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Accounting Policies of Nicco Uco Alliance Credit Ltd. Company

Mar 31, 2014

1.1 Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with generally accepted accounting principles comprising the mandatory accounting standards issued by The Companies (Accouting Standards) Rules, 2006, the provisions of Companies Act 1956, and the Guidelines issued by Reserve Bank of India and adopted consistently by the Company.

The financial statements has been prepared and presented as per the requirement of revised schedule VI as notified under the Companies Act 1956.

1.2 Use of Estimates

The preparaton of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialised.

1.3 Tangible Assets

Tangible assets are stated at cost. Capital Work-in-Progress forming part of note of fixed assets includes cost of assets not put to use before the year end.

1.4 Depreciation & Amortization

a) Depreciation on own tangible assets (other than leased assets) have been provided on straight line basis at the rates specified in Schedule XIV to the Companies Act 1956.

b) Leased Assets are depreciated at rates specified in Schedule XIV to the Companies Act, 1956 as required by AS 19 regarding ''Leases'' issued by The Companies (Accouting Standards) Rules, 2006. The difference between the depreciation charge, as computed on the basis of the IRR implicit in the lease, to ensure capital recovery over the primary lease period, and that arrived at in terms of Schedule XIV to the Companies Act, 1956, is reflected in the lease equalisation account.

c) As per Accounting Standard AS-19 regarding ''Leases'' issued by The Companies (Accouting Standards) Rules, 2006, which has been made mandatory w.e.f. 01.04.2001, Assets given under finance lease, are shown under non-current assets as other assets at an amount equal to the net investment value in the lease, initial indirect cost forming part of net investment value.

1.5 Impairment

Impairment loss is recognized based on cash generating unit concept, wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

1.6 Investments

a) Long term quoted investments are valued at cost less provision for diminution in market value if decline in carrying cost of the investment is considered to be other than temporary in nature.

b) Long term unquoted investments are valued at cost less provision for decline in break up value vis-a-vis cost.

c) Quoted Current Investments are valued at cost or market value, which ever is lower.

d) Unquoted Equity Shares in the nature of current investments are valued at cost or break-up value, whichever is lower. Where balance sheet of the investee company is not available for two years, such shares are valued at Re. 1 only.

e) Investment in Unquoted Government Securities or Government Guaranteed Bonds are valued at carrying cost.

1.7 Recognition of Income & Expenditure

a) Income :-

(i) Lease Income :

Lease income is computed as per agreement and in accordance with directions of Reserve Bank of India applicable to

Non-Banking Financial Companies and Accounting standard (AS-19) regarding ''Leases'' issued by The Companies (Accouting Standards) Rules, 2006.

Moreover, income from assets on lease in respect of lease agreement on or after 01.04.2001 are recognized on capital recovery basis over the effective lease period of the assets to comply with the requirement of Accounting Standard (AS- 19) regarding "lease" issued by The Companies (Accouting Standards) Rules, 2006.

(ii) Hire Purchase Income :

Hire Purchase income is computed on the basis of internal rate of return implicit in contracts.

(iii) Dividend income is accounted for as and when received.

b) Expenditure :-

Brokerage on public fixed deposits is amortised over the period of the Deposit.

1.8 Retirement Benefits to Employees

a) Defined Contribution Plan :

Provident Fund, Employees Pension and Employees State Insurance are provided on accrual basis. The accrued amount being deposited to the respective Trust / Authority.

b) Defined Benefit Plan :

Gratuity, Leave Salary and Superannuation benefit form part of defined benefit plan schemes existing in the company. The above benefits are accounted for on the basis of accrual of liability towards obligation on account of past/present service cost, interest and actuarial adjustment net of return on fund invested to cover the obligation in planned assets and actuarial gain/loss thereon in terms of calculation made by actuary under Unit Projected Credit Method.

c) Short Term Benefits :

Benefits payable within a year has been accounted for on accrual basis in terms of non discounted value.

1.9 Taxes on Income

Provision for current income tax is made on the basis of estimated taxable income.

