A Oneindia Venture
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Accounting Policies of Tierra Agrotech Ltd. Company
Mar 31, 2025
1. Material Accounting Policies
1.1 Basis of preparation of financial statements
The standalone financial statements of the Company have been prepared in accordance with Indian
Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015
(as amended from time to time) notified under Section 133 of Companies Act, 2013, (the âActâ) and
presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant
schedule III), as applicable and other relevant provisions of the Act. The standalone financial state¬
ments have been prepared on a going concern basis. The accounting policies are applied consistently
to all the periods presented in the standalone financial statements except where a newly issued ac¬
counting standard is initially adopted or a revision to an existing accounting standard requires change
in accounting policy hitherto in use.
1.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (INR), which is also the Com¬
panyâs functional currency. All financial information presented in Indian rupees have been rounded-off
to two decimal places to the nearest lakhs except share data or as otherwise stated.
1.3 Basis of measurement
The standalone financial statements have been prepared on the historical cost basis except for the
following items:
- Certain financial assets and liabilities: Measured at fair value
- Net defined benefit (asset)/ liability: Fair value of plan assets less present value of defined benefit
obligations
- Borrowings: Amortized cost using effective interest rate method
Use of estimates and judgements
In preparing these standalone financial statements, management has made judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of as¬
sets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized prospectively.
Judgements
Information about judgements made in applying accounting policies that have the most significant
effects on the amounts recognized in the standalone financial statements is included in the following
notes:
- Note 1.14 - lease classification.
- Note 1.14 - leases: whether an arrangement contains a lease and lease classification
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in
a material adjustment within the next financial year are included in the following notes:
- Note 1.12 - measurement of defined benefit obligations: key actuarial assumptions;
- Note 1.19 - recognition and measurement of provisions and contingencies: key assumptions about
the likelihood and
- Note 1.17 - impairment of financial assets;
- Note 1.7 - determining an assetâs expected useful life and the expected residual value at the end of
its life
Measurement of fair values
Accounting policies and disclosures require measurement of fair value for both financial and non-fi¬
nancial assets. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the liability
takes place either:
- In the principal market for the asset or liability or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value
of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest. A fair
value measurement of a non-financial asset takes into account a market participantâs ability to gener¬
ate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use. The Company uses valuation tech¬
niques that are appropriate in the circumstances and for which sufficient data is available to measure
fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable
inputs Fair values are categorized into different levels in a fair value hierarchy based on the inputs
used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as
far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different
levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the
same level of the fair value hierarchy as the lowest level input that is significant to the entire measure¬
ment. The Company recognizes transfers between levels of the fair value hierarchy at the end of the
reporting period during which the change has occurred.
1.4 Current and non-current classification:
The Schedule III to the Act requires assets and liabilities to be classified as either current or non-cur¬
rent. The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification.
Assets
An asset is classified as a current when it is:
- it is expected to be realized in, or is intended for sale or consumption in, the Companyâs normal op¬
erating cycle;
- it is expected to be realized within twelve months from the reporting date;
- it is held primarily for the purposes of being traded; or
- is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for
at least twelve months after the reporting dates.
Liabilities
A liability is classified as a current when:
- it is expected to be realized in, or is intended for sale or consumption in, the Companyâs normal op¬
erating cycle;
- it is due to be settled within twelve months from the reporting date;
- it is held primarily for the purposes of being traded;
- the Company does not have an unconditional right to defer settlement of liability for at least twelve
months from the reporting date.
All other liabilities are classified as non-current.
Deferred tax assets/liabilities are classified as non-current.
Operating Cycle
Operating cycle is the time between the acquisition of assets for processing and realization in cash or
cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of
current or non-current classification of assets and liabilities.
1.5 Revenue recognition
Sale of goods:
Revenue is recognized when the company satisfies a performance obligation by transferring a prom¬
ised good or service to its customers. The company considers the terms of the contract and its cus¬
tomary business practices to determine the transaction price. Performance obligations are satisfied
at the point of time when the customer obtains controls of the asset. Revenue is measured based
on transaction price, which is the fair value of the consideration received or receivable, stated net of
discounts, returns and value added tax. Transaction price is recognized based on the price specified
in the contract, net of the estimated sales incentives / discounts. Accumulated experience is used to
estimate and provide for the discounts/ right of return, using the expected value method. The Com¬
pany recognizes provision for sales return, based on the Management estimate, measured on net
basis of the margin of the sale. Therefore, Trade receivables are disclosed at net off provision for
sales for the products expected to be returned. The company classifies the right to consideration
in exchange for goods as a receivable and is presented net of impairment in the Balance Sheet.
Interest Income:
Interest Income is recognized on an accrual basis.
Interest income
Interest Income mainly comprises of interest on fixed deposits, Margin money deposit relating to bank
guarantee and Deposits against Bank Overdraft with banks. Interest income should be recorded using
the effective interest rate (EIR). However, the amount of margin money deposits relating to bank guar¬
antee and Over draft are purely current in nature, hence effective interest rate has not been applied.
