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Notes to Accounts of Vertex Securities Ltd.

Mar 31, 2015

1. Terms and rights attached to Shares.

A) Equity Shares.

The company has only one class of Equity share having a Par Value of Rs. 2/- each. Each holder of equity share is entitled for one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval by the share holders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holder 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.

2.0.5% Fully Convertible Preference Shares.

Each Fully Convertible Preference Share shall be compulsorily converted into five equity share of Rs. 2/- each fully paid up at par, at any time from the end of first year to the end of fifth year from the date of allotment.

Preference share holders are entitled to get dividend only when the company has distributable profits.

In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

3. 15%, Non Cumulative Redeemable Preference Shares.

Each Non Cumulative Redeemable Preference Share shall be redeemable with in a period of 1 to 8 years from the date of issue i.e. 05/05/2014 as may be determined by the Board of Directors of the company at their absolute discretion.

Preference share holders are entitled to get dividend only when the company has distributable profits.

In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

Figures as at Figures as at Particulars 31st March, 31st March, 2015 (Rs.) 2014 (Rs.)

4. CONTINGENT LIABILITIES

1. Counter guarantee issued in 15,000,000 11,900,000 favour of the banker for guarantee given by them to NSE for margin requirement Rs. 29.80 Mn. (P.Y. Rs. 29.80 Mn) and to BSE Rs. (Rs. P.Y. 0.2 Mn) for Margin requirment

2. Guarentee given on behalf of 5,000,000 30,000,000 subsidiary company Vertex Commodities & Finpro (P) Limited

3. Claims against the company not acknowledged as debts:- a. Tax demand in respect of:- Service Tax orders for FY 2006-07 to 2009-10 622,000 622,000

20,622,000 42,522,000

5. RELATED PARTY DISCLOSURES

As per Accounting Standard (AS-18) on Related Party Disclosures issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related party as defined in the Accounting Standard are given below:-

Name of the party Relation

Kumar Nair Chairman & Managing Director

Transwarranty Finance Holding Company Limited

Vertex Commodities and Subsidiary Company Finpro (P) Limited

Transwarranty Private Associated Company Limited (Until 16/12/2013)

Transwarranty Advisors Associated Company Private Limited

6. Sundry debtors include old outstanding debts amounting to Rs. 9,695,589/- (P.Y. Rs. 9,695,589) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

7. In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

8. The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients' accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

9. Lien has been marked in favour of Axis bank in respect of Bank Deposits worth Rs. 15,000,000/- (P.Y Rs. 11,900,000/-) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company. Lien has been marked in favour of BSE against trading guarantee in respect of Bank Deposit worth Rs. 1,000,000/- (P.Y. Rs. 1,000,000/-) together with accumulated interest thereon.

10. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS - 17) issued by the Institute of Chartered Accountants of India, the Company's primary business segment is share broking. All other activities of the company revolve around the main business.

As the company's business activity falls within a single primary business segment, the disclosure requirements of AS - 17 in this regard are not applicable.

11. The management has evaluated the long term investments and confirms that there exists no circumstances which warrants further provision on account of permanent diminution in the value of investments.

12. No provision for dividend on Preference Shares and dividend tax there on has been made in the financial statement in the absence of distributable profits during the year.

a) The Company has vide resolution passed at the meeting of Board of Directors dated 11th October, 2011 and 16th January, 2012 decided to demerge its Merchant Banking division into a new company in the name and style of Transwarranty Capital Market Services Private Limited

b) As per the requirement of the Clause 24(f) of the Listing Agreement, company has made an application to the Bombay Stock Exchange Limited (BSE) which is pending for approval.

c) Appointed date of the proposed scheme of demerger is January 1, 2012 also the current financials of the company includes the financials of the Merchant Banking division.

