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Accounting Policies of Bajaj Finance Ltd. Company

Mar 31, 2015

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules 2014, till the standards of accounting or any addendum thereto are prescribed by the Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Accordingly, these financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under section 211(3C) of the Companies Act, 1956, Companies (Accounting Standards) Rules, 2006, (as amended), the other relevant provisions of the Companies Act, 2013 and Reserve Bank of India Regulations in relation to Non Banking Finance Companies to the extent applicable to the Company.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the schedule III to the Companies Act, 2013. Based on the nature of the products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of its assets and liabilities.

A) System of accounting

(i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties.

(ii) Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

(iii) The preparation of financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as on the date of financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the Management''s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

B) Fixed assets, depreciation and amortisation

(I) (i) Tangible assets are carried at cost of acquisition. (ii) Depreciation on tangible assets

(a) From the current year, depreciation is provided on a pro-rata basis for all tangible assets except buildings on straight line method over the useful life of assets as against the past practice of determination of life based on minimum of rates provided by Schedule XIV of the Companies Act, 1956 on written down value (WDV) method.

(b) Useful lives of assets are determined by the Management by an internal technical assessment except where such assessment suggests a life significantly different from those prescribed by schedule II - part C of the Companies Act, 2013 where the useful life is as assessed and certified by a technical expert.

(iii) Depreciation on leasehold improvements is provided for on straight line method over the primary period of lease

fof premises. (iv) Depreciation on addition to assets and assets sold during the year is being provided for, at their respective rates on a pro rata basis with reference to the month in which such asset is added or sold as the case may be.

(vi) For effects of change in policy, see note no. 10 (f) and (g).

II) Intangible assets and amortisation thereof:

Intangible assets, representing specialised software etc., are recognised at cost and carried net of amortisation, consistent with the criteria specified in Accounting Standard - 26 ''Intangible Assets'' as prescribed by Companies (Accounting Standards) Rules, 2006. Intangible assets are amortised systematically over the useful life of the assets. Accordingly, software cost is amortised as an intangible equally over a period of sixty months.

C) An assessment is done at each balance sheet date as to whether there is any indication that an asset may be impaired. If any such indication exists, an estimate of the recoverable amount of asset is determined. If the carrying value of relevant asset is higher than the recoverable amount, the carrying value is written down accordingly.

D) Investments

(i) Investments maturing within twelve months from the date of acquisition and investments made with the specific intention to dispose of within twelve months from the date of acquisition are classified as short-term/current investments and are carried at their cost or market value/net realisable value, whichever is lower. Investments maturing within 3 months from the date of acquisition are classified as cash equivalents if they are readily convertible into cash.

(ii) Investments other than short-term/current investments are carried at their cost of acquisition. Provision for diminution in value of investments, if any, is made if, in the opinion of the Management, such diminution is other than temporary.

(iii) Fixed income securities are stated at cost less amortisation of premium/discount as the case may be {refer E (ii) (c) below}

Interest, finance charges, service charges etc. are recognised as income on accrual basis with reference to the terms of contractual commitments and finance agreements entered into with borrowers, as the case may be, except in the case of non-performing assets where income is recognised only when realised.

(ii) Investment

(a) Dividend is accrued when the right to receive is established i.e. when declared by the investee entity.

(b) Interest on securities is accounted for on accrual basis except where the ultimate collection cannot be established with reasonable certainty.

(c) In order to reflect the contracted yield as interest income, the premium/discount on fixed income securities is amortised with reference to the ''yield to maturity'' prevailing on acquisition.

(iii) Other income

Other income is mainly accounted on accrual basis, except in case of significant uncertainties.

F) Receivables under financing activity

(i) Receivables under financing activity represent principal and matured finance charges outstanding at the close of the year but net of amount written off.

(ii) The Company assesses all receivables for their recoverability and accordingly makes provisions for non-performing assets as considered necessary including by accelerating provision to an early stage based on past experience, emerging trends and estimates. However, the Company ensures that the said provisions are not lower than the provisions stipulated in the applicable Reserve Bank of India (RBI) Regulations/Guidelines.

