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.
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;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
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. 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
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
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 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
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.
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
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 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. 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
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).