Click it and Unblock the Notifications
Accounting Policies of Modern Dairies Ltd. Company
Mar 31, 2025
2. SIGNIFICANT ACCOUNTING POLICIES2.1) Basis of preparation of Financial Statements
i) Statement of Compliance
The Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013 and other accounting pronouncements of The Institute of Chartered Accountants of India.
ii) Basis of Preparation
Effective from 1st April 2017, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind-AS 101, âFirst Time Adoption of Indian Accounting Standards, with 1st April 2016 as the transition date. The transition was carried out from Indian Accounting principles generally accepted in India as prescribed under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
iii) Classification of Assets and liabilities as Current and Non-Current
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule III to the Companies Act, 2013.
Based on the nature of services and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of its assets and liabilities.
The preparation of financial statements, in conformity with Ind-AS require estimates and assumptions to be made by management, that may affect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Changes in the estimates are reflected in the financial statements in the period changes are made, and if material their effects are disclosed in the notes to the financial statements.
2.3) Property, Plant and Equipment and Depreciation
Under the Indian GAAP, Property, plant and equipment were carried in the balance sheet on historical cost. The company has elected to regard the carrying values as deemed cost as per Para D7AA of Ind-AS 101 as on transition date i.e.1st April 2016.
All tangible fixed assets are stated at cost less accumulated depreciation. Cost includes freight, duties, taxes and other expenses directly incidental to acquisition, bringing the asset to the location and installation including site restoration up to the time when the asset is ready for intended use. Such Costs also include Borrowing Cost if the recognition criteria are met. When a major inspection/repair occurs, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
As per the provision of IND AS-16, major spare parts, stand-by equipment and servicing equipment qualify as property, plant and equipment when an entity expects to use them during more than one period and the company has elected to do the same.
Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule II of the Companies Act 2013.
Assets held for Disposal
Assets held for disposal are valued at lower of cost or Net realizable value in accordance with IND AS-105.
2.4) Intangibles and Amortization
Intangible assets are recognized if it is probable that the future economic benefits attributable to those assets will flow to the enterprise. Intangibles assets are amortized on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.
(a) nventories are valued at the lower of cost and net realizable value
i) Raw Materials and Packing Material: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on FIFO Basis (net of GST).
ii) Work in Progress: Cost for this purpose includes direct materials, Labour and other direct cost and a proportion of manufacturing overhead and all appropriate allocable overheads.
iii) Finished Goods: Cost for this purpose includes direct materials, labour and other direct cost and a proportion of manufacturing overhead and all appropriate allocable overheads (net of GST). Cost is determined on monthly average cost basis.
iv) Stock of Stores, spares & Fuel are valued at cost and cost is computed on FIFO Basis (net of GST).
(b) Disposable and Used Stocks and Carbon Credit Units are valued at net realizable value.
(c) Stocks in working condition are valued at cost or realizable value whichever is less
2.6) Foreign Exchange Transaction
The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.
Forward Exchange contracts not intended for trading or speculation purpose
In case of forward exchange contract, the premium or discount arising at the inception of such contract is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e.
Difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the year.
(a) Short Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the financial reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as provision for employee benefit under short term provisions in the balance sheet.
(b) Post Employment obligations
The company operates the following post-employment schemes:
Defined benefit plan such as gratuity, provident fund
(c) Defined benefit obligations
The defined benefit obligations (Other than Provident Fund) are calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of related obligation.
The liability or asset recognized in the balance sheet in respect defined benefit obligations (except provident fund) is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets, if any.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized directly in other comprehensive income.
Changes in the present value of the defined benefit obligations resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Retirement benefits in the form of provident fund and family pension fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to statement of profit and loss of the year.
(a) Classification
The company classifies its financial assets in the following measurement categories:
⢠Those to be measured subsequently at fair value (either through other comprehensive income, or through profit & loss) and
⢠Those measured at amortized cost
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses arising from fair valuation will either be recorded in profit and loss or other comprehensive income. For investments in equity instruments, this will depend on whether the company has made any irrevocable election at the time of initial recognition to account for the equity investment for fair value through other comprehensive income.
(b) Measurement
The company measures a financial asset at its fair value and in the case of financial assets not at fair value through profit and loss, at fair value including transaction cost that are directly attributable to the acquisition of the financial asset. Transaction cost of financial asset carried at fair value through profit and loss are expensed in profit or loss.
To capitalize the borrowing costs that is directly attributable to the acquisition or Construction items of property, plant and equipment which take substantial period of time to get ready for their intended use. Other borrowing Costs are recognized as an expense in the year in which they are incurred.
a) Recognition and Initial measurement
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
b) Classification and subsequent measurement of financial assets
i) Debt Instruments
For the purpose of subsequent measurement, financial assets in the nature of debt instruments are classified as follows:
Amortized cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortized cost less impairments, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognized in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on de-recognition, cumulative gain or loss previously recognized in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognized in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Changes in fair value and income on these assets are recognized in the statement of profit and loss.
ii) Equity Instruments
The Company has made investment in equity instruments that are initially measured at cost. These investments are strategic in nature and held on a long-term basis.
c) Classification and subsequent measurement of financial liabilities
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortized cost - Financial liabilities are classified as financial liabilities at amortized cost by default. Interest expense calculated using EIR method is recognized in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognized in the statement of profit and loss.
d) De-recognition of financial assets and financial liabilities
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership. A financial liability is derecognized when the obligation under the liability is discharged or expires.
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of GST. Revenue is recognized net of returns, trade allowances, rebates, value added taxes and net of amount collected on behalf of the third parties.
Revenue from goods comprise of value of sales of products (net of returns) and cash and trade discounts. Sales are recognized with the transfer of significant risk and rewards of ownership of the goods, with the company losing effective control and the recovery of the consideration is probable.
