CORPORATE INFORMATION:
SHAH FOODS LIMITED ('the company") is engaged in Trading of shares and securities and
was engaged in manufacturing of Biscuits for Britannia Industries Limited till F.Y 19-20. The
company is now engaged in Business Wholesale trading of Fruits and vegetables.
STATEMENT OF COMPLIANCE:
The financial statements comply in all material aspects with Indian Accounting Standards
(Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies
(Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Basis of preparation and presentation
These financial statements are in accordance with Indian Accounting Standards (IND AS)
under the historical cost convention on the accrual basis accept for certain financial
instruments which are measured at fair values, the provision of the Companies Act,2013
("the Act") (to the extent notify) and guidelines issued by the Securities & Exchange Board
of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of
Companies (Indian Accounting Standard) Rules, 2015 and relevant rules issued thereafter.
Accounting policies have been consistently applied except where newly issued accounting
standards are initially adopted or a revision to an existing standard requires a change in the
accounting policy hitherto in used.
As the quarter and year figures are taken from the source and rounded to the nearest digit,
the figures reported for the previous quarters might not always adopt to the year-end
figures reported in these statements.
1.2 Functional and presentation currency
The financial statements are presented in Indian Rupees, the currency of the primary
economic environment in which the Company operates.
1.3 Use of Estimates
The preparation of financial statements are in conformity with the recognition and
measurement principles of Ind AS which requires management to make critical judgments,
estimates and assumptions that affect the reporting of assets, liabilities, income and
expenditure.
Estimates and underlying assumptions are reviewed on an ongoing basis and any revisions
to the estimates are recognised in the period in which the estimates are revised and future
periods are affected.
Key source of estimation of uncertainty at the date of financial statements, which may cause
material adjustment to the carrying amount of assets and liabilities within the next financial
year, is in respect of:
• Useful lives of property, plant and equipment (refer note no. 2.1)
• Valuation of deferred tax assets (refer note no. 2.8)
• Valuation of inventories (refer note no. 2.3)
• Provisions & contingent liabilities (refer note no. 2.6)
2. SIGNIFICANT ACCOUNTING POLICIES
2.1. Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or construction less
accumulated depreciation and any accumulated impairment losses. The cost of fixed assets
comprises of its purchase price, non-refundable taxes & levies, freight and other incidental
expenses related to the acquisition and installation of the respective assets. Borrowing cost
attributable to financing of acquisition or construction of the qualifying fixed assets is
capitalized to respective assets when the time taken to put the assets to use is substantial.
When major items of property, plant and equipment have different useful lives, they are
accounted for as separate items of property, plant and equipment. The cost of replacement
of any property, plant and equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefit associated with the item will flow to the Company
and its cost can be measured reliably.
The Estimated Useful Lives of assets are in accordance with the Schedule II of the
Companies Act, 2013.
The company has decided to sell its factory land, factory building and plant & machineries
in 2019-20 for which share holder consent/approval was obtained in the general meeting.
Factory Building was demolished and Plant and Machinery were disposed off later.
The Factory Land & Borewell were since then classified as "Assets Held for Sale" under the
"Current Assets" head
2.2. Financial Instruments
2.2.1. Cash and cash equivalents
Cash and cash equivalents consists of cash on hand, short demand deposits and highly
liquid investments, that are readily convertible into known amounts of cash and which are
subject to an insignificant risk of change in value. Short term means investments with
original maturities / holding period of three months or less from the date of investments.
Bank overdrafts that are repayable on demand and form an integral part of the Company's
cash management are included as a component of cash and cash equivalent for the purpose
of statement of cash flow.
2.2.2. Trade Receivables
Trade receivables are amounts due from customers for sale of goods or services performed
in the ordinary course of business. Trade receivables are initially recognized at its
transaction price which is considered to be its fair value and are classified as current assets
as it is expected to be received within the normal operating cycle of the business.
2.2.3. Borrowings
Borrowings are initially recorded at fair value and subsequently measured at amortized
costs using effective interest method. Transaction costs are charged to statement of profit
and loss as financial expenses over the term of borrowing.
2.2.4. Trade payables
Trade payables are amounts due to vendors for purchase of goods or services acquired in
the ordinary course of business and are classified as current liabilities to the extent it is
expected to be paid within the normal operating cycle of the business.
2.2.5. Other financial assets and liabilities
Other non-derivative financial instruments are initially recognized at fair value and
subsequently measured at amortized costs using the effective interest method.
2.3. Inventories
Items of inventories are measured at lower of cost and net realisable value after providing
for obsolescence, if any except inventory of shares and securities held for trading are valued
at fair value through P&L. Cost of inventories comprises of cost of purchase, cost of
conversion and other costs including manufacturing overheads incurred in bringing them to
their respective present location and condition. Cost of raw materials, process, stores and
spares, packing materials, trading and other products are determined on weighted average
basis.
2.4. Impairment of Assets
Financial assets
At each balance sheet date, the Company assesses whether a financial asset is to be
impaired. Ind AS 109 requires expected credit losses to be measured through loss allowance.
The Company measures the loss allowance for financial assets at an amount equal to lifetime
expected credit losses if the credit risk on that financial asset has increased significantly since
initial recognition. If the credit risk on a financial asset has not increased significantly since
initial recognition, the Company measures the loss allowance for financial assets at an
amount equal to 12-month expected credit losses. The Company uses both forward-looking
and historical information to determine whether a significant increase in credit risk has
occurred.
Non-financial assets
Tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for
recoverability whenever there is any indication that their carrying amounts may not be
recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair
value less cost to sell and the value-in-use) is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other
assets. In such cases, the recoverable amount is determined for the cash generating unit
(CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying
amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An
impairment loss is recognized in the statement of profit and loss to such extent.
2.5. Employee Benefit
Short term employee benefits
Short term benefits payable before twelve months after the end of the reporting period in
which the employees have rendered service are accounted as expense in statement of profit
and loss.
Long term employee benefits
During the Financial year 19-20 the company has discontinued the job work of Britannia
Industries limited. The company is exploring new line of business. Meanwhile the company
has relived most of the employees and has paid all the dues to the employees. Further the
company has surrendered the Employee Group Gratuity Scheme with LIC of India and also
surrendered employee group super annuation scheme.
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