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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 500096ISIN: INE016A01026INDUSTRY: Personal Care

BSE   ` 432.80   Open: 429.45   Today's Range 423.25
433.45
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490.70
Year End :2018-03 

1 Repayment terms and security disclosure for the outstanding non-current borrowings as at 31 March, 2018 and 31

March, 2017:

Secured borrowings facility from banks:

i) Facility of Rs, 100.00 crores, bearing interest rate of 7.25% per annum having balance amount repayable by way of a bullet payment after 37 months from the date of disbursal, i.e., 05 July, 2016. The loan is secured by way of sole hypothecation and equitable mortgage over movable and immovable assets (created by the loan) at Pantnagar, Uttarakhand, owned by the Company.

ii) Facility of Rs, 75.00 crores, bearing interest rate of 6.90% per annum having balance amount repayable by way of bullet payment after 3 years from date of first drawdown, i.e., 26 September, 2016. The loan is secured by way of hypothecation over movable fixed assets at Sonitpur, Assam, owned by the Company.

iii) Facility of Rs, 25.00 crores, bearing interest rate of 6.10% per annum having balance amount repayable by way of bullet payment after 37 months from the date of disbursal, i.e., 16 March, 2017. The loan is secured by way of equitable mortgage over movable and immovable assets at Baddi, Himachal Pradesh and Pantnagar, Uttarakhand, owned by the Company.

* Revenue for the period ended 31 March, 2018 is net of Goods and Service Tax (GST) which is applicable from 1 July, 2017, however, revenue for the periods up to 30 June, 2017 is net of VAT but gross of excise duty. Accordingly, revenue for the year ended 31 March, 2018 is not comparable with the previous year presented in these financial statements. Similarly, cost of goods sold and expenses are also not comparable.

# Represents the amount of budgetary support to be provided by the Government of India for the existing eligible manufacturing units operating under different industrial promotion tax exemption schemes, pursuant to the notification no: F.No. 10(1)/2017-DBA-II/NER issued by the Ministry of Commerce and Industry dated 05 October, 2017. The same has been recorded and disclosed in accordance with the Ind AS 20 'Government Grants.

* Cost of material consumed includes Rs, 1.56 crores (31 March, 2017: Rs, 1.50 crores) towards research and development, refer note 39.1.

a The Board of Directors at its meeting held on 1 May, 2018 have recommended a payment of final dividend of Rs, 6.25 per equity share (including special dividend of Rs, 5 per equity share) with face value of Rs, 1 each for the financial year ended 31 March, 2018, which amounts to Rs, 1,327.25 crores including dividend distribution tax of Rs, 226.30 crores.

The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.

# Paid to shareholders during the financial year 2017-18.

# based on discussions with the solicitors / favourable decisions in similar cases / legal opinions taken by the Company, the Management believes that the Company has a good chance of success in above-mentioned cases and hence, no provision is considered necessary.

* Sales tax provisions made towards classification matters and towards rate differences matters at various levels including assessing authority / commissioner's level / Appellate Tribunal and at Hon'ble High Courts.

** Entry tax provisions made towards tax difference matters at Orissa at various levels including Appellate Tribunal and at Hon'ble High Courts.

# Excise provisions made towards classification matters at various levels including Commissioner (Appeal) and Appellate Tribunal.

a Service tax provisions made towards service tax distribution (ISD) matters at various levels including Commissioner (Appeal) and Appellate Tribunal.

Notes:

i) These provisions represent estimates made mainly for probable claims arising out of litigations/disputes pending with authorities under various statutes (Excise duty, Service tax, Sales tax, Entry tax). The probability and the timing of the outflow with regard to these matters depend on the final outcome of the litigations/disputes. Hence, the Company is not able to reasonably ascertain the timing of the outflow.

ii) Withdrawal of provision relates to determination of liability in and subsequent payment made by Company in relevant context.

iii) Provisions are made herein for medium risk oriented issues as a measure of abundant precaution.

iv) The Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities and commitments listed under note 45.

v) Discounting obligation has been ignored considering that these disputes relate to Government Authorities.

