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Accounting Policies of Indbank Merchant Banking Services Ltd. Company

Mar 31, 2015

The financial statements are prepared by following the going concern concept on historical cost convention using the accrual method of accounting, unless otherwise stated.

Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts to revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/materialize.

A Revenue recognition

a) Issue Management Fee and fees for other managerial services - Considered on the completion of assignment.

b) Underwriting Commission and brokerage on distribution of financial products - Considered on receipt of subscription particulars.

c) Brokerages under stock broking operations are accounted on completion of contract.

d) Interest on overdue lease rentals and hire purchase installments are accounted for on receipt basis.

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

B Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation & provision for impairment (if any). Assets given on lease

(Contracted prior to December 1997) are further adjusted for the balance in lease adjustment account.

C Depreciation

a. On Assets other than given on lease

In respect of assets other than assets given on lease, the Company provides depreciation on the assets on the Straight Line Method (SLM) based on the useful life of the asset as prescribed in Schedule II to the Companies Act, 2013, on pro-rata basis. Software costs are amortized on SLM over a period of three years, from the year of acquisition.

b. On Assets given on lease under discontinuing operations

In respect of Assets given on lease under discontinuing operations, the Company provides depreciation on the assets in the WDV method on pro-rata basis, the month in which the assets are installed taken as full month. The cost of the Assets given on lease are amortized fully during the Lease period. (In accordance with the Guidance note on Accounting for Leases (revised) issued by the Institute of Chartered Accountants of India). The difference between the statutory depreciation and the annual lease charge is adjusted through the Lease Equalization, which is adjusted with the lease income.

D Investments

The investments held by the Company are all long-term investments. Long term investments are carried at cost less provision for diminution, other than temporary in nature. The Company has reckoned diminution in value of shares / debentures as permanent in nature by relying on market value of quoted shares and book value/ fair value whichever is higher in respect of unquoted shares.

E Employee Benefits

a. Short Term employee benefits/obligations are estimated and provide for.

b. Gratuity - The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days' salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company annual contribution to gratuity fund established as a Trust through a Group Gratuity Policy with Life Insurance Corporation of India. The Company's liability towards Gratuity is actuarially determined at balance sheet date using the Project Unit Credit (PUC) method. Actuarial gains and losses are recognized in revenue.

c. Provident Fund - The eligible employees of the company are entitled to receive benefits under Provident Fund, a defined contribution plan in which both employees and the company makes monthly contributions at a specified percentage of the covered employees salary, the contributions as specified under the Law are paid to the Provident fund and pension fund to the provident fund authorities.

d. Leave encashment - The eligible Leave encashment liability to the employees other than those deputed by Indian Bank has been provided for on the basis of actuarial valuation based on number of days un-utilised leave at each balance sheet date.

e. The retirement benefit liability to staff on deputation from Indian Bank is borne by Indian Bank except eligible Provident Fund contribution.

F Segment Reporting

The Segment Reporting is prepared in conformity with the accounting policies of the Company.

G Discontinuing Operations

The accounting policies adopted for discontinuing Operations are in line with the accounting policies adopted for Continuing Operations. H Income Tax.

Income Tax comprises the current tax provision and the net change in the deferred tax asset or liability during the year. Deferred tax assets and liabilities are recognized for the future tax consequences arising out of temporary differences between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable/virtual certainty (as applicable) that sufficient future taxable income will be available against which such deferred tax asset can be realized. The effect on deferred tax assets and liabilities resulting from change in tax rates is recognized in the income statement in the period of enactment of the change.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The expected rate of return is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the company's policy for plan assets management. The retirement benefit liability in respect of staff on deputation from Indian Bank is borne by Indian Bank.

The company has contributed Rs.6.37 Lakhs (previous year- Rs.5.18 lakhs) towards Gratuity liability in the year 2014-15.

The transactions with Holding company and fellow subsidiaries has not been disclosed in view of exemption for State-controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state-controlled enterprises.

The related party transactions with key management personnel have been disclosed in Managerial Remuneration - Note 30 of Notes on Accounts.


Mar 31, 2014

The financial statements are prepared by following the going concern concept on historical cost convention using the accrual method of accounting, unless otherwise stated.

Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts to revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt within the period in which the results are known/materialize.

A Revenue recognition

(a) Issue Management Fee and fees for other managerial services - Considered on the completion of assignment.

(b) Underwriting Commission and brokerage on distribution of financial products - Considered on receipt of subscription particulars.

