Accounting Policies of DFL Infrastructure Finance Ltd. Company

Mar 31, 2014

The accounts have been prepared using historic cost convention and on the basis of going concern, with revenues recognised, expenses accounted on accrual basis, unless otherwise stated and in accordance with applicable accounting standards as prescribed by Central Government through sub-section (3C) of section 211 of the Companies Act, 1956.

The Company is registered with Reserve Bank of India as a ''Non-Banking Finance Company under the category Non Deposit Taking NBFC'' and the Company follows the directions prescribed by the Reserve Bank of India for Non-Banking Financial Companies with respect to Income Recognition, Asset Classification, Provisioning norms.

The preparation of financial statements requires management to make estimates and assumptions of some of the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and amounts of revenues and expenses during the period reported.

1.1 Income Recognition:

Revenue is recognised on accrual basis other than those stated and where there is no uncertainty in ultimate realization

a. Income from Hypothecation loan transactions are accounted on the based on Internal Rate of Return method following accrual basis.

b. Income is not recognised on contracts in which the installments are due for more than 180 days.

c. Additional Finance Charges, Cheque dishonor charges, Due Date Missing Charges and Late payment charges are accounted on receipt basis.

1.2 Repossessed Stock:

Repossessed stocks are valued at the settlement value.

As per Guidelines issued by Reserve Bank of India, provision of 40% is made uniformly on the settlement value at the time of repossession.

1.3 Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation.

1.4 Depreciation:

On Own assets (Tangible):

Depreciation on assets for own use is provided on Written down value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Assets costing Rs.5,000/- or less acquired during the year are fully depreciated.

On Own assets (Intangible): Intangible assets are amortised over a period of five years.

1.5 Investments:

Investment in Subsidiary Company is valued at cost.

Provision, if any, is made to recognise decline other than a temporary, in the value of long-term investments.

1.6 Employee Benefits:

a. Short Term Employee Benefits such as salaries are charged at undiscounted amounts to the Statement of Profit and Loss in the year of service.

b. Contribution to Provident Fund is recognised in the Statement of Profit and Loss on the basis of actual liability.

c. Liability towards Long term compensated absence such as Earned Leave is recognised based on the estimates as determined by the Management.

d. Post employment benefit such as Gratuity is treated as Defined Contribution Plan and contribution is accounted as expense as when incurred towards Group Gratuity Scheme maintained with Life Insurance Corporation of India.

1.7 Taxes on Income:

Income-tax expense is accounted in accordance with AS 22 - "Accounting for taxes on Income" which includes current taxes and deferred taxes. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

1.8. Provisions & Contingencies:

a. A present obligation, which could be reliably estimated, is provided for in the accounts, if it is probable that an outflow of resources embodying economic benefits will be required for its settlement.

b. Contingent Liabilities are disclosed by way of notes in the Balance Sheet.

c. Contingent Assets are neither recognised nor disclosed.

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Mar 31, 2013

The Company follows the directions prescribed by the Reserve Bank of India for Non-Banking Financial Companies with respect to Income Recognition, Asset Classification, Provisioning norms. The applicable Accounting Standards prescribed by the central government vide its powers under sub section 3c of section 211 of The Companies Act 1956 is followed in preparing the accounts of the company.

1.1 Income Recognition:

a. Income from Hire purchase and hypothecation loan transactions is accounted on the basis of Internal Rate of Return method and followed on accrual basis. Income is not recognized on contracts in which the installments are due for more than 180 days.

b. Additional Finance Charges (AFC) is accounted on receipt basis.

c. Cheque Bouncing Charges is accounted at Rs. 500 per occurrence and accounted on receipt basis.

d. Due date Missing charges are charged when installments are not paid on the due dates at Rs. 500 and is accounted on receipt basis.

1.2 Repossessed Assets:

Repossessed assets are valued at outstanding amount and a provision of 40% is made uniformly on this as per RBI Guidelines.

1.3 Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation.

1.4 Depreciation:

On Own assets (Tangible):

Depreciation on assets for own use is provided on Written down value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Assets costing Rs.5,000/- or less acquired during the year are fully depreciated.

On Own assets (Intangible):

Intangible assets are depreciated on a straight-line basis over a period of five years.

1.5 Investments:

Investment in Subsidiary Company is shown at cost.

Company has invested an amount of Rs. 29.93 Lakhs in DFL Holdings and Securities Limited (Subsidiary Company). Due to slump in the market the subsidiary company has not actively entered in to any income generating activity. However, the subsidiary company has invested Rs. 91.38 Lakhs in DFL Infrastructure Finance Limited as Unsecured Loan and also holds 274100 Equity shares in holding company which is valued at Rs. 11.54 Lakhs as per market price as on 7th March, 2013. The company has also informed that the subsidiary company is taking necessary steps to generate income on regular basis. In view of the above no provision is being made for depreciation in value of shares.

1.6 Employee Benefits:

Provision for gratuity and leave encashment is made on estimates. Actuarial valuation is not done since the management is of the opinion that the amount involved is not very huge.

B. Change in the Accounting Policy

From 1st April 2012, the Company recognizes the income arising out of Additional Finance Charges (AFC), Due Date Missing Charges and Cheque Bouncing Charges on receipt basis as against on Accrual basis hitherto. Due to this change, the loss has been over stated by Rs. 117.23 Lacs during the year under consideration.