Revenue from Services
Revenue from services are recognized in proportion to the stage of completion of transaction at the end of reporting period, and cost incurred in the transaction including same to complete the transaction and revenue (representing economic benefit associated with the transaction) can be measured reliably.
Interest
Interest income is recognized on a time proportion basis (accrual basis) taking into account the amount outstanding and the rate applicable.
Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act 1961. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.
2.13) Provisions for Contingent liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way notes.
Basic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by taking into the account the aggregate of the weighted average number of equity shares outstanding during the period and weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity shares into equity shares
Cash and cash equivalents for the purpose of Statement of Cash Flows include bank balances, cheques and drafts on hand, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments that are readily convertible into cash. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of Statement of Cash flows. The cash flow statement has been in accordance with the Ind AS-7 on âCash Flow Statementsâ issued by the Companies (Accounting Standard) Rules, 2013.
2.16) Accounting policies not specifically referred to above are consistent with Indian Accounting Standards.
Mar 31, 2024
1. CORPORATE INFORMATION
Modern Dairies Limited (the Company) is a public listed company incorporated under the provisions of the Companies Act 1956 on 20th April 1992. The Company is engaged in manufacturing of Milk products.
2. SIGNIFICANT ACCOUNTING POLICIES2.1) Basis of preparation of Financial Statements
i) Statement of Compliance
The Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013 and other accounting pronouncements of The Institute of Chartered Accountants of India.
ii) Basis of Preparation
Effective from 1st April 2017, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind-AS 101, âFirst Time Adoption of Indian Accounting Standards, with 1st April 2016 as the transition date. The transition was carried out from Indian Accounting principles generally accepted in India as prescribed under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
iii) Classification of Assets and liabilities as Current and Non-Current
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule III to the Companies Act, 2013.
Based on the nature of services and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of its assets and liabilities.
The Company''s various credit facilities declared as NPA for which One-Time Settlement is under implementation and as such the amounts of such credit facilities have been reclassified into current liabilities.
The preparation of financial statements, in conformity with Ind-AS require estimates and assumptions to be made by management, that may affect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Changes in the estimates are reflected in the financial statements in the period changes are made, and if material their effects are disclosed in the notes to the financial statements.
2.3) Property, Plant and Equipment and Depreciation
Under the Indian GAAP, Property, plant and equipment were carried in the balance sheet on historical cost. The company has elected to regard the carrying values as deemed cost as per Para D7AA of Ind-AS 101 as on transition date i.e.1st April 2016.
All tangible fixed assets are stated at cost less accumulated depreciation. Cost includes freight, duties, taxes and other expenses directly incidental to acquisition, bringing the asset to the location and installation including site restoration up to the time when the asset is ready for intended use. Such Costs also include Borrowing Cost if the recognition criteria are met. When a major inspection/repair occurs, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
As per the provision of IND AS-16, major spare parts, stand-by equipment and servicing equipment qualify as property, plant and equipment when an entity expects to use them during more than one period and the company has elected to do the same.
Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule II of the Companies Act 2013.
Assets held for Disposal
Assets held for disposal are valued at lower of cost or Net realizable value in accordance with IND AS-105.
2.4) Intangibles and Amortization
Intangible assets are recognized if it is probable that the future economic benefits attributable to those assets will flow to the enterprise. Intangibles assets are amortized on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.
(a) Inventories are valued at the lower of cost and net realizable value
i) Raw Materials and Packing Material: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on FIFO Basis (net of GST).
ii) Work in Progress: Cost for this purpose includes direct materials, Labour and other direct cost and a proportion of manufacturing overhead and all appropriate allocable overheads.
iii) Finished Goods: Cost for this purpose includes direct materials, labour and other direct cost and a proportion of manufacturing overhead and all appropriate allocable overheads (net of GST). Cost is determined on monthly average cost basis.
iv) Stock of Stores, spares & Fuel are valued at cost and cost is computed on FIFO Basis (net of GST).
(b) Disposable and Used Stocks and Carbon Credit Units are valued at net realizable value.
(c) Stocks in working condition are valued at depreciated value or realizable value whichever is less
2.6) Foreign Exchange Transaction
The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.
Forward Exchange contracts not intended for trading or speculation purpose
In case of forward exchange contract, the premium or discount arising at the inception of such contract is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e.
Difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the year.
(a) Short Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the financial reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as provision for employee benefit under short term provisions in the balance sheet.
(b) Post Employment obligations
The company operates the following post-employment schemes:
Defined benefit plan such as gratuity, provident fund
(c) Defined benefit obligations
The defined benefit obligations (Other than Provident Fund) are calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of related obligation.
The liability or asset recognized in the balance sheet in respect defined benefit obligations (except provident fund) is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets, if any.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized directly in other comprehensive income.
Changes in the present value of the defined benefit obligations resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Retirement benefits in the form of provident fund and family pension fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to statement of profit and loss of the year.
(a) Classification
The company classifies its financial assets in the following measurement categories:
⢠Those to be measured subsequently at fair value (either through other comprehensive income, or through profit & loss) and
⢠Those measured at amortized cost
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses arising from fair valuation will either be recorded in profit and loss or other comprehensive income. For investments in equity instruments, this will depend on whether the company has made any irrevocable election at the time of initial recognition to account for the equity investment for fair value through other comprehensive income.
(b) Measurement
The company measures a financial asset at its fair value and in the case of financial assets not at fair value through profit and loss, at fair value including transaction cost that are directly attributable to the acquisition of the financial asset. Transaction cost of financial asset carried at fair value through profit and loss are expensed in profit or loss.
