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Accounting Policies of Milkfood Ltd. Company
Mar 31, 2025
2.3 Material Accounting Policies:
A) Property, plant and equipment (PPE)
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment
losses, if any.
Cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable
purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an asset to
working condition and location for its intended use. It also includes the present value of the expected cost for
the decommissioning and removing of an asset and restoring the site after its use, if the recognition criteria for
a provision are met.
Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs
and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are
incurred. Major inspection and overhaul expenditure is capitalized if the recognition criteria are met.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are
disclosed as âCapital work-in-progressâ. Assets in the course of construction and freehold land are not
depreciated.
When an item of property, plant and equipment is scrapped or otherwise disposed off, the carrying amount
and related accumulated deprecation are removed from the books of account and resultant profit or loss, if
any, is reflected in statement of Profit & Loss.
Company depreciates property, plant and equipment over the estimated useful life as prescribed in schedule
11 of the Companies Act 2013 on the straight-line method on pro rata basis from the date the assets are ready
for intended use.
The estimated useful lives of major components of PPE are as follows:
⢠Building 30-60 years
⢠Plant and equipment 35 years*(instead of 15 years as prescribed under schedule II)
⢠Furniture and Fixtures 8 -10 years
⢠Vehicles 6 - 10 years (instead of 8-10 years as prescribed under schedule II)
⢠Office equipments 3 - 6 years (including computer software)
*The company has taken a view on the basis of technical advice that plant in the dairy industry use non¬
corrosive raw materials, the expected life of the plant and machinery should be 35 years. This is in pursuance
of proviso to sub clause (c) of clause 3 of schedule II of the Companies Act 2013.
The Company has not revalued any of its property, plant and equipment during the year.
B) Biological Assets
Biological assets are recorded at a fair value less cost to sell. At each reporting date, subsequently, companies
must remeasure this value and record any gains or losses.
All expenses incurred in land preparation, planting and development of trees up to maturity are capitalised as
biological assets; all expenses subsequent to maturity are recognised directly in statement of profit and loss
account.
Biological assets are stated at revalued amount, which is the fair value at date of revaluation less any
accumulated impairment losses as certified by the Agricultural scientist.
C) Intangible Assets
Intangible assets purchased are initially measured at cost. The cost of a separately purchased intangible
asset comprises its purchase price including duties and taxes and any costs directly attributable to making the
asset ready for their intended use.
Intangible assets acquired in a business combination are recognised at fair value at the acquisition date.
Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses, if any.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is recognised in standalone statement of profit and loss
as incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. Indefinite-life intangible assets
comprises brand, for which there is no foreseeable limit to the period over which they are expected to generate
net cash inflows. These are considered to have an indefinite life, given the strength and durability of the
brands and the level of marketing support. For indefinite-life intangible assets, the assessment of indefinite life
is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis
revised estimates.
The Company has not revalued any of its intangible assets during the year.
D) Capital work in progress
Capital work in progress is stated at cost, if any. Assets in the course of construction are capitalized in capital
work in progress account. At the point when an asset is capable of operating in the manner intended by
management, the cost of construction is transferred to the appropriate category of property, plant and equipment.
Costs associated with the commissioning of an asset are capitalised when the asset is available for use but
incapable of operating at normal levels until the period of commissioning has been completed. Cost includes
direct costs, related incidental expenses, other directly attributable costs and borrowing costs. Advances paid
towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified
as capital advances under âOther Non-Current Assetsâ.
E) Leased Assets (Right of Use Assets)
The Companyâs lease asset classes consist of leases for land and buildings for the purpose of having offices/
various branches. The Company assesses whether a contract contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether a contract conveys the right to control the use
of an identified asset, the Company assesses whether:
(i) The Contract involves the use of an identified asset
(ii) The Company has substantially all of the economic benefits from use of the asset through the period of
the lease and
(iii) The Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases) and low value leases.
Right-of-use assets are initially measured at cost, less any accumulated amortization and impairment losses.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
lease payments made at or before the commencement date less any lease incentives received and estimate
of costs to dismantle.
Right-of-use assets are amortized on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets.
The Company has not revalued any of its right-of-use assets
Short term Leases and leases of low value of assets
The Company applies the short-term lease recognition exemption to its short-term leases. It also applies the
lease of low value assets recognition exemption that are considered to be low value. The Company recognizes
the lease payments as an operating expense on a straight-line basis over the term of the lease. The Company
incurred Rs 78 lakhs for the year ended 31st March, 2025 (31st March, 2024: Rs 70 Lakhs) towards expenses
relating to short-term leases and leases of low-value assets.
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. In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at the lease commencement date if the discount 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. The carrying amount is remeasured when there is a change in
future lease payments arising from a change in index or rate. 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 or a
change in the assessment of an option to purchase the underlying asset. The incremental borrowing rate
applied to lease liabilites is in the range of 11% per annum to 12% per annum.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
F) Impairment of Non Financial Assets
At the end of each reporting period, the Company assesses whether there is any indication that an assets or
a group of assets (cash generating unit) may be impaired. If any such indication exists, the recoverable amount
of the asset or cash generating unit is estimated in order to determine the extent of impairment loss (if any). If
it is not possible to estimate the recoverable amount of an individual asset, the entity determines the recoverable
amount of the Cash Generated Unit (CGU) to which the asset belongs.
Recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing the value in
use, the estimated future cash flow are discounted at their present value using the appropriate discount rate
that reflects current market assessment of time value of money and the risks specific to the assets for which
the estimates of future cash flow have not been adjusted.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
If the recoverable amount of an assets (or cash generating unit) is estimated to be less than its carrying
amount, the carrying amount of the assets (or cash generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in the statement of Profit & Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit)
is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss recognized originally in
the statement of Profit & Loss.
No Impairment was identified in FY 2024-25 and in previous FY 2023-24.
G) Financial instruments
A financial instrument is any contact that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets and financial liabilities are recognized when a Company
becomes a party to the contractual provisions of the instruments.
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 and loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. T ransaction costs directly attributable
to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized
immediately in the statement of profit and Loss.
(i) Financial Assets
(a) Initial recognition and measurement:
Financial assets, except for trade receivables, are recognized when the Company becomes a party
to the contractual provisions of the instrument.
Trade receivables are initially recognised at transaction price as they do not contain a significant
financing component. This implies that the effective interest rate for these receivables is zero.
(b) Subsequent measurement of financial assets:
All recognised financial assets are subsequently measured in their entirety at either amortised cost
or fair value, depending on the classification of the financial assets and are classified in four categories:
⢠Amortised cost
⢠Fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains
and losses (debt instruments)
⢠Fair value through OCI with no recycling of cumulative gains and losses upon derecognition
(equity instruments)
⢠Fair value through profit or loss
The classification of financial assets at initial recognition depends on the financial assetâs contractual
cash flow characteristics and the Companyâs business model for managing them.
In order for a financial asset to be classified and measured at amortized cost or fair value through
OCI, it needs to give rise to cash flows that are âsolely payments of principal and interest (SPPI)â on
the principal amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
Financial assets with cash flows that are not SPPI are classified and measured at fair value through
profit or loss, irrespective of the business model. The Companyâs business model for managing
financial assets refers to how it manages its financial assets in order to generate cash flows. The
business model determines whether cash flows will result from collecting contractual cash flows,
selling the financial assets, or both.
Financial assets classified and measured at amortized cost are held within a business model with
the objective to hold financial assets in order to collect contractual cash flows while financial assets
classified and measured at fair value through OCI are held within a business model with the objective
of both holding to collect contractual cash flows and selling.
(c) Derecognition of financial assets:
The Company derecognizes a financial asset when
- the contractual rights to receive the cash flows from the asset expire, or
- the Company has transferred its right to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
âpass-throughâ arrangement; and either
a) It transfers the financial asset and substantially all the risks and rewards of ownership of
the asset to another party or
b) The company has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognized in other comprehensive income and accumulated in equity is recognized
in the Statement of Profit and Loss if such gain or loss would have otherwise been recognized in the
Statement of Profit and loss on disposal of that financial asset.
(d) Impairment of financial assets:
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the financial assets that are debt instruments,
and are measured at amortised cost e.g., loans, deposits and trade receivables or any contractual
right to receive cash or another financial asset that result from transactions that are within the
scope.
The Company follows âsimplified approachâ for recognition of loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognizes loss allowance based on lifetime ECLs at each reporting date, right from its
initial recognition. ECL allowance recognised (or reversed) during the period is recognised as expense
(or income) in the standalone statement of profit and loss under the head âOther expensesâ.
(e) Write off
The gross carrying amount of a financial asset is written off when the Company has no reasonable
expectations of recovering the financial asset in its entirety or a portion thereof. A write-off constitutes
a derecognition event
(ii) Financial Liabilities
(a) Initial Recognition and Measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions
of the instrument. Financial liabilities are initially measured at the amortized cost unless at initial
recognition, they are classified as fair value through profit and loss. The Companyâs financial liabilities
include trade and other payables and loans and borrowings including bank overdrafts/cash credits.
(b) Subsequent measurement of financial liabilities:
All the financial liabilities are subsequently measured at amortized cost using the effective interest
rate method or at fair value through profit and loss. Financial liabilities carried at fair value through
profit or loss are measured at fair value with all changes in fair value recognized in the standalone
statement of profit and loss.
(c) Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expires. The difference in the carrying amounts and the consideration paid is recognized in the
Statement of Profit and Loss.
(d) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
(H) Inventories
Inventories are valued at the lower of cost and net realisable value except scrap and by products which are
valued at net realisable value. Costs comprises as follow:
(i) Raw materials and store and spares: Cost includes cost of purchase and other costs incurred in bringing
the inventories to their present location and condition. Cost is determined on weighted average basis.
