Mar 31, 2022
1. Corporate Information
Mangal Credit & Fincorp Limited (the company) is a public company domiciled in India and incorporated under the Companies Act, 2013 whose Corporate Identity No. is L65990MH1961PLC012227. The Company is Non Systemically Important Non Deposit Taking NBFC (NBFC-ND-Non SI) vide circular no. RBI/ DNBR/2016-17/44DNBS (PD).007/03.10.119/2016-17 dated September 01, 2016. Its shares are listed on Bombay Stock Exchange (BSE). Company is engaged in business of providing various type of loans to different type of customers.
2. Significant Accounting Policiesi. Statement of Compliance
These standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules 2015 as amended and notified under Section 133 of the Companies Act, 2013 ("the Act") as amended from time to time.
ii. Basis of preparation of accounts
These financial statements are prepared under the historical cost convention on the accrual basis except for certain assets and liabilities which are measured at fair value / amortised cost / transaction price as stated in respective accounting policies / notes.
The financial statements are presented in Indian Rupees, and all values are rounded off in lakhs to the nearest two decimal points except otherwise stated.
iii. Presentation of financial Statement
The standalone financial statements of the Company are presented as per Schedule III (Division III) of the Companies Act, 2013 (the Act) applicable to NBFCs, as notified by the Ministry of Corporate Affairs (MCA). Financial assets and financial liabilities are generally reported on a gross basis except when, there is an unconditional legally enforceable right to offset the recognised amounts without being contingent on a future event and the parties intend to settle on a net basis in the following circumstances:
⢠The normal course of business
⢠The event of default
⢠The event of insolvency or bankruptcy of the
Company and/or its counterparties
iv. Use of estimates and judgments and Estimation uncertainty
The preparation of the financial statements in conformity with Ind AS, requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the year in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
The Company drives its revenue primarily from the financing business and ancillary activities. The Company follows Ind AS 109 -Financial Instruments for revenue recognition for the income on the financial assets. In case of other revenues the Company recognised its revenue based on five step model prescribed in Ind AS 115- Revenue from Contracts with Customers.
⢠Identify the contract(s) with a customer.
⢠Identify the performance obligations in the contract.
⢠Determine the transaction price
⢠Allocate the transaction price to the performance obligations in the contract
⢠Recognise revenue when (or as) the entity satisfies a performance obligation.
a. Recognition of interest income on loans
Interest income on a financial asset at amortised cost is recognised on a time proportion basis taking into account the amount outstanding and the effective interest rate (''EIR''). The EIR is the rate that exactly discounts estimated future cash flows of the financial assets through the expected life of the financial asset or, where appropriate, a shorter period, to the net carrying amount of the financial instrument. The internal rate of return on financial assets after netting off the fees received and cost incurred approximates the effective
interest rate method of return for the financial asset. The future cash flows are estimated taking into account all the contractual terms of the instrument.
The interest income is calculated by applying the ElR to the gross carrying amount of non-credit impaired financial assets (i.e. at the amortised cost of the financial asset before adjusting for any expected credit loss allowance). For credit impaired financial assets, the interest income is calculated by applying the EIR to the amortised cost of the credit-impaired financial assets (i.e. the gross carrying amount less the allowance for ECLS). If the financial asset is no longer credit-impaired, the Company reverts to calculating interest income on a gross basis.
Additional interest on gold loan levied on customer for delay in repayment/non-payment of contractual cash flows is recognized on accrual basis whereas penal interest is recognized on realization basis.
Delay payment Interest (penal interest) in other than gold loan levied on customer for delay in repayment/non-payment of contractual cash flows is recognized on realisation basis.
If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is recorded as a positive or negative adjustment to the carrying amount of the asset in the balance sheet with an increase or reduction in interest income. The adjustment is subsequently amortized through Interest income in the Statement of profit and loss.
Fee based income are recognized when they become measurable and when it is probable to expect their ultimate collection. Commission and brokerage income earned for the services rendered are recognized as and when they are due.
c. Dividend and interest income on investments:
Dividends are recognized in Statement of profit and loss only when the right to receive payment is established, it is probable that the economic
benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
Interest income from investments is recognized when it is certain that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
vi. Property Plant and Equipment (PPE)
The Company has elected to measure property, plant and equipment, and intangible assets at its Previous GAAP carrying amount and use that Previous GAAP carrying amount as its deemed cost at the date of transition to Ind AS.
PPE are stated at cost of acquisition (including incidental expenses), less accumulated depreciation and accumulated impairment loss, if any.
Advances paid towards the acquisition of PPE outstanding at each balance sheet date are disclosed as "Capital Advances" under other non-financial assets. Under the head "Capital work in progress" comprises the cost of PPE that are not ready for its intended use at the reporting date.
Depreciation on PPE is provided on written down value basis in accordance with the useful lives specified in Part C of Schedule II to the Companies Act, 2013.
The estimated useful lives used for computation of depreciation are as follows:
Asset |
Useful life (in years) |
Plant and equipment |
15 |
Furniture and fixtures |
10 |
Vehicles |
6 |
Office equipment |
3 |
Computer peripherals |
3 |
Depreciation on asset added /sold/discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold/discarded.