Interest is recognized using the time-proportion method, based on rates implicit in the transactions.
1.6 Borrowing cost
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Bor¬
rowing costs directly attributable to acquisition, construction or production of an asset which necessar¬
ily take a substantial period of time to get ready for their intended use or sale are capitalized as part
of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which
they are incurred.
1.7 Property, plant and equipment & Capital work-in-progress
Recognition and measurement
The items of property, plant and equipment are stated at historical cost less accumulated depreciation
and accumulated impairment loss, if any. Cost of an item of property, plant and equipment comprises
its purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of bringing the item to its working condition for its
intended use and estimated costs (Present Value) of dismantling and removing the item and restoring
the site on which it is located. If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items (major components) of property,
plant and equipment.
Subsequent costs included in the assetâs carrying amount or recognized as a separate asset, as ap¬
propriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance
are charged to statement of profit or loss during the reporting period in which they are incurred. If an
item of property, plant and equipment is purchased with deferred credit period from supplier, such as¬
set is recorded at its cash price equivalent value.
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on dispos¬
al or retirement of an item of property, plant and equipment is determined as the difference between
sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Fully depreci¬
ated assets still in use are retained in the financial statements.
Capital work in progress
Capital work-in-progress is recognized at cost, net of accumulated impairment loss, if any. It comprises
of property, plant and equipment that are not yet ready for their intended use at the reporting date.
1.8 Depreciation and Goodwill
Depreciation is provided on the written down value methods per the useful life prescribed in Schedule
II to the Companies Act, 2013.
The useful lives of assets are periodically reviewed and re-determined and the unamortized depre¬
ciable amount is charged over the remaining useful life of such assets. Assets costing Rs. 5,000/-and
below are depreciated over a period of one year.
1.9 Intangible Assets
Intangible assets are stated at cost less accumulated amortization and impairment if any. Intangible
assets are amortized over their respective estimated useful lives on a straight-line basis, from the date
that they are available for use. The estimated useful life of an identifiable intangible asset is based on
a number of factors including the effects of obsolescence, demand, competition and other economic
factors (such as the stability of the industry and known technological advances) and the level of main¬
tenance expenditures required to obtain the expected future cash flows from the asset.
1.10 Inventories
Inventories comprise of Unprocessed seeds, Processed Seeds, and traded goods. Inventories are
valued at the lower of cost and the net realizable value after providing for obsolescence and other
losses, where considered necessary. Cost is determined on Average basis. Cost includes all charges
in bringing the goods to their present location and condition and receiving charges. The inventories are
valued at, Cost and NRV whichever is lower.
1.11 Foreign Currency Transactions
The company translates all foreign currency transactions at Exchange Rates prevailing on the date of
transactions. Exchange rate differences resulting from foreign exchange transactions settled during
the year are recognized as income or expenses in the period in which they arise. 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 and loss account.
1.12 Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service
are recognized in respect of employeesâ services up to the end of the reporting period and are mea¬
sured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled.
The liabilities are presented as current employee benefit obligations in the balance sheet.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contri¬
butions into a separate entity and will have no legal or constructive obligation to pay further amounts.
The Company makes specified monthly contributions towards Government administered provident
fund scheme and other funds. Obligations for contributions to defined contribution plans are recog¬
nized as an employee benefit expense in statement of profit and loss in the periods during which the
related services are rendered by employees.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
liability or asset recognized in the balance sheet in respect of defined benefit plans is the present value
of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
defined benefit obligation is calculated annually by a qualified actuary using the projected unit credit
method.
The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows by reference to market yields at the end of the reporting period on government bonds
that have terms approximating to the terms of the related obligation. The net interest cost is calculated
by applying the discount rate to the net balance of the defined benefit obligation and the fair value
of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial as¬
sumptions are recognized in the period in which they occur, directly in other comprehensive income.
They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or cur¬
tailments are recognized immediately in profit or loss as past service cost.
Termination benefits
Termination benefits are recognized as an expense when the Company is demonstrably committed,
without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment
before the normal retirement date, or to provide termination benefits as a result of an offer made to
encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as
an expense if the Company has made an offer encouraging voluntary redundancy, it is probable that
the offer will be accepted, and the number of acceptances can be estimated reliably.
Other long-term employee benefits
The Companyâs net obligation in respect of other long term employee benefits is the amount of future
benefit that employees have earned in return for their service in the current and previous periods. That
benefit is discounted to determine its present value. Re-measurements are recognized in the state¬
ment of profit and loss in the period in which they arise.
1.13 Taxes on Income
Taxes comprises Current Tax, Deferred tax and MAT credit. It is recognized in profit or loss except to
the extent that it relates to an item recognized directly in equity or in other comprehensive income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the
year and any adjustment to the tax payable or receivable in respect of previous years. The amount
of current tax reflects the best estimate of the tax amount expected to be paid or received after con¬
sidering the uncertainty, if any, related to income taxes. It is measured using tax rates (And tax laws)
enacted or substantively enacted by the reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretations and considers whether it is probable that
a taxation authority will accept an uncertain tax treatment.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set
off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis
or simultaneously.
Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the corresponding amounts used for taxation pur¬
poses. Deferred tax is not recognized for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is
not a business combination and that affects neither accounting nor taxable profit or loss at the time of
the transaction; and
- temporary differences related to investments in subsidiaries to the extent that the Company is able
to control the timing of the reversal of the temporary differences and it is probable that they will not
reverse in the foreseeable future;
Deferred tax assets are recognized for deductible temporary differences, the carry forwards of unused
tax credits and unused tax losses. Deferred tax assets are recognized to the extent that it is probable
that future taxable profits will be available against which they can be used. The existence of unused
tax losses is strong evidence that future taxable profit may not be available.
Therefore, in case of a history of recent losses, the Company recognizes a deferred tax asset only
to the extent that it has sufficient taxable temporary differences or there is convincing other evidence
that sufficient taxable profit will be available against which such deferred tax asset can be realized.
Deferred tax assets - unrecognized or recognized, are reviewed at each reporting date and are rec¬
ognized/ reduced to the extent that it is probable/ no longer probable respectively that the related tax
benefit will be realized.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled, based on the laws that have been enacted or substantively enacted
by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner
in which the Company expects, at the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Minimum Alternate Tax (MAT) Credit
Minimum alternate tax (MAT) credit is recognized in accordance with tax laws in India as an asset
only when and to the extent there is convincing evidence that the Company will pay normal income
tax during the specified period. The Company reviews the MAT credit at each balance sheet date and
writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing
evidence to the effect that the Company will pay normal income tax during the specified period.
1.14 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Company as a Lessor:
Leases for which the Company is a lessor are classified as a finance or operating lease. Whenever the
terms of a lease transfer substantially all the risks and rewards of ownership to the lessee, the contract
is classified as a finance lease. All other leases are classified as operating leases. Rental income from
operating leases is recognized on straight line basis over the term of relevant lease.
Company as a Lessee:
The Company applies a single recognition and measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
The Company determines the lease term as the non-cancellable period of a lease, together with both
periods covered by an option to extend the lease if the Company is reasonably certain to exercise that
option; and periods covered by an option to terminate the lease if the Company is reasonably certain
not to exercise that option.
In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or
not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that
create an economic incentive for the Company to exercise the option to extend the lease, or not to
exercise the option to terminate the lease. The Company revises the lease term if there is a change in
the non-cancellable period of a lease.
Right of use asset: The Company recognizes right-of-use asset representing its right to use the un¬
derlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset
measured at inception shall comprise of the amount of the initial measurement of the lease liability
adjusted for any lease payments made at or before the commencement date less any lease incentives
received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in
dismantling and removing the underlying asset or restoring the underlying asset or site on which it is
located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation,
accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The
right-of-use assets is depreciated using the straight-line method from the commencement date over
the shorter of lease term or useful life of right-of-use asset.
The estimated useful lives of right-of use assets are determined on the same basis as those of prop¬
erty, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indica¬
tion that their carrying amounts may not be recoverable. Impairment loss, if any, is recognized in the
statement of profit and loss.
Lease Liability: The Company measures the lease liability at present value of the future lease pay¬
ments at the commencement date of the lease. In calculating the present value of lease payments, the
Company uses its incremental borrowing rate at the lease commencement date because the interest
rate implicit in the lease is not readily determinable. The lease liability is subsequently remeasured by
increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to
reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or
lease modifications or to reflect revised in-substance fixed lease payments. The company recognizes
the amount of the re-measurement of lease liability due to modification as an adjustment to the right-
of-use asset and statement of profit and loss depending upon the nature of modification. Where the
carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the mea¬
surement of the lease liability, the Company recognizes any remaining amount of the re-measurement
in statement of profit and loss.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of buildings,
machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the com¬
mencement date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are considered to be low value. Lease pay¬
ments on short-term leases and leases of low-value assets are recognized as expense on a straight¬
line basis over the lease term.
1.15 Earning Per Share (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of
the Company by the weighted average number of Equity shares outstanding during the year excluding
the treasury shares as per Ind AS 33 Earnings per share. Diluted earnings per share is calculated by
dividing the profit/(loss) attributable to equity holders (after adjusting for interest on the Compulsory
convertible debentures) by the weighted average number of equity shares outstanding during the pe-
riod/year the weighted average number of equity shares that would be issued on conversion of all the
dilutive potential equity shares into equity shares.
1.16 Impairment of financial instruments
The Company recognizes loss allowances for expected credit losses on financial assets measured at
amortized cost and trade receivables. At each reporting date, the Company assesses whether finan¬
cial assets carried at amortized cost are credit-impaired. A financial asset is âcredit-impairedâ when one
or more events that have a detrimental impact on the estimated future cash flows of the financial asset
have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract;
- it is probable that the borrower will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for a security because of financial difficulties.
