Godrej Consumer Products : Consolidated

Independent Auditor's Report

To the Members of Godrej Consumer Products Limited

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Godrej Consumer Products Limited (hereinafter referred to as the "Holding Company") and its subsidiaries (Holding Company and its subsidiaries together referred to as "the Group"), which comprise the consolidated balance sheet

as at 31 March 2024, and the consolidated statement of profit and loss (including other comprehensive income), consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policies and other explanatory information in which are included the Returns for the year ended on that date audited by the branch auditor of the Holding Company's branch at Singapore (hereinafter referred to as "the consolidated financial statements").

In our opinion and to the best of our information and according to

the explanations given to us, and based on the consideration of report of the branch auditor on financial statements of such branch as was audited by the branch auditor

and reports of other auditors on separate/consolidated financial statements/ financial information of such subsidiaries as were audited by the other auditors, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 ("Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31 March 2024, of its consolidated loss and other comprehensive loss, consolidated changes in equity and consolidated cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the

Auditor's Responsibilities for the

Audit of the Consolidated Financial Statements section of our report.

We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in terms of the Code

of Ethics issued by the Institute of Chartered Accountants of India and the relevant provisions of the Act, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence obtained by us along with the consideration of reports of the branch auditor and other auditors referred to in paragraph (a) of the "Other Matters" section below, is sufficient and appropriate to provide a basis for our opinion on the consolidated financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed

in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Financial Statements | Consolidated

Revenue recognition

See Note 29 to consolidated financial statements

The key audit matter

How the matter was addressed in our audit

Revenue is measured net of any discounts and rebates.

Recognition and measurement of discounts and rebates accruals involves judgement and estimates. This leads to a risk of revenue being misstated due to inaccurate estimation over discounts and volume rebates.

Revenue is recognised when the control of the products being sold has transferred to the customer.

There is a risk of revenue being overstated on account of manipulation in the timing of transfer of control, due to the pressure on the Group to achieve performance targets for the year.

Accordingly, revenue recognition is considered to be a key audit matter.

Our audit procedures included:

• Assessing the Group's compliance of revenue recognition accounting policies, including those relating to discounts and rebates, with reference to Ind AS 115 'Revenue from contracts with customers' (applicable accounting standard);
• Testing the design, implementation and operating effectiveness of the Group's general IT controls and key IT application/ manual controls over the Group's systems, with the assistance of our IT specialists. These IT systems enable recording of revenue and computing discounts and volume rebates in the general ledger accounting system;
• Performing substantive testing by selecting statistical samples of revenue transactions recorded for the year as well as period end cut-off and agreeing to the underlying documents, which included sales invoices and shipping documents;
• Performing substantive testing by agreeing statistical samples of discounts and rebate accruals and disbursements to underlying documents;
• Performing a retrospective assessment of discounts and rebate accruals with prior period to evaluate the historical accuracy; and
• Assessing manual journals posted to revenue to identify unusual items

Intangible Assets- impairment assessment
See Notes 6 and 52 to consolidated financial statements
The key audit matter	How the matter was addressed in our audit

The carrying amount of goodwill and brands (indefinite life intangible assets) represent 48% of the Group's total assets.

The identification of relevant Cash Generating Units (CGUs) for the annual impairment evaluation of Goodwill by the Group involves significant judgement.

The annual impairment testing of these intangible assets with indefinite useful life and goodwill by the Group involves significant estimates and judgment due to the inherent uncertainty involved in forecasting discounting future cash flows and determining the recoverable amounts.

Accordingly, impairment assessment of goodwill and intangible assets is considered to be a key audit matter.

Our audit procedures included:

• Evaluating design and implementation and testing operating effectiveness of controls over the Group's process of impairment assessment and approval of forecasts;
• Evaluating Group's basis to identify relevant CGUs;
• Comparing the weighted average cost of capital with sector averages for the relevant markets in which the CGUs operate;
• Assessing the valuation methodology and challenging the assumptions used, in particular those relating to forecast revenue growth and earnings, weighted average cost of capital, long-term growth rates and royalty rates, with the assistance of our valuation specialists;
• Assessing the reliability of the financial projections prepared by the Group by comparing projections for previous financial years with actual results realized and analysis of significant variances;
• Performing sensitivity analysis by assessing the effect of possible reductions in the above assumptions on the recoverable amount; and
• Evaluating the adequacy of disclosures in respect of impairment evaluation of intangible assets with indefinite useful life and goodwill in the consolidated financial statements.

