(iii) Material accounting policies:
a. Property, plant and equipment
Recognition and initial measurement
Property, plant and equipment are stated at
their cost net of accumulated depreciation
and impairment losses, if any. Cost includes
all incidental expenses relating to acquisition,
installation and construction of property, plant
and equipment. Freehold land is stated at original
cost of acquisition.
Subsequent measurement
Subsequent expenditures are included in the
asset's carrying amount 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. All other
repairs and maintenance are generally charged
to the statement of profit and loss during the
reporting period in which they are incurred.
Property, plant and equipment which are not
ready for intended use as on the date of balance
sheet are disclosed as 'Capital work-in-progress'.
Capital work in progress is stated at cost, net of
accumulated impairment loss, if any. Such items
are classified to the appropriate category of
property, plant and equipment when completed
and ready for their intended use. Advances given
towards acquisition / construction of property,
plant and equipment outstanding at each
balance sheet date are disclosed as Capital
Advances under "Other non-current assets".
Depreciation on property, plant, and equipment
Depreciation on property, plant and equipment
is provided on straight line method, in terms
of useful life of the assets, as prescribed under
Schedule II of the Act. Depreciation on additions/
disposals is provided on a pro-rata basis i.e.
from the date on which the asset is capitalized
and till the date it was disposed-off. The residual
values, useful lives and methods of depreciation
of property, plant and equipment are reviewed at
each financial year end.
De-recognition
Any item of property, plant and equipment
and any significant part initially recognized is
derecognized upon disposal or when no future
economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition
of an item of property, plant and equipment is
measured as the difference between the net
disposal proceeds and the carrying amount of
the item and is recognized in the statement of
profit and loss when the item is derecognized.
b. Investment property
Recognition and initial measurement
Investment property is categorised as a property
that is:
Ý held to earn rentals or for capital appreciation
or both;
Ý not for sale in the ordinary course of business, or;
Ý not for use in the production or supply of goods
or services or for administrative purposes.
Investment property is measured at its cost,
including related transaction costs less
depreciation and impairment, if any. Subsequent
expenditure is capitalized 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. When part of an investment
property is replaced, the carrying amount of the
replaced part is derecognized.
Depreciation on investment property
Depreciation on investment property is provided
on the straight line method, in terms of the useful
life prescribed under Schedule II of the Act.
c. Intangible assets
Recognition and initial measurement
Intangible assets acquired separately are
measured on initial recognition at cost. Cost
comprises the purchase price (net of tax / duty
credits availed wherever applicable) and any
directly attributable cost of bringing the assets
to its working condition for its intended use
Following initial recognition, intangible assets are
carried at cost less accumulated amortization
and accumulated impairment loss, if any.
Intangible assets which are not ready for intended
use as on the date of balance sheet are disclosed
as "Intangible assets under development".
Subsequent measurement (amortization and
useful lives)
The useful lives of intangible assets are assessed
as finite. Intangible assets with finite lives are
amortised over the useful economic life and
assessed for impairment whenever there is
an indication that the intangible asset may
be impaired. The amortisation period and the
amortisation method for an intangible asset
with a finite useful life are reviewed during each
reporting period. Changes in the expected useful
life or the expected pattern of consumption
of future economic benefits embodied in the
asset are considered to modify the amortisation
period or method, as appropriate, and are
treated as changes in accounting estimates. The
amortisation expense on intangible assets with
finite lives is recognised in the statement of profit
and loss.
De-recognition
An intangible asset is derecognized on disposal or
when no future economic benefits are expected
from its use or disposal. Gains or loss arising
from the de recognition of an intangible asset, if
any, is measured as the difference between the
net disposal proceeds and the carrying amount
of the intangible asset and is recognized in the
statement of profit and loss when the asset
is derecognized.
d. Inventories
Raw materials, stores and spares and
packing materials
Raw material, stores and spares and packing
materials are valued at lower of cost and net
realizable value. Cost includes purchase price,
other costs incurred in bringing the inventories to
their present location and condition, and includes
non-refundable taxes. Materials and other items
held for use in the production of inventories are
not written down below cost if the finished goods
in which they will be incorporated are expected to
be sold at or above cost. Cost is determined on a
moving weighted average basis. Obsolete, slow
moving and defective inventories are identified
at the time of physical verification and wherever
necessary a provision is made.