Deferred tax is recognized, subject to the consideration of prudence , on timing differences as per Accounting Standard (AS- 22) regarding ''Accounting for taxes on income'' issued by The Companies (Accouting Standards) Rules, 2006, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

1.10 Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transactions is translated at the year end rates. Exchange differences arising on settlement of monetary items or on reporting of monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

b) In respect of Forward Exchange Contracts (except for firm commitments and highly probable forecast transactions), the premium or discount arising at the inception of Forward Exchange Contracts entered into to hedge an existing asset / liability, is amortised over the life of the contract. Exchange differences between the rate at the inception of such contracts and rate on the reporting date are recognised as income or expense for the period.

1.11 Valuation of Stock, etc.

a) Stock on hire under hire purchase agreement - At agreement value less amounts received.

b) Stock of Shares - Category-wise at lower of cost and market value in conformity to RBI prudential guidelines.

1.12 Provisions & Contingent Liabilities

Where there is reliable estimable amount of present obligation that warrant to be settled as a result of past event with possible outflow of resources embodying economic benefit, provision is recognized in account therefor. Otherwise no provision is made against contingent liabilities which are disclosed in notes to accounts.

2.1 : SHARE CAPITAL

a) The break-up of equity share subscribed and fully paid-up, subscribed but not fully paid-up could not be furnished in absence of proper details regarding Calls in Arrear, available at present.

b) The company has one class of issued shares i.e. equity shares having par value of Rs.10/- per share. Each holder of ordinary shares is entitled to one vote per share and equal right for dividend.

c) There has been no change/movements in number of shares outstanding at the beginning and at the end of the reporting period.

d) The Company does not have any holding company/ultimate holding company.

e) Details of shareholders holding more than 5% shares in the company :

f) No equity shares have been reserved for issue under options and contracts/ commitments for the sale of shares/disinvestment as at the balance sheet date.

g) No securities convertible into equity/preference shares has been issued by the company during the year.

h) No calls are unpaid by any Director and Officer of the Company during the year.

i) No shares have been alloted or has been bought back by the company during the period of 5 years preceding the date as at which the Balance Sheet is prepared.

j.i) Equity shares issued for consideration other than cash include 9,60,000 Equity shares of Rs.10/- each allotted pursuant to amalgamation of Sanpaola Hambro Nicco Finance Ltd.

j.ii) 4,00,000 Equity Shares of Rs.10/- each alloted pursuant to amalgamation of Nicco Investments Ltd.

j.iii) 19,72,560 Equity Shares of Rs.10/- each issued as free share in the ratio 1:7 due as per scheme of merger approved by Hon''ble Calcutta High Court on 21st April,1999.

j.iv) 1,38,66,687 Equity Shares of Rs.10/- each issued to the share holders of Alliance Credit & Investments Limited as per scheme of amalgamation approved by Hon''ble Calcutta High Court on 21st April,1999.

j.v) 1,05,00,000 Equity Shares of Rs.10/- each issued to the shareholders of Overseas Sanmar Financial Limited as per scheme of amalgamation approved by Hon''ble Calcutta High Court on 20th April, 2000 and Hon''ble Chennai High Court on 10th May, 2000.

j.vi) Restriction on transferebility of shares - Shares are transferable with the approval of directors. Board may refuse to recognise the transfer of shares in any case in which the company a lien upon such shares or where any money in respect of shares desired to be transferred remain unpaid. Board may also decline to recognise any instrument of transfer unless,

a) it is accompanied by certificate of shares to which it relates and such other evidence as the Board may reasonable required to show the right of the transferror to make the transfer.

i.a) Rupee Loans from Banks & Financial Institution consist of loans from: UCO Bank (Mehta Transport), UTI Bank (Axis Bank), IFCI.

i.b) Nature of Security : For UCO Bank (Mehta Transport) - By an agreement for hypothecation of movable plant and machinery to secure a term loan by the company on November 17, 2000, the company hypothecated the following vehicles as security for the repayment of the said term loan facility availed of by it from the applicant bank being the 50 number of Ashok Leyland Tusker Turbo tractors along with new chasis lent under Hire Purchase to M/s Mehta Transport Services (I) Ltd. "Further the company hypothecated to and charged in favour of the applicant bank as and by way of first charge thereon :

(i) all the goods described in general terms in the schedule written there under being 50 numbers of trailers to be purchased under the term loan and is to be lent under hire purchase agreement.

