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Accounting Policies of Manipal Finance Corporation Ltd. Company

Mar 31, 2015

A. 1) The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting

Principles in India to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. The financial statements are prepared under the historic cost convention in accordance with the provisions of the Companies Act, 2013 as adopted consistently by the Company. All significant items of income & expenditure are accounted on accrual system of accounting. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year, except for change in the accounting policy for depreciation on Fixed Assets, as more fully described under para G below.

2) The company has followed the Prudential Norms for Income Recognition as prescribed by Reserve Bank of India for Non-Banking Financial Companies. Lease Equalization is computed as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, since the Company has not entered into any new lease transactions, after the date on which the Accounting Standard 19 became applicable.

3) Income by way of "Interest" & "Rent" is recognized on the time proportionate method. "Dividend income" is recognized when the unconditional right to receive the income is established.

Interest on Income Tax refund and miscellaneous income are accounted as and when received, since the same are considered to be due on the date of receipt.

B. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

C. Investments held as long term, if any, are valued at cost. Provision for diminution in the value of the investments is made wherever the management is of the opinion that such decline is other than temporary.

D. Investments held as other than long term investments, if any, are valued at cost or net realizable value which ever is lower.

E. Stock in trade is valued at cost or net realizable value whichever is lower except for unquoted shares, which are valued at cost or breakup value, whichever is lower.

F. Fixed Assets are shown at cost or revalued amount as the case may be, less Depreciation. The lease hold land shown at revalued amount. The revalued amount on land has not been amortized to revaluation reserve. The Company has framed the policy of amortizing such value, on termination of lease. The Depreciation on the revalued portion of Buildings (both lease hold and free hold) (i.e. excess of value after revaluation over the actual cost) has been adjusted to the revaluation reserve till 31st March, 2014. Such depreciation fully charged to statement of profit and loss since 1st April, 2014, in the manner provided under Schedule II to the Companies Act, 2013.

G. Depreciation:

Till 31st March, 2014:

1) In respect of assets acquired prior to 1st October, 1987 depreciation is charged at the rates already arrived at after taking into consideration the effective life of the asset.

2) In respect of assets acquired on or after 1st October, 1987, other than those given on lease, the depreciation is charged under straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.

3) Depreciation on leased movable assets is accounted on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Lease Equalization represents the excess of Principal balance recovery over statutory depreciation.

4) Depreciation on buildings constructed on leasehold lands, is accounted by a method under which the asset is written off over the lease period.

With effect from 1st April, 2014

The depreciation for the current year has been provided, by reworking the useful life of the asset and considering the residual value in accordance with the Schedule II to the Companies Act, 2013. Accordingly the depreciable value (viz. Cost of the Asset minus residual value) of all assets (other than lease hold building) are being depreciated under straight line method prorata, over the useful life/remaining useful life as the case may be. The depreciation on lease hold buildings provided on straight line basis prorata, in such a manner that the asset is fully written off over the period/remaining period of the lease or over the useful life/ remaining useful life, where such useful life/remaining useful life is less than the period of the lease/remaining period of the lease, as the case may be. Lease equalization written back fully in the case of leases, since the useful life of such assets expired.

In the cases where the remaining useful life has expired before 1st April, 2014, the whole of the depreciable amount (viz. Cost of the Asset minus residual value) has been charged off to the statement of profit and loss, by exercising the option given under Schedule II to the Companies Act, 2013.

H. Employee Benefit:

The Company's "Retirement Benefit Plan" and "Other Benefit Plans" comprises of Contribution to Provident Fund, Employee State Insurance and Gratuity. Contribution to Provident Fund and Employee State Insurance is being made at pre-determined rates and are charged to the Statement of Profit & Loss. The Company's liability towards gratuity to employees is covered by group gratuity policy with LIC of India and accordingly the premium paid, charged to the Statement of profit & loss. Deficit of present value of obligations (under Gratuity policy) over the fair value of Gratuity plan assets, duly charged to the Statement of profit and loss, on year to year basis. Provision for leave encashment made on estimated basis.

