Accounting Policies of Arman Financial Services Ltd. Company
Mar 31, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Recognition of interest income
A. EIR method
Under Ind AS 109, interest income is recorded using
the effective interest rate method for all financial
instruments measured at amortised cost and
financial instrument measured at FVOCI. The EIR is
the rate that exactly discounts estimated future cash
receipts through the expected life of the financial
instrument or, when appropriate, a shorter period, to
the net carrying amount of the financial asset.
The EIR (and therefore, the amortised cost of the asset)
is calculated by taking into account any discount or
premium on acquisition, fees and costs that are an
integral part of the EIR. The Company recognises
interest income using a rate of return that represents
the best estimate of a constant rate of return over the
expected life of the financial instrument.
If expectations regarding the cash flows on the
financial asset are revised for reasons other than
credit risk, the adjustment is booked as a positive
or negative adjustment to the carrying amount of
the asset in the balance sheet with an increase or
reduction in interest income. The adjustment is
subsequently amortised through Interest income in
the statement of profit and loss.
B. Interest income
The Company calculates interest income by applying
EIR to the gross carrying amount of financial assets
other than credit impaired assets. When a financial
asset becomes credit impaired and is, therefore,
regarded as ''stage 3'', the Company calculates interest
income on the net basis. If the financial asset cures
and is no longer credit impaired, the Company reverts
to calculating interest income on a gross basis.
3.2 Financial instrument - initial recognition
A. Date of recognition
Debt securities issued are initially recognised when
they are originated. All other financial assets and
financial liabilities are initially recognised when
the Company becomes a party to the contractual
provisions of the instrument.
B. Initial measurement of financial instruments
The classification of financial instruments at initial
recognition depends on their contractual terms and
the business model for managing the instruments
(Refer note 3.3(A)). Financial instruments are initially
measured at their fair value (as defined in Note 3.8),
except in the case of financial assets and financial
liabilities recorded at FVTPL, transaction costs are
added to, or subtracted from this amount.
C. Measurement categories of financial assets and
liabilities
The Company classifies all of its financial assets
based on the business model for managing the assets
and the asset''s contractual terms, measured at either:
i) Amortised cost
ii) FVOCI
iii) FVTPL
3.3 Financial assets and liabilities
A. Financial assets
Business model assessment
The Company determines its business model at the
level that best reflects how it manages groups of
financial assets to achieve its business objective. The
Company''s business model is not assessed on an
instrument-by-instrument basis, but at a higher level
of aggregated portfolios and is based on observable
factors such as:
a. How the performance of the business model
and the financial assets held within that
business model are evaluated and reported to
the Company''s key management personnel.
b. The risks that affect the performance of the
business model (and the financial assets held
within that business model) and, in particular,
the way those risks are managed.
c. managers of the business are compensated
(for example, whether the compensation is
based on the fair value of the assets managed
or on the contractual cash flows collected).
d. The expected frequency, value and timing
of sales are also important aspects of the
Company''s assessment.
The business model assessment is based on
reasonably expected scenarios without taking ''worst
case'' or ''stress case'' scenarios into account. If cash
flows after initial recognition are realised in a way that
is different from the Company''s original expectations,
the Company does not change the classification of
the remaining financial assets held in that business
model, but incorporates such information when
assessing newly originated or newly purchased
financial assets going forward.
SPPI test
As a second step of its classification process, the
Company assesses the contractual terms of financial
assets to identify whether they meet SPPI test.
''Principal'' for the purpose of this test is defined as the
fair value of the financial asset at initial recognition
and may change over the life of financial asset (for
example, if there are repayments of principal or
amortisation of the premium/ discount).
The most significant elements of interest within a
lending arrangement are typically the consideration
for the time value of money and credit risk. To
make the SPPI assessment, the Company applies
judgement and considers relevant factors such
as the period for which the interest rate is set. In
contrast, contractual terms that introduce a more
than de minimis exposure to risks or volatility in the
contractual cash flows that are unrelated to a basic
lending arrangement do not give rise to contractual
cash flows that are solely payments of principal and
interest on the amount outstanding. In such cases, the
financial asset is required to be measured at FVTPL.
Accordingly, financial assets are measured as follows:
i) Financial assets carried at amortised cost
("AC")
A financial asset is measured at amortised
cost if it is held with in a business model
whose objective is to hold the asset in order
to collect contractual cash flows and the
contractual terms of the financial asset give
rise on specified dates to cash flows that are
solely payments of principal and interest on the
principal amount outstanding.
ii) Financial assets measured at FVOCI
A financial asset is measured at FVOCI if it is
held within a business model whose objective
is achieved by both collecting contractual
cash flows and selling financial assets and
the contractual terms of the financial asset
give rise on specified dates to cash flows
that are solely payments of principal and
interest on the principal amount outstanding.
Since, the loans and advances are held to sale
and collect contractual cash flows, they are
measured at FVOCI.
iii) Financial assets at fair value through profit
or loss ("FVTPL")
A financial asset which is not classified in any of
the above categories are measured at FVTPL.
iv) Investments in Mutual Funds
All investments in Mutual Funds are measured
at fair value, with value changes recognised in
Statement of Profit and Loss ("FVTPL'').
B. Financial liability
i) Initial recognition and measurement
All financial liability are initially recognized at
fair value. Transaction costs that are directly
attributable to the acquisition or issue of
financial liability, which are not at fair value
through profit or loss, are adjusted to the fair
value on initial recognition.
ii) Subsequent measurement
Financial liabilities are carried at amortized
cost using the effective interest method.
3.4 Reclassification of financial assets and liabilities
The Company does not reclassify its financial assets
subsequent to their initial recognition, apart from the
exceptional circumstances in which the Company
acquires, disposes of, or terminates a business
line. Financial liabilities are never reclassified. The
Company did not reclassify any of its financial assets
or liabilities in the year ended March 31, 2023 and
March 31, 2022.
3.5 Derecognition of financial assets and liabilities
A. Derecognition of financial assets due to
substantial modification of terms and conditions
The Company derecognises a financial asset,
such as a loan to a customer, when the terms and
conditions have been renegotiated to the extent
that, substantially, it becomes a new loan, with the
difference recognised as a derecognition gain or loss,
to the extent that an impairment loss has not already
been recorded. Where the substantial modification is
because of financial difficulties of the borrower and
the old loan was classified as credit-impaired, the
new loan will initially be identified as originated credit-
impaired financial asset. On satisfactory performance
of the new loan, the new loan is transferred to stage I
or stage II of ECL.
