1. GENERAL INFORMATION
The Company was incorporated on December 17, 2010 in the state of Gujarat underthe provisions of the CompaniesAct, 1956 with CIN No. L15549GJ2010PLC063283.
The Company is in the business of fruitsdrinks. The Company's business operations, which were being carried out in a different entity, were taken over by the Company effective from 1st April 2011. Further, effective from August 5, 2011 the name of the Company was changed to Manpasand Beverages Private Limited. Subsequently, effective from October 7,2014 the name of the Company has been changed to Manpasand Beverages Limited.
2. SIGNIFICANT ACCOUNTING POLICIES
(1) Statement of Compliance
The financial statements have been prepared in accordance with Ind ASs notified under the Companies (Indian Accounting Standards) Rules, 2015.
(2) Basis of Preparation and Presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. All assets and liabilities have been classified as current or non current as per the Company’s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. 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 ascertained its operating cycle as 12 months forthe purpose of current or non-current classification of assets and liabilities.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
(3) Revenue Recognition
(a) Sale of Goods
The Company has its selling network across the country in the form of Channel Partners (CP) and Depots. Goods sent to Depot is considered as stock transfer and later on considered as sales when the goods are sold from depot. Revenue from the sale of goods is recognised when all the following conditions are satisfied.
(I) the Company has transferred to the buyerthe significant risks and rewards of ownership of the goods;
(ii) the Company retains neithercontinuing managerial involvementto the degree usually associated with ownership nor effective control over the goods sold;
(iii) the amount of revenue can be measured reliably;
(iv) it is probable thatthe economic benefits associated with the transaction will flow to the Company; and
(v) the costs incurred orto be incurred in respect of the transaction can be measured reliably.
Sales are net of discounts, sales tax and value added tax and Goods & Services Tax. The Sales figure is grossed up to include Excise duty collected on sales uptoJun 30,2017.
(b)Dividend and interest income
Dividend income from investments is recognised when the shareholder's right to receive the payment has been established.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding.
(4) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
When acquired, finance leases are capitalised at fair value or presentvalue of minimum Lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line basis in net profit in the Statement of Profit and Loss overthe lease term.
(5) Foreign Currencies
(a) Functional Currencies
The functional currency of the Company is the Indian rupee. These financial statement are presented in indian rupees (rounded of to lakhs)
(b) Transactions and translations
In preparing the financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing atthat date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated atthe rates prevailing atthe date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
(6) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready fortheir intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and othercosts that the Company incurs in connection with the borrowing of funds.
(7) Employee Benefits
(a) Shortterm Employee Benefits
All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages etc. and the expected cost of bonus are recognised in the period in which the employee renders the related services.
(b) Other long-term Employee Benefit obligations
The liabilities for earned leave which are not expected to be settled wholly within 12 months afterthe end of the period in which the employees render the related service are measured on the basis of independent actuarial valuation certificate as the present value of the expected future payments to be made in respect of service provided by the employees upto the end of the reporting period.
(c) Post-Employment Benefits
(i) Defined Contribution Plan
The Company's contribution to provident fund, and otherfunds are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
(ii) Defined Benefit Plan
For defined benefit plans in the form of gratuity fund , the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the other comprehensive income in the period in which they occur. Past service cost is recognised in profit or loss in the period of a plan amendment.
(d) Long term employee benefits
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
(8) Share based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments atthe grant date.
(9) Taxation
Income tax expense represents the sum of the taxcurrently payable and deferred tax.
Current Tax
The tax currently payable is based on taxable profit forthe year. Taxable profit differs from ‘profit before tax’ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are nevertaxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted bythe end of the reporting period.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assetto be recovered.
Deferred tax liabilities and assets are measured atthe tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted bythe end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, atthe end of the reporting period, to recoveror settle the carrying amount of its assets and liabilities.
(10) Property, Plant and Equipment
Freehold land is carried at historical cost and not depreciated. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalised until the property, plant and equipment are ready for use, as intended by management. The Company depreciates property, plant and equipment overtheir estimated useful lives using the written down value method. The estimated useful lives of the assets are as follows:
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready fortheir intended use.
