(a) Basis of Preparation of Financial Statements
The Financial statements have been prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on accrual basis and are in accordance with the
applicable accounting standards issued by the Institute of Chartered
Accountants of India (ICAI) & prescribed in the Companies (Accounting
Standards) Rules, 2006. These Accounting policies have been
consistently applied, except where a newly issued accounting standard
is initially adopted by the company. Management evaluates the effect of
accounting standards issued on a going concern basis and ensures that
they are adopted as mandated by the ICAI.
(b) Fixed Assets
(i) Owned Assets
Fixed assets are stated at their original cost of acquisition inclusive
of inward freight, duties, taxes and incidental expenses relating to
acquisition and installation, adjusted by revaluation of land. The cost
of assets under installation or under construction plus direct
allocable expenses as at the Balance Sheet date are shown as capital
(ii) Assets taken on finance lease
Fixed assets taken on finance lease are stated at the lower of the fair
value of the lease assets or the present value of minimum lease
payments at the inception of the lease.
(iii) Intangible Assets and Amortization
Intangible Assets & related expenditure are recognized as per criteria
specified in Accounting Standard-26 on Intangible Assets issued by
the Institute of Chartered Accountants of India. The cost of software
purchased for internal use or main software comprises its purchase
price, including any import duties and other taxes (other than those
subsequently recoverable by the enterprise from the taxing authorities)
and any directly attributable expenditure on making the software ready
for its use. Any trade discounts and rebates are deducted in arriving
at the cost.
(i) Depreciation so far was being provided on Written Down Value Method
at the Corporate Office and Straight Line Method at the Amrit Food Unit
at the rates specified in Schedule XIV of the Companies Act, 1956. In
order to have uniformity in the depreciation accounting, the Written
Down Value Method was changed to Straight Line Method at the Corporate
Office w.e.f. 1st April, 2010. From the previous year ended 31st March,
2011 onwards, Company is following Straight Line Method on all assets,
except software, in both units.
(ii) The software is amortized over a period of 36 months from the
month subsequent to the month in which it got activated for use.
(iii) In respect of assets added/disposed off during the year,
depreciation is charged on a pro-rata basis with reference to the month
of addition/disposal. In the case of additions, it is charged for the
full month in which additions took place and in the case of sales up to
the month preceding the date of sale.
(iv) Assets below Rs. 5,000/- are depreciated at the rate of 100%.
(v) In respect of fixed assets taken on finance lease, when there is
reasonable certainty that the company will obtain ownership by the end
of the lease term, depreciation is provided in accordance with the
policy followed by the company for owned assets.
The carrying amount of assets is reviewed at each balance 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 at the weighted cost of capital.
Investments are classified into current and long term investments.
Investments that are readily realizable 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 stated at the lower of cost and fair value determined
on an individual basis. Long term investments, including interests in
joint-venture companies, are carried at cost. A provision for
diminution in value is made to recognize a decline other than temporary
in the value of long term investments. Profit/loss on sale of
investments is computed with reference to their average cost.
(i) Raw materials, components, stores, spares and loose tools are
valued at lower of weighted average cost.
- Work-in-progress (other than the property development or
construction related) is valued at cost determined at different stages
of production which includes related overheads.
- Property Development and construction-related work-in-progress is
valued at cost till such time the outcome of the work cannot be
ascertained and thereafter at lower of cost or net realizable value.
(iii) Finished goods are valued at lower of weighted average cost or
net realizable value. In the case of finished goods, cost is determined
by taking material, labour and related factory overheads including
depreciation and fixed production overheads which are apportioned on
the basis of normal capacity.
(iv) Unsold real estate inventory is valued at lower of cost or market
(v) Stock in trade are valued at cost or at market value, whichever is
lower. The cost in such cases, is valued at the last month weighted
(g) Revenue Recognition
Revenue is recognized to the extent that it can be reliable, measured
and is appropriate to the economic benefits that will flow to the
(i) Sale of goods
Revenue from the sale of goods is recognized when the significant risks
& rewards of ownership of the goods are transferred to the customers
and is stated net of rebates/trade discounts. Consignment sales are
booked to the extent of consignment sales notes received from
consignees. The revenue on sale of residential/ commercial plots and
constructed units are recognized on completion and execution of
sale/conveyance deeds and on reasonable expectation of collection of
the sale consideration from the customer. The estimates relating to
sale value, estimated cost etc., are revised and updated periodically
by the management and necessary adjustments are made in the current
(ii) Royalty and income from services
Income from royalty & services rendered is booked on accrual basis in
accordance with the terms of the royalty agreements/arrangements with
the concerned parties.