Finished goods, by products and stock in trade
Finished goods are valued at lower of cost
and net realisable value. Cost of inventories of
finished goods includes cost of raw materials,
direct and indirect overheads which are incurred
to bring the inventories to their present location
and condition.
By-products are valued at net realisable value.
Stock in trade are valued at lower of cost and net
realisable value. Cost of stock-in-trade includes
cost of purchase and other cost incurred in
bringing the inventories to the present location
and condition. Cost is determined on a moving
weighted average basis.
Net realisable value is the estimated selling
price in the ordinary course of business, less the
estimated costs of completion and the estimated
costs necessary to make the sale.
e. Revenue recognition
Revenue is measured based on the consideration
specified in a contract with a customer and
excludes amounts collected on behalf of third
parties, if any. The Company recognizes revenue
when it transfers control over a product or service
to a customer.
To determine whether to recognize revenue, the
Company follows a 5-step process:
Ý Identifying the contract with a customer
Ý Identifying the performance obligations
Ý Determining the transaction price
Ý Allocating the transaction price to the
performance obligations
Ý Recognising revenue when/as performance
obligations are satisfied.
A performance obligation is a promise in a
contract to transfer a distinct good or service (or
a bundle of goods and services) to the customer.
A contract's transaction price is allocated to each
distinct performance obligation and recognized
as revenue, as or when, the performance
obligation is satisfied.
Revenue is measured on the basis of transaction
price, which is the consideration, adjusted for
volume discounts, rebates, schemes allowances,
price concessions, incentives, amounts collected
on behalf of government and returns, if any, as
specified in the contracts with the customers.
Accumulated experience is used to estimate
the provision for such discounts and rebates.
Revenue is only recognised to the extent that
it is highly probable a significant reversal will
not occur.
a) Sale of finished goods, by-products and
stock-in-trade
As per Ind AS 115- Revenue from sale of goods
is recognised when control of the products
being sold is transferred to the customer
and when there are no longer any unfulfilled
obligations. The performance obligations
in the contracts are fulfilled at the time of
dispatch, delivery or upon formal customer
acceptance depending on terms with
customers. Revenue from sale of goods is
recognized when it transfers control of the
product to a customer i.e. when customers
are billed or when goods are delivered at the
delivery point, as per terms of the agreement,
which could be either customer premises or
carrier premises who will deliver goods to the
customer. When payments received from
the customers exceed revenue recognized to
date on a particular contract, any excess (a
contract liability) is reported in the balance
sheet under other liabilities.
Satisfaction of performance obligations
The Company's revenue is derived from
the single performance obligation to
transfer primarily rice and other products
under arrangements in which the transfer
of control of the goods and the fulfillment
of the Company's performance obligation
occur at the same time. Therefore, revenue
from the sale of goods is recognized when
the Company transfers control at the point in
time the customer takes undisputed delivery
of the goods. Whether the customer has
obtained control over the asset depends on
when the goods are made available to the
carrier or the buyer takes possession of the
goods, depending on the delivery terms.
No element of financing is deemed present
as the sales are made with insignificant
credit terms depending on the specific
terms agreed with customers.
b) Revenue from electricity generation
Sale of energy is accounted for on basis of
energy supplied.
c) 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 applicable effective
interest rate.
d) Rendering of services
Income from services rendered is recognised
at a point in time based on agreements /
arrangements with the customers when the
services are performed and there are no
unfulfilled obligations.
e) Dividend income
Dividend income is recognised when right
to receive is established (provided that it is
probable that the economic benefits will flow
to the Company and the amount of income
can be measured reliably).
f) Trade receivables
Trade receivables are initially recognised
at transaction price as they do not contain
a significant financing component. It
represents the Company's right to an amount
of consideration that is unconditional.
f. Employee benefits
Short-term employee benefits
Short-term employee benefits that are expected
to be settled wholly within twelve months from
the end of the year. The undiscounted amount
of short-term employee benefits to be paid in
exchange for employee services is recognised
as an expense as the related service is rendered
by employees. These benefits include salaries,
wages, bonus and other benefits.