(ii) all the company''s present and future book debts, outstanding monies, receivables, claims, bills, contracts etc.

i.c) Nature of Security : For UTI Bank (Axis Bank) : The facility is secured against assignment of receivable of the selected pool together with the entire interest, ownership and clear title and rights to the assets provided in the hire purchase agreements and also against cash collateral.

i.d) Nature of Security : For IFCI - The company hypothecated on 29th April, 1999 in favour of the lender by virtue of which the whole of the specific Industrial Assets, equipments, plant, machinery and other assets together with its spares, tools and other accessories acquired / to be acquired, were more particularly described below to the application were hypothecated in favour of the applicant as security for the term loan.

Particulars of the equipments, plant, machinery, and other assets acquired by the company out of loan :

1. TIL make Cranes

2. particles board plant.

All the movable properties and immovable properties of the company wherever lying and wherever situated. i.e) Foreign Currency Loan consists of IFC-Washington.

i. f) Nature of Security - For IFC Washington : The company hypothecated and charged as and by way of first fixed and exclusive

charge and lien to and / or in favour of the trustee in for the benefit of the corporation, certain properties and assets given on lease or hire purchase or acquired by the company out of finances.

ii. a) All loans have turned Non-Performing Assets in the books of the lenders and the same have been recalled by them and at

present being contested in Debt Recovery Tribunals and High Court at Calcutta. Hence, the clause relating to disclosure of terms of repayment of loans in such cases has become inapplicable.

ii.b) Banks and financial institutions have stopped giving confirmation of the balances and statements of accounts. Interest on these accounts are being provided as per last agreed rates.

iii) The details of default given below showing dates and amount (Principal and Interest) referring note no. 2.3.xii is as furnished by the management.

iv.a) UCO Bank has filed application in DRT - I to recover Rs. 327 Lacs (P.Y. Rs. 327 Lacs) on account of term loan, matter is pending.

iv.b) IFCI has filed an application in DRT - I to recover Rs. 62.91 Lacs (P.Y. Rs. 62.91 Lacs), matter is pending.

iv.c) Indusind Bank has filed an application in DRT, Chennai to recover Rs. 164.46 Lacs (P.Y. Rs. 164.46 Lacs) on account of Securitisation loan which is being contested (This relates to Note 2.5 short term borrowing).

iv.d) Axis Bank has filed an application in DRT, Chennai to recover Rs. 1368 Lacs (P.Y. Rs. 1368 Lacs) which is also being contested.

International Finance Corporation Washington initiated a suit in the Hon''ble High Court at Calcutta for recovery of a sum of US$ 26,82,877.73 (P.Y. US$ 26,82,877.73) with further interest against the company. The case is being contested.

UCO Bank has taken measures under section 13(4) of the SARFAESI Act against the company. The company filed an application under section 17(1) of the said Act.

In the Sarfaesi proceedings against the company by UCO Bank, being aggrieved by DRAT''s Order, company filed a Writ Petition before Hon''ble High Court, Calcutta and due to some deficiency in the procedure followed by UCO Bank and Others., High Court Ordered that no coercive steps should be taken by Bank. Bank has appealed against this order.

v) Application filed by the company u/s 391 and 394 of the Companies Act for reduction of face value of shares from Rs. 10/- to Rs. 2/- and issue of new equity shares to the deposit holders is pending before the Hon''ble Calcutta High Court.

vi) Company has obtained an interim stay order from Hon''ble High Court Calcutta vide order dated 15th February, 2008 restraining deposit holders from initiating any proceedings against the company and stayed the proceedings already initiated till disposal of the application made by the company u/s 391 and 394 of the Companies Act, 1956 pending before Hon''ble High Court, Calcutta.

