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Accounting Policies of M K Proteins Ltd. Company
Mar 31, 2025
II SINGNIFICANT ACCOUNTING POLICES
a) Property, Plant and Equipment:
Property, plant and equipment (other than freehold land) are stated at cost, less accumulated
depreciation and accumulated impairment loss, if any. The cost of an item of Property, Plant and
Equipment comprises:
a) its purchase price, including import duties and non-refundable taxes (i.e. Excise Duty/Value added
taxes/Goods and Service Tax, if any), after deducting trade discounts and rebates
b) any costs directly attributable to bringing the asset to the location and condition necessary for it to
be capable of operating in the manner intended by the management.
c) the initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located.
d) any subsequent expenditure for replacement/repair and maintenance is capitalised only if it is
probable that the future economic benefits associated with the expenditure will flow to the
Company. Otherwise the same are recognised as expenditure in the statement of profit and loss
when they are incurred.
Expenses directly related to the construction or acquisition of the fixed assets have been capitalized
and added to the particular assets. Pre-operative expenses incurred till the date of capitalization have
been apportioned on pro-rata basis. Items of fixed assets that are not yet ready for their intended use as
at the balance sheet date and other pre-operative expenses to the extent not apportioned are shown
under the head âCapital work in progressâ.
If significant parts of an item of Property, Plant and Equipment have different useful lives, then they
are accounted for as separate items (major components) of Property, Plant and Equipment and
depreciated accordingly.
Any Gains or losses arising from de-recognition of fixed assets are measured as the difference
between the net disposal proceeds and the carrying amount of the asset on the date of disposal and are
recognised in the statement of profit and loss when the asset is derecognised.
Depreciation/Amortization:
In respect of fixed assets (other than freehold land and capital work-in-progress) is calculated on
straight-line basis (âSLMâ) based on useful lives and residual values estimated by the management in
accordance with Schedule II of the Companies Act, 2013. Depreciation in respect of
addition/deduction to fixed assets during the year has been charged on pro-rata basis.
Depreciation is not recorded on capital work-in-progress until construction and installation is complete
and the asset is ready for its intended use.
The estimated residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed and adjusted, if appropriate, at the end of each reporting period for on a
prospective basis.
b) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
i) Company as lessee
The Company applies a single recognition and measurement approach for all leases, except for short¬
term leases. The Company recognises lease liabilities to make lease payments and Right-of-use assets
representing the right to use the underlying assets.
Right-of-use assets
The Company recognises Right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease
liabilities. The cost of Right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over the period of the
lease term. The Right-of-use assets are also subject to impairment.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of
the asset.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in substance fixed payments) less any lease incentives receivable. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the
Company and payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the lease payments
(e.g., changes to future payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the underlying asset. The
Companyâs lease liabilities are presented within the Balance Sheet under Financial Liabilities (Refer
Note 35).
Short-term leases
The Company applies the short-term lease recognition exemption to its short-term leases (i.e. those
leases that have a lease term of twelve months or less from the commencement date and do not contain
a purchase option). Lease payments on short-term leases are recognized as expenses.
ii) Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental income arising is accounted for over
the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same basis as
rental income.
c) Inventories
Inventories are measured at the lower of cost and net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges in bringing the goods to the
point of sale, including freight and other levies, transit insurance and receiving charges. The cost of
inventories is determined using the First-in-First out basis. Work-in-progress and finished goods
include appropriate proportion of overheads based on the normal operating capacity, wherever
applicable. Cost of finished goods further includes other costs incurred in brining the inventories to
their present location and condition. Cost of stock-in-trade includes cost of purchases and other costs
incurred in bringing the inventories to their present location and condition. Net realisable value is the
estimated selling price for inventories in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale. However, materials and other items
held for use in the production of inventories are not written down below cost if the finished products in
which they will be used are expected to be sold at or above cost.
d) Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term
deposits with a maturity of three months or less, which are subject to an insignificant risk of changes
in value.
For the purpose of presentation in the Statement of Cash Flows, Cash and Cash Equivalents includes
balance with banks and demand deposits with banks with original maturities of three months or less
and other short term highly liquid investments that are readily convertible into cash and which are
subject to an insignificant risk of changes in value.
e) Financial Instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
Financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in profit or loss.
