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Accounting Policies of IFB Agro Industries Ltd. Company

Mar 31, 2013

A. Basis of Preparation

The financial statements have been prepared to comply in all material respects with the notified accounting standards by Companies Accounting Standard Rules, 2006, and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on the accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b. Use of Estimates

In preparing the Company''s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

c. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i. Sales

Revenue from sale including sale from Company''s bottling plants in respect of tie-up arrangements, is recognized in the accounts on passing of title to the goods. Gross sales are inclusive of excise duty but are net of trade discounts, where applicable.

ii. Contracting charges

Income from contracting charges, arising out of tie-up agreements with Indian Made Foreign Liquor (IMFL) companies for manufacturing their brands, is recognized in terms of respective contracts.

iii. Dividend

Dividend income is recognized and accounted for when the right to receive payment is established.

iv. Sale of certified emission reduction (CER)

Revenue from sale of Certified Emission Reduction (CER) is recognized and accounted for on the basis of execution of sale contract.

v. Benefit under export incentive / duty drawback scheme

Revenue in respect of export incentive scheme including duty drawback scheme is recognized when the entitlement to receive the benefit is established.

vi. Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. Subsequent expenditures, if any, related to an item of fixed assets are added to its book value only if they increase the future benefits from existing asset beyond its previously assessed standard of performance.

e. Depreciation

Depreciation on tangible assets is provided as per written down value method at the rates prescribed in the Schedule XIV to the Companies Act, 1956.

Depreciation on leasehold improvements is provided over their respective lease period or estimated useful life of lease assets whichever is shorter.

Depreciation on assets costing Rs. 5,000 or below is charged @ 100% per annum.

f. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other borrowing costs are recognized as an expense in the period in which they are incurred.

g. Impairments 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, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists then the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

h. Investments

Investments that are readily realizable and intended to be held for not more than one year are classified as current investments; all other investments are classified as non-current investments. Non-current investment is carried at cost less provision (if any) for decline in value which is other than temporary in nature. Current investments are carried at lower of cost and fair value.

i. Inventories

Raw materials, work-in-progress, stores and spares and finished goods are valued at lower of cost and net realizable value. Cost of Inventories is computed on a weighted average/FIFO basis.

j. Foreign Currency Conversion

i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

iii) Exchange differences

Exchange differences arising on the settlement of monetary items or on restatement of the Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

k. Employee Retirement Benefits:

i) Defined Contribution Plans:

The Company provides Defined Contribution Plans for post employment benefits in the form of Provident Fund, Superannuation fund and Gratuity administered by Regional Provident Fund Commissioner and Life Insurance Corporation respectively. The Company''s contributions to Defined Contribution Plans are charged to the Statement of Profit and Loss as and when incurred. Provident Fund, Superannuation fund and Gratuity are classified as defined contribution plans as the Company has no further obligation beyond making the contributions.

ii) Defined Benefit Plans:

Liability for Compensated Absence is provided on the basis of valuation as at the Balance Sheet date carried out by independent actuary. Projected Unit Credit (PUC) actuarial method is used to measure the Plan liabilities, including those to death-in-service and incapacity benefits. The Plan Liability is the actuarial present value of the ''projected accrued benefits'' as of the beginning of the year for active members.

Termination benefits are recognised as an expense as and when incurred. Actuarial gains and losses arising during the year are recognised in the Statement of Profit and Loss of the year.

l. Leases

Leases of assets under which significant risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under an operating lease are recognized as expense in the Statement of Profit and Loss on a straight line basis over the lease term.

Assets acquired on finance lease which transfer risk and rewards of ownership to the Company are capitalized as assets by the Company at lower of fair value of the leased property or the present value of the related lease payments or where applicable, estimated fair value of such assets. Amortization of capitalised leased assets is computed on the written down value method over the useful life of the assets. Lease rental payable is apportioned between principal and finance charge using the internal rate of return method. The finance charge is allocated over the lease term so as to produce a constant periodic rate of return on the remaining balance of liability.

m. Accounting for taxes on income

The tax expense comprises current taxes and deferred taxes. Current tax is the amount of income tax determined to be payable in respect of taxable income for a period as per the provisions of the Income Tax Act, 1961. Deferred tax is the effect of timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are reviewed at each balance sheet date and recognized/derecognized only to the extent that there is reasonable/ virtual certainty, depending on the nature of the timing differences, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

n. Provisions and contingent liabilities

A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood on outflow of resources is remote, no provision or disclosure is made.

o. Earnings per share

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue and share split.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.


