1.

Introduction
The aim of this project is to study the policies followed by each company in the FMCG (Fast Moving
consumer goods) industry for valuation of assets and liabilities.
Since FMCG sector in itself is quite diversified, hence instead of selecting the companies on the
basis of total assets or total revenues, identification has been done on the sole criteria of BSE
and NSE FMCG indices. ITC has been excluded from the study as it is a classified as a
Conglomerate.
For summarizing the commonalities and differences following points were taken into
consideration:
1. Identifying the areas where policies followed are the same or closely similar
2. Identifying the differences in the policies followed
3. Analyzing the implications of the policy differences on profits/the value of assets and
liabilities.
Financial statements of all the organizations have been prepared as per the historical cost
convention on an accrual basis and in compliance with Accounting Standards and Companies
Act,2013. Detailed information has been provided about various heads under an organizations
balance sheet, like Tangible Assets, Intangible Assets, Long Term Provisions, Short term
Provisions etc.

2. Colgate-Palmolive
Assets:

General Observations
1. Noted as per historical/acquisition cost, less accumulated depreciation and impairment.
2. Subsequent expenditures that which increase the benefits from existing asset have been
added in the value.
3. Disposable assets = min(Net Book Value, Net Realizable Value). Expected losses mentioned in
P&L statement.
(i) Tangible assets:
1. Leasehold land: amortized over primary period of lease.
2. Depreciation: Straight line method. Estimated lives explicitly mentioned in the report for each
asset, calculated based on technical estimates and approved by management.
(ii) Intangible assets: All intangible assets amortized as of date. (Max. useful life = 10 years)
(iii) Investments:
1. Long-term investments: valued at cost, Provision made for diminution
2. Current investments: min(cost, fair value)
(iv) Inventories: Min(cost, net realizable value), where cost is determined using standard cost
method and Net realizable value
is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated costs necessary to make
the sale.
(v) Cash and Equivalents: Cash, deposits with banks and other short term holdings with
maturity period less than 3 months.

Liabilities:
(i) Long term Provisions: It has been made for items like gratuity, pension, PF and probable
tax liabilities. No provision has been made for situations where there are remote chances of
outflow of resources.
(ii)Short term provision: It has been made for taxes and certain employee benefits.
(iii) Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.

(iv) Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the weighted average number of equity shares outstanding during that
period.

3. Godrej
Assets:

General Observations
1. Noted as per historical/acquisition cost, less accumulated depreciation and impairment.
2. Subsequent expenditures that which increase the benefits from existing asset have been
added in the value.
(i) Tangible assets:
1. Leasehold land: amortized equally over primary period of lease.
2. Depreciation: Straight line method. Estimated lives explicitly mentioned in the report for each
asset eg Tools (9 years), Office Equipment (10 Years) etc.
(ii) Intangible assets:
1. All intangible assets amortized on straight line basis.
2. Software licenses 6 years, SAP licenses 4 years, Goodwill 5 years, Trademarks
min(useful life, 10 years), Technical know-how 10 years
(iii) Investments:
1. Long-term investments: valued at cost. Provision made for diminution
2. Current investments: min(cost, fair value), decline charged to revenue
(iv) Inventories: Min(cost, net realizable value), where cost is determined using weighted
average basis and Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated costs necessary to make
the sale.
(v) Cash and Equivalents: Cash, deposits with banks and other short term holdings with
maturity period less than 3 months.

Liabilities:
(i) Long term Provisions: It has been made for items like gratuity, pension, PF and probable
tax liabilities. No provision has been made for situations where there are remote chances of
outflow of resources.
(ii)Short term provision: It has been made for taxes and certain employee benefits.
(iii) Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(iv) Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the weighted average number of equity shares outstanding during that
period.

4. Hindustan Unilever Limited

Assets:
(i) Tangible assets:
1.
They are stated at acquisition cost less accumulated depreciation less accumulated
impairment losses
2. Depreciation: Straight line method. However, following exceptions are followed:a) plant and equipment is depreciated over 4 to 21 years based on the technical evaluation
of useful life done by the management.
b) Assets costing less than Rs. 5000 are fully depreciated in the year of purchase.
(ii) Intangible assets: Intangible assets are stated at acquisition cost less accumulated
amortization less accumulated impairment losses. The intangible assets are amortized on a
straight line basis as per rates mentioned below:a) Goodwill 25%

b) Brands/Trademarks 25%
c) Computer Software 20%
(iii) Investments:
3. Long-term investments: valued at cost, Provision made for diminution
4. Current investments: min(cost, fair value)
(iv) Inventories: Min(cost, net realizable value), where cost is computed using weighted
average basis and Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated costs necessary to make
the sale.
(v) Cash and Equivalents: Cash, term deposits with banks and other short term holdings with
maturity period less than 3 months.