The Company measures loss allowances at an amount equal to lifetime expected credit losses. Loss
allowances for trade receivables are always measured at an amount equal to lifetime expected credit
losses. Lifetime expected credit losses are the expected credit losses that result from all possible de¬
fault events over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default
events that are possible within 12 months after the reporting date (or a shorter period if the expected
life of the instrument is less than 12 months). In all cases, the maximum period considered when esti¬
mating expected credit losses is the maximum contractual period over which the Company is exposed
to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since ini¬
tial recognition and when estimating expected credit losses, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Companyâs historical experience
and informed credit assessment and including forward-looking information.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are mea¬
sured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the
Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet. Loss allowances for finan¬
cial assets measured at amortized cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that
there is no realistic prospect of recovery. This is generally the case when the Company determines
that the debtor does not have assets or sources of income that could generate sufficient cash flows
to repay the amounts subject to the write-off. However, financial assets that are written off could still
be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of
amounts due.
1.17 Impairment of non-financial assets
The Company assess at each reporting date whether there is any indication that the carrying amount
from non-financial assets may not be recoverable. If any such indication exists, then the assetâs recov¬
erable amount is estimated and an impairment loss is recognized if the carrying amount of an asset or
Cash generating unit (CGU) exceeds its estimated recoverable amount in the statement of profit and
loss. Goodwill is tested annually for impairment. For the purpose of impairment testing, goodwill aris¬
ing from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit
from the synergies of the combination.
Mar 31, 2024
Corporate information
"Tierra Agrotech Limited (''the company'') (formerly known as Tierra Agrotech Private Limited) is in the business of Seed Research, Production, Processing and Marketing of Seeds and related products. The Company was incorporated on 13th September 2013 in Hyderabad. The National Company Law Tribunal Bench at Hyderabad vide order dated 12.11.2021 sanctioned the scheme of amalgamation of Grandeur Products Limited (Holding Company - Transferor Company) with Tierra Agrotech Private Limited (Subsidiary Company - Transferee Company) with effect from the appointed date i.e., 01.04.2021 and consequent to the amalgamation and upon scheme becoming effective, the name of the Company has been changed from Tierra Agrotech Private Limited to Tierra Agrotech Limited. The principal accounting policies applied in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The Equity Shares of the Company are listed on Bombay Stock Exchange of India Ltd (BSE) in India on 27th May 2022.
The standalone financial statements for the year ended 31 March 2024, are approved by the Board of Directors and authorized for issue on 25 May 2024.
1. Significant Accounting Policies1.1 Basis of preparation of financial statements
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) notified under Section 133 of Companies Act, 2013, (the ''Act'') and presentation requirements of Division II of Schedule III to the Companies Act, 2013,
(Ind AS compliant schedule III), as applicable and other relevant provisions of the Act. The standalone financial statements have been prepared on a going concern basis. The accounting policies are applied consistently to all the periods presented in the standalone financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in accounting policy hitherto in use.
1.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All financial information presented in Indian rupees have been rounded-off to two decimal places to the nearest lakhs except share data or as otherwise stated.
The standalone financial statements have been prepared on the historical cost basis except for the following items:
- Certain financial assets and liabilities: Measured at fair value
- Net defined benefit (asset)/ liability: Fair value of plan assets less present value of defined benefit obligations
- Borrowings: Amortized cost using effective interest rate method
Use of estimates and judgements
In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the standalone financial statements is included in the following notes:
- Note 1.14 - lease classification.
- Note 1.14 - leases: whether an arrangement contains a lease and lease classification Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:
- Note 1.12 - measurement of defined benefit obligations: key actuarial assumptions;
- Note 1.19 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and
- Note 1.17 - impairment of financial assets;
- Note 1.7 - determining an asset''s expected useful life and the expected residual value at the end of its life Measurement of fair values
Accounting policies and disclosures require measurement of fair value for both financial and non-financial assets. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant
to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
1.4 Current and non-current classification:
The Schedule III to the Act requires assets and liabilities to be classified as either current or non-current. The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as a current when it is:
- it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
- it is expected to be realized within twelve months from the reporting date;
- it is held primarily for the purposes of being traded; or
- is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting dates.
A liability is classified as a current when:
- It expects to settle the liability in its normal operating cycle;
- it is due to be settled within twelve months from the reporting date;
- it is held primarily for the purposes of being traded;
- the Company does not have an unconditional right to defer settlement of liability for at least twelve months from the reporting date.
ALL other liabilities are classified as non-current.
Deferred tax assets/liabilities are classified as non-current.
Operating cycle is the time between the acquisition of assets for processing and realization in cash or cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent cLassification of assets and LiabiLities.
1.5 Revenue recognition1.5.1 Sale of goods:
Revenue is recognized when the company satisfies a performance obligation by transferring a promised good or service to its customers. The company considers the terms of the contract and its customary business practices to determine the transaction price. Performance obligations are satisfied at the point of time when the customer obtains controls of the asset. Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of discounts, returns and value added tax. Transaction price is recognized based on the price specified in the contract, net of the estimated sales incentives / discounts. Accumulated experience is used to estimate and provide for the discounts/ right of return, using the expected value method.
