2. Material Accounting Policies
Material accounting policies adopted by the Company are as under:
2.1 Basis of preparation of standalone financial
statements
a) Statement of Compliance
The Standalone Financial statements have been
prepared in accordance with 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 (the Act')
read with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 as amended from time to
time, and presentation requirements of Division II of
Schedule III to the Act.
Basis of Preparation of Standalone Financial
Statements
The Standalone Financial Statements have been
prepared on accrual basis and under historical cost
convention, except for certain financial assets and
liabilities which are measured at fair value (refer para
2.2(s) of accounting policy).
The functional and presentation currency of the
Company is Indian Rupee ("INR") which is the
currency of the primary economic environment
in which the Company operates. The Standalone
Financial Statements have been prepared on accrual
and going concern basis.
Accounting policies have been consistently applied
except where a newly issued Indian Accounting
Standards is initially adopted or a revision to an
existing Indian Accounting Standards requires a
change in the accounting policy hitherto in use.
All amounts disclosed in the Standalone Financial
Statements and notes have been rounded off to
the nearest "Lakhs", unless otherwise stated.
Transactions and balances with values below the
rounding off norm adopted by the Company have
been reflected as "0" in the relevant notes to these
Standalone Financial Statements.
b) Use of Estimates
The preparation of Standalone Financial Statements
in conformity with Ind AS requires the Management
to make estimates and assumptions that affect the
reported amount of assets and liabilities as at the
Balance Sheet date, reported amount of revenue
and expenditure for the period and disclosures of
contingent liabilities as at the Balance Sheet date. The
estimates and assumptions used in the accompanying
standalone financial statements are based upon the
Management's evaluation of the relevant facts and
circumstances as at the date of standalone financial
statements. Actual results could differ from these
estimates. Estimates and underlying assumptions
are reviewed on a year basis. Revisions to accounting
estimates, if any, are recognised in the period in which
the estimates are revised and in any future years
affected. (refer para 2.2(t) of accounting policy).
2.2 Summary of Material Accounting Policies
Current Vs Non-Current Classification
The Company presents assets and liabilities in the balance
sheet based on current/ non- current classification. An
asset is treated as current when it is:
• Expected to be realised or intended to be sold or
consumed in normal operating cycle,
• Held primarily for the purpose of trading,
• Expected to be realised within twelve months after the
reporting period, or
• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle,
• It is held primary for the purpose of trading,
• It is due to be settled within twelve months after the
reporting period, or
• There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period.
The Company classifies all other liabilities as non-current.
Based on the nature of business 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
and non- current classification of assets and liabilities.
Deferred tax assets/ liabilities are classified as non-current
assets/ liabilities.
The operating cycle is the time between the acquisition of
assets for processing and their realization in cash and cash
equivalents. The Company has identified twelve months as
its operating cycle.
a) Revenue recognition
Sale of goods
Revenue from sale of goods is recognized when
control of the products being sold is transferred to our
customer and when there are no longer any unfulfilled
obligations. The performance obligations in our
contracts are fulfilled at the time of dispatch, delivery
or upon formal customer acceptance depending on
the customer terms.
Revenue is measured based on the transaction price,
which is the consideration, after deduction of any
trade discounts, volume rebates and any taxes or
duties collected on behalf of the government such as
goods and services tax, etc. Accumulated experience
is used to estimate the provision for such discounts
and rebates. Revenue is recognised to the extent that it
is highly probable a significant reversal will not occur.
For sale of goods wherein performance obligation
is not satisfied, any amount received in advance
is recorded as contract liability and recognized as
revenue when goods are transferred to customers.
Any amount of income accrued but not billed to
customers in respect of such contracts is recorded as
a contract asset. Such contract assets are transferred
to Trade receivables on actual billing to customers.
In case customers have the contractual right to
return goods, an estimate is made for goods that
will be returned and a liability is recognized for
this amount using the best estimate based on
accumulated experience.
b) Property, plant and equipment
Freehold land is carried at historical cost. All other
items of property, plant and equipment is stated
at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
The cost of a self-constructed item of property, plant
and equipment comprises the cost of materials,
direct labour and any other costs directly attributable
to bringing the item to its intended working condition
including capitalised borrowing costs, if any, and
estimated costs of dismantling, removing and restoring
the site on which it is located, wherever applicable.
Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Company and the cost of the item can be measured
reliably. The carrying amount of any component
accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance
are charged to statement of profit and loss during the
reporting year in which they are incurred.
The present value of the expected cost for the
decommissioning of an asset after its use is included
in the cost of the respective asset if the recognition
criteria for a provision are met.
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or
loss arising on derecognition 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 derecognised.
Leasehold improvements are depreciated on a
straight-line basis over the period of lease.
