1.3 Material Accounting Policies
1.3.1 Property Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost of acquisition, construction and subsequent improvements thereto less
accumulated depreciation and impairment losses, if any.
Cost includes purchase price of assets or its construction cost including inward freight and other expenses incidental to acquisition or
installation and adjustment for exchange differences wherever applicable and any cost directly attributable to bring the asset into the
location and condition necessary for it to be capable of operating in the manner intended for its use.
For eligible assets, interest and other costs incurred on/ related to borrowings to finance such assets or fixed assets during
construction period and related pre-operative expenses are capitalized.
The component of assets is capitalized only if the life of the components varies significantly and whose cost is significant in relation to
the cost of the respective asset. The carrying amount of any component accounted for as separate asset is derecognized when
replaced.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Capital Work in progress includes preoperati've and development expenses, equipment to be installed, construction and erection
materials, advances etc., net of accumulated impairment losses, if any. Such items are classified to the appropriate categories of PPE
when completed and ready for intended use.
Depreciation and Amortization
Depreciation on PPE is provided as per Schedule II of the Companies Act, 2013 on Written Down Value method, over the useful life of
Property (excluding the freehold land), Plant, and Equipment at all locations of the Company.
No depreciation is charged on Free hold land. Depreciation on Property, Plant and Equipment commences when the assets are ready
for their intended use. The residual value for all the above assets are retained at 5% of the cost. On tangible fixed assets added /
Disposed off during the year, depreciation is charged on pro-rata basis for the period for which the asset was purchased and used.
Depreciation methods, useful lives, residual values are reviewed and adjusted as appropriate, at each reporting date.
1.3.2 Intangible Assets
Intangible assets are stated at cost comprising of purchase price incurred less accumulated amount of amortization and impairment
losses. Such assets are amortized over the useful life using straight line method and assessed for impairment whenever there is an
indication of the same.
1.3.3 Derecognition of Tangible and Intangible assets
An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from its use or disposal. Gain
or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognized in the Statement of Profit and Loss.
1.3.4 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception
of the lease.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and
rewards incidental to ownership to the lessee is classified as finance lease. A lease that no substantial transfer of risk and reward of
the property to the lessee Company, throughout the period of lease such lease is classified as operating lease.
Company as a lessee:
The Company at the commencement of the lease contract recognizes a Right-of-Use (RoU) asset at cost and corresponding lease
liability, except for leases with term of less than twelve months (short term leases) and low-value assets. For these short term and low
value leases, the company recognizes the lease payments as an operating expense on a straight-line basis over the lease term. The
cost of the right-of-use assets comprises the amount of the initial measurement of the lease liability, any lease payments made at or
before the inception date of the lease plus any initial direct costs, less any lease incentives received. Subsequently, the right-of- use
assets are measured at cost less any accumulated depreciation and accumulated impairment losses, if any. 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
assets. The estimated useful lives of right of use assets are determined on the same basis as those of property, plant and equipment.
The Company applies Ind-AS 36 to determine whether a RoU asset is impaired and accounts for any identified impairment loss as
described in the impairment of non-financial assets. For lease liabilities at the commencement of the lease, the Company measures
the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using
the interest rate implicit in the lease.
Company as a lessor:
Lessor accounting under Ind AS 116 is substantially unchanged compared to IndAS17. The company has only operating lease and
accounts the same as follows:
The company has classified it's lease of farm to a company, as operating lease, as the company does not transfer substantially all the
risks and rewards incidental to ownership of it's farm assets. The company continued to present the underlying farm assets other
than those of land and buildings under Property, Plant and Equipment. Farm assets of land and buildings given on operating lease,
have been included in the Investment Properties. Lease income is recognized on a straight-line basis over the non-cancellable lease
term, unless there is another systematic basis, which is more representative than of the time pattern of the lease. However, as per the
lease agreement lease terms are as follows: a. The Company has extended 7 years lease of Farm with all assets located in the farm
from July 2020 onwards to the company. b. the lease rent is agreed to increase by 10% every two years. c. Lease rent to be paid in
advance every year. d. Company had agreed to provide the fencing in the boundary of the land, wherever required. The company
completed the boundary fencing as agreed in the lease agreement and costs incurred have been capitalized under Investment
Property and further, the company didn't take any assets on lease.
1.3.5 Investment Properties:
Recognition and Initial Measurement Investment properties are properties held to earn rentals or for capital appreciation or both.
Investment properties are measured initially, at cost including the transaction costs, to bring the asset to it's working condition for the
intended use.
Subsequent Measurement (Depreciation and useful lives).
Subsequent costs are recognized in the assets carrying amount or recognized as separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the company and fair value of the property is disclosed in
the notes. Fair values are determined on an annual evaluation performed by registered valuer. Investment properties are stated at
cost less depreciation and accumulated impairment of loss, if any subsequently. Depreciation is provided on written down value
method, as per the useful life of the assets as prescribed under Schedule II of the Companies Act, 2013.