There are no other retirement benefits/other benefits are being provided by the Company.

I. Taxes on Income:

The Company has charged off the Current Income Tax to the Statement of Profit and Loss. Deferred Tax Assets/Liabilities recognised/provided in accordance with the Accounting Standard 22. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date, on the timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax Asset is recognised, subject to the considerations of prudence. Deferred tax asset so recognised, is being netted off to deferred tax liability or vice versa. Advance Income Tax Paid (including Tax deducted at source, tax paid on self assessment or otherwise) and provision for current Income Tax (if any) are presented in the Balance Sheet after setting off the same against each other.

J. The principal write back pertaining to deposits, debentures and Subordinated debts as stated in note no. 2.01, is in the nature of capital receipt. The stand taken by the Company is also duly supported by the decision of Jurisdictional High Court i.e. Honourable High Court of Karnataka, as reported in 285 ITR 310 (2006) (CIT Vs ICDS Limited) wherein it is held that surplus on purchase of own debentures is a Capital Receipt, not subject to tax and 249 CTR 214 (2011) (CIT Vs Compaq Electric Limited) wherein it was held that the waiver of the loan is a Capital receipt. In the case of the Company viz. CIT Vs Manipal Finance Corporation Limited (ITA No. 795 & 794/2008) the Hon. High Court of Karnataka has dismissed the appeal filed by the department on the similar grounds. Considering the above, the same has been directly taken to the credit of Capital Reserve in the Balance Sheet.

K. Borrowing cost are recognized as an expense in the year in which they are incurred except those which are directly attributable to acquisition/construction of qualifying fixed assets, (as defined under Accounting Standard 16), till the time such assets are ready for use, in which case the borrowing costs are capitalized as part of the cost of the asset.

L. Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. Diluted earning per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

M. The Company has framed the policy of impairing the asset, when the carrying value of the assets exceeds its recoverable amount, under the circumstances when the Company is having the sources of information (whether internal or external) that an impairment loss may have occurred. Accordingly, impairment losses will be charged to profit and loss account in the year in which an asset is identified as impaired. The impairment losses recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.

N. Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions not made in the account (which otherwise should have been made) are disclosed by way of appropriate note. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

O. Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

P. Lease rent on cancellable operating lease is recognised as Income in the Statement of Profit and Loss.

Q. Based on the nature of activities of the Company, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

23.02: The company has been incurring substantial losses over the last few years and major portion of its funds are blocked in non-

performing assets. In view of the same there is considerable uncertainty that the company will continue as a going concern and meet its commitments to its creditors. The accounts however have been prepared on the going concern basis in view of management's efforts to settle the liabilities with the debenture holders and subordinated debt holders by exploring the possibility of submitting a new scheme and or settlement at discounted rates etc. as detailed in Note No. 5.01 and the management is being hopeful of recovery of dues from borrowers so that dues of creditors can be settled. Accordingly the management is of the opinion that the losses as aforesaid and also the circumstances as stated in note 5.01 of the financials statement will not adversely affect the financial position of the Company.

23.03: The company has not recognised the net deferred tax asset which constitutes mainly of carry forward losses, excess depreciation

claimed in Income Tax and Provisions for doubtful debts, as a matter of prudence.

23.04: Disclosures in respect of related parties with whom transactions have taken place during the year:

A. Key Management Personnel and his relatives Sri T. Narayana M. Pai, Managing Director

Sri T. Sanjay Pai, Chief Financial Officer

B. Other related Companies

Vedachala Electronics and Financial Services Pvt. Limited Manipal Housing Finance Syndicate Limited

23.05: Contingent & other Liabilities:

A. Liability on debentures assigned to Vedachala Electronics and Financial Services Private Limited inclusive of interest accrued is Rs. 17,99 thousand. (P.Y. Rs. 17,99 thousand), without considering interest due on or after 1st day of July, 2002.

