2.2 Summary of material 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
- 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 the normal operating cycle
- It is held primarily for the purpose of trading
- 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.
Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non current
classification of assets and liabilities.
b) Revenue recognition
The Company derives revenue primarily from sale of agro commodities, chemicals, other items.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects
the consideration the Company expects to receive in exchange for those products or services. To recognize revenues, the
Company applies the following five step approach:
- identify the contract with a customer,
- identify the performance obligations in the contract,
- determine the transaction price,
- allocate the transaction price to the performance obligations in the contract, and
- recognize revenues when a performance obligation is satisfied.
Sale of goods
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, rebates,
scheme allowances, price concessions, incentives, and returns, if any, as specified in the contracts with the customers.
Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and
returns are estimated (using the most likely method based on accumulated experience and underlying schemes and
agreements with customers). Due to the short nature of credit period given to customers, there is no financing component
in the contract.
c) Other income
Interest income
The Company presently has no debt instruments measured at fair value through other comprehensive income. Interest
income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash
payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross
carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest
rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument
(for example prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest
income is included in other income in the statement of profit and loss.
Dividends
Revenue is recognised when the Company's right to receive the payment is established, which is generally when shareholders
approve the dividend.
d) Property, Plant and Equipment
Items of property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment
losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for
its intended use. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long¬
term construction projects if the recognition criteria are met. Subsequent expenditure related to an item of fixed asset is
added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard
of performance. When significant parts of plant and equipment are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised
in statement of profit and loss as incurred. In respect of additions to /deletions from the property, plant and equipment,
depreciation is provided on pro-rata basis with reference to the month of addition/deletion of the Assets. Depreciation for
the year has been provided as per the rates determined in Part C of Schedule II of the Companies Act, 2013.
e) Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in
the ordinary course of business, use in production or supply of goods or services or for administrative purpose. Upon initial
recognition, an investment property is measured at cost less accumulated depreciation and accumulated impairment loss,
if any.
Depreciation on investments in property has been provided on written down value basis in accordance with Schedule II of
the Companies Act, 2013 by estimating the useful life as 30 to 60 years as may be applicable.
f) Fair value measurement
The Company measures certain financial instruments 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
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