Notes to Accounts of Godfrey Phillips India Ltd.

Mar 31, 2025

4.11. Provisions and contingencies

4.11.1. Provisions

Provisions are recognised when the Company has a present obligation as a result of a past event
and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle
the present obligation at the end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When the effect of time value is material, the amount is
determined by discounting the expected future cash flows.

4.11.2. Contingent liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events,
the existence of which will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or a present obligation that

arises from past events where it is either not probable that an outflow of resources will be required
to settle or a reliable estimate of the amount can not be made.

4.12. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

4.12.1. Financial assets

4.12.1.1 .Initial recognition and measurement

All financial assets are recognised initially at fair value and in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition
of the financial asset. Purchases or sales of financial assets that require delivery of assets within a
time frame established by regulation or convention in the market place (regular way trades) are
recognised on the trade date, i.e. the date that the Company commits to purchase or sell the asset.

All recognised financial assets are subsequently measured in their entirety at either amortised cost or
fair value, depending on the classification of the financial assets.

4.12.1.2. Classification of financial assets

Classification of financial assets depends on the nature and purpose of the financial assets and
is determined at the time of initial recognition. The Company classifies its financial assets in the
following measurement categories:

? those measured at amortized cost,

? those to be measured subsequently at fair value, either through other comprehensive income
(FVTOCI) or through profit or loss (FVTPL)

Financial assets at amortised cost:

A financial assets is measured at the amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.

This category is the most relevant to the Company. After initial measurement, such financial assets
are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised
cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or
loss. The losses arising from impairment are recognised in the profit or loss.

Financial assets at FVTOCI:

A financial asset is classified as at the FVTOCI if both of the following criteria are met unless the
asset is designated at fair value through profit or loss under fair value option.

(a) The objective of the business model is achieved both by collecting contractual cash flows and
selling the financial asset, and

(b) The asset''s contractual cash flows represent SPPI.

Financial assets at FVTPL:

FVTPL is a residual category for financial assets. Any asset, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

4.12.1.3. Equity investment in subsidiaries and associates

Investments representing equity interest in subsidiaries and associates are carried at cost less
any provision for impairment. Investments are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable.

4.12.1.4. Derecognition

A financial asset (or where applicable, a part of financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e. removed from the companies Balance Sheet) when:

? The rights to receive cash flows from the asset have expired, or

? The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.

4.12.1.5. Impairment of financial assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the following financial assets and credit risk
exposure:

a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt
securities, deposits, trade receivables and bank balance.

b) Trade receivables or any contractual right to receive cash or another financial asset that result
from transactions that are within the scope of Ind AS 18.

The Company believes that, considering their nature of business and past history, the expected
credit loss in relation to its trade receivables and other financial assets is non-existent or grossly
immaterial. Thus, the Company has not recognised any provision for expected credit loss. The
Company reviews this policy annually, if required.

4.12.2. Financial liabilities

4.12.2.1. Initial recognition and measurement

"Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
profit or loss, loans and borrowings or payables, as appropriate.All financial liabilities are
recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Company''s financial liabilities include lease liabilities,
trade and other payables, loans and borrowings including bank overdrafts and financial
guarantee contracts."

4.12.2.2. Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities at fair value through profit or loss include financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or
loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are
satisfied.

Financial liabilities at amortised cost:

After initial recognition, interest-bearing loans and borrowings, lease liabilities, trade and other
payables are subsequently measured at amortised cost using the Effective Interest Rate (EIR)
method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as
well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit and loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Company are those contracts that require a payment
to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make
a payment when due in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are

directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the
higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109
and the amount recognised less cumulative amortisation.

4.12.2.3. Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the statement of profit and loss.

4.13. Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where
there is a legally enforceable right to offset the recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle the liability simultaneously.

4.14. Cash and cash equivalents

Cash and cash equivalents comprises of cash on hand and at banks, short-term balances (with an
original maturity of three months or less from the date of acquisition), highly liquid investments that
are readily convertible into known amounts of cash and which are subject to insignificant risk of
changes in value.

For the purpose of the Statement of Cash Flows, Cash & Cash Equivalents consists of Cash and
Short term deposits as defined above net of outstanding bank overdraft as they are considered an
integral part of the company''s cash management and balance in unclaimed dividend accounts
and corporate social responsibility unspent account.

4.15. Earnings per share (EPS)

Basic earnings per share has been computed by dividing the profit/(loss) after tax by the weighted average
number of equity shares outstanding during the year.

Diluted earnings per share has been computed by dividing the profit/(loss) after tax by the weighted
average number of equity shares outstanding during the year are adjusted for the effects of all dilutive
potential equity shares.

4.16. Fair value measurement

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:

? In the principal market for the asset or liability, or

? In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the standalone financial

statements are categorised within the fair value hierarchy, described as follows, based on the
lowest level input that is significant to the fair value measurement as a whole:

? Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

? Level 2 - Valuation techniques for which the lowest level input that is significant to the fair

value measurement is directly or indirectly observable."

? Level 3 - Valuation techniques for which the lowest level input that is significant to the fair

value measurement is unobservable."

For assets and liabilities that are recognised in the standalone financial statements on a recurring
basis, the Company determines whether transfers have occurred between levels in the hierarchy
by re-assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and
liabilities on the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above.

4.17. Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current
classification. An asset is treated as current when it is:

? Expected to be realised or intended to be sold or consumed in normal operating cycle

? Held primarily for the purpose of trading

? Expected to be realised within twelve months after the reporting period, or

? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

? It is expected to be settled in normal operating cycle

? It is held primarily for the purpose of trading

? It is due to be settled within twelve months after the reporting period, or

? There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation
in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

4.18. Dividend distribution to equity holders of the company

The Company recognises a liability to make cash distributions to equity holders of the company
when the distribution is authorised and the distribution is no longer at the discretion of the
Company. As per the corporate laws in India, a distribution is authorised when it is approved by the
shareholders. A corresponding amount is recognised directly in equity.

4.19. Employee share based payment

Equity settled share based payments to employees under Godfrey Phillips Employee Share Purchase
Schemes are measured at fair value of the equity instruments on the date of grant of shares. The fair
value is determined with an assistance of an external valuer and is expensed in the statement of
profit and loss based on the vesting conditions.

4.20. Discontinued Operation

Discontinued operation is a component of the Company that has been disposed of and represents a
major line of business.

Discontinued operation is excluded from the results of continuing operations and presented separately
as profit or loss from discontinued operation, tax expense/ (benefit) of discontinued operation and
profit or loss after tax from discontinued operation, in the statement of profit and loss.

Additional disclosures are provided in Note No. 49. All other notes to the standalone financial
statements mainly include amounts for continuing operations, unless otherwise mentioned.

4.21. Changes in presentation and disclosure

The Company has revised the presentation of employee related liabilities, primarily comprising of
accrued salaries, wages and bonuses to other financial liabilities instead of the hitherto followed
practice of including the same under trade payables as it believes that the same would lead to a
better presentation of financial statements. Accordingly, a sum of Rs.7023.29 lakhs as at 31 March
2024 has been reclassified to other financial liabilities from trade payables. Since this change
relates to only presentation and disclosure under the same sub heading, hence there is no impact
either on the total equity and/or profit and loss for the current year or any earlier period or on the
statement of cash flows. The management does not believe that this change has any material impact
on the balance sheet at the beginning of the comparative period and hence there is no need for a
separate presentation of an additional balance sheet.

4.22. Standards issued but not yet effective

There are no standards that are notified and yet not effective as on March 31, 2025.

5. Significant accounting judgements, estimates and assumptions

The preparation of the standalone financial statements requires management of the Company to
make judgements, estimates and assumptions that involves measurement uncertainty and effect the
reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of assets or liabilities
affected in future periods

Judgements and estimates

In the process of applying the accounting policies, management has made the following judgements
and estimates, which have the most significant effect on the amounts recognised in the standalone
financial statements:

a) Fair value measurement of financial instruments and disclosures

When the fair values of financial assets and financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in active markets, their fair value is measured using
other valuation techniques. The inputs to these models are taken from observable markets where
possible, but where this is not feasible, a degree of judgement is required in establishing fair values.
Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect the reported fair value of financial instruments, see
Note No.44 for further disclosures. Where fund houses have declared net assets value (NAV) and
are obliged to buy back the investments at the declared NAV and the same are disclosed as a
quoted investments. See Note No.9

b) Provisions and contingent liabilities

The Company has ongoing litigations with various regulatory authorities and others. Where an
outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can
be made based on management''s assessment of specific circumstances of each dispute and relevant
external advice, management provides for its best estimate of the liability.

Where it is management''s assessment that the outcome cannot be reliably quantified or is uncertain,
the claims are disclosed as contingent liabilities unless the likelihood of an adverse outcome is
remote. Such liabilities are disclosed in the notes but are not provided for in the standalone financial
statements. Liability for interest, if any, on the amount of entry tax provided in the books but not paid
as per stay ordered by the appellate authorities/courts is considered as remote.

When considering the classification of legal or tax cases as probable, possible or remote, there
is judgement involved. Management uses in-house and external professionals to make informed
decision. These are set out in Note no. 37.

Notes:

On transition to IndAS (i.e April 01, 2015) , the Company has elected to continue with the carrying value of all property, plant and
equipment measured as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.

* Includes Rs. 0.02 lakhs (Previous year Rs. 0.02 lakhs) being the cost of shares in co-operative societies.

**1. Includes freehold land of Rs. 79.08 lakhs (Previous year Rs.79.08 lakhs) situated in village Sahurpur, Mehrauli, New Delhi and
buildings constructed on the said land having an aggregate net book value of Rs. 903.66 lakhs (previous year Rs. 900.68 lakhs, including
capital work-in-progress of Rs.135.23 lakhs). The said land was purchased by the Company in the year 1991. The Hon''ble Supreme Court
on May 6, 2022, in response to an appeal filed by the Delhi Development Authority (DDA), held that the above referred land was acquired
by the Delhi Administration under the proceedings initiated in November 1980 under the Land Acquisition Act, 1894 and had directed
the DDA to pay a sum of Rs. 16.62 lakhs to the Company, which sum the Company is yet to receive. The Company had provided the said
property to Mr. Samir Kumaar Modi as rent-free accommodation in the year 2004 in accordance with the terms of his appointment and
considered the requisite perquisite value under Income-tax laws as part of his remuneration until he ceased to be a director and officer of
the Company w.e.f close of business on September 6, 2024. However, Mr. Modi has retained possession of the said property and has
approached the Hon''ble High Court of Delhi alleging that the Company has taken coercive steps to dispossess him from the said property
and the matter is sub-judice at present.

In light of the aforesaid judgment of the Hon''ble Supreme Court and the fact that possession of the said property is no longer with the
Company, the Company has, in these financial statements, recorded an impairment in the carrying value of the said land and buildings
constructed thereupon, aggregating to Rs. 982.74 lakhs.

2. The Company had provided an office space situated at one of its properties situated at 4, Community Centre, New Friends Colony,
New Delhi to Mr. Samir Kumaar Modi in his capacity as an Executive Director of the Company to carry out his official duties as a director
of the Company. Even though Mr. Samir Kumaar Modi has ceased to be a director of the Company w.e.f close of business on September
6, 2024, he has not vacated the said office space and continues to be in possession of the same. The Company has since sent a legal
notice to Mr. Modi seeking peaceful handover of the said office space following which Mr. Modi has approached the Hon''ble High Court
of Delhi and Ld. Saket District Court for seeking relief. The said matter is sub-judice at present and includes, inter alia, the issue raised that
Mr. Samir Modi has violated his statutory obligation by failing to vacate the said office space and is liable for all consequences under the
law including payment of rent and penalties. The Company believes that no adjustment is required to be carried out in the carrying value
of the said office in these financial statements.

