1. Background
Jyothy Laboratories Limited (''the Company'') was incorporated on January
15, 1992. The Company is principally engaged in manufacturing and
marketing of fabric whiteners, soaps, detergents, mosquito repellents,
scrubber and incense sticks.
2. (A) Basis of preparation of Financial Statements
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies (Accounting
Standards) Rules, 2006 (as amended) and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention on an accrual basis except in case of
assets for which provision for impairment is made. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
(B) Use of Estimate
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the results of operations during
the year end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
4. Employee Benefit:
(i) Defined Benefit Plans -
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company. The Company has
provided for gratuity and leave encashment based on actuarial valuation
done as per Projected Unit Credit Method.
(iii) Defined Contribution Plans -
Amount of Rs. 510.99 (2010 - Rs. 408.47) is recognised as an expense and
included in Schedule 16 - Contribution to provident and other funds
in the Profit and Loss account.
(iv) The Company expects to contribute Rs. 78.08 (2010 - Rs. 213.57) to
gratuity fund and Rs. 32.77 (2010 - Rs. 28.06) to Superannuation fund.
5. Scheme of Amalgamation (''the Scheme'') of Sri Sai Homecare Products
Private Limited, a wholly owned subsidiary, with Jyothy Laboratories
Limited (the Company)
a) Pursuant to a Scheme of Amalgamation under the provisions of
Sections 391 to 394 of the Companies Act, 1956 approved by the
shareholders of Sri Sai Homecare Products Private Limited and the
Company, and subsequently sanctioned by the Honourable High Court at
Mumbai, the entire business undertaking, assets and liabilities of Sri
Sai Homecare Products Private Limited have been transferred to and
vested in the Company with effect from April 1, 2010 being the
''Appointed Date''.
b) Sri Sai Homecare Products Private Limited was in the business of
manufacturing of mosquito repellent coil.
c) The Amalgamation has been accounted for under the pooling of
interest method of accounting prescribed under Accounting Standard -
14 (Accounting for amalgamation) issued by the Institute of Chartered
Accountants of India which was prescribed by the Scheme. Accordingly
all the assets, liabilities and reserves of Sri Sai Homecare Products
Private Limited as on April 1, 2010 have been aggregated at their book
value as specified in the Scheme. Further, the share capital of Sri Sai
Homecare Products Private Limited has been extinguished and the excess
of the value of share capital, taken over pursuant to the Scheme, over
the investment of the Company in Sri Sai Homecare Products Private
Limited have been adjusted to the capital reserve account.
d) Since the aforesaid Scheme of amalgamation of Sri Sai Homecare
Products Private Limited with the Company, which is effective from
April 1, 2010, has been given effect to in these accounts, the figures
for the current year to that extent are not comparable with those of
the previous year.
E) There are no delays in payments to Micro, Small and Medium
Enterprises in current year as well as in previous year as required to
be disclosed under Micro, Small and Medium Enterprises Development Act,
2006.
The above information and the details given in Schedule 11 - Current
liabilities as required to be disclosed under the Micro, Small and
Medium Enterprises Development Act, 2006 has been determined to the
extent such parties have been identified on the basis of information
available with the Company. This has been relied upon by the Auditors.
7. Segment Reporting
Business segments:
The primary segment of the Company has been determined on the basis of
business segment. The Company is organized into two business segments -
Soaps and Detergents and Home Care. Segments have been identified
taking into account the nature of the products, the differing risks and
returns, the organization structure and the internal reporting system.
Soaps and Detergents includes fabric whiteners, fabric detergents, dish
wash bar and soaps including ayurvedic soaps. Home Care products
include incense sticks, scrubber, dhoop and mosquito repellents. Others
includes Tea and coffee.
Secondary segment:
The Company mainly caters to the needs of the domestic market. The
export turnover is not significant in the context of total turnover. As
such, there is only one reportable geographical segments.
Segment revenue and result:
The income/expense that are not directly attributable to the business
segments are shown as unallocated corporate costs.
Segment assets and liabilities:
Segment assets include all operating assets used by a segment and
consist principally of debtors, inventories, advances and fixed assets.
Assets at corporate level are not allocable to segments on a reasonable
basis and thus the same have not been allocated.
Segment liabilities include all operating liabilities and consist
principally of creditors and accrued liability.
8. Related Party Disclosures
a) Parties where control exists Individual having control
M.P. Ramachandran Chairman and Managing Director As the Managing
Director of the Company is an individual having control and hence not
separately disclosed as a Key management personnel.
Wholly Owned Subsidiaries
Sri Sai Home Care Products Private Limited (refer Note 5 of Schedule
20) Associated Industries Consumer Products Pvt. Ltd.
Other Subsidiary
Jyothy Fabricare Services Limited
Jyothy Kallol Bangladesh Limited (w.e.f. October 14, 2010) (refer Note
14 of Schedule 20)
b) Related party relationships where transactions have taken place
during the year
Joint venture companies
Balaji Teleproducts Limited (upto February 24, 2010)
Firm/HUF in which the relatives of individual having control are
partners/members/proprietor.
