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Accounting Policies of Advanced Enzyme Technologies Ltd. Company
Mar 31, 2025
1 Corporate Information
Advanced Enzyme Technologies Limited (âthe Company'')
(CIN: L24200MH1989PLC051018) is engaged in the
business of manufacturing and sales of enzymes.
The Company is a public limited company and was
incorporated on 15 March 1989 under the provisions
of Companies Act, 1956 and is domiclied in India. The
corporate office of the Company is situated at Sun
Magnetica, A Wing, 5th floor, Near LIC Service Road, Louis
Wadi, Thane (West) - 400 604.
The equity shares of the Company are listed on National
Stock Exchange of India Limited (NSE) via id ADVENZYMES
and on BSE Limited (BSE) via Id 540025.
The Board of Directors approved the standalone financial
statements for the year ended 31 March 2025 and
authorised for issue on 13 May 2025.
2 Statement of compliance
These standalone financial statements have been prepared
in accordance with the Indian Accounting Standards
(referred to as âInd ASâ) as prescribed under section 133 of
the Companies Act, 2013 read with the Companies (Indian
Accounting Standards) Rules as amended from time to
time
3 Basis of preparation
These Standalone financial statements have been
prepared on a historical cost basis, except for certain
financial instruments and defined benefit plans which are
measured at fair value at the end of each reporting period.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
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.
All the assets and liabilities have been classified as current
or non current as per the Companyâs normal operating
cycle and other criteria set out in Schedule III to the Act.
Based on the nature of products and the time between the
acquisition of assets for processing and their realization
in cash and cash equivalent, the Company has ascertained
the operating cycle to be 12 months.
The statement of cash flows has been prepared under
indirect method, whereby profit or loss 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 items of income or expense associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities of the
Company are segregated. The Company considers all highly
liquid investments that are readily convertible to known
amounts of cash and are subject to an insignificant risk of
changes in value to be cash equivalents
Functional and presentation currency:
These Standalone financial statements are presented in
Indian rupees, which is the Companyâs functional currency.
All amounts have been rounded off to two decimal places
to the nearest million, unless otherwise indicated.
Going concern:
These standalone financial statements are prepared on
going concern basis.
4 Use of estimates
The preparation of standalone financial statements in
conformity with Ind AS requires the management to make
use of judgements, estimates and assumptions, that affect
the application of accounting policies and the reported
amounts of assets and liabilities, revenue and expenses
and disclosure of contingent liabilities. The estimates and
assumptions used in accompanying financial statements
are based upon managementâs evaluation of the relevant
facts and circumstances as of the date of the financial
statements. Actual results may differ from the estimates
and assumptions used in preparing the accompanying
standalone financial statements and reviewed on an
ongoing basis. Any revision to accounting estimates is
recognized prospectively in current and future periods.
Assumptions and estimation uncertainties that have a
significant risk of resulting in a material adjustment in the
year ended 31 March 2025 are as follows:
a. Depreciation and amortisation
Depreciation and amortisation is based on
management estimates of the future useful lives of
the property, plant and equipment and intangible
assets. The management estimates the useful lives of
tangible assets similar to the useful life prescribed in
Schedule II of the Act. In cases, where the useful lives
are different from that prescribed in Schedule II, they
are based on technical advice, taking into account the
nature of the asset, the estimated usage of the asset,
the operating conditions of the asset, past history
of replacement, anticipated technological changes,
manufacturersâ warranties and maintenance support.
Estimates may change due to technological
developments, competition, changes in market
conditions and other factors and may result in
changes in the estimated useful life and in the
depreciation and amortisation charges.
b. Defined benefit plans
The cost of the defined benefit gratuity plan and
the present value of the gratuity obligation are
determined using actuarial valuations. An actuarial
valuation involves making various assumptions that
may differ from actual developments in the future.
These include the determination of the discount
rate; future salary increases and mortality rates. Due
to the complexities involved in the valuation and its
long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions. In
determining the appropriate discount rate for plans
operated in India, the management considers the
interest rates of government bonds where remaining
maturity of such bond correspond to expected term of
defined benefit obligation.
The mortality rate is based on publicly available
mortality tables. Those mortality tables tend to change
only at interval in response to demographic changes.
Future salary increases and gratuity increases are
based on expected future inflation rates.
All assumptions are reviewed at each reporting date.
c. Provision for income tax and deferred tax assets
The Company uses judgements based on the relevant
rulings in the areas of allowances and disallowances
which is exercised while determining the provision for
income tax. A deferred tax asset is recognised to the
extent that it is probable that future taxable profit will
be available against which the deductible temporary
differences, tax losses and unabsorbed depreciation
can be utilised. Accordingly, the Company exercises
its judgement to reassess the carrying amount of
deferred tax assets at the end of each reporting
period.
d. Recognition and measurement of other provisions
The recognition and measurement of other provisions
are based on the assessment of the probability of
an outflow of resources, and on past experience and
circumstances known at the balance sheet date.
The actual outflow of resources at a future date may
therefore vary from the amount included in other
provisions.
e. Provision for expected credit losses (ECL) of trade
receivables
The Company uses a provision matrix to calculate
ECLs for trade receivables. The provision rates are
based on days past due for Groupings of various
customer segments that have similar loss patterns
(i.e., by aging of receivables after considering letters
of credit and other forms of security).
The provision matrix is initially based on the
Company''s historical observed default rates. At
every reporting date, the historical observed default
rates are updated. The Company''s historical credit
loss experience and forecast of economic conditions
may also not be representative of customerâs actual
default in the future.
f. Measurement of fair values
The Companyâs material accounting policies and
disclosures require the measurement of fair values,
for both financial and non-financial assets and
liabilities.
The Company has an established control framework
with respect to the measurement of fair values,
which includes overseeing all significant fair value
measurements, including Level 3 fair values by the
management. The management regularly reviews
significant unobservable inputs and valuation
adjustments. If third party information, such as
broker quotes or pricing services, is used to measure
fair values, then the management assesses the
evidence obtained from the third parties to support
the conclusion that such valuations meet the
requirements of Ind AS, including the level in the fair
value hierarchy in which such valuations should be
classified.
When measuring the fair value of a financial asset
or a financial liability, the Company uses observable
market data as far as possible. Fair values are
categorised 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).
I f 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
categorised 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
recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during
which the change has occurred.
5 Standards issued but not yet effective
Ministry of Corporate Affairs (âMCAâ) 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, 2025,
MCA has notified a new Accounting Standard Ind AS 117
on Insurance Contracts and a amendment to Ind AS 116
on Leases to existing standards however these are not
applicable to the Company.
6 Material accounting policies:
The accounting policies set out below have been applied
consistently to the periods presented in the financial
statements.
a. Revenue and other income
Revenue recognition
i. The Company recognises revenue from sale
of goods measured upon satisfaction of
performance obligation which is at a point of
time when the control of goods is transferred
to the customer. Revenue is measured based on
transaction price, which is the consideration,
adjusted for estimated returns and allowances,
discounts and volume rebates, if any, as specified
in the contracts with the customers. Sales are
exclusive of Goods and Service Tax (GST).
ii. Export incentives received pursuant to the Duty
Drawback Scheme and Remission of Duties
and Taxes on Exported Products (RoDTEP) are
accounted on an accrual basis, to the extent it is
probable that realization is certain.
Other income
i Interest income is recognized on a time
proportionate basis, taking into account the
amount outstanding and the rates applicable.
ii Dividend income is recognized when the
Companyâs right to receive dividend is
established by the reporting date.
b. Property, plant and equipment and depreciation
Recognition and measurement
i. Items of property, plant and equipment are
stated at cost less accumulated depreciation
and amortisation and accumulated impairment
losses, if any. Cost includes taxes, non
refundable duties and taxes, freight and
other incidental expenses directly related to
acquisition/construction and installation of the
assets. Any trade discounts and rebates are
deducted in arriving the purchase price. Interest
on borrowings to finance acquisition of property,
plant and equipment during qualifying period is
capitalized.
ii. Leasehold improvements represent expenses
incurred towards civil work and interior
furnishings on the leased premises.
iii. An asset is eliminated from the financial
statements on disposal or when no further
benefit is expected from its use and disposal.
Gains / losses arising from disposal of property,
plant and equipment carried at cost are
recognised in the Statement of Profit and Loss.
iv. Capital work-in-progress includes assets
not ready for their intended use and related
incidental expenses and attributable interest.
v. The Company has elected to continue with
the carrying value of all its property, plant and
equipment as recognized in the standalone
financial statements as at the date of transition
to Ind AS, measured as per the previous GAAP
and use that as the deemed cost as at the
transition date pursuant to the exemption under
Ind AS 101.
Subsequent expenditure
vi. Subsequent expenditure is capitalised only if it
is probable that the future economic benefits
associated with the expenditure will flow to the
Company.
Useful life
vii. The Company has reviewed its policy for
providing depreciation on its tangible assets and
has also reassessed their useful lives as per Part
C of Schedule II of the Act. The revised useful
lives, as assessed by the management, match
those specified in Part C of Schedule II of the
Act, for all classes of tangible assets.
The estimated useful life of assets are as follows:
Depreciation
vii. Depreciation on tangible fixed assets other
than plant and equipment and residential flat
included under buildings has been provided on
Written Down Value method and on plant and
equipment and on residential flat included under
buildings on Straight Line Method. Depreciation
is provided on a pro-rata basis, i.e. from the date
on which asset is ready for use.
viii. Leasehold improvements and leasehold land
are amortized on Straight Line Method over the
unexpired primary period of lease.
:. Intangible assets
i. Intangible assets are stated at cost of
acquisition less accumulated amortisation and
accumulated impairment losses, if any.
ii. Costs relating to acquisition of technical
know-how and software are capitalized as
intangible assets. Further, the expenditure
incurred towards product studies during the
development of product dossiers are grouped
under "Intangible assets under development" to
the extent such expenditure meet the criteria of
intangible asset.
iii. Subsequent expenditure is capitalised only
when it increases the future economic benefits
embodied in the specific asset to which it
relates.
iv. An intangible asset is eliminated from the
financial statements on disposal or when no
further benefit is expected from its use and
disposal. Gains / losses arising from disposal are
recognised in the Statement of Profit and Loss.
v. Any expected loss is recognized immediately in
the Statement of Profit and Loss.
vi. Intangible assets that are ready for use are
amortized on a straight line basis as follows:
d. Impairment of non-financial assets
The carrying values of assets at each balance sheet
date are reviewed for impairment if any indication of
impairment exists.
