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Accounting Policies of Fortune Financial Services (India) Ltd. Company

Mar 31, 2015

1 COMPANY OVERVIEW

Fortune Financial Services (India) Limited ('Fortune' or the Company) was incorporated on June 14, 1991 as a private limited company. It was subsequently converted into a public limited company on October 20, 1994. The company had made an initial public offer in February, 1995. The Company is presently listed on The Bombay Stock Exchange. The company has Indian subsidiaries for equity and commodity broking, financing , Investment banking and third party distribution activities.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention on an accrual basis. The financial statements have been prepared in accordance with the generally accepted accounting principles to comply in all material aspects with the Accounting Standards (AS) prescribed in the Companies (Accounting Standards) Rules 2006 and the provisions of the Companies Act, 2013 ("The Act") issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

2.2 Use of estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expense during the reporting period. Although these estimates are based upon Management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognized in the period in which the results are known / materialized.

2.3 Revenue recognition

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

a. Investment banking income is accounted on the basis of the terms of agreement with the clients.

b. Placement fees, professional fees and other service charges are accounted when there is reasonable certainty of its ultimate realization / collection.

c. Income from distribution is accounted when there is reasonable certainty of its ultimate realization/collection.

d. Interest income is recognized on an accrual (time proportion) basis.

e. Dividend income is recognized when the right to receive dividend is established.

f. Profit / loss on sale of investment is determined at the time of actual sale/ redemption

2.4 Employee benefits

a) Short term employee benefits

Employee benefits such as salaries, allowances short term compensated absences, estimated cost of bonus, exgratia and employee benefits under defined contribution plans such as provident fund and other funds which fall due within twelve months of rendering the service are classified as short term employee benefits and charged as expense to the Statement of Profit and Loss in the period in which the service is rendered

b) Long term employee benefits

Defined contribution plan such as provident fund etc. are charged to the statement of profit and loss as incurred. Defined benefit plans - The present value of obligation under such a plan is determined based on the actuarial valuation using the Projected Unit Credit Method, acturial gains and losses arising on such valuation are recognized immediately in the statement of profit and loss. In case of funded defined benefit plans the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis. Other long term employee benefit are recognized in the same manner as defined benefit plans.

2.5 Tangible assets

Tangible fixed assets are stated at cost of acquisition net of tax / duty credits less accumulated depreciation. Cost includes all expenses incurred incidental to the acquisition of fixed assets.

2.6 Intangible assets

Intangible assets are stated at cost of acquisition, net of tax / duty credits availed less amortization and impairment losses, if any. An asset is recognized when it is probable that the future economic benefits attributable to the assets will flow to the enterprise and where it's cost can be reliably measured.

2.7 Depreciation and amortization

The Company provides for depreciation and amortization as under:

The Company provides for depreciation as under:

a. On written down value basis, in accordance with the useful life prescribed in Schedule II to the Companies Act, 2013.

b. On a pro-rata basis on assets purchased / sold during the year.

c. On leasehold improvements, over the primary period of the lease.

d. On intangible assets, over a period of five years from the date of acquisition.

2.8 Impairment

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there is a change in the estimate of the recoverable amount.

2.9 Taxation

Provision for tax comprises current tax and deferred tax charge or credit.

Current taxes are measured on the basis of the taxes expected to be paid on the taxable income determined in accordance with the prevailing tax rates applicable to the relevant assessment year .

Deferred tax is the tax effect of the timing differences between the accounting income and taxable income. Deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the rates that have been enacted or substantially enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is a reasonable certainty that there will be sufficient taxable income against which it can be realised on account of other timing differences ; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. Deferred tax assets, if any, are re- assessed periodically.

Minimum alternate tax credit ( MAT credit) is recognised as an assets only to the extent there is convincing evidence that the company will pay normal tax during the specified period . Such asset is reviewed at each balance sheet date and carrying amount of the MAT credit asset is written down to the extent there is no longer convincing evidence to the effect that the company will pay normal tax during the specified period.

2.10 Investments

"All Investments are stated at cost. Investments that are readily realisable and intent to be held for not more than one year from the date on which investments are made are classified as current investments . All other investments are classified as long term investments . Current investments are carried at cost or fair value whichever is lower. Provision for diminution in value of current investments is made if the fair value of investments is less than its cost. Provision for diminution in the value of long-term investment is made only if such a decline is other than temporary. Provision for diminution in value of investments made during the year is charged to the Statement of Profit and Loss. "

2.11 Derivative instruments

Daily mark-to-market margins on the derivative trades are accounted separately as against the initial margin payments under Current Assets. The profit/loss on the final settlement of the derivative contracts, calculated as the difference between the final settlement price and the contract price of all the contracts in the series, is recognized on the expiry/square-up of the series of equity index/stock futures by transfer from the mark-to-market margin account.

