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Accounting Policies of Credit Analysis & Research Ltd. Company

Mar 31, 2016

1 Summary of Significant Accounting Policies

a. Basis of Preparation of Financial Statements

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standard notified under section 133 of the Companies Act, 2013 read with General Circular 8/2014 dated April 4, 2014, issued by the Ministry of Corporate Affairs to the extent applicable. The accounting policies have been consistently followed by the Company.

All 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 the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as up to twelve months for the purpose of current/non-current classification of assets and liabilities.

b. Use of Estimates

The financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in India which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes that the estimates made in the preparation of the financial statements are prudent and reasonable. Actual results may differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c Revenue Recognition

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

Initial rating fee is recognized on assignment of rating by the Rating Committee. The company recognizes a portion of surveillance fees as income, commensurate with the efforts involved, on the date the surveillance activity is completed. The balance surveillance fee is recorded equally over the twelve months surveillance period which commences one year after the date of assigning a rating.

Fee from other service accounted for on accrual basis.

As a matter of prudent policy and on the basis of past experience of recoverability of income, fees in respect of certain defined categories of clients are recognized when there is reasonable certainty of ultimate collection.

Income on subscription to information services primarily pertains to sale of research reports and the income thereon is recognized on sale of such reports.

Other Income

Dividends on investments are recognized as income as and when the right to receive the same is established. Interest income is recognized on accrual basis. Profit or loss on redemption / sale of investment is recognized on accrual basis on trade date of transaction.

d. Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

e. Depreciation

Depreciation on fixed assets is provided on Straight-Line method using the rates arrived at based on useful lives as provided in Schedule II of the Companies Act, 2013.

f. Operating Leases

Leases of assets under which all the risks and benefits of ownership are effectively retained by less or are classified as operating leases. Lease Rent made under operating leases are charged to the Statement of Profit & Loss on a straight line basis, over the lease term.

g. Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long Term Investments are carried at cost. Provision for diminution, if any, is made if the decline in value is other than temporary in nature. Current investments are stated at lower of cost and fair value. Any reduction in fair value and reversals of such reduction are included in Statement of Profit & Loss.

h. Foreign Currency Translation

Foreign currency transactions are recorded, on initial recognition in the reporting currency, at the prevailing rates as at the date of such transactions.

Foreign currency monetary items are reported using the closing rates. Non-monetary items which are carried in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction.

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

i. Retirement Benefits

i) The Company provides retirement benefits to its employees in the form of Provident Fund, Superannuation and Gratuity.

ii) Contribution to the Provident Fund is made at the prescribed rates to the Provident Fund Trust / Commissioner. Contribution to Provident Fund is charged to Statement of Profit & Loss.

iii) Superannuation benefit is contributed by the Company to Life Insurance Corporation of India (LIC) @ 10% of basic salary of the employees with respect to certain employees. Contribution to Superannuation Fund is charged to Statement of Profit & Loss.

iv) The Company accounts for the liability of future gratuity benefits based on actuarial valuation. The company has created a trust for future payment of gratuities which is funded through gratuity-cum-life insurance scheme of LIC of India (Defined Benefit Plan).

v) Long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method. Short term compensated absences are provided for based on estimates.

vi) Actuarial gain and losses are recognized immediately in the Statement of Profit and Loss as income or expenses.

j. Accounting for taxes

i) Current Tax : Current tax is provided on the taxable income in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred Tax : The Deferred tax is accounted in accordance with the Accounting Standard 22 "Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. The Deferred tax for the year on timing differences are accounted at tax rates that have been enacted by the Balance Sheet date.

Deferred tax assets arising from the timing difference are recognized to the extent that there is reasonable certainty that sufficient future taxable income will be available.

In case of unabsorbed losses and unabsorbed depreciation, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profit. At each Balance Sheet date the Company re-assesses unrecognized deferred tax assets.

k. Impairment of assets

In accordance with AS 28 on ''Impairment of Assets" where there is an indication of impairment of the Company''s assets, the carrying amounts of the company''s assets are reviewed at the 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 the cash generating unit to which it belongs, exceeds its 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.