To capitalize the borrowing costs that is directly attributable to the acquisition or Construction items of property, plant and equipment which take substantial period of time to get ready for their intended use. Other borrowing Costs are recognized as an expense in the year in which they are incurred, except as follows:
a) Recognition and Initial measurement
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
b) Classification and subsequent measurement of financial assets
i) Debt Instruments
For the purpose of subsequent measurement, financial assets in the nature of debt instruments are classified as follows:
Amortized cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortized cost less impairments, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognized in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on de-recognition, cumulative gain or loss previously recognized in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognized in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Changes in fair value and income on these assets are recognized in the statement of profit and loss.
ii) Equity Instruments
The Company has made investment in equity instruments that are initially measured at cost. These investments are strategic in nature and held on a long-term basis.
c) Classification and subsequent measurement of financial liabilities
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortized cost - Financial liabilities are classified as financial liabilities at amortized cost by default. Interest expense calculated using EIR method is recognized in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognized in the statement of profit and loss.
d) De-recognition of financial assets and financial liabilities
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership. A financial liability is derecognized when the obligation under the liability is discharged or expires.
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of GST. Revenue is recognized net of returns, trade allowances, rebates, value added taxes and net of amount collected on behalf of the third parties.
Revenue from goods comprise of value of sales of products (net of returns) and cash and trade discounts. Sales are recognized with the transfer of significant risk and rewards of ownership of the goods, with the company losing effective control and the recovery of the consideration is probable.
Revenue from Services
Revenue from services are recognized in proportion to the stage of completion of transaction at the end of reporting period, and cost incurred in the transaction including same to complete the transaction and revenue (representing economic benefit associated with the transaction) can be measured reliably.
Interest
Interest income is recognized on a time proportion basis (accrual basis) taking into account the amount outstanding and the rate applicable.
Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act 1961. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.
2.13) Provisions for Contingent liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way notes.
Basic earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by taking into the account the aggregate of the weighted average number of equity shares outstanding during the period and weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity shares into equity shares
Cash and cash equivalents for the purpose of Statement of Cash Flows include bank balances, cheques and drafts on hand, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments that are readily convertible into cash. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of Statement of Cash flows. The cash flow statement has been in accordance with the Ind AS-7 on âCash Flow Statementsâ issued by the Companies (Accounting Standard) Rules, 2013.
2.16) During the year ended 31 March, 2024, the Company reclassified short term borrowings as Long Term Borrowings.
2.17) Accounting policies not specifically referred to above are consistent with Indian Accounting Standards.
Mar 31, 2023
2. SIGNIFICANT ACCOUNTING POLICIES
2.1) Basis of preparation of Financial Statements
i) Statement of Compliance
The Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013 and other accounting pronouncements of The Institute of Chartered Accountants of India.
ii) Basis of Preparation
Effective from 1st April 2017, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind-AS 101, âFirst Time Adoption of Indian Accounting Standards, with 1st April 2016 as the transition date. The transition was carried out from Indian Accounting principles generally accepted in India as prescribed under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
iii) Classification of Assets and liabilities as Current and Non-Current
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Revised Schedule III to the Companies Act, 2013.
Based on the nature of services and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of its assets and liabilities.
The Company''s various credit facilities have been declared as NPA for which One-Time Settlement / Restructuring scheme is under implementation and as such the amounts of such credit facilities have been reclassified into current liabilities.
2.2) Use of Estimates
The preparation of financial statements, in conformity with Ind-AS require estimates and assumptions to be made by management, that may affect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Changes in the estimates are reflected in the financial statements in the period changes are made, and if material their effects are disclosed in the notes to the financial statements.
2.3) Property, Plant and Equipment and Depreciation
Under the Indian GAAP, Property, plant and equipment were carried in the balance sheet on historical cost. The company has elected to regard the carrying values as deemed cost as per Para D7AA of Ind-AS 101 as on transition date i.e.1st April 2016.
All tangible fixed assets are stated at cost less accumulated depreciation. Cost includes freight, duties, taxes and other expenses directly incidental to acquisition, bringing the asset to the location and installation including site restoration up to the time when the asset is ready for intended use. Such Costs also include Borrowing Cost if the recognition criteria are met. When a major inspection/repair occurs, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
As per the provision of IND AS-16, major spare parts, stand-by equipment and servicing equipment qualify as property, plant and equipment when an entity expects to use them during more than one period and the company has elected to do the same.
Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule II of the Companies Act 2013.
Assets held for Disposal
Assets held for disposal are valued at lower of cost or Net realizable value in accordance with IND AS-105.
2.4) Intangibles and Amortization
Intangible assets are recognized if it is probable that the future economic benefits attributable to those assets will flow to the enterprise. Intangibles assets are amortized on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.
2.5) Inventories
The cost in respect of various items of inventory is computed as under:
i) In case of Raw-material on FIFO Basis (net of GST).
ii) I n case of Work in Progress - Raw Material are valued at monthly average cost basis. Cost for this purpose includes direct cost and all appropriate allocable overheads.
iii) I n case of Finished Goods - Finished goods are valued at Cost or Net realizable value whichever is lower. Cost for this purpose includes direct cost on monthly average cost basis, all appropriate allocable overheads (net of GsT)
iv) Stock of Stores, spares & Fuel are valued at cost or net realizable value, whichever is lower and cost is computed on FIFO Basis (net of GST). Stocks in working condition are valued at depreciated value or realizable value whichever is less. Disposable and Used Stocks is valued at net realizable value.
2.6) Foreign Exchange Transaction
The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.
Forward Exchange contracts not intended for trading or speculation purpose
In case of forward exchange contract, the premium or discount arising at the inception of such contract is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e.
Difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the year.
2.7) Employees Benefits
(a) Short Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the financial reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as provision for employee benefit under short term provisions in the balance sheet.
(b) Post Employment obligations
The company operates the following post-employment schemes:
Defined benefit plan such as gratuity, provident fund
(c) Defined benefit obligations
The defined benefit obligations (Other than Provident Fund) are calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of related obligation.