P(iii) A general provision, as required by RBI regulations, is also made by the Company on the standard assets outstanding which is disclosed under ''Long-term provisions'' in note no. 7 to the financial statements.

G) Borrowing costs

All borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred

H) Employee benefits

(i) Gratuity: Payment for present liability of future payment of gratuity is being fully made to the Approved Gratuity fund viz. Bajaj Auto Limited Gratuity Fund Trust, which covers the same under cash accumulation policy and debt fund for the Life Insurance Corporation of India and Bajaj Allianz Life Insurance Company Limited (BALICL). However, any deficits in plan assets managed by LIC and BALICL as compared to actuarial liability determined using the projected unit credit method are recognised as a liability. (ii) Superannuation: Defined contribution to superannuation fund is being made as per the scheme of the Company.

(iii) Provident fund contributions are made to Bajaj Auto Limited Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the Company and recognised as an expense. Shortfall in fund assets over present obligation determined using the projected unit credit method by an appointed actuary is recognised as a liability.

(iv) Privilege leave: Privilege leave entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment, the liability using the projected unit credit method is recognised at the actuarially determined value by an appointed actuary.

(v) Defined contribution to Employees'' Pension Scheme, 1995 is made to Government Provident Fund Authority.

I) Taxation

Provision for taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the income tax act 1961. Deferred tax resulting from timing differences between book profits and tax profits is accounted for at the current rate of tax or the substantially enacted rate of tax to the extent the timing differences are expected to crystallise, in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised. However, deferred tax asset arising on account of unabsorbed depreciation and business losses are recognised only if there is virtual certainty supported by convincing evidence that there would be adequate future taxable income against which the same can be realised/set off.

J) Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a realisable 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

f 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.

K) Employee Stock Option Scheme

The Company operates its Employee Stock Option Scheme through a trust formed for the purpose. Equity shares are issued to the trust on the basis of the Company''s expectation of the options being exercised by employees. Cost of any benefit, if any, is recognised as an expense by the Company. The balance equity shares not exercised and held by the trust are disclosed as a reduction from the Share Capital and Securities Premium account with an equivalent adjustment to the subscription loan advanced to the trust. - See note no. 29

L) Operating leases

As a lessee: Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight line basis over the period of the lease.


Mar 31, 2014

Basis of preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Consequent to the clarification issued by the Ministry of Corporate Affairs vide GC no. 8 dated 4 April 2014, these financial statements have been prepared in accordance with the provisions of the Companies Act, 1956. Accordingly, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956 and Reserve Bank of India Regulations in relation to Non Banking Finance Companies to the extent applicable to the Company.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Revised Schedule VI to the Companies Act, 1956.

A) System of accounting:

i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties.

ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

iii) The preparation of financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as on the date of financial statements. The estimates and assumptions used in the 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 could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

B) Fixed assets, depreciation and amortisation:

I) i) Fixed assets are carried at cost of acquisition. ii) Depreciation:

a) Depreciation on own tangible assets other than leasehold Improvements, is being provided on "written down value method" at the rates specified in Schedule XIV to the Companies Act, 1956.

b) Depreciation on leasehold improvements is provided for on straight line method over the primary period of lease of premises.

c) Depreciation on addition to assets and assets sold during the year is being provided for, at their respective rates on a prorate basis with reference to the month in which such asset is added or sold as the case may be.

II) On Intangible assets and amortisation thereof:

Intangible assets, representing Specialised Software etc., are recognised consistent with the criteria specified in Accounting Standard - 26 "Intangible assets" as prescribed by Companies (Accounting Standards) Rules, 2006. The same is amortised over a period of 60 months, being the estimated useful life of the software.