PPE is derecognized on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the net carrying amount of the asset) is recognized in other income / netted off from any loss on disposal in the Statement of profit and loss in the year the asset is derecognized.
Intangible assets are stated at cost less accumulated amortization and accumulated impairment loss, if any.
Intangible assets comprise of computer software which is amortized over the estimated useful life. The amortization period is equal to 5 years which is based on management''s estimates of useful life. Amortization is calculated using the written down value method to write down the cost of intangible assets over their estimated useful lives.
viii. Investments in subsidiaries and associates
Investments in subsidiaries and associate are measured at cost less accumulated impairment, if a ny.
ix. Impairment of tangible, intangible and right to use assets:
The Company reviews the carrying amounts of its tangible and intangible assets at the end of each reporting period, to determine whether there is any indication that those assets have impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or Company of assets.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash generating unit) is increased to the revised estimate of its recoverable amount such that the increased carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset (or cash-generating unit) in prior years. The reversal of an impairment loss is recognized in Statement of profit and loss.
x. Financial instrumentsa. Initial Recognition and measurement:
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in Statement of profit and loss.
b. Subsequent measurement:⢠Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Advances, security deposits, rental deposits, cash and cash equivalents etc. are classified for measurement at amortised cost.
⢠Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss. All investment held for trading, derivative financial instruments are valued at fair value through profit and loss. All the debt instrument held for trading purpose are designated as fair value through profit and loss.
⢠Financial assets at fair value through other comprehensive income
For equity investments, the Company makes an election on an instrument-by-instrument basis to designate equity investments as measured at FVOCI. These elected investments are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the reserves. The cumulative gain or loss is not reclassified to Statement of profit and loss on disposal of the investments. These investments in equity are not held for trading. Instead, they are held for strategic purpose. Dividend income received on such equity investments are recognized in Statement of profit and loss.
⢠Financial liabilities
Financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in Statement of profit and loss. Any gain or loss on derecognition is also recognized in Statement of profit and loss.
c. Derecognition:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognised from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
D. Impairment of financial instruments
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in statement of profit and loss.
Overview of the ECL principles:
The Company records allowance for expected credit losses for all loans, other debt financial assets not held at FVTPL, together with loan commitments, in this section all referred to as ''financial instruments''. Equity instruments are not subject to impairment under Ind AS 109. The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss or LTECL), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months'' expected credit loss (12mECL) as outlined in these notes. Both LTECLs and 12mECLs are calculated on either an individual basis or a collective basis, depending on the nature of the underlying portfolio of financial instruments. The Company has established an internal model to evaluate ECL based on nature of Financial Assets. Based on the above process, the Company categorizes its loans into Stage 1, Stage 2 and Stage 3, as described below:
Stage 1: When loans are first recognized, the Company recognizes an allowance based on 12mECLs. Stage 1 loans also include facilities where the credit risk has improved and the loan has been reclassified from Stage 2.
Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an allowance for the LTECLs PDs and LGDs are estimated over the lifetime of the instrument. The expected cash shortfalls are discounted by an approximation to the original EIR.
Stage 3: For loans considered credit-impaired, the
Company recognizes the lifetime expected credit losses for these loans.
The key elements of the ECL are summarized below:
EAD: The Exposure at Default is an estimate of the exposure at a future default date (in case of Stage 1 and Stage 2), taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, and accrued interest from missed payments. In case of Stage 3 loans EAD represents exposure when the default occurred.
PD: The Probability of Default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognized and is still in the portfolio.
LGD: The Loss Given Default is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from the realization of any collateral. It is usually expressed as a percentage of the EAD. Impairment losses and releases are accounted for and disclosed separately from modification losses or gains that are accounted for as an adjustment of the financial asset''s gross carrying value.
d. Write offs
The gross carrying amount of a financial asset is written off when there is no realistic prospect of further recovery. This is generally the case when the Company determines that the debtor/ borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities under the Company''s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in Statement of profit and loss.
xi. Employee benefits
⢠Defined contribution plans
Company''s contribution paid/payable during the year to provident fund and ESIC is recognized in the Statement of profit and loss are recognized in statement of profit and loss in the years during the services are rendered by employees.
⢠Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Finance costs include interest expense computed by applying the effective interest rate on respective financial instruments measured at Amortized cost. Finance costs are charged to the Statement of profit and loss.
xiii. Taxation- Current and deferred tax:
Income tax expense comprises of current tax and deferred tax. It is recognized in Statement of profit and loss except to the extent that it relates to an item recognized directly in equity or in other comprehensive income.
Current tax comprises amount of tax payable in respect of the taxable income or loss for the year determined in accordance with Income Tax Act, 1961 and any adjustment to the tax payable or receivable in respect of previous years. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequence that would follow from
the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary difference could be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
xiv. Foreign currency translations:
The functional and presentation currency of the Company is Indian Rupee. Transactions in foreign currency are accounted for at the exchange rate prevailing on the transaction date. Gains / losses arising on settlement as also on translation of monetary items are recognised in the Statement of Profit and Loss.
xv. Provisions, contingent liabilities and contingent assets:
Provisions are recognized only when there is a present obligation, as a result of past events and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.