Interest is recognized on a time proportion basis in accordance with
agreement taking into account the amount outstanding and the rate
Dividend income is recognized if the right to receive the payment is
established by the Balance Sheet date.
(h) Employee Benefits
(i) Short Term Employee Benefits
All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
The benefits like salaries, wages, short term compensated absences etc.
and the expected cost of bonus, ex-gratia etc. are recognized in the
period in which the employee renders the related service. .
There are no other encashable short-term benefits.
(ii) Post-Employment Benefits
(1) Defined Contribution Plans: The State governed provident fund
scheme, employee state insurance scheme and employee pension scheme are
defined contribution plans. The contribution paid/payable under the
schemes is recognized during the period in which the employee renders
the related service.
(2) Defined Benefit Plans: The employees gratuity fund scheme and
provident fund scheme managed by trust are defined benefit plans.
- In the case of gratuity liability, the present value of the
obligation under such defined benefit plan is determined based on
actuarial valuation using the projected unit credit method, which
recognizes each period of service as giving rise to additional unit of
employee benefit entitlement and measures each unit separately to build
up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, is based on the market
yields on Government Securities as at the balance sheet date, having
maturity periods approximating to the terms of related obligations.
Actuarial gains and losses are recognized immediately in the Profit &
- In the case of provident fund administered by the Trust constituted
by the Company, the Company makes monthly contributions as a fixed
percentage of basic pay of certain specified employees to the Fund
every month. The interest credited to the account of the employees is
adjusted on annual basis to conform to the interest rate notified by
the Govt, for the Employees Provident Fund. The Company has an
obligation to make good the shortfall, if any, between the return on
investment of the Trust and the notified interest rate. There is no
deficit in the Fund.
- Long Term Employee Benefits
Entitlements to annual leave, casual leave and sick leave are
recognized when they accrue to the employees. Sick leave and casual
leave can only be availed while earned leave can either be availed or
encashed subject to restriction on the maximum number of accumulation
of leaves. The Company determines the liability for such accumulated
leaves using the projected unit credit method with actuarial valuation
being carried out at each Balance Sheet date in the similar manner as
in the case of defined benefit plans as mentioned in (ii) (2) above.
(3) The other staff benefit schemes will be provided according to
respective laws in respect of employees as and when these will be
applicable on company.
(i) Taxes on Income
The current charge for Income Tax is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income Tax Act, 1961.
Minimum Alternative Tax (MAT) paid in accordance with the tax laws,
which gives rise to future economic benefits in the form of adjustment
of future income tax liability, is considered as an Asset if there is
convincing evidence that company will pay normal tax in future. MAT
Credit entitlement can be carried forward and utilized for a period of
ten years from the year in which the same is availed. Accordingly, it
is recognized as an asset in the balance sheet when it is probable that
the future economic benefit associated with it will flow to the company
and the asset can be measured reliably.
Deferred tax is recognized subject to the consideration of prudence, on
timing differences, being the difference between taxable incomes and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable
to timing differences that result between taxable profits and
accounting profits. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in
the period that includes the enactment date. Deferred tax assets on
timing difference are recognized only if there is a
reasonable certainly that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
However, deferred tax assets on the timing differences when unabsorbed
depreciation and losses carried forward exist, are recognized only to
the extent that there is virtual certainly that sufficient future
taxable income will be available against which such deferred tax can be
realized. Deferred tax assets are reassessed for the appropriateness of
their respective carrying values at each balance sheet date.
(i) Assets acquired under leases where the Company has substantially
all the risks and rewards of ownership are classified as finance
leases. Such assets are capitalized at the inception of the lease at
the lower of the fair value or the present value of minimum lease
payments and a liability is created for an equivalent amount. Each
lease rental paid is allocated between the liability and the interest
cost, so as to obtain a constant periodic rate of interest on the
outstanding liability for each period.
(ii) Assets taken on lease under which lessor effectively retains all
significant risks & rewards of ownership have been classified as
operating lease. Lease payments made under operating lease are
recognized as expense in the profit & loss account on straight line
basis over the primary term of the lease as mentioned in the lease
agreement on accrual basis.
(iii) Assets given under a finance lease are recognized as receivable
at an amount equal to the net investment in the lease. Lease income is
recognized over the period of the lease so as to yield a constant rate
of return on the net investment in the lease.
(iv) Assets leased out under operating leases are capitalized. Rental
income is recognized on accrual basis over the lease term.
