By Himanshu V. Kishnadwala, Chartered Accountant
New Page 1
Section B : Miscellaneous
4 Scheme of arrangement for transfer of
amalgamation reserve to restructuring reserve and one-time restructuring costs
adjusted
GILLETTE INDIA LTD. — (30-6-2007)
From Notes to Accounts :
Consequent upon the scheme of arrangement u/s. 391 of the
Companies Act, 1956 as approved by the shareholders and confirmed by the Hon’ble
High Court of Rajasthan a sum of Rs.85,00,000 was transferred from the
amalgamation Reserve forming part of the Capital Reserves of the Company to a
Reconstruction Reserve Account. Further, vide a clarification dated December 4,
2006, the Hon’ble High Court has clarified that the transfer of expenses to the
Reconstruction Reserve Account should be gross of tax.
A detailed break-up of Rs.65 22 74 068 as has been utilised
towards the Business Restructuring expenses up to June 30, 2007 is given below :
One-time expenditure for the restructuring |
Maximum amount as sanctioned by the Court |
Actual expenses upto June 30, 2007 |
| |
Rs. |
Rs. |
Employee separation, Relocation and related costs |
536000000 |
490835509 |
Costs associated with change in Go to Market and Distribution model
|
212000000 |
139415791 |
Estimated value of
asset write down w.r.t.
the restructure |
43500000 |
8117433 |
Transition costs including travel/ training/ communication and other related
costs |
35000000 |
13905335 |
Other miscellaneous restructuring items including contingencies |
23500000 |
— |
Total |
850000000 |
652274068 |
The said Business Restructuring is expected to be completed
during the next financial year.
From Auditors’ Report :
Attention is invited to Note B2 of the Schedule 18 annexed to
and forming part of the financial statements regarding charging off of Business
Restructuring expenses to Capital Reserve. Pursuant to the approval given by the
High Court of Rajasthan dated August 22, 2006 and December 04, 2006 to the
Scheme of Arrangement filed by the Company under Section 391 of the Companies
Act, 1956, in respect of charging off of ‘business restructuring expenses —
gross of tax’ to the capital reserve; the Company has been permitted to transfer
an amount of up to Rs.8500.00 lakhs from the Capital Reserve to a
‘Reconstruction Reserve Account’. The total expenses charged off to
Reconstruction Reserve Account for the period from January 01, 2006 to June 30,
2007 amounted to Rs.6522.74 lakhs. Had the restructuring expenses not been
adjusted to Capital Reserve under the order of the High Court of Rajasthan and
debited to the Profit and Loss Account as per the generally accepted accounting
principles, the net profit after tax (inclusive of the effect of deferred tax)
would have been lower and the Capital Reserve been higher for the period from
January 01, 2006 to June 30, 2007 by Rs.5538.72 lakhs.