B. Liability in respect of damages and others in respect of suits against the Company before various Courts, Consumer Courts etc. (in respect of repayment of deposits/debentures/debts with interest & other costs) has not been quantified and provided, due to lack of information with the company and also considering the fact that many of such customers have approached the Company for settlement at discounted rates. The collection of information is under process.

C. No provision made for disputed income tax liability for various years wherever department has preferred an appeal before the Tribunal, High Court. The question of quantification of liability thereon, does not arise, for the reason that the cases were allowed in favour of the Company, by the lower appellate authorities.

23.06: The Management of the Company is of the opinion that the directors of the Company are not disqualified u/s 164(2) of Companies Act, 2013,

[in spite of the fact that the Company has stopped repaying matured Debentures/debts/deposits and interest thereon as detailed in note no. 5.01], for the reason that the Company is exploring the possibility of presenting a new scheme of arrangement, as detailed in the aforesaid note.

The Director of the Company Sri Chandappa R. Sherigar is the director of another Company. As evident from the records/documents produced before the Company, the another company has also stopped payment of matured deposits/debentures and interest thereon after 30th June, 2002. The Company has received a letter from him that he is not disqualified u/s 164(2) of Companies Act, 2013 for the reason that the another Company is exploring the possibility of making an application before the Hon'ble High Court of Karnataka u/s 391 of the Companies Act, 1956 for restructuring of its debts.

23.07: The assets of the Company are not valued, considering the cost involved therein. However the management is of the opinion that the carrying

cost of the asset (including that of leased assets after considering the Lease equalization Charge) does not exceed its recoverable value. Further the Company does not have any information whether internal or external, that indicates that "impairment loss may have occurred". Accordingly the question of impairment of assets does not arise.

23.08: The Company has not carried on any non banking business other than repayment of liability out of recoveries. All the payments have been

centralized in head office. Powers are not given to the Branches to incur the expenses. However to have the effective control and as required by the provisions of Companies Act, 2013, the Company has appointed the concern of Chartered Accountant as Internal Auditors of the Company.

23.09: Employee Benefits:

Brief description of the Plans:

a) The Company has two schemes for long-term benefits such as provident fund and gratuity. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through trustees/appropriate authorities. The Company's defined contribution plan is employees' provident fund (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952) wherein the Company has no further obligation beyond making the contributions.

The Company is also contributing towards Employee State Insurance Plan, as per statutory requirements, wherein the Company has no further obligation beyond making the contributions.

The Company is also providing employee benefit by way of encashment of earned leave. The provision for the same has been made on estimated basis. The amount involved therein is not material, considering the size of the Company. The Company has not opted for actuarial valuation, considering the cost involved and also the concept of materiality.

The Company's defined benefit plan is gratuity.

b) Charge to the Profit and Loss Account based on contributions:

The Company's contribution to Provident Fund charged to Statement of Profit and Loss during the year is Rs. 58 thousands. (P.Y. Rs. 58 thousands).

The Company's Contribution to Employee State Insurance Plan charged to Statement of Profit and Loss during the year is Rs. 19 thousands (P.Y. Rs. 20 thousands).

The Companies liability towards gratuity to employees covered by group gratuity policy with LIC of India. Premium paid on this account is Rs. 60 thousands (P.Y. Rs. 36 thousands).

The detail of provision for leave encashment is as under: Provision as on 1st April, 2014 Rs. 88 thousands (P.Y. Rs. 88 thousands) Amount charged to the Statement of profit & loss during the year Rs. Nil (P.Y. Rs. Nil). Actual payment during the year is Nil (P.Y. Rs. Nil). provision as on 31st March, 2015 Rs. 88 thousands (P.Y. Rs. 88 thousands).

c) Disclosures for defined gratuity benefit plans based on actuarial reports obtained from Life Insurance Corporation of India as on 31st March, 2015:

Valuation Method: Projected Unit Credit Method.

