A. Corporate information:
Gayatri BioOrganics Limited (“the Company”) was incorporated on December 02, 1991 and has
its registered office at Hyderabad, Telangana, India. It is mainly in the business of
manufacturing of Starch, its derivatives and related by-products, and development of
customised application for value added starch derivatives. The Company has manufacturing
plants located in states of Karnataka and Telangana. The Company's equity share is listed on
the BSE Limited.
B. Basis of preparation and Statement of compliance:
The financial statements have been prepared in accordance with Ind AS notified under the
Companies (Indian Accounting Standards) Rules, 2015 as amended read with Section 133 of
the Companies Act, 2013. The presentation of the Financial Statements is based on Ind AS
Schedule III of the Companies Act, 2013.
The financial statements have been prepared on the historical cost basis except for certain
financial instruments that are measured at fair values at the end of each reporting period, as
explained in the accounting policies below:
Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at 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 a basis, except
for share-based payment transactions that are within the scope of Ind AS 102, 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 at 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
i) Revenue recognition:
Sale of Goods
Revenue from contract with customers is recognised when the Company satisfies performance
obligation by transferring promised goods and services to the customer. Performance
obligations are satisfied at the point of time when the customer obtains controls of the asset.
Revenue is measured based on transaction price, which is the fair value of the consideration
received or receivable, stated net of discounts, returns and value added tax. Transaction price
is recognised based on the price specified in the contract, net of the estimated sales incentives/
discounts. Accumulated experience is used to estimate and provide for the discounts/ right of
return, using the expected value method.
Interest 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.
Dividend income from investments is recognised when the shareholder's right to receive
payment has been established (provided that it is probable that the economic benefits will flow
to the Company and the amount of income can be measured reliably).
Export benefits are accounted for in the year of exports based on eligibility and when there is no
uncertainty in receiving the same.
Insurance claims are accounted at the time when such income has been realised by the
Company.
ii) Tangible Fixed Assets:
Land and buildings held for use in the production or supply of goods or services, or for
administrative purposes, are stated in the balance sheet at cost less accumulated depreciation
and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are
carried at cost, less any recognised impairment loss. Cost includes professional fees and, for
qualifying assets, borrowing costs capitalised in accordance with the Company's accounting
policy. Such properties are classified to the appropriate categories of property, plant and
equipment when completed and ready for intended use. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended
use.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and
properties under construction) less their residual values over their useful lives, using the
straight-line method. The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same
basis as owned assets. However, when there is no reasonable certainty that ownership will be
obtained by the end of the lease term, assets are depreciated over the shorter of the lease term
and their useful lives.
An item of property, plant and equipment is de recognised 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 the asset and is
recognised in profit or loss.
iii) Depreciation on tangible fixed assets:
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less
its estimated residual value. Depreciation on tangible property, plant and equipment is provided
using the Straight Line Method (SLM) over the useful lives of the assets estimated by the
management.
iv) Non-current assets held for sale:
Non-current assets and disposal Group of assets are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather than through continuing
use. This condition is regarded as met only when the asset (or disposal group) is available for
immediate sale in its present condition subject only to terms that are usual and customary for
sales of such asset (or disposal group) and its sale is highly probable. Management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
Non-current assets (and disposal group) classified as held for sale are measured at the lower of
their carrying amount and fair value less costs to sell.
v) Borrowing Costs:
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
vi) Inventories:
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a First
in First out (FIFO) basis except for Raw materials, where monthly weighted average cost basis
method is followed. Obsolete, slow moving and defective inventories are identified and
provided for. Cost includes all charges in bringing the goods to the point of sale , including octroi
and other levies, transit insurance and receiving charges. Work in progress and finished goods
include appropriate proportion of overheads and, where applicable, excise duty. However,
materials and other items held for use in the production of inventories are not written down
below cost if the finished products in which they will be incorporated are expected to be sold at
or above cost.
Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and estimated costs necessary to make the sale.
vii) Leases:
Leases are classified as finance leases whenever the terms of lease transfer substantially all
the risks and rewards of ownership to the lessee. Leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as operating leases.
