2.3 Material Accounting Policies:
A) Property, plant and equipment (PPE)
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment
losses, if any.
Cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable
purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an asset to
working condition and location for its intended use. It also includes the present value of the expected cost for
the decommissioning and removing of an asset and restoring the site after its use, if the recognition criteria for
a provision are met.
Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs
and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are
incurred. Major inspection and overhaul expenditure is capitalized if the recognition criteria are met.
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”. Assets in the course of construction and freehold land are not
depreciated.
When an item of property, plant and equipment is scrapped or otherwise disposed off, the carrying amount
and related accumulated deprecation are removed from the books of account and resultant profit or loss, if
any, is reflected in statement of Profit & Loss.
Company depreciates property, plant and equipment over the estimated useful life as prescribed in schedule
11 of the Companies Act 2013 on the straight-line method on pro rata basis from the date the assets are ready
for intended use.
The estimated useful lives of major components of PPE are as follows:
• Building 30-60 years
• Plant and equipment 35 years*(instead of 15 years as prescribed under schedule II)
• Furniture and Fixtures 8 -10 years
• Vehicles 6 - 10 years (instead of 8-10 years as prescribed under schedule II)
• Office equipments 3 - 6 years (including computer software)
*The company has taken a view on the basis of technical advice that plant in the dairy industry use non¬
corrosive raw materials, the expected life of the plant and machinery should be 35 years. This is in pursuance
of proviso to sub clause (c) of clause 3 of schedule II of the Companies Act 2013.
The Company has not revalued any of its property, plant and equipment during the year.
B) Biological Assets
Biological assets are recorded at a fair value less cost to sell. At each reporting date, subsequently, companies
must remeasure this value and record any gains or losses.
All expenses incurred in land preparation, planting and development of trees up to maturity are capitalised as
biological assets; all expenses subsequent to maturity are recognised directly in statement of profit and loss
account.
Biological assets are stated at revalued amount, which is the fair value at date of revaluation less any
accumulated impairment losses as certified by the Agricultural scientist.
C) Intangible Assets
Intangible assets purchased are initially measured at cost. The cost of a separately purchased intangible
asset comprises its purchase price including duties and taxes and any costs directly attributable to making the
asset ready for their intended use.
Intangible assets acquired in a business combination are recognised at fair value at the acquisition date.
Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses, if any.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is recognised in standalone statement of profit and loss
as incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. Indefinite-life intangible assets
comprises brand, for which there is no foreseeable limit to the period over which they are expected to generate
net cash inflows. These are considered to have an indefinite life, given the strength and durability of the
brands and the level of marketing support. For indefinite-life intangible assets, the assessment of indefinite life
is reviewed annually to determine whether it continues, if not, it is impaired or changed prospectively basis
revised estimates.
The Company has not revalued any of its intangible assets during the year.
D) Capital work in progress
Capital work in progress is stated at cost, if any. Assets in the course of construction are capitalized in capital
work in progress account. At the point when an asset is capable of operating in the manner intended by
management, the cost of construction is transferred to the appropriate category of property, plant and equipment.
Costs associated with the commissioning of an asset are capitalised when the asset is available for use but
incapable of operating at normal levels until the period of commissioning has been completed. Cost includes
direct costs, related incidental expenses, other directly attributable costs and borrowing costs. Advances paid
towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified
as capital advances under “Other Non-Current Assets”.
E) Leased Assets (Right of Use Assets)
The Company’s lease asset classes consist of leases for land and buildings for the purpose of having offices/
various branches. The Company assesses whether a contract 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:
(i) The Contract involves the use of an identified asset
(ii) The Company has substantially all of the economic benefits from use of the asset through the period of
the lease and
(iii) The Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases) and low value leases.
Right-of-use assets are initially measured at cost, less any accumulated amortization and impairment losses.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
lease payments made at or before the commencement date less any lease incentives received and estimate
of costs to dismantle.
Right-of-use assets are amortized on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets.
The Company has not revalued any of its right-of-use assets
Short term Leases and leases of low value of assets
The Company applies the short-term lease recognition exemption to its short-term leases. It also applies the
lease of low value assets recognition exemption that are considered to be low value. The Company recognizes
the lease payments as an operating expense on a straight-line basis over the term of the lease. The Company
incurred Rs 78 lakhs for the year ended 31st March, 2025 (31st March, 2024: Rs 70 Lakhs) towards expenses
relating to short-term leases and leases of low-value assets.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at the lease commencement date if the discount rate implicit
in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. The carrying amount is remeasured when there is a change in
future lease payments arising from a change in index or rate. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a
change in the assessment of an option to purchase the underlying asset. The incremental borrowing rate
applied to lease liabilites is in the range of 11% per annum to 12% per annum.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments
have been classified as financing cash flows.
F) Impairment of Non Financial Assets
At the end of each reporting period, the Company assesses whether there is any indication that an assets or
a group of assets (cash generating unit) may be impaired. If any such indication exists, the recoverable amount
of the asset or cash generating unit is estimated in order to determine the extent of impairment loss (if any). If
it is not possible to estimate the recoverable amount of an individual asset, the entity determines the recoverable
amount of the Cash Generated Unit (CGU) to which the asset belongs.
Recoverable amount is the higher of fair value less cost of disposal and value in use. In assessing the value in
use, the estimated future cash flow are discounted at their present value using the appropriate discount rate
that reflects current market assessment of time value of money and the risks specific to the assets for which
the estimates of future cash flow have not been adjusted.
