2.8.Material accounting policies
The preparation of financial statements requires the
management of the Company to make estimates,
judgements and assumptions that affect the
reported balances of assets and liabilities and
disclosures of contingent liabilities at the date
of the Ind AS financial statements and reported
amounts of income and expense during the year.
Management believes that the estimates used in the
preparation of the financial statements are prudent
and reasonable.
Accounting estimates could change from period
to period. Actual results could differ from those
estimates. Changes in estimates are reflected in
the financial statements in the period in which the
changes are made and, if material, their effects are
disclosed in the notes to financial statements.
This note provides a list of material accounting
policies adopted during the preparation of these
financial statements which have been consistently
applied to all the years presented, unless
otherwise stated.
2.8.1. Foreign currency translation
On initial recognition, all foreign currency
transactions are translated into the functional
currency using the exchange rates prevailing on the
date of the transaction. As at the reporting date,
foreign currency monetary assets and liabilities are
translated at the exchange rate prevailing on the
Balance Sheet date.
Exchange differences arising on settlement or
translation of monetary items are recognised in
Statement of Profit and Loss except to the extent
of exchange differences which are regarded as an
adjustment to interest costs on foreign currency
borrowings that are directly attributable to the
acquisition or construction of qualifying assets
which are capitalised as cost of assets.
In case of an asset, expense or income where a
non-monetary advance is paid/received, the date of
transaction is the date on which the advance was
initially recognised. If there were multiple payments
or receipts in advance, multiple dates of transactions
are determined for each payment or receipt of
advance consideration.
2.8.2. Revenue Recognition
The Company recognises revenues from sale of
products measured at the amount of transaction
price, when it satisfies its performance obligation at
a point in time which is when goods are delivered
to local customers, or when shipped on board for
export sales which is when control including risks
and rewards and title of ownership pass to the
customer, collectability of the resulting receivables
is reasonably assured and when there are no longer
any unfulfilled obligation.
2.8.3. Government Grant
The Company receives government grants that
require compliance with certain conditions related to
the Company's operating activities or are provided
to the Company by way of financial assistance on
the basis of certain qualifying criteria.
Government grants are recognised when there is
reasonable assurance that the grant will be received
upon the Company complying with the conditions
attached to the grant.
Accordingly, government grants:
(a) related to or used for assets, are deducted from
the carrying amount of the asset.
(b) related to incurring specific expenditures are
taken to the Statement of Profit and Loss on a
systematic basis over the periods in which the
entity recognises as expenses the related costs
for which the grant is intended to compensate.
(c) by way of financial assistance on the basis of
certain qualifying criteria are recognised as
they become receivable.
In the unlikely event that a grant previously
recognised is ultimately not received, it is treated as
a change in estimate and the amount cumulatively
recognised is expensed in the Statement of Profit
and Loss.
2.8.4. Financial Instruments
i. Financial Assets
A. Initial Recognition and Measurement
All Financial Assets are initially recognised at fair
value. Transaction costs that are directly attributable
to the acquisition or issue of Financial Assets,
which are not at Fair Value Through Profit or Loss,
are adjusted to the fair value on initial recognition.
Purchase and sale of Financial Assets are recognised
using trade date accounting.
B. Subsequent Measurement
Financial Assets measured at Amortised Cost (AC)
A Financial Asset is measured at Amortised Cost if
it is held within a business model whose objective is
to hold the asset in order to collect contractual cash
flows and the contractual terms of the Financial
Asset give rise to cash flows on specified dates that
represent solely payments of principal and interest
on the principal amount outstanding.
C. Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL) model, for evaluating
impairment of Financial Assets other than those
measured at Fair Value through Profit and Loss
(FVTPL). Expected Credit Losses are measured
through a loss allowance at an amount equal to:
• The 12-months expected credit losses
(expected credit losses that result from those
default events on the financial instrument
that are possible within 12 months after the
reporting date); or
• Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument).
For Trade Receivables, the Company applies
'simplified approach' which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.