Contingent liability is disclosed for:
(a) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
(b) Present obligations arising from past events where
it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are disclosed where an inflow of economic benefit is probable.
xvi. Leases:Company as a lessee:
The Company''s lease asset classes primarily consist of leases for building. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses. ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or
a termination option.
However, company is having lease with term of 12 months or less (short term leases). the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Company as a lessor:
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
xvii. Cash and cash equivalents:
Cash and cash equivalents in the balance sheet comprise cash on hand, balance with banks in current accounts and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.Bank deposits having maturity more than 3 months have been classified as other bank balances.
xviii. Earnings Per Share:
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Company''s earnings per share is the net profit for the period after deducting preference dividends and any attributable tax thereto for 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, sub-division of shares etc. 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 or loss for the period attributable to equity shareholders is divided by the weighted average number of equity shares outstanding during the period, considered for deriving basic earnings per share and weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
xix. Statement of cash flows:
Cash flows are reported using the indirect method where by the profit after tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
3. Standards issued but not yet effective:
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2022 vide notification no. G.S.R 255(E) dated 23rd March 2022. Given below are the amendment made in brief and their possible impact on the financial statements of the company. The company will apply the amendments from 1 April 2022 being the effective date of the amendments:
Ind AS 101 - First-time adoption of Indian Accounting Standards: The amendment removes the conflict between the requirements of paragraph D16(a) of Ind AS 101 which provides exemptions where a subsidiary adopts Ind AS later than its parent and the exemptions on cumulative translation differences. The amendment permits the subsidiary to measure cumulative translation differences at the carrying amount included in the parent''s consolidated financial statements. Similar exemption is available to associate and joint venture that uses the exemption in paragraph D16(a) of Ind AS 101. Paragraph D16(a) of Ind AS 101 provides that the subsidiary can measure its assets and liabilities at the carrying amounts in parent''s consolidated financial statements. The amendment is applicable for entities adopting Ind AS from 1 April 2022. As the company has already adopted Ind AS. there is no impact of this amendment on the company. Ind AS 103 - Business Combinations: The amendments are made to enable change of reference to Conceptual Framework for Financial Reporting under Indian Accounting Standards issued by The Institute of Chartered Accountants of India and have no impact on the financial statements of the company. The amendments are applicable for business combinations having acquisition date on or after 1 April 2022.
Ind AS 109 - Financial Instruments: The
amendments clarify that only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on
the other''s behalf will be included in calculating the discounted present value of the cash flow under the new terms on modification of financial liability. The amendment is applicable for modification / exchange of financial liabilities on or after 1 April 2022. The amendment has no impact on the financial statements of the company.
Ind AS 16 - Property, plant and Equipment:
The amendment creates a carve-out from IAS 16. IAS 16 requires any sale proceeds and cost of samples produced when testing whether the asset is functioning properly to be recognised in profit or loss whereas the amendment clarifies that the same shall be deducted from the cost of the property, plant and equipment. No transition provisions have been specified and therefore, this amendment shall be applicable retrospectively. The company has been following the practice as clarified by the amendment and hence no impact on the financial statements of the company.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets: The paragraph clarifies what
cost needs to be considered in the costs to fulfil a contract while determining whether the contract is onerous. Changes previous practice of considering only incremental costs in the costs to fulfil a contract for determination of onerous contract. Now apart from incremental costs, the costs to fulfil a contact includes an allocation of directly attributable costs. The amendments apply to unfulfilled onerous contracts as on 1 April 2022. As the company does not have any onerous contract, the said amendment has no impact on the financial statements of the company.
Mar 31, 2018
Note 1: Significant Accounting Policies
i. Basis of preparation of accounts
The financial statements have been prepared and presented under the historical cost convention, on an accrual basis of accounting and in accordance with the generally accepted accounting principles and in compliance with the relevant provisions of the Companies Act, 2013. Further, the Company follows directions issued by the Reserve Bank of India (âRBIâ) as applicable.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 read with RBI Directions as aforesaid. Based on the nature of products and the time between the 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.
ii. Use of Estimates
The presentation of Financial Statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, revenues and expenses on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which results are known / materialized.
iii. Revenue Recognition
i) Interest income from financing activities is recognized on an accrual basis except in the case of non-performing assets, where it is recognised on realisation, as per the prudential norms of the RBI.
ii) Dividend from investments is accounted for as income when the Companyâs right to receive dividend is established.
iii) Income from Interest on Fixed Deposits with Banks is recognized on accrual basis.
iv. Property, Plant & Equipments
a. Property, Plant & Equipments
Property, Plant & Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Subsequent expenditures related to an item of tangible assets are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
b. Intangible Assets
Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to assets will flow to the enterprise and the cost of the assets can be measured reliably. Intangible assets are recorded at cost and carried at cost less accumulated amortization and accumulated impairment losses, if any.
v. Depreciation
Depreciation is provided on written down value Method, at the rates so calculated by useful life as specified in Schedule II of the Companies Act, 2013. Depreciation is provided on pro-rata basis on the assets acquired, sold or disposed off during the year.
