Nestle India Ltd. இன் கணக்கு குறிப்புகள்
Dec 31, 2022
Property, Plant and Equipment - Owned
Items of property, plant & equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Cost is inclusive of freight, duties, taxes or levies (net of recoverable taxes) and any directly attributable cost of bringing the assets to their working condition for intended use.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progress".
Profit or loss on disposal / scrapping / write off / retirement from active use of an item of property, plant and equipment is recognised in the statement of profit and loss.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under âOther Non-Current Assets".
Depreciation / Amortisation
The Company has assessed the useful lives of property, plant and equipment as required by Schedule II to the Companies Act, 2013. Accordingly, depreciation has been computed on useful lives based on technical evaluation of relevant class of assets including components thereof. Useful lives and residual values are reviewed annually. Depreciation is provided as per the straight line method computed basis useful lives of property, plant and equipment as follows:
|
Useful Life |
|
|
Leased Assets |
Lower of lease term or useful life |
|
Buildings |
25 - 40 years |
|
Plant & Equipments |
5 - 25 years |
|
Office Equipments |
5 years |
|
Furniture and fixtures |
5 years |
|
Vehicles |
5 years |
|
Information Technology (IT) equipment Freehold land is not depreciated. |
3 - 5 years |
Impairment of Property, Plant and Equipment
At each balance sheet date, the Company reviews whether there is any indication that an item of property, plant and equipment including capital work in progress, right of use assets or intangible assets (asset / cash generating unit) may be impaired. For the purpose of assessing impairment, assets are grouped at the levels for which there are separately identifiable cash flows (cash generating unit). If any impairment indicator exists, estimate of the recoverable amount of the property, plant and equipment /cash generating unit to which the asset belongs is made. An impairment loss is recognised in the statement of Profit and Loss whenever the carrying amount of an asset/ cash generating unit exceeds its recoverable amount. The recoverable amount is the greater of the fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount rate.
Reversal of impairment losses recognised in earlier years is recorded when there is an indication that the impairment losses recognised for the asset/cash generating unit no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset/cash generating unit in earlier years.
Property, Plant and Equipment - Right of Use Assets
The Company''s leases mainly comprises of land, buildings, plant & machinery and vehicles. The Company leases land and buildings primarily for offices, manufacturing facilities and warehouses.
The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
At the date of commencement of the lease, the Company recognises a Right of Use asset (âROU") and a corresponding lease liability for all lease arrangements in which it is a lessee.
The Right of Use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right of Use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term or useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made. A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments with a corresponding adjustment to the carrying value of Right of Use assets.
Inventories are stated at cost or net realisable value, whichever is lower. However, raw materials, packing materials and other supplies held for use in the production of inventories are not written down below cost if the finished goods in which they will be included are expected to be sold at or above cost.
Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Nature and description of reserve
(i) General Reserve - General reserve are free reserves of the company which are kept aside out of company''s profits to meet the future requirements as and when they arise. The Company had transferred a portion of the profit after tax (PAT) to general reserve pursuant to the earlier provisions of the erstwhile Companies Act, 1956. It is not mandatory to transfer the profit to reserve under the provisions of the Companies Act, 2013 (âAct").
The Board of Directors at their meeting held on 28th July 2021, had approved a Scheme of Arrangement between the Company and its Members under Sections 230 to 232 of the Act, as amended, read with other applicable provisions of the Act and rules thereunder, which inter alia envisages the transfer of the entire balance of '' 8,374.3 million standing to the credit of the General Reserves to Retained Earnings (âthe Scheme") upon sanction by the Hon''ble National Company Law Tribunal, New Delhi (NCLT). In terms of the Orders of the Hon''ble NCLT, the Scheme was approved by the Members of the Company with requisite majority at the NCLT convened meeting held on 25th July 2022. Meeting of the un-secured creditors was dispensed with by the Hon''ble NCLT. The Scheme was admitted by the Hon''ble NCLT in August 2022. Subsequently, the proceedings took place at Hon''ble NCLT and the matter is listed on 21st February 2023 for its consideration.
(ii) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less transfer to general reserves, dividend (including dividend distribution tax) and other distributions made to the shareholders.
(iii) Capital Reserve - Capital Reserve is a reserve arising on business combination under common control due to difference between carrying amount of net assets acquired and consideration paid (as adjusted for amount recognized in retained earnings). The amount is not available for distribution to shareholders.
(iv) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated with foreign currency transactions relating to firm commitments and highly probable forecasted transactions. This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying forecasted transactions.
(v) Equity instruments through other comprehensive income - This represents the cumulative gains and losses arising on fair valuation of equity instruments measured at fair value through other comprehensive income under an irrevocable option. These are reclassified to Retained Earnings on sale of underlying investments.
26. REVENUE FROM OPERATIONS a) Sale of products
Revenue from sale of goods is recognised on transfer of control of goods to the buyer. Revenue is measured at the price charged to the customer and are recorded net of returns (if any), trade discounts, rebates, other pricing allowances to trade/consumer, when it is probable that the associated economic benefits will flow to the Company. Accumulated experience is used to estimate the accruals and provisions for discounts and rebates.
Government Grants in relation to revenue and expenses are recognized when there is reasonable assurance that the Company will comply with the attached conditions and that the grant will be received. Such grants are recognized in Other operating revenues on a systematic basis.
27. OTHER INCOME
Interest income is recognised using effective interest rate (EIR) method. Dividend income on investments is recognized when the right to receive the payment is established.
(i) The Company makes contributions to Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees and these contributions are charged to statement of profit and loss on accrual basis. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognised '' 988.7 million (Previous year '' 730.4 million) as expense in the statement of profit and loss during the year towards contribution to these funds.
Out of the total contribution made for Provident Fund, '' 310.6 million (Previous year '' 300.8 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return. The Trustees of Nestle India Limited Employees Provident Fund Trust are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Trust is in accordance with the rules prescribed by the Government of India.
The total plan liabilities under the Nestle India Limited Employees Provident Fund Trust as at 31 December 2022 as per the unaudited financial statements are '' 5,562.5 million (Previous year '' 5,029.1 million) as against total plan assets of '' 5,490.0 million (Previous year '' 4,949.9 million). The funds of the Trust have been invested under various securities in accordance with the rules prescribed by the Government of India. The market value of quoted investments included in plan assets is '' 5,352.8 million (Previous year '' 4,971.9 million) having a net book value of '' 5,147.3 million (Previous year '' 4,616.3 million)
(ii) Other Employee Benefits: Short term employee benefits including performance incentives, are charged to statement of profit and loss on an undiscounted, accrual basis during the period of employment.
(iii) Pension and Gratuity Plans: The Company provides pension and gratuity to eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service. The Company makes contributions to the Nestle India Limited Employees'' Gratuity Trust Fund. The Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with the rules prescribed by the Government of India. The Company aims to keep annual contributions to the trust relatively stable at a level such that no significant gap arises between plan assets and liabilities.
Defined benefit pension plans are discretionary and consist of an unfunded defined benefit pension plan and a funded defined benefit pension plan (known as ''Future Ready Plan''). The unfunded defined benefit plan exposes the Company to risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
Liability for defined benefit plans i.e. gratuity and ''unfunded pension plan'' is determined based on the actuarial valuation carried out by an independent actuary as at the year-end. As these liabilities are relatively long term in nature, the actuarial assumptions take into account the requirements of the relevant Ind AS coupled with a long-term view of the underlying variables / trends, wherever required.
For funded defined benefit pension plan, the Company has made investments in appropriate Investment product of an Insurance company to cover the obligations. The amount and timing of the defined benefits payable under the ''Future Ready Plan'' match with the amounts recoverable from the Investment product. The accumulated investment balance shall be utilised to purchase pension annuities from the Insurance company for the employees as per the ''Future Ready Plan''. The plan exposes the Company to risks such as credit risk etc. Also, refer Note 4 to the financial statements for description of pension plan amendment and settlement.
Liability for funded defined benefit pension plan (''Future Ready Plan'') has been determined in 2021 based on actuarial valuation carried out by an independent actuary for past period of services and frozen. The obligation so determined is invested in an appropriate investment product of an Insurance company and is recognized as having ''reimbursement rights'' as per Ind AS 19 Employee Benefits. This investment will earn interest and the corresponding defined benefit liability will be increased with this interest amount. The amount recoverable from the investment product would be utilized for payment of the defined benefits payable under the Future Ready Plan. Also refer to Note 4 of the financial statements.
Service cost and net interest cost on the defined benefit liabilities/assets are recognized in the statement of profit and loss as employee benefit expense and finance costs respectively. Gains and losses on remeasurement of defined benefits liabilities/plan assets arising from changes in actuarial assumptions and experience adjustments are recognised in the other comprehensive income and are included in retained earnings in the balance sheet.
Long term employee benefits such as compensated absences and long service awards are charged to statement of profit and loss on the basis of an actuarial valuation carried out by an independent actuary as at the year-end. Actuarial gains and losses are recognised in full in the statement of profit and loss during the year in which they occur.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
As defined benefits obligations are of relatively long term in nature, the actuarial assumptions take in account the requirements of the relevant Ind AS coupled with a long term view of the underlying variables / trends, wherever required.
34. RESTRICTED STOCK UNIT (RSU) / PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU) / Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU) / Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The fair value of these units is charged to the statement of profit and loss over the vesting period. The Company has to pay Nestle S.A. an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
35. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of '' 1,309.4 million (Previous year '' 907.5 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The Company has also reversed/utilised contingency provision of '' 156.9 million (Previous year '' 749.8 million) due to the settlement of certain litigations and settlement of obligations for which provision is no longer required.
(i) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Excise Duty, Service Tax, Entry tax, Income Tax, Labour Laws, Value Added Tax, Sales and Purchase Tax, Goods and Service Tax etc.). This includes positions taken on matters under dispute involving judgements and assumptions to determine the possible outcome. The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(ii) Others - includes estimates made for products sold by the Company which are covered under free replacement warranty on crossing the best before date for consumption and other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
37. (a) TAX EXPENSE
Income tax expense comprises of current tax and deferred tax. Income tax expense is recognised in the statement of profit and loss, except when it relates to items recognised in the other comprehensive income or items recognised directly in the equity. In such cases, the income tax expense is also recognised in the other comprehensive income or directly in the equity as applicable. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation or under dispute with authorities and establishes provisions where appropriate.
Provision for current tax for the period comprises of:
a) estimated tax expense which has accrued on the profit for the period 1 January 2022 to 31 December 2022 and,
b) the residual tax expense for the period 1 April 2021 to 31 March 2022 arising out of the finalisation of fiscal accounts (Assessment Year 2022-2023), under the provisions of the Indian Income tax Act, 1961.
Deferred taxes are recognised basis the balance sheet approach on temporary differences, being the difference between the carrying amount of assets and liabilities in the Balance Sheet and its corresponding tax base, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which such assets can be utilized.
