Note 24: Corporate Information
Jayant Agro-Organics Limited was incorporated on May 7, 1992 having CIN L24100MH1992PLC066691 is holding company of Ihsedu Agrochem Pvt. Ltd., Ihsedu Itoh Green Chemicals Marketing Pvt. Ltd. and Ihsedu Coreagri Services Pvt. Ltd. and a subsidiary of Jayant Finvest Limited. Company is mainly engaged in manufacturing and trading of castor oil and its derivatives such as oleo chemicals.
Note 25: Significant Accounting Policies
A. Basis of Accounting
The financial statements are prepared to comply in all material respects with the mandatory Accounting Standards under section 133 of the Companies Act, 2013 (as amended). The financial statements have been prepared under the historical cost convention on an accrual basis in accordance with the generally accepted accounting principles in India.
B. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the results of operations during the period. Although these estimates are based upon management''''s best knowledge of current events, plans and actions, actual results could differ from these estimates. Any revision to accounting estimates and assumptions are recognized prospectively.
C. Fixed Assets
Tangible assets are stated at cost less accumulate depreciation and net of impairment, if any. Cost comprises the purchase price and any attributable / allocated cost of bringing the asset to its working condition for its intended use. The cost also includes direct costs and other related incidental expenses.
Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended use.
Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditure incurred in respect if capital projects under development and includes any attributable/allocable cost and other incidental expenses. Revenue earned, if any before capitalization from such capital projects are adjusted against the capital work in progress.
Borrowing costs relating to acquisition/construction/ development of tangible assets, intangible assets and capital work in progress which takes substantial period of time to get ready for its intended use are also included to the extent they relates to the period till such assets are ready to be put to use.
D. Borrowing Costs
Borrowing costs that are directly attributable to the acquisition of qualifying asset or for long - term project development are capitalized as part of their costs. Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the asset for their intended use are in progress. Other borrowing costs are recognized as an expense, in the period in which they are incurred.
E. Depreciation Tangible Assets
Depreciation on assets is provided from the date of asset is put to use on straight line method as per the useful life of the assets estimated by the management or at the rates prescribed under Schedule II of the Companies Act, 2013.
Depreciation method, useful life and residual value are reviewed periodically.
Assets of Rs.5,000/- or less are fully depreciated in the year of purchase.
Assets on lease is amortized over the period of lease.
Life of certain items of plant and equipments varies from
26 to 40 years as the case may be, building (road) is taken as
Leasehold Land is amortized over the period of lease.
Intangible Asset is amortized using straight line method over the estimated useful life, not exceeding 5 years. Amortization method, useful life and residual value are reviewed periodically.
F. Research and Development
Revenue expenditure on research and development is recognized as an expense in the year in which it is incurred and the expenditure on capital assets is depreciated on straight line method at the rates prescribed in Schedule II of the Companies Act, 2013.
G. Valuation of Inventories
Inventories are valued at lower of cost and net realizable value except by-products which are valued at net realizable value.
Cost of inventories of finished goods and work-in-process includes material cost, cost of conversion and other costs.
Cost of inventories of raw material, material cost of finished goods as well as work-in-process, Chemicals, Packing Materials, stores and spare parts are valued at weighted average cost.
H. Revenue Recognition
Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales are recognized when goods are supplied. Turnover includes sale of goods, services, scrap, export incentives and are net of sales tax/value added tax, excise duty and service tax.
Dividend income is recognized when right to receive the payment is established by the Balance Sheet Date. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
Revenue from services is recognized pro-rata over the period of the contract as and when services are rendered.
I. Accounting of Claims
Claims receivable are accounted at the time when such income has been earned by the Company depending on the certainty of receipts. Claims payable if any are accounted at the time of acceptance.
Claims raised by Government Authorities regarding taxes and duties, which are disputed by the Company, are accounted based on the merits of each claim.
Export incentive and duty drawback claims are accounted on accrual basis.
J. Foreign Currency Transactions
Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities on the closing date denominated in foreign currencies are recognized in the Statement of Profit and Loss as per AS 11. In case such monetary items are covered by forward contracts, gain or loss on the same is accounted in the statement of profit and loss as per AS 11.
Hedge Reserve: In order to recognize the impact of fluctuation in foreign currency rates arising out of derivative instruments acquired to hedge receivables as well as highly probable forecast transactions in appropriate accounting periods, the Company applies the principles of recognition set out in the GN (A) 33 (issued 2015) - Guidance Note on Derivative Contracts by the Institute of Chartered Accountants of India.
Accordingly the net unrealized gain/(loss) consequent to foreign currency fluctuations on such hedging instruments to hedge future exports are carried as a Hedging Reserve and ultimately set off in the statement of Profit and Loss when the underlying transaction arises. The net unrealized gain/ (loss) consequent to foreign currency fluctuations on such hedging instruments to hedge receivables are accounted in the statement of profit and loss account at the yearend date."
K. Sundry Debtors
Sundry debtors are stated after writing off debts which are not recoverable. Adequate provision is made for debts if considered doubtful.
L. Impairment of Assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized in the Statement of Profit and Loss if the carrying amount of an asset exceeds its recoverable amount.
M. Employee Benefits
Defined Contribution Plan
Retirement benefits in the form of contribution to provident fund and pension fund are charged to statement of profit and loss. Entitlements to annual leave and sick leave are recognized when they accrue to the employees. Sick leave can only be availed and annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leave. Provision for Leave Encashment is based on year end leave balance.
Defined Benefit Plan
The liability in respect of defined benefit plans and other postemployment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'''' services. Company has taken a policy from Life Insurance Corporation of India ("LIC") to meet its gratuity obligations and contributes annual premium to the fund maintained by LIC. Company has made appropriate provision for payment of gratuity to those employees which are not covered under the gratuity scheme so managed by LIC.
N. Proposed Dividend
Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting.
O. Taxes on Income Current Tax
Current Tax is determined as the amount of tax payable in respect of taxable income for the year after availing exemptions and deductions at the rates applicable under the Income Tax Act, 1961.
Deferred tax reflects the tax effects of timing differences between accounting income and the taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the Balance Sheet date. Deferred tax assets are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets, if any are reviewed at each Balance Sheet date to reassess realization.
Minimum Alternative Tax (MAT)
Minimum Alternative Tax credit is recognized as an asset only when and to the extent there is convening evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the MAT
Credit Entitlement asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will be able to utilize the MAT Credit Entitlement within the period specified under the Income Tax Act, 1961.
P. Earnings Per Share (EPS)
A basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issue upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value which is the average market value of the outstanding shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented. The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues, including for changes effected prior to the approval of the financial statements by the Board of Directors.
Q. Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
R. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may but probably may not, require an outflow of resources. A contingent liability also arises in rare cases where there is a probable liability that cannot be recognized because it cannot be measured reliably Where there is a possible obligation or a present obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are not recognized in the financial statements as this may result in the recognition of income that may never be realized.
S. Cash and Cash Equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks and corporations. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
T. Current / Non-Current Classification
All assets and liabilities have been classified as current and non-current as per the Company''''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
Where the Company is the Lessee
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating lease. Operating lease payments are recognized as an expense in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Where the Company is the Lessor
Assets representing lease arrangements given under operating leases are included in fixed assets. Lease income is recognized in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Initial direct costs are recognized immediately in the statement of profit and loss.
V. Segment Reporting
Identification of Segments
The Company''''s Operating businesses are organized and managed separately according to the nature of products and services provided with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.
Includes general corporate income and expense items which are not allocated to any business segment.
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.