13. The Company has revised depreciation rates on Fixed Assets effective 1st April, 2014 in accordance with requirements of Schedule II of Companies Act, 2013 ("the Act"). The remaining useful life of the Fixed Assets has been revised by adopting standard useful life as per new Companies Act 2013. The carrying amount of the Fixed Assets as on 1st April, 2014 is depreciated over the remaining useful life. As a result of this changes :-

The depreciation charge for the year ended 31st March, 2015 is higher by Rs. 11,24,024/-

There is a debit to retained earnings of Rs. 12,04,975/- Lakhs for the Fixed Assets whose remaining life as on 1st April, 2014 is expired in accordance with revised life as per Companies Act 2013.

14. Previous year figures have been re-grouped/reclassified/ re-arranged/recast wherever necessary to suit the current year's classification.

Previous year figures are, unless otherwise stated, given in bracket.


Mar 31, 2014

1) Terms and rights attached to Shares

A) Equity Shares

1) The company has only one class of Equity share having a Par Value of Rs.2/- each. Each holder of equity share is entitled for one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval by the share holders in the ensuring Annual General Meeting.

2) In the event of liquidation of the company, the holder 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.

B) 0.5% Fully Convertible Preference Shares.

1) Each Fully Convertible Preference Share shall be compulsorily converted into five equity share of Rs.2/- each fully paid up at par, at any time from the end of first year to the end of fifth year from the date of allotment.

2) Preference share holders are entitled to get dividend only when the company has distributable profits.

3) In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

C) 15%, Non Cumulative Redeemable Preference Shares.

1) Each Non Cumulative Redeemable Preference Share shall be redeemable with in a period of 1 to 3 year from the date of issue i.e. 19/05/2010 as may be determined by the Board of Directors of the company at their absolute discretion.

2) Preference share holders are entitled to get dividend only when the company has distributable profits.

3) In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

6) Employees Stock Option Scheme

a) The Vertex Employee Stock Option Plan 2010 has been approved by the Board Of Directors of the company on 10th March, 2008.

b) The vesting period is over five years from the date of grant, commencing after one year from the date of grant.

c) Exercise Period would commence one year from date of grant and will expire on completion of five years from the date of vesting.

d) The options will be settled in equity shares of the company.

e) The company used the intrinsic value method to account for ESOPs.

g) Consequently, no compensation cost has been recognized by the company in accordance with the Guidance Note on Accounting for Employee Share-Based payments issued by the Institute of Chartered Accountants of India.

i) Had fair value method been used, the compensation cost would have been higher by Rs.14.55 Lakhs (Previous Year Rs.21.44 Lakhs). Loss after tax would have been higher by Rs.113.61 Lakhs (Previous year Rs.21.44 Lakhs) and Basic EPS would have been Rs.(0.24 ) Per share (Previous Year Rs.(0.42) Per share) and Diluted EPS would have been Rs.(0.15) (Previous Year Rs.(0.25)).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2014 (ALL AMOUNTS MENTIONED ARE IN RUPEES)

Particulars Figures as at Figures as at 31st March, 31st March, 2014 2013

NON-CURRENT LIABILITIES

4. LONG TERM BORROWINGS

A) SECURED Term Loans From Banks:-

-Vehicle Loan from HDFC Bank - 74,228

(Secured by hypothecation of vehicle - Motor Car-Skoda)

NOTE: The loan from HDFC was taken for purchase of Skoda Car, during the year 2010-11. The loan carried an interest rate @ 9.75% and is repayable in 60 installment. The loan is against hypothecation of the Car Purchased.

B) UNSECURED

a) Loans and Advances from Related Parties

Inter-Corporate Deposits - Holding 50,388,865 37,927,082 Company

Inter-Corporate Deposits - Others 5,195,196 -

b) Other Loans and Advances

- Security Deposit from Franchises 5,365,156 6,196,740 & Advances 60,949,217 44,198,050

5. OTHER LONG TERM LIABILITIES

a) Trade Payables Amount due to Clients 3,120,001 1,710,189 b) Others Other Creditors 610,842 769,608

3,730,843 2,479,797

CURRENT LIABILITIES

3. SHORT TERM BORROWINGS A) FROM BANKS SECURED

Overdraft Account - Catholic Syrian Bank - 5,929,010

(Secured Against Pledge / Lien of Fixed Deposit Nil (P.Y Rs.7,969,985/-) including interest)

