2 Material accounting policies
(a) Revenue from contracts with customers
Revenue from contracts with customers is recognised when the control of the goods or services is transferred to the customer at an amount that
reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company recognises revenue from contracts with customers based on a five-step model as set out in Ind AS - 115, Revenue from contracts
with customers:
I) Identify the contracts with customers: A contract is defined as an agreement between two or more parties that creates enforceable rights and
obligations and sets out the criteria for every contract that must be met.
ii) Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer goods
or services to the customer.
iii) Determine the transaction price: The transaction price is the amount of consideration to which the Company expects to be entitled in
exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
iv) Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation,
the Company will allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to
which the Company expects to be entitled in exchange for satisfying each performance obligation.
v) Recognise revenue when (or as) the Company satisfies a performance obligation at a point in time or over time.
Sale of goods and services:
The Company has concluded that revenue from sale of goods should be recognised at a point in time when the control of the asset is transferred to
the customer, generally on despatch or delivery of the goods, as per the terms of the contract.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of
transaction price needs to be allocated. In determining the transaction price for the sale of goods, the Company considers the effect of significant
financing components. The Company receives short-term advance from its customers. As the year between the transfer of promised goods or
services and when the customer pays for those goods or services is expected to be less than one year, the Company has used the practical
expedient in Ind AS - 115 and not adjusted the consideration for significant financing component.
Revenue is measured based on the transaction price i.e. the consideration to which the company expects to be entitled from a customer, net of
returns and allowances, trade discounts and volume rebates. Revenue includes both fixed and variable consideration. Variable consideration
arises on the sale of goods as a result of discounts and allowances given and estimated rebates.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or
services to a customer, excluding amount collected on behalf of third parties and transaction costs. The consideration promised in a contract with
a customer is fixed.
For each performance obligation identified, the Company determines at contract inception that it satisfies the performance obligation over time
or satisfies performance obligation at a point in time. When either party to a contract has performed, an entity shall present the contract in the
Balance Sheet as a contract asset or a contract liability depending upon the relationship of the Company's performance and customer payment. A
receivable is recognised when goods are dispatched or delivered as this is the case of point in time recognition where consideration is
unconditional because only passage of time is required.
Tie-up manufacturing arrangements:
The Company has entered into arrangements with Tie-up Manufacturing Units (TMUs), where-in TMUs manufacture and sell bottled spirituous
beverages products on behalf of the Company. Under such arrangements, the Company has exposure to significant risks and rewards i.e., it has
the primary responsibility for providing goods to the customer, has pricing latitude and is also exposed to inventory and credit risks. The
Company is considered to be a principal in such arrangements with TMUs. Accordingly, the transactions of the TMUs under such arrangements
have been recorded as gross revenue, excise duty and expenses as if they were transactions of the Company. The Company presents inventory
held by the TMUs under such arrangements as its own inventory. The net receivables from/ payable to TMUs are recognised under financial
assets/ financial liabilities respectively.
(b) Property, plant and equipment
Recognition and initial measurement:
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if it is probable that future economic benefits
associated with the item will flow to the company and the cost of the item can be measured reliably. Property, plant and equipment is stated at
historical cost less accumulated depreciation and impairment losses, if any. Freehold land is carried at historical cost. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Subsequent costs are added in the asset's carrying amount/recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the
cost of such item can be measured reliably. All repairs and maintenance expenses are charged to the statement of profit and loss in the year in
which they are incurred. Upon first-time adoption of Ind AS, the Company has elected to measure all its property, plant and equipment
recognised as at 1 April 2016, as per the previous GAAP, and used the carrying amount as its deemed cost on the date of transition to Ind AS.
Capital work-in-progress:
Property, plant and equipment which are not ready for intended use as on the balance sheet date are disclosed as “Capital work-in-progress”.
Subsequent measurement (depreciation and useful lives):
Depreciation is provided on a pro-rata basis on the written down value (WDV) method based on estimated useful life prescribed under Schedule
II of the Companies Act, 2013 with the exception of plant and equipment of bottling plants that are being depreciated considering a useful life of
20 years based on technical evaluation instead of 15 years under Schedule II of the Companies Act, 2013. Depreciation of land acquired under
right of use is provided over their respective lease year or estimated useful life whichever is shorter. Residual values, useful lives and method of
depreciation of property, plant and equipment are reviewed at each balance sheet date and any change in them is adjusted prospectively.