C) Investments:

i) Investments maturing within twelve months from the date of acquisition and investments made with the specific intention to dispose off within twelve months from the date of acquisition are classified as short-term/current investments and are carried at their cost or market value/realisable value, whichever is lower. Investments maturing within 3 months from the date of acquisition are classified as cash equivalents if they are readily convertible into cash.

ii) Investments other than short-term/current investments are carried at their cost of acquisition. Provision for diminution in value of investments, if any, is made if, in the opinion of the Management, such diminution is other than temporary.

iii) Fixed income securities are stated at cost less amortisation of premium/discount as the case may be. (Refer D (ii) below)

D) Income from:

i) Financing activity:

Interest, finance charges, service charges etc. are recognised as income on accrual basis with reference to the terms of contractual commitments and finance agreements entered into with hirers, as the case may be, except in the case of Non- Performing Assets.

ii) Investment:

a. Dividend is accrued when the right to receive is established i.e. when declared by the investee entity.

b. Interest on securities is accounted for on accrual basis except where the ultimate collection cannot be established with reasonable certainty.

c. In order to reflect the contracted yield as interest income, the premium/discount on fixed income securities is amortised with reference to the "yield to maturity" prevailing on acquisition.

iii) Other income:

Other income is mainly accounted on accrual basis, except in case of significant uncertainties.

E) Receivables under financing activity:

i) Receivables under financing activity represent principal and matured finance charges outstanding at the close of the year but net of amount written off.

ii) The Company assesses all receivables for their recoverability and accordingly makes provisions for non-performing assets as considered necessary. Further, the Company has enhanced its provisioning norms by accelerating provision to an early stage based on past experience, emerging trends and estimates. However, the Company ensures that the said provisions are not lower than the provisions stipulated in the applicable Reserve Bank of India Regulations/Guidelines.

iii) A general provision is also made by the Company on the standard assets outstanding and disclosed under "Long-term provisions" in note no. 6 in the financial statements as required and considered necessary.

F) Employee Benefits:

i) Gratuity: Payment for present liability of future payment of gratuity is being made to the Approved Gratuity funds, which cover the same under cash accumulation policy of the Life Insurance Corporation of India. However, any deficits in plan assets managed by LIC as compared to actuarial liability are recognised as a liability.

ii) Superannuation: Defined contribution to superannuation fund is being made as per the scheme of the Company.

iii) Provident fund contributions are made to Bajaj Auto Limited Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the Company and recognised as an expense. Shortfall in fund assets over present obligation determined by an appointed actuary is recognised as a liability.

iv) Privilege leave: Privilege leave entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment the liability is recognised at the actuarially determined value by an appointed actuary.

v) Defined contribution to Employees'' Pension Scheme, 1995 is made to Government Provident Fund Authority.

G) Taxation:

Provision for taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act 1961. Deferred tax resulting from timing differences between book profits and tax profits is accounted for at the current rate of tax or the substantially enacted rate of tax to the extent the timing differences are expected to crystallise, in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised. However, deferred tax asset arising on account of unabsorbed depreciation and business losses are recognised only if there is virtual certainty supported by convincing evidence that there would be adequate future taxable income against which the same can be realised/set off.

H) Provisions and contingent liabilities:

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a realisable 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.

I) Employee Stock Option Scheme:

The Company operates its Employee Stock Option Scheme through a Trust formed for the purpose. Equity shares are issued to the Trust on the basis of the Company''s expectation of the options being exercised by employees. Cost of benefit, if any, is recognised as an expense by the Company. The balance equity shares not exercised and held by the Trust are disclosed as a reduction from the Share Capital and Securities Premium account with an equivalent adjustment to the subscription loan advanced to the Trust. - See note no. 28

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors and approved by the shareholders in the Annual General Meeting is paid in Indian Rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Equity shares allotted on conversion of preferential warrants, i.e. 4,690,000 and 1,310,000 equity shares are restricted from transfer other than inter se promoter group upto 28 March 2015 and 10 December 2015 respectively.

e) Shares reserved for issue under Employee Stock Option Plan:

1,829,803 Equity Shares (i.e. 5% of the then paid up equity share capital) have been approved/reserved for issue under Employee Stock Option Plan, 2009 of the Company drawn in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (SEBI guidelines)), of which 1,609,080 (upto 31 March 2013: 1,194,450) equity shares have been granted as per the scheme and 787,000 (upto 31 March 2013: 423,000) thereof have been issued and allotted to ESOP trust, viz. BFL Employee Welfare Trust, upto 31 March 2014. Consequent to the opinion expressed by the "Expert Advisory Committee" of the Institute of Chartered Accountants of India on the applicability of clause 22A.1 of the SEBI guidelines, the balance unexercised equity shares held by the trust at the close of the year amounting to 393,581 (as at 31 March 2013: 237,957) have been reduced against the share capital of the Company as if the trust is administered by the Company itself. The securities premium related to the unexercised equity shares held by the trust as at the close of the year aggregating Rs. 290,098,680 (as at 31 March 2013: Rs. 148,153,326) has also been reduced from securities premium account and adjusted against the Loans outstanding from the Trust. See note no. 28 for further details.


Mar 31, 2013

Basis of preparation

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956 and Reserve Bank of India Regulations in relation to Non Banking Finance Companies to the extent applicable to the Company.

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Revised Schedule VI to the Companies Act, 1956.

A) System of accounting:

i) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties.

ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

iii) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as on the date of financial statements. The estimates and assumptions used in the 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 could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

B) Fixed assets, depreciation and amortisation:

I) i) Fixed assets are carried at cost of acquisition.

ii) Depreciation

a. Depreciation on own assets is being provided on "Written Down Value method" at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions during the year is being provided for on a pro-rata basis with reference to the month of addition.

b. Depreciation on assets sold during the year is being provided for, at their respective rates up to the month in which such asset is sold.

II) Intangible assets and amortisation thereof

Intangible assets, representing specialised software etc., are recognised consistent with the criteria specified in Accounting standard - 26 "Intangible assets" as prescribed by Companies (Accounting standards) Rules, 2006. The same is amortised as an expense over a period of 60 months, being the estimated useful life of the software.

C) Investments:

i) Investments maturing within twelve months from the date of acquisition and investments made with the specific intention to dispose off within twelve months from the date of acquisition are classified as short term/current investments and are carried at their cost or market value/realizable value, whichever is lower. Investments maturing within 3 months from the date of acquisition are classified as cash equivalents if they are readily convertible into cash.

ii) Investments other than short term/current investments are carried at their cost of acquisition. Provision for diminution in value of investments, if any, is made if, in the opinion of the management, such diminution is other than temporary.

iii) Fixed income securities are stated at cost less amortisation of premium/discount as the case may be. (Refer D (ii) below)

D) Income from:

i) Assets under finance:

The Company has accrued finance charges and service charges in terms of contractual commitments with borrowers detailed in the finance agreements entered into with hirers except in the case of non-performing assets.

ii) Investment:

a. Dividend is accrued when the right to receive is established i.e. when declared by the investee entity.

b. Interest on securities is accounted for on accrual basis except where the ultimate collection cannot be established with reasonable certainty.

c. In order to reflect the contracted yield as interest income, the premium/discount on fixed income securities is amortised with reference to the "yield to maturity" prevailing on acquisition.

iii) Other Income:

Other income is mainly accounted on accrual basis, except in case of significant uncertainties.

E) Receivables under financing activity:

i) Receivables under financing activity represent principal and matured finance charges outstanding at the close of the year but net of amount written off.

ii) The Company assesses all receivables for their recoverability and accordingly makes provisions for non performing assets as considered necessary. Further, the Company has enhanced its provisioning norms by accelerating provision to an early stage based on past experience, emerging trends and estimates. However, the Company ensures that the said provisions are not lower than the provisions stipulated in the applicable Reserve Bank of India Regulations/Guidelines.

iii) A general provision is also made by the Company on the standard assets outstanding and disclosed under "Long term provisions" in Note No. 6 in the financial statements as required.

