Mar 31, 2014
1 Basis of preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards issued by
the Institute of Chartered Accountants of India.
2 Use of estimates
The preparation of financial statements, in conformity with GAAP,
requires that the management makes estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and the
reported amounts of revenue and expenses during the reported period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
3 Tangible fixed assets
Fixed assets are stated at their original cost less accumulated
depreciation and impairment losses. Cost comprises the purchase price
and any other attributable cost of bringing the asset to its working
condition for its intended use. Capital work in progress includes
advances paid to acquire fixed assets and cost of assets not ready for
intended use before the balance sheet date.
4 Intangible assets
Portfolio Management Fees are amortized on straight line basis over
their expected useful life in line with Accounting Standard 26
"Intangible Assets" issued by the Institute of Chartered Accountants of
India.
5 Depreciation on tangible fixed assets
Depreciation on assets is provided on straight-line method at the rates
and in the manner specified in Schedule XIV to the Companies Act, 1956
except for lease hold improvement which are depreciated over the period
of lease.
Depreciation on fixed assets added / disposed off during the year is
provided on pro-rata basis with reference to the month of addition /
disposal. Individual assets costing less than Rs. 5,000 are depreciated
in full in the year of purchase.
6 Leases
(i) Assets acquired under lease where the Company has substantially all
the risks and rewards of ownership are classified as finance lease.
Such leases are capitalized at the inception of lease at lower of the
fair value and present value of minimum lease payments.
(ii) Assets acquired under lease where the significant portion of risks
and rewards of ownership are retained by the lesser are classified as
operating lease. Lease rentals are charged to profit and loss account
on accrual basis.
7 Impairment of tangible and intangible assets
The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
An assessment is made at each reporting date as to whether there is any
indication that previously recognized impairment losses may no longer
exist or may have decreased. If such indication exists, the company
estimates the asset''s or cash- generating unit''s recoverable amount. A
previously recognized impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset''s
recoverable amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset does not
exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss
been recognized for the asset in prior years. Such reversal is
recognized in the statement of profit and loss unless the asset is
carried at a revalued amount, in which case the reversal is treated as
a revaluation increase.
8 Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
(i) Long term investments are carried at cost. Diminution in the value
of investments, other than temporary, is provided
(ii) Current investments are carried at lower of cost and fair value
(iii) Unlisted and not-actively traded investments are stated at their
cost of acquisition less provision for diminution in the value.
9 Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
a Income from services
Revenues from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. The company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit flowing to the company. Hence, it is excluded
from revenue.
b Interest
Interest income is recognized on a time proportion basis taking in to
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
c Dividends
Dividend income is recognized when the company''s right to receive
dividend is established by the reporting date.
10 Foreign currency transactions
The transactions in foreign currency are accounted at the exchange rate
prevailing on the date of transaction. Foreign currency monetary assets
and monetary liabilities at the balance sheet date are translated at
the rate of exchange prevailing on that date. The exchange difference
arising from foreign currency transactions and premium on forward
contracts are amortized as expenses or income over the life of the
contract.
11 Retirement and other employee benefits
a Short-term employee benefits
Short-term employee benefits including salaries, social security
contributions, short term compensated absences (such as paid annual
leave) where the absences are expected to occur within twelve months
after the end of the period in which the employees render the related
employee service, profit sharing and bonuses payable within twelve
months after the end of the period in which the employees render the
related services and non monetary benefits (such as medical care) for
current employees are estimated and measured on an undiscounted basis.
b Defined contribution plans
Company''s contributions paid/payable during the year are recognized in
the Profit and Loss Account.
c Defined benefit plans
The Company provides for gratuity in accordance with the Payment of
Gratuity Act, 1972, a defined benefit retirement plan (the Plan)
covering all employees. The plan, subject to the provisions of the
above Act, provides a lump sum payment to eligible employees at
retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee''s salary and the tenure of
employment. Gratuity liability is accrued and provided for on the basis
of an actuarial valuation on projected unit credit method made at the
end of each financial year. Actuarial gains/losses are immediately
taken to profit and loss account and are not deferred.
12 Income taxes
a Income tax
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized directly in equity is
recognized in equity and not in the statement of profit and
loss.Deferred income taxes reflect the impact of timing differences
between taxable income and accounting income originating during the
current year and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax ratesand the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
b Deferred tax
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
13 Segment reporting
Identification of segments
The Company''s business is organized in two segments - Financial
services and Investment services. Accordingly, these divisions comprise
the primary basis of segment information. The Company caters to Indian
markets and as such there are no reportable geographical segments. All
the assets are also located in India.
