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Accounting Policies of Hasti Finance Ltd. Company

Mar 31, 2015

Corporate Information

Hasti Finance Limited is a Non Banking Finance Company (Non Deposit accepting company) having Registered Office at Chennai. The Company is engaged in financing activities.

1.1 Basis of preparation:

The financial statements of the Company have been prepared under the historical cost convention on a going concern and accrual basis in accordance with the generally accepted accounting principles in India to comply with Accounting Standards notified under rule 7 of the companies (Accounts) Rules, 2014, the provision of Section 133 of the Companies Act, 2013 along with the applicable guidelines issue by Reserve Bank Of India ("RBI") for Non-deposit taking Non-Banking Finance Companies (NBFC-ND). Further, the company follows the prudential norms for income recognition, asset classification and provisioning as prescribed by Reserve Bank of India (RBI) for Non-deposit taking Non-Banking Finance Companies (NBFC-ND).

1.2 Use of Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Cash flow statement:

Cash flows are reported using the indirect method, whereby profit/ (loss) before extraordinary items and tax is adjusted for the effect of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from operating, investing and financing activities of the Company are segregated based on the available information. The Company considers all highly liquid financial instruments, which are readily convertible into cash, to be cash equivalents.

1.4 Revenue Recognition:

a. Income on Loan transactions

Interest from interest-bearing assets is recognized on accrual basis. Interest and other dues in the case of nonperforming loans is recognized upon realization, as per the income recognition and asset classification norms prescribed by the RBI. Unrealized interest recognized as income in the previous period is reversed in the month in which the loan is classified as Non Performing.

b. Income from Current and Long-term Investments

Income from dividend on shares of corporate bodies and units of mutual funds is accounted on accrual basis when the Company's right to receive dividend is established.

Interest income on bonds and deposits is recognized on accrual basis.

1.5 Provisions for Standard/Non Performing Assets and Doubtful Debts

The Company provides an allowance for loan receivables based on the prudential norms issued by the RBI relating to income recognition, asset classification and provisioning for non- performing assets. In respect of loans, where interest is not serviced, provision for diminution is made as per the parameter applicable to Non-Performing Advances. Provision on restructured loans and advances is made as per agreement and contract with the party. In addition the Company provides for Standard Assets as required by the directions issued by RBI.

1.6 Investments

Long Term investments are valued at cost. Diminution in value if any, which is of a temporary nature, is not provided.

1.7 Fixed Assets

Fixed assets are recorded at the cost of acquisition. Cost includes all identifiable expenditure incurred to bring the assets to its present condition and location.

1.8 Depreciation

Depreciation on fixed assets is calculated on a straight-line which reflect the management estimate of the useful lives of respective fixed assets and are lesser than or equal to useful life as prescribed in Schedule II of the companies Act, 2013.

1.9 Leases

Leases are classified as operating lease where significant portion of risk and reward of ownership of assets acquired under lease are retained by the lesser.

1.10 Taxes

Current tax provision has been determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961. Deferred tax is recognized for all timing differences, subject to the consideration of prudence.

1.11 Gratuity / Retirement Benefits

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

The present value of the obligation under such benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method which recognizes each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at present values of estimated future cash flows. The discounted rates used for determining the present value are based on the market yields on Government Securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the profit and loss account

1.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statement

1.13 Impairments

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indications exist, the assets recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value is use, the estimated future cash flows are discounted to their present value based on average pre-tax borrowing rate of the country where the assets are located, adjusted for risks specific to the asset.

After impairment, depreciation is provided on the assets revised carrying amount over its remaining useful life. A previously recognized impairment loss is increased or decreased depending on changes in circumstances. However, an impairment loss is not decreased to an amount higher than the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized in the prior year.

1.14 Earnings per share

Basic and diluted earnings per share are computed in accordance with Accounting Standared-20- Earnings Per Share. Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity share holders by the weighted average number of equity share outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the reporting period. Diluted earnings per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the end of the reporting period.

1.15 Cash flow statement

The cash flow statement is prepared in accordance with indirect method as explained in the Accounting Slandered on cash flow statements (AS) 3 issued by the institute of Chartered Accountants Of India. Cash and Bank Balances that have insignificant risk of change in value including term deposits, which have original durations up to three months, are included in cash and cash equivalents in the cash flow statement.


Mar 31, 2014

1.1 Basis of preparation

The financial statements of the Company have been prepared under the historical cost convention on a going concern and accrual basis in accordance with the generally accepted accounting principles in India to comply with Accounting Standards notified by under Section 211 (3C) of the Companies Act, 1956 ("the 1956 Act")(which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013Act") in terms of the General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. Further, the company follows the prudential norms for income recognition, asset classification and provisioning as prescribed by Reserve Bank of India (RBI) for Non-deposit taking Non-Banking Finance Companies (NBFC-ND).

