1. STATEMENT ON SIGNIFICANT ACCONG POLICIES BASIS OF brPARATION OF ACCOUNTS The financial statements of Agro Tech Foods Limited have been brpared and brsented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises accounting standards brscribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of Institute of Chartered Accountants of India and the relevant provisions of the Act. USE OF ESTIMATES The brparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods. CURRENT and NON-CURRENT CLASSIFICATION All assets and liabilities are classified into current and non-current. Assets An asset is classified as current when it satisfies any of the following criteria: a. it is expected to be realised in, or is intended for sale or consumption in the Company's normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is expected to be realised within 12 months after the reporting date; or d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date. Apart from the above, current assets also include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities A liability is classified as current when it satisfies any of the following criteria: a. it is expected to be settled in the Company's normal operating cycle; b. it is held primarily for the purpose of being traded; c. it is due to be settled within 12 months after the reporting date; or d. the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Apart from the above, current liabilities also include current portion of non-current financial liabilities. All other liabilities are classified as non-current. Operating cycle Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. REVENUE RECOGNITION Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of products are transferred to customers and no significant uncertainty exist regarding the amount of the consideration that will be derived from the sale of the goods. Sales are stated net off sales returns, trade discounts, sales tax, value added tax and excise duty. Sales are recognized when goods are dispatched or as per the terms of contract. Income from interest on deposits, loans and interest bearing securities is recognised on the time proportionate method. FIXED ASSETS AND DEbrCIATION Fixed assets are carried at cost of acquisition less accumulated debrciation and accumulated impairment loss, if any. Fixed assets are accounted for at cost of acquisition or construction inclusive of inward freight, duties, taxes and directly attributable costs of bringing the asset to its working condition for its intended use. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date are shown as capital advances under long-term loans and advances and assets under installation or under construction as at the balance sheet date are shown as capital work-in-progress under fixed assets. Debrciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by the Management. Debrciation for assets purchased/ sold during the year is proportionately charged. The Management estimates the useful lives for the other fixed assets as follows: INTANGIBLE ASSETS AND AMORTIZATION Brands and computer software acquired by the Company, the value of which is not expected to diminish in the foreseeable future, are capitalised and recorded in the balance sheet as trademarks and computer software at cost of acquisition less accumulated amortisation. These are being amortised on straight-line method over the estimated useful life as mentioned below. Useful life of brands are determined by persuasive evidences of expected usage contributing towards the performance and significant expenditure incurred to sustain the useful life of brands. Recoverable value of such brands are assessed in each financial year. The amortisation rates are as follows: - Brands 40 years - Computer Software 5 to 10 years New licenses of software including their installation costs are charged off over 10 years and the balance software including their installation costs are charged off over 5 years. IMPAIRMENT OF ASSETS The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, impairment provision is created to bring down the carrying value to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that if a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the impairment provision created earlier is reversed to bring it at the recoverable amount subject to a maximum of debrciated historical cost. INVESTMENTS Investments that are readily realisable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. However, that part of long-term investments which is expected to be realised within 12 months after the reporting date is also brsented under 'current investments' as "current portion of long-term investments" in consonance with the current/ non-current classification scheme of Schedule III of the Companies Act, 2013. Current investments are stated at the lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments. Any reductions in the carrying amount and any reversals of such reductions are charged or credited to the statement of profit and loss. 1. STATEMENT ON SIGNIFICANT ACCOUNTING POLICII INVENTORIES Inventories are valued at lower of weighted average cost and estimated net realisable value after providing for cost of obsolescence, where necessary. Cost of inventories comprises cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. In the case of finished goods, cost comprises material, labour and applicable overhead expenses and duties including excise duty paid/payable thereon. 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. Goods in transit / with third parties and at godowns are valued at cost which rebrsents the costs incurred up to the stage at which the goods are in transit / with third parties and at godowns. FOREIGN EXCHANGE CONVERSION The transactions in foreign currency are accounted for at a standard exchange rate of the month in which the transactions take place. Exchange differences arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year end rates. The resultant exchange differences are recognised in the statement of profit and loss. Non-monetary assets are recorded at a standard exchange rate of the month in which the transactions takes place. In respect of forward contracts, the differences between contracted exchange rates and monthly standard exchange rates are recognised as income or expense over the life of the contracts. EMPLOYEE BENEFITS Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees. (continued) Gratuity which is defined benefit plan, is accrued based on an actuarial valuation using the projected unit credit method at the balance sheet date. Provident Fund, wherein Company provides the guarantees of a specified return