2 Significant Accounting Policies
2.1 Basis of preparation of financial statements:
These financial statements have been prepared In accordance with Indian Accounting Standards find AS), under the historical
cost convention on accrual basis except for certain financial instruments which are measured at fair values. The Ind AS are
prescribed under Section 133 of the Companies Act, 2013 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.
2.2 Use of Estimates and judgments:
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and
assumptions that affect the applications of the accounting policies and the reported amounts of assets and liabilities, disclosure
of contingent assets & liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the year. The estimates and assumptions used in the accompanying financial statements are based upon management's
evaluation of the relevant facts and circumstances. Actual results may differ from the estimates and assumptions used in
preparing the accompanying financial statements.
23 Property, Plant and Equipment:
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment,
if any. Cost is inclusive of inward freight, duties and taxes and incidental expenses related to acquisition which is not
recoverable. All upgradation / enhancements are charged off as revenue expenditure unless they bring similar significant
additional benefits.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to
arise from the continued use of 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 the asset and is recognised
in Statement of Profit and Loss.
Depreciation on property, plant & equipment is calculated on Written Down Method in accordance with the provisions of
Schedule II of the Companies Act, 2013 keeping 5% of cost as residual value. The useful life of property, plant & equipment as
defined in Part C of schedule II of the Companies Act, 2013 has been taken for all property, plant & equipment except for Office
Equipments, Printer and Lab Equipments. In case of purchase / sale of assets during the year, depreciation has been charged on
pro rata basis from / up to date of commercial production / sale. Depreciation is not provided on Capital Work in Progress until
the assets are ready for its intended use.
The management believes that the useful lives as given below best represent the period over which the management expects to
use these assets. Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of schedule
II of the Companies Act, 2013;
Office Equipments 15 and 10 Years
Printer 6 Years
Lab Equipments 15 Years
Intangible Assets:
Intangible assets are stated at cost less accumulated amortization and net of impairments, if any. Intangible assets are
amortized over their estimated useful lives on straight-line basis. An intangible asset is recognized if it is probable that the
expected future economic benefits that are attributable to the asset will flow to the Cojjjzwnv-aa^its cost can be measured
re"ablv' -
2.4 Inventories:
The inventories are valued at lower of cost or net realizable value, The cost of inventories is determined based on weighted
average cost method as permitted by Indian Accounting Standard 2 Ý Inventories.
The basis of determining cost for various categories of inventories is as follows:¬
* Spares, consumables and accessories are valued on Weighted Average basis.
Ý Raw material are valued on Weighted Average basis.
* Work-in-progress are valued at cost of production (cost of materials and overhead up to the completed stage of production)
* Inventories of Finished goods are valued on Weighted Average basis or net realizable value whichever is less.
* Goods in transit are recorded at its purchase price.
2.5 Foreign Currency Transaction:
The functional and presentation currency of the Company is Indian Rupee. Transactions in foreign currency are accounted for at
the exchange rate prevailing on the transaction date. Current assets and current liabilities denominated in foreign currency are
translated at the exchange rate prevalent at the date of the balance sheet. Gains /losses arising on settlement as also on
translation of monetary items are recognized in the Statement of Profit and Loss.
2.6 Taxes on Income:
Taxes on income comprises of current taxes and deferred taxes. 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. Deferred tax is recognized 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.
2.7 Revenue Recognition:
Revenue is measured at the fair value of the consideration received or receivable for goods supplied Revenue from sale of
products is recognized when the company performs Its obligations to its customers and the amount of revenue can be
measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when
the control over the same is transferred to the customer. Revenue from sale of goods excludes Excise Duty, Sales Tax/GST and
Trade Discount.
Interest income is recognised in the Statement of Profit and Loss using the effective interest method.
Dividend income is recognized in the Statement of Profit and Loss when the right to receive dividend is established-
2.8 Borrowing Cost:
Borrowing cost that are attributable to the acquisition / construction of qualifying assets are capitalized as part of the cost of
the respective assets. Other borrowing costs are recognized as expenses in the year in which they are incurred.
2.9 Leases:
The Company assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if it
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
Right-of-Use (ROU) assets are recognized at inception of a contract or arrangement for significant lease components at cost less
lease incentives, if any. ROU assets are subsequently measured at cost less accumulated depreciation and impairment losses, if
any. The cost of ROU assets includes the amount of lease liabilities recognized, initial direct cost incurred and lease payments
made at or before the lease commencement date. ROU assets are generally depreciated over the shorter of the lease term and
estimated useful lives of the underlying assets on a straight line basis, Lease term is determined based on consideration of facts
and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option.
