Enter the first few characters of Company and click 'Go'

Notes to Accounts of Monarch Networth Capital Ltd.

Mar 31, 2018

1. A. Company Information

Monarch Networth Capital Limited (MNCL) was originally formed under the name of âNetworth Finance Limited on 2nd December 1993. Therafter, it was changed to Networth Stock Broking Limited w.e.f. 30/09/1997 and to Monarch Networth Capital Limited w.e.f 13/10/2015. MNCL is predominantly engaged in Share & Stock Broking, Merchant Banking, and Mutual Fund Distributor. The Company is a member of National Stock Exchange of India Ltd. (NSE) BSE Ltd. (BSE), Metropolitan Stock Exchange of India Ltd (MSEI) in the Capital Market and Derivatives (Futures & Options) Segment. It is also Depository Participant with Central Depositary Services India (CDSL) and National Securities Depository (India) Limited (NSDL) and also registered in Securities and Exchange Board of India (âSEBIâ) as a Category 1 Merchant Banker and Research Analyst.

The Company has availed the deemed cost exemption in relation to the property plant and equipment on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date.

Refer note below for the gross block value and the accumulated depreciation on 1 April 2016 under the previous GAAP.

The Company has availed the deemed cost exemption in relation to the intangible assets on the date of transition and hence the net block carrying amount has been considered as the gross block carrying amount on that date.

Refer note below for the gross block value and the accumulated amortisation on 1 April 2016 under the previous GAAP.

* Stock in trade represents shares held as on balance sheet date at valued at cost being shares held by virtue of acting as a merchant banker and market maker for the acquired equity shares. Balance in vandha & trading error A/c. are basically shares held as a result of Trading Error or Vandha Accounts of clients. In absence of information, disclosure relating quantity has not been given.

Note : As on 01.04.2016, there was a Provision for Doubtful Receivables for Rs 6,72,87,557/-. A further provision of Rs 100,00,000/- was made during the Financial Year 2016-2017 . The Board is of the opinion that inspite of all due efforts, the said Doubtful Receivables for Rs 7,72,87,557/-are not recoverable, hence the same has been written off during the Financial Year 2016-2017.

Note : As per management opinion there is no Expected Credit Loss in Trade Receivables of the Company and all are on fair value.

Notes:

1. Fixed deposits includes Rs. 15,97,30,335, Rs. 15,67,57,488, Rs. 7,87,50,000 for the year ended 31 March 2018, 31 March 2017 and 1 April 2016, respectively, under lien with banks towards bank guarantee, or kept as security with Exchanges as margin money.

2. Cash and Bank balances as on 31 March 2018, 31 March 2017 and as on 1 April 2016 include cheques on hands, which were cleared subsequent to the year end on periodic basis.

d Terms / Rights attached to Equity shares

âThe Company has only one class of equity shares with voting rights having a par value of Re 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting, except in case of interim dividend. During the year ended 31 March 2018, the amount of dividend per equity share recognised as distributions to equity shareholders is NIL (previous year NIL).

In the event of liquidation of the Company, the shareholders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

f The company had not issued any bonus share for consideration other than cash and no share had bought back during the period of five years immediately preceding the reporting date.

g During the year no share was reserved for issue under options and contracts/commitments for the sale of shares/disinvestment.

Notes:

In absence of information regarding vendors covered under Micro, Small & Medium Enterprises Development Act, 2006. disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act has not been given.

** This represents recovery of expenses in agreed proportion towards utilization of common facilities including staff cost from subsidiaries and associate concerns.

Note:2 Corporate social responsibility

Pursuant to the application of Section 135 of the Act and the Rules framed thereunder, the Company has constituted the CSR committee during the year. The company is required to spend at least two per cent of the average net profits of the company made during the three immediately preceding financial years as per the activities which are specified in Schedule VII of the Act and the Company has decided to spend the amount by way of contribution to a Trust . The disclosure as required by the Guidance Note on Accounting for Expenditure on Corporate Social Responsibility Activities issued by the Institute of Chartered Accounts of India are as follows:

- Gross amount required to be spent by the Company during the year is Rs. 20,01,782/

- Amount Spent during the year - Rs. Nil"

Note: 3 Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares. â

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

Note: 4 Employee benefit expense

The Company contributes to the following post-employment defined benefit plans in India.

(i) Defined Contribution Plans:

The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The Company recognised following amounts for provident fund and ESIC contributions in the Statement of Profit and Loss.