B. Derecognition of financial assets other than due
to substantial modification
i) Financial assets
A financial asset (or, where applicable, a part of
a financial asset or part of a group of similar
financial assets) is derecognised when the
contractual rights to the cash flows from the
financial asset expires or it transfers the rights
to receive the contractual cash flows in a
transaction in which substantially all of the risks
and rewards of ownership of the financial asset
are transferred or in which the Company neither
transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain
control of the financial asset. On derecognition
of a financial asset in its entirety, the difference
between the carrying amount (measured at the
date of derecognition) and the consideration
received (including any new asset obtained
less any new liability assumed) is recognised
in the statement of profit and loss. Accordingly,
gain on sale or derecognition of assigned
portfolio are recorded upfront in the statement
of profit and loss as per Ind AS 109. Also, the
Company recognises servicing income as a
percentage of interest spread over tenure of
loan in cases where it retains the obligation to
service the transferred financial asset. As per
the guidelines of RBI, the company is required
to retain certain portion of the loan assigned
to parties in its books as Minimum Retention
Requirement ("MRR"). Therefore, it continues to
recognise the portion retained by it as MRR.
ii) Financial liability
A financial liability is derecognised when the
obligation under the liability is discharged,
cancelled or expires. Where an existing
financial liability is replaced by another from
the same lender on substantially different
terms, or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as a derecognition
of the original liability and the recognition of
a new liability. The difference between the
carrying value of the original financial liability
and the consideration paid is recognised in the
statement of profit and loss.
3.6 Impairment of financial assets
A. Overview of ECL principles
In accordance with Ind AS 109, the Company uses
ECL model, for evaluating impairment of financial
assets other than those measured at FVTPL.
Expected credit losses are measured through a loss
allowance at an amount equal to:
i) The 12-months expected credit losses
(expected credit losses that result from those
default events on the financial instrument
that are possible within 12 months after the
reporting date); or Full lifetime expected credit
losses (expected credit losses that result from
all possible default events over the life of the
financial instrument) Both LTECLs and 12
months ECLs are calculated on collective basis.
Based on the above, the Company categorises
its loans into Stage 1, Stage 2 and Stage 3, as
described below:
Stage 1: When loans are first recognised, the
Company recognises an allowance based on
12 months ECL. Stage 1 loans includes those
loans where there is no significant credit risk
observed and also includes facilities where the
credit risk has been improved and the loan has
been reclassified from stage 2 or stage 3.
Stage 2: When a loan has shown a significant
increase in credit risk since origination, the
Company records an allowance for the life time
ECL. Stage 2 loans also includes facilities
where the credit risk has improved and the loan
has been reclassified from stage 3.
Stage 3: Loans considered credit impaired are
the loans which are past due for more than 90
days. The Company records an allowance for
life time ECL.
Loan commitments: When estimating LTECLs
for undrawn loan commitments, the Company
estimates the expected portion of the loan
commitment that will be drawn down over its
expected life. The ECL is then based on the
present value of the expected shortfalls in cash
flows if the loan is drawn down.
B. Calculation of ECLs
The mechanics of ECL calculations are outlined
below and the key elements are, as follows:
PD Probability of Default ("PD") is an estimate of
the likelihood of default over a given time horizon. A
default may only happen at a certain time over the
assessed period, if the facility has not been previously
derecognised and is still in the portfolio.
EAD Exposure at Default ("EAD") is an estimate of the
exposure at a future default date, taking into account
expected changes in the exposure after the reporting
date, including repayments of principal and interest
LGD Loss Given Default ("LGD") is an estimate of the
loss arising in the case where a default occurs at
a given time. It is based on the difference between
the contractual cash flows due and those that the
lender would expect to receive, including from the
realisation of any collateral. It is usually expressed as
a percentage of the EAD.
The Company has calculated PD, EAD and LGD to
determine impairment loss on the portfolio of loans
and discounted at an approximation to the EIR. At
every reporting date, the above calculated PDs, EAD
and LGDs are reviewed and changes in the forward¬
looking estimates are analysed.
The mechanics of the ECL method are
summarised below:
Stage 1: The 12 months ECL is calculated as the
portion of LTECLs that represent the ECLs that result
from default events on a financial instrument that
are possible within the 12 months after the reporting
date. The Company calculates the 12 months ECL
allowance based on the expectation of a default
occurring in the 12 months following the reporting
date. These expected 12-months default probabilities
are applied to a forecast EAD and multiplied by the
expected LGD and discounted by an approximation
to the original EIR.
Stage 2: When a loan has shown a significant increase
in credit risk since origination, the Company records
an allowance for the LTECLs. The mechanics are
similar to those explained above, but PDs and LGDs
are estimated over the lifetime of the instrument.
The expected cash shortfalls are discounted by an
approximation to the original EIR.
Stage 3: For loans considered credit-impaired, the
Company recognises the lifetime expected credit
losses for these loans. The method is similar to that
for stage 2 assets, with the PD set at 100%.
C. Loans and advances measured at FVOCI
The ECLs for loans and advances measured at FVOCI
do not reduce the carrying amount of these financial
assets in the balance sheet, which remains at fair
value. Instead, an amount equal to the allowance that
would arise if the assets were measured at amortised
cost is recognised in OCI as an accumulated
impairment amount, with a corresponding charge to
profit or loss. The accumulated loss recognised in OCI
is recycled to the profit and loss upon derecognition
of the assets.
D. Forward looking information
In its ECL models, the Company relies on a broad
range of forward looking macro parameters and
estimated the impact on the default at a given
point of time.
i) Gross fixed investment (% of GDP)
ii) Lending interest rates
iii) Deposit interest rates
3.7 Write-offs
Financial assets are written off when the Company
has stopped pursuing the recovery. If the amount to
be written off is greater than the accumulated loss
allowance, the difference is first treated as an addition
to the allowance that is then applied against the
gross carrying amount. Any subsequent recoveries
are credited to impairment on financial instruments
in the statement of profit and loss.
3.8 Determination of fair value
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of
an asset or a liability, the Company has taken into
account the characteristics of the asset or liability if
market participants would take those characteristics
into account when pricing the asset or liability at
the measurement date. In addition, for financial
reporting purposes, fair value measurements are
categorised into Level 1, 2, or 3 based on the degree
to which the inputs to the fair value measurements
are observable and the significance of the inputs to
the fair value measurement in its entirety, which are
described as follows:
⢠Level 1 financial instruments: Those where the
inputs used in the valuation are unadjusted quoted
prices from active markets for identical assets
or liabilities that the Company has access to at
the measurement date. The Company considers
markets as active only if there are sufficient trading
activities with regards to the volume and liquidity of
the identical assets or liabilities and when there are
binding and exercisable price quotes available on the
balance sheet date;
⢠Level 2 financial instruments: Those where the
inputs that are used for valuation and are significant,
are derived from directly or indirectly observable
market data available over the entire period of the
instrument''s life. Such inputs include quoted prices
for similar assets or liabilities in active markets,
quoted prices for identical instruments in inactive
markets and observable inputs other than quoted
prices such as interest rates and yield curves, implied
volatilities, and credit spreads; and
⢠Level 3 financial instruments: Those that include
one or more unobservable input that is significant to
the measurement as whole.