As on the date of the Balance Sheet, provision for anticipated loss is made for the debit balance if any, in the mark-to-market margin account (maintained scrip wise /index wise) on open futures contracts, credit balances if any, in the account attributable to anticipated income being ignored keeping in view the consideration of prudence.

2.12 Earnings per share

The basic earnings per share is computed and disclosed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year, adjusted for the effects of all dilutive potential equity shares, if any.

2.13 Provisions, contingent liabilities and contingent assets

A provision is recognised when there is a present obligation as a result of past events for which a probable outflow of resources embodying economic benefits are expected to settle the obligation and the amount of the obligation can be reliably estimated.

Contingent liabilities are not recognised but are disclosed in the notes in case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation,

b) a possible obligations, unless the probability of outflow of resources is remote.

Contingent assets are neither recognised, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

2.14 Leases

Operating lease where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Lease payments for assets taken under operating leases are charged off to the statement of Profit and Loss over the lease term.

2.15 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Realized gains and losses on foreign currency transactions during the year are recognized in the Statement of Profit and Loss. Monetary items denominated in foreign currency are restated using the closing exchange rate of the date of the balance sheet and the resulting net exchange difference is recognized in the Statement of Profit and Loss.


Mar 31, 2014

A) Basis of preparation

i) The Consolidated Financial Statements are prepared in accordance with the Accounting Standards 21 (AS 21) "Consolidated Financial Statements" as specified in the Companies (Accounting Standards) Rules, 2006.

ii) The notes and significant accounting policies to the Consolidated Financial Statements are intended to serve as a guide for a better understanding of the Groups position. In this respect, the Company has disclosed such notes and policies which represent the required disclosure.

b) Principles of consolidation

The consolidated financial statements have been prepared on the following basis:

i) The financial statements of the Company and its subsidiaries are combined on a line-by-line basis by adding together like items of assets, liabilities, income and expense after eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses and are presented to the extent possible, in the same manner as the Company''s independent financial statements.

ii) The details of subsidiaries and the interest of the Company therein, included in the Consolidated Financial Statements are as under :

c) Goodwill on consolidation

Goodwill on consolidation represents the difference between the Company''s share in the net worth of subsidiaries, and the cost of acquisition at each point of time of making the investment in the subsidiaries.

3 SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention on an accrual basis. The financial statements have been prepared in accordance with the generally accepted accounting principles to comply in all material aspects with the Accounting Standards (AS) prescribed in the Companies (Accounting Standards) Rules 2006 and the provisions of the Companies Act, 1956 ("The Act") and guidelines issued by the Reserve Bank of India (RBI) for Non Banking Financial Companies, to the extent applicable.

3.2 Use of estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expense during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognised in the period in which the results are known / materialised.

3.3 Revenue recognition

Revenue is recognised when it is earned and no significant uncertainty exists of its ultimate realisation/collection.

a. Investment banking income is accounted on the basis of the terms of agreement with the clients.

b. Professional fees and other service charges are accounted when there is reasonable certainty of its ultimate realisation/collection.

c. Income from broking activities is recognised on the trade dates.

d. Income from distribution is accounted when there is reasonable certainty of its ultimate realisation.

e. Interest income is recognised on an accrual (time proportion) basis. In its two subsidiaries which are non banking financial companies, interest on Non Performing Assets (NPAs), if any, is recognised on receipt basis, as per Reserve Bank of India guidelines.

f. Commission income on first year premium on insurance policies is recognised, when insurance policies sold by the Company are accepted by the principal insurance company. Renewal commission is accounted for on receipt basis.

g. Income from depository operations is recognised on accrual basis.

h. Dividend Income is recognised when the right to receive dividend is established. i. Profit/loss on sale of investment is determined at the time of actual sale/redemption

3.4 Employee Benefits

a) Short term employee Benefits

Employee benefits such as salaries, allowances, short term compensated absences, estimated cost of bonus, exgratia and employee benefits under defined contribution plans such as provident fund and other funds which fall due within twelve months of rendering the service are classified as short term employee benefits and charged as expense to the Statement of Profit and Loss in the period in which the service is rendered.

b) Long term employee benefits

Employee benefits under defined benefit plans like gratuity which fall due for payment after a period of twelve months from rendering of service or after completion of employment are determined base on acturial valuation using the projected unit credit method.

The Company''s obligations recognised in the Balance Sheet represents the present value of obligations as reduced by the fair value of plan assets, where applicable.