(ii) Defined Benefit Plan:

A) The Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. The scheme provides for payment as under:

âi) On normal retirement / early retirement / withdrawal / resignation:

As per the provisions of the Payment of Gratuity Act, 1972 with vesting period of 5 years of service.

ii) On death in service:

As per the provisions of the Payment of Gratuity Act, 1972 without any vesting period.â

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried out as at 31 March 2017. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

Assumptions regarding future mortality have been based on published statistics and mortality tables. The current longevities underlying the values of the defined benefit obligation at the reporting date were as follows:

ii. Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

Note: 5 Leases- Operating leases

Leases as lessee

a) The Company has entered into cancellable operating leasing arrangements for residential and office premises. Following Lease rentals has been included under the head âOther Expensesâ under Note No 25 in the notes to the financial statements.â

Note: 6 Fair value disclosures

1. Financial instruments - Fair values and risk management

A. Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

â(1) Assets that are not financial assets, in the opinion of the management are not included.

(2) Other liabilities that are not financial liabilities, in the opinion of the management are not included.

(3) In the opinion of the management, based on the details available with the company, all the financial assets and liabilities are tested for valuation, to identify their fair value, as prescribed in Indian Accounting Standards, and are measured at fair value, to the extent possible. The assets/ liabilities, which are not possible to be measured at fair value, in the opinion of the management, in the opinion of the management, are presented in the financial statements at their book value, without any adjustment towards fair valuation.â

B. Measurement of fair values (Key inputs for valuation techniques) :

1. Listed Equity Investments (other than Subsidiaries, Joint Ventures and Associates): Quoted Bid Price on Stock Exchange (Level 1)

2. Forward contracts : Forward exchange rate is taken from Foreign Exchange Dealers Association of India (FEDAI) (Level 1)

3. Valuation techniques and significant unobservable inputs: Not applicable (Level 3)

Transfers between Levels 1 and 2

There were no transfer from Level 1 to Level 2 or vice versa in any of the reporting periods.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk ;

- Liquidity risk ; and

- Market risk

i. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities.

The carrying amount of following financial assets represents the maximum credit exposure:

The Company does not have higher concentration of credit risks to a single customer.

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Board of Directors has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed half yearly. Any sales exceeding those limits require approval from the Board of Directors.

As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.

Management believes that the unimpaired amounts that are past due by more than 90 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk, including underlying customers'' credit ratings if they are available.

Cash and cash equivalents

The company maintains its Cash and cash equivalents and Bank deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit-worthiness on an on-going basis.

iii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The Company uses product-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimizing its cash return on investments. The Company monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

iv. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk and interest rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency risk

The Company is not exposed to any currency risk on account of its borrowings, other payables and receivables in foreign currency. All dealings are done in domestic markets by the company. The functional currency of the Company is Indian Rupee.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing financial instruments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing financial instruments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

Company''s interest rate risk arises from borrowings and fixed income financial instruments. Borrowings issued at fixed rates exposes to fair value interest rate risk. The interest rate profile of the Company''s interest-bearing financial instruments as reported to the management of the Company is as follows.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

The company does not have any financial assets or financial liabilities bearing floating interest rates. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Note 7 Capital Management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The Company monitors capital using a ratio of ''adjusted net debt'' to ''adjusted equity''. For this purpose, adjusted net debt is defined as total borrowings, comprising interest-bearing loans and borrowings less cash and cash equivalents. Adjusted equity comprises all components of equity.

Notes

(i) There are certain claims aggregating to Rs. 318 lacs (previous year Rs. 318 lacs) against the company for which the company has taken suitable legal recourse. Hence the same has not been recognized as a debt and no provision has been made thereof.

(ii) The Company''s pending litigations comprise of claims against the Company primarily by the customers. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial results at March 31, 2018

(iii) Pending resolution of the respective proceedings, it is not practicable for the company to estimate the timing of the cash outflows, if any, in respect of the above as it is determinable only on receipt of judgement/decisions pending with various forums/authorities.

Note 8

Disclosure on specified bank notes (SBN)

During the previous year, the company deposited specified bank notes (SBN) with the bank between November 8, 2016 to December 30, 2016. The amount so deposited consisted of currency note denominations of INR 1000 and INR 500 as defined in the MCA notification G.S.R 308 (E) dated MARCH 30, 2017 on the details of the SBN held and transacted during the period from November 8, 2016 to December 30, 2016.:

Note 9

Dividends proposed to be distributed for the equity shareholders for the year ended 2017-18 is Nil.