Defined contribution plan
Employee benefits in the form of contribution
to Provident Fund managed by government
authorities is considered as defined contribution
plans and the same are charged to the
statement of profit and loss for the year in which
the employee renders the related service.
Defined benefit plan
The Company's gratuity scheme is considered
as defined benefit plan. The present value of the
obligation under such defined benefit plan is
determined based on actuarial valuation using
the Projected Unit Credit ('PUC') method, which
recognises each period of service as giving rise
to additional unit of employee benefit entitlement
and measures each unit separately to build up
the final obligation. The obligation is measured
at the present value of the estimated future cash
flows. The discount rates used for determining the
present value of the obligation under defined
benefit plans, is based on the market yields on
Government securities as at the reporting date.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan
assets. The Company recognises the following
changes in the net defined benefit obligation as
an expense in the statement of profit and loss:
Ý Service costs comprising current service
costs; and
Ý Net interest expense or income.
Ý Re-measurements, comprising actuarial gains
and losses, the effect of the asset ceiling (if
any), and the return on plan assets (excluding
net interest), are recognized immediately in the
balance sheet with a corresponding debit or
credit to retained earnings through OCI in the
period in which they occur. Re-measurements
are not reclassified to the statement of profit
and loss in subsequent periods.
Other long-term employee benefits
Compensated absences are provided for on
the basis of an actuarial valuation, using the
projected unit credit method, as at the date of
the balance sheet. Actuarial gains / losses, if any,
are immediately recognised in the statement of
profit and loss. Compensated absences, which
are expected to be settled wholly within 12
months after the end of the period in which the
employees render the related service, are treated
as short term employee benefits. 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.
j. 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.
a) Financial assets
Financial assets are recognized when
the Company becomes a party to the
contractual provisions of the instrument.
Initial recognition and measurement
On initial recognition, a financial asset is
recognized at fair value. In case of financial
assets which are recognised initially at
fair value through profit and loss ('FVTPL')
except for trade receivables without
financing components which are measured
at transaction price, its transaction cost
is recognised in the Statement of Profit
and Loss. In other cases, the transaction
cost is attributed to the acquisition of the
financial asset.
Subsequent measurement
For purposes of subsequent measurement
financial assets are classified in
below categories:
Ý Financial assets carried at amortised cost
Ý Financial assets at fair value through
other comprehensive income ('FVTOCI')
Ý Financial assets at fair value through
profit or loss ('FVTPL')
Financial assets carried at amortised cost
A financial asset is subsequently measured
at the amortised cost if both the following
conditions are met:
Ý The asset is held within a business model
whose objective is to hold the asset in
order for collecting contractual cash
flows; and
Ý Contractual terms of the asset give rise on
specified dates to cash flows that are Solely
Payments of Principal and Interest ('SPPI')
on the principal amount outstanding.
Financial assets carried at FVTOCI
A financial asset is classified as at FVTOCI if
both the following criteria are met:
Ý The objective of the business model is
achieved both by collecting contractual
cash flows and selling the financial
assets; and
Ý The asset's contractual cash flows
represent SPPI.
Financial assets carried at FVTPL
FVTPL is a residual category for financial
assets. Any financial assets, which does
not meet the criteria for categorisation as
amortised cost or as FVTOCI, is classified as
FVTPL. Financial assets included within the
FVTPL category are measured at fair value
with all changes recognized in the statement
of profit and loss.
De-recognition
A financial asset (or, where applicable, a
part of a financial asset or part of a group
of similar financial assets) is primarily
derecognised when the rights to receive
cash flows from the asset have expired.
Impairment of financial assets
In accordance with Ind AS 109, the Company
applies expected credit losses ('ECL') model
for measurement and recognition of
impairment loss on the following financial
assets and credit risk exposure:
Ý Trade receivables;
Ý Financial assets measured at amortised
cost (other than trade receivables);
Ý Financial assets measured at fair value
through other comprehensive income
(FVTOCI).
b) Financial liabilities
Financial liabilities are recognised when
the Company becomes a party to the
contractual provisions of the instrument.