3.5 Employee stock option scheme

The stock options granted by the Company are accounted for as per the accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) and the Guidance Note on Accounting for Stock Options issued by The Institute of Chartered Accountants of India, whereby the intrinsic value of the options are recognised as deferred employee compensation. The deferred employee compensation, if any, is charged to the Statement of Profit and Loss on a straight line basis over the vesting period of the options. The Employee Stock Option outstanding account, net of unamortised deferred employee compensation, if any is shown separately as part of reserves.

3.6 Tangible assets

Tangible fixed assets are stated at cost of acquisition, net of tax/duty credits availed less amortisation and impairment losses, if any. An asset is recognised when it is probable that the future economic benefits attributable to the assets will flow to the enterprise and where it''s cost can be reliably measured.

3.7 Intangible assets

Intangible assets are stated at cost of acquisition, net of tax/duty credits availed less amortisation and impairment losses, if any. An asset is recognised when it is probable that the future economic benefits attributable to the assets will flow to the enterprise and where it''s cost can be reliably measured.

3.8 Depreciation and amortisation

The Company provides for depreciation and amortisation as under:

a. On written down value basis, in accordance with the rates prescribed in Schedule XIV to the Act.

b. On intangible assets, over a period of three years from the date of acquisition.

c. On a pro-rata basis on assets purchased / sold during the year.

d. On assets costing less than Rs.5,000, at hundred percent of the cost of the asset in the year of purchase.

e. On leasehold improvements, over the primary period of the lease.

f. On goodwill on acquisition over a period of five years from the date of acquisition

g. On goodwill on consolidation over a period of five years from the date of acquisition

3.9 Impairment

An asset is treated as impaired when the carrying amount of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in a prior accounting period is reversed if there is a change in the estimate of the recoverable amount recoverable amount.

3.10 Taxation

Provision for tax comprises current tax and deferred tax charge or benefit.

Current taxes are measured on the basis of the taxes expected to be paid on the taxable income determined in accordance with the prevailing tax rates and laws.

Deferred tax is the tax effect of the timing differences between the accounting income and taxable income and are capable of reversal in one or more subsequent periods. Deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the rates that have been enacted or substantially enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is a reasonable certainty that there will be sufficient taxable income against which it can be realised; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. Deferred tax assets, if any, are re-assessed periodically.

3.11 Investments

All Investments are stated at cost. Investments are classified as current or long term in accordance with Accounting Standard 13 on "Accounting for Investments". Provision for diminution in vale of current investments is made if the fair value of investments is less than its cost. Provision for diminution in the value of long-term investment is made only if such a decline is other than temporary. Provision for diminution in value of investments made during the year is charged to the Statement of Profit and Loss.

3.12 Derivative Instruments

Daily mark-to-market margins on the derivative trades are accounted separately as against the initial margin payments under Current Assets. The profit/loss on the final settlement of the derivative contracts, calculated as the difference between the final settlement price and the contract price of all the contracts in the series, is recognised on the expiry/ square-up of the series of equity index/stock futures by transfer from the mark-to-market margin account.

As on the date of the Balance Sheet, provision for anticipated loss is made for the debit balance if any, in the mark- to-market margin account (maintained scrip wise /index wise) on open futures contracts, credit balances if any, in the account attributable to anticipated income being ignored keeping in view the consideration of prudence.

3.13 Earnings per share

The basic earnings per share is computed and disclosed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year, adjusted for the effects of all dilutive potential equity shares, if any.

3.14 Miscellaneous expenditure

Preliminary expenditure and expenditure in connection with the raising of capital is amortised over a period of ten years from the year of commencement of business operation or from the year of raising capital.

3.15 Provisions, contingent liabilities and contingent assets

A provision is recognised when there is a present obligation as a result of past events for which a probable outflow of resources is expected to settle the obligation and the amount of obligation can be reasonably estimated.

Contingent liabilities are not recognised but are disclosed in the notes in case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation,

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent Assets are neither recognised, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

3.16 Leases

Operating lease where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Lease payments for assets taken under operating leases are charged off to the statement of Profit and Loss over the lease term.

3.17 Cash and cash equivalents

Cash and cash equivalents comprise of cash on hand and deposits with bank. The Company considers all highly liquid investments/ bank deposits with a remaining maturity on the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

3.18 Cash flow statements

The Cash Flow Statement is prepared using the indirect method set out in Accounting Standard 3 on "Cash flow Statement" and presents the cash flow by operating, investing and financing activities of the Company.

3.19 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Realised gains and losses on foreign currency transactions during the year are recognised in the Statement of Profit and Loss. Monetary items denominated in foreign currency are restated using the closing exchange rate of the date of the balance sheet and the resulting net exchange difference is recognised in the Statement of Profit and Loss.

c 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 an equity share is entitled to one vote per share.