F) Employee benefits:

i) Gratuity: Payment for present liability of future payment of gratuity is being made to the approved gratuity funds, which cover the same under cash accumulation policy of the Life Insurance Corporation of India (LIC). However, any deficits in plan assets managed by LIC as compared to actuarial liability are recognised as a liability.

ii) Superannuation: Defined contribution to superannuation fund is being made as per the scheme of the Company.

iii) Provident fund contributions are made to Bajaj Auto Limited Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the Company and recognised as an expense. Shortfall in fund assets over present obligation determined by an appointed actuary is recognised as a liability.

iv) Privilege leave: Privilege leave entitlements are recognised as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment, the liability is recognised at the actuarially determined value by an appointed actuary.

v) Defined contribution to Employees'' Pension Scheme, 1995 is made to Government Provident Fund Authority.

G) Taxation:

Provision for taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act 1961. Deferred tax resulting from timing differences between book profits and tax profits is accounted for at the current rate of tax or the substantially enacted rate of tax to the extent the timing differences are expected to crystallize, in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with reasonable certainty that there would be adequate future taxable income against which deferred tax assets can be realised. However, deferred tax asset arising on account of unabsorbed depreciation and business losses are recognised only if there is virtual certainty supported by convincing evidence that there would be adequate future taxable income against which the same can be realised/set off.

H) Provisions and contingent liabilities:

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a realizable 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.

I) Employee stock option scheme - See note no. 28


Mar 31, 2012

A) System of accounting:

i) The company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except in case of significant uncertainties.

ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

iii) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as on the date of financial statements. The estimates and assumptions used in the 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 could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

B) Fixed Assets, depreciation and amortization:

I) (i) Fixed Assets are carried at cost of acquisition.

(ii) Depreciation

(i) Depreciation is being provided on "Written Down Value method" at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions during the year is being provided for on a pro-rata basis with reference to the month of addition.

(ii) Depreciation on assets sold during the year is being provided for, at their respective rates up to the month in which such asset is sold.

II) On Intangible Assets and amortization thereof:

Intangible assets, representing specialized software etc, are recognised consistent with the criteria specified in Accounting Standard - 26 "Intangible Assets" as prescribed by Companies (Accounting Standards) Rules, 2006. The same is amortized as an expense over a period of 60 months, being the estimated useful life of the software.

C) Investments:

(i) Investments maturing within twelve months from the date of acquisition and investments made with the specific intention to dispose off within twelve months from the date of acquisition are classified as short term/current investments and are carried at their cost or market value/realizable value, whichever is lower. Investments maturing within three months from the date of acquisition are classified as cash equivalents if they are readily convertible into cash.

(ii) Investments other than short term/current investments are carried at their cost of acquisition. Provision for diminution in value of investments, if any, is made if, in the opinion of the management, such diminution is other than temporary.

(iii) Fixed income securities are stated at cost less amortization of premium/discount as the case may be. (Refer D (ii) below)

D) Income from:

(i) Assets under finance:

The company has accrued finance charges and service charges in terms of contractual commitments with borrowers detailed in the finance agreements entered into with hirers except in the case of Non- Performing Assets.

(ii) Investment

a. Dividend is accrued when the right to receive is established i. e. when declared by the investee entity.

b. Interest on securities is accounted for on accrual basis except where the ultimate collection cannot be established with reasonable certainty.

c. In order to reflect the contracted yield as interest income, the premium/discount on fixed income securities is amortized with reference to the "yield to maturity" prevailing on acquisition.

(iii) Other Income:

Other income is mainly accounted on accrual basis, except in case of significant uncertainties.

E) Receivables under financing activity:

(i) Receivables under financing activity represent principal and matured finance charges outstanding at the close of the year but net of amount written off.

(ii) The company assesses all receivables for their recoverability and accordingly, makes provisions for non performing assets as considered necessary. Further, the company has enhanced its provisioning norms by accelerating provision to an early stage based on past experience, emerging trends and estimates. However, the company ensures that the said provisions are not lower than the provisions stipulated in the applicable Reserve Bank of India Regulations/Guidelines.

(iii) A general provision is also made by the company @ 0.25% on the standard assets outstanding and disclosed under "Long term provisions" in note no. 6 in the financial statements as required by the Reserve Bank of India.