# Office building located in Delhi reclassified to Investment property based on future expected use as per IndAS 40, Investment Property.
For lien or charge against property, plant and equipment, refer Note No. 22.

---

Mar 31, 2024

b) Provisions and contingent liabilities

The Company has ongoing litigations with various regulatory authorities and others. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability.

Where it is management''s assessment that the outcome cannot be reliably quantified or is uncertain, the claims are disclosed as contingent liabilities unless the likelihood of an adverse outcome is remote. Such liabilities are disclosed in the notes but are not provided for in the financial statements. Liability for interest, if any, on the amount of entry tax provided in the books but not paid as per stay ordered by the appellate authorities/courts is considered as remote.

When considering the classification of legal or tax cases as probable, possible or remote, there is judgement involved. Management uses in-house and external professionals to make informed decision. These are set out in Note no. 37.

c) Assessment of carrying value of retail business

In view of the continuing operating losses, the Company has reviewed the carrying value of its assets relating to retail business ana estimated the recoverable amount of the assets in accordance with the requirements of Ind AS 36 for which an external professional agency was also engaged. Based on the said assessment, it has been concluded that the recoverable amount of the retail business is higher than its carrying value as at 31 March 2024 and therefore, no impairment was required to be recorded in these financial statements. The Company has determined the recoverable amount applying the fair value less cost to sell (''FVLCS'') method, using a level 2 valuation technique for which key inputs centred around the forecasted revenue and market multiple. (Also Refer Note No. 50)

(c) Defined benefit plans Gratuity

The Company makes annual contributions to gratuity fund established as a trust, which is a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity as per provisions of the payment of Gratuity Act, 1972 or the Company Scheme, whichever is beneficial.

The plan typically exposes the Company to actuarial risks such as: loss of investment risk, interest rate risk, mortality rate risk and salary rate risk.

Loss of investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the plan''s liability.

Mortality rate risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary rate risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

The following tables summarises the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for defined benefit plan:

43.1 Company as a lessee

The Company has lease contracts for various items of land, offices, warehouses, retail stores, store equipment and vehicles used in its operations. Leases of land have a term ranging from 45 to 99 years, offices, warehouses and stores have lease terms between 2 and 18 years, store equipment have a lease terms of 5 years, while motor vehicles generally have lease terms between 3 and 5 years. There are several lease contracts that include extension and termination options and variable lease payments, which are further discussed.

The Company also has certain leases of warehouses of 12 months or less. The Company applies the ''short-term lease'' recognition exemptions for these leases.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:

43.2 Company as a lessor

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. These leases have terms ranging between 11 months to 3 years. Rental income recognised by the Company during the year is Rs. 454.14 Lacs (Previous Year Rs. 456.09 Lacs). The carrying value of the said assets is not material.

44. Financial instruments and risk management 44.1. Fair value measurements

The fair value of financial assets and liabilities are included at the amount at which the instruments could be exchanged in as current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

i) The fair value of cash and cash equivalents, trade receivables, trade payables, lease liabilities, security deposits received, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Other non-current financial assets and liabilities, fair value is calculated using a discounted cash flow model with market assumptions, unless the carrying value is considered to approximate to fair value.

ii) The financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty/ ies. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by using valuation techniques that are appropriate in the circumstances and for which sufficient data are available.

Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of quoted equity shares and/or debt based mutual fund investments, bonds or debentures.

Level 2: This level hierarchy includes items measured using inputs, other than quoted prices included within level 1, that are observable for such items, directly or indirectly.

Level 3: This level of hierarchy includes items measured using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main items in this category are unquoted equity instruments.

Note for Financial assets

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments at FVTPL: Fair value for investments aggregating to Rs. 19366.29 lakhs (previous year Rs.17151.13 lakhs) and Rs.215670.41 lakhs (previous year Rs.203204.46 lakhs) have been determined with reference to the market quoted price of the investments, a level 1 valuation and to the declared NAV, a level 2 valuation respectively.

Financial instruments at amortised cost: Fair value for bonds aggregating to Rs. 12147.85 lakhs (previous year Rs.4954.57 lakhs) is determined with reference to the market quoted price of the investments, a level 1 valuation. For all other financial assets and financial liabilities, the carrying value approximate the fair value due to short term maturity.

44.3. Financial risk management objectives and policies

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by its Board of Directors.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency 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, deposits and foreign currency receivables, payables, loans and borrowings.

The Company manages market risk through its finance department, which evaluates and exercises independent control over the entire process of market risk management. The finance department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

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 in order to optimize the Company''s position with regard to interest income and interest expenses and to manage the interest rate risk, the finance department undertakes the interest rate risk management exercise from time to time.

The Company is not exposed to significant interest rate risk as at the respective reporting dates.

Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas markets and purchases from suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

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

(C) Exposure in mutual fund investments

The Company manages its surplus funds majorly through investments in debt based mutual fund schemes. The fair value of these investments is reflected through net asset values (NAVs) declared by the Asset Management Company on daily basis with regard to the invested schemes. The Company is exposed to market price risk on such investments.

Sensitivity analysis of mutual fund investments

Had the NAVs been higher/lower by 1% at the end of the reporting period, profit for the year ended 31.3.2024 would have increased/decreased by Rs. 2332.07 lakhs (for the year ended 31.3.2023 by Rs. 2167.48 lakhs).

45. Capital management

For the purposes of the Company''s capital management, capital includes issued capital and all other equity reserves. Net debts comprises of non-current and current debts (including trade payables, lease liabilities, other financial liabilities and other current liabilities as reduced by cash and cash equivalents and current investments). The primary objective of the Company''s capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

50. Following a detailed review of the Company''s retail business division being operated under the name 24Seven and after due consideration of the Stake holders'' feedback, long term performance of the retail business since inception, prevailing market conditions of the retail sector and long term business strategy of the Company, the Board of Directors, at its meeting held on April 12, 2024 has decided to exit from carrying out the business of its retails business division and the exit will be subject to completion of the necessary formalities.

The division had non-current assets of Rs. 20182.11 lakhs (includes Right of use assets Rs.14454.31 lakhs) as at March 31,2024 and forms part of Retail and related products as reportable segment under Ind AS 108 as detailed in Note no. 47.

51. The Company, vide agreement(s) dated 11th October 2022, had sold/assigned (a) Trademarks along with all the rights, titles and interests therein and (b) certain non-current assets including the rights in the Leasehold Land; used in relation to the Chewing business (part of cigarettes, tobacco and related products segment) of the Company for an aggregate sale consideration of Rs 8000.00 lakhs to non-related third parties. Consequently, the resultant net gain of Rs.3490.96 lakhs was accounted for in the previous year and included in Other income.

52. The Company has used two accounting software, viz Oracle EBS and SAPS4 Hana, for maintaining its books of account and both have the feature of recording audit trail (edit log) facility. While in Orcale EBS this feature was operational throughout the year, in SAPS4 Hana the same was made operational during the course of the year, for all relevant transactions recorded in these software, except that the audit trail was not enabled for direct changes to the underlying database using privileged access rights in both the software. However, no instance of audit trail feature having been tampered with was noted for both these software during the period of the year that these were operational.

53. There is no transaction and outstanding balance with struck off companies during the year and as at March 31,2024 and March 31,2023.

54. Disclosures required by Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and Section 186(4) of the Companies Act, 2013:

Investments:

Full particulars of investments made by the Company have been disclosed in Note No.9.

Guarantees:

Full particulars of guarantees given by the Company have been disclosed in Note No.37. Further, these guarantees have been given to the banks to secure financial facilities provided by them to the subsidiaries of the Company.

Loans:

There are no loans and advances in the nature of loans to the subsidiaries/associates/firms and companies in which directors are interested.

As per our report of even date For and on behalf of the Board of Directors

of Godfrey Phillips India Limited CIN: L16004MH1936PLC008587

For S.R. Batliboi & Co. LLP SUNIL AGRAWAL DR. BINA MODI DR. LALIT BHASIN

Chartered Accountants Chief Financial Officer (DIN 00048606) (DIN 00001607)

Firm registration number: 301003E/E300005 Chairperson, Managing Director & CEO ATUL KUMAR GUPTA

PONOT ^Agarwal SAMIR KUMAAR MODI 0-734070)

Membership No.: 502405 SANJAY KUMAR GUPTA (DIN 00029554) NIRMALA BAGRI Directors

Company Secretary Executive Director (DIN 01081867)

SHARAD AGGARWAL

(DIN 07438861) ^{(DIN 08970744)}

Place: New Delhi Place: New Delhi Whole-time Director

Date: May 30, 2024 Date: May 30, 2024

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Mar 31, 2023

(All amounts are in Rs. lakhs unless otherwise stated)
	As at 31.3.2023	As at 31.3.2022
37. Contingent liabilities not provided for
a) Demands from excise, income tax, goods and services tax, sales tax and other authorities not accepted by the Company @	6235.001	7364.051
b) Uncalled liability on shares partly paid (including share premium) c) Guarantee given to a bank on behalf of subsidiary company:	79.24	79.24
- International Tobacco Company Limited	35.55	35.55
- Godfrey Phillips Middle East DMCC (AED 34.36 lakhs)	- @@	722.59@@

(c) Defined benefit plans Gratuity

The Company makes annual contributions to gratuity fund established as a trust, which is a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity as per provisions of the payment of Gratuity Act or the Company Scheme, whichever is beneficial.

The plan typically exposes the Company to actuarial risks such as: loss of investment risk, interest rate risk, mortality rate risk and salary rate risk.Loss of investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the plan''s liability.

Mortality rate risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary rate risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

The following tables summarises the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for defined benefit plan:

42.2 Company as a lessor

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. These leases have terms ranging between 11 months to 3 years. Rental income recognised by the Company during the year is Rs. 456.09 lakhs (Previous Year Rs. 383.64 lakhs). The carrying value of the said assets is not material.

43. Financial instruments and risk management 43.1. Fair value measurements

The fair value of financial assets and liabilities are included at the amount at which the instruments could be exchanged in as current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

i) The fair value of cash and cash equivalents, trade receivables, trade payables, lease liabilities, security deposits received, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Other non-current financial assets and liabilities, fair value is calculated using a discounted cash flow model with market assumptions, unless the carrying value is considered to approximate to fair value.

ii) The financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty/ies. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by using valuation techniques that are appropriate in the circumstances and for which sufficient data are available.

Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of quoted equity shares and/or debt based mutual fund investments, bonds or debentures.

Level 2: This level hierarchy includes items measured using inputs, other than quoted prices included within level 1, that are observable for such items, directly or indirectly.

Level 3: This level of hierarchy includes items measured using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main items in this category are unquoted equity instruments.

Note: Investment in equity of subsidiaries and associates which are carried at cost are not covered under Ind AS 107 and hence not been included above.

Note for Financial assets

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to net asset values (NAVs) declared by the respective mutual fund houses for the relevant schemes.

43.3.Financial risk management objectives and policies

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by its Board of Directors.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency 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, deposits and foreign currency receivables, payables, loans and borrowings.