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, or a reasonable estimate thereof.

l. Earnings per share (''EPS)

The basic earnings per equity share are computed by dividing the net profit or loss attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting year.

Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average of equity and dilutive equity equivalent shares outstanding during the reporting year.

m. Provisions and Contingent Liabilities

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

n. Employee Stock Options

The stock options granted are accounted for as per the accounting treatment prescribed by Employee Stock Options Scheme, Employee Stock Purchase Guidelines, 1999, issued by Securities and Exchange Board of India and the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI, whereby the fair value of the option is recognized as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option.

The options that lapse are reversed by a credit to employee compensation expense, equal to the amortized portion of the value of lapsed portion and credit to deferred employee compensation expense equal to the unamortized portion.

o. Cash and Cash Equivalents

Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash / fixed deposits at bank including short-term highly liquid investments with an original maturity of three months or less.

p. Cash Flow Statement

Cash flows are reported using the indirect method, whereby the net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

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 company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders at the ensuing Annual General Meeting.

During the year ended March 31, 2016 ,interim dividends of Rs.18/- per share (Previous Year: Rs. 6/- per share) and special dividend of Rs. Nil per share (Previous Year: Rs. 65/-) was distributed to equity shareholders and the Board of Directors has recommended a final dividend of Rs. 10/- per share (Previous Year: Rs. 8/- per share).

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


Mar 31, 2014

A. Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standard notified under Companies (Accounting Standards) Rules 2006 (as amended), and the relevant provisions of the Companies Act, 1956 read with General Circular 3^014 dated April A, 2014, issued by the Ministry of Corporate Affairs to the extent applicable. The accounting policies have been consistently applied by the Company and are consistent with those used In the previous year,

All 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 the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as upto twelve months far the purpose of current/non- current classification of assets and liabilities.

b . Use of Estimates

The financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in India which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities. 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 which in management''s opinion are prudent and reasonable. 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.

c. Revenue Recognition

Revenue from Operation

Income from operations comprises income from initial rating and surveillance services and subscription to information services exclusive of service tax. Initial rating fee is recognized as income on assignment of rating by the Rating Committee. The company recognizes a portion of surveillance fees as income, commensurate with the efforts involved, on the date the surveillance activity is completed. The balance surveillance fee is recorded equally over the twelve months surveillance period which commences one year after the date of assigning a rating.

Fee for technical know-how is accounted for an accrual basis. Income an subscription to information services primarily pertains to sale of research reports and the income thereon is recognized on sale of such reports.

As a matter of prudent policy and on the basis of past experience of recoverability of income, fees in respect of certain defined categories of clients are recognized when there is reasonable certainty of ultimate collection.

Other Income

Dividends on investments are recognised as income as and when the right to receive the same is established- Interest income is recognised on accrual basis.

Profit or loss on redemption / sale of Investment is recognized on accrual basis on trade date of transaction.

d. Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment if any.

e. Depreciation

Depreciation is provided on straight-line method in the manner and at the rates prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on assets added, sold or discarded during the year has been provided on a pro- rata basis.

Computer software is fully depreciated in the year of purchase.

f. Operating Leases

Leases of assets under which all the risks and benefits of ownership are effectively retained by lessor are classified as operating leases. Payments made under operating leases are charged to ihe statement of profit & loss account, an a straight line basis, over the lease term.

g. Investments

Investments are classified Into current and long term investments. Long Term Investments are carried at cost. Provision for diminution, if any, is made if the decline in value is other than temporary in nature- Current investments are stated at lower of cost and fair value. Any reduction In fair value and reversals of such reduction are included In Statement of Profit & Loss. Investments in Commercial Paper stated at tarrying cost.

h . Foreign Currency Translation

Foreign currency transactions are recorded, on initial recognition in the reporting currency, at the prevailing rates as at the date of such transactions.

Foreign currency monetary items are reported using the closing rates. Nan-monetary Items which are carried In terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction.