The generally accepted accounting principles used in the preparation of
the financial statements are applied to record revenue and expenditure
in individual segments Revenue and direct expenses in relation to
segments are categorized based on items that are individually
identifiable to that segment, while other costs, wherever allocable, is
apportioned to the segments on an appropriate basis. Certain expenses
are not specifically allocable to individual segments as the underlying
services are used inter changeably. The Company believes that it is not
practicable to provide segment disclosures relating to such expenses,
and accordingly such expenses are separately disclosed as ''unallocated''
and directly charged to total income.
14 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period.
15 Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
16 Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognised because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
17 Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
18 Derivative instruments
In accordance with the ICAI announcement, derivative contracts, other
than foreign currency forward contracts covered under AS 11, are marked
to market on a portfolio basis, and the net loss, if any, after
considering the offsetting effect of gain on the underlying hedged
item, is charged to the statement of profit and loss. Net gain, if any,
after considering the offsetting effect of loss on the underlying
hedged item, is ignored.
19 Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2012
1. Basis of preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting stand
2. Use of estimates
The preparation of financial statements, in conformity with GAAP,
requires that the management makes estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and the
reported amounts of revenue and expenses during the reported period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
3. Tangible fixed assets
Fixed assets are stated at their original cost less accumulated
depreciation and impairment losses. Cost comprises the purchase price
and any other attributable cost of bringing the asset to its working
condition for its intended use. Capital work in progress includes
advances paid to acquire fixed assets and cost of assets not ready for
intended use before the balance sheet date.
4. Intangible assets
Portfolio Management Fees are amortized on straight line basis over
their expected useful life in line with Accounting Standard 26
"Intangible Assets" issued by the Institute of Chartered Accountants of
India.
5. Depreciation on tangible fixed assets
Depreciation on assets is provided on straight-line method at the rates
and in the manner specified in Schedule XIV to the Companies Act, 1956
except for lease hold improvement which are depreciated over the period
of lease.
Depreciation on fixed assets added / disposed off during the year is
provided on pro-rata basis with reference to the month of addition /
disposal. Individual assets costing less than Rs. 5,000 are depreciated
in full in the year of purchase.
6. Leases
(i) Assets acquired under lease where the Company has substantially all
the risks and rewards of ownership are classified as finance lease.
Such leases are capitalized at the inception of lease at lower of the
fair value and present value of minimum lease payments.
(ii) Assets acquired under lease where the significant portion of risks
and rewards of ownership are retained by the lessor are classified as
operating lease. Lease rentals are charged to Statement of profit and
loss on accrual basis.
7. Impairment of tangible and intangible assets
The company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating unit's (CGU) net
selling price and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. In determining
net selling price, recent market transactions are taken into account,
if available. If no suchtransactions can be identified, an appropriate
valuation model is used.
An assessment is made at each reporting date as to whether there is any
indication that previously recognized impairmentlosses may no longer
exist or may have decreased. If such indication exists, the company
estimates the asset's or cash- generating unit's recoverable amount. A
previously recognized impairment loss is reversed only if there has
been a changein the assumptions used to determine the asset's
recoverable amount since the last impairment loss was recognized.
Thereversal is limited so that the carrying amount of the asset does
not exceed its recoverable amount, nor exceed thecarrying amount that
would have been determined, net of depreciation, had no impairment loss
been recognized for theasset in prior years. Such reversal is
recognized in the statement of profit and loss unless the asset is
carried at a revalued amount, in which case the reversal is treated as
a revaluation increase.
8. Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
(i) Long term investments are carried at cost. Diminution in the value
of investments, other than temporary, is provided for
(ii) Current investments are carried at lower of cost and fair value
(iii) Unlisted and not-actively traded investments are stated at their
cost of acquisition less provision for diminution in the value.
9. Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
a) Income from services
Revenues from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. The company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit flowing to the company. Hence, it is excluded
from revenue.
b) Interest
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
c) Dividends
Dividend income is recognized when the company's right to receive
dividend is established by the reporting date.
10. Foreign currency transactions
The transactions in foreign currency are accounted at the exchange rate
prevailing on the date of transaction. Foreign currency monetary assets
and monetary liabilities at the balance sheet date are translated at
the rate of exchange prevailing on that date. The exchange difference
arising from foreign currency transactions and premium on forward
contracts are amortized as expenses or income over the life of the
contract.