vii) Networth of the company has completely been eroded due to large provisioning and huge loss suffered and consequently outstanding balance of fixed deposit has exceeded the ceiling fixed by Reserve Bank of India.

viii) The Company has paid to a number of depositors on hardship cases on settlement basis based on principal amount outstanding.

ix) Consequent upon non compliance by the company with CLB orders regarding repayment to the fixed deposit holders, legal action had been initiated by Serious Fraud Investigation Office before Hon''ble Calcutta High Court. Total dues inclusive of interest is Rs. 15,10,08,331/- as on 31.03.2014.

x) The entire secured loan accounts of the company except interest accrued and due have become NPA in the books of the lenders. The banks/financial institution have stopped giving statements & confirmations. Although interest on these accounts have been provided in the books as per agreed rates, the said accounts remain unconfirmed. No confirmation has been received in respect of current accounts from most of the banks.

2.4 : PROVISIONS

a) All assets financed through Hire Purchase / Lease have turned Non Performing Assets (N.P.A) in the books of the Company and have been provided for. List of such inventories are available excepting a few cases where financing were made through dealer however in the opinion of the management the same is not substantial. Full provision has also been made against doubtful debtors, loans & advances.

2.5 : SHORT TERM BORROWINGS

i) UCO Bank, the leader of the consortium of bankers, moved an application in the Debt Recovery Tribunal on 29.11.2005 to recover the outstanding dues amounting to Rs. 119.23 crores ( previous year Rs. 119.23 crores ) pending against the company which the company has contested. The learned D.R.T has passed an order on 01.12.2005 that till disposal of the prayer for interim relief, the company will not deal with or transfer or dispose off any of it''s secured properties. However, the company shall carry on it''s business as usual.

ii.A) Nature of Security : The company extended a joint deed of hypothecation in favour of consortium of bankers headed by UCO bank whereby the company hypothecated as and by way of first charge its entire tangible properties and assets both present and future including plant and machinery and /or other assets purchased and / or acquired for its hire pirchase/leasing business/operations and all relative lease rentals, hire charges receivables, both present and future.

ii.B) The company further created equitable mortgage in favour of the applicant banks in respect of the properties by way of deposit of original title deeds on 20th June, 2001 :

a) Office Space at Nicco House, 2nd Floor, 2 Hare Street, Kolkata-700 001;

b) Flat at 718, Dalmal Towers, Nariman Point, Mumbai - 400 021;

c) Flat no. 3 at 9, South North Road, Juhu Ville Parle Development Scheme, Mumbai-400 049;

d) Premises at 93/4, Karaya Road, 4th Floor, Kolkata - 700 019;

e) 0.65 acre, 2.92 acres, 1.70 acres, 0.95 acre, 0.85 acre and 5.90 acres of land at Poolavadi, Coimbatore, Tamil Nadu;

f) 142 kenels, 17 marlas of land in khewat nos. 16,37,38,61 & 79, khatoni nos. 21 min, 143min, 44 min, 83 min, 108min respectively at Village-Salhawas, Tehsil-Rewari, District-Rewari, Haryana.

iii) All loans have turned Non-Performing Assets in the books of the lenders and the same have been recalled by them and at present being contested in Debt Recovery Tribunals. Hence, the clause relating to disclosure of terms of repayment of loans in such cases has become inapplicable.

iv) Refer Note 2.3.

ix for explanatory disclosure.

v) The details of default given below showing dates and amount (Principal and Interest) referring note no. 2.5.vi is as furnished by the management.

a) Based on the informations available with the company, there are no dues towards Micro, Small and Medium Enterprises as on 31.03.2014 (P.Y. Nil).

2.7 : OTHER CURRENT LIABILITIES

Fixed deposit includes unclaimed Fixed Deposits the amount of which cannot be ascertained in view of non receipt of deposit receipts by the Company as the F.D. holders are unwilling to part with the deposit receipts in absence of full and final settlement. The Company is unable to pay to the depositors due to precarious financial condition but paying to such depositors who are approaching the Company with hardship condition. Besides a Scheme of Compromise with FD holders under section 391 & 394 of the Companies Act, 1956 is pending before Hon''ble High Court, Calcutta. For the reasons as explained above the company is unable to ascertain the amount of unclaimed Fixed deposit outstanding for more than seven years and transfer the same to Investors'' Education & Protection Fund.