The aforesaid items are valued at net realisable value if the finished products in which they are to be
incorporated are expected to be sold at a loss.
(ii) Finished goods and work in progress: Cost includes cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs.
Cost is determined on weighted average basis. In pursuance of IND AS-2 indirect production overheads
(estimated by the Management) have been allocated for ascertainment of cost. Net realisable value is
the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Obsolete inventories are identified and written down to net realisable value. Inventories (including whey
powder - by product) are valued on lower of cost or net realizable value.
(I) Fair value measurement
The Company measures certain financial instruments, defined benefit liabilities and equity settled employee
share based payment plan at fair value at each reporting date.
Fair value is the price that would be received to sell an assets or paid to transfer a liabilities in an orderly
transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
i. in the principal market for the asset or liability, or
ii. in the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
All financial assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, which are described as follows; level I - III.
Level I input
Level I input are quoted price in active market for identical assets or liabilities that the entity can access at the
measurement date
Level II input
Level II input are input other than quoted market prices included within level I that are observable for the
assets or liabilities either directly or indirectly.
Level III input
Level III inputs are unobservable inputs for the asset or liability. An entity develops unobservable inputs using
the best information available in the circumstances, which might include the entityâs own data, taking into
account all information about market participant assumptions that is reasonably available.
(J) Cash and Cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Cash and cash equivalents include balances with banks which are unrestricted for withdrawal and usage.
Mar 31, 2024
NOTE 1 CORPORATE INFORMATION & MATERIAL ACCOUNTING POLICIES
Milkfood Limited (âthe Companyâ) is a public limited company domiciled in India and incorporated under the provisions of the Indian Companies Act. The registered office of the Company is located at P.O. Bahadurgarh-147021 Distt. Patiala (Punjab), India. Its shares are listed on Bombay Stock Exchange (Bse). The Company is primarily engaged in the manufacture and sale of dairy products. The company has two manufacturing locations, one in the state of Punjab at Patiala and one in the state of Uttar Pradesh at Moradabad.
2 BASIS OF PREPARATION, MEASUREMENT AND MATERIAL ACCOUNTING POLICIES
(i) The financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as âInd ASâ) notified by the Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read together with Rule 3 of the Companies (Indian Accounting Standard) Accounts Rules, 2015, as amended from time to time.
(ii) These financial statements have been prepared on going concern basis following accrual system of accounting, applying consistent accounting policies for all the periods presented therein. The financial statements were approved for issue by the Board of Directors in accordance with the resolution passed on 25 June, 2024.
2.1 Current versus non-current classification
All assets and Liabilities have been classified as current or non current considering the normal operating cycle of 12 months, paragraph 66 and 69 of Ind AS 1 and other criteria as per Division II of Schedule III of Companies Act, 2013. The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Deferred tax assets and liabilities are classified as non -current assets and liabilities respectively.
The Ind AS Financial Statements are prepared under the Historical cost convention except for Biological assets (other than Bearer plants), certain class of financial assets/ financial liabilities, defined benefit plans, share based payments which have been measured at fair value as required by relevant Ind ASs.
Recent Accounting Developments:
Ministry of Corporate Affairs (MCA), vide notification dated 31st March, 2023, has made the following amendments to Ind As which are effective 1st April, 2023:
a. Amendments to Ind AS 1, Presentation of Financial Statements where the companies are now required to disclose material accounting policies rather than their significant accounting policies. The amendments have had an impact on the Companyâs disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Companyâs financial statements.
b. Amendments to Ind AS 8, Accounting policies, Changes in Accounting Estimates and Errors which clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Companyâs financial statements.
c. Amendments to Ind AS 12, Income Taxes where the scope of Initial Recognition Exemption (IRE) has been narrowed down. The amendments had no impact on the Companyâs financial statements.
The material accounting policies used in preparation of the standalone financial statements are as follows:
2.3 A) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The initial cost of property, plant and equipment comprises its purchase price, including import duties and nonrefundable purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an asset to working condition and location for its intended use. It also includes the present value of the expected cost for the decommissioning and removing of an asset and restoring the site after its use, if the recognition criteria for a provision are met.
Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are incurred. Major inspection and overhaul expenditure is capitalized if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
When an item of property, plant and equipment is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of account and resultant profit or loss, if any, is reflected in statement of Profit & Loss.
The Company has not revalued any of its property, plant and equipment during the year.
B) Intangible Assets
Intangible assets purchased are initially measured at cost. The cost of a separately purchased intangible asset comprises its purchase price including duties and taxes and any costs directly attributable to making the asset ready for their intended use.
Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in standalone statement of profit and loss as incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. Indefinite-life intangible assets comprises brand, for which there is no foreseeable limit to the period over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of the brands and the level of marketing support. For indefinite-life intangible assets, the assessment of indefinite life is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis revised estimates.
The Company has not revalued any of its intangible assets during the year.
Capital work in progress is stated at cost, if any. Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalised when the asset is available for use but incapable of operating at normal levels until the period of commissioning has been completed. Cost includes financing cost relating to borrowed funds attributable to construction. Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under âOther Non-Current Assetsâ.
The Company depreciates property, plant and equipment over the estimated useful life as prescribed in schedule II of the Companies Act 2013 on the straight-line method on pro rata basis from the date the assets are ready for intended use as described in para (i)(ii) above. Assets in the course of construction and freehold land are not depreciated.
The estimated useful lives of major components of PPE are as follows:
⢠Buildings 30-60 years
⢠Plant and equipments 35 years*(instead of 15 years as prescribed under schedule II)
⢠Furniture and fixtures 8 -10 years
⢠Vehicles 6 - 10 years (instead of 8-10 years as prescribed under schedule II)
⢠Office equipments 3 - 6 years (Including computer software)
*The company has taken a view on the basis of technical advice that plant in the dairy industry use non-corrosive raw materials, the expected life of the plant and machinery should be 35 years. This is in pursuance of proviso to sub clause (c) of clause 3 of schedule II of the Companies Act 2013.
The Companyâs lease asset classes consist of leases for land and buildings for the purpose of having offices/ various branches. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) The contract involves the use of an identified asset
(ii) The Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) The Company has the right to direct the use of the asset.
As a Lessee
Right of Use Assets
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. Right-of-use assets are measured at cost, less any accumulated amortization and impairment losses. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, lease payments made at or before the commencement date less any lease incentives received and estimate of costs to dismantle. Right-of-use assets are amortized on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
Short term Leases and leases of low value of assets
The Company applies the short-term lease recognition exemption to its short-term leases. It also applies the lease of low value assets recognition exemption that are considered to be low value. The Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The Company incurred 70 lakhs for the year ended 31st March, 2024 (31st March, 2023: 76 Lakhs) towards expenses relating to short-term leases and leases of low-value assets.
Determination of Lease term
As a lessee, the Company determines the lease term as the non cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
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. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date if the discount 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. The carrying amount is remeasured when there is a change in future lease payments arising from a change in index or rate. 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 or a change in the assessment of an option to purchase the underlying asset.
Impairment of Right of Use Assets
ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
For lease commitments and lease liabilities : Refer note 16A, 16B The Company has not revalued any of its right-of-use assets
2.7 Fair value measurement
The Company measures certain financial instruments, defined benefit liabilities and equity settled employee share based payment plan at fair value at each reporting date.
Fair value is the price that would be received to sell an assets or paid to transfer a liabilities in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
i. in the principal market for the asset or liability, or ii. in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, which are described as follows; level I - III.
Level I input
Level I input are quoted price in active market for identical assets or liabilities that the entity can access at the measurement date, A quoted market in an active market provided the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available, with limited exception. If an entity hold a position in a single assets or liabilities and the assets or liabilities is traded in an active market, the fair value of assets or liabilities held by the entity, even if the market normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price.
Level II input
Level II input are input other than quoted market prices included within level I that are observable for the assets or liabilities either directly or indirectly.
Level II inputs include:
- quoted price for similarly assets or liabilities in active market.
- quoted price for identical or similar assets or liabilities in market that are not active.
- input other than quoted prices that are observable for the assets or liabilities, for example -interest rate and yield curve observable at commonly quoted interval.
- implied volatilise.
- credit spreads.
- input that are derived principally from or corroborated market data correlation or other means (âmarket corroborated inputsâ).
Level III input
Level III inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. An entity develops unobservable inputs using the best information available in the circumstances, which might include the entityâs own data, taking into account all information about market participant assumptions that is reasonably available.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
2.8 Functional and presentation currency
These Ind AS Financial Statements are prepared in Indian Rupee which is the Companyâs functional currency. All financial information presented in Rupees has been rounded to the nearest lakhs. Transactions and balances with values below the rounding off norm adopted by the Company have been reflected as â0â in the relevant notes to these financial statements.
2.9 Impairment of Non Financial Assets
At the end of each reporting period, the Company assesses whether there is any indication that an assets or a group of assets (cash generating unit) may be impaired. If any such indication exists, the recoverable amount of the asset or cash generating unit is estimated in order to determine the extent of impairment loss (if any). If it is not possible to estimate the recoverable amount of an individual asset, the entity should determine the recoverable amount of the Cash Generated Unit (CGU) to which the asset belongs.
It is not possible to estimate the recoverable amount of the individual asset if:
⢠The assetâs Value in use (VIU) cannot be estimated to be close to its fair value less cost to sell (FLVCS).
⢠The asset does not generate cash inflows that are largely independent of those from other assets.
Recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing the value in use, the estimated future cash flow are discounted at their present value using the appropriate discount rate that reflects current market assessment of time value of money and the risks specific to the assets for which the estimates of future cash flow have not been adjusted.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
If the recoverable amount of an assets (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the assets (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of Profit & Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss recognized immediately in the statement of Profit & Loss.
No Impairment was identified in FY 2023-24 and in previous FY 2022-23.
2.10 Assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
Non-current assets that ceases to be classified as held for sale shall be measured at the lower of carrying amount before the non-current asset was classified as held for sale and its recoverable amount at the date of the subsequent decision not to sell. During the year, company has reclassified the assets held for sale into Property Plant and equipment at a carrying amount of Rs 143 Lakhs and has disposed off equipment of Rs 100 Lakhs. Balance equipment which is held for sale is expected to be disposed off in the next financial year.
Property, plant and equipment once classified as held for sale are not depreciated.
Assets classified as held for sale are presented separately in the balance sheet.
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. Cash and cash equivalents include balances with banks which are unrestricted for withdrawal and usage.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash at banks, on hand and short-term deposits, as defined above.
A financial instrument is any contact that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments. 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 and 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 recognized immediately in the statement of profit and Loss.
(i) Initial recognition and measurement:
The classification of financial assets at initial recognition depends on the financial assetâs contractual cash flow characteristics and the Companyâs business model for managing them.
In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it
needs to give rise to cash flows that are âsolely payments of principal and interest (SPPI)â on the principal amount outstanding. This assessment is referred to as the SPPl test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Companyâs business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.
Trade receivables are initially recognised at transaction price as they do not contain a significant financing component. This implies that the effective interest rate for these receivables is zero.
(ii) Subsequent measurement of financial assets:
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets and are classified in four categories:
⢠Financial assets at amortised cost
⢠Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)
⢠Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
⢠Financial assets at fair value through profit or loss
(iii) Derecognition of financial assets:
The Company derecognizes a financial asset when
- the contractual rights to receive the cash flows from the asset expire, or
- the Company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either
a) It transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party or
b) The company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in the Statement of Profit and Loss if such gain or loss would have otherwise been recognized in the Statement of Profit and loss on disposal of that financial asset.
(iv) Impairment of financial assets:
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the financial assets that are debt instruments, and are measured at amortised cost e.g., loans, deposits and trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope. The Company follows âsimplified approachâ for recognition of loss allowance on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
(i) Initial Recognition and Measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortized cost unless at initial recognition, they are classified as fair value through profit and loss. The Companyâs financial liabilities include trade and other payables and loans and borrowings including bank overdrafts/cash credits.
(ii) Subsequent measurement of financial liabilities:
All the financial liabilities are subsequently measured at amortized cost using the effective interest rate method or at fair value through profit and loss. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the standalone statement of profit and loss.
(iii) Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such on exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
Reclassification of financial assets and liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
No reclassification of financial assets and liabilities were made during the year.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
2.13 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss, net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Present obligations arising under onerous contracts are recognised and measured as provisions with charge to Statement of Profit and Loss. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
2.14 Inventories
Inventories are valued at the lower of cost and net realisable value except scrap and by products which are valued at net realisable value. Costs comprises as follow:
(i) Raw materials and store and spares: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis. The aforesaid items are valued at net realisable value if the finished products in which they are to be incorporated are expected to be sold at a loss.
(ii) Finished goods and work in progress: Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost is determined on weighted average basis. In pursuance of IND AS-2 indirect production overheads (estimated by the Management) have been allocated for ascertainment of cost.
(iii) Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
(iv) Obsolete inventories are identified and written down to net realisable value. Non moving / slow moving stocks of packing material of Rs 29 Lakhs (P.Y. Rs.33 Lakhs) Management is of the view that the same will be utilised in the financial year 2024-25. Adjustment if any shall be made in the subsequent year. Inventories (including whey powder - by product) are valued on lower of cost or net realizable value. In pursuance of IND AS-2 indirect production overheads (estimated by the Management) have been allocated for ascertainment of cost.
Company follows IND AS-19 as detailed below:-
(a) Short term benefits including salaries and performance incentives is recognized as expense at the undiscounted amount in the Statement of Profit & Loss of the year in which the related service is rendered.
(b) Company provides bonus to eligible employees as per Bonus Act 2016 and accordingly liability is provided on actual cost at the end of the year.
i) Provident Fund
The eligible employees of the company are entitled to receive benefits under the Provident Fund, a defined contribution plan in which both employees and the company make monthly contributions at a specified percentage of the covered employeeâs salary. The contributions as specified under the law are paid to the respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme.
ii) The Company has an obligation towards gratuity a defined benefit retirement plan covering all employees. The plan provides for a lumpsum payment to employees at retirement/determination of service on the basis of 15 days terminal salary for each completed year of service subject to maximum amount of Rs. 20 Lacs.
Companyâs liability towards gratuity and compensated absences is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income (OCI) in the period in which they occur. Remeasurement recognized in the other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.
Past service cost is recognized in statement of profit or loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and
- Net interest expense or income.
Defined benefit costs are categorized as follows:
⢠Service cost (including current service cost, past service cost as well as gains and losses on curtailments and settlements);
⢠Net interest expense or income; and
⢠Remeasurement gains and losses
(iii) Compensated Absences
Entitlements to annual leave are recognised when they accrue to employees. Leave entitlements may be availed while in service or encashed at the time of retirement/termination of employment, subject to a restriction on the maximum number of accumulations.
2.16 Revenue Recognition Sale of Products/Services
Revenue from sale of goods is recognised when control of the products being sold is transferred to our customer and when there are no longer any unfulfilled obligations. The Performance Obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on terms with customers.
Revenue is measured on the basis of contracted price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government such as Goods and Services Tax, etc. Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.
Specific recognition criteria described below must also be met before revenue is recognized.
(a) Export sales are recognized on the basis of date of bill of lading.
(b) Export entitlements i.e. duty free scrip and duty draw back are accounted for on the basis of export of goods on FOB value determined for custom purpose.
(c) Conversion charges are recognized on completion of jobs.
(d) Interest Income is recorded on time proportion basis using the effective rate of Interest (EIR).
(e) Carbon Credits are recognized on realization basis.
The main raw material of the company is milk, which is used to produce Pure Ghee and various types of Milk Powders. For the last few years, the company has changed its policy to produce Pure Ghee and Milk Powders which conforms to the quality standards adopted by the company consistent with its brand image. Quantities of Pure Ghee and Milk Powders are purchased and processed in the plant to give effect to the manufacturing policy and produce a product of high quality on consistent basis. Company has utilized its facilities for conversion of Milk to Ghee / Butter & Milk Powder on job works basis.
2.18 Taxation Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is recognised on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except when it is probable that the temporary differences will not reverse in the foreseeable future. Company does not recognised deferred tax liabilities on revaluation portion of land and building
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can 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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
GST paid on acquisition of assets or on incurring expenses. Expenses and assets are recognised net of the amount of GST paid, except:
When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable. When receivables and payables are stated with the amount of tax included, the net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
The Company presents basic and diluted earnings per share (âEPSâ) data for its equity shares.
Basic EPS is calculated by dividing the profit and loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.
Diluted EPS is determined by adjusting the profit and loss attributable to equity shareholders and the weighted average number of equity shares outstanding that could have been issued upon conversion of all dilutive potential equity shares Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Companyâs Managing Director assesses the financial performance and position of the Company, and makes strategic decision and has been identified as the chief operating decision maker. The Companyâs primary business segment is reflected based on principal business activities carried on by the Company. The company is operating under a single segment i.e., âDairy Products - comprising Ghee, Milk Powder, Whey powder and Dairy whitenerâ and therefore there are no reportable segments as per IND AS-108 âOperating Segmentsâ issued under section 133 of Companies Act 2013 read with Companies (Indian Accounting Standards) Rules 2015.
Cash flows are reported using indirect method as set out in Ind AS -7 âStatement of Cash Flowsâ, whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Therefore, in order to determine the amount to be recognised as a liability or to be disclosed as a contingent liability, in each case, is inherently subjective, and needs careful evaluation and judgement to be applied by the management. In case of provision for litigations, the judgements involved are with respect to the potential exposure of each litigation and the likelihood and/or timing of cash outflows from the Company, and requires interpretation of laws and past legal rulings. The Company does not recognize a contingent liability but discloses its existence in the standalone Ind AS financial statements.
Employees (including senior executives) of the Company receive remuneration in the form of share-based payments in consideration of the services rendered.
Under the equity settled share based payment, the fair value on the grant date is recognised as âemployee benefit expensesâ with a corresponding increase in other equity (Share Based Payment outstanding account) over the vesting period. The fair value of the options at the grant date is calculated by an independent valuer. When the options are exercised, the Company issues fresh equity shares and when the options are lapsed, the company transfers the balance into securities premium account i.e within other equity.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
As per Ind AS 103, Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Company. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities are recognised at fair values on their acquisition date. The difference, if any, between the consideration paid and the net identifiable assets acquired of the transferor company is transferred to Goodwill/capital reserve. Transaction costs are expensed in the standalone statement of profit and loss as incurred, other than those incurred in relation to the issue of debt or equity securities which are directly adjusted in other equity. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognised in the standalone statement of profit and loss.
Amalgamation of Triputi Infrastructure Pvt Ltd with the Company
In compliance with the scheme of amalgamation between Triputi Infrastructure Pvt Ltd (Transferor Company) with the Company duly approved by NCLT vide its order dated 16th April 2024 u/s 230 to 232 and other applicable provisions of the Companies Act, 2013 with effect from appointed date i.e. 01.04.2023, the company is required to allot 9,66,960 equity shares in lieu of acquisition of the assets (including brand) and liabilities of the transferor company at a fair value in accordance with Ind AS 103 - Business Combinations (acquisition method). The accounting entries have been made w.e.f 01.04.2023 and therefore previous year figures to the extent are not comparable.