The Company recognizes provision for sales return, based on the Management estimate, measured on net basis of the margin of the sale. Therefore, Trade receivables are disclosed at net off provision for sales for the products expected to be returned.
The company classifies the right to consideration in exchange for goods as a receivable and is presented net of impairment in the Balance Sheet
Interest Income is recognized on an accrual basis.
Interest income
Interest Income mainly comprises of interest on fixed deposits, Deposits against Bank Overdraft with banks. Interest income should be recorded using the effective interest rate (EIR). However, Over draft are purely current in nature, hence effective interest rate has not been applied. Interest is recognized using the time-proportion method, based on rates implicit in the transactions.
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition, construction or production of an asset which necessarily take a substantial period of time to get ready for their intended use or sale are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.7 Property, plant and equipment & Capital work-in-progress Recognition and measurement
The items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment loss, if any. Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs (Present Value) of dismantling and removing the item and restoring the site on which it is located. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to statement of profit or loss during the reporting period in which they are incurred. If an item of property, plant and equipment is purchased with deferred credit period from supplier, such asset is recorded at its cash price equivalent value.
Capital work-in-progress is recognized at cost, net of accumulated impairment loss, if any. It comprises of property, plant and equipment that are not yet ready for their intended use at the reporting date.
Depreciation is provided on the Written down value method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
The useful lives of assets are periodically reviewed and re-determined and the unamortized depreciable amount is charged over the remaining useful life of such assets. Assets costing Rs. 5,000/-and below are depreciated over a period of one year.
Intangible assets are stated at cost less accumulated amortization and impairment if any. Intangible assets are amortized over their respective estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
During the year the company has not provided any amount amortization of intangible assets.
The estimated useful lives of intangible asset are as follows:
|
Type of Asset |
Useful life |
|
Germplasm |
Indefinite Life |
|
Plant Variety |
Over the validity period |
|
Trade Marks |
Over the validity period |
|
License Fee |
Over the validity period |
Inventories comprise of Unprocessed seeds, Processed Seeds, and finished goods. Inventories are valued at the lower of cost or the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost is determined on Average basis. Cost includes all charges in bringing the goods to their present location and condition and receiving charges. The inventories are valued at, Cost or NRV whichever is lower.
1.11 Foreign Currency Transactions
The company translates all foreign currency transactions at Exchange Rates prevailing on the date of transactions. Exchange rate differences resulting from foreign exchange transactions settled during the year are recognized as income or expenses in the period in which they arise. 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 and loss account.
1.12 Employee benefits Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards Government administered provident fund scheme and other funds. Obligations for contributions to defined
contribution plans are recognized as an employee benefit expense in statement of profit and loss in the periods during which the related services are rendered by employees.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The liability or asset recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by a qualified actuary using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Other long-term employee benefits
The Company''s net obligation in respect of other long term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and previous periods. That benefit is discounted to determine its present value. Re-measurements are recognized in the statement of profit and loss in the period in which they arise.
Taxes comprises Current Tax, Deferred tax and MAT credit. It is recognized in profit or loss except to the extent that it relates to an item recognized directly in equity or in other comprehensive income.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (And tax laws) enacted or substantively enacted by the reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and considers whether it is probable that a taxation authority will accept an uncertain tax treatment.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is not recognized for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction; and
- temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future;
Deferred tax assets are recognized for deductible temporary differences, the carry forwards of unused tax credits and unused tax losses. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available.
Therefore, in case of a history of recent losses, the Company recognizes a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized. Deferred tax assets - unrecognized
or recognized, are reviewed at each reporting date and are recognized/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realized.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Minimum Alternate Tax (MAT) Credit
Minimum alternate tax (MAT) credit is recognized in accordance with tax laws in India as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. The Company reviews the MAT credit at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is
no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases for which the Company is a lessor are classified as a finance or operating lease. Whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. Rental income from operating leases is recognized on straight line basis over the term of relevant lease.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.
Right of use asset: The Company recognizes right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment
whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognized in the statement of profit and loss.
Lease Liability: The Company measures the lease liability at present value of the future lease payments at the commencement date of the lease. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
The company recognizes the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognizes any remaining amount of the re-measurement in statement of profit and loss.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of buildings, machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
Basic Earnings Per Share (''EPS'') is computed by dividing the net profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period excluding the treasury shares in accordance with Ind AS 33 Earnings per share.
Diluted earnings per share is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equities shares outstanding for the effects of all dilutive potential equity shares.
1.16 Investments in subsidiaries
Investments representing equity interest in subsidiaries carried at cost less any provision for impairment. Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable.
1.17 Impairment of financial instruments
The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost and trade receivables. At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired.
A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract;
- it is probable that the borrower will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for a security because of financial difficulties.