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Business combination - Acquisition of business from Raymond Consumer Care Limited

See Note 47 to consolidated financial statements
The key audit matter	How the matter was addressed in our audit

The Group has completed the acquisition of FMCG business of Raymond Consumer Care Limited effective 8 May 2023 pursuant to a business transfer agreement at a total consideration of `2,825 crores.

The Group has accounted for such acquisition as a business combination as per Ind AS 103 'Business Combinations' by recognizing identifiable assets and liabilities at fair value.

The measurement of the identifiable assets and liabilities acquired at fair value is inherently judgmental.

Fair value of brands was determined by the Group with the assistance of an external valuation expert using income approach (royalty relief method), considering the assets being measured.

Given the complexity and judgement involved in fair value measurements and magnitude of the acquisition made by the Group, this is a key audit matter.

Our audit procedures included:

• We have read the business transfer agreement to understand the key terms and conditions of the acquisition;
• We have evaluated the accounting treatment followed by the Group with reference to Ind AS 103;
• We have evaluated the design and implementation and tested the operating effectiveness of key internal controls related to the Group's valuation process;
• We have involved our valuation specialists;
• • to gain an understanding of the work of the experts by examining the valuation reports.
  • to critically evaluate the key assumptions (including revenue projections, royalty rate, terminal growth rate and discount rate) and purchase price allocation adjustments.
  • to evaluate the valuation of acquired tangible and intangible assets based on our knowledge of the Group and the industry.
• We have assessed the adequacy of the Group's disclosures in respect of the acquisition in accordance with the requirements of Ind AS 103.

Other Information

The Holding Company's Management and Board of Directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and auditor's reports thereon. The annual report is expected to be made available to us after the date of this auditor's report.

Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above

when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the relevant laws and regulations.

Management's and Board of Directors' Responsibilities for the Consolidated Financial Statements

The Holding Company's Management and Board of Directors

are responsible for the preparation and presentation of these consolidated financial statements in term of the requirements of the Act that give a true and fair view of the consolidated state of affairs, consolidated profit/ loss and other comprehensive income, consolidated statement of changes in equity

and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. The respective Management and Board of Directors of the companies included in the Group are responsible for maintenance

of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of each company and

for preventing and detecting

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Financial Statements | Consolidated

frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Management and Board of Directors of the Holding Company, as aforesaid.

In preparing the consolidated financial statements, the respective Management and Board of Directors of the companies included in the Group are responsible for assessing the ability of each company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The respective Board of Directors of the companies included in the Group are responsible for overseeing the financial reporting process of each company.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions

of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as

fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting in preparation of consolidated financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related
  to events or conditions that may cast significant doubt on the appropriateness of this assumption. If we conclude that a material uncertainty exists, we are required
  to draw attention in our auditor's report to the related disclosures in the consolidated

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financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial statements/financial information of such entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements/financial information of such entities included in the consolidated financial statements of which we are the independent auditors. For the other entities included in the consolidated financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our

responsibilities in this regard are further described in paragraph

1. of the section titled "Other Matters" in this audit report.

We communicate with those charged with governance of the Holding Company of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

1. We did not audit the financial statements of one branch, whose financial statements reflect total assets of `0.21 crores as at 31 March 2024, total revenue of `1.33 crores, total net profit after tax of `0.12 crores and net cash inflows
   of `0.11 crores for the year ended on that date, before giving effect to consolidation adjustments, as considered in the consolidated financial statements. These financial statements have been audited by the branch auditor whose report has been furnished to us by the Management, and our opinion on the consolidated financial statements in so far as it relates to the amounts and disclosures included in respect of this branch and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid branch is based solely on the report of the branch auditor.
2. We did not audit the financial statements / financial information of 33 subsidiaries, whose financial statements/ financial information reflects total assets of `5,899.71 crores as at 31 March 2024, total revenue of `7,022.14 crores, total net profit after tax of `343.05 crores and net cash outflows of `30.28 crores for the year ended on that date, before giving effect to consolidation adjustments, as considered
   in the consolidated financial statements. These financial

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Financial Statements | Consolidated

statements/financial information have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report

in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries is based solely on the reports of the other auditors.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the branch auditor and other auditors.