If the carrying amount of the assets exceed the
estimated recoverable amount, an impairment is
recognized for such excess amount. The impairment
loss is recognized as an expense in the Statement of
Profit and Loss, unless the asset is carried at revalued
amount, in which case any impairment loss of the
revalued asset is treated as a revaluation decrease to
the extent a revaluation reserve is available for that
asset.
The recoverable amount is the greater of the net
selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to
their present value based on an appropriate discount
factor.
When there is indication that an impairment loss
recognized for an asset (other than a revalued asset)
in earlier accounting periods no longer exists or may
have decreased, such reversal of impairment loss
is recognized in the Statement of Profit and Loss,
to the extent the amount was previously charged to
the Statement of Profit and Loss. In case of revalued
assets such reversal is not recognized.
e. Foreign currency transactions
i. Functional and presentation currency -
Items included in these standalone financial
statements are measured using the currency of
the primary economic environment in which the
entity operates (âthe functional currencyâ). These
standalone financial statements are presented
in Indian rupee (INR), which is the Companyâs
functional and presentation currency.
ii. Initial recognition - Foreign currency transactions
are recorded in the functional currency, by
applying to the foreign currency amount the
exchange rate between the functional currency
and the foreign currency at the date of the
transaction. All exchange differences arising
on settlement/conversion on foreign currency
transactions are included in the Statement of
Profit and Loss in the period in which they arise.
iii. Subsequent measurement- Monetary assets
and liabilities denominated in foreign currencies
are translated into the functional currency at
the exchange rate at the reporting date. Non¬
monetary assets and liabilities that are measured
at fair value in a foreign currency are translated
into the functional currency at the exchange rate
when the fair value was determined. Foreign
currency differences are generally recognised in
the Statement of Profit and Loss. Non-monetary
items that are measured based on historical
cost in a foreign currency are not translated.
f. Share-based payments
Employees Stock Option Plans (âESOPsâ):
Equity-settled plans are accounted at fair value
as at the grant date. The fair value of the share-
based option is determined at the grant date using a
market-based option valuation model (Black Scholes
Option Valuation Model). The fair value of the option
is recorded as compensation expense amortized over
the vesting period of the options, with a corresponding
increase in Reserves and Surplus under the head
"Employee Stock Option Reserve". On exercise of the
option, the proceeds are recorded as share capital.
The cumulative expense recognized for equity-settled
transactions at each reporting date until the vesting
date reflects the extent to which the vesting period
has expired and the Company''s best estimate of the
number of equity instruments that will ultimately
vest. The charge or credit to the Statement of Profit
and Loss for a period represents the movement in
cumulative expense recognized as at the beginning
and end of that period and is recognized in employee
benefits expense.
Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood of
the conditions being met is assessed as part of the
Company''s best estimate of the number of equity
instruments that will ultimately vest.
Employee stock options provided to the employees
of subsidiary under a group plan is accounted as
capital contribution to the subsidiary, if no payments
for related costs from the subsidiary to the Company
is agreed, and recorded as investments in the
standalone financial statements.
g. Inventories
i. Inventories of raw materials, packing materials,
consumables, finished goods and work-in
-process are valued at lower of cost or net
realizable value on an item-by-item basis.
ii. Cost of raw materials, consumables and packing
materials is determined on weighted average
basis. Cost of finished goods and stock-in
-process is determined by considering materials,
labour costs, conversion costs, including an
appropriate share of fixed production overheads
based on normal operating capacity and other
related costs incurred in bringing the inventories
to their present condition and location.
Net realisable value is the estimated selling
price in the ordinary course of business, less
the estimated costs of completion and the
estimated costs necessary to make the sale.
Raw materials and other supplies held for use
in the production of inventories are not written
down below cost except in case where material
prices have declined and it is estimated that the
cost of the finished product will exceed its net
realisable value.
h. Employee benefits
Employee benefits payable wholly within twelve
months of receiving employees services are classified
as short-term employee benefits. The short term
employee benefits are accounted on undiscounted
basis during the accounting period based on services
rendered by employees.
i. Defined contribution plans
A defined contribution plan is a post¬
employment benefit plan under which an entity
pays specified contributions to a separate
entity and has no obligation to pay any further
amounts. The Company contributes to statutory
provident fund in accordance with Employeesâ
Provident Fund and Miscellaneous Provisions
Act, 1952 that is a defined contribution plan and
contribution paid or payable is recognized as
an expense in the period in which the employee
renders services.
Superannuation benefits, a defined contribution
plan, has been funded with Life Insurance
Corporation of India and the contribution is
charged to Statement of Profit and Loss, when
the contribution to the Fund is due.
ii. Defined benefit plans
The Company provides for Gratuity benefit and
Compensated Absences, which are defined benefit
plans, covering all its eligible employees. Liability
towards gratuity benefits and compensated
absences expected to occur after twelve months,
are determined using the Projected Unit Credit
Method. Actuarial valuations are carried out at the
balance sheet date. Remeasurements of the net
defined benefit liability, which comprise actuarial
gains and losses, the return on plan assets
(excluding interest) and the effect of the asset
ceiling (if any, excluding interest), are recognised in
OCI. The retirement benefit obligation recognized
in the balance sheet represents the present value
of the defined benefit obligation as adjusted for
unrecognized past service cost, and as reduced
by the fair value of scheme assets. The gratuity
benefit and compensated absences scheme is
funded with the Life Insurance Corporation of India
(LIC).
The short term provision for compensated
absences has been calculated on undiscounted
basis, based on the balance of leave available
over and above the maximum accumulation
allowed as per the Company policy.
i. Income taxes
Income tax expense comprises current tax (i.e. amount
of tax for the period determined in accordance with
the income tax law), deferred tax charge or credit
(reflecting the tax effects of timing differences between
accounting income and taxable income for the period)
and Minimum Alternate Tax (MAT) credit entitlement.
Current tax
Current income tax relating to items recognised
outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity).
Current tax items are recognised in correlation to the
underlying transaction either in OCI or directly in equity.
Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred tax
Deferred tax is recognised in respect of temporary
difference between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses
can be utilised.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax
assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity).
Deferred tax items are recognised in correlation to the
underlying transaction either in Other Comprehensive
Income (OCI) or directly in equity.
Deferred tax assets and liabilities are offset only if:
a) The entity has a legally enforceable right to
set off current tax assets against current tax
liabilities; and
b) The deferred tax assets and the deferred tax
liabilities relate to income taxes levied by the same
taxation authority on the same taxable entity.
Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in
other comprehensive income or in equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity
j. Borrowing costs
Borrowing costs are interest and other costs that the
Company incurs in connection with the borrowing of
funds and is measured with reference to the Effective
Interest Rate (EIR) applicable to the respective
borrowing. Borrowing cost include interest costs
measured at EIR and exchange differences arising
from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs incurred on constructing or acquiring
a qualifying asset are capitalized as cost of that asset
until it is ready for its intended use. A qualifying asset
is an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale. All
other borrowing costs are charged to revenue and
recognized as an expense in the Statement of Profit
and Loss.
k. Research and development costs
Research and development costs incurred for
development of products are expensed as incurred,
except for development costs that relate to the design
and testing of new or improved materials, products
or processes, which are recognized as an intangible
asset to the extent that it is technically feasible to
complete the development of such asset and future
economic benefits are expected to be generated
from such assets. Capital expenditure on research
and development is included as part of assets and
depreciated on the same basis as other assets.
Mar 31, 2024
1 CORPORATE INFORMATION
Advanced Enzyme Technologies Limited (''the Company'') (CIN: L24200MH1989PLC051018) is engaged in the business of manufacturing and sales of enzymes.
The Company is a public limited company and was incorporated on 15 March 1989 under the provisions of Companies Act, 1956 and is domiclied in India. The corporate office of the Company is situated at Sun Magnetica, A Wing, 5th floor, Near LIC Service Road, Louis Wadi, Thane (West) - 400 604.
The equity shares of the Company are listed on National Stock Exchange of India Limited (NSE) via Id ADVENZYMES and on BSE Limited (BSE) via Id 540025.
The Board of Directors approved the standalone financial statements for the year ended 31 March 2024 and authorised for issue on 11 May 2024.
These standalone financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules as amended from time to time
These Standalone financial statements have been prepared on a historical cost basis, except for certain financial instruments and defined benefit plans which are measured at fair value at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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.
All the assets and liabilities have been classified as current or non current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained the operating cycle to be 12 months.
The statement of cash flows has been prepared under indirect method, whereby profit or loss 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 items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value to be cash equivalents
Functional and presentation currency:
These Standalone financial statements are presented in Indian rupees, which is the Companyâs functional currency. All amounts have been rounded off to two decimal places to the nearest million, unless otherwise indicated.
Going concern:
These standalone financial statements are prepared on going concern basis.
The preparation of standalone financial statements in conformity with Ind AS requires the management to make use of judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities. The estimates and assumptions used in accompanying financial statements are based upon managementâs evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying standalone financial statements and reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 March 2024 are as follows:
a. Depreciation and amortisation
Depreciation and amortisation is based on management estimates of the future useful lives of the property, plant and equipment and intangible assets. The management estimates the useful lives of tangible assets similar to the useful life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of
the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturersâ warranties and maintenance support.
Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the depreciation and amortisation charges.