The liability or asset recognized in the balance sheet in respect defined benefit obligations (except provident fund) is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets, if any.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized directly in other comprehensive income.
Changes in the present value of the defined benefit obligations resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cos.
(d) Provident Fund
Retirement benefits in the form of provident fund and family pension fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to statement of profit and loss of the year.
(e) Bonus Payable
The following bonus of previous financial years is payable; however, management of company is committed to pay the bonus dues in coming financial year.
Details as follows:
2.8) Investments
(a) Classification
The company classifies its financial assets in the following measurement categories:
⢠Those to be measured subsequently at fair value (either through other comprehensive income, or through profit & loss) and
⢠Those measured at amortized cost
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses arising from fair valuation will either be recorded in profit and loss or other comprehensive income. For investments in equity instruments, this will depend on whether the company has made any irrevocable election at the time of initial recognition to account for the equity investment for fair value through other comprehensive income.
(b) Measurement
The company measures a financial asset at its fair value and in the case of financial assets not at fair value through profit and loss, at fair value including transaction cost that are directly attributable to the acquisition of the financial asset. Transaction cost of financial asset carried at fair value through profit and loss are expensed in profit or loss.
2.9) Borrowing Costs
To capitalize the borrowing costs that is directly attributable to the acquisition or Construction items of property, plant and equipment which take substantial period of time to get ready for their intended use. Other borrowing Costs are recognized as an expense in the year in which they are incurred, except as follows:
a) Interest provisioning on various facilities from lenders
The Company has settled all the dues of the lenders namely PNB, Edelweiss ARC Limited (Earlier State Bank of India) by the way of OTS & restructuring. The OTS & restructuring scheme is under implementation and interest due there on has been accounted for.
Since, the account with various banks have turned NPA in the previous years, the company has not provided interest on the credit facilities subsequent to the accounts having been declared NPA. In case the OTS/ restructuring scheme fails, the Company will have to provide for Interest from the date of accounts becoming non performing asset. Such interest amounts for the year ended 31st March, 23, Rs. 42.99 crores. This will effect the stated current liabilities & profits for the current year 3151 March, 23, to that extent.
2.10) Financial Instruments
a) Recognition and Initial measurement
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities, other than those carried at fair value through profit or loss (FVTPL), are added to the fair value on initial recognition. Transaction costs in relation to financial assets and financial liabilities which are carried at fair value through profit or loss (FVTPL), are charged to the statement of profit and loss.
b) Classification and subsequent measurement of financial assets
i) Debt Instruments
For the purpose of subsequent measurement, financial assets in the nature of debt instruments are classified as follows:
Amortized cost - Financial assets that are held within a business model whose objective is to hold the asset in order to collect contractual cash flows that are solely payments of principal and interest are subsequently measured at amortized cost less impairments, if any. Interest income calculated using effective interest rate (EIR) method and impairment loss, if any are recognized in the statement of profit and loss.
Fair value through other comprehensive income (FVOCI) - Financial assets that are held within a business model whose objective is achieved by both holding the asset in order to collect contractual cash flows that are solely payments of principal and interest and by selling the financial assets, are subsequently measured at fair value through other comprehensive income. Changes in fair value are recognized in the other comprehensive income (OCI) and on de-recognition, cumulative gain or loss previously recognized in OCI is reclassified to the statement of profit and loss. Interest income calculated using EIR method and impairment loss, if any are recognized in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss. Changes in fair value and income on these assets are recognized in the statement of profit and loss.
ii) Equity Instruments
The Company has made investment in equity instruments that are initially measured at fair value. These investments are strategic in nature and held on a long-term basis. Accordingly, the company has elected irrevocable option to measure such investments at FVOCI. The Company makes such election on an instrument-by-instrument basis. Pursuant to such irrevocable option, changes in fair value are recognized in the OCI and are subsequently not reclassified to the statement of profit and loss.
c) Classification and subsequent measurement of financial liabilities
For the purpose of subsequent measurement, financial liabilities are classified as follows:
Amortized cost - Financial liabilities are classified as financial liabilities at amortized cost by default. Interest expense calculated using EIR method is recognized in the statement of profit and loss.
Fair value through profit or loss (FVTPL) - Financial liabilities are classified as FVTPL if it is held for trading, or is designated as such on initial recognition. Changes in fair value and interest expense on these liabilities are recognized in the statement of profit and loss.
d) De-recognition of financial assets and financial liabilities
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows including risks and rewards of ownership. A financial liability is derecognized when the obligation under the liability is discharged or expires.
2.11) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of GST. Revenue is recognized net of returns, trade allowances, rebates, value added taxes and net of amount collected on behalf of the third parties.
Revenue from Goods
Revenue from goods comprise of value of sales of products (net of returns) and cash and trade discounts. Sales are recognized with the transfer of significant risk and rewards of ownership of the goods, with the company losing effective control and the recovery of the consideration is probable.
Revenue from Services
Revenue from services are recognized in proportion to the stage of completion of transaction at the end of reporting period, and cost incurred in the transaction including same to complete the transaction and revenue (representing economic benefit associated with the transaction) can be measured reliably.
Interest
Interest income is recognized on a time proportion basis (accrual basis) taking into account the amount outstanding and the rate applicable.
Interest on electricity has been provisionally booked as there is no reasonable certainty of when the interest will be received.
2.12) Taxes on Income
Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act 1961. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.
As per books, profit for the year ended 31.03.2023 is Rs.1215.60 lacs. However, while calculating the Profit, interest amounting to Rs.4299.13 Lacs on borrowings was not provided in the books (Refer to point No. 2.9(b) of notes to accounts for further details). Therefore, if interest on the above is provided in statement of profit and loss, the loss comes to Rs. 3083.53 lacs. Hence, deferred tax asset has not been recognized due to absence of virtual certainty supported by convincing evidence to the effect that sufficient future taxable income would be available against which deferred tax assets can be realized.
