NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1 Corporate information Sakuma Exports Limited(Government of India recognised Star Trading House) is a public limited company domiciled in India and incorporated under the provisions of Companies Act 1956. Its shares are listed on Bombay Stock Exchange(BSE) and National Stock Exchnage (NSE). The company is engaged in exports of commodities like Sugar, Rice,Maize.Sesame Seeds. Ground Nuts,Pulses,Oil Meal, Raw Cotton etc. and Import of commodities like Sugar, Coal and Oil .The company caters to both domestic and international markets. 2.1 Basis of accounting and brparation of financial statements The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting standards as brscribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guide lines issued by the Securities and Exchange Board of India (SEBI). The financial statements have been brpared on accrual basis under the historical cost convention on the accrual basis of accounting, unless stated otherwise. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year except for debrciation and amortization as described in the accounting policy on debrciation and amortization. Summary of Significant Accounting Policies 2.2 Use of estimates The brparation of the financial statements are in conformity with Indian GAAP requires the Management to make estimates and assumptions that affect the reported amounts of revenues ,expenses, assets and liabilities and disclosure of contingent liabilities, at the end of the reporting period. Although this estimates are based on managements best knowledge of current events and actions,uncertainity about these assumptions and estimates could result in the outcomes requiring material adjustments to the carrying amounts of assets or liabilities in future period. Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. 2.3 Inventories Inventories are valued at the lower of cost and net realizable value. Cost of inventories have been computed to include all cost of purchase, and other cost incurred in bringing the goods to the point of sale. The cost is determined using the First in First Out Basis (FIFO) 2.4 Cash and cash equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Cash flow statement Cash flows are reported using the indirect method as brscribed by the Securities Exchange Board of India and in accordance with the provisions of Accounting Standard-3 issued by the Institute of Chartered Accountant of India whereby profit / (loss) before extraordinary items and 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. 2.5 Debrciation and amortisation From the current year, Schedule XIV has been replaced by Schedule II to the Companies Act, 2013, which brscribes useful lives for fixed assets. Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of its fixed assets and debrciation is provided on the written down value method ('WDV') unless otherwise stated, pro-rata to the period of use of assets based on useful lives as brscribed under Part C of Schedule II of the Companies Act, 2013. 2.6 Revenue recognition (a) Sale of goods Revenue from Sale of goods are recognised, on transfer of significant risks and rewards of ownership to the buyer i.e. on shipment or dispatch of goods to customers and is recorded net of Duties and Taxes. Revenue from Sale of Services rendered are recognised on Completion of Service. Export Incentive in the form of credit earned on exports made during the year, under DFIA /Duty Entitlement Pass Book (DEPB)/Target Plus Licenses(DFCE), Focus Product Market are accounted for at the time of sale/utilization of license due to uncertainty associated with respect to Sale/Utilization. Duty Drawback is accounted on Accrual Basis (b) Other income Dividend Income from investments are recognized on receipt basis. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. 2.7 Tangible fixed assets Fixed assets, are carried at cost less accumulated debrciation and impairment losses, if any. The cost of fixed assets direct/ indirect and incidental expenses incurred to bring them into their brsent location and conditions, subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance. 2.8 Foreign currency transactions (a) Initial recognition Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates brvailing on the date of the transaction or at rates that closely approximate to the rate at the date of the transaction. (b) Conversion At the year end, monetary item denominated in foreign currencies, other than the disputed receivables or payables, are retranslated into rupee equivalents at the year-end exchange rates. Non-monetary items, which are measured in terms of historical cost denominated in foreign currency, are reported using the exchange rates at the date of transaction. (c) Treatment of exchange differences Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss in the period in which they arise. 2.9 Investments Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made ,are classified as current investments. All other investments are classified as non current investments. Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties. 2.10 Employee benefits Employee benefits include provident fund, gratuity fund and compensated absences. (a) Defined contribution plans The Company's contribution to provident fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made. (b) Defined benefit plans Defined Benefit Plan i.e. gratuity is recognised on accrual basis based on the actuarial valuation in accordance with the requirement of Accounting Standard 15(Revised)-"Employee Benefits" The brsent value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional units of employee benefit entitlement and measures each unit separately to build up the final obligation. The particulars under the AS 15(Revised) are furnished in Disclosure (c) Short-term employee benefits Short Term Employee Benefit payable within one year is provided on accrual basis at actual value. 2.11 Borrowing costs Borrowing costs includes interest, amortization of ancillary costs incurred in connection with the arrangements of borrowings. Borrowing cost directly attributable to development of qualifying assets are capitalized till the date qualifying assets is ready for put to use for its intended purpose as part of cost of that assets .Other borrowing cost are recognised as expenses in the period in which they are incurred. 2.12 Segment reporting As permitted by paragraph — 4 of Accounting Standard — 17, "Segment Reporting", if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information is required to be brsented only on the basis of the consolidated financial statements. However , the company's business activity falls within a single primary segment viz. exports of commodities. In view of the general clarification (ASI-20 did. 14th February, 2004) issued by the Institute of Chartered Accountant of India for companies operating in single segment, the disclosure requirements as per AS-17, "Segment Reporting" is not applicable to the company. 2.13 Earnings per share Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period brsented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate. 2.14 Taxes on income Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed debrciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date. 2.15 Impairment of assets The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets. 2.16 Provisions and contingencies A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. 2.17 Hedge accounting The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecast transactions. The Company designates such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in "Accounting Standard 30 Financial Instruments: Recognition and Measurement". These forward contracts are stated at fair value at each reporting date. Changes in the fair value of these forward contracts that are designated and effective as hedges of future cash flows are recognised directly in "Hedging reserve account" under Reserves and surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in the Statement of Profit and Loss. Amounts accumulated in the "Hedging reserve account" are reclassified to the Statement of Profit and Loss in the same periods during which the forecasted transaction affects profit and loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. For forecasted transactions, any cumulative gain or loss on the hedging instrument recognised in "Hedging reserve account" is retained until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss recognised in "Hedging reserve account" is immediately transferred to the Statement of Profit and Loss. 2.18 Derivative contracts The Company enters into derivative contracts in the nature of foreign currency forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations. Derivative contracts designated as a hedging instrument for highly probable forecast transactions are accounted as per the policy stated for Hedge Accounting. All other derivative contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence. Commodity Futures Commodities futures are marked to market on a daily basis. Debit or Credit balance disclosed under loans and advances or current liabilities respectively, in the "Mark to Market Margin Account" rebrsents the net amount paid or received on the basis of movement in the prices of commodities futures till the balance sheet date. As on balance sheet date, profit/ loss on open position in commodities futures are accounted as follows • Credit Balance in the "Mark to Market Margin Account" being anticipated profit is ignored and no profit for the same is taken in the profit and loss account. • Debit balance in the "Mark to Market Margin Account" being anticipated loss is charged to profit and loss account. Settlement and Squaring up of contract is accounted as follows • On final delivery settlement the difference between the settlement price and contract price is added/reduced from/to sale/purchase • On squaring up of the contract the difference between the squared up price and contract price is recognized in profit and loss account When more than one contract in respect of the relevant series of commodity future contract to which the settled/squared up contract pertains is outstanding at the time of settlement/squaring up of the contract, the contract price is determined using weighted average method for calculating the difference/ profit/loss on settlement/squaring up. Note 2 Previous year’s figures 2. Previous year’s figures have been regrouped /reclassified whereever necessary to correspond with the current year’s classification or disclosure |