Note 10

Segment information

As per the requirements of Ind AS 108 on âOperating Segmentsâ, segment information has been provided under the Notes to Consolidated Financial Statements.

The Company has carried out Impairment test on its Fixed Assets as on the date of Balance Sheet and the management is of the opinion that there is no asset for which provision of impairment is required to be made as per applicable Indian Accounting Standard.

Note 11

Balance of all Sundry Debtors, Sundry Creditors, Investments & Loan and Advances are subject to confirmation and consequent reconciliation and adjustments, if any.

Note 12

In the opinion of the board, the current assets, loans and advances are approximately of the value state, if realized in ordinary course of business. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

Note 13

The company has taken suitable legal action for recovering deposits of Rs. 40 lacs (previous year Rs. 40 lacs) for premises at Bangalore. The management expects favorable order for the same, hence no provisions have been made thereof.

Note 14

The company has taken suitable legal action for recovering debts of Rs. 239 lacs (previous year Rs. 239 lacs) for fraudulent transaction done by client in the year 2008-09. SEBI has passed the interim order withholding the payout which is kept with Bombay Stock Exchange till completion of investigation. The management expects favorable order for the same, hence no provisions have been made thereof.

Note 15

Events Occurring After the Balance Sheet Date

To the best of knowledge of the management, there are no events occurring after the Balance Sheet date that provide additional information materially affecting the determination of the amounts relating to the conditions existing at the Balance Sheet Date that requires adjustment to the Assets or Liabilities of the Company.

Computation of net profit u/s 198 of the Companies Act, 2013 is not furnished as no commission is payable / paid to the Directors. The reimbursement or payment of expenses as per the contractual appointment, are not in the nature of personal expenses, as the same are accepted/incurred under contractual obligation as per the business practices. Also the expenditure incurred in the normal course of business, in accordance with the generally accepted business practices, on employees and directors, is not considered as expenditure of personal nature. There for the same has not been considered for the above purpose.

Note 16

The Company provides for the use by its subsidiaries certain facilities like use of premises infrastructure and other facilities / services and the same are termed as ''Shared Services''. The cost of such Shared Services are recovered from subsidiaries either on actual basis or on reasonable management estimates which are constantly refined in the light of additional knowledge gained relevant to such estimation.

Note 17

Transition to Ind AS:

For the purposes of reporting, company have transitioned its basis of accounting from Indian generally accepted accounting principles (âIGAAPâ) to Ind AS. The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the âtransition dateâ).

In preparing opening Ind AS balance sheet, company have adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS.â

Notes to the reconciliation:

1 Remeasurement of Post-employment benefit obligations (Net of Tax)

Both under previous GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis.

Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised to retained earnings through OCI.

Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. There is no impact on the total equity as at 31 March 2017

2 Fair valuation of investments

Under the previous GAAP, investments in equity instruments & securities were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for impairment towards other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value.

Under Ind AS, such investments are carried at fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI) (except for investment in subsidiaries, associates and joint ventures).

The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss. Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI - Equity investments reserve as at the date of transition and subsequently in the other comprehensive income.â

3 Deferred Tax

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period.

Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base.

The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under previous GAAP. In addition, the various transitional adjustments lead to temporary differences.

Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

4 Property, plant and equipment

Under Ind AS, the Company has elected to apply Ind AS 16-Property, plant and equipment from the date of acquisition of property, plant and equipment and accordingly depreciation has been retrospectively calculated and the resultant change has been adjusted in retained earnings.

5 Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise.

Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes

- re-measurements of defined benefit plans,

- effective portion of gain or loss on cash flow hedging instruments,

- fair value gain or loss on FVOCI equity instruments and

- their corresponding income tax effects.

The concept of other comprehensive income did not exist under previous GAAP.

6 Tax impact on adjustments

Retained earnings and statement of profit and loss has been adjusted consequent to the Ind AS transition adjustments with corresponding impact to deferred tax, wherever applicable.

7 Re-Classifications

The Company has done the following reclassifications as per the requirements of Ind-AS :

i) Assets / liabilities which do not meet the definition of financial asset / financial liability have been reclassified to other asset / liability.

ii) Under previous GAAP, Live Stock were presented under Property, Plant & Equipment being measured at cost.Under IND AS the same have been reclassified from Property, Plant & Equipment to Biological Assets other than bearer plants and measured at fair value less cost to sale.

8 Reconciliation of Cash Flow Statement

The IND AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities.

Consequently, IND AS adoption has no impact on the net cash flow for the year ended 31st March, 2017 as compared with the previous GAAP.

