1.    Company overview

G. M. Breweries Limited (“the Company”) is a public company incorporated in India. The Company is primarily engaged in the manufacturing of country liquor.

2.    Significant Accounting Policies:

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1 - Basis of Preparation:

(i)    Compliance with Ind AS

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] (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.

(ii)    Historical cost convention

The financial statements have been prepared on an accrual basis and under the historical cost convention except certain financial assets and liabilities are measured at fair value (refer accounting policy regarding financial instruments).

(iii)    Current vs non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:

>    Expected to be realized or intended to sold or consumed in normal operating cycle;

>    held primarily for the purpose of trading;

>    expected to be realized within twelve months after the reporting period; or

>    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:

expected to be settled in normal operating cycle;

>    held primarily for the purpose of trading;

>    due to be settled within twelve months after the reporting period; or

>    there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

Deferred Tax Assets and Liabilities are classified as noncurrent assets and liabilities respectively.

2.2 Summary of Significant Accounting Policies:

(a) Property, Plant and Equipment:

Freehold land is carried at historical cost. All other items of Property, plant and equipment are shown at cost,

less accumulated depreciation and impairment, if any. The cost of an item of property, plant and equipment comprises its cost of acquisition inclusive of inward freight, import duties, and other nonrefundable taxes or levies and any cost directly attributable to the acquisition / construction of those items; any trade discounts and rebates are deducted in arriving at the cost of acquisition.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to statement of profit or loss during the reporting period in which they are incurred.

Gain or losses arising on disposal of property, plant and equipment are recognised in profit or loss.

(b)    Capital Work in Progress

Property, plant and equipment under construction are disclosed as capital work in progress.

(c)    Depreciation and amortisation:

Depreciation has been provided based on useful life assigned to each asset in accordance with Schedule II of the Companies Act, 2013. The residual values are not more than 5% of the original cost of the asset. The useful life of major components of property, plant and equipments is as follows.

Factory Building :30 Years Plant and machinery : 15 Years Vehicles:8 Years Office Equipments:5Years Computers:3 Years Furniture & Fixture:10Years Softwares: 3Years

(d)    Impairment of assets

At the date of balance sheet, if there are indications of impairment and the carrying amount of the cash generating unit exceeds its recoverable amount (i.e. the higher of the fair value less costs of disposal and value in use), an impairment loss is recognised. The carrying amount is reduced to the recoverable amount and the reduction is recognised as an impairment loss in the profit or loss. The impairment loss recognised in the prior accounting period is reversed if there has been a change in the estimate of recoverable amount. Post impairment, depreciation is provided on the revised carrying value of the impaired asset over its remaining useful life.

Reasonable assumptions are made by the management in estimating the value-in-use and fair value less costs of disposal. Management has considered the indicators required for impairment testing and estimated reliably that there is no impairment loss for the purpose of Ind AS 36 and AS 28.

(e)    Inventories:

The cost of various categories of inventory is determined as follows:

Cost of raw material and packing materials are determined using first in first out (FIFO) method. Costs of finished goods and stock in process include cost of raw material and packing materials, cost of conversion and other costs incurred in bringing the inventories to the present location and condition.

(f)    Employees Retirement Benefits:

(a)    Defined Contribution Plans.

The Company has Defined Contribution Plan post employment benefit in the form of provident fund for eligible employees, which is administered by Regional Provident Fund Commissioner; Provident fund is classified as Defined Contribution Plan as the Company has no further obligation beyond making the contributions. The Company’s contributions to defined Contribution Plans are charged to the Profit and Loss Account as and when incurred.

(b)    Defined Benefit Plan.

The Company has Defined Benefit Plan for post employment benefit in the form of Gratutity for eligible employees, which is administered through a Group Gratuity Policy with Life Insurance Corporation of India (L.I.C). The Liability for the above Defined Benefit Plan is provided on the basis of an actuarial valuation as carried out by L.I.C. The actuarial method used for measuring the liability is the Projected Unit Credit Method.

(c)    Termination Benefits, if any, are recognized as an expense as and when incurred.

(d)    The Company does not have policy of leave encashment and hence there is no liability on this account. Refer to additional note no. 36

(g)    Revenue recognition:

Revenue is measured at the fair value of the consideration received or receivable. Gross Sales are inclusive of State excise duty, MVAT, and Net of returns, Claims, and Discount etc.

The Company recognizes sale of goods when the significant risks and rewards of ownership are transferred to the buyer, which is usually when the goods are loaded in party’s vehicle and are ready for dispatch after clearance from excise officials at the factory.

Interest Income is accounted on accrual basis and dividend income is accounted on receipt basis.

Fixed deposit interest is accounted as per statement/documents issued by banks inclusive of related tax deducted at source.

(h)    Excise Duty:

State Excise duty payable on finished goods is accounted for on clearance of goods from the Factory. Company’s products do not attract any Central Excise duty/ Goods and Service Tax.