(c) Brokerages under stock broking operations are accounted on completion of contract.

(d) Interest on overdue lease rentals and hire purchase installments are accounted for on receipt basis.

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

B Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation & provision for impairment (if any). Assets given on lease (Contracted prior to December 1997) are further adjusted for the balance in lease adjustment account.

C Depreciation

a) On Assets other than given on lease

In respect of assets other than assets given on lease, the Company provides depreciation on the assets on the Straight Line Method (SLM) at the rates prescribed in Schedule XIV to the Companies Act, 1956, on pro-rata basis, the month in which the assets are installed taken as full month. Software costs are amortized on SLM over a period of three years, from the year of acquisition.

b) On Assets given on lease under discontinued operations

In respect of Assets given on lease under discontinued operations, the Company provides depreciation on the assets in the WDV method at the rates prescribed in Schedule XIV to the Companies Act 1956 on pro-rata basis, the month in which the assets are installed taken as full month. The cost of the Assets given on lease are amortized fully during the Lease period. (In accordance with the Guidance note on Accounting for Leases (revised) issued by the Institute of Chartered Accountants of India). The difference between the statutory depreciation and the annual lease charge is adjusted through the Lease Equalization, which is adjusted with the lease income.

D Investments

The investments held by the Company are all long-term investments. Long term investments are carried at cost less provision for diminution, other than temporary in nature. The Company has reckoned diminution in value of shares / debentures as permanent in nature by relying on market value of quoted shares and book value/ fair value whichever is higher in respect of unquoted shares.

E Employee Benefits

a) Short Term employee benefits/obligations are estimated and provide for.

b) Gratuity - The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days'' salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company''s annual contribution to gratuity fund established as a Trust through a Group Gratuity Policy with Life Insurance Corporation of India. The Company''s liability towards Gratuity is actuarially determined at balance sheet date using the Project Unit Credit (PUC) method. Actuarial gains and losses are recognized in revenue.

c) Provident Fund - The eligible employees of the company are entitled to receive benefits under Provident Fund, a defined contribution plan in which both employees and the company makes monthly contributions at a specified percentage of the covered employees salary, the contributions as specified under the Law are paid to the Provident fund and pension fund to the provident fund authorities.

d) Leave encashment - The eligible Leave encashment liability to the employees other than those deputed by Indian Bank has been provided for on the basis of actuarial valuation based on number of days unutilised leave at each balance sheet date.

e) The retirement benefit liability to staff on deputation from Indian Bank is borne by Indian Bank except eligible Provident Fund contribution.

F Segment Reporting

The Segment Reporting is prepared in conformity with the accounting policies of the Company.

G Discontinued Operations

The accounting policies adopted for discontinued Operations are in line with the accounting policies adopted for Continuing Operations.

H Income Tax

I ncome Tax comprises the current tax provision and the net change in the deferred tax asset or liability during the year. Deferred tax assets and liabilities are recognized for the future tax consequences arising out of temporary differences between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable/virtual certainty (as applicable) that sufficient future taxable income will be available against which such deferred tax asset can be realized. The effect on deferred tax assets and liabilities resulting from change in tax rates is recognized in the income statement in the period of enactment of the change.

1. AS-15 - Employee Benefits Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expense for the year are as under: (Amount in Rs.)

Details 2013-14 2012-13

Employer''s contribution to Provident Fund 26,08,686 27,49,762

Employees Deposit Linked Insurance Scheme contribution to LIC 33,755 35,219

Defined Benefit Plan

I Reconciliation of opening and closing balances of Defined benefit obligation (Amount in Rs.)

Details Gratuity (Funded) Leave Encashment (Unfunded)

2013-14 2012-13 2013-14 2012-13

Defined benefit obligation at the 48,21,242 57,47,698 61,44,273 69,17,235 beginning of the year

Current service cost 5,24,332 6,34,967 6,98,510 90,130

Interest cost 3,85,699 4,59,816 5,59,129 5,53,379

Actuarial (gain)/ loss (11,95,793) 2,09,669 (14,86,532) (14,16,471)

Benefits paid - 22,30,908 - -

Settlement cost - - - -

Defined benefit obligation at the year end 45,35,480 48,21,242 59,15,380 61,44,273

II Reconciliation of opening and closing balances of fair value of plan assets

(Amount in Rs.)