F) Employee Benefits:

(i) Gratuity: Payment for present liability of future payment of gratuity is being made to the approved gratuity funds, which cover the same under cash accumulation policy of the Life Insurance Corporation of India (LIC). However, any deficits in plan assets managed by LIC as compared to actuarial liability are recognized as a liability.

(ii) Superannuation: Defined contribution to superannuation fund is being made as per the scheme of the company.

(iii) Provident fund contributions are made to Bajaj Auto Limited Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the company and recognized as an expense. Shortfall in fund assets over present obligation determined by an appointed actuary is recognized as a liability.

(iv) Privilege leave: Privilege leave entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the company. As accumulated leave can be availed and/or encashed at any time during the tenure of employment, the liability is recognized at the actuarially determined value by an appointed actuary.

(v) Defined contribution to Employees' Pension Scheme, 1995 is made to Government Provident Fund Authority.

G) Taxation:

Provision for taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act, 1961. Deferred tax resulting from timing differences between book profits and tax profits is accounted for at the current rate of tax to the extent the timing differences are expected to crystallize, in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with virtual certainty that there would be adequate future taxable income against which deferred tax assets can be realized. However, deferred tax asset arising on account of unabsorbed depreciation and business losses are recognized only if there is virtual certainty supported by convincing evidence that there would be adequate future taxable income against which the same can be realized/set off.

H) Provisions and contingent liabilities:

The company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a realizable 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.

I) Employee Stock Option Scheme - See note no. 28


Mar 31, 2011

A) System of Accounting:

i) The Company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except in case of significant uncertainties.

ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

iii) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as on the date of financial statements. The estimates and assumptions used in the accompanying financial statements are based upon managements evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

B) Fixed Assets, Depreciation and Amortization:

I) (i) Fixed Assets are carried at cost of acquisition.

(ii) Depreciation on additions to Assets relating to leasing Business is being provided for as above, on pro-rata basis with reference to the month of commencement of the lease Period.

(iii) Depreciation on Assets relating to leasing Business, sold during the year, is being provided for at their respective rates up to the month in which such asset is sold.

(b) On other Assets:

(i) Depreciation on other assets is being provided on "Written Down Value Method" at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions during the year is being provided for on a pro-rata basis with reference to the month of addition.

(ii) Depreciation on assets sold during the year is being provided for, at their respective rates up to the month in which such asset is sold.

II) On Intangible Assets and Amortization thereof:

Intangible assets, representing Specialized Software, are recognised consistent with the criteria specified in Accounting Standard - 26 "Intangible Assets" as prescribed by Companies (Accounting Standards) Rules, 2006. The same is amortized over a period of 60 months, being the estimated useful life of the software.

C) Investments:

(i) Investments maturing within twelve months from the date of acquisition and investments made with the specific intention to dispose off within twelve months from the date of acquisition are classified as short term / current investments and are carried at their cost or market value / realizable value, whichever is lower.

(ii) Investments other than short term / current investments are carried at their cost of acquisition. Provision for diminution in value of investments, if any, is made if, in the opinion of the management, such diminution is other than temporary.

(iii) Fixed income securities with effect from this year are stated at cost less amortization of premium/discount as the case may be. (Refer D (iii) below)

D) Income from:

(i) Assets under Finance:

The Company has accrued finance charges and service charges in terms of contractual commitments with borrowers detailed in the finance agreements entered into with hirers except in the case of Non- Performing Assets.

(ii) leasing Business:

(a) lease rental income is recognized on accrual basis.

(b) For leases effected prior to 1 April 2001, the Company follows the recommendations of the Institute of Chartered Accountants of India contained in the Guidance Note on Accounting for leases. Accordingly, a matching annual charge is made to the Profit and loss Account representing recovery of net investment of leased assets. The said charge is calculated by deducting Finance Income for the year (arrived at by applying the rate of interest implicit in the lease to the net investment in the lease during the year) from the lease rental in respect of all its leased assets. This annual charge comprises of book depreciation (as per the policy stated in Para 1(B) (ii)) and a lease equalization charge where the annual lease charge is more than book depreciation. Where the annual lease charge is less than book depreciation a lease equalization charge credit is taken. The balance standing in the lease Adjustment Account has been adjusted in the net value of leased assets.