The Company manages market risk through its finance department, which evaluates and exercises independent control over the entire process of market risk management. The finance department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

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 in order to optimize the Company''s position with regard to interest income and interest expenses and to manage the interest rate risk, the finance department undertakes the interest rate risk management exercise from time to time.

The Company is not exposed to significant interest rate risk as at the respective reporting dates. Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas markets and purchases from suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

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 trade receivables.

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. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the financial statement. The Company''s maximum credit exposure to credit risk

is Rs.243802.52 lakhs (previous year Rs.180100.16 lakhs). The Company has excluded cash and cash equivalents, other bank balances and investments in subsidiaries and associates as the credit risk associated with them is minimal.

Financial assets are provided for, when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been provided for, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss in the subsequent reporting period. The management believes that there is no significant exposure of credit risk due to the nature of Company''s business other than those for which impairment allowance has been recorded. For details of trade receivables those are past due, refer Note No.13.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligation on time or at a reasonable price. The Company''s finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by Board of Directors. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

(A) Maturities of financial liabilities

The table below analyze the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances, except lease liabilities, due within 12 months equal their carrying values as the impact of discounting is not significant.

Foreign currency sensitivity analysis

The following table demonstrates the sensitivity to a reasonably possible change in foreign currency exchange rate such as USD, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives:

(C) Exposure in mutual fund investments

The Company manages its surplus funds majorly through investments in debt based mutual fund schemes. The fair value of these investments is reflected through net asset values (NAVs) declared by the Asset Management Company on daily basis with regard to the invested schemes. The Company is exposed to market price risk on such investments.

Sensitivity analysis of mutual fund investments

Had the NAVs been higher/lower by 1% at the end of the reporting period, profit for the year ended 31.3.2023 would have increased/decreased by Rs. 2167.48 lakhs (for the year ended 31.3.2022 by Rs. 1520.62 lakhs).

44. Capital management

For the purposes of the Company''s capital management, capital includes issued capital and all other equity reserves. Net debts comprises of non-current and current debts (including trade payables, lease liabilities, other financial liabilities and other current liabilities as reduced by cash and cash equivalents and current investments). The primary objective of the Company''s capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

48. (a) The Income Tax department had searched the office premises of the Company in February 2021 in connection with search carried out by them under Section 132 of the Income-tax Act, 1961 on a promoter of the Company. The tax officials had taken possession of certain records of the Company and recorded statements of some of the Company Officials during and after the search proceedings. Additional information requested by the tax authorities from time to time has been furnished to them. Till date, no order under these proceedings has been received by the Company.

(b) The GST department has conducted an investigation in May 2023 at some of the offices of the Company and sought certain information and recorded statement of some of the officials of the Company. The Company is yet to receive any show cause notice from the department and does not expect any material liability other that what has been provided for in these financial statements.

49. The Company, vide agreement(s) dated 11th October 2022, has sold/assigned (a) Trademarks along with all the rights, titles and interests therein and (b) certain non-current assets including the rights in the Leasehold Land; used in relation to the Chewing business (part of cigarettes, tobacco and related products segment) of the Company for an aggregate sale consideration of Rs 8000.00 lakhs to non-related third parties. Consequently, the resultant net gain of Rs.3490.96 lakhs has been accounted for in the current year and included in Other income. The breakup of the same is as under.

-----1-------------------------------------------

51. The fig ures for the previous year have been re-classified/re-grouped, wherever necessary, to correspond with the current year''s classification/ disclosure.

1

includes Rs.1993.15 lakhs (Previous year - Rs. 1993.15 lakhs) relating to demands received by the subsidiary company - International Tobacco Company Limited from the excise authorities.

@all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial statements of the Company when ultimately concluded and interest, if any, would be additional.

@@this is to secure overdraft limit given by the bank. The actual overdrawn balance as on March 31, 2023 is Rs. Nil (Previous year Rs. Nil).

d) The following are the particulars of dues (including the amounts already provided for in the books) on account of sales tax, goods and services tax, value added tax, excise duty and income-tax as at March 31, 2023 that have been not accepted by the Company and are in appeals:

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Mar 31, 2022

Capital redemption reserve:

This was created on redemption of preference shares in accordance with the requirements of the erstwhile Companies Act, 1956. General reserve:

The general reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income. No amount was transferred during the current and previous year.

Retained earnings:

Retained earnings is the amount that can be distributed by the Company as dividends to its equity shareholders subject to the requirements of the Companies Act, 2013. The amount reported above are not distributable in entirety.

In respect of the year ended March 31, 2022, the directors have in the board meeting held on May 28, 2022, proposed a dividend of Rs. 28/- per fully paid equity share. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included in liability in the financial statements. The proposed equity dividend is payable to all the holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 14558.30 lakhs.

Rupees in Lakhs
	As at 31.3.2022	As at 31.3.2021
37. Contingent liabilities not provided for
a) Demands from excise, income tax, goods and services tax, sales tax and other authorities not accepted by the Company @	7364.05*	6503.32*
b) Uncalled liability on shares partly paid (including share premium) c) Guarantee given to a bank on behalf of subsidiary company:	79.24	79.24
- International Tobacco Company Limited	35.55	47.58
- Godfrey Phillips Middle East DMCC (AED 34.36 lakhs)	722.59@@	705.41@@

*includes Rs.1993.15 lakhs (Previous year - Rs. 2187.54 lakhs) relating to demands received by the subsidiary company - International Tobacco Company Limited from the excise authorities. Out of this Rs. 1366.56 lakhs (Previous year - Rs. 1366.56 lakhs) relates to an order received during the previous year from the Allahabad High Court upturning the earlier order of the CESTAT in favour of the subsidiary company. Against this order the subsidiary company has filed an appeal before the Hon''ble Supreme Court and has been legally advised that it has a strong case.

@all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial statements of the Company when ultimately concluded and interest, if any, would be additional.

@@this is to secure overdraft limit given by the bank. The actual overdrawn balance as on March 31, 2022 is Rs. Nil (Previous year Rs. Nil).

d) The following are the particulars of dues (including the amounts already provided for in the books) on account of sales tax, goods and services tax, value added tax, excise duty and income-tax as at March 31, 2022 that have been not accepted by the Company and are in appeals:

(c) Defined benefit plans Gratuity

The Company makes annual contributions to gratuity fund established as a trust, for the defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity as per provisions of the Payment of Gratuity Act, 1972 or the Company Scheme, whichever is beneficial.

The plan typically exposes the Company to actuarial risks such as: loss of investment risk, interest rate risk, mortality rate risk and salary rate risk.Loss of investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the plan''s liability. Mortality rate risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary rate risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.

The following tables summarises the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for defined benefit plan:

The average duration of the defined benefit plan obligation at the end of the reporting period is 6.69 years (Previous year 6.67 years).

(d) Defined benefit plans - Provident Fund

The Company makes monthly contributions towards provident fund which is administered by Godfrey Phillips India Limited Provident Fund (the Fund), an exempted PF Trust. The conditions governing the exemption require that the employer shall make good the loss, if any, incurred on the investments made by the Fund and also make good the deficiency in the rate of interest as may be notified by the EPFO from year to year. Accordingly, the Company has paid Rs. 129.76 lakhs towards shortfall in fund and the same is recognised under Other Comprehensive Income. Based on the review of investments held by the Fund as on 31st March 2022, the Company has recognised an additional liability of Rs. Nil (previous year Rs. 448.00 lakhs) to cover possible loss on account of nonrealisation by the Fund of certain such investments and the same is recognised under Other Comprehensive Income.

The Code on Social Security, 2020 (''the Code'') relating to employee benefits during employment and post-employment received the Presidential assent in September 2020. However, the related Rules are yet to be framed and the date on which the Code will come into effect has not yet been notified. The Company will assess the financial impact of the Code when it comes into effect and recognize the same its financial statements in the period in which the Code becomes effective.

42. Leases

42.1 Company as a lessee

The Company has lease contracts for various items of land, offices, warehouses, retail stores, store equipment and vehicles used in its operations. Leases of land have a term ranging from 45 to 99 years, offices, warehouses and stores have lease terms between 2 and 18 years, store equipment have a lease terms of 5 years, while motor vehicles generally have lease terms between 3 and 5 years. There are several lease contracts that include extension and termination options and variable lease payments, which are further discussed.

The Company also has certain leases of warehouses of 12 months or less. The Company applies the ''short-term lease'' recognition exemptions for these leases.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:

42.2 Company as a lessor

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. These leases have terms ranging between 11 months to 3 years. Rental income recognised by the Company during the year is Rs. 383.64 Lacs (Previous Year Rs. 272.24 Lacs). The carrying value of the said assets is not material.

43. Financial instruments and risk management 43.1. Fair value measurements

The fair value of financial assets and liabilities are included at the amount at which the instruments could be exchanged in as current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

i) The fair value of cash and cash equivalents, trade receivables, trade payables, lease liabilities, security deposits received, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Other non-current financial assets and liabilities, fair value is calculated using a discounted cash flow model with market assumptions, unless the carrying value is considered to approximate to fair value.

ii) The financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty/ies. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by using valuation techniques that are appropriate in the circumstances and for which sufficient data are available.

Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of quoted equity shares and/or debt based mutual fund investments, bonds or debentures.

Level 2: This level hierarchy includes items measured using inputs, other than quoted prices included within level 1, that are observable for such items, directly or indirectly.

Level 3: This level of hierarchy includes items measured using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main items in this category are unquoted equity instruments.

Note: Investment in equity of subsidiaries and associates which are carried at cost are not covered under Ind AS 107 and hence not been included above.

Note for Financial assets

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to net asset values (NAVs) declared by the respective mutual fund houses for the relevant schemes.

43.3.Financial risk management objectives and policies

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by its Board of Directors.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency 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, deposits and foreign currency receivables, payables, loans and borrowings.

The Company manages market risk through its finance department, which evaluates and exercises independent control over the entire process of market risk management. The finance department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

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 in order to optimize the Company''s position with regard to interest income and interest expenses and to manage the interest rate risk, the finance department undertakes the interest rate risk management exercise from time to time.

The Company is not exposed to significant interest rate risk as at the respective reporting dates. Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas markets and purchases from suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

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 trade receivables.

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. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the financial statement. The Company''s maximum credit exposure to credit risk

is Rs.180100.16 lakhs (previous year Rs.153022.01 lakhs). The Company has excluded cash and cash equivalents, other bank balances and investments in subsidiaries and associates as the credit risk associated with them is minimal.

Financial assets are provided for, when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been provided for, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss in the subsequent reporting period. The management believes that there is no significant exposure of credit risk due to the nature of Company''s business other than those for which impairment allowance has been recorded. For details of trade receivables those are past due, refer Note No.13.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligation on time or at a reasonable price. The Company''s finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by Board of Directors. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

(A) Maturities of financial liabilities

The table below analyze the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances, except lease liabilities, due within 12 months equal their carrying values as the impact of discounting is not significant.

(C) Exposure in mutual fund investments

The Company manages its surplus funds majorly through investments in debt based mutual fund schemes. The fair value of these investments is reflected through net asset values (NAVs) declared by the Asset Management Company on daily basis with regard to the invested schemes. The Company is exposed to market price risk on such investments.

Sensitivity analysis of mutual fund investments

Had the NAVs been higher/lower by 1% at the end of the reporting period, profit for the year ended 31.03.2022 would have increased/decreased by Rs. 1520.62 lakhs (for the year ended 31.03.2021 by Rs. 1317.20 lakhs).