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.
If the recoverable amount of an assets (or cash generating unit) is estimated to be less than its carrying
amount, the carrying amount of the assets (or cash generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in the statement of Profit & Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit)
is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss recognized originally in
the statement of Profit & Loss.
No Impairment was identified in FY 2024-25 and in previous FY 2023-24.
G) Financial instruments
A financial instrument is any contact that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets and financial liabilities are recognized when a Company
becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction 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 and loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. T ransaction costs directly attributable
to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized
immediately in the statement of profit and Loss.
(i) Financial Assets
(a) Initial recognition and measurement:
Financial assets, except for trade receivables, are recognized when the Company becomes a party
to the contractual provisions of the instrument.
Trade receivables are initially recognised at transaction price as they do not contain a significant
financing component. This implies that the effective interest rate for these receivables is zero.
(b) Subsequent measurement of financial assets:
All recognised financial assets are subsequently measured in their entirety at either amortised cost
or fair value, depending on the classification of the financial assets and are classified in four categories:
• Amortised cost
• Fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains
and losses (debt instruments)
• Fair value through OCI with no recycling of cumulative gains and losses upon derecognition
(equity instruments)
• Fair value through profit or loss
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Company’s business model for managing them.
In order for a financial asset to be classified and measured at amortized cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on
the principal amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
Financial assets with cash flows that are not SPPI are classified and measured at fair value through
profit or loss, irrespective of the business model. The Company’s business model for managing
financial assets refers to how it manages its financial assets in order to generate cash flows. The
business model determines whether cash flows will result from collecting contractual cash flows,
selling the financial assets, or both.
Financial assets classified and measured at amortized cost are held within a business model with
the objective to hold financial assets in order to collect contractual cash flows while financial assets
classified and measured at fair value through OCI are held within a business model with the objective
of both holding to collect contractual cash flows and selling.
(c) Derecognition of financial assets:
The Company derecognizes a financial asset when
- the contractual rights to receive the cash flows from the asset expire, or
- the Company has transferred its right to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either
a) It transfers the financial asset and substantially all the risks and rewards of ownership of
the asset to another party 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.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognized in other comprehensive income and accumulated in equity is recognized
in the Statement of Profit and Loss if such gain or loss would have otherwise been recognized in the
Statement of Profit and loss on disposal of that financial asset.
(d) Impairment of financial assets:
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the financial assets that are debt instruments,
and are measured at amortised cost e.g., loans, deposits and trade receivables or any contractual
right to receive cash or another financial asset that result from transactions that are within the
scope.
The Company follows ‘simplified approach’ for recognition of loss allowance on trade receivables.
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognizes loss allowance based on lifetime ECLs at each reporting date, right from its
initial recognition. ECL allowance recognised (or reversed) during the period is recognised as expense
(or income) in the standalone statement of profit and loss under the head ‘Other expenses’.
(e) Write off
The gross carrying amount of a financial asset is written off when the Company has no reasonable
expectations of recovering the financial asset in its entirety or a portion thereof. A write-off constitutes
a derecognition event
(ii) Financial Liabilities
(a) Initial Recognition and Measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions
of the instrument. Financial liabilities are initially measured at the amortized cost unless at initial
recognition, they are classified as fair value through profit and loss. The Company’s financial liabilities
include trade and other payables and loans and borrowings including bank overdrafts/cash credits.
(b) Subsequent measurement of financial liabilities:
All the financial liabilities are subsequently measured at amortized cost using the effective interest
rate method or at fair value through profit and loss. Financial liabilities carried at fair value through
profit or loss are measured at fair value with all changes in fair value recognized in the standalone
statement of profit and loss.
(c) Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expires. The difference in the carrying amounts and the consideration paid is recognized in the
Statement of Profit and Loss.
(d) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
(H) Inventories
Inventories are valued at the lower of cost and net realisable value except scrap and by products which are
valued at net realisable value. Costs comprises as follow:
(i) Raw materials and store and spares: Cost includes cost of purchase and other costs incurred in bringing
the inventories to their present location and condition. Cost is determined on weighted average basis.
The aforesaid items are valued at net realisable value if the finished products in which they are to be
incorporated are expected to be sold at a loss.
(ii) Finished goods and work in progress: Cost includes cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs.
Cost is determined on weighted average basis. In pursuance of IND AS-2 indirect production overheads
(estimated by the Management) have been allocated for ascertainment of cost. Net realisable value is
the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Obsolete inventories are identified and written down to net realisable value. Inventories (including whey
powder - by product) are valued on lower of cost or net realizable value.
(I) Fair value measurement
The Company measures certain financial instruments, defined benefit liabilities and equity settled employee
share based payment plan at fair value at each reporting date.
Fair value is the price that would be received to sell an assets or paid to transfer a liabilities in an orderly
transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
i. in the principal market for the asset or liability, or
ii. in the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
All financial assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, which are described as follows; level I - III.
Level I input
Level I input are quoted price in active market for identical assets or liabilities that the entity can access at the
measurement date
Level II input
Level II input are input other than quoted market prices included within level I that are observable for the
assets or liabilities either directly or indirectly.
Level III input
Level III inputs are unobservable inputs for the asset or liability. An entity develops unobservable inputs using
the best information available in the circumstances, which might include the entity’s own data, taking into
account all information about market participant assumptions that is reasonably available.
(J) Cash and Cash equivalent
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Cash and cash equivalents include balances with banks which are unrestricted for withdrawal and usage.
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