(a) RECOGNITION AND INITIAL MEASUREMENT
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
(b) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS
(i) Debt Instruments
For the purpose of subsequent measurement, financial assets in the nature of debt instruments are classified as follows:
Amortised cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortised cost less impairments, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on derecognition, cumulative gain or loss previously recognised in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Changes in fair value and income on these assets are recognised in the statement of profit and loss.
(ii) Equity Instruments
The Company has made investment in equity instruments that are initially measured at fair value. The company has elected irrevocable option to measure such investments at FVOCI. The Company makes such election on an instrument-by-instrument basis. Pursuant to such irrevocable option, changes in fair value are recognised in the OCI and is subsequently not reclassified to the statement of profit and loss.
(c) CLASSIFICATION AND SUBSEQUENT MEASUREMENT OF FINANCIAL LIABILITIES
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortised cost - Financial liabilities are classified as financial liabilities at amortised cost by default. Interest expense calculated using EIR method is recognised in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognised in the statement of profit and loss.
(d) DERECOGNITION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership.
A financial liability is derecognised when the obligation under the liability is discharged or expires.
(e) IMPAIRMENT OF FINANCIAL ASSETS
Financial assets (debt instruments) that are carried at amortised cost and fair value through other comprehensive income (FVOCI) are assessed for possible impairments basis expected credit losses taking into account the past history of recovery, risk of default of the counterparty, existing market conditions etc. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition.
For Trade receivables, the Company provides for expected credit losses based on a simplified approach as per Ind AS 109 - Financial Instruments. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset.
(f) DERIVATIVES AND HEDGE ACCOUNTING
Derivative instruments used by the Company include forward contracts. The Company formally establishes a hedge relationship between such forward contracts (''hedging instrument'') and recognized financial asset/liabilities (''hedged item'') through a formal documentation at the inception of the hedge. Forward contracts are designated as hedging instruments against changes in fair value of recognised assets and liabilities (fair value hedges) and against highly probable forecast transactions (cash flow hedges). The effectiveness of hedge instruments is assessed at the inception and on an ongoing basis.
Derivatives instruments such as forward contracts are initially measured at fair value. When a forward contract is designated as a cash flow hedge, the effective portion of change in the fair value of the contract is recognised in the other comprehensive income and accumulated in other equity under âeffective portion of cash flow hedges". Amount recognised in other equity is subsequently reclassified to the statement of profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the change in the fair value of the contract is recognised immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognised in the statement of profit and loss.
(g) FAIR VALUE MEASUREMENT
Fair value of financial assets and liabilities is normally determined by references to the transaction price or market price. If the fair value is not reliably determinable, the company determines the fair value using valuation techniques that are appropriate in the circumstances and for which sufficient data are available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of Company specific valuations using inputs that are not based on observable market data (unobservable inputs). Fair value of investment in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels.
(j) FINANCIAL RISK MANAGEMENT
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit risk and market risk. This Note presents the Company''s objectives, policies and processes for managing its financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with various banks to meet the obligations.
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation:
Investments
The Company has made investments in tax free long term bonds, treasury bills, deposit with banks etc. Funds are invested in accordance with the Company''s established Investment policy that includes parameters of safety, liquidity and post tax returns. The Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Company''s exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the company does not expect any significant risk of default.
Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Company''s established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset. This allowance is measured taking into account credit profile of the customer, geographical spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Other financial assets
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Company''s maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market Risk
Interest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as its investments are primarily in fixed rate instruments. Also, there are no significant borrowings as at the balance sheet date.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is exposed to the price risk mainly from investment in equity instruments. However, equity investments are not significant as at the balance sheet date.
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Company''s established policy for foreign exchange management. The Company enters into forward contracts as per the hedging policy to hedge against its foreign currency exposures.
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity falls within a single operating segment, namely Food. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery (Refer Note 26).
Revenue from major customers
There is no single customer that accounts for more than 10% of the Company''s revenue for the year ended 31 December 2022 and 31 December 2021. The other disclosure requirements of Ind AS 108 are not applicable.
The Board of Directors have recommended a final dividend of '' 75.00 per equity share amounting to '' 7,231.2 million for the year 2022 after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend has not been recognised as a liability as at the balance sheet date in line with Ind AS 10 on ''Events after the Reporting Period''.
48. OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the current financial year and previous financial year.
(iv) The Company does not have any such transactions which has not been recorded in the books of accounts but has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(v) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (ultimate beneficiaries), or (b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
The Company has not received funds from any person(s) or entity(ies), including foreign entities, with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, (a) lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party, or (b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(vii) Quarterly returns or statements of current assets filed by the Company with the banks in connection with the working capital limit sanctioned are in agreement with the books of accounts.
(viii) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.
49. NEW LABOUR CODES
The Indian Parliament has passed and approved the Code on Social Security 2020. While the effective date of the code and complete clarity on the rules/interpretations are still awaited, as a consequence, the impact of the same will be assessed and accounted for post notification of the relevant provisions. The Company has been taking cognizance of the changes and salary structures have been suitably designed to be compliant and accordingly, there are no material impacts foreseen on the financial statements of the Company.
50. REGROUPING / RECLASSIFICATION
Previous year''s figures have been regrouped / reclassified, where necessary, to conform to the current year''s classification. Please also refer to Note 5 on Business Combination under Common Control.
Dec 31, 2018
1 - CORPORATE INFORMATION
Nestle India Limited (âthe Companyâ) is a company domiciled in India, with its registered office situated at 100/101, World Trade Centre, Barakhamba Lane, New Delhi - 110 001. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the BSE Limited in India. The Company is primarily involved in Food business which incorporates product groups viz. Milk Products and Nutrition, Prepared dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.
2 - RECENT ACCOUNTING PRONOUNCEMENTS
IND AS 115: Revenue from Contracts with Customers
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115, âRevenue from Contracts with Customersâ. The Standard is applicable to the Company with effect from 1 January 2019.
Revenue from Contracts with Customers Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligation in contract
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer. The Company has evaluated Ind AS 115 and does not anticipate any significant impact.
3 - Impact of implementation of Goods and Services Tax (GST) on the financial statements
In accordance with Ind AS 18 on âRevenueâ and Schedule III to the Companies Act, 2013, Sales for the period 1 January to 30 June 2017 in the previous year were reported gross of Excise Duty and net of Value Added Tax (VAT)/ Sales Tax. Excise duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/Sales Tax, Excise duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sales as per the requirements of Ind AS 18. This has resulted in lower reported sales in the current year in comparison to the sales reported in the previous year under the pre-GST structure of indirect taxes. With the change in structure of indirect taxes, expenses are also being reported net of taxes. Accordingly, financial results for the year ended 31 December 2018 and in particular Sales, absolute expenses and ratios in percentage of Sales are not comparable with the previous year.
During the year, an amount of Rs. 520.5 million (net of reversals) [2017: Rs. 460.8 million] was charged to the statement of profit and loss on account of obsolete, damage and slow moving inventories.
(1) 2017: Includes an amount of Rs.150.0 million [representing 1,498,518 units of ICICI Prudential Liquid Plan - Daily Dividend] for which Company had placed the redemption on 29 December 2017 and was pending for execution till 31 December 2017. This has been subsequently realised on 1 January 2018.
Nature and description of reserve
(i) General Reserve - General reserve are free reserves of the company which are kept aside out of companyâs profits to meet the future requirements as and when they arise. The Company had transferred a portion of the profit after tax (PAT) to general reserve pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
(ii) Retained Earnings - Retained earnings are the accumulated profits earned by the Company till date, less transfer to general reserves, dividend (including dividend distribution tax) and other distributions made to the shareholders.
(iii) Effective portion of cash flow hedges - The Company uses forward contracts to hedge its risks associated with foreign currency transactions relating to firm commitments and highly probable forecast transactions. This reserve represents the cumulative changes in fair value of forward contracts that are designated as Cash Flow Hedges. These will be reclassified to statement of profit and loss upon occurrence of the underlying forecasted transactions.
(iv) Equity instruments through other comprehensive income - This represents the cumulative gains and losses arising on fair valuation of equity instruments measured at fair value through other comprehensive income under an irrevocable option.
4. Employee Benefit Plans
(i) The Company makes contributions to the Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company has recognised Rs. 421.4 million (Previous year Rs. 368.0 million) as expense in the statement of profit and loss during the year towards contribution to these funds.
Out of the total contribution made for Provident Fund, Rs. 169.5 million (Previous year Rs. 144.6 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The shortfall, if any, is made good by the Company in the year in which it arises. The Trustees of Nestle India Limited Employees Provident Fund Trust are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Trust is in accordance with the rules prescribed by the Government of India.
The total plan liabilities under the Nestle India Limited Employees Provident Fund Trust as at 31 December 2018 as per the unaudited financial statements are Rs. 3531.4 million (Previous year Rs. 3,316.3 million) as against total plan assets of Rs. 3,532.2 million (Previous year Rs. 3,326.4 million). The funds of the Trust have been invested under various securities in accordance with the rules prescribed by the Government of India.
(ii) Pension and Gratuity Plans: The Company provides pension and gratuity to eligible employees under defined benefit plans. The gratuity plan provides for a lump sum payment to employees upon vesting at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service.
The Company makes contributions to the Nestle India Limited Employeesâ Gratuity Trust Fund. The Trustees of Nestle India Limited Employees Gratuity Trust Fund are responsible for the overall governance of the plan and to act in accordance with the provisions of the trust deed and the relevant provisions prescribed under the law. Pattern of investment followed by the Gratuity Trust fund is in accordance with the rules prescribed by the Government of India. The Company aims to keep annual contributions to the trust relatively stable at a level such that no significant gap arises between plan assets and liabilities. Defined benefit pension is a discretionary, unfunded plan. These benefit plans expose the Company to risks, such as interest rate risk, inflation risk, price risk, longevity risk etc.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
As defined benefits obligations are of relatively long term in nature, the actuarial assumptions take in account the requirements of the relevant Ind AS coupled with a long term view of the underlying variables / trends, wherever required.
5. Restricted Stock Unit (RSU)/ Performance Share Unit (PSU) Plan
The Company participates in the Nestle Restricted Stock Unit (RSU)/ Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU)/ Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The Company has to pay Nestle S.A. an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
6. Total impairment loss on property, plant and equipment for the year ended 31 December 2018 is Rs. 110.8 million (Previous Year Rs. 371.8 million). Impairment loss relates to various items of plant and machinery and building that have been brought down to their recoverable values upon evaluation of future economic benefits from their use.
7. Net provision for contingencies
The Company has created a contingency provision of Rs. 1,242.5 million (Previous year Rs. 1,136.5 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The Company has also reversed, utilised/settled contingency provision of Rs. 205.6 million (Previous year Rs. 260.0 million) due to the satisfactory settlement of certain litigations and settlement of obligations under free replacement warranty for which provision is no longer required.