Gratuity (Funded) Details 2013-14 2012-13

Fair value of plan assets at the beginning of the year 52,70,514 61,80,698

Expected return on plan assets (8,30,993) 4,49,272

Contributions - 8,71,452

Actuarial (gain)/ loss - -

Benefits paid - 22,30,908

Settlement cost - -

Fair value of plan assets at year end 44,39,521 52,70,514

Actual return on plan assets (8,30,993) 4,49,272

III Reconciliation of fair value of assets and obligations

(Amount in Rs.)

Gratuity (Funded) Leave Encashment (Unfunded) Details 2013-14 2012-13 2013-14 2012-13

Fair value of plan assets 44,39,521 52,70,514 59,15,380 61,44,273

Present value of obligation 45,35,480 48,21,242 61,44,273 69,17,235

Amount recognized in Balance Sheet (95,959) 4,49,272 (2,28,893) (7,72,962)

IV Expense recognized during the year

(Amount in Rs.)

Details Gratuity (Funded) Leave Encashment (Unfunded)

2013-14 2012-13 2013-14 2012-13 Current Service Cost 5,24,332 6,34,967 6,98,510 90,130

Interest Cost 3,85,699 4,59,816 5,59,129 5,53,379

Expected return on plan assets (8,30,993) 4,49,272 - -

Actuarial (gain) / loss (11,95,793) 2,09,669 (14,86,532) (14,16,471)

Net Cost 5,45,231 8,55,180 (2,28,893) (7,72,962)

V Actuarial assumptions (Amount in Rs.)

Gratuity (Funded) Leave Encashment (Unfunded) Details 2013-14 2012-13 2013-14 2012-13

Mortality Table (LIC) 1994-96 1994-96 1994-96 1994-96 (Ultimate) (Ultimate) (Ultimate) (Ultimate)

Discount rate (per annum) 8% 8% 9.10% 8%

Expected rate of return (per annum) 8% 8% - -

Rate of escalation of salary (per annum) 5% 5% 7% 5%

Attrition Rate 1% to 3% 1% to 3% 12% 1% to 3%

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The expected rate of return is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the company''s policy for plan assets management. The retirement benefit liability in respect of staff on deputation from Indian Bank is borne by Indian Bank.

The company has contributed Rs. 5.18 Lakhs (previous year- Rs. 8.98 lakhs) towards Gratuity liability in the year 2013-14.

2. AS-18 - Related Party Transactions

The Company has identified all related parties and transactions with the related parties as per details given below:

Name Relationship

Indian Bank Holding Company

Ind Bank Housing Limited Fellow Subsidiary

Key Management Personnel Mr. Banabihari Panda, President & Wholetime Director

The transactions with Holding company and fellow subsidiaries has not been disclosed in view of exemption for State-controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state-controlled enterprises.

The related party transactions with key management personnel have been disclosed in Managerial Remuneration - Note 29 of Notes on Accounts.

3. AS-19 - Leases

In case of assets taken on lease

The company has operating leases for office premises at various locations with Indian Bank. The future minimum payments required under non-cancellable operating leases at year-end are as follows:

Rs.Lakhs

As on 31.03.2014 As on 31.03.2013

Lease payments for the year 20.63 21.50

Minimum Lease payments: Not later than one year 0.00 0.00

Later than one year but not later than five years 0.00 0.00

Later than five years 0.00 0.00

4. AS-24 - Discontinued operations and Segment reporting

The Company had discontinued fund-based activities consequent to SEBI regulations coming into force with effect from December 1997 and had decided to undertake only fee-based activities. The existing fund based exposures as on December 1997 are continued to run down to their contracted period. The Company had obtained cancellation of registration as NBFC from RBI consequent to repayment of fixed deposits and transfer of unclaimed fixed deposits to an escrow account with a nationalized bank for repayment as and when claimed. The Company is now governed only by SEBI regulations.

The business segments have been identified as the Primary Segment considering the nature of service, organizational structure and internal financial reporting system. The services of the reported domestic business segments are classified as "Discontinued operations" (Fund Based) and "Continuing Operations" (Fee Based). Discontinued operations consists of Leasing, Hire purchase, Intercorporate deposits and Investments. Continuing operations include Merchant Banking, Stock Broking, Depository Participant services, Distribution of Financial Products and allied activities. There is no Secondary Reportable Segment.