23.10: In the opinion of the Board of Directors, the assets listed under the head Non Current Assets & Current Assets (other than Fixed Assets and

Non Current Investments) in the Balance Sheet (viz: assets covered under Note No. 7 to 12), have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

23.11: The Company has earned Profit during the year and also during immediate previous financial year i.e. year ending 31st March, 2014, due to

Exceptional Income as stated in Note 20 and Extraordinary Income as stated in Note 21.

23.12: The Company is operating under one Geographical and Business segment. Therefore the question of making disclosures as required under

Accounting Standard 17 does not arise.

23.13: The nature of pending litigations have been disclosed in note 23.05. However the impact on the financial position of the Company is not

ascertainable for the present, for the reasons as mentioned therein.

23.14: The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

23.15: The Company is not required to transfer any amount to the investor education and protection fund for the reason that there are no unclaimed

deposits/debentures/subordinated debts as on 31st March, 2015 and also for the reasons as given in note 5.01.

23.16: Previous Year's amounts are regrouped/reclassified/rearranged, wherever necessary.


Mar 31, 2014

A. 1) The Financial statements are prepared to comply in all material aspects with applicable accounting principles in India, the relevant provisions of Companies Act, 1956 and mandatory Accounting Standards notified by the Companies (Accounting Standard) Rule 2006 (hereinafter referred to as "Accounting Standard" in this Schedule). The financial statements are prepared under the historic cost convention in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2) The company has followed the Prudential Norms for Income Recognition as prescribed by Reserve Bank of India for Non-Banking Financial Companies. Lease Equalization is computed as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, since the Company has not entered into any new lease transactions, after the date on which the Accounting Standard 19 became applicable.

3) Income byway of "Interest" & "Rent" is recognized on the time proportionate method. "Dividend income" is recognized when the unconditional right to receive the income is established.

Interest on Income Tax refund and miscellaneous income are accounted as and when received.

B. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Investments held as long term are valued at cost. Provision for diminution in the value of the investments is made wherever the management is of the opinion that such decline is other than temporary.

D. Investments held as other than long term investments if any, are valued at cost or net realizable value

whichever is lower. .

E. Stock in trade is valued at cost or net realizable value whichever is lower except for unquoted shares, which are valued at cost or breakup value, whichever is lower.

F. Fixed Assets are shown at cost or revalued amount as the case may be, less Depreciation. The lease hold land shown at revalued amount. The revalued amount has not been amortized to revaluation reserve. The Company has framed the policy of amortizing such value, on termination of lease.

G. Depreciation: .

1.) In respect of assets acquired prior to 1st October, 1987 depreciation is charged at the rates already arrived at after taking into consideration the effective life of the asset.

2) In respect of assets acquired on or after 1st October, 1987, other than those given on lease, the depreciation is charged under straight-line method at the'' rates specified in Schedule XIV to the Companies Act, 1956.

3) Depreciation on leased assets is accounted bn straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Lease Equalization represents the excess of Principal balance recovery over statutory depreciation.

4) Depreciation on buildings constructed on leasehold lands, is accounted by a method under which the asset is written off over the lease period.

H. Employee Benefit:

The Company''s "Retirement Benefit Plan" and "Other Benefit Plans" comprises of Contribution to Provident Fund, Employee State Insurance and Gratuity. Contribution to Provident Fund and Employee State Insurance is being made at pre-determined rates and are charged to the Statement of Profit & Loss. The Company''s liability towards gratuity to employees is covered by group gratuity policy with LIC of India and accordingly the premium paid, charged to the Statement of profit & loss. Deficit of present value of obligations (under Gratuity policy) over the fair value of Gratuity plan assets, duly charged to the Statement of profit and loss, on year to year basis. Provision for leave encashment made on estimated basis.

There are no other retirement benefits/other benefits are being provided by the Company.

I. Taxes on Income:

The Company has charged off the Current Income Tax to the Statement of Profit and Loss. Deferred Tax Assets/Liabilities recognised/provided in accordance with the Accounting Standard 22. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet ¦ date, on the timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax Asset is recognised, subject to the considerations of prudence. Deferred tax asset so recognised, is being netted off to deferred tax liability or vice versa. Advance Income Tax Paid (including Tax deducted at source, tax paid on self assessment or otherwise) and provision for current Income Tax (if any) are presented in the Balance Sheet after setting off the same against each other.