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

I, Retirement Benefits

1) The Company provides retirement benefits to its employees in the form of Provident Fund, Superannuation and

Gratuity.

ii) Contribution to the Provident Fund is made at the prescribed rates to the Provident Fund Trust / Commissioner. Contribution to Provident Fund is charged to Statement of Profit & Loss.

Mr) Superannuation benefit is contributed by the Company to Life Insurance Corporation of India (LIC) @ 10% of basic salary of the employees with respect to certain employees. Contribution to Superannuation Fund is charged to

Statement of Profit & Loss.

Iv) The Company accounts for the liability of future gratuity benefits based on actuarial valuation. The company has created a trust far future payment of gratuities which is funded through gratuity-cum-lrfe insurance scheme of LlC of India (Defined Benefit Plan)

v) Long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method. Short term compensated absences are provided for based on estimates.

vi) Actuarial gain and losses are recogniied immediately in the Statement of Profit and Loss as income or expenses.

j, Accounting for taxes

I) Current Tax: Current tax is provided an the taxable income In accordance with the provisions of the Income Tax Act. 1961,

ii) Deferred Tax ; The Deferred tax is accounted in accordance with the Accounting Standard 22 "Accounting for Taxes on Income" Issued by The Institute of Chartered Accountants of India. The Deferred tax for the year on timing differences are accounted at tax rates that have been enacted by the Balance Sheet date.

Deferred tax assets arising from the timing difference are recognized to the extent that there is reasonable certainty that sufficient future taxable income will be available.

In case of unabsorbed losses and unabsorbed depreciation, all deferred tax assets are recognised only if there Is virtual certainty supported by convincing evidence that they can be realised against future taxable profit. At each Balance Sheet date the Company re-assesses unrecognized deferred tax assets.

k, Impairment of Asset

In accordance with A5 28 on ''Impairment of Assets" where there is an indication of impairment of the Company''s assets, the carrying amounts of the company''s assets are reviewed at the 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 recognised whenever the carrying amount of an asset or the cash generating unit to which it belongs, exceeds its recoverable amount. Impairment loss is recognised 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 asessed impairment loss no longer exists, the recoverable amount is re-assessed and the asset is reflected at the recoverable arnount subject to a maximum of the depredated historical cost.

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, or a reasonable estimate thereof.

11 Earnings per share (''EPS'')

The basic earning per equity share are computed by dividing the net profit or loss attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting year.

Diluted EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average of equity and dilutive equity equivalent shares outstanding during the reporting year.

m. Provisions and Contingent Liabilities

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

n. Employee Stock Options

The stock options granted are accounted for as per the accounting treatment prescribed by Employee Stock Options Scheme, Employee Stock Purchase Guidelines, 1999, Issued by Securities and Exchange Board of India and the Guidance Note on Accounting for Employee Share-based Payments, issued by the ICAI, whereby the fair value of the option is recognised as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option.

The options that lapse are reversed by a credit to employee compensation expense, equal to the amortised portion of the value of lapsed portion and credit to deferred employee compensation expense equal to the unamortised portion.

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 company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders at the ensuing Annual General Meeting.

During the year ended March 31,2014, interim dividend of Rs. 18 per share was distributed to equity shareholders and the Board of Directors has recommended a final dividend of Rs. 10 per share. [March 31,2013: Rs. 20 per share)

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.

e The Company does not have a holding company

f Shares reserved for issue under options and contracts, including the terms and amounts:

For details of Shares reserved for issue under the Employee Stock Option Plan ( ESOP) of the Company refer Note: 31


Mar 31, 2013

A . Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standard notified under Companies (Accounting Standards) Rules 2006 issued by the Central Government and relevant provisions of the Companies Act,l956 to the extent applicable. The accounting policies have been consistently followed by the Company.

b . Use of Estimates

The financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in India which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities. 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 which in management''s opinion are prudent and reasonable. 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.

c . Revenue Recognition Revenue from Operation

Income from operations comprises income from initial rating and surveillance services and subscription to information services exclusive of service tax. Initial rating fee is recognized as income on assignment of rating by the Rating Committee. The company recognizes a portion of surveillance fees as income, commensurate with the efforts involved, on the date the surveillance activity is completed. The balance surveillance fee is recorded equally over the twelve months surveillance period which commences one year after the date of assigning a rating.