Liabilities:
(i) Long Term Provisions: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(ii) Short Term Provisions: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(iii) Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(iv)Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the weighted average number of equity shares outstanding during that period.

5. United Spirits
Assets:

General Observations
1. Noted as per historical cost convention
2. Accounting principles followed are Generally Accepted Accounting Principles(GAAP)
(i) Tangible assets:
1. Tangible fixed assets are stated at their original cost of acquisition less accumulated
depreciation.
2. Fixed Assets : Min(Net Book Value, Net Realizable Value)
3. Depreciation: Straight line method. Estimated lives are as follows:Computers 3 years, Vehicles 5 years, Vehicles 5 years, Aircrafts 11 years, Buildings
Factory 30 yrs, Buildings Non factory 54 years,
Plant & Machinery 20 yrs
(ii) Intangible assets:
All intangible fixed assets are stated at acquisition cost less accumulated amortization.
(iii) Investments:
1. Long-term investments: valued at cost. Provision made for diminution
2. Current investments: Stated at min(cost, fair value)
(iv) Inventories: Min(cost, net realizable value), where cost is determined using weighted
average basis and Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated costs necessary to make the
sale.
(v) Cash and Equivalents: Cash, demand deposits with banks and other short term holdings
with maturity period less than 3 months or less.

Liabilities:
(i) Long term Provisions: It has been made for items like gratuity, pension, PF and probable
tax liabilities. No provision has been made for situations where there are remote chances of
outflow of resources.
(ii)Short term provision: It has been made for taxes and certain employee benefits.

(iii) Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(iv) Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the weighted average number of equity shares outstanding during that
period.

6. Emami Limited
Assets: General Observations
1. Assets are recorded as per historical cost/acquisition, less accumulated depreciation.
2. Interest and other financial charges on loans borrowed specifically for acquisition of capital
assets that are capitalized (including all pre-operative and trial run expenditure) till the
start of commercial production are added to cost of asset
3. Subsequent costs which increased the benefits from existing asset have been added in the
value.
4. Disposable assets = MIN (Net Book Value, Net Realizable Value) and Expected losses
mentioned in P&L statement.
a) Tangible Assets:
1. Leasehold land is amortized over primary period of lease.
2. Depreciation: Straight line method. Estimated lives explicitly mentioned in the report for
each asset, calculated based on technical estimates and approved by management.
3. Assets such block, dies & moulds are depreciated @ 100% in the year of purchase itself on
prorate basis.
b) Intangible Assets:
1. The Intangible assets are valued at cost less accumulated amortization and impairment.
2. Good Will is recorded at Book Value and amortized over period of 5 years, and periodically
checked for Impairment.
3. Software is depreciated over a period of six years on Straight Line Method.
4. Other Intangible assets such as Brand, Trade Mark etc are amortized over period of maximum
10 years.
c) Investments:
1. Long-term investments are valued at cost, Provision made for diminution.
2. Current investments: min(cost, fair value)
d) Inventories: Min(Cost, Net Realizable Value), where cost is determined using weighted
average method and Net realizable value is the estimated selling price in the ordinary course of
business ,less the estimated costs of completion and the estimated costs necessary to make the
sale.
e) Cash and Equivalents: Cash, deposits with banks and other short term holdings with
maturity period less than 3 months.

Liabilities:
a)

b)
c)
d)

Long term Provisions: It has been made for items like gratuity, pension, Leave
encashment and probable tax liabilities. No provision has been made for situations
where there are remote chances of outflow of resources.
Short term provision: It has been made for taxes and certain employee benefits.
Other current liabilities: It includes items like Security Deposits, Unpaid Dividends,
and Employee Benefits etc.
Earnings per share: It is calculated by dividing the net profit/loss after tax among
equity shareholders by the weighted average number of equity shares outstanding
during that period.