J. The principal write back pertaining to deposits, debentures and Subordinated debts as stated in Note No. 2.01, is in the nature of capital receipt. The stand taken by the Company is also duly supported by the decision of Jurisdictional High Court i.e. Honourable High Court of Karnataka, as reported in 285 ITR 310 (2006) (CIT Vs ICDS Limited) wherein it is held that surplus on purchase of own debentures is a Capital Receipt, not subject to tax and 249 CTR 214 (2011) (CIT Vs Compaq Electric Limited) wherein it was held that the waiver of the loan is a Capital recejpt. Further the Board has passed the resolution long back, not to withdraw any amount from the aforesaid reserve at any time for declaration of dividend. Considering all above the same has been directly taken to the credit of Capital Reserve in the Balance Sheet.

K. Borrowing cost are recognized as an expense in the year in which they are incurred except which are directly attributable to acquisition/construction of qualifying fixed assets, (as defined under Accounting Standard 16), till the time such assets are ready for use, in which case the borrowing costs are capitalized as part of the cost of the asset.

L. Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. Diluted earning per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

M. The Company has framed the policy of impairing the asset, when carrying value of the assets exceeds its recoverable amount, under the circumstances when the Company is having the sources of information (whether internal or external) that an impairment loss may have occurred. Accordingly, impairment losses will be charged to profit and loss account in the year in which an asset is identified as impaired. The impairment losses recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.

N. Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Provisions not made in the account (which otherwise should have been made) are disclosed by way of appropriate note. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

O. Cash Flow Statement prepared under Indirect Method, as prescribed by Accounting Standard 3. Term Deposit with maturity period exceeding 3 months, earmarked bank balances and Deposits kept as margin money/security etc. are not considered as "cash and cash equivalent", in the Cash Flow Statement.

P. Lease rent on cancellable operating lease recognised as Income in the Statement of Profit and Loss.


Mar 31, 2013

A. 1) The Financial statements are prepared to comply in all material aspects with applicable accounting principles in India, the relevant provisions of Companies Act, 1956 and mandatory Accounting Standards notified by the Companies (Accounting Standard) Rule, 2006 (hereinafter referred to as "Accounting Standard" in this Schedule). The financial statements are prepared under the historic cost convention in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2) The company has followed the Prudential Norms for Income Recognition as prescribed by Reserve Bank of India for Non-Banking Financial Companies. Lease Equalization is computed as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, since the Company has not entered into any new lease transactions, after the date on which the Accounting Standard 19 became applicable.

3) Income by way of "Interest" & "Rent" is recognized on the time proportionate method. "Dividend income" is recognized when the unconditional right to receive the income is established.

Interest on Income Tax refund and miscellaneous income are accounted as and when received.

B. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

C. Investments held as long-term are valued at cost. Provision for diminution in the value of the investments is made wherever the management is of the opinion that such decline is other than temporary.

D. Investments held as other than long term investments if any, are valued at cost or net realizable value which ever is lower.

E. Stock in trade is valued at cost or net realizable value whichever is lower except for unquoted shares, which are valued at cost or breakup value, whichever is lower.

F. Fixed Assets are shown at cost or revalued amount as the case may be, less Depreciation. The lease hold land shown at revalued amount. The revalued amount has not been amortized to revaluation reserve. The Company has framed the policy of amortizing such value, on termination of lease.

G. Depreciation:

1) In respect of assets acquired prior to 1st October, 1987 depreciation is charged at the rates already arrived at after taking into consideration the effective life of the asset.

2) In respect of assets acquired on or after 1st October, 1987, other than those given on lease, the depreciation is charged under straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.

3) Depreciation on leased assets is accounted on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Lease Equalization represents the excess of Principal balance recovery over statutory depreciation.

