1 Material Accounting Policies . . . . ...
This note provides a list of the significant accounting policies adopted in the preparation of these restated Standalone finance! statements. These pol.ccea have been consistently appl.ed
to all the periods presented, unless otherwise stated.
1.1 Basis of Preparation
These standalone financial statements (‘financial statements*) have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind.AS ) as notified by
Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘Act’) read with of the Companies (Indian Accounting Standards) Rules. 2015, as amended, and other relevant
provisions of the Act. The accounting policies are applied consistently to all the periods presented in the financial statements.
The accounting policies are applied consistently to all the periods presented in the standalone financial statements
ii. Historical cost convention :
The financial statements have been prepared on a historical cost basis, except for the following:
1) certain financial assets and liabilities that are measured at fair value;
iii. Current and non-current classification: . _ . . . m . .. , . 11..1J,Jninu»1
All assets and liabilities have been classified as current or non-current based on the Company’s normal operating cycle as per the criteria set out m the Schedule ffl to the Act. The company
operating cycle is considered to be period of twelve months.
iv. Rounding of amounts: t , . .. .
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule m, unless otherwise stated.
1.2 Business combinations . .
The Company applies the acquisition method in accounting for business combinations. The cost of acquisition is the aggregate of the consideration transferred measured at fair value at the
acquisition date. Acquisition costs are charged to the Statement of Profit and Loss in the period in which they are incurred. At the acquisition date, identifiable assets acquired and liabilities
assumed are measured at fair value.
Goodwill is measured as excess of the aggregate of the fair value of the consideration transferred over the fair value of the net of identifiable assets acquired and liabilities assumed. If the fair
value of the net of identifiable assets acquired and liabilities assumed is in excess of the aggregate mentioned above, the resulting gain on bargain purchase is recognised.
Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is earned at cost less accumulated
impairment losses.
13 Use of Estimates and Judgments .
In preparing the standalone financial statements, the Management has to make certain assumptions and estimates that may substantially impact the presentation of the
Company’s financial position and/ or results of operations.
The estimates and judgments used in the preparation of the standalone financial statements are continuously evaluated by the Company and are based on historical experience
and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Although the
Company regularly assesses these estimates, actual results may differ from these estimates. Changes in estimates are recorded in the periods in which they become known.
1.4 Summary of Material Accounting Policies
(a) Property, Plant & Equipment
Measurement at recognition:
An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, items of property, plant and equipment are carried at its
cost less accumulated depreciation and accumulated impairment losses.
The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other non-refundable purchase taxes or levies, directly attributable cost of
bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts and rebates are deducted
in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met. Expenses directly attributable to new manufacturing facility
during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under
relevant heads of property, plant and equipment if the recognition criteria are met.
Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
On transition to Ind AS (i.e. 1 April 2020), the Company has elected to continue with the carrying value of all Property, plant and equipment measured as per the previous GAAP and use that
carrying value as the deemed cost of Property, plant and equipment.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each balance sheet
Hat»» nr<» Hisclns<»H ns Oth»»r VonU"*iiiT*nt Assets
(c) Revenue Recognition
Revenue from contracts with customers is recognized on transfer of control of promised goods or services to a customer at an amount that reflects the consideration to which the Company is
expected to be entitled to in exchange for those goods or services. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes
offered. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the
amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.
Sale of Products:
The majority of customer contracts that the Company enters into consist of a single performance obligation for the delivery of super phosphates fertilizers products. The Company recognises
revenue from product sales when control of the product transfers, generally upon shipment or delivery, to the customer, or in certain cases, upon the corresponding sales by customer to a third
party. The Company records product sales net of estimated incentives/discounts, returns, and other related charges. These are generally accounted for as variable consideration estimated in the
same period the related sales occur. The methodology and assumptions used to estimate rebates and returns are monitored and adjusted regularly in the light of contractual and legal obligations,
historical trends, past experience and projected market conditions. The revenue for such variable consideration is included in the Company’s estimate of the transaction price only if it is highly
probable that a significant reversal of revenue will not occur once any uncertainty is resolved. In making this assessment the Company considers its historical record of performance on similar
contracts.
Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of discounts, returns and goods and services tax. Transaction price is
recognized based on the price specified in the contract, net of the estimated sales incentives/ discounts.
Subsidy:
The Company is engaged in manufacturing of Single super phosphates (SSP) fertilisers. Manufacturing of SSP is covered by Government of India’s NBS Policy for P&K Fertilisers. The
Company is entitled for this NBS subsidy on the basis of actual sale by the retailers to the beneficiaries.