(v) Initial direct costs relating to assets given on finance leases are
charged to the Profit and Loss Account.
(k) Research and Development
Revenue expenditure on research and development is charged under
respective heads of account in the year in which it is incurred.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.
(I) Provisions and Contingencies
Provisions are recognized when the Company has a present obligation as
a result of past events, for which it is probable that an outflow of
resources embodying economic benefits will be required to settle are
reviewed regularly and are adjusted where necessary to reflect the
current best estimates of the obligation. Where the Company expects a
provision to be reimbursed, the reimbursement is recognized as a
separate Asset, only when such reimbursement is virtually certain.
Contingent Liabilities are disclosed after an evaluation of the facts
and legal aspects of the matters involved. Contingent Assets are
neither recognized, nor disclosed. Provisions, Contingent Liabilities
and Contingent Assets are reviewed at each Balance Sheet date.
(m) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires the management to make estimates and assumptions that affect
the reported balances of assets and liabilities and disclosures
relating to contingent assets and liabilities as at the date of the
financial statements and reported amounts of income and expenses during
the period. Examples of such estimates include provisions for doubtful
debts, future obligations under employee retirement benefit plans,
income tax, post-sales customer support and the useful lives of fixed
assets and intangible assets. Actual results could differ from those
estimate. Any revision to accounting estimate is recognized
prospectively in the current and future periods.
(n) Foreign Currency Transactions
Foreign exchange transactions are recorded at the rate of exchange
prevailing on the dates of the respective transactions. Exchange
differences are recorded in the Profit & Loss Account when the amount
actually is paid on import of goods are converted into Indian Rupees.
Accordingly, exchange differences arising on foreign exchange
differences settled during the period are recognized in the profit and
loss account of the period.
Monetary current assets and monetary current liabilities that are
denominated in foreign currency are translated at the exchange rate
prevalent at the date of the Balance Sheet. The resulting difference is
also recorded in the Profit & Loss Account.
(o) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalized as part of cost of
such asset till such time as the asset is ready for its intended use or
sale. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
(p) Earnings per Share
In determining earnings per share, the company considers the net profit
after tax and includes the post-tax effect of any
extraordinary/exceptional item. The number of shares used in computing
basic earnings per share is the weighted average number of shares
outstanding during the period. The number of shares used in computing
diluted earnings per share comprises the weighted average shares
considered for deriving basic earnings per share, and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares.
The details are stated in the financial notes, which are not reproduced
here. There is no diluted Earning per Share as there are no dilutive
potential equity shares.
(q) Segment Accounting
The Company has three primary segments namely, Food, Real Estate and
(i) Segment accounting policies
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
Segment revenue includes sales and other income directly identifiable
with/allocable to the segment including inter-segment revenue.
* Expenses that are directly identifiable with/allocable to segments
are considered for determining the Segment Result. Expenses which
relate to the Company as a whole and not allocable to segments are
included under Un-allocable Expenditure.
- Income which relates to the Company as a whole and not allocable to
segments is included in Un- allocable Income.
- Segment result includes margins on inter-segment capital jobs, which
are reduced in arriving at the profit before tax of the Company.
Segment assets and liabilities include those which are directly
identifiable with the respective segments. Un-allocable assets and
liabilities represent the assets and liabilities that relate to the
Company as a whole and not allocable to any segment. Un-allocable
assets mainly comprise Deposits with Banks, Margin Money, Bank Balances
and Investments and Deferred Tax Assets to the portfolio of the
Company''s core/ thrust areas of business such as infrastructure
development. Un-allocable liabilities include mainly Interest bearing
Share Capital, Reserves & Surplus, Public Deposits, Provision for Tax
and Interest Payable on Loans.
(ii) Segment Transactions
Segment transactions with other business segments are accounted on the
basis of cost to the segment concerned.
(r) Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit
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. The Cash Flow
statement is separately attached with the Financial Statements of the
(s) Accounting for interest in Joint Venture
Interest in Joint venture companies is accounted as follows:
(i) Income on investments is recognized when the right to receive the
same is established.
(ii) Investment in such joint ventures is carried at cost after
providing for any permanent diminution value.
(i) Equity Shares: The Company has one class of equity shares having at
par value of Rs. 10/- each. Each holder of equity shares is entitled to
one vote per share.
(ii) The Company declares and pays dividend in Indian rupees. The
proposed dividend of t 24/- per share recommended by Board of Directors
in its meeting held on 25th May, 2012 is subject to the approval of the
shareholders in the ensuing Annual General Meeting.