3.9 (I) Recognition of other income
Revenue (other than for those items to which Ind
AS 109 - Financial Instruments are applicable) is
measured at fair value of the consideration received
or receivable. Ind AS 115 - Revenue from contracts
with customers outlines a single comprehensive
model of accounting for revenue arising from
contracts with customers and supersedes current
revenue recognition guidance found within Ind ASs.
The Company recognises revenue from contracts
with customers based on a five step model as set out
in Ind AS 115:
Step 1: Identify contract(s) with a customer: A
contract is defined as an agreement between two
or more parties that creates enforceable rights and
obligations and sets out the criteria for every contract
that must be met.
Step 2: Identify performance obligations in the
contract: A performance obligation is a promise in a
contract with a customer to transfer a good or service
to the customer.
Step 3: Determine the transaction price: The
transaction price is the amount of consideration
to which the Company expects to be entitled in
exchange for transferring promised goods or services
to a customer, excluding amounts collected on behalf
of third parties.
Step 4: Allocate the transaction price to the
performance obligations in the contract: For a
contract that has more than one performance
obligation, the Company allocates the transaction
price to each performance obligation in an amount
that depicts the amount of consideration to which
the Company expects to be entitled in exchange for
satisfying each performance obligation.
Step 5: Recognise revenue when (or as) the Company
satisfies a performance obligation
A. Dividend income
Dividend income (including from FVOCI investments)
is recognised when the Company''s right to receive
the payment is established, it is probable that the
economic benefits associated with the dividend will
flow to the Company and the amount of the dividend
can be measured reliably. This is generally when the
shareholders approve the dividend.
B. Income from assignment transactions
Income from assignment transactions i.e. present
value of excess interest spread is recognised when
the related loan assets are de-recognised. Interest
income is also recognised on carrying value of assets
over the remaining period of such assets.
C. Other interest income
Other interest income is recognised on a time
proportionate basis.
D. Other Charges in Respect of Loans
Income in case of late payment charges are
recognized when there is no significant uncertainty
of regarding its recovery.
3.9 (II) Recognition of other expense
A. Borrowing costs
Borrowing costs are the interest and other costs that
the Company incurs in connection with the borrowing
of funds. Borrowing costs that are directly attributable
to the acquisition or construction of qualifying assets
are capitalised as part of the cost of such assets.
A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended
use or sale.
All other borrowing costs are charged to the
statement of profit and loss for the period for which
they are incurred.
3.10 Cash and cash equivalents
Cash comprises cash on hand and demand deposits
with banks. Cash equivalents are short-term balances
(with an original maturity of three months or less from
the date of acquisition), highly liquid investments
that are readily convertible into known amounts of
cash and which are subject to insignificant risk of
changes in value.
3.11 Property, plant and equipment
Property, plant and equipment ("PPEâ) are carried at
cost, less accumulated depreciation and impairment
losses, if any. The cost of PPE comprises its purchase
price net of any trade discounts and rebates, any
import duties and other taxes (other than those
subsequently recoverable from the tax authorities),
any directly attributable expenditure on making the
asset ready for its intended use and other incidental
expenses. Subsequent expenditure on PPE after it
purchase is capitalized only if it is probable that the
future economic benefits will flow to the enterprise
and the cost of the item can be measured reliably.
Depreciation is calculated using the straight-line
method to write down the cost of property and
equipment to their residual values over their estimated
useful lives which are in line with as specified under
schedule II of the Act. Land is not depreciated. The
estimated useful lives are, as follows:
i) Buildings - 60 years
ii) Vehicles - 8 years
iii) Office equipment - 3 to 10 years
iv) Furniture and fixtures - 10 years
Depreciation is provided on a pro-rata basis from the
date on which such asset is ready for its intended
use. The residual values, useful lives and methods
of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate. PPE is derecognised
on disposal or when no future economic benefits
are expected from its use. Any gain or loss arising
on derecognition of the asset (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is recognised in
other income / expense in the statement of profit and
loss in the year the asset is derecognised.
3.12 Intangible assets
The Company''s intangible assets include the value of
software. An intangible asset is recognised only when
its cost can be measured reliably and it is probable
that the expected future economic benefits that are
attributable to it will flow to the Company.
Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortisation and any accumulated
impairment losses.
Amortisation is calculated to write off the cost
of intangible assets less their estimated residual
values over their estimated useful lives (three years)
using the straight-line method, and is included in
depreciation and amortisation in the statement of
profit and loss.
3.13 Impairment of non-financial assets - property,
plant and equipments and intangible assets
The carrying values of assets / cash generating
units at the each balance sheet date are reviewed for
impairment. If any indication of impairment exists, the
recoverable amount of such assets is estimated and
if the carrying amount of these assets exceeds their
recoverable amount, impairment loss is recognised
in the statement of profit and loss as an expense,
for such excess amount. The recoverable amount
is the greater of the net selling price and value in
use. Value in use is arrived at by discounting the
future cash flows to their present value based on an
appropriate discount factor. When there is indication
that an impairment loss recognised for an asset in
earlier accounting periods no longer exists or may
have decreased, such reversal of impairment loss is
recognised in the statement of profit and loss.
3.14 Corporate guarantees
Corporate guarantees are initially recognised in the
standalone financial statements (within "other non¬
financial liabilitiesâ) at fair value, being the notional
commission. Subsequently, the liability is measured
at the higher of the amount of loss allowance
determined as per impairment requirements of Ind
AS 109 and the amount recognised less cumulative
amortisation.
Any increase in the liability relating to financial
guarantees is recorded in the statement of profit and
loss. The notional commission is recognised in the
statement of profit and loss under the head fees and
commission income on a straight line basis over the
life of the guarantee.
3.15 Retirement and other employee benefits
Defined contribution plans
The Company''s contribution to provident fund and
employee state insurance scheme are considered
as defined contribution plans and are charged as
an expense based on the amount of contribution
required to be made and when services are rendered
by the employees.
Defined benefit plans
The Company pays gratuity to the employees whoever
has completed five years of service with the Company
at the time of resignation / retirement. The gratuity
is paid @15 days salary for every completed year of
service as per the Payment of Gratuity Act, 1972.
The gratuity liability amount is contributed by the
Company to the Life insurance corporation of India
who administers the fund of the Company.
