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1. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
(i) Property, Plant and Equipment:
Recognition and measurement:
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment, if any. The cost of property, plant and equipment includes purchase price, including freight, duties, taxes and expenses incidental to acquisition and installation. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Government grants related to the acquisition or construction of tangible assets are recognized when there is reasonable assurance that the grant will be received and the company will comply with the conditions attached to the grant. Such grants are recognized in the financial statements either as deferred income or by deducting the grant from the carrying amount of the asset. If the grant is deducted from the carrying amount of the asset, it reduces the depreciation charge over the asset's useful life. When the grant is deducted from the carrying amount of the asset, the reduced carrying amount is depreciated over the asset's remaining useful life.
Property, plant and equipment are derecognized from financial statements, either on disposal or when no economic benefits are expected from its use or disposal. The gain or losses arising from disposal of property, plant and equipment are recognized in the Statement of Profit and Loss in the year of occurrence.
Revaluation of freehold land :
As at March 31, 2024, the Company has changed its accounting policy with respect to measurement of freehold land. According to the revised policy, freehold land is valued at Fair value based on valuations by external independent valuers. Any revaluation surplus is recognized in other comprehensive income and accumulated in equity under revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognized in statement of profit and loss, in which case the increase is recognized in statement of profit and loss. A revaluation deficit is recognized in statement of profit and loss, except to the extent that it offsets an existing surplus on the same asset carried in the revaluation reserve. This revaluation surplus is not available for distribution to shareholders.
Revaluation of land at least once every three to five years. Additionally, revaluation will be performed more frequently if significant changes in market conditions suggest that the
Impairment :-
The carrying amount of assets is reviewed at each Balance Sheet date if there is any indication of impairment based on internal/ exteral factors.
If the carrying amount of assets exceeds its estimated recoverable amount, an impairment loss is recognized in the Statement of Profit & Loss to the extent the carrying amount exceeds recoverable amount.
(ii) Intangible Assets :-
Intangible assets are initially recognized at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. The amortization period and the amortization method for an intangible asset are reviewed at least at the end of each reporting period. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized. Intangible assets are amortized over its useful life of five years.
Leasing / Right of use assets :-
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the useful life of the asset or the balance lease term of the underlying asset. Right of use assets is evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
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 the leases. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the company changes its assessment if whether it will exercise an extension or a termination option.
The Company has decided not to recognize right-of-use assets and lease liabilities for
short-term leases with a term of 12 months or less, and for leases involving low-value assets. Instead, the Company records the lease payments for these leases as an expense throughout the lease term.
Lease liability and ROU asset shall be separately presented in the Balance Sheet and lease payments shall be classified as financing cash flows.
(iii) Leases:
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease and whether it is a finance lease or an operating lease. If substantially all the risks and rewards incidental to ownership of the leased asset are transferred to the Company as lessee the arrangement is treated as a finance lease otherwise it is considered as an operating lease. The Company which has an operating lease (as a lessee) recognises the lease rentals as expense in the statement of Profit & Loss on a straight-line basis with reference to lease terms and other considerations.
(iv) Inventories:
Inventories consist of raw materials, stores and spares, packing material /traded goods, work-in-progress and finished goods. Net realisable value represents the estimated selling price (including subsidy income, where applicable) of inventories less all estimated costs of completion and costs necessary to make the sale.
Inventories are valued as under: -
Raw material, Work in process and Packing Materials: -
At Cost on First in First out (FIFO) basis or net realizable value whichever is lower. Raw material and work in process are not written down below cost if the finished products in which they will incorporated are expected to be sold at or above cost.
Finished Goods: -
At cost or net realizable value whichever is lower. The cost is computed on annual weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.
Traded Goods :-
At cost on First in First out (FIFO) basis or net realizable value whichever is lower.
Stores & Spares: -
At Cost on FIFO Basis.
(v) Provision for Doubtful trade Receivables:
The Company maintains an allowance for impairment of doubtful accounts based on financial condition of the customer, receivable and over dues, and historical experience of collections from customers adjusted for current estimates.
