(a) Presentation and disclosure of financial statements
During the year ended 31st December 2012, the revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
company, for preparation and presentation of its financial statements.
The company has also reclassified the previous year figures in
accordance with the requirements applicable in the current year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting year end. Although these estimates are
based upon management''s best knowledge of current events and actions,
actual results could differ from these estimates.
(c) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which take substantial period of time to get ready for intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
Depreciation on building and plant and machinery is provided for in the
accounts on straight line method in accordance with the rates
prescribed in Schedule XIV of the Companies Act, 1956.
Depreciation on other assets is provided using the Straight Line Method
as per the useful life of the assets estimated by the management, or at
the rates prescribed under Schedule XIV of the Companies Act, 1956
whichever is higher.
Individual fixed assets costing less than Rs. 5,000 are fully
depreciated in the year of purchase.
Lease hold improvements are depreciated over the period of lease which
is generally ten years.
(e) Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and risks
specific to the asset.
Goodwill is tested for impairment at the end of each balance sheet date
and any impairment loss arises is recognized in the statement of profit
(f) Intangible Assets
Costs relating to intangible assets, which are acquired, are
capitalised and amortised on a straight-line basis over their useful
Technical Knowhow 10 years
Technology License Fees 5 years
Germ Plasm 10 years
Software 10 years
Trade Marks / Brands 10 years
Goodwill arising on acquisition of business is not amortised
(g) Research and Development
Research expenditure is charged to revenue in the year in which it is
incurred. Development expenditure is carried forward when its future
recoverability can reasonably be regarded as assured and is amortised
over the period of expected future benefit.
Where the Company is the Lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalised at the lower of the fair value of the leased property
and present value of the minimum lease payments at the inception of the
lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and reduction of the lease
liability based on the implicit rate of return. Finance charges are
charged directly against income. Lease management fees, legal charges
and other initial direct costs are capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lesser effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
(i) Government Grants
Grants from the government are recognized when there is reasonable
assurance that the grant will be received and all attached conditions
will be complied with.
When the grant relates to an expense item, it is recognized as income
over the periods necessary to match them on a systematic basis to the
costs, which it is intended to compensate.
Government grants received in the nature of Investment Subsidy are
treated as Capital Reserve.
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(k) Inventories Inventories are valued as follows:
Raw materials, Packing Materials:
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Cost is
determined on a moving weighted average basis.
Work-in-progress and finished goods:
Lower of cost and net realizable value Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost is determined on standard cost basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
In case of a contract where company has a firm commitment, company has
recognised inventory of agricultural crop at net realisable value.
(l) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
i Revenue from sale of goods is recognized when significant risks and
rewards of ownership of the goods have passed to the buyer which
generally coincides with dispatch of goods (including sale of remnants)
to the customer. The sales are net of sales return and expected sales
ii Income from services are recognized as and when the services are
iii Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iv Dividend is recognized when the shareholders'' right to receive
payment is established by the balance sheet date.
v Royalty is recognised on an accrual basis in accordance with the
terms of the relevant agreement.
(m) Foreign Exchange Translation/Currency Transaction Initial
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
Exchange differences arising on the settlement of monetary items or on
reporting monetary items of company at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise except those arising from investments
in non-integral operations.
Exchange differences arising on a monetary item that, in substance,
form part of the company''s net investment in a non-integral foreign
operation is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognized as income or as expenses. Exchange
differences arising on the settlement of monetary items not covered
above, or on reporting such monetary items of company at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognized as
income or as expenses in the year in which they arise.
Exchange difference arising on financing activities are reflected under
(n) Derivative Instruments
As per the ICAI announcement, accounting for derivative contracts,
other than those covered under AS 11, are marked to market on a
portfolio basis, and the net loss is charged to the statement of profit
and loss. Net gains are ignored.
(o) Retirement and other employee Benefits
(i) Retirement benefits in the form of Provident Fund and
Superannuation Fund are a defined contribution scheme and the
contributions to the scheme are charged to the statement of Profit and
Loss of the year when the contributions to the respective funds are
due. The Superannuation Fund scheme is funded with an insurance company
in the form of a qualifying insurance policy.
(ii) Gratuity liability is defined benefit obligations and are provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
(iii) Short term compensated absences are provided for on based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
(iv) Actuarial gains / losses are immediately taken to the statement of
profit and loss and are not deferred.
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Ac,1961 enacted in India. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
(q) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
A provision is recognised when an enterprise has a present obligation
as a result of past event; 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 are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. Contingent Liabilities
are not recognized but are disclosed in the Notes. Contingent Assets
are neither recognized nor disclosed in the financials statements.
(s) Cash and Cash Equivalents
Cash and cash equivalents on the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
(t) Borrowing Costs
All borrowing costs are expensed in the period they occur. Borrowing
costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.
(u) Employee Stock Compensation Cost
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by the Institute
of Chartered Accountants of India. The Company measures compensation
cost relating to employee stock options using the intrinsic value
method. Compensation expense is amortised over the vesting period of
the option on a straight line basis.
(v) Segment Reporting Policies Identification of segments:
Segments are identified in line with AS 17 Segment Reporting, taking
into consideration the internal organization and management structure
as well as the differential risk and returns of the segment.
Based on the Company''s business model, research, production and
distribution of Hybrid seeds have been considered as the only
reportable segment and hence no separate financial disclosure is
provided in respect of its single business segment.
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.