2.26 Use of Key Accounting estimates and judgments
The preparation of financial statements requires management to make estimates, judgements and assumptions in the application of accounting policy that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which is known/materialised. Continuous evaluation is done on the estimation and judgements based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised prospectively
In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
(i) Property, Plant and Equipments - Note 3A
(ii) Indefinite useful life of Intangible Assets - Note 3C
(iii) Recognition of deferred tax assets/liabilities - Note 32D
(iv) Measurement of defined benefit obligation - Note 36
(v) Measurement and likelihood of occurrence of provisions and contingencies-Note 35
(vi) Measurement of Right of Use Asset and Lease liabilities - Note 3D, 16A and 16B.
2.27 Standards issued but not yet effective
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, mCa has not notified any new standards or amendments to the existing standards applicable to the Company.
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of preparation and compliance with Ind AS
(i) For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the accounting standards (Previous GAAP) as notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014, as amended, to the extent applicable, and the presentation requirements of the Companies Act, 201. In accordance with the notification dated February 16, 2015, issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under Section 133 read with Rule 4A of Companies (Indian Accounting Standards) Rules, 2015, as amended, and the relevant provisions of the Companies Act, 2013 (collectively, âInd ASsâ) with effect from April 1, 2017 and the Company is required to prepare its financial statements in accordance with Ind ASs for the year ended March 31, 2018. These financial statements as and for the year ended March 31, 2018 (the âInd AS Financial Statementsâ) are the first financial statements, the Company has prepared in accordance with Ind AS.
(ii) The Company had prepared a separate set of financial statements for the year ended March 31, 2017 and March 31, 2016 in accordance with the Accounting Standards referred to in section 133 of the Companies Act, 2013 (the âAudited Previous GAAP Financial Statementsâ), which were approved by the Board of Directors of the Company on May 30, 2017 and May 30, 2016 respectively. The management of the Company has compiled the Special Purpose Comparative Ind AS Financial Statements using the Audited Previous GAAP Financial Statements and made required Ind AS adjustments. The Audited Previous GAAP Financial Statements, and the Special purpose Comparative Ind AS Financial Statements, do not reflect the effects of events that occurred subsequent to the respective dates of approval of the Audited Previous GAAP Financial Statements.
(iii) These financial statements were approved for issue by the Board of Directors on May 25, 2018.
(iv) Transactions in currencies other than the Company''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the date of that date. Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.
Non- monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
2.2 Current versus non-current classification
All assets and Liabilities have been classified as current or non current considering the operating cycle of 12 months. Deferred tax assets and liabilities are classified as non -current assets and liabilities respectively.
2.3 Basis of measurement
The Ind AS Financial Statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except for certain financial assets and liabilities, including derivative financial instruments which have been measured at fair value as described below and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind ASs.
2.4 Fair value measurement
Fair value is the price that would be received to sell an assets or paid to transfer a liabilities in an orderly transaction between market participants at the measurement date. Fair value for measurement and / or disclosed in these financial statement is determined on such a basis.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, which are described as follows ; level I - III
Level I input
Level I input are quoted price in active market for identical assets or liabilities that the entity can access at the measurement date, A quoted market in an active market provided the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available , with limited exception . If an entity hold a position in a single assets or liabilities and the assets or liabilities is traded in an active market, the fair value of assets or liabilities held by the entity, even if the market normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price.
Level II input
Level II input are input other than quoted market prices included within level I that are observable for the assets or liabilities either directly or indirectly.
Level II inputs include:
-quoted price for similarly assets or liabilities in active market.
-quoted price for identical or similar assets or liabilities in market that are not active.
-input other than quoted prices that are observable for the assets or liabilities , for example -interest rate and yield curve observable at commonly quoted interval.
-implied volatilise.
-credit spreads.
-input that are derived principally from or corroborated market data correlation or other means (âmarket corroborated inputs'').
Level III input
Level III inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. An entity develops unobservable inputs using the best information available in the circumstances, which might include the entity''s own data, taking into account all information about market participant assumptions that is reasonably available.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
2.5 Functional and presentation currency
These Ind AS Financial Statements are prepared in Indian Rupee which is the Company''s functional currency. All financial information presented in Rupees has been rounded to the nearest lacs.
2.6 Property, Plant and Equipment
(i) Property, plant and equipment
The Company has applied Ind AS 16 with retrospective effect for all of its property, plant and equipment as at the transition date, viz., 1 April 2016.
The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an asset to working condition and location for its intended use. It also includes the present value of the expected cost for the decommissioning and removing of an asset and restoring the site after its use, if the recognition criteria for a provision are met. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are incurred. Major inspection and overhaul expenditure is capitalized if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
When an item of property, plant and equipment is scrapped or otherwise disposed off, the cost and related deprecation are removed from the books of account and resultant profit or loss, if any, is reflecting in statement of Profit & Loss.
(ii) Capital work in progress
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalised when the asset is available for use but incapable of operating at normal levels until the period of commissioning has been completed. Cost includes financing cost relating to borrowed funds attributable to construction.
(iii) Depreciation
The Company depreciates property, plant and equipment over the useful life as prescribed in schedule II of the Companies Act 2013 on the straight-line method from the date the assets are ready for intended use. Assets in the course of construction and freehold land are not depreciated.
The estimated useful lives of assets are as follows:
- Buildings 30-60 years
- Plant and equipments 20 years*
- Furniture and fixtures 8 -10 years
- Vehicles 8 - 10 years
- Office equipments 3 - 6 years (Including computer software)
*The management has reassessed the remaining useful life of Plant & Machinery with effect from 1st April 2014 in respect of Plant & Machinery, the company is consistently following the policy of charging depreciation over 20 years, notwithstanding certification by the Govt. approved valuer (Chartered Engineer) of the useful life of Plant & Machinery of more than 35 years. This is in pursuance of proviso to sub clause (c) of clause 3 of schedule II of the Companies Act 2013.
Similarly for addition of Plant & Machinery during the year company has estimated the useful life of 20 years (15 years specified in Schedule II) based upon the certificate of suppliers / manufacturers of Plant & Machinery. Additions made during the year have been capitalized at the year end at Patiala and accordingly depreciation has been charged.
2.7 Intangible Assets
Intangible assets acquired are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
The useful lives of intangible assets are assessed as either finite or indefinite. The Company currently does not have any intangible assets with indefinite useful life. Intangible assets are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
2.8 Impairment of Assets
At the end of each reporting period, the Company assesses whether there is any indication that an assets or a group of assets (cash generating unit) may be impaired. If any such indication exists, the recoverable amount of the asset or cash generating unit is estimated in order to determine the extent of impairment loss (if any). When it is not possible to estimate the recoverable amount of the cash generating unit to which the assets belongs.
Recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing the value in use, the estimated future cash flow are discounted at their present value using the pre-tax discount rate that reflects current market assessment of time value of money and the risks specific to the assets for which the estimates of future cash flow have not been adjusted.
If the recoverable amount of an assets (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the assets (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of Profit & Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss recognized immediately in the statement of Profit & Loss.
2.9 Cash and Cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
2.10 Financial instruments
A financial instrument is any contact that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
(i) Initial recognition and measurement:
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments. 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 and 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 recognized immediately in the statement of profit and Loss.
(ii) Subsequent measurement of financial assets:
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
(iii) Derecognition of financial assets :
The Company derecognises a financial asset when and only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in the Statement of Profit and Loss if such gain or loss would have otherwise been recognized in the Statement of Profit and loss on disposal of that financial asset.
(iv) Impairment of financial assets:
The Company applies the expected credit loss model for recognizing impairment loss on financial assets. The Company follows âsimplified approach'' for recognition of impairment loss allowance, The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from is initial recognition.
(v) Subsequent measurement of financial liabilities:
All the financial liabilities are subsequently measured at amortized cost using the effective interest rate method or at fair value through profit and loss. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
(vi) Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such on exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
2.11 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss, net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.12 Inventories
Inventories are valued at the lower of cost and net realisable value except scrap and by products which are valued at net realisable value. Costs comprises as follow:
(i) Raw materials: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.
(ii) Finished goods and work in progress: Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost is determined on weighted average basis.
(iii) Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
(iv) Obsolete inventories are identified and written down to net realisable value. Slow moving and defective inventories are identified and provided to net realisable value. Inventories (including whey powder - by product) are valued on lower of cost or net realizable value. In pursuance of IND AS-2 indirect production overheads (estimated by the Management) have been allocated for ascertainment of cost.
2.13 Retirement Benefits
Company follows IND AS-19 as detailed below:-
(a) Short-term benefits are recognized as expense at the undiscounted amount in the Statement of Profit & Loss of the year in which the related service is rendered.
(b) Company provides bonus to eligible employees as per Bonus Act 1965 and accordingly liability is provided on actual cost at the end of the year.
(c) Provident Fund:
The eligible employees of the company are entitled to receive benefits under the Provident Fund, a defined contribution plan in which both employees and the company make monthly contributions at a specified percentage of the covered employee''s salary. The contributions as specified under the law are paid to the respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme.
(d) The Company has an obligation towards gratuity a defined benefit retirement plan covering all employees. The plan provides for a lumpsum payment to employees at retirement/determination of service on the basis of 15 days terminal salary for each completed year of service subject to maximum amount of Rs. 20 Lacs.