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, 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. Financial assets are classified, at initial recognition, as financial assets measured at
fair value or as âFinancial assets measured at amortized costâ. The classification depends on the
entityâs business model for managing the financial assets and the contractual terms of the cash flows.
Subsequent measurement
After initial recognition, financial assets are measured at fair value (either through other
comprehensive income or through Profit and Loss), or amortized cost.
Debt Instruments
Debt instruments are subsequently measured at amortized cost, fair value through other
comprehensive income (âFVTOCIâ) or fair value through Profit and Loss (âFVTPLâ) till de-
recognition on the basis of (i) the entityâs business model for managing the financial assets and (ii) the
contractual cash flow characteristics of the financial asset.
There are three measurement categories into which the Company classifies its debt instruments.
a) Debt instruments at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest [SPPI] are measured at amortized cost. A gain or loss on a debt
investment that is subsequently measured at amortized cost is recognised in the Statement of Profit
and Loss when the asset is de-recognised or impaired. Interest income from these financial assets is
included in other income using the effective interest rate method.
b) Debt instruments at Fair value through other comprehensive income (FVTOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where
the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment
gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the
Statement of Profit and Loss. When the financial asset is de-recognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to the Statement of Profit and Loss and
recognised in other gains/ (losses). Interest income from these financial assets is included in other
income using the effective interest rate method.
c) Debt instruments at Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortized cost or FVTOCI are measured at FVTPL. A gain or
loss on a debt investment that is subsequently measured at FVTPL is recognised in the Statement of
Profit and Loss in the period in which it arises. Interest income from these financial assets is
recognised in the Statement of Profit and Loss.
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL.
For all other equity instruments, the Company decides to classify the same either as at FVTOCI or
FVTPL.
The Company makes such election on an instrument-by-instrument basis. The classification is made
on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). There is
no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of such
investments.
Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Statement of Profit and Loss.
Investment in equity shares, compulsorily convertible debentures and compulsory convertible
preference shares of subsidiaries, associates and jointly controlled entities have been measured at cost
less impairment allowance, if any.
De-recognition of financial assets
A financial asset is derecognized only when:
C the Company has transferred the rights to receive cash flows from the financial asset or
f retains the contractual rights to receive the cash flows from the financial asset but assumes a
contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred
substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset
is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership
of the financial asset, the financial asset is not derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards
of ownership of the financial asset, the financial asset is derecognized if the Company has not retained
control of the financial asset. Where the Company retains control of the financial asset, the asset is
continued to be recognized to the extent of continuing involvement in the financial asset.
Impairment of financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
C Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, deposits, and
bank balance.
C Trade receivables.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade
receivables which do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right
from its initial recognition.
Income recognition (Interest income)
Interest income from debt instruments is recognized using the effective interest rate method. The
effective interest rate is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the gross carrying amount of a financial asset.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at its fair value plus or minus, in the case of a financial
liability not at FVTPL, transaction costs that are directly attributable to the issue/origination of the
financial liability.
Subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is
classified as FVTPL if it is classified as held- for trading, or it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and
losses, including any interest expense, are recognized in the Statement of Profit and Loss. Other
financial liabilities are subsequently measured at amortized cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognized in Statement of Profit and Loss.
Any gain or loss on de-recognition is also recognized in the Statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation specified in the contract is discharged,
cancelled or expires.
Offsetting financial instruments
Financial assets and liabilities are off-set and the net amount is reported in the Balance Sheet where
there is a legally enforceable right to offset the recognized amounts and there is an intention to settle
on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right
must not be contingent on future events and must be enforceable in the normal course of business and
in the event of default, insolvency or bankruptcy of the Company or the counterparty.
Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts, interest rate
swaps and forward commodity contracts to hedge its foreign currency risks, interest rate risks and
commodity price risks respectively. Such derivative financial instruments are initially recognised at
Fair Value on the date on which a derivative contract is entered into and are subsequently re-measured
at Fair Value. Derivatives are carried as financial assets when the Fair Value is positive and as
financial liabilities when the Fair Value is negative.
f) Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the company
after deducting all of its liabilities. Equity instruments issued are recognised at the proceeds received,
net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity.