Mar 31, 2015
BACKGROUND AND NATURE OF OPERATIONS
Modern Dairies Limited ('the Company') was incorporated in 1992 and is
primarily engaged in business of manufacturing/ processing of milk and
milk products like milk powders, Cheese, Butter, Pure ghee and other
milk based products like Casein, Whey protein concentrate and Lactose,
etc.
(i) Basis of preparation
These financial statements have been prepared under the historical cost
convention on a going concern basis, on the accrual basis of accounting
in accordance with the Generally Accepted Accounting Principles in
India (Indian GAAP). Indian GAAP comprises mandatory accounting
standards as specified under Section 133 of the Companies Act, 2013
('the Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014
(as amended) and other accounting pronouncements of The Institute of
Chartered Accountants of India.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Revised Schedule III to the Companies Act,
2013. Based on the nature of services and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as
twelve months for the purpose of current/ non-current classification of
its assets and liabilities.
(ii) Use of estimates
In preparing the financial statements in conformity with accounting
principles generally accepted in India, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. Any revisions to accounting estimates are recognised
in the current and future periods.
(iii) Fixed assets
Tangible assets
Fixed assets are stated at historic cost less accumulated depreciation
and amortization and impairment losses (if any).
Cost comprises the purchase price and any attributable costs of
bringing the assets to their working condition for their intended use.
Borrowing costs directly attributable to acquisition or construction of
fxed assets, which necessarily take a substantial period of time to get
ready for their intended use, are capitalized.
Intangible assets
Software which is not an integral part of the related hardware is
classifed as an intangible asset.
(iv) Depreciation and amortization
Depreciation on fixed assets for the year ended 31st March, 2014 is
provided on straight line method as per the useful life of assets
estimated by the management, which correspond to the rates prescribed
under Schedule xIV of the Companies Act, 1956.
Pursuant to the notification in Part II of Schedule II to the Companies
Act, 2013, effective from 1st April, 2014, the management has
reassessed and changed, wherever necessary the useful lives to compute
depreciation, to conform to the requirements of the Companies Act,
2013. Depreciation on fixed assets for year ended 31st March, 2015 is
provided on straight line method based on life prescribed as per
Schedule II of the Companies Act, 2013. Revised useful lives of assets
are as below:
(v) Investments
- Investments that are readily realizable and intended to be held for
not more than a year are classified as current investments. All other
investments are classified as long term investments.
Current investments are carried at lower of cost and Fair value
determined on an individual investment basis. Long- term investments
are carried at cost; however, provision for diminution in value is made
to record other than temporary diminution in the value of such
investments. Profit/Loss on sale of investments is computed with
reference to their average cost of investments.
(vi) Inventories
Inventories are valued as follows:
a) Raw materials, packing materials, store and spare parts
Lower of cost and net realizable value, Cost includes purchase price,
taxes (those subsequently recoverable by the Company from the concerned
revenue authorities), freight inwards and other expenditure incurred in
bringing such inventories to their present location and condition. Cost
is determined on first -in first-out basis. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost.
b) Work-in Progress and Finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost is determined on monthly weighted average
basis.
c) By-Products
At net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated costs of
completion and to make the sale.
(vii) Revenue recognition
Revenue is recognised to the extent that it can be reliably measured
and is probable that the economic benefits will flow to the Company.
Sale of goods
Revenue from sale of goods is recognised when the significant risks and
rewards of ownership of the goods are transferred to the customer. It
includes excise duty wherever applicable but excludes value added tax/
sales tax and is net of sales returns. Excise duty shown as deduction
from revenue is the amount that is included in the amount of revenue
and not the entire amount of liability that arose during the year.
Interest income
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable rate of interest.
Dividends
Dividend is recognised if the right to dividend is established by the
balance sheet date.
Export benefit/incentives
Export benefits entitlements under the 'Duty Entitlement Pass Book'
Scheme are recognised in the statement of Profit and loss when the right
to receive credit as per the terms of the scheme is established in
respect of the exports made.
(viii) Foreign exchange transactions
Investments in foreign entities are recorded at the exchange rate
prevailing on the date of making the investment. Transactions in
foreign currencies are recorded at the rates prevailing on the date of
the transaction and monetary items denominated in foreign currency are
restated at the rate prevailing on the balance sheet date.
Differences arising on foreign currency translations of transactions
settled during the year are recognised in the statement of Profit and
loss.
Forward exchange contracts not covered under Accounting Standard 11
'Effect of change in Foreign Exchange Rates', that are entered to hedge
the foreign currency risk of highly probable forecast transactions and
unrecognized firm commitments are marked to market at the balance sheet
date and exchange loss is recognised in the statement of Profit and loss
immediately. Any gain is ignored and not recognised in the financial
statements, in accordance with the principles of prudence enunciated in
Accounting Standard 1- Disclosure of Accounting Policies.
- The premium or discount arising at the inception of the forward
contracts other than those entered into to hedge the foreign currency
risk of firm commitments or highly probable forecast transactions is
amortised as expense or income over the life of the contract.
Any Profit or loss arising on cancellation or renewal of forward
exchange contracts is recognised as income or expense for the year.
(ix) Employee benefits
Contribution to Provident Fund
The Company makes contributions to statutory provident fund in
accordance with Employees Provident Fund and Miscellaneous Provisions
Act, 1952. Provident Fund is a defined contribution scheme and the
contributions are charged to the statement of Profit and loss of the
year when the contributions to the respective funds are due. There are
no other obligations other than the contribution payable to the Fund.
Gratuity
Gratuity liability are defined benefit obligations made at the end of
each financial year and are provided for on the basis of an actuarial
valuation on projected unit credit method made at the end of each
financial year.
Actuarial gains/ losses are immediately taken to the statement of Profit
and loss and are not deferred.