1.2 Use of Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Cash flow statement:

Cash flows are reported using the indirect method, whereby profit/ (loss) before extraordinary items and tax is adjusted for the effect of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow from operating, investing and financing activities of the Company are segregated based on the available information. The Company considers all highly liquid financial instruments, which are readily convertible into cash, to be cash equivalents.

1.4 Revenue Recognition:

a. Income on Loan transactions

Interest income is recognised under the Internal Rate of Return method to provide a constant periodic rate of return on net investment outstanding on the Loan contract. In the case of Non Performing Loans, interest income is recognised upon realisation, as per RBI guidelines. Unrealised interest recognised as income in the previous period is reversed in the month in which the loan is classified as Non Performing.

b. Income from Current and Long-term Investments

Income from dividend on shares of corporate bodies and units of mutual funds is accounted on accrual basis when the Company''s right to receive dividend is established.

Interest income on bonds and deposits is recognised on accrual basis.

1.5 Provisions for Standard/Non Performing Assets and Doubtful Debts

The Company provides an allowance for loan receivables based on the prudential norms issued by the RBI relating to income recognition, asset classification and provisioning for non- performing assets. In addition to the provisioning as per RBI norms, the Company also provides for/writes off the entire receivables, where any of the instalment are overdue for a period exceeding llmonths.

In addition the Company provides for Standard Assets as required by the directions issued by RBI.

1.6 Investments

Long Term investments are valued at cost. Diminution in value if any, which is of a temporary nature, is not provided.

1.7 Fixed Assets

Fixed assets are recorded at the cost of acquisition. Cost includes all identifiable expenditure incurred to bring the assets to its present condition and location.

1.8 Depreciation

Depreciation on fixed assets is provided on Written Down Value at the rates specified in Schedule XIV of the Companies Act, 1956.

1.9 Leases

Leases are classified as operating lease where significant portion of risk and reward of ownership of assets acquired under lease are retained by the lessor.

1.10 Taxes

Current tax provision has been determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961. Deferred tax is recognized for all timing differences, subject to the consideration of prudence.

1.11 Gratuity / Retirement Benefits

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

The present value of the obligation under such benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method which recognizes each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at present values of estimated future cash flows. The discounted rates used for determining the present value are based on the market yields on Government Securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the profit and loss account

1.12 Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements

1.13 Impairments

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any indications exist, the assets recoverable amount is estimated. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value is use, the estimated future cash flows are discounted to their present value based on average pre-tax borrowing rate of the country where the assets are located, adjusted for risks specific to the asset.

After impairment, depreciation is provided on the assets revised carrying amount over its remaining useful life. A previously recognized impairment loss is increased or decreased depending on changes in circumstances. However, an impairment loss is not decreased to an amount higher than the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized in the prior year.

1.14 Earnings per share

The Company reports basic and diluted earning per share in accordance with "Accounting Standard 20 - Earnings per share" prescribed by Companies (Accounting Standards) Rules, 2006. Basic earning per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the reporting period.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the reporting period. Diluted earnings per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding as at the end of the reporting period.


Mar 31, 2013

I. Basis of preparation

The financial statements have been prepared under the historical cost convention on a going concern and accrual basis in accordance with the generally accepted accounting principles in India including Accounting Standards notified by under Section 211 (3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956

The company follows the prudential norms for income recognition, asset classification and provisioning as prescribed by Reserve Bank of India (RBI) for Non-deposit taking Non-Banking Finance Companies (NBFC-ND).

II. Use of Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

III. Cash and Cash Equivalents:

The Company considers all highly liquid financial instruments, which are readily convertible into cash, to be cash equivalents.

IV. Revenue Recognition:

Interest income is recognised under the Internal Rate of Return method to provide a constant periodic rate of return on net investment outstanding on the Loan contract. In the case of Non Performing Loans, interest income is recognised upon realisation, as per RBI guidelines. Unrealised interest recognised as income in the previous period is reversed in the month in which the loan is classified as Non Performing.

Interest income on bonds and deposits is recognised on accrual basis.

V. Taxes

Current tax provision has been determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961. Deferred tax is recognized for all timing differences, subject to the consideration of prudence.

VI. Fixed Assets

Fixed assets are recorded at the cost of acquisition. Cost includes all identifiable expenditure incurred to bring the assets to its present condition and location.

VII. Depreciation

Depreciation on fixed assets is provided on Written Down Value at the rates specified in Schedule XIV of the Companies Act, 1956.

VIII. Investments

Long Term investments are valued at cost. Diminution in value if any, which is of a temporary nature, is not provided.