No gain or loss is recognised in the Statement of Profit and Loss on the purchase, sale, issue or
cancellation of the Companyâs own equity instruments.
g) Borrowings Cost
Borrowing costs, general or specific, that are directly attributable to the acquisition or construction of
qualifying assets is capitalized as part of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other borrowing costs are charged to the
Statement of Profit and Loss.
The Company determines the amount of borrowing costs eligible for capitalization as the actual
borrowing costs incurred on that borrowing during the year less any interest income earned on
temporary investment of specific borrowings pending their expenditure on qualifying assets, to the
extent that a company borrows funds specifically for the purpose of obtaining a qualifying asset. In
case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing
costs eligible for capitalization are determined by applying a capitalization rate to the expenditures on
that asset.
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the finance cost.
h) Revenue Recognition
i) Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are
transferred to the customer at an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services. The Company has concluded that it is the
principal in all of its revenue arrangements since it is the primary obligor in all the revenue
arrangements as it has pricing latitude and is also exposed to inventory risks.
Goods and Services T ax (GST) is not received by the Company on its own account. Rather, it is tax
collected on value added to the commodity by the seller on behalf of the government. Accordingly, it
is excluded from revenue.
ii) Sale of Goods
Revenue from sale of products is recognised at the point in time when control of the asset is transferred
to the customer, generally on delivery of the products. Invoices are payable within contractually
agreed credit period.
The Company considers whether there are other promises in the contract that are separate performance
obligations to which a portion of the transaction price needs to be allocated. In determining the
transaction price for the sale of products, the Company considers the effects of variable consideration
(if any).
Revenue from sale of products is stated exclusive of Goods and Services Tax (GST). Revenues are net
of sales returns, discounts, provision for anticipated returns on expiry, made on the basis of
management expectations.
iii) Refund Liabilities
A refund liability is recognised for the obligation to refund some or all of the consideration received
(or receivable) from the customer. The Companyâs refund liabilities arise from customersâ right of
return and volume rebates. The Company updates its estimates of refund liabilities at the end of each
reporting period.
iv) Rendering of Services
Service income is recognised as per the terms of the contracts/arrangements when related services are
performed and is stated net of GST.
v) Dividend and Interest Income
Dividend income from investments is recognised when the shareholderâs right to receive payment has
been established (provided that it is probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably). Interest income from a financial asset is recognised
when it is probable that the economic benefits will flow to the Company and the amount of income
can be measured reliably. Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that assetâs net
carrying amount on initial recognition.
Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the
ordinary course of business and reflects Companyâs unconditional right to consideration (that is,
payment is due only on the passage of time). Trade receivables are recognised initially at transaction
price. The Company holds the trade receivables with the objective of collecting the contractual cash
flows and therefore measures them subsequently at amortized cost net of any expected credit losses.
Loss allowance on trade receivables is measured at an amount equal to life time expected losses.
Contract Liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier)
from a customer before the Company transfers the related goods or services. Contract liabilities are
recognised as revenue when the Company performs under the contract (i.e., transfers control of the
related goods or services to the customer).
i) Employees Benefits
Employee benefits include salaries, wages, contribution to provident fund, employee state insurance
fund & Labour welfare fund, leave encashment towards un-availed leave, gratuity, compensated
absences and other terminal benefits.
i) Defined Contribution Scheme
Retirement benefits such as provident fund, employee state insurance, and labour welfare fund are
classified as defined contribution schemes. The Companyâs obligation under these schemes is limited
to the amount of contributions payable, which is recognized as an expense when the employee renders
the related service.
If the contribution payable for services rendered before the balance sheet date exceeds the amount
already paid, the shortfall is recognized as a liability after deducting the contributions already paid.
Conversely, if the contributions already paid exceed the amount due for services received before the
balance sheet date, the excess is recognized as an asset, to the extent that the prepayment will result in
a reduction of future payments or a refund of cash
ii) Defined benefit plans
Defined benefit plans comprising of gratuity and other terminal benefits, are recognized based on the
present value of defined benefit obligations which is computed using the projected unit credit method,
with actuarial valuations being carried out at the end of each annual reporting period. These are
accounted either as current employee cost or included in cost of assets as permitted.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in employee benefit expense in the
statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised in the period in which they occur, directly in other comprehensive income.
They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments are recognised immediately in profit or loss as past service cost.
iii) Short term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognised during the year when the employees render the service.
