2.1. Basis of preparation and presentation
These Financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under the
historical cost convention on the accrual basis except for certain financial instruments which are measured at
fair values, the provisions of the Companies Act, 2013 ('the Act') (to the extent notified) and guidelines issued
by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act
read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules
issued thereafter.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially
adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in
use.
The figures reported for the previous quarters might not always add up to the year figures reported in this
statement.
These financial statements are presented in Indian Rupees, and all values are rounded to the nearest lakhs,
except when otherwise stated.
2.2. Use of estimates and judgments
The preparation of the financial statements in conformity with Ind AS requires the management to make
estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of
accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements and reported amounts of revenues and expenses during the
period. The application of accounting policies that require critical accounting estimates involving complex and
subjective judgments and the use of assumptions in these financial statements have been disclosed here under.
Accounting estimates could change from period to period. Actual results could differ from those estimates.
Appropriate changes in estimates are made as management becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which
changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Critical accounting estimates
i. Income taxes
In assessing the reliability of deferred income tax assets, management considers whether some portion
or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income
tax assets is dependent upon the generation of future taxable income during the periods in which the
temporary differences become deductible. Management considers the scheduled reversals of deferred
income tax liabilities, projected future taxable income and tax planning strategies in making this
assessment. Based on the level of historical taxable income and projections for future taxable income
over the periods in which the deferred income tax assets are deductible, management believes that the
company will realize the benefits of those deductible differences. The amount of the deferred income
tax assets considered realizable, however, could be reduced in the near term if estimates of future
taxable income during the carry forward period are reduced.
ii. Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company.
The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s
expected useful life and the expected residual value at the end of its life. The useful lives and residual
values of Company's assets are determined by the management at the time the asset is acquired and
reviewed periodically, including at each financial year end. The lives are based on historical experience
with similar assets as well as anticipation of future events, which may impact their life, such as changes
in technology. Refer note no. 2.7.
iii. Fair value measurement and valuation process
When the fair values of financials assets and financial liabilities recorded in the financial statements
cannot be measured based on quoted prices in active markets, their fair value is measured using
valuation techniques which involve various judgments and assumptions.
2.3. Operating Cycle
Based on the nature of activities of the Company and the normal time between acquisition of assets and their
realization in cash or cash equivalents, the Company has determined its operating cycle as twelve months for
the purpose of classification of its assets and liabilities as current and non-current.
2.4. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial Instruments are further divided in two parts viz. Financial Assets
and Financial Liabilities.
A. Initial recognition and measurement-
All financial assets are recognized initially at fair value on initial recognition, except for trade receivables which
are initially measured at transaction price. Transaction cost that are directly attributable to the acquisition or issue
of Financial Assets, which are not Fair value through Profit & Loss, are added to the fair value on initial
recognition. Regular way purchase and sale of Financial Assets are accounted for at trade date.
B. Subsequent measurement-
For purposes of subsequent measurement, financial assets are classified into three categories:
i. Financial assets measured at amortized cost
ii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
iii. Financial assets measured at fair value through profit or loss (FVTPL)
i. A financial asset that meets the following two conditions is measured at amortized cost.
Ý Business Model test: The asset is held within a business model whose objective is to hold assets
for collecting contractual cash flows, and
Ý Cash flow characteristics test: Contractual terms of the asset give rise on specified dates to
cashflows that are solely payments of principal and interest (SPPI) on the principal amount
outstanding.
ii. A financial asset that meets the following two conditions is measured at fair value through OCI.
Ý Business Model test: The objective of the business model is achieved both by collecting contractual
cash flows and selling the financial assets, and
Ý Cash flow characteristics test: The contractual terms of the instrument give rise on specified
dates to cash flows that are SPPI on the principal amount outstanding.
iii. Financial assets measured at fair value through profit or loss (FVTPL)
FVTPL is a residual category for financial instruments, Any financial asset which is not classified in any
of the above categories are subsequently fair valued through profit or loss.
Equity Instruments
All equity instruments in the scope of Ind AS 109 are measured at fair value. Equity instruments which are held
for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable
election to present subsequent changes in the fair value in OCI. The Company makes such an election on an
instrument-by instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the
instrument, including foreign exchange gain or loss and excluding dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to profit or loss, even on sale of investment. However, the Company
may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized
in the profit or loss.
C. Derecognition-
A financial asset is primarily derecognised (i.e. removed from the Company's balance sheet) when:
The contractual rights to receive cash flows from the asset have expired, or
(a) the Company has transferred substantially all the risks and rewards of the asset, or
(b) the Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in
OCI and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been
recognised in profit or loss on disposal of that financial asset.