4) Depreciation on buildings constructed on leasehold lands, is accounted by a method under which the asset is written off over the lease period.

H. Employee Benefit:

The Company''s "Retirement Benefit Plan" and "Other Benefit Plans" comprises of Contribution to Provident Fund, Employee State Insurance and Gratuity. Contribution to Provident Fund and Employee State Insurance is being made at pre-determined rates and are charged to the Statement of Profit & Loss. The Company''s liability towards gratuity to employees is covered by group gratuity policy with LIC of India and accordingly the premium paid, charged to the Statement of profit & loss. Deficit of present value of obligations (under Gratuity policy) over the fair value of Gratuity plan assets, duly charged to the Statement of profit and loss, on year to year basis. Provision for leave encashment made on estimated basis.

There are no other retirement benefits/other benefits are being provided by the Company.

I. Taxes on Income:

The Company has charged off the Current Income Tax to the Statement of Profit and Loss. Deferred Tax Assets/Liabilities recognised/provided in accordance with the Accounting Standard 22. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date, on the timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax Asset is recognised, subject to the considerations of prudence. Deferred tax asset so recognised, is being netted off to deferred tax liability or vice versa. Advance Income Tax Paid (including Tax deducted at source, tax paid on self assessment or otherwise) and provision for current Income Tax (if any) are presented in the Balance Sheet after setting off the same against each other.

J. The principal write back pertaining to deposits, debentures and Subordinated debts as stated in Note No. 2.01, is in the nature of capital receipt. The stand taken by the Company is also duly supported by the decision of Jurisdictional High Court i.e. Honourable High Court of Kamataka, as reported in 285 ITR 310 (2006) (CIT Vs ICDS Limited) wherein it is held that surplus on purchase of own debentures is a Capital Receipt, not subject to tax and 249 CTR 214 (2011) (CITVs Compaq Electric Limited) wherein it was held that the waiver of the loan is a Capital receipt. Further the Board has passed the resolution long back, not to withdraw any amount from the aforesaid reserve at any time for declaration of dividend. Considering all above the same has be^n directly taken to the credit of Capital Reserve in the Balance Sheet.

K. Borrowing cost are recognized as an expense in the year in which they are incurred except which are directly attributable to acquisition/construction of qualifying fixed assets, (as defined under Accounting Standard 16), till the time such assets are ready for use, in which case the borrowing costs are capitalized as part of the cost of the asset.

L. Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. Diluted earning per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

M. The Company has framed the policy of impairing the asset, when carrying value of the assets exceeds its recoverable amount, under the circumstances when the Company is having the sources of information (whether internal or external) that an impairment loss may have occurred. Accordingly, impairment losses will be charged to profit and loss account in the year in which an asset is identified as impaired. The impairment losses recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.

N. Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Provisions not made in the account (which otherwise should have been made) are disclosed by way of appropriate note. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

O. Cash Flow Statement prepared under Indirect Method, as prescribed by Accounting Standard 3. Term Deposit with maturity period exceeding 3 months, earmarked bank balances and Deposits kept as margin money/security etc. are not considered as "cash and cash equivalent", in the Cash Flow Statement.

P. Lease rent on cancellable operating lease recognised as Income in the Statement of Profit and Loss.


Mar 31, 2012

A. 1) The Financial statements are prepared to comply in all material aspects with applicable accounting principles in India, the relevant provisions of Companies Act, 1956 and mandatory Accounting Standards notified by the Companies (Accounting Standard) Rule 2006 (hereinafter referred to as "Accounting Standard" in this Schedule). The financial statements are prepared under the historic cost convention in accordance with the provisions of the Companies Act,

2) The company has followed the Prudential Norms for Income Recognition as prescribed by Reserve Bank of India for Non-Banking Financial Companies. Lease Equalization is computed as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, since the Company has not entered into any new lease transactions, after the date on which the Accounting Standard 19 became applicable.