For leases effected on or after 1 April 2001, the Company has followed the provisions of Accounting Standard – 19 "leases" as prescribed by Companies (Accounting Standards) Rules, 2006.

(iii) Investment

(a) Dividend is accrued when the right to receive is established i. e. when declared by the investee entity.

(b) Interest on securities is accounted for on accrual basis except where the ultimate collection cannot be established with reasonable certainty.

(c) With effect from current year, in order to reflect the contracted yield as interest income, the premium/discount on fixed income securities is amortized with reference to the "yield to maturity" prevailing on acquisition. The impact of this change in the accounting policy on the profit for the year is not material considering the consequential release of the provision for diminution in the value of investment made in earlier years.

(iv) Other Income:

Other income is mainly accounted on accrual basis, except in case of significant uncertainties.

E) Receivables under finance:

(i) Receivables under finance represent principal and matured finance charges outstanding at the close of the year but net of amount written off.

(ii) The Company assesses all receivables for their recoverability and accordingly, makes provisions for non performing assets as considered necessary. Further, with effect from the previous year, the Company has enhanced its provisioning norms by accelerating provision to an early stage based on past experience, emerging trends and estimates. however, the Company ensures that the said provisions are not lower that the provisions stipulated in the applicable Reserve Bank of India Guidelines.

(iii) A general provision is also made by the Company @ 0.25% on the standard assets outstanding and disclosed under "Provisions" in the schedule 8 in the financial statements as required by the Reserve Bank of India.

F) Employee Benefits:

(i) Gratuity:

Payment for present liability of future payment of gratuity is being made to the Approved Gratuity funds, which cover the same under cash accumulation policy of the life Insurance Corporation of India (lIC). however, any deficits in Plan Assets managed by lIC as compared to actuarial liability are recognized as a liability.

(ii) Superannuation:

Defined Contribution to superannuation fund is being made as per the scheme of the Company.

(iii) Provident fund contributions are made to Bajaj Auto limited Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the Company and recognized as an expense.

(iv) Privilege leave:

Privilege leave entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the Company. As accumulated leave can be availed and / or encashed at any time during the tenure of employment the liability is recognized at the actuarially determined value by an Appointed Actuary.

(v) Contribution to Employees Pension Scheme, 1995 is made to Government Provident Fund Authority.

G) Taxation:

Provision for Taxation is made on the basis of the Taxable Profits computed for the current accounting period in accordance with the Income Tax Act 1961. Deferred Tax resulting from timing differences between Book Profits and Tax Profits is accounted for at the current rate of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax liabilities with reasonable certainty and in case of Deferred Tax Assets with reasonable certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized. however, Deferred Tax Asset arising on account of unabsorbed depreciation and business losses are recognized only if there is virtual certainty supported by convincing evidence that there would be adequate future taxable income against which the same can be realized/set off.

h) Provisions:

Necessary provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect the best estimates based on available information.

I) Employee Stock Option Scheme – See Note No. 14


Mar 31, 2010

A) System of Accounting:

(i) The company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except in case of significant uncertainties.

(ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

(iii) The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities as on the date of financial statements. The estimates and assumptions used in the accompanying financial statements are based upon managements evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

B) Fixed Assets, Depreciation and Amortization:

(I) (i) Fixed Assets are carried at cost of acquisition.

(ii) Depreciation

(a) On assets relating to Leasing Business:

(i) Depreciation on Assets relating to Leasing Business is being provided at the rates worked on Straight Line Method over the primary period of Lease as stated in the lease agreement or at the rates specified in Schedule XIV to the Companies Act, 1956, whichever is higher.

(ii) Depreciation on additions to Assets relating to Leasing Business is being provided for as above, on pro-rata basis with reference to the month of commencement of the Lease Period.

(iii) Depreciation on Assets relating to Leasing Business, sold during the year, is being provided for at their respective rates up to the month in which such asset is sold.

