4.8 Provision, Contingent Liability and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a
present obligation as a result of past events and it is probable that there will be outflow of resources.
Provisions are determined by discounting the expected future cash flows at a pretax rate that reflects
current market assessment of the time value of money and the risks specific to the liability. Contingent
liabilities not provided for, are disclosed in the accounts by way of Notes.
4.9 Cash Flow statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects
of transactions of 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 cash flows. The cash
flows are segregated into operating, investing and financing activities.
4.10 Borrowing Cost
(i) Borrowing cost include interest computed using Effective Interest Rate method, amortization of
ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the interest cost.
(ii) Borrowing costs that are directly attributable to the acquisition, construction, production of a
qualifying asset are capitalized as part of the cost of that asset which takes substantial period of time to
get ready for its intended use. The Company determines the amount of borrowing cost eligible for
capitalization by applying capitalization rate to the expenditure incurred on such cost. The capitalization
rate is determined based on the weighted average rate of borrowing cost applicable to the borrowings
of the Company which are outstanding during the period, other than borrowings made specifically
towards purchase of the qualifying asset. The amount of borrowing cost that the Company capitalizes
during the period does not exceed the amount of borrowing cost incurred during that period. All other
borrowings cost are expensed in the period in which they occur.
4.11 Government Subsidy / Grant
(i) Government grants are recognized at fair value on accrual basis where there is a reasonable
assurance that the grant will be received and all the attached conditions are complied with.
(ii) In case of revenue related grant, the income is recognized on a systematic basis over the period for
which it is intended to compensate an expense and is disclosed under "Other operating revenue" or
netted off against corresponding expenses wherever appropriate. Receivables of such grants are shown
under "Other Financial Assets". Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same. Receivables of such benefits are
shown under "Other Financial Assets".
(iii) In case of grant relates to an asset, it is recognized as income over the expected useful life of the
related asset.
4.12 Foreign Currency Transactions
Foreign Currency Transactions are translated into the functional currency using exchange rates 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 reporting date exchange rates are recognized in
the statement of Profit and Loss. Non- monetary items which are carried at historical cost denominated
in foreign currency are reported using the exchange rates at the date of transaction.
4.13 Earnings Per Share
Basic Earnings per share is calculated by dividing the Net profit or loss after tax attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year. Diluted EPS
is determined by adjusting the Profit or loss attributable to equity shareholders and the weighted
average number of equity shares outstanding for the effects of all dilutive potential equity shares.
4.14 Income Tax
The tax provision is considered as stipulated in IND AS 12 and includes current and deferred tax liability.
The company recognizes the accumulated deferred tax asset based on accumulated time difference
using current tax rate. Both the current tax and deferred tax liability relating to items recognized outside
the profit or loss is recognized either in "other Comprehensive Income" or directly in "Equity" as the
case may be.
4.15 Segment Reporting
The Company's Operating segment is identified based on nature of activity, risks and returns. The
Company is primarily engaged in Trading of all kinds of tradeable and marketable goods - Operating
Segment.
4.15 Impairment of Non-financial Assets
(i) The carrying values of non-financial assets are reviewed for impairment at each Balance Sheet date, if
there is any indication of impairment based on internal and external factors.
(ii) Non-financial assets are treated as impaired when the carrying amount of such asset exceeds its
recoverable value. After recognition of impairment loss, the depreciation / amortization for the said
assets is provided for remaining useful life based on the revised carrying amount, less its residual value if
any, on straight line basis.
(iii) An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is
identified as impaired.
(iv) An impairment loss is reversed when there is an indication that the impairment loss may no longer
exist or may have decreased.
4.17 Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial assets and financial liabilities are recognized when the
Company becomes a party to the contractual provisions of the relevant instrument and are initially
measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities at fair value through profit or loss are recognized immediately in profit or loss.
4.18 Financial Asset
(i) Financial assets comprise of investments in Equity, Trade Receivables, Cash and Cash Equivalents and
Other Financial Assets.
(ii) Depending on the business model (i.e) nature of transactions for managing those financial assets and
its contractual cash flow characteristics, the financial assets are initially measured at fair value and
subsequently measured and classified at:
a) Amortized cost; or
b) Fair value through Other Comprehensive Income (FVTOCI); or
c) Fair value through Profit or Loss (FVTPL)
d) Amortized cost represents carrying amount on initial recognition at fair value plus or minus
transaction cost.
(iii) The Company classifies its financial assets for measurement as below:-
(iv) The company derecognises a financial asset when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another party. On derecognition of a financial asset or part thereof, the
difference between the carrying amount measured at the date of recognition and the consideration
received including any new asset obtained less any new liability assumed shall be recognized in the
statement of profit and Loss.
(v) The company assesses at each balance sheet date whether the financial asset or group of financial
assets is impaired. IND AS 109 requires expected credit losses to be measured through a loss allowance.
