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Accounting Policies of GCM Securities Ltd. Company

Mar 31, 2014

Basis of Preparaton of Financial Statements

The accounts have been prepared to comply in all material aspects with applicable accountng principles in India, the applicable Accountng Standards notfed under Section 211(3c) of the Companies Act, 1956 and the relevant provisions thereof.

All assets and liabilites have been classifed as current or non-current as per the Company''s normal operatng cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956.

Based on the nature of products and the tme between acquisiton of assets for processing and their realisaton in cash and cash equivalents, the Company has ascertained its operatng cycle as 12 months for the purpose of current / non-current classifcaton of assets and liabilites.

Use of Estmates

The preparaton of the financial statements in conformity with the generally accepted principles requires the management to make estmates and assumptons that efect the reported amount of assets, liabilites, revenues and expenses and disclosure of contngent assets and liabilites. The estmates and assumptons used in the accompanying financial statements are based upon management''s evaluaton of the relevant facts and circumstances as of the date of the financial statements. Actual results may difer from that estmates and assumptons used in preparing the accompanying financial statements. Any diferences of actual results to such estmates are recognized in the period in which the results are known / materialized.

Fixed Assets & Depreciaton

Fixed Assets are stated at cost less accumulated depreciaton thereon. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existng asset beyond its previously assessed standard of performance.

Items of fixed assets that have been retred from actve use and are held for disposal are stated at the lower of their book value and net realisable value and are shown separately in the financial statements under Other Current Assets. Losses arising from the retrement of, and gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Profit and loss account.

The cost of fixed assets comprises purchase price and any atributable cost of bringing the assets to its working conditon for its intended use. The Company provides pro-rata depreciaton from the date on which assets is acquired / put to use. Depreciaton is provided on the Writrn Down value method over the estmated useful lives of the assets or the rates prescribed under Schedule XIV of the Companies Act, 1956, whichever is higher. In respect of assets sold, prorata depreciaton is provided upto the date on which assets is sold. On all assets depreciaton has been provided using the Writen Down Value method at the rates specified in Schedule XIV to the Companies Act, 1956.

Intangible Assets & Amortsaton

Intangibles assets are stated at cost less accumulated amortsaton. These are being amortsed over the estmated useful life, as determined by the management. Leasehold land is amortsed over the primary period of the lease.

Revenue Recogniton

Revenue is recognized to the extent it is probable that the economic benefits will fow to the Company and the revenue can be reliably measured. The following Specific recogniton criteria must also be met before revenue is recognized.

a) Income is recognized on accrual basis from brokerage earned on secondary market operatons on trade date.

b) Income from arbitrage comprises Profit / loss on sale of securites held as stock-in- trade and Profit / loss on equity derivatve instruments is accounted as per following; i) Profit / loss on sale of securites is determined based on the FIFO cost of the securites sold. ii) Profit / loss on arbitrage transactons is accounted for as explained below:

Inital and additonal margin paid over and above inital margin for entering into contracts for Equity Index / Stock Futures / Currency Futures and or Equity Index / Stock Options / Currency Options, which are released on final setlement / squaring-up of underlying contracts are disclosed under "Other current assets". Mark-to-market margin-Equity Index / Stock Futures / Currency Futures representng the amounts paid in respect of mark to market margin is disclosed under "Other current assets".

Equity Index / Stock Option / Currency Option Premium Account" represents premium paid or received for buying or selling the Options, respectvely.

On final setlement or squaring up of contracts for Equity Index / Stock Futures / Currency Future, the realized Profit or loss afer adjustng the unrealized loss already accounted, if any, is recognized in the Statement of Profit and Loss. On setlement or squaring up of Equity Index / Stock Options / Currency Option, before expiry, the premium prevailing in ""Equity Index / Stock Option / Currency Option Premium Account"" on that date is recognized in the Statement of Profit and Loss.

As at the Balance Sheet date, the Mark to Market / Unrealised Profit / (Loss) on all outstanding arbitrage portolio comprising of Securites and Equity / Currency Derivatves positons is determined on scrip basis with net unrealized losses on scrip basis being recognized in the Statement of Profit and Loss and the net unrealized gains on scrip basis are ignored."

Other Income Recogniton

Interest on investments is booked on a tme proporton basis taking into account the amounts invested and the rate of interest.

Dividend income on investments is accounted for when the right to receive the payment is established.

Purchase

Purchase is recognized on passing of ownership in share based on broker''s purchase note.

Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilites.

Investments

Current investments are stated at the lower of cost and fair value. Long-term investments are stated at cost. A provision for diminuton is made to recognise a decline, other than temporary, in the value of long-term investments. Investments are classifed into current and long-term investments.