44. Capital management

For the purposes of the Company''s capital management, capital includes issued capital and all other equity reserves. Net debts comprises of non-current and current debts (including trade payables, lease liabilities, other financial liabilities and other current liabilities as reduced by cash and cash equivalents and current investments). The primary objective of the Company''s capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

* Debt-Equity for the year ending March 31, 2021 is higher mainly on account of long term debt of Rs. 6000 lakhs in FY 2020-21 which has been repaid in FY 2021-22.

** Return on investment for the year ending March 31, 2021 is higher mainly on account of relatively higher fair valuation gain in FY 2020-21 as compared to FY 2021-22.

48. The I ncome Tax department had searched the office premises of the Company in February 2021 in connection with search carried out by them under Section 132 of the Income-tax Act, 1961 on a promotor of the Company. The tax officials had taken possession of certain records of the Company and recorded statements of some of the Company Officials during and after the search proceedings. Additional information requested by the tax authorities from time to time has been furnished to them. Till date, no order under these proceedings has been received by the Company.

49. Disclosures required by Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and Section 186(4) of the Companies Act, 2013:

Investments: Full particulars of investments made by the Company have been disclosed in Note No.9.

Guarantees: Full particulars of guarantees given by the Company have been disclosed in Note

No.37. Further, these guarantees have been given to the banks to secure financial facilities provided by them to the subsidiaries of the Company.

Loans: There are no loans and advances in the nature of loans to the subsidiaries/associates/

firms and companies in which directors are interested.

50. The figures for the previous year have been re-classified/re-grouped, wherever necessary, to correspond with the current year''s classification/ disclosure.

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Mar 31, 2018

1. Corporate information

Godfrey Phillips India Limited (‘the Company’) is a public limited company incorporated in India and listed on the Bombay Stock Exchange and the National Stock Exchange. The Company is engaged in manufacturing of cigarettes, tobacco products and chewing products and in trading of tobacco products, tea and other retail products.

The address of its registered office is ‘Macropolo Building’, Ground Floor, Dr. Babasaheb Ambedkar Road, Lalbaug, Mumbai - 400033 and the address of its corporate office is Omaxe Square, Plot No.14, Jasola District Centre, Jasola, New Delhi - 110025. The financial statements were approved for issue by the Board of Directors on May 29, 2018.

2. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and as amended.

Effective April 1, 2016, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. The financial statements are presented in rupees lakhs except when otherwise indicated.

3. Basis of preparation and presentation

3.1. Basis of preparation and presentation

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies mentioned below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

3.2. Use of estimates

The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to contingent assets and contingent liabilities.

The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may differ from these estimates. Any revision to the accounting estimates or difference between the estimates and the actual results are recognised in the periods in which the results are known/materialise or the estimates are revised and future periods affected.

4. Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management of the Company to make judgements, estimates and assumptions that effect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Judgements and estimates

In the process of applying the accounting policies, management has made the following judgements and estimates, which have the most significant effect on the amounts recognised in the financial statements:

Defined benefit plans ( Gratuity)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

Further details about gratuity obligations are given in Note No.42.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using other valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note No.43 for further disclosures.

Useful lives of property, plant and equipment and intangible assets

As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period.

Provisions and contingent liabilities

The Company has ongoing litigations with various regulatory authorities and others. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management’s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability.

Information regarding income and expenditure of investment property

The Company’s investment properties comprise of certain land and buildings presently held by the Company for an undetermined purpose and these are located in Mumbai, Maharashtra and Bazpur, Uttarakhand.

Fair valuation of the properties

The following table provides an analysis of investment properties and their fair values:

The above values are based on valuation performed by an accredited independent valuer and the valuation has been carried out in accordance with the valuation model recommended by the International Valuation Standards Committee.

The Company has earned rental income of Rs. 44.15 lakhs (previous year Rs. Nil) from investment properties.

The Company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

The Company has used Level 3 valuation technique to arive at the fair values.

(i) There has been no movement in the equity shares in the current and previous year.

(ii) The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

(iii) Details of shareholders holding more than 5% shares in the company:

Capital redemption reserve:

This was created on redemption of preference shares in accordance with the requirements of the Companies Act, 1956.

General reserve:

The amount transferred to the general reserve is Rs.2500 lakhs (previous year Rs.2000 lakhs). As the general reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income.

Retained earnings:

Retained earnings is the amount that can be distributed by the Company as dividends to its equity shareholders subject to the requirements of the Companies Act, 2013. The amount reported above are not distributable in entirety.

In respect of the year ended March 31, 2018, the directors have, in the board meeting held on May 29, 2018, proposed a dividend of Rs.8 per fully paid equity share. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included in liability in the financial statements. The proposed equity dividend is payable to all the holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs.4159.51 lakhs apart from Rs.855.00 lakhs towards dividend distribution tax.

* Consequent to introduction of Goods and Services Tax (GST) with effect from July 1, 2017, Central Excise [other than National Calamity Contingent Duty (NCCD) on cigarettes and chewing tobacco] and Value Added Tax (VAT) have been subsumed into GST. In accordance with Indian Accounting Standard - 18 on Revenue and Schedule III of the Companies Act, 2013, levies like GST, GST Compensation Cess and VAT are not included in Gross Revenue from sale of products. Accordingly, Gross Revenue from sale of products and excise duty for the year ended March 31, 2018 are not comparable with the previous year. Following additional information is being provided to facilitate such comparison:

6. Corporate social responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, healthcare and woman economic empowerment, providing disaster relief and undertaking rural development projects.

Gross amount required to be spent by the Company during the year is Rs. 432.00 lakhs (Previous year Rs. 501.00 lakhs) and the details of amount spent are as under:

* excludes incremental liability for gratuity and compensated absences which are actuarially determined on an overall basis.

** includes Rs.150 lakhs (Previous year Rs. 112.50 lakhs) payable to a non-working director.

7. Contingent liabilities not provided for

a) Demands from excise, income tax, sales tax and other authorities not accepted by the Company @

b) Uncalled liability on shares partly paid (including share premium)

c) Guarantee given to a bank on behalf of subsidiary company:

- International Tobacco Company Limited

- Godfrey Phillips Middle East DMCC (AED 34.36 lakhs)

*includes Rs. 1622.91 lakhs (Previous year - Rs. 1825.39 lakhs) relating to demands received by the subsidiary company - International Tobacco Company Limited.

@all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

@@this is to secure overdraft limit given by the bank. The actual overdrawn balance as on March 31, 2018 was Rs. 11.04 lakhs (AED 0.62 lakhs); (Previous year Rs.123.09 lakhs) (AED 6.97 lakhs)

d) The following are the particulars of dues on account of sales tax, value added tax, excise duty and income-tax as at March 31, 2018 that have been not accepted by the Company and are in appeals:

8. Commitments

a) The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances)

b) The Company has other commitments, for purchases / sales orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term contracts including derivative contracts for which there will be any material foreseeable losses.

9. Dues to micro and small enterprises

The amount due to micro, small and medium enterprises as defined in the “The Micro, Small and Medium Enterprises Development Act, 2006” (“MSMED”) has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to the micro, small and medium enterprises as at March 31, 2018 are as under:

10. Operating lease arrangements

The Company as a lessee Leasing arrangements

The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. For such cancellable leases, there is no contingent rent in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub leases.

The Company has also entered into operating lease arrangements for various lands. These are non-cancellable in nature and range between forty five years to ninety nine years.

The aggregate rentals under such agreements/arrangements have been charged as rent in Note No.33.

The Company as a lessor

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note No.27.

11. Employee benefit plans

(a) Defined contribution plans and amounts recognised in the Statement of profit and loss

(b) Other long term employee benefits (based on actuarial valuation)

(c) Defined benefit plans Gratuity

The Company makes annual contributions to gratuity fund established as a trust, for the defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity as per provisions of the Payment of Gratuity Act, 1972 or the Company Scheme, whichever is beneficial.

The plan typically exposes the Company to actuarial risks such as: loss of investment risk, interest rate risk, mortality rate risk and salary rate risk.

Loss of investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the plan’s liability.

Mortality rate risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary rate risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

The following tables summarises the components of net benefit expense recognised in the Statement of profit and loss and the funded status and amounts recognised in the balance sheet for defined benefit plan:

The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

Sensitivities due to mortality and withdrawals are insignificant and hence ignored. Sensitivities as to rate of inflations, rate of increase of pensions in payments, rate of increase of pensions before retirement and life expectancy are not applicable being a lump sum benefit on retirement.

12. Financial instruments and risk management

12.1.Fair value measurements

The fair value of financial assets and liabilities are included at the amount at which the instruments could be exchanged in as current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

i) The fair value of cash and cash equivalents, trade receivables, trade payables, security deposits received, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

ii) The financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by using valuation techniques that are appropriate in the circumstances and for which sufficient data are available.

Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of quoted equity shares and/or debt based mutual fund investments.

Level 2: This level hierarchy includes items measured using inputs, other than quoted prices included within level 1, that are observable for such items, directly or indirectly.

Level 3: This level of hierarchy includes items measured using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main items in this category are unquoted equity instruments.

12.2. Fair value hierarchy

The following table provides an analysis of financial instruments that are measured at fair value and have been grouped into Level 1, Level 2 and Level 3 below:

Note: Investment in equity of subsidiaries, associates and joint ventures which are carried at cost are not covered under Ind AS 107 and hence not been included above.

Note for Financial assets

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in mutual funds: Fair value is determined by reference to net asset values (NAVs) declared by the respective mutual fund houses for the relevant schemes.

12.3. Financial risk management objectives and policies

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by its Board of Directors.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency 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, deposits and foreign currency receivables, payables, loans and borrowings.

The Company manages market risk through its finance department, which evaluates and exercises independent control over the entire process of market risk management. The finance department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

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 in order to optimize the Company’s position with regard to interest income and interest expenses and to manage the interest rate risk, the finance department undertakes the interest rate risk management exercise from time to time.

The Company is not exposed to significant interest rate risk as at the respective reporting dates.

Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas markets and purchases from suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

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 trade receivables.

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. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the financial statement. The Company’s maximum credit exposure to credit risk is Rs. 100,549.61 lakhs (previous year Rs. 69247.43 lakhs). The Company has excluded the balances with the banks and fixed deposit as the credit risk associated with them is minimal.

Financial assets are provided for, when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been provided for, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss in the subsequent reporting period. The management believes that there is no significant exposure of credit risk due to the nature of Company’s business. For details of trade receivables those are past due, refer Note No.13.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligation on time or at a reasonable price. The Company’s finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by Board of Directors. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

(A) Maturities of financial liabilities

The table below analyze the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying values as the impact of discounting is not significant.

Foreign currency sensitivity analysis

The following table demonstrates the sensitivity to a reasonably possible change in foreign currency exchange rate such as USD, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives:

(C) Exposure in mutual fund investments

The Company manages its surplus funds majorly through investments in debt based mutual fund schemes. The fair value of these investments is reflected through net asset values (NAVs) declared by the Asset Management Company on daily basis with regard to the invested schemes. The Company is exposed to market price risk on such investments.

Sensitivity analysis of mutual fund investments

Had the NAVs been higher/lower by 1% at the end of the reporting period, profit for the year ended 31.3.2018 would have increased/decreased by Rs.803.92 lakhs (for the year ended 31.3.2017 by Rs. 418.13 lakhs).

