Mar 31, 2015
(a) Basis for preparation of Accounts:
The financial Statement have been prepared in conformity with generally accepted accounting principle to comply in all material respect with the notified accounting standards ('AS') as amended, the relevant provisions of the companies Act, 2013 ('the Act') and the guidelines issued by the Reserve Bank of India ('RBI') as applicable to an Non - Banking Finance Company ('NBFC'). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the company and are consistent with those used in the previous year. The company adopts accrual system of accounting unless otherwise stated.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations during the reposting year end. Although these estimates are based upon management's best knowledge of current events and actions, actual result could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future years.
(c) Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the assets to its working condition for its intended use.
Intangible Assets expected to provide future enduring economic benefits are carried at cost less accumulated amortization and impairment losses, if any. Cot comprise of purchase price and directly attributable expenditure on making the assets ready for its intended use.
(d) Depreciation & Impairment of Assets
Depreciation on fixed assets is provided on written down value method over the useful life and in the manner prescribed in Schedule- II to the Companies Act, 2013.
Long-term investments are stated at cost. Provision of diminution in the value of long- term investments is made only if such a decline is other than temporary in the opinion of the management. As in case of Sri Amarnath Finance Limited such decline is presumed to be temporary hence no provision has been created.
(f) Revenue Recognition
(i) Loan Income
In respect of loan agreements, the income is accrued by applying the impact rate in the transaction on declining balance on the amount financed for the period of the agreement.
(ii) Dividend income on investments is accounted for as and when the right to receive the same is established.
(iii) No income is recognized in respect of Non- performing assets, if any, as per the prudential norms for income recognition introduced for Non-Banking Financial Corporation by Reserve Bank of India vide its notification o.DFC.NO.119/DG/ (SPT)- 98 date 31-01-1998 and revised notification no. DNBS.192/DG (VL)-2007 dated 22- 02-2007.
(g) Provisions of Assets
The company makes provisions for standard and Non-performing Assets as per the Non- Banking Financial (Non-Deposit Accepting of Holding Companies prudential Norms Reserve Bank) Directions, 2007, as amended from time to time. The company also makes additional provisions towards loan assets, to the extent considered necessary, based on the management's best estimate.
Loan assets which as per the management are not likely to be recovered are considered as bad debts and written off.
Provisions on standards assets are made as per the notification DNBS.PD.CC.No. 207/03.02.002/2010-11 issued by Reserve Bank of India.
(h) Provisions, contingents Liabilities and contingent Assets
(i) A Provision is recognized when the company has present obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
(ii) Contingent Liabilities are disclosed separately by way of note to financial statements after careful evaluation by the managements of the facts and legal aspects of the matter involved in case of:
(a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation.
(b) A possible obligation, unless the probability of outflow of resources is remote.
(iii) Contingent Assets are neither recognized, nor discolsed in the financial statements.
(i) Employee Benefits
Company do not follow the provision of the accounting Standard-15 "Employee benefits" as the company do not have employee more than 10 personnel's. So it is the policy of the company that any kind of provision mentioned in the AS -15 will not be entertained. And the company does not make provision for gratuity also.
In case the company's employee limits goes beyond the prescribed limits then AS-15 for Employee benefits will be taken into consideration.
Provisions for current tax is made in accordance with and at the rates specified under the Income Tax Act, 1961, in accordance with Accounting Standard 22- 'Accounting for taxes on Income', issued by the Institute of Chartered Accountant of India.
(k) Earning per share
Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted averages number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all diluted potential equity shares.
(l) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statements comprise cash at bank and in hand and highly liquid investments that are readily convertible into known amount of cash.