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds where remaining maturity of such bond correspond to expected term of defined benefit obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
All assumptions are reviewed at each reporting date.
c. Provision for income tax and deferred tax assets
The Company uses judgements based on the relevant rulings in the areas of allowances and disallowances which is exercised while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, tax losses and unabsorbed depreciation can be utilised. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.
d. Recognition and measurement of other provisions
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.
e. Provision for expected credit losses (ECL) of trade receivables
The Company uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for Groupings of various customer segments that have similar loss patterns (i.e., by aging of receivables after considering letters of credit and other forms of security).
The provision matrix is initially based on the Company''s historical observed default rates. At every reporting date, the historical observed default rates are updated. The Company''s historical credit loss experience and forecast of economic conditions may also not be representative of customerâs actual default in the future.
The Companyâs material accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including Level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses
observable market data as far as possible. Fair values are categorised 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).
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 categorised 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 recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
5 STANDARDS ISSUED BUT NOT YET EFFECTIVE
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.
6 MATERIAL ACCOUNTING POLICIES:
The accounting policies set out below have been applied consistently to the periods presented in the financial statements.
Revenue recognition
i. The Company recognises revenue from sale of goods measured upon satisfaction of performance obligation which is at a point of time when the control of goods is transferred to the customer. Revenue is measured based on transaction price, which is the consideration, adjusted for estimated returns and allowances, discounts and volume rebates, if any, as specified in the contracts with the customers. Sales are exclusive of Goods and Service Tax (GST).
ii. Export incentives received pursuant to the Duty Drawback Scheme and Remission of Duties and Taxes on Exported Products (RoDTEP) are accounted on an accrual basis, to the extent it is probable that realization is certain.
i Interest income is recognized on a time proportionate basis, taking into account the amount outstanding and the rates applicable.
ii Dividend income is recognized when the Companyâs right to receive dividend is established by the reporting date.
b. Property, plant and equipment and depreciation
Recognition and measurement
i. Items of property, plant and equipment are stated at cost less accumulated depreciation and amortisation and accumulated impairment losses, if any. Cost includes taxes, non refundable duties and taxes, freight and other incidental expenses directly related to acquisition/construction and installation of the assets. Any trade discounts and rebates are deducted in arriving the purchase price. Interest on borrowings to finance acquisition of property, plant and equipment during qualifying period is capitalized.
ii. Leasehold improvements represent expenses incurred towards civil work and interior furnishings on the leased premises.
iii. An asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal of property, plant and equipment carried at cost are recognised in the Statement of Profit and Loss.
iv. Capital work-in-progress includes assets not ready for their intended use and related incidental expenses and attributable interest.
v. The Company has elected to continue with the carrying value of all its property, plant and equipment as recognized in the standalone financial statements as at the
date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101.
Subsequent expenditure
vi. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Useful life
vii. The Company has reviewed its policy for providing depreciation on its tangible assets and has also reassessed their useful lives as per Part C of Schedule II of the Act. The revised useful lives, as assessed by the management, match those specified in Part C of Schedule II of the Act, for all classes of tangible assets.
The estimated useful life of assets are as follows:
|
Particulars |
Estimated useful life |
|
Building |
30 - 60 years |
|
Plant and equipment |
10 - 25 years |
|
Furniture and fixture |
10 years |
|
Vehicles |
8 years |
|
Office equipments |
5 years |
|
Computer and data processing equipment |
3 - 6 years |
Depreciation
viii. Depreciation on tangible fixed assets other than plant and equipment and residential flat included under buildings has been provided on Written Down Value method and on plant and equipment and on residential flat included under buildings on Straight Line Method. Depreciation is provided on a prorata basis, i.e. from the date on which asset is ready for use.
ix. Leasehold improvements and leasehold land are amortized on Straight Line Method over the unexpired primary period of lease.
i. Intangible assets are stated at cost of acquisition less accumulated amortisation and accumulated impairment losses, if any.
ii. Costs relating to acquisition of technical know-how and software are capitalized as intangible assets. Further, the expenditure incurred towards product studies during the development of product dossiers are grouped under âIntangible assets under development" to the extent such expenditure meet the criteria of intangible asset.
iii. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
iv. An intangible asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the Statement of Profit and Loss.
v. Any expected loss is recognized immediately in the Statement of Profit and Loss.
vi. Intangible assets that are ready for use are amortized on a straight line basis as follows:
|
Particulars |
Estimated useful life |
|
Computer software |
4 years |
|
Product dossiers |
10 years |
d. Impairment of non-financial assets
The carrying values of assets at each balance sheet date are reviewed for impairment if any indication of impairment exists.
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods no longer
exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognized.
e. Foreign currency transactions
i. Functional and presentation currency -
Items included in these standalone financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currencyâ). These standalone financial
statements are presented in Indian rupee (INR), which is the Companyâs functional and presentation currency.
ii. Initial recognition - Foreign currency
transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between
the functional currency and the foreign currency at the date of the transaction. All exchange differences arising on settlement/ conversion on foreign currency transactions are included in the Statement of Profit and Loss in the period in which they arise.
iii. Subsequent measurement- Monetary
assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency
differences are generally recognised in the Statement of Profit and Loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
Employees Stock Option Plans ("ESOPs"):
Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortized over the vesting period of
the options, with a corresponding increase in Reserves and Surplus under the head âEmployee Stock Option account". On exercise of the option, the proceeds are recorded as share capital.
The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest.
Employee stock options provided to the employees of subsidiary under a group plan is accounted as capital contribution to the subsidiary, if no payments for related costs from the subsidiary to the Company is agreed, and recorded as investments in the standalone financial statements.
i. Inventories of raw materials, packing
materials, consumables, finished goods and work in process are valued at lower of cost or net realizable value on an item-by-item basis.
ii. Cost of raw materials, consumables
and packing materials is determined on weighted average basis. Cost of finished goods and stock in process is determined by considering materials, labour costs,
conversion costs, including an appropriate share of fixed production overheads based on normal operating capacity and other related costs incurred in bringing the inventories to their present condition and location.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
the estimated costs necessary to make the sale. Raw materials and other supplies held for use in the production of inventories are not written down below cost except in case where material prices have declined and it is estimated that the cost of the finished product will exceed its net realisable value.
Employee benefits payable wholly within twelve months of receiving employees services are classified as short-term employee benefits. The short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.
A defined contribution plan is a postemployment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company contributes to statutory provident fund in accordance with Employeesâ Provident Fund and Miscellaneous Provisions Act, 1952 that is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the employee renders services.
Superannuation benefits, a defined contribution plan, has been funded with Life Insurance Corporation of India and the contribution is charged to Statement of Profit and Loss, when the contribution to the Fund is due.
The Company provides for Gratuity benefit and Compensated Absences, which are defined benefit plans, covering all its eligible employees. Liability towards gratuity benefits and compensated absences expected to occur after twelve months, are determined using the Projected Unit Credit Method. Actuarial valuations are carried out at the balance sheet date. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The retirement
benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. The gratuity benefit and compensated absences scheme is funded with the Life Insurance Corporation of India (LIC).
The short term provision for compensated absences has been calculated on undiscounted basis, based on the balance of leave available over and above the maximum accumulation allowed as per the Company policy.
Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period) and Minimum Alternate Tax (MAT) credit entitlement.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is recognised in respect of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry
forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income (OCI) or directly in equity.
Deferred tax assets and liabilities are offset only if:
a) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the Effective Interest Rate (EIR) applicable to the respective borrowing. Borrowing cost include interest costs measured at EIR and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs incurred on constructing or acquiring a qualifying asset are capitalized as cost of that asset until it is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue and recognized as an expense in the Statement of Profit and Loss.
k. Research and development costs
Research and development costs incurred for development of products are expensed as incurred, except for development costs that relate to the design and testing of new or improved materials, products or processes, which are recognized as an intangible asset to the extent that it is technically feasible to complete the development of such asset and future economic benefits are expected to be generated from such assets. Capital expenditure on research and development is included as part of assets and depreciated on the same basis as other assets.
l. Provisions and contingencies
Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When 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 contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable.
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether:
(i) the contact involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
As a lessee, the Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companyâs incremental borrowing rate.
Generally, the Company uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the fixed payments, including in substance fixed payments;
The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets.
The Companyâs leases mainly comprise office premises. The Companyâs leases land and buildings for warehouse facilities.
Cash comprises of cash at bank and in hand and cash equivalents comprise of short-term bank deposits with an original maturity of three months or less.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
o. Financial Instruments a. Financial assetsi. Recognition and initial measurement
Trade receivables and debt instruments issued are initially recognised when they are originated. All other financial assets are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset is initially measured at fair value. In the case of financial assets which are recognised at fair value through profit and loss (FVTPL), the transaction costs are recognised in the Statement of Profit and Loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset.
On initial recognition, a financial asset is classified as measured at
- amortised cost; or
- fair value through profit or loss (FVTPL); or
- fair value through other comprehensive income (FVOCI) - debt investment or equity investment
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment- byinvestment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
iii. Subsequent measurement and gains and lossesFinancial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in Statement of Profit and Loss.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is recognised in Statement of Profit and Loss.
These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to Statement of Profit and Loss.
These assets are subsequently measured at fair value. Dividends are recognised as income in Statement of Profit and Loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to Statement of Profit and Loss.
iv. Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
v. Impairment of financial assets
In accordance with Ind AS 109, the company applies Expected Credit Loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets and credit risk exposure:
i. Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
ii. Trade receivables.
The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
vi. Investment in subsidiaries
Investment in subsidiaries is carried at cost in the standalone financial statements.
i. Recognition and initial measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial liability is initially measured at fair value. In the case of financial liabilities which are recognised at fair value through profit and loss (FVTPL), the transaction costs are recognised in the Statement of Profit and Loss. In other cases, the transaction costs are attributed to the acquisition or issue of financial liability.
ii. Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or 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 recognised in Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in Statement of Profit and Loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
v. Financial guarantee contract
Financial guarantee contracts issued on behalf of a subsidiary is accounted as capital contribution to the subsidiary, if no payments from the subsidiary to the Company is agreed, and recorded as investments in the standalone financial statement.
p. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2023
1 OVERVIEW OF THE COMPANY
Advanced Enzyme Technologies Limited (âthe Company'') was incorporated on 15 March 1989 under the provisions of Companies Act, 1956. The Company is engaged in the business of manufacturing and sales of enzymes. The equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) via id ADVENZYMES and on BSE Limited (BSE) via Id 540025 on 1 August 2016.