vi. Investments
a. Investments are classified into Non-Current Investments and Current Investments.
b. Investments which are by nature readily realisable and intended to be held for not more than one year from the date of acquisition are classified as Current Investments and Investments other than Current Investments are classified as NonCurrent Investments.
c. Non-Current Investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.
d. Current Investments are valued at lower of cost and market value. In case of mutual funds, the net asset value of the units declared by the Mutual Funds is considered as the market value.
vii. Leased Assets
i) Assets acquired under Leases where a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as Operating Leases. The rentals and all the other expenses of assets under operating lease for the period are treated as revenue expenditure.
ii) Assets given on operating leases are included in fixed assets. Lease income is recognized in the statement of profit and loss on straight line basis over the lease term. Operating costs of leased assets, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct cost such as legal costs, brokerages etc. are charged to Statement of Profit and Loss as incurred.
viii. Impairment of Assets
An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable amount. An impairment loss is charged to the statement of profit & loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in estimate of the recoverable amount.
ix. Taxes on Income
i) Current tax is determined based on the amount of tax payable in respect of taxable income for the year.
ii) Deferred tax asset is recognized with regard to all deductable timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences could be utilized.
iii) Deferred Tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company re-assesses unrecognised deferred tax assets, if any.
iv) Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
x. Provisions, Contingent Liabilities and Contingent Assets
i) A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
ii) Contingent liabilities are not recognized but disclosed in the financial statement when there is a:
- Possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or
- Present obligation that arises from past events where it is either not probable that an outflow of resources will be required to be settled or a reliable estimate of the amount cannot be made.
iii) Contingent assets are neither recognized nor disclosed in the financial statements.
iv) Provision on Standard assets is made @ 0.25% of standard loans in accordance with the directions issued by RBI for NBFC.
v) Provision for non-performing assets is made in accordance with the directions issued by RBI for NBFC.
xi. Earnings Per Share
The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. For the purpose of calculating Diluted earnings per share the net profit for the year attributable to equity shareholders and weighted average number of shares outstanding during the reporting year is adjusted for the effects of all dilutive potential equity shares. In considering whether potential equity shares are dilutive or anti-dilutive, each issue or series of potential equity shares is considered separately rather than in aggregate.
Mar 31, 2016
Corporate Information
Mangal Credit &Fincorp Limited (the company) is a public company domiciled in India and incorporated under the Companies Act, 1956. The company had obtained its license from Reserve Bank of India to operate as a Non Banking Financial Company (NBFC) on March 11, 1998 vide certificate of registration no. 13.00329. The Company is Non Systemically Important Non Deposit Taking NBFC (NBFC-ND-Non SI) vide circular no. RBI/2015-16/23DNBS (PD) CC No.044/ 03.10.119/2015-16 dated 1 July 2015. Itâs shares are listed on Bombay Stock Exchange (BSE) and Ahmadabad Stock Exchange (ASE).
Note 1: Significant Accounting Policies
i. Basis of preparation of accounts
The financial statements have been prepared and presented under the historical cost convention, on an accrual basis of accounting and in accordance with the generally accepted accounting principles and in compliance with the relevant provisions of the Companies Act, 2013. Further, the Company follows directions issued by the Reserve Bank of India (âRBIâ) as applicable.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 read with RBI Directions as aforesaid. Based on the nature of products and the time between the acquisition of assets for processing and their realization 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.
ii. Use of Estimates
The presentation of Financial Statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, revenues and expenses on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which results are known / materialized.
iii. Revenue Recognition
i) Interest income from financing activities is recognized on an accrual basis except in the case of nonperforming assets, where it is recognized on realization, as per the prudential norms of the RBI.
ii) Dividend from investments is accounted for as income when the Companyâs right to receive dividend is established.
iii) Income from Interest on Fixed Deposits with Banks is recognized on accrual basis.
iv) Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of sales tax and sales returns.
iv. Fixed Assets
a. Tangible Assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Subsequent expenditures related to an item of tangible assets are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
b. Intangible Assets
Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to assets will flow to the enterprise and the cost of the assets can be measured reliably. Intangible assets are recorded at cost and carried at cost less accumulated depreciation and accumulated impairment losses, if any.
v. Depreciation
Depreciation is provided on written down value Method, at the rates so calculated by useful life as specified in Schedule II of the Companies Act, 2013. Depreciation is provided on pro-rata basis on the assets acquired, sold or disposed off during the year.
vi. Investments
a. Investments are classified into Long Term Investments and Current Investments.
b. Investments which are by nature readily realizable and intended to be held for not more than one year from the date of acquisition are classified as Current Investments and Investments other than Current Investments are classified as Long Term Investments.
c. Long Term Investments are accounted at cost and any decline in the carrying value other than temporary in nature is provided for.
d. Current Investments are valued at lower of cost and market value. In case of mutual funds, the net asset value of the units declared by the Mutual Funds is considered as the market value.
vii. Inventories
Stock is valued at weighted average cost. Cost of inventory comprises of all cost of conversion and other cost incurred in bringing them to their respective present location and condition.
