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 accrual
basis. GAAP comprises accounting standards prescribed 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 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 and NON-CURRENT CLASSIFICATION
All assets and liabilities are classified into current and non-current.
An asset is classified as current when it satisfies any of the
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
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
A liability is classified as current when it satisfies any of the
a. it is expected to be settled in the Company''s normal operating
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;
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
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 is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
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 DEPRECIATION
Fixed assets are carried at cost of acquisition less accumulated
depreciation 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 previously 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.
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 the following 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 amortization 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 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
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 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 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 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.
The comparison of cost and net realisable value is made on an
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 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 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.
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
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
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
The current charge for income taxes is calculated in accordance with
the relevant tax regulations applicable to the Company.
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.
Provisions are recognised at the best estimate of the expenditure
required to settle the present 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
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