2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with the section 133 of the Companies Act 2013 (âthe 2013 Actâ), read with Rule 3 of the Companies (Indian Accounting Standards) Rules 2015, and Companies (Indian Accounting Standards) Rules, 2016. The standalone financial statements were authorised for issue by the Company''s Board of Directors on 13 May 2023.
All the assets and liabilities have been classified as current or non current as per the Companyâs normal operating cycle and other criteria set out in Schedule III to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained the operating cycle to be 12 months.
Functional and presentation currency:
These Standalone financial statements are presented in Indian rupees, which is the Companyâs functional currency. All amounts have been rounded off to two decimal places to the nearest million, unless otherwise indicated.
The Standalone financial statements have been prepared on a historical cost basis, except for the following:
⢠certain financial assets and liabilities (including derivative instrument) that are measured at fair value;
⢠defined benefit plans - plan assets measured at fair value
The preparation of financial statements in conformity with Ind AS requires the management to make use of judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities. The estimates
and assumptions used in accompanying financial statements are based upon managementâs evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying standalone financial statements and reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 March 2023 are as follows:
a. Property, plant and equipment
Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalised. Useful lives of tangible assets are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturersâ warranties and maintenance support.
b. Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
c. Recognition of deferred tax assets
Deferred tax assets are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilised business loss and depreciation carryforwards and tax credits. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised.
d. Recognition and measurement of other provisions
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.
e. Discounting of long-term financial assets / liabilities
All financial assets / liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities/assets which are required to subsequently be measured at amortised cost, interest is accrued using the effective interest method.
f. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting. 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.
g. Fair value of financial instruments Derivatives are carried at fair value. Derivatives includes foreign currency forward contracts. Fair value of foreign currency forward contracts are determined using the fair value reports provided by respective merchant bankers.
The Companyâs accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including Level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised 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).
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 categorised 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 recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
3A STANDARDS ISSUED BUT NOT YET EFFECTIVE Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards. On March 31, 2023, the Ministry of Corporate Affairs (âMCAâ) through notifications, amended the existing Ind AS. The same shall come into force from annual reporting period beginning on or after April 1, 2023. Key Amendments relating to the same where financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:
(i) Disclosure of Accounting Policies - Amendment to Ind AS 1 Presentation of financial statements The MCA issued amendments to Ind AS 1, providing guidance to help entities meet the accounting policy disclosure requirements. The amendments aim to make accounting policy disclosures more informative by replacing the requirement to disclose âsignificant accounting policiesâ with âmaterial accounting policy informationâ. The amendments also provide guidance under what circumstance, the accounting policy information is likely to be considered material and therefore requiring disclosure.
The amendments are effective for annual reporting periods beginning on or after 01 April 2023. The
Company is currently revisiting their accounting policy information disclosures to ensure consistency with the amended requirements.
(ii) Definition of Accounting Estimates -Amendments to Ind AS 8 Accounting policies, changes in accounting estimates and errors The amendment to Ind AS 8, which added the definition of accounting estimates, clarifies that the effects of a change in an input or measurement technique are changes in accounting estimates, unless resulting from the correction of prior period errors. These amendments clarify how entities make the distinction between changes in accounting estimate, changes in accounting policy and prior period errors. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period.
The amendments are effective for annual reporting periods beginning on or after 01 April 2023. The amendments are not expected to have a material impact on the Companyâs financial statements.
(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12 Income taxes
The amendment to Ind AS 12, requires entities to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and liabilities.
The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, entities should recognise deferred tax assets (to the extent that it is probable that they can be utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary differences associated with:
⢠right-of-use assets and lease liabilities, and
⢠decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part of the cost of the related assets.
The cumulative effect of recognising these adjustments is recognised in retained earnings, or another component of equity, as appropriate. Ind AS 12 did not previously address how to account for the tax effects of on-balance sheet leases and similar transactions and various approaches were considered acceptable. Some entities may have already accounted for such transactions consistent with the new requirements. These entities will not be affected by the amendments.
The Company is currently assessing the impact of the amendments.
iv) The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications. The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
4 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to the periods presented in the financial statements.
a. Revenue and other income Revenue recognition
i. The Company recognises revenue from sale of goods measured upon satisfaction of performance obligation which is at a point of time when the control of goods is transferred to the customer. Revenue is measured based on transaction price, which is the consideration, adjusted for estimated returns and allowances, discounts and volume rebates, if any, as specified in the contracts with the customers. Sales are exclusive of Goods and Service Tax (GST).
ii. Export incentives received pursuant to the Duty Drawback Scheme and Merchandise Export from India Scheme are accounted on an accrual basis, to the extent it is probable that realization is certain.
i Interest income is recognized on a time proportionate basis, taking into account the amount outstanding and the rates applicable.
ii Dividend income is recognized when the Companyâs right to receive dividend is established by the reporting date.
b. Property, plant and equipment and depreciation
Recognition and measurement
i. Items of property, plant and equipment are stated at cost less accumulated depreciation and amortisation and accumulated impairment losses, if any. Cost includes taxes, non refundable duties and taxes, freight and other incidental expenses directly related to acquisition/construction and installation of the assets. Any trade discounts and rebates are deducted in arriving the purchase price. Interest on borrowings to finance acquisition of property, plant and equipment during qualifying period is capitalized.
ii. Leasehold improvements represent expenses incurred towards civil work and interior furnishings on the leased premises.
iii. An asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal of property, plant and equipment carried at cost are recognised in the Statement of Profit and Loss.
iv. Capital work-in-progress includes assets not ready for their intended use and related incidental expenses and attributable interest.
v. The Company has elected to continue with the carrying value of all its property, plant and equipment as recognized in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101.
Subsequent expenditure
vi. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Depreciation
vii. Depreciation on tangible fixed assets other than plant and equipment and residential flat included under buildings has been provided on Written Down Value method and on plant and equipment and on residential flat included under buildings on Straight Line Method. Depreciation is provided on a prorata basis, i.e. from the date on which asset is ready for use.
|
The estimated useful life of assets are as follows: |
|
|
Particulars |
Estimated useful life |
|
Building |
30 - 60 years |
|
Plant and equipment |
10 - 25 years |
|
Furniture and fixture |
10 years |
|
Vehicles |
8 years |
|
Office equipments |
5 years |
|
Computer and data processing equipment |
3 - 6 years |
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
viii. Leasehold improvements and leasehold land are amortized over the unexpired primary period of lease.
ix. The Company has reviewed its policy for providing depreciation on its tangible assets and has also reassessed their useful lives as per Part C of Schedule II of the Act. The revised useful lives, as assessed by the management, match those specified in Part C of Schedule II of the Act, for all classes of tangible assets.
c. Intangible assets
i. Intangible assets are stated at cost of acquisition less accumulated amortisation and accumulated impairment losses, if any.
ii. Costs relating to acquisition of technical know-how and software are capitalized as intangible assets. Further, the expenditure incurred towards product studies during the development of product dossiers are grouped under "Intangible assets under development" to the extent such expenditure meet the criteria of intangible asset. Intangible assets under development are tested for impairment annually to determine if recoverable amount of an asset is greater of its value in use and its fair value less costs to sell.
iii. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
iv. An intangible asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the Statement of Profit and Loss.
v. Any expected loss is recognized immediately in the Statement of Profit and Loss.
vi. Intangible assets that are ready for use are amortized on a straight line basis as follows:
|
Particulars |
Estimated useful |
|
life |
|
|
Computer software |
4 years |
|
Product dossiers |
10 years |
d. Non-current assets held for sale
Non-current assets classified as held for sale, if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, are generally measured at the lower of their carrying amount and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in Statement of Profit and Loss. Once classified as held-for-sale they are no longer depreciated.
e. Impairment of non-financial assets
The carrying values of assets at each balance sheet date are reviewed for impairment if any indication of impairment exists.
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognized.
f. Foreign currency transactions
i. Initial recognition - Foreign currency transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.
ii. Subsequent measurement- Monetary
assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in the Statement of Profit and Loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
iii. Exchange differences - All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Statement of Profit and Loss in the period in which they arise.
g. Stock based Compensation:
Employees Stock Option Plans (âESOPsâ): Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortized over the vesting period of the options, with a corresponding increase in Reserves and Surplus under the head "Employee Stock Option account". On exercise of the option, the proceeds are recorded as share capital.
The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest. Employee stock options provided to the employees of subsidiary under a group plan is accounted as capital contribution to the subsidiary, if no payments for related costs from the subsidiary to the Company is agreed, and recorded as investments in the standalone financial statements.
i. Inventories of raw materials, packing materials, consumables, finished goods and work in process are valued at lower of cost or net realizable value on an item-by-item basis.
ii. Cost of raw materials, consumables and packing materials is determined on weighted average basis. Cost of finished goods and stock in process is determined by considering materials, labour costs, conversion costs, including an appropriate share of fixed production overheads based on normal operating capacity and other related costs incurred in bringing the inventories to their present condition and location.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Raw materials and other supplies held for use in the production of inventories are not written down below cost except in case where material prices have declined and it is estimated that the cost of the finished product will exceed its net realisable value.
During the previous year, valuation policy for raw materials, consumables and packing materials inventory was changed from first in first out to Weighted average to align with valuation methods for finished goods and stock in process. The impact of the change in accounting policy for raw material and packing material as at 31 March 2020 is insignificant to the financial statements.
i. Employee benefits
Employee benefits payable wholly within twelve months of receiving employees services are classified as short-term employee benefits. The short term employee benefits are accounted on
undiscounted basis during the accounting period based on services rendered by employees.
i. Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company contributes to statutory provident fund in accordance with Employeesâ Provident Fund and Miscellaneous Provisions Act, 1952 that is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the employee renders services. Superannuation benefits, a defined contribution plan, has been funded with Life Insurance Corporation of India and the contribution is charged to Statement of Profit and Loss, when the contribution to the Fund is due.
ii. Defined benefit plans
The Company provides for Gratuity benefit and Compensated Absences, which are defined benefit plans, covering all its eligible employees. Liability towards gratuity benefits and compensated absences expected to occur after twelve months, are determined using the Projected Unit Credit Method. Actuarial valuations are carried out at the balance sheet date. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. The gratuity benefit and compensated absences scheme is funded with the Life Insurance Corporation of India (LIC).