Initial recognition and measurement
All financial liabilities are recognised initially
at fair value and, in the case of payables, net
of directly attributable transaction costs. The
Company's financial liabilities include trade
and other payables, short term borrowings
and derivative financial instruments.
Classification
Financial liabilities are classified initially at
initial recognition, as financial liabilities at
FVTPL or at amortised cost, as appropriate.
De-recognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires.
c) Offsetting of financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in
the standalone balance sheet if there is a
currently enforceable legal right to offset the
recognised amounts and there is an intention
to settle on a net basis, to realize the assets
and settle the liabilities simultaneously.
d) Fair value measurement
The Company measures financial
instruments at fair value at each balance
sheet date. All assets and liabilities for
which fair value is measured or disclosed
in the standalone financial statements are
categorized 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:
Ý Level 1: Quoted (unadjusted) market prices
in active markets for identical assets
or liabilities.
Ý Level 2: Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable.
Ý Level 3: Valuation techniques for which the
lowest level input that is significant to the
fair value measurement is unobservable.
For assets and liabilities that are recognised
in the standalone balance sheet on a
recurring basis, the Company determines
whether transfers have occurred between
levels in the hierarchy by re-assessing
categorization (based on the lowest level
input that is significant to the fair value
measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures,
the Company has determined classes of
assets and liabilities on the basis of the
nature, characteristics and risks of the asset
or liability and the level of the fair value
hierarchy as explained above.
e) Hedge accounting
Initial recognition and subsequent
measurement
The Company uses derivative financial
instruments, such as forward contracts
to hedge its foreign currency risks. 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.
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 recognised
directly in the Statement of profit and loss,
except for the effective portion of cash flow
hedges, which is recognised in OCI and later
reclassified to profit or loss when the hedged
item affects profit or loss. For the purpose of
hedge accounting, hedges are classified
as cash flow hedges where Company
hedges its exposure to variability in cash
flows that is attributable to foreign currency
risk and interest rate risk associated with
recognised liabilities in the standalone
financial statements.
At the inception of a hedge relationship,
the Company formally designates and
documents the hedge relationship to
which the Company wishes to apply hedge
accounting and the risk management
objective and strategy for undertaking the
hedge. The documentation includes the
group's risk management objective and
strategy for undertaking hedge, the hedging/
economic relationship, the hedged item
or transaction, the nature of the risk being
hedged, hedge ratio and how the entity
will assess the effectiveness of changes
in the hedging instrument's fair value in
offsetting the exposure to changes in the
hedged item's cash flows attributable to
the hedged risk. Such hedges are expected
to be highly effective in achieving offsetting
changes in cash flows and are assessed on
an ongoing basis to determine that they
continue to be highly effective throughout
the financial reporting periods for which they
are designated.
When a hedging instrument expires, or is sold
or terminated, or when a hedge no longer
meets the criteria for hedge accounting,
any cumulative deferred gain or loss and
deferred costs of hedging in equity at that
time remains in equity until the forecast
transaction occurs. When the forecast
transaction is no longer expected to occur,
the cumulative gain or loss and deferred
costs of hedging that were reported in equity
are immediately reclassified to profit or loss
within other gains/(losses).
h. Leases
The Company assesses whether a contract is
or contains a lease, at inception of a contract.
A contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration.
To assess whether a contract conveys the right
to control the use of an identified asset, the
Company assesses whether:
Ý the contract involves the use of an
identified asset;
Ý the Company has substantially all of the
economic benefits from use of the asset
through the period of the lease and;
Ý the Company has the right to direct the use
of the asset.
Company as a lessee
Right-of-use assets
At the date of commencement of the lease,
the Company recognizes a right-of-use asset
and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for
short-term leases and low value leases.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the
lease liability adjusted for any lease payments
made at or prior to the commencement date
of the lease. They are subsequently measured
at cost less accumulated depreciation and
impairment losses, if any. Right-of-use assets are
depreciated from the commencement date on
a straight-line basis over the shorter of the lease
term and useful life of the underlying asset.