viii. Leased Assets
i) Assets acquired under Leases where a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as Operating Leases. The rentals and all the other expenses of assets under operating lease for the period are treated as revenue expenditure.
ii) Assets given on operating leases are included in fixed assets. Lease income is recognized in the statement of profit and loss on straight line basis over the lease term. Operating costs of leased assets, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct cost such as legal costs, brokerages etc. are charged to Statement of Profit and Loss as incurred.
ix. Impairment of Assets
An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable amount. An impairment loss is charged to the statement of profit & loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in estimate of the recoverable amount.
x. Taxes on Income
i) Current tax is determined based on the amount of tax payable in respect of taxable income for the year.
ii) Deferred tax asset is recognized with regard to all deductable timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences could be utilized.
iii) Deferred Tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognized deferred tax assets, if any.
iv) Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
xi. Provisions, Contingent Liabilities and Contingent Assets
i) A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
ii) Contingent liabilities are not recognized but disclosed in the financial statement 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
-Present obligation that arises from past events where it is either not probable that an outflow of resources will be required to be settled or a reliable estimate of the amount cannot be made.
iii) Contingent assets are neither recognized nor disclosed in the financial statements.
iv) Provision on Standard assets is made @ 0.25% of standard loans in accordance with the directions issued by RBI for NBFC.
v) Provision for non-performing assets is made in accordance with the directions issued by RBI for NBFC.
xii. Earnings Per Share
The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. For the purpose of calculating Diluted earnings per share the net profit for the year attributable to equity shareholders and weighted average number of shares outstanding during the reporting year is adjusted for the effects of all dilutive potential equity shares. In considering whether potential equity shares are dilutive or anti dilutive, each issue or series of potential equity shares is considered separately rather than in aggregate.
Mar 31, 2014
I. Basis of preparation of accounts
The financial statements have been prepared and presented under the
historical cost convention, on an accrual basis of accounting and in
accordance with the generally accepted accounting principles and in
compliance with the relevant provisions of the Companies Act, 1956.
Further, the Company follows directions issued by the Reserve Bank of
India ("RBI") as applicable.
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 the Schedule VI to the Companies Act, 1956 read
with RBI Directions as aforesaid. Based on the nature of products and
the time between the 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.
ii. Use of Estimates
The presentation of Financial Statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, revenues and expenses on the date
of financial statements and the reported amount of revenue and expenses
during the reporting period. Difference between the actual results and
estimates are recognized in the year in which results are known /
materialized.
Notes Forming Part of Financial Statement
iii. Revenue Recognition
i) Interest income from financing activities is recognized on an
accrual basis except in the case of non-performing assets, where it is
recognised on realisation, as per the prudential norms of the RBI.
ii) Dividend from investments is accounted for as income when the
Company''s right to receive dividend is established.
iii) Income from Interest on Fixed Deposits with Banks is recognized on
accrual basis.
iv) Revenue from sale of goods is recognized when the significant risks
and rewards of ownership of the goods are transferred to the customer
and is stated net of sales tax and sales returns.
iv. Fixed Assets
a. Tangible Assets
Tangible fixed assets are stated at cost less accumulated depreciation
and accumulated impairment losses. Subsequent expenditures related to
an item of tangible assets are added to its book value only if they
increase the future benefits from the existing asset beyond its
previously assessed standard of performance.
b. Intangible Assets
Intangible Assets are recognized only if it is probable that the future
economic benefits that are attributable to assets will flow to the
enterprise and the cost of the assets can be measured reliably.
Intangible assets are recorded at cost and carried at cost less
accumulated depreciation and accumulated impairment losses, if any.
v. Depreciation
Depreciation is provided on written down value Method, at the rates
specified in Schedule XIV of the Companies Act, 1956 or the rates based
on useful lives of the assets as estimated by the management, if such
useful life is lower than prescribed in schedule XIV of the Companies
Act, 1956. Depreciation is provided on pro-rata basis on the assets
acquired, sold or disposed off during the year. Individual assets
costing up to Rs. 5,000 are fully depreciated in the year of
acquisition.
vi. Investments
a. Investments are classified into Long Term Investments and Current
Investments.
b. Investments which are by nature readily realisable and intended to
be held for not more than one year from the date of acquisition are
classified as Current Investments and Investments other than Current
Investments are classified as Long Term Investments.
c. Long Term Investments are accounted at cost and any decline in the
carrying value other than temporary in nature is provided for.
d. Current Investments are valued at lower of cost and market value.
mutual funds, the net asset value of the units declared by the Mutual
Funds is considered as the market value.
vii. Inventories
Stock is valued at weighted average cost. Cost of inventory comprises
of all cost of conversion and other cost incurred in bringing them to
their respective present location and condition. .
viii. Leased Assets
i) Assets acquired under Leases where a significant portion of the
risks and rewards of the ownership are retained by the lessor are
classified as Operating Leases. The rentals and all the other expenses
of assets under operating lease for the period are treated as revenue
expenditure.
ii) Assets given on operating leases are included in fixed assets.