These benefits include performance incentive and compensated absences which are expected to occur
within twelve months after the end of the period in which the employee renders the related service.
iv) Terminal benefits
Termination benefits are payable when employment is terminated by the Company before the normal
retirement date, or when an employee accepts voluntary retirement scheme in exchange for these
benefits. Expenditure on Voluntary Retirement Scheme (VRS) is charged to the Statement of Profit
and Loss when incurred.
j) Income Tax
Income tax expense comprises current and deferred tax. T ax is recognised in statement of profit and
loss, except to the extent that it relates to items recognised in the other comprehensive income or in
equity. In such cases, the tax is also recognised in the other comprehensive income or in equity. The
provision for current tax is made at the rate of tax as applicable for the income of the previous year as
defined under the Income tax Act, 1961.
i) Current Tax
The current income tax charge is calculated based on the Indian Tax Laws enacted or substantively
enacted at the end of the reporting period. The provision for current tax is made at the rate of tax as
applicable for the income of the previous year as defined under the Income tax Act, 1961. Current tax
assets and current tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
ii) Deferred Tax
Deferred tax is recognised using the liability method, on temporary differences at the reporting date
arising between the tax bases of assets and liabilities and their carrying amounts for the financial
reporting purpose at the reporting date.
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be
available against which the deductible temporary differences, unused tax losses, depreciation carry -
forward and unused tax credits could be utilized. The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax assets to be
recovered. Deferred tax assets and liabilities are measured based on the tax rates that are expected to
apply in the period when the asset is realized or the liability is settled, based on tax rates and tax laws
that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it
relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or directly in equity, respectively.
k) Government Grants and Subsidies
Government grants are not recognised until there is reasonable assurance that the Company will
comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the
years in which the Company recognises as expenses the related costs for which the grants are intended
to compensate or when performance obligations are meet.
Government grants, whose primary condition is that the Company should purchase, construct or
otherwise acquire non-current assets and non-monetary grants are recognised and disclosed as
âdeferred incomeâ under non-current liability in the Balance Sheet and transferred to the Statement of
Profit and Loss on a systematic and rational basis over the useful lives of the related assets.
l) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of
financial year which are unpaid at the period end. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period. They are recognised
initially at their Fair Value and subsequently measured at amortised cost using the effective interest
method.
Mar 31, 2024
II SINGNIFICANT ACCOUNTING POLICES
a) Property, Plant and Equipment:
Property, plant and equipment (other than freehold land) are stated at cost, less accumulated depreciation and accumulated impairment loss, if any. The cost of an item of Property, Plant and Equipment comprises:
a) its purchase price, including import duties and non-refundable taxes (i.e. Excise Duty/Value added taxes/Goods and Service Tax, if any), after deducting trade discounts and rebates
b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management.
c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
d) any subsequent expenditure for replacement/repair and maintenance is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company. Otherwise the same are recognised as expenditure in the statement of profit and loss when they are incurred.
Expenses directly related to the construction or acquisition of the fixed assets have been capitalized and added to the particular assets. Pre-operative expenses incurred till the date of capitalization have been apportioned on pro-rata basis. Items of fixed assets that are not yet ready for their intended use as at the balance sheet date and other pre-operative expenses to the extent not apportioned are shown under the head âCapital work in progressâ.
If significant parts of an item of Property, Plant and Equipment have different useful lives, then they are accounted for as separate items (major components) of Property, Plant and Equipment and depreciated accordingly.
Any Gains or losses arising from de-recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset on the date of disposal and are recognised in the statement of profit and loss when the asset is derecognised.
Depreciation/Amortization:
In respect of fixed assets (other than freehold land and capital work-in-progress) is calculated on straightline basis (âSLMâ) based on useful lives and residual values estimated by the management in accordance with Schedule II of the Companies Act, 2013. Depreciation in respect of addition/deduction to fixed assets during the year has been charged on pro-rata basis.
Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset is ready for its intended use.