13. Capital management

For the purposes of the Company’s capital management, capital includes issued capital and all other equity reserves. Net debts comprises of non-current and current debts (including trade payables and other financial liabilities), other current liabilities as reduced by cash and cash equivalents and current investments. The primary objective of the Company’s capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt.

No changes were made in the objectives, policies or processes during the year ended 31 March, 2018.

14. Discontinuance of Tea Business:

Vide agreement dated October 17, 2017 the Company has sold/assigned trademarks associated with its packaged tea business to Goodricke Group Limited for a consideration of Rs. 2000.00 lakhs and also agreed to discontinue its packaged tea business. As this material transaction arises from ordinary activity of the business and is not of recurring nature, the same has been disclosed as an exceptional item in the Statement of Profit and Loss.

Further, tea business was not significant considering the overall operations of the Company and was also not disclosed as a separate segment as per Ind AS 108. Hence, disclosures for discontinued operations as required under Ind AS 105 have not been provided in these Financial Statements.

15. The Company has invested Rs.1298.90 lakhs as at 31st March, 2018 in the share capital of its wholly owned foreign subsidiary, Flavors And More, Inc., USA. The subsidiary company, in course of exploring new business opportunities in the U.S. market, has incurred losses as per its standalone financials. The management is formulating and implementing the requisite business plans and is confident of realising the value of its investments in long run. Therefore, no write-down in the value of investment has been considered necessary at this stage.

16. Applicability of new and revised Ind AS

Amendments to Ind AS 7 Statement of Cash Flows: Disclosure Initiative

The amendment requires the company to provide disclosure of changes in their liabilities arising from financing activities, including changes arising from both, cash flows and non- cash changes. The amendments are effective for annual periods beginning on or after 01 April 2017, therefore, the company has not provided comparative information of previous year.

Ind AS 115-Revenue from Contract with Customers:

In March 2018, the MCA notified Ind AS 115, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard replaces most of the current revenue recognition guidance. The core principle of the new standard is for companies to recognize revenue when the control of the goods and services is transferred to the customer as against the transfer of risk and rewards. The amount of revenue recognised should reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively including service revenues and contract modifications and improved guidance for multiple element arrangements. The standard will be effective for the Company beginning April 1, 2018 and allow for both retrospective and prospective adoption. In order to identify the potential impact of the standard on the Company’s financial statements, the Company has analysed contracts of the relevant revenue streams. The work done is focused on evaluating the contractual arrangements across the Company’s principal revenue streams, particularly key terms and conditions which may impact the timing of revenue recognition and measurement of revenue. Accordingly, the Company has performed an assessment of the impact of the standard and developed a transition methodology. The implementation of changes required as per Ind AS 115 is identified to be not materially effecting the current recognition and measurement of revenues, though there would be significant additional disclosure requirements for the Company to comply with. The Company is in process of making necessary changes to policies, processes, and internal controls as well as system enhancements to generate the information necessary for the new disclosures.

17. Disclosures required by Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and Section 186(4) of the Companies Act, 2013:

Investments: Full particulars of investments made by the Company have been disclosed in Note No.9. Guarantees: Full particulars of guarantees given by the Company have been disclosed in Note No.37. Further, these guarantees have been given to the banks to secure financial facilities provided by them to the subsidiaries of the Company.

Loans: There are no loans and advances in the nature of loans to the subsidiaries/associates/firms and companies in which directors are interested.

18. The figures for the previous year have been re-classified/re-grouped, wherever necessary, to correspond with the current year’s classification/ disclosure.

---

Mar 31, 2017

1. Corporate information

Godfrey Phillips India Limited (‘the Company’) is a public limited company incorporated in India and listed on the Bombay Stock Exchange and the National Stock Exchange. The Company is engaged in manufacturing of cigarettes and chewing products and in trading of tobacco products, tea and other retail products.

The address of its registered office is ‘Macropolo Building’, Ground Floor, Next to Kala Chowky Post Office, Dr. Babasaheb Ambedkar Road, Lalbaug, Mumbai - 400033 and the address of its corporate office is Omaxe Square, Plot No.14, Jasola District Centre, Jasola, New Delhi - 110025.

2. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

Up to the year ended March 31, 2016, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company’s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2015. Refer Note No.51 for the details of first time adoption exemptions availed by the Company. The financial statements are presented in rupees and all values are rounded to the nearest lakhs except when otherwise indicated.

3. Basis of preparation and presentation

3.1. Basis of preparation and presentation

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies mentioned below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

3.2. Use of estimates

The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to contingent assets and contingent liabilities.

The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results may differ from these estimates. Any revision to the accounting estimates or difference between the estimates and the actual results are recognised in the periods in which the results are known/materialise or the estimates are revised and future periods affected.

4. Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management of the Company to make judgements, estimates and assumptions that effect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Judgements and estimates

In the process of applying the accounting policies, management has made the following judgements and estimates, which have the most significant effect on the amounts recognised in the financial statements:

Defined benefit plans ( Gratuity)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds.

The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

Further details about gratuity obligations are given in Note No.42.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using other valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.

Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Note No.43 for further disclosures.

Useful lives of property, plant and equipment and intangible assets

As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period.

Provisions and contingent liabilities

The Company has ongoing litigations with various regulatory authorities and others. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management’s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability.

Information regarding income and expenditure of investment property

The Company’s investment properties comprise of certain land and buildings presently held by the Company for an undetermined purpose and these are located in Mumbai, Maharashtra.

The above values are based on valuation performed by an accredited independent valuer and the valuation has been carried out in accordance with the valuation model recommended by the International Valuation Standards Council.

The Company has no restrictions on the realisability of its investment properties.

Presently, no rental income is derived from these investment properties.

On freehold land, no amortisation has been charged. On buildings, depreciation has been charged as per Schedule II of the Companies Act, 2013.

The Company has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

(i) There has been no movement in the equity shares in the current and previous year.

(ii)The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

(iii) Shares held by each shareholder holding more than 5%:

Capital redemption reserve:

This was created on redemption of preference shares in accordance with the requirements of the Companies Act, 1956.

General reserve:

The amount transferred to the general reserve is Rs.2000 lakhs (previous year Rs.2000 lakhs). As the general reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income.

Retained earnings:

Retained earnings is the amount that can be distributed by the Company as dividends to its equity shareholders subject to the requirements of the Companies Act, 2013. The amount reported above are not distributable in entirety.

In respect of the year ended March 31, 2017, the directors have, in the board meeting held on May 30, 2017, proposed a dividend of Rs.8 per fully paid equity share. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included in liability in the financial statements. The proposed equity dividend is payable to all the holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs.4159.51 lakhs apart from Rs.846.78 lakhs towards corporate dividend tax.

Summary of borrowing arrangements

1. Foreign currency term loans from banks

These loans carry floating interest rates based on JPY LIBOR plus an agreed premium and are repayable in half yearly / quarterly instalments ranging between 3 to 5 years. Further, these loans are secured by way of exclusive charge over specific plant and machinery.

2. Foreign currency non-repatriable borrowing

This borrowing carries a floating interest charge based on USD LIBOR and is repayable in two equal semi-annual instalments starting from the 18th month from the date of its disbursement. This borrowing is secured by way of the exclusive charge over specific plant and machinery.

Breach of loan agreement

There have been no breach of covenants mentioned in the loan agreements during the reporting periods.

5. Corporate social responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, healthcare and woman economic empowerment, providing disaster relief and undertaking rural development projects.

Gross amount required to be spent by the Company during the year is Rs. 501.00 lakhs (Previous year Rs. 496.00 lakhs) and the details of amount spent are as under:

*includes Rs. 1828.95 lakhs (March 31, 2016 - Rs. 1825.39 lakhs; March 31, 2015 - Rs. 1809.72 lakhs) relating to demands received by the subsidiary company - International Tobacco Company Limited.

@all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

@@this is to secure overdraft limit given by the bank. The actual overdrawn balance as on March 31, 2017 was Rs. 123.09 lakhs (AED 6.97 lakhs); (previous year Rs.196.54 lakhs) (AED 10.94 lakhs)

6. Operating lease arrangements The Company as a lessee Leasing arrangements

The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms.

The Company has also entered into operating lease arrangements for various lands. These are non-cancellable in nature and range between forty five years to ninety nine years.

The aggregate rentals under such agreements/arrangements have been charged as rent in Note No.33.

The Company as a lessor

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note No.27.

(a) Defined benefit plans Gratuity

The Company makes annual contributions to gratuity fund established as a trust, for the defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity as per provisions of the Payment of Gratuity Act or the Company Scheme, whichever is beneficial.

The plan typically exposes the Company to actuarial risks such as: loss of investment risk, interest rate risk, mortality rate risk and salary rate risk.

Loss of investment risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the plan’s liability.

Mortality rate risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary rate risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

The following tables summarises the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for defined benefit plan:

7. Financial instruments and risk management

7.1. Fair value measurements

The fair value of financial assets and liabilities are included at the amount at which the instruments could be exchanged in as current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

i ) The fair value of cash and cash equivalents, trade receivables, trade payables, security deposits received, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

ii) The financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Based on this evaluation, allowances are taken to account for the expected losses of these receivables.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by using valuation techniques that are appropriate in the circumstances and for which sufficient data are available.

Level 1: This level of hierarchy includes financial assets that are measured by reference to quoted prices in the active market. This category consists of quoted equity shares and/or debt based mutual fund investments.

Level 2: This level hierarchy includes items measured using inputs, other than quoted prices included within level 1, that are observable for such items, directly or indirectly. This category consists of over the counter (OTC) derivative contacts.

Level 3: This level of hierarchy includes items measured using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instruments nor based on available market data. The main items in this category are unquoted equity instruments.

Note for Financial assets

The fair value of the financial assets are determined at the amount that would be received to sell an asset in an orderly transaction between market participants. The following methods and assumptions were used to estimate the fair values:

Investments in debt mutual funds: Fair value is determined by reference to net asset values (NAVs) declared by the respective mutual fund houses for the relevant schemes.

Note for Financial liabilities

Fair value of currency and interest rate swap derivatives has been determined using valuation techniques based on information derived from observable market data.

Investment property

The following table provides an analysis of investment properties, their fair values and fair value hierarchy grouped into Level 1, Level 2 and Level 3:

7.3. Financial risk management objectives and policies

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by its Senior Management.

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency 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, deposits and foreign currency receivables, payables, loans and borrowings.

The Company manages market risk through its finance department, which evaluates and exercises independent control over the entire process of market risk management. The finance department recommends risk management objectives and policies, which are approved by Senior Management. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

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 in order to optimize the Company’s position with regard to interest income and interest expenses and to manage the interest rate risk, the finance department undertakes the interest rate risk management exercise from time to time.

The Company is not exposed to significant interest rate risk as at the respective reporting dates.

Foreign currency risk

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales in overseas markets and purchases from suppliers in various foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

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 trade receivables.

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. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss in the subsequent reporting period. The management believes that there is no significant exposure of credit risk due to the nature of company’s business.

Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligation on time or at a reasonable price. The Company’s finance department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by Senior Management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

(A) Maturities of financial liabilities

The table below analyze the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying values as the impact of discounting is not significant

Foreign currency sensitivity analysis

The following table demonstrates the sensitivity to a reasonably possible change in USD exchange rate, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives:

(C) Exposure in mutual fund investments

The Company manages its surplus funds majorly through investments in debt based mutual fund schemes. The fair value of these investments is reflected through net asset values (NAVs) declared by the Asset Management Company on daily basis with regard to the invested schemes. The Company is exposed to market price risk on such investments.