Capital Work in Progress
The cost of the assets not put to use before
such date are disclosed under the head Capital
work-in-progress.
c) Depreciation methods, estimated useful life and
residual value
Depreciation is calculated using the straight-line
method to allocate their cost, net of their residual
value, over their estimated useful lives. The Company
has used the following rates to provide depreciation
on its property, plant and equipment which are
similar as compared to those prescribed under the
Schedule II to the Act.
The management has estimated, supported by
assessment by company's professionals, that the
useful life of the following categories of assets are
lower than that indicated in Schedule II, based on
usage profile of the respective asset category:
Individual assets costing INR 5,000 or less are fully
depreciated in the period of purchase. The residual
values are not more than 5% of the original cost of the
asset. The residual values and useful lives of property,
plant and equipment are reviewed, and adjusted if
appropriate, at the end of each reporting year.
The useful lives is reviewed at least at each year-
end. Changes in expected useful lives are treated as
change in accounting estimates.
d) Investment properties
Property that is held for long-term rental yields
or for capital appreciation or both, and that is not
occupied by the Company, is classified as investment
property. Investment property is measured initially at
its cost, including related transaction costs and where
applicable borrowing costs. Subsequent to initial
recognition, investment property is measured at cost
less accumulated depreciation and accumulated
impairment losses, if any.
Subsequent expenditure is capitalised to the asset's
carrying amount only when it is probable that future
economic benefits associated with the expenditure will
flow to the Company and the cost of the item can be
measured reliably. All other repairs and maintenance
costs are expensed when incurred.
Though the Company measures investment property
using cost-based measurement, the fair value of
investment property is disclosed in the notes. Fair
values are determined based on an annual evaluation
performed by an accredited external independent
valuer applying a valuation model recommended by
the International Valuation Standards Committee.
Investment properties are derecognised either
when they have been disposed of or when they are
permanently withdrawn from use and no future
economic benefit is expected from their disposal.
The difference between the net disposal proceeds
and the carrying amount of the asset is recognised
in the statement of profit and loss in the year
of derecognition.
e) Intangible asset
Intangible assets including those acquired by the
Company are initially measured at acquisition cost.
Such intangible assets are subsequently stated at
acquisition cost, net of accumulated amortisation.
The Company amortises intangible assets with a finite
useful life using the straight-line method over the
following period:
A summary of amortisation policies applied to the
Company intangible assets is as below:
Intangible assets with finite lives are assessed for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation
method and period for an intangible asset with a finite
useful life are reviewed at least at the end of each
reporting year.
f) Inventories
Raw material, packing material and finished goods
Inventories are valued at the lower of cost and net
realisable value.
Costs incurred in bringing each product to its present
location and condition are accounted for as follows:
Raw materials and packaging materials are valued at
lower of cost and net realisable value. Cost includes
purchase price, (excluding those subsequently
recoverable by the enterprise from the concerned
revenue authorities), freight inwards and other
expenditure incurred in bringing such inventories to
their present location and condition. In determining
the cost, Weighted average cost method is used.
Manufactured finished goods are valued at the lower
of cost and net realisable value. Cost of manufactured
finished goods comprises direct material, direct
labour and an appropriate proportion of variable and
fixed overhead expenditure, the latter being allocated
on the basis of normal operating capacity.
Cost of inventories also includes all other costs
incurred in bringing the inventories to their present
location and condition.
Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated
cost of completion and the estimated costs necessary
to make the sale.
The Company has changed its accounting policy for
valuation of inventories from the First-In First-Out
(FIFO) to the Weighted Average Cost (WAC) method
except for the inventories of unit engaged in the Quick
Service Restaurant (QSR) business which continues
to value their inventories using the FIFO method. The
change has been made to better reflect the pattern
of consumption of inventories in a manufacturing
environment and to provide more reliable and relevant
information, in accordance with Ind AS 2 - Inventories
and Ind AS 8 - Accounting Policies, Changes in
Accounting Estimates and Errors. Management
believes that the Weighted Average Cost method is
more appropriate given the nature of raw materials,
work-in-progress, and finished goods, and the
frequency of purchase and production cycles.
In accordance with Ind AS 8, the change in accounting
policy has been applied retrospectively. However, the
impact of this change on the financial statements
for the current and prior periods is not material.
Accordingly, the comparative information has
not been restated.
g) Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker (CODM).
The board of directors of the Company assesses the
financial performance and position of the Company
and makes strategic decisions. The board of directors,
which has been identified as being the chief operating
decision maker, consists of managing director
and other directors. Refer note 38 for segment
information presented.
h) Finance costs
Borrowing cost includes interest, amortisation
of ancillary costs incurred in connection with the
arrangement of borrowings.