9 Other GAAP adjustments

Other GAAP adjustments include adjustment related to remeasurement and recognition of certain assets and liabilities in accordance with Ind AS which are not material in nature.

11 Deferred tax assets (net) :

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

Note: 18 Previous year''s figures have been regrouped or reclassified wherever necessary.

Mar 31, 2016

c. Terms / Rights attached to equity shares

The company has only one class of equity shares having par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian Rupees.

During the year ended March 31, 2016 the company had not declared any dividend ( Previous Year Nil ).

d. During the year no share was reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment.

f. The company had not issued any bonus share for consideration other than cash and no share had bought back during the period of five years immediately preceding the reporting date.

Note: Aforesaid loan is classified as Long Term Borrowing to the extent to which it is not in current nature i.e. which are due to be settled after 12 months and current maturities of the long term borrowings is classified as other current liabilities.

Note 1.Scheme of Amalgamation

The scheme of Amalgamation between Monarch Research and Brokerage Private Limited (âMRBPL'') and Monarch Net worth Capital Limited (erstwhile Net worth Stock Broking Limited) was approved by the Hon''ble High Court of Gujarat on May 03, 2013 and the scheme of Amalgamation between Monarch Projects and Fin markets Limited (MPFL) and Monarch Net worth Capital Limited (erstwhile Net worth Stock Broking Limited) was approved by the Hon''ble High Court Mumbai on August 07, 2014.

Pursuant to the scheme of Amalgamation between Monarch Research and Brokerage Private Limited (âMRBPL'') and Monarch Projects and Fin markets Limited (MPFL) with Monarch Net worth Capital Limited (erstwhile Net worth Stock Broking Limited), the assets and liabilities of the erstwhile transferor companies was transferred to and vested in the company with effect from the 1st April, 2010 being the appointed date, the scheme has been given effect to these accounts in respective financial year.

As per the Scheme of Amalgamation the Company was required to issue 1,90,80,000 equity shares of face value of Rs 10/- per share aggregating Rs 19,08,00,000/- to the shareholders of the erstwhile Transferor Companies MRBPL and MPFL. The Company has allotted 1,90,80,000 equity shares aggregating to Rs 19,08,00,000/- to the shareholders of the erstwhile MRBPL and MPFL on October 27, 2014.

(b) Method of accounting used to reflect the amalgamation The Pooling of Interests Method

(d) The scheme has envisaged an exchange ratio as under:

- MPFL - 201 (Two Hundred and One) Equity Shares of Rs. 10/- each of MNCL for every 100 (One Hundred) Equity Share of Rs.10/- each held in MPFL.

- MRBPL - 100 (One Hundred) Equity Shares of Rs. 10/- each of MNCL for every 100 (One Hundred) Equity Share of Rs.10/- each held in MRBPL.

Note : 2. ACCOUNTING TREATMENT ON AMALGAMATION

The accounting for Amalgamation has been done in accordance to the approved Scheme of Amalgamation clause no 14 -âAccounting Treatmentâ. Accordingly, the Company has accounted for the Scheme in its book of Accounts as under:

1. The reserves in the books of account of the Transferor Companies have been credited by the Transferee Company to its reserves in the same form in which they appear in the books of the Transferor Companies.

2. The amount lying to the balance of âProfit and Loss Accountâ in the books of account of the Transferor Companies has been adjusted by the Transferee Company to its Profit and Loss Account.

3. The Excess amount of Rs 3,31,91,490/- resulting on account of amalgamation has been transferred to âAmalgamation Reserve Accountâ. The said account has not been considered as a free reserve as provided u/s 2(29A) of the Companies Act, 1956 as directed by the Honorable Hight Court, Mumbai.

4. As per the Scheme of Amalgamation the Company was required to issue 1,90,80,000 equity shares of face value of Rs 10/- per share aggregating Rs 19,08,00,000/- to the shareholders of the erstwhile Transferor Companies MRBPL and MPFL. The Company has allotted 1,90,80,000 equity shares aggregating to Rs 19,08,00,000/- to the shareholders of the erstwhile MRBPL and MPFL on October 27, 2014.

5. The difference between the book value of net assets taken over and the value of shares issued after accounting for the cancellation if any have been adjusted to the Securities Premium Account.