During the year ended March 31, 2014 the amount of dividend per share recognised as distribution to equity shareholders was Nil (March 31, 2013 Nil)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive their share in the 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.

d The Company has not reserved any shares for issue of options and contracts/commitments for sale of shares/divestments.


Mar 31, 2013

1.1 Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention on an accrual basis. The financial statements have been prepared in accordance with the generally accepted accounting principles to comply in all material aspects with the Accounting Standards (AS) prescribed in the Companies (Accounting Standards) Rules 2006 and the provisions of the Companies Act, 1956 (The Act") issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

1.2 Useof estimates

The preparation of financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expense during the reporting period. Although these estimates are based upon Management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognised in the period in which the results are known / materialised.

1.3 Revenue recognition

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

a. Issue Management fee is accounted on the basis of the terms of agreement with the clients.

b Placement fees, professional fees and other service charges are accounted when there is reasonable certainty of its ultimate realisation / collection.

c Income from distribution is accounted when there is reasonable certainty of its ultimate realisation/collection.

d. Interest income is recognised on an accrual (time proportion) basis.

e. Dividend income is recognised when the right to receive dividend is established.

f Profit / loss on sale of investment is determined at the time of actual sale/ redemption.

1.4 Employee benefits

a) Short term employee benefits

Employee benefits such as salaries, allowances short term compensated absences, estimated cost of bonus, ex-gratia and employee benefits under defined contribution plans such as provident fund and other funds which fall due within twelve months of rendering the service are classified as short term employee benefits and charged as expense to the Statement of Profit and Loss account in the period in which the service is rendered

b) Long term employee benefits

Employee benefit under defined benefits plans like gratuity which fall due for payment after a period of twelve months from rendering of service or after completion of employment are determined based on actuarial valuation using the projected unit credit method.

The Company''s obligations recognised in the Balance Sheet represents the present value of obligations as reduced by the fair value of plan of assets, where applicable.

1.5 Employee stock option scheme.

The stock options granted by the Company are accounted for as per the accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) and the Guidance Note on Accounting for

Stock Options issued by The Institute of Chartered Accountants of India, whereby the intrinsic value of the options are recognised as deferred employee compensation. The deferred employee compensation, if any, is charged to the

Statement of Profit and Loss on a straight line basis over the vesting period of the options. The Employee Stock Option outstanding account, net of unamortised deferred employee compensation, if any is shown separately as part of reserves.

1.6 Tangiblefixed assets

Tangible fixed assets are stated at cost of acquisition net of tax / duty credits less accumulated depreciation and impairment losses, if any. Cost of acquisition includes all expenses incurred to bring the assets to their location and working conditions up to the date the assets are put to use.

1.7 Intangible fixed assets

Intangible Assets are stated at cost of acquisition, net of tax / duty credits availed less amortisation and impairment

losses, if any. An asset is recognised when it is probable that the future economic benefits attributable to the assets will flow to the enterprise and where it''s cost can be reliably measured.

1.8 Depreciation and amortisation

The Company provides for depreciation and amortisation as under:

a. On written down value basis, in accordance with the rates prescribed in Schedule XIV to the Act.

b. On intangible assets, over a period of three years from the date of acquisition.

c On a pro-rata basis on assets purchased / sold during the year.

d. On assets costing less than Rs.5,000, at hundred percent of the cost of the asset in the year of purchase.

e. On leasehold improvements, over the primary period of the lease.

1.9 Impairment

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognised in a prior accounting period is reversed if there is a change in the estimate of the recoverable amount.

1.10 Taxation

Provision for tax comprises current tax and deferred tax charge or benefit.

Current taxes are measured on the basis of the taxes expected to be paid on the taxable income determined in accordance with the prevailing tax rates and laws.

Deferred tax is the tax effect of the timing differences between the accounting income and taxable income and are capable of reversal in one or more subsequent periods. Deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the rates that have been enacted or substantially enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is a reasonable certainty that there will be sufficient taxable income against which it can be realised; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. Deferred tax assets, if any, are re-assessed periodically.

1.11 Investments

All Investments are stated at cost. Investments are classified as current or long term in accordance with Accounting Standard 13 on "Accounting for Investments". Provision for diminution in vale of current investments is made if the fair value of investments is less than its cost. Provision for diminution in the value of long-term investment is made only if such a decline is other than temporary. Provision for diminution in value of investments made during the year is charged to the Statement of Profit and Loss.