The liability in respect of gratuity and other post¬
employment benefits is calculated using the
Projected Unit Credit Method and spread over the
period during which the benefit is expected to be
derived from employees'' services. As per Ind AS 19,
the service cost and the net interest cost are charged
to the statement of profit and loss. Remeasurement
of the net defined benefit liability, which comprise
actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling
(if any, excluding interest), are recognised in OCI.
Short-term employee benefits
All employee benefits payable wholly within twelve
months of rendering the service are classified as
short-term employee benefits. Benefits such as
salaries, wages etc. and the expected cost of ex-
gratia are recognised in the period in which the
employee renders the related service. A liability is
recognised for the amount expected to be paid when
there is a present legal or constructive obligation to
pay this amount as a result of past service provided
by the employee and the obligation can be estimated
reliably. The cost of short-term compensated
absences is accounted as under:
(a) in case of accumulated compensated
absences, when employees render the services
that increase their entitlement of future
compensated absences; and
(b) in case of non-accumulating compensated
absences, when the absences occur.
Mar 31, 2018
Significant Accounting Policies :
a. Basis of preparation
The financial statements have been prepared under the historical cost convention and on accrual basis and in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) except interest on loans which have been classified as non-performing assets and are accounted for on realization basis. The said financial statements comply in all material respects with Accounting Standards notified under section 133 of the Companies Act, 2013 (âthe Actâ), read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of RBI as applicable to a Non Banking Financial services (NBFC).
The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
All assets and liabilities have been classified as current or non - current as per the Companies normal operating cycle as 12 months for the above purpose.
b. Use of estimates
In preparing the Companyâs financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.
c. Revenue Recognition
Revenue is recognized to the extent that it is probable that economics benefits will flow to the company and the revenue can be measured reliably.
i. Interest from Loans
Interest income on the loans granted is recognised on accrual basis and when no significant uncertainly as to collectability exists. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.
ii. Income from Assignment
ln case of assignment of receivables âat premiumâ, the assets are de-recognised since all the rights, title and future receivables are assigned to the purchaser. The interest spread arising on assignment is accounted over the residual tenor of the underlying assets.
iii. Other Interest Income
Other Interest Income is recognized on accrual basis.
iv. Processing Fees
Processing fees on processing of loans are recognized upfront as income.
v. Late Payment Charges
Income in case of late payment charges are recognized as and when realized.
vi. Insurance Commission
Insurance Commission is recognized when there is no uncertainty regarding its receipt.
vii. Income from Investments
Dividend from investments is accounted for as income when the right to receive dividend is established.
d. Property, Plant & Equipment
All the Property, Plant & Equipments are stated at cost less depreciation. The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.
When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in statement of profit and loss for the relevant financial year.
Depreciation
The depreciation on assets for own use is provided on âStraight Line Methodâ as per useful life specified in schedule II to the Companies Act, 2013 on Pro-rata Basis.
When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in statement of profit and loss for the relevant financial year.
e. Investments
Long term investments are stated at cost. Provision is made for any diminution in the value of the long term investments, if such decline is other than temporary. The Company does not have any current investments.
f. Retirement Benefits
a. The Employee and Company make monthly fixed contribution to government of India employeeâs provident fund equal to a specified percentage of the covered employeeâs salary. Provision for the same is made in the year in which services are rendered by the employee.
b. The liability for gratuity to employees, which is a defined benefit plan, as at Balance Sheet date determined on the basis of actuarial valuation based on projected unit credit method is funded to a gratuity fund administered by the trustees and managed by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts.
c. The Company does not allow carry forward of unavailed leave and hence unavailed leaves are encashed in the current year itself.
d. Short term benefits are recognised as an expense at the undiscounted amounts in the statement of profit and loss of the year in which the related service is rendered.
g. Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.
h. Segment Information
In the opinion of the management, the Company is mainly engaged in the business of providing finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -âSegment Reportingâ notified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014.
i. Lease
The Companyâs significant leasing arrangements are in respect of operating lease for premises that are cancelable in nature. The lease rentals paid under such agreements are charged to the statement of profit and loss.
j. Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.
Deferred tax resulting from âtiming differenceâ between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.
k. Intangible Assets
Intangible assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.
Intangible assets are amortized on a straight - line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed than years from the date when the asset is available for use is considered by the management. The amortization period and the amortization method are reviewed at least at each reporting date. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.
The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised as income or expenses in the Statement of Profit and Loss in the year of disposal. Intangible assets are amortized on a straight - line basis over 5 years.
l. Earnings per Share
Basic earnings per share is calculated by dividing net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.
m. Impairment
The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the Company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount.
n. Provision, Contingent Liabilities and Contingent Assets
A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.
o. Transfer and recourse obligation under Debt Securitization
The Company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.
p. Classification and Provision Policy for Loan Portfolio
(i) Classification of Loan Portfolio
Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time.
(ii) Provisioning policy for loan portfolio
Loans are provided for as per provisions required by Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular RBI/201516/22 DNBR (PD) CC.No.045/03.10.119/2015-16 dated July 01, 2015 (updated as on April 11,2016). Loans are classified and the percentage of provision made on such loans is as under.
Mar 31, 2016
SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of preparation
The financial statements have been prepared under the historical cost convention and on accrual basis and In accordance with Generally Accepted Accounting Principles in India (Indian GAAP) except interest on loans which have been classified as non-performing assets and are accounted for on realization basis. The said financial statements comply in all material respects with Accounting Standards notified under section 133 of the Companies Act,2013 ("the Actâ),read with Rule 7 of the Companies(Accounts) Rules, 2014 and the relevant provisions of RBI as applicable to a Non Banking Financial services(NBFC).
The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
All Assets and liabilities have been classified as current or non - current as per the Companies normal operating cycle as 12 months for the above purpose.
b. Use of estimates
In preparing the Company''s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
c. Revenue Recognition:
Revenue is recognized to the extent that it is probable that economics benefits will flow to the company and the revenue can be measured reliably.
i. Interest from Loans:
Interest income on the loans granted is recognized on accrual basis and when no significant uncertainly as to collectability exists. Income on non performing assets is recognized when realized as per the guidelines for prudential norms prescribed by the Reserve Bank of India.
ii. income from Assignment
in case of assignment of receivables "at premiumâ, the assets are de-recognized since all the rights, title and future receivables are assigned to the purchaser. The interest spread arising on assignment is accounted over the residual tenor of the underlying assets.
iii. Other Interest Income
Other Interest Income is recognized on accrual basis.
iv. Processing Fees
Processing fees on processing of loans are recognized upfront as income.
v. Late Payment Charges
Income in case of late payment charges are recognized as and when realized.
vi. Insurance Commission
Insurance Commission is recognized when there is no uncertainty regarding its receipt.
vii. Income from Investments
Dividend from investments is accounted for as income when the right to receive dividend is established.
d. Fixed Assets
All the Fixed Assets are stated at cost less depreciation. The cost of assets includes other direct/indirect and incidental cost incurred to bring them into their working condition.