Mar 31, 2012

1.1 Basis of preparation of financial statements

The finartciai'statements are prepared under the historical cosjt convention, iriaccordance with generally accepted accounting * principles comprising the mandatory accounting standards issued by the Institute of Chartered Accountants of India, the provisions of Companies Act 1956, and the Guidelines issued by Reserve Bank of India and adopted consistently by the , Company.

The financial statements has been prepared and presented as per the requirement of revised schedule VI as notified under the Companies Act 1956 with effect from current year. The adoption of revised schedule VI does not have any impact on recognition and measurement principles as consistently followed by the company.

1.2 Use of Estimates

The preparaton of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results are known / materialised.

1.3 Tangible Assets

Tangible assets are stated at cost. Capital Work-in-Progress forming part of note of fixed assets includes cost of assets not put to use before the year end.

1.4 Depreciation & Amortization

a) Depreciation on own tangible assets (other than leased'assets) have been provided on straight line basis at the rates specified in Schedule XIV to the Companies Act 1956.

b) Leased Assets are depreciated at rates specified in Schedule XIV to the Companies Act, 1956 as required by AS 19 regarding 'Leases' issued by the Institute of Chartered Accountants of India. The difference between the depreciation charge, as computed on the basis of the IRR implicit in the lease, to ensure capital recovery over the primary lease period, and that arrived at in terms of Schedule XIV to the Companies Act, 1956, is reflected in the lease equalisation account.

c) As per Accounting Standard AS-19 regarding 'Leases' issued by the Institute of Chartered Accountants of India, which has been made mandatory w.e.f. 01.04.2001, Assets given urider'finance lease, are shown under non-current assets

j. as other assets at an amount equal to the net investment value in the lease, initial indirect cost forming part of net investment value.

1.5 Impairment

Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount.

Reversal of impairment losses recognized in prioryears is recorded when there is an indication that the impairment losses ' ' recognized for the osset no longer exist or have decreased.

1.6 Investments

a) Long term quoted investments are valued at cost less provision for diminution in market value if decline in carrying cost of the investment is considered to be other than temporary in nature.

b) - Long term unquoted investments are valued at costless provision for decline inbreak up value vis-a-vis cost.

c) Quoted Current Investments are valued at cost or market value, which ever is lower.

d) Unquoted Equity Shares in the nature of current investments are valued at cost or break-up value, whichever is lower. Where balance sheet of the investee company is not available for two years, such shares are valued at Re. 1 only.

e) Investment in Unquoted Government Securities or Government Guaranteed Bonds are valued at carrying cost.

1.7 Recognition of Income & Expenditure

a) Income:-

(i) Lease Inddme:

Lease income is computed as per agreement and in accordance with directions of Reserve Bank of India applicable to Non-Banking Financial Companies and Accounting standard (AS-19) regarding 'Leases' issued by the Institute of Chartered Accountants of India.

Moreover, income from assets on lease in respect of lease agreement on or after 01.04.2001 are recognized on capital recovery basis over the effective lease period of the assets to comply with the requirement of Accounting Standard (AS- : 19) regarding "lease" issued by the Institute of Chartered Accountants of India.

(ii) Hire Purchase Income :

Hire Purchase income is computed on the basis of internal rate of return implicit in contracts.

(iii) Dividend income is accounted for as and when received.

b) Expenditure :-

Brokerage on public fixed deposits h amortised over the period of the Deposit.

1.8 Retirement Benefits to Employees

a) Defined Contribution Plan:

Provident Fund, Employees Pension and Employees State Insurance are provided on accrual basis. The accrued amount being deposited to the respective Trust / Authority.

b) Defined Benefit Plan:

Gratuity, Leave Salary and Superannuation benefit form part of defined benefit plan schemes existing in the company. The above benefits are accounted for on the basis of accrual of liability towards obligation on account of past/present service cost, interest and actuarial adjustment net of return on fund invested to cover the obligation in planned assets and actuarial gain/loss thereon in terms of calculation made by actuary under Unit Projected Credit Method.

c) Short Term Benefits:

Benefits payable within a year has been accounted for on accrual basis in terms of non discounted value.