1.12 Derivative instruments

Daily mark-to-market margins on the derivative trades are accounted separately as against the initial margin payments under Current Assets. The profit/loss on the final settlement of the derivative contracts, calculated as the difference between the final settlement price and the contract price of all the contracts in the series, is recognised on the expiry/square-up of the series of equity index/stock futures by transfer from the mark-to-market margin account.

As on the date of the Balance Sheet, provision for anticipated loss is made for the debit balance if any, in the mark- to-market margin account (maintained scrip wise /index wise) on open futures contracts, credit balances if any, in the account attributable to anticipated income being ignored keeping in view the consideration of prudence.

1.13 Earnings per share

The basic earnings per share is computed and disclosed by dividing the net profit after tax attributable.to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year, adjusted for the effects of all dilutive potential equity shares, if any.

1.14 Miscellaneous expenditure

Preliminary expenditure and expenditure in connection with the raising of capital is amortised over a period of ten years from the year of commencement of business operations or from the year of raising of capital.

1.15 Provisions, contingent liabilities and contingent assets

A provision is recognised when there is a present obligation as a result of past events for which a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated.

Contingent liabilities are not recognised but are disclosed in the notes in case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation,

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent Assets are neither recognised, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

1.16 Leases

Operating lease where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Lease payments for assets taken under operating leases are charged off to the statement of Profit and Loss over the lease term.

1.17 Cash and cash equivalents

Cash and cash equivalents comprise of cash on hand and deposits with bank. The Company considers all highly liquid investments/ bank deposits with a remaining maturity on the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

1.18 Cash flow statement

The Cash Flow Statement is prepared using the indirect method set out in Accounting Standard 3 on "Cash flow Statement" and presents the cash flow by operating, investing and financing activities of the Company.

1.19 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Realised gains and losses on foreign currency transactions during the year are recognised in the Statement of Profit and Loss. Monetary items denominated in foreign currency are restated using the closing exchange rate of the date of the balance sheet and the resulting net exchange difference is recognised in the Statement of Profit and Loss.


Mar 31, 2012

1.1 Basis of Preparation of Financial Statements

The accompanying financial statements have been prepared under the historical cost convention on an accrual basis. The financial statements have been prepared in accordance with the generally accepted accounting principles to comply in all material aspects with the Accounting Standards (AS) prescribed in the Companies (Accounting Standards) Rules 2006 and the provisions of the Companies Act, 1956 ("The Act'') issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

The Ministry of Corporate Affairs revised Schedule VI to the Act for the financial year commencing on or after April 1, 2011. The Balance Sheet, Statement of Profit and Loss. Cash Flow and comparative financial information for the previous year have accordingly been prepared and presented with disclosures as required under the revised Schedule VI.

1.2 Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expense during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual result and estimates are recognized in the period in which the results are known / materialized.

1.3 Revenue Recognition

Revenue is recognized when it is earned and no significant uncertainty exists of its ultimate realization/collection.

a. Issue Management fee is accounted on the basis of the terms of agreement with the clients.

b. Placement fees, professional fees and other service charges are accounted when there is reasonable certainty of its ultimate realization / collection.

c Income from distribution is accounted when there is reasonable certainty of its ultimate realization/collection.

d. Interest income is recognized on an accrual (time proportion) basis.

e. Dividend income is recognized when the right to receive dividend is established.

1.4 Employee Benefits

a) Short Term Employee Benefits

Employee benefits such as salaries, allowances short term compensated absences, estimated cost of bonus , excreta and employee benefits under defined contribution plans such as provident fund and other funds which fall due within twelve months of rendering the service are classified as short term employee benefits and charged as expense to the profit and loss account in the period in which the service is rendered

b) Long Term Employee Benefits

Employee benefits under defined benefits plans like gratuity which fall due for payment after a period of twelve months from rendering of service or after completion of employment are determined base on acturial valuation using the projected unit credit method.

The Company's obligations recognized in the Balance Sheet represents the present value of obligations as reduced by the fair value of plan of assets, where applicable

1.5 Employee Stock Option Scheme.

The stock options granted by the Company are accounted for as per the accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) and the Guidance Note on Accounting for Stock Options issued by The Institute of Chartered Accountants of India, whereby the intrinsic value of the options are recognized as deferred employee compensation. The deferred employee compensation, if any, is charged to the profit and loss account on a straight line basis over the vesting period of the options. The Employee Stock Option outstanding account, net of unamortized deferred employee compensation, if any is shown separately as part of reserves.

1.6 Tangible Fixed Assets

Tangible fixed assets are stated at cost of acquisition net of tax / duty credits less accumulated depreciation and impairment losses, if any. Cost of acquisition includes all expenses incurred to bring the assets to their location and working conditions up to the date the assets are put to use.