The estimated residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed and adjusted, if appropriate, at the end of each reporting period for on a prospective basis. Transition to Ind AS
On transition to Ind AS as on April 1,2022 the Company has elected to continue with the carrying value for all of its Property, Plant and equipments [Plant and Equipments and other fixed assets] as recognised in its Indian GAAP financial statements as deemed cost at the transition date.
b) Inventories
Inventories are measured at the lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including freight and other levies, transit insurance and receiving charges. The cost of inventories is determined using the First-in-First out basis. Work-in-progress and finished goods include appropriate proportion of overheads based on the normal operating capacity, wherever applicable. Cost of finished goods further includes other costs incurred in brining the inventories to their present location and condition. Cost of stock-in-trade includes cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price for inventories in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost.
c) Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects Companyâs unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at transaction price. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost net of any expected credit losses. Loss allowance on trade receivables is measured at an amount equal to life time expected losses.
d) Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of presentation in the Statement of Cash Flows, Cash and Cash Equivalents includes balance with banks and demand deposits with banks with original maturities of three months or less and other short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
e) Financial Instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than Financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
i) Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, 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. Financial assets are classified, at initial recognition, as financial assets measured at fair value or as âFinancial assets measured at amortized costâ. The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
Subsequent measurement
After initial recognition, financial assets are measured at fair value (either through other comprehensive income or through Profit and Loss), or amortized cost.
Debt Instruments
Debt instruments are subsequently measured at amortized cost, fair value through other comprehensive income (âFVTOCIâ) or fair value through Profit and Loss (âFVTPLâ) till de-recognition on the basis of (i) the entityâs business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
There are three measurement categories into which the Company classifies its debt instruments.
a) Debt instruments at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest [SPPI] are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognised in the Statement of Profit and Loss when the asset is de-recognised or impaired. Interest income from these financial assets is included in other income using the effective interest rate method.
b) Debt instruments at Fair value through other comprehensive income (FVTOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. When the financial asset is de-recognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to the Statement of Profit and Loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
c) Debt instruments at Fair value through profit or loss (FVTPL):
Assets that do not meet the criteria for amortized cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in the Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is recognised in the Statement of Profit and Loss.
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of such investments.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
Investment in equity shares, compulsorily convertible debentures and compulsory convertible preference shares of subsidiaries, associates and jointly controlled entities have been measured at cost less impairment allowance, if any.
De-recognition of financial assets
A financial asset is derecognized only when:
⢠the Company has transferred the rights to receive cash flows from the financial asset or
⢠retains the contractual rights to receive the cash flows from the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
Impairment of financial assets
The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
⢠Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, deposits, and bank balance.
⢠Trade receivables.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Income recognition (Interest income)
Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at its fair value plus or minus, in the case of a financial liability not at FVTPL, transaction costs that are directly attributable to the issue/origination of the financial liability. Subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as FVTPL if it is classified as held- for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in Statement of Profit and Loss. Any gain or loss on derecognition is also recognized in the Statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
Offsetting financial instruments
Financial assets and liabilities are off-set and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts to hedge its foreign currency risks, interest rate risks and commodity price risks respectively. Such derivative financial instruments are initially recognised at Fair Value on the date on which a derivative contract is entered into and are subsequently re-measured at Fair Value. Derivatives are carried as financial assets when the Fair Value is positive and as financial liabilities when the Fair Value is negative.
f) Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in the Statement of Profit and Loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
g) Borrowings Cost
Borrowing costs, general or specific, that are directly attributable to the acquisition or construction of qualifying assets is capitalized as part of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the Statement of Profit and Loss.
The Company determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the year less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that a company borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalization are determined by applying a capitalization rate to the expenditures on that asset.
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the finance cost.
h) Revenue Recognition
Revenue _ from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory risks.
Goods and Services Tax (GST) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
Sale of Goods
Revenue from sale of products is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the products. Invoices are payable within contractually agreed credit period.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of products, the Company considers the effects of variable consideration (if any).
Revenue from sale of products is stated exclusive of Goods and Services Tax (GST). Revenues are net of sales returns, discounts, provision for anticipated returns on expiry, made on the basis of management expectations.
Rendering of Services
Service income is recognised as per the terms of the contracts/arrangements when related services are performed and is stated net of GST.
Dividend and Interest Income
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably). Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
i) Employees Benefits
Employee benefits include salaries, wages, contribution to provident fund & employee state insurance fund, leave encashment towards un-availed leave, gratuity, compensated absences and other terminal benefits. Defined Contribution Scheme
Retirement benefits in the form of provident fund and employee state insurance are defined contribution schemes. The Company has no obligation other than the contribution payable to the funds and the contribution payable to fund is recognised as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Defined benefit plans
Defined benefit plans comprising of gratuity and other terminal benefits, are recognized based on the present value of defined benefit obligations which is computed using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. These are accounted either as current employee cost or included in cost of assets as permitted.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Short term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
Terminal benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary retirement scheme in exchange for these benefits. Expenditure on Voluntary Retirement Scheme (VRS) is charged to the Statement of Profit and Loss when incurred.