11. Retirement and other employee benefits
a) Short-term employee benefits
Short-term employee benefits including salaries, social security
contributions, short term compensated absences (such as paid annual
leave) where the absences are expected to occur within twelve months
after the end of the period in which the employees render the related
employee service, profit sharing and bonuses payable within twelve
months after the end of the period in which the employees render the
related services and non monetary benefits (such as medical care) for
current employees are estimated and measured on an undiscounted basis.
b) Defined contribution plans
Company's contributions paid/payable during the year are recognized in
the Statement of Profit and Loss.
c) Defined benefit plans
The Company provides for gratuity in accordance with the Payment of
Gratuity Act, 1972, a defined benefit retirement plan (the Plan)
covering all employees. The plan, subject to the provisions of the
above Act, provides a lump sum payment to eligible employees at
retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee's salary and the tenure of
employment. Gratuity liability is accrued and provided for on the basis
of an actuarial valuation on projected unit credit method made at the
end of each financial year. Actuarial gains/losses are immediately
taken to Statement of profit and loss and are not deferred.
12. Income taxes
a) Income tax
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India and tax laws
prevailing in the respective tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized directly in equityis
recognized in equity and not in the statement of profit and
loss.Deferred income taxes reflect the impact of timing differences
between taxable income and accounting income originating during the
current year and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax ratesand the tax laws enacted or
substantively enacted at the reporting date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
b) Deferred tax
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will beavailable against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
c) Fringe benefit tax
Fringe benefit tax is determined at current applicable rates on expense
falling within the ambit of 'Fringe benefit' as defined under the
Income Tax Act, 1961.
13. Segment reporting Identification of segments
The Company's business is organized in two segments - Financial
services and Investment services. Accordingly, these divisions comprise
the primary basis of segment information. The Company caters to Indian
markets and as such there are no reportable geographical segments. All
the assets are also located in India.
The generally accepted accounting principles used in the preparation of
the financial statements are applied to record revenue and expenditure
in individual segments
Revenue and direct expenses in relation to segments are categorized
based on items that are individually identifiable to that segment,
while other costs, wherever allocable, is apportioned to the segments
on an appropriate basis. Certain expenses are not specifically
allocable to individual segments as the underlying services are used
interchangeably. The Company believes that it is not practicable to
provide segment disclosures relating to such expenses, and accordingly
such expenses are separately disclosed as 'unallocated' and directly
charged to total income.
14. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that theyare entitled to participate in dividends relative to a
fully paid equity share during the reporting period.
15. Provisions
A provision is recognized when the company has a present obligation as
a result of past event, it is probable that outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can bemade of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based onthe best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
16. Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by theoccurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be
measured reliably. The company does not recognize a contingent
liability but discloses its existencein the financial statements.
17. Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
18. Derivative instruments
In accordance with the ICAI announcement, derivative contracts, other
than foreign currency forward contracts covered under AS 11, are marked
to market on a portfolio basis, and the net loss, if any, after
considering the offsetting effect of gain on the underlying hedged
item, is charged to the statement of profit and loss. Net gain, if any,
after considering the offsetting effect of loss on the underlying
hedged item, is ignored.
19. Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/ (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2010
(a) Basis of accounting and preparation of financial statements
The Company adopts the historical cost concept and accrual basis in
accordance with Generally Accepted Accounting Principles (GAAP) for the
preparation of its accounts and complies with accounting standards
issued by the Institute of Chartered Accountants of India and relevant
provisions of the Companies Act, 1956.
(b) Use of estimates
The preparation of financial statements, in conformity with GAAP,
requires that the management makes estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and the
reported amounts of revenue and expenses during the reported period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
(c) Fixed assets and capital work in progress
Fixed assets are stated at their original cost less accumulated
depreciation and impairment losses. Cost comprises the purchase price
and any other attributable cost of bringing the asset to its working
condition for its intended use. Capital work in progress includes
advances paid to acquire fixed assets and cost of assets not ready for
intended use before the balance sheet date.
(d) Intangibles
Portfolio Management Fees are amortized on straight line basis over
their expected useful life in line with Accounting Standard 26
"Intangible Assets" issued by the Institute of Chartered Accountants of
India.
(e) Depreciation
Depreciation on assets is provided on straight-line method at the rates
and in the manner specified in Schedule XIV to the Companies Act, 1956
except for lease hold improvement which are depreciated over the period
of lease.