Notes:
(i) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Income Tax, Excise Duty, Service Tax, Entry Tax, Value Added Tax, Sales and Purchase Tax, etc.). The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(ii) Others - includes estimates made for products sold by the Company which are covered under free replacement warranty on crossing the best before date for consumption and other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.
Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs). Fair value of investment in unquoted equity shares is determined using discounted cash flow technique.
There are no transfers between different fair value hierarchy levels in 2017 and 2018.
(c) Financial Risk Management
In the course of its business, the Company is exposed to a number of financial risks: liquidity risk, credit risk, market risk. This note presents the Companyâs objectives, policies and processes for managing its financial risk.
(i) Liquidity risk
Liquidity risk refers to risk that the Company may encounter difficulties in meeting its obligations associated with financial liabilities that are settled in cash or other financial assets. The Company regularly monitors the rolling forecasts to ensure that sufficient liquidity is maintained on an ongoing basis to meet operational needs. The Company manages the liquidity risk by planning the investments in a manner such that the desired quantum of funds could be made available to meet any of the business requirements within a reasonable period of time. In addition, the Company also maintains flexibility in arranging the funds by maintaining committed credit lines with various banks to meet the obligations.
(ii) Credit risk
Credit risk refers to risk of financial loss to the Company if a customer or a counter-party fails to meet its contractual obligations. The Company has following categories of financial assets that are subject to credit risk evaluation:
Investments
The Company has made investments in tax free long term bonds, treasury bills, certificate of deposits, commercial papers, short term bonds, deposit with banks, mutual funds etc. Funds are invested in accordance with the Companyâs established Investment policy that includes parameters of safety, liquidity and post tax returns. Company avoids the concentration of credit risk by spreading them over several counterparties with good credit rating profile and sound financial position. The Companyâs exposure and credit ratings of its counterparties are monitored on an ongoing basis. Based on historical experience and credit profiles of counterparties, the company does not expect any significant risk of default.
Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Companyâs established policy with regard to credit limits, control and approval procedures. The Company provides for expected credit losses on trade receivables based on a simplified approach as per Ind AS 109. Under this approach, expected credit losses are computed basis the probability of defaults over the lifetime of the asset. This allowance is measured taking into account credit profile of the customer, geographical spread, trade channels, past experience of defaults, estimates for future uncertainties etc.
Movement in expected credit loss allowance on trade receivables:
Other financial assets
Other financial assets include employee loans, security deposits etc. Based on historical experience and credit profiles of counterparties, the Company does not expect any significant risk of default.
The Companyâs maximum exposure to credit risk for each of the above categories of financial assets is their carrying values as at the reporting dates.
(iii) Market Risk
Interest rate risk
Interest rate risk refers to risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Company is not exposed to any significant interest rate risk as its investments are primarily in fixed rate instruments. Also, there are no significant borrowings as at the balance sheet date.
Price risk
Price risk refers to risk that the fair value of a financial instrument may fluctuate because of the change in the market price. The Company is exposed to the price risk mainly from investment in mutual funds and investment in equity instruments. Investment in mutual funds are made primarily in units of liquid funds and are not exposed to significant price risk. Further, Equity investment is strategic in nature and held on a long-term basis.
Foreign currency risk
Foreign currency risk refers to risk that the fair value of future cash flows of an exposure may fluctuate due to change in the foreign exchange rates. The Company is exposed to foreign currency risk arising out of transactions in foreign currency. Foreign exchange risks are managed in accordance with Companyâs established policy for foreign exchange management. The Company enters into forward contracts as per the hedging policy to hedge against its foreign currency exposures. The impact of strengthening/weakening of foreign currencies on the outstanding exposure remaining unhedged at the year-end is not significant.
(d) Derivative financial instruments
Derivative instruments used by the Company include forward contracts. All the forward contracts entered into are for the purpose of hedging foreign currency exposures relating to the underlying transactions and firm commitments or highly probable forecast transactions.
8. Capital Management
The Companyâs capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Companyâs operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
9. The Company had reviewed the General License Agreements in 2013, the Board of Directors of the Company negotiated and Nestle S.A. accepted an increase in royalty from 3.5% to 4.5% of domestic sales in a staggered manner by making an increase of 0.20% per annum over five years effective 1 January 2014. The royalty rate on exports is aligned to 4.5% of sales.
10. Operating Leases
The Companyâs significant leasing arrangements are primarily in respect of operating leases for premises (office, residential, warehouses etc.) and vehicles. The aggregate lease rentals charged to the statement of profit and loss account under different revenue accounts are Rs. 661.4 million (Previous year Rs. 718.8 million).
Note:
Other transactions with Key Managerial Personnel:
- Remuneration includes lease rentals paid at market rates Rs. 3.6 million (previous year Rs. 3.6 million).
(1) As the liabilities for defined benefit obligations are provided based on actuarial valuation for the company as a whole, the amount pertaining to Key management personnel has not been included.
11. Segment reporting
Based on the guiding principles given in Ind AS 108 on âOperating Segmentsâ, the Companyâs business activity falls within a single operating segment, namely Food. Accordingly, the disclosure requirements of Ind AS 108 are not applicable. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared Dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.
12. Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:
(ii) Proposed Final Dividend
The Board of Directors have recommended a final dividend of Rs. 25.0 per equity share amounting to Rs. 2410.4 million for the year 2018 (Previous Year: Rs. 23.0 per equity share amounting to Rs. 2,217.6 million) after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend (including dividend distribution tax) has not been recognised as a liability as at the balance sheet date in line with Ind AS 10 on âEvents after the Reporting Periodâ.
Dec 31, 2017
1. Capital Management
The Company''s capital management objective is to ensure that a sound capital base is maintained to support long term business growth and optimise shareholders value. Capital includes equity share capital and other equity reserves.
The Company''s operations are funded primarily through internal accruals. Return to shareholders through dividend is monitored as per the laid down dividend distribution policy.
2. The Company had reviewed the General License Agreement in 2013, the Board of Directors of the Company negotiated and Nestle S.A. accepted an increase in royalty from 3.5% to 4.5% of domestic sales in a staggered manner by making an increase of 0.20% per annum over five years effective 1 January 2014. The royalty rate on exports is aligned to 4.5% of sales.
4. Operating Leases
The Company''s significant leasing arrangements are primarily in respect of operating leases for premises (office, residential, warehouses etc.) and vehicles. The aggregate lease rentals charged to the statement of profit and loss account under different revenue accounts are '' 718.8 million (Previous year '' 709.7 million).
5. Related party disclosures under Ind AS 24
(a) Related party and their relationship
(i) Holding Companies
Nestle S.A (Ultimate holding Company)
Maggi Enterprises Limited
(ii) Fellow subsidiaries with whom the company had transactions
CPW Middle East FZCO Nestle Panama S.A.
Nestec S.A. Nestle Philippines, Inc.
Nestec York Ltd. Nestle Product Technology Centre
Nestle (China) Ltd. Nestle Products (Mauritius) Ltd.
Nestle (PNG) Ltd Nestle Products Sdn Bhd
Nestle (South Africa) (Pty) Ltd Nestle R&D Center, Inc.
Nestle (Thai) Ltd. Nestle R&D Centre (Pte) Ltd.
Nestle Adriatic S DOO Nestle R&D Centre India Private Ltd.
Nestle Asean (Malaysia) Sdn. Bhd. Nestle ROH (Thailand) Ltd.
Nestle Australia Ltd. Nestle Romania SRL
Nestle Bangladesh Ltd. Nestle Servicios Corporativos, S.A.
Nestle Brasil Ltda Nestle Shanghai Ltd.
Nestle Bulgaria AD Nestle Shuangcheng Ltd
Nestle Canada Inc. Nestle Singapore (Pte) Ltd.
Nestle Caribbean Inc. Nestle South Africa Pty Ltd.
Nestle Cote D''Ivoire Nestle Suisse S.A.
Nestle Deutschland AG Nestle Taiwan Ltd.
Nestle Dubai Manufacturing LLC Nestle Thailand Ltd.
Nestle Equatorial African Region Nestle Tianjin Ltd.
Nestle France S.A.S. Nestle Trinidad And Tobago Ltd.
Nestle Ghana Ltd. Nestle Turkiye Gida Sanayi A.S.
Nestle Hong Kong Ltd Nestle UK Ltd.
Nestle Hungaria Kft. Nestle USA Inc
Nestle Iran Nestle Vietnam Ltd.
Nestle Japan Ltd. Nestle Waters Management & Technology
Nestle Kenya Ltd. Nestle Waters Marketing & distibution S.A.S
Nestle Korea Ltd. Nestle Waters North America Inc
Nestle Lanka PLC Nestrade S.A.
Nestle Manufacturing (Malaysia) Sdn Bhd PJSC âLviv Confectionery Factory svitoch"
Nestle Mexico S.A. de C.V. PT Nestle Indonesia
Nestle Middle East FZE Purina Petcare India Pvt. Ltd.
Nestle Middle East Manufacturing Quality Coffee Products Ltd.
Nestle Nederland B.V. Servcom S.A.
Nestle Nigeria Plc SMA Nutrition India Private Ltd.
Nestle Operational Services Worldwide S.A. Societe des Produits Nestle S.A.
Nestle Pakistan Ltd.
(iii) Key Management Personnel Executive Directors
Suresh Narayanan, Chairman and Managing Director Shobinder Duggal, Director - Finance & Control and CFO
Aristides Protonotarios , Director - Technical (Director - Technical upto 31 March 2017)
Martin Roemkens , Director - Technical (Director - Technical w.e.f. 1 April 2017)
Non-Executive Directors Ashok Kumar Mahindra
Rama Bijapurkar (Non-Executive Director w.e.f. 1 May 2017)
Rakesh Mohan
Ravinder Narain (Non-Executive Director upto 1 May 2017)
R.V. Kanoria Swati A.Piramal
(iv) Employees benefit trusts where control exists Nestle India Limited Employees Provident Fund Trust Nestle India Limited Employees'' Gratuity Trust Fund
(b) Nature of transactions
The transactions with the related parties have been entered in the ordinary course of business and are at arm''s length.
Note:
Other transactions with Key Managerial Personnel:
- Remuneration includes lease rentals paid at market rates '' 3.6 million (previous year '' 3.3 million).
(1) As the liabilities for defined benefit obligations are provided based on actuarial valuation for the company as a whole, the amount pertaining to Key management personnel has not been included.
50. Segment reporting
Based on the guiding principles given in Ind AS 108 on ''Operating Segments'', the Company''s business activity falls within a single operating segment, namely Food. Accordingly, the disclosure requirements of Ind AS 108 are not applicable. The food business incorporates product groups viz. Milk Products and Nutrition, Prepared dishes and Cooking aids, Powdered and Liquid Beverages and Confectionery.