When assets are disposed or retired, their cost is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.
e. Depreciation
The depreciation on assets for own use is provided on "Straight Line Method âas per useful life Specified in Schedule II to the Companies Act, 2013 on Pro-rata Basis. . Intangible assets are amortized on a straight - line basis over 5 years.
When assets are disposed or retired, their accumulated depreciation is removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Statement of Profit and Loss for the relevant financial year.
f. Investments
Long Term Investments are stated at cost. Provision is made for any diminution in the value of the Long Term Investments, if such decline is other than temporary. The Company does not have any Current Investments.
g. Retirement Benefits
a. The Employee and Company make monthly fixed Contribution to Government of India Employee''s Provident Fund equal to a specified percentage of the Covered employee''s salary. Provision for the same is made in the year in which services are rendered by the employee.
b. The Liability for Gratuity to employees, which is a defined benefit plan, as at Balance Sheet date determined on the basis of actuarial Valuation based on Projected Unit Credit method is funded to a Gratuity fund administered by the trustees and managed by Life Insurance Corporation of India and the contribution thereof paid/payable is absorbed in the accounts.
c. The Company does not allow carry forward of unveiled leave and hence unveiled leaves are encashed in the current year itself.
d. Short Term benefits are recognized as an expense at the undiscounted amounts in the Statement of Profit and Loss of the year in which the related service is rendered.
h. Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost such assets, whenever applicable, till such assets are ready for their intended use. A qualifying asset is the one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue accounts. Capitalization of borrowing cost is suspended when active development is interrupted.
i. Segment Information:
In the opinion of the management, the Company is mainly engaged in the business of providing Finance. All other activities of the Company revolve around the main business, and as such, there are no separate reportable segments as per Accounting Standard 17 -''Segment Reportingâ notified under section 133 of the companyâs Act,2013 ("the Actâ),read with Rule 7 of the Companies (Accounts) Rules, 2014.
j. Lease:
The company''s significant leasing arrangements are in respect of operating lease for premises that are cancelable in nature. The lease rentals paid under such agreements are charged to the Statement of Profit and Loss.
k. Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act, 1961.
Deferred Tax resulting from "timing differenceâ between taxable and accounting income is accounted for using the tax rates and laws that are enacted or subsequently enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is virtual certainty that the assets will be realized in future.
l. Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.
Intangible assets are amortized on a straight - line basis over their estimated useful lives. A rebuttable presumption that the useful life of an intangible asset will not exceed than years from the date when the asset is available for use is considered by the management. The amortization period and the amortization method are reviewed at least at each reporting date. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly.
The gain or loss arising on the disposal or retirement of an intangible asset is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized as income or expenses in the Statement of Profit and Loss in the year or disposal.
m. Earnings per Share
Basic earnings per share is calculated by dividing net profit after tax for the year attributable to Equity Shareholders of the company by the weighted average number of Equity Shares issued during the year. Diluted earnings per share is calculated by dividing net profit attributable to equity Shareholders (after adjustment for diluted earnings) by average number of weighted equity shares outstanding during the year.
n. Impairment
The management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired, the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable amount.
o. Provision, Contingent Liabilities and Contingent Assets :
A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
A disclosure for a contingent liability is made when there is a possible or present obligation that may, but probably will not require an outflow of resources. Contingent Assets are neither recognized nor disclosed in the financial statements.
p. Transfer and recourse obligation under Debt Securitization.
The company assigns assets under securitization transactions. The assigned loans / assets are derecognized and gains / losses are recorded on assignment of loan contracts. Recourse obligation with respect to Debt Securitizations with other financiers is provided in books as per past track records of delinquency / servicing of the loans of the Company.
q. Classification and Provision Policy for Loan Portfolio.
(i) Classification of Loan Portfolio
Provision for loans and advances are made as per directions issued by Reserve Bank of India for Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as amended from time to time.
(ii) Provisioning policy for loan portfolio
Loans are provided for as per provisions required by Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and as per RBI circular RBI/2015-16/22 DNBR (PD) CC.No.045/03.10.119/2015-16 dated July 01, 2015 (updated as on April 11,2016). Loans are classified and the percentage of provision made on such loans is as under.
Mar 31, 2015
A. Basis of preparation
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies(Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act"), as applicable. The financial
statements have been prepared as a going concern on accrual basis under
the historical cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
b. Use of estimates
In preparing the Company's financial statements in conformity with the
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized prospectively in the current and future
periods.
c. Revenue Recognition
i. Interest from Loans
Interest income on the loans granted is recognized on accrual basis and
when no significant uncertainly as to collectability exists. Income on
non performing assets is recognized when realized as per the guidelines
for prudential norms prescribed by the Reserve Bank of India.
ii. income from Assignment
in case of assignment of receivables "at premium", the assets are
de-recognized since all the rights, title and future receivables are
assigned to the purchaser. The interest spread arising on assignment is
accounted over the residual tenor of the underlying assets.
iii. Other Interest Income
Other Interest Income is recognized on accrual basis.
iv. Processing Fees
Processing fees on processing of loans are recognized upfront as
income.
v. Late Payment Charges
Income in case of late payment charges are recognized as and when
realized.
vi. Insurance Commission
Insurance Commission is recognized when there is no uncertainty
regarding its receipt.
vii. Income from Investments
Dividend from investments is accounted for as income when the right to
receive dividend is established.
d. Fixed Assets
All the Fixed Assets are stated at cost less depreciation, after taking
into consideration provision for NPA. The cost of assets includes other
direct/indirect and incidental cost incurred to bring them into their
working condition.
When assets are disposed or retired, their cost is removed from the
financial statements. The gain or loss arising on the disposal or
retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognized in
Statement of Profit and Loss for the relevant financial year.
e. Depreciation
The depreciation on assets for own use is provided on "Straight Line
Method" on the basis of useful life of assets as specified in Schedule
II to the Companies Act, 2013 on Pro-rata Basis.