B) FROM OTHERS UNSECURED

Inter Corporate Deposits 5,642,520 -

5,642,520 5,929,010

Particulars Figures as at Figures as at 31st March 31st March 2014 2013

4. CONTINGENT LIABILITIES

1. Counter guarantee issued in favour 11,900,000 17,000,000 of the banker for guarantee given by them to NSE for margin requirement

2. Guarentee given on behalf of 30,000,000 10,000,000 subsidiary company Vertex Commodities & Finpro (P) Limited

3. Claims against the company not acknowledged as debts:-

a. Tax demand in respect of which:- - 1,111,000 - Authority (Income Tax) for the Assessment Year 2007-08

- Service Tax orders for FY 2006-07 622,000 622,000 to 2009-10 42,522,000 28,733,000

5. Sundry debtors include old outstanding debts amounting to Rs. 9,695,589/- (P.Y. Rs. 10,435,972) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

6. In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

7. The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients'' accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

8. Lien has been marked in favour of Axis bank in respect of Bank Deposits worth Rs.11,900,000/- (P.Y Rs.8,500,000/-) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company. Lien has been marked in favour of BSE against trading guarantee in respect of Bank Deposit worth Rs.1,000,000/- (P.Y. Rs.Nil) together with accumulated interest thereon.

9. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS - 17) issued by the Institute of Chartered Accountants of India, the Company''s primary business segment is share broking. All other activities of the company revolve around the main business. As the company''s business activity falls within a single primary business segment, the disclosure requirements of AS - 17 in this regard are not applicable.

10. The management has evaluated the long term investments and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

11. No provision for dividend on Preference Shares and dividend tax there on has been made in the financial statement in the absence of distributable profits during the year.

12. a) The Company has vide resolution passed at the meeting of Board of Directors dated 11th October, 2011 and 16th January, 2012 decided to demerge its Merchant Banking division into a new company in the name and style of Transwarranty Capital Market Services Private Limited

b) As per the requirement of the Clause 24(f) of the Listing Agreement, company has made an application to the Bombay Stock Exchange Limited (BSE) which is pending for approval.

c) Appointed date of the proposed scheme of demerger is January 1, 2012 also the current financials of the company includes the financials of the Merchant Banking division.

13. Previous year figures have been re-grouped/reclassified/re-arranged /recast wherever necessary to suit the current year''s classification. Previous year figures are unless otherwise stated given in bracket.


Mar 31, 2013

1. Sundry debtors include old outstanding debts amounting to f 10,435,972/- (Rs. 10,370,458) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

2. In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

3. During the year the company has purchased and sold securities due to trade mistakes and failure of delivery of shares by clients. The profit or loss thus incurred along with other mistakes due to operational and communication problems are recognised under the head Operating Expenses as Error Rectification.

4. The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients'' accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

5. Lien has been marked in favour of Axis bank in respect of Bank Deposits worth Rs. 8.5 Million (P.Y Rs. 5 Million) and in favour of HDFC Bank Rs. Nil (P.Y. Rs. 8.25 million) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company.

6. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS - 17) issued by the Institute of Chartered Accountants of India, the Company''s primary business segment is share broking. All other activities of the company revolve around the main business. As the company''s business activity falls within a single primary business segment, the disclosure requirements of AS - 17 in this regard are not applicable.

7. The management has evaluated the long term investments and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

8. No provision for dividend on Preference Shares and dividend tax there on has been made in the financial statement in the absence of distributable profits during the year.

9. a) The Company has vide resolution passed at the meeting of Board of Directors dated 11th October, 2011 and 16th January, 2012 decided to demerge its Merchant Banking division into a new company in the name and style of Transwarranty Capital Market Services Private Limited.

b) As per the requirement of the Clause 24(f) of the Listing Agreement, company has made an application to the Bombay Stock Exchange Limited (BSE) which is pending for approval.

c) Appointed date of the proposed scheme of demerger is January 1, 2012 also the current financials of the company includes the financials of the Merchant Banking division.