Marico Limited
Assets: General Observations
1. Assets
are
recorded
as
per
historical
cost/acquisition,
less
accumulated
depreciation/amortization and impairments.
2. Interest and other financial charges on loans borrowed specifically for acquisition of capital
assets that are capitalized (including all pre-operative and trial run expenditure) till the
start of commercial production are added to cost of asset
3. Subsequent costs which increased the benefits from existing asset have been added in the
value.
4. Disposable = MIN (Net Book Value, Net Realizable Value) and Expected losses mentioned
in P&L statement.
a) Tangible Assets:
1. Leasehold land is amortized over primary period of lease.
2. Depreciation: Straight line method. Estimated lives are calculated based on technical
estimates and approved by management or those stipulated in Schedule XIV to the
Companies Act, 1956. However the depreciation rates considered for the following items
are higher than the rates stipulated in Schedule XIV to the Companies Act, 1956:
Computers 3 years, Vehicles 5 years, Office Equipment- 2 Years-10 Years, ,Furniture and
Fixtures - 8Years, Moulds 6-7 Years.
3. Assets individually costing Rs. 5,000 or less are depreciated fully in the year of acquisition.
b) Intangible Assets:
Patents and trademarks are being amortized over the period of ten years on straight line basis.
Softwares are being amortized over the period of five years on straight line basis.
1. The Intangible assets are valued at cost less accumulated amortization and impairment.
2. Good Will is recorded at Book Value and periodically checked for Impairment.
3. Software is depreciated over a period of three years on Straight Line Method.
4. Other Intangible assets such as Brand, Trade Mark etc are amortized over period of maximum
10 years.
c) Investments:
3. Long-term investments are valued at cost, Provision made for diminution.
4. Current investments: min(cost, fair value)
d) Inventories: Min(Cost, Net Realizable Value), where cost is determined using weighted
average method and Net realizable value is the estimated selling price in the ordinary course of
business ,less the estimated costs of completion and the estimated costs necessary to make the
sale.
e) Cash and Equivalents: Cash, deposits with banks and other short term holdings with
maturity period less than 3 months.
Liabilities:
a)
Long term Provisions: It has been made for items like gratuity, pension, Leave
encashment and probable tax liabilities.
b)
Short term provision: It has been made for taxes and certain employee benefits.
c)
Other current liabilities: It includes items like Security Deposits, Unpaid Dividends,
and Employee Benefits etc.
d)
Earnings per share: It is calculated by dividing the net profit/loss after tax among
equity shareholders by the weighted average number of equity shares outstanding
during that period.

Dabur India Limited

The company has ascertained its operating cycle as 12 months for the purpose of current/noncurrent classification of

assets and liabilities.

Assets:
(i) Tangible assets:
Fixed assets are stated at carrying amount i.e. cost less accumulated depreciation. Depreciation
on fixed assets have
been calculated through Straight line method in terms of life span of assets.
(ii) Intangible assets: All intangible assets are amortized on straight line basis over the useful
life period. (Max. useful life = 10 years) E.g. Patents and trademarks are being amortized over
the period of ten years on straight line basis.
(iii) Investments:
1. Long-term investments: They are valued at cost and a provision made for diminution is
made to recognize a decline other than temporary in the value of long term investments.
2. Current investments: They are stated at the lower of cost and fair value.
(iv) Inventories: Inventories are valued at minimum of cost or net realizable value. The basis of
determination of cost is as follows:
a. Raw material, Packing Material, Stores & Spares :Moving Weighted Average basis
b. Work-in-progress : Cost of Input plus overhead up to the stage of completion
c. Finished Goods : Cost of input plus appropriate overhead
(v) Cash and Equivalents: Firm maintains cash, deposits with banks and other short term
holdings (maturity period less than 3 months).

Liabilities:
(v)Long term Provisions: It has been made for items like gratuity, pension, PF and probable
tax liabilities. No provision has been made for situations where there are remote chances of
outflow of resources. A provision for diminution is made to recognize a decline other than
temporary, if any, in the value of Noncurrent investments.
(vi) Short term provision: It has been made for taxes and certain employee benefits.
(vii) Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(viii) Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the weighted average number of equity shares outstanding during that period.

Britannia Industries Limited

The company has ascertained its operating cycle as 12 months for the purpose of current/noncurrent classification of assets and liabilities.

Assets:
(i) Tangible assets:
a) Tangible assets are stated at their cost of acquisition or construction minus accumulated
depreciation. Cost includes inward freight, duties, taxes and expenses incidental to
acquisition
and
installation
or
construction,
net of CENVAT and VAT credit. The cost of the fixed assets not ready for their intended use are
disclosed as capital work-in-progress.
b) Depreciation: Depreciation in respect of all the assets is provided on straight line method.
Vehicles acquired on finance lease are depreciated over a period of five years. Computers
(part of office equipments) are depreciated over a period of four years. Computer software is
fully depreciated over a period of six years, based on the review of useful life of such assets.
Assets costing individually up to ` 5,000/- are fully depreciated in the year of addition.
Leasehold land is amortized over the period of primary lease.
(ii) Intangible assets: Intangible assets are stated at cost of acquisition minus accumulated
amortization.