2.Information on lease transactions pursuant to Ind AS 17 - Leases A Assets taken on operating lease *

The Company leases out machines and vehicles under non-cancellable operating leases expiring within period not exceeding five years. The leases have varying terms, escalation Clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

3. Information on Segment Reporting pursuant to Ind AS 108 - Operating Segments Operating segments:

Consumer care business Home care, personal care and health care

Food business Juices, Beverages and Culinary

Other segments Guar Gum, Pharma and others

Identification of segments:

The chief operational decision maker monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss of the segment and is measured consistently with profit or loss in these financial statements. Operating segments have been identified on the basis of the nature of products.

Segment revenue and results

The expenses and income which are not directly attributable to any business segment are shown as unallowable expenditure (net of unallowable income).

Segment assets and liabilities:

Assets used by the operating segments mainly consist of property, plant and equipment, trade receivables, cash and cash equivalents and inventories. Segment liabilities include trade payables and other liabilities. Common assets and liabilities which cannot be allocated to any of the segments are shown as a part of unallocable assets/liabilities.

The measurement principles of segments are consistent with those used in preparation of these financial statements. There are no inter-segment transfers.

* The liquidation of Dabur Tunisie, is under process and is likely to be completed by 31 March, 2019. The liquidation was earlier expected to be completed by 31 March, 2018, but due to certain legal and regulatory compliances under the laws of Tunisia, the completion date was extended.

4 Information on Related Party Transactions pursuant to Ind AS 24 - Related Party Disclosures

Following are the related parties and transactions entered with related parties for the relevant financial year:

A) List of related parties and relationships

i) Subsidiaries

1 H & B Stores Limited 12 Dabur Lanka Private Limited

2 Dermovia Skin Essentials INC 13 Namaste Laboratories LLC

3 Dabur International Limited 14 Urban Laboratories International LLC

4 Naturelle LLC 15 Hair Rejuvenation & Revitalization Nigeria Limited

5 Dabur Egypt Limited 16 Healing Hair Laboratories International LLC

6 African Consumer Care Limited 17 Dabur (UK) Limited

7 Dabur Nepal Private Limited 18 Dabur Consumer Care Private Limited

8 Asian Consumer Care Private Limited 19 Dabur Tunisie (refer note 53)

9 Asian Consumer Care Pakistan Private Limited 20 Dabur Pakistan Private Limited

10 Hobi Kozmetik 21 Dabur Pars

11 RA Pazarlama 22 Dabur South Africa (PTY) Limited

ii) Joint Venture Forum 1 Aviation Private Limited

iii) Key Management Personnel Mr. P. D. Narang, Whole Time Director

Mr. Sunil Duggal, Chief Executive Officer (CEO)

& Whole Time Director

Mr. Lalit Malik, Chief Financial Officer (CFO)

Mr. Ashok Kumar Jain, Vice President (Finance) and Company Secretary

iv) Directors Dr. Anand Chand Burman, Chairman

Mr. Amit Burman, Vice Chairman

Mr. Mohit Burman, Director

Mr. Saket Burman, Director

Mr. P. D. Narang, Whole Time Director

Mr. Sunil Duggal, Chief Executive Officer (CEO)

& Whole Time Director

Mr. Pattamadai Natraja Sarma Vijay,

Independent Director

Mr. Ravindra Chandra Bhargava, Independent Director

Dr. Subbaraman Narayan, Independent Director

Dr. Ajay Kumar Dua, Independent Director Mr. Sanjay Kumar Bhattacharyya, Independent Director

Ms. Falguni Sanjay Nayar, Independent Director

v) Entities in which a Director or his/her Jetways Travels Private Limited relative is a member or Director 1 Aviva Life Insurance Company Limited

Lite Bite Foods Private Limited

Universal Sompo General Insurance Company

vi) Relatives of KMPs/Directors* Mr. Vivek Chand Burman, father of Director

Ms. Asha Burman, mother of Director

vii) Post employment benefit plan entities Dabur India Limited EPF Trust

Dabur Gratuity Trust Dabur Superannuation Trust

5 Capital Management - Policies and Procedures

For the purpose of the Company's capital Management, capital includes issued equity share capital, security premium and all other equity reserves attributable to the equity holders of the Company.

The Company' s capital Management objectives are:

- to ensure the Company's ability to continue as a going concern

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations, if any.