Beena Agencies Quilon Trading Co. Travancore Trading Corp. Sree
Guruvayurappan Agencies M.P. Agencies Tamil Nadu Distributors Deepthy
Agencies Sahyadri Agencies Sreehari Stock Suppliers Sujatha Agencies
M.P. Divakaran - H.U.F. M.P. Sidharthan - H.U.F.
Relative of individual having control
M.P. Sidharthan M.R. Jyothy (Director) M.R. Deepthi Ananth Rao T. Ravi
Razdan M. G. Santhakumari M.P. Divakaran
Enterprises significantly influenced by key management personnel or
their relatives Sahyadri Agencies Ltd.
Key management personnel (includes directors of the Company)
K. Ullas Kamath Deputy Managing Director
10. Contingent Liabilities
2010-11 2009-10
Contingent liabilities not provided
for in respect of:
(i) Amount outstanding in respect of
guarantees given by the Company to
banks 1,122.96 1,389.90
(ii) Tax matters
(a) Disputed sales tax demands
– matters under appeal 2,290.92 1,443.20
(b) Disputed excise duty and service
tax demand – matter under appeal 1,592.72 1,050.57
(iii) Others 20.11 15.83
(iv) Claims against the Company
not acknowledged as debt 120.00 120.00
12. As per the Notification No. 32/99-CE dated July 8, 1999, the
Company was entitled to refund of excise duty in Guwahati and Jammu
units equivalent to the amount of the duty paid through Personal Ledger
Account (''PLA''). During an earlier year, the Government issued
notifications No. 17/2008-CE and 19/2008-CE dated March 27, 2008
restricting the refund amount to a maximum percentage specified in the
notification. The Company had filed a writ petition in the Guwahati
High Court and the Jammu and Kashmir High Court against the respective
notifications and obtained stay orders from both the High Courts.
During the previous year, the Guwahati High Court has given a
favourable order in case of a similar matter against which the
Department has filed an appeal in the Supreme Court. Further, during
the current year, the Jammu High Court has also given favourable order.
Based on the orders of High Court, the Company has accrued Rs. 953.84
Lacs as excise duty receivable pertaining to the earlier years (of
which an amount of Rs. 478.58 Lacs adjusted from the material consumed)
and an additional benefit of Rs. 413.21 Lacs accrued in the current year,
of which an amount of Rs. 189.68 pertaining to previous year.
14. During the current year the Company has entered in to a joint
venture with Kallol Bangladesh Limited. The same has been named as
Jyothy Kallol Bangladesh Limited in which the Company has subscribed
75% equity share capital leading to the Company''s percentage of
ownership interest in the joint venture at 75% as at the year end.
15. During the year, the Company has issued 8,063,200 shares of Rs. 1
each to Qualified Institutional Buyers (QIBs) in terms of Chapter VIII
of SEBI (ICDR) Regulations, 2009 at a premium of Rs. 281.62 to generate
funds for primarily for acquisition in the future and to expand
inorganically by identifying acquisition opportunities as part of
Company''s growth strategy in India and, if required, for general
corporate purposes as well. The total sum received aggregated to Rs.
22,788.22 Lacs (including Rs. 22,707.58 Lacs towards Securities premium).
After investment in Henkel India Limited of Rs. 6,073.09 Lacs and share
issue expenses of Rs. 644.29 Lacs pending utilization of the money for
the purposes mentioned above, the Company has temporarily invested in
the fixed deposit and corporate deposits with the Banks.
16. During the earlier years, depreciation/ impairment on assets
include impairment losses representing the amount by which the carrying
amount of the asset exceeds its recoverable amount. Such impairment
losses were due to adverse market conditions for two of its Cash
Generating Unit pertaining to the ''Soaps and Detergents'' segment. The
pre-discount rate used for evaluation of the present value was 8% per
annum. In the current year the Company sold a portion of the land at
Pithampur washing powder unit to a third party at a rate much higher
than the carrying amount. In view of prevailing market price of land at
Pithampur, management believes that impairment indicators no longer
exist, therefore impaiment loss earlier recognised on land & building
should be reversed. Accordingly, the Company has reversed the provision
for impairment loss for land of Rs. 10.37 Lacs and building of Rs. 143.35
Lacs at Pithampur washing powder unit which pertains to ''Soaps &
Detergent segment''.
17. During the year, the Company acquired 14.9% equity share capital
in Henkel India Limited. Further subsequent to the year end, the
Company has entered in to a share purchase agreement with Henkel AG &
Co. KGaA (Henkel AG) for acquiring 50.97% equity share capital and 100
% preference share capital in the Henkel India Limited. In addition,
the Company made pubic announcement of its intention to make open offer
for acquiring upto 20% of the equity share capital in Henkel India
Limited from public at Rs. 41.20 per equity share.
18. During the year 7,500,000 0.1% Convertible Preference Shares in
Jyothy Fabricare Services Limited of Rs. 10 along with redemption premium
of Rs. 2 each share were converted into 6,000,000 Equity Shares (face
value - Rs. 10 each) at Rs. 15 each.
19. There are no amounts payable/due to Investor Education and
Protection Fund.
20. The prior period figures have been reclassified where necessary to
conform with current year''s presentation.
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