(iii) Investments:
1. Long-term investments: They are valued at cost and a provision made for diminution is
made to recognize a decline other than temporary in the value of long term investments.
2. Current investments: They are stated at the lower of cost and fair value for each
investment individually.
(iv) Inventories: Inventories are valued at minimum of cost or net realizable value. The basis of
determination of cost is as follows:
a. Raw material, Packing Material, Stores & Spares :Moving Weighted Average basis
b. Work-in-progress :Cost of Input plus conversion cost as applicable
c. Finished Goods : Lower of net realizable value and total cost including prime cost to
bringing the inventories to their present location.
(v) Cash and Equivalents: Firm maintains cash, deposits with banks and in other short term
holdings (maturity period less than 3 months).

Liabilities:
(vi) Long term Provisions: It has been made for items like gratuity, pension, PF and probable
tax liabilities. No provision has been made for situations where there are remote chances of
outflow of resources. A provision for diminution is made to recognize a decline other than
temporary, if any, in the value of Noncurrent investments.
(vii) Short term provision: It has been made for taxes and certain employee benefits.
(viii)Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(ix) Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the weighted average number of equity shares outstanding during that
period.

GlaxoSmithKline Pharmaceuticals Ltd

Investments that are readily realizable and are intended to be held for not more than one year
from the date on which such investments are made, are classified as current investments. All
other investments are classified as non-current investments.

Assets:
(i) Tangible assets:
Fixed assets are stated at cost of acquisition, including any attributable cost for
bringing the asset to its working condition for its intended use, less accumulated
depreciation. Interest on borrowings attributable to new projects is capitalized and
included in the cost of fixed assets as appropriate.
Leasehold land is not amortized however land improvements are amortized over the
period of the lease.
Obsolete assets are stated at lower of book value and estimated net realisable
value / salvage value, and are shown separately in the Financial Statements.
Capital work-in-progress comprises cost of fixed assets that are not yet ready for
their intended use at the year end.
Impairment: For the purpose of assessing impairment, assets are grouped at the
levels for which there are separately identifiable cash flows (cash generating unit).
(ii) Intangible assets: All intangible assets amortized over their estimated useful life.
(iii) Investments:
Long term investments are stated at cost, except where there is a diminution in
value other than temporary in which case the carrying value is reduced to recognize
the decline.
Current investments are stated at lower of cost and fair value
(iv) Inventories:

Inventories are valued at lower of cost and net realizable value. Cost is determined on first-in
first-out basis. The cost of work-in-progress (other than those lying at third party manufacturing
sites which is valued at material cost) and finished goods comprises of raw materials, direct
labor, other direct costs and related production overheads, but excludes interest expense. Net
realizable value is the estimate of the selling price in the ordinary course of business, less the
costs of completion and selling expenses.
(v) Cash and Equivalents: Cash, deposits with banks and other short term holdings with
maturity period less than 3 months.

Liabilities:
(vi)Long term Provisions:
It has been made for items like gratuity, pension, PF and probable tax liabilities. No provision has
been made for
situations where there are remote chances of outflow of resources.
(vii)Short term provision: It has been made for taxes and certain employee benefits.
(viii)Other current liabilities: It includes items like Security Deposits, Unpaid Dividends, and
Employee Benefits etc.
(ix)Earnings per share: It is calculated by dividing the net profit/loss after tax among equity
shareholders by the
weighted average number of equity shares outstanding during that period.
(x)Contingent Liabilities: A disclosure for contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not result in outflow of
resources.