The Company uses historical default rates to
determine impairment loss on the portfolio of trade
receivables. At every reporting date these historical
default rates are reviewed and changes in the
forward-looking estimates are analysed.
For other assets, the Company uses 12 month
ECL to provide for impairment loss where there
is no significant increase in credit risk. If there is
significant increase in credit risk full lifetime ECL
is used.
ii. Financial Liabilities
A. Initial Recognition and Measurement
All Financial Liabilities are recognised at fair value
and in case of borrowings, net of directly attributable
cost. Fees of recurring nature are directly recognised
in the Statement of Profit and Loss as finance cost.
B. Subsequent Measurement
Financial Liabilities are carried at amortised cost
using the effective interest method. For trade
and other payables maturing within one year from
the balance sheet date, the carrying amounts
approximate fair value due to the short maturity of
these instruments.
iii. Derivative Financial Instruments
The Company uses derivative financial instruments,
such as forward currency contracts, to hedge
its foreign currency risks. Derivatives are initially
recognised at fair value and are subsequently
remeasured to their fair value at the end of
each reporting period. The resulting gains /
losses are recognised in Statement of Profit and
Loss immediately
iv. Derecognition of Financial Instruments
The Company derecognises a Financial Asset when
the contractual rights to the cash flows from the
Financial Asset expire or it transfers the Financial
Asset and the transfer qualifies for derecognition
under Ind AS 109. A Financial liability (or a part
of a Financial liability) is derecognised from the
Company's Balance Sheet when the obligation
specified in the contract is discharged or cancelled
or expires.
v. Offsetting
Financial Assets and Financial Liabilities are offset
and the net amount is presented in the balance sheet
when, and only when, the Company has a legally
enforceable right to set off the amount and it intends,
either to settle them on a net basis or to realise the
asset and settle the liability simultaneously.
2.8.5. Taxes on income
I) Current Tax
Current tax in the Statement of Profit and Loss is
provided as the amount of tax payable in respect
of taxable income for the period using tax rates
and tax laws enacted during the period, together
with any adjustment to tax payable in respect of
previous years.
ii) Deferred Tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and
liabilities and the amounts used for taxation
purposes (tax base), at the tax rates and tax laws
enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets are recognised for the future tax
consequences to the extent it is probable that future
taxable profits will be available against which the
deductible temporary differences can be utilised.
Income tax, insofar as it relates to items disclosed
under other comprehensive income or equity, is
disclosed separately under other comprehensive
income or equity, as applicable.
2.8.6. Leases
Company as a Lessor
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Where
the Company is a lessor under an operating lease,
the asset is capitalized within property, plant and
equipment or investment property and depreciated
over its useful economic life. Payments received
under operating leases are recognised in the
Statement of Profit and Loss on a straight line basis
over the term of the lease.
2.8.7. Impairment of Non-Financial Assets
The Company assesses at each reporting date as
to whether there is any indication that any Property,
Plant and Equipment and Intangible Assets or group
of Assets, called Cash Generating Units (CGU) may
be impaired. A cash-generating unit is the smallest
identifiable group of assets that generates cash
inflows that are largely independent of the cash
inflows from other assets or groups of assets.
I f any such indication exists, the recoverable amount
of an asset or CGU is estimated to determine the
extent of impairment, if any. When it is not possible
to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable
amount of the CGU to which the asset belongs.
An impairment loss is recognised in the Statement of
Profit and Loss to the extent, asset's carrying amount
exceeds its recoverable amount. The recoverable
amount is higher of an asset's fair value less cost
of disposal and value in use. Value in use is based
on the estimated future cash flows, discounted to
their present value using pre-tax discount rate that
reflects current market assessments of the time
value of money and risk specific to the assets.
The impairment loss recognised in prior accounting
period is reversed if there has been a change in the
estimate of recoverable amount.
2.8.8. Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on
hand, cash at banks, short-term deposits and
short-term highly liquid investments that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
2.8.9. Inventories
Items of inventories are measured at lower of cost
determined on FIFO basis and net realizable value.