Depreciation on fixed assets added / disposed off during the year is
provided on pro-rata basis with reference to the month of addition /
disposal. Individual assets costing less than Rs. 5,000 are depreciated in
full in the year of purchase.
(f) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset, including intangible, may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. If such recoverable amount of the asset or the recoverable
amount of the cash generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced
to its recoverable amount. The reduction is treated as an impairment
loss and is recognized in the profit and loss account.
(g) Leases
(i) Assets acquired under lease where the Company has substantially all
the risks and rewards of ownership are classified as finance lease.
Such leases are capitalized at the inception of lease at lower of the
fair value and present value of minimum lease payments.
(ii) Assets acquired under lease where the significant portion of risks
and rewards of ownership are retained by the lessor are classified as
operating lease. Lease rentals are charged to profit and loss account
on accrual basis.
(h) Investments
(i) Long term investments are carried at cost. Diminution in the value
of investments, other than temporary, is provided for
(ii) Current investments are carried at lower of cost and fair value
(iii) Unlisted and not-actively traded investments are stated at their
cost of acquisition less provision for diminution in the value
(i) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured
(i) Revenue from services
Revenue from services rendered is recognized as the service is
performed based on terms of agreements / arrangements with the
concerned parties
(ii) Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(iii) Dividends
Dividend income is recognized when the right to receive payment is
established
(j) Foreign currency transactions
The transactions in foreign currency are accounted at the exchange rate
prevailing on the date of transaction. Foreign currency monetary assets
and monetary liabilities at the balance sheet date are translated at
the rate of exchange prevailing on that date. The exchange difference
arising from foreign currency transactions and premium on forward
contracts are amortized as expenses or income over the life of the
contract.
(k) Taxes on income
(i) Current taxation
Provision for current tax is made based on the tax liability computed
after considering tax allowances and exemptions.
(ii) Fringe benefit tax
Fringe benefit tax is determined at current applicable rates on expense
falling within the ambit of Fringe benefit as defined under the
Income Tax Act, 1961.
(iii) Deferred taxation
Deferred income tax is provided on all timing differences at the
balance sheet date between the tax basis of assets and liabilities and
their carrying amount for financial reporting purpose.
Deferred tax assets are recognized only if there is a reasonable or
virtual certainty, as may be applicable, that sufficient future taxable
income will be available, against which they can be realized. The
carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable income will be available to allow all or part of the
deferred tax asset to be utilized.
(l) Retirement benefits
(i) Short-term employee benefits
Short-term employee benefits including salaries, social security
contributions, short term compensated absences (such as paid annual
leave) where the absences are expected to occur within twelve months
after the end of the period in which the employees render the related
employee service, profit sharing and bonuses payable within twelve
months after the end of the period in which the employees render the
related services and non monetary benefits (such as medical care) for
current employees are estimated and measured on an undiscounted basis.
(ii) Defined contribution plans
Companys contributions paid/payable during the year are recognized in
the Profit and Loss Account.
(iii) Defined benefit plans
The Company provides for gratuity in accordance with the Payment of
Gratuity Act, 1972, a defined benefit retirement plan (the Plan)
covering all employees. The plan, subject to the provisions of the
above Act, provides a lump sum payment to eligible employees at
retirement, death, incapacitation or termination of
employment, of an amount based on the respective employees salary and
the tenure of employment. Gratuity liability is accrued and provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year. Actuarial gains/losses
are immediately taken to profit and loss account and are not deferred.
(m) Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past events, for which it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made. Provisions are reviewed
regularly and are adjusted where necessary to reflect the current best
estimate of the obligation. When the Company expects a provision to be
reimbursed, the reimbursement is recognized as a separate asset only
when reimbursement is virtually certain.
A disclosure for contingent liabilities is made where there is a
possible obligation or a present obligation that may probably not
require an outflow of resources. When there is a possible or a present
obligation where the likelihood of outflow of resources is remote, no
provision or disclosure is made.
Operating leases
In respect of buildings occupied as tenant, the aggregate lease rental
is charged as rent in the profit and loss account. There are no minimum
lease payments.
Defined benefit plan
The following tables summaries the components of net benefit expense
recognized in the profit and loss account and the funded status and
amounts recognized in the balance sheet for the respective plans
The fund is administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled. The information on
the allocation of the fund into major asset classes and expected return
on each major class are not readily available. We understand that LICs
overall portfolio of assets is well diversified and as such, the
long-term return on the policy is expected to be higher than the rate
of return on Central Government bonds.