Mar 31, 2012

A. Basis of Preparation

The financial statements have been prepared in conformity with Generally Accepted Accounting Principles in India, to comply in material respects with the notified Accounting Standards under the Companies Accounting Standard Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention, on accrual basis except for export incentives and claims from Government for higher cost of molasses, which are accounted for on cash basis consistently. The accounting policies applied by the Company are consistent with those applied in the previous year, except as otherwise stated elsewhere.

b. Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions, which are considered to arrive at the reported amounts of assets & liabilities and disclosure of contingent liabilities as on the date of the Financial Statements and the reported income and expenses during the reporting year. Although these estimates are based upon the management's best knowledge of current events and actions, actual results could differ from these estimates. Any revision to the accounting estimates are recognized prospectively in the current and future years.

c. Revenue Recognition

i. Sales including sales from Company's bottling plants in respect of tie-up arrangements is recognized in the accounts on passing of title to the goods. Gross sales are inclusive of excise duty and sales tax but net of trade discounts, where applicable.

ii. Income from contracting charges, arising out of tie-up agreements with IMFL Companies for manufacturing their brands, is recognized in terms of the respective contracts.

iii. Dividend income is recognized and accounted for when the right to receive the dividend is established.

iv. Sale of Certified Emission Reduction (CER) is recognized and accounted for on the basis of execution of sale contract.

d. Fixed Assets

Fixed Assets are capitalised at cost, inclusive of installation and related expenses.

e. Impairment of Fixed Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indication exists, the assets' recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.

f. Depreciation

Depreciation, after impairment if any, has been provided on written down value method, at the applicable rates specified in Schedule XIV of the Companies Act, 1956.

Depreciation on leased assets, at cost less residual value, is provided for on written down value method over the primary period of the lease.

g. Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

h. Investments

Investments that are intended to be held for not more than a year are classified as "current investments" ll other investments are classified as "non-current investments".

Investments are stated at cost. Provision for diminution in value, other than temporary in nature, is made to recognize a decline in value of non-current investments on an individual basis.

i. Inventories

Raw materials, work-in-progress, stores and spares and finished goods are valued at lower of cost and net realisable value. Cost of Inventories is computed on a weighted average/FIFO basis.

j. Foreign Currency Translation

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange differences relating to fixed assets and any other differences are dealt with in the Statement of Profit and Loss.

k. Employee Retirement Benefits:

i) Defined Contribution Plans:

The Company has Defined Contribution Plans for post-employment benefits in the form of Provident Fund & Superannuation fund and Gratuity administered by Regional Provident Fund Commissioner and Life Insurance Corporation of India, respectively. The Company's contributions to Defined Contribution Plans are charged to the Statement of Profit and Loss as and when incurred. Provident Fund, Superannuation fund and Gratuity are classified as defined contribution plans as the company has no further obligation beyond making the contributions.

ii) Defined Benefit Plans:

Liability for Compensated Absence is provided on the basis of valuation as at the Balance Sheet date carried out by independent actuary. Projected Unit Credit (PUC) actuarial method is used to measure the Plan's liabilities, including those for death-in-service and incapacity benefits. The Plan Liability is the actuarial present value of the 'projected accrued benefits' as at the beginning of the year for active members.

Termination benefits are recognised as an expense as and when incurred. Actuarial gains and losses arising during the year are recognised in the Statement of Profit & Loss of the year.

l. Prior Period & Extraordinary Items.

Expenses/Income (net) relating to earlier period and extraordinary items of material nature are disclosed separately. m. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

n. Provision

A provision is recognized when there is a present obligation as a result of a past event & it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. A provision is not discounted to its present value and is determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

o. Contingent Liabilities

Contingent Liabilities are not provided for in the books but are disclosed in the 'Notes to Financial Statements'.


Mar 31, 2011

1. Basis of Preparation

The financial statements have been prepared in conformity with Generally Accepted Accounting Principles in India, to comply in material respects with the notified Accounting Standards under the Companies Accounting Standard Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention, on accrual basis except for export incentives and claims from Government for higher cost of molasses, which are accounted for on cash basis consistently. The accounting policies applied by the Company are consistent with those applied in the previous year, except as otherwise stated elsewhere in this schedule.

2. Use of estimates

The preparation of financial statements requires the management to make estimates and assumptions, which are considered to arrive at the reported amounts of assets and liabilities and disclosure of contingent liabilities as on the date of the financial statements and reported income and expenses during the reporting year. Although these estimates are based upon the managements best knowledge of current events and actions, actual results could differ from these estimates. Any revision to the accounting estimates are recognized prospectively in the current and future years.

3. Revenue Recognition

a. Sale including sale from Companys bottling plants in respect of tie-up arrangements, is recognized in the accounts on passing of title to the goods. Gross Sales are inclusive of excise duty and sales tax but are net of trade discounts, where applicable.

b. Income from contracting charges, arising out of tie-up agreements with IMFL Companies for manufacturing their brands, is recognized in terms of respective contracts.

c. Dividend income is recognized and accounted for when the right to receive payment is established.

d. Sale of Certified Emission Reduction (CER) is recognized and accounted for on the basis of execution of sale contract.

4. Fixed Assets

Fixed Assets are capitalized at cost inclusive of installation and related expenses.

5. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

6. Impairments

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indication exists, the assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.

7. Depreciation

Depreciation after impairment if any has been provided on written down value method, at the applicable rates specified in Schedule XIV of the Companies Act, 1956. Depreciation on leased assets at cost less residual value is provided for on written down value method over the primary period of lease.

8. Investments

Investments are stated at cost. Provision for diminution in the value of long term investments is made only, if, such a decline is other than temporary nature, in the opinion of the management.

9. Inventories

Raw materials, work-in-progress, stores and spares and finished goods are valued at lower of cost and net realizable value. Cost of Inventories is computed on a weighted average/FIFO basis.

10. Foreign Currency Translation

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Foreign currency backed assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange differences relating to fixed assets and any other differences are dealt with in the Profit and Loss Account.

11. Employee Retirement Benefits:

a) Defined Contribution Plans:

The Company has Defined Contribution Plans for post employment benefits in the form of Provident Fund, Superannuation fund and Gratuity administered by Regional Provident Fund Commissioner and Life Insurance Corporation respectively. The Companys contributions to Defined Contribution Plans are charged to the Profit and Loss Account as and when incurred. Provident Fund, Superannuation fund and Gratuity are classified as defined contribution plans as the company has no further obligation beyond making the contributions.

b) Defined Benefit Plans:

Liability for Compensated Absence is provided on the basis of valuation as at the Balance Sheet date carried out by independent actuary. Projected Unit Credit (PUC) actuarial method is used to measure the Plans liabilities, including those to death-in-service and incapacity benefits. The Plan Liability is the actuarial present value of the projected accrued benefits as of the beginning of the year for active members.

Termination benefits are recognised as an expense as and when incurred. Actuarial gains and losses arising during the year are recognised in the Profit & Loss Account of the year.

12. Prior Period & Extraordinary items.

Expenses/Income (net) relating to earlier period and extraordinary items of material nature are shown separately.

13. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

14. Provision

A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

15. Contingent Liabilities

Contingent Liabilities are not provided for in the books and are disclosed by way of a note in the financial statements.


Mar 31, 2010

1. Accounting Conventions

The accounts are prepared under historical cost convention based on generally accepted accounting principles and applicable Accounting Standards in India. The Company follows accrual system of accounting and recognition of Income and Expenditure is on accrual basis except for export incentives and claims from Government for higher cost of molasses, which are accounted for on cash basis consistently.

2. Revenue Recognition

Sale is recognized in the accounts on passing of title to the goods. Dividend income is accounted for when the right to receive payment is established. Sale of Certified Emission Reduction (CER) is accounted for on the basis of execution of sale contract.

3. Fixed Assets

Fixed Assets are capitalized at cost inclusive of installation and related expenses.

4. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

5. Impairments

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indication exists, the assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.

6. Depreciation

Depreciation after impairment, if any, has been provided on written down value method, at the applicable rates specified in Schedule XIV of the Companies Act, 1956. Depreciation on leased assets at cost less residual value is provided for on written down value method over the primary period of lease.

7. Investments

Investments are stated at cost. Provision for diminution in the value of long term investments is made only, if, such a decline is other than temporary nature, in the opinion of the management.

8. Inventories

Raw materials, work-in-progress, stores and spares and finished goods are valued at lower of cost and net realizable value. Cost of Inventories is computed on a weighted average/FIFO basis.

9. Foreign Currency Translation

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Foreign currency backed assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end. Exchange differences relating to fixed assets and any other differences are dealt with in the Profit and Loss Account.

10. Employee Retirement Benefits:

a) Defined Contribution Plans:

The Company has Defined Contribution Plans for post employment benefits in the form of Provident Fund, Superannuation fund and Gratuity administered by Regional Provident Fund Commissioner and Life Insurance Corporation respectively. The Companys contributions to Defined Contribution Plans are charged to the Profit and Loss Account as and when incurred. Provident Fund, Superannuation fund and Gratuity are classified as defined contribution plans as the Company has no further obligation beyond making the contributions.

b) Defined Benefit Plans:

Liability for Compensated Absence is provided on the basis of valuation as at the Balance Sheet date carried out by independent actuary. Projected Unit Credit (PUC) actuarial method is used to measure the Plans liabilities, including those to death-in-service and incapacity benefits. The Plan Liability is the actuarial present value of the projected accrued benefits as of the beginning of the year for active members.

Termination benefits are recognised as an expense as and when incurred. Actuarial gains and losses arising during the year are recognised in the Profit & Loss Account of the year.

11. Prior Period & Extraordinary items.

Expenses/Income (net) relating to earlier period and extraordinary items of material nature are shown separately.

12. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

13. Provision

A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined on the best estimate required to settle the obligation at the year end date. These are reviewed at each year end date and adjusted to reflect the best current estimate.

14. Contingent Liabilities

Contingent Liabilities are not provided for in the books and are disclosed by way of a note in the accounts.

 
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