Depreciation is recognised so asto write off the costofassets (other than freehold land and properties under construction) less their residual values over their useful lives, using the on Written Down Value (WDV) basis. The estimated useful lives, residual values and depreciation method are reviewed atthe end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under Other Non-Current Assets and the cost of the assets not put to use before such date are disclosed under 'Capital work-in-progress'. Subsequent expenditures relating to property, plant and equipment is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the Statement of Profit and Loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognised in the Statement of Profit and Loss. Assets to be disposed off are reported atthe lowerof the carrying value orthe fair value less costto sell.
(11) Intangible Assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
(12) Impairment of Tangible and Intangible assets otherthan goodwill
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Forthe purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less costto 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 to which the asset belongs.
If such assets are considered to be impaired, the impairment is recognized in the Statement of Profit and Loss and is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the
Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization ordepreciation) had no impairment loss been recognized forthe asset in prioryears.
(13) Inventories
Inventories are stated at the lower of cost and net realisable value after providing for obsolescence. Costs of inventories are determined on weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition.
(14) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
(15) Financial Instruments
The Company determines the classification of its financial assets and liabilities at initial recognition. The classification depends on the Company’s business model formanaging the financial assets and the contractual terms of the cash flows.
Initial Recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
Subsequent Measurement (a) Non-derivative financial instruments
(i) Cash and Cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consists of balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial assets carried at amortised cost
A financial asset is subsequently 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 on specified dates to cash flows that are solely payments of principal and intereston the principal amount outstanding.
(iii) Financial assets at fair value through profit or loss (FVTPL)
Afinancial assetwhich is not classified in any of the above categories are subsequently fairvalued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one yearfrom the Balance Sheet date, the carrying amounts approximate fairvalue due to the short maturity of these instruments.
(b) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity.
Derecognition of financial instruments
The Company derecognizes afinancial assetwhen 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. Afinancial liability (ora part of afinancial liability) is derecognized from the Company's Balance Sheetwhen the obligation specified in the contract is discharged or cancelled or expires.
(16) Fairvalue of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include available quoted market prices and valuation reports from independent valuers. All methods of assessing fair value result in general approximation of value, and such value may neveractually be realized.
(17) Earning Per Share
Basic earnings per share is calculated by dividing the net profit or loss forthe period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit forthe period. Forthe purpose of calculating diluted earnings per share, the net profit or loss forthe period attributable to equity shareholders and the weighted average numberof shares outstanding during the period isadjustedforthe effects of all dilutive potential equity shares.
(18) Cash flow statement
Cash flows are reported using the indirect method, whereby net profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(19) Recent accounting pronouncements Standard issued but not yet effective
Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind AS which the Company has not applied as they are effective for annual periods beginning on orafter April 1,2018:
Ind AS 115 Revenue from Contracts with Customers Ind AS 21 The Effect of Changes in Foreign Exchange Rates
Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18- Revenue,
Ind AS 11 - Construction Contracts when it becomes effective.
The core principle of Ind AS 115 isthatan entity should recognise revenue to depictthe transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation istransferred to the customer.
The Company has completed its evaluation of the possible impact of Ind AS 115 and will adopt the standard with all related amendments to all contracts with customers retrospectively with the cumulative effect of initially applying the standard recognised atthe date of initial application. Under this transition method, cumulative effect of initially applying Ind AS 115 is recognised as an adjustment to the opening balance of retained earnings of the annual reporting period. The standard is applied retrospectively only to contracts that are not completed contracts at the date of initial application. The Company does not expectthe impact of the adoption of the new standard on its retained earnings and to its net income on an ongoing basis.
Ind AS 21 -The Effect of Changes in Foreign Exchange Rates
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company does not expect any impact of this amendment on its financial statements.
3. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
The following are the critical judgements, apart from those involving estimations that the management have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements. Actual results may differfrom these estimates. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Useful lives and residual value of property, plant and equipment and intangible asset:
The Company reviews the useful life and residual value of property, plant and equipment and intangible asset as atthe end of each reporting period. This reassessment may result in change in depreciation/ amortisation expense in future periods.
Income taxes:
Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions including set-off of available MAT credit in future years based on best estimate of revenue, expenses and tax positions for each future year.
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