Lease liabilities
Lease liability is initially measured at the present
value of the future lease payments. The lease
payments are discounted using the interest rate
implicit in the lease or, if not readily determinable,
using the incremental borrowing rates. The
Company uses the incremental borrowing rate
as the discount rate.
Lease payments included in the measurement
of the lease liability includes fixed payments,
variable lease payments that depend on an index
or a rate known at the commencement date; and
extension option payments or purchase options
payment which the Company is reasonably
certain to exercise.
Variable lease payments that do not depend
on an index or rate are not included in the
measurement the lease liability and the right-of-
use asset. The related payments are recognized
as an expense in the period in which the event or
condition that triggers those payments occurs
and are included in the line "other expenses" in
the statement of profit and loss.
The lease term comprises the non-cancellable
lease term together with the period covered by
extension options, if assessed as reasonably
certain to be exercised, and termination options,
if assessed as reasonably certain not to be
exercised. The lease liability is subsequently
remeasured by increasing the carrying amount
to reflect interest on the lease liabilities, reducing
the carrying amount to reflect the lease
payments made.
Right-of-use asset and lease liability have been
separately presented in the balance sheet
and lease payments have been classified as
financing cash flows.
Short-term leases and leases of low-value assets
The Company applies the short-term lease
recognition exemption to its short-term leases
(i.e., those leases that have a lease term of
12 months or less from the commencement
date). It also applies the lease of low-value
assets recognition exemption to leases that
are considered of low value. Lease payments
on short-term leases and leases of low-value
assets are recognised as expense on a straight¬
line basis over the lease term.
Company as a lessor
Leases for which the Company is a lessor is
classified as a finance or operating lease.
Whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee, the contract is classified
as a finance lease. All other leases are classified
as operating leases.
i. Foreign currency transactions and translations
The Company's standalone financial statements
are presented in (f), which is the Company's
functional currency.
In preparing the financial statements, transactions
in currencies other than the Company's functional
currency are recorded at the rates of exchange
prevailing on the date of the transaction. At
the end of each reporting period, monetary
items denominated in foreign currencies are
re-translated at the rates prevailing at the end
of the reporting period. Non-monetary items
carried at fair value that are denominated
in foreign currencies are re-translated at the
rates prevailing on the date when the fair value
was determined. Non-monetary items that are
measured in terms of historical cost in a foreign
currency are not translated.
Exchange differences arising on the re-translation
or settlement of monetary items are included in
the statement of profit and loss for the period.
Income Taxes
Tax expense is the aggregate amount included in
the determination of profit or loss for the period
in respect of current tax and deferred tax.
Current tax
Current tax is the amount of income taxes payable
in respect of taxable profit for a period. Taxable
profit differs from 'Profit before tax' as reported
in the statement of profit and loss because of
items of income and expense that are taxable
or deductible in other years and items that are
never taxable or deductible under Income Tax
Act, 1961.
Current tax is measured using tax rates that
have been by the end of the reporting period or
amount expected to be recovered from or paid
to taxation authorities.
The Company offsets current tax assets and
current tax liabilities where it has a legally
enforceable right exists to set off the recognised
amounts and and where it intends either to settle
on a net basis, or to realise the asset and settle
the liability simultaneously.
In case of deferred tax assets and deferred tax
liabilities, the same are offset if the Company has
a legally enforceable right to set off corresponding
current tax assets against current tax liabilities
and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the
same tax authority on the Company.
Deferred tax
Deferred tax is recognized 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 under Income Tax
Act, 1961.
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 it is probable
that taxable profit will be available against which
those deductible temporary differences can
be utilised.
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 years in which those temporary differences
are expected to be recovered or settled.
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 profit will be available to
allow the benefits of part or all of such deferred
tax assets to be utilised.
Current and deferred tax are recognised as
income or an expense in the statement of profit
and loss, except when they relate to items
that are recognised in Other Comprehensive
Income, in which case, the current and deferred
tax credit/charge are recognised in Other
Comprehensive Income.
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