This Change in Accounting Policy has been considered and recommended by the Audit Committee in the meeting held on 30th January, 2013 and approved by the Board of Directors in their meeting held on 31st January, 2013.

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Mar 31, 2012

The Company follows the directions prescribed by the Reserve Bank of India for Non-Banking Financial Companies with respect to Income Recognition, Asset Classification, Provisioning norms. The applicable Accounting Standards issued by The Institute of Chartered Accountants of India is followed in drafting the accounts of the company.

1.1 Income Recognition:

a. Income from Hire purchase and hypothecation loan transactions is accounted on the basis of Internal Rate of Return method and followed on accrual basis. Income is not recognized on contracts in which the installments are due for more than 180 days.

b. Additional Finance Charges (AFC) is accounted on accrual basis at 18% p.a. AFC is not recognized on contracts in which the installments are due for more than 180 days.

c. Cheque Bouncing Charges is accounted at Rs. 500 per occurrence.

d. Due date Missing charges are charged when instalments are not paid on the due dates at Rs. 500 and is accounted on accrual basis.

1.2 Repossessed Assets:

Repossessed assets are valued at the settlement value and a provision of 40 % is made uniformly on the settlement value.

1.3 Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation.

1.4 Depreciation:

On Own assets (Tangible):

Depreciation on assets for own use is provided on Written down value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Assets costing Rs. 5,000/- or less acquired during the year are fully depreciated.

On Own assets (Intangible):

Intangible assets are depreciated on a straight-line basis over a period of five years.

1.5 Investments:

Investment in Subsidiary Company is shown at cost.

Company has invested an amount of Rs. 29.93 Lakhs in DFL Holdings and Securities Limited (Subsidiary Company). Due to slump in the market the subsidiary company has not entered into any income generating activity. However, the subsidiary company has invested Rs. 96.38 Lakhs in DFL Infrastructure Finance Limited as Unsecured Loan and also holds 274100 Equity shares in holding company which is valued at Rs. 23.71 Lakhs as per market price as on 30th March, 2012. The company also informed that the subsidiary company is taking necessary steps to generate income on regular basis. In view of the above no provision is being made for depreciation in value of shares.

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Mar 31, 2011

The Company follows the directions prescribed by the Reserve Bank of India for Non-Banking Financial Companies with respect to Income Recognition, Asset Classification, Provisioning norms. The applicable Accounting Standards issued by The Institute of Chartered Accountants of India is followed in drafting the accounts of the company.

1.1 Income Recognition:

a. Income from Hire purchase and hypothecation loan transactions is accounted on the basis of Internal Rate of Return method.

b. In respect of receivables assigned bilaterally, the difference between the book value of the assets assigned and the sale consideration is booked as income in the year of contract.

c. Additional Finance Charges is accounted on accrual basis at 18% p.a whereas the contracted rate is 36%.p.a

d. Collection charges are accounted on cash basis

e. Due date Missing charges are accounted on accrual basis

1.2 Repossessed Assets:

Repossessed assets are valued at the settlement value and provision to an extent of 40 % is uniformly made on the settlement value.

1.3 Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation.

1.4 Depreciation:

On Own assets (Tangible):

Depreciation on assets for own use is provided on Written down value method at the rates prescribed in Schedule XIV to the Companies Act. 1956. Assets costing Rs.5,000/- or less acquired during the year are fully depreciated. On Own assets (Intangible):

Intangible assets comprising of Computer Software are depreciated on a straight-line basis over a period of five years.

1.5 Investments:

Long term Investments and unquoted investments are carried at cost

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Sep 30, 2009

The Company follows the directions prescribed by the Reserve Bank of India for Non-Banking Financial Companies with respect to income recognition, Asset classification, Provisioning norms and the applicable Accounting Standards 4ssued by The Institute of Chartered Accountants of India.

1.1 Income Recognition: The Companys policy on income recognition is enumerated below:

a. Income from Hire purchase and hypothecation loan transactions is accounted on the basis of Internal Rate of Return method.

b. In respect of receivables assigned bilaterally with Banks / Financial Institutions, being the difference between the book value of the assets assigned and the sale consideration is booked as income in the year of contract, whereas in the previous year the same was amortized over the tenor of the assignment of receivable.

c. Additional Finance Charges is accounted on accrual basis @18% pa whereas the contractual rate is 36%.

d. Collection charges are accounted on cash basis

e. Due date Missing charges are accounted on accrual basis

1.2 Repossessed Assets: Repossessed assets are valued at lower of the settlement value or realizable market value and 40% provision is uniformly made on the repossessed stock value

1.3 Fixed Assets: Fixed assets are stated at historical cost less accumulated depreciation.

1.4 Depreciation:

On Own assets (Tangible): Depreciation on assets for own use is provided on Written down value method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Assets costing Rs.5, 000/- or less acquired during the year are fully depreciated.

On Own assets (Intangible): Intangible assets comprising of Computer Software are depreciated on a straight-line basis over a period of five years.

1.5 Investments:

Long term Investments are carried at cost Unquoted Equity shares are valued at cost.