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Agro Tech Foods
BSE: 500215|NSE: ATFL|ISIN: INE209A01019|SECTOR: Edible Oils & Solvent Extraction
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« Mar 14
Accounting Policy Year : Mar '15
BASIS OF PREPARATION OF ACCOUNTS
 
 The financial statements of Agro Tech Foods Limited have been prepared
 and presented in accordance with Indian generally accepted accounting
 principles (GAAP) under the historical cost convention on the accrual
 basis. GAAP comprises accounting standards notified by the Central
 Government of India under Section 133 of the Companies Act, 2013, other
 pronouncements of Institute of Chartered Accountants of India and the
 relevant provisions of Companies Act, 2013.
 
 USE OF ESTIMATES
 
 The preparation 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, 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. 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 DEPRECIATION
 
 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.
 
 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.
 
 Depreciation on tangible assets is provided on the straight-line method
 over the useful lives of assets estimated by the Management.
 Depreciation for assets purchased/ sold during the year is
 proportionately charged. The Management estimates the useful lives for
 the other fixed assets as follows:
 
 For tne roiiowing class of assets based on internal assessment and
 technical evaluation carried out wherever necessary, the Management
 believes that the useful lives as given above represent the period over
 which Management expects to use these assets.  Hence the useful lives
 for the below assets are different from the useful lives as prescribed
 under Part C of Schedule II of the Companies Act 2013.
 
 - Server and network  - 5 Years
 
 - Handsets            - 2 Years
 
 - Vehicles            - 5 years
 
 - Assets given to 
 employees under a 
 scheme                - 5 years
 
 Depreciation and amortisation methods, useful lives and residual values
 are reviewed periodically, including at each financial year end.
 
 Leasehold assets are amortised over a period of the lease or useful
 life of asset whichever is lower.
 
 INTANGIBLE ASSETS AND AMORTISATION
 
 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. 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
 previously 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
 depreciated 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 presented 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.
 
 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 present 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.
 
 Goods-in-transit / with third parties and at godowns are valued at cost
 which represents the costs incurred upto 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 take 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
 
 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 increase 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 prescribed 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 present 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. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that may, but probably will not,
 require an outflow of resources. Where there is possible obligation or
 a present 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.
 
 a. Rights, preferences and restrictions attached to equity shares
 
 The Company has a single class of equity shares. Accordingly, all
 equity shares rank equally with regard to dividends and share in the
 Company''s residual assets. The equity shares are entitled to receive
 dividend as declared from time to time. The voting rights of an equity
 shareholder on a poll (not on show of hands) are in proportion to its
 share of the paid-up equity capital of the Company. Voting rights
 cannot be exercised in respect of shares on which any call or other
 sums presently payable have not been paid. Failure to pay any amount
 called up on shares may lead to forfeiture of the shares. On winding up
 of the Company, the holders of equity shares will be entitled to
 receive the residual assets of the Company, remaining after
 distribution of all preferential amounts in proportion to the number of
 equity shares held.
 
 d. CAG-Tech (Mauritius) Limited is the holding company and is an
 indirect subsidiary of ConAgra Foods Inc.  (ultimate holding company).
 
Source : Dion Global Solutions Limited
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