Contract Balances
Contract Assets
A contract asset is the right to consideration inexchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before
thecustomer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade Receivable
A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract Liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Company transfers the related goods . Contract liabilities are
recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
(e) Other Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income
is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount on initial recognition. Interest income is included in ‘Other Income’ in the Statement of Profit and Loss.
(f) Inventories
Inventories encompass goods consumed in production (raw materials, packing materials and stores and spare parts), goods in the production process for sale (work-in-progress) and goods held
for sale in the ordinary course of business (finished goods). Inventories are recognised at the lower of their cost of acquisition calculated by the weighted average method and at their net
realisable value. The net realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion and expenses necessary to make the sale.
(g) Financial Instruments
I Financial Assets
Classification
The Company classifies its financial assets either at Fair Value through Profit or Loss (FVTPL), Fair Value through Other Comprehensive Income (FVTOCI) or at amortised Cost, based on the
Company's business model for managing the financial assets and their contractual cash flows.
Initial recognition and measurement
The Company at initial recognition measures a financial asset at its fair value plus transaction costs that are directly attributable to its acquisition. However, transaction costs relating to financial
assets designated at fair value through profit or loss (FVTPL) are expensed in the statement of profit and loss for the year.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost
• Debt instruments at fair value through other comprehensive income (FVTOCI)
• Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
• Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on such
instruments is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is calculated using the effective interest rate method and is
included under the head "Finance income".
Debt instrument at FVTOCI ... „.
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair
value through other comprehensive income (FVTOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and
foreign exchange gains and losses which are recognised in the statement of profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to statement of profit and loss. Interest income from these financial assets is calculated using the effective interest rate method and is included under the head Finance
income".
Debt instrument at FVTPL ...
Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income (FVTOCI) are measured at fair value through profit or loss. Gain and losses on fair value
of such instruments are recognised in statement of profit and loss. Interest income from these financial assets is included in other income.----
Equity instruments
All equity instruments in 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 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 recognised in the profit or loss.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) 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
• The Company has transferred substantially all the risks and rewards of the financial asset or
• The Company has neither transferred nor retained substantially all the risks and rewards of the financial asset but has transferred control of the financial asset.
Impairment of financial assets
The Company assesses on a forward-looking basis, the expected credit losses associated with its financial assets carried at amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
II Financial liabilities and equity instruments
Classification
The Company classifies all financial liabilities at amortised cost or fair value through profit or loss.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, deposits or as payables, as appropriate. 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.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the profit
or loss.
Loans, borrowings and deposits
After initial recognition, loans, borrowings and deposits are subsequently measured at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in the
statement of profit and loss when the liabilities are derecognised as well as through the EIR amortization process. The EIR amortisation is included in finance costs in the statement of profit and
loss.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. For trade and other payables maturing within one year
from the balance sheet date, the carrying amounts approximate fair value due to the short-term maturity of these instruments.
Derecognition of financial liabilities
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.
(h) Fair Value Measurement
The Company's accounting policies and disclosures require the measurement of fair values for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments.
All assets and liabilities for which fair value is measured or disclosed in the Restated Financial Information are categorised within the fair value hierarchy, described as follows, based on the
lowest level input that is significant to the fair value measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
(i) Trade Receivables and Loans
Trade receivables are initially recognised at fair value. Subsequently, these assets are held at amortised cost, using the effective interest rate (EIR) method net of any expected credit losses. The
EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.
(j) Foreign Currency Transactions
The Restated Financial Information are presented in Indian Rupee, which is the Company’s functional and presentation currency. A company’s functional currency is that of the primary
economic environment in which the company operates.
Foreign currency transactions are recorded in the reporting currency (Indian rupee) by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign
currency on the date of the transaction.
All monetary items denominated in foreign currency are converted into Indian rupees at the year-end exchange rate. The exchange differences arising on such conversion and on settlement of the
transactions are recognised in the statement of profit and loss. Non-monetary items in terms of historical cost denominated in a foreign currency are reported using the exchange rate prevailing on
the date of the transaction.
(k) Income tax ...... .
The income tax expenses comprises current and deferred tax. It is recognised in the statement of profit and loss except to the extent that it relates to items recogmsed directly in equity or in other
comprehensive income.
Current Tax:
The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.
Deferred Tax:
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for taxation purposes.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that is probable that future taxable profits will be available against
which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised, sue
reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are measured at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects at the reporting date to recover or settle the carrying amount o
its assets and liabilities.
Minimum Alternate Tax (MAT) credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the
specified period. Such asset is reviewed at each balance sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evrdence to the
effect that the Company will pay normal income tax during the specified period.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the periods
in which those temporary differences are expected to be recovered or settled.
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