Accounting Policies of Source Natural Foods & Herbal Supplements Ltd. Company

Mar 31, 2024

Significant accounting policies

a) Revenue recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.

Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts, and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.

Revenue from subsidiaries is recognized based on transaction price which is at arm''s length. Unearned and deferred revenue ("contract liability'') is recognized when there are billings in excess of revenues

Provision for breakage is recognized when the Company expects to be entitled to a breakage amount in a contract liability. The Company recognizes the expected breakage amount as revenue in proportion to the pattern of rights exercised by the customer. If the Company does not expect to be entitled to a breakage amount, it recognizes the expected breakage amount as revenue when the likelihood of the customer exercising its remaining rights becomes remote.

Use of significant judgements in revenue recognition

• The Company''s contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.

• Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as discounts, etc. Any consideration payable to the customer is adjusted to the transaction price, unless it isa payment for a distinct product or service from the customer.

• The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period. The Company considers indicators such as how customer consumes benefits as services are rendered.

i. Revenue from products

Revenue from sale of products is recognized upon transfer of control to buyers (i.e. on delivery) and when no uncertainty exists regarding the amount of consideration that will be derived from sale of products and is recorded net of trade discounts and indirect tax (Goods and Services tax).

ii. Interest income or expense

Interest income or expense is accounted basis effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial assets, or the amortized cost of the financial liability.

However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit impaired, then the calculation of interest income reverts to the gross basis.

iii. Dividend income

Dividend income is recognized when the right to receive payment is established.

(b) Inventories

Raw materials, packing materials, stores, spares and consumables are valued at lower cost and net realizable value. However, these items are realizable at cost if the finished products in which they will be used are expected to be sold at or above cost.

Finished goods, stock-in-trade and work-in-progress are valued at lower of cost and net realizable value.Cost is ascertained on weighted average method and in case of finished products and work-in-progress, it includes appropriate production overheads and duties.

(c) Employee benefits

i. Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short- term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia/ bonus are recognized in the period in which the employee renders the related service. A liability is recognized for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The liabilities are presented as current employee benefit obligations in the balance sheet.

ii. Compensated absences

Compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as undiscounted liability at the balance sheet date. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

iii. Post-employment benefits

The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plans is the present value of the

defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.

Gratuity liability is covered by payment thereof to Gratuity fund. 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 the related obligation.

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 in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.

The total expense is recognized over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

iv. Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits at the earlier of the following dates:

a. when the Company can no longer withdraw the offer of those benefits; and

b. when the entity recognises costs for a restructuring that is made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.

c. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

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Mar 31, 2016

a. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern concept. Accounting policies not referred to specifically are consistent with Generally Accepted Accounting Principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis, except in the circumstances specifically mentioned below:

Sales Return : Breakages & Claims, Goods Returned Back.

c. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use.

d. Depreciation:

Depreciation on assets is provided on straight line method, at the rates and in the manner prescribed under Schedule II to the Companies Act, 2013.

e. Inventories:

a. Raw Material, Packing Material, Stores and Spare Parts are valued at cost by following FIFO method.

b. Work in Process is valued at cost.

c. Finished Goods are valued at lower of cost or net realisable value.

f. Retirement Benefits:

Employees Provident Fund is administered by Regional Provident Fund Commissioner to whom remittances are made. Employer’s Contribution is charged to revenue.

Gratuity amount payable to employees is provided based on actuarial Valuation during the Year. The Company has formed a trust for Gratuity purposes and has a Gratuity Fund registered with Life Insurance Corporation of India.

g. Prior period items etc:

There are no material items relating to prior period, non- recurring in nature and extraordinary items.

h. Taxes on Income:

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognise deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognise deferred tax asset on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

i. Foreign Currency Transactions:

To account for transactions in foreign currency at the exchange rate prevailing on the date of transaction. Gains/losses arising out of fluctuations in the exchange rates are recognised in Profit and Loss Account in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed assets.

Expenditure incurred in foreign currency Rs.9.88 lakh(Foreign Exchange outgo)

Income in foreign currency NIL during the year.