(ii) The Company has business operations only in India and does not hold any assets outside India. Revenue from major customers
There is no single customer that accounts for more than 10% of the Company''s revenue.
(ii) Proposed Final Dividend
The Board of Directors have recommended a final dividend of '' 23.00 per equity share amounting to '' 2,217.6 million for the year 2017 (Previous Year: '' 23.0 per equity share amounting to '' 2,217.6 million) after the balance sheet date. The same is subject to approval by the shareholders at the ensuing Annual General Meeting of the Company and therefore proposed final dividend (including dividend distribution tax) has not been recognized as a liability as at the balance sheet date in line with Ind AS 10 on ''Events after the Reporting Period''.
6. The Company did not have any holding or dealing in Specified Bank Notes and other denomination notes during the period 8 November, 2016 to 30 December, 2016 and hence disclosure requirements as per the notification G.S.R. 308(E) dated 31 March, 2017 are not applicable to the Company. For the purpose of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8 November, 2016.
7. First Time adoption of Ind AS
The Company has adopted Ind AS w.e.f 1 January 2017 with a transition date of 1 January 2016. Accordingly, financial statements for the year ended 31 December 2017 together with the comparative information for the year ended 31 December2016 and opening Ind AS balance sheet as at 1 January 2016 have been prepared in accordance with accounting policies as set out in Note 2 - âSignificant accounting policies".
The Company has prepared its opening Ind AS balance sheet as at 1 January 2016 by recognising assets and liabilities whose recognition is required by Ind AS, derecognising assets and liabilities which are not permitted by Ind AS, reclassifying assets and liabilities as required by Ind AS, and applying Ind AS measurement principles, subject to certain optional exemptions and mandatory exceptions. The resulting difference between the carrying values of the assets and liabilities as at the transition date under Ind AS and Previous GAAP have been adjusted directly against âOther Equity".
The effect of the transition to Ind AS on Company''s financial position, financial performance and cash flows is set out below.
(a) Optional exemptions and mandatory exceptions
The Company has availed the following optional exemptions and mandatory exceptions on first time adoption of Ind AS as per Ind AS 101.
(i) Optional exemptions
Deemed cost for property, plant and equipment
The Company has opted to continue with the carrying value as per the Previous GAAP for all items of its property, plant and equipment as its deemed cost on the date of transition.
Leases
The Company has opted to determine, whether a contract or arrangement existing at the date of transition contains a lease on the basis of facts and circumstances existing at the date of transition rather than at the inception of the arrangement.
Designation of investment in equity instruments
The Company has opted to designate equity investments as at fair value through other comprehensive income (FVOCI) based on the facts and circumstances existing at the date of transition to Ind AS rather than at initial recognition.
(ii) Mandatory exceptions
Classification and measurement of financial assets
The Company has determined the classification and measurement of financial assets on the basis of the facts and circumstances existing at the date of transition.
Estimates
The Company''s estimates under Ind AS as at 1 January 2016 are consistent with the estimates as at the same date made in conformity with the Previous GAAP. However, estimates that were not required under Previous GAAP but now required under Ind AS have been made basis facts and conditions as at the date of transition.
Footnotes:
I. Current Investments:
(a) Investments in mutual funds: Under Previous GAAP, investments in mutual funds were measured at cost or market value, whichever is lower. Under Ind AS, these investments have been classified as âmeasured at fair value through profit or loss (FVTPL)". Changes in fair value are recognized in the statement of profit and loss.
(b) Investments in treasury bills, certificate of deposits, commercial papers etc.: Under Previous GAAP, investments in treasury bills, certificate of deposits and commercial papers etc. were measured at cost or market value, whichever is lower. Under Ind AS, these investments have been classified as âmeasured at amortized cost". Interest income calculated using the effective interest rate (EIR) method is recognized in the statement of profit and loss.
II. Forward Contracts
Under Previous GAAP, the premium paid on forward contracts was recognized as expense or income over the life of the contract. Difference between the exchange rate on the date of inception and as at the settlement date of the forward contract was recognized as exchange difference. Further in case of forward contracts for highly probable forecasted transactions, net mark to market losses were recognized in the statement of profit and loss, and net gains, if any, were ignored.
Under Ind AS, derivative instruments such as forward contracts are measured at fair value. Forward contracts are designated as hedging instruments against changes in fair value of recognized assets and liabilities (fair value hedges) and against highly probable forecast transactions (cash flow hedges). When a forward contract is designated as a cash flow hedge, the effective portion of changes in the fair value of the contract is recognized in the other comprehensive income and is transferred to the statement of profit and loss upon occurrence of the related forecasted transaction. Any ineffective portion of the changes in the fair value of the contract is recognized immediately in the statement of profit and loss.
Changes in fair value of forward contracts designated as fair value hedge are recognized in the income statement.
III. Deferred Taxes
Under Previous GAAP, deferred taxes were accounted basis the income statement approach which required creation of deferred tax asset/liability on temporary differences between taxable income and accounting income. Under Ind AS, deferred taxes are accounted basis the balance sheet approach which requires creation of deferred tax asset/liability on temporary differences between the carrying amount of an asset/liability in the Balance Sheet and its corresponding tax base.
Application of Ind AS has also resulted in recognition of deferred taxes on new temporary differences arising due to adjustments made on transition to Ind AS.
IV. Proposed dividend
Under Previous GAAP, dividend proposed by the Board of Directors after the balance sheet date but before the approval of the financial statements was considered as an adjusting event. Accordingly, provision for proposed dividend (including dividend distribution tax) was recognized as a liability in the same year to which it pertained. Under Ind AS, proposed dividend is recognized when the same is approved by the shareholders in the Annual General Meeting.
V. Government Grants
Under Previous GAAP, government grants in relation to fixed assets were reduced from the cost of the related asset. Under Ind AS, such grants have been treated as deferred income and is recognized in the statement of profit and loss on a systematic basis over the useful life of the asset.
Under Previous GAAP, Government grants in relation to investment outlay were recognized as part of capital reserves. Under Ind AS, these grants have been recognized in the statement of profit and loss on fulfillment of the underlying attached conditions.
VI. Sales
(a) Excise duty: Under Previous GAAP, Sales were presented net of Excise Duty. Under Ind AS, Sales are reported gross of excise duty. Excise duty is presented as a separate expense line item in the statement of profit and loss. (Also refer Note 4)
(b) Marketing and Selling Incentives: Under Previous GAAP, certain marketing and selling incentives to trade were reported as advertisement/ selling and distribution expenses in the statement of profit and loss. Under Ind AS, these have been netted off from sales.
VII. Re-measurement of defined benefit plans
Under Previous GAAP, re-measurement of retrial defined benefit plans i.e. actuarial gains/ (losses) arising due to experience adjustments and change in assumptions were recognized in the statement of profit and loss. Under Ind AS, remeasurement of retrial defined benefit plans is recognized in the âOther Comprehensive Income".
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
VIII. Investments in equity instruments
Under Previous GAAP, investments in equity instruments were carried at cost less provision for other than temporary diminution in the value of such investments. Under Ind AS, these investments have been classified as âmeasured at fair value through other comprehensive income (FVOCI)" through an irrevocable election. Changes in fair value are recognized directly in the âOther Comprehensive Income".
IX. Cash and Cash equivalents
Under Previous GAAP, bank overdrafts were presented as part of âCash flows from financing activities" in the statement of cash flows. Under Ind AS, bank overdrafts are included as a component of cash and cash equivalents in the statement of cash flows.
Dec 31, 2016
1. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of '' 1,813.6 million (Previous year '' 794.6 million) for various contingencies resulting mainly from matters, which are under litigation / related disputes and other uncertainties requiring management judgement. The current yearâs provision has been impacted due to completion of certain procedures relating to litigation / disputed matter for more number of years in the current year as compared to only one year in the previous year. The Company has also reversed, utilised/settled contingency provision of '' 128.9 million (Previous year '' 160.0 million) due to the satisfactory settlement of certain litigations and settlement of obligations under free replacement warranty for which provision is no longer required.
*out of this, '' 418.0 million (Previous year '' 333.1 million) has been recognised as contingencies from operations and balance amount of '' 1,266.7 million (Previous year '' 301.5 million) as others.
Notes:
(a) Litigations and related disputes - represents estimates made mainly for probable claims arising out of litigations / disputes pending with authorities under various statutes (i.e. Income Tax, Excise Duty, Service Tax, Entry tax, Value Added Tax, Sales and Purchase Tax, etc.). The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company which are covered under free replacement warranty on crossing the best before date for consumption and other uncertainties requiring management judgement. The timing and probability of outflow with regard to these matters will depend on the external environment and the consequent decision/ conclusion by the Management.
2. EMPLOYEE BENEFIT PLANS
(a) Defined contribution plans
The Company makes contributions to the Provident Fund, Employee State Insurance, National Pension System etc. for eligible employees. Under these plans, the Company is required to contribute a specified percentage of payroll costs. The Company during the year has recognised '' 324.1 million (Previous year '' 292.8 million) as expense in the statement of profit and loss during the year.
Out of the total contribution made for Provident Fund, Rs, 128.9 million (Previous year Rs, 118.6 million) is made to the Nestle India Limited Employees Provident Fund Trust. The members of the Provident Fund Trust are entitled to the rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The shortfall, if any, is made good by the Company in the year in which it arises.
The total plan liabilities under the Nestle India Limited Employees Provident Fund Trust as at December 31, 2016 as per the unaudited financial statements for the year then ended is Rs, 2,969.7 million (Previous year Rs, 2,668.7 million) as against total plan assets of Rs, 2,982.8 million (Previous year Rs, 2,689.8 million). The funds of the Trust have been invested under various securities as prescribed under the rules of the Trust.
(b) Defined benefit plans
The company provides gratuity and defined benefit pension to eligible employees. The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment. Gratuity vesting occurs upon completion of five years of service. The Company makes contributions to the Nestle India Limited Employeesâ Gratuity Trust Fund. Defined benefit pension is a discretionary, unfunded plan.
Total employee benefits expense due to passage of time charged in statement of profit and loss is Rs, 874.0 million (Previous year Rs, 753.2 million). This includes Rs, 814.1 million (Previous year Rs, 699.5 million) towards pension and gratuity and Rs, 59.9 million (Previous year Rs, 53.7 million) towards compensated absences and long service awards.
The estimates of future salary increases considered in actuarial valuation, take account of inflation, performance, promotion and other relevant factors such as demand and supply in the employment market.
The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of assets management, historical results of return on plan assets and the policy for plan assets management.