Cost of inventories comprises of cost of purchase,
cost of conversion and other costs incurred in
bringing them to their respective present location
and condition.
2.8.10. Biological assets
The Company recognises biological assets only
when, the Company controls the assets as a result
of past events, it is probable that future economic
benefits associated with such assets will flow to the
Company. Biological assets of the Company are in
the nature of Consumable Biological Assets. It is
bifurcated into
Brood Stock, (the Parents) and harvested species
which undergo biological transformation under
different stages as Nauplius, Zoea, Mysis and Post
Larvae. The Company sells the biological assets
harvested from brood stock at Nauplius and Post
Larvae Stages. The Brood Stock has a maximum
useful life of 6 months for laying eggs. and thereafter
these are destroyed.
The valuation of the Brood stock biological assets
are determined on the following basis:
Brood stock are used for captive consumption or to
support farmers, it can not be sold before the end of
its useful life and as such, there is no active market.
Other references to market prices such as market
prices for similar assets are also not available due
to the uniqueness of the breed. Valuation based
on a discounted cash flow method is considered
to be unreliable given the uncertainty with respect
to mortality rates and production. Consequently,
brood stock and Shrimp seed (Different stages)
are measured at cost, less depreciation and
impairment losses.
The transmission phase from Nauplius to Zoea
and Mysis are not considered as significant
transformation of biological asset and hence Zoea
and Mysis are not valued as per Ind AS - 41.
2.8.11. Property, Plant and Equipment:
a) Property, Plant and Equipment
The Initial cost of property, plant and equipment
comprises its purchase price, including non¬
refundable duties and taxes, attributable borrowing
costs of bringing an asset to working condition
and location for its intended use. It also includes
the present value of the expected cost for the
decommissioning and removing of an asset and
restoring the site after its use, if the recognition
criteria for a provision are met.
Expenditure incurred after the property, plant and
equipment have been put into operation such as
repairs and maintenance are normally charged
to the statement of profit and loss in the period in
which the costs are incurred. Major inspection and
overhaul expenditure is capitalized if the recognition
criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals,
the Company depreciates them separately based
on their specific useful lives. All other repair and
maintenance costs are recognized in the statement
of profit and loss as incurred.
Gains and losses on disposal of an item of property,
plant and equipment are determined by comparing
the proceeds from disposal with the carrying
amount of property, plant and equipment, and are
recognized net within other income/ other expenses
in statement of profit and loss.
An item of property, plant and equipment and any
significant part initially recognized is derecognized
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds
and the carrying amount of the asset) is included
in the statement of profit and loss, when the asset
is derecognized.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
b) Capital Work in progress
Assets in the course of construction are capitalized
to capital work in progress account. At the point
when an asset is capable of operating in the
manner intended by the management, the cost
of construction is transferred to the appropriate
category of property, plant and equipment. Costs
associated with the commissioning of an asset are
capitalized when the asset is available for use.
c) Depreciation
Assets in the course of development or construction
and freehold land are not depreciated. Depreciation
is provided on other property, plant and equipment
when the assets are ready for their intended use.
Depreciation is calculated on the depreciable
amount, which is the cost of an asset less its
residual value. Depreciation on tangible assets has
been provided on the straight line method as per the
useful life prescribed in Schedule II to the Companies
Act, 2013 except in respect of the following assets,
where useful life is different than those prescribed in
Schedule II based on management judgement:
Depreciation methods, useful lives and residual
values are reviewed at each financial year end
and changes in estimates, if any, are accounted
for prospectively.
2.8.12. Borrowing Cost
Borrowing costs are interest and other costs
(including exchange differences relating to foreign
currency borrowings to the extent that they are
regarded as an adjustment to interest costs)
incurred in connection with the borrowing of
funds. Borrowing Cost directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalized during the period of time that
is required to complete and prepare the asset for
its intended use. Qualifying assets are those assets
that necessarily take a substantial period of time to
get ready for their intended use. Other borrowing
costs are recognized as an expense in the period in
which these are incurred.
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