Company''s liability towards gratuity and compensated absences is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income (OCI) in the period in which they occur. Remeasurement recognized in the other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the defined benefit liability or asset.
Defined benefit costs are categorized as follows:
- Service cost (including current service cost, past service cost as well as gains and losses on curtailments and settlements);
- Net interest expense or income; and
- Remeasurement
2.14 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable taking in to account contractually defined terms of payment excluding others taxes or duties collected on behalf of the government. Specific recognition criteria described below must also be met before revenue is recognized.
(a) Export sales are recognized on the basis of date of bill of lading.
(b) Export entitlements i.e. duty free scrip and duty draw back are accounted for on the basis of export of goods on FOB value determined for custom purpose.
(c) In accordance with guidance note issued by the Institute of Chartered Accountants of India, (ICAI) Certified Emission Reduction (CER) units obtained under Clean Development Mechanism (CDM) are treated as inventory on credit by the United Nations Framework Convention on Climate Change (UNFCCC). CER''s are valued at lower of cost or Net Realizable Value (NRV- certified by the consultant) as per IND AS-2 of ICAI. VCS has been valued at the future realizable value as certified by the consultant.
(d) Interest Income is recorded on time proportion basis using the effective rate of Interest (EIR).
2.15 Manufacturing policy
The main raw material of the company is milk, which is used to produce Pure Ghee and various types of Milk Powders. For the last few years, the company has changed its policy to produce Pure Ghee and Milk Powders which conforms to the quality standards adopted by the company consistent with its brand image. Quantities of Pure Ghee and Milk Powders are purchased and processed in the plant to give effect to the manufacturing policy and produce a product of high quality on consistent basis.
2.16 Taxation
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except when it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can 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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Sales/ value added taxes paid on acquisition of assets or on incurring expenses.
Expenses and assets are recognised net of the amount of sales/ value added taxes paid, except:
When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.
When receivables and payables are stated with the amount of tax included, the net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
2.17 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
2.18 Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the customs rate on the date of dispatch of goods. The difference between the rates recorded and the rates on the date of actual realization is transferred to difference in exchange fluctuation account .At the year end, the balances are converted at the year end rate and difference if any between the book balance and converted amount are transferred to the exchange fluctuation account. The premium or discount arising at the inception of a forward exchange contract is amortized as expenses / income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward contract is recognized as income / expenses for the period. Non-monetary items that are measured in historical cost in a foreign currency are not retranslated.
2.19 Earning per shares
The Company presents basic and diluted earnings per share (âEPSâ) data for its equity shares. Basic EPS is calculated by dividing the profit and loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit and loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares
2.20 Segment Reporting
The company is operating under a single segment i.e., âDairy Products- comprising Ghee, Milk Powder, Casein, Whey powder and Dairy whitenerâ and therefore there are no reportable segments as per IND AS-108 âSegment Reportingâ issued by The Institute of Chartered Accountants of India.
2.21 Cash Flow Statement
Cash flows are reported using indirect method as set out in Ind AS -7 âStatement of Cash Flowsâ, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information
2.22 Contingent liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the standalone Ind AS financial statements.
2.23 Leases
Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
2.24 Use of estimates and judgments
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 financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which is known/materialised. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
(i) Property, Plant and Equipments -
(ii) Intangible assets -
(iii) Taxes on income -
(iv) Retirement and other employee benefits -
Mar 31, 2016
NOTE1. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS A) SIGNIFICANT ACCOUNTING POLICIES
1.1. Basis of Preparation of Accounts
The accounts have been prepared in accordance with historical cost convention, applicable accounting standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 2013 following accrual method of accounting.
All assets and Liabilities have been classified as current or non current considering the operating cycle of 12 months.
1.2. Tangible Fixed Assets
Fixed assets are stated at cost. All direct expenses incurred for bringing the assets to their present location are debited to the respective assets. In regard to new projects expenditure incurred till the date of commencement of commercial productions are charged to the respective assets i.e. Building, Plant & Machinery proportionately. Replacement of various part of fixed assets/substantial repair/renovation are also capitalized considering the benefit of enduring nature.
1.3. Depreciation on Tangible Fixed Assets
Depreciation has been charged on Straight Line Method in accordance with Schedule II of the Companies Act 2013, The management has reassessed the remaining useful life of Plant & Machinery with effect from 1st April 2014 in respect of Plant & Machinery, the company is consistently following the policy of charging depreciation over 20 years, notwithstanding certification by the Govt. approved valuer (Chartered Engineer) of the useful life of Plant & Machinery of more than 35 years. This is in pursuance of proviso to sub clause (I) of clause 3 of schedule II of the Companies Act 2013. Similarly for addition of Plant & Machinery during the year company has estimated the useful life of 20 years (15 years specified in Schedule II) based upon the certificate of suppliers / manufacturers of Plant & Machinery. Additions made during the year have been capitalized at the year end at Patiala and accordingly depreciation has been charged.
On Stores Items Capitalized: Estimated useful life of the asset.
On Assets Held for Disposal: On SLM as per rates in schedule II of Company Act 2013 and in case net realized value is lower than the written down value then depreciation is charged to confirm the carrying value to net realized value.
1.4 Intangible Assets
In accordance with AS-26 - expenses incurred on development/defining the manufacturing process of any product to meet the required standards is recognized as Intangible Asset and is amortized over a period of 10 years.
The launching including advertisement expenses on the new product are amortized over a period of four years.
1.5 Impairment of Assets:-
Assessment of indication of impairment of an assets is made at the year end and impairment loss, if any, is recognized.
1.6. Investments
Long Term Investments are stated at cost, less provision if any for diminution in the value of such investments, other than temporary.
1.7 Inventories
Inventories (including - by products) are valued on lower of cost or net realizable value. In pursuance of AS-2 indirect production overhead (estimated by the Management) have been allocated for ascertainment of cost.
1.8 Retirement Benefits
Company follows AS-15 (revised) as detailed below:-
(a) Short-term benefits are recognized as expense at the undiscounted amount in the Statement of Profit & Loss of the year in which the related service is rendered.
(b) Leave encashment are carried forward on year to year basis and facility is granted to employees only in the year of determination of service.
(c) Company provides bonus to eligible employees as per Bonus Act 1965 and accordingly liability is provided on actual cost at the end of the year.
(d) The Company has an obligation towards gratuity a defined benefit retirement plan covering all employees including the Directors in the wholetime employment of company. The plan provides for a lumpsum payment to employees at retirement/determination of service on the basis of 15 days terminal salary for each completed year of service subject to maximum amount of Rs.10 Lac. During the year company has made provision of gratuity and leave encashment of Rs.201 Lac as per AS-15.
(e) Provident Fund:
The eligible employees of the company are entitled to receive benefits under the Provident Fund, a defined contribution plan in which both employees and the company make monthly contributions at a specified percentage of the covered employee''s salary. The contributions as specified under the law are paid to the respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme.
1.9 Revenue Recognition
(a) Sales are recognized at the point of despatch to customers and are net of sales return. Export sales are recognized on the basis of date of bill of lading.
(b) Export entitlements i.e. duty free scrip and duty draw back are accounted for on the basis of export of goods on FOB value determined for custom purpose.
c) In accordance with guidance note issued by the Institute of Chartered Accountants of India, (ICAI) Certified Emission Reduction (CER) units obtained under Clean Development Mechanism (CDM) are treated as inventory on credit by the United Nations Framework Convention on Climate Change (UNFCCC). CER''s are valued at lower of cost or Net
Realizable Value (NRV- certified by the consultant) as per AS-2 of ICAI. Total cost incurred is nil (Rs.25.82 Lac in previous year) for CDM project being lower than NRV of 128919 CER Units which have been valued on consultant''s advice for potential realization at valuation at an amount not less than at what they are stated in the Balance Sheet.
1.10 Manufacturing policy
The main raw material of the company is milk, which is used to produce Pure Ghee and various types of Milk Powders. For the last few years, the company has changed its policy to produce Pure Ghee and Milk Powders which conforms to the quality standards adopted by the company consistent with its brand image. Quantities of Pure Ghee and Milk Powders are purchased and processed in the plant to give effect to the manufacturing policy and produce a product of high quality on consistent basis.
1.11 Deferred Tax
The tax expense consists of current tax and deferred tax. Provision for the current tax is based on tax liability computed in accordance with relevant provisions of the Income Tax Act. Provisions for deferred tax are made for all timing differences arising between taxable incomes and accounting income at Income Tax rates that have been enacted or substantially enacted as of the balance sheet date. Deferred Tax Assets are recognised and carried forward only if there is convincing evidence that they will be realised in future against future taxable income. The carrying amounts of Deferred Tax Asset are reviewed for the appropriateness of their respective carrying values at each balance sheet date. For computing the deferred tax liability/assets, benefit of brought forward losses has been taken on the basis of returned income (loss) instead of assessed income (loss) with regards to matters preferred in appeal (s). Deferred tax liability for the year ended 31.03.2016 is Rs.390 Lac (Previous Year Rs.360 Lac). During the year deferred tax asset of Rs.91.92 Lac has been recognized in respect of losses on disposal of investment to be carried forward for adjustment in near future regarding accrual of Capital gain as certified by the Management.
1.12 Borrowing Costs
Interest and other cost that are directly attributable to the acquisition, construction or production of a qualifying asset (including trial run) and for product development (under AS-26) within the meaning of Accounting Standard-16 are capitalized as part of the cost of that asset till the assets are ready for intended use or for producing on commercial scale/sale. Other borrowing costs are recognized as an expense in the period in which they are incurred.