The Company measures loss allowances at an amount equal to lifetime expected credit losses.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the
expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s
historical experience and informed credit assessment and including forward-looking information.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
1.18 Impairment of non-financial assets
The Company assess at each reporting date whether there is any indication that the carrying amount from nonfinancial assets may not be recoverable. If any such indication exists, then the asset''s recoverable amount is estimated and an impairment loss is recognized if the carrying amount of an asset or Cash generating unit (CGU) exceeds its estimated recoverable amount in the statement of profit and loss. Goodwill is tested annually for impairment. For the purpose of impairment testing, goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
1.19 Provisions and Contingent Liabilities
A Provision is recognized if, as a result of past event, the Company has a present legal obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the present obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also 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 a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
A financial instrument is any contract that give rise to a financial asset of one entity and a financial liability or equity of another entity.
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability
Subsequent MeasurementFinancial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved both by collection contractual cash flows on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding and selling financial assets.
Financial assets at fair value through Profit and Loss
Financial assets are measured at fair value through profit and loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs that are directly attributable to the acquisition of financial assets and liabilities at fair value through profit and loss are immediately recognized in statement of profit and loss.
Financial liabilities are classified as measured at amortized cost or Fair Value Through Profit and Loss Account (FVTPL). A financial liability is classified as at FVTPL if it is classified as held for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or loss on derecognition is also recognized in statement of profit and loss.
1.21 Investment in Subsidiaries
Investment in Subsidiaries is carried at cost De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition as per Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
1.22 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts and Cash Credit that are repayable on demand and form an integral part of our cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Cash flows are reported using the indirect method, whereby net profit/ (loss) 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 and item of income or expenses associated with investing or financing cash flows. The cash flows from regular revenue generating (operating activities), investing and financing activities of the Company are segregated.
1.23 Research and Development Costs (Product Development):
Research expenditure is recognized as an expense when it is incurred. Development expenditure on an individual project is recognized as an intangible asset when the Company can demonstrate:
a) The technical feasibility of completing the intangible asset so that the asset will be available for use or sale.
b) Its intention to complete and its ability and intention to use or sell the product.
c) How the asset will generate future economic benefits.
d) The availability of resources to complete the asset.
e) The ability to measure reliably the expenditure during development.
Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognized as an expense when it is incurred.
Items of property, plant and equipment and acquired Intangible Assets utilized for Research and Development are capitalized and depreciated in accordance with the policies stated for Property, Plant and Equipment and Intangible Assets.
1.24 Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Mar 31, 2023
i. notes to financial statements
"Tierra Agrotech Limited (''the company''} (formeriy known as Tierra Agrotech Private Limited) is in the business of Seed Research, Production, Processing and Marketing of Seeds and reiated products. The Company was incorporated on 13th September 2013 in Hyderabad. The National Company Law Tribunal Bench at Hyderabad vide order dated 12.11.2021 sanctioned the scheme of amalgamation of Grandeur Products Limited (Holding Company - Transferor Company) with Tierra Agrotech Private Limited (Subsidiary Company - Transferee Company) with effect from the appointed date i.e., 01.04.2021 and consequent to the amalgamation and upon scheme becoming effective, the name of the Company has been changed from Tierra Agrotech Private Limited to Tierra Agrotech Limited. The principal accounting policies applied in the preparation of the financial statements are set out beiow. These policies have been consistentiy applied to aii the years presented, uniess otherwise stated.
The Equity Shares of the Company are listed on Bombay Stock Exchange of India Ltd (BSE) in India on 27th May 2022.
The standalone financial statements for the year ended 31 March 2023, are approved by the Board of Directors and authorized for issue on 11 April 2023.
1. Significant Accounting Policies1.1 Basis of preparation of financial statements
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) notified under Section 133 of Companies Act, 2013, (the ''Act'') and presentation requirements of Division II of Schedule III to the Companies Act, 2013,
(Ind AS compliant schedule III), as applicable and other relevant provisions of the Act. The standalone financial statements have been prepared on a going concern basis. The accounting policies are applied consistentiy to aii the periods presented in the standalone financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in accounting policy hitherto in use.
1.2 Functional and presentation currency
These standalone financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All financial information presented in Indian rupees have been rounded-off to two decimal places to the nearest lakhs except share data or as otherwise stated.
The standalone financial statements have been prepared on the historical cost basis except for the following items:
- Certain financial assets and liabilities: Measured at fair value
- Net defined benefit (asset)/ liability: Fair value of plan assets less present value of defined benefit obligations
- Borrowings: Amortized cost using effective interest rate method
Use of estimates and judgements
In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the standalone financial statements is included in the following notes:
- Note 1.14 - lease classification.
- Note 1.14 - leases: whether an arrangement contains a lease and lease classification Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:
- Note 1.12 - measurement of defined benefit obligations: key actuarial assumptions;
- Note 1.19 - recognition and measurement of provisions and contingencies; key assumptions about the likelihood and
- Note 1.17 - impairment of financial assets;
- Note 1.7 - determining an asset''s expected useful life and the expected residual value at the end of its life Measurement of fair values
Accounting policies and disclosures require measurement of fair value for both financial and non-financial assets. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either;
- In the principal market for the asset or liability or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3; inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant
to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
1.4 Current and non-current classification:
The Schedule III to the Act requires assets and liabilities to be classified as either current or non-current. The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as a current when it is:
- it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
- it is expected to be realized within twelve months from the reporting date;
- it is held primarily for the purposes of being traded; or
- is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least tweive months after the reporting dates.