Investments that are readily realisable and are intended to be held for not more than one year from the date on which such investments are made, are classifed as current investments. All other investments are classifed as non current investments.

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 Statement of Profit and Loss in the year in which an asset is identfed as impaired. The impairment loss recognized in prior accountng period is reversed if there is a change in the estmated recoverable value.

Borrowing Costs

Borrowing cost atributable to acquisiton, constructon and producton of qualifying assets is capitalized as part of cost of such assets. Qualifying assets are the assets which takes substantal period of tme to become ready for intended use or sale. All other borrowing costs are charged to statement of Profit & loss.

Taxaton

Provision for current Income Tax is made on the taxable income using the applicable tax rates and tax laws. Deferred tax assets or liabilites arising on account of tming diferences between book and tax Profits, which are capable of reversal in one or more subsequent years is recognized using tax rate and tax laws that have been enacted or subsequently enacted. Deferred tax asset in respect of unabsorbed depreciaton and carry forward losses are not recognized unless there is sufcient assurance that there will be sufcient future taxable income available to realize such losses.

Lease

The company bifurcate its lease contract into Operatng and Finance lease, as per AS – 19. Operatng Lease is a agreement in which a significant porton of the risks and rewards of ownership are retained by the lessor. In finance lease significant porton of the risks and rewards are transferred to leasee. Lease Rentals in respect of operatng lease arrangements are charged to the Statement of Profit & Loss.

Earnings per Share

Basic earning per share is calculated by dividing the net Profit for the period atributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potental equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculatng diluted earnings per share, the net Profit for the period atributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the efects of all dilutve potental equity shares.

Stock in Trade

Shares are valued at cost or market value, whichever is lower. The comparison of Cost and Market value is done separately for each category of Shares.

Units of Mutual Funds are valued at cost or market value whichever is lower. Net asset value of units declared by mutual funds is considered as market value for non-exchange traded Mutual Funds.

Contngent Liabilites & Provisions

A provision is recognised when there is a present obligaton as a result of a past event, it is probable that an outlow of resources will be required to setle the obligaton and in respect of which reliable estmate can be made. Provision is not discounted to its present value and is determined based on the best estmate required to setle the obligaton at the year end date

These are reviewed at each year end date and adjusted to refect the best current estmate.

Contngent liabilites are disclosed when there is a possible obligaton arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligaton that arises from past events where it is either not probable that an outlow of resources will be required to setle or a reliable estmate of the amount cannot be made.

Segment reportng

The company operates in capital market which is only identfable reportng segment under AS-17 Segment Reportng issued by the Insttute of Chartered Accountants of India.

Foreign Currency Transactons

Foreign currency transactons are accounted for at the exchange rates prevailing at the date of the transacton. The year end balances in the payable/receivable account are reported on the basis of closing exchange rate of respectve currency. Gains and losses resultng from the setlement of such transactons in foreign currencies are recognised in the Profit and loss account on realizaton date. Forward exchange contracts outstanding as at the year end on account of firm commitment transactons are marked to market and the losses, if any are recognized in the Profit and loss account and gains are ignored in accordance with the Announcement of the Insttute of Chartered Accountants of India on ''Accountng for Derivatves'' issued in March 2008.

Equity shareholder holding more than 5% of equity shares along with the number of equity shares held:-

The Company has only one class of shares referred to as equity shares having par value of Rs. 10 each


Mar 31, 2013

Basis of Preparation of Financial Statements

The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3c) of the Companies Act, 1956 and the relevant provisions thereof.

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 Revised Schedule VI to the Companies Act, 1956.

Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.

Use of Estimates

The preparation of the financial statements in conformity with the generally accepted principles requires the management to make estimates and assumptions that effect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and 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. Actual results may differ from that estimates and assumptions used in preparing the accompanying financial statements. Any differences of actual results to such estimates are recognized in the period in which the results are known / materialized.

Fixed Assets & Depreciation

Fixed Assets are stated at cost less accumulated depreciation thereon. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their book value and net realisable value and are shown separately in the financial statements under Other Current Assets. Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the profit and loss account.

The cost of fixed assets comprises purchase price and any attributable cost of bringing the assets to its working condition for its intended use. The Company provides pro-rata depreciation from the date on which assets is acquired / put to use. Depreciation is provided on the Writtrn Down value method over the estimated useful lives of the assets or the rates prescribed under Schedule XIV of the Companies Act, 1956, whichever is higher. In respect of assets sold, prorata depreciation is provided upto the date on which assets is sold. On all assets depreciation has been provided using the Written Down Value method at the rates specified in Schedule XIV to the Companies Act, 1956.