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Mar 31, 2015

A. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern concept. Accounting policies not referred to specifically are consistent with generally accepted accounting principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis, except in the circumstances specifically mentioned below:

Sales Return: Breakages & Claims, Goods Returned Back and discounts.

c. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use.

d. Depreciation:

Depreciation on assets is provided on straight line method, at the rates and in the manner prescribed under Schedule II to the Companies Act, 2013. Adopted useful life as per schedule II of the companies act in the current year.

e. Inventories:

a. Raw Material, Packing Material, Stores and Spare Parts are valued at cost by following FIFO method.

b. Work in Process is valued at cost.

c. Finished Goods are valued at lower of cost or net realisable value.

f. Retirement Benefits:

Employees Provident Fund is administered by Regional Provident Fund Commissioner to whom remittances are made. Employer's Contribution is charged to revenue.

Gratuity amount payable to employees is provided based on actuarial Valuation during the Year. The Company has formed a trust for Gratuity purposes and has a Gratuity Fund registered with Life Insurance Corporation of India.

g. Prior period items etc:

There are no material items relating to prior period, non- recurring in nature and extraordinary items.

h. Taxes on Income:

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognise deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognise deferred tax asset on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

The Company has adopted AS 22 - Accounting for Taxes on Income. The accumulated net deferred tax asset on account of timing difference between book and tax loss has not been recognised due to virtual uncertainty that there will be future taxable income in near future available to realise such losses.

i. Foreign Currency Transactions:

To account for transactions in foreign currency at the exchange rate prevailing on the date of transaction. Gains/losses arising out of fluctuations in the exchange rates are recognised in Profit and Loss Account in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed assets. There is no significant transactions during the year.

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Mar 31, 2014

A. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern concept. Accounting policies not referred to specifically are consistent with Generally Accepted Accounting Principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis, except in the circumstances specifically mentioned below:

Sales Return : Breakages & Claims, Goods Returned Back.

c. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use.

d. Depreciation:

Depreciation on assets is provided on straight line method, at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

e. Inventories:

a. Raw Material, Packing Material, Stores and Spare Parts are valued at cost by following FIFO method.

b. Work in Process is valued at cost.

c. Finished Goods are valued at lower of cost or net realisable value.

f. Retirement Benefits:

Employees Provident Fund is administered by Regional Provident Fund Commissioner to whom remittances are made. Employer''s Contribution is charged to revenue.

Gratuity amount payable to employees is provided based on actuarial Valuation during the Year. The Company has formed a trust for Gratuity purposes and has a Gratuity Fund registered with Life Insurance Corporation of India.

g. Prior period items etc:

There are no material items relating to prior period, non- recurring in nature and extraordinary items.

h. Taxes on Income:

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognise deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognise deferred tax asset on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

i. Foreign Currency Transactions:

To account for transactions in foreign currency at the exchange rate prevailing on the date of transaction. Gains/losses arising out of fluctuations in the exchange rates are recognised in Profit and Loss Account in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed assets.

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Mar 31, 2013

A. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern. Accounting policies not referred to specifically are consistent with generally accepted accounting principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis, except in the circumstances specifically mentioned below:

Sales Return : Breakages & Claims, Goods Returned Back.

c. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use.

d. Depreciation:

Depreciation on assets is provided on straight line method, at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

e. Inventories:

a. Raw Material, Packing Material, Stores and Spare Parts are valued at cost by following FIFO method.

b. Work in Process is valued at cost.

c. Finished Goods are valued at lower of cost or net realisable value.

f. Retirement Benefits:

Employees Provident Fund is administered by Regional Provident Fund Commissioner to whom remittances are made. Employer''s Contribution is charged to revenue.

Gratuity amount payable to employees is provided based on actuarial Valuation during the Year.

g. Prior period items etc:

There are no material items relating to prior period, non- recurring in nature and extraordinary items.

h. Taxes on Income:

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognise deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognise deferred tax asset on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

i. Foreign Currency Transactions:

To account for transactions in foreign currency at the exchange rate prevailing on the date of transaction. Gains/losses arising out of fluctuations in the exchange rates are recognised in Profit and Loss in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed assets.

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Mar 31, 2012

A. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern. Accounting policies not referred to specifically are consistent with generally accepted accounting principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis, except in the circumstances specifically mentioned below:

Sales Return : Breakages & Claims, Goods Returned Back.

c. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use.

d. Depreciation:

Depreciation on assets is provided on straight line method, at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

e. Inventories:

a. Raw Material, Packing Material, Stores and Spare Parts are valued at cost by following FIFO method.

b. Work in Process is valued at cost.

c. Finished Goods are valued at lower of cost or net realisable value.

f. Retirement Benefits:

Employees Provident Fund is administered by Regional Provident Fund Commissioner to whom remittances are made. Employer's Contribution is charged to revenue.