3) Income by way of "Interest" & "Rent" is recognized on the time proportionate method. "Dividend income" is recognized when the unconditional right to receive the income is established. Interest on Income Tax refund and miscellaneous income are accounted as and when

B. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period

C. Investments held as long term are valued at cost. Provision for diminution in the value of the investments is made wherever the management is of the opinion that such decline is other than temporary.

D. Investments held as other than long term investments if any, are valued at cost or net realizable value whichever is lower.

E. Stock in trade is valued at cost or net realizable value whichever is lower except for unquoted shares, which are valued at cost or breakup value, whichever is lower.

F. Fixed Assets are shown at cost or revalued amount as the case may be, less Depreciation. The leasehold land shown at revalued amount. The revalued amount has not been amortized to revaluation reserve. The Company has framed the policy of amortizing such value, on termination of lease.

G. Depreciation:

1) In respect of assets acquired prior to 1st October 1987, depreciation is charged at the rates already arrived at after taking into consideration the effective life of the asset.

2) In respect of assets acquired on or after 1!t October 1987, other than those given on lease, the depreciation is charged under straight-line method at the rates specified in Schedule XIV to the

3) Depreciation on leased assets is accounted on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Lease Equalization represents the excess of principal balance recovery over statutory depreciation.

4) Depreciation on buildings constructed on leasehold lands, is accounted by a method under which the asset is written off over the lease period.

H. Employee Benefit:

The Company's "Retirement Benefit Plan" and "Other Benefit Plans" comprises of Contribution to Provident Fund, Employee State Insurance and Gratuity. Contribution to Provident Fund and Employee State Insurance is being made at pre-determined rates and are charged to the Statement of Profit & Loss. The Company's liability towards gratuity to employees is covered by group gratuity policy with LIC of India, and accordingly the premium paid, charged to the Statement of profit & loss. Deficit of present value of obligations (under Gratuity policy) over the fair value of Gratuity plan assets, duly charged to the Statement of profit and loss, on year to year basis. Provision for leave encashment made on estimated basis.

There are no other retirement benefits/other benefits are being provided by the Company.

The Company has charged off the Current Income Tax to the Statement of Profit and Loss. Deferred Tax Assets/Liabilities recognized/provided in accordance with the Accounting Standard 22. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date, on the timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred Tax Asset is recognized, subject to the considerations of prudence. Deferred tax asset so recognized, is being netted off to deferred tax liability or vice versa. Advance Income Tax Paid (including Tax deducted at source, tax paid on self assessment or otherwise) and provision for current Income Tax (if any) are presented in the Balance Sheet after setting off the same against each other.

j. The principal write back pertaining to deposits, debentures and Subordinated debts as stated in note no. 2.01, is in the nature of capital receipt. Therefore the same has been directly taken to the credit of Capital Reserve in the Balance Sheet.

K. Borrowing cost are recognized as an expense in the year in which they are incurred except which are directly attributable to acquisition/construction of qualifying fixed assets (as defined under Accounting Standard 16), till the time such assets are ready for use, in which case the borrowing costs are capitalized as part of the cost of the asset.

L. Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. Diluted earning per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

M. The Company has framed the policy of impairing the asset, when carrying value of the assets exceeds its recoverable amount, under the circumstances when the Company is having the sources of information (whether internal or external) that an impairment loss may have occurred. Accordingly, impairment losses will be charged to profit and loss account in the year in which an asset is identified as impaired. The impairment losses recognized in prior accounting periods is reversed if there has been a change in the estimate of the recoverable amount.

N. Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Provisions not made in the account (which otherwise should have been made) are disclosed by way of appropriate note. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

O. Cash Flow Statement prepared under Indirect Method, as prescribed by Accounting Standard 3. Term Deposit with maturity period exceeding 3 months, earmarked bank balances and Deposits kept as margin money/security etc. are not considered as "cash and cash equivalent", in the Cash Flow Statement.