De-recognition:
An item of property, plant and equipment and any significant part initially recognized is de-recognized 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 recognized in the statement of profit and loss, when the asset is de¬
recognized.
Intangible assets
(i) Recognition and measurement
Acquired Intangible assets: Intangible assets are initially measured at cost and subsequently measured at cost less accumulated
amortisation cost and any accumulated impairment losses. Intangible assets are capitalised only if the expenditure can be measured
reliably. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Internally generated intangible assets: Expenditure pertaining to research is expensed out as an when incurred. Expenditure incurred on
development is capitalised if such expenditure leads to creation of an asset, otherwise such expenditure is charged to statement of profit and
loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.
(iii) Amortisation
Amortisation is the systematic allocation of the cost of intangible assets less their estimated residual values over their estimated useful lives
using the straight-line method, and is included in depreciation and amortisation in Statement of Profit and Loss.
c) Impairment of non-financial assets
Assessment for impairment is done at each balance sheet date when there is an indication that a non-financial asset may be impaired. For the
purpose of assessing impairment, smallest identifiable group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows from other assets/groups of assets is considered as a cash generating unit. If any indication of impairment exists,
an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value
exceeds their recoverable amount are written down to the recoverable amount by recognizing the impairment loss as an expense in the statement
of profit and loss. Recoverable amount is higher of an asset's/cash generating unit's fair value less cost of disposal and its value in use. Value in
use is the present value of estimated future cash flows expected to arise from the continuing use of an asset/cash generating unit and from its
disposal at the end of its useful life. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment
loss recognized for an asset/cash generating unit in any prior accounting years may no longer exist or may have decreased, based on which a
reversal of an earlier recorded impairment loss is recognized in the statement of profit and loss. Such a reversal is made only to the extent that the
asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
(d) Investments in subsidiaries
Investment in subsidiary are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exist, the carrying
amount of investment is assessed and written down immediately to its recoverable amount. The recoverable amount is the higher of an asset's fair
value less cost of disposal and value in use. On disposal of the investment, the difference between net disposal proceeds and the carrying amount
is recognized in the statement of profit and loss.
(e) Financial instruments
(A) Financial assets
Classification:
The Company classifies its financial assets in the following measurement categories depending on the Company's business model for managing
such financial assets and the contractual cash flow terms ofthe asset.
(i) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
(ii) those subsequently measured at amortized cost.
For assets measured at fair value, gains or losses are either recorded in the statement of profit and loss or other comprehensive income.
Investments in debt instruments are classified depending on the business model managing such investments. The Company re-classifies the debt
investments when and only when there is a change in business model managing those assets. For investments in equity instruments which are not
held for trading, the Company has made an irrevocable election at the time of initial recognition to account for such equity investments at fair
value through other comprehensive income.
Measurement:
A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus or minus, for an
item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
Debt instruments
Subsequent measurement of debt instruments depends on the Company's business model managing such debt instruments and the contractual
cash flow characteristics ofthe instrument. There are three measurement categories into which the debt instruments are classified:
(i) Amortized cost: Business model managing such asset has the objective to realize the contractual cash flows arising from the asset by
holding such asset and the contractual cash flows represent solely payments of principal and interest on the outstanding amount of
principal, measured at amortized cost. A gain or loss on a financial asset subsequently measured at amortized cost is recognized in the
statement of profit or loss when the asset is de-recognised or impaired.
(ii) Fair value through other comprehensive income (FVTOCI): Business model managing such asset has the objective to collect the contractual
cash flows arising from such asset and to sale the asset, where such contractual cash flows represent solely payments of principal and interest
on the outstanding amount of principal, measured at fair value through other comprehensive income (FVTOCI). Changes in fair value of
such instruments are recognized through OCI, except for the recognition of impairment gains or losses, interest income and foreign
exchange gains and losses which are recognized in the statement of profit and loss. When the financial asset is de-recognised, the cumulative
gain or loss previously recognized in OCI is reclassified from equity to statement of profit and loss and recognized in other income.