(i)    Brand Development:

The Company had incurred expenses on brand development of various products. The expenses were accounted as per prevailing Industry practices.

(j)    Value Added Tax (VAT):

VAT payable of finished goods is accounted net of setoff i.e. VAT payable on finished goods less VAT paid on Raw Materials (Rectified Spirit).

(k)    Taxes on Income:

Provision is made for income tax liability estimated to arise on the results for the year at the current rate of Tax in accordance with Income Tax Act, 1961.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively

Deferred Tax arising on account of depreciation is recognised only to the extent there is a reasonable certainty of realisation.

(l)    Expenses:

Currently alcoholic liquor for human consumption is outside the scope of GST and consequently certain input tax paid by the company is not available for input tax credit. Thus, this input tax paid is currently being expensed out in the books of accounts.

(m)    Provisions, Contingent liabilities and contingent assets:

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably.

All known Liabilities, wherever material, are provided for and Liabilities, which are disputed, are referred to by way of Notes on Accounts.

(n)    Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(o)    Earnings Per Share:

Basic earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

(p)    Fair value measurement:

The Company measures 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.

All assets and liabilities for which fair value is measured or disclosed in the financial statement are categorised within the fair value hierarchy.

(q)    Financial Instruments:

Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. All the financial assets and liabilities are measured initially at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial asset and financial liabilities (other than financial assets and liabilities carried at fair value through profit or loss) are added or deducted from the fair value measured on initial recognition of financial asset or financial liability.

(r)    Financial assets Classification and Measurement

All the financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial asset (other than financial assets carried at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset.

Subsequent measurement of a financial assets depends on its classification i.e., financial assets carried at amortised cost or fair value (either through other comprehensive income or through profit or loss). Such classification is determined on the basis of Company’s business model for managing the financial assets and the contractual terms of the cash flows.

The Company’s financial assets primarily consists of cash and cash equivalents, trade receivables, loans to employees and security deposits etc. which are classified as financial assets carried at amortised cost.

Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a financial assets that is subsequently measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is recognised using the effective interest rate method.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. For trade receivables, the Company provides for lifetime expected credit losses recognised from initial recognition of the receivables.

Derecognition of financial assets

A financial asset is derecognised only when the Company has transferred the rights to receive cash flows from the financial asset or retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

(s)    Income recognition Interest income

Interest income is recognised at contracted rate of interest.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

(t)    Cash flow statement

Cash flows are reported using the indirect method, whereby profit/ loss before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company are segregated

25.    Investment Properties

Investment property is measured at cost.

Investment property consists of residential flats, property occupied by tenants and property occupied as tenants. The Fair Market Value of Investment Property based on ready reckoner rates/ cost is 80.35 crores as on March 31, 2024.

In case of property occupied by tenants, rental income earned is disclosed in the accounts.

26.    Clarification regarding note pertaining to “Transport Fee Liability” mentioned in earlier years.

The Company had, along with other manufacturers of Country Liquor and IMFL in the State of Maharashtra, filed a Writ Petition in the Hon’ble Bombay High Court challenging the applicability of “Transport Fee” under Bombay Rectified Spirit (Transport in Bond) Rules 1951.

The Hon’ble Bombay high Court by its Order and Judgment dated 6th May, 2011 had allowed the Writ Petitions and set aside the levy of Transport Fee under the said Rules. The Hon’ble Bombay High Court has also directed the Government of Maharashtra to Refund the “Transport Fee” Deposited pursuant to the Interim Order. The Government is yet to Refund the deposit of “Transport Fee” made by the Company.

The State of Maharashtra has also filed a Special Leave Petition in the Hon’ble Supreme Court of India against the said Order of the Bombay High Court which is pending for admission.

27.    MVAT / Income Tax / GST

As alcoholic liquor for human consumption has been kept out of the purview of Goods and Services Tax (GST) introduced from July 01, 2017, the company’s finished product namely country liquor continues to be taxed under Maharashtra Value Added Tax (MVAT).

Under the MVAT Act in force from 1/4/2005 there is no procedure for assessment. The Company is filing monthly MVAT returns on regular basis and all dues have been paid as per the returns. The MVAT department of Government of Maharashtra has completed Audit of the company’s transactions up to the financial year 2018-19. The Company has also filed the audit report as required under the MVAT Act up to the financial year 2022-23. The GST audit is completed up to F.Y.2017-2018.

The company’s Income Tax assessment has been completed up to assessment year 2020-21 and the demands raised by the department ( Except demands in disputes ) has already been paid by the company.

28.    Remuneration to Directors (Rs. in Lacs)

29.    In the opinion of the Board of Directors, the Current Assets, Loans and Advances are approximately of the value stated if realised in the ordinary course of business. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

30.    Micro Small and Medium Enterprises

The Company has called for complete information from all the vendors regarding their status as small-scale/ micro industrial undertaking. Based on information received regarding the status of the vendors there are no amounts outstanding for more than Rs.1,00,000/- for more than 30 days.