6. The application and reduction of the Share Premium Account has been effected as an integral part of the Scheme without having to follow the process under the provisions of Section 78 and Section 100, 102 and 103 of the Act. Such application/ reduction of the Share Premium account does not involve either diminution of liability in respect of unpaid share capital or payment to any shareholder of any paid up share capital. The order of the Court sanctioning the Scheme under Section 394 of the Act is deemed to be an order under Section 102 of the Act confirming the reduction and the compliance by the Transferee Company of the provisions of Section 391-394 of the Act shall be deemed to be the sufficient compliance of the provisions of Section 100 to 103 of the Companies Act, 1956, rule 85 of the Companies (Court) Rules, 1959, and other applicable provisions, if any, relating to the reduction of share capital.

Note 7 The Company provides for the use by its subsidiaries certain facilities like use of premises infrastructure and other facilities / services and the same are termed as âShared Services''. The cost of such Shared Services are recovered from subsidiaries either on actual basis or on reasonable management estimates which are constantly refined in the light of additional knowledge gained relevant to such estimation.

Note 8 Contingent Liability & Commitments (to the extent not provided for)

The management of the Company does not anticipate any contingent liability having material effect on the position stated in the Balance Sheet at the yearend except as stated below:

a. There are certain claims aggregating to Rs, 318 lacs (previous year Rs,318 lacs) against the company for which the company has taken suitable legal recourse. Hence the same has not been recognized as a debt and no provision has been made thereof.

b. The company has given guarantee of Rs, 20 crores for loan taken by its Subsidiary Company Ravisha Financial Services Private Limited from financial institutions.

c. The company has given guarantee of Rs, 4 crores for loan taken by its Subsidiary Company Net worth Commodities & Investments Limited from Bank.

c. Contingent Liabilities of erstwhile Transferor companies:

MRBPL

a. Bank Gurantee : NIL

b. The Commissioner of Service tax, Ahmadabad has issued show cause for claiming wrong exemption/exclusion of NSE/BSE transaction charges ,SEBI fees etc. .The total demand for the said show cause notice is Rs, 6,76,405/- No liability has been provided as the liabilities is contingent in nature.

c. The Assistant Commissioner of Income Tax ,Ahmadabad has issued order dated 13/03/2013,disallowed Bad Debts of Rs, 3,80,037/- for A. Y. 2009-10. The total demand for the said order u/s 143(3) is Rs, 1,37,444/- and the company has filed appealed against the said order. no liabilities has been provided as the liabilities is contingent in nature

d. The Assistant Commissioner of Income Tax ,Ahmadabad has issued order dated 21/12/2011,disallowed Bad Debts of Rs,

11,27,093/- for A. Y. 2010-11. The total demand for the said order u/s 143(3) is Rs, 45,500/-And the assessed has filed appealed against the said order. no liabilities has been provided as the liabilities is contingent in nature.

e. The Company''s pending litigations comprise of claims against the Company primarily by the customers. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial results at March 31, 2016.

Note 9 Related Party Disclosure of NSBL

(a) List of Related Parties and Relationship

NAME OF THE RELATED PARTY NATURE OF RELATIONSHIP

Net worth Commodities & Investments Ltd. Subsidiary Company

Monarch Insurance Broking Private Limited Subsidiary Company

Net worth Wealth Solutions Ltd. 100% Subsidiary Company

Ravisha Financial Services Private Ltd. 100% Subsidiary Company

Net worth Insurance Broking Private Ltd. 100% Subsidiary Company

Net worth Softtech Ltd Associate Concern

Net worth Financial Services Ltd. Associate Concern Key Management Personnel

Mr. Vaibhav Shah Managing Director cum Chairman (Chairman w.e.f. 12th

February, 2016)

Mrs. Manju Bafna Executive Director Others

Mr. Suresh Pukhraj Jain Chairman (upto 12th February, 2016) & Dominant Promoter

Group

Mrs. Kanta Jain Dominant Promoter Group

S.P. Jain - HUF Enterprises over which Director/ Key Managerial Personnel/

Sun Capital Advisory Services Private Limited DPG are able to exercise significant influence

Mrs. Kinnari Shah Dominant Promoter Group

Mr. Bankim Shah Dominant Promoter Group

Mr. Himanshu Shah Dominant Promoter Group

Mr. Suresh Bafna Dominant Promoter Group

Premjayanti Properties- Partnership Firm Enterprises over which Director/ Key Managerial Personnel/

(Mr. Vaibhav Shah & Mr. Himanshu Shah- being Partners) DPG are able to exercise significant influence

Premjayanti Enterprises Private Limited Enterprises over which Director/ Key Managerial Personnel/