D. Impairment of financial assets-
In accordance with Ind AS 109, The company assesses impairment based on expected credit losses (ECL)
model at an amount equal to: -
• 12 months expected credit losses, or
• Lifetime expected credit losses depending upon whether there has been a significant increase in credit
risk since initial recognition.
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables or
any contractual right to receive cash or another financial asset.
The application of the simplified approach does not require the company to track changes in credit risk. Rather
it recognizes impairment loss allowance based on provision matrix. The provision matric takes into account
Historical credit loss experience and is adjusted for forward looking information. The ECL is based on aging of
trade receivables that are due and the rates used in the provision matrix..
A. Initial recognition and measurement-
All financial liabilities are recognised initially at fair value, and in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
B. Subsequent measurement-
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at
FVTPL.
Financial liabilities at fair value through profit or loss-
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or is designated upon
initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they
are incurred principally for the purpose of repurchasing in the near term or on initial recognition it is part of a
portfolio of identified financial instruments that the Company manages together and has a recent actual pattern
of short-term profit-taking. This category also includes derivatives entered into by the Company that are not
designated and effective as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or
losses on liabilities held for trading are recognized in the profit or loss.
C. Derecognition-
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference between the carrying
amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or
loss.
Derivative financial instruments-
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, full currency swap,
options and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such
derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is
entered into and are subsequently re-measured at fair value at the end of each reporting period. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
2.5. Fair Value Measurement
Fair value is the price that would be received upon sale of an asset or paid to transfer a liability through an orderly
transaction between market participants on the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability,
the Company takes into account the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these financial statements is determined on such basis, except for
leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair
value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,2, or 3 based
on the degree to which the inputs to the fair value measurements are observable and the significance of the
inputs to the fair value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access on the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
The Company has consistently applied the following accounting policies to all periods presented in these
financial statements.
2.6. Operating Segment
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker. The chief operating decision maker of the Company is responsible for allocating
resources and assessing performance of the operating segments and accordingly is identified as the Chief
Operating Decision Maker.
The Chief Operating Decision Maker monitors the operating results of its business segments separately for the
purpose of making decisions about resource allocation and performance assessment. Segment performance is
evaluated based on profit and loss and is measured consistently with the profit and loss in the financial
statements.
The Company is engaged in a single operating segment, namely, agri-commodity operations. All other activities
of the Company revolve around the main business. Since the business operations of the Company are primarily
concentrated in India, the Company is considered to operate only in the domestic segment.
2.7. Property, plant and equipment
I. Property, Plant and Equipment other than Land:
Items of property, plant and equipment are stated in balance sheet at cost less accumulated
depreciation and accumulated impairment losses, if any. Costs directly attributable to acquisition are
capitalised until the Property, Plant & Equipment are ready for use, as intended by management.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of property, plant and equipment and is
recognised in profit or loss. The company depreciates property, plant and equipment over their
estimated useful lives using the straight line method.
II. Property, Plant and Equipment - Land:
The Company follows the revaluation model for accounting of Freehold Land and any
increase\decrease in the fair value of land is correspondingly reflected in Revaluation Surplus. The fair
value of Land has been determined by external, independent property valuers, having appropriate
recognized professional qualifications and recent experience in the location and category of the
property being valued. The best evidence of fair value is current price in an active market for similar
properties.
De-recognition
Depreciation is recognized so as to write off the cost of assets (other than freehold land and Capital
work-in-progress) less their residual values on straight-line method over their useful lives as indicated in
Part C of Schedule II of the Companies Act, 2013. Depreciation methods, useful lives and residual
values are reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
Impairment
Property, plant, and equipment are evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less
cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not
generate cash flow that are largely independent of those of those from other than assets. In such cases,
the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the
Statement of Profit and Loss is measured by the amount by which the carrying value of the
assets exceeds the estimated recoverable amount of the assets. An impairment loss is
reversed in the statement of profit and loss if there has been a change in the estimates used
to determine the recoverable amount.
The carrying amount of the assets is increased to its revised recoverable amount, provided
that this amount does not exceed the carrying amount that would have been determined (net
of any accumulated depreciation) had no impairment loss been recognized for the assets in
prior years.
2.8. Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The
cash flows from operating, investing and financing activities of the Company are segregated based on the
available information.
2.9. Impairment of non-financial assets
The carrying amounts of the Company's PPE and intangible assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell.
An impairment loss is recognised in the profit or loss if the estimated recoverable amount of an asset or
its cash generating unit is lower than its carrying amount. Impairment losses recognised in respect of
cash-generating units are allocated to reduce the carrying amount of the other assets in the unit on a pro-rata
basis.
In respect of other asset, impairment losses recognised in prior periods are assessed at each reporting date for
any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognised.
2.10. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and fixed deposits.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash as defined above, net
of outstanding bank overdrafts as they are considered an integral part of the Company's cash management.
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