1.7 Intangible Fixed Assets

Intangible Assets are stated at cost of acquisition, net of tax / duty credits availed less amortization and impairment losses, if any. An asset recognized when it is probable that the future economic benefits attributable to the assets will flow to the enterprise and where it is cost can be reliably measured.

1.8 Depreciation and amortization

The Company provides for depreciation and amortization as under:

a. On written down value basis, in accordance with the rates prescribed in schedule XIV to the Act.

b. On intangible assets, over a period of three years from the date of acquisition on written down value basis, c On a pro-rata basis on assets purchased / sold during the year.

d. On assets costing less than Rs.5,000 at hundred percent of the cost of the asset in the year of purchase.

e. On leasehold improvements, over the primary period of the lease.

1.9 Impairment of Assets

An asset is treated as impaired when the carrying amount of the assets exceeds its recoverable amount. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there is a change in the estimate of its recoverable amount.

1.10 Taxation

Provision for tax comprises current tax and deferred tax charge or benefit.

Current taxes are measured on the basis of the taxes expected to be paid on the taxable income determined in accordance with the prevailing tax rates and laws.

Deferred tax is the tax effect of the timing differences between the accounting income and taxable income and are capable of reversal in one or more subsequent periods. Deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognized using the rates that have been enacted or substantially enacted as at the balance sheet date.

Deferred tax assets are recognized only to the extent there is a reasonable certainty that there will be sufficient taxable income against which it can be realized; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of assets. Deferred tax assets, if any, are re-assessed periodically.

1.11 Investments

All Investments are stated at cost. Investments are classified as current or long term in accordance with Accounting Standard 13 on "Accounting for Investments". Provision for diminution in value of current investments is made if the fair value of investments is less than its cost. Provision for diminution in the value of long-term investment is made only if such a decline is other than temporary. Provision for diminution in value of current investments is made during the year is charged to the statement of profit and loss.

1.12 Derivative Instruments

Daily mark-to-market margins on the derivative trades are accounted separately as against the initial margin payments under Current Assets. The profit/loss on the final settlement of the derivative contracts, calculated as the difference between the final settlement price and the contract price of all the contracts in the series, is recognized on the expiry/ square-up of the series of equity index/stock futures by transfer from the mark-to-market margin account.

As on the date of the Balance Sheet, provision for anticipated loss is made for the debit balance if any, in the mark- to-market margin account (maintained scrip wise /index wise) on open futures contracts, credit balances if any, in the account attributable to anticipated income being ignored keeping in view the consideration of prudence.

1.13 Earnings Per Share

The basic earnings per share is computed and disclosed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year, adjusted for the effects of all dilutive potential equity shares, if any.

1.14 Miscellaneous Expenditure

Preliminary expenditure and expenditure in connection with the raising of capital is amortized over a period of ten years from the year of commencement of business operations or from the year of raising of capital.

1.15 Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past events for which a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated.

Contingent liabilities are not recognized but are disclosed in the notes in case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation,

b) a possible obligation, unless the probability of outflow of resources is remote.

Contingent Assets are neither recognized, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

1.16 Leases

Lease payments for assets taken under operating leases are charged off to the Profit and Loss Account as and when incurred.

1.17 Cash and Cash Equivalents

Cash and cash equivalents comprise of cash on hand and deposits with bank. The Company considers all highly liquid investments/ bank deposits with a remaining maturity on the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

1.18 Cash flow Statements

Cash flows is prepared using the indirect method set out in Accounting Standard 3 on "Cash flow Statement" and presents the cash flow by operating, investing and financing activities of the Company.

1.19 Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Realized gains and losses on foreign currency transactions during the year are recognized in the statement of profit and loss. Monetary items denominated in a foreign currency are restated using the closing exchange rate on the date of balance sheet and resulting net exchange difference is recognized in the Statement of Profit and Loss.


Mar 31, 2011

1. Basis of Preparation of financials Statements

The accompanying financial statements have been prepared under the historical cost convention on an accrual basis. The financial statements have been prepared in accordance with the generally accepted accounting principles to comply in all material aspects with the accounting standards prescribed in the Companies (Accounting Standards) Rules 2006, issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expense during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

3. Revenue Recognition

Revenue is recognised when there is reasonable certainty of its ultimate realisation / collection.

a. Issue Management fee is accounted on the basis of the terms of agreement with the clients.

b. Placement fees, professional fees and other service charges are accounted when there is reasonable certainty of its ultimate realisation / collection.

c. Income from distribution is accounted when there is reasonable certainty of its ultimate realisation/collection.

d. Interest income is recognised on an accrual (time proportion) basis.

e. Dividend income is recognised when the right to receive dividend is established.