1. The financial statements/ financial information of 2 subsidiaries, whose financial statements/financial information reflects total assets of ` Nil crores as at 31 March 2024, total revenue of ` Nil crores, total net profit after tax of `30.92 crores and net cash flows of ` Nil crores for the year ended on that date, before giving effect to consolidation adjustments, as considered
   in the consolidated financial statements, have not been audited either by us or by other auditors. These unaudited financial statements/ financial information have been furnished to us by the Management and

our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of sub-section (3) of Section 143 of the Act in so far as it relates to the aforesaid subsidiaries, is based solely on such unaudited financial statements / financial information. In our opinion and according to the information and explanations given to us by the Management, these financial statements/ financial information are not material to the Group.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of this matter with respect to the financial statements/financial information certified by the Management.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2A. As required by Section 143(3) of the Act, based on our audit and on the consideration of

reports of the other auditors on separate/consolidated financial statements of such branch and subsidiaries as were audited by other auditors, as noted in the "Other Matters" paragraph, we report, to the extent applicable, that:

1. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.
2. In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors and proper returns adequate for the purposes of our audit have been received from the branch not visited by us, except for the matter stated in the paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
3. The report on the accounts of the branch office of the Holding Company audited under Section 143(8) of the Act by branch auditor

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has been sent to us and has been properly dealt with by us in preparing this report.

1. The consolidated balance sheet, the consolidated statement of profit and loss (including other comprehensive income), the consolidated statement of changes in equity
   and the consolidated statement of cash flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statementsand with the returns received from the branch not visited by us.
2. In our opinion, the aforesaid consolidated financial statements comply with the Ind AS specified under Section 133 of the Act.
3. On the basis of the written representations received from the directors of the Holding Company as on
   31 March 2024 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies incorporated in India, none of the directors of the Group companies incorporated in India is disqualified as on 31 March 2024 from being appointed

as a director in terms of Section 164(2) of the Act.

1. 1. The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph
      2A(b) above on reporting under Section 143(3)(b) of the Act and paragraph 2B(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
   2. With respect to the adequacy of the internal financial controls with reference to financial statements of the Holding Company and its subsidiary companies and the operating effectiveness
      of such controls, refer to our separate Report in
      "Annexure B".
2. With respect to the other matters to be included in the
   Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and based on
   the consideration of the reports of the other auditors on separate/consolidated financial statements/ financial information of the branch and subsidiaries, as noted in the "Other Matters" paragraph:
3. 1. The consolidated financial statements disclose

the impact of pending litigations as at 31 March 2024 on the consolidated financial position of the Group. Refer Note 28 and 42 to the consolidated financial statements.

1. The Group did not have any material foreseeable losses on long-term contracts including derivative contracts during the year ended 31 March 2024.
2. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Holding Company during the year ended 31 March 2024. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by its subsidiary companies incorporated in India during the year ended
   31 March 2024.

• (i) The management of the Holding Company and its subsidiary companies whose financial statements/ financial information have been audited under the Act have represented to us and the other auditors
  of such subsidiary companies that, to the best of its knowledge and belief, as disclosed in the

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Financial Statements | Consolidated