Fee for technical know-how is accounted for on accrual basis. Income on subscription to information services primarily pertains to sale of research reports and the income thereon is recognized on sale of such reports.

As a matter of prudent policy and on the basis of past experience of recoverability of income, fees in respect of certain defined categories of clients are recognized when there is reasonable certainty of ultimate collection.

Other Income

Dividends on investments are recognised as income as and when the right to receive the same is established. Interest income is recognised on accrual basis.

Profit or loss on redemption / sale of investment is recognized on accrual basis on trade date of transaction.

d Fixed Assets

Fixed assets are stated at cost less accumulated depreciation.

e . Depreciation

Depreciation is provided on straight - line method in the manner and at the rates prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on assets added, sold or discarded during the year has been provided on a pro-rata basis.

Computer software is fully depreciated in the year of purchase.

f . Operating Leases

Leases of assets under which all the risks and benefits of ownership are effectively retained by lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit & Loss, on a straight line basis, over the lease term.

g . Investments

Investments are classified into current and long term investments. Long Term Investments are carried at cost. Provision for diminution, if any, is made if the decline in value is other than temporary in nature. Current investments are stated at lower of cost and fair value. Any reduction in fair value and reversals of such reduction are included in Statement of Profit & Loss. Investments in Commercial Paper stated at carrying cost.

h . Foreign Currency Translation

Foreign currency transactions are recorded, on initial recognition in the reporting currency, at the prevailing rates as at the date of such transactions.

Foreign currency monetary items are reported using the closing rates. Non-monetary items which are carried in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction.

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

i . Retirement Benefits

i) The Company provides retirement benefits to its employees in the form of Provident Fund, Superannuation and Gratuity.

ii) Contribution to the Provident Fund is made at the prescribed rates to the Provident Fund Trust / Commissioner. Contribution to Provident Fund is charged to Statement of Profit & Loss.

iii) Superannuation benefit is contributed by the Company to Life Insurance Corporation of India (LIC) @ 10% of basic salary of the employees with respect to certain employees. Contribution to Superannuation Fund is charged to Statement of Profit & Loss.

iv) The Company accounts for the liability of future gratuity benefits based on actuarial valuation. The company has created a trust for future payment of gratuities which is funded through gratuity-cum-life insurance scheme of LIC of India (Defined Benefit Plan)

v) Long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method. Short term compensated absences are provided for based on estimates.

vi) Actuarial gain and losses are recognized immediately in the Statement of Profit and Loss as income or expenses.

j . Accounting for taxes

i) Current Tax : Current tax is provided on the taxable income in accordance with the provisions of the Income Tax Act, 1961.

ii) Deferred Tax : The Deferred tax is accounted in accordance with the Accounting Standard 22" Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. The Deferred tax for the year on timing differences are accounted at tax rates that have been enacted by the Balance Sheet date.

Deferred tax assets arising from the timing difference are recognized to the extent that there is reasonable certainty that sufficient future taxable Income will be available.

k . Impairment of Asset

As asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged in the Statement of Profit & Loss to the extent carrying amount of asset exceeds their recoverable amount in the year in which an asset is identified as impaired.

l . Provisions and Contingent Liabilities

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


Mar 31, 2012

A . Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting and comply with the Companies (Accounting Standards) Rules 2006 issued by the Central Government and relevant provisions of the Companies Act,1956 to the extent applicable. The accounting policies have been consistently followed by the Company.

b . Use of Estimates

The financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in India which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities. 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 which in management''s opinion are prudent and reasonable. 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.

c . Changes in Accounting Policy for Revenue Recognition

During the year, the Company changed its revenue recognition policy for surveillance fees. Up till now the Company was recognizing surveillance fees in full in the year in which they became due. However, in the current year the management has estimated a portion of surveillance fees to be recognised as income, commensurate with the efforts involved on the date the surveillance activity is completed. The balance surveillance fee is recorded equally over the 12 months surveillance period which commences 1 year after the date of assigning a rating.