The short term provision for compensated absences has been calculated on undiscounted basis, based on the balance of leave available over and above the maximum accumulation allowed as per the Company policy.
j. Income taxes
Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income
and taxable income for the period) and Minimum Alternate Tax (MAT) credit entitlement.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax
Deferred tax is recognised in respect of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income (OCI) or directly in equity.
Deferred tax assets and liabilities are offset only if:
a) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity Minimum Alternate Tax
Minimum Alternate Tax (MAT) under the provisions of Income Tax Act, 1961 is recognized as deferred tax in the the Statement of Profit and Loss. The Company recognizes MAT credit available as an asset only when it is probable that the future economic benefit associated with it will flow to the Company i.e. the Company will pay normal income tax during the period for which MAT Credit is allowed to be carried forward. In the year in which the Company recognizes MAT Credit recognized as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, by way of credit to the Statement of Profit and Loss and shown as âDeferred taxâ MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid evidence no longer exists.
k. Borrowing costs
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the Effective Interest Rate (EIR) applicable to the respective borrowing. Borrowing cost include interest costs measured at EIR and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs incurred on constructing or acquiring a qualifying asset are capitalized as cost of that asset until it is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are
charged to revenue and recognized as an expense in the Statement of Profit and Loss.
l. Research and development costs
Research and development costs incurred for development of products are expensed as incurred, except for development costs that relate to the design and testing of new or improved materials, products or processes, which are recognized as an intangible asset to the extent that it is technically feasible to complete the development of such asset and future economic benefits are expected to be generated from such assets. Capital expenditure on research and development is included as part of assets and depreciated on the same basis as other assets.
m. Provisions and contingencies
Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When 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 contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable.
The Company has adopted Ind AS 116 effective from April 1 2019 using modified retrospective approach.
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether:
(i) the contact involves the use of an identified
asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
As a lessee, the Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companyâs incremental borrowing rate.
Generally, the Company uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the fixed payments, including in substance fixed payments;
The lease liability is measured at amortised cost using the effective interest method.
The Company has used number of practical expedients when applying Ind AS 116: - Shortterm leases, leases of low-value assets and single discount rate.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company
recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
The Companyâs leases mainly comprise office premises. The Companyâs leases land and buildings for warehouse facilities.
o. Cash and cash equivalents
Cash comprises of cash at bank and in hand and cash equivalents comprise of short-term bank deposits with an original maturity of three months or less.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
p. Operating cycle
Operating cycle is the time between the acquisition of assets for processing an their realization in cash or cash equivalents. Based on the nature of products/ activities of the Company, the management has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
q. Share issue expenses
Share issue expenses are adjusted against the Securities premium as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilization in the Securities premium. Share issue expenses in excess of the balance in the Securities premium is expensed in the Statement of Profit and Loss.
r. Financial Instrumentsa. Financial assets
i. Recognition and initial measurement
Trade receivables and debt instruments issued are initially recognised when they are originated. All other financial assets are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset is initially measured at fair value. In the case of financial assets which are recognised at fair value through profit and loss (FVTPL), the transaction costs are recognised in the Statement of Profit and
Loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset. ii. Classification
On initial recognition, a financial asset is classified as measured at
- amortised cost; or
- fair value through profit or loss (FVTPL); or
- fair value through other comprehensive income (FVOCI) - debt investment or equity investment
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
i. Recognition and initial measurement
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investmentâs fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment- byinvestment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described
above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
iii. Subsequent measurement and gains and losses
Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in Statement of Profit and Loss.
Financial assets at amortised cost These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is recognised in Statement of Profit and Loss. Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to Statement of Profit and Loss.
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in Statement of Profit and Loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to Statement of Profit and Loss.
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
v. Impairment of financial assets
In accordance with Ind AS 109, the company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
i. Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
ii. Trade receivables.
The application of simplified approach does not require the company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
vi. Investment in subsidiaries
Investment in subsidiaries is carried at cost in the standalone financial statements. b. Financial liabilities
i. Recognition and initial measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial liability is initially measured at fair value. In the case of financial liabilities which are recognised at fair value through profit and loss (FVTPL), the transaction costs are recognised in the Statement of Profit and
Loss. In other cases, the transaction costs are attributed to the acquisition or issue of financial liability.
ii. Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or 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 recognised in Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
iii. Derecognition
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in Statement of Profit and Loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the
Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
v. Financial guarantee contract
Financial guarantee contracts issued on behalf of a subsidiary is accounted as capital contribution to the subsidiary, if no payments from the subsidiary to the Company is agreed, and recorded as investments in the standalone financial statement.
vi. Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its interest rate risk. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at each reporting period. Any changes therein are generally recognised in the Statement of profit and loss.
s. Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2018
1 Overview of the Company
Advanced Enzyme Technologies Limited (''the Company'') was incorporated on 15 March 1989 under the provisions of Companies Act, 1956. The Company is engaged in the business of manufacturing and sales of enzymes. The equity shares of the Company were listed on National Stock Exchange of India Limited (NsE) via id ADVENZYMES and on BSE Limited (BSE) via Id 540025 on 1 August 2016. The registered office of the company is Sun Magnetica, A wing, 5th Floor, Near LIC Service Road, Louiswadi, Thane (W), Maharashtra - 400604
2 Basis of preparation of financial statements
"The Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with the Section 133 of the Companies Act 2013 ("the 2013 Act"), read with Rule 3 of the Companies (Indian Accounting Standards) Rule 2015, and Companies (Indian Accounting Standards) Rules, 2016. For all periods up to and for the year ended 31 March 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2016 (Indian GAAP). These financial statements are the Company''s first Ind AS financial statements and are covered by Ind AS 101, First-time adoption of Indian Accounting Standards. The transition to Ind AS has been carried out from the accounting principles generally accepted in India ("Indian GAAP") which is considered as the "Previous GAAP" for purposes of Ind AS 101. The financial statements were authorised for issue by the Company''s Board of Directors on 19 May 2018.
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained the operating cycle to be 12 months.
Functional and presentation currency:
These Standalone financial statements are presented in Indian rupees, which is the Company''s functional currency. All amounts have been rounded off to two decimal places to the nearest million, unless otherwise indicated.
Historical cost convention:
The Standalone financial statements have been prepared on a historical cost basis, except for the following:
- certain financial assets and liabilities (including derivative instrument) that are measured at fair value;
- defined benefit plans - plan assets measured at fair value"
3 Use of estimates
The preparation of financial statements in conformity with Ind AS requires the management to make use of judgements, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities. The estimates and assumptions used in accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying standalone financial statements and reviewed on an on-going basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
Assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 March 2018 are as follows:
a. Property, plant and equipment
Determination of the estimated useful lives of tangible assets and the assessment as to which components of the cost may be capitalised. Useful lives of tangible assets are based on the life prescribed in Schedule II of the Act. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
b. Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
c. Recognition of deferred tax assets
Deferred tax assets are recognised for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilised business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised.
d. Recognition and measurement of other provisions
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.
e. Discounting of long-term financial assets / liabilities
All financial assets / liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities/assets which are required to subsequently be measured at amortised cost, interest is accrued using the effective interest method.
f. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting. 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.
g. Fair value of financial instruments
Derivatives are carried at fair value. Derivatives includes foreign currency forward contracts. Fair value of foreign currency forward contracts are determined using the fair value reports provided by respective merchant bankers.
h. Measurement of fair values
The Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values, which includes overseeing all significant fair value measurements, including Level 3 fair values by the management. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised 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).
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 categorised 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 recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
3A Standards issued but not yet effective
Ministry of Corporate Affairs ("MCA"), on 28 March 2018, through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the new standard for revenue recognition and amended certain existing Ind ASs which are effective for annual periods beginning on or after
1 April 2018
Ind AS 115- Revenue from Contract with Customers:
Ind AS 115 will supersede the existing revenue recognition standard ''Ind AS 18 - Revenue''. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers. The Company is evalvating the requirements of the Ind AS 115 including its effect on the standalone financial statements.
Ind AS 21- The effect of changes in Foreign exchange rates
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the nonmonetary asset or non-monetary liability arising from the payment or receipt of advance consideration.
The amendment will come into force from 1 April 2018. The Company does not expect the effect of this on the standalone financial statements to be material based on preliminary evaluation.