Lease payments associated with short-term leases and low value leases are charged to the Statement of Profit and Loss on a
straight line basis over the term of the relevant lease.
The Company recognises lease liabilities measured at the present value of lease payments to be made on the date of
recognition of the lease. Such lease liabilities do not include variable lease payments (that do not depend on an index or a rate),
which are recognised as expense in the periods in which they are incurred. Interest on lease liability is recognised using the
effective interest method. Lease liabilities are subsequently increased to reflect the accretion of interest and reduced for the
lease payments made. The carrying amount of lease liabilities is also remeasured upon modification of lease arrangement or
upon change in the assessment of the lease term. The effect of such remeasurements is adjusted to the value of the ROU
assets.
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 capitalised within property, plant and
equipment or investment property and depreciated over its useful economic life. Payments^ueeeivecUjnder operating leases are
recognised in the Statement of Profit and Loss on a straight line basis over the term ofjHe^aSeN/A^N.
2.10 Financial instruments: Financial assets, Financial liabilities and Equity Instruments:
Financial Assets -
Recognition
Financial Assets are initially recognised at transaction price. Management determines the classification of an asset at initial
recognition depending on the purpose for which the assets were acquired. Financial assets are classified as those measured at:
(a) amortized cost, where the financial assets are held solely for collection of cash flows arising from payments of principal
and/or interest.
(b) fair value through other comprehensive income (FVTOCI), where the financial assets are held not only for collection of cash
flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently
measured at fair value, with unrealized gains and losses arising from changes in the fair value being recognised in other
comprehensive income.
(c) fair value through profit or loss (FVTPL), where the assets are managed in accordance with an approved investment strategy
that triggers purchase and sale decisions based on the fair value of such assets. Such assets are subsequently measured at fair
value, with unrealized gains and losses arising from changes in the fair value being recognised in the Statement of Profit and
Loss in the period in which they arise.
Derecognition
Financial assets are derecognized when the right to receive cash flows from the assets has expired, or has been transferred, and
the Group has transferred substantially all of the risks and rewards of ownership. If the asset is one that is measured at:
(a) amortized cost, the gain or loss is recognised in the Statement of Profit and Loss;
(b) fair value through other comprehensive income, the cumulative fair value adjustments previously taken to
reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment, in which case the
cumulative fair value adjustments previously taken to reserves are reclassified within equity.
Financial Liabilities -
Recognition
Borrowings, trade payables and other financial liabilities are initially recognised at the value of the respective contractual
obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption/ settlement is
recognised in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and
adjusted to the liability figure disclosed in the Balance Sheet.
Derecognition
Financial liabilities are derecognized when the liability is extinguished, that is, when the contractual obligation is discharged,
cancelled or on expiry.
Equity Instruments-
Equity instruments are recognised at the value of the proceeds, net of direct costs of the capital issue.
2.11 Employee Benefits:
a) 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, performance, incentives, etc, are recognised as an expense at the undiscounted amount in
the Statement of Profit and Loss for the year in which the employee renders the related service.
b) Post-Employment Benefits
Post retirement benefits like provident fund, superannuation, gratuity and post retirement medical benefits are provided for as
below:
Defined Contribution Plans
Contributions under Defined Contribution Plans i.e. provident fund & superannuation fund are recognised in the Statement of
Profit and Loss in the period in which the employee has rendered the service.
Defined Benefit Plans
For defined benefits retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method,
with actuarial valuation being carried out at each year end balance sheet date. Re-measurement gains and losses of the net
defined benefit liability/(asset) are recognised as an expense within employment costs,
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related
restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of defined-benefit obligation as
reduced by the fair value of plan assets.
c) Other benefits
Other long term benefits include compensated absences, long term service benefit, pension and sick leave. The liability towards
other long term benefits is determined by independent actuary at every balance sfje^d^fg %nd se/vice cost, net interest on net
defined liability/ (asset) are recognised in profit and loss account.
*** s7„ri__
2.12 Basic earning per share;
Basic earning per share is calculated by dividing the net profit or loss (excluding other comprehensive income) for the year
attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus
element in a right issue, shares split and reserve share splits that have changed the number of equity shares outstanding,
without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss
(excluding other comprehensive income) for the year attributable to equity shareholders and the weighted average number of
shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.13 Segment Information:
The Company is primarily engaged in the business of "tobacco and allied products" and "Agro Commodities", which in terms of
Ind A5 108 on "Segment Reporting'’ constitutes a two reporting segments.
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