-When assets are disposed or retired, their accumulated depreciation is
removed from the financial statements. The gain or loss arising on the
disposal or retirement of an asset is determined as the difference
between sales proceeds and the carrying amount of the asset and is
recognized in Statement of Profit and Loss for the relevant financial
year.
f. Investments
Long Term Investments are stated at cost. Provision is made for any
diminution in the value of the Long Term Investments, if such decline
is other than temporary. The Company does not have any Current
Investments.
g. Retirement Benefits'
a. The Employee and Company make monthly fixed Contribution to
Government of India Employee's Provident Fund equal to a specified
percentage of the Covered employees salary. Provision for the same is
made in the year in which services are rendered by the employee.
b. The Liability for Gratuity to employees, which is a defend benefit
plan, as at Balance Sheet date determined on the basis of actuarial
Valuation based on Projected Unit Credit method is funded to a Gratuity
fund administered by the trustees and managed by Life Insurance
Corporation of India and the contribution thereof paid/payable is
absorbed in the accounts.
c. The Company does not allow carry forward of unveiled leave and
hence unveiled leaves are encased in the current year itself.
d. Short Term benefits are recognized as an expense at the
undiscounted amounts in the Statement of Profit and Loss of the year in
which the related service is rendered.
h. Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
such assets, whenever applicable, till such assets are ready for their
intended use. A qualifying asset is the one which necessarily takes
substantial period to get ready for intended use. All other borrowing
costs are charged to revenue accounts. Capitalization of borrowing cost
is suspended when active development is interrupted.
i. Segment Information
In the opinion of the management, the Company is mainly engaged in the
business of providing finance. All other activities of the Company
revolve around the main business, and as such, there are no separate
reportable segments as per Accounting Standard 17 -,Segment Reporting"
prescribed by Companies (Accounting Standards) Rules, 2006.
j. Lease
The Company's significant leasing arrangements are in respect of
operating lease for premises that are cancellable in nature. The lease
rentals paid under such agreements are charged to the Statement of
Profit and Loss.
k. Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration
benefits admissible under the provision of the Income Tax Act, 1961.
Deferred Tax resulting from "timing difference" between taxable and
accounting income is accounted for using the tax rates and laws that
are enacted or subsequently enacted as on the balance sheet date.
Deferred tax asset is recognized and carried forward only to the extent
that there is virtual certainty that the assets will be realized in
future.
l. Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization. All costs, including financing
costs till commencement of commercial production, net charges on
foreign exchange contracts and adjustments arising from exchange rate
variations attributable to the intangible assets are capitalized.
m. Earnings per Share
Basic earnings per share is calculated by dividing net Profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earnings per share is calculated by dividing net Profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
n. Impairment
-The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
o. Shares Issue Expenses
Expenses incurred on issue of shares are charged to Statement of Profit
and Loss.
p. Provision, Contingent Liabilities and Contingent Assets
A provision is recognized when there is a present obligation as a
result of past event and it is probable that an outfow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
A disclosure for a contingent liability is made when there is a
possible or present obligation that may, but probably will not require
an outfow of resources. Contingent Assets are neither recognized nor
disclosed in the financial statements.
q. Transfer and recourse obligation under Assignment
The company assigns assets under securitization transactions. The
assigned loans / assets are derecognized and gains / losses are
recorded on assignment of loan contracts. Recourse obligation with
respect to Debt Securitizations with other financiers is provided in
books as per past track records of delinquency / servicing of the loans
of the Company.
r. Classification and Provision Policy for Loan Portfolio
(i) Classification of Loan Portfolio
Provision for loans and advances are made as per directions issued by
Reserve Bank of India for Non Banking Financial (Non Deposit Accepting
or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007
as amended from time to time.
(ii) Provisioning policy for loan portfolio
Loans are provided for as per provisions required by Non Banking
Financial (Non Deposit Accepting or Holding) Companies Prudential Norms
(Reserve Bank) Directions, 2007 and as per RBI circular dated December
02, 2011, as amended from time to time. Loans are classified and the
percentage of provision made on such loans is as under.
Mar 31, 2014
A) Basis of preparation
The financial statements have been prepared to comply with the
Accounting Standards referred to in the Companies (Accounting
Standards) Rule, 2006 issued by the Central Government in exercise of
the power conferred under sub-section ( I ) (a) of section 642 and the
relevant provisions of the Companies Act, 1956 (the 'Act'). The
financial statements have been prepared under the historical cost
convention on the accrual basis. The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
b) Use of estimates
In preparing the Company's financial statements in conformity with the
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in the current and future
periods.
c) Revenue Recognition
(i) Interest from Loans:
Interest from Loans is recognized in the year in which the installment
falls due as per the terms of Loan Agreement. Income on non performing
assets is recognized when realized as per the guidelines for prudential
norms prescribed by the Reserve Bank of India.
(ii) Other Interest Income
Other Interest Income is recognized on accrual basis.
(iii) Processing Fees
Processing fees on processing of loans are recognized upfront as
income.
(iv) Late Payment Charges
Income in case of late payment charges are recognized as and when
realized.
(v) Insurance Commission
Insurance Commission is recognized when there is no uncertainty
regarding its receipt.
(vi) Income from Investments
Dividend from investments is accounted for as income when the right to
receive dividend is established.
(vii) lncome from Assignment
ln case of assignment of receivables "at premium", the assets are
de-recognised since all the rights, title and future receivables are
assigned to the purchaser. The premium / profit spread arising on
assignment is accounted over the residual tenor of the underlying
assets.
d) Fixed Assets
All the Fixed Assets are stated at cost less depreciation, after taking
into consideration provision for NPA.
The cost of assets includes other direct/indirect and incidental cost
incurred to bring them into their working condition.
When assets are disposed or retired, their cost is removed from the
financial statements. The gain or loss arising on the disposal or
retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognised in
Statement of Profit and Loss for the relevant financial year.
e) Depreciation
The depreciation on assets for own use is provided on "Straight Line
Method" at the rates Specified in Schedule XIV of the Companies Act,
1956 on Pro-rata Basis.
When assets are disposed or retired, their accumulated depreciation is
removed from the financial statements. The gain or loss arising on the
disposal or retirement of an asset is determined as the difference
between sales proceeds and the carrying amount of the asset and is
recognised in Statement of Profit and Loss for the relevant financial
year.
f) Investments
Long Term Investments are stated at cost. Provision is made for any
diminution in the value of the Long Term Investments, if such decline
is other than temporary. The Company does not have any Current
Investments.
g) Retirement Benefits
(i) The Employee and Company make monthly fixed Contribution to
Government of India Employee's Provident Fund equal to a specified
percentage of the Covered employee's salary. Provision for the same is
made in the year in which services are rendered by the employee.
(ii) The Liability for Gratuity to employees, which is a defined
benefit plan, is determined on the basis of actuarial Valuation based
on Projected Unit Credit method. Actuarial gain / loss in respect of
the same are charged to the Statement of Profit and Loss.
(iii) The Company does not allow carry forward of unavailed leave and
hence unavailed leaves are encashed in the current year itself.