1.9 Taxes on Income

Provision for current income tax is made.on the basis of estimated taxable income.

Deferred tax is recognized, subject to the consideration of prudence, on timing differences as per Accounting Standard (AS- 22) regarding 'Accounting for taxes on income' issued by the Institute of Chartered Accountants of India.being the difference between taxable income and accounting income that originate in one period and »r» capable of reversal in one or mon subsequent periods.

1.10 Foreign Currency Transaction*

a) Transaction* in foreign currency are recorded at the rata of exchange prevailing on tha data of transaction. Year and balance of foreign currency transactions It translated at tha year and rates. Exchange differences arising on settlement of monetary Items or on reporting of monetary Item at rates different from thoaa at whloh they were Initially recorded during tha period or reported In previous financial statement are recognized a Inoome or expenses In tha period In whloh they arise.

b) in respect of Forward Exchange Contract (except for firm commitment and highly probable forecast transactions), tha premium or discount arising at tha Inception of Forward Exohanga Contract! entered Into to hadga an existing asset / liability, I amortiaad over tha Ufa of tha oontraot. Exchange differences between tha rate at tha Inception of such contraota and rata on tha reporting, data are recognised a Income or axpama for tha period,

1.11 Valuation of Stock, ato,

a) Stock on hire under hire purchase agreement At agreement value leas amount raoalvad,

b) Stock of Share Catoeory-wlia at lower of oot and market value In oonformlty to RBI prudential guideline

1.12 Provision Contingent Llabllltle

Where there In reliable aatlmable amount of pretant obligation that warrant to ba aattlad an a mult of paat ovont with poislblt outflow of raaouroae embodying aoonomlo benafrt, provision I recognized In amount therefor, Otherwise no provision I made against contingent llabllitlaa whloh are disclosed In not** to account


Mar 31, 2011

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with generally accepted accounting principles comprising the mandatory accounting standards issued by the Institute of Chartered Accountants of India, the provisions of Companies Act 1956, and the Guideline issued by RBI and adopted consistently by the Company.

2. Fixed Assets

Fixed assets are stated at cost. Capital Work-in-Progress forming part of Schedule of fixed assets includes advances paid to acquire fixed assets and the cost of assets not put to use before the year end.

3. Depreciation

a) Depreciation on own fixed assets (other than leased assets) have been provided on straight line basis at the rates specified in Schedule XIV to the Companies Act 1956.

b) Leased Assets are depreciated at rates specified in Schedule XIV to the Companies Act, 1956 as required by AS-19 regarding 'Leases' issued by the Institute of Chartered Accountants of India. The difference between the depreciation charge, as computed on the basis of the IRR implicit in the lease, to ensure capital recovery over the primary lease period, and that arrived at in terms of Schedule XIV to the Companies Act, 1956, is reflected in the lease equalisation account.

c) As per Accounting Standard AS-19 regarding 'Leases' issued by the Institute of Chartered Accountants of India, which has been made mandatory w.e.f. 01.04.2001, Assets given under finance lease, are shown under current assets, loans and advances at an amount equal to the net investment value in the lease, initial indirect cost forming part of net investment value.

4. Impairment

Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

5. Investments

a) Long term quoted investments are valued at cost less provision for diminution in market value if decline in carrying cost of the investment is considered to be other than temporary in nature.

b) Long term unquoted Investments are valued at cost less provision for decline in break up value vis-a-vis cost.

c) Quoted Current Investments are valued at cost or market value, which ever is lower.

d) Unquoted Equity Shares in the nature of current investments are valued at cost or break-up value, whichever is lower. Where balance sheet of the investee company is not available for two years, such shares are valued at Re. 1 only.

e) Investment in Unquoted Government Securities or Government Guaranteed Bonds are valued at carrying cost.