Rs.Lakhs

2013-14

Particulars Continuing Discontinued Operations Operations Un Total (Fee based) (Fund based) Allocated

Income from Operations 744.62 13.90 0.00 758.52

Expenses

Administration & Other exp 543.01 5.35 0.00 548.36

Depreciation 67.11 0.00 0.00 67.11

Provisions 9.72 87.29 0.00 97.01

Finance Cost 4.39 0.00 0.00 4.39

Int on IT refund - Excess 942 0.00 0.00 9.42 interest reversed

Total - Expenses 633.65 92.64 0.00 726.29

Profit/(Loss) before Tax 110.97 (78.74) 0.00 32.23

Exceptional item - Interest 0.00 0.00 0.00 0.00

ExcePtional item - Prior period adjustments 0.00 0.00 0.84 0.84

Provision for tax - Deferred 0.00 0.00 1.37 1.37

Provision for tax - Prior period 0.00 0.00 0.00 0.00

Profit/(Loss) after Tax 110.97 (78.74) (2.21) 30.02

Total Assets 3210.63 364.44 1555.83 5130.90

Total liabilities 961.58 0.00 0.00 961.58

Capital Expenditure 1.92 0.00 0.00 1.92

Non cash expenditure 9.72 87.29 0.84 97.85

Net Cash flow from operating 877.74 (89.13) 1.37 789.98

Net Cash flow from (565.20) 107.26 0.00 (457.94)

Rs.Lakhs

2012-13

Particulars Continuing Discontinued Operations Operations Un- Total (Fee based) (Fund based) Allocated

Income from Operations 703.36 48.97 0.00 752.33

Expenses

Administration & Other exp 642.98 14.87 0.00 657.84

Depreciation 70.85 0.00 0.00 70.85

Provisions 0.46 (36.89) 0.00 (36.43)

Finance Cost 0.63 0.00 0.00 0.63

Int on IT refund - Excess interest reversed

Total - Expenses 714.92 (22.02) 0.00 692.89

Profit/(Loss) before Tax (11.57) 70.99 0.00 59.42 Exceptional item - Interest 0.00 0.00 0.00 0.00

ExcePtional item - Prior period adjustments 0.00 0.00 42.86 42.86

Provision for tax - Deferred 0.00 0.00 29.35 29.35

Provision for tax - Prior period 0.00 0.00 0.00 0.00

Profit/(Loss) after Tax (10.93) 70.99 12.88 72.94

Total Assets 2735.43 461.30 1502.60 4699.33

Total liabilities 560.02 0.00 0.00 560.02

Capital Expenditure 126.47 0.00 0.00 126.47

Non cash expenditure 0.46 (14.62) (42.86) (57.02)

Net Cash flow from operating (89.27) 22.03 29.35 (37.89)

Net Cash flow from (175.05) 76.36 0.00 (98.69)

Investment activities

5. Interest on Income tax refund - Excess Interest reversed

Based on the orders, under section 154 of the Income Tax Act, received during the year, the interest reduced by the department on the refunds due under Income Tax which were earlier allowed and booked during 2011-12 for various assessment years amounting to Rs. 9.42 lakhs were reversed in the accounts.

Assessment Year Particulars Amount (Rs.)

2000-01 Interest on income tax refund due 409201

2001-02 Interest on income tax refund due 452267

2003-04 Interest on income tax refund due 80961

Total 942429

6. Indian Bank, the parent Bank, has permitted the company to pay the balance of Rs. 897.48 lakhs payable to them under the Right to Recompense on or before 30.09.2013. The company has represented to Indian Bank for waiver of this amount which is under consideration of the Bank.

7. AS-29 - Contingent Liability

A Disputed demand on taxes

i) Income Tax Rs.Lakhs

2013-14 2012-13

Asst Year Tax Interest Total Tax Interest Total Demand Demand 1997-98 20.13 0.00 20.13 0.00 0.00 0.00

1998-99 45.31 0.00 45.31 0.00 0.00 0.00

2007-08* 462.02 155.45 617.47 462.02 155.45 617.47

2008-09** 832.56 296.49 1129.05 832.56 296.49 1129.05

2009-10 72.23 0.00 72.23 72.23 0.00 72.23 Total 1432.25 451.94 1884.19 1366.81 451.94 1818.75

* The company has paid Rs. 18 lakhs for this Assessment Year in terms of the orders passed by the CIT on the stay petition filed by the company.

