2.8. Material accounting policy information
The preparation of financial statements requires the
management of the Company to make estimates,
judgements and assumptions that affect the reported
balances of assets and liabilities and disclosures of
contingent liabilities at the date of the Ind AS financial
statements and reported amounts of income and
expense during the year. Management believes that
the estimates used in the preparation of the financial
statements are prudent and reasonable.
Accounting estimates could change from period
to period. Actual results could differ from those
estimates. Changes in estimates are reflected in
the financial statements in the period in which the
changes are made and, if material, their effects are
disclosed in the notes to financial statements.
This note provides a list of material accounting policies
adopted during the preparation of these financial
statements which have been consistently applied to
all the years presented, unless otherwise stated.
2.8.1. Foreign currencytranslation
On initial recognition, all foreign currency transactions
are translated into the functional currency using
the exchange rates prevailing on the date of the
transaction. As at the reporting date, foreign currency
monetary assets and liabilities are translated at the
exchange rate prevailing on the Balance Sheet date.
Exchange differences arising on settlement or
translation of monetary items are recognised in
Statement of Profit and Loss except to the extent
of exchange differences which are regarded as an
adjustment to interest costs on foreign currency
borrowings that are directly attributable to the
acquisition or construction of qualifying assets which
are capitalised as cost of assets.
In case of an asset, expense or income where a
non-monetary advance is paid/received, the date
of transaction is the date on which the advance was
initially recognised. If there were multiple payments
or receipts in advance, multiple dates of transactions
are determined for each payment or receipt of
advance consideration.
2.8.2. Revenue Recognition
The Company recognises revenue from sale of
products measured at the amount of transaction
price, when it satisfies its performance obligation at
a point in time which is when goods are delivered to
local customers, or when shipped on board for export
customers, which is when control including risks and
rewards and title of ownership pass to the customer,
collectability of the resulting receivables is reasonably
assured and when there are no longer any unfulfilled
obligation. The transaction price which is determined
based on the terms of contract and entity's customary
practice. Amounts disclosed as revenue are inclusive
of duties, but exclusive of Goods and Service tax
(GST), which the company pays as principal and net
of returns, trade allowances, rebates
2.8.3. Government Grant
The Company receives government grants that
require compliance with certain conditions related to
the Company's operating activities or are provided to
the Company by way of financial assistance on the
basis of certain qualifying criteria.
Government grants are recognised when there is
reasonable assurance that the grant will be received
upon the Company complying with the conditions
attached to the grant.
Accordingly, government grants:
(a) related to or used for assets, are deducted from
the carrying amount of the asset.
(b) related to incurring specific expenditures are
taken to the Statement of Profit and Loss on a
systematic basis over the periods in which the
entity recognises as expenses the related costs
for which the grant is intended to compensate.
(c) by way of financial assistance on the basis of
certain qualifying criteria are recognised as they
become receivable.
In the unlikely event that a grant previously recognised
is ultimately not received, it is treated as a change in
estimate and the amount cumulatively recognised is
expensed in the Statement of Profit and Loss.
2.8.4. Financial Instruments
i. Financial Assets
A. Initial Recognition and Measurement
All Financial Assets are initially recognised at fair value.
Transaction costs that are directly attributable to the
acquisition or issue of Financial Assets, which are
not at Fair Value Through Profit or Loss, are adjusted
to the fair value on initial recognition. Purchase and
sale of Financial Assets are recognised using trade
date accounting.
B. Subsequent Measurement
Financial Assets measured at Amortised Cost (AC)
A Financial Asset is measured at Amortised Cost if
it is held within a business model whose objective
is to hold the asset in order to collect contractual
cash flows and the contractual terms of the Financial
Asset give rise to cash flows on specified dates that
represent solely payments of principal and interest on
the principal amount outstanding.
C. Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses
'Expected Credit Loss' (ECL) model, for evaluating
impairment of Financial Assets other than those
measured at Fair Value through Profit and Loss
(FVTPL). Expected Credit Losses are measured
through a loss allowance at an amount equal to:
• The 12-months expected credit losses
(expected credit losses that result from those
default events on the financial instrument that
are possible within 12 months after the reporting
date); or
• Full lifetime expected credit losses (expected
credit losses that result from all possible default
events over the life of the financial instrument).
For Trade Receivables, the Company applies
'simplified approach' which requires expected lifetime
losses to be recognised from initial recognition of
the receivables.
The Company uses historical default rates to determine
impairment loss on the portfolio of trade receivables.
At all reporting date these historical default rates
are reviewed and changes in the forward-looking
estimates are analysed.
For other assets, the Company uses 12-month ECL
to provide for impairment loss where there is no
significant increase in credit risk. If there is significant
increase in credit risk full lifetime ECL is used.
ii. Financial Liabilities
A. Initial Recognition and Measurement
All Financial Liabilities are recognised at fair value and
in case of borrowings, net of directly attributable cost.
Fees of recurring nature are directly recognised in the
Statement of Profit and Loss as finance cost.
B. Subsequent Measurement
Financial Liabilities are carried at amortised cost using
the effective interest method. For trade and other
payables maturing within one year from the balance
sheet date, the carrying amounts approximate fair
value due to the short maturity of these instruments.
iii. Derivative Financial Instruments
The Company uses derivative financial instruments,
such as forward currency contracts,to hedgeits foreign
currency risks. Derivatives are initially recognised at
fair value and are subsequently remeasured to their
fair value at the end of each reporting period. The
resulting gains / losses are recognised in Statement
of Profit and Loss immediately
iv. Derecognition of Financial Instruments
The Company derecognises a Financial Asset when
the contractual rights to the cash flows from the
Financial Asset expire or it transfers the Financial Asset
and the transfer qualifies for derecognition under Ind
AS 109. A Financial liability (or a part of a financial
liability) is derecognised from the Company's Balance
Sheet when the obligation specified in the contract is
discharged or cancelled or expires.
v. Offsetting
Financial Assets and Financial Liabilities are offset
and the net amount is presented in the balance sheet
when, and only when, the Company has a legally
enforceable right to set off the amount and it intends,
either to settle them on a net basis or to realise the
asset and settle the liability simultaneously.
2.8.5. Taxes on income
I) Current Tax
Current tax in the Statement of Profit and Loss is
provided as the amount of tax payable in respect of
taxable income for the period using tax rates and tax
laws enacted during the period, together with any
adjustment to tax payable in respect of previous years.
ii) Deferred Tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
and the amounts used for taxation purposes (tax base),
at the tax rates and tax laws enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets are recognised for the future tax
consequences to the extent it is probable that future
taxable profits will be available against which the
deductible temporary differences can be utilised.
Income tax, insofar as it relates to items disclosed
under other comprehensive income or equity, is
disclosed separately under other comprehensive
income or equity, as applicable.
2.8.6. Leases
Company as a Lessor
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Where
the Company is a lessor under an operating lease,
the asset is capitalized within property, plant and
equipment or investment property and depreciated
over its useful economic life. Payments received under
operating leases are recognised in the Statement of
Profit and Loss on a straight-line basis over the term
of the lease.
2.8.7. Impairment of Non-Financial Assets
The Company assesses at each reporting date as
to whether there is any indication that any Property,
Plant and Equipment and Intangible Assets or group
of Assets, called Cash Generating Units (CGU) may
be impaired. A cash-generating unit is the smallest
identifiable group of assets that generates cash
inflows that are largely independent of the cash
inflows from other assets or groups of assets.
If any such indication exists, the recoverable amount
of an asset or CGU is estimated to determine the
extent of impairment, if any. When it is not possible
to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable
amount of the CGU to which the asset belongs.
I IAn impairment loss is recognised in the Statement of
Profit and Loss to the extent, asset's carrying amount
exceeds its recoverable amount. The recoverable
amount is higher of an asset's fair value less cost of
disposal and value in use. Value in use is based on
the estimated future cash flows, discounted to their
present value using pre-tax discount rate that reflects
current market assessments of the time value of
money and risk specific to the assets.