10. Previous year figures have been re-grouped/reclassified/re-arranged/recast wherever necessary to suit the current year''s classification. Previous year figures are unless otherwise stated given in bracket.


Mar 31, 2012

1) Terms and rights attached to Shares.

A) Equity Shares.

1) The company has only one class of Equity share having a Par Value of Rs 2/- each. Each holder of equity share is entitled for one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval by the share holders in the ensuring Annual General Meeting.

2) In the event of liquidation of the company, the holder 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.

B) 0.5% Fully Convertible Preference Shares.

1) Each Fully Convertible Preference Share shall be compulsorily converted into five equity share of Rs 2/- each fully paid up at par, at any time from the end of first year to the end of fifth year from the date of allotment.

2) Preference share holders are entitled to get dividend only when the company has distributable profits.

3) In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

C) 15%, Non Cumulative Redeemable Preference Shares.

1) Each Fully Convertible Preference Share shall be redeemable with in a period of 1 to 3 year from the date of issue i.e. 19/05/2010

2) Preference share holders are entitled to get dividend only when the company has distributable profits.

3) In the event of winding up or repayment of capital, Preference share holders have the preferential right to be repaid the amount of capital paid up.

As per records of the company, including its register of share holders/ members and other declarations received from the shareholders regarding beneficial interest, the above represents both legal and beneficial ownership of shares.

The Company had issued and allotted 376,730 equity shares of Rs 2/- each on 16-01-2012, pursuant to Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2010 (ICDR) . Although the listing approval from BSE is received on 09-05- 2012 the above shares have been included in the above shareholding pattern.

1) Employees Stock Option Scheme

a) The "Vertex Employee Stock Option Plan 2010" has been approved bv the Board Of Directors of the company on 10th March, 2008.

b) The vesting period is over five years from the date of grant, commencing after one year from the date of grant.

c) Exercise Period would commence one year from date of grant and will expire on completion of five years from the date of vesting.

d) The options will be settled in equity shares of the company.

e) The company used the intrinsic value method to account for ESOPs.

i) Had fair value method been used , the compensation cost would have been higher by Rs 75.77 Lakhs (Previous Year Rs 89.37 Lakhs Loss after tax would have been higher by Rs 75.77 Lakhs (Previous year Rs 89.37 Lakhs) and Basic EPS would have been Rs (0.43) Per share (Previous Year Rs (1.92 ) Per share) and Diluted EPS would have been Rs (0.25) (Previous Year Rs (0.80)).

Particulars For the year ended For the year ended 31st March, 2012 31st March 2011 2 CONTINGENT LIABILITIES

1. Counter guarantee issued in favour of the banker for guarantee given by them to NSE for margin requirement 36,500,000 34,000,000

2. Guarantee given on behalf of subsidiary company Vertex Commodities & Finpro (P) Limited 50,000.000 60,000,000

3. Claims against the company not acknowledged as debts:-

a. Tax demand in respect of which:-

- Company's Appeal is pending before the first appellate Authority (Income Tax) for the Assessment Year 2007-08 1,111,000 1,111,000

- Service Tax orders for FY 2006-07 to 2009-10 622,000 497,000

88,233,000 95,608,000

3 Sundry debtors include old outstanding debts amounting to Rs 10,370,458 (Rs 11,790,892) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

4 In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

5 During the year the company has purchased and sold securities due to trade mistakes and failure of delivery of shares by clients. The profit or loss thus incurred along with other mistakes due to operational and communication problems are recognised under the head Operating Expenses as Error Rectification.

6 The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients' accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

7 Lien has been marked in favour of ICICI Bank Ltd in respect of Bank Deposits worth Rs Nil (P.Y Rs 3.80 Million) and in favour of HDFC Bank t 8.25 million (P.Y. Rs 13.25) and in favour of Axis bank Rs 5 Million ( P.Y. Rs Nil) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company.

8 Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS - 17) issued by the Institute of Chartered Accountants of India, the Company's primary business segment is share broking. All other activities of the company revolve around the main business. As the company's business activity falls within a single primary business segment, the disclosure requirements of AS - 17 in this regard are not applicable.

