on the basis of an actuarial valuation, using the Projected Unit Credit
Method, as at the date of the Balance Sheet. Actuarial gains / losses
comprising of experience adjustments and the effects of changes in
actuarial assumptions are immediately recognised in the Statement of
Profit and Loss.
2.15 Depreciation and Amortisation
(i) Leasehold land and Leasehold improvements are amortised equally
over the lease period.
(ii) Depreciation is provided, pro rata to the period of use, based on
the estimated useful life of fixed assets as stipulated by Schedule II
to the Companies Act, 2013, except in the case of Plant and Machinery
where the Company, based on the condition of the plants, regular
maintenance schedule, material of construction and past experience, has
considered useful life of Plant and Machinery as 30 years instead of 20
years useful life as prescribed in Schedule II of the Act.
Intangible assets are amortised on straight line basis as given below :
(i) Trade marks are amortised equally over a period of ten years, (ii)
Computer software is amortised over a period of three years.
2.16 Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year determined in accordance with the provisions of the Income-tax
Deferred tax subject to consideration of prudence, is recognised on
timing differences; being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax asset /
liabilities in respect of timing differences which originate and
reverse during the tax holiday period are not recognised. Deferred tax
assets / liabilities in respect of timing differences that originate
during the tax holiday period but reverse after the tax holiday period
are recognised. Deferred tax assets on unabsorbed tax losses and tax
depreciation are recognised only to the extent that there is virtual
certainty supported by convincing evidence of their realisation and on
other items when there is reasonable certainty of realisation. The tax
effect is calculated on the accumulated timing differences at the year
end based on the tax rates and laws enacted or substantially enacted on
the balance sheet date.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement
of Profit and Loss as current tax. The Company recognises MAT credit
available as an asset only to the extent there is reasonable
possibility that the Company will pay normal income tax during the
specified period for which MAT Credit is allowed to be carried forward.
The Company recognises MAT Credit as an asset by way of credit to the
statement of Profit and Loss and is disclosed as MAT Credit
Entitlement. under Long Term Loans and Advances.
2.17 Cash and Cash Equivalents
In the Cash Flow Statement, Cash and Cash Equivalents includes cash in
hand, bank balances and term deposits with bank having maturity term of
less than three months.
2.18 Earnings Per Share
Basic Earnings per share is calculated by dividing the net profit for
the period attributable to the equity shareholders by the weighted
average number of equity shares outstanding during the period. For the
purpose of calculating diluted earnings per share, the net profit for
the period attributable to the equity shareholders and the weighted
average number of equity shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.