The impairment loss recognised in prior accounting
period is reversed if there has been a change in the
estimate of recoverable amount.
2.8.8. Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand,
cash at banks, short-term deposits and short-term
highly liquid investments that are readily convertible
to known amounts of cash and which are subject to
an insignificant risk of changes in value.
2.8.9. Inventories
Items of inventories are measured at lower of cost
determined on FIFO basis and net realizable value.
Cost of inventories comprises of cost of purchase,
cost of conversion and other costs incurred in
bringing them to their respective present location
and condition.
2.8.10. Biological assets
The Company recognises biological assets only when,
the Company controls the assets as a result of past
events, it is probable that future economic benefits
associated with such assets will flow to the Company.
Biological assets of the Company are in the nature
of Consumable Biological Assets. It is bifurcated into
Brood Stock, (the Parents) and harvested species
which undergo biological transformation under
different stages as Nauplius, Zoea, Mysis and Post
Larvae. The Company sells the biological assets
harvested from brood stock at Nauplius and Post
Larvae Stages. The Brood Stock has a maximum
useful life of 6 months for laying eggs and thereafter
these are destroyed.
The valuation of the Brood stock biological assets are
determined on the following basis:
Brood stocks are used for captive consumption or to
support farmers, it cannot be sold before the end of
its useful life and as such, there is no active market.
Other references to market prices such as market
prices for similar assets are also not available due
to the uniqueness of the breed. Valuation based
on a discounted cash flow method is considered to
be unreliable given the uncertainty with respect to
mortality rates and production. Consequently, brood
stock and Shrimp seed (Different stages) are measured
at cost, less depreciation and impairment losses.
The transmission phase from Nauplius to Zoea and
Mysis are not considered as significant transformation
of biological asset and hence Zoea and Mysis are not
valued as per Ind AS - 41.
2.8.11. Property, Plant and Equipment:
a) Property, Plant and Equipment
The Initial cost of property, plant and equipment
comprises its purchase price, including non¬
refundable duties and taxes, attributable borrowing
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
statement 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. 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 recognized in the statement of profit and loss
as incurred.
Gains and losses on disposal of an item of property,
plant and equipment are determined by comparing
the proceeds from disposal with the carrying amount
of property, plant and equipment, and are recognized
net within other income/ other expenses in statement
of profit and loss.
An item of property, plant and equipment and any
significant part initially recognized is derecognized
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 statement of profit and loss, when the asset
is derecognized.
The residual values, useful lives and methods of
depreciation of property, plant and equipment
are reviewed at each financial year end and
adjusted prospectively.
b) Capital Work in progress
Assets in the course of construction are capitalized to
capital work in progress account. At the point when an
asset is capable of operating in the manner intended
by the 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 capitalized when the
asset is available for use.
c) Depreciation
Assets in the course of development or construction
and freehold land are not depreciated. Depreciation
is provided on other property, plant and equipment
when the assets are ready for their intended use.
Depreciation is calculated on the depreciable amount,
which is the cost of an asset less its residual value.
Depreciation on tangible assets has been provided
on the straight-line method as per the useful life
prescribed in Schedule II to the Companies Act, 2013
except in respect of the following assets, where useful
life is different than those prescribed in Schedule II
based on management judgement:
Depreciation methods, useful lives and residual values
are reviewed at each financial year end and changes
in estimates, if any, are accounted for prospectively.
2.8.12. Borrowing Cost
Borrowing costs are interest and other costs
(including exchange differences relating to foreign
currency borrowings to the extent that they are
regarded as an adjustment to interest costs)
incurred in connection with the borrowing of funds.
Borrowing Cost directly attributable to the acquisition,
construction or production of a qualifying asset are
capitalized during the period of time that is required to
complete and prepare the asset for its intended use.
Qualifying assets are those assets that necessarily
take a substantial period of time to get ready for their
intended use. Other borrowing costs are recognized as
an expense in the period in which these are incurred.
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