2.2 Summary of significant accounting policies
(a) Current versus 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 realized or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realized 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 primarily 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.
Deferred tax assets and liabilities are classified as non-current assets and 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.
(b) Foreign currencies
The financial statements are presented in INR (Indian rupees), which is the functional currency of the Company
and the currency of the primary economic environment in which the Company operates.
Transactions and balances
The Company at its functional currency spot rates initially records transactions in foreign currencies at the
date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the statement
of profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined. The
gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items
whose fair value gain or loss is recognized in Other Comprehensive Income or profit or loss are also recognized
in Other Comprehensive Income or profit or loss, respectively).
(c) Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
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, maximizing the use of relevant observable inputs and minimizing the use
of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the 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:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
• 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 recognized in the financial statements 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.
(d) Revenue recognition
Revenue from the sale of grown items is recognized upon passage of the title to the customers, which generally
consists with the delivery and acceptance thereof by the purchaser or their duly authorized agent/s.
(e) Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted, at the reporting date in the countries where the Company operates and generates
taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either
in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying
transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax
returns with respect to situations in which applicable tax regulations are subject to interpretation and
establishes provision where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax
liabilities are recognized for all taxable temporary differences.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax
asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized
to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in
other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying
transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
(f) Property, plant and equipment
Under the previous GAAP (Indian GAAP), Freehold land and buildings (property), were carried in the balance
sheet at cost of acquisition. The company has elected to regard those values of property as deemed cost at
the date of the acquisition since they were broadly comparable to fair value. The company has also determined
that cost of acquisition does not differ materially from fair valuation as at April 01,2015 (date of transition to
Ind AS).
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the income statement when the asset is de-recognised.
The Residual values of the assets are considered 5% in general and ZERO/less than 5% in cases where the assets
have no value at the end of their useful life as decided by internal technical experts.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
at each financial year-end and adjusted prospective period, if appropriate.
(g) Inventories
Inventories are valued at lower of cost and net realizable value. Cost is determined on a weighted average
basis and includes other directly associated costs in bringing the inventories to their present location and
condition. Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs necessary to make the sale.
Owing to the nature of Inventory being perishable item, the company is disclosing the actual sale taken place,
following 3-4 days of the reporting date as cost or net realizable value.
(h) 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 groups 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.
In 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 CGUs to which the individual assets are allocated.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the
statement of profit and loss, except for properties previously revalued with the revaluation surplus taken to
OCI. For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation
surplus. An assessment is made at each reporting date to determine whether there is an indication that
previously recognized 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 recognized impairment loss 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 recognized. The reversal is limited so 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 recognized for the asset in prior periods/ years. Such reversal
is recognized in the statement of profit or loss unless the asset is carried at a revalued amount, in which case,
the reversal is treated as a revaluation increase.
Owing to the nature of the bearer plants and experience of the management in the industry, the management
felt that an additional impairment loss need to be provided over and above the depreciation as referred to in
para 2.2. (f), @ 15% on the opening balance of WDV plus Current Year Additions.
(i) Employee Benefits
The number of qualifying employees in the company are less than statutory limit. Hence the company is not
providing any retirement benefits.
(j) Borrowing Cost
The company has not taken Loans from banks/NBFCs or any other financial institutions. Hence there is no
borrowing costs charged in the books of accounts.
|