Transition to Ind AS
In accordance with the applicable laws, the Company provides for gratuity, a defined benefit retirement plan (âThe Gratuity Planâ) for eligible employees. The Gratuity Plan provides a lump sum payment to vested employees upon retirement (subject to completion of five or more years of continuous employment), death, incapacitation or termination of employment. The payment amount is based on employeeâs last drawn salary and tenure of service. Previously, the company calculated accruing gratuity liability based on the assumption that such benefits would be payable to all employees at the end of the accounting year, subject to annual review. However, the company now recognizes liabilities related to the Gratuity Plan on an actuarial valuation on the reporting date. Currently, the companyâs Gratuity Plan is not funded by any qualified assets.
j) Income Tax
Income tax expense comprises current and deferred tax. Tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in the other comprehensive income or in equity. In such cases, the tax is also recognised in the other comprehensive income or in equity. The provision for current tax is made at the rate of tax as applicable for the income of the previous year as defined under the Income tax Act, 1961.
Current Tax
The current income tax charge is calculated based on the Indian Tax Laws enacted or substantively enacted at the end of the reporting period. The provision for current tax is made at the rate of tax as applicable for the income of the previous year as defined under the Income tax Act, 1961. Current tax assets and current tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Tax
Deferred tax is recognised using the liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purpose at the reporting date.
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forward and unused tax credits could be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered. Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
k) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases. The Company recognises lease liabilities to make lease payments and Right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Company recognises Right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of Right-of-use assets includes the amount cost of Right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the period of the lease term. The Right-of-use assets are also subject to impairment.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Companyâs lease liabilities are presented within the Balance Sheet under Financial Liabilities (Refer Note 34).
Short-term leases
The Company applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a lease term of twelve months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases are recognized as expenses.
Transition to Ind AS 116 Leases:
As per Ind AS 116 Leases, the Company has adopted the standard for all lease contracts existing on 1 st April 2022 using the fully retrospective approach. These leases were classified as "Operating Leases" under previous GAAP. On transition to Ind AS 116 "Leases", for these leases, lease liabilities (Including provision for estimated dismantling costs) are measured at the present value of the lease payments using the full retrospective approach (i.e. from the date of commencement of the lease, April 1, 2021), discounted at the Company''s incremental borrowing rate as of April 1,2021. The carrying amount of the Right of use (ROU) assets is calculated as if Ind AS 116 had been applied since the commencement date, using the incremental borrowing rate as of that date.
The Company has recorded the ROU assets and lease liability (Including provision for estimated dismantling costs) as of April 1,2022, using discounting values as of April 1,2021. The difference between the ROU asset and Lease liability will impact retained earnings as of April 1, 2022.
Due to transition, the nature of expenses related to operating leases has changed from "Lease Rent" to "depreciation cost" and "finance cost" for the right-of-use assets and for interest accrued on lease liability respectively. Therefore, these expenses for the current year and previous year have been reclassified accordingly.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
l) Government Grants and Subsides
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the years in which the Company recognises as expenses the related costs for which the grants are intended to compensate or when performance obligations are meet.
Government grants, whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets and nonmonetary grants are recognised and disclosed as âdeferred incomeâ under non-current liability in the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets. i) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid at the period end. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their Fair Value and subsequently measured at amortised cost using the effective interest method.
Mar 31, 2023
[lAj General Information
M. K. Proteins Limited (âthe Companyâ) is a public limited company. The registered office of the Company is situated at Village Garnala, Naraingarh Road, Tehsil and Distt. Ambala (Haryana) â 134003. The Company is engaged in manufacturing of Vegetable Refined Oil and by-products (i.e. Rice Bran Fatty, Wax, Gums and Spent Earth) etc. The manufacturing plant is situated at Village Garnala, Naraingarh Road, Tehsil and Distt. Ambala (Haryana). The Company is also engaged in trading of various products (i.e. Rice Bran Oil and other items etc.). The equity shares of the Company have been listed on the Emerge SME Platform of the National Stock Exchange of India Limited w.e.f. 18 April, 2017.