De-recognition
Investment properties are de-recognized either when they have been disposed of or when they are permanently withdrawn from use
and no future economic benefit is expected from their disposal. The difference between net disposal proceeds and the carrying
amount is recognized in the Statement of Profit and Loss in the period of de-recognition.
1.3.6 Impairment of Non-Financial Assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may
be impaired. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such
recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount, the
carryingamount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the
Statement of Profit and Loss. If, at the reporting date, there is an indication that a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed, and the asset is reflected at the recoverable amount. 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 years. Such reversal is recognized in
the Statement of Profit and Loss.
1.3.7 Financial Assets and Financial Liabilities Initial recognition and measurement
Financial assets and financial liabilities are recognized measured initially at fair value adjusted for transaction costs, except for those
carried at fair value through profit or loss which are measured initially at fair value. Trade receivables are recognized at their
transaction value as the same do not contain significant financing component. Trade payables in respect of the amount due on
account of goods or services purchased in the normal course of business and are recognized at their transaction value and services
availed value as the same do not contain significant financing component.
Non-derivative financial assets Subsequent measurement
Financial assets carried at amortized cost financial asset is measured at the amortized cost, if both the following conditions are met.
The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and Contractual
terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal
amount outstanding. After initial measurement, such financial assets are subsequently measured at amortized cost using the
effective interest rate (EIR) method.
Financial Assets at Fair Value Through Other Comprehensive Income (FVTOCI) - Includes assets that are held within in a business
model where the objective is both collecting contractual cash flows and selling the financial assets along with the contractual terms
giving rise on specified dates to cash flows that are solely payments principal and interest on principal amount outstanding. The
election is made on instrument-by-instrument basis.
Financial assets at Fair Value Through Profit or Loss (FVTPL) - Financial assets at FVTPL include financial assets that are designated at
FVTPL upon initial recognition and financial assets that are not measured at amortized cost or at fair value through other
comprehensive income. The election is made on instrument-by-instrument basis.
As there are no investments made by the company in the categories under FVTPL and FVTOCI, the question of election of such a
measurement during the period of reporting did not arise.
Impairment and Derecognition of Financial Assets: All financial assets are reviewed for impairment at least at each reporting date to
identify whether there is any evidence of impairment of a financial asset or group 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 loses that results 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 results from all possible default events over the life of the financial
instrument).
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.
Non-derivative financial liabilities
Borrowings, trade payables and other financial liabilities are initially recognized at the value of the respective contractual obligations.
Any discount or premium on redemption / settlement is recognized in the Statement of Profit and Loss as finance cost over the life of
the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.
Equity Instruments
Equity Instruments are recognized at the value of the proceeds net of direct costs of the capital issue.
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortized cost using the effective interest
rate method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains
or losses recognized in statement of profit and loss.
The effective interest rate is the rate that discounts estimated future cash payments or receipts (including all fees and transaction
costs and other premiums or discounts) through the expected life of the Financial Asset or Financial Liability to the gross carrying
amount of the financial asset or to the amortized cost of financial liability or where appropriate a shorter period to the net carrying
amount on initial recognition.
De-recognition of financial instruments.
The Company de-recognizes 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 recognition under Ind AS 109.
A Financial liability (or a part of a Financial Liability) is derecognized from the Company's Balance Sheet when the obligations specified
in the contract is discharged or cancelled or expires.
Derivative Financial instruments and hedge accounting
Derivative financial instruments are accounted for at FVTPL except for derivatives designated as hedging instruments in cash flow
hedge relationships, which require a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must
meet strict conditions with respect to documentation, strategy, and economic relationship of the hedged transaction. For the
reporting periods under review, the Company do not have any derivative instruments including forward currency contracts, and
hence question of derivative and hedge accounting does not arise.
Offsetfng of Financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis and to realize the assets and
settle the liabilities simultaneously.
1.3.8 Inventories
Inventories are valued at lower of cost or net realizable value. Cost of inventories is ascertained on 'weighted average' basis. Net
Realizable Value is the estimated selling price in the ordinary course of business less estimated cost of completion and estimated
costs necessary to make the sale.
Cost in respect of raw materials and stores and spares includes all expenses incurred in bringing the material to the location and
excludes the credit availed with respect to duties and taxes. Cost in respect of finished goods represents prime cost and includes
appropriate portion of overheads. Cost in respect of process stock represents, cost incurred up to the stage of completion, including
the landed cost of raw materials.
The company doesn't have inventories during the reporting period, hence not applicable.
1.3.9 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, cheques on hand and demand deposits with banks with original maturities of three
months or less.
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