4 Significant accounting policies:
The accounting policies set out below have been applied consistently to the periods presented in the financial statements.
a. Revenue recognition
i. Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.
ii. Sale of goods is recognized as revenue when the significant risks and rewards of ownership of the goods have passed to the buyer. Revenues are recognized when collectability of the resulting receivable is reasonably assured. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Sales are inclusive of excise duty and net of sales tax, goods and service tax (GST) and discounts.
iii. Export incentives received pursuant to the Duty Drawback Scheme and Merchandise Export from India Scheme are accounted on an accrual basis, to the extent it is probable that realization is certain.
iv. Interest income is recognized on a time proportionate basis, taking into account the amount outstanding and the rates applicable.
v. Dividend income is recognized when the Company''s right to receive dividend is established by the reporting date.
vi. Income from services rendered is recognized based on agreements with the customers using the proportionate completion method, when services are performed and no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering of service. Income is recognized net of taxes, as applicable.
b. Property, plant and equipment and depreciation Recognition and measurement
i. Items of property, plant and equipment are stated at cost less accumulated depreciation and amortisation and accumulated impairment losses, if any. Cost includes taxes, non-refundable duties and taxes, freight and other incidental expenses directly related to acquisition/construction and installation of the assets. Any trade discounts and rebates are deducted in arriving the purchase price. Interest on borrowings to finance acquisition of fixed assets during qualifying period is capitalized.
ii. Leasehold improvements represent expenses incurred towards civil work and interior furnishings on the leased premises.
iii. An asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal of fixed assets carried at cost are recognised in the Statement of Profit and Loss.
iv. Capital work-in-progress includes assets not ready for their intended use and related incidental expenses and attributable interest.
v. The Company has elected to continue with the carrying value of all its property, plant and equipment as recognized in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as the deemed cost as at the transition date pursuant to the exemption under Ind AS 101
Subsequent expenditure
vi. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company
Depreciation
vii. Depreciation on tangible fixed assets other than plant and equipment has been provided on Written Down Value method and on plant and equipment on Straight Line Method. Depreciation is provided on a pro-rata basis, i.e. from the date on which asset is ready for use.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
viii. Leasehold improvements and leasehold land are amortized over the unexpired primary period of lease except for lease hold land acquired under perpetual lease.
ix. The Company has reviewed its policy for providing depreciation on its tangible assets and has also reassessed their useful lives as per Part C of Schedule II of the Act. The revised useful lives, as assessed by the management, match those specified in Part C of Schedule II of the Act, for all classes of tangible assets.
c. Intangible assets
i. Intangible assets are stated at cost of acquisition less accumulated amortisation and accumulated impairment losses, if any.
ii. Costs relating to acquisition of technical knowhow and software are capitalized as intangible assets. Further, the expenditure incurred towards product studies during the development of product dossiers are grouped under "Intangible assets under development" to the extent such expenditure meet the criteria of intangible asset.
iii. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates
iv. An intangible asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal are recognised in the Statement of Profit and Loss.
v. Any expected loss is recognized immediately in the Statement of Profit and Loss.
vi. Intangible assets that are ready for use are amortized on a straight line basis over a period of four years.
d. Non-current assets held for sale
Non-current assets classified as held for sale, if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, are generally measured at the lower of their carrying amount and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in Statement of Profit and Loss. Once classified as held-for-sale they are no longer depreciated.
e. Impairment of non-financial assets
The carrying values of assets at each balance sheet date are reviewed for impairment if any indication of impairment exists.
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalue amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognized.
f. Foreign currency transactions
i. Initial recognition - Foreign currency transactions are recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.
ii. Subsequent measurement- Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in the Statement of Profit and Loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
iii. Exchange differences - All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Statement of Profit and Loss in the period in which they arise.
g. Stock based Compensation:
Employees Stock Option Plans ("ESOPs"):
Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortized over the vesting period of the options, with a corresponding increase in Reserves and Surplus under the head ""Employee Stock Option account"". On exercise of the option, the proceeds are recorded as share capital.
The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest.
h. Inventories
i. Inventories of raw materials, packing materials, consumables, finished goods and work in process are valued at lower of cost or net realizable value on an item-by-item basis.
ii. Cost of raw materials, consumables and packing materials is determined on first-in-first-out basis except for stock of not ordinarily interchangeable raw materials, which are determined on their specific individual costs. Cost of finished goods and stock in process is determined by considering materials, labour costs, conversion costs, including an appropriate
share of fixed production overheads based on normal operating capacity and other related costs incurred in bringing the inventories to their present condition and location. Cost of finished goods and stock in process is determined on weighted average cost method.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Raw materials and other supplies held for use in the production of inventories are not written down below cost except in case where material prices have declined and it is estimated that the cost of the finished product will exceed its net realisable value.
i. Employee benefits
Employee benefits payable wholly within twelve months of receiving employees services are classified as short-term employee benefits. The short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.
i. Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company contributes to statutory provident fund in accordance with Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 that is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the employee renders services.
Superannuation benefits, a defined contribution plan, has been funded with Life Insurance Corporation of India and the contribution is charged to Statement of Profit and Loss, when the contribution to the Fund is due.
ii. Defined benefit plans
The Company provides for Gratuity benefit and Compensated Absences, which are defined benefit plans, covering all its eligible employees. Liability towards gratuity benefits and compensated absences expected to occur after twelve months, are determined using the Projected Unit Credit Method. Actuarial valuations are carried out at the balance sheet date. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. The gratuity benefit and compensated absences scheme is funded with the Life Insurance Corporation of India (LIC).
The short term provision for compensated absences has been calculated on undiscounted basis, based on the balance of leave available over and above the maximum accumulation allowed as per the Company policy.
j. Income taxes
Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period) and Minimum Alternate Tax (MAT) credit entitlement.
Current tax
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is recognised in respect of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income (oCi) or directly in equity.
Deferred tax assets and liabilities are offset only if:
a) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity
Minimum Alternate Tax
Minimum Alternate Tax (MAT) under the provisions of Income Tax Act, 1961 is recognized as deferred tax in the the Statement of Profit and Loss. The Company recognizes MAT credit available is recognized as an asset only when it is probable that the future economic benefit associated with it will flow to the Company i.e. the Company will pay normal income tax during the period for which MAT Credit is allowed to be carried forward. In the year in which the Company recognizes MAT Credit recognized as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 1961, by way of credit to the Statement of Profit and Loss and shown as "Deferred tax" MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid evidence no longer exists.
k. Borrowing costs
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the Effective Interest Rate (EIR) applicable to the respective borrowing. Borrowing cost include interest costs measured at EIR and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs incurred on constructing or acquiring a qualifying asset are capitalized as cost of that asset until it is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue and recognized as an expense in the Statement of Profit and Loss.
l. Research and development costs
Research and development costs incurred for development of products are expensed as incurred, except for development costs that relate to the design and testing of new or improved materials, products or processes, which are recognized as an intangible asset to the extent that it is technically feasible to complete the development of such asset and future economic benefits are expected to be generated from such assets. Capital expenditure on research and development is included as part of assets and depreciated on the same basis as other assets.
m. Provisions and contingencies
Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When 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 contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable.
n. Leases
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.
Assets taken on finance lease
A finance lease is recognized as an asset and a liability at the commencement of the lease, at the lower of the fair value of the asset and the present value of the minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Assets taken on operating lease
Leases other than finance leases are operating leases, and the leased assets are not recognized on the Company''s balance sheet. Payments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease.
o. Cash and cash equivalents
Cash comprises of cash at bank and in hand and cash equivalents comprise of short-term bank deposits with an original maturity of three months or less.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
p. Operating cycle
Operating cycle is the time between the acquisition of assets for processing an their realization in cash or cash equivalents. Based on the nature of products/ activities of the Company, the management has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
q. Share issue expenses
Share issue expenses are adjusted against the Securities premium reserve as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilization in the Securities premium reserve. Share issue expenses in excess of the balance in the Securities premium reserve is expensed in the Statement of Profit and Loss.
r. Financial Instruments a. Financial assets
i. Recognition and initial measurement
Trade receivables and debt instruments issued are initially recognised when they are originated. All other financial assets are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset is initially measured at fair value. In the case of financial assets which are recognised at fair value through profit and loss (FVTPL), the transaction costs are recognised in the Statement of Profit and Loss. In other cases, the transaction costs are attributed to the acquisition value of the financial asset.
ii. Classification
On initial recognition, a financial asset is classified as measured at
- amortised cost; or
- fair value through profit or loss (FVTPL); or
- fair value through other comprehensive income (FVOCI) - debt investment or equity investment
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by- investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
iii. Subsequent measurement and gains and losses Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in Statement of Profit and Loss.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is recognised in Statement of Profit and Loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in Statement of Profit and Loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to Statement of Profit and Loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in Statement of Profit and Loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to Statement of Profit and Loss.
iv. Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset. If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
v. Impairment of financial assets
In accordance with Ind AS 109, the company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
i. Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities,deposits, and bank balance.
ii. Trade receivables.
The application of simplified approach does not require the company to track changes in credit risk. Rather,it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
vi. Investment in subsidiaries
Investment in subsidiaries is carried at cost in the standalone financial statements.
b. Financial liabilities
i. Recognition and initial measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial liability is initially measured at fair value. In the case of financial liabilities which are recognised at fair value through profit and loss (FVTPL), the transaction costs are recognised in the Statement of Profit and Loss. In other cases, the transaction costs are attributed to the acquisition or issue of financial liability.
ii. Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or 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 recognised in Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in Statement of Profit and Loss. Any gain or loss on derecognition is also recognised in Statement of Profit and Loss.
iii. Derecognition
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in Statement of Profit and Loss.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
v. Derivative financial instruments
The Company uses derivative financial instruments, such as forward currency contracts to hedge its interest rate risk. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at each reporting period. Any changes therein are generally recognised in the Statement of profit and loss.
s. Earnings Per Share:
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
1 Overview of the Company
Advanced Enzyme Technologies Limited (''the Company'') was incorporated on 15 March 1989 under the provisions of Companies Act, 1956. The Company is engaged in the business of developing manufacturing and sales of enzymes. The equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) via id ADVENZYMES and on BSE Limited (BSE) via Id 540025 on 1 August 2016.
2 Basis of preparation of financial statements
The ''Standalone Financial Statements'' (hereinafter referred to as the, ''Financial Statements''), which have been prepared and presented under the historical cost convention on the accrual basis of accounting, are in accordance with the requirements of the Companies Act, 2013 (''the Act'') and comply in all material aspects with the applicable Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) rule, 2014 and also comply with the revised accounting standards notified by Companies (Accounting Standard) Amendment Rules, 2016 on 30 March 2016.