Comparative Study:
ColgatePalmoli
ve

HUL

United
Spirits

Emami

Marico

Nestle

Dabur

Britan
nia

Tangibl
e

Historical
concept;
straight
line
method for
depreciatio
n

Historical
concept;
straight line
method for
depreciation

Historical
concept;
straight
line
method
for
depreciati
on

Historical
concept;
straight
line
method
for
depreciati
on

Historical
concept;
straight
line
method for
depreciatio
n

Historical
concept;
straight
line
method
for
depreciati
on

Historical
concept;
straight
line
method
for
depreciati
on

Historical
concept;
straight
line
method
for
depreciati
on

Historical
concept;
straight
line
method
for
depreciati
on

Intangi
ble

Amortized
using
straight
line
method

All assets
amortized

Amortized
using
straight
line
method

Amortized
using
straight
line
method

Amortized
using
straight
line
method

Amortized
using
straight
line
method

Amortize
d using
straight
line
method

Amortized
using
straight
line
method

Amortized
using
straight
line
method

Invest
ments

Long term:
at cost
Short term:
Lower of
cost and
fair value

Long term:
at cost
Short term:
Lower of
cost and fair
value

Long
term: at
cost
Short
term:
Lower of
cost and
fair value

Long
term: at
cost
Short
term:
Lower of
cost and
fair value

Long term:
at cost
Short term:
Lower of
cost and
fair value

Long term:
at cost
Short
term:
Lower of
cost and
fair value

Long
term: at
cost
Short
term:
Lower of
cost and
fair value

Long
term: at
cost
Short
term:
Lower of
cost and
fair value

Long
term: at
cost
Short
term:
Lower of
cost and
fair value

Invent
ory

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Min (cost,
NRV)

Cash
and
Equiva
lents

Bank
deposits &
govt.
bonds (<3
months
maturity)

Bank
deposits &
govt. bonds
(<3 months
maturity)

Bank
deposits &
other
secs(<3
months
maturity)

Bank
deposits &
other secs
(<3
months
maturity)

Bank
deposits &
other secs
(<3
months
maturity)

Bank
deposits &
other secs
(<3
months
maturity)

Bank
deposits
& other
secs (<3
months
maturity)

Bank
deposits
& other
secs (<3
months
maturity)

Bank
deposits
& other
secs (<3
months
maturity)

Assets

Godrej

GSK
Historic
al
concept
;
straight
line
method
for
depreci
ation
Amortiz
ed using
straight
line
method
Long
term: at
cost
Short
term:
Lower of
cost and
fair
value
Min
(cost,
NRV
Bank
deposits
& other
secs
(<3
months
maturity
)

Liabilit
ies

Godrej

ColgatePalmoli
ve

HUL

United
Spirits

Emami

Marico

Nestle

Dabur

Britan
nia

GSK

Gratuity,
pension,
PF, Leave
Encashm
ent,
probable
taxes

Gratuity,
pension,
PF, Leave
Encashm
ent,
probable
taxes

Gratuity,
pension,
PF, Leave
Encashm
ent,
probable
taxes

Gratuity
,
pension,
PF,
Leave
Encash
ment,
probabl
e taxes

Long
term
provisi
ons

Gratuity,
pension,
PF,
probable
taxes

Gratuity,
pension, PF,
probable
taxes

Employee
benefits,
pension,
medical,
absences

PF,
pension,
absences,
death
relief

Gratuity,
pension,
PF, Leave
Encashmen
t, probable
taxes

Gratuity,
pension,
PF, Leave
Encashme
nt,
probable
taxes

Short
term
provisi
ons

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes and
certain
employee
benefits

Taxes
and
certain
employ
ee
benefits

Shareh
older
Fund/E
PS

Division of
PAT by
weighted
avg. no. of
shares

Division of
PAT by
weighted
avg. no. of
shares

Division of
Net Profit
by
weighted
avg. no. of
shares

Division of
Net Profit
by
weighted
avg. no. of
shares

Division of
Net Profit
by
weighted
avg. no. of
shares

Division of
PAT by
weighted
avg. no. of
shares

Division
of Net
Profit by
weighted
avg. no.
of shares

Division
of Net
Profit by
weighted
avg. no.
of shares

Division
of Net
Profit by
weighted
avg. no.
of shares

Division
of Net
Profit by
weighte
d avg.
no. of
shares

Other
Curren
t
Liabilit
ies

Security
deposits,
unpaid
dividends,
employee
benefits
etc.

Security
deposits,
unpaid
dividends,
employee
benefits etc.

Unpaid
dividends,
employee
benefits

Unpaid
dividends,
employee
benefits

Security
deposits,
unpaid
dividends,
employee
benefits
etc.

Security
deposits,
unpaid
dividends,
employee
benefits
etc.

Unpaid
dividends
,
employee
benefits

Unpaid
dividends,
employee
benefits

Unpaid
dividends,
employee
benefits

Unpaid
dividend
s,
employ
ee
benefits

Thus we can observe that there is no significant variations in the policies in value of assets and
liabilities.