(b) On other Assets:

(i) Depreciation on other assets is being provided on "Written Down Value method" at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions during the year is being provided for on a pro-rata basis with reference to the month of addition.

(ii) Depreciation on assets sold during the year is being provided for, at their respective rates up to the month

(II) On Intangible Assets and Amortization thereof:

Intangible assets, representing Specialized Software, are recognised consistent with the criteria specified in

Accounting Standard - 26 "Intangible Assets"as prescribed by Companies (Accounting Standards) Rules, 2006. The same is

amortized over a period of 60 months, being the estimated useful life of the software.

C) Investments:

Investments maturing within twelve months from the date of acquisition and investments made with the specific intention to dispose off within twelve months from the date of acquisition are classified as short term / current investments and are carried at their cost or market value / realizable value, whichever is lower.

Investments other than short term/current investments are carried at their cost of acquisition. Provision for diminution in value of investments, if any, is made if, in the opinion of the management, such diminution is other than temporary.

D) Income from:

(i) Assets under Finance:

The company has accrued finance charges and service charges in terms of contractual commitments with borrowers detailed in the finance agreements entered into with hirers except in the case of Non- Performing Assets.

(ii) Leasing Business:

(a) Lease rental income is recognized on accrual basis.

(b) For leases effected prior to 1 April 2001, the company follows the recommendations of the Institute of Chartered Accountants of India contained in the Guidance Note on Accounting for Leases. Accordingly, a matching annual charge is made to the Profit and Loss Account representing recovery of net investment of leased assets. The said charge is calculated by deducting Finance Income for the year (arrived at by applying the rate of interest implicit in the lease to the net investment in the lease during the year) from the lease rental in respect of all its leased assets. This annual charge comprises of book depreciation (as per the policy stated in Para 1 (B) (ii)) and a lease equalization charge where the annual lease charge is more than book depreciation. Where the annual lease charge is less than book depreciation a lease equalization charge credit is taken. The balance standing in the Lease Adjustment Account has been adjusted in the net value of leased assets.

For leases effected on or after 1 April 2001, the company has followed the provisions of Accounting Standard - 19 "Leases"as prescribed by Companies (Accounting Standards) Rules, 2006.

(iii) Other Income:

Other income is mainly accounted on accrual basis, except in case of significant uncertainties.

E) Non performing assets:

The company has followed the directives of the Reserve Bank of India (RBI) on Prudential Normsof Income recognition, Provision for bad and doubtful debts etc. issued from time to time. Accordingly the Company has not accrued income in respect of Assets under Finance/Lease contracts/Consumer Loans, which are Non Performing Assets as redefined therein and has made provision in respect of the said Assets, as considered necessary, however ensuring that the said provisions are not lower than the provisions stipulated in the applicable RBI guidelines.

F) Employee Benefits:

(i) Gratuity:

Payment for present liability of future payment of gratuity is being made to the Approved Gratuity funds, which fully cover the same under cash accumulation policy of the Life Insurance Corporation of India. However, any deficits in Plan Assets managed by LIC as compared to actuarial liability are recognized as a liability.

(ii) Superannuation:

Defined Contribution to superannuation fund is being made as per the scheme of the company.

(iii) Provident fund contributions are made to Bajaj Auto Limited Provident Fund Trust. Deficits, if any, of the fund as compared to aggregate liability is additionally contributed by the company and recognized as an expense.

(iv) Privilege Leave:

Privilege leave entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the company. As accumulated leave can be availed and / or encashed at any time during the tenure of employment the liability is recognized at the actuarially determined value by an Appointed Actuary.

(v) Contribution to Employees Pension Scheme, 1995 is made to Government Provident Fund Authority.

G) Taxation:

Provision for Taxation is made on the basis of the Taxable Profits computed for the current accounting period in accordance with the Income Tax Act, 1961. Deferred Tax resulting from timing differences between Book Profits and Tax Profits is accounted for at the current rate of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.

H) Provisions:

Necessary provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions reflect the best estimates based on available information.

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