6. Recognition of Income & Expenditure

a) Income :-

(i) Lease Income :

Lease income is computed as per agreement and in accordance with directions of Reserve Bank of India applicable to Non-Banking Financial Companies and Accounting standard (AS-19) regarding 'Leases' issued by the Institute of Chartered Accountants of India.

Moreover, income from assets on lease in respect of lease agreement on or after 01.04.2001 are recognized on capital recovery basis over the effective lease period of the assets to comply with the requirement of Accounting Standard (AS-19) regarding 'lease' issued by the Institute of Chartered Accountants of India.

(ii) Hire Purchase Income :

Hire Purchase income is computed on the basis of internal rate of return implicit in contracts.

(iii) Dividend income is accounted for as and when received.

b) Expenditure :-

Brokerage on public fixed deposits is amortised over the period of the Deposit.

7. Retirement Benefits to Employees

a) Defined Contribution Plan :-

Provident Fund, Employees Pension and Employees State Insurance are provided on accrual basis. The accrued amount being deposited to the respective Trust / Authority.

b) Defined Benefit Plan :-

Gratuity, Leave Salary and Superannuation benefit form part of defined benefit plan schemes existing in the company.

The above benefits are accounted for on the basis of accrual of liability towards obligation on account of past/present service cost, interest and actuarial adjustment net of return on fund invested to cover the obligation in planned assets and actuarial gain/loss thereon in terms of calculation made by actuary under Unit Projected Credit Method.

c) Short Term Benefit Plan :-

Benefits payable within a year has been accounted for on accrual basis in terms of non discounted value.

8. Taxes on Income

Provision for income tax is made on the basis of estimated taxable income.

Deferred tax is recognized, subject to the consideration of prudence, on timing differences as per Accounting Standard (AS-22) regarding 'Accounting for taxes on income' issued by the Institute of Chartered Accountants of India, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

9. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transactions is translated at the year end rates. Exchange differences arising on settlement of monetary items or on reporting of monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

b) In respect of transactions covered by Forward Exchange Contracts (except for firm commitments and highly probable forecast transactions), the difference between the forward rate and exchange rate at the inception of the contract is recognized as income or expenses over the life of the contract.

10. Valuation of Stock, etc.

a) Stock on hire under hire purchase agreement - At agreement value less amounts received.

b) Stock of Shares - Category-wise at lower of cost and market value in conformity to RBI prudential guidelines.

11. Contingent Liabilities

Where there is reliable estimable amount of present obligation that warrant to be settled as a result of past event with possible outflow of resources embodying economic benefit, provision is recognized in account therefor. Otherwise no provision is made against contingent liabilities which are disclosed in notes to accounts.

12. Miscellaneous Expenditure

Preliminary and Share issue expenses are being amortised over a period of ten years. Expenses on merger and commitment charges paid on term loans; both forming part of deferred Revenue expenses, are amortised over a period of five years and the tenure of loan respectively in such a manner so that the expenditure so deferred are not carried forward to accounting periods commencing on or after 1st April, 2010.


Mar 31, 2010

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, in accordance with generally accepted accounting principles comprising the mandatory accounting standards issued by the Institute of Chartered Accountants of India, the provisions of Companies Act 1956, and the Guideline issued by RBI and adopted consistently by the Company.

2. Fixed Assets

Fixed assets are stated at cost. Capital Work-in-Progress forming part of Schedule of fixed assets includes advances paid to acquire fixed assets and the cost of assets not put to use before the year end.

3. Depreciation

a) Depreciation on own fixed assets (other than leased assets) have been provided on straight line basis at the rates specified in Schedule XIV of the Companies Act 1956.

b) Leased Assets are depreciated at rates specified in Schedule XIV to the Companies Act, 1956 as required by AS-19 regarding Leases issued by the Institute of Chartered Accountants of India. The difference between the depreciation charge, as computed on the basis of the IRR implicit in the lease, to ensure capital recovery over the primary lease period, and that arrived at in terms of Schedule XIV to the Companies Act, 1956, is reflected in the lease equalisation account.

c) As per Accounting Standard AS-19 regarding Leases issued by the Institute of Chartered Accountants of India, which has been made mandatory w.e.f. 01.04.2001, Assets given under finance lease, are shown under current assets, loans and advances at an amount equal to the net investment value in the lease, initial indirect cost forming part of net investment value.

