Emami Limited

Accounting Policies followed by Company

S.No Area

Accounting Policy

Fixed Asset

2.

Intangible Assets

3.

Depreciation and
Amortisation

Fixed Assets are stated at cost less stated Depreciation. All the expenses incurred till the assets are ready to
use are capitalised.
These are recognised only if future economic benefits are probable and the cost can be measured reliably.
They are carried at cost less accumulated amortisation/impairement.
Depreciation on the assets are charged on the following basis: Block, dies & moulds (other than high-end moulds) are depreciated @ 95% in the year of purchase itself
on prorata basis.
Lease hold Land is amortised over the period of Lease.
Tangible assets of Vapi, Dongri and Masat units are depreciated by WDV method at the rates
prescribed under Schedule XIV of the Companies Act.
All other tangible assets are depreciated by SLM method at the rates prescribed under Schedule XIV of
the Companies Act.
Equal amount of Goodwill accounted consequent of a merger is depreciated over the useful life of 5
years.

4.

Investments

5.

Inventory

6.

Revenue

7.

Provisions and
Contingent Liabilities

8.

Taxation

9.

Share Capital

10.

Long Term Borrowings

Trade Marks and other intangible assets are amortised over the period not exceeding 10 years.
Software is amortised @ 16.21% on SLM basis.
Long term Investments are stated at cost.
Current Investments are stated at cost or fair value, whichever is lower.
Any kind of permanent diminution in the value of investments is charged to Profit & Loss A/C.
Inventories are valued at cost or NRV whichever is less, except for WIP and advertising material which
are valued at cost.
Costs are calculated on weighted average method.
Revenue is recognised on accrual basis
Sales include duty drawback, license premium on exports, Sales Tax net of Trade discounts and other
rebates.
Provisions are recognised when there is a legal and constructive obligation as a result of past event, for
which it is probable that a cash outflow will be required and a reliable estimate can be made of the
amount of the obligation.
Contingent liabilities are disclosed when the Company has a possible obligation or a present obligation
and it is probable that a cash outflow will not be required to settle the obligation.
Provision for tax is made both for current and deferred tax.
Provision for current tax is made at the current tax rates based on assessable income.
Deferred tax assets are recognised only to the extent that there is virtual certainty supported by
convincing evidence that sufficient future taxable income will be available against which such deferred
tax assets can be realised.
Comprises only of Equity Shares, no preference shares.
Face Value of shares Re. 1.
All the borrowings are secured by mortgage on movable and immovable assets.
All borrowings are in the form of bank loans.

Component wise analysis

Rs. (In Lacs)
Particulars

200910
76,346

201011
79,696

201112
83,470

201213
92,045

Items Covered

Fixed Assets

200809
70,644

CWIP

3,670

620

648

6,563

4,411

Share Capital

1,313

1,513

1,513

1,513

1,513

Includes mainly P&M

under construction.
Equity Shares of Rs.2 each

Borrowings

44,819

25,906

22,937

10,753

4,355

Mainly comprise of
Tangible assets like Land,
Building, P&M, furniture
etc. And Intangible assets
like Goodwill, Trade Marks
and software.

Mainly includes Loan

taken from Banks, Related
parties etc., and short
term finance from banks
in the form of short term
loans and cash credit.

Remarks
Small additions per year due to the new Plant &
Machinery installed.
A Trademark registration in the year 2009-10
worth Rs. 100 Lacs.
Installed Capacity of the company increased
significantly in the two years from 2009-2011
and then again in 2012-13.
Mainly comprises of Construction of Plant &
Machinery.
100 lacs shares of Rs.2 each issued to QIBs @
Rs. 310/share in the year 2009-10 to repay the
borrowings.
In 2008-09, Borrowings were mainly from
banks, related parties, and other parties.
Repaid the loan amount of approx Rs. 200
Crores due from related parties out of the
proceeds of share issue in the year 2009-10.
Constant variations in the sources of finance i.e.
banks and other parties year by year.
Company started paying its debts gradually with
the new issue of shares.
At the end whole outstanding loan was from
bank.

Investments

3,989

6,208

708

8,080

16,358

Consists of quoted and

unquoted investments like
shares, Mutual funds etc.

Inventories

7,320

7,861

12,191

10,941

11,226

Mainly consists of Finished

Goods (Approx 50-60%)
and Raw materials &
packing materials (4050%).

Debtors

5,075

7,273

9,128

7,893

8,048

Cash and
Bank

1,077

15,980

20,415

27,248

27,909

Account receivables of the

company mainly divided in
to 2 broader heads:
Due over 6 months
Other dues
Mainly comprises of
balance in current
accounts, Fixed Deposits
and cheques in hand.

Initially consisted of Mutual funds and shares

Mutual funds worth Rs. 55 crores were
purchased and Rs. 32 crores were sold in the
year 2009-10.
Investments worth Rs 55 Crores sold in 2010-11.
Invested in Mutual funds worth Rs. 73.55
Crores.
Invested Rs. 83 crores in mutual funds in the
year 2012-13.
In 2010-11, finished goods increased drastically
by 30 crores and RM by 10 crores.
Main reason behind this was the increase in the
installed capacity of the company.
FG mainly consists of Ayurvedic medicines and
Cosmetics & Toiletries.
Raw materials mainly consist of Oils, Chemicals,
Tubes & Containers and Packing material.
No specific reason for the increase or decrease
of the Debtors
Provision made as per the best estimate
available of approx .5% of debtors.
Initially the balance comprised mainly only of
current account
A F.D. of Rs 133 crores done in the year 2009-10
and Rs 65 crores in 2010-11 and Rs. 65 crores in
2011-12 and Rs. 40 crores matured in 2012-13.
At the end of 2012-13 there were cheques in
hand of Rs 33 crores, F.D. of Rs 221 crores and
current account balance of Rs. 24 crores.

Current
Liabilities

15,059

15,375

15,370

28,565

28,392

Sales

72,235

100,68
5

122,11
5

138,98
1

162,70
9

COGS

30,877

38,204

51,132

61,080

69,343

Manufacturi
ng, Admin &
selling exp

29,130

38,377

45,875

50,420

58,684

Financing
Expenses

1,964

2,095

(1,181)

1,555

610

Depreciation

1,789

11,749

11,603

12,074

12,329

Mainly comprises of
Accounts payables,
proposed dividends and
taxes payable.
Main items sold are
Cosmetics & Toiletries and
Ayurvedic medicines.
Mainly comprises of cost
of Raw materials like oil,
chemicals and packaging
materials.
Mainly comprises of
Salaries & Wages (approx
15%), manufacturing
expenses (approx 10%),
Advertisement & sales
promotion (approx 50%)
Interest expenses less
interest income on
investments.

Depreciation and
amortisation expenses.

The reasons for increase in current liabilities and

provisions for the year 2011-12 are proposed
dividend and CDT (Rs. 79 Crores), Creditors (Rs.
40 crores).
Main increase in sales is due to the gradual
increase in the installed capacity of the
company.
Main increase is due to the increase in sales, so
correspondingly COGS increased.

These expenses are not related to anything as

they are indirect expenses.
Gradual increase is mainly due to increase in
annual increment in salaries and advertisement
costs.
The reason for increase in the finance cost in
the year 2009-10 despite of the fact that the
loan amount went down was due to the more
high interest debt in the form of bank loan in
comparison with the cheaper loan of related
parties which were paid off during the year.
The same reason is applicable for all the other
years.
Main reason for the drastic increment in the
depreciation cost from 2009-10 onwards is the
additional amortisation cost of approx Rs. 100
crores of the goodwill capitalised in the late
2008-09.