4. Employee Benefits

a) Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. These benefits like short-term compensated absences, estimated cost of bonus and ex-gratia are recognised in the period in which the employee renders the related service.

b) Post Employment Benefits

i) Defined Benefit Plans

The Company's net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are based on the market yields on Government securities at the Balance Sheet date.

Actuarial gains and losses are recognised immediately in the profit and loss account.

ii) Defined Contribution Plans

The Company contributes to defined contribution plans like the state governed employees provident fund and pension fund schemes for all its employees who are eligible for the benefit. All such contributions are recognised during the period in which the employee renders the related service.

5. Employee Stock Option Scheme.

The stock options granted by the Company are accounted for as per the accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Stock Options issued by The Institute of Chartered Accountants of India, whereby the intrinsic value of the options are recognised as deferred employee compensation. The deferred employee compensation, if any, is charged to the profit and loss account on a straight line basis over the vesting period of the options. The Employee Stock Option outstanding account, net of unamortised deferred employee compensation, if any is shown separately as part of reserves.

6. Tangible Fixed Assets

Tangible fixed assets are stated at cost of acquisition net of tax / duty credits availed less accumulated depreciation and impairment loss, if any. Costs include all expenses incidental to the acquisition of fixed assets.

7. Intangible Assets

Intangible assets are stated at cost of acquisition net of tax / duty credits availed less amortisation.

8. Depreciation and Amortisation

The Company provides for depreciation and amortisation as under:

a. On written down value basis, in accordance with the rates prescribed in Schedule XIV to the Companies Act, 1956.

b. On intangible assets, over a period of three years from the date of acquisition on written down value basis.

c. On a pro-rata basis, on assets purchased / sold during the year.

d. On assets costing less than Rs.5,000, at hundred percent of the cost of the asset in the year of purchase.

e. On leasehold improvements, over the primary period of the lease.

9. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in a prior accounting period is reversed if there is a change in the estimate of the recoverable amount.

10. Taxation

Provision for tax comprises current tax and deferred tax charge or benefit.

Current taxes are measured on the basis of the taxes expected to be paid on the taxable income determined in accordance with the prevailing tax rates and laws.

Deferred tax is the tax effect of the timing differences between the accounting income and taxable income. Deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the rates that have been enacted or substantially enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is a reasonable certainty that there will be sufficient taxable income against which it can be realised; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. Deferred tax assets, if any, are re-assessed periodically.

11. Investments

All Investments are stated at cost. Investments are classified into long term investments and current investments. Provision for diminution in the value of long term investment is made only if such a decline is other than temporary. Provision for diminution in the value of Current Investment as at the end of the year is charged to the Profit and Loss Account.

12. Derivative Instruments

Daily mark-to-market margins on the derivative trades are accounted separately as against the initial margin payments under Current Assets. The profit/loss on the final settlement of the derivative contracts, calculated as the difference between the final settlement price and the contract prices of all the contracts in the series, is recognised on the expiry/ square-up of the series of equity index/stock futures by transfer from the mark-to-market margin account.

As on the date of the balance sheet, provision for anticipated loss is made for the debit balance if any in the mark-to market margin account (maintained scripwise/indexwise) on open futures contracts, credit balances if any, in the account attributable to anticipated income being ignored keeping in view the consideration of prudence.

13. Earnings Per Share

The basic earnings per share is computed and disclosed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year, adjusted for the effects of all dilutive potential equity shares, if any.

14. Miscellaneous Expenditure

Expenditure in connection with the raising of capital / additional capital are amortised over a period of ten years from the year of raising of capital / additional capital.

15. Provisions, Contingent Liabilities and Contingent Assets

A Provision is recognised when there is a present obligation as a result of past events for which a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated.

Contingent Liabilities are not recognised but are disclosed in the notes in case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation,

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent Assets are neither recognised, nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

16. Leases

Lease payments for assets taken under operating leases are charged off to the Profit and Loss Account as and when incurred.


Mar 31, 2010

1. Accounting Convention

The accompanying financial statements have been prepared under the historical cost convention on an accrual basis, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 in compliance with the accounting standards prescribed in the Companies (Accounting Standards) Rules 2006, issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards, to the extent applicable.

2. Use of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities on 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.

3. Revenue Recognition

Revenue is recognised when there is reasonable certainty of its ultimate realisation /collection.

a. Investment Banking and Merchant Banking Income

i. Underwriting Commission is accounted on the closure of the issue underwritten on the basis of the terms of agreement with the clients.

ii. Issue Management fee is accounted on the basis of the terms of agreement with the clients.

iii. Placement Fees and other Service Charges are accounted when there is reasonable certainty of its ultimate realisation /collection.

b. Interest income is recognised on a time proportion basis.

c. Dividend Income is recognised when the right to receive dividend is established.