P. Lease rent on cancellable operating lease recognized as Income in the Statement of Profit and Loss.


Mar 31, 2010

A) 1) The Financial statements are prepared to comply in all material aspects with applicable accounting principles in India, the relevant provisions of Companies Act, 1956 and mandatory Accounting Standards notified by the Companies (Accounting Standard) Rule 2006 (hereinafter referred to as "Accounting Standard" in this Schedule). The financial statements are prepared under the historic cost convention in accordance with the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2) The company has followed the Prudential Norms for Income Recognition as prescribed by Reserve Bank of India for Non-Banking Financial Companies. Lease Equalization is computed as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, since the Company has not entered into any new lease transactions, after the date on which the Accounting Standard 19 became applicable.

3) "Interest" is recognised on the time proportionate method. "Dividend income" is recognised when the unconditional right to receive the income is established.

Interest on Income Tax refund and miscellaneous income are accounted as and when received.

b) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

c) Investments are held as longterm and are valued at cost. Provision for dimunition in the value of the investments is made wherever the management is of the opinion that such decline is other than temporary.

d) Investments held as other than longterm investments are valued at cost or net realizable value whichever is lower.

e) Stock in trade is valued at cost or net realizable value whichever is lower except for unquoted shares, which are valued at cost or breakup value, whichever is lower.

f) Fixed Assets are shown at cost or revalued amount as the case may be, less Depreciation. The lease hold land shown at revalued amount. The revalued amount has not been amortized to revaluation reserve. The Company has framed the policy of amortizing such value, on termination of lease.

g) Depreciation:

1) In respect of assets acquired prior to 1st October, 1987 depreciation is charged at the rates already arrived at after taking into consideration the effective life of the asset.

2) In respect of assets acquired on or after 1st October, 1987, other than those given on lease, the depreciation is charged under straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.

3) Depreciation on leased assets is accounted on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. Lease Equalization represents the excess of Principal balance recovery over statutory depreciation.

4) Depreciation on buildings constructed on leasehold lands, is accounted by a method under which the asset is written off over the lease period.

h) Employee Benefit:

The Companys "Retirement Benefit Plan" and "Other Benefit Plans" comprises of Contribution to Provident Fund, Employee State Insurance and Gratuity. Contribution to Provident Fund and Employee State Insurance is being made at pre-determined rates and are charged to the Profit & Loss Account. The Companys liability towards gratuity to employees is covered by group gratuity policy with LIC of India and accordingly the premium paid, charged to the profit & loss account. Deficit of present value of obligations (under Gratuity policy) over the fair

value of Gratuity plan assets, duly charged to the profit and loss account, on year to year basis. Provision for leave encashment made on estimated basis.

There are no other retirement benefits/other benefits are being provided by the Company.

i) Taxes on Income

Tax on Income for the current period is determined on the basis of taxable income computed by the Company. Deferred Tax Liability (Net of Asset) reflects the impact of current year timing differences between the taxable income/losses and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax asset (if any) is being recognized, subject to the consideration of prudence.

j) The principal write back pertaining to deposits, debentures and Subordinated debts as stated in Note No. Il( 5) of this Schedule, is in the nature of capital receipt. Therefore the same has been directly taken to the credit of Capital Reserve in the Balance Sheet.

k) Borrowing cost are recognized as an expense in the year in which they are incurred except which are directly attributable to acquisition/construction of qualifying fixed assets, (as defined under Accounting Standard 16), till the time such assets are ready for use, in which case the borrowing costs are capitalized as part of the cost of the asset.

l) Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. Diluted earning per share, if any is computed using the weighted average number of equity shares and dilutive potential equity share outstanding during the period except when the results would be anti-dilutive.

m) The Company has framed the policy of imparing the asset, when carrying cost of assets exceeds its recoverable amount. Accordingly an impairment loss will be charged to profit and loss account 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 the estimate of the recoverable amount.

n) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be outflow of resources. Provisions not made in the account (which otherwise should have been made) are disclosed by way of appropriate note. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

o) Cash Flow Statement is being prepared under "Indirect Method" as laid down under Accounting Standard 3 of Companies (Accounting Standards) Rules 2006.

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