3 Use of estimates
The preparation of financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumption that affect the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities. The estimates and assumptions used in accompanying financial statements are based upon management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements and reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
4 Significant accounting policies:
The accounting policies set out below have been applied consistently to the periods presented in the financial statements.
a. Revenue recognition
i. Revenue is recognized to the extent it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.
ii. Revenue from sale of goods is recognized ,when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred to the customer/agent and no effective ownership is retained. Sales are inclusive of excise duty and net of sales tax and discounts.
iii. Income from services rendered is recognized based on agreements with the customers using the proportionate completion method, when services are performed and no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering of service. Income is recognized net of service tax, as applicable.
iv. Export incentives pursuant to the Duty Drawback Scheme are accounted on an accrual basis, to the extent it is probable that realization is certain.
v. Interest income is recognized on a time proportionate basis, taking into account the amount outstanding and the rates applicable.
vi. Dividend income is recognized when the Company''s right to receive dividend is established by the reporting date.
b. Fixed assets, depreciation and amortization
i. Fixed assets, both tangible (Property, Plant and Equipment) and intangible are stated at cost of acquisition/construction less accumulated depreciation and amortization and accumulated impairment losses, if any. Cost includes taxes, duties, freight and other incidental expenses directly related to acquisition/construction and installation of the assets. Any trade discounts and rebates are deducted in arriving the purchase price. Interest on borrowings to finance acquisition of fixed assets during qualifying period is capitalized.
4 Significant Accounting Policies (Continued)
b. Fixed assets, depreciation and amortization (Continued)
ii. Subsequent expenditure related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
iii. Leasehold improvements represent expenses incurred towards civil work and interior furnishings on the leased premises.
iv. Capital work-in-progress includes fixed assets not ready for their intended use and related incidental expenses and attributable interest.
v. Costs relating to acquisition of technical know-how and software are capitalized as intangible assets. Further, the expenditure incurred towards product studies during the development of product dossiers for registration are grouped under "Intangible assets under development" to the extent such expenditure meet the criteria of intangible asset as defined in Accounting Standard (AS) 26.
Depreciation on tangible fixed assets (property, plant and equipment) other than plant and equipment has been provided on Written Down Value method and on plant and equipment on Straight Line Method. Depreciation is provided on a pro-rata basis, i.e. from the date on which asset is ready for use.
vii. Leasehold improvements and leasehold land are amortized over the unexpired primary period of lease except for lease hold land acquired under perpetual lease.
viii. Intangible fixed assets that are ready for use are amortized on a straight line basis over a period of four years.
ix. Items of fixed assets that are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately under other current assets in the financial statements. Any expected loss is recognized immediately in the Statement of Profit and Loss.
x. A fixed asset is eliminated from the financial statements on disposal or when no further benefit is expected from its use and disposal. Gains / losses arising from disposal of fixed assets carried at cost are recognized in the Statement of Profit and Loss.
C. Investments
Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments.
Long-term investments are carried at cost less any other-than temporary diminution in value. Current investments are valued at lower of cost and net realizable value. Any reduction in the carrying amount and any reversals of such reductions are charged or credited to the Statement of Profit and Loss.
d. Foreign currency transactions
i. Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.
ii. Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance sheet. Non-monetary assets and liabilities denominated in foreign currency are reported at the rate of exchange prevailing on the date of transaction.
iii. Exchange differences - All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Statement of Profit and Loss .
e. Stock based Compensation:
Employees Stock Option Plans ("ESOPs"):
Equity-settled plans are accounted at fair value as at the grant date. The fair value of the share-based option is determined at the grant date using a market-based option valuation model (Black Scholes Option Valuation Model). The fair value of the option is recorded as compensation expense amortized over the vesting period of the options, with a corresponding increase in Reserves and Surplus under the head "Employee Stock Option Outstanding". On exercise of the option, the proceeds are recorded as share capital.
The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the Statement of Profit and Loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate of the number of equity instruments that will ultimately vest."
f. Impairment of assets
In accordance with Accounting Standard 28 on ''Impairment of assets'', the Company assesses at each balance sheet date, whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount of the assets (or where applicable that of the cash generating unit to which the asset belongs) is estimated as the higher of its net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the assets and from its disposal at the end of its useful life. An impairment loss is recognized whenever the carrying amount of an asset or the cash-generating unit to which it belongs, exceeds it recoverable amount. Impairment loss is recognized in the Statement of Profit and Loss or against revaluation surplus, where applicable. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable amount subject to a maximum of the depreciated historical cost.
g. Inventories
i. Inventories are valued at lower of cost or net realizable value on an item-by-item basis.
ii. Cost of raw materials, consumables and packing materials is determined on first-in-first-out basis except for stock of not ordinarily interchangeable raw materials, which are determined on their specific individual costs. Cost of finished goods and stock in process is determined by considering materials, labour costs, conversion costs, including an appropriate share of fixed production overheads based on normal operating capacity and other related costs incurred in bringing the inventories to their present condition and location. Cost of finished goods and stock in process is determined on weighted average cost method.
h. Employee benefits
i Employee benefits payable wholly within twelve months of receiving employees services are classified as short-term employee benefits. The short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.
ii. Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts.
The Company contributes to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 that is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the employee renders services.
Superannuation benefits, a defined contribution plan, has been funded with Life Insurance Corporation of India and the contribution is charged to Statement of profit and loss, when the contribution to the Fund is due.
iii. Defined benefit plans
The Company provides for gratuity benefit and compensated absences, which are defined benefit plans, covering all its eligible employees. Liability towards gratuity benefits and compensated absences expected to occur after twelve months, are determined using the Projected Unit Credit Method. Actuarial valuations are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss account in the year of occurrence of such gains and losses. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. The gratuity benefit and compensated absences scheme is funded with the Life Insurance Corporation of India (LIC).
The short term provision for compensated absences has been calculated on undiscounted basis, based on the balance of leave available over and above the maximum accumulation allowed as per the Company policy.
i. Income taxes
Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income tax law), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period) and Minimum Alternate Tax (MAT) credit entitlement.
Current tax
Current tax is computed and provided for in accordance with the applicable provisions of the Income Tax Act, 1961.
Deferred tax
Deferred tax is recognized on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognized only if there is a virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits.
At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Minimum Alternate Tax
Minimum Alternate Tax (MAT) under the provision of Income Tax Act, 1961 is recognized as current tax in the Statement of Profit and Loss. The credit available under the Act in respect of MAT paid is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the period for which the MAT credit can be carried forward for set off against the normal tax liability. MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
j. Borrowing costs
Borrowing costs incurred on constructing or acquiring a qualifying asset are capitalized as cost of that asset until it is ready for its intended use . A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use . All other borrowing costs are charged to revenue and recognized as an expense in the Statement of Profit and Loss.
k. Research and development costs
Research and development costs incurred for development of products are expensed as incurred, except for development costs that relate to the design and testing of new or improved materials, products or processes, which are recognized as an intangible asset to the extent that it is technically feasible to complete the development of such asset and future economic benefits are expected to be generated from such assets.
l. Provisions and contingencies
The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources embodying economic benefits and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When 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.
m. Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on straight line basis over the primary period of lease in accordance with the respective lease agreements.
Lease under which the Company assumes substantially all the risk and rewards of ownership are classified as finance leases. Assets taken on finance lease are initially capitalized at fair value of the asset i.e., the premium paid at the inception of the lease. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease terms so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
n. Cash and cash equivalents
Cash comprises of cash at bank and in hand and cash equivalents comprise of short-term bank deposits with an original maturity of three months or less.
o. Operating cycle
Operating cycle is the time between the acquisition of assets for processing an their realization in cash or cash equivalents. Based on the nature of products/ activities of the Company, the management has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
c) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity share having a par value of '' 10/- per share. The final dividend, if any, proposed by Board of Directors is subject to approval by the Shareholders. All shares rank pari passu on repayment of capital in the event of liquidation. Dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing AGM except interim dividend.
d) Shares reserved for issue under options
The Company had reserved issuance of 44,000 (Previous year Nil) Equity shares of certificate 10/- each for offering to eligible employees of the Company under Employees Stock Option Scheme (ESOS). The option would vest on graded basis over a maximum period of 4 years or such other period as may be decided by the Employees Stock Compensation Committee from the date of grant based on specific criteria. (Also, refer note 40)
e) Subdivision of shares
The Shareholders vide a special resolution has approved sub division of shares of the Company in the ratio of 5 shares of face value of certificate2/- each for every existing 1 share of the face value of certificate 10/- each through postal ballot. The requisite approvals for modification of the Memorandum and Articles of Association of the Company had been accorded by the shareholders on 4 May 2017.
f) Initial public offering
The Company had made an Initial Public Offer (IPO) of 4,594,875 Equity shares of certificate 10/- each at an issue price of certificate 896/- per Equity share ( certificate 810/- per Equity share for eligible employees), consisting of fresh issue of 560,405 Equity shares and an Offer for Sale of 4,034,470 Equity shares by Selling Shareholders.
g) Utilization of IPO proceeds
From the total proceeds of certificate4,114.88 million through an IPO, the Company received proceeds of certificate499.99 million towards fresh issue of 560,405 equity shares of certificate 10/- each fully paid up at a premium of certificate 886/- per share for 535,714 equity shares and certificate 800/- per share for 24,691 equity shares , net of certificate3,614.89 million attributed to the selling shareholders towards 4,034,470 equity shares of certificate 10/- each fully paid up at a premium of certificate 886/- per share offered by them for sale.
b) Details of security for each type of borrowing as at 31 March 2017
i Term loans from banks are secured by (i) hypothecation charge of present and future movable and immovable fixed assets assets of the Company; and (ii) first pari-passu charge by way of equitable/ registered mortgage on all the present and future land and building (immovable properties) of the Company.
ii Vehicle loans availed from four banks and two financial institutions are secured by charge on vehicles as specified in their respective loan agreements.
iii Loans repayable on demand from Banks (Working Capital loans) are secured by first pari passu charge on all existing and future current assets of the Company.
c) Terms of repayment of term loans and other loans
Term loan from banks
Term loan form bank carries an interest rate of base rate 1% (amounts to 10.50% both for the current and previous year) and from date of borrowing it is payable in 60 equal monthly installments of Rs,2.5 million each along with interest up to 9 November 2020.
