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Notes to Accounts of Indbank Merchant Banking Services Ltd.

Mar 31, 2015

1. Prior period adjustments

During the year 2014-15 there was no prior period expenses (previous year Rs. 83633/-)

2. Tax expenses

a. In view of losses (as per Income tax) as well as book losses (as per MAT computation) no provision for tax is required for the year.

b. No provision is made for the disputed demands of income tax keeping in view the judicial pronouncements and/or legal opinion on the issues.

c. The provision for deferred tax (net) for the year is Rs.98.47 lakhs (Previous year Rs.1.37 lakhs) which has been charged to profit & loss account.

3. AS-24 - Discontinuing operations and Segment reporting

The Company had discontinuing 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 "Discontinuing operations" (Fund Based) and "Continuing Operations" (Fee Based). Discontinuing operations consists of Leasing, Hire purchase, Inter corporate 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.

4. Indian Bank, the parent Bank, has approved a moratorium period of 3 years from September 2013 to September 2016 for repayment of the amount of Rs. 897.48 lakhs payable to them under the Right of Recompense clause with repayment of Rs. 75 lakhs per half year to commence from the half year ending 31.03.2017 without any interest charge for the period of moratorium/repayment. Hence no liability has been provided in the books for the current financial year.

5. AS-29 - Contingent Liability

A. Disputed demand on taxes

i) Income Tax Rs.Lakhs 2014-15 Asst Year Tax Demand Interest Total

1997- 98 0.00 0.00 0.00

1998- 99 32.13 0.00 32.13

2007- 08* 462.02 155.45 617.47

2008- 09** 832.56 296.49 1129.05

2009- 10 72.23 0.00 72.33

Total 1398.94 451.94 1850.98

2013-14

Asst year Tax Demand Interest Total

1997-98 20.13 0.00 20.13

1998-99 45.31 0.00 45.31

2007-08 462.02 155.45 617.47

2008-09 832.56 296.49 1129.05

2009-10 72.23 0.00 72.23

1432.25 451.94 1884.19

*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. 132 lakhs for this Assessment Year in terms of the orders passed by the CIT and High Court, Madras on the stay petition filed by the company.

Sales Tax demand disputed in appeal - Rs.42.78 lakhs (Previous year Rs.57.37 lakhs).

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 - Nil).

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.

6. As at March 31,2015, 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.

7. 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.

8. 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, 2014

1. Prior period adjustments

During the year 2013-14 a sum of Rs. 83633 pertaining to expenses of previous year has been shown under prior period expenses.

2. Tax expenses

a) In view of losses (as per Income tax) as well as book losses (as per MAT computation) no provision for tax is required for the year.

b) No provision is made for the disputed demands of income tax keeping in view the judicial pronouncements and/or legal opinion on the issues.

c) The provision for deferred tax (net) for the year is Rs. 1.37 lakhs (Previous year Rs. 29.35 lakhs) which has been charged to profit & loss account.


Mar 31, 2013

1. Interest onIncome tax / interest tax refund due

Based on the orders received during the year, the interest allowed by the department on the refunds due under Income Tax/Interest Tax has been reckoned inthe accounts for various assessment yearsasunder:

2. Prior period adjustments

During the year 2011-12, based on the orders of the Income tax department for interest on income tax/interest tax refunds due an amount of Rs. 455.81 lakhs was reckoned in the accounts. Howeverthe said orders were revised by the department on 29.06.2012 as there was an error in the interest calculations and the excess interest of Rs. 204.62 lakhs was reversed. Consequent to the above, the interest provision of Rs. 247.48 lakhs made in the accounts in the year 2011 -12 towards the interest payable to Indian Bank under the right of recompense was reversed during the year and the net resultant amount of Rs. 42.86 lakhs is shown under prior period adjustment. Consequent to the above, the balance interest payable to Indian Bank under the right of recompense is Rs. 897.48 lakhs. The bank has permitted the company to pay the balance on or before 30.9.2013.

3. Tax expenses

a) In view of losses (as per Income tax) as well as book losses (as per MAT computation) no provision for tax is required forthe year.

b) No provision is made forthe disputed demands of income tax keeping in view the judicial pronouncements and/or legal opinion on the issues.

c) The provision for deferred tax (net) forthe year is Rs.29.35 lakhs (Previous year Rs.11.62 lakhs) which has been charged to profit & loss account.

4. AS-24 - Discontinuing 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 isnow governed only bySEBI 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 "Discontinuing operations" (Fund Based) and "Continuing Operations" (Fee Based). Discontinuing 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.

ii) Sales Tax demand disputed in appeal - Rs. 108.87 lakhs (Previous year Rs. 110.72 lakhs). (Rs. 51.50 lakhs at Bangalore, 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 - Rs. 20.72 lakhs (Previous Year Rs. 109.40 lakhs).

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 shareholdersofthe Company.

5. As at March 31, 2013, 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.

6. In the opinion of the Management all Fixed Assets, Current Assets, Loans & Advances will have value on realization in the ordinarycourse of businessat least equal to the amountsat which they are statedin the accounts.

7. The previous year''s figures in the Balance Sheet, Profit and Loss Account and Cash Flow Statement have been regrouped and reclassified, wherever necessary,toconformtothe current year''sclassification.

 
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