In order to achieve this overall objective, the Company's capital Management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2018 and 31 March, 2017.

Loan covenants

Under the terms of the major borrowing facilities, the Company is required to comply with certain financial covenants which include Debt Service Coverage Ratio (DSCR), Fixed Asset Coverage Ratio (FACR) etc. The Company has complied with these covenants throughout the reporting period.

58 Financial Risk Management - Objectives and Policies

The Company's financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company's financial assets comprise mainly investments, loans, trade receivables, cash and cash equivalents, other balances with banks and other receivables.

The Company's financial risk Management is an integral part of how to plan and execute its business strategies.

The Company's activities expose it to market risk, interest rate risk and foreign currency risk. The Board of Directors ('Board') oversee the Management of these financial risks through its Risk Management Committee. The risk Management policy of

the Company formulated by the Risk Management Committee and approved by the Board, states the Company's approach to address uncertainties in its endeavour to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Company's Management, the structure for managing risks and the framework for risk Management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Company's financial performance.

The following disclosures summarize the Company's exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

A Market Risk

Market risk is the risk of loss of future earnings, fair value or future cash flows arising out of change in the price of a financial instrument. These include change as a result of changes in the interest rates, foreign currency exchange rates, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments and deposits, foreign currency receivables, payables and loans and borrowings.

The Company manages market risk through a Risk Management Committee engaged in, inter alia, evaluation and identification of risk factors with the object of governing/mitigating them according to Company's objectives and declared policies in specific context of impact thereof on various segments of financial instruments. The Board provides oversight and reviews the risk Management policy on a quarterly basis.

i) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. In order to balance the Company's position with regards to interest income and interest expense and to manage the interest rate risk, treasury performs comprehensive interest rate risk Management. The Company is not exposed to significant interest rate risk as at the respective reporting dates.

ii) Foreign Currency Risk

The Company operates internationally with transactions entered into several currencies. Consequently the Company is exposed to foreign exchange risk towards honoring of export / import commitments.

Management evaluates exchange rate exposure in this connection in terms of its established risk Management policies which includes the use of derivatives like foreign exchange forward contracts to hedge risk of exposure in foreign currency.

The above table represents total exposure of the Company towards foreign exchange denominated assets and liabilities. The details of exposures hedged using forward exchange contracts are given as a part of note 55 A and the details of unhedged exposures are given as part of note 55 B.

Foreign Currency Sensitivity

The below table demonstrates the sensitivity to a 1% increase or decrease in the foreign currencies against ', with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 1% represents Management's assessment of reasonably possible change in foreign exchange rate. 1% increase or decrease in foreign exchange rates will have the following impact on profit before tax:

iii) Price Risk

The Company's exposure to price risk arises from investments held and classified as FVTPL or FVOCI. To manage the price risk arising from investments, the Company diversifies its portfolio of assets.

Sensitivity Analysis

Profit or loss and equity is sensitive to higher/lower prices of instruments on the Company's profit for the year:

B Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's treasury department is responsible for maintenance of liquidity (including quasi liquidity), continuity of funding as well as timely settlement of debts. In addition, policies related to mitigation of risks are overseen by senior Management. Management monitors the Company's net liquidity position on the basis of expected cash flows vis-a-vis debt service fulfillment obligation.

Maturity Profile of Financial Liabilities

The table below analysis derivative and non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:

C Credit Risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables. Individual risk limits are also set accordingly.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Company compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The Company considers reasonable and supportive forward-looking information.

Financial assets are written-off when there is no reasonable expectation of recovery, such as debtor failing to engage in a repayment plan with the Company. The Company provides for overdue outstanding for more than 90 days other than institutional customers which are evaluated on a case to case basis. The Company's concentration of risk with respect to trade receivables is low, as its customer's base is widely spread across the length and breadth of the country.

During the year, the Company has recognized loss allowance of Rs, 1.25 crores (31 March, 2017 : Rs, Nil) under 12 month ECL model. No significant changes in estimation techniques or assumptions were made during the reporting period.

Concentration of Financial Assets

Concentration of credit risk with respect to trade receivables are limited, due to the Company's customer base being large and diverse. All trade receivables are reviewed and assessed for default on a quarterly basis.