Compensated absences
The employees of the Company are entitled to compensated absences which
are non-accumulating in nature. Expense on non-accumulating
compensated absences is recognized in the period in which the absence
is occurring.
(x) Taxes on income
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred income tax
reflect the impact of current year timing differences between the
taxable income and accounting income for the year and reversal of
timing differences of earlier years.
Deferred tax is measured based on the tax rates and tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets
are recognized only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised in situations where the
Company has unabsorbed depreciation or carry forward tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that they can be realised against
future taxable Profits.
At each balance sheet date, the Company re-assesses unorganized
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income be available
against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such right-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
suffcient future taxable income will be available.
Minimum Alternate Tax ('MAT') credit is recognised as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India ('ICAI'), the said
asset is created by way of a credit to the statement of Profit and loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that Company will pay normal income-tax during the
specified period.
(xi) Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of the obligation can be
made. A disclosure is made for a contingent liability when there is a
i) Possible obligation, the existence of which will be confirmed by the
occurrence/non-occurrence of one or more uncertain events, not fully
with in the control of the Company; ii) Present obligation, where it is
not probable that an outflow of resources embodying economic benefits
will be required to settle the obligation; (iii) Present obligation,
where a reliable estimate cannot be made.
(xii) Earnings per share
Basic earnings per share are calculated by dividing the net Profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and at attributable taxes) by the
weighted average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they were entitled to participate in dividends
relative to a fully paid equity share during the reporting period. The
weighted average numbers of equity shares outstanding during the period
are adjusted for events of bonus issue and share split.
For the purpose of calculating diluted earnings per share, the net
Profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(xiii) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the statement of Profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject to a maximum of
depreciated historical cost.
(xiv) Government grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants related to revenue are recognised on systematic basis
in the statement of Profit and loss over the periods necessary to match
them with the related cost which they are intended to compensate. Where
the grant or subsidy relates to an asset, its value is deducted in
arriving at the carrying amount of the related asset. Government
grants of the nature of promoters' contribution are credited to capital
reserve and treated as apart of shareholders' funds.
(xv) Cash and cash equivalents
Cash and cash equivalents comprise cash and deposit with banks. The
Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are
readily convertible to known amounts of cash to be cash equivalents.
Note:
i) Excise duty: During 2005-06, the Company had availed CENVAT credit
of M 77.21 lacs on certain steel and other similar items (i.e.
'supporting goods') as inputs used in fabrication of storage tanks and
other structures. As per the Excise Authorities, this credit of M 77.21
lacs pertains to inputs used in fabrication of milk storage tanks and
other supporting structures of storage tanks and has therefore denied
all the aforesaid credit on the ground that the inputs and goods
mentioned above neither qualify as capital goods nor inputs as per
CENVAT Credit Rules, 2004 for manufacture of the final products viz.
Casein and Lactose. The Company has deposited demand of M 77.21 lacs
together with interest thereon of M 5.19 lacs under protest. The case
is pending in CESTAT and is awaited for regular hearing.
Further during the year 2007-08 to 2009-10 the Company also availed
CENVAT credit of M 78.30 lacs on certain steel items & other items as
input used in fabrication of storage tanks. The excise authority
(Panchkula) issued show cause notice for denial of the said CENVAT
credit. The Company fled an appeal before Commissioner and commissioner
confirmed a demand of CEVAT Credit amounting to M 78.30 lacs along with
a penalty of amount equal to the Cenvat Credit, interest of M 4.57 lacs
and M 17.68 lacs of CENVAT Credit wrongly taken and reversed. The
Company had fled appeal before CESTAT and hearing on stay application
was fixed on 14th October, 2012 which was adjourned to 11th December,
2012 and thereafter on the request of department representative the
same was adjourned to 12th February, 2013. On this date, CESTAT ordered
to deposit M 15 lacs as redeposit within 12 weeks which was deposited
by Company on 15th May, 2013.
Based upon the legal advise obtained by the Company, the management
believes that the Company has reasonably good chances of winning the
case and hence currently no provision has been recorded.
ii) Custom Duty: During 2011-12, the Company had exported 17.070 MT of
Cheese Curd to a customer in Saudi Arabia and out of total 17.070 MT
Cheese Curd of 14.218 MT was rejected by customer due to some
functionality issues in stretching. The Company re-imported the goods.
The Additional Commissioner of Customs (Imports) vide its order dated
7th May, 2012 confiscated the goods and imposed a penalty of M 3.6 lacs
and redemption fine of M 7 lacs stating that re-imported goods had
violated the prescribed condition under the Food Safety and Standards
Act, 2006 (FSA) and hence were liable for confiscation. The Company
deposited penalty of M 3.6 lacs and redemption fine of M 7 lacs on and
got the goods released. The Company filled an appeal before Commissioner
of Customs (Appeals), Mumbai against the order of Additional
Commissioner of Customs (Imports) imposing penalty and fne stating that
re-import was not against the provisions of FSA Act. The Commissioner
of Customs (Appeals), Mumbai upheld the order of Additional
Commissioner of Customs (Imports) and rejected the claim of Company
vide order dated 27th June, 2013. The Company aggreived by the order of
Commissioner of Customs (Appeals), Mumbai has preferred an appeal
before CESTAT, Mumbai on 10th October, 2013. The case is pending in
CESTAT and is awaited for regular hearing.
(iii) Entry tax: Local Area Development Tax ('LADT') was imposed in the
state of Haryana with effect from 1st April, 2000. In 2007-08, the LADT
was quashed and declared ultra-vires by the Hon'ble High Court of
Punjab and Haryana in its order dated 1st April, 2008. The State
Government replaced the LADT with Entry Tax and it was also declared
ultra-vires by the Hon'ble High Court of Punjab and Haryana. The State
Government fled an appeal in the Hon'ble Supreme Court. The Hon'ble
Supreme Court passed an order dated 30th October, 2009, directing all
assesses to file all the returns and staying recovery of tax till final
order. The final order is still awaited.