on contribution are considered as defined benefit plans and are accrued based on an actuarial valuation using the projected unit credit method at the balance sheet date. The employees can carry-forward a portion of the unutilised accrued compensated absences and utilise it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increases this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method. All actuarial gains and losses arising during the year are recognised in the statement of profit and loss of the year. EMPLOYEE STOCK OPTION SCHEME Stock options granted to the employees under the stock option scheme are evaluated as per the accounting treatment brscribed by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 issued by the Securities and Exchange Board of India. Accordingly, the excess of purchase price of the shares purchased by the ESOP Trust of the Company over the exercise price of the options is recognised as employee compensation in the statement of profit and loss. LEASES Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases and recorded as expense in statement of profit and loss on a straight line basis. EARNINGS PER SHARE Basic earnings per share ("EPS") is computed by dividing the net profit after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit after tax for the year and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. INCOME TAX EXPENSE Income tax expense comprises current tax and deferred tax charge or credit. Income-tax expense is recognised in the statement of profit and loss. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company. Deferred tax Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably certain to be realised. The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company has a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws. Minimum Alternate Tax (MAT) credit entitlement Minimum Alternative Tax ('MAT') under the provisions of the Income-tax Act, 1961 is recognised as current tax in the statement of profit and loss. The credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the year for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists. PROVISIONS AND CONTINGENT LIABILITIES The Company creates a provision when there is a brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the brsent obligation at the balance sheet date. The provisions are measured on an undiscounted basis. A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. CASH FLOW STATEMENT Cash flows are reported using the indirect method, whereby excess of income over expenditure before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated 2. Employee benefits a) The employee benefit schemes are as under: i. Provident fund : All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees' salary. These contributions are made to the Fund administered and managed by the Company's own Trust. ii. Superannuation fund: The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees' salary. These contributions are administered by Company's own Trust which has subscribed to "Group Superannuation Policy" of ICICI Prudential Life Insurance Company Limited. The Company's monthly contributions are charged to the statement of profit and loss. iii. Gratuity : In accordance with the 'The Payment of Gratuity Act, 1972' of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to statement of profit and loss. The Gratuity Plan is a funded Plan administered by Company's own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited. iv. Compensated absences : The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of profit and loss. 2.2: Corporate Social Responsibility (CSR) expenditure During the year, the Company has spent Rs. 5.39 for Social welfare program called "Poshan". The program which is designed to address malnourishment amongst children, works with the Government Anganwadi's and Child Malnourishment Treatment Centers using Peanut Butter which is a rich source of protein and highly effective to fight malnutrition. The amount includes allocable manufacturing overhead and it rebrsents about 1% of last 3 years average profit. This amount is booked under the head of miscellaneous expenses and charged to the statement of profit and loss. Gross amount required to be spent by the company during the year : Rs. 10.89 Amount spent during the year on: The fact that the Company has spend 1% lower than brscribed 2% of average of the profit as stipulated under Section 135 of Companies Act, 2013 has been taken on record by the Board of Directors. However, spending was lower at 1% due to higher efficiencies in the process and further expansion of the program awaiting necessary governmental approvals. On receipt of approvals we will be in a position to further expand this program and work towards the 2% guideline brscribed in the Companies Act, 2013. 2.3: Pursuant to the Companies Act, 2013 (the 'Act'), being effective from 1 April 2014, the Company has reassessed useful life of its fixed assets which coincide with the useful life specified in Part 'C' of Schedule II of the Act. As a result of this change, impact on the debrciation charge for the year ended 31 March 2015 (brvious year) was higher by Rs. 0.72. There has been no such charge in the statment of profit and loss for the year ended 31 March 2016. 2.4: The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The Company's Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company's results of operations or financial conditions. The Company has accrued appropriate provision wherever required. 2.5: The Central Government in consultation with National Advisory Committee on Accounting Standards has amended Companies (Accounting Standards) Rules, 2006 ("principal rules'), vide notification issued by Ministry of Corporate Affairs dated March 30, 2016. The Companies (Accounting Standards) Rules, 2016 is effective March 30, 2016. According to the amended rules, proposed dividend of Rs. 48.74 are not recorded as a liability as at March 31, 2016. (Refer Para 8.5 of AS-4 - Contingencies and Events occurring after Balance Sheet date). 2.6: Previous year figures Previous year figures have been regrouped/ reclassified wherever necessary, to conform to current year classification. As per our report of even date attached for B S R & Associates LLP for Agro Tech Foods Limited Chartered Accountants CIN: L15142TG1986PLC006957 Firm's registration no. 116231W/W-100024 Sachin Gopal President Dr.P.G.Chaudhuri Director DIN 02650577 Lt.Gen.D.B. Singh Director DIN 00239637 Sriram Mahalingam Partner Membership No.049642 Arijit Datta Chief Financial Officer Phani K Mangipudi Company secretary Place : Gurgaon Date : 26 April 2016 |