Lease income is recognized in the statement of profit and loss on
straight line basis over the lease term. Operating costs of leased
assets, including depreciation are recognized as an expense in the
statement of profit and loss. Initial direct cost such as legal costs,
brokerages etc. are charged to Statement of Profit and Loss as
incurred.
ix. Impairment of Assets
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable amount. An impairment loss is charged to the
statement of profit & loss in the year in which an asset is identified
as impaired. The impairment loss recognized in prior accounting periods
is reversed if there has been a change in estimate of the recoverable
amount.
x. Taxes on Income
i) Current tax is determined based on the amount of tax payable in
respect of taxable income for the year.
ii) Deferred tax asset is recognized with regard to all deductable
timing differences to the extent that it is probable that taxable
profit will be available against which deductible timing differences
could be utilized.
iii) Deferred Tax assets and liabilities axe measured using the tax
rates and tax laws that have been enacted or substantively enacted by
the Balance Sheet date. At each Balance Sheet date, the Company
re-assesses unrecognised deferred tax assets, if any.
iv) Minimum Alternate Tax (MAT) paid in accordance with the tax laws,
which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognised as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.
xi. Provisions, Contingent Liabilities and Contingent Assets
i) A provision is recognized when the Company has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which reliable estimate can be made. These are reviewed at each balance
sheet date and adjusted to reflect the current best estimates.
ii) Contingent liabilities are not recognized but disclosed in the
financial statement 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
- Present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to be
settled or a reliable estimate of the amount cannot be made.
iii) Contingent assets are neither recognized nor disclosed in the
financial statements.
iv) Provision on Standard assets is made @ 0.25% of standard loans in
accordance with the directions issued by RBI for NBFC.
v) Provision for non-performing assets is made in accordance with the
directions issued by RBI for NBFC.
xii. Earnings Per Share
The basic earnings per share is computed by dividing the net profit /
loss attributable to the equity shareholders for the period by the
weighted average number of equity shares outstanding during the
reporting period. For the purpose of calculating Diluted earning per
share the net profit for the year attributable to equity shareholders
and weighted average number of shares outstanding during the reporting
year is adjusted for the effects of all dilutive potential equity
shares. In considering whether potential equity shares are dilutive or
anti dilutive, each issue or series of potential equity shares is
considered separately rather than in aggregate.
Mar 31, 2013
A. Accounting Convention/Basis of Accounts
- The financial statements have been prepared under historical cost
conventions in according with the generally accepted accounting
principles and in compliance with the Accounting Standards notified
under Section 211 (3C) of the Companies Act, 1956 as the Companies
(Accounting Standards) Rules, 2006, and in accordance with the other
relevant provisions of the Companies Act, 1956.
- The financial statements for the year ended March 31,2013 had been
prepared as per the then applicable, pre-revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended March 31,2013 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year''s classification. The adoption of Revised Schedule
VI for previous year figures does not impact recognition and
measurement principles followed for preparation of financial
statements.
b. 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 revenues
and expenses during the reporting year, the reported amounts of assets
and liabilities and the disclosures of contingent liabilities as on the
date of the financial statements.
c. Fixed-Assets:
Fixed assets are stated at cost less accumulated depreciation and
impairment loss, if any.
Cost for the purpose of valuing fixed assets & capital work in progress
comprises of the purchase price and any attributable cost of bringing
the asset to working condition for it''s intended use.
- Pre-operative Expenditure and cost relating to borrowed funds
attributable to the construction or acquisition upto the date asset is
ready for use is included under Capital Work-in-Progress and the same
is allocated to the respective fixed assets on its completion for
satisfactory commercial commencement.
d. Method of Depreciation:
Depreciation on fixed assets has been provided on written down values
as per the rates mentioned in Schedule XIV to The Companies Act 1956.
e. Investment:
- Investments that are intended to be held for more than a year from
the date of acquisition are classified as long-term investments and are
stated at its cost of acquisition. Diminution, if any, other than
temporary, in the value of such investments is provided.
- Investments other than long-term investments, being current
investments, are valued at the lower of cost and fair value, determined
on an individual basis, including held by the Subsidiaries for
long-term purposes is provided. Diminution in the value of other
investments is provided.
f. Revenue Recognition:
- Revenue is recognized on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
Sale of Goods :-
Revenue from sale of goods is recognized when the significant risks and
rewards of ownership of the goods are transferred to the customer and
is stated net of sales tax and sales returns. Export sales are stated
at FOB value.
- Service, Maintenance Charges & installation :-
Revenue from these activities is booked, based on
agreements/arrangements with concerned parties.
-Interest :-
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
-Insurance Claims :-
Insurance claims are accounted for when settled/received. Brokerage &
Charges are recognized on completed settlement basis and banks interest
on accrual basis.
g. Taxes on Income:
Provision for Current Tax is made after taking into consideration
benefits admissible under the provision of The Income Tax Act 1961.