(iv) Income tax: During the year ended 31st March, 2012, the Income Tax
Department carried out assessment for assessment years 2006-07, 2008-09
and 2009-10 and issued a notice of demand u/s 156 of the Income Tax
Act, 1961 for M 6.06 lacs, M 0.40 lacs and M 4.95 lacs respectively.
For assessment years 2006-07 and 2008-09 Company has preferred an
appeal with Income Tax Appellate Tribunal (ITAT), New Delhi against the
order of Commissioner of Income Tax (Appeals). Whereas for assessment
year 2009-10 the Company's appeal is pending with Commissioner of Income
Tax (CIT), Gurgaon.
The provisions of 'The Haryana Murrah Buffalo and Other Milch Animal
Breed (Presentation and Development of Animal Husbandry and Dairy
Development Sector) Act, 2001 ('Act')', requires every milk processing
company to pay milk cess not exceeding fifteen paisa per liter on
registered capacity of a milk plant under Milk and Milk Product Order,
1992. Accordingly Haryana State Government, vide its notification no.
6388-AH-4-2001/16142 dated 9th September, 2001, imposed a milk-cess of
ten paisa per liter on the registered capacity of plants. In 2001, the
Company fled a writ petition before the Hon'ble High Court of Punjab
and Haryana challenging the imposition of such cess as against the
Constitution of India. The Hon'ble High Court of Punjab and Haryana
issued a stay order dated 9th July, 2004 on such imposition and
directed the Company to continue to pay 1/3rd of the total milk-cess
amount to the State Government on registered capacity till the final
outcome of the case. Till 2004-05, the Company had provided milk-cess
amounting to M 353.75 lacs in the books of account. In 2004, a similar
cess was levied in the state of Punjab by the Government of Punjab
under the Punjab Dairy Development Board Ordinance, 2000, and was
upheld unconstitutional by the Hon'ble Supreme Court. Based upon this
order of the Hon'ble Supreme Court, the stay order from the Hon'ble
High Court of Punjab and Haryana and as per the legal advice obtained
by the Company at that point of time, the Company discontinued the
provision of milk-cess in the books of account as it was believed that
the chances of cess being levied on the Company for the period after
the year 2004-2005 of M 421.88 lacs would be remote and hence no
provision against this was considered necessary. On 28th May, 2010 the
Hon'ble High Court of Punjab and Haryana dismissed the Company's writ
petition and upheld the levy of cess by State Government on milk
plants. On 18th August, 2010 the Company fled a review application with
the Hon'ble High Court. Subsequently, the Company's review application
with Hon'ble High Court of Punjab and Haryana has been dismissed. On
18th October, 2010 the Company also fled a special leave petition
before the Hon'ble Supreme Court challenging the impugned judgment. The
matter was listed before the Hon'ble Supreme Court on 5th August, 2011.
The Hon'ble Supreme Court has issued a notice to the Govt. of Haryana
on Special Leave Petition fled by the Company as well as on the
application for interim stay. On 20th April, 2012, the Government of
Haryana fled its reply and The Hon'ble Supreme Court has ordered the
case to be put before the Hon'ble Bench. The Company had also received
a notice dated 1st April, 2011 from Semen Bank Officer, Haryana
Livestock Development Board, Karnal demanding the payment of M 21,25.75
lacs as arrears of Cess and M 1,28.72 lacs towards interest on the full
unpaid amount for the period 1st January, 2011 to 31st March, 2011.
However, The Hon'ble Supreme Court in its order dated 7th September,
2012 granted an interim stay on impugned judgment passed by The Hon'ble
High Court, subject to petitioners depositing 50% of the cess levied
and demanded by the State Government for expediting the hearing in this
case. Based on the order of The Hon'ble Supreme Court, the Company has
deposited 50% of milk cess liability amounting to M 5,91 lacs till 7th
September, 2012 (date of the order) after which there has been no
hearing held in the Supreme Court till date."
c) Interest and claims by customers may be payble as and when the
outcome of the related matters are finally determined and hence not been
included above. Management based on legal advice and historical trends
believes that no material liability will devolve on the company in
respect of these matters.
d) Particulars of unhedged foreign currency exposure as at the
reporting date: Unhedged foreign currency exposure as at year end
Mar 31, 2010
A) Basis of preparation
The financial statements of Modern Dairies Limited ("the Company") have
been prepared to comply with the Accounting Standards referred to in
the Companies (Accounting Standards) Rule 2006 issued by the Central
Government in exercise of the power conferred under sub-section (I) (a)
of Section 642 and the relevant provisions of the Companies Act, 1956
(the Act). The financial statements have been prepared under the
historical cost convention on accrual basis. The accounting policies
have been consistently applied by the Company unless otherwise stated.
b) Use of Estimates
In preparing Companys financial statements in conformity with
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in current and future periods.
c) Fixed Assets
Tangible
Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises the purchase price and any
attributable costs of bringing the assets to their working condition
for their intended use.
Borrowing costs directly attributable to acquisition or construction of
fixed assets, which necessarily take a substantial period of time to
get ready for their intended use, are capitalized.
Intangible
Software which is not an integral part of the related hardware is
classified as an intangible asset.
d) Depreciation and amortisation
Depreciation on fixed assets is provided on straight-line method as per
the useful lives of the assets estimated by the management, which
correspond to the rates prescribed under schedule XIV of the Act.
Depreciation is calculated on a pro-rata basis from the date of
installation till the date the assets are sold or disposed off. Assets
costing individuallyRs.5,000 or less are fully depreciated in the year
of purchase.
Software is being amortised, using the straight-line method, over a
period of five years, being its estimated useful life.
e) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments.
Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long-term investments
are carried at cost, however, provision for diminution in value is made
to record other than temporary diminution in the value of such
investments.