A liability is classified as a current when:
- it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
- it is due to be settled within twelve months from the reporting date;
- it is held primarily for the purposes of being traded;
- the Company does not have an unconditional right to defer settiement of Liability for at Least tweive months from the reporting date,
ALL other liabilities are classified as non-current.
Deferred tax assets/liabilities are classified as non-current.
Operating Cycie
Operating cycle is the time between the acquisition of assets for processing and realization in cash or cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent cLassification of assets and LiabiLities.
1.5 Revenue recognition Sale of goods:
Revenue is recognized when the company satisfies a performance obligation by transferring a promised good or service to its customers, The company considers the terms of the contract and its customary business practices to determine the transaction price. Performance obligations are satisfied at the point of time when the customer obtains controis of the asset, Revenue is measured based on transaction price, which is the fair vaiue of the consideration received or receivable, stated net of discounts, returns and vaiue added tax, Transaction price is recognized based on the price specified in the contract, net of the estimated sales incentives / discounts. Accumuiated experience is used to estimate and provide for the discounts/ right of return, using the expected vaiue method, The Company recognizes provision for saies return, based on the historical resuits, measured on net basis of the margin of the sale, Therefore, Trade receivables are disclosed at net off refund Liability, for the products expected to be returned,
The company classifies the right to consideration in exchange for goods as a receivable and is presented net of impairment in the Balance Sheet
Interest Income:
Interest Income is recognized on an accrual basis,
Interest income
Interest Income mainly comprises of interest on Margin money deposit relating to bank guarantee and Deposits against Bank Overdraft with banks, Interest income should be recorded using the effective interest rate (EIR). However, the amount of margin money deposits relating to bank guarantee and Over draft are purely current in nature, hence effective interest rate has not been
applied, Interest is recognized using the time-proportion method, based on rates implicit in the transactions,
Borrowing costs are interest and other costs incurred in connection with the borrowing of funds, Borrowing costs directly attributable to acquisition, construction or production of an asset which necessarily take a substantial period of time to get ready for their intended use or sale are capitalized as part of the cost of that asset, Other borrowing costs are recognized as an expense in the period in which they are incurred,
1.7 Property, plant and equipment & Capital work-in-progress Recognition and measurement
The items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment loss, if any. Cost of an item of property, plant and equipment comprises its purchase price, incLuding import duties and non-refundabie purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs (Present Value) of dismantling and removing the item and restoring the site on which it is located. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to statement of profit or loss during the reporting period in which they are incurred. If an item of property, plant and equipment is purchased with deferred credit period from supplier, such asset is recorded at its cash price equivalent value.
Capital work-in-progress is recognized at cost, net of accumuiated impairment Loss, if any. It comprises of property, plant and equipment that are not yet ready for their intended use at the reporting date.
Depreciation is provided on the straight-Line method as per the usefui Life prescribed in Scheduie II to the Companies Act, 2013.
The usefui Lives of assets are periodically reviewed and re-determined and the unamortized depreciable amount is charged over the remaining usefui Life of such assets. Assets costing Rs. 5,000/-and beiow are depreciated over a period of one year.
Intangibie assets are stated at cost Less accumuiated amortization and impairment if any. Intangible assets are amortized over their respective estimated useful Lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
During the year the company has not provided any amount amortization of intangible assets.
The estimated useful Lives of intangible asset are as follows:
|
Type of Asset |
Useful life |
|
License Fee |
10 Years |
|
Intangible Asset |
Indefinite Life |
Inventories comprise of Unprocessed seeds, Processed Seeds, and traded goods. Inventories are valued at the Lower of cost or the net realizable value after providing for obsolescence and other Losses, where considered necessary. Cost is determined on Average basis. Cost includes all charges in bringing the goods to their present Location and condition and receiving charges. The inventories are valued at, Cost or NRV whichever is Lower.
1.11 Foreign Currency Transactions
The company translates all foreign currency transactions at Exchange Rates prevailing on the date of transactions. Exchange rate differences resulting from foreign exchange transactions settled during the year are recognized as income or expenses in the period in which they arise, 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 and loss account.
1.12 Employee benefits Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled, The liabilities are presented as current employee benefit obligations in the balance sheet.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts, The Company makes specified monthly contributions towards Government administered provident fund scheme and other funds. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in statement of profit and loss in the periods during which the related services are rendered by employees.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The liability or asset recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by a qualified actuary using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation, The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income,
They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably,
Other long-term employee benefits
The Company''s net obligation in respect of other long term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and previous periods. That benefit is discounted to determine its present value. Re-measurements are recognized in the statement of profit and loss in the period in which they arise,
Taxes comprises Current Tax, Deferred tax and MAT credit. It is recognized in profit or loss except to the extent that it relates to an item recognized directly in equity or in other comprehensive income.