(iii) Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value
through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognized in
statement of profit and loss in the year in which it arises.
Equity instruments:
The Company classifies all its equity investments at fair value. In case of equity instruments not held for trading, Company's management has
made an irrevocable election to present fair value gains and losses on such equity instruments in other comprehensive income and there is no
subsequent reclassification of fair value gains and losses to the statement of profit and loss.
Investments in mutualfunds:
Investments in mutual funds are measured at fair value through profit and loss.
Interest income:
Interest income is recorded on accrual basis using the effective interest rate (EIR) method. The 'effective interest rate' is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortised cost of the financial liability.
Dividend income:
Dividend income is recognized when the right to receive dividend is established.
Impairment:
The Company assesses the expected credit losses for its financial assets at amortized cost and FVTOCI debt instruments. Impairment
methodology applied depends on whether there has been a significant increase in credit risk and the loss amount assessed depends upon past
events, present conditions and future economic scenario.
For trade receivables only, the Company applies the simplified approach required by Ind AS 109 which allows loss allowance to be recognized at
an amount equivalent to the lifetime expected credit losses from the initial recognition of such receivables irrespective of whether there has been
a significant increase in credit risk.
Offsetting:
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company has
legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and to settle the liability
simultaneously.
De-recognition:
A financial asset is de-recognized when:
(i) Contractual right to receive cash flows from such financial asset expires;
(ii) Company transfers the contractual right to receive cash flows from the financial asset; or
(iii) Company retains the right to receive the contractual cash flows from the financial asset, but assumes a contractual obligation to pay such
cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards associated
with the ownership of the financial asset. In such cases, the financial asset is de-recognized. Where the Company has not transferred
substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognized.
Where the Company has neither transferred nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset
is de-recognised if the Company does not retained control of the financial asset. Where the Company retains control of the financial asset, the
asset is continued to be recognized to the extent of continuing involvement in such financial asset.
(B) Financial liabilities
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-
for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at
amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any
gain or loss on derecognition is also recognised in profit or loss.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of profit and loss over the
year of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of
the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a
prepayment and amortised over the year of the facility to which it relates.
Borrowings are derecognized from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in statement of profit and loss as other gains or (losses).
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12
months after the reporting year.
Derivatives
The Company enters into derivative financial instruments, primarily foreign exchange forward contracts, to manage its exposure to foreign
exchange risks.
Derivatives are initially recognised at fair value and are subsequently re-measured to their fair value at the end of each reporting year. The
resulting gains/losses is recognised in the statement ofprofit and loss.
(f) Government grants and subsidies
Grants and subsidies from the government are recognized when there is reasonable certainty that the grant or the subsidy will be received and the
conditions attached to such grant will be complied. When the grant or the subsidy relates to a revenue item, it is recognized as income over the
year necessary to match them on a systematic basis to the costs which they intend to compensate. Where the grant or the subsidy relates to a
capital asset, it is initially recorded as deferred revenue income and subsequently recognized as income in the statement of profit and loss, over
the remaining useful life of the related asset.
Incomefrom export incentives:
Income from export incentives such as Remission of Duties and Taxes on Export Products (RoDTEP) and duty drawback are recognized on
accrual basis.
(g) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of such assets.
A qualifying asset is one that necessarily takes substantial year of time to get itself ready for the intended use. Other borrowing costs are
recognized as an expense in the year in which they are incurred. Borrowing costs include exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to interest costs. Non-monetary items that are measured based on historical cost
in a foreign currency are translated at the exchange rate at the date of the transaction.
(h) Inventories
Raw materials, packing materials, work-in-progress, stores and spares, finished goods and stock-in-trade are valued at lower of cost and net
realizable value. However, materials and other items held for use in production of inventories are not written down below cost if the finished
goods in which they will be incorporated are expected to be sold at or above cost.
Cost of inventories comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from the tax authorities), cost of
conversion and all other costs incurred in bringing the inventories to their present location and condition. In determining the cost, weighted
average cost method is used. In determining the cost of manufactured finished goods and work-in-progress an appropriate share of fixed and
variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and
condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities. Costs of purchased inventory are
determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale. The comparison of cost and net realisable value is made on an
item-by-item basis. Adequate allowance is made for obsolete and slow moving items.