Had the Company continued with its earlier policy, Rating Income including surveillance fees for the year would have been higher by Rs. 197, 892, 924 while profit after tax and revenue reserves would have been higher by Rs. 133,686,565.

d . Revenue Recognition

Income from operations comprises income from initial rating and surveillance services and subscription to information services. Initial rating fee is recognized as income on assignment of rating by the Rating Committee. The company recognizes a portion of surveillance fees as income, commensurate with the efforts involved, on the date the surveillance activity is completed. The balance surveillance fee is recorded equally over the 12 months surveillance period which commences 1 year after the date of assigning a rating.

Fee for technical know - how is accounted for on accrual basis. Income on subscription to information services is recognized as and when the same is received.

As a matter of prudent policy and on the basis of past experience of recoverability income, fees in respect of certain defined categories of clients are recognized when there is reasonable certainty of ultimate collection.

e. Investment Income

Dividend from investments is recognized as income as and when the right to receive the same is established. Interest income is accrued on a time proportion basis over the period of investment.

f . Fixed Assets

Fixed assets are stated at cost less accumulated depreciation.

g . Depreciation

Depreciation is provided on straight - line method in the manner and at the rates prescribed in Schedule XIV of the Companies Act, I956. Depreciation on assets added, sold or discarded during the year has been provided on a pro-rata basis.

Computer software is fully depreciated in the year of purchase.

h . Operating Leases

Leases of assets under which all the risks and benefits of ownership are effectively retained by lessor are classified as operating leases. Payments made under operating leases are charged to the Profit & Loss Account, on a straight line basis, over the lease term.

i . Investments

Investments are classified in to current and non-current investments. Non-current investments are carried at cost. Provision for diminution, if any, is made if the decline in value is other than temporary in nature. Current investments are stated at lower of cost and fair value. Any reduction in fair value and reversals of such reduction are included in Statement of Profit & Loss. Investments in Commercial Paper stated at carrying cost.

j . Foreign Currency Translation

Foreign currency transactions are recorded, on initial recognition in the reporting currency, at the prevailing rates as at the date of such transactions.

Foreign currency monetary items are reported using the closing rates. Non-monetary items which are carried in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction.

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

k . Retirement Benefits

The Company provides retirement benefits to its employees in the form of Provident Fund, Superannuation and Gratuity.

i) Contribution to the Provident Fund is made at the prescribed rates to the Provident Fund Trust / Commissioner. Contribution to Provident Fund is charged to Statement of Profit & Loss.

ii) Superannuation benefit is contributed by the Company to Life Insurance Corporation of India (LIC) @ I0% of basic salary of the employees with respect to certain employees. Contribution to Superannuation Fund is charged to Statement of Profit & Loss.

iii) Company accounts for the liability of future gratuity benefits based on actuarial valuation. The company has created a trust for future payment of gratuities which is funded through gratuity-cum-life insurance scheme of LIC of India (Defined Benefit Plan)

iv) Long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for Short term compensated absences which are provided for based on estimates. Actuarial gain and losses are recognized immediately in the statement of Profit and Loss Account as income or expenses.

l . Accounting for taxes

i) Current Tax : Current tax is provided on the taxable income in accordance with the provisions of the Income Tax Act, I96I.

ii) Deferred Tax : The Deferred tax is accounted in accordance with the Accounting Standard 22" Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. The Deferred tax for the year on timing differences are accounted at tax rates that have been enacted by the Balance Sheet date.

Deferred tax assets arising from the timing difference are recognized to the extent that there is reasonable certainty that sufficient future taxable Income will be available.

m . Provisions and Contingent Liabilities

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

n . Impairment of Asset

As asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss, if any, is charged to the Statement of Profit & Loss to the extent carrying amount of asset exceeds their recoverable amount in the year in which an asset is identified as impaired.

 
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