Sensitivity analysis of mutual fund investments

Had the NAVs been higher/lower by 1% at the end of the reporting period, profit for the year ended 31.3.2017 would have increased/decreased by Rs.418.13 lakhs (for the year ended 31.3.2016 by Rs. 324.33 lakhs).

8. Capital management

For the purposes of the Company’s capital management, capital includes issued capital and all other equity reserves. The primary objective of the Company’s capital management is to maximise shareholder value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

9. Segment Information

a) Products from which reportable segments derive their revenues

The Company’s reportable segments under Ind AS 108 are as follows:

i) Cigarette and tobacco products; and

ii) Tea and other retail products

Segment information for the year ended March 31, 2017 and March 31, 201 6 is as follows:

d) Segment accounting policies for the purpose of monitoring segment performance and allocating resources between segments:

In addition to the significant accounting policies applicable to the business segments as set out in Note No.4, the accounting policies in relation to segment accounting are as under:

i) Segment revenue and expenses:

Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from loans given, dividend income, profit or loss on sale/redemption/fair valuation of investments, provision for diminution in value of investments, finance cost, donations and provision for taxation (current and deferred tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

ii) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of trade payables and other financial liabilities. Segment assets and liabilities do not include investments, loans given, bank balances for unclaimed dividend and fixed deposits’ unclaimed interest, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current and deferred tax).

10. Details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016 is as per the following details;

11. Applicability of new and revised Ind AS

Ind AS 7 has been amended in March 2017 to require an entity to enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The Company will adopt the amended standard from the effective date which is still to be notified. The Company is in the process of performing a detailed analysis of the changes to understand the impact. Further, amendment in Ind AS 102 which deals with share based payments, is not applicable to the Company.

12. Disclosures required by Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and Section 186(4) of the Companies Act, 2013:

Investments: Full particulars of investments made by the Company have been disclosed in Note No.9.

Guarantees: Full particulars of guarantees given by the Company have been disclosed in Note No.37. Further, these guarantees have been given to the banks to secure financial facilities provided by them to the subsidiaries of the Company.

13. First time adoption of Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The effect of the Company’s transition to Ind AS is summarised in the following notes:

(i) Transition elections

(ii) Reconciliation of equity, total comprehensive income, balance sheet, profit and loss and cash flows as reported as per Ind AS in this statement with as reported in previous years as per previous Indian GAAP.

13.1. Transition elections

The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2015 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to certain exception and certain optional exemptions availed by the Company as detailed below.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has accordingly applied the following exemptions:

Deemed cost of property, plant and equipment, investment properties and other intangibles assets

The Company has opted to consider previous GAAP carrying value of property, plant and equipment, investment properties and other intangible assets as deemed cost on transition date.

Leases

The Company has opted to determine whether an 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.

Investments in subsidiaries and associates in separate financial statements

The Company has opted to consider previous GAAP carrying value of investments as deemed cost on transition date for investments in subsidiaries and associates in separate financial statements.

13.2 Effect of Ind AS adoption of the statement of cash flows for the year ended March 31, 2016:

The transition from previous GAAP to Ind AS has not had a material impact on the statement of cash flows.

13.3. Effect of Ind AS adoption of the other comprehensive income for the year ended March 31, 2016:

Under previous GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled previous GAAP profit and loss to profit and loss as per Ind AS. Further, previous GAAP profit and loss is reconciled to total comprehensive income as per Ind AS.

Notes to first time adoption

(i) Under the previous GAAP, dividend proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend and related corporate dividend tax were recognised as a liability. Under Ind AS, such dividends and related corporate dividend tax are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend of Rs. 5006.29 lakhs (including corporate dividend tax of Rs. 846.78 lakhs) as at April 1, 2015 and Rs. 5006.29 lakhs (including corporate dividend tax of Rs. 846.78 lakhs) as at March 31, 2016 included under provisions as per previous GAAP has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by the amount of Rs. 5006.29 lakhs as at April 1, 2015 and by Rs. 5006.29 lakhs as at March 31, 2016 and the amount of provisions decreased by the same amounts.

(ii) Under the previous GAAP, investment in mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments aggregating to Rs. 5459.65 lakhs have been recognised in retained earnings as at the date of transition and Rs. 700.98 lakhs subsequently in the profit or loss for the year ended March 31, 2016. Consequent to this change, the amount of investments increased by Rs. 5459.65 lakhs as at April 1, 2015 (non-current investments by Rs. 5387.14 lakhs and current investments by Rs. 72.51 lakhs) and by Rs. 6160.63 lakhs as at March 31, 2016 (non-current investments by Rs. 5182.54 lakhs and current investments by Rs. 978.09 lakhs).

(iii) The Company in line with previous GAAP, had been recognizing lands obtained on lease at its cost under property, plant and equipments (PPE) since AS -19 specifically excluded lands obtained on lease from its ambit. However, in line with Ind AS -17, the Company has assessed and treated these lands as operating lease and is thus measuring the same at the aggregate value of upfront payments and other charges under other non-current/current assets. The resulting cumulative amortization of leasehold land aggregating to Rs. 98.02 lakhs has been recognised in retained earnings as at the date of transition and Rs. 33.88 lakhs subsequently in the profit or loss for the year ended March 31, 2016. Consequent to this change, the amount of PPE decreased by Rs. 1433.16 lakhs as at April 1, 2015 and by Rs. 1900.59 lakhs as at March 31, 2016 with a corresponding increase in other assets by Rs. 1335.14 lakhs as at April 1, 2015 (other non current assets by Rs. 1301.65 lakhs and other current assets by Rs. 33.88 lakhs) and by Rs. 1768.68 lakhs as at March 31, 2016 (other non current assets by Rs. 1731.75 lakhs and other current assets by Rs. 36.93 lakhs).

(iv) The Company entered into a currency swap and interest rate swap agreement to hedge its exposure in foreign currency loan liability (in JPY) and interest thereon, whereby the Company converted the loan from JPY to USD and similarly the interest rate was swapped from floating interest to fixed interest. Consequently, under the previous GAAP, the JPY borrowing was treated as denominated in USD. Further, under the previous GAAP, the fair value of currency and interest rate swap derivative was not recognised. Under Ind AS, all financial instruments are required to be recognised at fair value. Accordingly, the resulting impact (net) due to fair valuation of currency and interest rate swap derivative, change of loan currency from USD to JPY and change in interest from fixed to floating, aggregating to Rs. 115.07 lakhs has been recognised in retained earnings as at the date of transition and Rs. 102.19 lakhs subsequently in profit and loss for the year ended March 31, 2016. Consequent to this change, the amount of borrowings increased by Rs. 97.47 lakhs (non-current decreased by Rs. 1014.79 lakhs and current increased by Rs. 1112.26 lakhs) as at April 1, 2015 and by Rs. 11.18 lakhs (current) as at March 31, 2016.

(v) Under previous GAAP, upfront fees paid for processing of loans was expensed out in the year of payment itself. As per Ind AS, the processing fees paid for availment of loan needs to be amortised over the tenure of the loan. The resulting change due to amortisation of upfront fees aggregating to Rs. 17.60 lakhs has been recognised in retained earnings as at transition date and Rs. 15.90 lakhs subsequently in finance costs in profit and loss for the year ended March 31, 2016.

(vi) Under the previous GAAP, rent expenses were recognised as per terms of the agreement entered into with the lessor. Under Ind AS, lease rentals are recognised as an expense on a straight-line basis over the lease term (including rent free period). The resulting impact of straight lining of lease rentals over the lease term (including rent free period) aggregating to Rs. 408.08 lakhs has been recognised in retained earnings as at the date of transition and Rs. 208.16 lakhs subsequently in the profit or loss for the year ended March 31, 2016. Consequent to this change, the amount of trade payables increased by Rs. 408.08 lakhs as at April 1, 2015 and by Rs. 616.24 lakhs as at March 31, 2016.

(vii) Under previous GAAP, the employee loans (given on concessional interest rates) and security deposits were measured at cost. Under Ind AS, the same are initially measured at fair value using effective interest rate and subsequently measured at amortised cost. The resulting fair value changes of these employee loans and security deposits aggregating to Rs. 36.82 lakhs have been recognised in retained earnings as at the transition date and Rs. 4.04 lakhs subsequently in the profit and loss for the year ended March 31, 2016. Consequent to this change, there is an increase in loans (financial assets) and other assets by Rs. 36.82 lakhs as at April 1, 2015 and by Rs. 32.78 lakhs as at March 31, 2016.

(viii) Deferred tax has been recognised on the adjustments made on transition to Ind AS. The resulting amount of deferred tax liabilities (net of deferred tax assets) recognised on the adjustments due to Ind AS aggregating to Rs. 137.63 lakhs has been recognised in retained earnings as at the date of transition and Rs. 92.81 lakhs in profit and loss for the year ended March 31, 2016. Consequent to this change, the amount of deferred tax assets (net) decreased by Rs. 137.63 lakhs as at April 1, 2015 and by Rs. 230.44 lakhs as at March 31, 2016.

(ix) Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss aggregating to Rs. 335.96 lakhs (tax effect of this Rs. 116.27 lakhs). Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. There is no impact on the total equity.

(x) Under previous GAAP, there was no requirement to present investment property seperately. Under Ind AS investment property is required to be presented seperately in balance sheet. Consequent to this change, the amount of PPE decreased by Rs. 507.89 lakhs as at April 1, 2015 and by Rs. 496.01 lakhs as at March 31, 2016 due to reclassification of PPE into investment property.

(xi) Ind AS requires assets and liabilities to be classified into financial assets/liabilities and other assets/ liabilities and accordingly, certain reclassifications have been carried out.

(xii) The decrease in revenue is on account of cash discount (Rs. 1 10.68 lakhs) and customer loyalty programs (Rs. 8521.68 lakhs) netted off from revenue in accordance with revenue recognition policy under Ind AS.

14. Approval of financial statements

The financial statements were approved for issue by the board of directors on May 30, 2017.

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Mar 31, 2016

CORPORATE INFORMATION

Godfrey Phillips India Limited (''the Company'') is a public limited company and listed on the Bombay Stock Exchange and the National Stock Exchange. The Company is engaged in manufacturing of cigarettes and chewing products and in trading of tobacco products, tea and other retail products.

1. Corporate Social Responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, healthcare and woman economic empowerment, providing disaster relief and undertaking rural development projects.

Gross amount required to be spent by the Company during the year is Rs.496.00 lacs (Previous year Rs.499.00 lacs) and the details of amount spent are as under:

2 (a). The following are the particulars of dues on account of sales tax, value added tax, excise duty and income-tax as at March 31, 2016 that have been disputed by the Company in appeals pending before the appellate authorities:

Further, there are no dues of customs duty which have not been deposited on account of any disputes. Further, as per information available with the Company, the concerned authority is in appeal against favourable orders received by the Company in respect of the following matters:

2. (b) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the requirements of the Companies Act.

3. The Company and its contract manufacturers have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

4. a) The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.2239.24 lacs (previous year- Rs.7767.74 lacs).

b) The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term contracts including derivative contracts for which there will be any material foreseeable losses.

5. The amount due to micro, small and medium enterprises as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006" ("MSMED") has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to the micro, small and medium enterprises as at March 31, 2016 are as under.

6. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year - Rs.820.49 lacs (previous year - Rs.1176.50 lacs).

(ii) for periods between later than one year and less than five years - Rs.307.13 lacs (previous year - Rs.5337.10 lacs).

(iii) For period later than five years- Rs. Nil (previous year Rs.1814.78 lacs).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 22.

7. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited

Godfrey Phillips Middle East DMCC (company incorporated in Dubai)

Flavors And More, Inc. (company incorporated in USA)

(b) Subsidiaries through the subsidiary companies:

Friendly Reality Projects Limited

(Formerly Kashyap Metal and Allied Industries Limited)

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Friendly Reality Projects Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc., of which the Company is an associate.

K K Modi Investment & Financial Service Private Limited, of which the Company is an associate. Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company.

(d) Key management personnel and their relatives:

Mr. K.K.Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director (upto 28th May,2015) and a relative of

Mr.K.K.Modi, Mrs. Bina Modi and Mr.Samir Kumar Modi

Mrs. Bina Modi Ordinary Director and a relative of Mr. K.K. Modi,

Mr. Lalit Kumar Modi and Mr. Samir Kumar Modi

Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Beacon Travels Private Limited

Indofil Industries Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

8. Employee Benefits

The Company has classified the various benefits provided to employees as under -

I. Defined contribution plans and amounts recognized in the statement of profit and loss

II. Other long term employee benefits (based on actuarial valuation)

- Compensated absences - amount recognized in the statement of profit and loss- Rs.1435.89 lacs (previous year Rs.1760.77 lacs).

III. Defined benefit plans (based on actuarial valuation)

- Gratuity

In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined benefit plan and details of the same are given below:

9. Previous year''s figures have been regrouped/reclassified, wherever considered necessary to confirm to the current year''s classification/disclosure.

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Mar 31, 2015

CORPORATE INFORMATION

Godfrey Phillips India Limited ('the Company') is a public limited company and listed on the Bombay Stock exchange and the National Stock exchange. The Company is engaged in manufacturing of cigarettes and chewing products and in trading of tobacco products, tea and other retail products.

1. The exceptional item in the previous year represents compensation paid to unionized staff and workmen attached to the Company's plant at Andheri, Mumbai, pursuant to the voluntary retirement schemes announced by the Company under the terms of settlement memorandum executed by it with the workers' union.

2. The face value of equity share of the Company has been split from Rs.10 to Rs. 2 per share w.e.f. December 1, 2014. Accordingly, all shares and per share information in these financial statements reflect the effect of split retrospectively for the previous year.

3. Corporate Social Responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting education, healthcare and woman economic empowerment, providing disaster relief and undertaking rural development projects.

4. Contingent Liabilities not provided for As at As at 31.3.2015 31.3.2014

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 3679.74* 3592.66*

b) Uncalled liability on shares partly paid 79.24 79.24

c) Guarantee given to a bank on behalf of subsidiary company – International Tobacco Company Limited 81.18 76.99

* includes Rs. 1809.72 lacs (previous year Rs.1812.19 lacs) relating to demands received by the subsidiary company – International Tobacco Company Limited. @ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

5. a) The following are the particulars of dues on account of sales tax, value added tax, excise duty and income-tax as at March 31, 2015 that have been disputed by the Company in appeals pending before the appellate authorities:

6. The Company and its contract manufacturers have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

7. a) The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.7767.74 lacs (previous year- Rs.4661.44 lacs).

b) The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term contracts including derivative contracts for which there will be any material foreseeable losses.

8. The amount due to micro, small and medium enterprises as defined in the "The Micro, Small and Medium Enterprises Development Act, 2006" ("MSMED") has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to the micro, small and medium enterprises as at March 31, 2015 are as under.

9. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year – Rs.1176.50 lacs (previous year – Rs.254.74 lacs).

(ii) for periods between later than one year and less than five years – Rs.5337.10 lacs (previous year – Rs.473.90 lacs).

(iii) For period later than five years- Rs. 1814.78 lacs (previous year Rs. Nil).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 22.

10. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited

Chase Investments Limited

(b) Subsidiaries through the subsidiary companies:

Kashyap Metal and Allied Industries Limited

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc., of which the Company is an associate.

K K Modi Investment & Financial Service Private Limited, of which the Company is an associate.

Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company.

(d) Key management personnel and their relatives:

Mr. K.K. Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director and a relative of Mr. K.K. Modi,

Mrs. Bina Modi and Mr. Samir Kumar Modi

Mrs. Bina Modi Ordinary Director and a relative of Mr. K.K. Modi,

Mr. Lalit Kumar Modi and Mr.Samir Kumar Modi

Mr. R. Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Beacon Travels Private Limited

Indofl Industries Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

11. As per the requirements of the Companies Act, 2013, the Company has computed depreciation with reference to the useful life of respective assets specified in and in the manner prescribed in Schedule II to the Act. Accordingly, an amount of Rs. 410.27 lacs (net of deferred tax of Rs.217.12 lacs) on account of assets whose useful life has already exhausted as on 1st April, 2014, has been charged to open- ing balance of retained earnings and an additional depreciation amounting to Rs.1526 lacs has been charged to the Statement of Profit and Loss for the year ended March 31, 2015 based on the residual life of the remaining assets. In relation to the assets added after 1st April, 2014, depreciation has been charged as per the provisions of said Schedule II.

12. Previous year's figures have been regrouped/reclassified, wherever considered necessary to conform to the current year's classification/disclosure.

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Mar 31, 2014

I. The exceptional item represents compensation paid to unionized staff and workmen attached to the Company''s plant at Andheri, Mumbai, pursuant to the voluntary retirement schemes announced by the Company under the terms of settlement memorandum executed by it with the workers'' union.

II. Contingent Liabilities not provided for As at As at 31.3.2014 31.3.2013

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 3592.66* 2873.54*

b) Uncalled liability on shares partly paid 79.24 79.24

c) Guarantee given to a bank on behalf of subsidiary company - International Tobacco Company Limited 76.99 54.29

* includes Rs. 1812.19 lacs (previous year Rs.1730.18 lacs) relating to demands received by the subsidiary company - International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

III. The Company and its contract manufacturers have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

IV. The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.4661.44 lacs (previous year- Rs.5449.58 lacs).

The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

V. Amount due to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Act, 2006" has been disclosed to the extent such parties having been identified from the available information. The Company has not received any claim for interest from any party covered under the said Act.

VI. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year - Rs.254.74 lacs (previous year - Rs.165.96 lacs).

(ii) for periods between later than one year and less than five years - Rs.473.90 lacs (previous year - Rs.386.79 lacs).

(iii) For period later than five years- Rs. Nil (previous year Rs. Nil).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 21.

VII. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited

(b) Subsidiaries of the subsidiary companies:

Kashyap Metal and Allied Industries Limited

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc., of which the Company is an associate.

K K Modi Investment & Financial Service Private Limited, of which the Company is an associate. Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company

(d) Key management personnel and their relatives:

Mr. K.K. Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director and a relative of Mr. K.K. Modi and Mr. Samir Kumar Modi

Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Beacon Travels Private Limited

Indofil Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in Note 1, the accounting policies in relation to segment accounting are as under:

VIII Segment revenue and expenses:

Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from inter-corporate deposits and loans given, dividend income, profit or loss on sale of investments, provision for diminution in value of investments, finance cost, donations and provision for taxation (current and deferred tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

a) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, inter-corporate deposits and loans given, bank balances for unclaimed dividend and fixed deposits'' unclaimed interest, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current and deferred tax).

---

Mar 31, 2013

1. CONTINGENT LIABILITIES NOT PROVIDED FOR

As at As at 31.3.2013 31.3.2012

a) Demands from excise'' income tax'' sales tax and other authorities disputed by the Company @ 2873.54* 2459.27*

b) Uncalled liability on shares partly paid 79.24 79.24

c) Guarantee given to a bank on behalf of subsidiary company – International Tobacco Company Limited 54.29 54.29

*includes Rs.1730.18 lacs (previous year Rs.1784.86 lacs) relating to demands received by the subsidiary company – International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company'' these are not expected to have material effect on the fnancial results of the Company when ultimately concluded.

2. The Company and its contract manufacturer have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required'' the Company does not consider these to constitute a liability of any kind.

3. The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.5449.58 lacs (previous year- Rs.5642.29 lacs).

The Company has other commitments'' for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefts including union agreements'' in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts'' which might have material impact on the fnancial statements.

4. Amount due to micro and small enterprises covered under "The Micro'' Small and Medium Enterprises Act'' 2006" has been disclosed to the extent such parties having been identifed from the available information. The Company has not received any claim for interest from any party covered under the said Act.

5. The Company has entered into various operating lease agreements for premises (residential'' offces'' godowns'' etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally'' or longer'' and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year – Rs.165.96 lacs (previous year – Rs.207.85 lacs).

(ii) for periods between later than one year and less than fve years – Rs.386.79 lacs (previous year

– Rs.460.52 lacs). (iii) For period later than fve years- Rs. Nil (previous year Rs.80.73 lacs).

The Company has let out and sub-let part of its owned and rented offce premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 21.

6. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited

(b) Subsidiaries of the subsidiary companies:

Kashyap Metal and Allied Industries Limited

Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied

Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc.'' of which the Company is an associate. Success Principles India Limited'' an associate of the Company. IPM India Wholesale Trading Private Limited'' an associate of the Company. KKM Management Centre Private Limited'' an associate of the Company

(d) Key management personnel and their relatives:

Mr. K.K.Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Ordinary Director and a relative of

Mr.K.K.Modi and Mr.Samir

Kumar Modi Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise signifcant infuence:

Modicare Limited

Beacon Travels Private Limited

Indofl Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

International Research Park Laboratories Limited

Rajputana Fertilizers Limited

7. Previous year’s figures have been regrouped/reclassified'' wherever considered necessary to conform to the current year’s classifcation/disclosure.

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Mar 31, 2012

(i) There has been no movement in the equity shares in the current and previous year.

(ii) The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the Company.

(iii) Shares held by each shareholder holding more than 5%:

1. CONTINGENT LIABILITIES NOT PROVIDED FOR As at As at 31.3.2012 31.3.2011

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 2459.27* 2524.93

b) Uncalled liability on shares partly paid 79.24 148.99

c) Surety given to U.P. Trade Tax Authority on behalf of subsidiary company- international Tobacco Company Limited - 15.66

d) Guarantee given to a bank on behalf of subsidiary company - International Tobacco Company Limited 54.29 46.79

*includes Rs.1784.86 lacs (previous year Rs.1702.65 lacs) relating to demands received by the subsidiary company - International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

Further, there are no dues of wealth tax, customs duty and service tax which have not been deposited on account of any disputes.

Further, as per information available with the Company, the concerned authority is in appeal against favourable orders received by the Company in respect of the following matters:

2. The Company and its contract manufacturer have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

3. The estimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances) amount to Rs.5642.29 lacs (previous year- Rs.19369.47 lacs).

The Company has other commitments, for purchases/sales orders which are issued after considering requirements per operating cycle for purchase/sale of goods and services and employee benefits including union agreements, in normal course of business. The Company does not have any other long term commitments or material non-cancellable contractual commitments/contracts, which might have material impact on the financial statements.

4. Amount due to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Act, 2006" has been disclosed to the extent such parties having been identified from the available information. The Company has not received any claim for interest from any party covered under the said Act.

5. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Note 28.