Deferred Tax resulting from "timing difference"& "rate difference"
between book Profit and taxable profit is accounted for using the tax
rate and laws that have been enacted or substantively enacted as on the
Balance sheet date. The deferred tax asset is recognized and carried
forward only to the extent that there is reasonable certainty that the
assets will be realized in future.
h. Valuation of Stock
Stock is valued at weighted average cost. Cost of inventory comprises
of all cost of conversion and other cost incurred in bringing them to
their respective present location and condition and valued on the basis
of weighted average method.
i. Foreign Currency Transaction :
- All monetary assets & liability in foreign currencies are translated
in Indian rupee at exchange rates prevailing at the balance sheet date
as notified by the Foreign Exchange Dealers Association of India
(FEDAI).
- All non-monetary items which arc carried at historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
- Items of income and expenditure relating to foreign exchange
transaction arc recorded at exchange rate prevailing on the date of
transaction.
- Exchange differences arising on the settlement of monetary items or
on reporting at rates different from those at which they were initially
recorded during the year, or reported in previous financial statements,
are recognized as income or expenses in the year in which they arise.
j. Accounting of CENVAT/VAT benefits:
Cenvat/VAT credit availed under the relevant provisions in respect of
Raw materials. Packing materials, capital goods, etc. is reduced from
the relevant cost of purchases.
k. Employee Benefits :
- Defined contribution plan: The Company''s superannuation scheme and
state governed providcnl fund scheme arc defined contribution plans.
The contribution paid/payable under the schemes is recognized during
the year in which the employees renders the related service.
- Defined benefit plan - Gratuity: In accordance with applicable Indian
Laws, the Company provides for gratuity, a defined benefit retirement
plan ("Gratuity Plan") covering all employees. The Gratuity Plan
provides a lump sum payment to vested employees, at retirement or
termination of employment, an amount based on the respective employees
last drawn salary and the years of employment with the Company.
Liability with regard to Gratuity Plan is accrued based on actuarial
valuation at the Balance Sheet date, carried out by an independent
Actuary. Actuarial gain or loss is recognised immediately in the
statement of Profit and Loss as Income or Expense.
- Compensated Absences: As per policy of the Company, it allows for the
encashment of absence or absence with pay to its employees. The
employees are entitled to accumulate such absences subject to certain
limits, for the future encashment or absence. The Company records an
obligation for Compensated absences in the year in which the employees
renders the services that increases this entitlement. The Company
measures the expected cost of compensated absences as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the Balance Sheet date on the basis
of an independent Actuarial valuation.
l. Borrowing Costs:
- Boixowing costs that are attributable to the acquisition /
construction of qualifying assets, are capitalized, net of income /
income earned on temporary investments from such borrowings. Other
borrowing costs are charged to the Statement of Profit and Loss as
expense in the year in which the same are incurred.
- Redemption Premium payable on borrowings are included as part of
borrowing costs on a periodic cost basis.
m. Provisions, Contingent Liabilities And Contingent Assets:
- Provisions arc recognized for liabilities that can be measured only
by using a substantial degree of estimation, if the Company has a
present obligation as a result of a past event, a probable outflow of
resources is expected to settle the obligation and the amount of the
obligation can be reliably estimated.
- Reimbursement expected in respect of the expenditure required to
settle a provision is recognized only when it is virtually certain that
the reimbursement will be received.
- Contingent liability is stated in the case of a present obligation
arising from a past event, when it is not Probable that an outflow of
resources will be required to settle the obligation, a possible
obligation, unless the probability of outflow of resources is remote.
- Contingent assets are neither recognized, nor disclosed.
- Provisions, contingent liabilities and contingent assets are reviewed
at each balance sheet date.
n. Cash Flow Statement:
The statement of cash flow has been prepared under the indirect method
as set out in Accounting Standard - 3 issued under the Companies
(Accounting Standard) Rules, 2006.
Mar 31, 2012
A. Accounting Convention/Basis of Accounts
- The financial statements have been prepared under historical cost
conventions in according with the generally accepted accounting
principles and in compliance with the Accounting Standards notified
under Section 211 (3C) of the Companies Act, 1956 as the Companies
(Accounting Standards) Rules, 2006, and in accordance with the other
relevant provisions of the Companies Act, 1956.
- The financial statements for the year ended March 31, 2011 had been
prepared as per the then applicable, pre- revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended March 31, 2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year's classification. The adoption of Revised Schedule
VI for previous year figures does not impact recognition and
measurement principles followed for preparation of financial statements
b. 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 revenues
and expenses during the reporting year, the reported amounts of assets
and liabilities and the disclosures of contingent liabilities as on the
date of the financial statements.
c. Fixed-Assets:
- Fixed assets are stated at cost less accumulated depreciation and
impairment loss, if any.
- Cost for the purpose of valuing fixed assets & capital work in
progress comprises of the purchase price and any attributable cost of
bringing the asset to working condition for it's intended use.
- Pre-operative Expenditure and cost relating to borrowed funds
attributable to the construction or acquisition upto the date asset is
ready for use is included under Capital Work-in-Progress and the same
is allocated to the respective fixed assets on its completion for
satisfactory commercial commencement.
d. Method Of Depreciation:
Depreciation on fixed assets has been provided on written down values
as per the rates mentioned in Schedule XIV to The Companies Act 1956.
e. Investment:
- Investments that are intended to be held for more than a year from
the date of acquisition are classified as long-term investments and are
stated at its cost of acquisition. Diminution, if any, other than
temporary, in the value of such investments is provided.