** The company has paid Rs. 32 lakhs for this Assessment Year in terms of the orders passed by the CIT on the stay petition filed by the company.

ii) Sales Tax demand disputed in appeal - Rs. 57.37 lakhs (Previous year Rs. 108.87 lakhs). (Rs. 42.78 lakhs at Chennai and Rs.14.59 lakhs at Rajasthan)

B Guarantees - Counter guarantee issued to bank for guarantees - Rs. 200.00 lakhs (Previous Year- Rs. 200.00 lakhs)

C Estimated amount of contracts remaining to be executed on capital account and not provided for - Nil (Previous Year Rs. 20.72 lakhs).

8. Managerial Remuneration: Rs.Lakhs

Name Designation 2013-14 2012-13

Salary 12.64 11 29

Mr. Banabihari Panda President & Wholetime Director Contribution to PF 0.65 0.64

Sitting Fees paid to Non - Wholetime Directors 0.96 0.96 President and Whole Time Director of the Company is on deputation from Indian Bank and the remuneration is in accordance with the service rules of the said Bank and also in terms of appointment as ''Whole Time Director'' by the shareholders of the Company.

9. As at March 31,2014, the Company has no outstanding dues to medium and small enterprises. There is no liability towards interest on delayed payments under the Micro, Small and Medium Enterprises Development Act, 2006 during the year.

10. In the opinion of the Management all Fixed Assets, Current Assets, Loans & Advances will have value on realization in the ordinary course of business at least equal to the amounts at which they are stated in the accounts.

11. The previous year''s figures in the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been regrouped and reclassified, wherever necessary, to conform to the current year''s classification.


Mar 31, 2011

The financial statements are prepared by following the going concern concept on historical cost convention using the accrual method of accounting, unless otherwise stated.

Use of Estimates :

The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts to revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize.

A. Revenue recognition

(a) Issue Management Fee and fees for other managerial services - Considered on the completion of assignment.

(b) Underwriting Commission and brokerage on distribution of financial products - Considered on receipt of subscription particulars.

(c) Brokerages under stock broking operations are accounted on completion of contract.

(d) Interest on overdue lease rentals and hire purchase installments are accounted for on receipt basis.

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

B. Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation & provision for impairment (if any). Leased assets (Contracted prior to December 1997) are further adjusted for the balance in lease adjustment account.

C. Depreciation

a) On Assets other than given on lease

In respect of assets other than assets given on lease, the Company provides depreciation on the assets on the Straight Line Method (SLM) at the rates prescribed in Schedule XIV to the Companies Act, 1956, on pro-rata basis, the month in which the assets are installed taken as full month. Software costs are amortised on SLM over a period of three years, from the year of acquisition.

b) On Leased assets under discontinued operations

In respect of leased assets under discontinued operations, the Company provides depreciation on the assets in the WDV method at the rates prescribed in Schedule XIV to the Companies Act 1956 on pro-rata basis, the month in which the assets are installed taken as full month. The cost of the Leased Assets are amortised fully during the Lease period. (In accordance with the Guidance note on Accounting for Leases (revised) issued by the Institute of Chartered Accountants of India.) The difference between the statutory depreciation and the annual lease charge is adjusted through the Lease Equalisation, which is adjusted with the lease income.

D Investments

The investments held by the Company are all long-term investments. Long term investments are carried at cost less provision for diminution, other than temporary in nature. The Company has reckoned diminution in value of shares / debentures as permanent in nature by relying on market value of quoted shares and book value/ fair value whichever is higher in respect of unquoted shares.

E Employee Benefits

a) Short Term employee benefits/obligations are estimated and provide for.

b) Gratuity - The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment an amount equivalent to 15 days' salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company annual contribution to gratuity fund established as a Trust through a Group Gratuity Policy with Life Insurance Corporation of India. The Company's liability towards Gratuity is actuarially determined at balance sheet date using the Project Unit Credit (PUC) method. Actuarial gains and losses are recognized in revenue.

c) Provident Fund - The eligible employees of the company are entitled to receive benefits under Provident Fund, a defined contribution plan in which both employees and the company makes monthly contributions at a specified percentage of the covered employees salary, the contributions as specified under the Law are paid to the Provident fund and pension fund to the provident fund authorities

d) Leave encashment - The eligible Leave encashment liability to the employees other than those deputed by Indian Bank has been provided for on the basis of actuarial valuation based on number of days un- utilised leave at each balance sheet date.

e) The retirement benefit liability to staff on deputation from Indian Bank is borne by Indian Bank except eligible Provident Fund contribution.