9 The management has evaluated the long term investments and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

10 No provision for dividend on Preference Shares and dividend tax there on has been made in the financial statement in the absence of distributable profits during the year.

11 a) The Company has vide resolution passed at the meeting of Board of Directors dated 11th October, 2011 and 16th January, 2012 decided to demerge its Merchant Banking division into a new company in the name and style of Transwarranty Capital Market Services Private Limited

b) As per the requirement of the Clause 24(f) of the Listing Agreement, company has made an application to the Bombay Stock Exchange Limited (BSE) which is pending for approval.

c) Appointed date of the proposed scheme of demerger is January 1, 2012 also the currert financials of the company includes the financials of the Merchant Banking division.

12 Previous year figures have been re-grouped / reclassified / re-arranged / recast wherever necessary to suit the current year's classification. Previous year figures are unless otherwise stated given in bracket.


Mar 31, 2011

1. Some of the debtors, advances, creditors, and security deposit are subject to confirmation, reconciliation and adjustments if any. The management does not expect any material difference affecting the current years financial statements.

2. Sundry debtors include old outstanding debts amounting to Rs.11,790,892 (Rs.6,735,421) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable.

3. In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

4. During the year the company has purchased and sold securities due to trade mistakes and failure of delivery of shares by client,. The profit or loss thus incurred along with other mistakes due to operational and communication problems are recognised under the head Operating Expenses as Error Rectification.

5. The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients accounts only when the company receives a written request from the clients and after confirming that they have enouga credit / margin in their account.

6. Lien has been marked in favour of ICICI Bank Ltd in respect of Bank Deposits worth Rs. 3.80 million (P.Y Rs. 20 million) and i n favour of HDFC Bank Rs. 13.25 million (P.Y. Rs. Nil) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company.

7. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS - 17) issued by the Institute of Chartered Accountants of India, the Companys primary business segment is share broking. All other activities of the company revolve around the main business. As the companys business activity falls within a single primary business segment, the disclosure requirements of AS - 17 in this regard are not applicable.

8. Contingent Liabilities not provided for:

(Rs. In Lakhs) As at As at 31.03.2011 31.03.2010 Rs. Rs.

Particulars

i) Counter guarantee issued in favour of bankers for guarantee given by 340 410 them to NSE for margin requirements

ii) Guarantee given on behalf of subsidiary company Vertex Commodities 600 Nil & Finpro (P) Limited.

iii) Claims against the company not acknowledged as debt

a) Tax demand in respect of which:

i Companys appeal is pending before the first appellate Authority 11.11 11.11 (Income Tax) for the Assessment Year 2007-08

ii) Companys Service Tax appeal is pending before the CESTAT 4.97 4.97

b) Arbitration against the company pending in courts Nil 13.70

13. Information on related party transaction as required by Accounting Standard -18

(a) Name of the related parties and description of the relation:

Name of the Party Relation

Transwarranty Finance Limited Holding Company

Kumar Nair Chairman & Managing Director

Vertex Commodities & Finpro Private Limited. Subsidiary Company

Transwarranty Private Limited. Associated Company

Transwarranty Advisors Private Limited. Associated Company

Ashok Mittal Chief Executive Officer

9. The management has evaluated the long term investments and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

10. Employe Stock Option Scheme

a) The "Vertex Employe Stock Option Plan,2010" has been approved by the Board Of Directors of the company on 10th March. 2008.

b) The vesting period is over five years from the date of grant, commencing after one year from the date of grant.

c) Exercise Period would commence one year from date of grant and will expire on completion of five years from the date of vesting.

d) The options will be settled in equity shares of the company.

e) The company used the intrinsic value method to account for ESOPs.

g) Consequently, no compensation cost has been recognized by the company in accordance with the "Guidance Note on Accounting for Employee Share-Based payments" issued by the Institute of Chartered Accountants of India.

i) Had fair value method been used, the compensation cost would have been higher by Rs.89.37 Lakhs (Previous Year Rs Nil) Loss after tax would have been higher by Rs.89.37 Lakhs (Previous year Rs.Nil) and EPS basic would have been Rs (1 92 ) Per share (Previous Year Rs.Nil )Per share and Diluted EPS would have been Rs.(0.80) Per share (Previous Year Rs Nil)

11. For the 27,758, 15% Non Cumulative Redeemable Preference shares of Rs.100/- each and 8,300,715, 0.5% fully convertible preference shares of Rs.10 each, no provision for dividend and dividend tax has been made in the financial statement in the absence of distributable profits during the year.