- Investments other than long-term investments, being current
investments, are valued at the lower of cost and fair value, determined
on an individual basis, including held by the Subsidiaries for
long-term purposes is provided. Diminution in the value of other
investments is provided.
f. Revenue Recognition:
Revenue is recognized on accrual basis to the extent it is probable
that the economic benefits will flow to the Company and the revenue can
be reliably measured.
- Sale of Goods :-
Revenue from sale of goods is recognized when the significant risks and
rewards of ownership of the goods are transferred to the customer and
is stated net of sales tax and sales returns. Export sales are stated
at FOB value.
- Service, Maintenance Charges & installation :-
Revenue from these activities is booked, based on
agreements/arrangements with concerned parties.
- Interest :-
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
- Insurance Claims.-
Insurance claims are accounted for when settled/received. Brokerage &
Charges are recognized on completed settlement basis and banks interest
on accrual basis.
g. Taxes on Income:
Provision for Current Tax is made after taking into consideration
benefits admissible under the provision of The Income Tax Act 1961.
Deferred Tax resulting from "timing difference" & "rate difference"
between book Profit and taxable profit is accounted for using the tax
rate and laws that have been enacted or substantively enacted as on the
Balance sheet date. The deferred tax asset is recognize and carried
forward only to the extent that there is reasonable certainty that the
assets will be realized in future.
h. Valuation of Stock:
Stock is valued at weighted average cost. Cost of inventory comprises
of all cost of conversion and other cost incurred in bringing them to
their respective present location and condition and valued on the basis
of weighted average method.
i Foreign Currency Transaction:
- All monetary assets & liability in foreign currencies are translated
in Indian rupee at exchange rates prevailing at the balance sheet date
as notified by the Foreign Exchange Dealers Association of India
(FEDAI).
- All non-monetary items which are carried at historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
- Items of income and expenditure relating to foreign exchange
transaction are recorded at exchange rate prevailing on the date of
transaction.
- Exchange differences arising on the settlement of monetary items or
on reporting at rates different from those at which they were initially
recorded during the year, or reported in previous financial statements,
are recognized as income or expenses in the year in which they arise.
j. Accounting of CENVAT/VAT benefits:
Cenva/VAT credit availed under the relevant provisions in respect of
Raw materials, Packing materials, capital goods, etc. is reduced from
the relevant cost of purchases.
k. Employee Benefits:
- Defined contribution plan: The Company's superannuation scheme and
state governed provident fund scheme are defined contribution plans.
The contribution paid/payable under the schemes is recognized during
the year in which the employees renders the related service.
- Defined benefit plan - Gratuity: In accordance with applicable Indian
Laws, the Company provides for gratuity, a defined benefit retirement
plan ("Gratuity Plan") covering all employees. The Gratuity Plan
provides a lump sum payment to vested employees, at retirement or
termination of employment, an amount based on the respective employees
last drawn salary and the years of employment with the Company.
Liability with regard to Gratuity Plan is accrued based on actuarial
valuation at the Balance Sheet date, carried out by an independent
Actuary. Actuarial gain or loss is recognised immediately in the
statement of Profit and Loss as Income or Expense
- Compensated Absences: As per policy of the Company, it allows for the
encashment of absence or absence with pay to its employees. The
employees are entitled to accumulate such absences subject to certain
limits, for the future encashment or absence. The Company records an
obligation for Compensated absences in the year in which the employees
renders the services that increases this entitlement. The Company
measures the expected cost of compensated absences as the additional
amount that the Company expects to pay as a result of the unused
entitlement that has accumulated at the Balance Sheet date on the basis
of an independent Actuarial valuation.
l. Borrowing Costs:
- Borrowing costs that are attributable to the acquisition/construction
of qualifying assets, are capitalized, net of income/income earned on
temporary investments from such borrowings. Other borrowing costs are
charged to the Statement of Profit and Loss as expense in the year in
which the same are incurred.
- Redemption Premium payable on borrowings are included as part of
borrowing costs on a periodic cost basis. m. Provisions, Contingent
Liabilities And Contingent Assets:
- Provisions are recognized for liabilities that can be measured only
by using a substantial degree of estimation, if the Company has a
present obligation as a result of a past event, a probable outflow of
resources is expected to settle the obligation and the amount of the
obligation can be reliably estimated.
- Reimbursement expected in respect of the expenditure required to
settle a provision is recognized only when it is virtually certain that
the reimbursement will be received.
- Contingent liability is stated in the case of a present obligation
arising from a past event, when it is not Probable that an outflow of
resources will be required to settle the obligation, a possible
obligation, unless the probability of outflow of resources is remote.
- Contingent assets are neither recognized, nor disclosed.
- Provisions, contingent liabilities and contingent assets are reviewed
at each balance sheet date.
n. Cash Flow Statement:
The statement of cash flow has been prepared under the indirect method
as set out in Accounting Standard - 3 issued under the Companies
(Accounting Standard) Rules, 2006.