4. Impairment

Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.

5. Investments

a) Long term quoted investments are valued at cost less provision for diminution in market value if decline in carrying cost of the investment is considered to be other than temporary in nature.

b) Long term unquoted Investments are valued at cost less provision for decline in break up value-vis-a-vis cost.

c) Quoted Current Investments are valued at cost or market value, which ever is lower.

d) Unquoted Equity Shares in the nature of current investments are valued at cost or break-up value, whichever is lower. Where balance sheet of the investee company is not available for two years, such shares are valued at Re. 1 only.

e) Investment in Unquoted Government Securities or Government Guaranteed Bonds are valued at carrying cost.

6. Recognition of Income & Expenditure a) Income :-

(i) Lease Income :

Lease income is computed as per agreement and in accordance with directions of Reserve Bank of India applicable to Non-Banking Financial Companies and Accounting standard (AS-19) regarding Leases issued by the Institute of Chartered Accountants of India.

Moreover, income from assets on lease in respect of lease agreement on or after 01.04.2001 are recognized on capital recovery basis over the effective lease period of the assets to comply with the requirement of Accounting Standard (AS-19) regarding lease issued by the Institute of Chartered Accountants of India.

(ii) Hire Purchase Income :

Hire Purchase income is computed on the basis of internal rate of return implicit in contracts.

(iii) Dividend income is accounted for as and when received.

b) Expenditure :-

Brokerage on public fixed deposits is amortised over the period of the Deposit.

7. Retirement Benefits to Employees

a) Defined Contribution Plan :-

Provident Fund, Employees Pension and Employees State Insurance are provided on accrual basis. The accrued amount being deposited to the respective Trust / Authority.

b) Defined Benefit Plan :-

Gratuity, Leave Salary and Superannuation benefit form part of defined benefit plan schemes existing in the company.

The above benefits are accounted for on the basis of accrual of liability towards obligation on account of past/present service cost, interest and actuarial adjustment net of return on fund invested to cover the obligation in planned assets and actuarial gain/loss thereon in terms of calculation made by actuary under Unit Projected Credit Method.

c) Short Term Benefit Plan :-

Benefits payable within a year has been accounted for on accrual basis in terms of non discounted value.

8. Taxes on Income

Provision for income tax is made on the basis of estimated taxable income.

Deferred tax is recognized, subject to the consideration of prudence, on timing differences as per Accounting Standard (AS-22) regarding Accounting for taxes on income issued by the Institute of Chartered Accountants of India, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

9. Foreign Currency Transactions

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transactions is translated at the year end rates. Exchange differences arising on settlement of monetary items or on reporting of monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements are recognized as income or expenses in the period in which they arise.

b) In respect of transactions covered by Forward Exchange Contracts (except for firm commitments and highly probable forecast transactions), the difference between the forward rate and exchange rate at the inception of the contract is recognized as income or expenses over the life of the contract.

10. Valuation of Stock, etc.

a) Stock on hire under hire purchase agreement - At agreement value less amounts received.

b) Stock of Shares - Category-wise at lower of cost and market value in conformity to RBI prudential guidelines.

11. Contingent Liabilities

Where there is reliable estimable amount of present obligation that warrant to be settled as a result of past event with possible outflow of resources embodying economic benefit, provision is recognized in account therefor. Otherwise no provision is made against contingent liabilities which are disclosed in notes to accounts.

12. Miscellaneous Expenditure

Preliminary and Share issue expenses are being amortised over a period of ten years. Expenses on merger and commitment charges paid on term loans; both forming part of deferred Revenue expenses, are amortised over a period of five years and the tenure of loan respectively in such a manner so that the expenditure so deferred are not carried forward to accounting periods commencing on or after 1st April, 2010.