The future minimum lease payments in respect of non-cancellable periods ofcertain operating leases are as under:

(i) for periods not later than one year - Rs.207.85 lacs (previous year - Rs.118.22 lacs)

(ii) for periods between later than one year and less than five years - Rs.406.52 lacs (previous year - Rs.216.65 lacs).

(iii) For period later than five years- Rs.80.73 Lacs (previous year Rs. Nil).

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Note 21.

6. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited

Chase Investments Limited

Manhattan Credits and Finance Limited (merged with Chase Investments Limited in current year)

City Leasing and Finance Company Limited (merged with Chase Investments Limited in current year)

(b) Subsidiaries of the subsidiary companies:

Kashyap Metal and Allied Industries Limited Unique Space Developers Limited

Rajputana Infrastructure Corporate Limited (subsidiary of Kashyap Metal and Allied Industries Limited)

Gopal Krishna Infrastructure & Real Estate Limited (subsidiary of Unique Space Developers Limited)

(c) Associates:

Philip Morris Global Brands Inc. (Formerly Philip Morris International Finance Corporation), which the Company is an associate.

Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company .

(d) Key management personnel and their relatives:

Mr. K.K. Modi President and Managing Director

Mr. Samir Kumar Modi Executive Director

Mr. Lalit Kumar Modi Executive Director (upto July 31, 2010) and Ordinary Director thereafter and a relative of Mr. K.K.Modi and Mr.Samir Kumar Modi

Mr. R. Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Modern Homecare Products Limited

Beacon Travels Private Limited

Indofil Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Modi Innovative Education Society

7. Segment reporting disclosures under Accounting Standard 17

(A) Business segments:

Based on the guiding principles given in Accounting Standard-17 "Segment Reporting", the Company's primary business segments are (a) Cigarette and tobacco products; and (b) Tea and other retail products.

(B) Geographical segments:

Since the Company's activities/operations are primarily within the country and considering the nature of products it deals in, the risks and returns are same and as such there is only one geographical segment.

Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in Note 1, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from inter-corporate deposits and loans given, dividend income, profit or loss on sale of investments, provision for diminution in value of investments, finance cost, donations and provision for taxation (current and deferred tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

b) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, inter-corporate deposits and loans given, bank balances for unclaimed dividend and fixed deposits' unclaimed interest, real estate stock, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current and deferred tax).

II. Other long term employee benefits (based on actuarial valuation)

* Compensated absences - amount recognized in the statement of profit and loss - Rs.842.57 lacs; previous year Rs.737.23 lacs.

III. Defined benefit plans (based on actuarial valuation)

* Gratuity

In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined benefit plan and details of the same are given below:

8. The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/reclassified, wherever considered necessary to conform to the current year's classification/disclosure.

---

Mar 31, 2011

1. CONTINGENT LIABILITIES NOT PROVIDED FOR

As at As at

31.3.2011 31.3.2010

a) Demands from excise, income tax, sales tax and other authorities disputed by the Company @ 2524.93* 448.85*

b) Uncalled liability on shares partly paid 148.99 148.99

c) Surety given to U.P. Trade Tax Authority on behalf of subsidiary company-International Tobacco Company Limited 15.66 15.66

d) Guarantee given to a bank on behalf of subsidiary company – International Tobacco Company Limited 46.79 26.83

* includes Rs.1702.65 lacs (previous year Rs.166.00 lacs) relating to demands received by the subsidiary company – International Tobacco Company Limited.

@ all these matters are subject to legal proceedings in the ordinary course of business and in the opinion of the Company, these are not expected to have material effect on the financial results of the Company when ultimately concluded.

2 The Company and its contract manufacturer have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

3. Sundry creditors include Rs.240.86 lacs (previous year Rs.117.80 lacs) due to micro and small enterprises covered under "The Micro, Small and Medium Enterprises Act, 2006" to the extent such parties have been identified from the available information. The Company has not received any claim for interest from any party covered under the said Act.

4. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Schedule 15.

The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year – Rs.118.22 lacs (previous year – Rs.122.86 lacs)

(ii) for periods between later than one year and less than five years – Rs. 216.65 lacs (previous year – Rs.281.26 lacs)

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Schedule 13.

5.Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies:

International Tobacco Company Limited Chase Investments Limited City Leasing and Finance Company Limited Manhattan Credits and Finance Limited Kashyap Metal and Allied Industries Limited Unique Space Developers Limited

(b) Subsidiaries of the subsidiary companies:

Rajputana Infrastructure Corporate Limited Gopal Krishna infrastructure & Real Estate Limited

(c) Associates:

Philip Morris International Finance Corporation, of which the Company is an associate.

Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

KKM Management Centre Private Limited, an associate of the Company

(from March 14,2011).

(d) Key management personnel:

Mr. K.K.Modi President and Managing Director

Mr. Lalit Kumar Modi Executive Director (upto July 31, 2010) and

Ordinary Director thereafter Mr. Samir Kumar Modi Executive Director

Mr. R.Ramamurthy Whole-time Director

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modicare Limited

Modern Homecare Products Limited

K.K. Modi Investment & Financial Services Private Limited

Beacon Travels Private Limited

Indofil Industries Limited (Formerly Indofil Organic Industries Limited)

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Modi Healthcare Placement India Private Limited

Fashion Television India Private Limited

6.Segment reporting disclosures under Accounting Standard 17

(A) Business segments:

Based on the guiding principles given in Accounting Standard-17 "Segment Reporting", the Company's primary business segments are (a) Cigarette and tobacco products; and (b) Tea and other retail products.

(B) Geographical segments:

Since the Company's activities/operations are primarily within the country and considering the nature of products it deals in, the risks and returns are same and as such there is only one geographical segment.

Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in Note 1 in Schedule 16, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from inter-corporate deposits and loans given, dividend income, profit or loss on sale of investments, provision for diminution in value of investments, interest expense (excluding those relatable to segments), donations and provision for taxation (current and deferred tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

b) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, inter-corporate deposits and loans given, bank balances for unclaimed dividend and fixed deposits' unclaimed interest, real estate stock, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current and deferred tax).

II. Other long term employee benefits (based on actuarial valuation)

- Compensated absences – amount recognized in profit and loss account – Rs. 737.23 lacs; previous year Rs. 488.30 lacs.

7. The figures for the previous year have been re-cast, wherever necessary to conform to the current year's classification.

---

Mar 31, 2010

1. CONTINGENT LIABILITIES NOT PROVIDED FOR As at As at 31.3.2010 31.3.2009 a) Demands from excise, income tax, sales tax and other authorities disputed by the Company 448.85 274.03

b) Uncalled liability on shares partly paid 148.99 148.99

c) Surety given to U.P. Trade Tax Authority on behalf of subsidiary company-International Tobacco Company Limited 15.66 15.66

d) Guarantee given to a bank on behalf of subsidiary company – International Tobacco Company Limited 26.83 20.86

2. The Company and its contract manufacturer have received various show cause notices from Excise Authorities asking them to explain why certain amounts mentioned in these notices should not be paid. As these notices are in the nature of explanations required, the Company does not consider these to constitute a liability of any kind.

3. Sundry creditors include Rs.117.80 lacs (previous year Rs.84.35 lacs) due to micro and small enterprises covered under “The Micro, Small and Medium Enterprises Act, 2006” to the extent such parties have been identified from the available information. The Company has not received any claim for interest from any party covered under the said Act.

4. The Company has entered into various operating lease agreements for premises (residential, offices, godowns, etc.). These lease arrangements are mostly cancellable in nature and range between two to three years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate rentals paid under such agreements have been charged as rent in Schedule 15. The future minimum lease payments in respect of non-cancellable periods of certain operating leases are as under:

(i) for periods not later than one year – Rs.122.86 lacs (previous year – Rs.60.00 lacs).

(ii) for periods between later than one year and less than five years – Rs.281.26 lacs (previous year – Rs.213.00 lacs).

The Company, pursuant to the contract manufacturing arrangement with its wholly owned subsidiary company International Tobacco Company Limited, has taken from it certain plant and machinery and equipments for use in its manufacturing operations. Hire charges, if any, payable in respect thereof have been charged as rent in Schedule 15 .

The Company has let out and sub-let part of its owned and rented office premises under lease arrangements which are cancellable in nature but renewable on mutually agreeable terms. The rent and hire charges receivable in respect thereof have been accrued as income in Schedule 13.

5. Exchange gain (net) included in the profit and loss account for the year is Rs.1203.46 lacs (previous year- loss (net) Rs.2780.62 lacs).

6. Related party disclosures under Accounting Standard 18

(A) Names of related parties and nature of related party relationships:

(a) Subsidiary companies: International Tobacco Company Limited Chase Investments Limited City Leasing and Finance Company Limited Manhattan Credits and Finance Limited Kashyap Metal and Allied Industries Limited Unique Space Developers Limited

(b) Subsidiaries of the subsidiary companies:

Rajputana Infrastructure Corporate Limited Gopal Krishna Infrastructure & Real Estate Limited

(c) Associates:

Philip Morris International Finance Corporation, of which the Company is an associate.

Success Principles India Limited, an associate of the Company.

IPM India Wholesale Trading Private Limited, an associate of the Company.

(d) Key management personnel:

Mr. K.K.Modi Mr. Lalit Kumar Modi Mr. Samir Kumar Modi Mr. S.V.Shanbhag Mr. R.Ramamurthy

President and Managing Director

Executive Director

Executive Director

Whole-time Director (upto July 31, 2009)

Whole-time Director (from August 14, 2009)

(e) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Modi Entertainment Limited

Modicare Limited

Modern Homecare Products Limited

K.K.Modi Investment & Financial Services Private Limited

Beacon Travels Private Limited

Indofil Organic Industries Limited

Assam Cigarette Company Private Limited

R C Tobacco Private Limited

HMA Udyog Private Limited

Kaushambi Industries Private Limited

Bina Fashion N Food Private Limited

Modicare Foundation

Priyal Hitay Nidhi

Colorbar Cosmetics Private Limited

Gujarmal Modi Science Foundation

Ananda Embroidery Industries Private Limited

Doruka Designs Private Limited

Modi Healthcare Placement India Private Limited

12. Segment reporting disclosures under Accounting Standard 17

(A) Business segments:

Based on the guiding principles given in Accounting Standard-17 “Segment Reporting”, the Company’s primary business segments are (a) Cigarette and tobacco products; and (b) Tea and other retail products.

(B) Geographical segments:

Since the Company’s activities/operations are primarily within the country and considering the nature of products it deals in, the risks and returns are same and as such there is only one geographical segment.

Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in Note 1 in Schedule 16, the accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses: Segment revenue and expenses only include items directly attributable to the segment. They do not include investment income, interest income from inter-corporate deposits and loans given, dividend income, profit or loss on sale of investments, provision for diminution in value of investments, interest expense (excluding those relatable to segments) and bill discounting charges, donations and provision for taxation (current, deferred and fringe benefit tax). Since the corporate office of the Company primarily caters to the cigarette and tobacco products segment, its expenses have been considered to be attributable to the same.

b) Segment assets and liabilities:

All segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consist principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, inter-corporate deposits and loans given, bank balances for unclaimed dividend and fixed deposits interest, real estate stock, share capital, reserves and surplus, loan funds, dividends payable and income-tax (current, deferred and fringe benefit tax).

7. Employee Benefits

The Company has classified the various benefits provided to employees as under -

8. The figures for the previous year have been re-cast, wherever necessary to conform to the current year’s classification.