(1) Financial results for the previous year ended 31st December, 2015 had been impacted by the MAGGI Noodles issue. The trust of its consumers and the safety and quality of its products is Nestleâs foremost priority. Unfortunately, developments and growing concerns about the product had led to an environment of confusion for the consumers to such an extent that the Company, on 5th June, 2015, decided to take the products temporarily off the shelves, despite the product being safe. This was done to reassure the consumers that their trust has always been of utmost importance for the Company and to maintain their continued patronage for Companyâs products. The Food Safety and Standards Authority of India (FSSAI) issued a ban order later on the same day i.e. 5th June, 2015 mainly alleging higher than permissible limits of lead and asking the Company to recall MAGGI Noodles, stop further manufacture and comply with other directions. In line with the instructions from the authorities and in keeping with environmental considerations, the withdrawn products including stocks with the Company were sent for high temperature thermal destruction and the Company suspended further manufacturing of MAGGI Noodles. The Company had conducted extensive additional tests, of over 3500 samples representing over 200 million packs of MAGGI Noodles, in both national and international accredited laboratories. All results confirmed levels of lead were well below the permissible limits. Furthermore, several other countries had found MAGGI Noodles safe after testing samples of the product exported from India. With a view to resolving the issue, the Company approached the Honâble Bombay High Court raising issues of interpretation of the Food Safety and Standards Act 2011, whilst seeking judicial review of the order dated 5th June, 2015 passed by FSSAI and order dated 6th June, 2015 passed by the Commissioner of Food Safety, Maharashtra (FDA). The Honâble Bombay High Court vide its Judgment dated 13th August, 2015 read along with Order dated 4th September, 2015 revoked the ban order passed by FSSAI and FDA and directed fresh testing of MAGGI Noodles for lead at three NABL (National Accreditation Board for Testing and Calibration Laboratories) accredited laboratories notified by FSSAI for testing of food products under Food Safety and Standards Act. Results from these laboratories were received by 16th October, 2015. 100% of the samples tested were clear with lead much below the permissible limits. In compliance with the directions of the Honâble Bombay High Court, the Company thereafter started manufacture of MAGGI Masala Noodles. Samples from the fresh manufacture of MAGGI Masala Noodles were sent to the same three laboratories to test for lead. Results from these laboratories were received by 4th November, 2015. 100% of the samples tested were clear with lead much below the permissible limits. The Company, after successfully passing the two levels of testing directed by the Honâble Bombay High Court, re-launched MAGGI Masala Noodles on 9th November, 2015. In December, 2015 the FSSAI filed a Special Leave Petition in the Honâble Supreme Court, challenging the Judgment of the Honâble Bombay High Court, which is currently pending before the Honâble Supreme Court.
Net Sales worth '' 3,034.0 million (about 23,650 tons) had been reversed during the previous year ended 31st December, 2015 in relation to MAGGI Noodles stock withdrawn from trade partners and market. The exceptional item relates to loss on account of stocks withdrawn including incidental costs thereto and estimates of other related costs incurred exclusively in the ordinary course of Companyâs business, dealt in line with the Accounting Standard AS 2 on âValuation of Inventoriesâ and Accounting Standard AS 5 on âNet Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policiesâ.
The exceptional item comprises of cost of finished goods, obsolete raw and packaging material, contractual commitments, destruction expenses and other related costs, including administrative costs, which had been incurred /reclassified from the expenses reported under the regular heads in the Statement of Profit and Loss (Refer note - 21).
Previous yearâs figures are indicated in brackets.
1. Includes product manufactured by contract manufacturers on conversion basis.
2. Sales quantity include company products withdrawn for sales promotion but exclude company products which have crossed the best before date for consumption and/or damaged in transit/ market which are destroyed.
3. Excludes stock of MAGGI Noodles destroyed (about 34,650 tons) - [Refer Note - 30].
3. RESTRICTED STOCK UNIT (RSU)/ PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU)/ Performance Share Unit (PSU) Plan of Nestle S.A., whereby select employees are granted non-tradable units with the right to obtain Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU)/ Performance Share Units (PSU) granted to employees vest, subject to certain conditions, after completion of three years. Upon vesting Nestle S.A. determines, whether shares, free of charge or cash equivalent to the value of shares, is to be transferred to the employee. The Company has to pay Nestle S.A an amount equivalent to the value of Nestle S.A. shares on the date of vesting, delivered to the employee.
4. The Company had reviewed the General License Agreement in 2013, the Board of Directors of the Company negotiated and Nestle S.A. accepted an increase in royalty from 3.5% to 4.5% of domestic sales in a staggered manner by making an increase of 0.20% per annum over five years effective January 1, 2014. The royalty rate on exports is aligned to 4.5% of sales.
5. OPERATING LEASES
The Companyâs significant leasing arrangements are primarily in respect of operating leases for premises (office, residential, warehouses etc.) and vehicles. The aggregate lease rentals charged to the statement of profit and loss account under different revenue accounts are Rs, 709.7 million (Previous year Rs, 720.9 million).
Future minimum lease rentals payable as at 31st December, 2016 as per the lease agreements:
The Company also has other commitments for purchase /sales of goods and services for which orders are issued after considering requirements as per the operating cycle of the business.
6. RELATED PARTY DISCLOSURES UNDER ACCOUNTING STANDARD 18
(a) Related party and their relationship
(i) Holding Companies
Nestle S.A
Maggi Enterprises Limited
(ii) Fellow subsidiaries with whom the company had transactions
Nestec S.A. Nestle Purina Petcare Company
Nestec York Ltd Nestle R&D Center (Pte) Ltd
Nestle (China) Ltd. Nestle R&D Center, Inc.
Nestle (PNG) Ltd Nestle R&D Centre India Private Ltd
Nestle (South Africa) (Pty) Ltd Nestle ROH (Thailand) Ltd.
Nestle (Thai) Ltd. Nestle Romania SRL
Nestle Adriatic S DOO Nestle Servicios Corporativos, S.A. de C.V
Nestle Asean (Malaysia) Sdn Bhd Nestle Shanghai Ltd.
Nestle Australia Ltd Nestle Shuangcheng Ltd
Nestle Bangladesh Ltd Nestle Singapore (Pte) Ltd
Nestle Brasil Ltda Nestle Suisse S.A.
Nestle Bulgaria A.D Nestle Taiwan Ltd
Nestle Canada Inc Nestle Tianjin Ltd.
Nestle Central And West Africa Nestle Turkiye Gida Sanayi A.S.
Nestle Chile S.A. Nestle UK Ltd
Nestle Cote DâIvoire Nestle USA Inc
Nestle Deutschland AG Nestle Vietnam Ltd
Nestle Dubai Manufacturing LLC Nestle Waters (Suisse) SA
Nestle Egypt S.A.E. Nestle Waters Management & Technology S.A.S
Nestle Equatorial African Region Nestle Waters Marketing & distribution S.A.S
Nestle Espana, S.A. Nestle Waters North America Inc
Nestle Food Kazakhstan LLP Nestle Zimbabwe (Private) Ltd
Nestle France S.A.S Nestrade S.A.
Nestle Ghana Ltd Osem Investments Ltd.
Nestle Hong Kong Ltd PJSC âLviv Confectionery Factory svitochâ
Nestle Hungaria Kft. PT Nestle Indonesia
Nestle International Travel Retail Quality Coffee Products Ltd.
Nestle Iran Sanpellegrino S.p.A.
Nestle Japan Ltd. Servcom S.A.
Nestle Korea Ltd SMA Nutrition India Private Ltd
Nestle Lanka PLC Societe des Produits Nestle S.A
Nestle Manufacturing (Malaysia) Sdn Bhd Wyeth Nutritionals Ireland Ltd
Nestle Mexico S.A. de C.V.
Nestle Middle East FZE Nestle Middle East Manufacturing Nestle Nederland B.V.
Nestle Nigeria Plc
Nestle Operational Services Worldwide S.A Nestle Pakistan Ltd.
Nestle Panama S.A.
Nestle Philippines, Inc.
Nestle Products (Mauritius) Ltd Nestle Polska S.A.
Nestle Product Technology Centre Nestle Products Sdn Bhd
(iii) Key Management Personnel
Suresh Narayanan, Chairman and Managing Director Aristides Protonotarios, Director - Technical
(Managing Director w.e.f. 01st August, 2015) Shobinder Duggal, Director - Finance & Control and CFO
(Chairman and Managing Director w.e.f. 29th October, 2015)
Etienne Benet - Managing Director (Managing Director up to 25th July, 2015)
(iv) Employees benefit trusts where control exists
Nestle India Limited Employees Provident Fund Trust Nestle India Limited Employeesâ Gratuity Trust Fund
7. SEGMENT REPORTING
Based on the guiding principles given in Accounting Standard on âSegment Reportingâ (AS-17), the Companyâs primary business segment is Food. The food business incorporates product groups viz. Milk Products and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates and Confectionery, which mainly have similar risks and returns. As the Companyâs business activity falls within a single primary business segment the disclosure requirements of AS -17 in this regard are not applicable.
8. DISCLOSURE UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
On the basis of confirmation obtained from suppliers who have registered themselves under the Micro Small Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:
Dec 31, 2014
1. NET PROVISION FOR CONTINGENCIES
The Company has created a contingency provision of Rs. 734.8 millions
(Previous year Rs. 736.4 millions) for various contingencies resulting
mainly from matters, which are under litigation / related disputes and
other uncertainties requiring management judgement. The Company has
also reversed, utilised/settled contingency provision of Rs. 121.0
millions (Previous year Rs. 115.9 millions) due to the satisfactory
settlement of certain litigations and settlement of obligations under
free replacement warranty for which provision is no longer required.
Notes:
(a) Litigations and related disputes - represents estimates made mainly
for probable claims arising out of litigations / disputes pending with
authorities under various statutes (i.e. Income Tax, Excise Duty,
Service Tax, Entry tax, Sales and Purchase Tax, etc.). The probability
and the timing of the outflow with regard to these matters depend on
the ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company
which are covered under free replacement warranty on becoming unfit for
human consumption during the prescribed shelf life. The timing and
probability of outflow with regard to these matters will depend on the
external environment and the consequent decision/ conclusion by the
Management.
2. CONTINGENT LIABILITIES AND COMMITMENTS
Contingent liabilities
Claims against the Company not acknowledged
as debts: (Rs. in (Rs. in
millions) millions)
Indirect Taxes 195.4 127.6
Capital Commitments
Capital expenditure commitments remaining
to be executed and not 201.3 599.2
provided for [net of advances Rs. 19.3
millions (Previous year Rs. 25.6 millions)]
Corporate social responsibility expense
commitments 38.6 -
The Company also has other commitments for purchase /sales of goods and
services for which orders are issued after considering requirements as
per the operating cycle of the business.
3. SEGMENT REPORTING
Based on the guiding principles given in Accounting Standard 17 on
''Segment Reporting'' (AS-17), the Company''s primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
Company''s business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
4. DISCLOSURE UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006
On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the Company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs. 24.1 millions
(Previous year Rs. 51.6 millions). Further, no interest during the year
has been paid or payable under the terms of the MSMED Act, 2006.