[IB] Summary of Significant Accounting Policies
i) Basis of Preparation of Financial Statement
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 2013.
All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Companies Act, 2013.
ii) Presentation of Financial Statements
The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 (âthe Actâ). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 âCash Flow Statementâ. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement
iii) Use of Estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
iv) Tangible Fixed Assets:
i) Fixed Assets have been stated at historical cost less accumulated depreciation and cumulative impairment. Expenses directly related to the construction or acquisition of the fixed assets have been capitalized and added to the particular assets. Pre-operative expenses incurred till the date of capitalization have been apportioned on pro- rata basis. Items of fixed assets not capitalized and other pre-operative expenses to the extent not apportioned are shown under the head âCapital work in progressâ.
ii) Depreciation/Amortization:
In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, depreciation/amortization is charged on Straight Line method so as to write off the cost of the assets over the useful life and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life of assets as prescribed in Schedule II to the Companies Act, 2013.
Depreciation in respect of addition/deductionto fixed assets during the year has been charged on pro-rata basis.
v) Impairment of Assets
At each Balance Sheet date, the management reviews the carrying amounts of its assets to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an assetâs net selling price and value in use. In assessing value in use, the estamated future cash flow expected from the continuing use of the assets and from its disposal and discounted to their persent value using a pre-tax discounted rate that reflects the current market assessment of time value of money and risks specific to the asset.
vi) Revenue Recognition
i) Revenue from the sale of goods is recognized upon delivery, which is when title passes to the customer. Sales are stated net of trade discounts and sales taxes/Good and Service Tax.
ii) Other items of income are accounted as and when the right to receive arises.
iii) The expenses and income considered payable and receivable respectively are accounted for on accrual basis.
(i) The Companyâs contribution to the recognized Provident/Family Pension Fund and Employees State Insurance Fund (Defined Contribution Scheme) schemes whether in pursuance of any law or otherwise is accounted on accrual basis and charged to the Statement of Profit and Loss of the year.
(ii) Gratuity Fund: The retirement gratuity benefit to employees is accounted for on accruing basis for the employeesâ, based on their last drawn salary, completed years of services, instead of ascertaining actuarial impact.
(iii) Leave encashment benefit is considered and provided, based on actual as at the end of the financial year.
Valuation of Inventories
Inventories are valued as under: -
-Raw Material, packing material, chemicals and fuel At cost or net realizable value whichever is less -Finished/Semi-finished goods (including by-products) At cost or net realizable value whichever is less -Stores and spares At cost or net realizable value whichever is less
-Stock-in-Trade At cost or net realizable value whichever is less
Note:
Cost for the purpose of valuation of finished/semi-finished goods (including by-products) is determined by considering material, labour and other related overheads.
Excise duty on finished goods manufactured is accounted for on clearance of goods from factory premises.
ix) Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
x) Taxes on income
(i) Provision for current tax is made on the basis of taxable income and tax credits computed in accordance with the provisions of Income Tax Act, 1961.
(ii) Deferred tax expenses or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
xi) Miscellaneous Expenditure
Preliminary expenses are being written off over a period of 10 years.
xii) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
xiii) Foreign currency transactions and foreign operations
i) The reporting currency of the Company is Indian rupee.
ii) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction.
iii) Any income or expenses on account of exchange difference either or settlement or on translation is recognized in the Statement of Profit and Loss, except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.
xiv) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into cash and have original maturities of three months or less from the date of purchase, to be cash equivalents.
xv) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted from the effect of transactions of non cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities is segregated.
xvi) Extraordinary and exceptional items
Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosures of such events/transactions are made in the financial statements. Similarly, any external event beyond the control of the Company significantly impacting income or expense is also treated as extraordinary item and disclosed as such.
On certain occasions, the size, type or incidence of an item of income or expenses, pertaining to the ordinary activities of the Company is such that its disclosure improves an understanding of the performance of the Company. Such income or expenses is classified as an exceptional item and accordingly disclosed in the notes to accounts.
xvii) Lease Accounting:
As a Lessor: The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.
