SIGNIFICANT ACCOUNTING POLICIES:BASIS OF PREPARATION AND PRESENTATION:
The financial statements have been prepared on the historical cost basis except for the following assets and liabilities which
have been measured at fair value amount:
i) Certain financial assets and liabilities (including derivative instruments)
ii) Defined benefit plans - plan assets
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. All assets and liabilities have been classified as current and non-current as per the
Company’s normal operating cycle. Based on the nature of transactions involving sale of goods to customers and time
elapsed between deployment of resources and the realisation in cash and cash equivalents, the Company has considered an
operating cycle of 12 months.
STATEMENT OF COMPLIANCE:
These financial statements have been prepared in accordance with Indian Accounting Standards ('Ind AS1), notified under
Section 133 of the Companies Act, 2013 (the Act), read with the Companies (Indian Accounting Standards) Rules, 2015 and
other relevant provisions of the Act.
Effective April 1,2017, the Company has adopted all the applicable Ind AS Standards and the adoption was carried out in
accordance with Ind AS 101, First Time adoption of Indian Accounting Standards, with April 1,2016 as the transition date.
The transition was carried out from Indian Accounting Principles Generally Accepted in India (Indian GAAP), as prescribed
under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP), which was the
previous GAAP
Accounting Policies have been consistently applied except where a newly issued Accounting Standard is initiallty adopted or
a revision to an existing Accounting Standard requires a change in the Accounting Policy hitherto adopted.
FUNCTIONAL AND PRESENTATION CURRENCY
The financial statements are presented in Indian rupees, the national currency of India, which is the functional currency of the
company.
Figures are rounded off to the nearest lakhs with two decimal places.
SUMMARYOFSIGNIFICANTACCOUNTING POLICIES:Inventories
Inventories are valued in line with Ind AS 2 - Inventories. Items of inventories are measured at lower of cost and net realisable
value after providing for obsolescence, if any, except in case of by-products which are valued at net realisable value. Cost of
inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads net of
recoverable taxes incurred in bringing them to their respective present location and condition. The formula used for arriving at
the cost for various items of inventories are as follows:
i) Raw materials - Weighted Average Cost
ii) Packing Materials - Weighted Average Cost
Hi) Additives - Weighted Average Cost
iv) Stores & Spares - Weighted Average Cost
v) Semi-finished goods - Weighted Average Cost
vi) Finished goods - Weighted Average Cost
vii) Livestock - Weighted Average Cost
Livestocks of the company comprises live birds reared primarily for eggs. Initially Live birds (Chicks) are purchased and
grown by the company. After a particular period, the bird enters the stage of grower, in which stage, the bird attains its full
growth but is yet to lay eggs. Once, the live bird is fully grown and starts laying eggs, these birds enter the layer stage and are
categorized as layer birds. The useful life of the birds will start only from the stage it starts laying eggs.The useful life of the
layer birds are normally one year or less than a year, after which the layer birds would become devoid of the egg laying ability
and are culled from the flock and the birds so culled are sold as scrap (culled birds).
As the birds are reared by the company for eggs, the live birds are bearer biological assets and are outside the scope of Ind AS
41 and need to be accounted as per Ind AS 16 - Property, Plant, and Equipment. However, since the useful life of the layer bird
is comparitively small (one year or less in most cases) for itto be categorized under Ind AS 16 (PPE), live birds at chick stage,
grower stage and the unamortized value of layer birds are categorized under Ind AS 2 - inventories. Although layer birds are
living animals and contribute to future economic benefits through egg production, they are primarily part of the Company’s
integrated production process. Accordingly, the Company treats layer birds as inventory under Ind AS 2 - Inventories,
recognized at cost. This approach reflects the substance of the transactions and provides more reliable and relevant financial
information.
Ind AS 2 - Inventories applies to agricultural produce after harvest. Eggs are therefore valued in line with Ind AS 2 -
Inventories.