Intangible Assets & Amortisation

Intangibles assets are stated at cost less accumulated amortisation. These are being amortised over the estimated useful life, as determined by the management. Leasehold land is amortised over the primary period of the lease.

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 reliably measured. The following specific recognition criteria must also be met before revenue is recognized.

a) Income is recognized on accrual basis from brokerage earned on secondary market operations on trade date.

"b) Income from arbitrage comprises profit / loss on sale of securities held as stock-in- trade and profit / loss on equity derivative instruments is accounted as per following; "i) Profit / loss on sale of securities is determined based on the FIFO cost of the securities sold. "ii) Profit / loss on arbitrage transactions is accounted for as explained below: "Initial and additional margin paid over and above initial margin for entering into contracts for Equity Index / Stock Futures / Currency Futures and or Equity Index / Stock Options / Currency Options, which are released on final settlement / squaring-up of underlying contracts are disclosed under "Other current assets". Mark-to-market margin-Equity Index / Stock Futures /"Currency Futures representing the amounts paid in respect of mark to market margin is disclosed under "Other current assets". "Equity Index / Stock Option / Currency Option Premium Account" represents premium paid or received for buying or selling the Options, respectively. "On final settlement or squaring up of contracts for Equity Index / Stock Futures / Currency Future, the realized profit or loss after adjusting the unrealized loss already accounted, if any, is recognized in the Statement of Profit and Loss. On settlement or squaring up of Equity Index / Stock Options / Currency Option, before expiry, the premium prevailing in "Equity Index / Stock Option / Currency Option Premium Account" on that date is recognized in the Statement of Profit and Loss. "As at the Balance Sheet date, the Mark to Market / Unrealised Profit / (Loss) on all outstanding arbitrage portfolio comprising of Securities and Equity / Currency Derivatives positions is determined on scrip basis with net unrealized losses on scrip basis being recognized in the Statement of Profit and Loss and the net unrealized gains on scrip basis are ignored."

Other Income Recognition

"Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest.""Dividend income on investments is accounted for when the right to receive the payment is established.""

Purchase

Purchase is recognized on passing of ownership in share based on broker''s purchase note.

Expenditure

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

Investments

"Current investments are stated at the lower of cost and fair value. Long-term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments. Investments are classified into current and long-term investments.""Investments that are readily realisable and are 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 non current investments.""

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 Statement of Profit and Loss 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 estimated recoverable value.

Borrowing Costs

Borrowing cost attributable to acquisition, construction and production of qualifying assets is capitalized as part of cost of such assets. Qualifying assets are the assets which takes substantial period of time to become ready for intended use or sale. All other borrowing costs are charged to statement of Profit & loss.

Taxation

Provision for current Income Tax is made on the taxable income using the applicable tax rates and tax laws. Deferred tax assets or liabilities arising on account of timing differences between book and tax profits, which are capable of reversal in one or more subsequent years is recognized using tax rate and tax laws that have been enacted or subsequently enacted. Deferred tax asset in respect of unabsorbed depreciation and carry forward losses are not recognized unless there is sufficient assurance that there will be sufficient future taxable income available to realize such losses.

Lease

The company bifurcate its lease contract into Operating and Finance lease, as per AS – 19. Operating Lease is a agreement in which a significant portion of the risks and rewards of ownership are retained by the lessor. In finance lease significant portion of the risks and rewards are transferred to leasee. Lease Rentals in respect of operating lease arrangements are charged to the Statement of Profit & Loss.

Earnings per Share

"Basic earning per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.""The weighted average number of equity shares outstanding during the period and for all periods"presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.""

Stock in Trade

"Shares are valued at cost or market value, whichever is lower. The comparison of Cost and Market value is done separately for each category of Shares.""Units of Mutual Funds are valued at cost or market value whichever is lower. Net asset value of units declared by mutual funds is considered as market value for non-exchange traded Mutual Funds.""

Contingent Liabilities & Provisions

"A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Provision is not discounted to its present value and is determined based on the best estimate required to settle the obligation at the year end date.""These are reviewed at each year end date and adjusted to reflect the best current estimate.""Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.""

Segment reporting

The company operates in capital market which is only identifiable reporting segment under AS-17 Segment Reporting issued by the Institute of Chartered Accountants of India.

Foreign Currency Transactions

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. The year end balances in the payable/receivable account are reported on the basis of closing exchange rate of respective currency. Gains and losses resulting from the settlement of such transactions in foreign currencies are recognised in the profit and loss account on realization date. Forward exchange contracts outstanding as at the year end on account of firm commitment transactions are marked to market and the losses, if any are recognized in the profit and loss account and gains are ignored in accordance with the Announcement of the Institute of Chartered Accountants of India on ''Accounting for Derivatives'' issued in March 2008.

 
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