Gratuity amount payable to employees is provided based on actuarial Valuation during the Year.

g. Prior period items etc:

There are no material items relating to prior period, non- recurring in nature and extraordinary items.

h. Taxes on Income:

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognise deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognise deferred tax asset on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

i. Foreign Currency Transactions:

To account for transactions in foreign currency at the exchange rate prevailing on the date of transaction. Gains/losses arising out of fluctuations in the exchange rates are recognised in Profit and Loss in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed assets.

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Mar 31, 2010

A. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern. Accounting policies not referred specifically are consistent with generally accepted accounting principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognizes income and expenditure on accrual basis, except in the circumstances specifically mentioned below:

Sales Return: Breakages & Claims, Goods Returned Back.

c. Sales:

During the year Company manufactured the goods on Job Work basis. Further company also manufactured Masalas on sale basis.

d. Purchases:

Purchases have been accounted on receipt basis and the liabilities thereon have also been provided.

e. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use. State Subsidy of Rs.20 Lakhs has been adjusted against plant and machinery.

f. Depreciation:

Depreciation on assets is provided on straight-line method, at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

g. Inventories:

a. Raw Material, Packing Material, Stores & Spares are valued at cost by following FIFO method.

b. Work in Process is valued at cost.

c. Finished goods are valued at lower of cost or net realizable value.

h. Retirement benefits:

Employees Provident Fund is administered by the Regional Provident Fund Commissioner to whom remittances are made. Employers contribution is charged to revenue.

Gratuity amount payable to employees is provided on estimated basis in accordance with Payment of Gratuity Act, 1972.

i. Prior period items etc:

There are no Material items relating to prior period, non-recurring in nature and extraordinary items.

j. Taxes on Income

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognize deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognize Deferred tax assets on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that there will be sufficient future taxable income available to realize such assets.

k. Foreign Currency Transaction

To account for transactions in foreign currency at the exchange rate prevailing on the date of transactions. Gains/losses arising out of fluctuations in the exchange rates are recognized in Profit and Loss in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed asset. No Foreign Currency Transactions were done during the year.

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Mar 31, 2009

A. The Accounting Convention:

The financial statements are prepared in historical cost convention and as a going concern. Accounting policies not referred specifically are consistent with generally accepted accounting principles.

b. Revenue Recognition:

The Company generally follows the mercantile system of accounting and recognizes income and expenditure on accrual basis, except in the circumstances specifically mentioned below: Sales Return: Breakages & Claims, Goods Returned Back.

c. Sales:

During the year Company manufactured Ayurvedic Products on Job Work basis. Further company claimed Job Work Charges from M/s.Pochiraju Industries Limited (PIL) till the date of agreement.

Hence, there are no sales for the Financial Year in the books of account of the Company.

d. Purchases:

During the year there was no purchase of Raw material and Packing material.

e. Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost includes freight, taxes and any attributable cost of bringing the asset to its working condition for its intended use.

f. Depreciation:

Depreciation on assets is provided on straight-line method, at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.

f. Inventories:

a. During the year there was no purchase of Raw materials, Packing Materials, Stores & Spares stocks thereof.

b. There is no Work in Process during the year.

c. Finished goods are valued at lower of cost or net realizable value. There is no finished goods as on closing of the accounting year.

g. Retirement benefits:

Employees Provident Fund is administered by the Regional Provident Fund Commissioner to whom remittances are made. Employers contribution is charged to revenue.

Gratuity amount payable to employees is provided on estimated basis in accordance with Payment of Gratuity Act, 1972.

All contingent liabilities not provided for in the estimated basis in accordance with Payment of Gratuity Act, 1972.

h. Prior period items etc:

There are no Material items relating to prior period, non-recurring in nature and extraordinary items.

i. Taxes on Income

To provide and determine current tax as the amount of tax payable in respect of taxable income for the period. To provide and recognize deferred tax on timing differences between taxable income and accounting income subject to consideration of prudence. Not to recognize Deferred tax assets on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that • there will be sufficient future taxable income available to realize such assets.

j. Foreign Currency Transaction

To account for transactions in foreign currency at the exchange rate prevailing on the date of transactions. Gains/losses arising out of fluctuations in the exchange rates are recognized in Profit and Loss in the period in which they arise except in respect of fixed assets where exchange variance is adjusted in carrying amount of the respective fixed asset. No Foreign Currency Transactions were done during the year.