During the year interest of Rs.6.64 Lac (PY Rs. 38 Lac) has been capitalized in Plant & Machinery in accordance with AS-16 as certified by the Management. Processing fees charged by banks are amortized as per the tenure of the loan.
1.13 Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the customs rate on the date of dispatch of goods. The difference between the rates recorded and the rates on the date of actual realization is transferred to difference in exchange fluctuation account .At the year end, the balances are converted at the year end rate and difference if any between the book balance and converted amount are transferred to the exchange fluctuation account. The premium or discount arising at the inception of a forward exchange contract is amortized as expenses / income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward contract is recognized as income / expenses for the period.
Mar 31, 2015
1.1. Basis of Preparation of Accounts
The accounts have been prepared in accordance with historical cost
convention, applicable accounting standards issued by the Institute of
Chartered Accountants of India and relevant provisions of the Companies
Act, 2013 following accrual method of accounting.
All assets and Liabilities have been classified as current or non
current considering the operating cycle of 12 months.
1.2. Tangible Fixed Assets
Fixed assets are stated at cost. All direct expenses incurred for
bringing the assets to their present location are debited to the
respective assets. In regard to new projects expenditure incurred till
the date of commencement of commercial productions are charged to the
respective assets i.e. Building, Plant & Machinery proportionately.
Replacement of various part of fixed assets/substantial
repair/renovation are also capitalized considering the benefit of
enduring nature.
1.3. Depreciation on Tangible Fixed Assets
Depreciation has been charged on Straight Line Method in accordance with
Schedule II of the Companies Act 2013, The management has reassessed the
remaining useful life of Plant & Machinery with effect from 1st April
2014. As a result of above, depreciation of Rs.26.64 Lac has been
charged to Statement of Profit & Loss Account and Rs.3.36 Lac has been
adjusted with opening retained earnings (i.r.o. assets of which useful
life is exhausted.) for twelve months ended 31st March 2015. In respect
of Plant & Machinery, the company is consistently following the policy
of charging depreciation over 20 years, notwithstanding certification by
the Govt. approved valuer (Chartered Engineer) of the useful life of
Plant & Machinery of more than 35 years. This is in pursuance of proviso
to sub clause (I) of clause 3 of schedule II of the Companies Act 2013.
Similarly for addition of Plant & Machinery during the year company has
estimated the useful life of 20 years (15 years specified in Schedule
II) based upon the certificate of suppliers / manufacturers of Plant &
Machinery. Additions made during the year have been capitalized at the
year end and accordingly depreciation has been charged.
On Stores Items Capitalized: Estimated useful life of the asset.
On Assets Held for Disposal: On SLM as per rates in schedule II of
Company Act 2013 and in case net realized value is lower than the
written down value then depreciation is charged to confirm the carrying
value to net realized value.
1.4 Intangible Assets
In accordance with AS-26 - expenses incurred on development/defining
the manufacturing process of any product to meet the required standards
is recognized as Intangible Asset and is amortized over a period of 10
years
1.5 Impairment of Assets:-
Assessment of indication of impairment of an assets is made at the year
end and impairment loss, if any, is recognized.
1.6. Investments
Long Term Investments are stated at cost, less provision if any for
diminution in the value of such investments, other than temporary.
1.7 Inventories
Inventories (including whey powder - by product) are valued on lower of
cost or net realizable value. In pursuance of AS-2 indirect production
overhead (estimated by the Management) have been allocated for
ascertainment of cost.
1.8 Retirement Benefits
Company follows AS-15 (revised) as detailed below:-
(a) Short-term benefits are recognized as expense at the undiscounted
amount in the Statement of Profit & Loss of the year in which the
related service is rendered.
(b) Leave encashment are carried forward on year to year basis and
facility is granted to employees only in the year of determination of
service.
(c) Company provides bonus to eligible employees as per Bonus Act 1965
and accordingly liability is provided on actual cost at the end of the
year.
(d) The Company has an obligation towards gratuity a defined benefit
retirement plan covering all employees including the Directors in the
wholetime employment of company. The plan provides for a lumpsum
payment to employees at retirement/determination of service on the
basis of 15 days terminal salary for each completed year of service
subject to maximum amount of Rs.10 Lac. During the year company has
made provision of gratuity and leave encashment of Rs.215 Lac as per
AS-15.
(e) Provident Fund:
The eligible employees of the company are entitled to receive benefits
under the Provident Fund, a defined contribution plan in which both
employees and the company make monthly contributions at a specified
percentage of the covered employee's salary. The contributions as
specified under the law are paid to the respective Regional Provident
Fund Commissioner and the Central Provident Fund under the State Pension
Scheme.
1.9 Revenue Recognition
(a) Sales are recognized at the point of despatch to customers and are
net of sales return. Export sales are recognized on the basis of date
of bill of lading.
(b) Export entitlements i.e. duty free scrip and duty draw back are
accounted for on the basis of export of goods on FOB value determined
for custom purpose.
c) In pursuance of guidance note issued by ICAI on accounting for self
generated certified emission reductions (CERS) the same has to be
recognized when UNFCCC certifies and credit the same to the generating
entity. Company is entitled for 69692 CERS p.a w.e.f. 14 February 2012
till 2022 .Company has recognized the CER's 128919 units as inventory
in terms of Guidance Note of ICAI and valued the same as per AS-2. Net
realizable value has been certified by the consultant. In respect of
VCS, company had recognized the income in the earlier years on the
basis of consultant certificate. VCS in hand as the close of the year
are 97000 units which have been valued on consultant's advice for
potential realization at valuation at an amount not less than at what
they are stated in the Balance Sheet.
1.10 Deferred Tax
The tax expense consists of current tax and deferred tax. Provision for
the current tax is based on tax liability computed in accordance with
relevant provisions of the Income Tax Act. Provisions for deferred tax
are made for all timing differences arising between taxable incomes and
accounting income at Income Tax rates that have been enacted or
substantially enacted as of the balance sheet date. Deferred Tax Assets
are recognised and carried forward only if there is convincing evidence
that they will be realised in future against future taxable income. The
carrying amounts of Deferred Tax Asset are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date. For computing the Deferred tax liability/assets, benefit of
brought forward losses has been taken on the basis of returned income
(loss) instead of assessed income (loss) with regards to matters
preferred in appeal (s). Deferred tax liability for the year ended
31.03.2015 is Rs.360.71 Lac (Previous Year Rs.322 Lac). During the year
deferred tax asset of Rs.91.92 Lac has been recognized in respect of
losses on disposal of investment to be carried forward for adjustment
in near future regarding accrual of Capital gain as certified by the
Management.
1.11 Borrowing Costs
Interest and other cost that are directly attributable to the
acquisition, construction or production of a qualifying asset
(including trial run) and for product development (under AS-26) within
the meaning of Accounting Standard- 16 are capitalized as part of the
cost of that asset till the assets are ready for intended use or for
producing on commercial scale/sale. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
During the year interest of Rs.38 Lac has been capitalized in Plant &
Machinery in accordance with AS-16 as certified by the Management.
1.12 Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the customs rate on the date of dispatch of goods. The difference
between the rates recorded and the rates on the date of actual
realization is transferred to difference in exchange fluctuation
account .At the year end, the balances are converted at the year end
rate and difference if any between the book balance and converted
amount are transferred to the exchange fluctuation account. The premium
or discount arising at the inception of a forward exchange contract is
amortized as expenses / income over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
contract is recognized as income / expenses for the period.
(B) ADDITIONAL NOTES TO ACCOUNTS
i. Contingent liabilities:
Claims not acknowledged as debts Rs.95 Lac (Previous year Rs.152 Lac)
and guarantee / obligations of Rs.400 Lac.(Previous year Nil).
ii. Estimated amount of contracts remaining to be executed on capital
account is Rs.5 Lac and not provided for (Net of Advances) (Previous
year 23 lac).
iii. Expenditure in foreign currency :
Particulars For the year ended For the year ended
31 March, 2015 31 March, 2014
(Rs. in lacs) (Rs. in lacs)
Fees & Subscription 0 0
Travelling 1 3
TOTAL 1 3
Mar 31, 2014
1.1. Basis of Preparation of Accounts
The accounts have been prepared in accordance with historical cost
convention, applicable accounting standards issued by the Institute of
Chartered Accountants of India and relevant provisions of the Companies
Act, 1956 following accrual method of accounting.
All Assets and Liabilities have been classified as current or non
current considering the operating cycle of 12 months.
1.2. Tangible Fixed Assets
Fixed assets are stated at cost. All direct expenses incurred for
bringing the assets to their present location are debited to the
respective assets. In regard to new projects expenditure incurred till
the date of commencement of commercial productions are charged to the
respective assets i.e. Building, Plant & Machinery proportionately.
Replacement of various part of fixed assets/substantial
repair/renovation are also capitalized considering the benefit of
enduring nature.
1.3. Depreciation on Tangible Fixed Assets
On Fixed Asset: On written down value as per prescribed rates in
Schedule XIV of Companies Act 1956.
On Stores Items Capitalized: Estimated useful life of the asset.
On Assets Held for Disposal: On written down value as per rates in
schedule XIV of Company Act and in case net realized value is lower
than the written down value then depreciation is charged to confirm the
carrying value to net realized value.
During the year company has written back the depreciation of Rs.300 Lac
in respect of Plant and Machinery on the belief that it had charged
excess depreciation in earlier years considering the useful life of
assets on certain reasonable assumptions regarding additions/deletions
and rates of depreciation charged as per the provisions of the
Companies Act, 1956.
