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Agro Tech Foods
BSE: 500215|NSE: ATFL|ISIN: INE209A01019|SECTOR: Edible Oils & Solvent Extraction
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« Mar 13
Accounting Policy Year : Mar '14
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 notifed by the Central
 Government of India under Section 211 (3C) of the Companies Act, 1956,
 read with the General Circular 15/2013 dated September 2013 of the
 Ministry of Corporate Affairs in respect of Section 133 of the
 Companies Act, 2013, other pronouncements of Institute of Chartered
 Accountants of India, the provisions of Companies Act, 1956 and
 guidelines issued by Securities and Exchange Board of India.
 
 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 classifed into current and non-current.
 
 Assets
 
 An asset is classifed as current when it satisfes 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 classifed as
 non-current.
 
 Liabilities
 
 A liability is classifed as current when it satisfes 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 classifcation.
 
 Apart from the above, current liabilities also include current portion
 of non-current financial liabilities. All other liabilities are
 classifed 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 recognised 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 fxed 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 is provided on straight line method at rates based on the
 useful life of the fxed assets as estimated by the management as
 specifed below, or the rates specifed in accordance with the provisions
 of Schedule XIV to the Companies Act, 1956, whichever are higher.
 
 - Leasehold land 1.01% to 3.59%
 
 - Buildings 1.63% to 16.67%
 
 - Office equipment, computer and related hardware 19% to 50%
 (included in plant and machinery)
 
 - Plant and machinery 4.75% to 9.5%
 
 - Furniture and fxtures 5% to 10%
 
 - Vehicles 19%
 
 In respect of assets given to the employees under a scheme,
 depreciation is provided at rates determined on the basis of the
 economic useful life of these assets (5 years), and these rates are
 higher than those specifed in Schedule XIV to the Companies Act, 1956.
 
 Assets individually costing ^5,000 or less, are depreciated fully in
 the year of purchase.  Depreciation is charged on a proportionate basis
 for all assets purchased and sold during the year.
 
 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 Trade Marks 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 classifed as current
 investments.  All other investments are classifed 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
 classifcation scheme of revised Schedule VI.
 
 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 fnished 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 specifed
 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 classifed 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 Employee
 Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999
 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 classifed 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 refects 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 is
 written-down or written-up to refect 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.
 
 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 outfow 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 outfow of resources. Where there is possible obligation or a
 present obligation in respect of which the likelihood of outfow of
 resources is remote, no provision or disclosure is made.
Source : Dion Global Solutions Limited
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