12. Previous year figures have been re-grouped/reclassified/ re-arranged/recast wherever necessary to suit the current years classification. Previous year figures are unless otherwise stated given in bracket.


Mar 31, 2010

1. Amalgamation with M/s. Transwarranty Capital Private Ltd.

The Company had entered into a Scheme of Amalgamation(Scheme) with M/s. Transwarranty Capital Private Ltd. (TCPL) for the amalgamation of TCPL with the Company effective April 1, 2009 (Appointed date). The Scheme was approved by the Honourable High Court of judicature at Bombay on 18.12.2009 and Honourable High Court of judicature at Kerala on 23 .02.2010.

Pursuant to the order of the Honourable High Courts, TCPL has been amalgamated with the Company and stands dissolved without being wound up.

The Assets and Liabilities of erstwhile TCPL who is engaged in the business of shares, derivatives, stock broking, depository services, merchant banking and distribution of Mutual funds, were transferred and vested in the Company w.e.f. the appointed date viz: 1st April, 2009 in accordance with the Scheme sanctioned by the High Courts. The Scheme has accordingly been given effect to in the accounts. Hence the accounts of the current year are not comparable with that of the previous year.

The amalgamation has been accounted for under the "The Purchase Method" as prescribed by Accounting Standard (AS-14: Accounting for Amalgamation) subject to the specific accounting treatment sanctioned by the High Courts. Accordingly the assets and liabilities of erstwhile TCPL as on 1st April 2009 has been taken over at their book values. The accumulated losses (Rs.78.95 Lakhs) of TCPL is deemed as loss of the Company. Further, 820,950 equity shares of Rs.10 each fully paid up and 8,300,715, 0.5% fully convertible preference shares of Rs.10/- each fully paid up was issued to the equity share holders of the erstwhile TCPL in exchange of 9,121,665 equity shares of Rs.10/- each fully paid up held by them in erstwhile TCPL. Further 31,500 equity shares of Rs.10/- each fully paid up and 318,500 0.5% fully convertible preference shares of RslO/- each fully paid up are pending to be issued to the equity share holders of the erst while TCPL in exchange of 350,000 equity shares of Rs 10/- each fully paid up held by them in erst while TCPL since approval from Department of Industrial Policy and Promotion is pending, the amount has been disclosed under "Share Capital Suspense Account" in schedule 1-A as of 31st March 2010.

The preference share holders of the erstwhile TCPL was issued 27,758, 5 year 15 % non cumulative redeemable preference shares of Rs.100/- each credited as fully paid up in exchange of equivalent number of 15% non cumulative redeemable preference shares held by them in TCPL.

The Company is providing depreciation on straight-line method at the rates prescribed in Schedule XIV to the Companys Act, 1956 where as, the erstwhile TCPL was providing depreciation on written down value method at the rates prescribed in Schedule XIV to the Companys Act 1956. In order to align with the accounting policy followed by the Company, depreciation on assets of the erstwhile TCPL till the amalgamation where recomputed under straight-line method at the rates prescribed in Schedule XIV to the Companys Act 1956 and a sum of Rs.1,100,569 is added along with the free reserves of the Company. The difference of Rs. 60.78 lakhs between the value of shares to be issued over the value of net assets taken over and loss adjusted is included under Reserves and Surplus as Reserve on Amalgamation Account.