6.Category wise Classification of Financial Instruments

The fair values of the financial assets and financial liabilities are defined as the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the financial year 2016-17. The following methods and assumptions were used to estimate the fair values:

i) The fair values of investments in mutual fund units is based on the Net Asset Value ('NAV') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

ii) The fair values of other investments measured at FVTOCI and FVTPL are determined based on observable market data other than quoted prices in active market.

iii) The carrying amount of financial assets and financial liabilities measured at amortised cost in these financial statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

Financial assets and financial liabilities are measured at fair value in these financial statement and are grouped into three levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: unobservable inputs for the asset or liability

* During the year, there were no transfers between Level 1 and Level 2 fair value measurements.

C Valuation technique used to determine fair value:

Specific valuation techniques used to value financial instruments include:

(a) Investment in mutual funds: The fair values of investments in mutual fund units is based on the Net Asset Value ('NAV') as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date.

(b) Investment in debt instruments: The fair value of investments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates.

7. Disclosure relating to employee benefits pursuant to Ind AS 19 - Employee Benefits

(A) Defined contribution plans

Amount of Rs, 3.80 crores (31 March, 2017 : Rs, 3.97 crores) is recognized as an expense and included in employee benefits expense in the Standalone Statement of Profit and Loss under Employees' Superannuation Fund.

(B) Defined benefit plans Gratuity (funded)

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a lump sum payments to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to 15 days salary for each completed year of service. Vesting occurs on completion of 5 continuous years of service as per Payment of Gratuity Act, 1972. However, no vesting condition applies in case of death. The weighted average duration of defined benefit obligation is 7.06 years (31 March, 2017 : 7.07 years).

The Company makes contributions to Dabur Employees' Gratuity Trust, which is funded defined benefit plan for qualifying employees.

Post separation benefit of Directors

Post separation benefit of Directors includes car, telephone, medical and housing facility for eligible Directors. Description of risk exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follows:

(a) Salary increases - Actual salary increases will increase the plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

(b) Investment risk - If plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

(c) Discount rate - Reduction in discount rate in subsequent valuations can increase the plan's liability.

(d) Mortality and disability - Actual deaths and disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

(C) Provident Fund

The Company makes contribution towards provident fund which is administered by Dabur India Limited E.P.F Trust. The rules of the Company's provident fund administered by a trust, requires that if the trust is unable to pay interest at the rate declared by the Government under Para 60 of the Employees' Provident Funds Scheme, 1972 for the reason that the return on investments is less or for any other reason, then the deficiency shall be made good by the Company making interest shortfall a defined benefit plan. Accordingly, the Company has obtained actuarial valuation and based on the below provided assumption there is no deficiency as at the balance sheet date. Hence, the liability is restricted towards monthly contribution only.

Contribution made by the Company to the provident fund trust set-up by the Company during the year is Rs, 9.04 Crores (31 March, 2017 : Rs, 8.28 crores).

8. Disclosures required pursuant to Ind AS 102 - Share Based Payment

Under Employee Stock Option Scheme (ESOP) of the Company, share options of the Company are granted to the senior executives subject to achievement of targets as defined in ongoing vision of the Company. Vesting period ranges from 1 to

5 years. Each option carries the right to the holder to apply for one equity share of the Company at par. There has been no variation in the terms of options during the year. The share options are valued at the fair value of the options as on the date of grant using Black Scholes pricing model. There is no cash settlement alternative.

Subsequent to the financial year ended 31 March, 2018, the Nomination and Remuneration Committee of the Board of Directors of the Company in its meeting held on 19 April, 2018 has cancelled 15,55,900 stock options granted to the employees of the Company and its subsidiaries relevant to the financial year ended 31 March, 2018.

* Nil Share options were exercised on a regular basis throughout the year. The weighted average share price during the period was Nil.

# The options outstanding as at 31 March, 2018 were with the exercise price of Rs, 1.00 to Rs, 84.60. The weighted average of the remaining contractual life is 0.12 years.

9. Previous year amounts have been re-grouped / re-casted wherever considered necessary, to make them comparable with those of the current year.

10. In the opinion of the Board of Directors, current assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet and provisions for all known / expected liabilities have been made.