5. EMPLOYEE BENEFIT PLANS
(a) Defined contribution plans
The Company makes contributions to the Provident Fund, Employee State
Insurance, National Pension System etc. for eligible employees. Under
these plans, the Company is required to contribute a specified
percentage of payroll costs. The Company during the year has recognised
Rs. 258.2 millions (Previous year Rs. 221.3 millions) as expense in the
statement of profit and loss during the year.
Out of the total contribution made for Provident Fund, Rs. 114.3
millions (Previous year Rs. 112.4 millions) is made to the Nestle India
Limited Employees Provident Fund Trust while the remainder contribution
is made to Provident Fund Plans operated by the Regional Provident Fund
Commissioners. The members of the Provident Fund Trust are entitled to
the rate of interest declared by the Central Government under the
Employees Provident Funds and Miscellaneous Provisions Act, 1952. The
shortfall, if any, is made good by the Company in the year in which it
arises.
The total plan liabilities under the Nestle India Limited Employees
Provident Fund Trust as at December 31, 2014 as per the unaudited
financial statements for the year then ended is Rs. 2,319.4 millions
(Previous year Rs. 1,981.9 millions) as against total plan assets of
Rs. 2,332.0 millions (Previous year Rs. 1,995.5 millions). The funds of
the Trust have been invested under various securities as prescribed
under the rules of the Trust.
(b) Defined Benefit plans
The company provides gratuity and defined benefit pension to eligible
employees. The gratuity plan provides for a lump sum payment to vested
employees at retirement, death while in employment or on termination of
employment. Gratuity vesting occurs upon completion of five years of
service. The Company makes contributions to the Nestle India Limited
Employees'' Gratuity Trust Fund. Defined benefit pension is a
discretionary, unfunded plan.
6. RESTRICTED STOCK UNIT (RSU)/ PERFORMANCE SHARE UNIT (PSU) PLAN
The Company participates in the Nestle Restricted Stock Unit (RSU)/
Performance Share Unit (PSU) Plan of Nestle S.A., whereby select
employees are granted non-tradable units with the right to obtain
Nestle S.A. shares or cash equivalent. Restricted Stock Units (RSU)/
Performance Share Units (PSU) granted to employees vest, subject to
certain conditions, after completion of three years. Upon vesting
Nestle S.A. determines, whether shares, free of charge or cash
equivalent to the value of shares, is to be transferred to the
employees. The Company has to pay Nestle S.A. an amount equivalent to
the value of Nestle S.A. shares on the date of vesting, delivered to
the employees.
7. OPERATING LEASES
The Company''s significant leasing arrangements are primarily in respect
of operating leases for premises (office, residential, warehouses etc.)
and vehicles. The aggregate lease rentals charged to the statement of
profit and loss account are Rs. 681.6 millions (Previous year Rs. 607.3
millions).
8. EXTERNAL COMMERCIAL BORROWINGS
The Company had drawn US Dollars 192 millions in the year 2011 and 2012
from Nestle S.A. for 5 years for the purpose of capital expenditure
under the External Commercial Borrowings (ECB) approval from Reserve
Bank of India. During the current year, Company has repaid the entire
ECB of US Dollars 192 millions.
9. The Company has reviewed the General License Agreement in 2013, the
Board of Directors of the Company negotiated and Nestle S.A. accepted
an increase in royalty from 3.5% to 4.5% of domestic sales in a
staggered manner by making an increase of 0.20% per annum over five
years effective January 1, 2014. The royalty rate on exports will now
be aligned to 4.5% of sales.
10. During the year, the Company has incurred Rs. 85.1 millions
towards corporate social responsibility activities in accordance with
section 135 of the Companies Act, 2013. The Company also has
outstanding commitments of Rs. 38.6 millions as on 31st December, 2014
towards corporate social responsibility projects. This includes
expenditure on projects which are relatively long term in nature and
costs spread over several months.
Dec 31, 2013
1. Net provision for contingencies
The Company has created a contingency provision of Rs. 736.4 millions
(Previous year Rs. 556.4 millions) for various contingencies resulting
mainly from matters, which are under litigation / related disputes and
other uncertainties requiring management judgment. The Company has
also reversed, utilised/settled contingency provision of Rs. 115.9
millions (Previous year Rs. 298.0 millions) due to the satisfactory
settlement of certain litigations for which provision is no longer
required.
(a) Litigations and related disputes - represents estimates made mainly
for probable claims arising out of litigations / disputes pending with
authorities under various statutes (i.e. Income Tax, Excise Duty,
Service Tax, Entry tax, Sales and Purchase Tax etc.). The probability
and the timing of the outflow with regard to these matters depend on the
ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company
which are covered under free replacement warranty on becoming unft for
human consumption during the prescribed shelf life. The timing and
probability of outflow with regard to these matters will depend on the
external environment and the consequent decision/ conclusion by the
Management
2. Contingent liabilities and commitments
Contingent liabilities
Claims against the Company not
acknowledged as debts:
Indirect Taxes 127.6 117.0
Capital Commitments
Capital expenditure commitments remaining to
be executed and not 599.2 921.6
provided for [net of advances Rs. 25.6
millions (Previous year Rs. 59.7
millions)]
3. Segment reporting
Based on the guiding principles given in Accounting Standard on
''Segment Reporting'' (AS-17), the Company''s primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
Company''s business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
4. Disclosure under the Micro, Small and Medium Enterprises
Development Act, 2006
On the basis of confirmation obtained from suppliers who have registered
themselves under the Micro Small and Medium Enterprises Development
Act, 2006 (MSMED Act, 2006) and based on the information available with
the Company, the balance due to Micro & Small Enterprises as defend
under the MSMED Act, 2006 is Rs. 51.6 millions (Previous year Rs. 12.6
millions). Further, no interest during the year has been paid or
payable under the terms of the MSMED Act, 2006.
5. Employee Plans
(a) Defned contribution plans
The Company makes contributions to the Provident Fund, Employee State
Insurance, National Pension System etc. for eligible employees. Under
these plans, the Company is required to contribute a specified
percentage of payroll costs. The Company during the year has recognised
Rs. 221.3 millions (Previous year Rs. 221.7 millions) as expense in the
statement of profit and loss during the year.
Out of the total contribution made for Provident Fund, Rs. 112.4 millions
(Previous year Rs. 104.2 millions) is made to the Nestli India Limited
Employees Provident Fund Trust while the remainder contribution is made
to Provident Fund Plans operated by the Regional Provident Fund
Commissioners. The members of the Provident Fund Trust are entitled to
the rate of interest declared by the Central Government under the
Employees Provident Funds and Miscellaneous Provisions Act, 1952. The
shortfall, if any, is made good by the Company in the year in which it
arises.
The total plan liabilities under the Nestli India Limited Employees
Provident Fund Trust as at December 31, 2013 as per the unaudited
financial statements for the year then ended is Rs. 1,981.9 millions
(Previous year Rs. 1,658.2 millions) as against total plan assets of Rs.
1,995.5 millions (Previous year Rs. 1,667.4 millions). The funds of the
Trust have been invested under various securities as prescribed under
the rules of the Trust.
(b) Defend Benefit plans
The company provides gratuity and defend benefit pension to eligible
employees. The gratuity plan provides for a lump sum payment to vested
employees at retirement, death while in employment or on termination of
employment. Gratuity vesting occurs upon completion of five years of
service. The Company makes contributions to the Nestli India Limited
Employees'' Gratuity Trust Fund. Defend benefit pension is a
discretionary, unfunded plan.
The estimates of future salary increases considered in actuarial
valuation, take account of inflation, performance, promotion and other
relevant factors such as demand and supply in the employment market.
The expected return on plan assets is determined considering several
applicable factors mainly the composition of the plan assets held,
assessed risks of assets management, historical results of return on
plan assets and the policy for plan assets management.
6. Restricted Stock Unit ( RSU ) Plan
The Company participates in the Nestli Restricted Stock Unit ( RSU )
Plan of Nestli S.A., whereby select employees are granted non-tradable
Restricted Stock Units with the right to obtain Nestli S.A. shares or
cash equivalent. Restricted Stock Units granted to employees vest,
subject to certain conditions, after completion of three years. Upon
vesting Nestli S.A. determines, whether shares, free of charge or cash
equivalent to the value of shares, is to be transferred to the
employee. The Company has to pay Nestli S.A. an amount equivalent to
the value of Nestli S.A. shares on the date of vesting, delivered to
the employee.
7. Operating Leases
The Company''s significant leasing arrangements are primarily in respect
of operating leases for premises (office, residential, warehouses etc.)
and vehicles. The aggregate lease rentals charged to the statement of
profit and loss are Rs. 607.3 millions (Previous year Rs. 512.8 millions).
8. External Commercial Borrowings
The Company had drawn US Dollars 192 millions in the year 2011 and 2012
from Nestli S.A. for 5 years for the purpose of capital expenditure
under the External Commercial Borrowings (ECB) approval from Reserve
Bank of India. Total loan outstanding as at 31st December 2013 stood at
Rs. 11,871.4 millions (Previous year Rs. 10,499.5 millions).
Dec 31, 2012
1. Net provision for contingencies
The Company has created a contingency provision of Rs. 481.4 millions
(Previous year Rs. 492.6 millions) for various contingencies resulting
mainly from matters, which are under litigation / related disputes and
other uncertainties requiring management judgment. The Company has
also reversed contingency provision of Rs. 223.0 millions (Previous year
Rs. 23.6 millions) due to the satisfactory settlement of certain
litigations for which provision is no longer required.
Provisions for Contingencies for the year ended 31.12.2012 is not
comparable with the same period of 2011 due to timing difference of
certain provisions arising from change in regulatory procedures.
Notes:
(a) Litigations and related disputes - represents estimates made mainly
for probable claims arising out of litigations / disputes pending with
authorities under various statutes (i.e. Income Tax, Excise Duty,
Service Tax, Sales and Purchase Tax etc.). The probability and the
timing of the outflow with regard to these matters depend on the
ultimate settlement /conclusion with the relevant authorities.
(b) Others - include estimates made for products sold by the Company
which are covered under free replacement warranty on becoming unfit for
human consumption during the prescribed shelf life. The timing and
probability of outflow with regard to these matters will depend on the
external environment and the consequent decision/ conclusion by the
Management.
2012 2011
(Rs. in
millions) (Rs. in
millions)
2. Contingent liabilities and
commitments. Contingent liabilities
Claims against the company not
acknoledged as debts:
VAT matters 117.0 -
Capital commitments
Capital expenditure commitments
remaining to be executed and not
provided for
(net of advance Rs. 59.7 millions
(Previous year Rs. 468.6 millions) 921.6 4,618.7
3. Segment reporting
Based on the guiding principles given in Accounting Standard on Segment
Reporting'' (AS-17), the Company''s primary business segment is Food. The
food business incorporates product groups viz. Milk Products and
Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates and
Confectionery, which mainly have similar risks and returns. As the
Company''s business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
iii) Key Management Personnel
Antonio Helio Waszyk - Chairman & Managing Director
Shobinder Duggal, Director - Finance & Control Christian Schmid,
Director - Technical
iv) Employees benefit trusts where control exists Nestlé India Limited
Employees'' Provident Fund Trust Nestlé India Limited Employees''
Gratuity Trust Fund
4. Disclosure under the Micro, Small and Medium Enterprises
Development Act, 2006
On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the Company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs. 12.6 millions
(Previous year Rs. 44.8 millions). Further, no interest during the year
has been paid or payable under the terms of the MSMED Act, 2006.