Operating Lease
Operating lease payments are recognized as an expense in the Statement of Profit and Loss on
a straight-line basis over the lease term except where another systematic basis is more
representative of the time pattern in which economic benefits from leased assets are
consumed. The aggregate benefits of incentives (excluding inflationary increases where
rentals are structured solely to increase in line with the expected general inflation to
compensate for the lessor's inflationary cost increases, such increases are recognised in the
year in which the benefit ts accrue) provided by the lessor is recognized as a reduction of rental
expense over the lease term on a straight-line basis.
Finance Lease
Assets held under finance leases are initially recognized as assets of the Company at their fair
value at the inception of the lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in the Balance Sheet as a finance
lease obligation.
Assets held under finance leases are depreciated over their expected useful lives on the same
basis as owned assets or, where shorter, the term of the relevant lease. Lease payments are
apportioned between finance expenses and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability.
Finance expenses are recognized immediately in profit or loss, unless they are directly
attributable to qualifying assets, in which case they are capitalized in accordance with the
Company's general policy on borrowing costs. Contingent rentals are recognized as expenses
in the periods in which they are incurred.
viii) Government Grants and Subsidies:
Government grants are not recognised until there is reasonable assurance that the Company
will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in
which the Company recognises as expenses the related costs for which the grants are intended
to compensate. Specifically, government grants whose primary condition is that the Company
should purchase, construct or otherwise acquire non-current assets are recognised as deferred
revenue in the balance sheet and transferred to profit or loss on a systematic and rational basis
over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Company with no future
related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government
grant, measured as the difference between proceeds received and the fair value of the loan
based on prevailing market interest rates.
ix) Financial Instruments:
Financial assets and liabilities are recognised when the Company becomes a party to the
contractual provisions of the instrument. Financial assets and liabilities are initially measured at
fair value. Transactions costs that are directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value measured on initial
recognition of financial asset or financial liability.
Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into
known amounts of cash that are subject to an insignificant risk of change in value and having
original maturities of three months or less from the date of purchase, to be cash equivalents.
Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal
and usage.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these
financial assets are held within a business whose objective is achieved by both collecting
contractual cash flows on specified dates that are solely payments of principal and interest on
the principal amount outstanding and selling financial assets.
The Company has made an irrevocable election to present in other comprehensive income
subsequent changes in the fair value in equity investments not held for trading.
Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at
amortised cost or at fair value through other comprehensive income on initial recognition. The
transaction costs directly attributable of financial assets and liabilities at fair value through profit
or loss are immediately recognised profit or loss.
Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
Equity instruments
An equity instruments is a contract that evidences residual interest in the assets of the company
after deducting all of its liabilities. Equity instruments recognised by the Company are
recognised at the proceeds received net off direct issue cost.
DE recognition
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)
where,
- The rights to receive cash flow and the asset have expired, or
- The Company has transferred the rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to the third party under a '
pass - through' arrangement and either
(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.
When the Company has transferred its rights to receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and
rewards of ownership. When it has neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset, the company continues to
recognise the transferred asset to the extent of the company's continuing involvement. In that
case, the company also recognises an associated liability. The transferred asset and
associated liability are measured on a basis that reflects the rights and obligations that the
company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the company could be required to pay.
Derivative financial instruments
The Company enters into certain derivative contracts to hedge risks which are not designated
as hedges. Such contracts are accounted for at fair value through profit or loss and are included
in other gains/ (losses).
x) Foreign currency:
The functional currency of the Company is Indian rupee (INR).
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 and the exchange gains or losses are recognised in the
Statement of Profit and Loss.
xi) Retirement and other employee benefits:
Defined benefit plans
For defined benefit plans, the cost of providing benefits is determined using the Projected Unit
Credit Method, with actuarial valuations being carried out at each Balance sheet date. Actuarial
gains and losses are recognised in full in the other comprehensive income for the period in
which they occur. Past service cost both vested and unvested is recognised as an expense at
the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity
recognises related restructuring costs or termination benefits.
Defined contribution plans
Contribution to defined contribution plans are recognised as expense when employees have
rendered services entitling them to such benefits.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of
the period in which the employee renders the related services are recognised as an actuarially
determined liability at the present value of the defined benefit obligation at the Balance sheet
date.
xii) Income Taxes:
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit
before tax' as reported in the statement of profit and loss because of items of income or expense
that are taxable or deductible in other years and items that are never taxable or deductible. The
Company's current tax is calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that
have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Company expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case, the current
and deferred tax are also recognised in other comprehensive income or directly in equity
respectively. Where current tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business combination.
|