1.4 Intangible Assets
In accordance with AS-26 - expenses incurred on development/defining
the manufacturing process of any product to meet the required standards
is recognized as Intangible Asset and is amortized over a period of 10
years
1.5 Impairment of Assets:-
Assessment of indication of impairment of an assets is made at the year
end and impairment loss, if any, is recognized.
1.6. Investments
Long Term Investments are stated at cost, less provision if any for
diminution in the value of such investments, other than temporary.
1.7 Inventories
Inventories (including whey powder-by product) are valued on lower of
cost or net realizable value. In pursuance of AS-2 indirect production
overhead (estimated by the Management ) have been allocated for
ascertainment of cost.
1.8 Retirement Benefits
Company follows AS-15 (revised) as detailed below:-
(a) Short-term benefits are recognized as expense at the undiscounted
amount in the Statement of Profit & Loss of the year in which the
related service is rendered.
(b) Leave encashment are carried forward on year to year basis and
facility is granted to employees only in the year of determination of
service.
(c) Company provides bonus to eligible employees as per Bonus Act 1965
and accordingly liability is provided on actual cost at the end of the
year.
(d) The Company has an obligation towards gratuity a defined benefit
retirement plan covering all employees including the Directors in the
wholetime employment of company. The plan provides for a lumpsum
payment to employees at retirement/determination of service on the
basis of 15 days terminal salary for each completed year of service
subject to maximum amount of Rs.10 lacs except for the top management
of the company. During the year company has made provision of gratuity
and leave encashment of Rs.173 Lac as per AS-15 and charged the same as
exceptional items.
(e) Provident Fund: The eligible employees of the company are entitled
to receive benefits under the Provident Fund, a defined contribution
plan in which both employees and the company make monthly contributions
at a specified percentage of the covered employee''s salary. The
contributions as specified under the law are paid to the respective
Regional Provident Fund Commissioner and the Central Provident Fund
under the State Pension Scheme.
1.9 Revenue Recognition
(a) Sales are recognized at the point of despatch to customers and are
net of sales return. Export sales are recognized on the basis of date
of bill of lading.
(b) Export entitlements i.e. duty free scrip and duty draw back are
accounted for on the basis of export of goods on FOB value determined
for custom purpose.
c) In pursuance of guidance note issued by ICAI on accounting for self
generated certified emission reductions (CERS) the same has to be
recognized when UNFCCC certifies and credit the same to the generating
entity. Company is entitled for 69692 CERS p.a w.e.f. 14 February 2012
till 2022 .Company has not recognized the entitlement as assets because
the same is yet to be credited in its account by the UNFCCC. In respect
of VCS, company had recognized the income in the earlier years on the
basis of consultant certificate. VCS in hand as the close of the year
are 97000 units which have been valued on consultant''s advice for
potential realization at valuation at an amount not less than at what
they are stated in the Balance Sheet.
1.10 Deferred Tax
The tax expense consists of current tax and deferred tax. Provision for
the current tax is based on tax liability computed in accordance with
relevant provisions of the Income Tax Act. Provisions for deferred tax
are made for all timing differences arising between taxable incomes and
accounting income at Income Tax rates that have been enacted or
substantially enacted as of the balance sheet date. Deferred Tax Assets
are recognised and carried forward only if there is convincing evidence
that they will be realised in future against future taxable income. The
carrying amounts of Deferred Tax Asset are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date. For computing the Deferred tax liability/assets, benefit of
brought forward losses has been taken on the basis of returned income
(loss) instead of assessed income (loss) with regards to matters
preferred in appeal (s).
1.11 Borrowing Costs
Interest and other cost that are directly attributable to the
acquisition, construction or production of a qualifying asset
(including trial run) and for product development (under AS-26) within
the meaning of Accounting Standard- 16 are capitalized as part of the
cost of that asset till the assets are ready for intended use or for
producing on commercial scale/sale. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
1.12 Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the customs rate on the date of dispatch of goods. The difference
between the rates recorded and the rates on the date of actual
realization is transferred to difference in exchange fluctuation
account .At the year end, the balances are converted at the year end
rate and difference if any between the book balance and converted
amount are transferred to the exchange fluctuation account. The premium
or discount arising at the inception of a forward exchange contract is
amortized as expenses / income over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
contract is recognized as income / expenses for the period.
Mar 31, 2012
1.1 Basis of Preparation of Accounts
The accounts have been prepared in accordance with historical cost
convention, applicable accounting standards issued by the Institute of
Chartered Accountants of India and relevant provisions of the Companies
Act, 1956 following accrual method of accounting except for gratuity
and leave encashment which are being accounted for on payment basis.
All Assets and Liabilities have been classified as current or non
current considering the operating cycle of 12 months.
1.2. Tangible Fixed Assets
Fixed assets are stated at cost. All direct expenses incurred for
bringing the assets to their present location are debited to the
respective assets. In regard to new projects expenditure incurred till
the date of commencement of commercial productions are charged to the
respective assets i.e. Building, Plant & Machinery proportionately.
Replacement of various part of fixed assets/ substantial
repair/renovation are also capitalized considering the benefit of
enduring nature.
1.3. Depreciation on Tangible Fixed Assets
On Fixed Asset: On written down value as per prescribed rates in
Schedule XIV of Companies Act 1956.
On Stores Items Capitalized: Estimated useful life of the asset.
On Assets Held for Disposal: Only in case the net realizable value of
Assets is lower than the carrying amount.
1.4 Intangible Assets
In accordance with AS-26 - expenses incurred on development/defining
the manufacturing process of any product to meet the required standards
is recognized as Intangible Asset and is amortized over a period of 10
years.
1.5 Impairment of Assets:-
Assessment of indication of impairment of an assets is made at the year
end and impairment loss, if any, is recognized.
1.6. Investments
Long Term Investments are stated at cost, less provision if any for
diminution in the value of such investments, other than temporary.
1.7 Inventories
Inventories are valued on lower of weighted average cost or net
realizable value. Valuation of intermediary products (Whey Powder) is
estimated on the basis of net realizable value of the final product.
1.8 Retirement Benefits
Company follows AS-15 (revised) as detailed below:-
(a) Short-term benefits are recognized as expense at the undiscounted
amount in the Statement of Profit & Loss of the year in which the
related service is rendered.
(b) Leave encashments are not carried forward on year to year basis and
facility is granted to employees only in the year of determination of
service. Therefore no provision of leave encashment is made on year to
year basis.
(c) Company provides bonus to eligible employees as per Bonus Act 1965
and accordingly liability is provided on actual cost at the end of the
year.
(d) The Company has an obligation towards gratuity a defined benefit
retirement plan covering all employees including the Directors in the
wholetime employment of company. The plan provides for a lumpsum
payment to employees at retirement/determination of service on the
basis of 15 days terminal salary for each completed year of service
subject to maximum amount of Rs.10.00 lakh.
(e) Provident Fund:
The eligible employees of the company are entitled to receive benefits
under the Provident Fund, a defined contribution plan in which both
employees and the company make monthly contributions at a specified
percentage of the covered employee's salary. The contributions as
specified under the law are paid to the respective Regional Provident
Fund Commissioner and the Central Provident Fund under the State
Pension Scheme.
1.9 Revenue Recognition
(a) Sales are recognized at the point of despatch to customers and are
net of sales return. Export sales are recognized on the basis of date
of bill of lading.
(b) Export entitlements i.e. duty free scrips are accounted for on the
basis of export of goods on FOB value determined for custom purpose.
(c) Entitlements under Clean development mechanism (CDM) & voluntary
Carbon standards (VCS) (2007) are accounted for income at the time of
final registration with the approval authority of host country.
1.10 Deferred Tax
The tax expense consists of current tax and deferred tax. Provision for
the current tax is based on tax liability computed in accordance with
relevant provisions of the Income Tax Act. Provisions for deferred tax
are made for all timing differences arising between taxable incomes and
accounting income at Income Tax rates that have been enacted or
substantially enacted as of the balance sheet date. Deferred Tax
Assets are recognised and carried forward only if there is convincing
evidence that they will be realised in future against future taxable
income. The carrying amounts of Deferred Tax Asset are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
1.11 Borrowing Costs
Interest and other cost that are directly attributable to the
acquisition, construction or production of a qualifying asset
(including trial run) and for product development (under AS-26) within
the meaning of Accounting Standard-16 are capitalized as part of the
cost of that asset till the assets are ready for intended use or for
producing on commercial scale/sale. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
1.12 Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on estimated rate on the date of dispatch of goods. The difference
between the rates recorded and the rates on the date of actual
realization is transferred to difference in exchange fluctuation
account. At the year end, the balances are converted at the year end
rate and difference if any between the book balance and converted
amount are transferred to the exchange fluctuation account.
Mar 31, 2011
1. Basis of Preparation of Accounts
The accounts have been prepared in accordance with historical cost
convention, applicable accounting standards issued by the Institute of
Chartered Accountants of India and relevant provisions of the Companies
Act, 1956 following accrual method of accounting except for gratuity
and leave encashment which are being accounted for on payment basis.
2. Fixed Assets
Fixed assets are stated at cost. All direct expenses incurred for
bringing the assets to their present location are debited to the
respective assets. In regard to new projects expenditure incurred till
the date of commencement of commercial productions are charged to the
respective assets i.e. Building, Plant & Machinery proportionately.
Replacement of various part of fixed assets are also capitalized
considering the benefit of enduring nature.
3. Depreciation on Fixed Assets
On Fixed Assets : On written down value as per prescribed rates in
Schedule XIV of Companies Act 1956.
On Stores Items Capitalized: Estimated useful life of the asset.
On Assets Held for Disposal: Only in case the net realizable value of
Assets is lower than the carrying amount.