Paragraph 30 of Ind AS 41 states as follows:
There is a presumption that fair value can be measured reliably for a biological asset. However, that presumption can be
rebutted only on initial recognition for a biological asset for which quoted market prices are not available and for which
alternative fair value measurements are determined to be clearly unreliable. In such a case, that biological asset shall be
measured at its cost less any accumulated depreciation and any accumulated impairment losses. Once the fair value of such
a biological asset becomes reliably measurable, an entity shall measure it at its fair value less costs to sell.
Reason why a reliable estimate of the fair value of the birds cannot be made:
The livestock contains birds of numerous phases ranging from day old chicks, to layer birds of various stages within a year.
The fair value of layer birds is not reliably measurable due to variability in age, health, productivity, and market prices. Also, as
the birds are reared for eggs and not for their meat, the fair value or marketability of the layer birds does not hold much
relevance forthe company, (although old and aged birds are culled from the flock and sold as scrap birds, afterthe birds stop
laying eggs) and only the extraction of eggs from the layer birds is relevant to the business of the company. Any attempt to
prematurely assess fair value of the biological assets is bound to portray a distorted financial position of the company with
respect to the livestock. Hence, having regard to the facts and the impracticalities attached with assessing the fair value of
the same, a reliable estimate of the live birds cannot be made and are valued at cost and are held under inventories.
Valuation of livestock:
a. ) The livestock is valued on the basis of purchase cost of birds with loaded expenses upto the stage of birds attaining
layer stage. The accumulated costs are amortized over the period of the layer birds after it starts laying eggs based on the
number of eggs laid by the birds.
b. ) Culled birds are valued at market price or net realisable value. The cost is considered in respect of live and culled birds,
aftertaking into account the mortality of the birds.
Revenue Recoginition
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the
buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing
effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from sale of goods is meaured at the fair value of consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Revenue is recognised and expenditure is accounted for on their accrual
Sales of Finished goods, Eggs, Birds & Feeds are recognised on accrual basis and are accounted for in the books of accounts
on the dates on which the goods are actually despatched from the Factory, Farm, Feedmill respectively.
Interest Income:
Interest income from a financial asset is recognised using effective interest rate method.
Dividend Income:
Revenue on account of dividend income recognised when the Company's right to receive the payment has been established.
Government grants/assistance:
Revenue from grants, subsidies or government assistance in any form are recognised when the Company's right to receive
the payment has been established.
Grants from the Government are recognized attheirfair market value where there is a reasonable assurance that the grant will
be received and the company will comply with all attached conditions. Government grants receivable as compensation for
expenses orfinancial support are recognized in profit or loss of the period in which it becomes available.
Government grants relating to the purchase of property, plant and equipment are shown by way of reduction from the value
of the Property, plant & equipment in accordance with Ind AS 20 - Accounting for Government Grants and Disclosure of
Government Assistance.
Finance Cost
Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost. Borrowing costs that are directly attributable to the acquisition or construction of qualifying
assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use.
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 charged to the Statement of Profit and Loss forthe period for which they are incurred.
Leases
The Company, as a lessee, recognises a right of use asset and a lease liability for its leasing arrangements, if the contract
conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the
Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified
asset. The cost of the right of use asset shall comprise of the amount of the initial measurement of the lease liability adjusted
for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use
assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and
adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method
from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.
Lease liability and ROU asset are separately presented in the Balance Sheet and lease payments are classified as financing
cash flows. At the date of commencement of the lease, the Company recognizes a right-of-use (“ROU”) asset representing
its right to use the underlying asset for the lease term and a lease liability for all lease arrangements in which it is a lessee
except for leases with a term of 12 months or less (short term leases) and leases for which the underlying assets is of low
value. For short-term and low value leases, the Company recognises the lease payments as an operating expense on a
straight-line basis overthe lease term.
Earnings Per Share
Basic earnings per share is calculated by dividing the net profit aftertax by the weighted average number of equity shares
outstanding during the year. Diluted earnings per share adjusts the figures used in determination of basic earnings per share
to take into account the conversion of all dilutive potential equity shares. Since the company does not have any potential
equity shares, the basic earnings per share and diluted earnings per share are the same for the company.
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