Current tax comprises the expected tax payabie or receivable on the taxabie income or Loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, reiated to income taxes, It is measured using tax rates (And tax Laws) enacted or substantiveiy enacted by the reporting date, Management periodically evaiuates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and considers whether it is probable that a taxation authority will accept an uncertain tax treatment,
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously,
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is not recognized for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction; and
- temporary differences reiated to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future;
Deferred tax assets are recognized for deductible temporary differences, the carry forwards of unused tax credits and unused tax losses, Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available.
Therefore, in case of a history of recent losses, the Company recognizes a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized. Deferred tax assets - unrecognized or recognized, are reviewed at each reporting date and are recognized/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realized.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantiveiy enacted by the reporting date, The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities, Minimum Alternate Tax (MAT) Credit
Minimum alternate tax (MAT) credit is recognized in accordance with tax Laws in India as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. The Company reviews the MAT credit at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases for which the Company is a lessor are classified as a finance or operating lease. Whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. Rental income from operating leases is recognized on straight line basis over the term of relevant lease.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease.
The Company revises the lease term if there is a change in the non-cancellable period of a lease.
Right of use asset: The Company recognizes right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognized in the statement of profit and loss.
Lease Liability: The Company measures the lease liability at present value of the future lease payments at the commencement date of the lease. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company recognizes the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognizes any remaining amount of the re-measurement in statement of profit and loss.
Short-term Leases and Leases of Low-vaLue assets
The Company applies the short-term lease recognition exemption to Its short-term leases of buildings, machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders by the weighted average number of equities shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equities shares outstanding for the effects of all dilutive potential equity shares.
1.16 Investments in subsidiaries
Investments representing equity interest in subsidiaries carried at cost less any provision for impairment. Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable.
1.17 Impairment of financial Instruments
The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost and trade receivables. At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired.
A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract;
- it is probable that the borrower will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for a security because of financial difficulties.
The Company measures loss allowances at an amount equal to lifetime expected credit losses.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s historical experience and informed credit assessment and including forward-looking information.
Measurement of expected credit Losses
Expected credit Losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
1.18 Impairment of non-financial assets
The Company assess at each reporting date whether there is any indication that the carrying amount from nonfinancial assets may not be recoverable. If any such indication exists, then the asset''s recoverable amount is estimated and an impairment loss is recognized if the carrying amount of an asset or Cash generating unit (CGU) exceeds its estimated recoverable amount in the statement of profit and loss. Goodwill is tested annually for impairment. For the purpose of impairment testing, goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
1.19 Provisions and Contingent LiabiLities
A Provision is recognized if, as a result of past event, the Company has a present legal obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the present obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also 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 a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
A financial instrument is any contract that give rise to a financial asset of one entity and a financial liability or equity of another entity.
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved both by collection contractual cash flows on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding and selling financial assets.
Financial assets at fair value through Profit and Loss
Financial assets are measured at fair value through profit and loss unless it is measured at amortized cost or at fair vaLue through other comprehensive income on initial recognition. The transaction costs that are directly attributable to the acquisition of financial assets and liabilities at fair value through profit and loss are immediately recognized in statement of profit and loss.
Financial liabilities are classified as measured at amortized cost or Fair Value Through Profit and Loss Account (FVTPL). A financial liability is classified as at FVTPL if it is classified as held for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or loss on derecognition is also recognized in statement of profit and loss.
1.21 investment in Subsidiaries
Investment in Subsidiaries is carried at cost De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition as per Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
1.22 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts and Cash Credit that are repayable on demand and form an integral part of our cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Cash flow statement
Cash flows are reported using the indirect method, whereby net profit/ (loss) 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 and item of income or expenses associated with investing or financing cash flows. The cash flows from regular revenue generating (operating activities), investing and financing activities of the Company are segregated.
1.23 Research and Development Costs (Product Development):
Research expenditure is recognized as an expense when it is incurred. Development expenditure on an individual project is recognized as an intangible asset when the Company can demonstrate:
a) The technical feasibility of completing the intangible asset so that the asset will be available for use or sale.
b) Its intention to complete and its ability and intention to use or sell the product.
c) How the asset will generate future economic benefits.
d) The availability of resources to complete the asset.
e) The ability to measure reliably the expenditure during development.
Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognized as an expense when it is incurred.
Items of property, plant and equipment and acquired Intangible Assets utilized for Research and Development are capitalized and depreciated in accordance with the policies stated for Property, Plant and Equipment and Intangible Assets.
1.24 Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2023, MCA Issued the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose the material accounting policies rather than significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general-purpose financial statements.
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.
The Company is assessing the impact of these changes and will accordingly incorporate the same in the financial statements for the year ending March 31, 2024.
The accompanying notes are an integral part of these financial statements As per our Report of even date
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