In accordance with Ind AS , the Company uses the expected credit loss (“ECL”) model for measurement and recognition of impairment loss on its trade receivables. For this purpose, the Company uses a provision matrix to compute the expected credit loss amount for trade receivables. The provision matrix takes into account external and internal credit risk factors and historical data of credit losses from various customers adjusted for forward looking estimates.
(vi) Revenue Recognition:
The Company is primarily into manufacturing of Fertilizer, Sulphuric Acid, Micro Nutrients and Soya oil . Sales are made at a point in time in accordance with IND AS 115-Revenue from Contracts with Customers is recognised when goods are dispatched and the control over the goods sold is transferred to customers The Company does not expect to have any contracts where the period between the transfer of goods and payment by customer exceeds one year. Hence, the Company does not adjust revenue for the time value of money.
Sale of goods & Subsidy
(a) Sale of goods
Revenue, in respect of sale of products is recognised when the significant risks and rewards of ownership of the goods are passed on to the buyer. Amounts disclosed as revenue are net of returns and allowances, trade discounts and rebates. The Company collects Goods and Service Tax (GST) on behalf of the government and, therefore, it is not an economic benefit flowing to the
Company. Hence, it is excluded from revenue.
(b) Government Subsidy: -
v Subsidy is recognized as per Ind AS 20
'Accounting for Government Grants and Disclosure of Government Assistance' on the basis of the rates notified from time to time by the Government of India in accordance with the Nutrient Based Subsidy (NBS) policy on the quantity of fertilisers sold during the year by the Company for the period for which notification has been issued.
Other income :-
(c) Insurance Claims :- Revenue in respect of insurance / other claims are recognized only when it is reasonably certain that the ultimate collection will be made.
(d) Interest Income :- Interest income is recognized 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 accounted on accrual basis , using effective interest rate method.
(vii) Employee benefits:
Short term employee benefits:
Short term employee benefits are recognized as an expense at the amount disclosed in the Statement of Profit and Loss for the period in which the related service rendered.
Post employment benefits & long term employee benefits:
Post employment benefits are determined using the projected unit credit method, with actuarial valuation being carried out at Balance sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur.
Defined contribution plans:
Contributions paid/payable to defined contribution plans comprising of Provident Funds for certain employees covered under the respective Schemes are recognised in the profit or loss each year when employees have rendered service entitling them to the contributions.
Defined benefit plans:
The liability recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefits obligation is calculated annually by actuaries using the projected unit credit method.
The Company operates defined benefit plan for Gratuity. The cost of providing such defined benefit is determined using the projected unit credit method of actuarial valuation made at the end of the year. The Company has created an Employees Group Gratuity Fund which has taken a Group Gratuity Assurance Scheme with the Life Insurance Corporation of India.
Actuarial gains and losses are recognised in other comprehensive income for gratuity and recognised in the Statement of Profit & Loss for leave encashment.
Remeasurement gain and losses arising from experience adjustments, changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income (OCI). They are included in retained earnings in the statement of change in equity and in the balance sheet.
Compensated absences :
Obligations on leave encashment are provided using the projected unit credit method of actuarial valuation made at the end of the year.
(viii) Borrowing costs:
Borrowing costs attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their 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 recognized in profit or loss in the period in which they are incurred.
(ix) Segment reporting:
The Managing Director monitor the operating results of the business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is
measured consistently with profit or loss in the financial statements.
The Operating segments have been identified on the basis of the nature of products. Segment revenue includes sales and other income directly identifiable with/ allocable to the Segment.
Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under unallocable expenditure. Income which relates to the Company as a whole and not allocable to segments is included in unallocable income.
Segment result represent the profit / (loss) before interest and tax earned by each segment without allocation of central administrative costs.
Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
The company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilizers, Micro Nutrients & Chemicals and Oil, taking into accounts the nature of product, the different risk and returns, the organizational structure and the internal reporting system.
The company caters mainly to the need of domestic market. The direct export turnover is Nil during the year. As such there are no reportable geographical segments.
(x) Foreign Currency Transactions: -Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss.
Measurement of foreign currency items at reporting date:
Foreign currency monetary items of the Company are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Nonmonetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair value is measured. Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss
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