F Segment Reporting

The Segment Reporting is prepared in conformity with the accounting policies of the Company.

G Discontinued Operations

The accounting policies adopted for Discontinued Operations are in line with the accounting policies adopted for Continuing Operations.

H Income Tax

Income Tax comprises the current tax provision and the net change in the deferred tax asset or liability during the year. Deferred tax assets and liabilities are recognized for the future tax consequences arising out of temporary differences between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable/virtual certainty (as applicable) that sufficient future taxable income will be available against which such deferred tax asset can be realized. The effect on deferred tax assets and liabilities resulting from change in tax rates is recognized in the income statement in the period of ehacement of the chanae.


Mar 31, 2010

The financial statements are prepared by following the going concern concept on historical cost convention using the accrual method of accounting, unless otherwise stated.

Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts to revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/materialize.

A Revenue recognition

(a) Issue Management Fee and fees for other managerial services - Considered on the completion of assignment.

(b) Underwriting Commission and brokerage on distribution of financial products - Considered on receipt of subscription particulars.

(c) Brokerages under stock broking operations are accounted on completion of contract.

(d) Interest on overdue lease rentals and hire purchase installments are accounted for on receipt basis.

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

C Fixed Assets

Fixed Assets are stated at historical cost less accumulated depreciation & provision for impairment (if any). Leased assets (Contracted prior to December 1997) are further adjusted for the balance in lease adjustment account.

D Depreciation

a) On Assets other than given on lease

In respect of assets other than assets given on lease, the Company provides depreciation on the assets on the Straight Line Method (SLM) at the rates prescribed in Schedule XIV to the Companies Act, 1956, on pro-rata basis, the month in which the assets are installed taken as full month. Software costs are amortised on SLM over a period of three years, from the year of acquisition.

b) On Leased assets

In respect of leased assets, the Company provides depreciation on the assets in the WDV method at the rates prescribed in Schedule XIV to the Companies Act 1956 on pro-rata basis, the month in which the assets are installed taken as full month. The cost of the Leased Assets are amortised fully during the Lease period in accordance with the Guidance note on Accounting for Leases (revised) issued by the Institute of Chartered Accountants of India. The difference between the statutory depreciation and the annual lease charge is adjusted througn the Lease Equalisation, which is adjusted with the lease income.

E Investments

The investments held by the Company are all long-term investments Long term investments are carried at cost less provision for diminution, other than temporary in nature. The Company has reckoned diminution in value of shares / debentures as permanent in nature by relying on market value of quoted shares and book value/ fair value whichever is higher in respect of unquoted shares

F Employee Benefits

a) Short Term employee benefits/obligations are estimated and provide for.

b) Gratuity -The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lumpsum payment to vested employees at retirement, death While in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The companys annual contribution to gratuity fund established as a Trust through a Group Gratuity Policy with Life insurance Corporation of India. The Companys liability towards Gratuity is actuanally determined at balance sheet date using the Project Unit Credit (PUC) method, Actuarial gains and losses are recognized in revenue.

c) Provident Fund - The eligible employees of the company are entitled to receive benefits under Provident Fund, a defined contribution plan in which both employees and the company make monthly contributions at a specified percentage of the covered employees salary, the contributions as specified under the Law are paid to the Provident fund and pension fund to the provident fund authorities

d) Leave encashment - The eligible Leave encashment liability to the employees other than those deputed by Indian Bank has been provided for on the basil of actuarial valuation based on number of days of un-utilised leave at each balance sheet date.

e) The retirement benefit liability to staff on deputation from indian Bank is borne by Indian Bank except eligible Provident Fund contribution.

G Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset when it will result in future economic benefits to the Company. Other borrowing costs are recognised as an expense in the period in which they are incurred.

H Segment Reporting

The Segment Reporting is prepared in conformity with the accounting policies of the Company.

I Discontinuing Operations

The accounting policies adopted for Discontinuing Operations are in line with the accounting policies adopted for Continuing Operations.

J Income Tax

Income Tax comprises the current tax provision and the net change in the deferred tax asset or liability during the year. Deferred tax assets and liabilities are recognized for the future tax consequences arising out of temporary differences between the carrying values of the assets and liabilities and their respective tax bases. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable/virtual certainty (as applicable) that sufficient future taxable income will be available against which such deferred tax asset can be realized. The effect on deferred tax assets and liabilities resulting from change in tax rates is recognized in the income statement in the period of enactment of the change.

 
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