Loan repayable on demand
i Cash Credit from bank for '' 95.37 million (Previous Year Rs, 165.90 million) carries an interest rate of 9% to 12%.
ii Packing credit foreign currency loan from bank for Rs,65.96 million (Previous Year ''53.61 million) carries an interest rate of Libor 80 bps (previous year Libor 125 to 200 bps)
iii Working capital demand loan from bank for Rs,50.00 million (Previous Year ''75.00 million) carries an interest rate of 8.20% p.a. (previous year 9.60% p.a.)
c) Terms of repayment of term loans and other loans (Continued)
Deferred sales tax payment liabilities
Deferred Sales Tax Loan is interest free and payable in 5 equal annual installments after expiry of initial 10 years of moratorium year from each such year of deferral period from 1996-97 to 2006-07.
a) Employee benefits
The Company provides for gratuity benefit and compensated absences, which are defined benefit plans, covering all its eligible employees. The Company has taken a group gratuity and compensated absences policy for its employees with the Life Insurance Corporation of India (LIC). Under gratuity policy, the eligible employees are entitled to receive gratuity payments upon their resignation or death (subject to completion of 4.5 years of employment) in lumpsum after deduction of necessary taxes.
The following table set out the status of the gratuity and compensated absences plan as required under Accounting Standard (AS)- 15- Employee benefits and the reconciliation of opening and closing balances of the present value of the defined benefit obligation.
Until 31 March 2016, the Company accounted for sales returns on basis of actual returns. During the year ended 31 March 2017, in line with an opinion of Expert Advisory Committee of the Institute of Chartered Accountants of India on accounting for sales returns, the Company has revised its approach by accounting for anticipated sales returns and has recorded a cumulative provision for anticipated sales returns during the year ended 31 March, 2017, by charging it to Statement of Profit and Loss.
The Management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2017 has been made in the standalone financial statements based on information received and available with the Company.
Mar 31, 2016
1 Background of the Company
Advanced Enzyme Technologies Limited (âthe Company'') was incorporated on 15 March 1989. The Company is engaged in the business of manufacturing and sales of enzymes.
2 Basis of preparation of financial statements
The ''Standalone Financial Statements'' (hereafter, ''Financial Statements''), which have been prepared and presented under the historical cost convention on the accrual basis of accounting, are in accordance with the requirements of the Companies Act, 2013 (''the Act'') and comply in all material aspects with the applicable Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) rule, 2014 (as amended).
3 Use of estimates
The preparation of financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumption that affect the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent liabilities. The estimates and assumptions used in accompanying financial statements are based upon managementâs evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any revision to accounting estimates is recognized prospectively in current and future periods.
4 Significant accounting policies:
a. Revenue recognition
i. Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.
ii. Revenue from sale of goods is recognized on delivery of the products, when all significant contractual obligations have been satisfied, the property in the goods is transferred for a price, significant risks and rewards of ownership are transferred to the customer/agent and no effective ownership is retained. Sales are inclusive of excise duty and net of sales tax and discounts.
iii. International incentives received pursuant to the Duty Drawback Scheme and Status holder scrip incentive are accounted on an accrual basis, to the extent it is probable that realization is certain.
iv. Interest income is recognized on a time proportionate basis, taking into account the amount outstanding and the rates applicable.
v. Dividend income is recognized when the Companyâs right to receive dividend is established by the reporting date.
vi. Income from services rendered is recognized based on agreements with the customers using the proportionate completion method, when services are performed and no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering of service. Income is recognized net of service tax, as applicable.
b. Fixed assets, depreciation and amortization
i. Fixed assets, both tangible and intangible are stated at cost of acquisition. Cost includes taxes, duties, freight and other incidental expenses related to acquisition and installation of the assets. Interest on borrowings to finance acquisition of fixed assets during qualifying period is capitalized.
ii. Leasehold improvements represent expenses incurred towards civil work and interior furnishings on the leased premises.
iii. Capital work in progress includes fixed assets not ready for their intended use and related incidental expenses and attributable interest.
iv. Costs relating to acquisition of technical know-how and software are capitalized as Intangible Assets. Further, the revenue expenditure incurred during the development of product dossiers are grouped under "Intangible assets under development" to the extent such expenditure meet the criteria of Intangible Asset as defined in Accounting Standard (AS) 26.
v. The Company has reviewed its policy for providing depreciation on its tangible fixed assets and has also reassessed their useful lives as per Part C of Schedule II of the Companies Act, 2013. The revised useful lives, as assessed by the management, match those specified in Part C of Schedule II of the Companies Act, 2013, for all classes of tangible assets.
Depreciation on tangible fixed assets other than Plant and Equipments has been provided on Written Down Value method and on Plant and Equipments on Straight Line Method.
vi. Leasehold improvements and leasehold land are depreciated over the unexpired primary period of lease except for lease hold land acquired under perpetual lease.
vii. Intangible assets that are ready for use are amortized on a straight line basis over a period of four years.
viii. Items of fixed assets that are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements. Any expected loss is recognized immediately in the Statement of profit and loss.
c. Investments
Investments are classified into long-term investments and current investments. Long-term investments are carried at cost. Provision for diminution in the value of long-term investments is not provided for unless it is considered other than temporary. Current investments are valued at lower of cost and net realizable value.
d. Foreign currency transactions
i. Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of the transaction.
ii. Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the date of the Balance sheet. Non-monetary assets and liabilities denominated in foreign currency are reported at the rate of exchange prevailing on the date of transaction.
iii. Exchange differences - All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Statement of profit and loss in the period in which they arise.
e. Derivative instruments
i. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange contracts, where the counterparty is a bank.
ii. As per Accounting Standard (''AS'') 11 - The Effects of Changes in Foreign Exchange Rates'', the premium or the discount on forward exchange contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculation purpose is amortized as expense or income over the life of the contract. All other derivatives, which are not covered by AS 11, are measured using the mark-to-market principle and losses, if any, are recognized in the Statement of profit and loss.
f. Impairment of assets
In accordance with Accounting Standard (AS) 28 on âImpairment of Assetsâ , the carrying amounts of the Companyâs assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of the assets or where applicable, that of the cash generating unit to which the asset belongs is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. Impairment loss is recognized in the Statement of profit and loss or against revaluation surplus where applicable.
g. Inventories
i. Inventories of stores, spares, packing materials, raw materials, finished goods and stock in process are valued at lower of cost or net realizable value.
ii. Cost of raw materials, stores, spares and packing materials is determined on first-in-first-out basis except for stock of not ordinarily interchangeable raw materials, which are determined on their specific individual costs. Cost of finished goods and stock in process is determined by considering materials, labor and other related costs incurred in bringing the inventories to their present condition and location. Cost of finished goods and stock in process is determined on specific identification method.
h. Employee benefits
i. All short term employee benefits are accounted on undiscounted basis during the accounting period based on services rendered by employees.
ii. Defined contribution plans
The Company contributes to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 that is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which the employee renders services.
Superannuation benefits, a defined contribution plan, have been funded with Life Insurance Corporation of India and the contribution is charged to Statement of profit and loss, when the contribution to the Fund is due.
iii. Defined benefit plans
The Company provides for gratuity benefit and leave encashment, which are defined benefit plans, covering all its eligible employees. Liability towards gratuity benefits and leave encashment is determined on actuarial valuation done by Life Insurance Corporation of India (LIC) during the year, based upon which the Company contributes to the schemes with LIC. The Company also provides for the additional liability over the amount determined by LIC based on an actuarial valuation done by an independent actuary as at the balance sheet date and actuarial gains/losses are charged to the Statement of profit and loss.
The short term provision for leave encashment has been calculated on undiscounted basis, based on the balance of leave available over and above the maximum accumulation allowed as per the Company policy.
i. Income taxes Current tax
Current tax is computed and provided for in accordance with the applicable provisions of the Income Tax Act, 1961.
Deferred tax
Deferred tax is recognized on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the Company has unabsorbed depreciation or carry forward tax losses, deferred tax assets are recognized only if there is a virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits.
At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Minimum Alternate Tax
Minimum Alternate Tax (MAT) paid during the reporting period is charged to the Statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset when it is probable that the future economic benefit associated with it will flow to the Company, i.e., the Company will pay normal income tax during the period for which MAT Credit is allowed to be carried forward. 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 Minimum Alternate Tax 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 âMAT Credit Entitlement.â
j. Borrowing costs
Borrowing costs incurred on constructing or acquiring a qualifying asset are capitalised as cost of that asset until it is ready for its intended use or sale. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue and recognized as an expense in the Statement of profit and loss.
k. Research and development costs
Research and development costs incurred for development of products are expensed as incurred, except for development costs that relate to the design and testing of new or improved materials, products or processes, which are recognized as an intangible asset to the extent that it is technically feasible to complete the development of such asset and future economic benefits are expected to be generated from such assets. Capital expenditure on research and development is included as part of fixed assets and depreciated on the same basis as other fixed assets.
l. Provisions and contingencies
The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources embodying economic benefits and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When 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.
m. Leases
Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of profit and loss.
n. Cash and cash equivalents
Cash comprises of cash at bank and in hand and cash equivalents comprise of short-term bank deposits with an original maturity of three months or less.
o. Operating cycle
Based on the nature of products/ activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
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ഓഹരി വിപണി 11 മാസത്തെ താഴ്ചയില്, നിഫ്റ്റി, സെന്സെക്സ് കൂപ്പുകുത്തി, കാരണങ്ങളറിയാം -
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കേന്ദ്രബജറ്റ് സെഷന് 2026: ഇടിവോടെ തുടങ്ങി നിഫ്റ്റിയും സെന്സെക്സും, നിക്ഷേപകര് പ്രതീക്ഷിക്കുന്നതെന്ത്? -
9 മാസത്തില് 314 ശതമാനം ഉയര്ന്ന് ഹിന്ദുസ്ഥാന് കോപ്പര് ഓഹരി, ഭാവി സാധ്യതകള് -
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1065 പോയിന്റ് ഇടിഞ്ഞ് സെന്സെക്സ്, നിഫ്റ്റി 25250 ന് താഴെ; ഭാവി പ്രവണതകള് -
2025 ലെ മികച്ച ഓഹരി; കുതിപ്പ് തുടരാൻ ശ്രീറാം ഫിനാൻസ്; ലക്ഷ്യവില ഇങ്ങനെ -
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