Note 56(a) to the	financial information
consolidated financial	have been audited
statements, no funds	under the Act have
have been advanced	represented to us and
or loaned or invested	the other auditors
(either from borrowed	of such subsidiary
funds or share	companies that,
premium or any other	to the best of its
sources or kind of	knowledge and belief,
funds) by the Holding	as disclosed in the
Company or any of its	Note 56(b) to the
subsidiary companies	consolidated financial
incorporated in	statements, no funds
India to or in any	have been received
other person(s) or	by the Holding
entity(ies), including	Company or any of its
foreign entities	subsidiary companies
("Intermediaries"),	incorporated in India
with the	from any person(s)
understanding,	or entity(ies),
whether recorded in	including foreign
writing or otherwise,	entities ("Funding
that the Intermediary	Parties"), with the
shall directly or	understanding,
indirectly lend or	whether recorded in
invest in other	writing or otherwise,
persons or entities	that the Holding
identified in any	Company or any of its
manner whatsoever	subsidiary companies
by or on behalf	incorporated in
of the Holding	India shall directly
Company or any of its	or indirectly, lend
subsidiary companies	or invest in other
incorporated in	persons or entities
India ("Ultimate	identified in any
Beneficiaries")	manner whatsoever
or provide any	by or on behalf
guarantee, security	of the Funding
or the like on behalf	Parties ("Ultimate
of the Ultimate	Beneficiaries")
Beneficiaries.	or provide any
(ii) The management of	guarantee, security
or the like on behalf
the Holding Company	of the Ultimate
and its subsidiary	Beneficiaries.
companies whose	(iii) Based on the audit
financial statements/
procedures that have

been considered reasonable and appropriate in the circumstances by us and that performed by the auditor of the subsidiary companies incorporated in India whose financial statements/financial information has been audited under the Act nothing has come to our or other auditor notice that has caused us or the other auditor to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under

1. 1. and (ii) above, contain any material misstatement.
2. The interim dividend declared and paid by the Holding Company during the year and until the date of this audit report is in accordance with Section 123 of the Act.
3. Based on our examination which included test checks, except for the instance mentioned below, the Holding Company and
   its subsidiary companies incorporated in India whose financial statements have been audited under the Act, have used accounting softwares for maintaining its books
   of account which has a feature of recording audit

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trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective softwares;

In the absence of independent auditor's report for the period 1 April 2023 to 31 March 2024 in relation to controls at service organisation for accounting software used for maintaining the books of account relating to consolidation process, which is operated by a third-party software service provider, we are unable to comment whether audit trail feature of the said software was enabled and operated for the period

1 April 2023 to 31 March

2024 for all relevant transactions recorded in the software.

Further, for the period audit trail (edit log) facility was enabled and operated for the respective accounting softwares, we did not come across any instance of the audit trail feature being tampered with.

1. With respect to the matter to be included in the Auditor's
   Report under Section 197(16) of the Act:
   In our opinion and according to the information and explanations given to us, the remuneration paid during the current year by the Holding Company to its directors is in accordance with the provisions of Section 197 of the Act.
   The remuneration paid to any director by the Holding Company to its directors is not in excess of the limit laid down under Section 197 of the

Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us. In our opinion and according to the information and explanations given to us and based on the reports of the statutory auditors of the subsidiary companies incorporated in India, the subsidiary companies have not paid / provided managerial remuneration which would require requisite approvals mandated by the provisions of Section 197 of the Act.

For B S R & Co. LLP

Chartered Accountants

Firm's Registration

No.:101248W/W-100022

Vijay Mathur

Partner

Membership No.: 046476

Place: Mumbai

Date: 06 May 2024

ICAI UDIN:24046476BKGPAZ8646

462

Financial Statements | Consolidated

Annexure A to the Independent Auditor's Report on the Consolidated Financial Statements of Godrej Consumer Products Limited for the year ended 31 March 2024

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

1. In our opinion and according to the information and explanations given to us, following company incorporated in India and included in the consolidated financial statements, has a remark given by its auditor in their report under the Companies (Auditor's Report) Order, 2020 (CARO):

Sr. No.	Name of the entities	CIN	Holding Company/	Clause number of the
			Subsidiary/ JV/	CARO report which
			Associate	is unfavourable or
				qualified or adverse
1.	Godrej Consumer	CIN No.:	Subsidiary	17
	Supplies Limited	U20230MH2023PLC415494

For B S R & Co. LLP

Chartered Accountants

Firm's Registration No.:101248W/W-100022

Vijay Mathur

Partner

Membership No.: 046476

Place: Mumbai

Date: 06 May 2024

ICAI UDIN:24046476BKGPAZ8646

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