The company recognizes lifetime expected losses for trade receivables that do not constitute a financing
transaction. For all other financial assets, expected credit losses are measured at an amount equal to 12
month expected credit losses or at an amount equal to lifetime expected losses, if the credit risk on the
financial asset has increased significantly since initial recognition.
4.19 Financial Liability
(i) Financial liabilities comprise of Borrowings from Banks, Trade payables, Derivative financial
instruments, financial guarantee obligation and other financial liabilities.
(iii) Financial liabilities are derecognised when and only when it is extinguished (i.e) when the obligation
specified in the contract is discharged or cancelled or expired.
(iv) Upon de-recognition of its financial liabilities or part thereof, 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 recognized in the
Statement of Profit and Loss.
4.20 Fair value measurement
(i) 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.
(ii) The fair value of an asset or a liability is measured / disclosed using the assumptions that the market
participants would use when pricing the asset or liability, assuming that the market participants act in
the economic best interest.
(iii) All assets and liabilities for which fair value is measured are disclosed in the financial statements are
categorised within fair value hierarchy based on the lowest level input that is significant to the fair value
measurement as a whole. The fair value hierarchy is described as below:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level inputs that are significant to the fair value
measurement are directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level inputs that are significant to the fair value
measurement are unobservable."
(iv) For assets and liabilities that are recognised in the Balance sheet on a recurring basis, the company
determines whether transfers have occurred between levels in the hierarchy by reassessing
categorisation at the end of each reporting period (i.e) based on the lowest level input that is significant
to the fair value measurement as a whole.
(v) For the purpose of fair value disclosures, the company has determined the classes of assets and
liabilities based on the nature, characteristics and risks of the assets or liabilities and the level of the fair
value hierarchy as explained above.
(vi) The basis for fair value determination for measurement and / or disclosure purposes is detailed
below:
Investments in Equity
The fair value is determined by reference to their quoted prices at the reporting date. In the absence of
the quoted price, the fair value of the equity is measured using generally accepted valuation techniques.
Non-derivative financial liabilities
The fair value of non-derivative financial liabilities viz, borrowings are determined for disclosure
purposes calculated based on the present value of future principal and interest cash flows, discounted at
the market rate of interest at the reporting date.
4.21 Significant Estimates and Judgements
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the
accompanying disclosures, and the disclosure of contingent liabilities.
Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed
on an on-going basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision effects only that period or in the period of the revision or future
periods, if the revision affects both current and future years. Accordingly, the management has applied
the following estimates / assumptions / judgements in preparation and presentation of financial
statements:
(i) Property, Plant and Equipment, Intangible Assets and Investment Properties
The residual values and estimated useful life of PPEs, Intangible Assets and Investment Properties are
assessed by technical team duly reviewed by the management at each reporting date. Wherever the
management believes that the assigned useful life and residual value are appropriate, such
recommendations are accepted and adopted for computation of depreciation/amortization. Also,
management judgement is exercised for classifying the asset as investment properties or vice versa."
(ii) Current Taxes
Calculations of income taxes for the current period are done based on applicable tax laws and
management's judgement by evaluating positions taken in tax returns and interpretations of relevant
provisions of law.
(iii) Contingent Liabilities
Management judgement is exercised for estimating the possible outflow of resources, if any, in respect
of contingencies / claims / litigations against the Company as it is not possible to predict the outcome of
pending matters with accuracy."
"(iv) Impairment of Trade receivables
The impairment for financial assets are done based on assumptions about risk of default and expected
loss rates. The assumptions, selection of inputs for calculation of impairment are based on management
judgement considering the past history, market conditions and forward looking estimates at the end of
each reporting date."
"(v) Impairment of Non-financial assets (PPE/Intangible Assets / Investment Properties)
The impairment of non-financial assets is determined based on estimation of recoverable amount of
such assets. The assumptions used in computing the recoverable amount are based on management
judgement considering the timing of future cash flows, discount rates and the risks specific to the asset."
"(vi) Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities could not be measured based on quoted
prices in active markets, management uses valuation techniques including the Discounted Cash Flow
(DCF) model, to determine its fair value. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of judgement is exercised in establishing fair
values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility."
i) Contingent Liabilities
Claims against the company not acknowledged as debts
ii) Commitments:
Estimated amount of contracts remaining to be executed on capital account and not provided
Note: 30 Segment reporting
The Company's Operating segment is identified based on nature of activity, risks and returns. The
Company is primarily engaged in Manufacturing and Trading of all kinds of tradeable and marketable
goods of food items. Accordingly there are no separate reportable segments according to Ind AS 108
'Operating Segments' issued.
Note: 31 Earnings Per Share
The amount considered in ascertaining the Company's earnings per share constitutes the net profit after
tax and includes post tax effect of any exceptional items. The number of shares used in computing basic
earnings per share is the weighted average number of shares outstanding during the year. The number
of shares used in computing diluted earnings per share comprises the weighted average number of
shares considered for deriving basic earnings per share and also the weighted average number of shares
which could have been issued on conversion of all dilutive potential shares.
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