As per The Purchase Method prescribed in AS-14, Accounting for Amalgamation, accumulated losses cannot be taken over by the Company. However as per Scheme approved by High Courts accumulated losses will be deemed to be loss of the Company Had the accounting treatment prescribed under the Purchase method in AS-14, Accounting for Amalgamation been followed there would be a goodwill of Rs.1,816,948/- as against present Reserve on Amalgamation Account amounting to Rs.6,078,890/-.

Final orders on the application to the SEBI for approval in connection with the amalgamation of TCPL with the Company is pending as on date.

4. Foreign Exchange Transaction:

Earnings in foreign currency - Nil Nil

Expenditure in foreign currency - Nil Nil,

5. Some of the debtors, advances, creditors, and security deposit are subject to confirmation, reconciliation and adjustments if any 1 he management does not expect any material difference affecting the current years financial statements.

6. Sundry debtors include old outstanding debts amounting to Rs.67,35,421.19 (P.Y. Rs.67,62,691.79) in respect of which Company has initiated legal and other recovery actions, the proceedings of which are in different stages of progress. No provision for doubtful debts has been made in the accounts during the year since the management is confident that the debts are good and recoverable. °

7. In the opinion of Directors, the current assets and deposits have the value as stated in the Balance Sheet, if realized in the ordinary course of business.

8. During the year the company has purchased and sold securities due to trade mistakes and failure of delivery of shares by clients The profit or loss thus incurred along with other mistakes due to operational and communication problems are recognised under the head Operating Expenses as Error Rectification.

9. The company is maintaining DEMAT beneficiary account with own Depository Services. The stock is transferred to the respective clients accounts only when the company receives a written request from the clients and after confirming that they have enough credit / margin in their account.

10. Lien has been marked in favour of ICICI Bank Ltd in respect of Bank Deposits worth Rs.200 Lakhs (P.Y. Rs. 200 Lakhs) and in favour of Federal Bank for Rs.5 lakhs (P.Y. Nil) together with accumulated interest thereon, against bank guarantees issued by them on account of the Company.

11. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS - 17) issued by the Institute of Chartered Accountants of India, the Companys primary business segment is share broking. All other activities of the company revolve around the main business. As the companys business activity falls within a single primary business segment, the disclosure requirements of AS - 17 in this regard are not applicable.

12. Contingent Liabilities not provided for:

(Rs. In Lakhs) Particulars As at As at 31.03.2010 31.03.2009 Rs. Rs.

i) Counter guarantee issued in favour of bankers for guarantee given by 410 400 them to NSE for margin requirements

ii) Guarantee given on behalf of subsidiary company Vertex Commodities Nil 100 & Finpro (P) Ltd.

iii) Claims against the company not acknowledged as debt

1. Tax demand in respect of which:

a) Tax authorities appealed before Income Tax Appellate Tribunal Nil 69.32 against the orders which were ruled in favour of the company by the First Appellate Authority for the Assessment years -2005-06

b) Companys appeal is pending before the first appellate Authority 11.11 Nil (Income tax) for the assessment year 2007-08

c) Companys Service Tax appeal is pending before the CESTAT 4.97 Nil

2. Arbitration against the Company pending in courts 13.70 10.04

13. Information on related party transaction as required by Accounting Standard -18

(a) Name of the related parties and description of the relation:

Name of the Party Relation

Ranjan Verghese Managing. Director

Geetha Verghese Relative of the Managing Director

Transwarranty Finance Ltd Holding Company

Transwarranty Capital (P) Ltd Amalgamating Company (Previous year Subsidiary to Holding Company)

Transwarranty Advisors(P) Ltd. Company controlled by Directors/ Relatives

Transwarranty Private Ltd. Company controlled by Directors/ Relatives

Kumar Nair Chairman

Vertex Commodities & Finpro Private Ltd. Subsidiary Company

14. The management has evaluated the long term investments in Nawani Corp (India) Limited and Cochin Stock Exchange Limited and confirms that there exist no circumstances which warrant provision on account of permanent diminution in the value of investments.

21. Previous year figures have been re-grouped/reclassified/re-arranged/ recast wherever necessary to suit the current years classification.

Previous year figures are unless otherwise stated given in bracket.

 
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