4. Employee Benefits

Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The employees can carry forward a portion of the unutilised accrued leave balance and utilise it in future periods. The Company records an obligation in respect of compensated absences in the period in which the employee renders the service that increases the entitlement. The Company measures the cost of compensated absence as the amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date.

Long Term Employee Benefits

a. Defined Benefit Plans

The Companys net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Accrued Benefit Method (same as projected Unit Credit Method), which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities at the Balance Sheet date.

Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

b. Defined contribution Plans

The Company contributes to the employees provident fund and pension fund schemes for all its employees who are eligible for the benefit. All such contributions are recognised as an expense and charged to revenue each year.

5. Employee Stock Option Scheme.

The stock options granted by the Company are accounted for as per the accounting treatment prescribed by Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) and the guidance note on Accounting for Stock Options issued by The Institute of Chartered Accountants of India, whereby the intrinsic value of the options are recognised as deferred employee compensation. The deferred employee compensation, if any, is charged to the Profit and Loss Account on a straight line basis over the vesting period of the options. The Employee Stock Options Outstanding Account, net of unamortised Deferred Employee Compensation, if any is shown separately as part of Reserves.

6. Tangible Fixed Assets

Tangible fixed assets are stated at cost of acquisition less accumulated depreciation and impairment loss, if any. Costs include all expenses incidental to the acquisition of fixed assets.

7. Intangible Assets.

Intangible assets are stated at cost of acquisition less amortisation.

8. Depreciation and Amortisation.

The Company provides for depreciation and amortisation as under:

a. On written down value basis in accordance with the rates prescribed in Schedule XIV to the Companies Act, 1956.

b. Intangible assets are amortised over a period of three years from the date of acquisition on written down value basis.

c. On a pro-rata basis on assets purchased / sold during the year.

d. Asset costing less than Rs. 5,000/- per item is fully depreciated in the year of purchase.

e. Leasehold improvements are depreciated over the primary period of the lease.

9. Impairment Loss

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in a prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

10. Taxation

Provision for tax comprises current tax, deferred tax charge or benefit.

Current taxes are measured on the basis of the taxes expected to be paid on the taxable income determined in accordance with the prevailing tax rates and laws.

Deferred tax is the tax effect of the timing differences between the accounting income and taxable income. Deferred tax charge or benefit and the corresponding deferred tax liabilities and assets are recognised using the rates that have been enacted or substantially enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is a reasonable certainty that there will be sufficient taxable income against which it can be realised; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of assets. Deferred Tax Assets, if any, are re-assessed periodically.

11. Investments

All Investments are stated at cost. Investments are classified into long term investments and current investments. Provision for diminution in the value of long term investment is made only if such a decline is other than temporary. Provision for diminution in the value of Current Investment as at the end of the year is charged to the Profit and Loss Account.

12. Derivative Instruments

Daily mark-to-market margins on the derivative trades are accounted separately as against the initial margin payments under Current Assets. The profit/loss on the final settlement of the derivative contracts, calculated as the difference between the final settlement price and the contract prices of all the contracts in the series, is recognised on the expiry/ square-up of the series of equity index/stock futures by transfer from the mark-to-market margin account.

As on the date of the Balance Sheet, provision for anticipated loss is made for the debit balance if any in the mark-to market margin account (maintained scripwise/indexwise) on open futures contracts, credit balances if any, in the account attributable to anticipated income being ignored keeping in view the consideration of prudence.

13. Earnings per Share

Basic earnings per share is computed and disclosed by dividing the net profit after tax by the weighted average number of shares outstanding during the year.

Diluted earnings per share is computed and disclosed using the weighted average number of shares outstanding during the year, adjusted for the effects of all dilutive potential equity shares, if any.

14. Miscellaneous Expenditure

Preliminary expenditure and expenditure in connection with the raising of capital /additional capital are amortised over a period of ten years from the year of commencement of business operations or from the year of raising of capital / additional capital.

15. Provisions, Contingent Liabilities and Contingent Assets A Provision is recognised when there is a present obligation as a result of past events for which a probable outflow of resources is expected to settle the obligation and the amount of the obligation can be reliably estimated.

Contingent Liabilities are not recognised but are disclosed in the notes in case of:

a) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation.

b) a possible obligation, unless the probability of outflow of resources is remote. Contingent Assets are neither recognised, nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

16. Leases

Lease payments for assets taken under operating leases are charged off to the Profit and Loss Account as and when incurred.

 
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