As a Lessee: Operating lease payments are recognized as expenditure in the Statement of Profit and Loss as per the terms of
the respective lease agreements.
xviiil F.arning Per Share
Basic earning per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2018
[A] Summary of Significant Accounting Policies
i) Basis of Preparation of Financial Statement
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 2013.
All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Companies Act, 2013.
ii) Presentation of Financial Statements
The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 (â^e Actâ). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 âCash Flow Statementâ. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement.
iii) Use of Estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
iv) Tangible Fixed Assets:
i) Fixed Assets have been stated at historical cost less accumulated depreciation and cumulative impairment. Expenses directly related to the construction or acquisition of the fixed assets have been capitalized and added to the particular assets. Pre-operative expenses incurred till the date of capitalization have been apportioned on prorata basis. Items of fixed assets not capitalized and other pre-operative expenses to the extent not apportioned are shown under the head âCapital work in progressâ.
ii) Depreciation/Amortization:
In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, depreciation/amortization is charged on Straight Line method so as to write off the cost of the assets over the useful life and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life of assets as prescribed in Schedule II to the Companies Act, 2013. Depreciation in respect of addition/deduction to fixed assets during the year has been charged on pro-rata basis.
v) Impairment of Assets
At each Balance Sheet date, the management reviews the carrying amounts of its assets to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an assetâs net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the assets and from its disposal and discounted to their present value using a pre-tax discounted rate that reflects the current market assessments of time value of money and risks specific to the asset.
Reversal of impairment loss is recognized immediately as income in the Statement of Profit and loss.
vi) Revenue Recognition
i) Revenue from the sale of goods is recognized upon delivery, which is when title passes to the customer. Sales are stated net of trade discounts and sales taxes.
ii) Other items of income are accounted as and when the right to receive arises.
iii) The expenses and income considered payable and receivable respectively are accounted for on accrual basis.
vii) Retirement Benefits
(i) The Companyâs contribution to foe recognized Provident/Family Pension Fund and Employees State Insurance Fund (Defined Contribution Scheme) schemes whether in pursuance of any law or otherwise is accounted on accrual basis and charged to the Statement of Profit and Loss of the year.
(ii) Gratuity Fund: The retirement gratuity benefit to employees is accounted for on accruing basis for the employeesâ, based on their last drawn salary, completed years of services, instead of ascertaining actuarial impact.
(iii) Leave encashment benefit is considered and provided, based on actual as at the end of the financial year.
viii) Valuation of Inventories
Inventories are valued as under: -
-Raw Material, packing material, chemicals and fuel At cost or net realizable value whichever is less
-Finished/Semi-finished goods (including by-products) At cost or net realizable value whichever is less
-Stores and spares At cost or net realizable value whichever is less
-Stock-in-Trade At cost or net realizable value whichever is less
Note:
Cost for the purpose of valuation of finished/semi-finished goods (including by-products) is determined by considering material, labour and other related overheads.
Cost of trading items includes cost of purchase & other costs of acquisition attributable thereto.
Excise duty on finished goods manufactured is accounted for on clearance of goods from factory premises.
ix) Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
x) Taxes on income
(i) Provision for current tax is made on the basis of taxable income and tax credits computed in accordance with the provisions of Income Tax Act, 1961.
(ii) Deferred tax expenses or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
xi) Miscellaneous Expenditure
Preliminary expenses are being written off over a period of 10 years.
xii) Provisions. Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
xiii) Foreign currency transactions and foreign operations
i) The reporting currency of the Company is Indian rupee.
ii) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items, carried at historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.
iii) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss, except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.
xiv) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into cash and have original maturities of three months or less from the date of purchase, to be cash equivalents.
xv) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted from the effect of transactions of non cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities is segregated.
xvi) Extraordinary and exceptional items
Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosures of such events/transactions are made in the financial statements. Similarly, any external event beyond the control of the Company significantly impacting income or expense is also treated as extraordinary item and disclosed as such.
On certain occasions, the size, type or incidence of an item of income or expenses, pertaining to the ordinary activities of the Company is such that its disclosure improves an understanding of the performance of the Company. Such income or expenses is classified as an exceptional item and accordingly disclosed in the notes to accounts.
xvii) Lease Accounting:
As a Lessor: The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.
As a Lessee: Operating lease payments are recognized as expenditure in the Statement of Profit and Loss as per the terms of the respective lease agreements.
xviii) Earning Per Share
Basic earning per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighed average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
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