During the year Company has not charged depreciation in respect of
Plant and Machinery and furniture and fixtures of Patiala Unit prior to
financial year 2005-06 as these Assets had reached its residual value
in earlier years as prescribed under Companies Act, 1956.
4. Investments
Long Term Investments are stated at cost, less provision if any for
diminution in the value of such investments, other than temporary.
5. Inventories
Inventories are valued on lower of weighted average cost or net
realizable value. Valuation of intermediary products (Whey Powder) is
estimated on the basis of net realizable value of the final product.
6. Retirement Benefits (Revised)
Company follows AS-15 (revised) as detailed below:-
(1) Short-term benefits are recognized as expense at the undiscounted
amount in the Profit & Loss Account of the year in which the related
service is rendered.
(2) Leave encashments are not carried forward on year to year basis and
facility is granted to employees only in the year of determination of
service. Therefore no provision of leave encashment is made on year to
year basis.
(3) Company provides bonus to eligible employees as per Bonus Act 1965
and accordingly liability is provided on actual cost at the end of the
year.
(4) The Company has an obligation towards gratuity a defined benefit
retirement plan covering all employees including the Directors in the
wholetime employment of company. The plan provides for a lumpsum
payment to employees at retirement/ determination of service on the
basis of 15 days terminal salary for each completed year of service
subject to maximum amount of Rs.10.00 lakh.
(5) Provident Fund:
The eligible employees of the company are entitled to receive benefits
under the Provident Fund, a defined contribution plan in which both
employees and the company make monthly contributions at a specified
percentage of the covered employee's salary. The contributions as
specified under the law are paid to the respective Regional Provident
Fund Commissioner and the Central Provident Fund under the State
Pension Scheme.
7 Revenue Recognition
(i) Sales are recognized at the point of despatch to customers and are
net of sales return. Export sales are recognized on the basis of date
of bill of lading.
(ii) Export entitlements i.e. duty free scrips are accounted for on the
basis of export of goods on FOB value determined for custom purpose.
(iii) In respect of entitlements under clear development mechanism
(CDM) of Kyoto Protocol, Income is accounted on the basis of estimated
valuation made by the Consultant appointed by the Company for the final
registration with UNFCCC. Initial expenditure incurred for Registration
etc., are charged over a period during which benefit is likely to
accrue. During the year a sum of Rs.4.21 Lacs have been charged to
Profit & Loss Account.
8. Deferred Tax
The tax expense consists of current tax and deferred tax. Provision for
the current tax is based on tax liability computed in accordance with
relevant provisions of the Income Tax Act. Provisions for deferred tax
are made for all timing differences arising between taxable incomes and
accounting income at Income Tax rates that have been enacted or
substantially enacted as of the balance sheet date. Deferred Tax
Assets are recognised and carried forward only if there is convincing
evidence that they will be realised in future against future taxable
income. The carrying amounts of Deferred Tax Asset are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date (also refer Note 16 of Schedule 18 B).
9. Borrowing Costs
Interest and other cost that are directly attributable to the
acquisition, construction or production of a qualifying asset
(including trial run) and for product development (under AS-26) within
the meaning of Accounting Standard-16 are capitalized as part of the
cost of that asset till the assets are ready for intended use or for
producing on commercial scale/sale. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
However, no borrowing cost has been capitalized during the year.
10. Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on estimated rate on the date of dispatch of goods. The difference
between the rates recorded and the rates on the date of actual
realization is transferred to difference in exchange fluctuation
account. At the year end, the balances are converted at the year end
rate and difference if any between the book balance and converted
amount are transferred to the exchange fluctuation account.
11. Intangible Assets
In accordance with AS-26 - expenses incurred on development/defining
the manufacturing process of any product to meet the required standards
is recognized as Intangible Asset and is amortized over a period of 10
years. The amount amortized during the year is Rs.59.67 Lakhs (Previous
Year Rs.59.67 Lakhs).
12. Managerial Remuneration:
Managerial remuneration of Rs.81.13 Lakhs (Previous Year Rs.69.74
Lacs), in the absence of profits under section 198 and 349 of the
Companies Act 1956, is based on legal opinion that limits prescribed in
Schedule XIII are on consolidated entitlements.
Mar 31, 2010
1. Basis of Preparation of Accounts
The accounts have been prepared in accordance with historical cost
convention, applicable accounting standards issued by the Institute of
Chartered Accountants of India and relevant provisions of the Companies
Act, 1956 following accrual method of accounting except for gratuity
and leave encashment which are being accounted for on payment basis.
2. Fixed Assets
Fixed assets are stated at cost. All direct expenses incurred for
bringing the assets to their present location are debited to the
respective assets. In regard to new projects expenditure incurred till
the date of commencement of commercial productions are charged to the
respective assets i.e. Building, Plant & Machinery proportionately.
Replacement of various parts of fixed assets are . also capitalized
considering the benefit of enduring nature.
3. Depreciation on Fixed Assets
Depreciation on fixed assets is provided on the straight-line method at
the rates and manner as specified in schedule XIV of the Companies Act,
1956. Depreciation in respect of stores capitalized in plant and
machinery is charged on the basis of estimated useful life of the
respective assets following written down method. In respect of Assets
held for disposal for discontinued operations, depreciation is provided
if the net realizable value is less than the carrying amount.
4. Investments
Long Term Investments are stated at cost, less provision if any for
diminution in the value of such investments, other than temporary.
5. Inventories
Inventories are valued at lower of cost or net realisable value except
in case of Casein which is valued at net realizable value determined on
the basis of prevalent international market prices. Cost is determined
on a weighted average basis. In case of finished goods, Fixed, Variable
and Administrative overheads are loaded on absorption costing basis.
Net realizable value is determined by taking average of market prices
of goods sold subsequent to the date of balance sheet.
6. Retirement Benefits (Revised)
Company follows AS-15 (revised) as detailed below:-
(1) Short-term benefits are recognized as expense at the undiscounted
amount in the Profit & Loss Account of the year in which the related
service is rendered.
(2) Leave encashments are not carried forward on year to year basis and
facility is granted to employees only in the year of determination of
service. Therefore no provision of leave encashment is made on year to
year basis.
(3) Company provides bonus to eligible employees as per Bonus Act, 1965
and accordingly liability is provided on actual cost at the end of the
year.
(4) The Company has an obligation towards gratuity a defined benefit
retirement plan covering all employees including the Directors in the
wholetime employment of company. The plan provides for a lumpsum
payment to employees at retirement/ determination of service on the
basis of 15 days terminal salary for each completed year of service
subject to maximum amount of Rs. 3.50 lakh. Company accounts for
gratuity in the books on actual payment basis. Vide Government of India
Notification published in the Official Gazette the limit of Rs. 3.50
lakhs has been increased to Rs. 10.00 Lakhs.
(5) Provident Fund:
The eligible employees of the company are entitled to receive benefits
under the Provident Fund, a defined contribution plan in which both
employees and the company make monthly contributions at a specified
percentage of the covered employees salary. The contributions as
specified under the law are paid to the respective Regional Provident
Fund Commissioner and the Central Provident Fund under the State
Pension Scheme.
7 Revenue Recognition
(i) Sales are recognized at the point of despatch to customers and are
net of sales return. Export sales are recognized on the basis of date
of bill of lading.
(ii) Export entitlements i.e. duty free scrips are accounted for on the
basis of export of goods on FOB value determined for custom purpose.
(iii) In respect of entitlements under clear development mechanism
(CDM) of Kyoto Protocol Income is accounted on the basis of estimated
valuation made by the Consultant appointed by the Company for the final
registration with UNFCCC. The expenditure incurred representing
payments made for Registration are charged over a period of 2 years
during which benefit is likely to accrue.
8. Deferred Tax
The tax expense consists of current tax and deferred tax. Provision for
the current tax is based on tax liability computed in accordance with
relevant provisions of the Income Tax Act. Provisions for deferred tax
are made for all timing differences arising between taxable incomes and
accounting income at Income Tax rates that have been enacted or
substantially enacted as of the balance sheet date. Deferred Tax
Assets are recognised and carried forward only if there is convincing
evidence that they will be realised in future against future taxable
income. The carrying amounts of Deferred Tax Asset are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date (also refer Note 17 of Schedule 18 B).
9. Borrowing Costs
Interest and other cost that are directly attributable to the
acquisition, construction or production of a qualifying asset
(including trial run) and for product development (under AS-26) within
the meaning of Accounting Standard-16 are capitalized as part of the
cost of that asset till the assets are ready for intended use or for
producing on commercial scale/sale. Other borrowing costs are
recognized as an expense in the period in which they are incurred.
10. Foreign Currency Transactions
Foreign Currency Transactions involving export sales are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on estimated rate on the date of despatch of goods. The difference
between the rates recorded and the rates on the date of actual
realization is transferred to difference in exchange fluctuation
account .At the year end, the balances are converted at the year end
rate and difference if any between the book balance and converted
amount are transferred to the exchange fluctuation account.
11. Intangible Assets
In accordance with AS-26 - expenses incurred on development/defining
the manufacturing process of any product to meet the required standards
is recognized as Intangible Asset and is amortized over a period of 10
years. The amount amortised during the year is Rs. 59.67 lakhs
(Previous Year Rs. 4.30 lakhs).
12. Managerial Remuneration:
Company has paid remuneration of Rs. 69.74 lakhs to its Managerial
Personnel. Company is of the view and has taken legal opinion that in
view of inadequacy of profits u/s 198 read with section 349 of
Companies Act, 1956 remuneration paid during the year is within the
prescribed limit of Section II of part II of Schedule XIII of Companies
Act, 1956 computed on yearly basis of combined entitlements of
Managerial Personnel during the year.
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