General and Specific borrowing costs that are
attributable to the acquisition, construction or
production of an asset that necessarily takes a
substantial period of time to get ready for its intended
use or sale are capitalised as part of the cost of the
respective asset. All the other borrowing costs are
expensed in the year they occur.
i) Employee 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 recognised in respect of employees'
services up-to the end of the reporting year and
are measured at the amount expected to be paid
when the liabilities are settled. The liabilities
are presented as current employee benefit
obligations in the balance sheet.
Leave encashment: Accumulated leaves which
are expected to be utilised within next 12 months
are treated as short term employee benefit. The
Company measures the expected cost of such
absences as the additional amount that it expects
to pay as a result of the unused entitlement that
has accumulated at the reporting date.
b) Other long-term employee benefit obligations
i. Defined contribution plan
Provident Fund:Contribution towards
provident fund is made to the regulatory
authorities, where the Company has no
further obligations. Such benefits are
classified as Defined Contribution Schemes
as the Company does not carry any further
obligations, apart from the contributions
made on a monthly basis which are charged
to the Statement of Profit and Loss.
Employee's State Insurance Scheme:
Contribution towards employees' state
insurance scheme is made to the regulatory
authorities, where the Company has no
further obligations. Such benefits are
classified as Defined Contribution Schemes
as the Company does not carry any further
obligations, apart from the contributions
made on a monthly basis which are charged
to the statement of profit and loss.
ii. Defined benefit plans
Gratuity:The Company operates a defined
benefit gratuity plan in India, which requires
contributions to be made to a fund set up
by Life Insurance Corporation of India.
Provision in respect of Gratuity is made as
per actuarial valuation carried out by an
independent actuary. The cost of providing
benefits under the defined benefit plan is
determined using projected unit credit
method. Remeasurements, comprising
of actuarial gains and losses, the effect
of the asset ceiling, and the return on
plan assets (excluding amounts included
in net interest on the net defined benefit
liability), are recognised immediately in the
balance sheet with a corresponding debit
or credit to retained earnings through
Other Comprehensive Income in the year
in which they occur. Remeasurements are
not classified to Statement of Profit and
Loss in subsequent periods. Past service
costs are recognised in Statement of Profit
and Loss on the earlier of the date of the
plan amendment or curtailment and the
date on which the Company recognises
related restructuring costs. Net interest
is calculated by applying the discount
rate to the net defined benefit liability or
asset. The Company recognises service
costs comprising current service costs,
past- service costs, gains and losses on
curtailment and non-routine settlements,
and net interest expense or income in
the net defined benefit obligation as an
expense in the statement of profit and loss.
Compensated Absences:Accumulated
compensated absences, which are expected
to be availed or encashed within 12 months
from the end of the year are treated
as short term employee benefits. The
obligation towards the same is measured
at the expected cost of accumulating
compensated absences as the additional
amount expected to be paid as a result of
the unused entitlement as at the year end.
Accumulated compensated absences,
which are expected to be availed or
encashed beyond 12 months from the
end of the year end are treated as other
long term employee benefits. The Group's
liability is actuarially determined (using the
Projected Unit Credit method) at the end
of each year. Actuarial losses/gains are
recognized in the statement of profit and
loss in the year in which they arise.
c) Share based payment arrangements
Equity-settled share-based payments to
employees are measured at the fair value of the
equity instruments at the grant date. The fair
value determined at the grant date of the equity-
settled share-based payments is expensed on
a straight-line basis over the vesting period,
based on the Company's estimate of equity
instruments that will eventually vest, with a
corresponding increase in equity. At the end of
each reporting year, the Company revises its
estimate of the number of equity instruments
expected to vest. The impact of the revision of
the original estimates, if any, is recognised in
the standalone Statement of profit and loss such
that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to
the Share option's outstanding account.
j) Impairment of non-financial assets
The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset's recoverable amount.
An asset's recoverable amount is the higher of an
asset's or cash-generating unit's (CGU) fair value less
costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless
the asset does not generate cash inflows that are
largely independent of those from other assets or
Company of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to
its recoverable amount.
If assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions
are taken into account. If no such transactions can
be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Company bases its impairment calculation on
detailed budgets and forecast calculations, which are
prepared separately for each of the Company's CGU's
to which the individual assets are allocated.
Impairment losses are recognised in the statement of
profit and loss.
For assets, an assessment is made at each reporting
date to determine whether there is an indication
that previously recognised impairment losses no
longer exist or have decreased. If such indication
exists, the Company estimates the asset's or CGU's
recoverable amount. A previously recognised
impairment toss is reversed only if there has been
a change in the assumptions used to determine the
asset's recoverable amount since the last impairment
loss was recognised. The reversal is limited to the
extent that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined,
net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal
is recognised in the statement of profit and loss.
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