(iv) Short Term benefits are recognised as an expense at the
undiscounted amounts in the Statement of Profit and Loss of the year in
which the related service is rendered.
h) Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
such assets, whenever applicable, till such assets are ready for their
intended use. A qualifying asset is the one which necessarily takes
substantial period to get ready for intended use. All other borrowing
costs are charged to revenue accounts. Capitalization of borrowing cost
is suspended when active development is interrupted.
i) Segment Information:
In the opinion of the management, the Company is mainly engaged in the
business of providing finance. All other activities of the Company
revolve around the main business, and as such, there are no separate
reportable segments as per Accounting Standard 17 -'Segment Reporting"
prescribed by Companies (Accounting Standards) Rules, 2006.
j) Lease:
The company's significant leasing arrangements are in respect of
operating lease for premises that cancelable are in nature. The lease
rentals paid under such agreements are charge to the Statement of
Profit and Loss.
k) Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration
benefits admissible under the provision of the Income Tax Act, 1961.
Deferred Tax resulting from "timing difference" between taxable and
accounting income is accounted for using the tax rates and laws that
are enacted or subsequently enacted as on the balance sheet date.
Deferred tax asset is recognised and carried forward only to the extent
that there is virtual certainty that the assets will be realized in
future.
l) Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount. The impairment loss recognised in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
amounts.
m) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization. All costs, including financing
costs in respect of qualifying assets till commencement of commercial
production, net charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the intangible
assets are capitalized.
n) Share Issue Expenses
Expenses incurred on issue of shares are adjusted against Security
Premium Reserve.
o) Earnings per Share
Basic earnings per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earnings per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
p) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes to the accounts. Contingent Assets are neither recognized nor
disclosed in the financial statement.
q) Transfer and recourse obligation under Debt Securitization.
The company assigns assets under securitization transactions. The
assigned loans / assets are derecognized and gains / losses are
recorded on assignment of loan contracts. Recourse obligation with
respect to Debt Securitizations with other financiers is provided in
books as per past track records of delinquency / servicing of the loans
of the Company.
r) Classification and Provision Policy for Loan Portfolio
(i) Classification of Loan Portfolio
Provision for loans and advances are made as per directions issued by
Reserve Bank of India for Non Banking Financial (Non Deposit Accepting
or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007
as amended from time to time.
(ii) Provisioning policy for loan portfolio
Loans are provided for as per provisions required by Non Banking
Financial (Non Deposit Accepting or Holding) Companies Prudential Norms
(Reserve Bank) Directions, 2007 and as per RBI circular dated
December02, 2011, as amended from time to time. Loans are classified
and the percentage of provision made on such loans is as under.
s) Accounting policies not specifically referred to otherwise are
consistent with generally accepted accounting principles.
Mar 31, 2013
A) Basis of preparation
The financial statements have been prepared to comply with the
Accounting Standards referred to in the Companies (Accounting
Standards) Rule, 2006 issued by the Central Government in exercise of
the power conferred under sub-section (I) (a) of section 642 and the
relevant provisions of the Companies Act, 1956 (the ''Act''). The
financial statements have been prepared under the historical cost
convention on the accrual basis. The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
b) Use of estimates
In preparing the Company''s financial statements in conformity with the
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in the current and future
periods.
c) Revenue Recognition
(i) Interest from Loans:
Interest from Loans is recognized in the year in which the installment
falls due as per the terms of Loan Agreement. Income on non performing
assets is recognized when realized as per the guidelines for prudential
norms prescribed by the Reserve Bank of India.
(ii) Other Interest Income
Other Interest Income is recognized on accrual basis. (iii) Processing
Fees
Processing fees on processing of loans are recognized upfront as
income. (iv) Late Payment Charges
Income in case of late payment charges are recognized as and when
realized. (v) Insurance Commission
Insurance Commission is recognized when there is no uncertainty
regarding its receipt. (vi) Income from Investments
Dividend from investments is accounted for as income when the right to
receive dividend is established
(vii) Income from Assignment
In case of assignment of receivables "at premium", the assets are
de-recognised since all the rights, title and future receivables are
assigned to the purchaser. The interest spread arising on assignment is
accounted over the residual tenor of the underlying assets.
d) Fixed Assets
All the Fixed Assets are stated at cost less depreciation, after taking
into consideration provision for NPA.
The cost of assets includes other direct/indirect and incidental cost
incurred to bring them into their working condition.
When assets are disposed or retired, their cost is removed from the
financial statements. The gain or loss arising on the disposal or
retirement of an asset is determined as the difference between sales
proceeds and the carrying amount of the asset and is recognised in
Statement of Profit and Loss for the relevant financial year.
e) Depreciation
The depreciation on assets for own use is provided on "Straight Line
Method" at the rates Specified in Schedule XIV of the Companies Act,
1956 on Pro-rata Basis.
When assets are disposed or retired, their accumulated depreciation is
removed from the financial statements. The gain or loss arising on the
disposal or retirement of an asset is determined as the difference
between sales proceeds and the carrying amount of the asset and is
recognised in Statement of Profit and Loss for the relevant financial
year.
f) Investments
Long Term Investments are stated at cost. Provision is made for any
diminution in the value of the Long Term Investments, if such decline
is other than temporary. The Company does not have any Current
Investments.
g) Retirement Benefits
(i) The Employee and Company make monthly fixed Contribution to
Government of India Employee''s Provident Fund equal to a specified
percentage of the Covered employee''s salary. Provision for the same is
made in the year in which services are rendered by the employee.
(ii) The Liability for Gratuity to employees, which is a defined
benefit plan, is determined on the basis of actuarial Valuation based
on Projected Unit Credit method. Actuarial gain / loss in respect of
the same are charged to the Statement of Profit and Loss.
(iii) The Company does not allow carry forward of unavailed leave and
hence unavailed leaves are encashed in the current year itself.
(iv) Short Term benefits are recognised as an expense at the
undiscounted amounts in the Statement of Profit and Loss of the year in
which the related service is rendered.
h) Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
such assets, whenever applicable, till such assets are ready for their
intended use. A qualifying asset is the one which necessarily takes
substantial period to get ready for intended use. All other borrowing
costs are charged to revenue accounts. Capitalization of borrowing cost
is suspended when active development is interrupted.
i) Segment Information:
In the opinion of the management, the Company is mainly engaged in the
business of providing finance. All other activities of the Company
revolve around the main business, and as such, there are no separate
reportable segments as per Accounting Standard 17 -''Segment Reporting"
prescribed by Companies (Accounting Standards) Rules, 2006.
j) Lease:
The company''s significant leasing arrangements are in respect of
operating lease for premises that cancelable are in nature. The lease
rentals paid under such agreements are charge to the Statement of
Profit and Loss.
k) Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration
benefits admissible under the provision of the Income Tax Act, 1961.
Deferred Tax resulting from ''liming difference" between taxable and
accounting income is accounted for using the tax rates and laws that
are enacted or subsequently enacted as on the balance sheet date.
Deferred tax asset is recognised and carried forward only to the extent
that there is virtual certainty that the assets will be realized in
future.
I) Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount. The impairment loss recognised in prior accounting periods is
reversed if there has been a change in the estimate of recoverable
amounts.
m) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization. All costs, including financing
costs in respect of qualifying assets till commencement of commercial
production, net charges on foreign exchange contracts and adjustments
arising from exchange rate variations attributable to the intangible
assets are capitalized.
n) Share Issue Expenses
Expenses incurred on issue of shares are adjusted against Security
Premium Reserve.
o) Earnings per Share
Basic earnings per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earnings per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year.
p) Provisions. Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes to the accounts. Contingent Assets are neither recognized nor
disclosed in the financial statement.
q) Transfer and recourse obligation under Debt Securitization.
The company assigns assets under securitization transactions. The
assigned loans / assets are derecognized and gains / losses are
recorded on assignment of loan contracts. Recourse obligation with
respect to Debt Securitizations with other financiers is provided in
books as per past track records of delinquency / servicing of the loans
of the Company.
r) Accounting policies not specifically referred to otherwise are
consistent with generally accepted accounting principles.
Mar 31, 2012
A) Basis of Accounting:
The financial statements are prepared on a historical cost convention
on the accrual basis and materially comply with the accounting standard
notified by Companies (Accounting Standard) Rules, 2008 and relevant
provisions of the Companies Act, 1956.
b) Revenue Recognition
(i) Interest on Loan:
Interest on Loan is recognized in the year in which the installment
falls due as per the terms of Loan Agreement. Income on non performing
assets is recognized when realized as per the guidelines for prudential
norms prescribed by the Reserve Bank of India.
(ii) Other Interest Income
Other Interest Income is recognized on accrual basis. (iii) Processing
Fees Processing fees on processing of loans are recognized upfront as
income.
(iv) Late Payment Charges
Income in case of late payment charges are recognized as and when
realized.
(v) Insurance Commission
Insurance Commission is recognized when there is no uncertainty
regarding its receipt.
c) Fixed Assets
All the assets are stated at cost less depreciation, after taking into
consideration provision for NPA.
d) Depreciation
The depreciation on assets for own use is provided on straight line
method at the rates Specified in Schedule XIV of the Companies Act,
1956 on Pro-rata Basis.
e) Investments
Long Term Investments are stated at cost. Provision is made for any
diminution in the market value of the Quoted Investments. The Company
does not have any Current Investments.
f) Retirement Benefits
(i) The Employee and Company make monthly fixed Contribution to
Government of India Employee's Provident Fund equal to a specified
percentage of the Covered employee's salary, Provision for the same is
made in the year in which services are rendered by the employee.
(ii) The Liability for Gratuity to employees, which is a defined
benefit plan, is determined on the basis of actuarial Valuation based
on Projected Unit Credit method. Actuarial gain / loss in respect of
the same are charged to the profit and loss account.
g) Borrowing Cost
Borrowing costs are capitalized as part of qualifying fixed assets when
it is possible that they will result in future economic benefits. Other
borrowing costs are expensed.
h) Provision for Taxation
Provision for taxation has been made in accordance with the tax laws
and rules applicable to the relevant assessment year.
i) Deferred Taxation
Deferred Tax resulting from timing differences between book and tax
profit is accounted for under the liability method, at the current
rates of tax, to the extent that the timing differences are expected to
crystallize.
j) Impairment
The management periodically assesses, using external and internal
sources whether there is an indication that an asset may be impaired.
If an asset is impaired, the company recognizes an impairment loss as
the excess of the carrying amount of the asset over the recoverable
amount.
k) Earning per Share
Basic earning per share is calculated by dividing net profit after tax
for the year attributable to Equity Shareholders of the company by the
weighted average number of Equity Shares issued during the year.
Diluted earnings per share is calculated by dividing net profit
attributable to equity Shareholders (after adjustment for diluted
earnings) by average number of weighted equity shares outstanding
during the year
l) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes to the accounts. Contingent Assets are neither recognized nor
disclosed in the financial statement.
m) Transfer and recourse obligation under Debt Securitization.
The company assigns assets under securitization transactions. The
assigned loans / assets are derecognized and gains / losses are
recorded on assignment of loan contracts. Recourse obligation with
respect to Debt Securitizations with other financiers is provided in
books as per past track records of delinquency / servicing of the loans
of the Company.
n) Accounting policies not specifically referred to otherwise are
consistent with generally accepted accounting principles.
Mar 31, 2010
(a) Method of Accounting
The Company follows accrual method of accounting.
(b) Revenue Recognition
(i) Interest on Loan against:
Interest on Loan against hypothecation of vehicle is recognised in the
year in which the installment falls due as per the terms of contract.
(ii) Income is not recognized in respect of Non Performing Assets, as
per the guidelines for prudential norms prescribed by the Reserve Bank
of India.
(c) Fixed Assets
All the assets are stated at cost less depreciation, after taking into
consideration provision for NPA.
(d) Depreciation
The depreciation on assets for own use is provided on straight line
method at the rates Specified in Schedule XIV of the Companies Act,
1956 on Pro-rata Basis.
(e) Investments
Long Term Investments are stated at cost. Provision is made for any
diminution in the market value of the Quoted Investments. The Company
does not have any Current Investments.
(f) Stock In Trade
Stock in Trade is valued at Lower of Cost and net realizable value.
Cost is determined on FIFO basis.
(g) Retirement Benefits
a) The Employee and Company make monthly fixed Contribution to
Government of India Employees Provident Fund equal to a specified
percentage of the Covered employees salary, Provision for the same is
made in the year in which services are rendered by the employee.
b) The Liability for Gratuity to employees, which is a defined benefit
plan is determined on the basis of actuarial Valuation based on
Projected Unit Credit method. Actuarial gain / loss in respect of the
same is charged to the profit and loss account.
(h) Borrowing Cost
Borrowing costs are capitalized as part of qualifying fixed assets when
it is possible that they will result in future economic benefits. Other
borrowing costs are expensed.
(i) Provision for Taxation
Provision for taxation has been made in accordance with the tax laws
and rules applicable to the relevant assessment year.
(j) Deferred Taxation
Deferred Tax resulting from timing differences between book and tax
profit is accounted for under the liability method, at the current
rates of tax, to the extent that the timing differences are expected to
crystallise.
(k) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes to the accounts. Contingent Assets are neither recognized nor
disclosed in the financial statement.
(l) Transfer and recourse obligation under Debt Securitization.
The company assigns assets under securitization transactions. The
assigned loans / assets are derecognized and gains / losses are
recorded on assignment of loan contracts. Recourse obligation with
respect to Debt Securitisations with other financiers is provided in
books as per past track records of delinquency / servicing of the loans
of the Company.
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