5. Employee Plans
a) The Company makes contribution towards employees'' provident fund and
employees'' state insurance plan scheme. Under the rules of these
schemes, the Company is required to contribute a specified percentage
of payroll costs. The Company during the year recognised Rs. 221.7
millions (Previous year Rs. 193.0 millions) as expense towards
contributions to these plans.
Out of the total contribution made for Employees'' Provident Fund, Rs.
104.2 millions (Previous year Rs. 89.2 millions) is made to the Nestle
India Limited Employees Provident Fund Trust while the remainder
contribution is made to Provident Fund Plan operated by the Regional
Provident Fund Commissioner.
The total plan liabilities under the Nestle India Limited Employees
Provident Fund Trust as at December 31, 2012 as per the unaudited
financial statements for the year then ended is Rs. 1,658.2 millions
(Previous year Rs. 1,426.4 millions) as against total plan assets of Rs.
1,667.4 millions (Previous year Rs. 1,416.2 millions). The funds of the
Trust have been invested under various securities as prescribed under
the rules of the Trust.
b) Gratuity scheme - This is a funded defined benefit plan for
qualifying employees. The Company makes contributions to the Nestle
India Limited Employees'' Gratuity Trust Fund. The scheme provides for a
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Vesting occurs upon
completion of five years of service.
c) Pension scheme - The Company has a discretionary unfunded defined
pension benefit scheme for its qualifying employees.
6. Restricted Stock Unit ( RSU ) Plan
The Company participates in the Nestlé Restricted Stock Unit ( RSU )
Plan of Nestlé S.A., whereby select employees are granted non- tradable
Restricted Stock Units with the right to obtain Nestlé S.A. shares or
cash equivalent. Restricted Stock Units granted to employees vest,
subject to certain conditions, after completion of three years. Upon
vesting Nestlé S.A. determines, whether shares, free of charge or cash
equivalent to the value of shares, is to be transferred to the
employee. The Company has to pay Nestlé S.A. an amount equivalent to
the value of Nestlé S.A. shares on the date of vesting, delivered to
the employee.
7. Operating Leases
The Company''s significant leasing arrangements are primarily in respect
of operating leases for premises (office, residential, warehouses etc.)
and vehicles. The aggregate lease rentals charged to the statement of
profit and loss account are Rs. 512.8 millions (Previous year Rs. 440.6
millions).
8. External Commercial Borrowings
During first half of 2012, the Company had drawn US Dollars 56 millions
(Previous year US dollars 136 millions) from Nestlé S.A. for 5 years
for the purpose of capital expenditure under the External Commercial
Borrowings (ECB) approval from Reserve Bank of India. Total amount of
loan outstanding as at 31st December 2012 is Rs. 10,499.5 millions
(Previous year Rs. 7,249.5 millions). Total cost of this borrowing,
including interest (net of earnings from temporarily surplus
liquidities) and exchange differences, during 2012 is Rs. 693.7 millions
(Previous year Rs. 1,129.2 millions) which is either treated as capital
expenditure or charged to statement of profit and loss as per the
accounting policy details of which are as follow:
9. Buyer''s Credit
During January 2012, the Company had drawn US Dollars 6.7 millions
(Previous year US dollars 46 millions) as Buyer''s Credit from various
commercial banks for a period up to one year. Total loan amount has been
paid during the year and outstanding as at 31st December 2012 is Nil
(Previous year Rs. 2,450.8 millions). Total cost of this borrowing,
including interest and exchange differences, during 2012 is Rs. 112.9
millions (Previous year Rs. 19.5 millions) which is either treated as
capital expenditure or charged to statement of profit and loss as per
the accounting policy details of which are as follow:
10. The Company''s borrowing facilities, comprising fund based and non
fund based limits from various bankers, are secured by way of a first
pari passu charge on all movable assets (excluding plant and
machinery), finished goods (including stock-in-trade),
work-in-progress, raw materials and book debts.
b) All the forward contracts are for hedging foreign exchange exposures
relating to the underlying transactions and firm commitments or highly
probable forecast transaction.
Dec 31, 2010
1. There is no impairment loss on fixed assets during the year ended
December 31, 2010. For the previous year impairment loss on fixed
assets (gross -Rs 103,168 thousands, net of deferred taxes - Rs. 68,101
thousands) relates to various items of plant and machinery that have
been brought down to their recoverable values upon evaluation of future
economic benefits from their use.
2. Segment reporting
Based on the guiding principles given in Accounting Standard on
Segment Reporting (AS-17), the Companys primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
Companys business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
3. Related party disclosures under Accounting Standard 18
Holding companies: Nestle S.A. and Maggi Enterprises Limited
Fellow subsidiaries are disclosed to comply with para 3 (a) of
Accounting Standard -18 on "Related Party Disclosures" albeit these do
not control or exercise significant influence on Nestle India Limited:
Belte Schweiz AG, Nestec S.A., Nestec York Limited, Nestle (China)
Limited, Nestle (PNG) Limited, Nestle (South Africa) (Pty) Limited,
Nestle (Thai) Limited, Nestle Australia Limited, Nestle Bangladesh
Limited, Nestle Central And West Africa Ltd., Nestle Deutschland AG,
Nestle Egypt S.A.E., Nestle Hong Kong Limited, Nestle Foods Kenya Ltd.,
Nestle France S.A.S., Nestle Ghana Ltd., Nestle Hungaria Kft., Nestle
Iran (Private Joint Stock Company), Nestle Japan Ltd., Nestle Korea
Ltd., Nestle Kuban LLC, Nestle Lanka PLC, Nestle Manufacturing
(Malaysia) Sdn. Bhd, Nestle Middle East FZE, Nestle Nederland B.V.,
Nestle Pakistan Ltd., Nestle Philippines, Inc., Nestle Product
Technology Centre Lebensmittelforschung GMBH, Nestle Products Sdn.
Bhd., Nestle R&D Centre (Pte) Limited, Nestle Romania S.R.L., Nestle
Shanghai Limited, Nestle Singapore (PTE) Limited, Nestle Suisse S.A.,
Nestle Taiwan Limited, Nestle Tianjin Limited, Nestle Turkiye Gida
Sanayi A.S., Nestle UK Ltd., Nestle USA Inc, Nestle Vietnam Limited,
Nestrade-Nestle World Trade Corporation, Osem Food Industries Limited,
Osem Uk Limited, PT Nestle Indonesia, Servcom SA, Societe des Produits
Nestle S.A., Nestle R&D Centre India Private Limited, Nestle Canada
Inc., Nestle Waters France S.A.S, Nestle R&D Center Shanghai Limited,
Nestle Italiana S.p.A, Nestle Maroc S.A, Nestle New Zealand Limited,
Nestle Shuangcheng Limited, Nestle Mexico S.A.de C.V, Nestle Business
Services S.A., Nestle Equatorial Africa Region (EPZ) Limited, Nestle
Cesko s.r.o., Nestle Product Technology Centre, Nestle Asean (Malaysia)
Sdn. Bhd., Societe Pour LExportation Des Produits Nestle S.A., Al
Manhal Water Factory Co. Ltd., Nestle Manufacturing Ltd., Nestle Waters
Product Technology Centre, Nestle Polska S.A., Nestle Chile S.A.,
Nestle Brasil Ltda., Nestle Zimbabwe (Pvt) Ltd., Nestle Dubai
Manufacturing LLC, Quality Coffee Products Ltd., Nestle Belgilux S.A.,
Nestle Cote dIvoire, Nestle Syria Ltd., Nestle Dongguan Limited,
Nestle Capital Advisers S.A., Osem Investments Ltd., Nestle Nigeria
PLC, Nestle Purina PetCare France S.A.S, Saudi Food Industries Co.
Ltd., Nestle R&D Centre Beijing Ltd., Sanpellegrino S.p.A., Nestle
(Ireland) Ltd., Nestle Purina Petcare Company, Nestle Nespresso S.A.,
Nestle Espana S.A.
Whole time directors: Antonio Helio Waszyk, Chairman & Managing
Director, Martial G Rolland, Chairman & Managing Director (upto
September 30, 2009), Shobinder Duggal, Director - Finance & Control,
Christian Schmid, Director - Technical (From August 02, 2010).
4. On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs. 52,451
thousands (previous year Rs. 16,396 thousands). Further, no interest
during the year has been paid or payable under the terms of the MSMED
Act, 2006.
5. Employee Plans
a) The Company makes contribution towards employees provident fund and
employees state insurance plan scheme. Under the rules of these
schemes, the Company is required to contribute a specified percentage
of payroll costs. The Company during the year recognised Rs. 156,180
thousands (previous year Rs. 126,811 thousands) as expense towards
contributions to these plans.
Out of the total contribution, made for employees provident fund, Rs.
77,540 thousands (previous year Rs. 67,262 thousands) is made to the
Nestle India Limited Employees Provident Fund Trust while the remainder
contribution is made to provident fund plan operated by the Regional
Provident Fund Commissioner. The outstanding balance payable as at
December 31, 2010 to the Trust is Rs. 14,078 thousands (previous year
Rs. 11,986 thousands) on account of companys and employees
contribution for the month of December 2010. The same has since been
paid on 05.01.2011.
The total plan liabilities under the Nestle India Limited Employees
Provident Fund Trust as at December 31, 2010 as per the unaudited
financial statements for the year then ended is Rs. 1,202,164 thousands
(previous year Rs. 1,007,533 thousands) as against total plan assets of
Rs. 1,198,580 thousands (previous year Rs. 1,004,449 thousands). The
funds of the Trust have been invested under various securities as
prescribed under the rules of the Trust.
b) Gratuity scheme - This is a funded defined benefit plan for
qualifying employees. The Company makes contributions to the Nestle
India Limited Employees Gratuity Trust Fund. The scheme provides for a
lumpsum payment to vested employees at retirement, death while in
employment or on termination of employment. Vesting occurs upon
completion of five years of service.
c) Pension scheme - The Company operates a non funded pension defined
benefit scheme for its employees that qualify under the scheme. The
scheme is discretionary in nature.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors such as demand and supply in the employment market.
The expected return on plan assets is determined considering several
applicable factors mainly the composition of the plan assets held,
assessed risks of assets management, historical results of return on
plan assets and the policy for plan assets management.