(i) Cash and cash equivalents
Cash and cash equivalents comprise of cash-in-hand and demand deposits with banks. The Company considers it's highly liquid, short-term
investments (having original maturity less than three months) which can be readily converted to known amount of money and subject to
insignificant risks arising from changes in their fair values, as cash equivalents. Accordingly time deposits with banks, having original maturity
less than three months, is considered as cash equivalent.
The standalone statement of cash flows, cash and cash equivalent consists of cash and short term deposits, as defined above, net of outstanding
bank overdraft as they are considered an integral part of the company's cash management.
(j) Assets held for sale
Assets are classified as held for sale under current assets if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use and a sale is considered highly probable and is expected to be sold within one year from the balance sheet date. They
are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from
employee benefits and financial assets which are specifically exempt from this requirement.
(k) Foreign currency transactions
Functional currency and presentation currency:
The financial statements are presented in Indian Rupees (i.e., INR), the functional currency of the Company. Functional currency is the currency
of the primary economic environment in which the Company operates.
Transactions and balances with value below the rounding off norm adopted by the Company have been reflected as '0' in the relevant notes to
these financial statements.
Transactions and balances:
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of the transaction. Foreign
exchange gains and losses from settlement of these transactions, and from translation of monetary assets and liabilities at the exchange rates
prevailing on the balance sheet dates are recognized in the statement of profit and loss.
(l) Employee benefits expense
Short-term employee benefits:
Short-term employee benefit obligations are measured on an undiscounted basis and is expensed as the related service is provided. A liability is
recognised for the amount expected to be paid eg, under short term cash bonus, if the Company has the present legal or constructive obligation to
pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
The Company provides defined contribution plans for post-employment benefits in the form of provident fund and superannuation fund
administered by Regional Provident Fund Commissioner and Life Insurance Corporation of India respectively. The Company's contributions to
defined contribution plans are charged to the statement of profit and loss as and when incurred. Provident and superannuation funds are
classified as defined contribution plans as the Company has no further obligation beyond making the contributions, even if the assets of the fund
is not enough to pay all the employee benefits.
Defined benefit plans and other long term benefits:
Liability for compensated absence and gratuity is provided on the basis of actuarial valuation as at the balance sheet date carried out by an
independent actuary using Projected Unit Credit (PUC) method. It is used to measure the plan liabilities, including death-in-service and incapacity
benefits. Plan liability is the actuarial present value of the 'defined benefit obligations' as on the balance sheet dates for all active members.
Gratuity plan is classified as post retirement employee benefit and hence the current service cost including net interest cost / (income) is
recognized in the statement of profit and loss under “employee benefit expenses” during the year in which it is incurred. Remeasurement of
defined benefit obligation due to change in actuarial assumptions or experience adjustments or expected return on plan assets (to the extent not
covered under net interest on net defined benefit obligation) is recognized under other comprehensive income and not subsequently reclassified
to the statement of profit and loss.
Liability for compensated absence has been classified as long-term employee benefit and the entire cost incurred on such plan is recognized in
the statement of profit and loss under “employee benefit expenses” during the year in which it is incurred.
Termination benefits
Termination benefits are recognized as an expense as and when incurred. The Company recognizes termination benefits at the earlier of the
following dates:
(i) when the Company can no longer withdraw the offer ofthose benefits; or
(ii) when the Company recognizes a restructuring cost within the scope of Ind AS 37.
Termination benefits falling due more than 12 months after the end of the reporting year are discounted to their present value.
(m) Leases
As a lessee
The Company's lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease,
at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a year of
time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the
asset through the year of the lease and (iii)the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding 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 low value leases. 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 term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities
includes these options when it is reasonably certain that they will be exercised. The Right Of Use assets are initially recognized at cost, which
comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus
any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the
underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from
other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. The lease
liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the
interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases.
Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it
will exercise an extension or a termination option. Lease liability and ROU assets have been separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.
As a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified
as a finance or operating lease by reference to the ROU asset arising from the head lease. For operating leases, rental income is recognized on a
straight line basis over the term of the relevant lease.
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