IX. Gratuity / Retirement Benefits

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

The present value of the obligation under such benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method which recognizes each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at present values of estimated future cash flows. The discounted rates used for determining the present value are based on the market yields on Government Securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the profit and loss account

X. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

XI. Provisioning under Financing Activity

Provision for Standard Assets is made as per internal estimates, based on past experience, realisation of security, and other relevant factors, on the outstanding amount of Standard Assets for all types of lending subject to minimum provisioning requirements specified by RBI.


Mar 31, 2012

I. Basis of preparation

The financial statements have been prepared under the historical cost convention on a going concern and accrual basis in accordance with the generally accepted accounting principles in India including Accounting Standards notified by under Section 211 (3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956

The company follows the prudential norms for income recognition, asset classification and provisioning as prescribed by Reserve Bank of India (RBI) for Non-deposit taking Non-Banking Finance Companies (NBFC-ND).

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the method of charging depreciation as more fully described in Note 21.

II. Use of Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

III. Cash and Cash Equivalents:

The Company considers all highly liquid financial instruments, which are readily convertible into cash, to be cash equivalents.

IV. Revenue Recognition:

Interest income is recognised under the Internal Rate of Return method to provide a constant periodic rate of return on net investment outstanding on the Loan contract. In the case of Non Performing Loans, interest income is recognised upon realisation, as per RBI guidelines. Unrealised interest recognised as income in the previous period is reversed in the month in which the loan is classified as Non Performing.

Interest income on bonds and deposits is recognised on accrual basis.

V Taxes

Current tax provision has been determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961. Deferred tax is recognized for all timing differences, subject to the consideration of prudence.

VI Fixed Assets

Fixed assets are recorded at the cost of acquisition. Cost includes all identifiable expenditure incurred to bring the assets to its present condition and location.

VII Depreciation

Depreciation on fixed assets is provided on Written Down Value at the rates specified in Schedule XIV of the Companies Act, 1956.

VIII Investments

Long Term investments are valued at cost. Diminution in value if any, which is of a temporary nature, is not provided.

IX Gratuity / Retirement Benefits

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

The present value of the obligation under such benefit plan is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method which recognizes each period of service that give rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at present values of estimated future cash flows. The discounted rates used for determining the present value are based on the market yields on Government Securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the profit and loss account

X Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

XI Provisioning under Financing Activity

Provision for Standard Assets is made as per internal estimates, based on past experience, realisation of security, and other relevant factors, on the outstanding amount of Standard Assets for all types of lending subject to minimum provisioning requirements specified by RBI.


Mar 31, 2011

I. Accounting Concepts

a. The Accounts have been prepared on historical cost basis.

b. The company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

c. The Company follows Prudential Norms for Income recognition and Provisioning for Non- Performing Assets as prescribed by the Reserve Bank of India for Non Banking Financial Companies.

II. Income Recognition:

Finance charges are accounted under Capital Recovery method. Additional Finance charges are accounted on receipt basis. The interests on Loan amounts given are provided whenever it is receivable. Also in accordance with the guidelines issued by the Reserve Bank of India for Non Banking Financial Companies, Income on Business Assets classified as Non-performing Assets, is recognised on receipt basis.

III. Taxes

Current tax provision has been determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961. Deferred tax is recognized for all timing differences, subject to the consideration of prudence. There being no timing difference during the period, deferred tax provision is not made.

IV. Fixed Assets

Fixed assets are recorded at the cost of acquisition. Cost includes all identifiable expenditure incurred to bring the assets to its present condition and location.

V. Depreciation

Depreciation for the year has been provided for the year at the rate prescribed in Income Tax Act, 1961.

VI. Investments

Long Term investments are valued at cost. Diminution in value if any, which is of a temporary nature, is not provided.

VII. Gratuity / Retirement Benefits

These are accounted for on cash basis

VIII. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

I. Accounting Concepts

a. The Accounts have been prepared on historical cost basis.

b. The company generally follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

II. Income Recognition:

Finance charges are accounted under Capital Recovery method. Additional Finance charges are accounted on receipt basis. The interest on Loan amounts given are provided whichever it is receivable. The interest amount is not provided, where the principle amount in itself is in doubtful. The same shall be provided as and when received.

III. Taxes

Current tax provision has been determined on the basis of relief, deductions etc. available under the Income Tax Act, 1961. Deferred tax is recognized for all timing differences, subject to the consideration of prudence. There being no timing difference during the period, deferred tax provision is not made.

IV. Fixed Assets

Fixed assets are recorded at the cost of acquisition. Cost includes all identifiable expenditure incurred to bring the assets to its present condition and location.

V. Depreciation

Depreciation is provided for on Written Down Value method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

Depreciation on additions deletions to the fixed assets during the year is- provided on pro-rata basis from to the date of such additions deletions as the case may be.

VI. Investments

Long Term investments are valued at cost. Diminution in value if any, which is of a temporary nature, is not provided.

VII. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized not disclosed in the financial statements.

 
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