6. The Companys significant leasing arrangements are primarily in
respect of operating leases for premises (office, residential,
warehouses etc.) and vehicles. These leasing arrangements which are not
non-cancellable are usually renewable on mutually agreeable terms. The
aggregate lease rentals charged to the profit and loss account are Rs
395,851 thousands (previous year Rs. 332,706 thousands).
7. The Companys borrowing facilities, comprising fund based and non
fund based limits from various bankers, are secured by way of a first
pari passu charge on all movable assets (excluding plant and
machinery), finished goods, work in progress, raw materials and book
debts.
8. Previous year figures have been regrouped/reclassified wherever
necessary, to make them comparable.
Dec 31, 2009
1. During the year ended December 31, 2009, impairment loss on fixed
assets (gross - Rs. 103,168 thousands, net of deferred taxes - Rs.
68,101 thousands) relates to various items of plant and machinery that
have been brought down to their recoverable values upon evaluation of
future economic benefits from their use.
2. Segment reporting
Based on the guiding principles given in Accounting Standard on
ÃSegment Reportingà (AS-17), the CompanyÃs primary business segment is
Food. The food business incorporates product groups viz. Milk Products
and Nutrition, Beverages, Prepared dishes and cooking aids, Chocolates
and Confectionery, which mainly have similar risks and returns. As the
CompanyÃs business activity falls within a single primary business
segment the disclosure requirements of AS -17 in this regard are not
applicable.
3. Related party disclosures under Accounting Standard 18
Holding companies: Nestlé S.A. and Maggi Enterprises Limited
Fellow subsidiaries are disclosed to comply with para 3 (a) of
Accounting Standard -18 on ÃRelated party Disclosuresà albeit these do
not control or exercise significant influence on Nestlé India Limited:
Belte Schweiz AG, Limited., Nestec S.A., Nestec York Limited, Nestlé
(Fiji) Limited, Nestlé (China) Limited., Nestlé (PNG) Limited, Nestlé
(South Africa) (Pty) Limited, Nestlé (Thai) Limited, Nestlé Australia
Limited, Nestlé Bangladesh Limited, Nestlé Brazil Ltda, Nestlé Central
And West Africa Ltd, Nestlé Deutschland AG, Nestlé Egypt S.A.E., Nestlé
Foods Kenya Ltd, Nestlé France S.A.S., Nestlé Ghana Ltd, Nestlé Hong
Kong Limited, Nestlé Hungaria Kft., Nestlé Iran (Private Joint Stock
Company), Nestlé Japan Ltd, Nestlé Korea Ltd, Nestlé Kuban LLC, Nestlé
Lanka PLC, Nestlé Manufacturing (Malaysia) Sdn. Bhd, Nestlé Middle East
FZE, Nestlé Nederland B.V., Nestlé Pakistan Ltd, Nestlé Philippines,
Inc., Nestlé Polska S.A., Nestlé Product Technology Centre
Lebensmittelforschung GMBH, Nestlé Products Sdn..Bhd., Nestlé R&D
Centre (Pte) Limited, Nestlé Romania S.R.L., Nestlé Shanghai Limited.,
Nestlé Singapore (PTE) Limited, Nestlé Suisse S.A., Nestlé Taiwan
Limited, Nestlé Tianjin Limited., Nestlé Trading (Fiji) Limited, Nestlé
Turkiye Gida Sanayi A.S., Nestlé UK Ltd, Nestlé USA Inc, Nestlé Vietnam
Limited., Nestlé Waters Supply Est, Nestrade-Nestlé World Trade
Corporation, Osem Food Industries Limited, Osem Uk Limited, PT Nestlé
Indonesia, Servcom SA, Société des Produits Nestlé S.A., Nestlé R&D
Centre India Private Limited (formerly Speciality Foods India Pvt
Limited), Nestlé Canada Inc, Nestlé Bolivia S.A., Nestlé Waters France
S.A.S, Nestlé R&D Center Shanghai Limited, Nestlé Italiana S.p.A,
Nestlé Maroc S.A, Nestlé Portugal S.A, Nestlé Panama S.A, Nestlé
Senegal, Nestlé Adriatic doo, Nestlé New Zealand Limited, Nestlé
Shuangcheng Limited, Nestlé Mexico S.A.de C.V, Nestlés Products
(Mauritius) Limited, Nestlé Business Services S.A., Nestlé Dongguan
Limited, Nestlé Equatorial Africa Region (EPZ) Limited, Nestlé Cesko
s.r.o., Nestlé Product Technology Centre, Nestlé Asean (Malaysia) Sdn.
Bhd., Societe Pour LÃExportation Des Produits Nestlé S.A., Al Manhal
Water Factory Co. Ltd., Nestlé Syria Ltd., Nestlé Manufacturing Ltd.,
Nestlé Waters Product Technology Centre, Nestlé (Ireland) Ltd.
Whole time directors: Antonio Helio Waszyk, Chairman & Managing
Director (w.e.f. October 22, 2009), Martial G Rolland, Chairman &
Managing Director (upto September 30, 2009), Shobinder Duggal, Director
- Finance & Control.
4. On the basis of confirmation obtained from suppliers who have
registered themselves under the Micro Small Medium Enterprise
Development Act, 2006 (MSMED Act, 2006) and based on the information
available with the company, the balance due to Micro & Small
Enterprises as defined under the MSMED Act, 2006 is Rs.16,396 thousands
(previous year Rs. 15,917 thousands). Further, no interest during the
year has been paid or payable under the terms of the MSMED Act, 2006.
5. Employee Plans
a) The company makes contribution towards employeesà provident fund and
employeesà state insurance plan scheme. Under the rules of these
schemes, the Company is required to contribute a specified percentage
of payroll costs. The Company during the year recognised Rs. 126,811
thousands (previous year Rs. 102,088 thousands) as expense towards
contributions to these plans.
Out of the total contribution, made for employeesà provident fund, Rs.
67,262 thousands (previous year Rs. 50,793 thousands) is made to the
Nestlé India Limited Employees Provident Fund Trust while the remainder
contribution is made to provident fund plan operated by the Regional
Provident Fund Commissioner. The outstanding balance payable as at
December 31, 2009 to the Trust is Rs. 11,986 thousands (previous year
Rs. 10,741 thousands) on account of companyÃs and employees
contribution for the month of December 2009.
The total plan liabilities under the Nestlé India Limited Employees
Provident Fund Trust as at December 31, 2009 as per the unaudited
financial statements for the year then ended is Rs. 1,007,533 thousands
(previous year Rs. 877,873 thousands) as against total plan assets of
Rs. 1,004,449 thousands (previous year Rs. 878,195 thousands). The
funds of the Trust have been invested under various securities as
prescribed under the rules of the Trust.
b) Gratuity scheme - This is a funded defined benefit plan for
qualifying employees. The company makes contributions to the Nestlé
India Limited Employeesà Gratuity Trust Fund. The scheme provides for a
lumpsum payment to vested employees at retirement, death while in
employment or on termination of employment. Vesting occurs upon
completion of five years of service.
c) Pension scheme - The company operates a non funded pension defined
benefit scheme for its employees that qualify under the scheme. The
scheme is discretionary in nature.
6. The Company participates in the Nestlé Restricted Stock Unit (RSU)
Plan of Nestlé S.A., whereby select employees are granted non-
tradeable Restricted Stock Units with the right to obtain Nestlé S.A.
shares or cash equivalent. Restricted Stock Units granted to employees
vest, subject to certain conditions, after completion of three years.
Upon vesting Nestlé S.A. determines, whether shares, free of charge or
cash equivalent to the value of shares, is to be transferred to the
employee. The Company has to pay Nestlé S.A. an amount equivalent to
the value of Nestlé S.A. shares on the date of vesting, delivered to
the employee. Provisions are made based on estimates including Nestlé
S.A. share price over the vesting period.
7. The CompanyÃs significant leasing arrangements are primarily in
respect of operating leases for premises (office, residential,
warehouses etc.) and vehicles. These leasing arrangements which are not
non-cancellable are usually renewable on mutually agreeable terms. The
aggregate lease rentals charged to the profit and loss account are Rs.
332,706 thousands (previous year Rs. 271,157 thousands).
8. The Companys borrowing facilities, comprising fund based and non
fund based limits from various bankers, are secured by way of a first
pari passu charge on all movable assets (excluding plant and
machinery), finished goods, work in progress, raw materials and book
debts.
9. During the calendar year 2007, the Company had sought approval of
the HonÃble Delhi High Court under Sections 391 to 394 of the Companies
Act, 1956 for a Scheme of Arrangement (ÃSchemeÃ) between the Company
and its shareholders and creditors. The Scheme envisaged utilisation of
following amounts for payment to the shareholders, subject to
applicable taxes :
i) An amount of Rs. 432,363 thousands as lying in the Share Premium
Account of the Company; and
ii) An amount of Rs. 430,857 thousands from the General Reserve Account
of the Company, which was voluntarily transferred by the Company in
excess of the prescribed 10% of the profits of the Company in
accordance with the provisions of the Companies (Transfer of Profits to
Reserves) Rules, 1975 during the financial years 1981 to 1996.
The equity shareholders supported the Scheme at a meeting held on May
3, 2007 as per directions of the HonÃble Delhi High Court.
Subsequently, the Honourable Delhi High Court vide its Order dated
September 30, 2008 sanctioned the aforesaid Scheme and the Scheme
became effective from October 31, 2008 after filing the certified copy
of the aforesaid Order with the Registrar of Companies, NCT of Delhi
and Haryana. Thereafter as per the Scheme, after deducting applicable
corporate dividend tax from the aggregate amount of Rs. 863,220
thousands credited to the Profit and Loss Account, a Special Dividend
of Rs.7.50 (Rupees seven and paise fifty only) per share calculated by
dividing the net amount by the outstanding 96,415,716 equity shares of
face value of Rs. 10/- each and rounding it off to the nearest half
Rupee, was paid on November 26, 2008 to those shareholders whose name
appeared in the Register of Members/ Beneficial Owners on November 17,
2008.
10. The Company has entered into the Business Purchase Agreement dated
18th December, 2009 with Nestlé R&D Centre India Private Limited
(formerly Speciality Foods India Private Limited) [SFIPL], a wholly
owned subsidiary of Nestlé SA for the purchase of Healthcare Nutrition
Business, with effect from 1st January, 2010 alongwith identified
assets and liablities. The total consideration net of liabilities,
determined for the acquisition is Rs. 67,005 thousands. Accordingly,
with effect from 1st January, 2010, the Company has acquired the
Healthcare Nutrition Business from SFIPL.
11. Previous year figures have been regrouped/reclassified wherever
necessary, to make them comparable.
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Nestle India Ltd. குறித்த கூடுதல் தகவல்களை
-
Nestle India Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Nestle India Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- போனஸ்
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
Nestle India Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Nestle India Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Nestle India Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Nestle India Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Nestle India Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