Profit/ loss on sale of investments are computed on first-in-first-out
(FIFO) basis.
f) Inventories
Inventories are valued as follows:
Raw materials, Packing Materials, Stores and Spare Parts
Lower of cost and net realizable value. Cost includes purchase price
(those subsequently recoverable by the Company from the concerned
revenue authorities), freight inwards and other expenditure incurred in
bringing such inventories to their present location and condition. Cost
is determined on FIFO basis. However, materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost.
Work-in-progress and finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost is determined on monthly weighted average
basis.
By-Products
At net realizable value. Net realizable value is the estimated selling
price in the ordinary course of business, less estimated costs of
completion and to make the sale.
g) Revenue Recognition
Revenue is recognised to the extent that it can be reliably measured
and is probable that the economic benefits will flow to the Company.
Sale of Goods
Revenue from sale of goods is recognised when the significant risks and
rewards of ownership of the goods are transferred to the customer. It
includes excise duty wherever applicable but excludes value added
tax/sales tax and is net of sales returns. Excise duty shown as
deduction from revenue is the amount that is included in the amount of
revenue and not the entire amount of liability that arose during the
year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the applicable rate of interest.
Dividends
Dividend is recognised if the right to dividend is established by the
balance sheet date.
Export benefit/incentives
Export benefit entitlements under the Duty Entitlement Pass Book
Scheme are recognised in the profit and loss
account when the right to receive credit as per the terms of the scheme
is established in respect of the exports made.
h) Foreign Exchange Transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount, the exchange rate
between the reporting currency and the foreign currency at the date
of the transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
restatement of the Companys monetary items at rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognized as income or
as expenses in the year in which they arise except exchange differences
arising in respect of liabilities for acquisition of fixed assets
acquired from outside India before accounting period commencing on or
after December 7, 2006, where such exchange differences have been
adjusted in the cost of respective fixed assets.
Forward Exchange Contracts not intended for trading or speculation
purposes.
Forward contracts are entered into to hedge the foreign currency risk
of the underlying outstanding at the balance sheet date. The premium or
discount on such contracts is amortized as income or expense over the
life of the contract. Any profit or loss arising on the cancellation or
renewal of forward contracts is recognized as an income or expense for
the period. The exchange difference on such a forward exchange contract
is calculated as the difference between
(i) the foreign currency amount of the contract translated at the
exchange rate at the Balance Sheet date, or the settlement date where
the transaction is settled during the reporting period, and
(ii) the same foreign currency amount translated at the later of the
date of inception of the forward exchange contract and the last
reporting date. Such exchange differences are recognized in the Profit
and Loss Account in the reporting period in which the exchange rates
change.
i) Employee benefits
Contributions to Provident Fund
The Company makes contributions to statutory provident fund in
accordance with Employees Provident Fund and Miscellaneous Provisions
Act, 1952. Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit and Loss account of the year
when the contributions to the respective funds are due. There are no
other obligations other than the contribution payable to the fund.
Gratuity
Gratuity liability are defined benefit obligations made at the end of
each financial year and are provided for on the basis of an actuarial
valuation on projected unit credit method made at the end of each
financial year.
Actuarial gains/losses are immediately taken to profit and loss account
and are not deferred.
Compensated absences
The employees of the Company are entitled to compensated absences which
are non-accumulating in nature. Expense on non-accumulating
compensated absences is recognised in the period in which the absences
occur.
j) Taxes on Income
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act,1961. Deferred income tax
reflect the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlieryears.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India (ICAI), the said
asset is created by way of a credit to the Profit and Loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income-tax during the specified
period.
k) Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of the obligation can be
made.
Adisclosure is made for a contingent liability when there is a:
(i) possible obligation, the existence of which will be confirmed by
the occurrence/non-occurrence of one or more uncertain events, not
fully with in the control of the Company;
(ii) present obligation, where it is not probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation;
(iii) present obligation, where a reliable estimate cannot be made.
I) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue and share split.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the profit and loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated
historical cost.
n) Government grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
Government grants related to revenue are recognised on systematic basis
in the profit and loss account over the periods necessary to match them
with the related costs which they are intended to compensate. Where the
grant or subsidy relates to an asset, its value is deducted in arriving
at the carrying amount of the related asset.
Government grants of the nature of promoters contribution are credited
to capital reserve and treated as a part of shareholdersfunds.
o) Derivative Instruments
As per ICAI announcement, accounting for derivative contracts,
otherthan those covered under AS-11, are marked to market on a
portfolio basis, and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the income statement.
Net gains are ignored.
p) Cash flow statements
Cash flows are reported using indirect method, whereby profit before
tax is adjusted for the effects of transactions of a non-cash nature
and any deferrals or accruals of past or future cash receipts or
payments. The cash flows from operating, financing and investing
activities of the Company are segregated.
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Modern Dairies Ltd.
-
Modern Dairies Ltd. Tools
- Bulk Deals
- Block Deals
-
Modern Dairies Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
-
Modern Dairies Ltd. Key Financial Ratios
- Ratios
-
Modern Dairies Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Modern Dairies Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Modern Dairies Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Modern Dairies Ltd. Corporate Announcements
- Book Closure
- Board Meetings
-
Stocks To Buy Today, Dec 19: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Stocks To Buy Today, Dec 18: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday -
Stocks To Buy Today, Dec 17: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
Stocks To Buy Today, Dec 16: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
India Stock Market Weekly Review: Nifty and Sensex Fall as Caution Spreads -
Stocks To Buy Today, Dec 15: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday
-
Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
-
Block for 8 hours
-
Block for 12 hours
-
Block for 24 hours
-
Don't block
Sign in with Google- Male
- Female
- Others
- Under 18
- 18 to 25
- 26 to 35
- 36 to 45
- 45 to 55
- 55+